Positioning Your Portfolio for Market Chaos - Bizarro World 187

Buckle up. Stocks are now the lowest they’ve been since December 2020. They’ll likely head lower still amid further economic contraction and Fed tightening. How should you position? Cash is a good place to start, if you haven’t already, with the dollar now the strongest it’s been in more than two decades. What about gold? It’s held up better than stocks but is facing headwinds of its own. We discuss all that plus the protests in Iran and how private placements can increase the performance of your portfolio in episode 187 of Bizarro World.

1:51 Buckle Up: Bear Market Worsens Amid Continued Fed Rate Hikes
8:56 Positioning Your Portfolio for Market Chaos
16:07 Is Gold In a Bear Market?
21:49 Protests in Iran
27:16 Using Migrants as Political Pawns
35:46 Austin Votes to Decriminalize Marijuana
39:58  Wins, Losses & Private Placements

Gerardo Del Real: Not safe for work moment, I'll give you five seconds. Is Donald Trump a fucking Jedi? We're going to talk about it. The dollar continues to surge, the way we told you it would. Is gold in trouble? It broke through our support that we said was critical. The Trumpsters are getting sued by New York. They're protesting in the streets of Iran. Is Vladimir getting desperate? A lot to get to as there always is. I am Gerardo Del Real, along with Mr. Nick Hodge. This is Episode Number 187 of our therapy session that we call Bizarro World. Nick, not say for work moment again, guys. Five more seconds. It's a lot of crazy fucking shit going on out there, Nick.

Nick Hodge: Oh man, it's a Bizarro World. It has been for years since we started this podcast. You didn't ask me how I was doing this week. You normally do that. How are you doing, Gerardo?

Gerardo Del Real: I feel that we just caught up. I am well, thank you for asking, and excuse my rudeness. It's so crazy out there. I just assumed that we were on the same page with stuff. And also look, frankly, we just got to see each other in Beaver Creek. It was really nice catching up. I feel like reconnecting in person spoke to that a little bit. But yes, Nick, I am well, thank you for asking. How are you? I know it's been a busy week to could catch up for both of us getting back from Beaver Creek, right?

Nick Hodge: That's it. Yeah. Craziness in the world, craziness in the markets, catching up from being out for a week. Fed decision or rate hike this week, all kinds of stuff going on. So just a little bit scrambled, but happy to be here and talk about all of it.

Buckle Up: Bear Market Worsens Amid Continued Fed Rate Hikes

Gerardo Del Real: Let's get right into it. The dollar index has surged over 111. Jerome has spoken. And Jerome, much to my surprise, actually, he looks pretty hellbent on continuing to raise rates. I thought he would be at least a little more dovish in his posture, not his language, but in his posture, in this meeting that just passed. And that wasn't the case. And so to his credit, if something breaks overseas because of a surging dollar, he's going to have to own that. But it looks like he's willing to own that as long as he appears tough on inflation — the inflation they denied for so long. But, credit to him, again, for owning it, standing by it and making it his baby.

Nick Hodge: Don’t give him any fucking credit.

Gerardo Del Real: Just this one time for at least owning the fact that whatever he breaks is his, right? He already did all the other stuff that he denied. He owns that too. And he's not owning it. We're putting it on him and we've held him accountable. But I'll give him a little bit of credit on this. It's like when Greg Abbott does something smart every now and then, right? I give him credit. And then he goes off and he does dumb shit. And we'll talk about Ron DeSantis, his other little dumb asshole buddy here, in a little bit, flying legal migrants all around the country like they're ping pongs on a ping pong table. But no, look, to Powell's credit, he's been consistent with his policy decisions and what he said, which hasn't always been the case. It's been the total opposite every other time. He says one thing, does another. Says one thing, does another. So I'll give him that much credit, Nick, just on the consistency of the message being complimented by the actions.

Nick Hodge: Yeah, but he is doing the wrong things.

Gerardo Del Real: Oh yeah. That's another conversation.

Nick Hodge: He might be doing what he says, but it's the wrong thing at the wrong time. So the time to raise was during the bubble highs of the euphoric market coming out of the pandemic. When everybody had padded checking accounts because of stimulus and PPP checks. If you don't remember, they spent that time, instead of raising rates, they spent that time telling you that inflation was transitory, which you already mentioned. And so now they're hiking into a recession, which they tried to deny as well, both the Fed and the incumbent administration, the Biden administration, right? Moving goal post, telling you the technical definition of a recession had changed. And also telling you there's going to be a soft landing too, by the way. Right? Well guess what? Now there's no more soft landing. There's going to be some pain. The specter of a recession is higher, according to Powell's remarks this week and Americans should be off. 

Gerardo Del Real: Absolutely.

Nick Hodge: You mentioned Iran. But look, now you've got mortgage rates at 14-year highs. You've got people taking loans to buy groceries. Buy now, pay later grocery loans are a thing now I was reading. Buy now, pay later weddings are now a thing as well. 

Gerardo Del Real: Don't do it. However you feel about the institution of marriage. And there's no judgment from me on this, right? I am happily married. However you feel about that institution, right? I personally feel it's somewhat archaic though I participated in the outdatedness of it. If you're starting your marriage by buying it now and paying later, you probably should just wait a little. Wait a little bit, baby. Wait a little bit. It's going to be all right. You don't have to go right now, right now.

