Bizarro World Podcast,
with Nick and Gerardo
March 21, 2022
Gold is up on the Fed hike and the looming slowdown in economic growth. Housing prices are surging.
We dive into where, and how, to allocate capital now. It includes precious metals, safe dividend stocks, and commodities like lithium and uranium.
We dispel some misinformation about lithium, including why recycling and new battery technologies won't save us.
And we answer a question we wish we didn't have to ask: How is Hunter Biden's laptop like vaccine efficacy rates?
The answer is precisely why the time for better political discourse and leadership is coming.
Table of Contents
1:38 Gold Up on Fed Hike, Looming Growth Slowdown
7:30 Surging Real Estate Prices
11:30 Where (and how) to Allocate Capital Now
22:15 Long Lithium Miners: Why Lithium Recycling and New Battery Technologies Won't Save Us
31:10 Multiple Ways to Allocate to Precious Metals & Commodities
37:08 How Hunter Biden's Laptop Is Like Vaccine Efficacy Rates
41:20 The Time for Better Political Discourse and Better Leadership Is Coming
Gerardo Del Real: The Fed hiked 25 basis points. You knew that because we told you this about a month ago. Gold went down. No, it didn't. We told you that about a month ago. We're going to talk uranium. We're going to talk lithium recycling abd battery technologies. We're going to talk about DC doing what DC does best, baby, other than being corrupt, which is lose money, this time on sports gambling.
We're going to ask Nick how Hunter Biden is like vaccine efficacy rates. A lot to get to, as always. I am Gerardo Del Real, with my co-host, Mr. Nick Hodge. This is episode 162 of our therapy session, otherwise known as Bizarro World. How are you, Nick? You want to buy a gold mine, said the movie chain company?
Nick Hodge: Only if I can provide them my expertise in providing liquidity and fleecing retail investors through share offerings, then sure. Let's do it.
Gerardo Del Real: I feel like I'm still in the metaverse.
Nick Hodge: That was a great episode last week. There's a lot of crazy shit going on. It's a bizarro world, and whether it was talking about uranium in the face of the war, or talking about the shutdown of the nickel trading on the LME, I think that podcast resonated with people. Its been one of the most viewed so far, and things aren't any less crazy this week, so excited to talk about it.
Gold Up on Fed Hike, Looming Growth Slowdown
Gerardo Del Real: Let's get right into it. The Fed did what we said the Fed would do because the Fed told us a few weeks ago. It telegraphed what it was going to do to make sure that the markets reacted in a positive fashion. So, the Fed hiked 25 basis points. It was hilarious watching Bloomberg and CNBC be confused about why the markets rallied.
There were six boxes on the television screen, and they each were playing who can be the most confused whack-a-mole on the television screen with the boxes, so it was one of the most bizarre 30 minutes of mainstream media television, as far as financial shows, that I've seen in quite some time because nobody other than the guest, Peter Boockvar, who I follow on Twitter, and we've spoken at conferences together in New Orleans.
He's someone I think everybody should follow, but he was the only one that was able to bring some sort of practical rationale and logic as to why the market was reacting the way the market reacted. It was not a surprise on my end, anyway, to see the market rally the way it did it. It wasn't a surprise to me to see gold rally the way that it did, and I think it's following through very, very well.
You mentioned last week's episode being one of the most viewed ones. It also should have been profitable for y'all, if y'all would've taken some notes on the free advice that we were giving last week. We told you the uranium dip was one that you should be buying. Big news in the uranium space today. We'll get to that, but your take on the Fed decision? A non-event? A positive event?
Nick Hodge: Same with gold. We had told him that the low $1900s was sort of the new low end of the range and that it was going to bounce up from there. His neck was sweating yesterday. I mean, it had to be, right? He had that ring around the collar when he got home.
That's a tough position to be in, knowing that growth is slowing, knowing that earnings growth are slowing, knowing that you're completely behind the eight ball on inflation and called it wrong for an entire year, knowing that inflation is several times your target rate, and knowing that what you're doing is likely going to extend further harm on the recovery or any sort of economic growth.
Maybe he doesn't know that. I don't know. I'm not inside his head. Maybe he did think inflation was transitory. It's funny you mentioned the talking heads and the people on TV. I mean, no wonder they were confused. They were the same people that had been saying for 12 or 18 months that inflation was transitory. They were confused then and, of course, they're confused now. So what comes next is the question, right?
Gerardo Del Real: It should be.
Nick Hodge: I was buying more gold. I think I told you via Slack message this week. In fact, right on the screws, and I got to pound my chest again because we were buying GLD at $177, and it was well above $180 until this week, and it went to $177 just for a couple of hours and then right back up, so really nailing the levels of gold.
I don't think that's done yet, rangebound maybe, which we've talked about, but a rangebound is fine if it's a hundred dollars range, which we've also said. Much higher gold price for the people that produce it and the people that have royalties on it. Go pull up charts of the gold royalty companies, for example, and they're looking really good and including one that you and I have a video out about, so we can provide a link to that.
Earning season is over. Earnings growth didn't come in as well as it did late last year, late 2021, and so now we're looking forward to GDP numbers later this month and the next round of S&P earnings, which are going to be some ridiculously nasty comps, right?
Gerardo Del Real: Not the good kind of nasty. Like ugh that was nasty, like the nasty nasty.
Nick Hodge: I was writing today. So, if we had rampant growth last year, we're going to have rancid growth this year.
Gerardo Del Real: Rancid.
Nick Hodge: So, what was I doing? I sold some more mainstream stocks yesterday in my personal account. I sold IBM. I was selling things that don't jingle jangle because we had a nice bounce. Like you were saying, stocks went up, I wasn't buying that. Hopefully, the people on TV weren't buying that. That was something to sell non-commodity equities into, so that's what I did, and we've been doing that in the letter.
