Bizarro World Podcast,
with Nick and Gerardo
Sept. 20, 2022
This episode of Bizarro World was filmed "live" at the 2022 Beaver Creek Precious Metals Summit. We give a recap of the sentiment and energy at the conference, including some companies worth a look and the troubles the sector is facing. The stock market is still bearish. IS there a real estate crash coming? And more bad news in the form of Pakistan flooding, American chilldren fallin behind educationally because of lockdowns, and an ongoing Russian invasion. Plus: the Queen died and we're all still peasants. This is episode 186 of Bizarro World.
0:38 Recap: Beaver Creek Precious Metals Summit
4:35 Still In a Bear Market, Stocks Can Go Lower
7:00 Copper & Copper Stock Update
11:25 Lithium & Uranium Remain Bullish
15:05 Is a Real Estate Crash Coming?
21:30 Update on Russian Invasion and Pullack
23:22 Companies Worth Looking At
28:28 Bad News: Rail Strike, Reading & Math Scores, Pakistan Flooding
32:00 Queen Dies & We’re All Still Peasants
34:44 Market Week Ahead
Gerardo Del Real: This is Gerardo Del Real along with my co-host Mr. Nick Hodge and this is episode number 186 of our weekly therapy session known as Bizarro World. Normally, Nick and I would do the introduction and talk about all the crazy things going on in the world. But today, we're at the Beaver Creek Precious Metal Summit. So, I wanted to start by saying one, how are you doing?
Nick Hodge: I'm doing great. I'm on the couch. It feels like a therapy session.
Gerardo Del Real: We're going to make some breakthroughs here today, Nick.
Nick Hodge: Need me to lay down?
Recap: Beaver Creek Precious Metals Summit
Gerardo Del Real: Yeah, yeah. I think we'll be okay. Let's not do that. So listen, we got in a few days ago. It's been, on my end of it, a productive, productive conference thus far. I'd love to get your take on the sentiment.
Nick Hodge: The sentiment and the energy I think are two different things. I heard someone say earlier that he was...
Gerardo Del Real: He's a smart one, folks. I tell you.
Nick Hodge: That he was energized by being here and certainly the bar was buzzing the past couple of nights and people are having a good time of it. I think that stems from being the first one in person in a couple of years and just everybody being back at it. That of course is different than sentiment, like I said, which if you look at the charts and even while we were here, the market had a 4% down day. It's worse since June 2020. So, sentiment is another thing. When I talked to companies, most of the questions they're getting asked is, "How are you funding yourselves? Are you going to need more money? How are you going to be able to raise that money?" It's still a tough environment out there with commodities relatively soft and people who didn't raise money earlier in the year wondering why they didn't. So, I think that's a pretty good summation.
Gerardo Del Real: I think that's a great summation. It's been interesting to me in the meetings that I decided to take. I try to make it to where I took a few meetings with explorers, a few meetings with producers and a few meetings with companies that are looking to get in production. And, by far the most pain is being felt by the companies that are looking to get into production, that are having cost overruns.
And we've seen recently a couple of companies that completely blew out their CapEx estimates and blew themselves up. And so, I say that to actually go in a positive direction. There are companies that I think are doing a hell of a job in keeping up with inflation, procuring the equipment that they need a year and a half or two ago. And one in particular really stuck out, Sabina Gold & Silver (TSX: SBB)(OTC: SGSVF). Sabina has done a wonderful job during a very challenging environment. Procuring all its equipment, getting funding in place, doing things the right way, not rushing it and making sure that they don't end up in one of these situations where they get a revised estimate on something, and all of a sudden that project's not being built. And so, kudos to that team for doing it the right way. The market's not giving them any credit.
Nick Hodge: I was just going to say, is the market rewarding them for that?
Gerardo Del Real: The market is absolutely not rewarding them for that. And, there's so many CEOs that are clearly frustrated at the fact that they're delivering the goods to the market and the market is yawning. Now, that is the gold space. And I know that this is a precious metal summit. It's been interesting to me how few companies are boasting about their silver exploration and or their resource base. One company that stuck out to me that we interviewed yesterday, Dolly Varden Silver. Shawn Khunkhun, very, very good at telling the company's story. He's got a clear vision for that company. And credit to him, he's being aggressive where most silver explorers are being timid. And he's not short on ounces, he's not short on cash and he's not short on vision. So, Dolly Varden Silver is a company that I would say is worth a look if you want quality silver exposure. With that being said, I think silver's going to stay trading as an industrial metal here for the next... At least probably the next six months.
Nick Hodge: Oh, I agree with you. I was telling you earlier, I met with someone who I'm in a private silver deal with. I've actually been in the private deal for going on six or seven years now. I've written a check at six cents, written a check of 25 cents and...
