gold news

 [Music] I'm Charlotte McLoud with investing.com and here today with me is an rosenweg managing partner at Garing and rosenswig thank you so much for being here great to have you yeah nice to talk to you again really good to be catching up with you as well it's been a little while but really what a perfect time to have you on I thinking with the gold price at historic levels right now that would be a good place to start and I'm going to begin with kind of an open question here for you when you look at what's going on

in Gold where would you place Us in the current cycle I think the current gold cycle is just getting started and that might be like a crazy thing to say with gold making all-time highs and pushing through $22,900 an ounce but I really think that in a lot of very real senses this Market uh hasn't really even taken off yet because investors you know particularly what we wouldd call Western investors haven't woken up to the gold store yet there's been lots of press about it and lots of I suppose people

watching it but if you look at the Holdings of the GDX which obviously holds gold shares that's plummeting and if you look at the shares outstanding of all the gold physical uh ETFs which in recent years has become a preferred way for a lot of investors to get access to Gold uh it's come up a little bit off the bottom I have it here in front of me you know it looks like it bottomed in May of last year at 81 million ounces and now we're up to you know a whopping 803 million ounces so you're still a

huge huge cry from where we used to be we were up at you know 110 plus million oun in 2020 and 105 as recently as 2022 so the participation has still been very subdued on the part of investors and that's why I think ultimately this Market has a long long way to run well I think that's definitely what our audience would like to hear about when it comes to gold and so if we look over to Gary and Rosen swag's latest quarterly report talking about gold it's no secret that central banks have been

strong buyers of gold for the last several years supporting the price driving the price higher but the report talks about a shift that we might be starting to see there where central banks maybe buy a little bit less and that Western investor interest picks up so since the report has been publish is that a trend that you've seen continue that's the fun part about writing investment reports is that their stale you know depending on how long we take to edit it they might be stale before we even release them um so I

think that from a investor perspective we are seeing an uptick in the ETF gold buying as I mentioned before it's certainly not dramatic it's nothing like it was a couple of years ago but the direction is trending in the right way so I think in the last few months months and in our last letter that we wrote we did talk about how the Western investor seems to be coming back a little bit and I think that's still true I think that trend is still in place Al be at very early days um as far as central banks

though central banks have resumed gold purchases so now I think you have this sort of double whammy uh where you have the Western investor on the margin little by little certainly not selling and I think that's the important part right because gold prices are set on the margin like every commodity and you need a willing buyer and a willing seller and so when central banks were buying lots of gold and they're pretty price insensitive they don't care what they pay for the gold they just make the

decision they want to own more of it uh and you had the Western Speculator selling it into them that that was a strong Dynamic but now you're in an even stronger Dynamic where the Central Bank is still buying quite a bit and that those purchases have pic ticked back up again and and the Western investor is not there to sell it to them anymore and so then what you need is obviously higher prices to HKS ounces back into the market and I think that's beginning to be what you're seeing now yeah I can

certainly understand you know things go moving so quickly that it's hard to to keep up with all of that so thanks for going into that one and if we look at the Western investors a little bit more closely what is something that you think would drive more interest from them we've been hearing for a long time I think that they need to come back into the market so what could what could start to make that pick back up even more if I could explain what investors do and why they do it I think I I would be a

very very rich man so look I'll punt a little bit I don't know ultimately I I think like so many Investments what will ultimately pull Western interest is uh performance and momentum and and we're starting to see that now in a very material way you know gold stocks are starting to C show some signs of Life uh at least you know relative to other sectors in the market and the gold price certainly has people's attention so I think if you get a few more months of that you'll start

to really see A Renewed interest again back in uh the gold space but a couple things that I want to point out briefly you know first of all I think it's a little bit of a misconception particularly for investors that have gold uh exposure either through the equities which we think are at you know generational lows in terms of their cheapness relative to gold and to their earning power and things like that uh or or whether you're talking about gold itself and that is you know in order to

really unleash things you need massive uh Market participation and that's really not true what you need I is for investors not to be liquidating that that's really the key point and I would I would put people's attention onto the coal space you know coal stocks they didn't have a great year last year but since the bottom in 2020 coal stocks have been I think the best performing sub sector and the market beating everything I think it's probably don't quote me on this but if not beating

