Breakout Underway In Gold & Silver. How High Will They Go? | Jonathan Wellum

Summary

• Precious Metals Breakout: Gold and silver are experiencing significant price breakouts, with gold futures reaching an all-time high above $3,600 an ounce and silver futures pushing towards $42 an ounce.
• Investment Strategy: Jonathan Wellum emphasizes a long-term value investment approach, focusing on well-managed companies in the precious metals sector, particularly royalty companies like Franco-Nevada and Wheaton Precious Metals.
• Market Drivers: The surge in precious metals is attributed to macroeconomic factors such as rising debt levels, fiscal deficits, and fiat currency pressures, prompting investors to seek protection and value preservation.
• Sector Opportunities: Wellum highlights opportunities in smaller royalty companies and quality miners, noting that silver miners could see explosive growth if silver prices continue to rise.
• Investor Sentiment: There is a growing interest among retail investors in precious metals, driven by concerns over purchasing power erosion and the appeal of alternative assets like cryptocurrencies.
• Market Volatility: Investors are advised to be prepared for potential volatility and downstrokes within the bull market cycle, maintaining focus on fundamental reasons for holding precious metals.
• Acquisition Trends: As the bull market progresses, larger mining companies may begin acquiring smaller junior miners to replenish their reserves, a typical cycle in the mining industry.
• Geopolitical Risks: Country risk and potential nationalization are considerations for mining investments, with political stability and jurisdictional safety being key factors in evaluating opportunities.

Transcript

And we should be live. Welcome to Thoughtful Money. I'm Thulful Money founder and host Adam Tagert. Uh welcoming you here for a special Wednesday live stream with Jonathan Wellum uh one of the head of one of the financial advisors that thoughtful money endorses. Jonathan runs Rocklink uh partners up in Canada. Uh so they Rocklink is Thoughtful Money's endorsed Canadian advisor. Um, Jonathan is also a uh very experienced investor in general, very much from a Warren Buffett style, but but very much experienced in investing in the precious metals. And uh, on the day we're talking, we seem to be right in the thick, Jonathan, of a breakout in gold and silver. So, it's actually a very exciting time, folks. It's early my day. That's why you're getting the slick back shower hair. Hopefully, it'll dry as we talk here. But anyways, Jonathan, great to see you. Great to be on the program again. and uh see you and uh talk with the listeners. That's wonderful. All right. Well, look, Jonathan, um why don't we just get right to the meat of it here? Um so, for the longtime precious metals investors that are watching, they've got to be feeling pretty chipper today. Um gold is uh it's been on a string of breakouts over the the recent past trading days, but uh last check uh it was well above 3,600 an ounce. It actually surprises me to have that word come out of my mouth. uh that gold has moved very far over the past two years. Um and uh so that's an all-time high for gold. By the way, this is gold future, the gold futures price I'm I'm mentioning here. Um the silver futures uh broke above $40 an ounce, I think two trading days ago, and are now pushing their way towards $42 an ounce at the moment. And I know, you know, from past conversations with you, Jonathan, um, you we had talked about silver really trying to bust through $35 an ounce and then once it did, wouldn't really have a lot of resistance above it until it got up near around 50 or so an ounce. And I think we're maybe sort of seeing evidence of that in real time here. So anyways, I will take a beat, but what as as someone who's been investing in this space for a long time, who I think has been positioning his client capital for a moment like this, g give me a sense of of how you're reading the tape right now. Yes. Um, I mean, back when I set up Rock Link, after being in the mutual fund industry for almost 20 years, I set up Rock Link and we took basically a 15% position or so in precious metals securities. a lot of them the royalty companies. We like the you know the Franco, the Wheatens, the Royal Gold, Sandstorm, etc. And so we built positions there and um and then we did very well. Of course, as you know, in 2011 things jumped up and then they went back down again and then in 2016 we got a bit of a run um and then back down again and then COVID and so forth. But our view, again, we're value investors, is we're looking at the macro um economic environment, and we're seeing everything that your um the different folks that you have on the program are speaking about in terms of the debt issues, debt, you know, potential debt deflation. Um you've got uh again, government is just running out of control in terms of deficits, all of those factors, fiat currency under pressure. I mean the numbers are horrific in terms of loss of purchasing power over the last number of decades, not just the last couple of years. And so our view is you have to be there and you try to buy the best companies, companies that are well-run, know how to invest in the sector, know how to reinvest and uh and uh and so forth. And so that's what we've done. And uh yeah, we're very happy now with some of the positions. We've seen s significant expansion in terms of the price uh you know, price appreciation. And um we're happy to see that. But you know, we our view is that um we're not going to get out of our monetary and fiscal situations in an easy manner. It's going to be painful and therefore you need to be in these spaces and you want to own some of the best companies and for some people they can dabble and maybe do a little bit of speculation because when things start to run as you know they can really take off. Um, but again, you want to be wise and you want to be prudent and careful so that you don't uh, you know, throw money uh throw money down the toilet, so to speak, and you make sure you're buying companies with, you know, good managers with good assets and in reasonable countries. All right. Well, look, let me um I'm going to talk about any and all of that, uh, today, Jonathan, and then we'll also, folks, um, we will halfway through I'll do my best to open this up to Q&A from the live audience so you can ask questions there in the live stream and I'll start pulling them in. Um but Jonathan um so you know from our many previous conversations over the years uh I I well understand your kind of macro reasons for getting into this space and you mentioned a few of them there. Um I'm curious what your thoughts are on kind of what is instigating the move right now in the precious metals. Is it is it more um just sort of true price discovery starting to happen where the world is enough investors are starting to wake up to the macro issues that you talked about and are saying you know what I actually want to I want to get me some some protection here and and some exposure to this asset class and we just sort of hit the tipping point and the price is starting to really move because as you and I have talked in the past too these markets gold especially silver they're not that big relative to the general stock market or the general bond market. So, is it is it more just sort of hitting the natural inflection point of of awareness and interest or, you know, um is there something that's really driving this? Um either something big like um you know, China is is doing a ton of fiscal uh rescue stimulus this year. Is is is that wave just bleeding into things? Is it fear of the US tariffs and the fact that Doge really didn't seem to do much and that we're just going to have runaway fiscal deficits forever? Um, is it uh or is it more like maybe something's breaking and and the the rush to the precious metals is the early smart money saying, "Hey, we know that there's something going on. The rest of the world doesn't know yet, and we're trying to position in advance." And I don't know, you know, this that requires a fair amount of speculation, but if we just sort of look over at the UK market and we see the yields and UK guilts blowing out, that seems to be a sign that somewhere in the world something might be breaking. So, I'm curious. Do you have a a strong opinion one way or the other? Yeah, I think it's really all of the above. I