Gerardo Del Real: They answered your calls back then, right?
Nick Hodge: Yeah, Yeah.
Gerardo Del Real: How's it been lately?
Nick Hodge: Well, they still answer my calls, but now they're less optimistic about when they're going to IPO, which is what I was going to say. So, they filed their prospectus, they got all their audits done to go public this quarter and now they're thinking maybe next quarter... Hopefully next quarter. It's not like they want to IPO. It's that if they wait until the first quarter of 2023, then they got to get all that stuff re-certified, because it's a new calendar year. So all that to say that, they're content to delay their IPO because they don't think there's appetite for it in the market.
Still In a Bear Market, Stocks Can Go Lower
Gerardo Del Real: Agree. That's silver, that's gold. We're at a precious metal summit. I thought we would start there. Let's talk about the overall indices. I had a moment where I looked at my phone yesterday and mind you today we're recording this. It's Wednesday the 14th, I believe.
Nick Hodge: It's been a blur.
Gerardo Del Real: It's been a blur. And typically, we record on Thursday. But, I had a moment yesterday where I looked at my phone and I thought the Dow was down 1.3% and... No, it was down 1,300 points. You've been warning that there was a lot of room left towards the downside before we got to fair valuations. And before we got to a point where educated and institutional capital was willing to allocate capital back into the markets in a meaningful way. Still more room to go on the downside for the major indices?
Nick Hodge: For sure. You got the S&P around 4,000, it could easily go to 3,800. The people that thought the Fed could control inflation or being proven wrong, these are the same people who caused the inflation. And to believe that they could reign it in with a couple of rate hikes was naive. And so, you're seeing that. The reason the markets were down was the CPI number of course. It came out for August at 8.3% and people thought that it was going to be much lower. You remember Biden tweeting in July that there was no inflation. You remember that right?
Gerardo Del Real: 0%.
Nick Hodge: Politicians have been keen to point to gas prices going down, which yes, they're going down, but the core components of the index remain stubbornly high. And so, 8.3% is still 40 year high inflation. And the markets took it upon themselves to sell down 4% in a single day. So, it was the worst down day since the lows of the pandemic. It was the worst down day since June 2020.
Gerardo Del Real: And which you referenced many times before this episode. You've said, we haven't seen a day yet, like the lows of the pandemic. We just saw one, but we haven't seen the lows of the pandemic yet.
Nick Hodge: And, you could see more of those days. I might have just slipped on what I was going to say next, but the market definitely didn't like that. And there's more room to sell. So, we had the June rally, which I was calling bear rally, and now the market has given back all of the gains since now, all of its August gains, all of the end of July gains. And you're looking at going back towards the June lows. So, oh, it was volatility I was going to reference, which we mentioned in last week's podcast. I was saying the volatility was going to spike up and all of a sudden it's at a three month high.
Gerardo Del Real: Nothing happens. Then it happens all at once.
Nick Hodge: That's it.
Copper & Copper Stock Update
Gerardo Del Real: That's gold, that's silver. Any copper names? Any battery metals names? I know it's a precious metal summit, but they're lurking. Some of them are not here efficiently, but here unofficially.
Nick Hodge: Copper's interesting. We talk about it every week and it's $5 a pound in March and today it's closer to $3.50. And some of the copper names have struggled. I sound like a broken record. We sold our Rio Tinto. I actually sold my Ivanhoe last week, and that was a good move because Copper had a little mini rally and then it is sold off again here in the past couple of days. So, the long term picture is very clear. The short term picture is much murkier. you've got slow down in China, they've got lockdowns, millions of people back in lockdown and they've also got a typhoon about to hit. So, we'll see how long they get knocked offline, how much of a slowdown that's going to be. But look, John Black was sitting right here earlier and last week you asked me for a name and I gave you Aguila Copper (TSX-V: AGL)(OTC: AGLAF) and we could probably talk about Aldebaran Resources (TSX-V: ALDE)(OTC: ADBRF) for a little bit. That's over a billion pounds of copper. And what was he saying? He sold his last copper asset for...
Gerardo Del Real: Four cents a pound.
Nick Hodge: Four cents a pound and this one is getting valued at less than a penny a pound, and it's growing. So, that's a big deposit. Mentioned inflation already. Argentina's experiencing some 70% inflation. I saw some numbers earlier today. Second only to Turkey, which is at 80% inflation. But those headwinds aside, that's a giant deposit that they're going to drill an anomaly soon here once the winter ends. They're inverse of us, because southern hemisphere. So, they're about to get rigs starting again. He said that people were going to go check the roads and see how deep the snow was. And, I'd be interested to see some more drill results for sure. You also mentioned the funding. How people are securing their funding and that's a big component of Aldebaran and they've got significant shareholders in Route one and Sibanye and now in South32 who he was mentioning. So, that's a great long term copper play. The copper in the ground's not going anywhere, even if it takes five years for a true market in copper to materialize.
