Inflation Reduction Act Stocks — Bizarro World 182

Stocks resume their slide as the dollar strengthens. The media loves to report on nuclear boogeyman stories because the fear drives clicks, but nuclear energy is the safest source of electricity we have. A look at how the Inflation Reduction Act benefits uranium and lithium stocks. What does the CFO of The Trump Organization pleading guilty mean? Rivers and lakes across the world are drying up. And naked shorting has been banned in Canada. This is episode 182 of Bizarro World. 

3:48 Media Loves Nuclear Boogeyman Stories
9:30 Inflation Reduction Act Benefits Lithium Stocks
22:00 CFO of Trump Organization Pleads Guilty
29:30 Rivers and Lakes Drying Up Globally
36:38 Naked Shorting Banned in Canada

Gerardo Del Real: The dollar's back. Don't say we didn't tell ya. Gold still, meh. Is uranium the new gold? A lot of bored uranium bugs out there. We'll get into uranium a bit. We'll talk copper, we'll talk about the volatility index. We're going to do a bit of a dig and deep dive into the Inflation Reduction Act, which is a BS name for what this is. But despite the BS name, there are a lot of good items that are going to benefit our portfolio, and I think lead to some pretty decent profits in the latter part of this year and all of 2023, 2024 and 2025. We're going to talk about China's heat wave. The heat wave around the world. Germany's upcoming cold winter, naked shorting being banned in Canada, Liz Cheney, Giuliani, the Trumpster, it's a bizarro world. Nick, how are you today? This is episode 182 of our therapy session known as Bizarro World. I am Gerardo Del Real along with Mr. Nick Hodge. How goes it Nick? It's crazy out there.

Nick Hodge: I feel like I'm drinking from a fire hose with all the news and things that have to get done. And it's supposedly the slow days of summer. Can't wait until it picks up in the fall. I'm doing good, Gerardo.

Gerardo: You've been a little busy?

Nick: A little bit.

Gerardo: Let's dive right into it. Look, gold's still boring. I don't even want to talk gold and silver. Let me spoil it for everyone. Unless you want to opine Nick, but silver's still trading like the industrial metal it is. Eventually it'll hit $50. It's not going to happen this year. It's probably not going to happen next. Gold, I still think hits new all the time highs maybe in Q1 of 2023, but it's not going to happen in August. So we can sell gold again in September when I think it's going to start getting interesting again.
I do want to touch on the dollar index. Well above 107. After kissing 104 and 103 even, just a few weeks back. Would love to get your thoughts on the dollar index.

Nick: Oh, I'm not sure I have many thoughts on the dollar index like you didn't have many thoughts on silver and gold. We continue to say it's the cleanest, dirty shirt. We continue to say that a recession is here. And despite a recession being here, stocks at least in the US, have been buoyant since June. But when you look across the ponds in both directions to the east and to the west, you see some real trouble shaping up. China's reported a slow down. I mentioned that a couple of weeks ago when you asked me about copper, that it might depend on what China's up to. And they've reported a slow down. They might even have to do a new stimulus, I was reading this week, because of the slowdown in their economy. And then you look at Europe and it's even slower than here in the US. So no surprise that the dollar remains strong for those reasons.

And also because in a bear market, the dollar, as Mr. Dines told us, has its own bull market. And despite that rise, I mentioned since June in stocks, I still think we're in a bear market. I'm probably starting to sound like a broken record, especially as people get giddy again about meme stocks and the like, but you still, I continue to say, have only had about a 17% rise off the bottom. It's come on extremely low volume. It's come without bullish fundamentals, especially when you look at S&P earnings. And so that was a bit of a meandering answer, but no surprise to see the dollar strong and then why I continue to have a third of my safe capital in those dollars.

Gerardo: No, look, I actually thought it was a great answer. I think it's a great way of saying a lot in a short amount of time. Now we have a big storm brewing here near Austin. And so my internet connection was down. So this will be a little briefer than it usually is just because I'm afraid it's going to cut out on everybody.