Long gold and gold stocks and commodities continue to look good, including copper. We've been telling you that and that's not going away. So, Elon had himself a hell of a week on Twitter, but one of the things he said, we should talk about Elona. That was funny.
One of the things he said was that you should be investing in physical things -- and I had one of my bang my head on the desk moments --- because if there is one thing I've been talking about for years it's how there was a shift underway to things that are real, away from things that weren't real, away from monetizing people as free users on tech stocks, for example, like Twitter and Facebook do and towards physical things. Exactly what he said, things that come out of the ground, things that you need to build, hard assets, and we're in the thick of that now, so that's what it is. If you haven't allowed that to register in your brain yet, you better soon because S&P's down 10% for the year.
Surging Real Estate Prices
Gerardo Del Real: Housing prices. We talked a bit off air, right? I just read an article this morning here in Williamson County, which is the county where I have two homes, and the chief county appraiser is estimating, and these will be out in the next couple of weeks here in Texas, but that housing prices in the county will appreciate an average of 50% year on year, 50%.
So, for people that have been sitting on cash that have done it the traditional fashion that have thought that we just wait for rates to come back up or things to pull back, and then they'll buy, you just missed a 50% move in a year. I think Washington State where you're at, Nick, you just went through a 60% rise. Is that accurate?
Nick Hodge: That's what the New York Times was writing about in an article a couple of weeks ago. The title of the article was "The Next Affordable City Is Already Too Expensive." I believe they cited a 60% increase in residential homes in two years. I was just in Bozeman the other week, as you know and we talked about, and they were telling me, it was a real estate thing I was at, and they were telling me the average price of a home in downtown Bozeman is $800,000.
Gerardo Del Real: Average.
Nick Hodge: Yeah.
Gerardo Del Real: Meaning mid.
Nick Hodge: That's right.
Gerardo Del Real: Right.
Nick Hodge: That's almost twice the national average because I think the nationwide average is $360,000. So, I mean, yeah. Real estate prices going up for all sorts of reasons, flight to low tax jurisdictions. You and I have talked about a lot before and it's certainly benefiting Texas with corporations moving there and people fleeing the coasts to get away from whatever it is, taxes, traffic, overpopulation, crime, just general Fourth Turning migration as millennials approach that window where you got four million of them turning 30 for the next four years.
I was just pulling up my thing here because I just got my taxes assessment, as well. I don't think it says the percentage here but it's up significantly. So, we just bought a second house, as well, and it's worth noting that.
Gerardo Del Real: Congrats.
Nick Hodge: Thank you. It's almost like a rotation of assets. I've done well in the stock market for a decade. There's been a 10-year bull market in stocks, and I know real estate prices have been going up, but they don't have the inherent volatility that equity markets do. Even big multi-billion dollar or trillion-dollar stocks at this point move very much on an annual basis. I was watching somebody from, I think it was Oakcliff Capital, the other week, giving a presentation about how even the largest equities in the market have volatility throughout the year like Google, he was saying, will fluctuate 50% in price. So if you're coming out of that 10-year bull market and you have significant gains, significant capital, it makes sense to rotate those, especially as millennials get a little bit older and don't want as much volatility, into assets that are a little bit more stable. So, you got the investor class in there trying to buy houses. You got the millennials in there trying to buy houses.
Increasingly, you've got the REITs and the private equity in there trying to buy houses. In that presentation I gave the other wee, in the research I was doing for it, I learned that at one point in 2021, nearly 20% of the offers being put on houses were coming from companies, so that's one in five houses. I mean, people need a place to live, and when you've printed this much money and when you got a segment of the population in millennials, I'm talking about, that's so big, bigger than the cohort before them who aren't leaving their houses because they're living longer. I mean, what are you going to do? Sorry, what were you going to say?
Where (and how) to Allocate Capital Now
Gerardo Del Real: No, that's the perfect segue. That was my point. Right? If you're looking for capital rotation, sector rotation, and where to allocate capital now, there are still sectors that present compelling value. Sitting and waiting is not a strategy at this point, and we've been hammering this point home since we started this podcast. We talked in real-time about your move to Washington State. We talked about the reasons why our family decided to move to Texas.
We did this three years ago when we first started this podcast, so when I look at the uranium sector, when I look at the Department of Energy today, pledging to accelerate aid for current and future US nuclear reactors with global uranium and enriched fuel supplies under threat, this isn't a new theme. It's not a coincidence that the uranium equities were up some 15, 20% across the board. We told you last week you should be buying the dip.
I don't want to make the episode about, I told you so. I want to make this episode about, what can you do next if you already missed out on the 150% in real estate appreciation over the past four or five years. What can you do if you missed out on the stock market because it hasn't made sense for so long, yet it still keeps going up. What can you do if you're looking at all of this, you're on a limited budget, but you have some capital to allocate that you want to work for you as you get older so that you don't have to work as hard or work at all. There are sectors that still present compelling value. The uranium space is one to look at.
The lithium space. I know we're going to talk about lithium and battery recycling and how that is going to play a minor role in the future, but it's not going to be consequential anytime soon. That's a megatrend. There are so many sectors that can still be profitable for people out there. Write a note, people. Send us a note, not that we know it all, not that we get all the calls right, but there's a reason why we've done relatively well in bull markets or bear markets, whether it's the gold space, the uranium space, through private placements, through our two companies, through our real estate holdings. I mean, again, not an episode of I told you so, an episode of there is a method to some of the madness and then to some of the bizarro stuff that we talk about on here.
