[Music] I'm Charlotte Mloud with investingnews.com and here today with me is Adam Rosenwag, managing partner at Garing and Rosenwag. Thank you so much for being here. Great to have you as always. Great to talk to you again too. Really good to be catching up. Our last conversation was a few months ago and at the time we talked a lot about the bullish factors that were driving gold and certainly we've seen that price momentum continue. But if we take a look over at your latest commentary, you talk
about something interesting which is that western investor interest still hasn't returned to the gold stock. So I thought that would be an interesting point to start with and get your thoughts there. No, absolutely. And it is a really interesting uh divergence because if you go back to 2023 2024, you know what ended up happening was that the gold price for bullion caught a bid as the central bank started buying and the western investors still really weren't that interested and it created a
little bit of an air pocket for the gold stocks because you saw the western investors selling both gold bars and gold shares and the central banks were buying up the gold bars and then some. uh but no one was buying the shares and so they lagged and they lagged and people said when are they going to start to perform better? Well, sure enough, now they're performing better. In fact, they're doing uh very very well so far this year. They're outpacing gold bullion actually. Um although there's
still they still haven't caught up all that lost, you know, momentum from from last year and the year before. Uh so they still represent really good investments, but yet it's still all happening without the participation of the West as you as you mentioned. And so if you look for instance at the shares outstanding of the GDX, uh the GDX of course being the most widely followed gold equity ETF, investors have been liquidating. They've been in liquidating all year long despite the fact that it
is the best performing sector in the market. So I think that tells you kind of two things. first is that there's a lot of room for these names to run because we still have to have that next uh move as the investors start to come back into the space eventually. Uh and second of all, it's just a real headscratcher because it's one thing, you know, when gold is trading sideways and no one's interested. It's another thing if gold is going up but real interest rates are going up. But here
we've been in this period now for, you know, the better part of of a year where it's sort of like uh uh perfect conditions for gold. And sure enough, gold's doing really really well. And gold stocks, they were the only thing that have protected you so far this year. And I would think after a number of months of that, somebody would say, you know, maybe we should consider buying some of these stocks, but it doesn't seem to be happening yet. Uh and that means that there's a huge uh a huge
huge leg higher for gold stocks. I think that conclusion is is definitely something that investors will find encouraging. So really good to go into that. And I don't want to spend too too much time on gold today because we have so many topics that we should cover. But I did want to ask you if there are any key themes that you are looking at in the gold market right now. I know one thing that has emerged since that last conversation is all of the the tariff turmoil. That's a big one that we've
seen impacting the market. anything you'd pull out from the past quarter or so? I think that the gold equities, they've all reported their first quarter at this point and you know, we're starting to see the impact of high gold prices. Last year there had been a bit of a concern where we and we see this a lot in equity markets where the price action of the stock creates the narrative and so gold wasn't gold stocks weren't keeping up with gold and everyone said well of course I know why this must be and they
started searching for answers and a big thing that we heard people say all the time was that they weren't going to enjoy the benefits of higher gold prices because their costs were going up even faster than the gold price. Well, I think that sort of had some cold water splashed on it. You know, the after the first quarter, um, a lot of these companies have showed really nice cash flows and and most of the move to that gold, uh, most of the move in gold has fallen to the bottom line. Uh, not all
of it, not in every case, but by and large, I think with the first quarter behind us, we're starting to see that. It's very reminiscent to me of the oil companies in 2022 and early 23 where after years and years of pain, we finally got this period where I said, "Okay, wow, now the machine's working again. Uh they're enjoying the benefits of that." And so I think that that ought to continue. Of course, there'll be disappointments here and there. But I think uh in general, you know, the these
companies are now reaping the benefits of higher gold price. So that's great. uh we're starting to see I think some kind of interesting um you know corporate activity and what have you and probably the most interesting one and you know for full disclosure we do own Nova Gold but of course was Tom Kaplan partnering uh up with John Pollson to acquire Barrack's 50% stake in Donlin I think that's a pretty interesting transaction both in terms of the people involved and then also uh the asset
itself and what kind of market an asset like that works in which which is effectively a bull market, right? It's a huge huge huge uh multi-tens of million ounces of gold and it benefits big capex build, etc. And it benefits from from higher prices, higher gold prices. It really kind of begins to to to hum and generate substantial cash for investors. And so to see interesting back into a project like that from people like that, uh I think is quite promising. Very interesting. And just a a quick note on
M&A in the gold space. Do you see more of that continuing in the year ahead and and at that scale? Is that something we can expect moving forward? Well, you know, that scale, it it wasn't such a massive transaction. It's a massive deposit, but it wasn't, you know, such a big dollar amount. Um, and and I think that speaks to the fact that the gold space in general is just a tiny tiny little uh little blip uh in the broader market. you know, I think uh the entire gold sector is like a day's move in uh
in in Facebook or Meta or something like that or certainly Nvidia. Um will there be more uh M&A? I mean, I suspect as the cycle goes on there absolutely will be. You know, we saw some consolidation uh minor here and there, a couple big transactions and you know, obviously with Bareric a few years ago and then it's been a little bit more quiet. I suspect it'll probably pick up. But, you know, ultimately what we try to focus on are the assets uh and and the quality of the assets and corporate structures come
and go and they change and they can crystallize value, but ultimately the ounces in the ground are what matters. All right. And I want to spend a little bit of time on silver as well. And we've talked about silver in the past in terms of when it moves in the cycle, but I know right now people are taking a look at the gold silver ratio and and how high it is and they're wondering if it's time for silver to take off. So maybe we can get your thoughts on what you're thinking about silver at this time.