Gerardo Del Real: And to be clear, John Black has been on the record saying if copper just stays at $3.50, he's enthused he said. "I'm enthused." He's said $3.50 is, if you would've asked me two years ago, I would've taken that every day for the next five years. Copper doesn't need to be higher for that project to work. And copper doesn't need to be higher for all the brands to be re-rated. You mentioned the valuation they're getting right now. If copper never goes up another penny and they never discover another pound, that should be trading closer to a $400 to $500 million market cap. That's a four to five time return with today's copper price, with the asset that's there now. And look, I think you mentioned something that's critical.
You talked about the geophysics and the geochem work and the exploration work on the ground. He said they just got some geophysical data that... And I don't want to put words in his mouth, but he said, they had never seen a one-to-one correlation between the actual results that they received and the data set and what they found in the ground when they poked a hole near the edge of one of the anomalies. And so, it's...
Nick Hodge: Right. Not a complete hole.
Gerardo Del Real: And so, it sounds to me like they have a tiger by the tail in an area that's outside of the current resource and in an area that we've already seen very long runs of mineralization that is borderline economic, but also was on the tip of that anomaly. Now they know exactly where they're drilling, it sounds like they're about to enter into their most aggressive drilling campaign in the company's history. And I believe that starts in October. And so, if you're looking for your money's worth, and this is a free podcast where we rant and rave about all things, Adebaran is a great copper speculation if you're able to hold it for the next year or two years and let John Black and their team do what they do best, which is sell assets for half a billion dollars in South America.
Nick Hodge: Before we recorded it, I was talking about Filo Mining (TSX: FIL)(OTC: FLMMF) and that's not a company I'm as intimately familiar with, but that's just a monster copper asset and it's also an Argentina, which is what reminded me while we were talking there. And I was listening to a presentation here at Beaver Creek and they were talking about the rock density and the tonnage that they already have and it's multiple square kilometer blocks that are 3.2 billion tonnes of resource. So, that stock has pulled back significantly as well. Gosh, off the top of my head, I might not want to say, but I believe it was C$28 or something. It's pulled back to C$16. And so, the chart looks like that's a healthy consolidation. And, I put a little bid in today, not at the market like a dollar below, but I'd be content to buy some more Filo for sure.
Lithium & Uranium Remain Bullish
Gerardo Del Real: Absolutely. Can't have a Bizarro World without talking uranium and lithium. It's not a coincidence to me that the uranium and lithium names, even during that nasty selloff, held up pretty damn well. The Lithium Americas of the world, even the Fission Uraniums of the world — they weren't down four, five, 6% or 10%, like a lot of the other plays in the metal space. And so, thoughts there, I know that we continue to preach strength in the lithium and uranium space and we think short term that's where the action's going to be. But, has that narrative changed for you at all?
Nick Hodge: It's so much to talk about. Fission put out an updated resource. I think it's 130 million pounds of U308. We know that's a high grade deposit. The news continues to flow. Europe is wanting to ration energy, they're putting headlines now coming up with a plan, they desperately need their nuclear reactors. A company we know in Poland, Was it KGHM? Is that what it is?
Gerardo Del Real: Yeah.
Nick Hodge: Partnered with a new scale this week to build the first small modular reactor in Poland. And I saw another announcement by LEU, the company, to that they've contracted for $320 million worth of sales over the next, I believe it was like eight years or something. So, those contract sales are starting to come back into the market where there's been a dearth of those for a while. The ETFs remain strong. The news, like I say, just continues to fall in place. I think there was another reactor in the US that's going to get an extension of its life. Maybe Tennessee Valley Authority or something like that. No, the price has held up. U308 at the spot was back over $51 for a bit there. Pulled back a dollar while we were here to $50 a pound. But, it's a great start for a uranium market and there's a lot to like and a lot of companies to like as well.
Gerardo Del Real: Let's talk real estate.
Nick Hodge: But we didn't talk lithium. I don't know how much you would've added there.
Gerardo Del Real: I think the same comments that apply to uranium frankly apply to lithium. I think the news keeps getting better every day. I think the orders keep coming in. I think there's a lack of new supply coming on. I think there's an immense amount of demand coming on. And so, I think it's almost like uranium's cousin. It's a different metal. But as far as flight demand fundamentals and where the action is in the near term, I like both of them equally. It's a precious metal summit and everybody keeps asking me, "What do you like right now? What's your favorite metal?" I'm like, "Which sector?" "Just in general." Lithium and uranium and then copper. Copper would be third.
