Bizarro World Podcast,
with Nick and Gerardo
Oct. 24, 2022
Political and economic chaos in the UK is more evidence of a global Fourth Turning. Are interest rates topping? Lithium and battery metal stock opportunities. Uranium stocks and market update. Biden’s billions to boost battery metals. Memes & The Moon: A Requiem for Rabid Redditors. And we’re funding a new private deal. This is episode 191 of Bizarro World.
1:17 Recap: New Orleans Investment Conference
8:27 Kanye West’s Music > Social Commentary
11:22 Alex Jones & The Billion-Dollar Settlement
17:13 Liz Truss & The Fourth Turning
22:53 Are Interest Rates Topping?
28:48 Lithium & Battery Metals Stock Opportunities
33:35 Uranium Stock & Market Update
38:57 Biden Awards $2.8 Billion to Boost Battery Metals
42:20 Memes & The Moon: A Requiem for Rabid Redditors
46:03 Should We Be Tapping the Strategic Petroleum Reserve?
48:49 Funding a New Private Deal
Gerardo Del Real: The dollar, gold, Liz Truss. Fourth Turning — don't say we didn't tell you. Kanye's an idiot. A recap of the 2022 New Orleans Investment Conference. The usual, everyone. A lot going on. I am Gerardo Del Real along with Mr. Nick Hodge. This is episode 191 of our therapy session that we call Bizarro World. Nick, how the heck are you sir?
Nick Hodge: I'm doing great, Gerardo. Getting caught up after being away for the conference like you were. Duck season has started, so I'm happy about that. And weather's starting to cool off, so I'm happy about that as well. I'm a fall and winter guy. How are you doing?
Gerardo Del Real: I'm having to wear hoodies on my morning jogs, Nick. I am not a fan of wearing hoodies during my morning jogs. So, yes, I'm in the same boat. I know that you are a hunting man and I am not. If I was a hunting man, I would welcome the cooler weather. Have you got any hunting in recently?
Nick Hodge: We did some duck and goose hunting over this past weekend. It was opening weekend. It wasn't too productive, because it was still warm, but we'll get more productive for sure.
Recap: New Orleans Investment Conference
Gerardo Del Real: I like it. Let's get right into it. We just got back from the New Orleans Investment Conference. You had a great presentation that I want you to touch on here in a bit. Then you and I did our New Orleans version of Bizarro World Live in New Orleans. First and foremost, before we get a recap of your excellent presentation, what'd you think of the conference? How was the sentiment? What are you hearing?
Nick Hodge: Oh, man. It's interesting, because it's an interesting group of people who are seemingly always bullish on the metals. But there might have been a bigger dose of reality there this year as gold has continued its tough slog. And as the companies that exhibit there, their charts go down and to the right — or at least have so far this year post gold running back to $2,000 last year. So, a lot of still waiting for the pivot, which we hear from all corners of the market. And a lot of not believing that gold hasn't been the inflation hedge that people once thought. But other than that, sort of like Beaver Creek, sentiment is different than the atmosphere. And people were, outside of the market, upbeat, glad to see each other. It's always a fun city. And last year was a full hybrid event, because we were still lingering out of COVID. This year everyone I think was glad to be together and I was as well. What did you think of it?
Gerardo Del Real: I think you're spot on. I thought that there was definitely a heavier dose of reality, which again, as I always say, it makes my contrarian heart smile. But it only makes my contrarian heart smile when I'm able to have a long enough timeline to pick apart some of these names that are high quality names, trading like trash, junior stocks. I look at Perpetua (TSX: PPTA)(NASDAQ: PPTA), I look at Magna Gold (TSX-V: MGR)(OTC MGLQF). I look at some of these other companies. And sure, Magna had a missed quarter and sure it's got some liquidity issues it's working through. But good gracious, that's a producing mine, with all in sustaining costs at $1100 to $1200 an ounce. Excluding the last quarter, again, where those costs blew out to the $1700-$1800 level, which got them in trouble, because of that failure in their geologic model. But definitely more upbeat on the personal side.
Inventa Capital, Liz Monger, Chris Donaldson, and that group threw a phenomenal event in a historic location in New Orleans that was very well attended. It was upbeat, the networking was fantastic throughout. But as far as the market's going, as far as the gold space, it's definitely a more cautious approach. We had a lot of potential clients that reached out definitely to me, and I know to you as well, because I was there for a few of those, wanting to come on the Resource Stock Digest side and wanting us to help them share their story. But they're also wanting to wait until Q1 of 2023, as we're dead in the eye of the tax loss season selling storm that happens every year — earlier every year, I should say. Yeah. Had a great time. It was great to hear your presentation. I want to touch on that in a bit. But a lot of reality there. I think everybody's preparing themselves for gold to at least briefly penetrate that $1600 level down to the low high $1500s. And I think that's healthy. I think one last capitulation event would be a good catalyst for a turnaround.