Nvidia from the absolute lows is probably pretty close uh really really really strong performance coming out at the coal stocks from the bottoms and I guarantee you that's not because of any large Market participation nobody owns coal stocks nobody has any interest in them but when things get really cheap they can go up quite a bit uh even without a huge amount of investor interest and remember you know the gold market cap now I don't have the numers off the top of my head but it's tiny

it's absolutely tiny after you know a fairly brutal bare Market that lasted from 2011 all the way to the bottom in you know 2020 2021 uh you just eviscerated the market capitalization of the gold industry and so you don't doesn't take a lot of buying to come back in order to really see a big price uh movement uh in those stocks and so I don't think you do have to get the Western Speculator really whipped into a frenzy in order to see some really strong Returns the way we like to say is that when you buy things

this cheap there's usually not a huge cost to being early maybe the fireworks come down the line and you know some of those those years of truly spectacular performance needs a broader participation but you can get a really good return When stocks are as cheap as they are today uh with with relatively modest flows coming back into the space now having said all of that I do think that something is on the horizon in the near term that is going to change people's perception towards gold investors perception towards gold and

speculators perceptions towards both gold and gold equities and I think it's happening really really uh potentially quite soon and what I'm talking about you know we've talked in the past about these long cycles of Commodities and real assets and certainly on any measure we like to look at commodity prices relative to stock prices it's nice and simple and straightforward uh and any measure Commodities are as cheap today as they've ever been and historically the big Catalyst to rate real assets

much higher has been a shift in the global monetary system and so you saw that in the late 1920s excuse me I'm just coming off a cold so pardon me but in the late 1920s that was the end of the classical gold standard uh in the end of the 1960s which was another inflection point where Commodities did really well uh was the end of brenon woods and at the late 1990s it was the shift of all the Asian currencies and how they pegged their currency to the dollar they decided to decided to P their currency well below

the market rate to help spur their exports and draw treasuries to the East and draw uh Asian Goods into the Western consumer markets those were all major shifts in how we conduct our Global monetary plumbing and so as far back as 2020 when Commodities got really cheap relative to financial assets we said look to the global monetary system that's going to be your key that the catalyst is coming and a couple years ago the Central Bank started buying gold and there was lots of talk of China looking to settle trade outside the

dollar and the brics currency block was going to be formed to provide a threat to the dollar and things of that nature and we said oh maybe this is it maybe this is the Catalyst uh I'm not so sure anymore I think more and more the Catalyst for a new monetary system might come from a very unlikely place which is the United States itself and I think we're starting to hear a lot of talk from uh treasury secretary bessent about what that might look like in some of the you know fairly revolutionary I'd say

radical but but I think really you know revolutionary is a better word um initiatives that he's suggesting the US take to help Shore up uh its balance sheet and to help uh really kind of change trade directions and geopolitics in general and what I'm talking about is you know really three things the first is his discussion of the use of tariffs and things of that nature to kind of create this this Walled Garden this this Common Wealth of Nations or some people are calling it The United States of the

West wherein uh if you agree to the terms of trade which is to say you continue to use the US dollar and you support treasury purchases then you know you're including uded in the common market and if you take a more adversarial approach then that's fine but you know expect really high tariffs and and uh a difficulty accessing the US consumer Market um that's a really bold shift in in global uh monetary stance you know using the dollar uh and effectively the uh dollar exchange settlement to be able to um you know

create sort of this delineation of you know Allied countries if you will uh the is his Talk of the use of century bonds which we probably can get into in a different a whole different podcast spend an hour talking about that but you know there's some really really new Innovative technology being put forward uh by the treasury uh and by the current Administration that I think would would come to uh rise to the bar of a change in the global monetary system and the third which has to do directly with gold