Nick Hodge: I wonder what those interest rates are going to be. I wonder if they're adjustable, if they're locked in at whatever, five or six or 7%. So all that to say, if you weren't already bearish it's time to get bearish. Things aren't looking good. We've talked about the COVID lows. Your GDPNow forecast is just about at zero for Q3. And guess what? We're getting into pre-announcements for Q3 earnings that aren't going to be good. Buckle your seat belts if you haven't already, is what I would say.

Gerardo Del Real: I think you're absolutely right. Do you think this dollar surge continues? Mean? In light of the fact that Mr. Powell seemingly is going to continue to raise rates through the end of the year despite, and again, I was wrong about this. Despite the midterm elections being right around the corner, I thought he would at least soften the posture before that because typically, the Fed doesn't want to appear to be meddling in politics; but again, doesn't seem like he's going to change that. I could be wrong about that. I've been wrong thus far. Maybe he does an about face. I don't know, but ...

Nick Hodge: Let me answer it in terms of bonds and in terms of stocks. I capitulated on the bonds. You sort of have to, at the 10-year scream to above 3.5%. It's time to just step aside and let this play out. So if I was a third in cash, I'm in 50% cash now. Things are getting wonky out there. You mentioned things breaking. Well, things are breaking. The yield curve has inverted nearly, almost 0.6 or whatever it is. 

Gerardo Del Real: It's a lot of 69 in going on with the yield curve.

Nick Hodge: It's rough times out there for sure. So yeah, I think people are going to continue to sell stocks. I certainly am content to move to more cash. And that portends a stronger dollar, which was your question. It's not tough to see when this is going to end. I've been saying Q2 next year for a while, but that's five or six months away. And so if people need to step aside and hold cash, then you could certainly see a dollar continue to strengthen, if not stay at least as strong as it is. Which some could argue, and even I could probably make up an argument if you gave me some time, that things are already broken. You mentioned things breaking. Yield curve inversions the most they've been in 20 years. Dollar, the strongest it's been in 20 years. That's a generation. 20 years is a generation. Stuff's the craziest, most unprecedented, inverted, all that stuff that it's been in a generation. So things are breaking.

Gerardo Del Real: I think there are bigger things coming. I think bigger things are going to break. I think economies are going to start imploding. And again, some of them already are. We're going to talk about Ron DeSantis and the migrants, the legal migrants from Venezuela that came here seeking asylum., did the right thing, followed the US Immigration Policy procedures. And then again, got flown around like fucking pawns.

Nick Hodge: Literal pawns, yeah.

Gerardo Del Real: Literal pawns, right? Political pawns. So no, look, I think, I look overseas that the bond market's there. I know how manipulated those are. But we're getting to the point, I touched on Iran, and we'll get into what's going on out there. But all the things that I'm seeing, whether it's the morality police in Iran and the riots there, riots we haven't seen in quite some time from that part of the world in Iran to Europe, to Japan's economy, to Vladimir getting desperate in Russia.

Positioning Your Portfolio for Market Chaos

These are all Fourth Turning events. We look at the institutional friction here in the United States, whether it's our Supreme Court or our state governments or the New York Attorney General suing Donald Trump for fraud. We are seeing unprecedented actions across all of our major institutions. So when I talk about things breaking, I'm thinking big breaks. And again, not to minimize the pain that's already being felt around the world and here in the US, because obviously, clearly we're in a recession. You can go to the grocery store and realize that we're already there. But I am a bit fearful as to what's to come. And I don't see this dollar surge slowing down anytime soon because of the volatility. Because it is the cleanest dirty shirt in the laundry basket, like I say every month and has been since 2016. And so, tricky times, tricky times. What do we do? Nick? You go to cash? That's what you said, right?

Nick Hodge: For your retirement money, you go to cash. You sell down your tax losses, if you're fortunate enough to have some gains to offset them for the year. You focus on yourself and your family and try to tune out a lot of the noise that's going on. Some of that stuff will make you go crazy if you try to keep up with and pay attention to it all. I know some of it is sad. People fighting for their human rights overseas. The Russian invasion, that stuff is obviously sad if you're a human and have a heart. But to a certain extent, you have to keep that at arms length and focus on what's best for you and your family. It's interesting because this is stuff that I've been preaching for, for years. I happen to find myself on a bit of land with lots of propane and a backup generator and a safe full of things.

Gerardo Del Real: And bullets, everybody, bullets.

Nick Hodge: At a certain point, it's like, you got to listen or pay attention. If you didn't already go to cash, now's the time. And again, broken record. I just feel like a broken record saying all the stuff. How many times can I say that, this is a Fourth Turning, stuff's going to get wonky. We're in a bear market. Those are all the things you got to do. I've been writing about it for years.

Gerardo Del Real: And again, just to be clear, Nick and I have somewhat different approaches. We think alike on a lot of things. But we have somewhat different approaches to this market. I still believe, and I don't mean to speak for Nick. Nick could speak for himself, obviously. But I still believe there are opportunities to make money in this space. I'll be very honest with you all. I don't have a large cash position right now. The bulk of my net worth is either in real estate or it's in stocks. Now, it is a whole heck of a lot more concentrated than it was before. I'm being very, very, very picky with my positions and my allocations. But I still think there are things out there that are going to continue to do well, regardless of what the dollar does, regardless of what the broader indices do.