Nick Hodge: I think it's in the cards. It's interesting to see who embraces that reality and who tries to keep that reality at arm's length. I know that Brent Cook contributed to the Exploration Insights letter recently and was talking about some of the conspiracy theories that were being floated there. You and I had a question about global depopulation in our workshop. The gentleman was saying that one of the presenters was talking about this elite cabal of people who was going to depopulate the earth, so they could have the energy and the resources for themselves. And if that happens, what does it mean for resources? I'll tell you, if that happens, resource prices are the last thing you’ll be worrying about…
Gerardo Del Real: Your portfolio is the last thing you're going to have to worry about, dude. Don't worry about that.
Nick Hodge: There's some conspiracy theories floating around and some reality floating around as well. I guess it depends on which string you want to grab as it were.
Kanye West’s Music > Social Commentary
Gerardo Del Real: Which brings me to Kanye. We're going to segue right into this dumb ass idiot. Kanye West is the epitome of why you shouldn't ever, ever in your life listen or follow a person blindly, just because they do a thing well. What Kanye does very, very well, and he is a genius at producing music. He's been a genius at producing music for at least 20 years. At least 20 years. Absolutely tier one talent, phenomenal. I'm sure his next album will be phenomenal. He's done every type of beat you can imagine. And then we get into his opinions on things. And that's where you just got to appreciate the music and tell him to shut up on the other side of it.
Have you seen the most recent little shenanigans that were uncalled for and completely not excused by whatever mental illness he's going through? If you're an asshole, you're an asshole. I've called other people assholes on this podcast before. Love Kanye's production, cannot stand the man's opinions on a lot of things, including the antisemitism as of late. Any thoughts there, Nick? Have you read any of this?
Nick Hodge: I was going to say you know me, I don't know the details, but I know the gist. He got kicked off of Twitter and Instagram for, as you just said, some antisemitic comments. I'm not sure exactly what those were and subsequently said, a la Mr. Trump, that he's going to go his own way on the social media front and buy Parler, I think it is, which was some sort of right leaning social media outlet. I think that's the broad overarching story. But what are the details?
Gerardo Del Real: The very short version is, he was doing an interview with Chris Cuomo on a Sirius satellite station, and he was upset that he is referred to in the media as a rapper, instead of being referred to as a multi-billion dollar businessman and tycoon, who happens to produce music and also do fashion and all the other things that he does.
Nick Hodge: He wants to be a business, man… not a businessman?
Gerardo Del Real: Good job there. Good job. I see you brush stuff on your J. And what he said was that, and I'll give you the exact quote, because I definitely don't want to misquote Mr. West. He does enough of getting in trouble himself. He said the Jewish underground media mafia is the reason why he's not referred to as a billionaire or a tycoon in the press. This follows him saying that George Floyd, repeating a conspiracy theory that has since been debunked, we have the autopsy report. He went after everybody. He said that George Floyd didn’t die from a knee to the neck, that it was a fentanyl overdose. That's been spread on rightwing conspiracy channels.
He then went to Paris, as if he hadn't upset enough people, and wore a White Lives Matter shirt, which of course white lives matter, just like Black Lives Matter, just like all lives matter. But I must say when I look at the news, and maybe it's the news, it seems like disproportionately it's low income and black people and brown people that get the bullets. That get the bullets and that get the, "He was running away and I felt threatened for my life. So, I shot him 42 times." Or, "I thought he had a gun, it was a candy bar. So, I shot him 27 times after giving him two seconds." Or, "Oh, I knocked on the wrong house with information that we fabricated to get this warrant, and I thought my life was in danger. So, I shot her 20 times." And it doesn't seem to happen a lot in the better off communities and it certainly doesn't happen a lot in the better off caucasian communities.
So, he's been on a run. And again, I think Jon Stewart said it best. Jon Stewart said, "I don't know what drug you could get," when there were defenders of Kanye saying he clearly has a mental illness. Jon Stewart said, "I don't know what drug you could get that can make you not believe that Jews are controlling the flow of information from your mouth to the public." They can't knock the logic there, John. John, of course, is one of the better interviewers and logical people out there. So, that was a week in the life of Kanye West. That's the short version. I could get you some more details, but I think that's enough.
Nick Hodge: I wonder if that conspiracy theory is the same reason Chris Cuomo is on some satellite channel and not on CNN.
Gerardo Del Real: It’s very possible. I think this Chris Cuomo interview was one of the things that happened. The second interview where he talked about George Floyd was on a show called Drink Champs by a gentleman that goes by the name of Noriega, an entertainer-rapper turned journalist and podcast host. He gets millions of views every week, a phenominal show. And even him towards the end, he tried to correct Kanye on a number of facts. And it just seems like he's on another planet. Again, that doesn't excuse the racism and it certainly doesn't excuse the ignorance. That's my Kanye rant. You want to hear my Alex Jones rant?
Nick Hodge: Sure.
Alex Jones & The Billion-Dollar Settlement
Gerardo Del Real: Alex Jones was ordered to pay nearly $1 billion in damages to the families of the Sandy Hook victims. And the only reason I bring Alex Jones up again, because I don't like bringing him up, because I have very little respect for his public persona. Who am I? It’s just Gerardo Del Real with his 2-cents that maybe isn't even worth the 2-cents. But that man's character is clear to me and I think he's scum. At least his public persona, not to mention some of the domestic violence allegations in his personal life and some of the other things that have gone out. He happens to live here in Austin. So, that's always fun when I see him and his little cronies downtown and their big trucks, riding around, riling people up and then bailing when the action starts. But that's a whole nother conversation.