And look, I love my gold. We met someone yesterday that was telling us a story about a gentleman that had a billion dollars of equities and value and worth and couldn't for the life of him see the value of having any gold in his portfolio.
And it was his wife that had to convince him to have a little bit of gold in case the banking system imploded or fiat currencies imploded, which could happen in our lifetime and likely will within the next decade. And so, it's so interesting to me just how unloved gold is right now. It's probably a great contrarian signal saying that you should be adding some and rotating some profits from your better lithium and uranium names. I'm not saying sell your lithium or uranium names. I'm saying, if you're sitting on a three, 4000% gain in a stock, you maybe take 10% off and go buy something that's really unloved, but has the potential to give you four to five fold gains like Aldebaran in copper or another company that may provide that kind of upside. But, nothing wrong with taking a little bit off the table and nothing wrong with rotating capital. Keeping the bulk of the position, but seeing if you could duplicate that somewhere else with a small position of sales.
Nick Hodge: A $2,000 question is, when though? Rates continue to go up, the dollar exceedingly strong still approaching I think 110.
Is a Real Estate Crash Coming?
Gerardo Del Real: Yeah, almost 110. Great pivot. I wanted to talk about real estate. You mentioned the dollar that plays right into interest rates. We have 30 year fixed at over 6%. We had a conversation, you had a conversation with the Economic Ninja, who by the way, gets more views on his YouTube channel than CNN. Is that accurate?
Nick Hodge: Yep.
Gerardo Del Real: And you all had a great conversation about real estate. That was incredibly insightful to me anyhow, just the perspective, not necessarily that I agree with the way everything will play out. But I thought it was insightful commentary and I thought it was an interesting take you care to share?
Nick Hodge: You know more about real estate than I do. And he was saying that he sees mortgages going to 20% amid a real estate crash essentially, that the Fed isn't going to be able to pivot that, that rates are just going to skyrocket on the mortgage side and homes are going to lose significant amount of value because, people are going to be willing to sell their homes. What did you hear?
Gerardo Del Real: That's what I heard. And, I respectfully disagree. And everybody's got opinions and hopefully that's not the scenario. I don't think that, given our debt levels here in the US and given the dollar’s standing around the world as the reserve currency, I don't think that the Fed or the markets will allow interest rates to get that high, because you're going to implode a lot of economies around the world. You're going to break down the middle class even more. So, first you break them down with inflation, now you're going to break them down with deflation and then you're going to completely stunt what's one of the strongest drivers of our economy, which is the real estate sector. It's not just real estate in the general traditional sense where you're buying houses or buying a commercial building. It's the contractors. It's the real estate agents, it's the title companies, it's all of these other people that all are a part of that business and have a vested interest in that sector doing well.
So do I think interest rates can rise? Can a 30 year rise to 8%? Sure. I think that's plausible. It's at 6.25% right now.
Nick Hodge: That's not historically out of the norm.
Gerardo Del Real: Absolutely not. 20%, I think with debt levels here in the US, the military budgets that we carry with the amount of debt that we're going to have to start servicing here over the next 18 months, I find it impossible that that can happen. If it does, that gentleman that has that billion dollars in equity and value, he's going to want to have some gold. And if that does happen, everybody's going to want to have a little bit of gold, because it's going to be some dark days. I don't think that'll be the case. I do think there's more pain coming in the real estate market. I think there's more pain coming in the broader indices. I think it's good to have a little bit of liquidity. I've preached on this podcast many times that it's good to be able to defend yourself however you choose to do that. It's good to have an extra month or two worth of food that you can freeze up just in case. It's good to have some wood if you have room to store it.
It's good to have all of the things that traditionally help you navigate a crisis that nobody foresees. They're called black swans for a reason. And so, that's different for everybody. Everybody has different needs. I would encourage people to have a little bit of gold. I would encourage people to have some money outside of the banking system. There was a report that I read earlier this week from the US, warning of the potential for our financial institutions to be hacked. And I've long said on this podcast that I just can't see an aggressive Russia continuing its invasion of the Ukraine or attempted invasion of the Ukraine. They're getting pushed back now. We'll talk about that in a second. But, I can't see that continuing and that just to go in that direction, I don't see that sticking.