and and we're hearing more more sort of Whispers of this coming out of certain circles in DC and other Beltway Watchers and things there's a big interview in the financial times this weekend that discussed it was the idea that the US might in fact at some point revalue the treasury's gold Holdings that they keep on balance at the FED now for those that might not be familiar most countries when their central banks own gold the asset the gold is held at market prices on the C Central bank's balance sheet in

the US it's a little bit different when we ended Bretton Woods and uh closed the gold window uh actually I'm sorry I think it happened actually long before that um it might have actually happened don't quote me but I think it might have happened more uh in in the early uh in early 1930s but at some point whatever it was they moveed decided to move the gold Holdings uh to the treasury and the treasury issued uh on balance at the FED an IOU effectively for the gold that it would then hold off of the fed's balance

sheet and when they did that uh the the statutory uh law held that the FED would hold that on its balance sheet at you know $42 an ounce it wouldn't Market to Market and for a long time gold prices didn't move obviously today clearly with gold you know pushing through $22,900 uh that is a massive massive difference between where the FED marks its gold holding and where the actual true value is with the stroke of a pen you could say no you know revalue that at the current prevailing market price

and if you were to do that it would result in about $800 billion do of increased assets at the fed and for anyone who had to take Accounting in high school or college or even God forbid is an accountant professionally um you know that if you increase the asset side of the balance sheet you have to increase either the liabilities the equity and in this case case you would increase the equity in the form of an unrealized capital gain into the treasury's general account that's the mechanism the treasury would then be

free to use that money they could draw that down to zero there's no reason that they couldn't do that uh and it would effectively remove $800 billion of uh additional treasury issuance that they would need to either pay interest or pay you know roll the debt and things like that I mean that that's a pretty sharp shift uh it wouldn't involve selling the US's gold or in any way pledging it or hypothecating it you know it's just literally marking it to Market instead of holding it at Cost which at this

point is off by a factor of what's that you know 20 or so um and I think if that were to happen any of those three things all of those three things that would certainly constitute a shift in the global monetary plumbing and that historically has been when the pendulum swings back towards real assets because what it really represents is a devaluation of the dollar not necessarily relative to other currencies in fact the dollar May appreciate I don't know but certainly relative to gold and that in turn kind of Lights a

fire under investors and speculators to say wait a second here we are valuing our real asset stock at the lowest level relative to growth stocks or technology stocks or just the broad Market in the 20th and 21st century the last 150 years and perhaps it's time to to you know see that relationship normalize so I think we could be on the verge of of finally getting the Catalyst because people have asked for a number of years yes Commodities are cheap yes resources stocks are cheap what's going to stop

them being cheap my answer's always been the same who cares as long as they're cheap they represent good Investments uh but I do think that the Catalyst could actually be here now okay that's that's very fascinating to take a look at that I think that when I talk about people about these Global monetary regime shift types of things the bricks do come up a lot as as you had mentioned so just to maybe wrap up there a little bit to what degree do you see the bricks as important in this situation given

everything that you've gone over again you know I I I try to focus on you know being knowing what I know and knowing what I don't know what what I do think very very uh confidently is that we're in the right neighborhood the right zip code as it say down here postal code in Canada uh the right area for what of these changes to take place and so to some degree I don't have a horse in the race we've just had our antennas up looking for potential shifts that could take place and if you would

asked me uh a year ago or two years ago to me the most natural uh potential for a regime change would have come from the bricks they were threatening the US dollar dominance uh the idea of the us as a uh unrivaled Reserve currency it wasn't to say that the bricks were going to introduce a new Reserve currency and displace the dollar but again on the margin they were going to provide competition and potentially uh take some interest away from the US dollar as as a um as a sole and and un uh you know

unchallenged Reserve currency uh now I think though that that in fact the regime change could happen from the US kind of digging in its heels and trying to uh enact certain measures that ensure the dominance of the dollar as a reserve currency for the Next Generation or two going forward so I don't know and I don't have a horse in that race I do think though that the time you know it's sort of getting time to be like the The Showdown at the Corral at this point where where it does seem as though