We talked about an orgy of lithium and uranium profits, and I think that's going to continue. I think the party continues the rest of the year and all of 2023. But everybody's situation is different. Everybody has different liquidity needs. And so you got to make sure you can define the timeline. And I also know if I have to hit at a sell button immediately, I can hit a sell button. I've made this mistake in the past. It's not all tied up in positions that I can't get out of if I absolutely need to.

I've made that mistake in the past where you get that big IRS bill, then you have three other things going that fall apart. And all of a sudden, you start looking around. You go, oh, the IRS doesn't want to wait for my payment anymore. And the three things that I thought were going to happen, aren't happening. Time to call my rich friend and see if we can get out of this really quick. So again, everybody's different. There's definitely sectors where I still believe you can make money. Nick's still making money on some of his positions. I'm still making money on some of my positions. But cutting your losers, I think, is going to be essential over the next couple of months.

Nick Hodge: Yeah, and everybody's situation is different, like you said. I had a couple of questions about this last month that I answered in Foundational Profits. These people were asking for rule of thumb for how much safe money, how much speculative money. And it's tough to answer, right? Because everybody's thumbs are different sizes is what I wrote. I'm not even 40 years old, though I'm certainly knocking on the door. And somebody was asking, you write about safe money and you write about speculative money. How much do you have in each? And for better or worse or for right or wrong, I'm probably 70% speculative and 30% safe money. And you just said, you're even more than that. Now, I don't include real estate in that. I own a bit of real estate as well. It's probably worth as much as that 70% of speculative positions I have. So yeah, again, everyone is different and it's tough to make decisions for everybody.

Gerardo Del Real: Yup.

Nick Hodge: So you have people writing in. How much have you allocated to this position? How much do you have allocated to this position? And it's like, well, what I have allocated to each position might not be what's right for you. So I just try to be as transparent as possible. What I've been doing, at least on the safe side of things, is basically making a video or report every quarter that says, this is what percentage of my safe money is in cash, what percentage is in gold or bonds or dividend companies or whatever it is, consumer staples.

Yeah, at a certain point, you've got to take all that information, which we say a lot as well, find a couple of experts that are successful. It's like a recipe. I’ll give you an analogy since I seem to be rambling on. You're looking for a recipe to make something new. And if you're a good cook, you don't necessarily follow a recipe to a T. What I do is, I Google a recipe, I read five or 10 of them, and I take the good ideas from each and then I make the dish, not following any of those recipes precisely to a T. Just taking them in and then making my own decisions. And I think you got to do the same with your portfolio.

Gerardo Del Real: Absolutely agree. So different for everybody. Nick and I try to do as diligent a job as we possibly can responding to all emails from subscribers of our paid services. And I think, correct me if I'm wrong, Nick, but I think we're putting out a video or two every week between the two of us just responding to those questions. You know it's interesting times when you start getting more questions and people start getting a little antsier, right?

And luckily, the positions that we have bigger positions in have worked out, but that's not the case for everybody. So it's a long winded way of saying, I encourage you to all keep writing in. If you're a paying subscriber, if you have a question, you have a comment, send it our way. At the end of the day, the bulk of our money really comes from our personal investments. We love doing what we do and we love sharing our experiences. But at the end of the day, those are just our experiences. The research and the insights are meant to provide a diversity of ideas for you to go do due diligence and to go vet and to figure out if it's appropriate for your situation. And hopefully, some of those make you some money, right?

Nick Hodge: Exactly. Love the questions.

Is Gold In a Bear Market?

Gerardo Del Real: We got to talk gold. Gold broke through our critical support level that we had cited before. You are more the chartist, the more technical trader of the two of us. How are we looking? Do we need a weekly close above $1684? Do we need a monthly close above $1684? Or are we going down to the high $1500s again?

Nick Hodge: It sounds like you know the levels. I'm not sure.

Gerardo Del Real: I read your stuff.

Nick Hodge: I'm not sure it's made up its mind yet. Everything this week after the fed announcement went like this, right? Whatever that was in whatever direction. The VIX spiked up and then went down and then went back up, and then gold spiked down to whatever, $1650 something, and then spiked back up to support at $1680.

Gerardo Del Real: I call it Viagra charts.

Nick Hodge: And all that's amid rising volatility, which we've mentioned in the past two weeks. When volatility goes up, as Keith McCullough would say, "the ranges of things widen as volatility goes up.” So we'll see how much volatility stays in. And not just volatility as in the VIX, but the volatility of gold itself, or the volatility of the NASDAQ or whatever it is. Do we need a monthly close or a weekly close above 1684? Certainly a monthly close would be nice, right? Or else, I think you're going down closer to $1600 than $1700 or $1800. But it's wanting to hold in there. And that's why I say, ask me again next week. What's it at right now? If you look well, we have, while we've been recording.

Gerardo Del Real: Let's look live. I'm going to guess $1677.

Nick Hodge: $1671.

Gerardo Del Real: All right. Off by six bucks. There you go.

Nick Hodge: So, it doesn't want to breakdown breakdown, but the dollar still going up and rates still going up. Yeah. If we're technically speaking, then yeah, gold has broken down for the time being.

