Jay Martin: A Commodities Supercycle Is Just Beginning | Ft. @TheJayMartinShow
Summary
Gold Thesis: Secular bull case driven by central bank buying, currency devaluation, and geopolitical unpredictability, with the move still early in mainstream adoption.
Gold Equities: Preference for high-quality producers (e.g., AEM, NEM, WPM) over physical alone, while urging profit-taking and risk management in junior miners amid volatility.
Government Tailwinds: The U.S. is embracing state-capitalism tactics to secure supplies, creating policy and funding support that is bullish for mining investors.
Trilogy Metals (TMQ): Highlighted as a prime example where a DoD equity stake and coordinated policy (e.g., Ambler Road) could unlock project economics and accelerate development.
Rare Earths: Not truly rare; the bottleneck is refining capacity, making vertical integration and recycling critical, with DoD-backed initiatives signaling strong support.
Industrial Metals & Copper: Long-term bullish outlook due to structural supply deficits and rising critical demand, though near-term recession risks could pressure prices.
Critical Minerals Expansion: The U.S. critical minerals list nearly doubled since 2018, underscoring supply insecurity and reinforcing the case for reshoring and allied sourcing.
Transcript
We're at a place now where either the price goes up or the lights go out, but eventually the price is going to go up to an unsustainable level. I believe that. >> Hello and welcome to Wealthy. I'm Maggie Lake and today I'm joined by Jay Martin, founder of Commodity University and host of the Jay Martin Show. Hey Jay, it's great to have you on. >> Hey Maggie, it's great to be here. So, just a reminder before we start, if you would like to check if your asset allocation is the right fit for you, you can get a free portfolio review from an advisor in the Wealthy Network. Just click the link in the description or go to wealthy.comfree. So, Jay, it's a fascinating time to be in commodities. Uh, what do you make of the price action we've seen in gold? >> Oh man, it's exciting. I'd have to say it's the gift that gold investors have been waiting for for about 15 years. But as a consequence of that, I'm seeing some almost comical activity from uh gold equity investors in that it's been so long since they've experienced a good market that it's like they're trapped in their own PTSD and forgot what it feels like. And now whenever they hear any mainstream uh investor or financial journalist start talking about gold, they immediately jump to the conclusion that that must mean this is the top and that the market's gotten too hot because we just haven't experienced that kind of coverage in so long. >> Um so it's it's sort of funny to me. I mean what I would say about this gold market, Maggie, is that it has rolled out in the most textbook fashion that one could imagine. You know, there were some false starts 2016, 2020, but this really the first seed of of this market would be the central bank buying a physical back in 2022. And you know, it was about a year of just physical gold purchases from central banks eventually crawling that price up. Gold investors were very impatient and curious why the equity prices weren't moving at that point. But the simple answer was that central banks don't buy equities, they buy physical. And so that's why one price was moving and the other wasn't. >> But a year later, you know, institutions started realizing they needed exposure to the producers of that commodity. And so mid 2023, end of 2023, we saw sort of the best-in-class royalty companies or the best-in-class miners, their share price begin to crawl up. And there's been just a very slow, patient, methodical trickle of capital further down the value chain since then. And I love how slow it's been. Actually, the last few months got a bit hot and frothy. But, you know, as you know, that's more a consequence of the two factors always at play in any secular market, whether it's a bull or a bear. In this case, a secular bull market in the the gold sector, which I have high conviction in. But within that, you have traders that dip in and dip out and try to swing trade opportunities. And so, they create short-term volatility inside of a long-term trend. So, you know, that's always been the case with the gold sector and and will be for this market. But, um, it's healthy. It's rolled out very patiently and methodically. So, I have a lot of confidence in the longevity as a result. >> Yeah. You you mentioned something uh or touched on something that I'm curious about and you talked about the secular story. Um, do you see it as that? Is is is this do you feel like this is sort of cyclical in nature or tied to a specific situation? You know, a lot of people talk about the weaponization of Swift or or something like that, or do you think this is part of a a real structural change when it comes to precious metals? >> It's it's both. And if you go back to that initial seed, and we could sort of people could point to earlier instances that began to rally the gold price, but the central bank buying urgency that occurred in 2022 was sort of the big tectonic shift from a macro standpoint that we're still realizing today. and they will be the drivers that are holding the line on gold price, taking physical ownership and keeping that price where it is. So I mean in terms of what what to make of the trend, central banks began buying gold for two primary reasons. There are two assumptions they were making. The first assumption was that the issuer of the US dollar was going to continue to dilute that currency and devalue the purchasing power of the dollar. So if you still believe that assumption to be true, then gold is a good bet. And the second assumption was exactly what you said. It was the confiscation of assets. The second assumption being um geopolitical strategy from the Americans will be less predictable than it used to be. Right. And if that assumption is still true, then gold's also still a good bet because it is that sort of life raft um you know safety net with no counterparty risk that you can hedge your bets with. And so as long as those two assumptions are in play, devaluation of the currency and less predictable predictable geopolitical strategy, gold is still going to be in favor. >> And we can unpack both of those and why I have super high conviction they both are still in play. But as long as they are, the gold thesis is intact. Yeah, I think that the the uh devaluation argument is interesting because you know I was just talking to someone about that and there I think this issue of debt and debasement um I know a lot of people feel really strongly about it but it's not one it's not just a US story right it's an everybody's story so does that factor in into how you're thinking about gold >> yeah 100% and yeah there's a lot to unpack in terms of what debt was used for Um and you know so people often compare you know debt to GDP between nations and use that as a litmus test to compare the health of the balance sheet right and you could say oh you know US debt to GDP is like 124% and China's debt to GDP is like 300%. So if the US has a debt problem and China's is twice as bad. The second part of that is that you have to ask yourself what was the debt spent on because not all debt is equal. Like for example, Maggie, if you and I both had an identical income, right, we now have the same GDP. And if you and I both borrow a million dollars, we have the same debt to GDP. So metrictometric basis, we look even. But if we let a year play out and then we check in and I ask you, Maggie, what did you spend your million dollars on? And you tell me, well, I bought a small business. I parked a piece of it in gold. I bought some farmland. And then I built positions in equities with strong earnings that pay healthy dividends. That's what you did with your million dollars. But me during that year, I bought a Lambo. I traveled like a rockstar. I flew private five-star resorts and I paid off a bunch of my buddies credit card debts because I'm just a good guy. You know, a year later, we have the same debt to GDP. But obviously, you and I are in very different situations because you took your debt, you bought assets and cash flow, I took my debt and bought memories and high fives, right? It's not the same. And it's a silly analogy, but I use that because we can use that as a filter to look at um sovereigns debt to GDP ratios and what did they spend the money on. And that's where the conversation gets interesting because you know, China's borrowed about $40 trillion in the last 30 years. The purpose of that debt was to build out their industrialized economy. And they shifted the nation from what was effectively a a nation of rice farmers into the most specialized economic zones that the world's ever seen. Uh very specific manufacturing bases where you know the refineries are built right beside the component makers placed right beside the deep water ports or the heavy rail. Everything was designed inside that country over the course of 30 years to be the most efficient manufacturer at the cheapest price. And that's what that debt was used for. It was very expensive. Over $40 trillion invested, but that's what they got for that assets and cash flow. Um the US has borrowed about $31 trillion in the last 30 years. And the majority of that went to funding foreign wars um that they lost, bailing out banks for fraud or funding stimulus programs. much of it went much of which went to purchase goods that were manufactured in China. So, you know, that lens is important to look at the debt picture. Like, as you mentioned, it's not as simple as like who's got more debt. It's what did you spend the debt on? What did you get in return? Now, I'm seeing a massive shift in American policy right now. And frankly, I'm I'm loving it. It's going to be very inflationary. A lot of money is going to be borrowed, but it's going to be borrowed to re-industrialize the American economy. It's going to be a lot more expensive than people understand. And I', you know, love to unpack that because reshoring industry, reshoring jobs, bringing home manufacturing, high-tech industries, all this stuff sounds great as a headline, but as mentioned, China did this over the last 30 years and it cost over $40 trillion. If the US is about to attempt something similar, but in today's dollar terms, it's going to cost a lot a lot of money. Tens and tens and tens of trillions. Um, now it might end up being worth it, right? And I have high conviction they're going to pursue that target, but it's going to be far more expensive. It's going to be done on borrowed money and therefore far more inflationary than anybody really expects or is talking about. And so, uh, that's yeah, that's a couple things I'm paying attention to on the sovereign debt angle. >> Yeah. Um, and and I think the inflationary part of it is really important. I mean, just on China, I I understand what you're saying. You could argue that or or certainly some folks who look inside the books of China argue that there's a lot of that debt that's offbalance sheet that we're not we have no transparency into that went into um ghost cities and um a lot of infrastructure that does nothing bridge to nowhere type of thing because um it's important for social reasons to be employed and if you're a manufacturer you're also an exporter and so if you have a global downturn you know you're not bulletproof from some of the issues that we're talking about. Um, but I but I take your point that, you know, um, sort of everyone is in this together and now we're going to see big changes in the economy. When you talk about it being inflationary, so is part of your gold thesis a hedge, you know, gold as a hedge against inflation, do you think that's part of what's driving this? >> Yes, 100%. 