Yeah, absolutely. Um, we've done some interesting research looking at different precious metals bull markets in the past. And the conventional wisdom is that you don't really have a truly robust uh gold bull market until silver begins to outperform. Uh, and there's some reasons for that. It's been considered and called, you know, poor man's gold. And, uh, it tends to uh, elicit the speculative uh, um, interest a little bit more than gold. So when you when you really sort of get uh a strong
and sustained global market, you tend to see some fireworks in silver, that's at least the working theory. What we've actually found is something a little bit different. These periods of silver lagging gold are actually quite common and they're quite common in very strong, robust, precious metals bull markets. Uh but then what happens is after lagging and lagging and lagging, silver tends to stage this massive catch-up rally right at the very end of the precious metals bull run. So that by the end of it when
it's all said and done, silver's usually kind of up neck and neck with gold. And um the last year or 6 months or what have you of the move, silver definitely outperforms because it's lagged for so long. And that tends to be what people remember uh is that last kind of massive catchup uh after you know they've been disappointed for so long and then they're and then you know just when they're ready to give up and I'm sure some do uh you get this massive explosion higher. Now two things there.
First of all, as I said, it tends to occur at the end of the bull run and so it it actually sort of signals when you might want to take some exposure off in precious metals in general. Uh and and second is that for most of the move higher in gold, silver historically does lag. So I think we have to ask yourself here um is a what kind of investment pressure are you under? What sort of reporting and performance uh you know burdens do you have? Is it your own personal money or do you manage money as
uh as a manager for somebody else? I think that will really change whether or not you you feel comfortable holding silver because if it's just for your own, you know, personal account and you're willing to be a long-term holder, silver is going to do very well and silver stocks will do very very well, but it's going to come compressed and consolidated right at the very end of the move. Um, if you're worried about, you know, investment performance in the interim, you probably want to stick a
little bit more with gold, unless you think this run is ending. Unless you think we're in the late innings, then you might want to be tactical and look at silver. And we very much think that the gold and precious metals bull market uh will continue for several years. I don't think gold has finished doing its move here. Central banks are not done buying and we still have the western investor to come back. So I don't think I think that silver will probably disappoint, continue to disappoint. Now
maybe it still goes up along with gold, but the ratio I think will remain elevated until we get to that end point or later innings uh in in the cycle. So, we have a little bit of silver investment, but we prefer gold at this point. Okay. I think those are important considerations for people who are are thinking about silver right now. So, thanks for going into that. And so, of course, I always love to go over gold and silver with you, but in the latest commentary that we were talking about, it's platinum group metals that are kind
of front and center. So, I wanted to make sure that we touch on that. And you lay out a number of reasons for being bullish. And I thought we could start on the demand side. So the electric vehicle adoption story which we've talked about before your views on that that's part of the story. You also touch on the rise of hybrids vehicle emission standards. So I wondered if we could go over those those demand reasons to be interested in platinum group metals. Absolutely. So platinum group metals and
let's call let's just start with platinum and u there there's similar dynamics at play with palladium as well. Um, but this is a market that has all the hallmarks of something we like to get involved with. And what are those? Well, it's done absolutely nothing for the last several years. You know, platinum prices topped out uh at $2,000 per ounce all the way back in 2008. And as of today, they are $1,060 per ounce. And historically, you know, it was not uncommon pre call it the last 10 years for platinum to trade,
you know, as much as a $500 or, you know, even in that spike, it was $1,000 premium to gold. And today, it is at a $2,230 discount to gold per ounce. So, really dramatic. Uh, how has it impacted the industry? No one can make money. I say nothing about, you know, investing in a new platinum mine. Nobody can make money on the existing mines. It's very similar and reminiscent to uranium in 2018, which is to say, if you want a platinum industry, if you intend to keep having platinum uh produced in the
world, you need a higher price. And I think that's exactly what we're going to get. Um, now, do we need a platinum industry uh anymore? What does platinum go into? obviously goes into some jewelry, goes into some uh different industrial products, but by and large, you know, major major driver and certainly a driver of growth in recent decades has been uh into catalytic converters in cars. So, basically, there's a uh piece of equipment in your car. It sits right next to the engine. Uh and what it does is it uh is able to