mean, the fact Yeah, I think the factors you mentioned, they're all coming together. I mean, you had a a wonderful guest, Lawrence uh Leard. I listened to that just recently. you just had that uh just in the last couple of days and I mean he's to I mean he's firing at all cylinders. I mean you talk about uh the the problems and Lacy Hunt too. I mean he's dealt with some of these issues but at the end of the day the debts have just piled up so high and the deficits just keep rolling and no one seems to care. Um but the funding of these uh debts and uh and deficits is it's impossible at uh at the current interest rate level. And so we are now having to really expand the money supply in order to cover the interest payments. That's where we're at. So you put that along with the tariffs and the sort of reordering of trading arrangements in the world. Um China and the problems that they have. Uh the central banks concerned about each other so that they're buying up a lot of gold. I mean the central banks have added a lot of gold to uh their um their reserves over the last little while. And so you put all of that together along with demographics and slowdown with all of this debt. How are we going to get out of the debt cycle that we're in? And I think people are going, we need to protect ourselves and our purchasing power. Our purchasing power is being eroded at an incredible rate. I mean, I run the numbers over the last 50 years and you look at how much we've we've lost in terms of purchasing power. It's shocking and the government statistics are are are clearly um inadequate and inaccurate uh in terms of gauging the kind of loss of purching power. So I think with the Bitcoin phenomenon also um some of the cryptocurrencies all of that is just pointing everything's pointing in the direction of protect yourself um that this is going not going to be a pretty picture as we try to extricate ourselves from uh the mess that has been building now for a number of decades. I mean as you know we solved the the great financial uh debt crisis of 2008 and 2009 with basically increasing the debt levels by 50 to 70%. I mean it's it's really quite which wasn't really a solution. It was just a kicking the can, right? Yeah. And so I think all of those are coming together and people are starting to say, "Hey, we need to protect uh our assets." But as you know and as you've pointed out, the market is very small. It's underowned. I mean, we now have a quarter of our assets in gold, silver, and a little bit in uranium and so forth. Some of the areas I think will benefit from uh the increasing demand in energy because Sorry, sorry to interrupt it. Is that because you've bought more or just because that position size has appreciated so much? Both. Both. We've bought more. We've topped up positions over the last year or two. I mean, I I said at the outset that we started off with about 15% in Rocklink portfolios, but that was back 2010. And over the years, we've just let it crawl up slowly. Um, and uh recently uh I just ran the numbers before doing this program and uh we're up to a quarter of our assets and 30% in our Rocklink partners fund which we use for some of our clients. that's through growth and also just putting more positions on the books um because we think that uh we are close to something that's going to get a little more painful from a monetary perspective. Okay. Um let me ask you this question. Uh Grant Williams you may remember famously wrote a piece 10 years ago or so called gold no one cares. And it was written for guys like us who thought about and worried about all the things that that you've mentioned, Jonathan, and why that that meant owning gold was a wise thing to do. Um, but gold just sort of sat there, right? Had a bunch of bunch of years after the the price spike came down in 2012 or whenever it was. Um, and and really just sort of went nowhere for a long period of time. and Grant basically said, "Look, you're probably very right on your thesis, but it doesn't matter if nobody cares, right?" And since then, we've seen different segments start to care in recent years. Um, we saw central banks actually, really the first ones started to care and they they started buying gold um now at rates higher than they've ever bought before. um we saw the uh the eastern speculator wake up and start to care and for the past number of years you know they've been very happy to buy gold from the west at you know low prices. Um, we have, I think, waited for the moment when the western investor was going to wake up and start to care. And I've been asking people like you, Jonathan, over the past year as gold has started to move, hey, are we at that stage yet? And generally, the answer I've gotten is not really yet. You know, people were looking at outflows from GLD and things like that. Are we at the point now with the West Western investors carrying? Is that part of what's bringing this up? Or even if not, is what's happening right now enough to wake up the Western investor? Because the Western investor at the end of the day loves momentum, right? Wall Street has not been a huge fan of gold, but it's a it's more of a fan of anything that's got good price momentum behind it. Um, do you think the Western investors now going to be jumping in or are they already getting in? I think they're starting to get in. I think Costco is interesting. I mean, we all know that Costco started selling gold uh in their facilities and it went very quickly and I think that was a bit of a tip of the iceberg sort of just telling us that actually there's more demand out there than you think. Now, talking to the retail investor, which is which I do all day long because that's the business I'm in. uh and maybe a little biased because people coming to our organization know that uh we're value investors and we are open to open open to owning gold and silver but a lot of the professional adviserss and I'm speaking here in Canada um they're largely controlled by the big banks up here they don't really promote silver and gold and precious metals holding they say they poohoo it it's not really all that interesting I think the retail investors is looking through their advisor and they're looking at the market and they're smarter and they're starting to say no we need to we need to add this we've seen the the cryptocurrency phenomenon also and we need an alternative to fiat currency our purchasing power is being eroded at a brutal rate and uh you know you know we can't afford to buy homes are um are you know the price of food's gone up insurance costs all of these things are skyrocketing so I think it is starting to penetrate the retail market and the retail market is running around a lot of the advisers because again I still see the professional uh for professional adviserss not all that excited about it but you know this is an area as you know as you talked with your introduction there um Adam um you have to be patient and so we own this for a long time we've done okay in it because we own the royalty companies and they could make money even in a sideways market but it's one of those things that uh from my perspective if you're a disciplined investor you will make a lot of your returns in short periods of time but you have to be there and you have to be there be be there for the right reasons you don't know when it's going to occur I mean I'm not a short-term market timer, but we were building positions because we could see that eventually payday is coming. You cannot avoid what uh what our governments have been doing the last number of years. They've been imposing again tremendous damage on the financial system and and consumers and so forth with a lot of debt binges. So, um you have to be there, you have to be disciplined. Uh and then uh when it takes off, yeah, you you really are obviously happy about that. But now the question becomes how high can it go and uh when do we take some profits off the table and things like that. That's the other challenge that comes into it when you do well. Well, you anticipated my next question. So, um, you know, we we've, well, first off, I just want to underscore, yeah, we've we've talked many times over the past years about how, um, in your precious metals positions, I think in particular the miners, um, they move so fast and furiously when they move that, um, if you're not in them, by the time you notice they're making the move, the big money's already been made. And