100%. I think you know devaluation of the currency breaking confidence in people's future outlook about US dollar power and that's I think consumers corporates nationals central banks all the way up the chain and and you're bang on by the way a lot of that money that China borrowed and spent was a miss I mean you can look at the entire belt and road initiative right this was you know a trillion dollars spent over about 13 years effectively to buy friends and influence people right this was China's response to 2008 because they're an export nation And in 2008, it was the Americans and the Europeans that were hurting and they stopped buying as much as they used to from the Chinese. And one strategy that the Chinese came up with was could we lift up the next generation of consumer by building the infrastructure to get them online in the global economy. Let's build the refineries, the ports, the bridges, the highways, all of this interconnectedness and capacity to bring up the next gen of consumers so they will buy Chinese goods. And there's definitely been some valuable projects implemented, but about 80% of that infrastructure is in decay, right? It was poorly managed, poorly built, built in a rush, >> uh rusting and falling apart. And so, and you know, geopolitics in terms of buying friends, it's not so much a game of, you know, what did you do for me last year? It's what are you going to do for me today, right? And so, I don't know that I think the Belt and Road initiative is being put to the test in real time right now. >> And um I'm not sure it'll it'll >> we'll reflect on that as being a very sound trillion dollar bet. It might be a massive loss. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsallalliance.com. That's hardassallalliance.com. >> Um, >> by the way, I think there was just a bridge, a brand new bridge that just fell apart in China as well. Right. So, but but but I but I think it's important to because we tend to uh especially when you're sitting in the states tend to see it as a sort of, you know, um [snorts] there's a lack of transparency. So, it's easy to say everything they're doing is, you know, we're in much better shape. We're the cleanest dirty, you know, shirt in the laundry, dirty laundry and all that. So I think it's it is important to sort of you know um point out some of the differences and certainly the manufacturing power when we're talking about rare earths when we're talking about that capacity is is turning out to be a really big deal and a and a like sort of I would say at the epicenter of geopolitics right now. >> It is and that's why I think we're seeing this shift of uh state participation in private business in the west. This is, you know, it's this is old business in in China, right? Since Deng Xiaoping took over and started merging socialism with capitalism. Capitalism where it was convenient. Socialism where it worked, right? It doesn't matter if it's a white cat or a black cat as long as it catches the mice. That was the statement. And he just meant we can be socialist. We can be capitalist as long as we get the result. It doesn't matter. And that was the Chinese state capitalism model that helped them industrialize so quickly. That is what we're now seeing enter the US on the margin um with all sorts of equity deals in the natural resource sector trying to secure supply of those critical metals. Right. Trilogy Metals up in Alaska. It's a Canadian business project in in the states um and it was the Department of Defense just took a 10% equity stake in that business, but that's one of many. There's been billions of dollars of deals every week for about three months now. Whether it's 5% in US antimony, 10% in lithium Americas, 10% in Intel, 15% in MT materials, Intel aside, those are all mining companies. They're controlling resources. >> Do you see that as bullish or are you concerned about that? Not everybody loves the idea of state ownership in the West. >> Yeah, that's it's such a great question because I see it as incredibly bullish if distasteful. All right, I'm a small business entrepreneur. I'm a free market guy. I don't want the government in my business. But as it turns out, the government doesn't care what I want. They're going to do what they're going to do. And this is what they're doing. The reason this is incredibly bullish for commodity investors is because there's a new investor at the table. Two two things have happened here. One is there's a new investor at the table who has incredibly deep pockets. But not just deep pockets. They have the ability to move policy to that project's favor. The Trilogy Medal medals deal is a classic example. That's a valuable asset up in Alaska, but there was no access to it. It was air access only, so it wasn't economic. And the Biden administration blocked any foreseeable road that could have been built. After the United States administration took a stake in Trilogy Metals last month, the next move was to coordinate the Bureau of Land Management to get that road built. It's a billion-dollar road up to the Amler project, the Amler Road it's called. And that project will now come online because this new investor financed it and then shifted policy to ensure it it goes into production. And that's a big shift >> and not only because over the last 15 years the raw materials industry whether it's energy or or you know hard rock metals and mining has been demonized by both political parties in Canada the US and Australia like pretty much globally in the west and that's shifted now and so what what has been a headwind for the last 15 years where investors couldn't be certain about projects getting their permits or how long a project would be stuck in the regulator regy process that's now shifted to a tailwind to the favor of commodity investors. So if you're investing in projects that are in the best interest of the United States specifically, I'm incredibly bullish on those projects right now. And it's bigger than just the US, any US adjacent nations, G7s or G7 adjacent like Australia. very bullish, very bullish right now because the administration has woken up and realized we need to take securing supply of these critical metals very seriously and we need to act now and quite frankly we don't have the privilege of letting the private market work it out. We need to force the outcome and so that's what they're doing right now. That is very bullish for mining investors. So, it's it's really interesting um because we've sort of we started out talking with gold and we'll we'll kind of round out your thoughts going forward um you know at the end but we tal we started out talking about gold talked about how the metal gains in the metal preceded the equity the miners when we're talking about now uh things like rare earths and uh the kind of raw materials do you think that now that there's government muscle behind it is that good for um the minerals themselves ves understanding they're a little bit more complicated you know they don't trade sort of you know I would say like a typical commodity and even commodities themselves are hard um so do you see gain but we've seen what happened in for with uranium for example do you see the gains in the minerals themselves gaining first and then the miners coming or in this case is it switched just because of access to the market that you're going to see that bullishness represented in in the companies and the equities >> yeah that's a great question because the rare earths are inappropriately named, right? They're in fact not very rare. Rare earths are very abundant in the earth's crust. The bottleneck, the reason they're scarce is the refining uh capacity. That's what China nailed, you know, and that was the deal that we all signed 30 years ago, right? When we all decided we wanted the advanced technology and the laptops and the iPads and all this and we wanted to design. >> They wanted that dirty business in their background. That was the thing there was and you know China raised their hand and said we will seed environmental concessions and we will leverage our cheap labor to handle that part of the process and it worked very effectively. We all benefited from that and if we don't like that deal today uh you know we did sign that contract 20 30 years ago but that's what the United States has to reshore to unlock that value and so you know it was uh it was reelemental was the deal I saw this morning another uh coordinated deal between a um a rare earth minor but in this case uh reelemental actually gets their rare earth elements from the recycling process they're recycling used magnets and and you you know, technology products. They partner with a refiner and ma magnet manufacturer in the US and they're financed by the department of defense. And so that's like the full suite vertical integration that will unlock that value for investors. You're right, the rare earths are so obscure and you know how there's not really a deranium market or an antimmonium market that you can pay attention to or really get your get a firm grasp on. And and part of the reason for that, Maggie, is that most of these metals are used in advanced technology or emerging technology. Now, not all, but a lot. And in emerging technology, the the [snorts] tech is always going to pivot and the ingredients will pivot, you know, and we've seen cobalt become relevant, irrelevant, relevant again, and then irrelevant in the EV battery market, right? And that's because it's hard to get access to cobalt unless you're willing to buy it from the Congo. And you know that has always been the case with an