Trump Keeps Digging Himself a Hole

Gerardo Del Real: I agree. Let's get into Donald Trump. I think the Trumpster is actually worried about this one, Nick. He might be going to jail over those classified documents. I don't know. I saw him on Hannity. And I don't watch Hannity, typically, because I think it's a smug little fuck. But I do like hearing what the other side has to say from time to time. By the other side, I mean the media, all of it, whether it's CNN or Fox News, every now and then, I'll tune in just to see what Don Lemons' dumbass has got to say about something. Or Sean Hannity on the other side's dumbass has got to say about something. And I thought it was really interesting to see Hannity actually asking the President about the process. And for those that need some context, Donald Trump was raided by the FBI. We talked about this for weeks. And they took a lot of things.

They searched his safe, which he felt violated. They took a lot of records. They took pictures. He said, "That's not how I had them. They did that for publicity's sake.” Because lawyers basically told him, “Shut up. You're getting yourself in more trouble by admitting that you did have these in your possession knowingly. Because they're labeled Top Secret, dumb-dumb.” So now that they're digging a little bit more, he goes on Hannity, and you can tell that the pivot is coming on. And you can tell his attorneys have told him, “you are in trouble." It's hilarious as it always is with the guy. Right? Because he's entertaining as hell. But he gets there and this is why I said, is he a fucking Jedi? Have you seen the clip, Nick?

Nick Hodge: No, but I know what he said. I saw it on Twitter, yeah. I read.

Gerardo Del Real: Okay, excellent. So I'll give you the very short version. Sean Hannity is trying to walk Donald Trump towards a legal basis for why having those records is not a crime. It's the sense that I got. And so Hannity says, "Mr. President, Mr. President, explain to me why those records were there legally. Why that was okay." And Donald Trump goes, "I declassified them. I declassified them. They were declassified." So Sean Hannity says, "Oh, so you went through the process of declassifying them." And he says, "There is no process. There is no process.I think about it. I think about it and they're declassified. No process. Doesn't need to be a process.” And the look on Hannity's face was like ... You know? Because he kisses Trump's ass for a living, is just priceless. He's looking at him thinking “How do I pivot from here?” 

And again, you could critique Hannity for a lot of things. He's a pretty good interviewer, regardless of how you feel about his takes and him being on the take and everything else. He actually knows how to get the point across that, usually, he wants to get across. And just to look at his face was pure comedy gold to me. And look, I don't know, man. I think Trump's in trouble. That's one piece of legal problem that Mr. Trump has. He also now has the New York Attorney General suing him and everyone in his organization, basically, for fraud. And he's saying it's a political hit job. You know the politics. And maybe it is. But it's a lot of shots on goal to get Mr. Trump, at the very least, barred from running again, and then possibly even incarcerated, unless he gets a pardon after the next election. If he drags this out and the Republicans win.

Nick Hodge: I'm tired, Gerardo. I'm tired of hearing about it. I'm tired of having to try to keep up with it. I'm tired of telling people things six months or a year in advance and then them playing out and having to say, "I told you so again." I mentioned Letitia James on this podcast. It had to be six months ago. I told you she is serious. I told you she wasn't done. And here we are.

Protests in Iran

Gerardo Del Real: Yeah, here we are. We got to talk about Iran. Look, it pains me like everything else. This stuff in the Ukraine and everything going on around the world. But there are people that have died now. There's people rioting in the streets. And for those that don't know, a young 22-year-old Iranian woman was arrested by the country's Morality Police. I'm not making this up. For an untold violation of the country's laws on women's dress. And a week later, the people are pissed. And the reason they're pissed is initially the government said that she had "a health problem" and that she "died of a heart attack" while in custody. And now it's turned out that the family isn't shutting up. The family isn't going with the old guard. And they're saying no, "She had no health condition." It looks like "she was beaten." And people, like you just said, Nick, people are tired, man.

People are tired. Eight to 10 people have died. Thousands are in the street. People want to be free, man. And free means different things to different people. But people are tired out there. And again, this is all Fourth Turning stuff that I think is going to continue to escalate. I wish everybody out there safety and all the best. And my heart goes out to everybody in that part of the world. Culturally, it's such a beautiful part of the world in so many ways. It's tough to see that going on in a society that just wants to be free.

Nick Hodge: Was her name Freddie Gray?

Gerardo Del Real: Yeah. People are tired, right?

Nick Hodge: Yeah. It's been three years, I think, since Iran killed 1500 people. Protests erupted as happens every so often. It's a brutal regime. And I guess the point I was making with the Freddie Gray comment is that people die mysteriously in police custody in the United States of America, as well, which is supposedly a free nation that doesn’t have civil rights atrocities. Things happen everywhere. Pick your flavor of ice cream, pick what you want to be upset about in any given week. This is the one that's grabbing headlines this week. And unfortunately, it happens in a lot of places. And gosh, I don't have a lot of thoughts. I'm not an Iran expert. But I guess people are starting to respond to it in their own ways. I happened to flick on 60 Minutes the other night and I saw President Biden declare the pandemic over.

But I also saw Leslie Stahl wearing a headscarf to interview, I think it was the President of Iran or something like that. And then today I read, he was slated to give an interview to some CNN woman journalist and then she refused to wear the headscarf. And so he canceled the interview. And I don't know, you might think that's petty, but people are responding in their own ways. Like I say, there's lots of stuff going on. For me, I've got my own stuff to deal with. I can't solve Iran's problems and we're certainly not going to solve them in these 60 minutes.