catalyze out and effectively strip out all the particulate matter that comes when you combust both gasoline and diesel. And um that's why tail pipes are so clean now compared to how they were you know several decades ago. There's no uh you know soot and uh for lack of a better word you know sort of dark smoke coming out of your tail pipes which were all the particulate matter and impurities in the gasoline and diesel after they combust it. Uh that all gets captured in the catalytic converter and
that's very PGM intensive. the easiest way to clean your car's tailpipe emissions is to increase the PGM loadings in the car uh in the catalytic converter. And that's what we've seen. Now, in recent years, there's been a view that as electric vehicles, you know, were bound to displace internal combustion engine vehicles, we wouldn't need any more PGMs for catalytic converters, and that would leave the market in a pretty substantial surplus. And as you mentioned, we've never been
of the opinion that electric vehicles are the uh you know panacea to the world's transportation ills. Notably, it it is very energy intensive and materials intensive to manufacture these massive 100 kilowatth plus lithium ion batteries. uh so much so that we basically estimate that over the whole life of a vehicle, half of the energy that you will consume is done before you ever take delivery of the car in the form of manufacturing that battery. The electricity that you then put into it for the rest of the car's life only
amounts to the same amount of energy as was already embedded in that battery. Uh, and plus, you know, the other thing that people don't really always think about is they're really heavy and so it's really energy intensive to move them around. It's like sort of, you know, going to the corner store with like a big hiking backpack full of like 4 weeks worth of food and clothes. It's just you don't really need all of that most of the time. Um, you compare and contrast that to an internal combustion
engine and gasoline and diesel are much more energy dense. you put in a lot more energy per uh unit of weight than you do into a battery. So you can get 300 miles of range uh using much less weight than you would for a 100 kow battery. So where do hybrids come in? We've always liked hybrids. Hybrids do something really different than electric vehicles. A traditional hybrid, there's two types of hybrids, but a traditional hybrid will um use a tiny tiny lithium ion battery. In fact, the old uh traditional
hybrids didn't even use lithium-ion batteries. They used uh more more legacy technologies that were much less energy intensive to manufacture, less high performance, but for the task at hand, it was exactly what you needed. And that is it powers a small electric motor that helps the internal combustion engine, particularly at points when an electric motor is more efficient, like when the car is at a full stop, because electric motors have a different torque profile than a traditional engine. And so it
actually makes a lot of sense. And where does it get the electricity? Well, this is the other kind of neat part. It it almost captures it out of thin air in the sense that every time your car slows down, Yeah. It's there's wasted energy that comes in the form of friction against the wheels and the brake pads and um that gets captured by a generator. And so as the wheel spins and while it's slowing down, all of that uh it's called regenerative braking, you know, all of that energy that would
otherwise be completely lost is now captured and put into this tiny 2 kWh battery. 90% smaller, 50, it's between 1 and 2 kowatt. So, it's either 90 it's 99 to 50%, you know, smaller than 100 kowatth EV battery and you just capture it from from almost from nothing. It's it's the closest thing I've seen to a free lunch that you get. And what does it get you? It gets you massively improved uh fuel standards. So, you get you you go from, you know, a really fuel efficient car
might be, you know, in the low 50 mile per gallon range and then it bumps you up all the way to like 70 m per gallon. It's it's absolutely excellent for very little investment, very very little energy cost investment, very little materials cost investment, and very little dollar investment. So, they're great. And it's amazing to see actually how the traditional hybrids have sort of hung in and continue to sell very well despite the fact that in most jurisdictions, they receive zero uh
incentive from the government to do so. Um, then you have another class of vehicle. I don't like these as much, but but they've been getting a lot of attention to and they're known as plug-in hybrid electric vehicles. So now you talking about a 10 kilowatt hour battery, about onetenth the size of a traditional EV, but still five up to 5 to 10 times larger than a traditional hybrid. So it sits right in the middle. It gives you, you know, 30 mi of range. So it's not nothing, but it's not going
to take you the long distances. But when you're just kind of coming in and out of town and running errands and things like that, it's entirely plausible that you could uh be entirely electric. But then when you need to go the farther distances, you have your gasoline there. And so you don't have to lug around this very heavy 100 kow battery. You know, if and just for the sort of rare time that you want to take the car on a big long road trip, right? you have to carry it around all the time and it's only once