Nick Hodge: Yeah. I mean, facts are facts, and sometimes you got to espouse your track record to convey whatever, you're ethos, that you know what you're talking about. My retirement safe money's not down for the year. I was just looking today. My IRA is up 3% for the year, for example. We talked last week about how many hedge funds were down 2% for the year, and that's not uranium and lithium and speculative equities. That's getting the fuck out of tech stocks six months ago, five months ago, going to a little bit of cash, and then buying high-quality dividend stocks in commodities and staples.
I have a 16 stock portfolio that's outperforming the entire market. And it's not in a lot of things, except for large-cap mining producers and sector ETFs. So, there's a way to do this profitably without trading, without taking on a lot of risk, and without touching your portfolio all the time. I'm convinced, and this is where I'm going to try to make my mark in coming months and years is the replacement of financial advisors. If you haven't realized that on your own, I think you will as you mature. I'm old enough to remember looking at my parents' financial statements before I knew a lot and them wondering why their account was going down. This is going back 10 years, probably on the tail end of the great financial crisis, but wondering why they were paying TD a fee to lose their money.
The same as my experiment last year, I paid them 1% of my assets to not match the S&P. I mean, that's absolutely crazy. I know that's not a big thing like the S&P went up 27% and they delivered 25%, but when you're paying somebody a percentage of your assets and you can just own one fund that tracks the S&P, and you could have beat that financial advisor. There's an educational component that is hopefully starting to evolve here in the US when it comes to personal finance and investments. They don't teach it in school. We all know we have to learn this all on our own. Unfortunately for many people who don't learn it on their own or aren't in the industry or tangential industry related to investments where they can learn. Teachers, doctors, people that actually help people, unlike me, they don't have time to, not that I don't help people. I help people with their investments, but I'm not out there suturing wounds and healing people. They don't have time to manage their investments, and those are the people who I am trying to help. Because if you're out there 40, 50, 60 hours a week, whatever, teaching kids and triaging in the hospital or whatever, you should be able to invest such that you at least match the market without having to give somebody a percentage of your assets.
We could talk about a lot of things, how that system is set up, how 401ks came to be, the regulatory regime that shuffles people into financial advisors and managed funds with high expense ratios, and how your financial advisor has beers with a guy who runs that fund, like all that sort of shit. That's coming to an end. It's part of the Fourth Turning. It's part of what we see in the markets every day, the Fed governors having to resign because they're insider trading on the asset purchases that they know about. Crazy-ass Nancy Pelosi, did you see her this week? Crazy-ass Nancy Pelosi's doing...
Gerardo Del Real: She recited a poem by Bono today on St. Patty's. Happy St. Patty's Day, by the way, everybody. By the time you get this, it'll have passed, but to all my Irish friends out there, Happy St. Patty's Day. She came out, and she recited a poem by Bono, so how can you not like old chatty Nancy.
Nick Hodge: On the other side, Kelly Loeffler, because I like to give it to both sides, Look. The time, I think, of the people is coming. We've said this a million ways from Sunday, but you know, that reverberation away from shutting down the LME to bail out the aristocracy, that's, I think, going to be old hat in the next 10 years. But what that means is the empowering of the individual is what I'm trying to say. So, you'll be in a better position to manage your own money because there'll be more transparency and accountability and, hopefully at some point, there's going to be a framework where you're not run down the cattle chute to a financial advisor to give them a percentage of your assets to not make you as much money as they should be.
Gerardo Del Real: Absolutely agree with all of that. I was smiling halfway through because you took my next question and comment right out from under me. It was going to be about how you pulled your money from the group that was managing it at just the right time before you lost your ass on some of that, and then manage to reallocate a portion of it profitably. Look, to be absolutely clear for those of you maybe that aren't familiar with Nick and I, maybe stumbled onto this podcast and are listening saying, wow, these guys really are great financial advisors. Look how well they're doing. We are not giving financial advice nor are we financial advisors. We are talking to you about opportunities that we see and things that we are doing with our own capital and providing ideas that we believe have the potential to make us money.
So, just to be absolutely clear, we're not looking to take a fee to manage your money. Quite the contrary, have enough going on between the multiple companies and the real estate and the family and the other things that we're building out, but man, there is nothing like enabling the enablers, as I like to call it. You mentioned the people that do great work for society, the doctors, the nurses, the good police officers, the fire department, the firefighters, our military. If somehow we can help provide an idea or two that helps provide some financial literacy or some financial independence, then yeah, that feels awesome. That's something that I think both you and I have a passion for.
It's great to have a platform to be able to kind of share our thoughts, our therapy session about the world and how it's changing and how we're hopefully helping some people profit from those changes because it is not going to slow down. This volatility and this turning that's happening. It's going to intensify, and you're either going to come out of that very well off, better off, or you are going to lose your ass. And not just negative money. I'm talking about missed opportunity money because the cost value of time is something that, as I get a little bit older and a little tiny bit more mature, I'm appreciating time a whole lot more than I used to in the past. I know some of that comes with a better financial profile, and I have the luxury to be able to do that now where in the past that wasn't always the case, but it's important that we help enable the enablers and the people that do great work out there.
At the very least, all we can do is provide some research, provide some insights, and answer some questions. Have them write in, happy to jump on a call, happy to answer an email anytime.
Nick Hodge: Time, money, and health, you can have two.
Gerardo Del Real: That's it. Let's get right into uranium, lithium, energy, and megatrends that are only intensifying. We're talking profit opportunities in this episode. I was going to joke that my IRAs Patriot Battery Metals (CSE: PMET)(OTC: PMETF). Y'all shouldn't do that.
Nick Hodge: No, don't do that.
Gerardo Del Real: It's not, but... You know I'm wired higher risk, higher reward than most people. It is a significant holding for me, and if it plays out the way I think it's going to play out, it'll end up probably surpassing the retirement assets that I have in place. Jokes aside, let's talk lithium and uranium.