Media Loves Nuclear Boogeyman Stories

But let's talk about uranium. There's conversations now being had, and this is just breaking the last 30 minutes or so, between Russia and Kazakhstan and the Ukraine and the nuclear atomic energy. Bottom line is they're getting a bunch of experts together because they believe Russia is planning a nuclear incident tomorrow, which would be Friday, the 19th of August. And so anytime I start hearing a country like Ukraine involving international agencies about worries that an incident is being planned and then it coincides with Russia telling workers not to go to work tomorrow… My tin foil hat, spidey senses start tingling a little bit. And I worry a bit because I joked about uranium, maybe being the new gold, because the fundamentals are there. Everything's played out exactly the way we thought with the exception of the utilities, which are the largest consumer of course, and going to be the driver of a much higher uranium spot price.
But when we have the potential for an incident like this, I can't help but be reminded of Fukushima. And I really, really hope one, for humanity's sake, for the human toll, that any incident could have. One. I hope it doesn't happen for that reason, but two would that be a bummer for the uranium sector. If there's another incident that somehow all of a sudden paints uranium and nuclear energy as the boogeyman, as Fukushima did, despite the fact that Fukushima was an engineering lapse, not a lapse in nuclear energy.

And so, I don't know if you had a chance to even read about that because it just broke here recently, but I'm hoping that by the time people hear this and watch this, that tomorrow came and went and everything is fine and hunky dory and back to a brutal occupation of the Ukraine and its citizens and a war that looks like it's not going to end anytime soon.

Nick: Not those recent developments I haven't seen,but I have seen the plant but I can't pronounce its name in Ukraine. That's been in the news for a couple of weeks now. And the media loves these stories because if it bleeds leads, first of all. But they love the nuclear boogeyman stories. And so for a couple of weeks now, it's been this nuclear plant is on the verge of a catastrophic event. It's got the potential to be cataclysmic. You've seen CNN run those headlines for most of August now. And thankfully, as you say, that has yet to materialize.

The other story that's been making the rounds is there was some war game or some simulation about if this war does turn nuclear, what a new nuclear war could do to humanity and how it could wipe out basically over half the population, some 5 billion people. Not because of immediate deaths from nuclear bombing, but because of how the fallout would blot out the sun and lead to crop failures and starvation and things like that. And people must be clicking on that story because USA Today and Bloomberg have tweeted it out repeatedly for the past couple of days. Again, if it bleeds, it leads.

So those fears are always there. I've seen in the past week, softening of uranium stocks. We were talking about one before we started recording that went from a $1.40 to $1.20 in very short order. And then another one we're involved in, Labrador Uranium was below 50 cents last time I checked after being above $1.50.

Gerardo: Absolute steal, by the way.

Nick: Uranium stocks were really robust. And so I guess those are my thoughts. Gosh, I hope nothing does happen. Thankfully, nothing has happened so far, despite the media running the worst headlines they could possibly run. And I guess to put a positive spin on it, you mentioned the fundamentals are obviously bullish, but even the recent news. And I know we've mentioned Germany and Japan recently, but Germany officially pivoted this week. So they are going to keep on their reactors because of the energy situation, as a result of Russia's invasion and them not being able to get gas for the winter.

And so hopefully investors, Mr. Market, is smart enough to know that a planned event, a false flag or whatever it is, is separate from a real nuclear incident. And that the reactors that exist in the world, not only the light water reactors that we rely on for a significant portion of global electricity and an even more significant portion of clean electricity, are safer, are safe. I'll just stop there.

Gerardo: Yeah.

Nick: That's the safest form of energy there is. Cleaner otherwise. And then you've got new reactor technologies on the heels of those that Bill Gates and others are thoroughly invested in that are now being approved by the Nuclear Energy Regulatory Commission. And so hopefully the good outweighs the bad. I continue to believe it would, or I wouldn't be a bull on uranium or a shareholder of uranium equities. And I guess those would be my thoughts. That's all I had to say about that, as Mr. Gump said.

Gerardo: I like it. Wow, Labrador Uranium, absolute bargain. You want your freebie of the day. That is it. I'm biased. I'm a shareholder, have my full position. Not selling. And yeah, I think it's a hell of a speculation. Drilling, cashed up, massive land package, excellent team, newly listed company, a couple of months out the gate. So I think there's a heck of an opportunity there.

Inflation Reduction Act Benefits Lithium Stocks

If we're going to talk nuclear, I think we have to get into the Inflation Reduction Act. I know you wanted to do a bit of a deeper dive. We mentioned it last week. We mentioned it was very bullish for the uranium sector that I'm bullish on, the lithium sector that I'm bullish on, clean energy in general. And we mentioned that despite the bullshit name and title, it actually has a lot of really good things in it.

I'm just disappointed that they keep lying to us about what it's supposed to do when there's so many great things in this bill that should be applauded and that we all should be cheering for as just humans. Forget being American, just as humans. There's a lot of really good things in here that I'm excited about. And it is a major accomplishment for the Biden administration, which I continuously trash along with the other side as well. They get equal sticks around here.