there's now both from the bricks countries and from uh treasury in the United States uh a willingness a desire and almost a sense of urgency in doing something different and having tomorrow look a little different than today and yesterday and historically that's going to be what unwinds this trade you know so many things in this market whether it's passive investing Tech investing um you know growth stocks High duration whatever uh really comes down to the same factor it's all short volatility as

long as it keeps working it'll keep working and the more it keeps working the more money it'll draw in and it'll go up and up and up and we've seen trend like that in the past you know we had the nifty50 in the 1960s where the idea was you have a high PE multiple stock you buy a low PE multiple stock you create earnings per share growth that makes the high PE multiple stock go even higher you can do it even more you're like what could go wrong and and so many of these things the answer is it works

until it doesn't uh it's the same way of saying it's short volatility it's assuming that tomorrow is the same as today and yesterday and I think for the with the highest probability that I've seen uh in my ing career the next six months have the risk of looking very different than the last 20 years yeah I think that that all makes very clear what you're thinking here and so if we if we go back and look a little bit at Gold you've mentioned in previous conversations that your long-term gold

price Outlook has five figures in it so wanted to check in with you on that and also ask about 2025 what the price potential is looking like to you right now yeah absolutely know our long-term price on gold is is based we come at it a couple of different ways you know one way and these are all relationships over time uh gold is a little bit different than other Commodities in the sense that it is more of a monetary commodity uh you know it's not consumed like oil's consumed you can't say well at what

price does you know high oil slow the economy you can't really say at what price does a high gold price slow the economy because because it really is uh it carries a very very serious and real monetary role so we like to look at its price and its evaluation uh relative to other Financial stock metrics and so uh what I mean by that is we sometimes like to look at it relative to how many dollars have been printed I know we're not on a gold standard anymore however the value of the central banks the US

treasury's Gold Holdings relative to the dollar uh has actually stayed in a fairly it's a wide band but it's a steady band for the last 200 years even you know while gold was exchangeable into dollars and while it wasn't you know back when we were on a gold standard you had more or less gold flow in or out of the United States the price was fixed but the volumes came in and out and the backing of the dollar uh it went from being you know 20 cents of the dollar backed by gold to 150 cents of

the dollar backed by gold uh we in 1971 said okay we'll let the price float but volumes won't come in or out and price took over the job that volume did before so even in the period since then we've also seen uh the dollar be backed as much as 70% by gold and as low as about 10% by gold so that band continues and if you take kind of the long-term long run average you're at about eight or $9,000 an ounce at this point and if you start to take you know what it could look like at the high end which is to

say if you really get a speculative Mania going uh then you're easily into the 5 figures and you could get as high as $20,000 an ounce so you know what's the price Target if we go from a huge bare Market to a huge bull market it's not going to stop nice and neat right on the nose of fair value it's going to way overshoot to the upside so I think that you can make a very very conservative case for $88,000 an ounce gold just looking at what the long-term historical average has been and in a real bull

market you could get that you know easily to 15 or $20,000 an ounce I don't know that that's justifiable I probably would be selling my gold Holdings uh around that time another thing that we like to look at and this one can be tricky too but we like to look at you know the the odd fact and this used to be sort of an adage uh on Wall Street is that every investor will see uh the Dow Jones Industrial Average and the gold price cross twice in their investment lifetime I think the idea of twice in

the investment lifetime might be pulled out a little bit in 1980 came uh awfully close uh to doing just that so some of the older people might see it you know a second time um I don't know that younger people will get it twice in their generation but we'll have to wait and see so you know the Dow right now is 44,000 I suspect if the uh gold price and the Dow were to cross it wouldn't be with the Dow at its highs uh could that be down 50% I mean in a really horrible horrendous bare Market that lasts years

and years which I don't think is the base case but you know 20,000 uh could that happen so I think the idea of gold with five figures sounds crazy and outlandish but I think there's lots of historical precedent for for that and and I think if we do get into a little bit of a new uh regime here where real assets start to come back into favor I think what could surprise people is how fast that moves well I think that that type of price level sounds less and less crazy day by day so we we'll see how that plays out I