emerging tech uh product. The ingredients shift to facilitate what's available right and so the rare earth market's a bit complex for that reason. But it's the companies that can master the full scale vertical integration uh supply to enduse product not just supply to refined product. Right? It's not about turning um um you know nickel into refined nickel. It's about turning rare earth into a magnet. Right? It's one step further. That's important. M so where do industrial metals fit into this secular story for you? Uh because we're we're talking about having to build having to reshore having to build the infrastructure to be able to get access to that. Um what's the outlook? What's your outlook for industrial metals? >> I'm I'm sweepingly this is going to sound repetitive, but I I am sweepingly bullish on the industrials as well. But my my reason for that, Maggie, and my timeline's different, by the way, >> and we can get into that. But, you know, we've seen the critical metals list in the US increase from what was only 35 minerals in 2018 to 60 today. It's nearly doubled. Like, at this rate, it'll include the entire periodic table in a couple years, right? And and that's just, you know, that's important to pay attention to because now inside that critical list are metals like copper and nickel, right? and and also minerals like pot ash, right? This is not a metal. Pod ash is primarily comes from Saskatchewan and Canada and is primarily used to grow food. It's a fertilizer, right? But it's a mineral and it's now on the critical mineral supply list. Anything that hits that list, the government has recognized the supply is far less certain than we thought it was or far less certain than it used to be. I mean, all of this is kind of wrapped in the call it the delobalization pivot that we're going through, right? My entire life has been the era of increased access to cheaper goods and a wider variety. And if you had the cash or the credit, you could buy whatever you wanted from whoever had it. That era is over. We know that for sure. But what happens next probably won't be as dramatic as many analysts are forecasting. But it will be less certain and less predictable. And on the heels of that, governments become very serious about securing that supply. And that's why the critical metals list keeps growing. And you know, co copper being a prime example and very bullish copper on the long term. Um, but there could be some events in the short term that destroy the demand, right? Some kind of a, you know, I wouldn't be surprised if we go through a bit of a globally coordinated recession. I see a lot of vulnerabilities in the broad equities market that make me uncomfortable and I've got no exposure there as a consequence. But, you know, um, copper is directly correlated to economic growth globally. And so but but long term I'm very bullish and that's just because you can look at copper demand for 50 years. You can go back to 1970 and zoom out on like a decade over decade basis and you'll see that copper demand has increased every decade by about sort of 3 to 5 million metric tons without fail. And inside that 50 years like we've seen everything that people are predicting in the future. We've seen massive tech innovation. Uh we've seen massive globally coordinated recessions. But despite all of that noise, decade over decade, the copper demand keeps on climbing. And copper supply matched the demand in the 70s and the 80s and the 90s and even in 2000. It was around 2010 that supply began to a gap began to widen there between supply and demand 2050 and it really got strong and now it's obvious that we didn't invest in new supply, but we kept on consuming more and now that's becoming a problem. That's why the copper price is up. Um, and I don't know how we're going to solve that because copper mines take sort of 10, 20 years to come online and billions of dollars. So, one step I think is government intervention in the regulation process and wiping a lot of that bureaucracy out of the way. I believe that's coming. Bullish for commodities. And secondly, innovation, right? We're going to eventually, I believe, find some alternate alloys in the copper sector. You know, we use copper to wire our homes because it's the most it's the highest efficiency conductor that we have access to at a good price because silver is actually a better conductor than copper is. But to wire your house with silver would be ridiculously expensive. Nobody would do that. And aluminum works as well. It's remarkably cheap. You could wire your house with aluminum for a fraction of the cost of copper, but it gets so hot it's a massive fire hazard. So, it's actually illegal in most states of the US. So, copper is our best bet right now. But I you know I I think we will have a better solution in the future especially with you know there's some very exciting um sort of material science developments happening on the heels of AI and experimentation. So you know finding a a new sort of copper alloy at a cheaper price more abundant >> but not in the near term. In the near term I'm I'm buying copper stocks. >> Yeah I love I by the way thank you for flagging that. I love that it fits into the category find the biggest problem and you have the best business opportunity out there. And so thinking about what in the world of AI seems maybe like a boring company, something like a material science company or or an innovator in that space is super interesting and and a great flag. So thank you for that. So um in if we're thinking about this, I'm hearing you uh it sounds like talk about uh there is a supply demand imbalance that you see as part of this big picture. Is that fair to say across the board that there's demand for precious metals, uh, critical minerals and industrial metals and the demand because of a lack of investment, uh, sorry, the supply because of the lack of investment is really lagging and it's going to be a while until it can catch up. Is that fair? >> That's fair. I think the two pieces there are the starvation of capital for the last 15 years and the increase in regulation and permitting requirements which has just slowed new projects down. that's prevented new supply from getting to the market. >> So against that bullish backdrop, uh it does sound like you're saying expect some volatility though, it's not just up and to the and to the right. There will be some vulnerabilities including economic downturn that we have to watch out for. >> Yeah. I mean, when the gold price is running like it is today, people make the mistake of looking at that as the next asset rally. like maybe they participated in real estate and crypto and AI and now like oh now it's gold's turn you know but gold's a bit different in that good news for gold investors is usually sort of bad news for everybody else right it's the smoke signal it's what central banks institutions and investors buy when they're worried about the future when they're not bullish on the macro outlook and they want to step into an asset that doesn't have any counterparty risk that isn't correlated to the broad equities markets or broad economic health and so that's one piece right now. I don't want to sound like pessimistic about the future because I'm anything but. My biggest conviction is like I'm long human ingenuity and progress and stepping back to, you know, a long long enough time horizon. You know, our journey is incredibly bullish and optimistic and we're going to keep going that way because we're amazing problem solvers. Uh but yes, in the near term there's often volatility and sometimes it's steep. And so right now I think is a good time to have a portion of your portfolio in the gold sector just in case things don't go the way you want them to. For me as a commodity investor, it's it's actually perfect because I'm already sort of tuned that direction, right? Whether gold, precious metals or industrial. Um but even the generalist investor, I think 5 10% these days isn't too much. I think that's just the minimum that you might want exposure to the gold sector just because of the boogeyman that might be around the corner. Hard to predict. >> Yeah. Do you think what do you think gold is saying? We've seen a heck of a run this year. What do you think it is saying about the health of the global financial system? >> Well, I think it comes back to those two assumptions that the the broad belief is that we don't know what the future of the US dollar is anymore. And um you know we're [clears throat] seeing you know de call it the ddollarization trend but just deals being done on the margin not big in any sense but increasing in volume right like when this rare earth headline hit the waves uh end of September early October that was all anybody talked about and that stole all the press coverage. But, you know, another deal that the Chinese announced that same week was a deal with BHP out of Australia, and it began by Chinese importers of BHP's iron ore. They import about $75 billion a year. So, a lot um halting all future orders of iron ore in US dollars. So, they didn't halt orders of iron ore, just orders in US dollars. And BHP came to the negotiating table, as you do with your biggest customer. And where they landed was that in the future future contracts uh Chinese importers could pay 30% of their order in renbi and 70% in US dollars. And you know the reason that struck me as a notable event was because we've seen you know global trade happening outside of the US dollar between you know China and Indonesia or Brazil or India but this is Australia. BHP is Australian and one of the largest commodity trading companies in the world. And I think this just gives a a piece of leverage to the Chinese that they can now take to the rest of the world and say when we want to we do business in Renman B and it was good enough for BHP so it's going to be good enough for you and it's new precedent in the DDOLization conversation. Um, and everybody sees that, right? We we see what's happening that, you know, the reason the US can sit tight and confident despite their debt is because demand globally for US dollars is higher than any other currency. But every little non- US dollar trade like this chips away at that a little tiny bit, little tiny bit by little tiny bit. And so if it's a obscure deal between uh, you know, China and Russia, I'm not worried about it. I don't pay too much attention to it. But when you see a company like BHP Australia participate, that's something different. It's a bit of a a tide change. And now obviously BHP will be accumulating a treasury of Ren Minby, right? They're selling 30% of their iron ore to their biggest customer in Ren Minbby. So they'll now have to find a supplier that