GOLD the 'Perfect Asset' as 'Haymaker After Haymaker' ROCKS Economy: Jay Martin
Summary
Geopolitical Impact on Commodities: The fracturing geopolitical landscape is causing uncertainty in commodity supply chains, leading countries to pay more to secure resources, with strategic alliances shifting rapidly.
Gold Market Dynamics: Gold's price surge is seen as a response to global economic volatility, with central banks increasing their gold reserves due to uncertainties about the US dollar's stability.
Silver Market Complexity: Silver's dual role as both a monetary and industrial metal complicates its market dynamics, with supply not responding to price changes due to its byproduct nature.
Nickel Market Opportunity: Indonesia's dominance in nickel production has depressed prices, but potential environmental regulation changes could benefit Canadian and Australian producers in the long term.
US-China Tech Rivalry: China's strategic use of the "catfish effect" has allowed it to outpace US tech industries, with venture capitalists now viewing several American tech sectors as uninvestable.
American Empire's Decline: The US's involvement in multiple global conflicts is seen as a sign of its waning global influence, with historical patterns suggesting a shift in power to Eastern nations.
Investment Strategy: Investors are advised to derisk by distinguishing between cash-flowing investments and speculative plays, especially in the volatile mining sector.
Transcript
Hello everybody and welcome into commodity culture where we dive into commodities markets, sound money principles and geopolitics all with the goal of making you a better investor in the commodities sector. And on this episode I'm thrilled to welcome Jay Martin to the program, the organizer of the Vancouver Resource Investment Conference and the host of the Jay Martin show. Today, we're going to dive into the intricate connection between geopolitics and commodities and discover the main themes and trends he thinks investors should be watching to add alpha to their hard asset portfolios. We dive into gold, silver, and precious metals mining stocks. Why he thinks nickel could be the next metal to go on a rampage. How China is outsmarting the West in the world of tech. why he thinks the sun is setting on the American empire and so much more. So strap yourselves in for my conversation with Jay Martin. Jay Martin, it is great to have you back on commodity culture. I want to kick things off by discussing the current geopolitical landscape and its potential impact on commodities markets. What are the main themes and trends you're watching in this area that you think more investors should be paying attention to? There's a lot of threads to pull on right now, Jesse. But, you know, two that I I'm paying a lot of attention to and I I think are worthy of your attention. The first is just the the big trend we've been watching for the last 10 years. And this is the fracturing of the geopolitical chessboard which really began to heat up obviously in the post2020 world. But as a consequence of this, what's effectively happening is that countries don't know which way to look to find friends or enemies. Alliances and adversaries are shifting that quickly right now. What that means for commodity investors is that countries that thought they had secure supply of raw materials can no longer be so sure anymore. And in that kind of uncertainty, people are just willing to pay more, do more to secure that supply. And so we're seeing a lot of activity in that regard right now. Countries becoming very strategic with who they'll sell to, what they'll what they'll sell, right? And who what they're doing in order to buy from other other countries that have stuff they need. And you know, it's it's crazy to think that we may it's hard to understand what the alliance picture is going to look like in as short of a time frame as like 5 years, let alone 10. And even in just the last month, there's been some pretty seismic shifts in the geopolitical landscape landscape like the SEO, the Shanghai Cooperation Summit hosted about a month ago. Uh this was the largest over 40 countries attended this year. It's never been that large in the past. More countries are tuning in to see what China has to offer as an alternative. And there was a lot of performative politics at this summit. uh namely you know the handshake between the minister of South Korea and Kim Jong-un. But the message was really clear behind this performative politics. You have another regional hegeimon sending a message to the world that says we can steward peace and we can mediate. Uh this is this is we got this under control, you know, and the world took notice, right? And um there's a lot of countries right now that are trying to thread the needle of neutrality and they're watching that, right? And some are obvious, kind of the bricks adjacent countries, but some aren't. You know, you look at a country like Australia, they're threading the needle of neutrality very effectively right now. They're maintaining their sort of military agreements with the United States, but the trade agreements are stronger with China. That's their biggest customer. And the difference for them is from a proximity standpoint or a geographic standpoint, China's actually the the better partner, the more cost-effective partner. The same reason that Canada will never decouple from the United States. We have the longest coastline in the world and access to three oceans and every global market, but it's never going to be as cost-effective as shipping goods across a land border. And Australia finds themselves in that in that situation. So, you know, would we see a country like Australia attend the SEO in a couple years? I wouldn't be shocked to see that, right? Um, and you know, a month ago, we saw this news of the Israelis dropping a bomb in Doha in Qatar. And this was really significant, but not for the reasons that people were following right now. First of all, this was a it occurred because Qar had raised their hand to ho to hold and host uh peace negotiations. That's why the operatives were there, the targets, all this. Uh but a Qatar national has never been bombed inside that country ever before. This was a first and it was notable that obviously as as we've read the Israelis suffered zero consequences from their strategic partner being the United States and that was the headline that we all read. But the important thing happened two weeks later and this is when Saudi Arabia reading the landscape decided to sign a defense pact with Pakistan. Now Pakistan's the only Muslim majority nuclear armed country in the world, but they got that nuclear technology from China, which puts Saudi Arabia de facto under the Chinese nuclear umbrella. And this bucks everything we've known about, you know, the petro dollar concept my entire life in the face. It's the reversal of that, right? Sell your oil for dollars and we'll protect you. Well, that technically has been over for a minute, but practically it's now done. Now it's really over and Pakistan since announced the door is open for other countries to entertain subsequent agreements. Now, we know that's not Pakistan speaking. That's China speaking through a proxy. That's how these things are done. But all that to say, it's a that's a behemoth of a country that has historically had the power and the will to stay neutral now picking a side in a fairly major way. And so when when the the geopolitical chessboard is so unclear, countries will be willing to pay a lot more for the stuff they need. And um you know that's that's why we're seeing state capitalism creep in a major way into the United States right now. Um this is you know practice general practice in in China. But in the last few months, we've seen what started with the Nippon steel, US steel merger that was originally blocked by the US administration and then approved in exchange for the US government taking a board seat and given veto power over a handful of different uh operational metrics in the country and then the kickback, the 10% kickback on the Nvidia chip sales to China deal. But in the resource business, we're seeing fairly big moves. Uh whether it's the Department of Defense investing in MP Materials rare earth refinery in China or the $245 million US antimony deal where last week President Trump saying he's going to take a 10% stake in lithium Americas. This for commodity investors, you cannot ignore this. This is a new very strategic investor with incredibly deep pockets and the ability to shift policy at the table. And what that means is that if you're investing in projects that are important to the United States, you now have an activist investor at the table. somebody who might not just finance, but somebody who probably will look at regulation and permitting and make sure if that project is going to supply them with product, that permit's going to get expedited. And that's great news for mining investors. It shifts how you think about jurisdictional risk back to away from jurisdictional risk and into what you might call global alliance advantage. But jurisdiction matters in a new way and in a major way. And I I think we're we're going to see that the state creep into the commodity sector. And I'm not, you know, people have opinions about state capitalism. I totally get it. I don't have an opinion. I just try to read the room and then play my cards accordingly. And this is absolutely a new trend. And it's a big one in the mining business. The sponsor of today's episode is Arc Silver Gold Osmium. Owner Ian Everard is praised even by his competitors as one of the most honest and level-headed bullion dealers in the United States. They have some great prices. You can see some of them displayed right now on screen. Take advantage of these specials today by reaching out to Ian at 3072649441 or by email at ianarchsggo.com. Make sure to tell him of course that commodity culture sent you. And now back to the interview. Great summary. I want to dive into the geopolitical landscape more a little bit later, but first I'd like to touch on some specific commodities. Of course, I want to kick things off with precious metals on an absolute tear so far this year. Let's hone in on gold first. Now sitting around $3,940. So, we're in within spitting distance of $4,000. Seems to be continuously making new all-time highs. Obviously fantastic for those of us holding gold and related equities, but we often hear that such a rapid rise in the gold price can also be a cause for concern about what's happening with the health of the global economy, with the health of financial markets, and with the state of the world in general. So, what are your thoughts on this dramatic rise in the gold price, the catalyst driving it? And should people be worried if gold continues to advance to 4,000, 5,000 in short order? Is that a representation of perhaps geopolitical and economic chaos in the world that people need to be wary of? >> Yeah, I think you hit the nail on the head and a lot of investors are looking at this rally as just the next market run and they've seen uh rallies and and bubbles in real estate, in AI stocks, in crypto, and now it's gold's turn. And that's how they're processing this. It's just the next asset that's on a bit of a tear, so I should probably get in there. But as exactly what you said, good news for gold investors is bad news for pretty much everybody else. And so, you know, the the price of gold is a measuring stick in terms of the amount of volatility people are expecting in the future. And we can go back to the beginning. I mean, this has been the most textbook gold bull