Long Lithium Miners: Why Lithium Recycling and New Battery Technologies Won't Save Us
Gerardo: Nick, I know you wanted to talk about the so-called experts and how they write articles and they write stories and editorials about how this lithium megatrend really is one that's going to start waning here soon and that this is a trend that isn't sustainable, and all we're going to have to do is just recycle a little bit and then, ta-da, everything's going to be all right. Do you care to expound on that a little bit?
Nick Hodge: Yeah, I do want to talk about lithium for a second as one who's had a close eye on the space for about half a decade or so, and I'm going to go through it for a second. So, Lithium X from 15 cents to $2.60, was bought by the Chinese. Millennial Lithium at 60 cents erupted into a bidding war, finally taken out this year for over $4 a share. Advantage Lithium, which you were also in, ended up getting bought by Orocobre, and I held my Orocobre shares, and they've done absolutely fantastic. Then I funded Critical Elements (TSX-V: CRE)(OTC: CRECF) at 30 cents and watched that run to nearly $2. So a bit of track record in lithium companies there and understanding the lithium space and why it's important and have been doing this for a little bit. Wrote a book about investing in renewable energy in 2008, wrote a book about energy investing in 2012. So, have the knowledge base there to separate the wheat from the chaff. Wrote about Tesla in that book, for example. Bought BYD in 2008 when Buffet was. So, over the years, I've seen all these different things, and you've heard me talk about some of these asinine miracle puppy rainbow technologies, like solar roads and wave energy and all the things that I cite as tropes about shit that's never going to work. That's taking your eye off the ball.
Those aren't really move the needle solutions. What is real move the needle solution is baseload power that doesn't spew carbon into the air, perhaps carbon capture and storage, which I think we're going to make significant technological advancements on where we can just suck the shit out of the air. That seems like the most logical conclusion. Call me crazy. Then switching our fleet of transportation away from internal combustion engines to centralized combustion or non-combustion engines if they're nuclear power plants or solar or wind. And this transition has been underway for a long time. Tesla's been selling cars for 10 years. They have a trillion-dollar market cap.
All the major automakers are now on board from Ford (NYSE: F), which has over 100,000 reservations for its Lightning to GM (NYSE: GM), which has an electric Hummer and just unveiled the electric Silverado to the Volkswagens and the Porsches of the world. They've all committed to going electric. They have already committed to the technologies they're going to use. So whether it's Nikola or Tesla or Ford or GM or Volkswagen or Volvo or Fiat or whatever the fuck it is, they're using lithium batteries. And they've decided on that. And they're building out the supply chains to do that.
First of all, the supply for the batteries, the gigafactories. You've got Gigafactory being built in Texas. They're already built and announcements for other ones in Europe and other places are under construction. Look, the inertia is already there like the companies have decided on the lithium-ion battery, and that's what we're using. We can tinker with the chemistry of that, try to reduce the amount of nickel or cobalt or manganese or whatever it is that's in that battery, but we're not going to some black box technology that's going to emerge this year or next year or the year after that because too much capital has been sunk into building out the supply chains for the lithium. And now we're going down the supply chain.
We build up these gigafactories, and we've decided that we're going to electrify our fleets and our cars, and it's going to be with a lithium battery. Now we're to, where's the lithium supply going to come from the phase of it. That's sort of what I just mentioned. We've seen some of these companies get taken out, so that's the first part.
Gerardo Del Real: I love that they asked that question at the end of the decision, like everybody got together, decided that's the battery we're going to invest in, invested billions, hundreds of billions of dollars in infrastructure, and then said...
Nick Hodge: Oh, shit!
Gerardo Del Real: So, where are we getting the lithium from, guys? Oh, I thought you had the lithium. I thought you had the... You don't fucking have the lithium either? Oh shit!
Nick Hodge: Call the guy.
Gerardo Del Real: Write the checks. There you go.
Nick Hodge: You got to call the guy. No, that's sort of what you and I saw years ago. I mean, that just was my natural thought process when I saw this stuff. Like, we're going to build solar panels and batteries and wind turbines... and I thought to myself, that's great. Where the fuck are you going to get the steel and the rare earths? All that shit's going to come out of the ground.
That's what I meant last week when I said we found with a flashlight what now everyone sees with a spotlight. It was clear as day, 10,000% ago. So, now we're here. That was the first part. It's lithium, right? It's not vanadium. It's not whatever it is, some other black box technology. Then the second part was, I see these articles about how we don't have to mine. We're going to be able to invest in lithium recycling, and that is great. We should recycle all the things that we can, all the paper, cardboard, batteries and everything else that we can recycle. I was in elementary school in the '90s. The Rs were drilled into my head, reduce, reuse, recycle, the triangle, the numbers, all the things.
Gerardo Del Real: We should do all that with politicians, too.
Nick Hodge: Yes.
Gerardo Del Real: Reduce, reuse, recycle.
Nick Hodge: Just reduce actually. What was I talking about? So, we're not going to recycle the amount of lithium that we need. It's not even close to making a dent in it. First of all, the batteries have a long life cycle. So the batteries that are going in cars now are going to last 5, 10, 15, 20 years, whatever it is. Where are you getting the batteries to recycle the lithium and how are you going to create more lithium from a recycling process? It doesn't make any sense. So, to offer investment advice, espousing this as taking over the lithium sector is deceitful at best and fraudulent at worst. So, it's lithium and we're going to have to mine it was the point of that tirade there. We got lithium companies like I had lithium companies before. We got new ones now.
Gerardo Del Real: And uranium companies.
Nick Hodge: Exactly.