will accept Ren Minbby. And in that sense, BHP is now incentivized to find more players to join the DDOLization movement because what are they going to do with all that RenMb? They could just convert it to US dollars. But I mean, as any non US business owner knows, currency risk is a headache. It's expensive and it's risky. So that's not optimal. What they'd rather do is find a supplier who will accept Ren Mindi, not US dollars. The most obvious one is just to double down on business with China. But looking outside of that is also in their best interest. So, um, you know, we see that the world sees that and on on balance, these events when they occur aren't super notable, but what you have to remember is they're part of a trend and a trajectory and what direction does this point to and that's going to deplete confidence in the US dollar for sure. >> So, which commodity do you think has the strongest upside over the next 5 to 10 years or what category are you looking at for the most upside? I have the most Okay, so it's an interesting question. You know, I have the most confidence in the gold sector. I have the most confidence in the gold sector. Um, now do I think that's going to be the biggest gainer over the next 5 10 years? Probably not. We'll probably see some of the more volatile metals uh sprint ahead of gold on a gain basis. But if I'm thinking about um you know hedging myself against global uncertainty, retaining my purchasing power and participating in a bunch of upside um that's gold. And and for me, you know, I'd look at the gold miners, the producers, the high quality, strong earning producers of that commodity, not just the physical. And so I'd look at like the sort of Agniko Eagles, the nuance, the best-in-class producers of that metal. Yeah, that's a great way to put it, by the way, because we know we can get spikes, but you're talking about really staying power in terms of the best performer. >> Yes. Yes. I mean, if you're to sort of pick one asset over that timeline, uh, that's the direction I would go for sure. >> Yeah. Um what do you think is is there a sort of angle of this that's overlooked because gold has been sort of capturing I think especially when you're talking about moving out of institutional uh into the psyche of broader the broader investing community. Um gold has been grabbing a lot of headlines. We've seen silver as well which we haven't talked about yet. Uh what do you think is overlooked? What are you paying attention to that you think people are not maybe aware of? I'm still going to say it's it's the gold thesis to be honest. Let let me explain what I mean by that. You know, inside the the community of of commodity investors or precious metals investors, it might feel like the industry is getting a little bit hot, you know, but >> just two weeks ago, I was in Japan with uh I'm part of this forum group. There's eight entrepreneurs, not in the finance sector. They're all different industries. We all bring something different to the table. We've met every month for 13 years just to share ideas uh when it comes to building our companies and they're all smart. They're all successful. They're all critical thinkers. Not one of them had has even had the thought that they should attribute $1 of their portfolio to gold. It's not on the radar whatsoever. Right. >> Wow. >> It's like we should just double down on the QQQ or buy the broad equities market because that's the most obvious thing that any smart investor would do. And quite frankly, the track record provides a bit of evidence of that. And so inside I think the school of finance especially inside any sort of hard money adjacent circles gold is an obvious conversation and the gold market's super hot >> and now we are seeing mainstream coverage every now and then >> but really it's on the margin. It's it's just it comes back to it's been so long since you weren't ridiculed for buying gold. I mean let's just be clear. It wasn't like it wasn't favorable. It was like you're an idiot. Why would you do that? you know, and that's where we came from for over a decade. So, that's important context. The mainstream is still still not paying attention. Um, and uh, so we got a long way to go. People ask me like, "What inning do you think we're in in the gold market?" And, you know, I have to scratch my head and say we might still be in the minor leagues. Like, I don't know if it's the game's begun yet, you know, to be honest with you. Um, and so I think from a broad investor standpoint, that is being overlooked. If you are already a gold investor, if you're a precious metals investor, what might you be overlooking? And here's what I'd share with you is that the market's handed you a bit of a gift right now. And if you're in the best-in-class names like the Agnikos, the new months, the wheat and precious metals, I'm comfortable parking capital there for the next 5 10 years, right? As long as I believe those two assumptions are still intact, the gold thesis is too. And those vehicles, I'm comfortable riding this secular bull market. There will be ups and downs along the way, but they'll withstand those and they'll come out stronger. But for those of you in the gold sector who like looking a bit earlier stage into the higher risk, higher reward, more speculative stocks, never be hesitant to derisk when given the chance. And I'm seeing way too many investors right now celebrate 100% 300% 500% gains in these early stage speculations and they're not taking profits because they have some price in their imagination that they are fixated on and once it gets there I'll sell. Let me tell you what like the best investors in the precious metal sector that have been around 30 40 years they might not be better buyers than anybody but they're far better sellers. And when the market gives them the opportunity to derisk and at least take their principle off the table and let the rest ride, you take that opportunity because there's going to be a new bus every 15 minutes and if you can participate in the speculative market derisked, you should always jump at that chance. Don't get greedy, you know. Um, but that's what I'm seeing a lot of right now and I've d-risked massively. You know, in the speculative market, you're not really investing in businesses. It's important for people to remember that, right? IO Eagle is a business. It generates cash. The earlier stage mining companies that are looking for the minerals and provide the opportunity for higher upside, they don't actually make any money. They're reliant on financings, raising money from investors to continue their operation. So, when you're investing in those, you're not buying a business. You're betting on a catalyst and a catalyst that hopefully moves the share price up. That catalyst could be a mineral discovery. It could be a a permit or it could be market sentiment like we've got right now and you've got that catalyst in your pocket. Share price are up. D-risk. I'm not saying sell everything, but take the opportunity to take some risk off the table so you stay at the table. Right. >> Rule number one is stay alive. You only do that by taking your principle off the table when you get the chance. It's >> a really, really, really important reminder, Jay. I'm so glad you said that. And I mean, when you're saying sort of the riskier, more speculative part, is that what most people would or a lot of people would call junior minors? Is that what you're talking about? >> Exactly. Exactly. Yeah. I mean, I would just bucket it and say they're not producing cash yet, right? They're they're a funded developer, a developer, an exploration company. Um near-term producer, but near-term, right? Uh if you're not generating cash, I put them in that bucket. >> Yeah. Fantastic stuff. Uh I just want to circle back to the innovation part because you're clearly looking at that, which I think is really interesting. Um, is it in that uh sort of new material space that you see the most you come across the most interesting conversations or is there you know efficiency or uh you know um environmental output especially when you're talking about reshoring to areas that are going to be under more scrutiny in terms of the environment environmental impact. Um what are the kind of interesting innovators in this space that we should be watching? Well, I think the interesting part is that I'm I'm not having a lot of conversations like that, but I think we should be. And I do think it's inevitable because the uh supply demand gap we're facing will not just be closed as quickly as, you know, a couple years and a little bit of investment arriving at the table. We've got a bigger problem than that. And for a lot of these critical commodities, whether that's anything energy related, right, uranium, copper, these metals, um, you know, we're at a place now where either the price goes up or the lights go out, but eventually the price is going to go up to an unsustainable level. I believe that. >> Yeah. >> And you know, what typically happens in those scenarios is we innovate our way out, right? And so we haven't seen much disruption whatsoever in the material sciences. like since I've been in this industry for about 18 years, u we've just been relying on the old way will be the new way too and and that won't last. And I think, you know, we typically innovate our way when we're feeling a tremendous amount of pain. And I think the pain of high commodity prices will drive that. Um and so that's, you know, that's what I'm seeing there, Maggie. And >> maybe that capital has just been sort of hoovered into AI as well, right? When you're talking about trying to raise money to innovate, we see it all moving in one direction. And this is when we don't have transparency in private markets. Be super interesting as we watch those commodity prices move to see whether those pendulum swings. >> Yeah. And you know that reelemental company in the US is projected to produce around 10,000 tons of battery sorry of magnet I believe and it's all from recycled goods. So it's a sort of an outlier in the space but bringing a new approach to an old industry and leading the way in a sense in the reshoring uh movement as a consequence. >> Yeah. Fantastic stuff, Jay. This was such an interesting conversation. So appreciate you taking the time, >> Maggie. It's been a pleasure. Anytime. >> And uh just a reminder, as we said at the top, if you want to take a look at what kind of role commodities should play in your portfolio or just get a sense if you are uh stress testing it for what might be coming, you can get a free portfolio review. Just hit the link in the description or head to wealthy.comfree. Thanks so much for watching. We'll see you again next time.