But no look, kudos to the administration on this one and kudos to the Republicans, the few Republicans, I think it was nine that actually voted to get this across the finish line. But I know you wanted to touch on some of what's inside this though and I'd love to hear it.

Nick: It's a good pivot. Maybe not so much on the nuclear stuff, though I'll mention it for a second. We've talked about California wanting to secure funding and how even the democratic governor there wants to keep the two reactors at Diablo Canyon online. The Infrastructure Bill passed last year, the so-called BIL, the bipartisan infrastructure legislation or infrastructure law. Provided a couple of billion, $6 billion for that. This does much more. This provides something like $30 billion to keep nuclear reactors online, extend the lives of them, et cetera. And then it has a separate tax credit, a production tax credit for energy produced from nuclear reactors on a kilowatt-hour basis.
So clearly the government, in this case a democratically controlled government, and a bill that was primarily, in the case of a Senate, only voted for by Democrats, are receptive. And I would say admitting that nuclear has to be a serious part of the mix. So that's good.
But I wanted to actually talk more about the Infrastructure Bill or excuse me, the Inflation Reduction Act as it relates to lithium. And God, that fucking name Gerardo. Anyway.

Gerardo: Yeah, it gets me too. I want to rename it and just, yeah.

Nick: Even The New York Times, in their recent newsletters, has been writing about how, again, admitting this isn't going to really reduce inflation in the short term. And in fact, some of the projections say that prices are going to rise as a result. And it's going to be a couple of years before it has a real effect. And it's primarily a climate, energy, and let's not forget tax bill with your however many agents the IRS is going to hire. Maybe, or maybe not with assault rifles, willing to kill somebody as their job ad said a couple of weeks ago. Did you happen to see that?
Gerardo: I did. I did. You want to hear my favorite meme quote on the Inflation Reduction Act?
Nick: I'll send you one privately, but let me hear yours.

Gerardo: This guy's yelling at his son. He says, "inflation's destroying everyone." And the son says "I can't keep up with my expenses." And the dad yells back, "that's why the Inflation Reduction Act costs $739 billion." And the son flies off the handle and goes, "why the fuck is the government spending $739 billion?" And the dad yells back "because that's how you beat inflation." Can't make this up folks. 
That's what they're telling us. I can't make this up. You would think I'm being facetious or sarcastic or ironic. And unfortunately I am not. This is how they talk to us folks.

Nick: No, as Milton Friedman taught us, as Mr. Dines taught us, the definition of inflation is the expanding of the monetary base and the entity that controls that is the government. So by the government creating even more spending, I mean, it's the exact opposite of the reduction of inflation.

But anyway, let's set that aside for a second, call it a climate and energy bill and talk about the EVs and the lithium, because I've been saying for a couple of years now that eventually you're going to go to buy your electric vehicle on the lot and the sticker instead of having the miles per gallon is going to have where the individual elements came from. We know about the cobalt. We know about the child labor in the DRC. And we know that a lot of these minerals come from abhorrent labor conditions and not on the up and up capitalistic practices.
So this bill has, I'm reading from my notes now. It has $369 billion in federal funds that will go into climate change and energy security. And there's a new $7,500 tax credit. That sort of makes better the tax credit that was in place, which was just basically allowing white collar workers who made a lot of money to get their Teslas for even cheaper. This one puts an income cap on who can get the tax credit, but it also says that the tax credit doesn't apply unless the minerals that are in the vehicle are 40% from free trade agreement partners. That would be obviously the US. The list includes Canada, Australia, Chile, Mexico, and Peru. So you and I have investments in mineral companies in those regions, particularly in Canada as it relates to lithium. And this is definitely a step in the right direction.

There's also a $4,000 tax credit for used electric vehicles, which I think is going to be very beneficial going forward. And so I guess this is more a chest pounding for you and I than anything else because we had the foresight to know that something like this was going to come down the legislative pike eventually. I mean, weren't going to be able to sell lithium ion batteries with cobalt inputs that came from child labor in the DRC, that wasn't going to fly.

Gerardo: Yeah.

Nick: And so to see that they've said that these minerals have to come from friendly countries, we skated to where the puck was going to be. I hear the thunder. And I think it's going to pay dividends in the form of the speculative investments that we have in the lithium space. Obviously the Albemarles (NYSE: ALB) are going to be a good investment, the Allkems (TSX: AKE) of the world. But when you look at the automakers who aren't meeting that requirement yet, I think it's only Tesla (NASDAQ: TSLA) and GM (NYSE: GM) are two of the few companies who meet that requirement. There's going to be a scrambling, as we've said, by the Fords (NYSE: F) of the world, the Volkswagans of the world, et cetera, to secure these supplies from the countries that are mentioned in the bill that are going to be able to get the tax credits.

