Bizarro World Podcast,
with Nick and Gerardo
Nov. 6, 2021
Gerardo Del Real: Gold is back. Maybe, maybe not. The Fed going to taper. Does it matter? Zillow (NYSE: Z) should not be in the investing business. We'll talk Zillow. We'll talk food shortages. We'll talk Prince Andrew. JFK Jr. might be alive. A whole lot to get to. I am Gerardo Del Real along with my co-host, Mr. Nick Hodge. And this is Episode 142 of Bizarro World. Mr. Hodge, how goes you today?
Nick Hodge: Busy as you are Gerardo, looking forward to being away for a week, chasing elk in Montana. Otherwise, enjoying all-time record highs in stocks and some commodities and the excitement that goes along with that. How are you doing?
Gerardo Del Real: I am doing well. Oh, hold on. I think JFK Jr.'s here. Hold on a second. Nope. Nope. Wasn't him. Sorry. I thought he was a few days late. No, look I'm doing well. Things are good. Things are busy. Things are productive. The markets are very favorable, inflation profits, as you call them, continue to add up. Things are great. Things are great. Did you hear that story about the QAnon people in Dallas that were out there in the rain and the cold weather and they were waiting for JFK Jr. over by the grassy knoll, where Kennedy was killed? Did you read that?
Nick Hodge: I can only imagine. No, I did not. Did he or the other gunman show up?
Gerardo Del Real: Well, senior did not show up. Junior was scheduled to show up according to them, he was going to come back and let everyone know he was alive. Now, this wasn't like a ragtag group of five people. There were hundreds of people that showed up in Dallas expecting JFK Jr.'s return. So, they believe that Trump is battling a Satan-worshiping cabal that traffics children for sex. While you know how I feel, and I know how you feel about sex trafficking and anything that is non-consensual or criminal as it relates to trafficking of women or men or children. But this here, this particular group, it's a fascinating group to me. It's fascinating for this reason. Of course, all of us should be vigilant about sex traffickers. Right? See one, say something. That's the one where I agree, like absolutely. Tell on them and go get those assholes, whoever that is.
I just don't understand how it morphs from, "Hey, we're going to be very vigilant about the trafficking of kids." Whether it's politicians or whether it's the Epstein's or whether it's the Prince Andrew's or whoever it is. Maybe Bill Gates? I don't know. Kidding Bill, kidding. Don't turn off the chip. But how it morphs from that into JFK Jr.'s coming back and we're going to wait for him out in the rain and then to have hundreds of people actually show up, believing this. It truly is a Bizarro World out there. I don't know how else to put it, but I thought this was one of those Onion headlines, where it's just too bizarre to believe, but it happens. So it is what it is, I guess.
Nick Hodge: Yeah, I think people love stories. It's what allows people to organize and always has, frankly, going back to the biblical sense of it. So that's the root of how it could go from one thing to another. The story changes and people continue to believe it because of our inherent nature to be susceptible to stories. So hundreds of people showing up for that is incredible, though not unbelievable because hundreds of people show up, dress up like furry animals at organized events and things like that.
So to each their own, I think things also get over-amplified. So you see this and you're like, "Man, it's just like looking at a train wreck." So it gets amplified because everybody wants to look at it because it is so bizarre. Yeah, we'll talk about the Epstein stuff later, I'm sure. But I'm sorry they didn't get fulfilled or seek what they were looking for there.
Gerardo Del Real: I'm sorry for them as well. If there's any QAnon listeners out there, this is not a shot at you or your group. I think the mission statement is noble. Keep putting pressure on the sex traffickers out there, but some of the other stuff, you got to know it looks a little off from this side of it.
Anyhow, everything still awesome in the stock market, Nick. I know that you and I talked about the money that you have that is managed "professionally by others." You, of course, do extremely well for yourself. We've done very well. We've been fortunate in that sense. We positioned well. I really hope that the group that is managing your money is starting to outperform because every week is a record level in the major indices. They're not keeping up, Nick.