He was ordered to pay $965 million to the families of Sandy Hook victims. And that was just spread out amongst a few. There's still lawsuits pending. Clearly this is going to eventually bankrupt his Infowars media company. Even if he files for bankruptcy, there's going to be some loopholes that he's going to be able to exploit. But he is going to come out of pocket and this is going to financially cripple him. But the reason I bring Alex Jones up, is because I start to think about Kanye West and George Floyd's family just filed a lawsuit for $250 million for the spreading of the misinformation about why George Floyd died. Look, if that was my brother, father, cousin, nephew, you name it, son, and he died in such a public, just horrific, tragic manner and someone with the platform and following of a Kanye West made it a point to disparage the way in which he died… I, at the very least, would be filing a lawsuit.
And there's precedent now with Alex Jones. I was listening to the Joe Budden Podcast the other day, and he tied the two together and he said, "Look, before this Alex Jones thing, there wasn't a lot of precedent as far as speech went. And how damaging public opinions and conspiracy theories being spread could be, as far as monetizing, the damage.” There's precedent now, and it doesn't surprise me that the first lawsuit was a $250 million one. And so I hope Kanye does have those $9 billion he brags about, because he might need some of that.
Nick Hodge: He's Ye, isn't he? The lawsuit is against Ye. How do you say it?
Gerardo Del Real: Yay
Nick Hodge: Yay for the end of Kanye anyway.
Gerardo Del Real: Yay for Kanye. There you go.
Nick Hodge: We've heard a lot of talk about how we're in a post-truth era, where it's tough to discern what the reality is. We were just talking about conspiracy theories and reality from the New Orleans Investment Conference. Maybe these lawsuits can set us down the path and I'd have to toss the Fourth Turning in there as well as you did at the beginning of the podcast, where you turn from this anybody can say whatever they want, no holds barred conspiracy theories, QAnon on and all this, stuff whatever it is, to a place where what you say actually matters. Because truth does matter. And on a less serious note, the only thing I could think when I was reading about the $1 billion and the Alex Jones things was if the judge was like, "$1 billion." Because I'm not sure that money's going to come for real.
Gerardo Del Real: His estimated net worth. And again, this speaks to America, I'm sorry, and then the world that we live in right now. His estimated net worth is estimated anywhere according to one of the outlets, between $135 million and I think $200 million.
Nick Hodge: So, five to 10 times more than his entire thing is worth.
Gerardo Del Real: And more lawsuits pending.
Nick Hodge: Why not $1 trillion?
Gerardo Del Real: Oh God. Should we continue with stupidity for a little bit? We told you already that gold was going down further. We told you already, if you're a contrarian, which means that you buy when things are low and you're not afraid of things going low or if you have the right timeline and liquidity, you could write it out and you can make some very, very good money when it turns. However, anyone that tells you they know exactly when it turns is lying to you. I thought by Q4 that gold would be approaching the $2,000 level. I thought the consolidation would be quicker. It's clearly extending past that. I know it'll happen, I just don't know exactly when, but I do know there's some quality names worth getting. But should we continue on with the stupidity of our society right now, Nick?
Nick Hodge: Up to you.
Gerardo Del Real: Let's do it. The good old state of Tejas, freedom, is sending public school students home with DNA kits designed to help their parents identify their children in case of an emergency. This is our response to Uvalde? This is what we're doing> Are we serious? I thought this was an Onion headline. The Onion, the group, they do the parodies, the satire. And then I looked, I'm like, "This is Reuters, this is AP, this is a real thing.” So, Texas public school system will be providing ink-free fingerprint and DNA identification cards to all K-6 students who are eligible. Parents aren't mandated to use the kids, but if your kid gets shot up, then you may want to have these handy.
Liz Truss & The Fourth Turning
You want more societal turns, more forth turning stuff. We just had the UK, the British Prime Minister, Liz Truss quit her job.
Nick Hodge: I was getting attached to her.
Gerardo Del Real: How? It was just 45 days, Nick. How are you getting attached to her? It's insane. I saw a meme of the prime minister's place and it said “great for short term stays Airbnb.” And it had me laughing. And this of course comes on the heels of Miss Truss deciding that the thing to deal with roaring inflation and a recession was to cut taxes, and go ahead and go easy. And obviously, those tax cuts were something that Britain could not afford, and the citizenry got pissed. And kudos to the citizenry for voicing those opinions and getting her... However you feel about the politics, I'm just speaking to the action of the citizenry, being vocal enough to pressure several politicians in that party to be accountable for their actions. So, we talk about accountability on this show a lot.
We talked Kanye West and we talked Alex Jones and we talk about the things that you do and the things that you say. And speech is free. I'm a big freedom of speech guy, but doesn't mean there doesn't come accountability with the things that you say. Well the things that you do should most definitely carry a high level of accountability. And in this case, however you feel about the party, however you feel about the politicians over there, kudos to the citizenry for speaking up and saying, "Nope. Nope. If this is how you're going to start to lead, how about you just go? This is not going to work. This is not what we signed up for."