so it's just one of those things that we've said, hey, look, you have to have a foundational position so that you're in it when that move happens. And I think people are getting that lesson in real time right now. I'm seeing people in the in the live chat here sort of trade stories about the returns that they've gotten on some of their miners and I'm, you know, seeing some 100 plus percent, you know, percentages there. Um, so, uh, I guess the question for you, look, if you have any price targets, we'd love to hear them. Um, I don't know if you're in the business of making price targets on the precious metals, but but maybe more generally given that this move has started, um, do you think we're just in the early innings of of of where this is likely headed or was this like a just a going from a stationary start to a sprint, but it's it's you expect it to end soon? I'm looking at the economic situation in that as long as they continue to run up the deficits, as long as the debt continues to grow, as long as we're having uh again the trade wars going on around the world, as long as the u you know the BRICS countries and so forth are trying their best to you know to use US dollars uh less often and come up with alternatives and uh people don't trust each other and therefore you know collateral becomes more important in our currencies um then I think that the trend continues. So I I think that we are I'd say yeah if you're if you're going to use a baseball analogy I guess I'd say maybe third inning or something like that third fourth but I think we've got a lot more runway. I do think if you're an investor and you've done exceptionally well you should look at your asset allocation. How much percentage of your assets do you really want to have in silver and gold and be careful if that starts running up against incredibly high levels. You might want to just take some money off the table. You might also again take some profits off of companies that are you know larger, more stable um more predictable in terms of the business and then look for some uh really good expiration companies um where you can make a little more upside but you're using profits then and uh you can take advantage of some really significant moves on some of those companies. But again look at the management talk to advisors talk to other you know know who else has invested in these companies. I think there's going to be some great opportunities coming forward. But again, do it in a disciplined manner and keep an eye on um the overall waitings and what you can afford to uh uh to lose or you know how much volatility you can take. Okay. I want to ask you about some specific sectors of the precious metals market or maybe even some specific companies. Um but first uh you know there there's kind of two ways capital could could flow into the space. One is fear, right? Fear over the things that you mentioned, Jonathan. And I don't doubt that that maybe that will be the the main driver over time. You know, if we really start seeing uh a a return to more visible, you know, rising inflation. I mean, it prices still aren't fun right now, but they're not rising like they were when we had 9% CPI, right? Um, but you know, well, at some point people just say, "Look, I I'm I'm, you know, like you see in developing countries like Argentina or whatever where it's like they've been through hyperinflation before and you get your paycheck and first thing you do is run to spend it because you know that those pesos are are going to be half as valuable tomorrow, right? We're not we're not at that part of the story yet." And I do wonder if before we potentially get to that part of the story, um, the driver might be greed. Um whereas I mentioned earlier, you know, Wall Street loves a party where it can make money in a short period of time. So it's always looking for an industry that's catching fire. And again, it's I I would say the mining space has been quite under owned or at least underfollowed by Wall Street. I mean, a lot of a lot of Wall Street firms got rid of their mining analysts years ago. Like I think they're having to like, you know, scramble to find people that actually understand these companies now. So, if if Wall Street starts to get excited about this, you know, like especially the mining space, it's it's tiny. I mean, tiny tiny. Um, I mean, I think you put all the companies together and you get like seven or 800 billion dollars, you know, like I think that's the entire sector where you take the top five, you know, of the Magnificent Seven and they're like over 15 trillion or something like that. So, you don't need that much money to say, you know what, we've had this massive AI trade. Maybe it's cooling off. Wow, you know, the mining complex is catching fire. Yeah, maybe I'll put a little bit in there, right? That could that could double the space of the mining sector almost overnight. So, what kind of role do you think greed could play here if Wall Street really wakes up? A massive one. I mean, the market is driven by uh fear and greed and I think greed is already probably starting to come in at this point. people are um looking at a lot of the companies in terms of opportunities and uh that will I think have a massive impact on the marketplace when things start to move again it's fear of missing out your neighbors doing well in his silver stocks or his gold stocks why aren't I in there I mean I'm already hearing people talk about it just you know not just in our office uh and with our clients but just out in the street when you're meeting people who aren't in the in the business so just just up in northern Ontario uh recently and that's what's top of top you know that's top of mind that's that's what people are starting to talk And so interesting just because I I haven't I've heard it amongst my, you know, friends and peers who who follow the gold market. Hey, you know, good days are finally here, right? I haven't heard the average guy in the street say like, oh, I I got to get me a mining stock yet. And maybe I'm just not talking to the right people, but I'm not sure we're at that level of of public awareness yet. Yeah, I mean, it certainly could get much much broader. Yeah, could could get much broader. No question about that. But you are hearing people talk about it. Now, I have a back in 2015, I must admit, I uh I I personalized my license plate on on my sports car and it says, "Buy gold." Okay? And so, I have the odd person drive up alongside me and they'll they'll I forget, of course, I'm driving with that plate on. They'll say, "How much gold should I buy?" And they'll yell at me and uh and then I realize that they're looking for some financial advice just on the highway. So, there you go. But, uh yeah. Okay. Are are you getting more people noticing your license plate now? Yes, absolutely. This year, this this summer I've had I only drive in the summertime, but uh I've had a number of people uh uh make make, you know, put thumbs up and a few things like that. And so that's I know that's what they're making reference to. Yeah. Okay. Um All right. It's going to be disappointing when it's an attractive woman doing it and then you realize she's talking about your license plate and not you. Um All right. So uh in terms of opportunity right now um where do you think the greatest opportunity lies? Does it lie in the metals? Does it lie in the miners? You know the miners have historically um been a more levered play although silver you know was was really well behind gold and so we had talked about silver maybe having some of the best potential here to play catch-up and it and it kind of is in real time. Um so I guess let me ask that question and then I want to get into the mining space where you see the opportunity more in the miners versus you know streamers development exploration that type of thing. Yeah. Well, with the streamers, which we've owned um through the whole piece and we have our largest position still in the streamers, uh they have done very well and they are trading some of them at two two and a half times net asset value which is quite high. And so I think if you own the Franco and Wheaten for example and even royal royal gold which is now taking out Sandstorm if everything goes according to plan um then you you probably will move along with the price of gold with a little bit leverage to it. Um, I don't think that uh, again, the moves up can be incredibly dramatic at this