in a while that you want to go 300 plus miles on a single charge. Um, so it kind of splits the difference and there's a lot of I I I sort of get it. Uh, I think the overall energy efficiencies to be honest are better off with a traditional hybrid than a plug-in hybrid cuz you do require a lot of energy still to make a 10 to 12 kWh battery. But it makes sense and then you get all the other benefits too, the uh regenerative braking and things like that. So, you know, that's the kind of landscape when you start to
disagregate the electric vehicle sales. This is where things get a little confusing, too. Traditional hybrids get lumped in with internal combustion engines. Plug-in hybrids get lumped in with electric vehicles. And so, if you actually start to take out the hybrid part of the electric vehicles, the pure electric vehicle sales numbers have been very disappointing. Notably outside of China, they've been very, very disappointing. and the plug-in hybrids have sort of carried the day and the traditional hybrids as well. So, I think
that we're seeing certainly people begin to appreciate the benefits of hybrid vehicles. Uh I think that what people don't appreciate necessarily is that the platinum loadings on a hybrid vehicle are even more than a traditional IC. So, whereas everyone is looking at these EV numbers and saying, "Oh, this is proof we don't need platinum." In reality, what you're embedding in there is all these hybrids that you're counting as EVs that are actually, you know, very, very platinum intensive. So, the supply
demand story is quite positive. The price is very low and investors uh couldn't care less and that to us is a recipe for nice strong performance going forward. I think that makes a lot of sense the way you've laid it out, got a great idea of what's happening with demand. Anything further to to know about the supply side? I know you mentioned the low prices have made mines uneconomic. Companies have taken mines offline. Not very appealing to bring new mines online. Is there anything else to
add there? It's all in South Africa. So you got to get comfortable with South Africa risk. And um you know to us that's we we have it sort of now in the portfolio at about a you know 6% position uh in aggregate a 6% theme. um that's a little bit lower than we might have a traditional you know core theme that we have a lot of conviction in you uranium got as high as 20 25% of the portfolio for instance uh and and I think the main limiter for from wanting us to be more concentrated is just the
fact that there's not a lot of names out there producing uh and they all tend to be in South Africa so it might creep up a little bit from here but uh you have to get comfortable with a little bit of South Africa risk yeah I think that's definitely good to note before you start going into this face. Last question on platinum group metals. I was going to ask about prices for platinum and palladium. So you're seeing them going higher. They've they haven't exactly traded in the same way over the last 5
years ago or so. There have been differences there. So what do you see coming in terms of price outlook? I think prices are going to move a lot higher. You know, again, you're not sending the right incentive signal to the market. I mean that that's kind of what it distills down to that makes you know a lot of really exciting developments seem a little bland but that's what's happening right you're not giving the market the right signal to bring on enough new supply and so I think that that means the prices have
have to move up you used to see platinum padium and gold all kind of trade related to one another and that has really broken down and it's broken down I think because of this feeling that if in fact EVs are going to entirely replace internal combustion engines you're just not going to get the same uh PGM demand that you got in the past. So, it was sort of like a feeling like a fundamental shift or or an existential threat to PGM demand and that's going to go away. So, what I suspect will happen
is that that platinum and platium will begin to trade back into their more historical relationships with gold. Um and and that obviously means that that they could run quite quite a bit and I think that's what makes us so excited. Okay, so that will be one to keep an eye on. I'm sure we'll come back to it in the future, but we'll leave it there for now. Of course, I also want to touch on uranium with you because we've had such such interesting news in the last couple of weeks or so with the Trump executive
orders on nuclear. So, wanted to get your thoughts on that and and how we should be looking at those in terms of the uranium market. I know investors have gotten excited, the stocks have been running. How important is this news for the sector? Well, I think in in the short term it's not particularly important because we're not, you know, going to get SMR demand even on a tight timeline. It's not going to come in in a material way uh until the early 2030s. SMRs are small modular reactors, Gen 4 reactors they're often