Nick Hodge: It was a very fast turnaround. Like you say, 45 days, it was six weeks. I don't think anybody even got a chance to get acquainted with her or establish her in the lexicon. So, maybe the next person will be able to stave off economic reality. We'll see.
Gerardo Del Real: Shortest tenure of any British Prime Minister ever. Ever is a long time, as we always say here.
Nick Hodge: I saw some interesting stats, the first person to serve under two monarchs since Winston Churchill. And then another one, I'm going to get it wrong, but how many we've seen in the past three years. There's been three British prime ministers in the past three years. Teresa May, and then the shaggy-haired Mr. Boris and then this one. So, now we're going to get four. That's political chaos, that's turning stuff. They don't have the answers, because, shockingly, the answers don't come from government.
Gerardo Del Real: And these are problems created by government that don't have quick solutions. You can't talk your way out of them. This is the Fourth Turning that we keep referencing. Where at that inflection point in history, I believe, Nick, where you can't talk or BS your way out of situations you created, because everyone now knows it's you that created them. And that's coming to a country near you, regardless of where you are listening to this. There's very few fiscally and morally responsible parts of the world right now that are overjoyed about their economy, that are overjoyed about their quality of life, that are overjoyed about the potential for upward mobility.
These are the pillars that the great countries and stable economies and stable societies, these are the pillars that they're built on. And it's going to get tougher before it gets better, everybody. I hate to be the bearer of somber news, but I keep telling y'all, keep whatever you need to keep to make you feel like you can protect and keep your family safe, because I don't think it's going to get any better anytime soon.
Nick Hodge: No doubt. A lot further to go. We've talked about Iran on this podcast, those are fueled by social media. Taking it back to the Arab Spring, that was fueled by social media. I was reading something this week about how Chinese citizens are up in arms and taking to social media because they've been paying these mortgages or have taken out mortgages on real estate that has yet to materialize. And there was a seemingly appeasing speech by Xi this week, and late last week, I guess. They had a big event with the Chinese Communist Party. And all the way to South America. I think you're right, obviously. I think there's a political turning at hand. And that coincides with a lot of things, militarily, economically and otherwise, which I think everybody around us senses and sees.
Gerardo Del Real: And because the world isn't interesting enough, Boston University decided it was going to go ahead and make a brand new COVID strain that has an 80% mortality rate in mice.
Nick Hodge: Oh, man. Why?
Gerardo Del Real: Did you miss that one?
Nick Hodge: I did, yeah. Hopefully I don't get it. I've been more sick than usual. I typically never get sick. I've got another cold.
Gerardo Del Real: What could possibly go wrong, Nick? A university making a deadlier strain that's 80% fatal in mice. And mice, by the way, that mimic the human immune system. And so again, I'm no smart sciency guy, but that didn't seem like a good idea to me.
Nick Hodge: Maybe they are trying to depopulate the earth.
Gerardo Del Real: It all comes full circle. Did we get that guy's name?
Are Interest Rates Topping?
Let's get back to the markets. Interest rates, mortgage rates, all the rates, Viagra charts. How you feeling about the earning season thus far and how are you feeling about where we are as it relates to interest rates? Starting to feel a little toppy to me, if I'm being honest. But you're more the charges and technicians. So, I'll give you the floor there.
Nick Hodge: That's a lot in a question, but let's start with the inverted yield curve, which remains inverted. The two-year yield is screaming higher. And so-
Gerardo Del Real: 69 yield curve, we established this, Nick.
Nick Hodge: When you take that away from the 10-year, it means that there's still more trouble ahead. It was like the most inverted it has been since all this started earlier this year, this week. And then it's a little tiny bit less inverted now, but still significantly inverted. The other thing about the two year going higher means that the Fed is going to continue to hike. So, Mr. Kashkari was telling us as much this week saying that there's likely two 75 basis point hikes ahead. And I firmly believe that's the case. I've been talking about waiting for pivo. That's my funny line in the talks I've been giving, because Godot is the character that never comes in the play. And so, I don't think that the pivot comes. I think that's what the two year going higher is telling you. I'm not sure about getting toppy, but I do know that that's keeping a firm lid on gold, which you've already mentioned. I didn't see where it closed today, but it was down around the $1640 mark, perhaps a little bit weaker than that.
Gerardo Del Real: $1620-ish, yeah.
Nick Hodge: Surprise, surprise. #SilverStqueeze from a couple of weeks ago, when the dollar and yields did have a brief pullback, was again a short term inverse indicator that silver was of course not being squeezed. The dollar is breaking out and if the Fed is going to continue to hike. If you pull the chart back to the eighties, it went much higher than it is now when Volker was hiking rates back then.
And then you asked about earnings. I had said that earnings were going to go to negative earnings growth, not necessarily this quarter, but for fourth quarter earnings and potentially first quarter 2023 earnings. You've had about 70 companies report so far of the 500 in the S&P, and in fact earnings growth is negative. But a couple of things, one, it'll go positive as the rest of the company's report. You won't get negative earnings growth this quarter. Two, I hear a lot about beats. This company beat and that company beat, but they're beating the lowest of hurdles.
Gerardo Del Real: If I fight a 10 year old, I'll probably beat him.