Gerardo Del Real: No, we're not. No, we're not. Let's ... the Freddie Gray thing, by the way, I don't think was so mysterious, but that's another conversation for another time.

Nick Hodge: Well, just like her death probably wasn't so mysterious.

Gerardo Del Real: Yeah. That’s the point of the riots? Absolutely. For anyone that didn't have the context on Freddie Gray, he was driven around in a police van without a seatbelt on, and it was done in a way so that he could bang his head in across the surfaces of the van. And so he died from brain contusions.

Nick Hodge: Yeah. Well now we'll talk about the Baltimore Police. Riots erupted after that. I was in Baltimore for those riots. I remember being locked down in our office building and told we had to stay there for a bit while there were literally dozens and dozens and dozens of cop cars outside. So we might've talked about this in past episodes. There's a new documentary, not The Wire, which was a quasi documentary, but I think it's called, We Own This City. Or something like that.

Gerardo Del Real: A phenomenal show.

Nick Hodge: So you've seen it? A couple of people told me about it.

Gerardo Del Real: Phenomenal.

Nick Hodge: I read the news on a daily basis. I probably don't need to watch the show. I know about the Gun Trace Task Force tand the finding of evidence and guns and the execution of detective Sean Suiter in a park. And they tried to blame that on gangs. When if you have two brain cells rattling around, you know that the cops killed him to cover things up, et cetera. So yeah, Iran, Baltimore, potato, potato.

Gerardo Del Real: I hear you. I think it's a six-episode mini series. It's not something that requires a ton of time. It's extremely well written, well acted. It's a drama style documentary, is what I call it. Right. I actually think we talked about this a couple times.

Nick Hodge: Drocumentary?

Gerardo Del Real: Documentary style. Drocumentary. I like that one. But it's done by the same producers that did The Wire.

Nick Hodge: Oh, there you go.

Gerardo Del Real: And so that the Intel and the feel of that was going to be pretty authentic. And I didn't live in Baltimore. I haven't lived in Baltimore, but I have to believe that given the credit that that team got for how accurate The Wire was, that they probably did a pretty good job on this one. And yeah, We Own This City, phenomenal, phenomenal. Six-part mini series.

Nick Hodge: I'll check it out.

Using Migrants as Political Pawns

Gerardo Del Real: People want to be free. People don't want to be abused. People don't want to be promised jobs and housing when they're escaping a regime that is brutalizing them in an economy that's imploding. I'm talking about Venezuela. And then be told that there's a job and some housing waiting for them and that they got them a plane ticket, and then be flown around as political pawns and dropped off with not even basic services waiting for these people. So for those of you not aware, Florida Governor Ron DeSantis decided he could come to Texas. He could come to San Antonio. He paid people, obviously, he didn't do it because they don't ever do it. And they promised these 50 migrants who had gone through the legal process — this is really important — they went through the legal process of seeking asylum. Meaning some people walked 10 countries. Some people drove, some people, however they got here, the first thing these people did is they checked in with the US authorities, with ICE, Immigration Customs agency. They said, "We're seeking asylum. This is the basis. This is where we're from. We want to be law abiding. We want to submit this petition." 

So by law, when you do that, you are allowed, while your case is being investigated and you get a hearing to present it, you are allowed to be here legally. Right? So these 50 migrants are in San Antonio waiting for their date to be heard, so that a judge, because this is fucking America, and it's how it's supposed to be… So that a judge gives these people their day in court to see if there's any merit to them being able to stay in this country legally. If they're really fleeing from persecution, if there's a criminal background, if they are a threat in any way to American citizens and our American way of life, whatever that is nowadays. And so Ron DeSantis thought it would be really amusing to promise these people jobs and housing, and give them a plane ticket.

This cost like $12 million, by the way, the political stunt with your money, taxpayer money, if you're an American. And flew them to Martha's Vineyard, which is a symbol of democratic wealth. He thought he'd be funny to drop them off there with zero basic services, no job, no access to a restroom, no access to food. And then make a show about it, saying if you love immigrants so much Democrats, take them. Ron DeSantis is now being investigated by Texas authorities for trafficking these people because he took them across state lines unwillingly under false pretenses, which I don't know if it is a legal crime, because I am not an attorney, but it sure the fuck is a moral one. And my God, if I was a DeSantis supporter, I'd be embarrassed as all hell to back that thing up. So these people, once they arrived at Martha's Vineyard, this is a real cruel part, Nick, if it wasn't already cruel enough. They then automatically all got dates. They landed there on a Friday or a Saturday and their dates were somehow expedited for their hearing for Monday. And so what happened with these dates are they're all over the country because the same government officials that these legal migrants gave information to, the agents took the forms and falsified the addresses and wrote addresses, fake addresses, all around the country, so that when they got to Martha's Vineyard and they expedited, because somebody made the call to expedite these court dates — they expedited the court date for Monday, two days later.

Nick Hodge: So they couldn't show up.

Gerardo Del Real: It was to a place they had never been. Nobody could show up. And now they're illegal because you missed your court date and you had your day in court, as America says you should.

I have things I want to say that I cannot say, because I'll probably get myself in trouble. But I wish Governor Ron DeSantis and everyone that had something to do with this all the reciprocity in the world — nothing more, nothing less. All of it, every inch of it. And I would just leave it at that. That is one of the cruelest, most inhumane things. We talked about Freddie Gray. We talked about Baltimore Police. We've talked about Breonna Taylor on here. We've talked about, we could go on and on with the injustices in this country and around the world, we just talked about Iran and other places. And these people are fleeing Venezuela because it's hell out there right now. But this is just cruel. This is cruel on so many levels. Shame on them.