point. They can still do very well, but they're already trading at reasonably high valuations. So, what we did is we started to go downstream on even the royalty companies and buy some of the smaller ones that were trading at lower net asset value multiples. So, a Cisco royalties, gold royalty, groy, um, a few of those, but those also now have done very well. I mean, our Groy position has almost tripled this year. Um, and so, uh, that's just year-to- date. And so, there people are waking up and they're they're searching through and they're trying to filter through what are some of the great companies that were just, you know, overlooked. They were smaller at market caps. They were overlooked. So, I think that's taking place. So, I think the next move would be actually to look at quality miners. And uh and in that in that case uh I I I think there's no I think everybody agrees that silver if silver does continue to move it's going to be explosive and the silver miners will be quite the ride. But again trying to find good names, solid names in good jurisdictions will be the key. Um or buying um we do with some of our clients. We don't do this extensively but we'll buy say the spat you know silver miners um and they will handp pick a handful of them for you so that you don't have to be uh precisely wrong. you want to be approximately right, right? That makes sure that you get a good lift. So, I think that's where the next play will be the miners and going down the mid midsize and some of the smaller ones um that have good good deposits. They're well funded and they're run by exceptionally good people and then uh you can make some good money there. Okay. Let me ask you about a couple of uh specific stocks. One, I I I want to thank you. um uh I think at the beginning of the year we had a conversation can't remember if it was on air or not but um where you recommended looking into gold royalty uh and as you said that that's done really well in fact that was offering warrants as well which I think have done even better than the underlying stock itself sure wish I had bought a lot more um but but I can't complain at all with the returns that that it's had so far um you I've also I I posted about this publicly. Um I have one of the miners that I'd been invested in for the past couple years. Uh I mean I last check I think it was up 18,000 uh no 1,800%. 1,800%. Um and look, I mean returns like that are just amazing. Again, I wish I'd put a lot more into it. Um, I only put a couple of grand, but even at that return, it's nice, right? Um, so, you know, I I mentioned that a just to show we've been talking about the potential of of this space when it catches fire and now we're getting evidence of what really happens. And I should definitely also be really transparent. My portfolio has a long history of a lot of mining stocks that blew up, went nowhere, lost a ton of money. So I'm not trying to portray here that I'm I'm some master investor. But what's nice about this space is uh you know your downside is limited to zero in these companies where the upside is kind of unlimited and when the space really catches fire your winners can make up for an awful lot of losers. Yeah, you're nodding as I'm saying this. I'll let you chime in. Well, there incredibly asymmetric returns. So uh yeah, you're quite right. You can again 10 10 baggers 20 baggers on the upside. you can only you can only lose 100% of your money, but you can make multiples on the upside. So, I think that is that is the game that you play. But I think every time you allocate money, you need to be looking at who's running the company, what jurisdiction they're in, how well funded they are and so forth. Be very very careful. Um because uh I think it was Rick Rule that pointed this out and um you know Rick is fantastic in this space and I certainly stand on his shoulders whenever I can. He says like you know 95% of the of the miners that trade on the venture exchange are worth you know less than zero, right? And so again, it's really being careful to fair it out. Um, you know, the better companies. And I think it to that extent, it's probably better to go midsize companies. If you're not sure, if you're not, if you're just gambling, don't do that, please. You you need to invest with knowledge, and you need to have some base knowledge. If you're going to go into these companies, it's probably better to go into some of the mid-size ones that are already producing, making money, don't need to go come back to the trough in terms of raising capital. Um and uh but they they they're starting to produce more and and their production is growing and they've got some really good good good uh or deposit you know deposits that they can uh you know take advantage of and then those that increasing production along with the increasing price of gold silver the different resources will give you a tremendous ride but it's much more predictable and you won't lose money. So again you have to be very very careful in terms of where you're investing otherwise the worst thing is the price takes off and you don't do you don't make any money. Um that's very frustrating. So you want to be careful. So uh I'm just going to pull up this comment here by um this user Espane here. Uh he says, "Don't try to pick specific miners if you're not an expert in that field. The gold mining ETFs will do just fine." So you're nodding and this is advice that we've given a lot on this channel, which is um look, highly volatile space. Uh like I said, um it's been a widowmaker for many years. Uh so even though we're having our moment in the sun right now, doesn't mean it couldn't go back to being a widowmaker. Um and so if you don't have experience in this this space, you're it's much safer just to go for the beta, right? Which is just what's the the return of the the average return of the sector, right? So just buy one of the big ETFs, GLD, whatever, and just just capture the beta that way. Now if you want to try to capture the alpha which is the specific upside of the individual companies then again unless you've got years of of experience to to leverage here highly recommend you leverage others years of experience and you can do that number of ways but but the two I think best ones are one um either uh if you're a DIY guy and you really want to be DIY then look over the shoulder of a professional that does nothing but analyze this space and knows all the management teams and you know has dirt on their boots from having gone out and doing mine tours and stuff like that. And there are people out there who who do that and you know Rick Rule is a good example of that. Jeff Clark who I have on this program from time to time he's an example of that. So you know subscribe to one of their newsletters, their services and and literally look over their shoulder as they make their trades. Um that's one way to do it. The other way is to work with an adviser like you Jonathan who has decades of experience of investing in the space. You really research the companies. I I I referenced earlier kind of your Buffettesque approach um you know and somebody who is building a very uh intentional portfolio of very specific well-run companies for very specific reasons and is monitoring that portfolio so in case something changes you're making the adjustments to the portfolio there yourself. So do you agree with what I just said there? Absolutely. Absolutely. And as I mentioned, I'll tell you also um if you look at you know Van in the United States of course is they've got some really good experience in the uh in the gold and precious metal space uh SPAT which I have a lot of respect for a lot of they will create these ETFs and they'll try to give you as much uh of that return as possible by faring out the companies that they think are riskier and and say focusing on the top 15 or 20 silver miners and they do the balance sheet analysis they look at the geographical areas and uh they do all of those fundamental analys analysis. So, they're screening out a lot of companies for you and then you're getting a basket and you will get a substantial portion of the upside without uh the downside. What typically can happen, we see this in the retail market, people just jump on at the, you know, the with the just, you know, they hear something uh someone tells them they made money in a stock, they they buy it just because of that. They don't know what's happening. And silver can go