Nick Hodge: No doubt. So, the expectations were lowered such that all these companies are beating, but they're still shrinking earnings growth-wise. And that's exactly what I'm saying when I tell you that the 70 companies that have reported so far have reported overall negative earnings growth. But you hear about all these beats. Just take a look at the financial sector, for example, which do I still have a tab up here about it?
Gerardo Del Real: I see you got new art back there going on a wall soon.
Nick Hodge: It's getting there. I've been bringing stuff in here and there. Over the past month. the financials have lost 4% of their value. The earnings have been abysmal. And really what I wanted to mention there was Tesla (NASDAQ: TSLA). Because Tesla reported earnings this week and is on a significant slide down. You remember when he had the funding secured at $420 was the tweet, if you remember right. And Tesla now is a $200 stock. It's lost more than half its value since the funding was secured to go private at $420. And has slid, gosh, it's lost 30% of its value in the past month and a half. It was a $315 stock in September and now it's a $200 stock. So, air is still coming out of this market. A little bit of air, maybe not even a little bit, more air still to be let out of this market, I would say. So, I'm giving you a long answer. Sorry, but-
Gerardo Del Real: It's what I asked for.
Nick Hodge: You had a bounce in the S&P. You're getting another bear market bounce in the past couple of days. And the reason is that, at least what people are attributing it to, is algorithmic buying. You had a retracement, a technical level of 50% of the gains from the COVID lows. So, the market went up like 2,600 points since March 2020, and it's now lost like 1300-some points. And right on the screws when it retraced 50% of those gains algorithms came in and started buying. But in the letter I wrote today, which hasn't got mailed out yet, you'll see, I expect that luster of this technical indicator, this 50% retracement, will wear off pretty quick, because of the negative earnings that we see.
And I continue to think, as I just said, we lost 50% since the COVID lows. You could get closer to the COVID lows before this whole thing turns around. The only thing I didn't address there, that you were asking, was about the rates feeling toppy. I'm not sure the 10-year is back to where it was in 2008. Historically, it's been much, much higher. Maybe in the short intermediate term it's a little bit toppy, but could go higher.
Gerardo Del Real: I think you're right. I still think there's going to be a panic into the dollar. Near term it looks a little toppy to me. I think as far as the cycle goes, you're spot on. If you look at a chart, it can go much, much higher. That's one of those that we're going to have to wait and see. We'll see which way it shakes out and how quickly it shakes out.
Lithium & Battery Metals Stock Opportunities
Speaking of shaken out, look, I think there's an opportunity right now. Let me give you my Patriot Battery Metals (TSX-V: PMET)(OTC: PMETF) update for the week. There is a pause in assay results. The last set of results was spectacular, by the way. But the company is doing something that is going to be extremely beneficial. It has applied for an ASX listing, it has to go through a filing of its prospectus.
All that means is that for three weeks, you're not going to get any news from the company. And that's going to lead to sideways, to downward trends, regardless of what lithium does. That is an absolute gift for you all that maybe feel like you missed the initial run up, and haven't wanted to step in and buy it at the $7 level. It's currently in the mid fives to low sixes on the average day. I think anything in the fives is a phenomenal entry point. And I think this time next year, we'll be talking about a stock that's in the twenties. And so, that's your freebie for the day.
I would encourage everybody that is looking for a very well cashed up company that has a very already robust anchor asset in a stable part of the world, and is onto a hot new discovery of semi massive, nickel, copper, PGMs, rhodium, gold, you should subscribe to Mr. Hodge's letter. He'll put a link up to buy it.
And if it goes down between now and a year or six months or whatever our refund policy is right now, we'll give you your money back. That's as easy a money-making resource stock as is out there if you have the six to 12 month timeline to just let that company continue to drill out this new discovery and the existing resource. Six rigs turning, $40 million dollars in cash. As one of our friends and a mentor to both of us said, "If this one doesn't work out, I might just walk away from the resource space." I feel that way about Patriot and so far so good there. But look, this has the potential to be... Now the stock is trading under two bucks, I think this time next year it has the potential to be between C$7 and C$10.
Nick Hodge: Yeah. That company you're talking about is a PGM deposit as you said. But they've since found some semi massive and massive sulfides of nickel and copper. And they stepped out from where they hit those semi massive and massive sulfides, 50 meters to the north, 50 meters to the south. Put two holes up top, two holes down below. And are saying that visually, at least, all four of those holes have intersected semi-massive sulfides as well as containing the PGMs. So, you're getting holes that contain 11 meters of four point something grams per tonne PGMs, plus gold, plus a percent, and some change copper, plus 2% nickel in sulfides. And they're only halfway through a very robust phase one drill program. You mentioned six rigs turning. They’ve drilled something like 91 holes, and that’s only halfway done.
So, newsflow for the rest of the year and the stock is held up. A lot of it is in really close hands. The chairman owns some, I think, 40% of the company. BlackRock is in there. You and I are shareholders and most of that stock is still locked up. If anything, a quarter has come free trading, but I don't think anybody is selling, there's not a lot of shares to be had. So, I was writing about that today too.