market I could ever have imagined. And if we go back just a few years to 2022 23, we all noticed that central banks were the first buyers in this market. They started buying in at paces we hadn't seen in 50 years. Now, why would a central bank do that? Well, it's because they looked at the current system, the system they've relied on for so many years, being the US dollar system, and they were just a little bit less certain about what might happen next. A little bit less sure that it was going to be as predictable as it used to be. And when you're less certain about something, it's good to find some optionality and just divest a little bit into something close. Gold is the perfect choice because it's a global market that is accepted 247 anywhere you go. It's an optional liquidity. It's as liquid as US dollars. But in the event that something funny happens with the US dollar, you're not tied to that boat anymore. And effectively what they saw was, you know, two things. It was that the issuer of that currency is not as reliable as they used to be and they can in fact confiscate US dollar assets should they want to which we saw with Russia of course and secondly that the devaluation of that currency hit a pace that they weren't comfortable with right and so they moved to an asset without the counterparty risk that you cannot dilute and that's gold but like investors were frustrated in 2023 when the gold price was running and the equity prices were not and that's you know central bankers buy gold. They don't buy gold equities, right? So that's why that decoupling occurred. But when the price of gold ran the way it did, the earnings of the companies that do produce gold turned really favorable. And four to five quarters later, meetings started occurring in boardrooms with institutional investors and professional hedge funds saying, "Look at these earnings trends. We need to be positioned in this. There's definitely a trend emerging and we need in." And that was 2023 24 when you began to see you know the wheat and precious metals and the Franklin debatas led the way and the barracks and the numonts and the eggo eagles followed right after and you know since then Jesse like we've seen a very logical patient and sequential trickle of capital down to the earlier stage opportunities the high quality mid-tier producers the junior producers and even into like the funded and semifunded developers Right. And and the market never moves fast enough for investors. They always get impatient. Uh I think this has been the most textbook gold bull market that I ever could have imagined. Um and um you know if if people are wondering is this market getting a bit long? Is it getting a bit hot? I would just go back to the origin that we just talked about. If the initial reasons that people started trending to gold was because we believe that the US dollar will continue to be devalued in the future and we believe that the United States issuer is going to be less predictable than it used to be. If those two things are still true, then the gold thesis is still true and in fact probably more true today than it used to be. So people bet on gold when they're scared. They bet on gold when they don't know what boogeyman's around the corner. Um and and that's effectively what's happening right now. This decade, every year has thrown a haymaker at us, right? From 2020 forward, new boogeyman around every single corner, and we're only halfway through. Um and that's that's positive for gold, but it's bad for everything else. >> Silver, the poor man's gold. Well, while gold has been making new all-time highs, silver has been having its own quiet breakout now sitting around $48.50, 50s, very close to previous all-time highs of around $50 at least in nominal terms. Of course, it would take around $200 to get back to 1980 highs adjusted for inflation. And that's using official government inflation statistics. So, the real number likely much higher than that. What are your thoughts on silver's trajectory and the catalyst driving this market? >> Well, silver is a lot more complex than gold for a couple of reasons. And the first one is that it's a dualpurpose metal. And so it's impacted by monetary sentiment and it performs like a monetary metal like gold does that we just discussed. But obviously it also performs in response to industrial demand like copper does, right? And so it's got a foot in each camp. And in addition, it's produced differently. There's very few pure silver mines in the world. Most of the silver that we have is produced as a byproduct of something else, usually gold. And as a consequence, supply doesn't really respond to price the way most things would. Typically, if the price of something goes up, the producers of that thing will produce more of it. Silver doesn't respond like that because silver is a byproduct of something else as the primary production. As a result, it's a lot more difficult to have an airtight thesis on the silver market. Therefore, it's very important to have an airtight management team on the companies that you're investing in. And silver is a small market. There's not a lot of companies to choose from. I think there's nine silver companies on the New York Stock Exchange. The most recent of which was maybe four or five months ago when Sean Kungun's Dollyard and Silver uh got listed on the New York Stock Exchange. you know, they're they're one of these like semifunded developers in a good jurisdiction in British Columbia. Uh strong resource and growing the ounce count, all all of this. Um and uh you know, I I play the silver market that way. I look at the historic pairings between the gold and the silver price and the gold and the silver equities. And with um strong repetition, silver lags and then outperforms in the long run. And it's difficult to time that, but it's occurred almost every single precious metals bull market in that fashion because I can't have as much conviction in the uh demand thesis. I'm very strict in my management team. And you know, I for investors watching this show, you know, there's I mentioned Dolly Vard and Silver and I'm not promoting that company. I am a shareholder. But what I like about companies like that like Dolly Vard and Silver is that they're part of a larger organization. In this case, it's the Fior group, right? Founded by legendary mining investor and entrepreneur Frank Gustra. And in the Fiora group, there's eight or nine companies that they're incubating right now, all in the junior mining realm. And it's massively advantageous to find those high-erforming incubation shops and then look at those companies because they're financing them. They're pooling resources. They're saving money on GNA and back administration costs. They're workshopping problems and opportunities as they came in. All companies together. And so you don't just have the brain capital of two or three executives. You have 15 to 20 working on every problem inside that company. And when it comes time to raise money, they pull everybody's capital networks. More optionality leads to a cheaper cost of capital. And so just as an aside, I encourage investors to look for shops like that. Fior Group, Invented Capital, another one. Just like everything in the junior mining sector, there's dozens of them and most of them are questionable, but there are some very good ones and they're a great place to look uh because you start investing in the team and um you know once you find a good team, they deliver you some returns, you stick with them. Success begets success. It's a strategy that's worked for me very well. >> Well, let's dive a little bit deeper into the gold and silver mining sector. The GDX and SIL ETFs are up over 115% year to date. At the last VR, uh, as you touched on, a lot of the conversation was revolving around why aren't the miners able to really provide that levered play on the metals that they had in previous bull markets. And now here we are. That thesis appears to be playing out. However, on an RSI basis, both ETFs are pretty overbought at these levels. Do you think some caution is warranted here that we might see a pullback or do you think the greater fear is that this market could run away from those who were sitting on the sidelines hoping for a correction? >> You know, I think two things can be true. So the first thing I'd say is that if you have been an investor in this industry, meaning the junior mining sector for two to three years, more that's qualifies to 15 20 years absolutely you've been through some hard years even if you've only been here for three years, right? The market has just given you a gift as you just described, right? And you should take that gift and derisk a little bit. Now, I'm not saying exit the gold sector, but look critically at your portfolio. Be honest with yourself about what is an investment cash flowing business. Agniko Eagle, Newmont, Weeden, Precious Metals, and what is a speculation, a company that doesn't generate cash, and you're just waiting on a catalyst that might move the share price. Well, that catalyst has arrived. that catalyst has come in the form of market sentiment becoming a tailwind for the earlier stage companies. This is when you derisk. This is when you have the opportunity to withdraw your principle and let the remaining shares ride risk-free. That should be the goal of every speculator is find the riskfree ride. Imagine you can find the asymmetric 10x opportunities with no risk. You would take that all day long. This is your opportunity to do that. And I know it's tempting not to because you're in XYZ developer or latestage exploro and you're up 200% but you're looking at the macro and you're like I'm going to ride this thing till it's a 10bagger. Do that but not with all your capital. And that may sound conservative or cautious but this is what every junior mining household name investor does with their portfolio is when they're given the opportunity to derisk, they take it. Rule number one is don't lose any money. But having said that, Jesse, like gold is still off the radar of most investors. And I don't mean people, I mean investors. Just last week, I was in Japan with nine other entrepreneurs, all very successful entrepreneurs, eight figure businesses, critical thinkers, very intelligent, brave, all of this stuff across the board. There's not a single person outside of myself that has a dollar in the precious metals sector, whether it's physical equities, miners, nothing. Nothing. Every single one of them still just throws their money in the QQQ like it's the most obvious choice that anybody should make because the market always goes up. Now, those are like wealthy, critical thinking, successful investors, right? Entrepreneurs first, investors second. But that's what I'm saying that the mainstream money hasn't even sniffed at this rally yet. We think that we're getting maybe a bit hot and frothy because we're surrounded by it, right? And we've been waiting for this moment. Investors who have been in this game for a few years, you know, and that's why you should take the opportunity to derisk and just recycle those profits. Have you been so lucky? Recycle those profits into, you know, gold savings companies, right? Companies like Agniko, Newmont. I mean, those are companies that you can put cash in if you have a 10-year thesis on gold and just park it there, right? Ride some of the volatility and corrections that will come, but don't treat your speculations that way. Don't make that mistake of thinking those two very different equities should be treated the same, right? Don't park your money in a speculation and think you should just should