silver might go to $100, might go up to a couple hundred, might go up to $300 or $400 and they buy something that's dead in the water and they don't make any money. And so you that's you do not want to get into that situation. And uh and retail investors often will because they'll just be totally speculating and not understanding what they're buying. As Warren Buffett says, the less you know, the more you should diversify. The more you know, the less you need to diversify. And so be very careful. I think the ETFs looking at other professionals as you mentioned Rick Rule um and uh other individuals like that look at some of the top holdings in some of the um the portfolios that some of the professionals are running if they have you know a silver portfolio and they have two or three of the holdings tend to be nine or you know 9 10% of the fund that's probably a conviction stock and you might do some research and look at you know why they own it and uh and then get you know get uh get into a position like that. So there's ways that you can do due diligence effectively. Um so super important points. Um and folks really I think if you're looking to invest in the mining space and you don't have a lot of experience to leverage um highly recommend you talk to a financial adviser like Jonathan and his firm that is well experienced in this and they'll just answer your questions. I mean they'll just give you their advice and you can you know you can take it and do whatever you want with it. get an experienced professional's advice who sits down with you, learns about your specific situation and then goes from there. And you know like really big questions beyond just oh what should I invest in are questions like how much of my portfolio should I have exposed to this sector right and again if you're not really well experienced in this space you want to get that kind of guidance from an outside expert. Um so let me just as a case study here Jonathan let me ask you about a specific company. So, you know, you said, hey, you think the biggest opportunity right now may be in the quality miners and in um specifically you think the silver miners could do really well. There aren't a lot of pure play silver mining companies as you know u because silver predominantly is a byproduct of mining other metals. Um, so one of the largest, may be the largest, but one of the one of the largest pure play silver mining companies is First Majestic. And that stock has not performed that well over the past bunch of years. It's it's been a disappointing stock. It has kind of come back to life a bit this year, but just looking at silver, you know, silver's breakout over the past couple of trading days, stock hasn't really done that much. Now, it's got Keith Newmier running it, who everybody refers to as one of the best mining CEOs around. Um, they seem to have some really good deposits. What a do you have any idea of what's keeping that is this an example of of the type of stock you're talking about or, you know, is this a company that's poised to pop? That's a and that's a great question. Um, you know, and I've watched First Majestic for a number of years. I've been at conferences where Keith has spoken. Um, yeah, he's uh he's a he's a, you know, long-term professional uh in the in the in the industry, but he's had disappointing results um over time also and he's had a few missteps along the way and I think that uh that that uh investors are very are skeptical and so that's why I don't think the stock has been moving as much. He's also gotten some gold in exposure in the business now also. But I think that could be an opportunity. I mean Keith is seasoned. He's got some great uh assets and if the price of silver goes to 50 60 70 $80 he is going to mint money and so even though he's had some a few missteps and some difficulties over the last number of years and that sort of maybe put a damper on the stock and people a little bit more negative and more skeptical. Um I think that skepticism can disappear very quickly if you start to add 10 15 20 $30 onto the price of silver. uh people will all of a sudden I think say oh Keith Keith's a genius again and uh they will p pound back into that stock so I think there is a lot of upside in first majestic we don't currently own it but I am watching the stock and I am noticing what you're noticing that it really hasn't gone very far I think people again as I say are skeptical but he's got great deposits and when he can turn them on also he's had to sort of slow down a little bit when he's had cash crunch and uh he's been very careful so uh when money starts rolling in um that allows them to expand and do all sorts wonderful, wonderful things. So, and Keith is seasoned. He, you know, he knows his stuff and he's a very smart uh investor. Okay. And this this is, you know, kind of interesting in the sense, you know, there are layers to investing, folks. obviously, you know, who's got the most promising projects and what's happening with the price of the metals and stuff, but then there's also sort of the psychology of it too, which is, and I'm not saying this is the case with First Majestic, you'll want to get the advice of of one of these analysts I mentioned earlier or, you know, a firm like Jonathan's that's taken a deep dive look at the company where, you know, sometimes a reputation gets developed that may not actually no, it may no longer apply a reality on the ground. And so if there's a a company that's sort of fallen out of favor but actually has really good fundamentals, you might be able to get in at a discount before the street wakes up to the fact that oh, you know, we've been undervaluing this thing all along. This ugly duckling is now a swan and we all want part of it. Exactly. I think that's that's exactly the case. And so if you you can find companies that uh they actually do have great assets. It's just that uh you know maybe there's been a a difficulty emerged, temporary political issue, something like that. um displaces uh the business for a few for a few quarters um and people therefore just look look elsewhere but the underlying asset is strong and with increasing prices they're going to produce a lot more of that product and they're going to make a lot more money so I think that uh uh there are opportunities in that area I mean Gro Groy gold royalty which I which you know we talked about briefly that was a company again that we owned through Abati royalties uh it was a royalty company up here in Canada around the the malartic property which is ano eagle and Yuman at the time, which is all Agnika Eagle now. And uh then they were bought out. Uh we made good money on our um Abati deal and they were bought out by by Gold Royalty, but um Gold Royalty did a couple other acquisitions and it sort of fell out of favor and the stock dropped literally about 75%. Um and it was trading at half net net asset value despite having some of the best royalty properties in the world. Um, and no one cared because they're they were two, three years away from uh substantial cash flows. And so, you know, you looked at it, you go, "This thing's not making any money." But then you look at the royalties and the parties that are developing the royalties and you couldn't buy a better package. Our concern was it was going to get bought out um that Franco was poking around some of the other larger players and they would love to own that business and we were we were we were hoping that, you know, it wouldn't disappear so we could get the capital growth. But there's an example. it just it just fell completely off the radar screen and a lot of a lot of your guests have talked about index investing also and so um you know people are just pounding their money into indexes and if you know the gold and silver companies aren't in you know very many indexes and people are not buying the you know sort of you know precious metals indexes there's not much capital going into these businesses and so they do nothing they just go sideways but if you're patient eventually the cash flow will get picked up and uh people will price the securities based upon the cash and then if greed sets in as we've talked about um it can just take off like a rocket and I think that we are seeing some of that right now and the global macro situation and the monetary conditions are only adding gasoline to this situation at a rapid rate. I mean they're just pouring gas on this. Okay. So commensurate