want to take it back around to the gold stocks and what investors should do in this scenario because I think that's always helpful for people when they look at this so if we have the gold price going to these levels it really sounds to me like there should be opportunities across the Spectrum when it comes to the stocks and of course each investor is different so they have to choose what works best for them but you know for people who are looking at all right what do I do now when it comes to the gold

stocks and maybe wondering when we're going to see that across the board move that I think a lot of people are still hoping and waiting for what would you say on that note look I I think that people have been you know overly pessimistic on gold stocks for some time now and and obviously in the 2022 to 20 early 24 mid 24 mid 24 period um that was a little bit of an anomaly because you had Western investors with high-rising real rates selling gold and they were selling both gold shares and gold Boolean and

you the central banks buying the Boolean and propping up not propping up but bidding up the gold price uh but the equities were kind of lost in the shuffle right so in that 22 to 24 period gold stocks didn't do as well as the gold price did and I think there's a really plausible explanation for why that's the case but really over every other time in the last you know 25 years uh gold stocks have done what they're supposed to do which is to say that they've offered High beta High leverag return to the

gold price because they have you know a bunch of fixed costs and so gold price Rises by you know 30% and their earnings don't go up by 30% their earnings go up by 90% or more uh and so you get this kind of big you know move in their earnings and then eventually in their stock prices and and look we we can sort of quibble on on small periods of time but I think the only real deviation from that was 22 to 24 and I think you know stocks are having a good year now and they're they're starting to perform

better uh despite the fact that the GDX uh is is you know shedding huge amounts of open interest uh but the stocks you know are are hanging in and I I would make one distinction though which is that some of the large major gold companies and I don't want to pick on any in particular but I think everyone knows who they are you know are suffering from a little bit of a of a challenging uh fate because of a reserve base that hasn't really been invested in enough in the last 10 or 15 years you

know there's been all this talk of capital discipline and of you know not increasing exploration budgets not increasing acquisition budgets after a string of you know pretty lousy value destructive deals in the last cycle and you know that was good for near-term shareholder return but unfortunately excuse me unfortunately now that the gold price is coming back up they find themselves with a lot of Aging assets and with costs that are starting to increase and with a difficulty in really kind of the

achieving all the bottom line uh that they would like from from an increase in the gold price I don't find that that's true however amongst the intermediate Golds and amongst the sort of um you know newer projects either just through development into production or a couple years into production and you know you can look at our Holdings we we have Alamos is a name that we've held for uh some time uh we have some of the you know more uh junior you know what I would call the more senior development

companies uh companies with one and two assets that are a year or two into production and those companies are incredibly attractive and they're seeing really good results and they're starting to see cash flow really fall to the bottom line so I think they're in the cat bird seat right now I think that the barracks of the world oh I guess I said it um will probably be forced to come out uh and acquire some of them to help backfill some of the production and things like that obviously baric is is

talking now about about Recco deque as well which is you know massive project in Pakistan uh but you know I think there's some other opportunities uh as well yeah I was going to ask you how these gold Majors get out of this situation do they go on an m&a spree at some point and where would they be focusing on do we see them invest more in Exploration or in juniors anything else you would add on on those points well I think the model of the large uh gold seniors and this is true in the energy space as well and it's true in

the big mining house is like the bhps and Rios is that over the past 20 years or so they they really have relied upon the Juniors and the intermediates as acquisition targets uh you know there's a little bit more of an entrepreneurial culture there's a little bit more of um you uh uh an ability to be nimble uh and to navigate more more challenging early stage uh issues that that they have to deal with uh whereas you know an Exxon or BHP or Barrack can be a little bit of a bigger ship to turn and frankly I mean

that's okay it's understandable what they do provide is ballast you know in tougher times and if you had to own one stock over the whole cycle that's a different question but if you think that gold prices are going higher I do think that the intermediates and the development companies stand in a really really good position right now and I do think that there will be um you know m&a is it possible that baric decides to ramp up its internal exploration and let that be the driver of success going