And so it expedites that, right. Where it might have taken until 2035 or 2040 for that supply chain to correct itself. Now you have a legislative carrot to incent that supply to come to North America. So anyway, I'm sort of blabbering, but

Gerardo: No, you're not. I love this.

Nick: Holding domestic equities securities of lithium companies that have assets in these jurisdictions is going to make us even more lithium barons than we already are.

Gerardo: I agree with every single word that you spoke and look. I think the last point that's worth making is it's going to expedite not just a critical metal supply chain that's very North American friendly. It's also going to drive a premium to companies that have assets with scale and grade. I talk almost every week about Patriot Battery Metals (CSE: PMET), because it's my largest personal holding.

And David Talbot had a note this week that if anybody has a chance to read, maybe we'll put a link up for it. But it was a very well written report. He estimates, I've said privately to you and maybe publicly, that I think there's at least 100to 150 million tons on this 2.1 kilometer corridor of outcropping pegmatites. Lithium spodumene bearing pegmatites. And so that's just on two kilometers, there's 50 kilometers. They just found another two kilometer trend that looks parallel to it. And David Talbot thinks there's 163 million tons that can be proven up in the initial resource estimate at a percent, which makes it among the largest lithium deposits in the world.

If that second corridor is anywhere close to what the first one, and it looks like a twin, by the way, then you may have the single largest lithium deposit in the world because there's so much trend to go and explore. They just discovered other corridors. I mean it's the perfect storm. When you take the macro situation, when you take the bipartisan support, when you take the scale of that project, the grade of that project, and then frankly, a share structure that's still very solid. For a maiden resource estimate anywhere near 163 million tons, and we're expecting that by year end, would be an absolute barnburner of a catalyst for the company.

And by the way, it's got three rigs turning. And I think another one on the way here in the next month or two. So not slowing down anytime soon. I had a subscriber reach out and ask what's my favorite lithium pick right now. They feel like they missed the Patriot boat. Again, I'm on the record of saying, I think Patriot can be a $20 stock this time next year. It's trading for $5. If a four fold win isn't enough for you in this space, I don't know what to tell you. If I'm halfway and it goes to 10 bucks and you double your money, I don't think you'll be upset with the recommendation and the tip. And so I know that you added to your position recently. I think that's gone well, thankfully I've had family members that have asked me, Hey, what speculation do you have out there, I have a little extra cash to play with? And they've done well, luckily. And so it won't go straight up. Nothing does. But yeah.

I am excited about the premiums that this bipartisan support is going to bring. And the money and the capital. The capital that's being allocated to actually advancing projects forward and the supply chains forward. I'm excited to see the premiums that are commanded, because I think Goldman Sachs is dead wrong on their lithium call. And again, even by their own report, they said, if there is a drop in price, it would be for a couple of years. It wouldn't last for very long. So whether you agree with Goldman Sachs or not, lithium is the sector that I'm most excited about in the next couple of years, followed by uranium and yes, everybody copper and then even gold, if you can believe that.

Nick: Yeah. And investors are definitely interested in lithium. I was talking to a mutual friend of ours this week who said that he was hearing from somebody about a metals conference in Australia, where there were sort of gold companies in the exhibit hall and then battery metals companies. And it was like a tale of two worlds. There was no investors on the gold side, the precious metals side of the conference. Everybody was around the battery, metals, explorers and developers. And I see that in the clicks as well.
And so there's a lot of places that you can allocate capital to in that sector. And I guess I would just say that we'll continue to bring those to you in the coming months here. Because there's more than one way to skin a cat. And so yeah, excited about the battery metal space. And I guess just to pile on, it's worth mentioning again that even with this switch to lithium iron phosphate that Tesla and some of the others are doing, the first word in that battery is still lithium. And so this-

Gerardo: Check out the big brains on Nick!

Nick: These articles, and I've said this before. “New technology's going to replace lithium” or “recycling is going to replace lithium.” It's simply not.

Gerardo: Elon's not dying. Tesla's not dying. They're not going bankrupt.

Nick: That's it. Even the report I've mentioned here a couple of times from the International Energy Agency said that we need 50 new lithium mines by 2030, and recycling's not going to make a dent and new technologies aren't going to make a dent. You might be able to whittle away some of the amount of cobalt that's needed. You might be able to go to some sort of lower nickel solution. But at the end of the day, it's lithium all the way.