Nick Hodge: You must have read the September issue of Foundational Profits. It was talking a lot about how the world is ending and there's a lot of bad news and we're in a bear market. But, I'm not sure that the end times are here that the great reset is upon us or some of that tinfoil hat stuff. In real estate, trees don't grow to the sky. Some markets in the US were getting significantly overheated when you've got whatever, 15% or 20% year over year growth in prices and houses being sold, site unseen, waving inspections. It gets all the way to the end of the spectrum and then it course corrects a little bit. Does that mean it crashes here? I'm not necessarily sure, but I do think that it's different than 2008, primarily from a demographic perspective. In 2008, there wasn't so many millennials that are out there starting families and needing to buy a home. And also with their parents and grandparents passing away and leaving them money to potentially buy a house. I think that's actually a big current in the market. And so, we'll see. Healthy correction is always good for a market.
Gerardo Del Real: Agree. On this podcast a year or two ago, I had a rant about how much I hated the fact that funds like BlackRock were coming in and buying entire neighborhoods. I saw it in Austin, I saw it a lot. I saw it in a lot of places where these billion dollar funds would come in and just outbid everybody and take entire neighborhoods up. And then, they raise the rent 30, 40, 50% and push everybody out, sit on the property for six months to a year and then resell it at a pretty substantial profit. In Austin, home appreciation last year was 50% year on year. This year they're saying the slow down's going to be 15 to 20% year on year. That's still insane by historical standards.
So, I wanted to provide that context because you mentioned how this is different from 2008 and it's also different from 2008 in the sense that a lot of these homes that were bought up by people, companies like BlackRock, funds like BlackRock, there were cash buyers. And if there's one silver lining and them actually coming in and buying entire neighborhoods is...
Nick Hodge: There's no mortgages.
Gerardo Del Real: There's no mortgages there. So, I think the implosion won't be as severe as it was back in 2008. Doesn't mean there's not more pain coming, doesn't mean there's not going to be some opportunities.
Nick Hodge: They're still buying too. There was a headline on Bloomberg last week that said some fund that they were using to buy houses was slowing down. But it was only in a couple of markets. They're still buying in more markets than they're getting out of. And so, they also have several billion dollars in another fund that they say they're willing to buy houses with. So, I don't think they'll wait for an ultimate bottom, If prices get cheaper I think you get institutions that continue to buy those assets. Mainly also because we're in a bear market in equities and if you can get that sort of hard asset in the form of housing, I think they're willing to step in and buy.
Update on Russian Invasion and Pullack
Gerardo Del Real: I like it. The world's getting crazier, Nick.
Nick Hodge: Every day.
Gerardo Del Real: What's sticking out to you?
Nick Hodge: Oh man. You said we were going to talk Russia, so...
Gerardo Del Real: Yep, that's where I was going. You read my mind. Thanks for catching that.
Nick Hodge: Like you say, Ukraine has advanced something like several 100 square kilometers in the past couple of weeks.
Gerardo Del Real: You made an interesting comment to me the other day that you read somewhere.
Nick Hodge: Yeah, I'll get to that in a second. And, Putin is getting some pushback, even in his own country. There was a group of... I think it was a couple of dozen or maybe even 200 mayors that signed a petition basically calling for Putin to resign. So there's some internal chaos going on in Russia and we'll see how Putin reacts to that. We've already seen lots of Russian diplomats and businessmen...
Gerardo Del Real: Jumping out of windows?
Nick Hodge: Slipping out windows. So, cars being exploded even. And then things like that. It seems like they're running low on supplies. On the one hand, there's reports out saying that they're buying missiles and things from North Korea, because the sanctions are starting to work and the slowdown in Russia makes it such that they can't produce the things themselves. But when you think of the might of Russia next to "Meek Ukraine", it's like... Well, he's still got a bunch of things that he could do if he wants to really be a war criminal. Some things that he did in Chechnya and Syria, for example. So, it could get very interesting. And yeah, the thing I read was a doom thing, a Zero Hedge thing, about one of the reasons Ukraine could be advancing so fast is because Russia is pulling their troops out in advance of some form of tactical nuclear strike, which the world gets really crazy really fast if that happens.
So, I don't like to live in fear and I'm not sure that would be an all out nuclear war. They have these smaller nuclear warheads that they could deploy now, but that's just crazy times and tough stuff to think about.
Companies Worth Looking At
Gerardo Del Real: Very much so. Very much so. What other companies... Have any other companies stuck out to you during this summit? We're doing this live, it's great.
Nick Hodge: I don't want to give them all away.
Gerardo Del Real: Yeah, well that's where I was going. That's where I was going. I know we can't give everything away, but let me phrase it this way. Are there companies that you absolutely love that are recommendations and we can put a link up to you. We'll share in the cloud, we can put a link up to your services and people can subscribe if they want to get those recommendations. But, are there companies in your letter that you've vetted here further and have been impressed with, without giving the names away.