Gerardo Del Real: And new ones now. By the way, speaking of making money, we told you last week about Labrador Uranium (CSE: LUR) when it was at 85 cents, and I said, Hey, we wrote a check at much lower prices, then we wrote another check together, Nick, at higher prices. Even at 85 cents last week, we were saying, it's still pretty damn good speculation. I can see a market cap today, this was last week, which justifies a $1.65, $1.70, $2.00 share price. Hey, a couple of days later, one of the better-known research firms comes out with a report and says, fuck, us, too. Target price $1.65. I think you're going to see $2 sooner rather than later. It closed up some eight or nine percent here in the last couple of days at a $1.05, $1.06, $1.07. That one is likely headed higher, folks. That's your free stock pick for the podcast, getting your money's worth again on this one.
Lithium. Uranium. These are trends that are so clear, with supply/demand fundamentals that are so favorable, that if you just spend a tiny amount of time learning about share structures and how to vet management teams and assets, or you know someone that can do that for you... you can do very, very, very well in these types of bull markets.
What we're going to see in the uranium space, we're just getting going. You could have bought Uranium Energy (NYSE: UEC) for 50 cents just two years ago. It's a $4.50 company that, in a year or two years, probably going to be a $15 company, as crazy as that sounds to people.
Nick Hodge: I Saw Mr. Scott Melbye standing next to Liz Chaney in a tweet today.
Multiple Ways to Allocate to Precious Metals & Commodities
Gerardo Del Real: Come on, you can't make this stuff up. So, there are so many different exciting ways to make some money in the space, in multiple spaces. Just pay a little attention to whether the Fed hikes seven times, as it said it is going to, is non-consequential for these sectors and these trends. It doesn't matter. You shouldn't stay up late at night wondering what's going to happen if the Fed hikes nine times or what's going to happen if the Fed only hikes four times or three times or two times, like I think might happen, but we'll see. At the end of the day, it really won't matter if you're allocating capital appropriately and you do so in a way that's in line with your risk tolerance, your timeline, and just the expected returns from that capital.
So, we started by talking about the Fed and the hike and, at the end of the day, even if they hike seven times and they get it to just under two and a half, you're still negative real rates because of the inflation rate being so high and being so crazy. Until they get that under control, those hikes aren't consequential.
It's what the gold market sniffed out. Like, oh, that's your worst-case scenario two and a half percent, two-point whatever the number was? Oh, okay. We're going to stay negative.
If I'm gold, I go higher, which is exactly what happened. Gold went higher. So, for those of you confused about why gold moved up, it's because the strategy, the worst-case scenario, the floor has been laid out by Mr. Powell and his friends, and if that's the worst-case scenario, that is a very, very favorable gold scenario.
Again, the equities have lagged for the last year-and-a-half. They're starting to percolate. I joked about my spidey sense tingling with you yesterday about another company. That is not an investment strategy, but you better get that list and you better check it twice, and you better get out there and add some gold exposure to your portfolio because I sense that 2022, 2023 and 2024 are going to be banner years for the gold stocks.
Nick Hodge: Multiple ways to do it, too, which is important, and I meant to add this to something I was just saying, and I didn't. You mentioned your retirement plan, and that's fine. So, there's multiple ways to skin a cat, which comes up on this podcast a lot. So, this week I recorded a video report. It was just about my retirement portfolio, and it was about the percent allocations to asset classes or sector classes of the market. It was like 30% cash, 22% bonds, 15% large dividend-paying companies, 5% international equities, 2% gold.
And what I was saying is that's the retirement portfolio. That 2% gold is just in the SPDR Gold Fund (NYSE: GLD), which I've said on this podcast and which I mentioned earlier. But that doesn't mean that the safe's not loaded down with physical gold. That's separate from the percentage in my IRA. That gold in the safe is for if we go Ukraine or something like that. That's like end of day stuff. I don't anticipate ever taking that gold out of the safe except to give it to my kids. I mean, hopefully, it stays there forever, but the allocations...
Gerardo Del Real: For those of you that get bright ideas, there are bullets next to [crosstalk 00:34:25].
Nick Hodge: Next to my bed too, so I can get them faster.
Gerardo Del Real: That's your disclaimer if you get brave, as you will, Mr.. Hodge. It wasn't an invitation.
Nick Hodge: The allocations in the portfolio can change, and you can reflect those in different ways is what I wanted to say. So. Where I might buy GDX and GLD in Foundational Profits, I'm modeling that as a long-term retirement macro-allocation strategy, but that doesn't mean that in Junior Resource Trader or in Hodge Family Office, we don't own gold companies with market caps less than $50 million, so that's a very different thing. It's still exposure to gold, but I guess I'm saying there's something for everyone. If you're risk-averse and you don't want to be in tiny gold penny stocks, you don't have to be. You can be in Newmont (NYSE: NEM) and Barrick (NYSE: GOLD) and Franco (NYSE: FNV) and GLD. Then once you're established and you've got the portfolios and allocations down, then you can take the shots. Or you can take them right upfront. I mean, I'm not one to tell you what to do with your money. But what I'm saying is, we offer various approaches and you should be evaluating various approaches to see what's right for you, what's comfortable for you, and what's best for your situation.
When you say we're not financial advisors, that's what's tough for at least me. Because if I'm writing something out to a couple of thousand people, I don't know what all their bottom lines are and asset allocation strategies and risk tolerances. I'm writing about what I've been doing with my money, and so I try to frame that as such every time I do. That's good for consumers, for clients, because there are different strategies that we offer that they can browse and put to use.
Gerardo Del Real: Well said, sir., I think Donald Trump, Jr. might watch Bizarro World.
Nick Hodge: Because he wants to nominate his dad like you said?