just ride that for the next five years. You should be very clear on on what your exit strategy and your d-risk strategy should be. So, we're early. I think we're very early innings in the gold run for sure. But for those of us who have been here a few years, take this gift and derisk. I think there's a long runway ahead. And I'm given that conviction by all the mainstream conversations I have who aren't even looking at this asset class or industry yet. >> Yeah, that's a great way of looking at it because the mining business is of course extraordinarily risky. Single company risk is much greater in this industry than in others. We've seen things like coups occur in places like Nijair. Um we've seen issues even with Franco Nevada, the supposedly safe, stable royalty company when the Cobra Panama mine got shut down by the government there. Um their stock price also took a massive hit. They've recovered since then, but these are things that you have to think about that in one moment a massive amount of of that value can be erased. So, I think that makes a lot of sense to to take your initial bet off of the table in those types of companies. I I want to talk about other commodities that you're watching right now outside of the gold and silver sector that you think could present a potential opportunity. What's top of mind for you? >> One chart that everybody should pull up right now is the price of nickel. And if you have a look, you might ask yourself the question, why has nickel fallen off a cliff for two straight years when almost every other hard commodity has done the opposite, right? And um the the the short story is that there's been one player that's consolidated that market and flooded the industry with cheap product. That player is Indonesia. That's where I am right now. And um nickel effectively comes from three places. It comes from Canada, comes from Australia, it comes from Indonesia. Nickel is the most important alloy in stainless steel. So, for example, the the president of the United States wants to reshore and uh resurrect the American steel industry. There's no possibility of that happening without a steady supply of nickel. You want that steel to be durable, uh temperature resistant, anti-corrosive. There's about 20 different alloys that you use. Nickel is the most important. So, think about nickel that way. That's what it's used for. Um, now Indonesia tried to form a nickel cartel effectively with Canada and Australia a couple of times. Kind of like OPEC but for nickel and Canada and Australia shut them down. So, Indonesia went to China and raised about $65 billion to build a incountry refined nickel refining industry. Uh, Indonesia is endowed with lots of nickel, but they didn't have the capital, the expertise to build the refineries to export the refined products. With the help of China via their belt and road initiative, they were able to build what has become the most competitive nickel um uh region in the world. And due to Indonesia's very cheap labor and incredibly lax environmental policies over the last couple of years, they have flooded the market with cheaper nickel than anybody else could produce, putting Canadian and Australian miners on care and maintenance. They can't respond to these prices, right? You flood the market with cheap product. You put your competitors out of business and you scoop up more of that market. So remember, they tried to form the nickel OPEC with Canada and Australia. Canada and Australia turned them down. Today, Indonesia on their own controls 67% of the nickel market where they're on pace to do like 75% by 2028. Now, just for context, OPEC at their peak in 1973 only had 55% of the oil market. So, 67% is colossal. It's it's absolute pricing power. But the problem is is that Indonesia is modernizing and the the Swasi Islands where the in where the nickel comes from is one of the worst environmental disasters that the world hasn't heard about yet. This is something else. Uh it's an absolute catastrophe in a country that for the last 3 years, this is where the island of Bali is. Bali was the number one traveled tourist destination in the world for the last three years running. Uh the new president is trying to modernize the company the country. He's um revisiting the uh status of of permits for buildings all over the country putting in um uh uh superfast train and rail all over all over Bali to begin and other islands. Um this is a country that's trying to you know Canada and Indonesia just signed a massive trade deal after the fact, right? Uh but this is a country that's trying to enter the global stage in a major way. 285 million people and I firmly believe that this environmental standard is going to be raised in that process as Indonesia joins the ranks from developing to developed countries. Um there's going to be some massive shifts in how their nickel is perceived and some big changes in how it's regulated in country and that's going to provide massive opportunities for Canada and Australian nickel uh companies. This is not a thesis that I imagine playing out over the next year. I think it's more of a 3 to fiveyear uh duration here. But nickel is extraordinarily and unsustainably cheap and that's not going to last. And so uh call this interview back in three years. Let's look at the nickel price. And if you're finding Canadian-based, Australianbased, uh Brazil's got some nickel as well. Um I think that's where some smart money is going to be, but it's going to be in that three to five year time horizon. copper, you know, I look at copper. People always want to know about copper. Um, I have sort of a similar, for very different reasons, time horizon on copper. I'm bullish on copper. Uh, but the uncertainty around the vulnerabilities in the global economy make me less certain near-term. And so, if you were to ask me 5 10 years, uh, I'm I'm definitely very bullish. But in, you know, the one two-year time frame, I'm far less so. And so, uh, that's a place where I've got some money with very high quality management teams, money that I'm comfortable parting with for that amount of time. I'm very clear of my time horizon, um, and comfortable being patient there. >> Well, you've been covering geopolitics quite a lot on the J Martin show and in your newsletter. Your most recent letter is titled, "How China outsmarted Silicon Valley and dives into the advantage that China now has over the US in many tech industries." Could you break that down for us? Yeah, certainly. So, I I spend a lot of time studying the Chinese economy primarily because in the west it is greatly misunderstood and that's a consequence of most of the reporting just being incredibly biased. But I like using filters to view global developments through. And one of the filters I use is when there's a global headline, some trade aggression, um hot war breaking out, something like this. If you view these things through the lens of United States, China competitiveness, often they make a lot more sense. And so I I study China in depth. Um, and yeah, there's there's a a very tried and tested strategy in China when it comes to American technology companies, and it's called the catfish effect. So, this dates back to um centuries ago when um fishermen would bring cod from the North Atlantic Ocean back home when they they travel for weeks at a time and they'd have to keep the cod alive because they didn't have the ability to freeze uh fish in their boats at this time. And if you leave a a wild cod in a tank for two weeks, by the time you get it ashore, it's pale and lifeless and the flavor is gone and it's not a good product. What they determined is if they drop a couple saltwater catfish in the cod tank, um the catfish will relentlessly antagonize the cod for the entire duration of the trip, by the time they get to shore, the cod are actually fit and healthy because they've been under stress. That's the catfish effect. You invite in a strong provocator to strengthen the local competition. That is the strategy that China has implied uh applied to Google, to Uber, to Facebook, to Amazon, um and to Tesla. Most recently, they've invited these companies into the country. They'll often offer incentives of some kind, tax advantages, JV opportunities, subsidies, etc. And when they get in into China, there's also some some uh some stipulations. Usually that's data sharing or you know supply chain integration that gives China some eyes and ears inside the operation. What you see with amazing repetition is major American firms entering the Chinese marketplace. Within three to five years the regulation turns sour on them and suddenly a Chinese competitor is being supported by the state enterprise whether capital or policy and that that catfish is chased back out to sea. And um this is the Google BU story. This is the Facebook WeChat story. This is the LinkedIn Maymay story. Uh this is the Uber DD story. This is exactly what happened. And right now we're watching this unfold with Tesla in the country. They were invited in to be the first um car manufacturer, non-Chinese car manufacturer to wholly own their plant in China. Massive advantage over any Western car companies. Hugely seductive offer to enter the Chinese market. not a lot of traction at first because they had to import American cars into the country but eventually it began manufacturing in China and within two three years the Model S became the number one selling electric vehicle in the country. Um but since then and this has been a point of frustration that Elon Musk has talked about publicly many times now he keeps on running into regulation obstacles mainly with the full self-driving technology and Tesla is not getting approvals as fast as national competitors. Um and today Tesla's market share in the Chinese EV sector has dropped down to about 3 to 4% and BYD has consolidated the market with over 30%. And so this is in real time the catfish effect playing out. There was about 90 EV companies in China. So it wasn't just we all know BYD and they're everywhere here in Indonesia. Um but this there was about 90. Um and the you know the intention was invite the strongest fish into our economy, put all of our local competitors on notice, get them to increase their competition, learn from that fish, and then regulate them out of business and support our own industry. Um, it's a remarkably effective strategy and say what you want about it, it works and it's worked for about 30 years. You know, just last month 20 venture capitalists from the United States and Europe went on a high technology tour of Shanghai, Beijing, Guanjo, um, a couple other cities to visit variety of industries and they came back with a very sobering report. What they stated and what they will announce at the New York Climate Week very soon here is that they've identified six American technology industries that they now deem uninvestable. And they're uninvestable because they're no longer competitive with their Chinese competitors. So we're not talking about American companies, but entire industries. They referenced battery technology, solar generation, electric vehicles. These are industries that they see China so far ahead. they as investors can no longer justify allocating capital to the loser of a race. Now that is sobering but if you look at so last year ch China has has automated their workforce faster than anybody else on the planet and today they employ over 2 million robots in their workforce. That's a funny thing to think about but but they employ utilize more robots in their labor force than the rest of the world combined. And in 2024, they added 300,000 new autonomous robots to their labor force. The