Nick Hodge: You got to get in there and we've been preaching that you got to do it for yourself, especially when things that are starting to perform now are different than they have been in the past couple of years. Algorithmically programmed is how these funds and managers look at things. Whereas, the things that are happening now that weren't happening before, whatever that is... the inflation, the commodity prices going up, the Fed trying to change stance now and beginning to taper. Things starting to do things that didn't historically happen. Like, that you've talked about for a long time. Stocks continuing to go up alongside rates and gold having a little show of it today. So it's all very new territory. Yeah, you got to be nimble and be able to go fast where the profits are being made. And institutions, I guess, simply aren't meant to do that.
Gerardo Del Real: Let's talk about the move in gold. It was as high as $1,823, and the move was interesting to me. I know the gold bugs are frustrated. I know gold speculators are frustrated. I did an interview with INN and I said, I'm frankly loving this environment and hope it lasts another month or so. So I can kind of double down on my best positions. There're names out there that just like the uranium names when they were all bought, it wasn't a matter of if? It was a matter of when these stocks were going to go up three, four, five, sixfold, and that happened. So I see the same thing happening in the gold space and I think the opportunity right now is incredible.
I'm encouraged by move because it happened simultaneously with the dollar soaring to more than a one-year high after the jobs report. It did pull back a bit, but that's always been to me the precursor to new all-time gold highs that'll be sustainable is an elevated dollar. It doesn't have to break new highs. Just an elevated dollar and rates rising alongside the major US indices and cryptos and Michael Jordan shoes. Everything else that goes along with that. So I think today's move was interesting. It happened on a Friday. It happened during FedWeek, where the Fed's talking about tapering. Typically, typically, you get the beat down when you hear the news that the Fed is going to taper. It didn't happen that way. Silver outperformed, as it usually does to the upside when it's headed up. We all know it does to the downside when it's headed down. But thoughts on the move today?
Nick Hodge: Well, I was going to talk about getting positioned on the equity side of things because I think whether gold takes off from here and breaks out or it settles back down below $1,800... There's a real chance to get positioned here at the end of the year on two fronts, I was going to talk about. One is, the tax loss front. There's some quality names that you can pick up, smaller companies I'm talking about, that have had a rougher go of it simply because gold has had a rougher go of it this year. But that are liquid and that have good projects and that typically bounce back. I think you were going to do an interview about that here in the coming weeks, if I'm not mistaken. I don't know if you were still planning on on doing that or not. I happened to be writing about GoldMining (NYSE: GLDG)(TSX: GOLD) this week, simply because it's in the Foundational Profits portfolio.
It has an NYSE listing. It has a lot of projects, a large resource base and isn't shy about marketing. So it makes for a good tax loss candidate. That's sort of one way to think about gold stocks right now. Then the other way is larger companies. I was talking about a month or two ago, starting to peck away at Kinross (NYSE: KGC) and stuff like that. I bought that all the way down. So I was actually looking just today. I'm up like, 6% on my Kinross. I've only owned it for a little tiny bit, easy work, if you can get it.
So what I started to do is peel out of a little bit of that and see where else can I put that. What hasn't come up like Kinross has in the past... I don't know... 30 or 60 days. It's like, a Newmont (NYSE: NEM) or a Wheaton (NYSE: WPM) that is still been beaten down... and then positioning in those larger companies that haven't moved yet. I don't know. That's just how I'm looking at gold stocks headed into the end of the year. The gold price, the move today is "surprising." We'll see if it's sustainable or if it's just a one-off. I'm not paid enough to make those decisions.
Gerardo Del Real: You're not paid enough to make those decisions, huh? Does it matter if the Fed tapers? I was wrong. I thought the Fed wasn't going to taper. I also didn't think it was going to be consequential. So I guess I was half right and half wrong. Yeah, I actually was surprised that the Fed decided to announce and keyword is announce... it hasn't started the taper yet. But is it consequential? Does it matter? Should we care? Everything is awesome. Right?
Nick Hodge: The market didn't seem to care. Stocks didn't throw a taper tantrum. I said the one thing that might give them reserve was the jobs report. We got a good jobs report. The economy continues to be growing. So I think at least until we get into 2022 when the year-over-year comparisons aren't as rosy, because you're not coming off such a low baseline then, yeah, I think it might not be so consequential here for a quarter, maybe two.