Nick Hodge: I'll get my jokes out of the way. It's probably inappropriate. But I knew flights were expensive. Why does it cost $12 million?

Gerardo Del Real: It's a good one, actually.

Nick Hodge: Good Lord.

Gerardo Del Real: It's a lot of agencies to coordinate. You're having to call judges. You're expediting these dates. You're having to send people to San Antonio to pick these people up that are just minding their own business. Yeah, sure. I'm sure somewhere millions were allocated to some political campaign that is neutral in a third party somewhere. Right?

Nick Hodge: DeSantis and Abbott, 2024.

Gerardo Del Real: Yeah. It's possible. Those are the times we live in right now.

Nick Hodge: What's sad is that people eat it up. Just glossing the social media and glossing the ... and people that have hundreds of thousands of followers are cheering this on and saying, “Yeah, send more immigrants, send them to Rehoboth Beach, Delaware, Bethany, wherever it is that Biden has his beach house, more of this. Keep doing it.” And it's like, that's really the discourse, man? I can't. That's why I just check out.

Gerardo Del Real: I don't blame you. I don't blame you. It's hard to have a meaningful conversation on legal immigration and getting the hardest working and the best and the brightest and doing what America has traditionally done: Growing itself into this amazing experiment called America by giving people an opportunity that deserve an opportunity, and giving people the opportunity to prove that they deserve that opportunity. And then if they don't, then there's already a path there to punish that and for there to be consequences.

But it's clear that we're not even at a point where we can even have a conversation about legal immigration. And again, some of this has to be put on President Obama who campaigned twice and catered a lot to the Hispanic community saying, look, I will get legal immigration done. I have the votes. I'll get it done in year one. And then as soon as he was elected, he pivoted both times. Pivoted both times and decided to do something else. So it's not just Republicans that are guilty on this. It's some Democrats, too. And they had control to pass the votes and decided to prioritize other things. And so not saying the other things didn't have merit, the other issues like healthcare didn't have merit, but we got to make some better decisions in this country, everybody, because this is a fucking shit show.

Nick Hodge: And people just don't understand. Just taking it down to a basic human level. I was reading an article today about blood donations. Did you know that 10% of the plasma we get in the US comes from Mexicans that have visas, and they cross the border to come donate blood, and then they go back? Did you know that? 10% of the plasma? I had no idea. It's crazy. I bet you that people who are cheering on the dropping off of migrants in Martha's Vineyard have received transfusions or otherwise benefited from Mexican blood. It's crazy.

Gerardo Del Real: Or labor.

Nick Hodge: Right. Well sure, absolutely.

Gerardo Del Real: Culture. We could go on. I mean we could go on. And Hispanics are the Pinata right now. There you go. You want to do a funny inappropriate analogy? I'm Mexican. I can say it, right. I can laugh about it. Hispanics are the pinata right now. We're it. We're the scapegoats. The Irish had their day, the Italians had their day. Muslims and Middle Eastern folk had their day. And not to say that we've completely gone away from messing with other people, but be absolutely clear that it's Hispanics that are catching the beatdown right now.

Nick Hodge: Sure, sure.

Gerardo Del Real: And in America, blacks. And if you're a black woman or Hispanic woman ... It gets worse. There's a pecking order and it's not good. And none of it's right.

Nick Hodge: I can't wait until it's the Fed Governors.

Austin Votes to Decriminalize Marijuana

Gerardo Del Real: Yeah. I'm looking forward to it. Let's talk some positive news. I want to talk about some positive news because this has been one of those weeks. Right? Go Austin. I got to talk my own book here. On Saturday 85% — and this already happened before, but now it's official — of Austin had voted to officially decriminalize marijuana in the capital here and it just went into effect this past week. And so, it's good to see. It's good to see the follow through on that. It's good to know that if you're minding your business and you had a gummy and it's got some THC or you smoked the joint or you had a vape, you no longer have to worry about going to prison over it. Yeah. I'll leave that there. We also banned no knock warrants, which is what got Breonna Taylor killed. Along with the detective lying to the judge, falsifying evidence.

Nick Hodge: I was going to say. Have we banned falsifying documents?

Gerardo Del Real: In that case the cops falsified documents to get the search warrant, then going in there, going to the wrong address. The guy didn't even live there anymore. Shooting without warning and then killing a young lady that was working in the medical field and pursuing a career. Because America. You could die in your sleep at midnight here just because some cops decided to lie, take down the door and go shoot some shit out. But anyhow, go Austin for decriminalizing marijuana and go Austin for banning no knock warrants. That's my good news of the day, Nick.

Nick Hodge: Well, you know me, I'm just going to knock it right back down.

Gerardo Del Real: Here we go.

Nick Hodge: Wait. So even though it's inside a Tejas, they can just supersede state law at the jurisdictional level, at a city level. How does that work? You might not know.