CFO of Trump Organization Pleads Guilty

Gerardo: Yeah. Interesting, interesting, interesting. We got to get to the Trumpster because every week he just provides fodder that makes me smile, right. This week, the CFO to the Trump Organization pleaded guilty to 15 counts. Not one, not two, not three, not five, not 10. 15. Wasn't proven guilty. He was so guilty, he raised his hand and said I'm guilty to 15 counts. Yes. Pled guilty. I don't think that's the last that we're going to hear from that gentleman. He's the CFO. The CFOs know where the bodies are.

I don't think it's a coincidence that Mr. Trump has not wanted to unseal the warrant despite him publicly and on social media, crying about them searching his safe and the FBI must have planted some things. Well, very simple solution, Mr. Trump, just unseal. Just show exactly what was taken and show exactly what was searched and what the warrant was for. The FBI has to outline that when they come and provide you with the search warrant. Also not a coincidence that Rudy Giuliani's been informed that he's the target of a criminal investigation relating to the recent election and tampering in Georgia, looking to overturn those results. Again, bit of a conspiracy theorist, but some of these tend to play out from time to time.

CFO of Trump Org pleads guilty to 15 counts. Giuliani is the target of a criminal investigation. Trump gets rated by the Feds. I don't know, man. I don't know. It's going to be interesting. Liz Cheney just got beat by a Trump backed candidate. So this is the other side of it. 

Nick: That's exactly what I was going to say.

Gerardo: Yeah. If anybody believes that all these scandals are hurting Trump in his base, you are dead wrong. The people that believe in him, believe in him. He is the second coming of Jesus, for those of you that are into that kind of thing. And so Liz Cheney, a Republican, a conservative one by the way, who won a primary by 70 points, just lost the follow-up election by 40 points because she was the person that is leading the January 6th investigation to see if there was a crime committed by the Trumpster.
And so if you're wondering about Trump's political capital… He survives indictments, he survives these other people that could potentially turn on him and become informants. There's an article in a pretty reputable outlet that said that internally, the family feels that there's a family member that was the informant that tipped people off to the classified documents at Mar-a-Lago.
It's a fun soap opera to watch. If nothing was done wrong, I hope they're all exonerated. But knowing the Giuliani's and the Trump's and being that his CFO just pled guilty to 15 counts, I don't think it's going to be the last time somebody pleads guilty. And it's a heck of a reality show. I'll give him that. He does know how to do that well.

Nick: Well, he was a reality star, obviously. I know that's the point you were making. And I don't have a lot to add there. Like I told you previously, I haven't been following too-too closely, mostly because I don't care too-too much. But everything you say is right. Yeah. Trump backed candidates are winning at the polls. And I guess I'm just more jaded than anything that that's still the case and that there hasn't been a viable either new candidate or new party to emerge for these next couple of years here.
Andrew Yang's trying to do his little thing with a Forward Party, but it's really just a sticker and a catchphrase. There's really no meat on that bone. And Liz says she's going to parlay this into a presidential run, which we'll see. I mean, that could just end up being more of a spoiler, like Ross Pero style, than anything else. I'm not sure who really is going to vote for Liz Cheney. Me, as a Libertarian/Independent remembers that she was a supporter of water boarding and things like that. I get that she's done some good things lately, but I don't think I would be pulling the lever for her as a presidential candidate. And so disheartened and jaded is the tent that I'm still sitting in.

Gerardo: Sounds like we might sit out a few elections, right. I think I'll still vote locally because there's some things here in the state of Texas that I'm passionate about. And whether I disagree with certain candidates on certain positions, there are certain issues that I guess I'm not voting for the other guy or sitting out. But on a national scale, I mean this set of politicians, it's just absolute hot garbage man, all the way around. I know we say it every week. I know we sound like a broken record. I can't wait for the day that Nick and I are sitting here excited about these new young Libertarian, Republican and Democratic candidates that are debating the merits of ideas and the way forward and how to be more inclusive and not divisive and how to compromise the way that once upon a time there was at least an attempt to do. And now it's just all one big reality show on all sides. And it frankly makes me sick, if I'm being 100% honest.

Nick: You know what we haven't mentioned is Beto calling that guy a motherfucker, which was, I like to see that. That was pretty good.

Gerardo: Loved it. Little context. We talked about the Uvalde shooting where 19 babies were massacred while over 330 law enforcement officers gathered around and 19 officers with assault rifles and guns were inside a hallway, getting Purell on their hands and checking their phones and all the other stuff, while this psychopath killed these babies. But anyhow, I digress.