United States, by comparison, added 34,000, so 10%. Right? If these gaps in many high-tech industries already exist to the extent that venture capitalists will no longer provide capital to those American industries and simultaneously the Chinese economy is automating at a speed of 10x via robotic automation the United States is what's going to happen to those gaps in the future? What's going to happen to the industries that aren't impacted yet? Uh I'm very curious and it's uh it's something we should pay attention to, but you know, these developments are happening fast and I understand the resistance in the American economy to automating the workflows. I I totally get it. Why would you want to give my job to a robot? That's going to be bad for business. Well, look, uh bad for business in the short term. If if a politician steps in and protects your job from a robot taking it, they protect your job for a couple of years. But what's the long-term effect there? The long-term effect is that that company and that industry can no longer compete with the countries that are automating and you still lose your job a couple years later, but now the entire industry cradles as well. So, same result for you, worse result for everybody else. We always fear a new technology every single time it arrives at our door and then we adopt it 100% of the time. So, we will here too. My question is, will we do it fast enough? >> I want to end on the potential fall of the American empire in terms of its hegemony worldwide. that it has enjoyed since the close of World War II because you've written and discussed this a lot um both on your show and in the newsletter and now we're finding the US involved in a multitude of conflicts around the world, Russia, Ukraine with Trump taking a U-turn and now saying not only can Ukraine win this war, but they'll be able to reclaim all the territory they lost and we're going to help them essentially. Um I believe he said we're going to keep providing weapons to NATO and they can do whatever they want with them. Uh there's also of course talks about long-range Tomahawk missiles being supplied to Ukraine and even help with finding targets in Russian territory. Of course the US involved in Israel Hamas. Venezuela now looking like the next target as the Trump administration has destroyed three boats that they claimed were smuggling drugs I believe without providing any concrete proof to the public at all. Uh, of course, a new war against Iran with Israel now potentially on the horizon as well and even a war within the US against what Trump has labeled the enemy within. So, are these wars being waged to try and solidify global supremacy? Are they the final desperate moves of a dying empire? How do you read this situation? >> I think a lot of it is bluster. I think a lot of it is bravado and threats and I believe that most of it cannot be uh supported or backed up. Um if and just for context, you know, I am Canadian, my wife and children are American. Uh I'm not sort of anti uh the establishment here. I try to look at things as mentioned earlier without my opinion involved and just look at what's occurring tactically and then navigate that. Um, you know, in professional boxing or UFC, if a fight goes to a decision, like if it goes all of the rounds, when the bell rings at the end, you'll notice with amazing consistency, both fighters throw their hands up in the air and they parade around the ring, right? And if you're watching the fight, it might be clear to you that guy obviously lost. Why does he have his hands up in the air? That's just primal instinct. until your very last moment, show everybody who can see you that I've got this under control. All right, I've got this on lock. All right, I did the job, right? And that's a lot of what we're seeing here. You can make threats of invading this, invading that. Um, you know, last week, uh, the United States paused a bunch of arm sales to Europe. Uh, Denmark, for example, had a bunch of Patriot missiles on order. deal was signed and at the last minute the United States paused the order and uh weapons contractor analyst could not figure out why it looked like a good deal but the deputy assistant to the um secretary of defense Elbridge KBY came out and said these missiles are more valuable to us at home than the deal was which is to say we need the missiles more than the money um that's that's an important statement to pay attention to because we talked about the belt and road initiative earlier. China has provided infrastructure loans to about twothirds of the globe um to build alliances, gain friends and and elevate the next generation of consumers. The United States has weapons diplomacy. If China has debt diplomacy, United States has weapons diplomacy and they sell weapons to about 97 countries around the world and that's how they maintain uh their alliances. But they're becoming unable to do that. the United States is not the manufacturing hub that it used to be and um they're in a position now where they're not going to be able to uh maintain any of these wars. That that's what I believe. And so, you know, um when your back's against the wall, you just swing wildly. And we're seeing a bit of that right now. We're seeing a bit of that externally and a lot of that internally. Uh and it's quite messy. Without question, the American empire is in the sunset years. That I have very high conviction in. How long that takes to play out, I have way less. The British Empire slowly faded for about 35 years, right? And London's still a great place to visit. So is Rome. Like I mean, you know, you go through the cycle of empires since Portugal, right? You got Portuguese Empire, the Spanish Empire, the Dutch Empire, the British Empire, the American Empire. That's five global empires in only 600 years. That goes back only to the 15th century. All right? It's not a long period of time, but it should give you a sense of how expeditiously that puck is passed around the world, right? And uh this shift that will occur in my lifetime, I think, will be a bit bigger than those shifts in the past. Culturally, each one of the preceding empires we just mentioned, Portugal, Spain, Dutch, British, Britain, and the and the US, those are all Western Christian empires, and there's very clearly no Western Christian country who's got their hand up ready to take the baton. That's not the case, right? So, we're going back to the East as a center of power and influence. Um, and um, you know, that's not good or bad news. That just is, right? And, you know, I don't I don't look at that. I don't think I'm a pessimist. I don't think I'm an optimist. I don't think that's dystopian. Uh it's none of those things, right? It's just that's just how the world will work. Uh but yeah, when an empire flames out, it usually flames out in a flurry of wars. And um you know, that's been a sort of a tested thesis in the history of the preceding four empires. They all flamed out in just a flurry of war. Unfortunately, everything you just mentioned, Ukraine, Israel, Venezuela, Iran, it's it's proving to be very similar and sort of adding to my conviction that we're a bit further down the path than I maybe thought. Uh because we're we're executing the exact blueprint that we saw with with Holland, that we saw with Britain, and now we're watching with the United States. >> Fantastic conversation, Jay, as always. greatly appreciate you coming on the show. Uh tell us about Commodity University. This is a very exciting project where you've got a variety of experts teaching online courses when it comes specifically to investing in commodities. Uh tell us as well about the Jay Martin show and if there's anywhere else you want to direct people online, feel free. >> Thank you, Jesse, and thank you for being an instructor at the commodity university. So, you know, we've seen a flood of new investors enter the commodity sector, the metals and the mining sector. And as we discussed today, it's a volatile, high-risk, unpredictable industry. It's not one that should be approached alone. And quite frankly, after two years at my conference of meeting new investors who asked me, "How do I get started in this industry? I'm really glad that I'm here, but I don't even know how to talk to that company CEO. So, how do I get started?" And as you know, there's like a hundred answers to that question, and they're all right, depending on your age, your time horizon, your available capital, your risk tolerance, your goals, all that stuff. So, we built some courses for that investor to get them started. And it started with a course called Commodities 101. Um, that was built to arm that investor with the intelligence to show up at a mining investment conference and be able to speak intelligently about any of the important hard commodities, gold, silver, uranium, nickel, copper, rare earths, etc. Um, it ended up being very um popular and so we've now scaled out. It's a it's a a larger ecosystem now with 11 instructors, new courses every month, mastermind sessions with myself and the other instructors and we talk shop. We talk about where we're putting our capital and why. We analyze companies together and it becomes a bit of an it's become an investment club. Uh people share their best ideas, share where they're putting capital, bring their questions to the experts at the masterminds and uh and you know consume a new course that refineses their skills every single month. Sometimes they're focused on a certain commodity like uranium, copper or silver. Sometimes they're focused on junior mining analysis etc etc. So the commodityuniversity.com check it out. You can buy the courses alakart or sign up for a membership. And um you know the other thing I mentioned is that we're coming back to Vancouver January 25th and 26th. This is the Vancouver Resource Investment Conference, my annual conference. This year we expect around 9,000 investors to attend. When you walk in, it's a marketplace of junior mining companies, around 300 companies in the trade show, and we have six stages around the perimeter, over a hundred keynote speakers. It's two days jam-packed of junior mining intelligence. Everybody that we put on the podium is somebody whose track record we vetted, and we want to hear about where they're allocating capital in the year to come. So if you want to hear where many of the best investors in the industry, the serely successful entrepreneurs, the analysts are putting their cash in the year ahead, go to vric media.com and come join us in Vancouver January 25th, 26. See Jesse live on stage 100 keynote. It's a ton of fun. I absolutely love the VR. It's the highlight of my year. So I'm looking forward to that. >> Great. I will put links in the description to the Commodity University, VRIC Media, and of course the Jay Martin Show where you host fantastic interviews with a variety of great guests. Jay, as always, great to have you on the show. >> Yeah, great to see you, Jesse. Thank you. >> Thank you for joining us today. Our sponsor, Arc Silver, Gold, Osbium has some great specials on right now. The prices are on your screen to take advantage. Reach out to owner Ian Everard today at 307-264-9441 or by email at ianarchsggo.com and make sure to tell him that Commodity Culture sent you. And be sure to pick up your Commodity Culture merch. All backed by a 100% quality guarantee. Use the link in the description below and I'll see you guys in the next episode. Commodity Culture is a series on commodities and natural resources. If you would like to see more, be sure to subscribe and hit the bell notification so you're always up to date with the latest episodes.