Jay Martin: A Commodities Supercycle Is Just Beginning | Ft. @TheJayMartinShow
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We're at a place now where either the price goes up or the lights go out, but eventually the price is going to go up to an unsustainable level. I believe that. >> Hello and welcome to Wealthy. I'm Maggie Lake and today I'm joined by Jay Martin, founder of Commodity University and host of the Jay Martin Show. Hey Jay, it's great to have you on. >> Hey Maggie, it's great to be here. So, just a reminder before we start, if you would like to check if your asset allocation is the right fit for you, you can get a free portfolio review from an advisor in the Wealthy Network. Just click the link in the description or go to wealthy.comfree. So, Jay, it's a fascinating time to be in commodities. Uh, what do you make of the price action we've seen in gold? >> Oh man, it's exciting. I'd have to say it's the gift that gold investors have been waiting for for about 15 years. But as a consequence of that, I'm seeing some almost comical activity from uh gold equity investors in that it's been so long since they've experienced a good market that it's like they're trapped in their own PTSD and forgot what it feels like. And now whenever they hear any mainstream uh investor or financial journalist start talking about gold, they immediately jump to the conclusion that that must mean this is the top and that the market's gotten too hot because we just haven't experienced that kind of coverage in so long. >> Um so it's it's sort of funny to me. I mean what I would say about this gold market, Maggie, is that it has rolled out in the most textbook fashion that one could imagine. You know, there were some false starts 2016, 2020, but this really the first seed of of this market would be the central bank buying a physical back in 2022. And you know, it was about a year of just physical gold purchases from central banks eventually crawling that price up. Gold investors were very impatient and curious why the equity prices weren't moving at that point. But the simple answer was that central banks don't buy equities, they buy physical. And so that's why one price was moving and the other wasn't. >> But a year later, you know, institutions started realizing they needed exposure to the producers of that commodity. And so mid 2023, end of 2023, we saw sort of the best-in-class royalty companies or the best-in-class miners, their share price begin to crawl up. And there's been just a very slow, patient, methodical trickle of capital further down the value chain since then. And I love how slow it's been. Actually, the last few months got a bit hot and frothy. But, you know, as you know, that's more a consequence of the two factors always at play in any secular market, whether it's a bull or a bear. In this case, a secular bull market in the the gold sector, which I have high conviction in. But within that, you have traders that dip in and dip out and try to swing trade opportunities. And so, they create short-term volatility inside of a long-term trend. So, you know, that's always been the case with the gold sector and and will be for this market. But, um, it's healthy. It's rolled out very patiently and methodically. So, I have a lot of confidence in the longevity as a result. >> Yeah. You you mentioned something uh or touched on something that I'm curious about and you talked about the secular story. Um, do you see it as that? Is is is this do you feel like this is sort of cyclical in nature or tied to a specific situation? You know, a lot of people talk about the weaponization of Swift or or something like that, or do you think this is part of a a real structural change when it comes to precious metals? >> It's it's both. And if you go back to that initial seed, and we could sort of people could point to earlier instances that began to rally the gold price, but the central bank buying urgency that occurred in 2022 was sort of the big tectonic shift from a macro standpoint that we're still realizing today. and they will be the drivers that are holding the line on gold price, taking physical ownership and keeping that price where it is. So I mean in terms of what what to make of the trend, central banks began buying gold for two primary reasons. There are two assumptions they were making. The first assumption was that the issuer of the US dollar was going to continue to dilute that currency and devalue the purchasing power of the dollar. So if you still believe that assumption to be true, then gold is a good bet. And the second assumption was exactly what you said. It was the confiscation of assets. The second assumption being um geopolitical strategy from the Americans will be less predictable than it used to be. Right. And if that assumption is still true, then gold's also still a good bet because it is that sort of life raft um you know safety net with no counterparty risk that you can hedge your bets with. And so as long as those two assumptions are in play, devaluation of the currency and less predictable predictable geopolitical strategy, gold is still going to be in favor. >> And we can unpack both of those and why I have super high conviction they both are still in play. But as long as they are, the gold thesis is intact. Yeah, I think that the the uh devaluation argument is interesting because you know I was just talking to someone about that and there I think this issue of debt and debasement um I know a lot of people feel really strongly about it but it's not one it's not just a US story right it's an everybody's story so does that factor in into how you're thinking about gold >> yeah 100% and yeah there's a lot to unpack in terms of what debt was used for Um and you know so people often compare you know debt to GDP between nations and use that as a litmus test to compare the health of the balance sheet right and you could say oh you know US debt to GDP is like 124% and China's debt to GDP is like 300%. So if the US has a debt problem and China's is twice as bad. The second part of that is that you have to ask yourself what was the debt spent on because not all debt is equal. Like for example, Maggie, if you and I both had an identical income, right, we now have the same GDP. And if you and I both borrow a million dollars, we have the same debt to GDP. So metrictometric basis, we look even. But if we let a year play out and then we check in and I ask you, Maggie, what did you spend your million dollars on? And you tell me, well, I bought a small business. I parked a piece of it in gold. I bought some farmland. And then I built positions in equities with strong earnings that pay healthy dividends. That's what you did with your million dollars. But me during that year, I bought a Lambo. I traveled like a rockstar. I flew private five-star resorts and I paid off a bunch of my buddies credit card debts because I'm just a good guy. You know, a year later, we have the same debt to GDP. But obviously, you and I are in very different situations because you took your debt, you bought assets and cash flow, I took my debt and bought memories and high fives, right? It's not the same. And it's a silly analogy, but I use that because we can use that as a filter to look at um sovereigns debt to GDP ratios and what did they spend the money on. And that's where the conversation gets interesting because you know, China's borrowed about $40 trillion in the last 30 years. The purpose of that debt was to build out their industrialized economy. And they shifted the nation from what was effectively a a nation of rice farmers into the most specialized economic zones that the world's ever seen. Uh very specific manufacturing bases where you know the refineries are built right beside the component makers placed right beside the deep water ports or the heavy rail. Everything was designed inside that country over the course of 30 years to be the most efficient manufacturer at the cheapest price. And that's what that debt was used for. It was very expensive. Over $40 trillion invested, but that's what they got for that assets and cash flow. Um the US has borrowed about $31 trillion in the last 30 years. And the majority of that went to funding foreign wars um that they lost, bailing out banks for fraud or funding stimulus programs. much of it went much of which went to purchase goods that were manufactured in China. So, you know, that lens is important to look at the debt picture. Like, as you mentioned, it's not as simple as like who's got more debt. It's what did you spend the debt on? What did you get in return? Now, I'm seeing a massive shift in American policy right now. And frankly, I'm I'm loving it. It's going to be very inflationary. A lot of money is going to be borrowed, but it's going to be borrowed to re-industrialize the American economy. It's going to be a lot more expensive than people understand. And I', you know, love to unpack that because reshoring industry, reshoring jobs, bringing home manufacturing, high-tech industries, all this stuff sounds great as a headline, but as mentioned, China did this over the last 30 years and it cost over $40 trillion. If the US is about to attempt something similar, but in today's dollar terms, it's going to cost a lot a lot of money. Tens and tens and tens of trillions. Um, now it might end up being worth it, right? And I have high conviction they're going to pursue that target, but it's going to be far more expensive. It's going to be done on borrowed money and therefore far more inflationary than anybody really expects or is talking about. And so, uh, that's yeah, that's a couple things I'm paying attention to on the sovereign debt angle. >> Yeah. Um, and and I think the inflationary part of it is really important. I mean, just on China, I I understand what you're saying. You could argue that or or certainly some folks who look inside the books of China argue that there's a lot of that debt that's offbalance sheet that we're not we have no transparency into that went into um ghost cities and um a lot of infrastructure that does nothing bridge to nowhere type of thing because um it's important for social reasons to be employed and if you're a manufacturer you're also an exporter and so if you have a global downturn you know you're not bulletproof from some of the issues that we're talking about. Um, but I but I take your point that, you know, um, sort of everyone is in this together and now we're going to see big changes in the economy. When you talk about it being inflationary, so is part of your gold thesis a hedge, you know, gold as a hedge against inflation, do you think that's part of what's driving this? >> Yes, 100%. 