Beto O'Rourke who again, I disagree on his stance on the second amendment. He wants to ban all guns, I think at his core. And I'm a second amendment supporter, though I think there's a smarter way to own those guns. And I do believe there's an age limit that you should reach and an aptitude test that you should take before you could just go buy something like an AR15. So again, I think there's a compromise to be made there, but I fundamentally disagree with him saying that he wants to come for people's guns because one, I don't think it's realistic. Two, I think he does himself a disservice because he has really bright ideas on a lot of other issues.

In this situation he was at a town hall meeting and he was talking about the Uvalde shooting, how these weapons are continually used to massacre babies. And a guy started laughing. He started laughing. And Beto rightfully looked over and said, "it may be funny to you motherfucker, but it's not funny to me." And you know what? I like that kind of passion in my politicians. The one thing I admired about Trump was he never pretended to be anybody other than he was. He very rarely pretended to be someone else. If he folded on an issue like abortion, he was a big abortion supporter and leaned more Democrat on that issue before taking office, he just kind of went silent, decided I just won't talk about it. I'll just be quiet. Forget that I was married however many times I was married. Forget all my ties with Epstein, forget all the other nasty stuff. I just won't talk about it. But at least he never pretended to be somebody that he wasn't.
And with Beto, I like that he's saying, “Hey look, gloves off. I'm not for play with this stuff. This isn't something you joke about.” You don't laugh about babies being massacred no matter what your stance is on the second amendment or gun ownership in this country. So good for him. I like for people to keep that energy, it wasn't threatening. It was just, I thought the response that gentleman deserved.

Nick: That's it. And I like to see it.

Rivers and Lakes Drying Up Globally

Gerardo: Yup. You know what I don't like to see? Droughts all around the world. China droughts, France, you name it everywhere. Europe's rivers are at century-long lows, river levels. I mean, look, I'm not one of these people that is a huge proponent of government getting involved in trying to fix the climate. But I'm also not one of these people that's going to sit here and deny that climate change, forget global warming, that climate change is real and that it's cyclical and that as humans, whether or not we're causing the bulk of it, let's put that argument to the side. We have to be honest about the fact that these are once in a generation droughts. And then also on the other side of it, winters that we're seeing repeatedly now, hurricane seasons, tsunami seasons, droughts, the sun, the Earth's spinning faster than it ever did. I mean, all of these things I understand probably have been going on for thousands of years and will continue to until the whole thing implodes.

But I do believe there's a smart, responsible way where everyone can compromise and government doesn't have to lead the way by the way and do whatever little bit we can do to do some common sense things, right? And so I say all that to say, Nick, any thoughts? I mean, I'm no climate expert. I'm no climate/energy expert. I'm no energy reduction of the carbon footprint expert, none of that stuff. But it's scary to see all this stuff because I know one thing, you don't play with mother nature. You're not going to win that one.

Nick: No, she can shake you off like a flea on the back of a dog. And I see all the same headlines that you do. I've been writing about water for a long time. That was one of the first things I started writing about as a editor in the publishing space. And there's a lot of causes, not just the climate. We've made some ill decisions in the past about where we built cities like Las Vegas. That's an easy example. Probably shouldn't even exist as a city, given the amount of water that has to be pumped into it, not just for the citizens, but for all its lovely golf courses as well. I mean it's entirely unsustainable and you see the photos of Lake Mead and the Po River in Italy, whether down so low that they're revealing new treasures and non treasures. I mean we're finding bodies, we're finding boats from previous world wars, I've been seeing pictures of.

And I guess some of the implications are one is energy, specifically as it relates back to Germany. The Rhine River there is down to, I think something like 30-some centimeters and the ships need at least 40 to get through. So they can't even get the coal that they're now having to rely on because they can't get the gas. I mean, they can't get the barges with the coal up the river so they can burn that, which they don't want to do anyway. But it's just an impossibility when you can't move boats up and down the river. That's another pro for uranium, by the way, for nuclear, I've got to throw that in there.

And then you talk about or think about the food, right? Because you've got farmers here in the US who are culling crops because they're not getting enough water. I've been reading about… I'll just rattle them off. Arizona produces something like, I don't know, 60% of our lettuce in the wintertime because it's one of the few climates that can grow lettuce when it's cold and they don't have enough water to grow the lettuce for the winter. I've been reading about spaghetti sauce and ketchup because there's not enough water in California for the tomatoes. And so the price of ketchup is through the roof. I was actually linking to these. I did a whole ketchup, mustard, hot dog thing in my letter today for one of my reading links.