Nick Hodge: Well, I think the two I interviewed are the ones you get when you sign up for this gold video that we've been touting for the past couple of weeks. The one is an Idaho gold company that is onto, what we've been calling America's Next Biggest Gold Discovery. And so, they released news while we were here that, in fact they found more high grade underneath a zone that they were delivering high grade from late last year. They still got a lot of drilling to do. They still have holes pending. So, that's what part of this video is about: how soon the market is going to realize what's going on there, that this is maybe an orogenic deposit deeper than anyone first thought. So, they were 50 meters of three point some grams of...
Gerardo Del Real: What kind of deposit, Nick?
Nick Hodge: Orogenic. Why?
Gerardo Del Real: Okay. Because I'm a child of last week's Bizarro World episode, it was called an Orgy of Profits. I just wanted to hear you say orogenic again. I don't get to do this face to face with you every week, so thank you for that. But as you were...
Nick Hodge: The next holes that are going to come out or many tens of meters below the holes that they're going to announce now. So, those ounces add up very quickly when you're talking about plus three, four, five, 10 gram to gold. So, that would be one of them. And then another one is a...
Gerardo Del Real: Not to cut you off, but what's the potential upside with that company in a better gold market, which I think is coming by the way in the next quarter or two.
Nick Hodge: I mean...
Gerardo Del Real: It's undervalued given today's market.
Nick Hodge: Yeah, the report says that there's 2000% upside just based on the in-situ price of gold in previous comparable acquisitions. I don't know about their enterprise value or nav off the top of my head. But what I would say is, they're getting valued at only eight or $9 per ounce in the ground. And in previous acquisitions were done, I think historically around $40. And some recent ones have been upwards of like $200, especially when they come with de-risk.
Gerardo Del Real: Yes. Infrastructure, grade all those things.
Nick Hodge: Which this company has. And so, if they've got four million ounces, we're pretty sure there's five million ounces and they're going to be much bigger than that. You do the math on that and multiply it times just $40 in fact, and you can see what the upside is. And then the other one is a big PGM deposit in Brazil. So, as part of that video, you get a report about this other company in Brazil as well, that has a high grade PGM resource with gold as well. And also with nickel. They've been hitting some semi massive and massive sulfides and pretty excited about that. It's good to gauge people's body language as you know and...
Gerardo Del Real: They had a confident vibe.
Nick Hodge: Their chests are out for sure. Yeah.
Gerardo Del Real: Yeah. And just to add and chime in a bit, without giving the name, we're both shareholders of that company. They already have a massive resource in place. PGM resource, plus rhodium, plus Gold, this new copper-nickel massive sulfide discovery that they've made. The grins on the faces of the management team was very telling to me and the fact that they put a rig on this immediately, tells me they think this could potentially be another significant deposit to a company, the one that already exists. And let's be absolutely clear. This is a company that I think within 12 to 18 months can trade at five times.
Nick Hodge: Sure. Several dollars.
Gerardo Del Real: Absolutely the current value. And if this new copper nickel deposit turns out to be what they think it is, we're going to be really off to the races on that one. So, long-winded way of saying everybody, click on the link and pony up however much it is. And if you don't make money with it, just cancel it before the refund period expires, you'll get your money back and you get a chance to make some money. Seems pretty simple.
Nick Hodge: Thanks for the plug.
Gerardo Del Real: You're very welcome. Make sure to click the link everybody. What else are you watching out there, Nick?
Nick Hodge: Oh man. I don't know.
Gerardo Del Real: I have a new favorite actress?
Nick Hodge: Who's that?
Gerardo Del Real: Ana de Armas.
Nick Hodge: I don't think I know who that is.
Gerardo Del Real: She'll be playing...
Nick Hodge: More than Rihanna? I remember Rihanna's how we started this whole podcast.
Gerardo Del Real: Rihanna could still sing ABC's to me every day. More than Rihanna? It's tough. Then, we don't have to pit woman against woman. Let's just say I like them a lot. Ana de Armas will be starting in a new movie based on Marilyn Monroe. Netflix original, a biopic, and supposedly she did a phenomenal job, aside from being drop dead gorgeous, she's a phenomenal actress. So, high Ana de Armas.
Nick Hodge: There you go. I continue down the bad news trail.