forward it's entirely possible but as we all know it takes a long time to explore uh delineate develop and ultimately produce a new deposit and so I think that're they're happy to pay a premium to have some of that work front loaded by some of the smaller companies yeah I think certainly we all know how long these these things can take so that gives us I think quite a good idea of what's going on with gold and the gold stocks but I have to ask you as well at least a little bit about silver so we we

know what your outlook is for gold how does silver perform in this coming environment I I think by the time the cycle is over uh silver will have done quite well just as gold will have um but there's a little bit of a timing issue so I think it depends whether your listeners or viewers are you know looking for performance this year or are trying to play a long uh cycle or you know are owning already silver companies and and thinking should I be selling them here and I would say the answer to

that is know I particularly if there's tax consequences I think silver by the end of the cycle will have done very very well and I think the silver stocks will as well right now however we favor gold and gold miners and and the reason is kind of interesting and you know my partner Lee uh did this work a couple years ago and I find it really quite fascinating but most gold investors are under the impression that in order to have a truly strong and robust gold bull market you need to have silver leading

and outper forming and it turns out that that's not really true in fact it's kind of the opposite in most po markets gold outperforms and outperforms and outperforms and silver lags and silver investors Nash their teeth and talk about you know how it's not fair that you know this gold to Silver ratio is blowing out and it's you know at at distorted levels and stuff like that and yet it keeps going in that direction for longer than anyone expects and then bang silver catches up right at the very end

makes up all that lost time and so right at kind of the culmination of the gold Bull Run you will have a sharp outperformance of silver as it catches up all that lost ground and so if you look just at that one year that 18 months yes silver will have led and if you think about the quintessential bull market years yes maybe that was a quintessential gold bull market year so I think that's where the misconception comes you know where where they say to have a really strong Global Market you need silver to to uh outperform that

really happens in a big catch-up rally right at the end and we saw that in the 70s into the early 80s we saw that more recently when gold rallied from 1999 to 2011 uh and then we also saw it actually you know when gold had its uh its rally during covid and silver caught up in 2021 when the Reddit crowd came into the mix and decided to really try to you know pull a Hunt Brothers and try to Corner the silver market unsuccessfully I again obviously I might add um and in all cases it actually signaled

a little pause in some cases three years in some cases longer uh in goal's advance and actually if you look back that's kind of when we lightened up on some of our gold Investments was because we felt that you know silver was giving you that signal saying okay you know you had the catch-up rally uh this is sort of over and maybe it's time to consolidate a little bit now we're back into silver lagging gold has obviously started a new Old Market uh and I think it's the end once again if history is a

guide which it doesn't have to be but it often Bears some similarity I think you'll get you know at the very end this kind of huge gasp for silver prices higher so I don't think it's there yet if you want to own it for the cycle you want to own it for the whole thing then it doesn't really much matter okay so silver we should kind of think of as our our finale here do do you have a price in mind for for this cycle for silver no I I think I think it's hard to say look I mean I I think that if you

look at gold and you at the Historical ratios of gold to Silver uh then you know you could easily uh you could easily have you know $100 plus silver if not higher than that so I think certainly you know if you're going to get fireworks um that then silver is going to go along with it at some point probably the end I think the fireworks people call it the bouquet is the last uh the last big finale of the fireworks okay I think I think that's fair enough and just one more point on Silver when

it comes to the stocks I think we know that the Universe of silver stocks is much smaller than gold stocks for example and especially if you want to look for Pure Place Silver companies that that gets quite tricky so any considerations for you when you are looking at silver stocks with that in mind no look I think you're exactly right there's not a lot to pick from so you know you're probably not going to differentiate yourself uh quite as much you know going after uh you know this huge Universe of of

diamonds and the rough on the on the silver side of things I me there certainly are some Junior silver companies you we own we own paname and um you know there's a few names to own and and I think any of them uh will probably will probably do well in the environment okay okay we can we can leave silver there and gold as well I want to also bring you over to uranium because since we last talked about uranium there have been some pretty big changes in the space we've had this big AI boom and the big tech companies