GOLD the 'Perfect Asset' as 'Haymaker After Haymaker' ROCKS Economy: Jay Martin
Summary
Transcript
Hello everybody and welcome into commodity culture where we dive into commodities markets, sound money principles and geopolitics all with the goal of making you a better investor in the commodities sector. And on this episode I'm thrilled to welcome Jay Martin to the program, the organizer of the Vancouver Resource Investment Conference and the host of the Jay Martin show. Today, we're going to dive into the intricate connection between geopolitics and commodities and discover the main themes and trends he thinks investors should be watching to add alpha to their hard asset portfolios. We dive into gold, silver, and precious metals mining stocks. Why he thinks nickel could be the next metal to go on a rampage. How China is outsmarting the West in the world of tech. why he thinks the sun is setting on the American empire and so much more. So strap yourselves in for my conversation with Jay Martin. Jay Martin, it is great to have you back on commodity culture. I want to kick things off by discussing the current geopolitical landscape and its potential impact on commodities markets. What are the main themes and trends you're watching in this area that you think more investors should be paying attention to? There's a lot of threads to pull on right now, Jesse. But, you know, two that I I'm paying a lot of attention to and I I think are worthy of your attention. The first is just the the big trend we've been watching for the last 10 years. And this is the fracturing of the geopolitical chessboard which really began to heat up obviously in the post2020 world. But as a consequence of this, what's effectively happening is that countries don't know which way to look to find friends or enemies. Alliances and adversaries are shifting that quickly right now. What that means for commodity investors is that countries that thought they had secure supply of raw materials can no longer be so sure anymore. And in that kind of uncertainty, people are just willing to pay more, do more to secure that supply. And so we're seeing a lot of activity in that regard right now. Countries becoming very strategic with who they'll sell to, what they'll what they'll sell, right? And who what they're doing in order to buy from other other countries that have stuff they need. And you know, it's it's crazy to think that we may it's hard to understand what the alliance picture is going to look like in as short of a time frame as like 5 years, let alone 10. And even in just the last month, there's been some pretty seismic shifts in the geopolitical landscape landscape like the SEO, the Shanghai Cooperation Summit hosted about a month ago. Uh this was the largest over 40 countries attended this year. It's never been that large in the past. More countries are tuning in to see what China has to offer as an alternative. And there was a lot of performative politics at this summit. uh namely you know the handshake between the minister of South Korea and Kim Jong-un. But the message was really clear behind this performative politics. You have another regional hegeimon sending a message to the world that says we can steward peace and we can mediate. Uh this is this is we got this under control, you know, and the world took notice, right? And um there's a lot of countries right now that are trying to thread the needle of neutrality and they're watching that, right? And some are obvious, kind of the bricks adjacent countries, but some aren't. You know, you look at a country like Australia, they're threading the needle of neutrality very effectively right now. They're maintaining their sort of military agreements with the United States, but the trade agreements are stronger with China. That's their biggest customer. And the difference for them is from a proximity standpoint or a geographic standpoint, China's actually the the better partner, the more cost-effective partner. The same reason that Canada will never decouple from the United States. We have the longest coastline in the world and access to three oceans and every global market, but it's never going to be as cost-effective as shipping goods across a land border. And Australia finds themselves in that in that situation. So, you know, would we see a country like Australia attend the SEO in a couple years? I wouldn't be shocked to see that, right? Um, and you know, a month ago, we saw this news of the Israelis dropping a bomb in Doha in Qatar. And this was really significant, but not for the reasons that people were following right now. First of all, this was a it occurred because Qar had raised their hand to ho to hold and host uh peace negotiations. That's why the operatives were there, the targets, all this. Uh but a Qatar national has never been bombed inside that country ever before. This was a first and it was notable that obviously as as we've read the Israelis suffered zero consequences from their strategic partner being the United States and that was the headline that we all read. But the important thing happened two weeks later and this is when Saudi Arabia reading the landscape decided to sign a defense pact with Pakistan. Now Pakistan's the only Muslim majority nuclear armed country in the world, but they got that nuclear technology from China, which puts Saudi Arabia de facto under the Chinese nuclear umbrella. And this bucks everything we've known about, you know, the petro dollar concept my entire life in the face. It's the reversal of that, right? Sell your oil for dollars and we'll protect you. Well, that technically has been over for a minute, but practically it's now done. Now it's really over and Pakistan since announced the door is open for other countries to entertain subsequent agreements. Now, we know that's not Pakistan speaking. That's China speaking through a proxy. That's how these things are done. But all that to say, it's a that's a behemoth of a country that has historically had the power and the will to stay neutral now picking a side in a fairly major way. And so when when the the geopolitical chessboard is so unclear, countries will be willing to pay a lot more for the stuff they need. And um you know that's that's why we're seeing state capitalism creep in a major way into the United States right now. Um this is you know practice general practice in in China. But in the last few months, we've seen what started with the Nippon steel, US steel merger that was originally blocked by the US administration and then approved in exchange for the US government taking a board seat and given veto power over a handful of different uh operational metrics in the country and then the kickback, the 10% kickback on the Nvidia chip sales to China deal. But in the resource business, we're seeing fairly big moves. Uh whether it's the Department of Defense investing in MP Materials rare earth refinery in China or the $245 million US antimony deal where last week President Trump saying he's going to take a 10% stake in lithium Americas. This for commodity investors, you cannot ignore this. This is a new very strategic investor with incredibly deep pockets and the ability to shift policy at the table. And what that means is that if you're investing in projects that are important to the United States, you now have an activist investor at the table. somebody who might not just finance, but somebody who probably will look at regulation and permitting and make sure if that project is going to supply them with product, that permit's going to get expedited. And that's great news for mining investors. It shifts how you think about jurisdictional risk back to away from jurisdictional risk and into what you might call global alliance advantage. But jurisdiction matters in a new way and in a major way. And I I think we're we're going to see that the state creep into the commodity sector. And I'm not, you know, people have opinions about state capitalism. I totally get it. I don't have an opinion. I just try to read the room and then play my cards accordingly. And this is absolutely a new trend. And it's a big one in the mining business. The sponsor of today's episode is Arc Silver Gold Osmium. Owner Ian Everard is praised even by his competitors as one of the most honest and level-headed bullion dealers in the United States. They have some great prices. You can see some of them displayed right now on screen. Take advantage of these specials today by reaching out to Ian at 3072649441 or by email at ianarchsggo.com. Make sure to tell him of course that commodity culture sent you. And now back to the interview. Great summary. I want to dive into the geopolitical landscape more a little bit later, but first I'd like to touch on some specific commodities. Of course, I want to kick things off with precious metals on an absolute tear so far this year. Let's hone in on gold first. Now sitting around $3,940. So, we're in within spitting distance of $4,000. Seems to be continuously making new all-time highs. Obviously fantastic for those of us holding gold and related equities, but we often hear that such a rapid rise in the gold price can also be a cause for concern about what's happening with the health of the global economy, with the health of financial markets, and with the state of the world in general. So, what are your thoughts on this dramatic rise in the gold price, the catalyst driving it? And should people be worried if gold continues to advance to 4,000, 5,000 in short order? Is that a representation of perhaps geopolitical and economic chaos in the world that people need to be wary of? >> Yeah, I think you hit the nail on the head and a lot of investors are looking at this rally as just the next market run and they've seen uh rallies and and bubbles in real estate, in AI stocks, in crypto, and now it's gold's turn. And that's how they're processing this. It's just the next asset that's on a bit of a tear, so I should probably get in there. But as exactly what you said, good news for gold investors is bad news for pretty much everybody else. And so, you know, the the price of gold is a measuring stick in terms of the amount of volatility people are expecting in the future. And we can go back to the beginning. I mean, this has been the most textbook gold bull market I could ever have imagined. And if we go back just a few years to 2022 23, we all noticed that central banks were the first buyers in this market. They started buying in at paces we hadn't seen in 50 years. Now, why would a central bank do that? Well, it's because they looked at the current system, the system they've relied on for so many years, being the US dollar system, and they were just a little bit less certain about what might happen next. A little bit less sure that it was going to be as predictable as it used to be. And when you're less certain about something, it's good to find some optionality and just divest a little bit into something close. Gold is the perfect choice because it's a global market that is accepted 247 anywhere you go. It's an optional liquidity. It's as liquid as US dollars. But in the event that something funny happens with the US dollar, you're not tied to that boat anymore. And effectively what they saw was, you know, two things. It was that the issuer of that currency is not as