Bad News: Rail Strike, Reading & Math Scores, Pakistan Flooding
Gerardo Del Real: I'm trying to talk about beautiful women, everybody. I'm trying to stay happy. My brother wrote an article this week that he said is a tough read. It was one of the toughest ones that he's had to write in his career. He said, and I haven't read it because I haven't wanted to dampen my mood, especially in light of the fact that we get to be here in person, we get to connect with everybody. It's been a blast. It's been a lot of hard work, but it's also been a lot of fun. So, I'm saving it for that. But as you were with your bad news, Nick.
Nick Hodge: Oh man. I was going to say I'll spare you, but I guess I won't. You've got this threat of the rail lines striking at Burlington Northern Santa Fe and some of the other big ones which could exacerbate the already woeful supply chain. We're talking about coal getting to power plants, we're talking about grains like commodities and soy getting where they need to go and fertilizer getting where it needs to go to grow more of that stuff. So, we'll see if that materializes. Those headlines just started percolating up a little bit.
And then one article I was reading while I was sitting here earlier was about the US education system. And we talked a lot about lockdowns when they were going on and how they kept us...
Gerardo Del Real: Positive Nick over here.
Nick Hodge: I know. Sorry. How they kept the kids out of school so long and how I was grateful that the private schools didn't do thatm ot them back as much as they could and they weren't out that long in fact. And now we're seeing the effects of that. The standardized tests are coming out. And on the reading side of things, US public school kids had the biggest fall in 20 or 30 years since the early 90s. And on the math side, it was the first decline ever — since the tests started being given. So make sure your kids are reading, make sure they're getting math tutelage or whatever it is. And it continues to show you that not letting a good crisis go to waste has consequences. Those were like teacher unions and politicians who were pushing for those lockdowns in the day. And so, I'm not trying to get all political or get into the virus debate or whatever, but real world implications for the future of the country, for sure.
Gerardo Del Real: Absolutely. Since we're sharing bad news, let's get into Pakistan and the fucking media's horrible job of covering what is a catastrophe in Pakistan. The floods are absolutely terrible. Millions have been displaced. Thousands if not tens of thousands have died. If you just Google it, you can find some news articles, but you really have to look for it. You actually have to be curious about what's going on with the Pakistani people. My heart goes out to them and it really pisses me off to see that the media hasn't been more at the forefront of covering it. And that goes from the Foxes to the CNNs. I don't care what your political leanings are, nobody's really had this on the front page. I got to read fucking articles and look at news reports about Prince Harry and his brother making up and whether that's going to happen now that the queen's dead.
Nick Hodge: We haven't talked about the queen. Good on us.
Gerardo Del Real: And I'm not. May you rest in peace. Right?
Nick Hodge: Charles has a billion dollars I was reading today.
Gerardo Del Real: Oh fuck it. We will talk about the queen just not in the way that you want it to, since we're going there. So, media do a better job because that catastrophe deserves a whole hell of a lot more support from the media, from people, from nonprofits. We're sending 100s of billions of dollars in weapons aid to Ukraine and I'm not opposed to that. I'm not opposed to that. Meanwhile, we're completely, almost completely ignoring what's going on in Pakistan. So, do better media and then if you want to stay on the...
Queen Dies & We’re All Still Peasants
We're all peasants in the bigger scheme of things, if you don't have the kind of wealth that allows for you to do these things. Yes, the queen passed. Yes, we now know that Prince Charles has a billion dollar war chest and we also know that his fucking princely ass isn't going to pay the 40% inheritance tax, because the Queen was able to negotiate a special exception on that inheritance tax. 40% folks. You do the math, it's not really hard.
40% of a billion. You know what that would've been? You don't think the citizenry could've used it? Maybe those schools, maybe the infrastructure, maybe raising the pay of teachers, maybe raising the pay of state employees? I don't know. Maybe sending Prince Andrew to a fucking island where he is not molesting and raping kids? There's so many things you can do with that money that make a special exception. And my other point is folks, you'll never get a special exception. That's not going to happen unless you have the kind of capital and influence that allows for that to happen. It's the same kind of influence that allows for Prince Andrew to go around doing the sick shit that he did for as many years as he did. And since we're being on the Bad News rant, I was reading more articles about all these people coming forward talking about, well they all knew what Jeff Epstein was doing, but we just didn't feel that we had the power to stop it.
It makes me sick. You're complicit. And, it's some nasty people out there, man, you took me down the rabbit hole of bad news. So, here we are. It is a Bizarro World.
Nick Hodge: Considering all the resources they put into low level crimes and drug crimes and things like that and all the resources we give police, certainly there should be the fire power to do something about it. I guess it's good to be the king and to have your face on the money. And to speak about the two tier justice system and the self-servism here in the States, the New York Times had a report out this week. Trades made by members of Congress, the House of Representatives and the Senate. I don't know if you had a chance to catch that. And there were 3,500 suspicious trades or something that they found. One congress person was on the agricultural committee and was trading cattle futures.