Gerardo Del Real: I think the other thing in the markets were encouraged by was the fact that it appears that Jerome is going to keep Jerome-ing. I know that Joe Biden met with chairman Jerome Powell and the governor, Lael Brainard. I'll butcher that name as I usually do. But look, it seems like everybody's throwing their weight with the establishment. Janet Yellen came out and said, she wants to keep Janet-and-Jeroming, and appears that's the direction it's going to go in. I wonder if some of the reaction in the gold price was in part because it did happen. It wasn't a first thing in the morning type of thing. It was in part the market kind of reading the tea leaves. Nothing's going to change. Taper or no taper, a rate rise is not in the cards anytime soon. If Powell is back then, Powell and Yellen, you know what the deal is going to be? It's not going to change unless the bond market forces a change.
Nick Hodge: Yep. We're going to see when it happens. Like I say, I don't know when that's going to be.
Gerardo Del Real: Energy. You've done really well with energy. That's the one sector that as I've said here before I stay away from, because I don't feel qualified in a professional sense to speculate and certainly not qualified in a professional sense to recommend companies and names. It just doesn't click for me the way the other metals do. But thoughts on energy and then where that's at... I see Biden complaining that OPEC and Russia are to blame for the energy crisis... that's how it's being framed. I always worry when I start hearing that type of verbiage, because that tends to be a precursor to situations that could lead to war. So when I look at that and I look at China urging families to stockpile food and essentials, because they fear winter shortages. The populace doesn't really do well with hunger, historically and rightfully so.
This has a very similar feeling to me as the Arab Spring did back in 2011 ish, 2010-2011. The last time we saw energy prices like this and the last time that we saw it affect the bottom line, as it relates to poverty and access to essentials and food. Now that coupled with COVID related shortages and bottlenecks, that don't seem to be alleviating anytime soon. So when I look at all those things and connect the dots there, I would not be surprised if we had an incident. An international incident, relatively soon to distract from the underlying issue, which again, I hate to beat a dead horse. It sounds like a broken record, but it's Central Bank policy creating the most wealthy inequality I have ever seen in my lifetime. Thoughts on that, Nick? I know it's a lot there.
Nick Hodge: Yeah. There's a ton there, Gerardo. I don't know what's going to happen in China. They announced this week that they want to build some new nuclear reactors. So they're trying to get some longer term sustainable, cheaper energy. I don't see really a break in energy prices anytime soon. Whether or not that's OPEC or demand-related, it's being inflation-driven. I think I was telling you recently. I was listening to Bloomberg and I was laughing because the guy was asking the analyst if he was looking at the supply side or the demand side. I was just laughing because it didn't really matter because it's just inflation-driven. So, is it going to cause a rise up like the Arab Spring? I'm not sure. We were talking about recently that there's so many black swans out there that they're not even black swans.
They just sort of come and go and they're dealt with and they flare-up. So is it a good time to own fertilizer inputs and companies that can pass on the cost of food inflation and things like that? Yeah. Do I spend time worrying about flare-ups and stuff like that? I used to more but not as much now. I more think about the market implications of stuff like that. You talk about an international incident. Obviously, the US and China are on a collision course. I don't know what the timing of that looks like. You see little stuff pop up all the time that would've in previous years been a much bigger deal. I don't know... seeing UFOs, for example. But even as it relates more to what we're talking about. There was a US nuclear sub that hit bottom in the South China Sea, which is contested waters, the other week.
China's asking questions basically like, "What the fuck were you doing there? Why did you run aground?" You don't see that stuff like, on the evening news so much, and it's definitely in the background. So I don't know if that answers any of your questions at all. But the inflation is real, obviously. We got to say that. So what I see now is a lot of backpedaling and I think this is might be what you're alluding to. A lot of covering it up and trying to distract from it because it hasn't been so transitory
Gerardo Del Real: Agreed, 100%. You touched on China and you touched on nuclear. So we have to talk about uranium. I hate to be the person that sold uranium stocks a couple months ago. China's planning at least 150 new nuclear reactors. Again, this isn't a short-term trend, where we're going to have a one-year or two-year spikes in prices followed by another 10-year bear market. The dynamics for this market are dramatically different than they were pre Fukushima. So when I look at lithium, when I look at the trend there, when I look at nuclear and uranium, it's hard for me to not want to pound the table about the opportunities to create some real wealth for yourself in this market. We talked about that last week. I don't want to get into that again, but there's just so many ways out there to make money right now.