Gerardo Del Real: And that'll soon be my third largest personal holding. Currently it's Labrador Uranium (CSE: LUR)(OTC: LURAF), but I suspect that the company, the chart, the way that I see it, it’s going to continue higher. When I look at the numbers, Nick, the last hole in the new discovery, the grades are just phenomenal. You mentioned it already, but it's worth highlighting. The grades are high in every one of the commodities. You're talking 1.23% copper, over 2% nickel, 4.24 grams per tonne PGMs plus gold. This is not the typical way you drill a hole a kilometer or two away and see what you find out. This one is special. So, again, I would subscribe. I think it's well worth it. If you don't make money, you get your money back. It seems easy to me.
Nick Hodge: It's like a whole bag of good candy, man. There's Reese's and Twix and Kit Kats in there. No candy corn.
Gerardo Del Real: All the good stuff. All the good stuff. No candy corn.
Uranium Stock & Market Update
We have to talk uranium before we get out of here. It's ticked up to the $52 level. Labrador Uranium has been my third largest personal holding. It'll likely be a competition between Labrador and Bravo here soon. But Uranium's touched $52, it looks primed to go higher. You're the chartist amongst us, Nick. I do love that chart though, it looks pretty.
Nick Hodge: I'm going to write you a whole editorial here mainly so I can send it out as an editorial. Uranium's one of the few assets that has remained positive for the year. The price of the underlying commodity, U3O8, is up year to date 2022, whereas nearly every other metal commodity is down. So that's the first point. The second point is that the news flow is incredible. The news flow from both a country standpoint and from a company standpoint is incredible. We've mentioned Germany on this podcast before and their pivot from wanting to phase out all their nuclear reactors to saying, "Hey, hang on, wait a minute, we're going to leave two running, because of the situation that's going on with Russia and the uncertainty of the natural gas supply for the winter." But in the past couple of days they've gone even further and said, "We're going to leave three running." So, it's like an auction now. It's like, "Four? Can I get four, five? How about five?"
So, you see that countries like that are starting to see the writing on the wall and acquiesce to it. And we've mentioned Japan as well. They said they're going to restart 17 reactors. They want to extend the life of those reactors, just as we're doing here in the United States. And they want to build new advanced reactor technologies. Now that was the prime minister who said that in August. This month, there was the head of the Institute of Energy Economics in Japan, who writes a message every month. And his entire October message was about nuclear energy. And he was talking about those three goals that I just mentioned, restarting, extending the life and building new ones. But he was also talking about how the country in general is embracing it, especially the young generation. And that's important, because the young generation gets old and they carry those beliefs with them. So, it portends a literal new generation of nuclear acceptance.
Whereas the 60 and older crowd, they were still in support but not as strongly in suppor. The 18-39 year-old crowd was 71% in support of building new nuclear reactors. That's a very strong support, stronger than most politicians get for sure. And so you can see the embarrassment there.
And then on the company front, you've got some big deals going down. Westinghouse, which is a company that supplies nuclear technology for reactors. Their technology is in, I think, something like 40% of the 440 nuclear reactors that we have in the world. That company went bankrupt, was taken into private equity hands, because of cost overruns at some plants it was building here in South Carolina and Georgia. In the past week, we've seen that Cameco (NYSE: CCJ)(TSX: CCO) stepped up to buy them, along with Brookfield Renewable (NYSE: BEPC) for an enterprise value of $7.9 billion, but about half of that was debt. So, Cameco put up $2.2 billion for 49%. And Brookfield Renewables put up $2.3 billion for its 51%.
Gerardo Del Real: It's real money.
Nick Hodge: That's real money. It's billions of dollars. It's interesting the name, Brookfield Renewables. It's a renewables company that's buying a nuclear reactor company. And so, I'm not saying uranium's renewable, what I'm saying is that it's being embraced by that clean energy renewable crowd.
I should mention UEC as well. UEC has been busy rolling up assets for the past year. They bought the Uranium One assets back from Russia, which was a big scandal when Hillary Clinton was Secretary of State and let those assets go away. And then they outbid Denison NYSE: DNN)(TSX: DML) for UEX. And then in the past week or so they purchased the Roughrider asset in the Athabasca Basin from Rio Tinto (NYSE: RIO).
Lots of positive uranium news flow, lots of embracing of the technology. And yet, and this is important, if you look at the mainstream uranium ETFs, like the Sprott Uranium Miners (NYSE: URNM) or the Global X Uranium ETF (NYSE: URA), they are down some 10% to 16% for the year. So, there's opportunity there. The sector had a very strong run, I think it was in the late first quarter or early in the second quarter. The prices were much higher than they are now, which tells me that some uranium names could be subject to tax loss selling, just like the gold names. I think there's significant value there in quality companies. And like Forest Gump says, "That's all I got to say about that."
Biden Awards $2.8 Billion to Boost Battery Metals
Gerardo Del Real: You said older generation and I immediately thought of our president Joe Biden. And so, I want to commend old Joe this week, because I'm pretty decent about giving it to both administrations and both parties when they deserve it. But on this side of it, he deserves a bit of credit. He is awarding $2.8 billion in grants to boost US production of electric vehicle batteries and the minerals used to build them. And that is a step in the right direction, especially if we're going to keep counterfeiting money anyhow, let's get something tangible that's sustainable, that has some societal value here moving forward. So, Albemarle (NYSE: ALB), several other companies received grants. I think Albemarle was $150 million. A couple of other ones received $50 million, $20 million. $141 million for Piedmont Lithium (NYSE: PLL). Talon Metals (TSX: TLO)(OTC: TLOFF) received $114.8 million.