with everything that we're talking about um there are very high valuations placed on the rest of the the equity markets right so we have an AI you know stock boom still going on a lot of debate right now whether it's a bubble and you know we even have some pretty prominent people in the AI space no less than Sam Alman saying hey it's a bubble so I want to take another quote same fellow here when the stock market is in a secular decline, that's when the gold miners will really fly. This year's been good, but it's nothing compared to what's coming. So, curious to hear your thoughts on that. So, you know, uh I get it in the sense that like, hey, if we've got all this capital that's, you know, been getting shoved into other parts of the market, you know, we've had folks talk about how, um, I don't know, close to 40 cents of every dollar that gets put into the market, um, through the whole passive investing um, process gets put into basically seven or 10 stocks, right? Pretty much none of that's going into the precious metal space. So, um, yeah, if capital starts saying, "Hey, look, we're we're we're not being treated as well as we were over here, so let's go where we're better treated and we'll go into the mining sector." Yeah, I could totally see that sending prices much higher, as you and I have already talked about. But we've also seen parts or we've seen cycles where the market has um been very richly valued and it's gone through a material correction and kind of as it's going through the correction, everything gets pulled down in that vortex, right? Especially if it's a sharp correction with margin calls and stuff like that. So curious your reaction to what this guy just said. you you feel like yeah as the rest of the market cools off in general we're going to do great or you know be careful I you know be careful um that uh what the gentleman has pointed out is uh could certainly take place and uh that is a viable um uh path that we could see uh people start to panic out of one area or you know it's a bubble they start to pull money and then they look for other areas and they that could certainly push the miners and some of the commodity businesses up. I do think that um uh as we saw in 089 if it's really dramatic drop then I think you're just going to have to hang on that people will sell what they can sell they'll seek liquidity at any cost and they'll get out of things and that can also take down uh gold and silver. We saw that in 0809 but then we saw a quick rebound. And so again if you're an investor you've got to be careful. You got to know why you own them. And you can't get spooked out of positions if the fundamentals are supporting those businesses and the valuations are there. Um if you you know if you can get spooked out that easily then you're really not an investor. You're a speculator. I do think that um you know the the valuation is clearly because of AI are extended. I mean I'm not telling you anything that uh is is really all that intelligent. I mean when you're trading it just you know 40 50 times sales and things like this. And of course that's not sustainable. No one knows when that'll come off, but um from for a professional investors like us, we can't chase those kind of stocks like a pel and tear or something like that. I mean, again, an amazing company and so forth, but it's just, you know, you just we just can't pay those kind of multiples. But with AI, with digitization, with robotics, all of these long-term trends, they are requiring a mining revolution. I mean, they all require dramatic digging of holes in the extraction of nickel, copper, silver, all sorts of resources, right? and you're going to need uranium to you know power the um you know the AI facilities and so forth. And so I think that um along with the concern over fiat currency and and um and uh purchasing power there you know there could quite likely be a a good commodities boom and uh opportunities there and so we're trying our best to sort of handpick businesses and and selectively get exposure to areas that will benefit from that. Also, I think Stephanie Pomboy was talking about that recently on your uh on your program and I I agree 100%. That's where we would rather find businesses trading at, you know, onetenth the multiples um with similar growth prospects in some cases. Um and we we think we can make more money and protect our investors capital better. Okay, let me pull this question here from Steve. Um he asks for your thoughts on investing in Mexico, silver, miners, and politics. Let if you have anything to say about that, please do. But let me expand the question here which is with um commodity companies in general certainly with precious metals producers um you have country risk because a lot of these operators operate in countries outside of the US and Canada right um in this new world order where America is you know assuming more of an American America first uh way of dealing with the rest of the world. And so, you know, everybody is kind of taking a beat and saying, "Okay, well, maybe it's a little bit less about we're all, you know, part of one big globalized family and it's we're, you know, as Michael Ever would say, it's sort of a return to mercantalism." Um, has country risk rerated to a higher level in this new world order? I Yeah, I think so. I think you want to be careful in terms of political risk in different uh in different countries. Um Mexico let me ask one more question just so you can wrap it into your answer. Is is the risk of like nationalization higher now as countries are starting to say hey wait a minute you know maybe I don't want to just liberally share my country's resources with the rest of the world the way I was doing before. You know, I think I think the risk of nationalization um uh it probably is on the rise. I mean, you've got totalitarian governments, more government central centralization of power going on in many many countries. And so, even if they don't outright nationalize it, uh they can step in and demand royalties, right, which in effect is an equity position. We seeing uh some of that negotiation going on in Panama now with the Cobra mine with copper. I mean eventually I think that'll come back up again but uh you know Panama will make sure that it gets ex you know expropriates a fair bit of the uh wealth of that. Even in Canada we've had you know royalty situations change um and you know we basically a country that's pretty favorable for resources but you know you start fooling around uh with the royalty rates and uh again governments are strapped and so they don't have to necessarily Jack Jack just asked kind of tongue and cheek like Canada. Yeah, I mean Canada's changed uh royalties uh on different assets over the years. Um and uh and and and basically that's taking an equity position. They can say, you know, they don't like Donald Trump taking an equity stake in Intel. Well, if you're taking a royalty stream, that's an equity stake basically out of the company uh and out of the assets. So, I think we do have to watch that. I do I again I speaking to individuals who know Mexico much better than I do and are investing down there. Some of the folks running the companies there. Mexico is still very close to the US. It's very dependent on the US. I think nationalizing and just expropriating assets from US investors could be a little tricky. I think they would be careful about that. So I think um you're probably safer in Mexico than than in you know many other countries despite the fact that it has tremendous political problems and as we know sections of it it's run by you know drug cartels and so forth. Um I think you have to be careful and that's probably one reason why you diversify and even if you're looking at a mining company it's be careful about buying just a one trick pony where they might just have uh one one asset in one country that's risky. if they can have it in a few different places, that can give you some protection to your asset value. Also, I mean, First Quantum is a good example of that. A well-run company, very well-run company. Uh they put all that money, a good chunk of their money in Panama over, you know, over 10 billion US in that Cobra mine and the next thing you know, it shut down. Um the company didn't go out of, you know, out of business. They had to raise capital. They they worked worked worked. They had other assets. They protected themselves and they've lived to uh fight