Gerardo Del Real: Again, they have zero respect for you people. I don’t care if it's England, here in the US and whatever, zero respect.
Nick Hodge: And I think another one was selling Boeing the day before a report came out of a congressional committee about the safety measures and how the planes were unsafe and things like that.
Gerardo Del Real: Now they got people killed because of their negligence.
Nick Hodge: And then they both claimed that these were just done. These were broker trades that they didn't have anything to do with. You got to be kidding me. Right?
Market Week Ahead
Gerardo Del Real: Coinkydinks man. A lot of coinkydinks out there. What are you watching for this week in the markets, Nick?
Nick Hodge: Oh man. I'll give you the same answer as last week. So, GDP is not going to be good for the third quarter and we're getting to the end of it. So, more bearish catalysts are going to abound. Two weeks ago, the Atlanta Fed had their GDP in outcast at closer to 3%. And then the two weeks since then, it's fallen down closer to 1% and the update that based on economic reports that come out, CPIs and manufacturing indexes and things like that. So, you get an update fairly frequently. There'll be another one the day after we record this and I would expect it to go lower again. So, I think GDP for the third quarter comes in zero to 1%. Keen eye on rates. And other than that, I'm making a list. Because, it's not going to be a bear market forever. And so, I found some decent opportunities that I would like to deploy capital into once the broad markets tell me it's time to do that. And so, diligence on those companies, I guess I'll be doing.
Gerardo Del Real: I like it. I know I've gotten a lot of comments. I know several of you now tuned into this podcast just for my Patriot Battery Metals rant. And so, look, the company keeps acting like a company that is very serious about not just turning the Corvette Lithium district into one of, if not the biggest lithium deposits, because I think it'll be multiple deposits with the biggest lithium district in the world. They continue to show me and to telegraph to the market, they are willing and positioning to actually build this out and become the next Pilbara. Which now has a market Cap, by the way, after hitting new all time highs of something like $12 or $13 billion.
So, they brought another gentleman on board, they created a special committee and essentially this committee is tasked with investigating all of the potential opportunities for making this a vertically integrated business. Not just exploring for exploration's sake. We've seen how quickly... And this is my estimate, and then there's several research firms that agree with me now. We've seen how quickly they've been able to drill out what I think is anywhere between 165 to 200 million tonnes thus far of lithium. At 1% or above. That hasn't taken very long. That's been less than a year since they really got aggressive about the drilling. And this is the most aggressive drill program thus far. We're in the midst of it. The next 12 months if they're able to put out a resource of anywhere near 200 million tonnes and then they're able to duplicate that and then they're able to finance with very minimal dilution, the build out of this thing and start securing offtake agreements, that $50 target and the right lithium environment with the right macro backdrop could end up proven conservative.
And so, kudos to them. I expect assays from the company this week. By the time y'all get this, it'll be this week. And look, they keep doing all the right things. So, it's interesting to me, the company's held up pretty well despite the broader indices and the market pullback. The one that's pulled back a little bit more is Nevada Sunrise Gold. And I think there's a pretty logical explanation for that. There's some 30-cent warrants that at 36-cents were in the money and I know the company is likely encouraging some long-term investors to take some profits on the current stock price in order to access the capital from those 30-cent warrants. I suspect that's happening. I suspect that's why the price has drifted lower back to the 30-cent side.
So for those of you out there on the retail side that don't have the luxury of being able to sell your stock and then buying 30-cent warrants, 30-cents seems like a pretty damn good price to pay for Nevada Sunrise Gold, which is now drilling in Nevada. And again, the clay. Clay is the clay. Maybe it's economic, maybe it's not. Maybe there's a lot of it, but the prize there is a brine. And we know that lithium in water came from somewhere and if they discover brine and Nevada, then it's on. It's going to be off to the races.
Nick Hodge: Good shit.
Gerardo Del Real: So watching those two, we like Aldebaran. Click on the link. Kidding. I'm not doing that. Yeah, click on the link for Nick service and the new promo in the video. And frankly, the video's very educational. Even if you don't buy anything, it's a good video and a very educational video. And if you don't make money, get your money back. That's all. That's all I got. Anything else Nick?
Nick Hodge: No, that's it. We'll see you next week back in the office, right?
Gerardo Del Real: Absolutely. It was fun everybody live from the 2022 Beaver Creek Precious Metal Summit. I am Gerardo Del Real along with Mr. Nick Hodge. This was episode 186 of our therapy session we call Bizarro World. Say something smart to the people, Nick.
Nick Hodge: I tell them see ya.