Gerardo Del Real: Yeah. So the City PD reports to Austin City Council. Right? And so in Austin yes, they will not enforce any offenses. And look, let me be honest. I go to music festivals every year out here, right? I love Austin City Limits. Three-day music festivals. We see over a hundred different acts. The cops walk around, everybody smokes weed. This has been the case for years, right? There's a joke in Austin where people ask, what's going to change now that marijuana's decriminalized? Nothing. People have been spoken openly up here for a long time. But it is good to have it on the books. Right? This makes it to where a police officer can't just selectively decide to book you on a marijuana charge or search your vehicle because they smelled marijuana and then say that's the pretense to search the vehicle, when most of the time that's not the case either. But yeah. There's no enforcement here in the city, in the city by city police officers. Not allowed.

Nick Hodge: Let me tell you where there is enforcement. I'll take it back to my hometown in Maryland. I saw an article this week about a high school girl, black girl, 18 years old. Was selling gummies. You mentioned gummies. That's what reminded me. Was selling gummies at school. Had a, I don't know, a pound and a half of gummies or something, which isn't a pound and a half of weed, because gummies aren't weed.

Gerardo Del Real: Correct.

Nick Hodge: But they had THC in the gummies. And some kid in the school told an administrator that she was selling these gummies and they brought the dogs. The Cecil County, that's the county where I grew up in ... and man, Cecil County sheriffs are a whole podcast onto to themselves. But Cecil County sheriffs show up, arrest the girl, take all the gummies. Charge her with seven counts that carry 20 years a piece and she's 18 years old. So here you have a high school kid, selling gummies in a state where it's decriminalized, facing whatever 20 times seven is, 140 years in prison for some marijuana gummies.

Gerardo Del Real: It's insane.

Nick Hodge: And to bring it back to the markets, some people were calling for a bottom in marijuana stocks a couple of months ago. I would inform you that the MSOS Marijuana ETF hit new 52-week lows today.

Wins, Losses & Private Placements

Gerardo Del Real: Wow. We talk about wins every week here. We like to highlight wins because who the hell doesn't like celebrating wins. I like celebrating good things, not bad things. And so on the good front, Patriot Battery Metals had a quiet week. It's traded sideways all week. They're in the midst of getting final approval for a financing that was taken down by a small group of investors. Fully subscribed, no warrant. They did it at over C$13 a share, flowthrough. That gives them a war chest to continue to drill. I say all that to say that, the quiet period is likely over by the time you watch this, as the financing should close, I think, here in the next week. And once it closes, the company will start releasing assays from the drill program, which now sees three rigs turning. And I was told that the C$20 million will be used for the next drill program. All of it going in the ground. It's going to be a five rig program that I think's really going to bust the doors open on the potential scale of this lithium district. So yay, Patriot Battery Metals.

On the 52-week low front, Magna Gold, you're breaking my heart, kid. It's been an absolute fucking shit show. And so let me be absolutely clear. I am a big fan of the CEO, Arturo Bonillas. The company misstepped. Well, the company executed beautifully up until two quarters ago. It missed on its geologic model. It expected to find 7000 ounces of gold but the rock was barren. You can do the math. 7000 times $1700, which is what it was selling at the time. It's quite a hit to the balance sheet. It appears the company was a bit overextended on its liabilities. The market had offered a financing, saw it vulnerable, and decided to prey on it.

And it's gone from, this was a C$1.85 cents stock at one point, that then became a C$1.20 stock on a pullback, which was healthy. Then became an C$0.80 stock, which was normal because the entire sector was consolidating. Then became a C$0.50 cent stock. And that's around the time they were looking to get this financing thing done. And then it was shorted down to C$0.40 cents, then C$0.35 cents. And this week it hit a 52-week low of C$0.15. A C$20 million market cap for a mine that's going to produce the amount of gold ounce it says it's going to produce profitably next year, because they got the model figured out now, is absolute insanity. And I am curious to see how the company works or if it works its way out of this. Because there's no way that there's not a suitor at these levels to come in and buy it at a 100% premium, C$0.40 cents. Right?

And then there were whispers that a deal was on the table. Not sure if that'll ever lead to anything. Not saying buy Magna Gold. I’m saying it's been a shit show the last couple of quarters. And so, just like we wear our victories on our chest. We gotta own the ones that go the wrong way. Should have taken profits a while back. Lesson learned. And hopefully it's a lesson for people out there and hopefully people didn't lose on that one if you weren't in it. But no look, we got in early. We got into C$0.30 cents, rode it all the way up, and it was a round trip, which happens in this business. So I think it's good to highlight those every now and then and explain the reasons why something like that can happen and how quickly it can happen. And again, this is a mine. It's a company that I think fully deserves a C$100 million market cap. Doesn't matter what Gerardo Del Real thinks on this one. It matters what the market thinks it can extract. And it's a couple of pounds of flesh on this one.

Nick Hodge: And there's negative sentiment in the gold space, anyway. We covered gold breaking down. We talked about the sentiment at Beaver Creek last week. But to your credit, and I guess to my credit, as well, and I'll lift you back up.

Gerardo Del Real: Yay.

Nick Hodge: You know… You talk about Patriot Battery Metals, which you got subscribers in at what level?

Gerardo Del Real: C$0.16.

Nick Hodge: Right. And so that goes to C$7.00. And that pays for more than a couple of Magnas. And so I just want to talk about private placements for a second because it relates to a couple of things. Earlier I said that I was 70% speculative and 30% safe because I was young, but also because we have access to private placements. So those 70% speculative positions that I'm in, that's not all bought in the open market.