called as well. We've done quite a bit of work studying these. I've been to most of the SMR companies uh facilities. have toured them and spoken with their managements extensively and particularly the ones that are looking to use molten sodium uh as a coolant instead of water. They have some really fundamental benefits. Uh it's possible that you could generate electricity for up to 75 to 90% less materials, steel, concrete, cement, valves, welding, etc. than a pressurized water reactor. uh and it
would generate substantially less waste and this is all normalized for output. So per kilowatt hour of electricity much less waste and the reason for that is you get rid of water which boils at 100° and you replace it with sodium which boils at 850° and the reactor core generates heat at about 500°. So in the case of a water cooled reactor you need to pressurize that water otherwise just like in your car's radiator it'll it'll boil off and then you'll have a meltdown. Um, and so
you need to circulate new water all the time and you need to keep that all under heavy pressure like 150 times atmospheric pressure. And so everything has to be big and thick because to deal with those kinds of pressures and it's, you know, radioactive steam, so you don't want it being released out into the uh broader environment. So the whole thing, not that it's dangerous, you know, third generation reactors have had an unbelievable safety record over the last 70 years. Incredible. A very safe
industry. Uh more people are killed by coal trains every year than have ever been killed in the nuclear power business. Um but the Gen 4 reactors are fundamentally more safe because you can't really melt down the reactor because the sodium can absorb all the heat in the reactor core without ever boiling uh away. So, you know, these are great technologies. is they're efficient, less waste and and safer, which is really the three uh criteria that I think uh will drive nuclear adoption going forward. But but
nothing's going to happen before 2030. Uh even if you were to approve these reactor designs at this point. So in the near term, you have a very very tight uranium market. Um there's not much in the way of mine supply coming online. There's NextG up in Canada. Will they or won't they make their project timelines? you know, it's in they're already included in everyone's numbers, but I think there's a pretty big risk that they fall behind schedule. Um, you know, Dennis has has Wheeler River, there's
some stuff in the US, but nothing to really move the needle and and demand from existing reactors and what's being built today in China and Korea, uh, is very very robust. So, it's a very tight market between now and 2030. The SMRs are 2030 and beyond story. However, I think that their eventual impact is going to be huge and I think that the decision last week, Trump's executive order is incredibly important for their development. And why do I say that? Well, after 2011 in Fukushima, the NRC,
the Nuclear Regulatory Commission, became just locked down. They became super super strict in regulating the nuclear industry. there was, you know, they under no circumstance did they ever want to be accused of being too cozy to nuclear uh power in the event that there was something akin to Fukushima in the US. They definitely didn't want, you know, that on them. And they basically, you know, maybe I'm being a little unkind to them, but they basically looked to regulate the industry out of
business. And when a new reactor design would be put forward, it would just sort of languish. and the permitting process. You know, everybody we spoke to said that the only risk with small modular reactor designs and buildouts is whether the NRC is going to get on board. And you there's bipartisan support and this and that, but the culture at the NRC remain very, very tight. And what Trump's executive order seeks to do is it seeks to put in place a framework where at least they have to adjudicate
and decide on these different proposals. you know, he gives them, I think, 12 or 18 months to come up with a framework in which every proposal will have to be determined within 18 months. Obviously, doesn't mean they have to say yes to everything, nor should they, as a regulator, but they at least have to make uh an informed decision and begin the process and have that process last 18 months. Uh it obviously sends a huge signal to the NRC, too, and I suspect there'll be other elements to it that
will help to accelerate uh that that timeline. So that's massive massive because what you have to understand about sodium cooled reactors is that they have been around a very long time. Some of the earliest nuclear reactors were sodium cooled. Uh and we've operated in the United States sodium cooled research reactor for for decades. Uh so it's an old technology. We know how to do it. Obviously huge advancements and stuff like that. I don't want to make it sound easy. uh but you know this is not this is this is
proven existing technology and if we can get it through the approval process then we can get out and start to build these things uh at scale but in no terms will that be um in no world will that be a 2020s type of a story that's all going to be 2030 and beyond but the impacts then could be enormous okay I think that helps me a lot to contextualize it so very important but the impact will of course take time to play out I want to touch on uranium prices of course as well. We were talking about disconnects