And then speaking of mustard, Canada grows the bulk of the mustard seed. Not enough water for the mustard this year in Canada and all this feeds into supply chain stuff, into rising prices, right. I don't know the exact number, but you look at those stories that you'll see from time to time about how much does it cost for a family to have a picnic or to go out to a ball game. I mean those prices are through the roof. Literally the cost of ketchup and mustard, I mean condiments for your fucking hot dog are getting harder and harder to come by.

Gerardo: Condoms, sorry too easy.

Nick: I don't want to be a Malthusian or whatever, but you've had people warning about this food crisis and to a certain extent, I believe in human ingenuity. I see these phosphate guys out there every time there's a story saying, “Oh, you got to buy this phosphate stock.” Well, why? Because you're the CEO of a phosphate company. That's why. People have an incentive to fearmonger, but nonetheless it's a significant issue this summer and for power generation as well. I mean, we've talked about this. The strain on the grid. It's 101 degrees here in Spokane today for example. And I've seen just the amount of power we use to keep cool relative to years before. And so it's definitely a real thing and it plays back into the things that we invest in. I mean, we just talked about the climate and energy bill and people are going to have to make a change eventually. I think part of the coping process is denial, but that only lasts so long.

Gerardo: Inflation profits have been good. Climate profits are looking good, a lot of runway for these sectors and these trends. These aren't six month trends. This isn't rare earths back in 2010, 2011, where it was a 12-month spectacular ride. By the way, it was very fun and made a couple of nickels during that run. But you kind of saw that while there was a real issue, it was going to be a short lived mania. This isn't going to be a short lived mania folks. We need real solutions. It's going to require a lot of capital. It's going to require a lot of ingenuity and yes, by the way, there's going to be a lot of money made.

And so I would encourage everybody that thinks they missed the Patriot Battery or they missed Critical Elements or they missed one of these uranium companies that were 10 cents and went to a dollar and now sits at 60 cents, that you can't chase them. I would encourage people to rethink that and be very specific about the catalyst and the potential for a lot of these stocks to re-rate higher because you have significant tailwinds helping your cause. I'm a capitalist at heart, right. And nothing wrong with making money while trying to help the world out a little bit.

Nick: No, that's it. It's a culmination of a lot of things that we've both been writing about for a long time. And in some respects, I'll go back to my feeling jaded. It's like, well, not that I'm some big prophet or whatever, but I tried to tell you so.

Naked Shorting Banned in Canada

Gerardo: Hey, last but not least, we talked Canada a bit. Naked shorting has been banned in Canada and we had a conversation off air about being bought into stock. When you're trying to sell stock, sometimes you're bought in and they make you buy the whole position back. And I can't help but wonder, now that the naked shorting ban has taken effect because it's effective immediately in Canada, if that's not playing a part into, what my broker has said, is record amounts of buy-ins and it makes me wonder how many of customer’s shares where you nakedly shorting institutions of reputable backgrounds. Again, maybe it's just a conspiracy theory, but it seems like a bit of a coincidence to me that the day or the days where naked shorting is banned in Canada, all of a sudden everybody's being bought in for their positions.

Nick: I didn't make the connection, but it's very astute, the connecting of the dots there. And I'm not an expert. Even when my broker was explaining it to me is just sort of went in one ear and out the other, how they've got to wait. And it gets very complicated with whether or not the companies are DTC eligible. If they're involved in that process or if you have to get the physical shares delivered. And in my case, they have to get the physical certs from whatever- the DRS agent, get them to the back office at RBC. And then they got to go to the person on the other side of the trade. And this is taking, that's a multi-week process, especially if the counterparties in all these trades, not just mine, but yours and Jim's and Bob's and Steve's are all requesting their shares, their certs to be delivered.

And my broker was saying that for one trade that I made, they probably put in a collective 20 man and woman hours emailing back and forth with the exchange and with the counterparty and trying to get an extension for when the trade has come to settle. And in one case, the exchange just came in over the top and said no more extensions. And then the exchange bought me back in. And when they do that, if you look at the market depth of a stock, the level two, how many shares are for sale at whatever price, they don't care, man.

Gerardo: Yeah.

Nick: It's not like they put in a limit order for you to get bought back in. I mean, they'll fucking wipe out the shares all the way up. And when you're talking about illiquid penny stocks, if you just sold one at 35 cents and there's no shares for sale at 35 cents or 36 cents…

Gerardo: It can move 20 cents real quick.