Gerardo Del Real: He said it three days after I said it. I mean, come on, I can't make this up. You know when we record everybody, the episode's time stamped. Go listen to last week's episode. I said, jokingly, half-jokingly, maybe we should bring Donald Trump back and make him an ambassador and send him over to negotiate because then they'll know that we're not fucking around. Three days later, Donald Trump, Jr. says you should send my dad over there to Brussels to negotiate peace. He could get it done. So, Donny, if you're listening, I think you're just a spoiled little fuck, but hi.
Nick Hodge: You know, words have powers.
How Hunter Biden's Laptop Is Like Vaccine Efficacy Rates
Gerardo Del Real: Powerful. Agreed. So, we gave old Donny Jr. a go fuck off. So, I have to ask you because, again, we like to give it to both sides here. How is Hunter Biden's laptop like vaccine efficacy rates?
Nick Hodge: So, a couple of things in the past couple of weeks and we've talked about them tangentially, but I wanted to hit him with a hammer real quick. COVID is gone, except it's not. Shenzhen's locked down. I think China reported the highest daily case rates since this whole thing began. I'm pretty sure South Korea reported the highest daily deaths yesterday since COVID began. I'm not sure if it's a new strain or not. I haven't got that far. But COVID is out of the headlines.
Let me start backward with the vaccines because you've got these new efficacy rates coming out, especially for kids, which I'm poignantly interested in, saying that, for five to 11-year-olds, this Pfizer vaccine was only less than a third effective at preventing infection.
Gerardo Del Real: 12%.
Nick Hodge: Crazy, right? So, that wasn't something that was blared from the media, I don't think. It was something that left the headlines pretty quick, and it's something that, and this is the point about Hunter Biden, it's something that you weren't allowed to talk about. It's something that you were getting banned from social media for. We had a whole Spotify thing with Joe Rogan. We had YouTube banners and Twitter banners: This is COVID information. Read carefully or whatever.
We had de-platforming. We had canceling. We had all that stuff. And then the actual data comes out, oh, that vaccine was only 12% effective for kids. Whoops. But you weren't allowed to talk about that in real-time. You weren't allowed to question it in real-time. It's similar to Hunter Biden because, and I don't know all the details of this case because, quite frankly, I don't give a fuck.
What I do know is that you weren't allowed to talk about Hunter Biden during the election. The New York Post story about Hunter Biden's laptop. You remember, the pictures with him and the whores and with the drugs and stuff? You saw some of those pictures. I know you did. They existed, right? We all knew they existed. We could fucking see the pictures. But you weren't about to write a story about it. You'd get de-platformed. Twitter literally banned the New York Post article. But here we are, over a year into the term, and the New York Times today puts out an article about Hunter Biden, the laptop and how it's real and what was on it and things like that. I think that's just what people are pissed off about, not that I'm a doctor or an expert on Ukraine policy and contractors there, but when I see a picture of someone naked in a hotel room, I know what it is. I know what the fuck that is.
So, the same as when you see people wearing masks and getting vaccinated who are contracting the virus. It's like, wait, you're vaccinated and you got sick. That's not how that's supposed to work. So, you need to be allowed to say that, and the muzzling needs to stop, frankly on both sides. I picked those two examples because they came from the left, but you know, easily on the right, as well. It's fascinating to me that... Take it back to when Trump was in office. I forget what the expose was that was about to get published on him and, the day was about to get published, he just tweeted out, yeah, I did that or whatever. And the journalist was like, I can't believe he just tweeted it out! It's like, yeah, the shit's just like out there in the open, but it's about who you're not allowed to talk about and the things that are taboo to say.
Oftentimes, the things that are most important are the things that you can't talk about. Or, put another way, the saying is, if you want to know who your masters truly are, it's who you're not allowed to offend or who you're not allowed to talk about. You think about Russian propaganda and RT and the things Putin has been saying about Ukraine, and I just wonder how that's any different from you telling me that the vaccine is effective or that the Hunter Biden laptop doesn't exist.
The Time for Better Political Discourse and Better Leadership Is Coming
Gerardo Del Real: We have to get back to a place where we can challenge ideas regardless of who they come from and judge that challenge on the merit of the challenge and the merit of the idea. AOC had a brilliant explanation on Twitter this week about why implementing... I'm no policy expert, but the way it was presented was brilliant about why enacting a no-fly zone puts the US in the middle of and escalates an already tough situation and puts the US at the forefront of what could be a World War, the third World War and how dangerous a precedent that was. I thought that was a well-articulated point. The same AOC, a few days before that, came out and said some shit that I considered dumb as all fucking hell. She wanted a tax, along with Senator Warren, both minds who I have great respect for in certain aspects of their commitment to people and advancing ideas. AOC comes out and says that she wants to help move forward and advance a windfall profits tax on oil companies.
Now, I am a capitalist/libertarian at heart. When I talk about capitalism, I don't believe oil companies making billions should get corporate subsidies, government subsidies from me, the taxpayer. Take that away. I am all for that. Compete, win or die. That's it. That's the way it goes. That's capitalism. That's how it used to be. But I sure in the heck am not for waiting until a business is profitable, has supply/demand fundamentals for whatever reason that are now favorable, and then saying, we're going to change the tax rate and, because you're making so much money, now we're going to go ahead and take a chunk of that. That is government overreach, and I am completely against that.
So again, we can have a conversation where we say AOC is brilliant on this issue. And then we can have another one and say, but man, I think she's got it wrong on this one. And not turn it into a political discourse about why that's a lefty point or a point from the right. Who cares? Who cares?
Let's talk about the idea. Let's talk about the merit of it. And we should all do better at that, I think. I think we'd be a more civil world if we were able to do that subjectively, objectively, and subjectively.
Nick Hodge: Objectively.