in the gold space and I think in uranium there's the disconnect between the spot and term prices that many investors are are looking at and wondering when may that close up. So curious to get your thoughts on on what you see there. I think it's closing you know kind of as we speak and I think it'll continue to close. um what the history of uranium for the last couple years has really been uh unfortunately I think made a lot murkier by the hedge funds. So uranium prices fell 90% over a decade
give or take and they bottomed in 2018 at 18 bucks. By 2023 they had moved from 18 call it to probably I don't know 75 or so 70 and the hedge funds really started to become interested in the space and they started to you know we saw a huge number of uh hedge fund conferences and idea dinners and stuff like that and everyone was talking about their favorite uranium stock and what ended up happening and I think really did the industry a bit of a disservice but what ended up happening was that uh the hedge
funds were playing a game whereby they were buying the spat physical uranium trust, bidding it up to a premium over its net asset value. That would mean that the spat physical trust would go out and issue new shares and then use the proceeds to buy uranium. Now, spot market uranium was becoming harder and harder to find. And so, when that would happen, you would get a price reaction uh in in in the spot price. And the reason it was becoming harder to find is that for years and years there was excess inventories that were slloshing
around in Japan after Fukushima. They turned off all their reactors but they didn't uh stop taking uranium uh from their contracts and so it was piling up in their warehouses and that is what fed the spot market for a while. Uh as that began to kind of wayne in 18 and 19, uh this game started to be played more and more and by 23 it was really you know working in full force to the point that the spot price for uranium got well in excess uh of the term price. Um while they were doing this they would also go
out and buy high beta speculative uranium junior companies which would you know scream higher when you got a move higher in the spot uranium price. That stopped in 24 and it began to work in reverse and we started to see a lot of liquidation of these positions and profit taking until you know we felt that they were sort of out of the market but they didn't stop there and they continued to go and in fact they ended up going short and we heard recently that you know one of the strategies was to try to now prevent the SPAT physical
uranium trust from trading at its net asset value which prevented them or precluded them from issuing new shares. which meant that over time if they couldn't access the capital markets uh they would eventually begin to have a cash flow problem where even though it's a pretty you know passive closedend fund that just buys and holds uranium I mean they still have bills to pay and the notable bill of course is their storage bill with Kamico so there was this rumor that that got passed around that said if that happens
they'll have to sell uranium out of the trust and use that to create dollars and use the dollars to pay their bills. And of course, if that happens, then the60 million pounds of uranium sitting in that trust might not be as immobilized as everybody thinks they had and hopes that it is. And you know,60 million if that came back onto the market, I mean, that that that would be material. Now, of course, they wouldn't have to sell all 60 million. They would just need to sell a tiny amount to raise the money to
pay their bills. But I think once any amount of material was sold from that trust, there would begin to become a speculative run on the bank, basically pushing the price lower and lower to continue forcing them to bleed that out uh over time. So I think that, you know, there would be blood in the water if they did that. And that was the that was the rumor that was being passed around. And at the same time, a lot of these guys were out shorting again these same speculative high beta names that they
had been long before. And so we saw short interests in some of the uranium names become really high and I would say frankly dangerously high. And then about 2 weeks ago now uh SPAT went out into the market and they issued new equity at a premium. So they issued equity at net asset value which was a 6% premium to the unit price. So somebody ate a 6% loss effectively. you could buy shares in the market for 6% cheaper than this private placement of stock. And yet people did that. Um we did not participate in that, but but but people
did, investors did. And that allowed SPRAT to replenish their coffers and it allowed them to effectively get out from behind this concern. And I think that that's now a trigger for some of these uh hedge funds to just get out of this trade entirely because I think that that kind of story uh is is now less relevant than it was a few weeks ago. So I think what we've been seeing is probably some short covering u more than anything. Um and I I hope that it's now you know we can move on and uh after after 23 where
the hedge funds were super long and 24 where they were short and now 20 are exiting and 25 where they've been short. Hopefully now we can get back to market fundamentals. Really interesting overview of of what's going on there. And I'm wondering, do you have any thoughts for investors on how to navigate the market in the best way right now? Cuz of course uranium is known for being so opaque and we've it seems like we're coming out of this period of kind of manipulative activity.