Nick: Fuck yeah, it can. And so if you thought you just made however much money selling that stock, you got to come out of pocket even more than the unsettled funds that you have from that sale to buy back in. And I know it's a complex topic for mostly accredited investors. Cause this has been happening for an issue that we've been talking about as it relates to private placements and whether they’re “have sold” or “will sell.” And gosh, it gets real complicated.
Gerardo: Yeah.

Nick: And I might sound stupid, but some deals are “will sell,” which means that it's implied that you will sell the shares because of course you will. That's why you bought them in the first place.

Gerardo: You want to make a profit.

Nick: Absolutely. And so some deals increasingly, especially Canadian small cap TSXV deals. For whatever reason, the lawyers have switched and they're mostly “have sold,” which means you can't get your shares entirely cleaned up until you have sold them. So that means once you have sold your shares, you put them for sale and you sell them. Then they got to go to the company, get the company's lawyers' approval. He's got to then look at the legend to make sure the sale was legit and it adheres to securities laws. And this is part of that process that I started this answer with, that takes so long.

And if that doesn't get done in the three days that it should take a trade to settle and the counterparty wants their shares, right? Cause like you were saying, if they're short or if they were naked short, now they can't be. And we really should get an expert on to talk more about this. They need those shares in their possession. They can't be naked short. They have to have the shares. And so they're saying, I want my shares. I want my shares. I want my shares. And that's how you end up getting bought back in. Yeah.

Gerardo: A lot going on. The storm. I made it through the storm. We got a good 40 minutes in, Nick. I'm actually impressed. I was worried when that thunder and that lightning started kicking up halfway through. I hope I didn't speak too soon, but no look. I think the end of summer is near. September's right around the corner. I know you and I are excited to be at Beaver Creek at the Precious Metal Summit. I believe it's September 13th through the 16th. If anyone is out there, please reach out. Please say hello. Would love to catch up with everyone. Looking forward to it. It's been a bit. And yeah. What are you watching in the market, Nick?

Nick: Oh gosh, I've been busy on the marketing side of things as opposed to the market side this week. Finishing up some copy for a new gold video that we're going to launch. It's actually a documentary style about a tour I took of an up and coming gold mine that we'll have out in the next couple of weeks.

I'm still watching for the broader industries to turn around if I'm being honest. They continue to make me look like a fool as they march higher, even turning around the day we recorded this to close higher, despite being lower most of the day.
The end of the month is coming up here. You have an options expiration, that's August 21st, which really makes it August 19th because that's a Sunday. That might get some of this meme stock funny business out of here. I saw that Bed Bath and Beyond was already down some 20% today after rising from, it was up 500% almost over the past like 27 days or something.

Gerardo: Good work if you can get it.

Nick: I think some of that wonkiness is going to come out. And I continue to look at the real fundamentals. If you take energy out of the S&P earnings, they're negative for Q2. And Q3 isn't going to be any better because oil prices weren't $100 on average in this quarter. They've been $88 or $90. So the S&P isn't going to have the energy sector to keep it buoyant as it relates to earnings. And then last thing I guess is GDP, right? Which is going to come in probably very close to zero again for Q3. And it's-

Gerardo: Just like inflation.

Nick: Yeah, everyone's on that Atlanta fed nowcast, right. They got that GDPNow that's getting really popular. And they had it up around two and a half percent a couple of weeks ago. And it's come back down closer to 1.5%percent real, real quick. And I think you see that come even closer to zero as the weeks progress here. The consumers just don't have it. I mean, Target (NYSE: TGT) told you so this week, those shares were down. The consumer's in a really tough spot. And eventually I think those fundamentals are going to play out in the stock market, which we know is different from the economy. And I guess a hat tip to Hedgeye for a second. They're calling this, whereas 2008 was a Wall Street crisis — it was a leveraged securitized mortgage crisis that clearly started with the banks with Lehman collapsing, Bear, Stearns, etcetera — this one, the banks haven't felt as much at least yet, right. This is a main street crisis that has to percolate up. And I think the percolating is happening.

Gerardo: Well, it's happening in and out of Argentina. It's happening around the world with riots and protests, inflation out of control, food prices. Wages not keeping up. Everything can't be awesome forever here in the US, I agree with you, Nick. It's definitely something to watch. I continue to be bullish on copper, lithium, uranium, and gold if you have the right timeline. Meaning not right now, but maybe in a few months. A lot to like out there. A lot to make money off of. So I think we'll leave with that. I am Gerardo Del Real along with Mr. Nick Hodge. This was episode 182 of Bizarro World. Enjoy your week everybody.

Nick: Stay cool. See ya.