Gerardo Del Real: Yeah, and subjectively. You can have your own opinion about an objective take and be honest about that. I have a bias towards AOC because she's young and I think she's brilliant, and I think she missteps sometimes, but I think with time, I think she'll be one of those people that really influences good change in this country through the rule of law, but then she has some moments where I'm just like, no, you're completely wrong on this, so you can believe both things. That's my wrap.
Nick Hodge: The time for discourse is coming. So I was thinking about this recently because we're in a Fourth Turning. Neil Howe actually gave an hour talk this week on Hedgeye that was pretty good. He took questions from the audience, and he was talking about the Turning in the context of Ukraine and in the context of the book, basically, and he was saying that it's taking longer for a couple of reasons that made absolute sense.
It's taking longer for millennials to mature. They were sheltered longer. I'm the oldest. I'm almost 40, and I still haven't entirely come of age, I would tell you. There's 60 million or 70, 75, 80 million behind me who are still coming of age, so it's taking that generational cohort, is what it would be called, longer to reach the point of maturity to challenge the entrenched generations. Then the entrenched generations are truly entrenched, and they're living longer, as well, so it should be the millennials replacing the boomers in positions of leadership, but in some cases, you still have the Silent generation in office, like octogenarians in office, and they're living longer. So, one, term limits, two, they're going to pass away in the next 10 years and they'll have to be replaced.
So, I started thinking about the dearth of leadership. I mean, who are the young politicians that are going to replace them? Can you think of anybody? You mentioned AOC. I think she's smart as well, in some things, like you said. Other things, it's completely batshit crazy. So who are they is what I'm wondering? Who are the 30 to 40-year-old politicians who are going to rise up?
I haven't seen, frankly, any inspirational leadership on either side of the aisle, the Democrats or the Republicans. I'm not sure what I'm talking about, really, what the point of this is, except to say Neil Howe was saying that Biden's not going to run next time. The circles in DC are saying that, basically, he's not going to run. I don't know if that's true or not.
Gerardo Del Real: He's almost 80.
Nick Hodge: That's the word on the street. And then his question was, well, nobody fucking likes Kamala, so who's the leader on that side? Similarly, who's the leader on the other side if Trump is in his 70's. So, I saw this ad, this is where I was going with this, from the Senate race in Arizona. What's the guy's name? Let me get it right. Blake Masters. He's running against Mark Kelly for Senate in Arizona.
He's a younger guy, but he comes from the Peter Thiel camp. He's from Peter Thiel's circle, basically. So, I watched his video of his elevator pitch, basically, and it made a lot of a sense. I can see how it resonates with a lot of people about how some of the stuff I just said, you're not allowed to talk about things, you're not allowed to challenge.
The internet was supposed to enable freedom, and they're using it to limit freedoms. Obviously inflation and wages, he was talking about how you can't raise a family on sometimes even two salaries. He made a lot of sense. You should go watch it, but then he throws in the wall. He's like, we've got to complete the wall, then something that wasn't related to the wall.
I was like, well, you lost me. When you bring up the wall, I need to hear we're going to fix immigration in the same sentence or else the wall doesn't make a lot of sense. So, we'll see how he addresses that, but I can see this guy posing a real challenge to Mark Kelly in Arizona. I'm not real familiar with him and I don't know his politics, but it was the best pitch I've seen from a young politician. I guess I'll put it that way,, wall stuff aside.
So, I'm interested to see who it is. And I'm also interested to see how much money you got to make to run for office. Then I was thinking about our situation because there's people who probably do have good ideas, but I'm not leaving my salary to go run for office to put my name in the spotlight, not that I would be a good politician. There's got to be a ton of people like that who have good ideas, but also have good jobs and aren't going to leave that for the reasons you've seen with politicians over the past 10 years. So, I guess just one open-ended question for me is like how that dearth of leadership is going to be filled on the US politician front.
Gerardo Del Real: Yeah. We definitely need new people to step up. We need more experienced people, and I'm not talking about age. Clearly, we have the oldest of the old. It hasn't translated into experience. I'm talking about real-world experience. I can tell you the last election cycle.
Nick Hodge: That's it.
Gerardo Del Real: I was very excited about the potential for Mark Cuban to run for president, and I think Mark Cuban, being the fun human being that I imagine him to be, said, I need to clean some shit up for the next four years before I throw my hat in there officially,. Because I sense that he was about to do so last time, and I think he likely had an honest conversation with his wife and those around him, and I think they probably nudged him and said, well, a little too close to those fun times over here.
Nick Hodge: Skeletons.
Gerardo Del Real: Exactly. Let's let a little bit of that cycle pass, and then we'll talk about it. So, he's someone that I get excited about without knowing all of his positions yet because I see how successful he's been in the business world and how practical he appears to be to me. He's been successful in multiple types of businesses, from being the owner of a basketball team to restaurants, to real estate, to you name it. He's got his hands in so many different things, and he's able to navigate that world successfully, which again, I look at the politicians in power. Now, I look at a Pelosi, I look at a McConnell. I look at these people. I wouldn't trust these people to go get my Starbucks order and bring it back to me today, let alone run the country.
Nick Hodge: Howard Schultz is back running Starbucks (NYSE: SBUX), by the way. Do you know what he came from? Did he make himself?
Gerardo Del Real: Mark Cuban? Yes, early 2000's before the internet, bust. He sold the company for billions of dollars.
Nick Hodge: But his dad didn't give him millions of dollars to start that?
Gerardo Del Real: My understanding is, no, he was self-made. Yeah, yeah, yeah.
Nick Hodge: That's important.
Gerardo Del Real: Bartending, working on his code, working on the site. Getting that up, hiring, all of that. A good story there.