reliable as they used to be and they can in fact confiscate US dollar assets should they want to which we saw with Russia of course and secondly that the devaluation of that currency hit a pace that they weren't comfortable with right and so they moved to an asset without the counterparty risk that you cannot dilute and that's gold but like investors were frustrated in 2023 when the gold price was running and the equity prices were not and that's you know central bankers buy gold. They don't buy gold equities, right? So that's why that decoupling occurred. But when the price of gold ran the way it did, the earnings of the companies that do produce gold turned really favorable. And four to five quarters later, meetings started occurring in boardrooms with institutional investors and professional hedge funds saying, "Look at these earnings trends. We need to be positioned in this. There's definitely a trend emerging and we need in." And that was 2023 24 when you began to see you know the wheat and precious metals and the Franklin debatas led the way and the barracks and the numonts and the eggo eagles followed right after and you know since then Jesse like we've seen a very logical patient and sequential trickle of capital down to the earlier stage opportunities the high quality mid-tier producers the junior producers and even into like the funded and semifunded developers Right. And and the market never moves fast enough for investors. They always get impatient. Uh I think this has been the most textbook gold bull market that I ever could have imagined. Um and um you know if if people are wondering is this market getting a bit long? Is it getting a bit hot? I would just go back to the origin that we just talked about. If the initial reasons that people started trending to gold was because we believe that the US dollar will continue to be devalued in the future and we believe that the United States issuer is going to be less predictable than it used to be. If those two things are still true, then the gold thesis is still true and in fact probably more true today than it used to be. So people bet on gold when they're scared. They bet on gold when they don't know what boogeyman's around the corner. Um and and that's effectively what's happening right now. This decade, every year has thrown a haymaker at us, right? From 2020 forward, new boogeyman around every single corner, and we're only halfway through. Um and that's that's positive for gold, but it's bad for everything else. >> Silver, the poor man's gold. Well, while gold has been making new all-time highs, silver has been having its own quiet breakout now sitting around $48.50, 50s, very close to previous all-time highs of around $50 at least in nominal terms. Of course, it would take around $200 to get back to 1980 highs adjusted for inflation. And that's using official government inflation statistics. So, the real number likely much higher than that. What are your thoughts on silver's trajectory and the catalyst driving this market? >> Well, silver is a lot more complex than gold for a couple of reasons. And the first one is that it's a dualpurpose metal. And so it's impacted by monetary sentiment and it performs like a monetary metal like gold does that we just discussed. But obviously it also performs in response to industrial demand like copper does, right? And so it's got a foot in each camp. And in addition, it's produced differently. There's very few pure silver mines in the world. Most of the silver that we have is produced as a byproduct of something else, usually gold. And as a consequence, supply doesn't really respond to price the way most things would. Typically, if the price of something goes up, the producers of that thing will produce more of it. Silver doesn't respond like that because silver is a byproduct of something else as the primary production. As a result, it's a lot more difficult to have an airtight thesis on the silver market. Therefore, it's very important to have an airtight management team on the companies that you're investing in. And silver is a small market. There's not a lot of companies to choose from. I think there's nine silver companies on the New York Stock Exchange. The most recent of which was maybe four or five months ago when Sean Kungun's Dollyard and Silver uh got listed on the New York Stock Exchange. you know, they're they're one of these like semifunded developers in a good jurisdiction in British Columbia. Uh strong resource and growing the ounce count, all all of this. Um and uh you know, I I play the silver market that way. I look at the historic pairings between the gold and the silver price and the gold and the silver equities. And with um strong repetition, silver lags and then outperforms in the long run. And it's difficult to time that, but it's occurred almost every single precious metals bull market in that fashion because I can't have as much conviction in the uh demand thesis. I'm very strict in my management team. And you know, I for investors watching this show, you know, there's I mentioned Dolly Vard and Silver and I'm not promoting that company. I am a shareholder. But what I like about companies like that like Dolly Vard and Silver is that they're part of a larger organization. In this case, it's the Fior group, right? Founded by legendary mining investor and entrepreneur Frank Gustra. And in the Fiora group, there's eight or nine companies that they're incubating right now, all in the junior mining realm. And it's massively advantageous to find those high-erforming incubation shops and then look at those companies because they're financing them. They're pooling resources. They're saving money on GNA and back administration costs. They're workshopping problems and opportunities as they came in. All companies together. And so you don't just have the brain capital of two or three executives. You have 15 to 20 working on every problem inside that company. And when it comes time to raise money, they pull everybody's capital networks. More optionality leads to a cheaper cost of capital. And so just as an aside, I encourage investors to look for shops like that. Fior Group, Invented Capital, another one. Just like everything in the junior mining sector, there's dozens of them and most of them are questionable, but there are some very good ones and they're a great place to look uh because you start investing in the team and um you know once you find a good team, they deliver you some returns, you stick with them. Success begets success. It's a strategy that's worked for me very well. >> Well, let's dive a little bit deeper into the gold and silver mining sector. The GDX and SIL ETFs are up over 115% year to date. At the last VR, uh, as you touched on, a lot of the conversation was revolving around why aren't the miners able to really provide that levered play on the metals that they had in previous bull markets. And now here we are. That thesis appears to be playing out. However, on an RSI basis, both ETFs are pretty overbought at these levels. Do you think some caution is warranted here that we might see a pullback or do you think the greater fear is that this market could run away from those who were sitting on the sidelines hoping for a correction? >> You know, I think two things can be true. So the first thing I'd say is that if you have been an investor in this industry, meaning the junior mining sector for two to three years, more that's qualifies to 15 20 years absolutely you've been through some hard years even if you've only been here for three years, right? The market has just given you a gift as you just described, right? And you should take that gift and derisk a little bit. Now, I'm not saying exit the gold sector, but look critically at your portfolio. Be honest with yourself about what is an investment cash flowing business. Agniko Eagle, Newmont, Weeden, Precious Metals, and what is a speculation, a company that doesn't generate cash, and you're just waiting on a catalyst that might move the share price. Well, that catalyst has arrived. that catalyst has come in the form of market sentiment becoming a tailwind for the earlier stage companies. This is when you derisk. This is when you have the opportunity to withdraw your principle and let the remaining shares ride risk-free. That should be the goal of every speculator is find the riskfree ride. Imagine you can find the asymmetric 10x opportunities with no risk. You would take that all day long. This is your opportunity to do that. And I know it's tempting not to because you're in XYZ developer or latestage exploro and you're up 200% but you're looking at the macro and you're like I'm going to ride this thing till it's a 10bagger. Do that but not with all your capital. And that may sound conservative or cautious but this is what every junior mining household name investor does with their portfolio is when they're given the opportunity to derisk, they take it. Rule number one is don't lose any money. But having said that, Jesse, like gold is still off the radar of most investors. And I don't mean people, I mean investors. Just last week, I was in Japan with nine other entrepreneurs, all very successful entrepreneurs, eight figure businesses, critical thinkers, very intelligent, brave, all of this stuff across the board. There's not a single person outside of myself that has a dollar in the precious metals sector, whether it's physical equities, miners, nothing. Nothing. Every single one of them still just throws their money in the QQQ like it's the most obvious choice that anybody should make because the market always goes up. Now, those are like wealthy, critical thinking, successful investors, right? Entrepreneurs first, investors second. But that's what I'm saying that the mainstream money hasn't even sniffed at this rally yet. We think that we're getting maybe a bit hot and frothy because we're surrounded by it, right? And we've been waiting for this moment. Investors who have been in this game for a few years, you know, and that's why you should take the opportunity to derisk and just recycle those profits. Have you been so lucky? Recycle those profits into, you know, gold savings companies, right? Companies like Agniko, Newmont. I mean, those are companies that you can put cash in if you have a 10-year thesis on gold and just park it there, right? Ride some of the volatility and corrections that will come, but don't treat your speculations that way. Don't make that mistake of thinking those two very different equities should be treated the same, right? Don't park your money in a speculation and think you should just should just ride that for the next five years. You should be very clear on on what your exit strategy and your d-risk strategy should be. So, we're early. I think we're very early innings in the gold run for sure. But for those of us who have been here a few years, take this gift and derisk. I think there's a long runway ahead. And I'm given that conviction by all the mainstream conversations I have who aren't even looking at this asset class or industry yet. >> Yeah, that's a great way of looking at it because the mining business is of course extraordinarily risky. Single company risk is much greater in this industry than in others. We've seen things like coups occur in places like Nijair. Um