really starting to embrace nuclear power to power their their AI needs so I wanted to get your thoughts on that especially because the setup for Uranium was so strong before this came into the picture so when you look at it all this AI demand for nuclear power in uranium how much does that really change what's going on here well I think it puts it puts I shouldn't say fuel on a fire is probably not the right thing to say in the uranium sector but you know it certainly adds to the tightness in the

market and you know if you go all the way back to 2018 which is when we got involved D this cycle in uranium uh our thesis was was pretty simple um we had shut in a lot of Mind Supply reactor demand was being taken offline all around the world and we made the conclusion or or the um assumption at that point that anything that would be taken offline was already disclosed you know that that Germany you know was still in the process of shutting stuff down but anything other than what was already announced at that

point we said let's just keep that in you know by that point in 2018 s years after Fukushima if you had wanted to take your nule your nukes offline you probably did or at least announced your intention to do so and we made the conclusion that nothing new would come offline and in that environment the market would slip into deficit in 201819 and you'd have a real problem by 2021 and the reason for the Gap is because after Fukushima when Japan shut down all their nuclear reactors they Warehouse

continued to take and Warehouse all the uranium that they had contracted for and it was just sitting there uh you know they never declared Force measure they just took it all and they were sitting on on this big stock pile and so even though M supplies as early as 201819 was actually below reactor demand meaning the market was in a primary deficit you know you weren't mining enough new uranium to put through reactors uh you had the stock piles and other secondary supplies to bridge that Gap right and we said that that would

run out by 2021 and that then it would be Off to the Races and that's exactly what happened and uranium has gone from $18 a pound up to about $85 a pound got it size 100 on the spot basis um now when you look forward you're starting to see Life Extensions of existing nukes that we expected to be shut down which no longer will be you're starting to actually see restarts of nuclear power plants in the United States and notably you know Three Mile Island where you know there was a a incident in Three Mile Island you know

decades ago people sometimes erroneously think that they're restarting those damaged reactors that's not what they're doing at all in fact there always was a third reactor that never came offline and it's remained operational till 2019 and that's the one that they're bringing back online now um so they're not you know they're not taking the the you know old Three Mile Island that we remember from the news reels and and you know cementing over the cracks uh just restarting what had been an

operation until very recently but you're starting to see more and more of that um across the board some of it's been driven by the tech sector some of it's been driven by utilities that are looking to provide ballast against very intermittent Renewables uh but but it's all happening in a very very real way um obviously China and Korea remain on track with their nuclear programs and they're building out new capacity all the time and then this huge new source of demand which you know I'll be be

honest nobody really knows how big it could get I would argue it could be bigger than anyone expects but it is a little bit out there uh is is the demand coming from the so-called small modular reactors which should come online anywhere between 2027 and 2030 and I suspect closer to 2030 uh and that's all going to have a huge huge huge impact because those reactors are very safe incredibly safe they don't use High Press water so the idea of a core meltdown is almost impossible it's basically impossible um they're very

Capital efficient relative to existing third generation reactors and then uh they also create about 90% less waste than the current reactors because they use a different type of uranium they use a high assay low the so-called halum and what that does is it burns up much more efficiently and so what you're left with is much much less waste per unit of electricity dispatched uh so those are kind of the three major concerns a lot of folks have about nuclear power you know safety cost and waste both of all

three are addressed we now have an Administration in the US who is very much in favor of small modular reactors the uh Secretary of Energy Chris Wright sits on the board of oo uh which is one of the SMR companies it's actually publicly traded so he's you know at very very much acquainted with the power of the technology and very much in favor of it uh and I think that from a regular atory perspective you know nuclear's day really could finally be here and the reason the tech companies are embracing

it is is really quite simple uh the AI demands and data center demands in general are incredibly incredibly uh odorous you know if you look actually you know oo which I said Chris writ it's on the board of Sam Altman uh was um was one of the first founders of that company and the legend sort of has it that um when he started to build out uh open Ai and chat GPT you know he very quickly said okay well this is all well and good on the software side but but what it's really going to need is power and that's

where I'm going to make you know my fortune and so he moved over gave a lot of money to aquo and basically was you the lead investor of that company from the very very beginning Bill Gates is the guy who's running Terra power not running it but is is the and majority owner behind that so you have all these people who I think have realized that the tech technology Side Of The Ledger is going to have a huge huge impact on electricity demand uh and where's it going to come from it can't come from