There's so many megatrends. There's so many supercycles that are just running simultaneously. That again, this is not the time to not do anything. I hope that some of what we rant and talk about here and the little advice that we give here on the podcast, I hope that some of that translates into at least a discussion for people out there about ways to diversify their revenue streams because that is something in my lifetime that I've done extremely well with. Whether it's real estate or mining stocks or, you name it. Any number of things. So yeah, that's the long-winded way of saying, uranium and nuclear and lithium and all of these metals that are necessary inputs for the energy revolution, that's not a fly-by-night type of trend. That is something that will continue. Hopefully, people can make some money off of it. I don't know what else to say.
Nick Hodge: Well, I would relate it I guess, to lithium, especially the Chinese, because it comes back to solar roads and how you get those done? The Chinese have a plan. Of course they do. So as they build out their lithium refining capacity, battery cell manufacturing capacity, et cetera. They've gone down the supply chain of inputs and started buying up the companies. The Ganfeng's, the Zijin Minings, for example, when Western mid-tier producers, explorers, and developers are bought out, I won't say more often than not, although it seems like that... the Chinese are in the mix. One of my earliest lithium wins, the company was sold to a Chinese outfit. Recently, you see the bidding war for Millennial Lithium erupt between a Chinese outfit and now Lithium Americas (NYSE: LAC) coming into it.
So at least in a lithium space, larger Western companies are starting to realize that they have to bid for these assets or else the Chinese are going to buy them up. That's going to be the case with uranium as well. To some extent, it has been. Even going back to like, look at who came into partner with Fission Uranium, for example, when the world realized how big that Triple R deposit was going to be? Certainly, they're doing this in Africa in more nefarious ways, financing countries and things like that to take control of the assets. But in uranium specifically, yeah, now there's going to be I think even more Chinese, call it a pressure or bidding, in the mix for these Western uranium assets. That can only be further good for the price of the smaller uranium stocks.
Gerardo Del Real: Agreed. Tesla is planning to open a factory to produce battery manufacturing equipment in Ontario. Can you imagine the erections right now from the Canadian brokerages? I sense a lot of wetness and a lot of erectness in Canada right now. You can't make this up. Nick, can you imagine the stories that are being spun right now about the next Tesla takeover target. "We're only 100 kilometers from the new Tesla factory then to site? That's all we can say." I can see it now. I for one, I'm going to delight in watching this happen. Be careful out there. You all I could see the stories happening already. I know the way your mind works, Nick.
Nick Hodge: I'd be nice if you were already positioned in some Canadian hard rock lithium assets.
Gerardo Del Real: Wouldn't it? Especially real assets, that might actually deliver some real results and real deposits and actually having a story to tell and actually have the interest of companies like, a Rio Tinto or something like that? Yeah, that would be nice. You all are going to have to subscribe for that one. Mark, I know you listen. Mark B, I won't say his whole last name because I don't know if he's supposed to listen. But I know you listen buddy and I know that. I know you must have some ideas. But if you have a couple of shells out there, somewhere near where this factory is going to be. Give Nick and I a call, maybe we can do something together.
Nick Hodge: That's funny.
Gerardo Del Real: Let's talk about Zillow. Zillow, not the best traders in the world. Nick, did you read that story? They lost $381 million because they overpaid for houses. The reason that that trend accelerated is because they were overpaying. We know that now. So the bummer there of course is that there's real-life consequences to making bad business decisions. That's the way capitalism is supposed to work anyway. So now Zillow is shutting that division down after losing $381 million in one quarter. That's leading to a 25% layoff of its workforce. We all get stuff wrong. I get stuff wrong. Everybody gets stuff wrong. But $381 million worth of wrong in three months on a home in this market? It takes a special kind of something to pull that off.
Nick Hodge: Yeah. What was the special kind of something? I did see the headline. I wasn't aware of the scale. How did they let it go on for so long? Why didn't they pinch it off?