What is the place to focus at this time now for people who are still believing in the story? Well, you know, the way to focus, I I would say that the way to focus is how we're focused, you know, and that's not a coincidence. If I felt differently, we would focus differently. But, you know, I think you probably want to own a couple of the Bellweathers, which is really only Kamo and Kazataprom. Uh, we own both, but we own more Camo than Kazataprom. I think that the political geopolitical landscape in
Kazakhstan is is getting a little bit trickier than it was. I still think it's okay to have exposure there, but we've taken that position down because of that. We still own Camo. And then, you know, you could probably leave it there if you wanted to be conservative or you could begin kind of dipping your toe into the uh more development stories. And in the development tier, you know, you have NextGen and Denison, which are probably, you know, the clear favorites in terms of, you know, big hard rock
mines that are um going to be in production hopefully in the next several years, but don't have any production today. Uh and then there's kind of smaller companies that um which some are not so small anymore, but you know, they they have insitu leachch operations in the US, some have existing production. They're not going to be on the same scale as a Camo, of course, which is the, you know, second largest in the world. Uh, but, you know, at at today's uranium prices, they can make good money and um, and there's a
number of those both in the United States and and a couple in Australia. And those give you a little bit of a higher beta uh to the to the uranium price. And then there's the other class of of vehicles, which are these closedend funds of which the SPRAT physical certainly in this part of the world is probably the most wellknown. Yellow Cake in London as well, and there's a couple others. And what those vehicles do is they go out and they effectively just buy and store physical uranium uh to try to act as a proxy on
the on the physical uranium price on the spot price. Um they obviously have their challenges as we discussed but you know for those just looking to want uranium exposure without the stock risk or the execution risk you can always do that and we have a little bit of all them. Okay, very very helpful to know what you are doing. And just one more small question on uranium. I we should probably also talk about the price direction now that we're coming out of this this period as you described. Where
do you see prices going maybe for the rest of the year? And you can mention spot or term whichever you feel is more relevant. Well, I think prices are going to move higher and I think they're going to make a run for and test 100. You know the it's a quirky market uranium for so many reasons. You know, first is like it's unbelievably opaque. The second is that the fuel cycle itself, just manufacturing to go from mine supply to fuel in a reactor can be 3 to 5 years, you know. So, it's like you you have
different pinch points that occur at different times and it takes a long time to work itself through the market. It's not like crude or, you know, diesel or something like that where you're getting weekly inventory updates and and the market's you know, reacting in near instant time. uh uranium can feel very slow and um you know marauding a little bit like that. So but anyway um I think that the price is going to go uh quite a bit higher. Uh and then the other thing that's so interesting about the uranium
market is that there's really no price elasticity of demand because once you build a nuclear reactor whether it's a gen 3 reactor, gen 4 small modular reactor makes no difference. uh 95% of the cost of that m of that reactor is building it and the fueling cost is actually very very low. Uh compare and contrast that with a gas plant or a coal plant. It's pretty cheap to stand up a a gas plant or a coal plant and the percent of the total costs over the life of that uh plant that comes from the fuel is much much much
higher. So gas plants and coal plants are very sensitive to um moves in in the underlying fuel price and you know at certain points there'll be coal to gas switching that occurs all the time if one becomes cheap relative to the other. Uranium it's like almost the opposite. You have that thing up and running and you will pay just about anything for the uranium to fuel it. The last thing you'll ever do is get yourself in a position where you would have to shut down that reactor. that would be really
catastrophic to the economics and to the viability of that project. So would you pay 100 bucks? Would you pay 200 bucks? Would you could pay 500 bucks. So traditionally when I think about you know supply and demand modeling you when you're in a bull market and the market is tight and getting tighter you have to start to ask yourself how high can it go before it starts to squeeze out demand you know becomes a little self-regulating. Uh when it comes to uranium there's kind of the sky's is the
limit a little bit. So, I think we'll once we kind of clean up some of this noise that we've had in the last year or two, I think we'll probably consolidate and then make another test of 100 and from there, I mean, it could easily be 200. But for this year, I don't know, 100 is not a bad guess. 120. Okay, sounds reasonable to me. So, thanks for going into that as well. I think we've gone through the topics that I was keen to get your thoughts on today. We've got a lot of ideas for investors to pursue