Gerardo Del Real: Sure.

Nick Hodge: The bulk of that is private placement holdings. And it's because of the network that we have and the deals that we get to see and vet and participate in, that we're comfortable holding more speculative positions than safe positions. And also because of the return that they've generated. If I look at last year's closed positions in my private placement newsletter, the average gain, average, was 100% on closed positions. Did we have some 60% and 70% losers? Yeah we did. But did we have multiple multiple-hundred-percent winners? Yes. We had multiple multiple-hundred-percent winners that paid for all those losers. Right?

Gerardo Del Real: Yeah.

Nick Hodge: And so that's the benefit of investing in that way. And it's one of the things I've tried to tell people. We’ve talked about checking the box and participating in the private placements. That really would behoove you to get on that, I would say, "tip," that's a slang word, to get on that style of investing, if you haven't already. And the other thing that reminded me was I was watching a presentation or an interview this week where a Arash Adnani from, well, Blender Media, but also privateplacements.com, which was a smart URL buy, was interviewing Rick Rule and Doug Casey. And they were saying the same thing that I just told you.

A couple of 1000% winners, even one multiple 1000% winner, pays for a bunch of losers. And then I got to toot my own horn for a second. One of the questions that they asked Doug was where do you source private placements from? We were just talking about networks or at least I was, and he says, well, "I got a couple of guys that I get private placements from. One is Marin Katsura.” And he didn't remember my whole name, but that's good enough. Doug's getting old. He said the other one is "a chap named Hodge that I get my news from.”

Gerardo Del Real: A chap named Hodge!

Nick Hodge: I'll be a chap named Hodge. So to be able to get in those deals early is one way to invest. And so that's how I think you and certainly I have been able to pad our accounts, to build that buffer that we feel protected from recessions, et cetera. So anyway, all that to say, if you don't invest in private placements, you should think about doing so and at least learn more about them, either through me or you or just some general reading or whatever.

Gerardo Del Real: How long have you had your prior placement service, Nick?

Nick Hodge: Oh man. I think it was 2015 that it was formed formally. Yeah.

Gerardo Del Real: So people did this before 2016? The private placement business model wasn't invented in 2016?

Nick Hodge: No, it's been around for a bit and a lot of folks do it. And more and more folks are trying to do it. But, caveat emptor, not everybody has the same network, the level of deals aren't always the same. And like anything else, you got to make sure that the person you're getting them from is astute, is hopefully putting some of their own money on the line and not just feeding you any deal that comes across the desk because there are those characters out there. Now, I will go off on a tangent. There's an entire business model that exists in the newsletter world to pair newsletter writers up with companies that don't do their own due diligence.

Gerardo Del Real: Right.

Nick Hodge: That don't have networks. They go to these meet and greets to meet companies. And most of them are pre-revenue, pre-profit companies that are looking for cheap capital. And there's no cheaper source of capital than getting some schlep newsletter writer to put out your deal to his flock of sheep. And so there's a lot of those services out there. And fortunately, some of them are starting to go away. The newsletter industry itself has been consolidating for the past year or two. It'll be two years next month since we started doing our own thing. And there's been an implosion. What analogy do I want? Let's do the cream this time. As the cream rises to the top ...

Gerardo Del Real: Love the cream. Well, I'll toot your own horn for you. Again, Mr. Hodge, you are the person that I get the prior placement business model from ... If any of you motherfuckers out there are wondering ... That's all I got. Anything else Mr. Hodge:?

Nick Hodge: Do I want to tell you about the spoon. Let me tell you about the spoon. So ...

Gerardo Del Real: I want to hear about the spoon.

Nick Hodge: I know we're getting long in the tooth, but it's been a while since we've done a random story.

Gerardo Del Real: It has been, and I love them.

Nick Hodge: An off the wall one. So Kirin, K-I-R-I-N, which is a Japanese company. You may have seen their beer at a sushi joint or something, but they're a big conglomerate holding company. And they've invented a spoon and a bowl that makes your food taste saltier by running an electrical current through it, with the materials they make the bowl and the spoon out of. So you'll know that one of the staples in Japanese cuisine is soy sauce, right?

Gerardo Del Real: Sure.

Nick Hodge: And that stuff is extra salty. You should be buying the low sodium soy sauce. It's a problem in Japan because they consume, I forget the exact number. I think the article said like 30% more salt than the rest of the world. So if you can have a bowl and a spoon that makes your food taste saltier, then you don't have to dump as much salt or soy sauce on it. And I just think about, well, I don't want to classify all baby boomers, but I think about my dad, right? He sits down for a meal. It doesn't matter where it's at, the fanciest restaurant or at the table. Before he even tastes it, right? He doesn't know if the food is salty enough or not. He just goes right for the salt and puts it on there. The food could have already been salty. He doesn't care. He's still going for the salt.

Gerardo Del Real: I knew that with Cholula by the way. So ...

Nick Hodge: Anyway, I thought the spoon and the bowl that makes your food taste saltier was if not a novelty, maybe could have some traction here going forward. And if not, was at least an interesting story.

Gerardo Del Real: I love it. I love it. That was 187, folks. I wish everyone the sweetest of weeks. Have an awesome week. Make it count, make some memories. Tell your people you love them, if you love them. And be kind to each other, everybody. Say something nice to the people, Nick.

Nick Hodge: See ya.