What I'm trying to tell you folks, what Nick is trying to communicate as well, is that there are bull markets right now that are undergoing consolidations. And there are stocks within those bull markets that you should be exploiting. We talked about Patriot, we talked about you all subscribing to Nick's newsletter and seeing what that pick is. Both of those are stocks that within the next 12 months, I think have the potential to trade four to five times higher, possibly on the low end. If we're half right about that and you just double or triple your money, I don't think you'd be upset with us. But everyone is different, had to bring up the $2.8 billion in grants and I think that's a step in the right direction for the US, one that’s long overdue.
Nick Hodge: It's important. We talk about it all the time. Where is that lithium going to come from? And there was an article in Foreign Policy magazine this week saying that South American states in the Lithium Triangle like Argentina, Bolivia and Chile… All of those countries, because of their political situations, aren’t responding as fast as they need to to exploit that robust resource that they have there. All those companies you mentioned, Albemarle, Piedmont, et cetera, are ompanies with North American assets. And granted some of them operate in other jurisdictions, but Albemarle certainly has the big lithium production in Nevada. And Piedmont is in North Carolina with a partnership on an asset in, it's either in Ontario or Quebec. So, North America's got to get on it game for lithium and sure, we'll take the money printer money.
Gerardo Del Real: Inflation profits, lithium profits, call it whatever you want, buy some more Patriot, y'all. Not financial advice. Just what we're doing, just what I'm doing. I know, Nick, you've got a bid in, right?
Nick Hodge: I got bid in. Yeah, I think it gets a little bit cheaper here in the next couple of weeks.
Gerardo Del Real: I like it.
Nick Hodge: Yeah. Limit order set.
Gerardo Del Real: You only don't like that if you need to sell some in the next month or so, everyone. If you don't, you should be embracing this. And if you have free capital, you should be taking advantage of the weakness and the quiet period.
Memes & The Moon: A Requiem for Rabid Redditors
Nick, before we go, you had a fascinating presentation at the New Orleans investment conference as you always do. You want to touch on it here before we get on out of here? I'm wondering, by the way, if they're going to keep inviting us back. Every time we go to a gold conference, we tell everybody that gold is not the sector that you should be allocating capital towards. Right now it's lithium and uranium.
And then every time you get invited to a silver conference, you tell them that silver is trading like an industrial metal and is probably going to $15 before it goes to $30. And so, let's see if the invitations keep coming, but our responsibility and obligation is always to the people and then the listeners and readers that follow our stuff. And maybe get some inspiration to go do some due diligence on their own and make some decisions. So, all we can tell is give you our point of view and our take. And sometimes it's right, sometimes it's wrong, but at least it's honest.
Nick Hodge: Yeah. It was similar to a talk I gave at the Silver Symposium here in Spokane in late August, I believe it was. It was called ‘Memes & the Moon: A Requiem for Rabid Redditors.’ And it was going through the history of the Reddit channel dedicated to silver and how silver was going to be squeezed starting in early 2021. But in fact, they called the top of the silver market and it didn't get squeezed from there. It didn't go to the moon from there. All it's done is lose 30% of its value from $28 to $18. And it was about how you can't invest via social media and you can't invest via trends. Albeit, it's fun to post memes about how inept the government is and the fed and conspiracy theories about a Great Reset and the death of the dollar. That's all good and can create a good chuckle.
But if you follow that, and I pointed out one gentleman who didn't have a lot of spare money, $200 in free cash a month. He was a restaurant worker and he was saying, back when this silver movement started in early 2021, that he was putting half that money every month into buying silver. He's lost 30% of his little bit of cash that he had since then. That's not the way to invest. And the death of the dollar, sure on a long enough timeframe is a real thing. But certainly not since the social media meme stock, “silver squeeze” thing has been going on. The dollar is at 20 plus year highs in fact. And so it was just a dose of reality and a bit of a warning that all these people who think they're contrarian are actually the contrarian indicators to true contrarians.
I went through the first level thinking and second level thinking as far as contrarianism is concerned. And as I said earlier in this podcast, even as recently as late September, early October, they had the #SilverSqueeze trending again. And sure enough, it was the short term top silver gets $21 approaches, $22 #SilverSqueeze trends and that's it. Silver's back down to $18 bucks, rates turned back around, dollar turned back around. That's reality. They're inverse indicators of the sector, they want to go higher. Just a bit of caution out there. And that's not to say I don't own silver and I don't own silver stocks, I do. But I'm not rabid for them. That's why I was calling them rabid Redditors. And I don't blindly support them and blindly hashtag them. There's other factors that you have to consider. And Klaus Schwab wanting to feed you bugs is no reason to go out there and buy meal kits and more silver at prices that aren’t necessarily good values.
Should We Be Tapping the Strategic Petroleum Reserve?