we've seen issues even with Franco Nevada, the supposedly safe, stable royalty company when the Cobra Panama mine got shut down by the government there. Um their stock price also took a massive hit. They've recovered since then, but these are things that you have to think about that in one moment a massive amount of of that value can be erased. So, I think that makes a lot of sense to to take your initial bet off of the table in those types of companies. I I want to talk about other commodities that you're watching right now outside of the gold and silver sector that you think could present a potential opportunity. What's top of mind for you? >> One chart that everybody should pull up right now is the price of nickel. And if you have a look, you might ask yourself the question, why has nickel fallen off a cliff for two straight years when almost every other hard commodity has done the opposite, right? And um the the the short story is that there's been one player that's consolidated that market and flooded the industry with cheap product. That player is Indonesia. That's where I am right now. And um nickel effectively comes from three places. It comes from Canada, comes from Australia, it comes from Indonesia. Nickel is the most important alloy in stainless steel. So, for example, the the president of the United States wants to reshore and uh resurrect the American steel industry. There's no possibility of that happening without a steady supply of nickel. You want that steel to be durable, uh temperature resistant, anti-corrosive. There's about 20 different alloys that you use. Nickel is the most important. So, think about nickel that way. That's what it's used for. Um, now Indonesia tried to form a nickel cartel effectively with Canada and Australia a couple of times. Kind of like OPEC but for nickel and Canada and Australia shut them down. So, Indonesia went to China and raised about $65 billion to build a incountry refined nickel refining industry. Uh, Indonesia is endowed with lots of nickel, but they didn't have the capital, the expertise to build the refineries to export the refined products. With the help of China via their belt and road initiative, they were able to build what has become the most competitive nickel um uh region in the world. And due to Indonesia's very cheap labor and incredibly lax environmental policies over the last couple of years, they have flooded the market with cheaper nickel than anybody else could produce, putting Canadian and Australian miners on care and maintenance. They can't respond to these prices, right? You flood the market with cheap product. You put your competitors out of business and you scoop up more of that market. So remember, they tried to form the nickel OPEC with Canada and Australia. Canada and Australia turned them down. Today, Indonesia on their own controls 67% of the nickel market where they're on pace to do like 75% by 2028. Now, just for context, OPEC at their peak in 1973 only had 55% of the oil market. So, 67% is colossal. It's it's absolute pricing power. But the problem is is that Indonesia is modernizing and the the Swasi Islands where the in where the nickel comes from is one of the worst environmental disasters that the world hasn't heard about yet. This is something else. Uh it's an absolute catastrophe in a country that for the last 3 years, this is where the island of Bali is. Bali was the number one traveled tourist destination in the world for the last three years running. Uh the new president is trying to modernize the company the country. He's um revisiting the uh status of of permits for buildings all over the country putting in um uh uh superfast train and rail all over all over Bali to begin and other islands. Um this is a country that's trying to you know Canada and Indonesia just signed a massive trade deal after the fact, right? Uh but this is a country that's trying to enter the global stage in a major way. 285 million people and I firmly believe that this environmental standard is going to be raised in that process as Indonesia joins the ranks from developing to developed countries. Um there's going to be some massive shifts in how their nickel is perceived and some big changes in how it's regulated in country and that's going to provide massive opportunities for Canada and Australian nickel uh companies. This is not a thesis that I imagine playing out over the next year. I think it's more of a 3 to fiveyear uh duration here. But nickel is extraordinarily and unsustainably cheap and that's not going to last. And so uh call this interview back in three years. Let's look at the nickel price. And if you're finding Canadian-based, Australianbased, uh Brazil's got some nickel as well. Um I think that's where some smart money is going to be, but it's going to be in that three to five year time horizon. copper, you know, I look at copper. People always want to know about copper. Um, I have sort of a similar, for very different reasons, time horizon on copper. I'm bullish on copper. Uh, but the uncertainty around the vulnerabilities in the global economy make me less certain near-term. And so, if you were to ask me 5 10 years, uh, I'm I'm definitely very bullish. But in, you know, the one two-year time frame, I'm far less so. And so, uh, that's a place where I've got some money with very high quality management teams, money that I'm comfortable parting with for that amount of time. I'm very clear of my time horizon, um, and comfortable being patient there. >> Well, you've been covering geopolitics quite a lot on the J Martin show and in your newsletter. Your most recent letter is titled, "How China outsmarted Silicon Valley and dives into the advantage that China now has over the US in many tech industries." Could you break that down for us? Yeah, certainly. So, I I spend a lot of time studying the Chinese economy primarily because in the west it is greatly misunderstood and that's a consequence of most of the reporting just being incredibly biased. But I like using filters to view global developments through. And one of the filters I use is when there's a global headline, some trade aggression, um hot war breaking out, something like this. If you view these things through the lens of United States, China competitiveness, often they make a lot more sense. And so I I study China in depth. Um, and yeah, there's there's a a very tried and tested strategy in China when it comes to American technology companies, and it's called the catfish effect. So, this dates back to um centuries ago when um fishermen would bring cod from the North Atlantic Ocean back home when they they travel for weeks at a time and they'd have to keep the cod alive because they didn't have the ability to freeze uh fish in their boats at this time. And if you leave a a wild cod in a tank for two weeks, by the time you get it ashore, it's pale and lifeless and the flavor is gone and it's not a good product. What they determined is if they drop a couple saltwater catfish in the cod tank, um the catfish will relentlessly antagonize the cod for the entire duration of the trip, by the time they get to shore, the cod are actually fit and healthy because they've been under stress. That's the catfish effect. You invite in a strong provocator to strengthen the local competition. That is the strategy that China has implied uh applied to Google, to Uber, to Facebook, to Amazon, um and to Tesla. Most recently, they've invited these companies into the country. They'll often offer incentives of some kind, tax advantages, JV opportunities, subsidies, etc. And when they get in into China, there's also some some uh some stipulations. Usually that's data sharing or you know supply chain integration that gives China some eyes and ears inside the operation. What you see with amazing repetition is major American firms entering the Chinese marketplace. Within three to five years the regulation turns sour on them and suddenly a Chinese competitor is being supported by the state enterprise whether capital or policy and that that catfish is chased back out to sea. And um this is the Google BU story. This is the Facebook WeChat story. This is the LinkedIn Maymay story. Uh this is the Uber DD story. This is exactly what happened. And right now we're watching this unfold with Tesla in the country. They were invited in to be the first um car manufacturer, non-Chinese car manufacturer to wholly own their plant in China. Massive advantage over any Western car companies. Hugely seductive offer to enter the Chinese market. not a lot of traction at first because they had to import American cars into the country but eventually it began manufacturing in China and within two three years the Model S became the number one selling electric vehicle in the country. Um but since then and this has been a point of frustration that Elon Musk has talked about publicly many times now he keeps on running into regulation obstacles mainly with the full self-driving technology and Tesla is not getting approvals as fast as national competitors. Um and today Tesla's market share in the Chinese EV sector has dropped down to about 3 to 4% and BYD has consolidated the market with over 30%. And so this is in real time the catfish effect playing out. There was about 90 EV companies in China. So it wasn't just we all know BYD and they're everywhere here in Indonesia. Um but this there was about 90. Um and the you know the intention was invite the strongest fish into our economy, put all of our local competitors on notice, get them to increase their competition, learn from that fish, and then regulate them out of business and support our own industry. Um, it's a remarkably effective strategy and say what you want about it, it works and it's worked for about 30 years. You know, just last month 20 venture capitalists from the United States and Europe went on a high technology tour of Shanghai, Beijing, Guanjo, um, a couple other cities to visit variety of industries and they came back with a very sobering report. What they stated and what they will announce at the New York Climate Week very soon here is that they've identified six American technology industries that they now deem uninvestable. And they're uninvestable because they're no longer competitive with their Chinese competitors. So we're not talking about American companies, but entire industries. They referenced battery technology, solar generation, electric vehicles. These are industries that they see China so far ahead. they as investors can no longer justify allocating capital to the loser of a race. Now that is sobering but if you look at so last year ch China has has automated their workforce faster than anybody else on the planet and today they employ over 2 million robots in their workforce. That's a funny thing to think about but but they employ utilize more robots in their labor force than the rest of the world combined. And in 2024, they added 300,000 new autonomous robots to their labor force. The United States, by comparison, added 34,000, so 10%. Right? If these gaps in many high-tech industries already exist to the extent that venture capitalists will no longer provide capital to those American industries and simultaneously the Chinese economy is automating at a speed of 10x via robotic automation the United States is what's going