100%. I think you know devaluation of the currency breaking confidence in people's future outlook about US dollar power and that's I think consumers corporates nationals central banks all the way up the chain and and you're bang on by the way a lot of that money that China borrowed and spent was a miss I mean you can look at the entire belt and road initiative right this was you know a trillion dollars spent over about 13 years effectively to buy friends and influence people right this was China's response to 2008 because they're an export nation And in 2008, it was the Americans and the Europeans that were hurting and they stopped buying as much as they used to from the Chinese. And one strategy that the Chinese came up with was could we lift up the next generation of consumer by building the infrastructure to get them online in the global economy. Let's build the refineries, the ports, the bridges, the highways, all of this interconnectedness and capacity to bring up the next gen of consumers so they will buy Chinese goods. And there's definitely been some valuable projects implemented, but about 80% of that infrastructure is in decay, right? It was poorly managed, poorly built, built in a rush, >> uh rusting and falling apart. And so, and you know, geopolitics in terms of buying friends, it's not so much a game of, you know, what did you do for me last year? It's what are you going to do for me today, right? And so, I don't know that I think the Belt and Road initiative is being put to the test in real time right now. >> And um I'm not sure it'll it'll >> we'll reflect on that as being a very sound trillion dollar bet. It might be a massive loss. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsallalliance.com. That's hardassallalliance.com. >> Um, >> by the way, I think there was just a bridge, a brand new bridge that just fell apart in China as well. Right. So, but but but I but I think it's important to because we tend to uh especially when you're sitting in the states tend to see it as a sort of, you know, um [snorts] there's a lack of transparency. So, it's easy to say everything they're doing is, you know, we're in much better shape. We're the cleanest dirty, you know, shirt in the laundry, dirty laundry and all that. So I think it's it is important to sort of you know um point out some of the differences and certainly the manufacturing power when we're talking about rare earths when we're talking about that capacity is is turning out to be a really big deal and a and a like sort of I would say at the epicenter of geopolitics right now. >> It is and that's why I think we're seeing this shift of uh state participation in private business in the west. This is, you know, it's this is old business in in China, right? Since Deng Xiaoping took over and started merging socialism with capitalism. Capitalism where it was convenient. Socialism where it worked, right? It doesn't matter if it's a white cat or a black cat as long as it catches the mice. That was the statement. And he just meant we can be socialist. We can be capitalist as long as we get the result. It doesn't matter. And that was the Chinese state capitalism model that helped them industrialize so quickly. That is what we're now seeing enter the US on the margin um with all sorts of equity deals in the natural resource sector trying to secure supply of those critical metals. Right. Trilogy Metals up in Alaska. It's a Canadian business project in in the states um and it was the Department of Defense just took a 10% equity stake in that business, but that's one of many. There's been billions of dollars of deals every week for about three months now. Whether it's 5% in US antimony, 10% in lithium Americas, 10% in Intel, 15% in MT materials, Intel aside, those are all mining companies. They're controlling resources. >> Do you see that as bullish or are you concerned about that? Not everybody loves the idea of state ownership in the West. >> Yeah, that's it's such a great question because I see it as incredibly bullish if distasteful. All right, I'm a small business entrepreneur. I'm a free market guy. I don't want the government in my business. But as it turns out, the government doesn't care what I want. They're going to do what they're going to do. And this is what they're doing. The reason this is incredibly bullish for commodity investors is because there's a new investor at the table. Two two things have happened here. One is there's a new investor at the table who has incredibly deep pockets. But not just deep pockets. They have the ability to move policy to that project's favor. The Trilogy Medal medals deal is a classic example. That's a valuable asset up in Alaska, but there was no access to it. It was air access only, so it wasn't economic. And the Biden administration blocked any foreseeable road that could have been built. After the United States administration took a stake in Trilogy Metals last month, the next move was to coordinate the Bureau of Land Management to get that road built. It's a billion-dollar road up to the Amler project, the Amler Road it's called. And that project will now come online because this new investor financed it and then shifted policy to ensure it it goes into production. And that's a big shift >> and not only because over the last 15 years the raw materials industry whether it's energy or or you know hard rock metals and mining has been demonized by both political parties in Canada the US and Australia like pretty much globally in the west and that's shifted now and so what what has been a headwind for the last 15 years where investors couldn't be certain about projects getting their permits or how long a project would be stuck in the regulator regy process that's now shifted to a tailwind to the favor of commodity investors. So if you're investing in projects that are in the best interest of the United States specifically, I'm incredibly bullish on those projects right now. And it's bigger than just the US, any US adjacent nations, G7s or G7 adjacent like Australia. very bullish, very bullish right now because the administration has woken up and realized we need to take securing supply of these critical metals very seriously and we need to act now and quite frankly we don't have the privilege of letting the private market work it out. We need to force the outcome and so that's what they're doing right now. That is very bullish for mining investors. So, it's it's really interesting um because we've sort of we started out talking with gold and we'll we'll kind of round out your thoughts going forward um you know at the end but we tal we started out talking about gold talked about how the metal gains in the metal preceded the equity the miners when we're talking about now uh things like rare earths and uh the kind of raw materials do you think that now that there's government muscle behind it is that good for um the minerals themselves ves understanding they're a little bit more complicated you know they don't trade sort of you know I would say like a typical commodity and even commodities themselves are hard um so do you see gain but we've seen what happened in for with uranium for example do you see the gains in the minerals themselves gaining first and then the miners coming or in this case is it switched just because of access to the market that you're going to see that bullishness represented in in the companies and the equities >> yeah that's a great question because the rare earths are inappropriately named, right? They're in fact not very rare. Rare earths are very abundant in the earth's crust. The bottleneck, the reason they're scarce is the refining uh capacity. That's what China nailed, you know, and that was the deal that we all signed 30 years ago, right? When we all decided we wanted the advanced technology and the laptops and the iPads and all this and we wanted to design. >> They wanted that dirty business in their background. That was the thing there was and you know China raised their hand and said we will seed environmental concessions and we will leverage our cheap labor to handle that part of the process and it worked very effectively. We all benefited from that and if we don't like that deal today uh you know we did sign that contract 20 30 years ago but that's what the United States has to reshore to unlock that value and so you know it was uh it was reelemental was the deal I saw this morning another uh coordinated deal between a um a rare earth minor but in this case uh reelemental actually gets their rare earth elements from the recycling process they're recycling used magnets and and you you know, technology products. They partner with a refiner and ma magnet manufacturer in the US and they're financed by the department of defense. And so that's like the full suite vertical integration that will unlock that value for investors. You're right, the rare earths are so obscure and you know how there's not really a deranium market or an antimmonium market that you can pay attention to or really get your get a firm grasp on. And and part of the reason for that, Maggie, is that most of these metals are used in advanced technology or emerging technology. Now, not all, but a lot. And in emerging technology, the the [snorts] tech is always going to pivot and the ingredients will pivot, you know, and we've seen cobalt become relevant, irrelevant, relevant again, and then irrelevant in the EV battery market, right? And that's because it's hard to get access to cobalt unless you're willing to buy it from the Congo. And you know that has always been the case with an emerging tech uh product. The ingredients shift to facilitate what's available right and so the rare earth market's a bit complex for that reason. But it's the companies that can master the full scale vertical integration uh supply to enduse product not just supply to refined product. Right? It's not about turning um um you know nickel into refined nickel. It's about turning rare earth into a magnet. Right? It's one step further. That's important. M so where do industrial metals fit into this secular story for you? Uh because we're we're talking about having to build having to reshore