Gerardo Del Real: Before we go, because of course we try to be fair here. I have to mention the thing Joe did this week that I didn't like. He released 50 million barrels from the strategic petroleum reserve. I think it's near sighted. I think that whatever you think of, former President Trump and his politics, he was talking about filling that reserve at 24 bucks, I believe. 24, 25, $26 a barrel. He was also telling Germany, "Maybe you shouldn't depend on Russians for all your energy needs." For all the things that Mr. Trump fabricates lies about, makes up, gets incorrect, he's gotten some things pretty correct. And on those two points, he was spot on. He understood the dynamics there. Do you think that this release of 50 million barrels matters, especially when you have Saudi Arabia, our buddy, who we won't ever go after, despite, don't let me get going again, despite all of the offenses committed against the US by the Saudi government? Do you think these 50 million barrels are going to matter in the midterm?
Nick Hodge: The midterm elections or the midterm timeframe.
Gerardo Del Real: Midterm timeframe. And I'm saying that within the context of Saudi Arabia saying, "Oh well, guess what? We're not going to put off our vote and we're going to cut our production to offset the 50 million barrels you're releasing on yours."
Nick Hodge: No, I told you a couple of weeks ago that oil was going to trade and range. It's pulled back from $90 to, I don't know what it's at today, $88 bucks something like that. It's a total political move to try to get gas prices down, because they were ticking back up as people head to the polls this fall. In the long term scheme of things, I don't think it matters. The economic reality is that demand will likely wane a little bit, because of the recession that's materializing. And even Saudi Arabia has been politicized. They were pointing, we, our politicians were pointing at them saying, "Look at these bad Saudi Arabians, they're limiting the supply or whatever."
And they shot right back like, "Look, man. It's not a political thing, it's a recession. We're cutting supply, because we expect demand to go down." Total politics. The last thing I'd add there is just like gold stocks aren't gold, oil stocks aren't oil. So, oil could go to $75 or stay at $80 bucks, and that's a good price for oil stocks. So, oil stocks can be bullish, while oil prices stay flat. Is it a short sighted thing? Yeah, obviously. It's meant for the midterm elections.
Funding a New Private Deal
Gerardo Del Real: I like it. You have a new private deal coming up, right? I talked up your one newsletter. I think you have another newsletter, because Mr. Hodge writes three and edits and publishes a whole bunch of other ones. But you have a new deal and I know what it is and I like it a lot. So, did you want to speak to that a bit?
Nick Hodge: It might be closed by the time this gets out, but it's worth just laying it out there a little bit, so we can put a link up. We haven't done a ton of private deals this year, just because of the overall macro environment. Last year the average price of a closed deal that we sold was over a hundred percent. And this year it's down closer to 10%, but that's still outperforming some of the best hedge funds in the world. We've been very selective and, as you said, there's some very attractive deals out there just because stocks have been sold off. The deal we're funding this week is a Latin American prospect generator. It has several assets in South America that it's already vended out or optioned/joint ventured to majors. It has option agreements, earn-in agreements with some of the biggest mining companies in the world that, if all their earn-in agreements are met in their cash and share payments are made total something like $30 million.
And the company is trading with a C$5 or C$6 million market cap. And they've still got projects that can be vented out that they've done some de-risking work on, geophysics and early exploration, et cetera. And the shares in this company were rolled back a couple of years ago. The last two financings they've done were at higher prices. So, we're buying the cheapest private placement paper that's ever been sold. And by the way, it comes with a three year full warrant as well. If you're worried about the timeline it's going to take for the metals market to come back, that's a pretty good buffer. It's got good management and-
Gerardo Del Real: We met with management.
Nick Hodge: That's exactly right, in New Orleans. And it's got a relatively tight share structure, 57 million shares outstanding. But like the company we were talking about earlier, one board member owns some 43% of those shares, something like that. So, in strong hands and worth a shot in this environment if we think that maybe not in the next six months, but certainly in the next three years, that the metals complex is going to turn around. Buying a company that has JVs with major miners at a C$6 million Canadian valuation is a pretty good bet. Even if, and I'm not saying you should do this or it's what I'm going to do, even if you just want to sell your shares and then hold the warrants as a lottery ticket, you of course have to be accredited to participate. Hodge Family Office Private Intel is participating. Some people have already written in expressing their interest. I am personally participating. And that's it. We'll put a link up if you'd like to learn more about the service.
Gerardo Del Real: It's going to be hard not to make money with that one.
Nick Hodge: We'll see. And like you said, maybe we'll walk away from the industry if these quality deals don't work out.
Gerardo Del Real: Anything else you want to get off your chest, Nick?
Nick Hodge: No, that's it. I thought we were going to wrap up at 33 minutes and we're approaching an hour, so let's do it.
Gerardo Del Real: And if we keep talking, you know how that goes, we'll be here for another 30 minutes. It was great being back in the office. Great catching back up. I am Gerardo Del Real along with Mr. Nick Hodge. This was our therapy session that we call Bizarro World, number 191. Be kind, everyone, even with people you disagree with. It's okay.
Nick Hodge: See ya.
Gerardo Del Real: Have a good one. Be safe y'all.