for that asset in the future. So, they were able to survive. that might not have happened if they just had that one asset. Um, so the things like that you need to look at when you're looking at companies and realize that that's part of the risk profile. Yeah. And so you're underscoring two really important things. One, you really got to do your your homework and due diligence if you're buying individual miners. And as you said earlier, you know, you can really benefit from diversification, whether it's just playing it safe and buying the the industry sector ETF and just capturing the beta or leveraging someone else's portfolio, but again getting getting diversification because no one knows what's going to happen with any individual minor. Um, let me ask you this. So Joe asks, with the prices going up in gold and silver, when will the small junior miners start to be acquired by the larger ones? Should happen, right? I mean that that tends to be the cycle of the space, right? You talked about how you were afraid that that GROY was going to get snapped up by a larger player. Um so at some point if if this bull market continues um we should expect that right Jonathan? Yes, we should. That is the natural order. I think that as uh as Rick Rule pointed out in the period I think it was from 2011 to 200 no I'm sorry 2001 to 2008 you had like a quadrupling of the price of uh of gold and um you had the free cash flow per share on gold uh gold miners actually go down and so you had a lot of acquisitions that didn't make any sense and so forth. So I do think that um there is a little bit more financial discipline in the market right now and so those junior acquisitions I think will come but it'll probably be the better companies and I think there will be a lot more scrutiny on terms of uh especially the early transactions of what's taking place. We've seen some transactions already going on. I mean some silver companies have disappeared. Um assets have been bartered amongst companies um you know like the porcupine property bought by Discovery Silver and so forth off of Pneumont. So there are transactions going on. I think that will that will uh continue but again there I think they're going to be very careful. So if you are looking for to buy a company where you think it might get acquired make sure again it's got great assets in a good spot they can be developed by putting more capital into it and expertise you can really develop the the the production level of the uh of the gold or silver. That's what companies are going to be interested in buying. Um but I think again it might be a little slower this time around but it will speed up eventually if money is to be made. it will be it'll take place. Um M&A activity uh that's that's inevitable eventually, especially if if silver keeps going up and gold keeps going up, there'll be more M&A activity, right? And I've also heard Rick talk about how uh a lot of the you know major producers um sort of slowed down their capex uh over the past decade. Um the point being that they just sort of have, you know, either less gold in the ground or less um uh projects in development, uh looking out forward than they have in past eras. And so at some point they're going to need to go on an acquisition spree um to to start making up for that deficit in capex. Do is that something you've said to Yeah, absolutely. That's that's that that is what um the experts who follow uh the area very carefully in terms of it. And the reason why the capital hasn't been invested as much going back a few years again is because the stock prices were low and they were being punished. Um, right. And and if you're running, if you're a CEO of a company, you're and your stock price is in is in, you know, on on the on the basement floor and um and you're trying to preserve your capital and you don't dare uh issue any stock um or you're just going to get killed um in terms of dilution and so forth, you're just going to be preserving capital and trying to really run a a business that is protecting your balance sheet. Basically, when the price of gold and silver now have gone up quite a bit, all of a sudden your cash is flowing in and um and you're going to have to deploy that and uh otherwise you're not going to grow the business. I mean, the whole game is to take cash this year and put it back into your business at high high return on invested capital. So, you can compound. You don't compound unless you reinvest. So, as the cash flow comes into these businesses, the trick will be reinvestment. And they're I think going to be careful this time around um just because of the uh bad experience they had. But again over time that carefulness will go away too right if you if if for example we we run another four or five years of uh really high prices and money's flowing uh you know people will get reckless again so be very careful you want to buy um into companies that are not reckless they're very disciplined I mean one company we've been very fortunate to own um is a Eagle you know run by Shawn Boyd you know now different CEO but he's been chairman uh and that thing is just amazingly disciplined and you see what happens if you run a disciplined company. Uh the ability to compound and outperform your peers is just massive. And you look at the misallocations at Bareric, for example, just to pick on them, you know, they've gone nowhere. Um and Eagle Eagle is up, you know, hundreds and hundreds of percent. So, um it is all about capital allocation and uh Rick is quite quite right. they will be buying resources and they'll be looking for great resources that they can uh put their cash to work in and um and so I think that will also spur on the sector and get more more greed and more interest and uh more more uh fear of missing out into the sector. Yeah. and and that that FOMO. Um I I recall right after the the last big bull run that this space had. um an analyst sitting down with me and you know basically sharing just the data and you know saying hey the the buying just got stupid at the end of the the cycle where you know companies were out there willy-nilly just spending stupid amounts of money to acquire these these really junky small you know explorers. Um, and he said if you if you actually look at the stock prices when the mania was really raging, the worse the company's prospects on paper, the better the stock performed like like they just could not get enough speculation. Um, I mean there's no guarantees it's going to go exactly that way again, but if if if the bull run continues the way you think it will, do you think we will eventually enter that cycle? And I'm not encouraging people to go intentionally buy junky companies, but where that that's that that kind of caution gets thrown into the wind like that by the industry where it's like we we just got to get more of this stuff. If it goes long enough, we'll be there again because that's human nature. And I we haven't changed anything about human nature. Over time, people will forget all that they learned in the past and they'll repeat it again. and that I don't believe in a cyclical view of of life but uh I do believe that uh things will rhyme with the past because human nature is the same. So again we saw like with the tech situation too we're see I think we are seeing valuations in some tech stocks. I mean there's some wonderful tech stocks but some of the valuations are getting just a ridiculous levels and we saw that back in uh you know uh 2000 um and we I lived all through that the JDS unif micro systemystems you know on and on they go and people they could do no wrong um and uh people will pay for the pay pay those valuations. So I think the same thing happens in every sector. If money is being made and things are going up aggressively and that goes on for you know a reasonable period of time then caution gets thrown to the wind and people jump in with uh both feet, both hands uh and uh and and try to grab whatever they can. So yeah, I think that that will that will occur if this goes on for an extended period. Okay. Well, um that's the big if and uh Jonathan will be tracking what happens uh as this goes on and we'll have you back on to update us as things go on. Um, we might have I hope we didn't, but we might have t top ticked this whole run. Um, while we've been talking here, um, a few minutes ago, uh, probably about 20 minutes ago, uh, silver futures jumped up to like 4225. Um, they've now