to happen to those gaps in the future? What's going to happen to the industries that aren't impacted yet? Uh I'm very curious and it's uh it's something we should pay attention to, but you know, these developments are happening fast and I understand the resistance in the American economy to automating the workflows. I I totally get it. Why would you want to give my job to a robot? That's going to be bad for business. Well, look, uh bad for business in the short term. If if a politician steps in and protects your job from a robot taking it, they protect your job for a couple of years. But what's the long-term effect there? The long-term effect is that that company and that industry can no longer compete with the countries that are automating and you still lose your job a couple years later, but now the entire industry cradles as well. So, same result for you, worse result for everybody else. We always fear a new technology every single time it arrives at our door and then we adopt it 100% of the time. So, we will here too. My question is, will we do it fast enough? >> I want to end on the potential fall of the American empire in terms of its hegemony worldwide. that it has enjoyed since the close of World War II because you've written and discussed this a lot um both on your show and in the newsletter and now we're finding the US involved in a multitude of conflicts around the world, Russia, Ukraine with Trump taking a U-turn and now saying not only can Ukraine win this war, but they'll be able to reclaim all the territory they lost and we're going to help them essentially. Um I believe he said we're going to keep providing weapons to NATO and they can do whatever they want with them. Uh there's also of course talks about long-range Tomahawk missiles being supplied to Ukraine and even help with finding targets in Russian territory. Of course the US involved in Israel Hamas. Venezuela now looking like the next target as the Trump administration has destroyed three boats that they claimed were smuggling drugs I believe without providing any concrete proof to the public at all. Uh, of course, a new war against Iran with Israel now potentially on the horizon as well and even a war within the US against what Trump has labeled the enemy within. So, are these wars being waged to try and solidify global supremacy? Are they the final desperate moves of a dying empire? How do you read this situation? >> I think a lot of it is bluster. I think a lot of it is bravado and threats and I believe that most of it cannot be uh supported or backed up. Um if and just for context, you know, I am Canadian, my wife and children are American. Uh I'm not sort of anti uh the establishment here. I try to look at things as mentioned earlier without my opinion involved and just look at what's occurring tactically and then navigate that. Um, you know, in professional boxing or UFC, if a fight goes to a decision, like if it goes all of the rounds, when the bell rings at the end, you'll notice with amazing consistency, both fighters throw their hands up in the air and they parade around the ring, right? And if you're watching the fight, it might be clear to you that guy obviously lost. Why does he have his hands up in the air? That's just primal instinct. until your very last moment, show everybody who can see you that I've got this under control. All right, I've got this on lock. All right, I did the job, right? And that's a lot of what we're seeing here. You can make threats of invading this, invading that. Um, you know, last week, uh, the United States paused a bunch of arm sales to Europe. Uh, Denmark, for example, had a bunch of Patriot missiles on order. deal was signed and at the last minute the United States paused the order and uh weapons contractor analyst could not figure out why it looked like a good deal but the deputy assistant to the um secretary of defense Elbridge KBY came out and said these missiles are more valuable to us at home than the deal was which is to say we need the missiles more than the money um that's that's an important statement to pay attention to because we talked about the belt and road initiative earlier. China has provided infrastructure loans to about twothirds of the globe um to build alliances, gain friends and and elevate the next generation of consumers. The United States has weapons diplomacy. If China has debt diplomacy, United States has weapons diplomacy and they sell weapons to about 97 countries around the world and that's how they maintain uh their alliances. But they're becoming unable to do that. the United States is not the manufacturing hub that it used to be and um they're in a position now where they're not going to be able to uh maintain any of these wars. That that's what I believe. And so, you know, um when your back's against the wall, you just swing wildly. And we're seeing a bit of that right now. We're seeing a bit of that externally and a lot of that internally. Uh and it's quite messy. Without question, the American empire is in the sunset years. That I have very high conviction in. How long that takes to play out, I have way less. The British Empire slowly faded for about 35 years, right? And London's still a great place to visit. So is Rome. Like I mean, you know, you go through the cycle of empires since Portugal, right? You got Portuguese Empire, the Spanish Empire, the Dutch Empire, the British Empire, the American Empire. That's five global empires in only 600 years. That goes back only to the 15th century. All right? It's not a long period of time, but it should give you a sense of how expeditiously that puck is passed around the world, right? And uh this shift that will occur in my lifetime, I think, will be a bit bigger than those shifts in the past. Culturally, each one of the preceding empires we just mentioned, Portugal, Spain, Dutch, British, Britain, and the and the US, those are all Western Christian empires, and there's very clearly no Western Christian country who's got their hand up ready to take the baton. That's not the case, right? So, we're going back to the East as a center of power and influence. Um, and um, you know, that's not good or bad news. That just is, right? And, you know, I don't I don't look at that. I don't think I'm a pessimist. I don't think I'm an optimist. I don't think that's dystopian. Uh it's none of those things, right? It's just that's just how the world will work. Uh but yeah, when an empire flames out, it usually flames out in a flurry of wars. And um you know, that's been a sort of a tested thesis in the history of the preceding four empires. They all flamed out in just a flurry of war. Unfortunately, everything you just mentioned, Ukraine, Israel, Venezuela, Iran, it's it's proving to be very similar and sort of adding to my conviction that we're a bit further down the path than I maybe thought. Uh because we're we're executing the exact blueprint that we saw with with Holland, that we saw with Britain, and now we're watching with the United States. >> Fantastic conversation, Jay, as always. greatly appreciate you coming on the show. Uh tell us about Commodity University. This is a very exciting project where you've got a variety of experts teaching online courses when it comes specifically to investing in commodities. Uh tell us as well about the Jay Martin show and if there's anywhere else you want to direct people online, feel free. >> Thank you, Jesse, and thank you for being an instructor at the commodity university. So, you know, we've seen a flood of new investors enter the commodity sector, the metals and the mining sector. And as we discussed today, it's a volatile, high-risk, unpredictable industry. It's not one that should be approached alone. And quite frankly, after two years at my conference of meeting new investors who asked me, "How do I get started in this industry? I'm really glad that I'm here, but I don't even know how to talk to that company CEO. So, how do I get started?" And as you know, there's like a hundred answers to that question, and they're all right, depending on your age, your time horizon, your available capital, your risk tolerance, your goals, all that stuff. So, we built some courses for that investor to get them started. And it started with a course called Commodities 101. Um, that was built to arm that investor with the intelligence to show up at a mining investment conference and be able to speak intelligently about any of the important hard commodities, gold, silver, uranium, nickel, copper, rare earths, etc. Um, it ended up being very um popular and so we've now scaled out. It's a it's a a larger ecosystem now with 11 instructors, new courses every month, mastermind sessions with myself and the other instructors and we talk shop. We talk about where we're putting our capital and why. We analyze companies together and it becomes a bit of an it's become an investment club. Uh people share their best ideas, share where they're putting capital, bring their questions to the experts at the masterminds and uh and you know consume a new course that refineses their skills every single month. Sometimes they're focused on a certain commodity like uranium, copper or silver. Sometimes they're focused on junior mining analysis etc etc. So the commodityuniversity.com check it out. You can buy the courses alakart or sign up for a membership. And um you know the other thing I mentioned is that we're coming back to Vancouver January 25th and 26th. This is the Vancouver Resource Investment Conference, my annual conference. This year we expect around 9,000 investors to attend. When you walk in, it's a marketplace of junior mining companies, around 300 companies in the trade show, and we have six stages around the perimeter, over a hundred keynote speakers. It's two days jam-packed of junior mining intelligence. Everybody that we put on the podium is somebody whose track record we vetted, and we want to hear about where they're allocating capital in the year to come. So if you want to hear where many of the best investors in the industry, the serely successful entrepreneurs, the analysts are putting their cash in the year ahead, go to vric media.com and come join us in Vancouver January 25th, 26. See Jesse live on stage 100 keynote. It's a ton of fun. I absolutely love the VR. It's the highlight of my year. So I'm looking forward to that. >> Great. I will put links in the description to the Commodity University, VRIC Media, and of course the Jay Martin Show where you host fantastic interviews with a variety of great guests. Jay, as always, great to have you on the show. >> Yeah, great to see you, Jesse. Thank you. >> Thank you for joining us today. Our sponsor, Arc Silver, Gold, Osbium has some great specials on right now. The prices are on your screen to take advantage. Reach out to owner Ian Everard today at 307-264-9441 or by email at ianarchsggo.com and make sure to tell him that Commodity Culture sent you. And be sure to pick up your Commodity Culture merch. All backed by a 100% quality guarantee. Use the link in the description below and I'll see you guys in the next episode. Commodity Culture is a series on commodities and natural resources. If you would like to see more, be sure to subscribe and hit the bell notification so you're always up to date with the latest episodes.