having to build the infrastructure to be able to get access to that. Um what's the outlook? What's your outlook for industrial metals? >> I'm I'm sweepingly this is going to sound repetitive, but I I am sweepingly bullish on the industrials as well. But my my reason for that, Maggie, and my timeline's different, by the way, >> and we can get into that. But, you know, we've seen the critical metals list in the US increase from what was only 35 minerals in 2018 to 60 today. It's nearly doubled. Like, at this rate, it'll include the entire periodic table in a couple years, right? And and that's just, you know, that's important to pay attention to because now inside that critical list are metals like copper and nickel, right? and and also minerals like pot ash, right? This is not a metal. Pod ash is primarily comes from Saskatchewan and Canada and is primarily used to grow food. It's a fertilizer, right? But it's a mineral and it's now on the critical mineral supply list. Anything that hits that list, the government has recognized the supply is far less certain than we thought it was or far less certain than it used to be. I mean, all of this is kind of wrapped in the call it the delobalization pivot that we're going through, right? My entire life has been the era of increased access to cheaper goods and a wider variety. And if you had the cash or the credit, you could buy whatever you wanted from whoever had it. That era is over. We know that for sure. But what happens next probably won't be as dramatic as many analysts are forecasting. But it will be less certain and less predictable. And on the heels of that, governments become very serious about securing that supply. And that's why the critical metals list keeps growing. And you know, co copper being a prime example and very bullish copper on the long term. Um, but there could be some events in the short term that destroy the demand, right? Some kind of a, you know, I wouldn't be surprised if we go through a bit of a globally coordinated recession. I see a lot of vulnerabilities in the broad equities market that make me uncomfortable and I've got no exposure there as a consequence. But, you know, um, copper is directly correlated to economic growth globally. And so but but long term I'm very bullish and that's just because you can look at copper demand for 50 years. You can go back to 1970 and zoom out on like a decade over decade basis and you'll see that copper demand has increased every decade by about sort of 3 to 5 million metric tons without fail. And inside that 50 years like we've seen everything that people are predicting in the future. We've seen massive tech innovation. Uh we've seen massive globally coordinated recessions. But despite all of that noise, decade over decade, the copper demand keeps on climbing. And copper supply matched the demand in the 70s and the 80s and the 90s and even in 2000. It was around 2010 that supply began to a gap began to widen there between supply and demand 2050 and it really got strong and now it's obvious that we didn't invest in new supply, but we kept on consuming more and now that's becoming a problem. That's why the copper price is up. Um, and I don't know how we're going to solve that because copper mines take sort of 10, 20 years to come online and billions of dollars. So, one step I think is government intervention in the regulation process and wiping a lot of that bureaucracy out of the way. I believe that's coming. Bullish for commodities. And secondly, innovation, right? We're going to eventually, I believe, find some alternate alloys in the copper sector. You know, we use copper to wire our homes because it's the most it's the highest efficiency conductor that we have access to at a good price because silver is actually a better conductor than copper is. But to wire your house with silver would be ridiculously expensive. Nobody would do that. And aluminum works as well. It's remarkably cheap. You could wire your house with aluminum for a fraction of the cost of copper, but it gets so hot it's a massive fire hazard. So, it's actually illegal in most states of the US. So, copper is our best bet right now. But I you know I I think we will have a better solution in the future especially with you know there's some very exciting um sort of material science developments happening on the heels of AI and experimentation. So you know finding a a new sort of copper alloy at a cheaper price more abundant >> but not in the near term. In the near term I'm I'm buying copper stocks. >> Yeah I love I by the way thank you for flagging that. I love that it fits into the category find the biggest problem and you have the best business opportunity out there. And so thinking about what in the world of AI seems maybe like a boring company, something like a material science company or or an innovator in that space is super interesting and and a great flag. So thank you for that. So um in if we're thinking about this, I'm hearing you uh it sounds like talk about uh there is a supply demand imbalance that you see as part of this big picture. Is that fair to say across the board that there's demand for precious metals, uh, critical minerals and industrial metals and the demand because of a lack of investment, uh, sorry, the supply because of the lack of investment is really lagging and it's going to be a while until it can catch up. Is that fair? >> That's fair. I think the two pieces there are the starvation of capital for the last 15 years and the increase in regulation and permitting requirements which has just slowed new projects down. that's prevented new supply from getting to the market. >> So against that bullish backdrop, uh it does sound like you're saying expect some volatility though, it's not just up and to the and to the right. There will be some vulnerabilities including economic downturn that we have to watch out for. >> Yeah. I mean, when the gold price is running like it is today, people make the mistake of looking at that as the next asset rally. like maybe they participated in real estate and crypto and AI and now like oh now it's gold's turn you know but gold's a bit different in that good news for gold investors is usually sort of bad news for everybody else right it's the smoke signal it's what central banks institutions and investors buy when they're worried about the future when they're not bullish on the macro outlook and they want to step into an asset that doesn't have any counterparty risk that isn't correlated to the broad equities markets or broad economic health and so that's one piece right now. I don't want to sound like pessimistic about the future because I'm anything but. My biggest conviction is like I'm long human ingenuity and progress and stepping back to, you know, a long long enough time horizon. You know, our journey is incredibly bullish and optimistic and we're going to keep going that way because we're amazing problem solvers. Uh but yes, in the near term there's often volatility and sometimes it's steep. And so right now I think is a good time to have a portion of your portfolio in the gold sector just in case things don't go the way you want them to. For me as a commodity investor, it's it's actually perfect because I'm already sort of tuned that direction, right? Whether gold, precious metals or industrial. Um but even the generalist investor, I think 5 10% these days isn't too much. I think that's just the minimum that you might want exposure to the gold sector just because of the boogeyman that might be around the corner. Hard to predict. >> Yeah. Do you think what do you think gold is saying? We've seen a heck of a run this year. What do you think it is saying about the health of the global financial system? >> Well, I think it comes back to those two assumptions that the the broad belief is that we don't know what the future of the US dollar is anymore. And um you know we're [clears throat] seeing you know de call it the ddollarization trend but just deals being done on the margin not big in any sense but increasing in volume right like when this rare earth headline hit the waves uh end of September early October that was all anybody talked about and that stole all the press coverage. But, you know, another deal that the Chinese announced that same week was a deal with BHP out of Australia, and it began by Chinese importers of BHP's iron ore. They import about $75 billion a year. So, a lot um halting all future orders of iron ore in US dollars. So, they didn't halt orders of iron ore, just orders in US dollars. And BHP came to the negotiating table, as you do with your biggest customer. And where they landed was that in the future future contracts uh Chinese importers could pay 30% of their order in renbi and 70% in US dollars. And you know the reason that struck me as a notable event was because we've seen you know global trade happening outside of the US dollar between you know China and Indonesia or Brazil or India but this is Australia. BHP is Australian and one of the largest commodity trading companies in the world. And I think this just gives a a piece of leverage to the Chinese that they can now take to the rest of the world and say when we want to we do business in Renman B and it was good enough for BHP so it's going to be good enough for you and it's new precedent in the DDOLization conversation. Um, and everybody sees that, right? We we see what's happening that, you know, the reason the US can sit tight and confident despite their debt is because demand globally for US dollars is higher than any other currency. But every little non- US dollar trade like this chips away at that a little tiny bit, little tiny bit by little tiny bit. And so if it's a obscure deal between uh, you know, China and Russia, I'm not worried about it. I don't pay too much attention to it. But when you see a company like BHP Australia participate, that's something different. It's a bit of a a tide change. And now obviously BHP will be accumulating a treasury of Ren Minby, right? They're selling 30% of their iron ore to their biggest customer in Ren Minbby. So they'll now have to find a supplier that will accept Ren Minbby. And in that sense, BHP is now incentivized to find more players to join the DDOLization movement because what are they going to do with all that RenMb? They could just convert it to US dollars. But I mean, as any non US business owner knows, currency risk is a headache. It's