dropped back down below 42. Um, they're still close to it. Um, but anyways, um, we'll see what happens from here. But um the story has definitely gotten a lot more interesting um since the last couple of times we've talked Jonathan and um uh we'll be getting you know deep into the latest update on this uh in the not too distant future at Thoughtful Money's fall online conference uh which you'll be participating in Jonathan. So thanks in advance for that. Um and folks you'll have a chance to ask more Q&A of Jonathan there too. Um, you know, specifically, if you have questions about how to invest in this space, um, you can talk to Jonathan and his team anytime you like. Um, and the easy way to do that is just by filling out the short form here at thoughtfulmoney.com. Um, if you live in Canada, then make sure that we on the there's a very short form to fill out there. You fill out um that Canada is your country of residence and that way you'll be connected directly with with Jonathan there and his team. Um, but yeah, I have a lot of Canadians that watch this channel and and from time to time I I get, you know, Canadians reaching out to me saying, "Hey, do you have an endorsed adviser in Canada?" And yeah, I just want to say, "Yeah, we do. We've had for a good while. It's Jonathan and Jonathan and his team. And whether you're super excited about, you know, the miners and want to talk to him about that or whether you're concerned about, you know, all the other stocks, you know, the AI stocks and the general markets itself, again, his team can help with that. Or if you just want to talk about, hey, I I I want to update my financial plan. I want to make sure I'm on track to hit my financial goals in life, retirement, funding, education, whatever. Uh, you can talk with this firm about that, too. So Jonathan, I'll let you have the kind of the closing words here um to folks about anything I did either didn't ask you or just you know any parting bits of advice you have for folks. Yeah, one one item I just point out is you do have to be prepared for some downstrokes within a bull run. So um you know if if silver drops back to $35 or something like that or gold drops back to 3,000 or 2,800 again I'm not predicting that but you do get these moves within a bull cycle. We you want to understand the fundamental reasons why you own these precious metals. And again, it gets back to all of the different uh folks that you've had on speaking about the challenging um you know, macro situation, the monetary conditions, the trading conditions around the world. You know, the housing market weakness. I mean, watched Melody, right, talk about that and so forth. These are all real economic issues. And it's all of these issues ultimately that are buttressing and supporting the prices and the valuations of gold and silver and so forth as well, especially with silver with the production shortfall given the demand. So, don't be scared out of these things. Understand why you're buying into the sector and if things come off uh take advantage of that dollar cost average. If the fundamentals are still supporting it, then there's just going to be greater opportunity. So, just be careful. There will be some volatility, right? Yeah. And that's um you know obviously Buffett famously says he loves it when the things that he like that he owns goes down in price because it means he can buy them at a better better deal you know as long as he still believes in the the main thesis. Um and and I'm glad you brought that up one because these are just volatile assets to begin with. I mean folks you you can't invest in the space even just the metals themselves without really appreciating the fact it's very volatile. So you're signing up for a wild ride. especially so if you're investing in the miners here. But Jonathan, you know, we we we talk a lot in this program about how bare markets have um you know, historically had some of the biggest rallies in history, right? And they're kind of designed to suck people in thinking that the the rally the the bare market's over and then the bear claws come back out and destroy everybody that that just jump back into the pool. Is it somewhat similar in a in a bull market run where you have these drawdowns um and they you know their kind of goal is to get the weekends out but then it's back off to the races. So you want to make sure you're mentally prepared not to get shaken loose. Absolutely. Absolutely. That is exactly what happens. Uh people will get shaken out very easily. They want to buy high and sell low. Um it's you know retail investors overall and and professionals too. We have to be very careful as professionals. Uh but retail investors, I mean, the studies have been done. Um they can they can be in an asset class that goes up 10% a year over 10 years and they can lose money in it because they're buying high and they're selling low. I mean that famous that famous study that Fidelity did years ago with Peter Lynch, you know, on the Mellan Fund, uh I think the Mellan Fund, uh I made an average of I don't know 14% a year or something like that, but the average investor in it made two. Um and you know, it's some crazy things like that. I mean don't quote me on the exact numbers but that's directionally what happened and that's again because people get shaken out much too easily because they haven't invested for the right reasons and they don't understand those fundamentals. So again u be very careful about that or work with I mean we're more than glad to work with people that way we uh we can talk to you and and and uh you know walk you off the ledge and say this is why you own these stocks. Nothing has changed. Uh the federal government's still running these massive deficits. Uh you know Europe is in a is is in a funk. Um, you know, Japan's got major challenges. China's got issues. These issues haven't gone away and so fiat currency is under pressure and that's why you want to own the precious metals for the for the foreseeable future. All right. Um, well, very well said, my friend. Again, folks, just a quick reminder. Um, Jonathan will be speaking uh with uh a lot of other phenomenal faculty at the upcoming thoughtful money fall online conference. That's Saturday, October 18th. Don't worry if you can't watch live that day because everybody who registers will be sent replay videos of the full event, uh, all the presentations, all the live Q&A, you won't miss a thing. Um, so to sign up now and lock in the early bird price discount, which is the lowest price we're offering, go to thoughtfulmoney.com/conference. Um, and if you are a premium subscriber to our Substack, make sure you check your emails that I've sent you. uh in them is a code that you can use to get an additional $50 off of that lowest early bird price. I want to make sure everybody who can gets the lowest price they can. Um all right, Jonathan, this has been great. Folks, do Jonathan a favor. Let them know in the live chat there in the comments section below how much you've enjoyed him being here today. And to show him that, hit the like button and then click the subscribe button below as well as that little bell icon right next to it. And obviously if you want to go talk to him and his firm or one of the other financial adviserss that uh Thoughtful Money endorses if you live in the US uh just fill out the short form there at Thoughtful Money. Jonathan, my friend, great to see you again. Great job today. Um have fun riding this ride. I'm sure there's going to be some some curveballs, some twists and turns. I've got confidence that you're going to navigate that just fine for your clients. But as uh you know we get more uh highly interesting developments here, love to have you come back on the channel to uh to elucidate them for us. Yeah, I love speaking with you Adam. You do a fantastic job and the channel's very instructive for me also as a professional. I love to listen to the different uh guests and more recently some of the guests have been outstanding in terms of the value add information. So just encourage all the listeners and uh to take advantage of it. This is amazing information. Well, that that's very kind of you to say and it's an honor to hear that you watch it to to educate yourself. But yeah, we landed a really big guy just fairly recently. We got Jonathan Wellm on the program. Amazing. Thank you very much, Adam. Take care, Jonathan. Everybody else, thanks so much for watching.