if they'd like to. Before I let you go though, any final thoughts or areas of interest that you would leave people with at this time? Well, I think that you know in general across the commodity complex, people are now beginning to uh try to reconcile the this following kind of almost paradox which is uh all the announcements that have come geopolitically and from the Trump administration seem to cast quite a bit of uncertainty over economic growth. there's a possibility that we have recession if tariffs end up
you know hurting demand um then then that gets whipsawed back the other side with the court saying maybe we won't have tariffs at all. So the the the range of outcomes and the uncertainty has clearly gone up this year and you would think that in that type of a situation something as economically sensitive as commodities would fare badly. Uh but just the opposite's happened. Commodities led by gold but not only gold. copper is doing quite well in uranium too. Uh have have been the kind of only places to hide so far
this year that that have you know not severely disappointed and I think the reason for that and our readers and listeners would will know this but the reason for that is that if you look over these long commodity cycles where real assets and commodity stocks become so cheap relative to financial stocks. What tends to end those bare markets and bring on a new bull market is a change in the global monetary system, a change in the global monetary regime, a devaluation of the dollar relative to gold, and
ultimately what comes as well is a change in the underlying trade systems. Because of course, if you're going to change the monetary regime, you have to change the trade regime. You know, money doesn't flow around the world for nothing. It flows around the world as the other side of of transacting goods and services. And so it's very unlikely that you would change one without seeing a change in the other. And sure enough, when you look at the commodity markets over the last 150 years, every major
bottom has been associated with a huge change in the monetary regime and a huge change in the trade regime. That was true with the original tariffs put in place in the early 1930s. The end of the gold standard coincided very closely. Incidentally, that was also the low for commodity prices and commodity stocks. During the depression, few people believe me, during the depression, a basket of commodity stocks actually uh outperformed significantly in both real and absolute terms. If you had put your
money in commodity stocks at the height of the stock market bubble, 1929, a decade on, you had doubled your money and the S&P was down 50%. That's a big big difference. uh in the late 1960s we had the repeal of all those tariffs and we had the end of Bretton Woods and we had a period of time from then on literally coinciding with both of those events that commodities went up dramatically. Gold went from uh you know $42 an ounce to 800 and oil went from you know up 15fold throughout the 1970s.
It was the only asset class that could protect you against the ravages of inflation of the 1970s. And then in 1999 we had the Asian currency crisis which made us reconsider on a wholesale basis how we handle and think of emerging market currency pegs and we had all these countries joining the WTO. So again major trade announcements and major change in monetary regimes from 99 to 2010 commodities were where you wanted to be. And I think we're seeing the same thing. So, while the kind of knee-jerk reaction is to say, "Oh, I
don't know if I want to be in the commodity space now cuz the economic landscape looks so uncertain, uh, I think just the opposite is true. We're seeing an unwind of this carry trade that has had an everything bubble, a tech bubble, and it's left real assets completely on the sidelines. Uh, now we're starting to see the beginnings of a sector rotation. And if we're right, and you know, we made the prediction a couple years ago, watch changes in the monetary regime. We're seeing them now.
Uh we could have economic dislocation and commodity prices go up. We're seeing that now as well. And so if if things continue to play out, uh this could be the beginning of a very very strong move higher in real assets and in commodity stocks and will likely be the only asset class uh to truly protect you going forward. and gold's already telling you that that's happening. Very important broader context to keep in mind. So, really good to end on that note, I think. And I'll link to your latest
commentary in the video description. And I've also got a couple of our previous interviews that I'll link to as well that I think help add context to everything. So, thank you so much for for coming on to go over all these topics. Always really good to have you. Yeah, thank you as well. Talk to you again soon. Of course. And once again, I'm Charlotte Mloud with investingnews.com and this is Adam Rosenwag with Garing and Rosenwag. Thank you for watching. If you like this video, make sure you hit the like button
and subscribe to our channel. We'd also love to hear your thoughts, so leave us a comment below. [Music]
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