expensive and it's risky. So that's not optimal. What they'd rather do is find a supplier who will accept Ren Mindi, not US dollars. The most obvious one is just to double down on business with China. But looking outside of that is also in their best interest. So, um, you know, we see that the world sees that and on on balance, these events when they occur aren't super notable, but what you have to remember is they're part of a trend and a trajectory and what direction does this point to and that's going to deplete confidence in the US dollar for sure. >> So, which commodity do you think has the strongest upside over the next 5 to 10 years or what category are you looking at for the most upside? I have the most Okay, so it's an interesting question. You know, I have the most confidence in the gold sector. I have the most confidence in the gold sector. Um, now do I think that's going to be the biggest gainer over the next 5 10 years? Probably not. We'll probably see some of the more volatile metals uh sprint ahead of gold on a gain basis. But if I'm thinking about um you know hedging myself against global uncertainty, retaining my purchasing power and participating in a bunch of upside um that's gold. And and for me, you know, I'd look at the gold miners, the producers, the high quality, strong earning producers of that commodity, not just the physical. And so I'd look at like the sort of Agniko Eagles, the nuance, the best-in-class producers of that metal. Yeah, that's a great way to put it, by the way, because we know we can get spikes, but you're talking about really staying power in terms of the best performer. >> Yes. Yes. I mean, if you're to sort of pick one asset over that timeline, uh, that's the direction I would go for sure. >> Yeah. Um what do you think is is there a sort of angle of this that's overlooked because gold has been sort of capturing I think especially when you're talking about moving out of institutional uh into the psyche of broader the broader investing community. Um gold has been grabbing a lot of headlines. We've seen silver as well which we haven't talked about yet. Uh what do you think is overlooked? What are you paying attention to that you think people are not maybe aware of? I'm still going to say it's it's the gold thesis to be honest. Let let me explain what I mean by that. You know, inside the the community of of commodity investors or precious metals investors, it might feel like the industry is getting a little bit hot, you know, but >> just two weeks ago, I was in Japan with uh I'm part of this forum group. There's eight entrepreneurs, not in the finance sector. They're all different industries. We all bring something different to the table. We've met every month for 13 years just to share ideas uh when it comes to building our companies and they're all smart. They're all successful. They're all critical thinkers. Not one of them had has even had the thought that they should attribute $1 of their portfolio to gold. It's not on the radar whatsoever. Right. >> Wow. >> It's like we should just double down on the QQQ or buy the broad equities market because that's the most obvious thing that any smart investor would do. And quite frankly, the track record provides a bit of evidence of that. And so inside I think the school of finance especially inside any sort of hard money adjacent circles gold is an obvious conversation and the gold market's super hot >> and now we are seeing mainstream coverage every now and then >> but really it's on the margin. It's it's just it comes back to it's been so long since you weren't ridiculed for buying gold. I mean let's just be clear. It wasn't like it wasn't favorable. It was like you're an idiot. Why would you do that? you know, and that's where we came from for over a decade. So, that's important context. The mainstream is still still not paying attention. Um, and uh, so we got a long way to go. People ask me like, "What inning do you think we're in in the gold market?" And, you know, I have to scratch my head and say we might still be in the minor leagues. Like, I don't know if it's the game's begun yet, you know, to be honest with you. Um, and so I think from a broad investor standpoint, that is being overlooked. If you are already a gold investor, if you're a precious metals investor, what might you be overlooking? And here's what I'd share with you is that the market's handed you a bit of a gift right now. And if you're in the best-in-class names like the Agnikos, the new months, the wheat and precious metals, I'm comfortable parking capital there for the next 5 10 years, right? As long as I believe those two assumptions are still intact, the gold thesis is too. And those vehicles, I'm comfortable riding this secular bull market. There will be ups and downs along the way, but they'll withstand those and they'll come out stronger. But for those of you in the gold sector who like looking a bit earlier stage into the higher risk, higher reward, more speculative stocks, never be hesitant to derisk when given the chance. And I'm seeing way too many investors right now celebrate 100% 300% 500% gains in these early stage speculations and they're not taking profits because they have some price in their imagination that they are fixated on and once it gets there I'll sell. Let me tell you what like the best investors in the precious metal sector that have been around 30 40 years they might not be better buyers than anybody but they're far better sellers. And when the market gives them the opportunity to derisk and at least take their principle off the table and let the rest ride, you take that opportunity because there's going to be a new bus every 15 minutes and if you can participate in the speculative market derisked, you should always jump at that chance. Don't get greedy, you know. Um, but that's what I'm seeing a lot of right now and I've d-risked massively. You know, in the speculative market, you're not really investing in businesses. It's important for people to remember that, right? IO Eagle is a business. It generates cash. The earlier stage mining companies that are looking for the minerals and provide the opportunity for higher upside, they don't actually make any money. They're reliant on financings, raising money from investors to continue their operation. So, when you're investing in those, you're not buying a business. You're betting on a catalyst and a catalyst that hopefully moves the share price up. That catalyst could be a mineral discovery. It could be a a permit or it could be market sentiment like we've got right now and you've got that catalyst in your pocket. Share price are up. D-risk. I'm not saying sell everything, but take the opportunity to take some risk off the table so you stay at the table. Right. >> Rule number one is stay alive. You only do that by taking your principle off the table when you get the chance. It's >> a really, really, really important reminder, Jay. I'm so glad you said that. And I mean, when you're saying sort of the riskier, more speculative part, is that what most people would or a lot of people would call junior minors? Is that what you're talking about? >> Exactly. Exactly. Yeah. I mean, I would just bucket it and say they're not producing cash yet, right? They're they're a funded developer, a developer, an exploration company. Um near-term producer, but near-term, right? Uh if you're not generating cash, I put them in that bucket. >> Yeah. Fantastic stuff. Uh I just want to circle back to the innovation part because you're clearly looking at that, which I think is really interesting. Um, is it in that uh sort of new material space that you see the most you come across the most interesting conversations or is there you know efficiency or uh you know um environmental output especially when you're talking about reshoring to areas that are going to be under more scrutiny in terms of the environment environmental impact. Um what are the kind of interesting innovators in this space that we should be watching? Well, I think the interesting part is that I'm I'm not having a lot of conversations like that, but I think we should be. And I do think it's inevitable because the uh supply demand gap we're facing will not just be closed as quickly as, you know, a couple years and a little bit of investment arriving at the table. We've got a bigger problem than that. And for a lot of these critical commodities, whether that's anything energy related, right, uranium, copper, these metals, um, you know, we're at a place now where either the price goes up or the lights go out, but eventually the price is going to go up to an unsustainable level. I believe that. >> Yeah. >> And you know, what typically happens in those scenarios is we innovate our way out, right? And so we haven't seen much disruption whatsoever in the material sciences. like since I've been in this industry for about 18 years, u we've just been relying on the old way will be the new way too and and that won't last. And I think, you know, we typically innovate our way when we're feeling a tremendous amount of pain. And I think the pain of high commodity prices will drive that. Um and so that's, you know, that's what I'm seeing there, Maggie. And >> maybe that capital has just been sort of hoovered into AI as well, right? When you're talking about trying to raise money to innovate, we see it all moving in one direction. And this is when we don't have transparency in private markets. Be super interesting as we watch those commodity prices move to see whether those pendulum swings. >> Yeah. And you know that reelemental company in the US is projected to produce around 10,000 tons of battery sorry of magnet I believe and it's all from recycled goods. So it's a sort of an outlier in the space but bringing a new approach to an old industry and leading the way in a sense in the reshoring uh movement as a consequence. >> Yeah. Fantastic stuff, Jay. This was such an interesting conversation. So appreciate you taking the time, >> Maggie. It's been a pleasure. Anytime. >> And uh just a reminder, as we said at the top, if you want to take a look at what kind of role commodities should play in your portfolio or just get a sense if you are uh stress testing it for what might be coming, you can get a free portfolio review. Just hit the link in the description or head to wealthy.comfree. Thanks so much for watching. We'll see you again next time.