Gerardo Del Real: Well, this is the thing. It didn't go on for long. It wasn't very long. They just started paying top dollar and above dollar and I guess were not liquid enough to ride out a quarter of a pause in rising prices. I'm in the middle of a refinance here on my house in Round Rock just because I can't believe what they're willing to give me. I know what I can do with it. So I'm like, sure, I'll take a mortgage. Why not? Look, I feel for the people that are getting laid off. I was very critical of the Zillows and BlackRock's and the hedge funds that came into the space a year ago when they started doing this. I ranted about it and then I meant it because of what it did for first time home buyers and people that maybe weren't the best off economically. It made it really, really tough to compete.
If you're looking to buy your first-time home, it's you and your girlfriend or you and your boyfriend. You come to this country and you're looking to start something and start carving something out for your family and you're competing with a hedge fund. Now we know they were not only competing with hedge funds, they were competing with companies like, Zillow that were overpaying grossly. So this is the way that capitalism is supposed to work. Hopefully, there's some balance in that market, but yeah, Zillow gone wild. What can you say?
Nick Hodge: I was going to say class actions, but I see they're already starting.
Gerardo Del Real: They are already starting is correct, sir. You know what else is starting? Prince Andrew's legal team. They've been put on notice. I talked about this a few weeks ago. Excuse me. I was curious to see if he was going to respond to the subpoena. They responded to the subpoena. The judge has advised his legal team that he's got two months to prepare for a court hearing to try to get the judge to throw out the lawsuit brought by, 'll leave her name out of it, just out of respect to the alleged victim here.
So I will be looking forward to seeing if this moves forward. You know Jeff Epstein's girlfriend and madam and pimp is locked up. We haven't heard much from her. There're pictures of this victim with Prince Andrew when she was 17, that is documented. I saw a documentary on Netflix, maybe six months ago. They interviewed many, many, many, many alleged victims and it was gross to say the least. I hope everybody just has whatever they have coming, whatever they've earned in life through their actions, I hope they get it in full.
Nick Hodge: Oh, well yeah, absolutely. And it's deeper than that. Last week, I had mentioned Leon Black was back in the news saying that this was all a conspiracy to bring him down and that he was going to go back to court with his accuser, who was all tied back to this Epstein stuff. Then you had Jes Staley come back in the news just in the past week, who has been investigated long ago and faded for a bit. He's the head of Barclays. It comes back that he ended up having pressure put on him to step down by the British authorities. As we've long said, this is a real thing. It goes deeper than you think, or like to imagine.
What's really sick is that, these are the people who make decisions that impact so many others. Sometimes and obviously in ways that only enrich themselves. So like Barclays, for example, was one of the banks who's known to have manipulated LIBOR for example, which cost people billions or more dollars. They manipulated loans and mortgages that were tied to that benchmark. So not only are they the ones who are the "rulers of the world", but then they're also doing, allegedly or whatever, this stuff. But everyone knows.
It's like, getting out there in the open. That's why people are upset, I think is one of the real reasons. One of the reasons that alternative currencies and things are popping up because those players, the Leon Black's, the Prince Andrew's, the Jes Staley's. They've bastardized the current system. If there's not a way to fix it, or if they won't let it go easily, then it's going to be rebuilt and decentralized and deinstitutionalized. These are the broader themes we talk about all the time. This really hits at the core of the overarching reason. Why is that they think that they're the rulers of the world and above the law? Everyone else is tired of that.
Gerardo Del Real: Well said, well said. Again, when you couple that with food shortages, when you couple that with the wealth inequality that we're seeing, when you couple that with inept and corrupt government. Fourth Turning type of stuff, and inflection point type of stuff and we've said it before on this podcast, if you can make preparation to be able to protect yourself and sustain yourself and your family, it's not the worst idea in the world. It's advice that I'm taking and have taken myself. I won't speak for Mr. Nick Hodge. But knowing Mr. Nick Hodge, I'm pretty sure that Nick could make it a couple of days or a couple of weeks or a couple of months, if it really hit the fan. Yeah, I would advise everyone if you haven't already done so. Maybe not the worst idea in the world. Right?