Nick Hodge: That's the important part. So, when you talk about practicality, that's how you get a breadth of decision-making. You get adversity sent your way and you got to learn how to deal with that. When you get these silver spoon people, these people who come from money, who have been in the aristocracy their whole life, one, they don't see it from the majority perspective and, two, they haven't been dealt adversity and they haven't had to be creative in ways that benefited them coming up with businesses, coming up with ideas, testing and failing. A leader has to have those qualities, has to have had adversity. At least for me, has to have had the blue-collar job, things like that to draw on those experiences, to make common-sense decisions, which I think we see lacking with the "leader class" that we currently have. It's a completely different class of people. I don't relate to them at all.
Gerardo Del Real: At all. Again, you mentioned the gentleman and him being practical and sounding practical and then bringing up something that's just symbolic the wall. The wall is a dog whistle to people that don't want immigrants in the country.
Nick Hodge: Right. He showed the farmer with the belt buckle while the clip of the wall...
Gerardo Del Real: Of course.
Nick Hodge: ... right after he said that.
Gerardo Del Real: Of course, and it's like, again, I want a solution to a practical immigration process as much as anyone else because it directly affects people that I love and care about. I have family members that have been waiting 11 to 12 years to see their mom again because they can't get this thing done because there's no process that's anywhere near practical. You throw inflation and wealth inequality and everything else that's going on. The lawlessness in places like Mexico, Central America.
In Mexico, we're dealing with immigration from Central America because of how bad things are there. And then they get to Mexico and they start figuring out it's almost as bad here. So, what are people supposed to do, everyone? If you have a child or if you don't have a child, it's just you, are you just supposed to accept that there's this magical border there and that you know there's a better opportunity there. Are you just supposed to accept that it's just against the law, so let me sit here and wither and die? As a human being that's offensive to me. So, as a property owner, as a business owner, as a father and husband, I want a good practical immigration policy. Neither the right or the left provide that.
So, when I see the Biden administration campaigning on a sensible immigration plan and pleading to Hispanics, and Barack Obama did the same thing, it upsets me just as much as when I see people do the dog whistle thing by talking about a wall. What's a wall do? Not a thing. So what is that? That's just a dog whistle. It's a symbolic dog whistle. Talk to me about what your policy will be to prevent the murdering, violent traffickers, all of that. Nobody wants that. People in Mexico don't want that. The Mexicans here don't want that. Nobody on any side wants that. Let's find a system that's practical so we get the best of the best. We have some skilled labor. We have some low cost labor. It helped us in '87 when the country here in the United States was in a recession and Reagan did the whole amnesty thing. That's how my parents got their citizenship and residency.
It helped with real estate. It helped stabilize the economy. It helped provide some competitive labor. Let's talk real solutions as opposed to just pointing, but not really actually offering anything up. I think there is a better way to do politics, and I hope that people like Mark Cuban put some pressure on some of the people that have been there for far too long. For far too long.
Nick Hodge: Non-career politicians, right?
Gerardo Del Real: Non-career politicians. To answer your question, I Googled it, of course. He made his first billion, $5.9 billion paychecks after he sold his online streaming audio service to Yahoo in 1999. He made his first million in 1990 after selling a business to CompuServe. The guy used to sell stamps and coins. He was writing newspapers from Cleveland to Pittsburgh. Literally, had a paper right at the age of 16, except he was doing entire regions of it.
So, life experience. It's important. It's important in politics. I hope that the turning involves a lot more of that, and I hope that the young politicians that we haven't even heard of yet are able to be mentored by people like that. Again, I'm saying this as someone that doesn't know all of Mark Cuban's politics. There's going to be skeletons in the closet, people. If you're waiting for your perfect politician or your perfect human or your perfect wife or your perfect husband...
Nick Hodge: Doesn't exist.
Gerardo Del Real: Good luck. You're going to be holding your breath until you turn blue.
Nick Hodge: Yeah, it doesn't exist.
Gerardo Del Real: Nick, it's been almost an hour. I could go for another hour. There's a lot, a lot, a lot to get into. AMC (NYSE: AMC) decided to buy a gold mine.
Nick Hodge: Mr. Sprott got involved.
Gerardo Del Real: Eric's involved. Eric Sprott's involved. I wish them the best. I always wish success to everyone. I don't know that this one's going to end so well, but it is going to be fun to watch. I thought I was being pranked. I thought it was an Onion headline, but again, Mr. Sprott's done well for himself, and he matched the check, so it'll be interesting to see how that plays out. I will leave that at that.
Nick Hodge: He can make more bets than most.
Gerardo Del Real: He can also afford to lose more than you and I.
Nick Hodge: That's what I mean.
Gerardo Del Real: That's it. Anything else you want to get off your chest this week, Nick?
Nick Hodge: No, only that Washington DC tried to enact sports gambling and did. They had a monopoly on it. They ran the app through which was the only app to gamble in Washington, DC.
Gerardo Del Real: Easy money.
Nick Hodge: They lost millions of dollars on the operation. They were the house in the casino, and they lost. So, when you talk about broken politics and how we can't get anything done, literally the government can't run a casino and make money.
Gerardo Del Real: On either side.
Nick Hodge: No, there was no left or right there. It was just the government.
Gerardo Del Real: I am Gerardo Del Real, along with my therapy partner and cohost, Mr. Nick Hodge. This was episode 162 of Bizarro World. Next week's episode may be a day or so late, Mr. Hodge, and I have some travel to attend to. A little bit of a heads up in case for a day or so. Be kind. Be kind to each other. Be safe out there. Wish everyone an amazing, amazing week. Thanks for dealing with us, everyone. Say bye to the people, Nick.
Nick Hodge: It was actually 161. See ya.
Gerardo Del Real: See. It's that crazy, guys.
This transcript is unedited. Please excuse grammatical errors and run-on sentences.