Nick Hodge: That's it. It's never a bad idea to have a plan B and a little bit of extra of everything. Just like you have 5% or 10% of your portfolio in gold. You hope you never have to use it. But it's nice to have it if you're able. In the meantime, position to take advantage of what's happening in the market because of that stuff. So a twofold approach.
Gerardo Del Real: Absolutely. Absolutely. Let's talk a market week ahead. You'll be out next week, Nick. So obviously, I want to get you on out of here and let you get to it. There's lots to do before you take your trip. Happy hunting, by the way. I'm excited for you.
Nick Hodge: Thank you. We're very much looking forward to it. I'll try to keep an eye on the market. If I can get some cell service in the evenings, we'll see. What are you looking forward to in the week ahead?
Gerardo Del Real: You talked about Kutcho Copper (TSX-V: KC)(OTC: KCCFF) last week. We talked about it in New Orleans. I think anybody that kind of followed and has followed that ticker for the last year has done well. Even if you just bought it because you heard the podcast from New Orleans. That's just touching brand new 52 week highs today, hitting a C$1.05 at one point closed at C$1.03. I think this copper stock still has substantial upside. I know we got a feasibility study that's due any day now. Maybe next week, maybe the week after. Not quite sure, but I'll definitely be looking forward to that. Lithium Americas, I wrote it up a $21 and it took me a couple of days to get it out. By the time I did get it out, it was at $24 and $25. Here it is today closing at 52 week high at $32. That's gone extremely well.
Then I guess my sleeper, kind of under the radar trade. I should have maybe taken some profits early on, but I actually believe in the story and the assets. So I want to trade around results, not around marketing is Patriot Battery Metals (CSE: PMET), which has pulled back from the $0.75 range down to the $0.25, $0.26 range. Not a coincidence that financing that I helped, that I participated in, helped raise money for just came due.
You can see where the volume and the selling and people that front run that, where that happened. But that financing was at $0.16, came with a full warrant at $0.25, stocks at $0.25. I think it's a heck of an entry point. There's a reason why I didn't take profits. I think you start seeing results from their 25-kilometer lithium trend in Canada. I think within the next week or two, if the labs cooperate. So those are three names that I look at every day and it's not a coincidence that it's copper, lithium, gold. Those are the commodities that you get exposure to there with a touch of zinc on the Kutcho side.
Nick Hodge: I told you about Playboy (NASDAQ: PLBY) last week or the week before it was at-
Gerardo Del Real: The Sticky Ecosystem.
Nick Hodge: It was last week. So there you go. It was at like, $24 or $25 bucks and it has broken out to above $30. So you got your money's worth for a free podcast. But more importantly, earnings panned out exactly as described in previous issues of this podcast. Namely that they're good and carried stocks to all-time highs and small caps are breaking out as advertised. So looking for plays there and I continue to buy oil stocks. So I think that's a place to look like we touched on earlier. I think energy continues to go higher. It's been the best performing sector of the market for the past 12 months. That story's just starting to cascade over and then attract more people. Not just oil, but lithium and uranium as we discussed. So anyway, I look forward to uranium stocks breaking out to new highs. They knocked on the door a bit this week to try to do that. I think they'll get there in the next couple of weeks or months here.
Gerardo Del Real: Agreed. I'll leave you all with one of my favorite. Not favorite funny-not-funny headlines that just broke here from the Washington Post. "Nicaragua's Ortega cruises to reelection after jailing seven potential opposition candidates." It's a Bizarro World out there, Nick. I don't know what to tell you. That's a great way to win an election, though, if you can pull it off. I am Gerardo Del Real along with my co-host, Mr. Nick Hodge. This was Episode 142 of Bizarro World. Nick, happy hunting. Some words of wisdom before you go?
Nick Hodge: No. Get after it next week, I'll be gone. You'll have a guest here, hopefully. I think we can pull it off. I look forward to enjoying the week with my dad and taking the week off. Have a good week.
Gerardo Del Real: Have a good week everyone. I'll tease the guest. He's a gentleman that made 70 to 75 times his money in the crypto space. We're going to talk crypto next week for those of you who're interested. Have a great week everyone.
Nick Hodge: Yeah.
This transcript is unedited. Please excuse grammatical errors and run-on sentences.