Renewables there's a number of reasons why intermittency is obviously a huge one uh even if the intermittency Were Somehow dealt with um it turns out actually that that the power that comes from a windmill even if the wind's blowing is not high quality enough it's not regulated enough and in with the same harmonic distortions that would allow it to go through some of these very sensitive El ronics um and it's really inefficient it takes so much energy so much steel and cement uh so

much copper so much Manpower and so much energy to transport these massive massive uh infrastructure projects that you end up consuming you know as much as 10% or 15% of the energy that that thing is going to produce over its life right so these are not the answers to a huge increase in electricity demand that that data centers uh are going to require and that leaves you with coal and natural gas and both of those obviously emit CO2 which uh is not um satisfactory to most of the big tech companies so you see a lot of gas that's

going to be built out for sure you know because gas is both more efficient than coal and uh much lower uh CO2 much low carbon intensity uh and where does that leave you I mean it leaves you with with nuclear and so I think this is a very crazy circuitous path that we've taken you know via renewable and Tech and growth but I think the big thing here is that they're finally realizing and unlocking what we as industry and we as consumers uh have not really had to confront which is what is the most efficient safest and lowest

carbon for so form of power and that is so clearly uh nuclear and the reason the tech companies I think are important in this going forward is that even with the small modular reactors uh there's a lot of capital to be put to work and there's a huge amount of risk aversion on the part of utilities and on the part of certainly regulated utilities and IPS as well but the tech companies have both the capital and the risk tolerance I think to be able to push forward on something like this particularly when

they see it as an existential uh threat uh which it really is the lack of power is an existential threat to the tech industry okay I think really good overview of what's going on with uranium demand and and I want to make sure that we touch on what's happening with the supply side as well because there's a lot of interesting Dynamics there and I'm curious what you're watching the most closely we've got companies that are struggling to ramp up or increase production we've got the whole

geopolitical angle with where Supply going to come from what are you focusing on when it comes to supply what should we be paying attention to there well I think that there's two kind of big things to pay attention to you know in the west when everyone is looking at is nextg and The Rook Arrow deposit and that's scheduled to come online I believe in 2028 and there's some controversy around that and certain people believe that uh they'll be able to hit their timelines and other people

think that they're tooo aggressive of a timeline uh we own the company we own shares in the company um we really like the asset uh it is uh an incredibly high quality uh uranium deposit I well I guess I'll remain neutral on on on this podcast I think it's a pretty ambitious timeline uh to to try to bring a big project online we obviously own the stock we continue to own the stock uh I think from a stock perspective ironically you know if they came out and said that they that they wouldn't be

able to meet their timelines the whole uranium sector would probably lift because that's going to be a big big big 20 plus million pound uh project coming online in 2028 and that's in everyone's models right so that that even with that the market stays pretty tight if you took that out then I think uranium prices would Gap higher and I'm sure all the stocks would go up along with it um so that's what to that's what is to watch in the West in the East it's obviously Kazakhstan Kaza prom is the

world's largest uranium producer Kazakhstan is the world's largest producing country and there's both geological and geopolitical concerns there from a geological perspective they're moving into a new part of that asset it's an insitu leech so they drill Wells and they chemicals into the wells and leech the uranium out of the rock they don't mind it as such and the area that they are going into now is proving to be a little bit challenging it's deeper it's different

geology uh and it's certainly consuming acid more than they expected they talk about an acid shortage in the country that's true it's not so much a supply bottleneck issue although that's part of it it's also that the rock is just consuming acid uh more than than they would have expected so I I think there's some real geological issues to confront there and unlike a traditional mind which might have a mind life of 20 or 30 years you know this is much more like uh an oil Shell Oil Field where they

declined and so you need to be out drilling your next Wells and you know continuing the pace of development they're very economic assets they're wonderful assets but if all of a sudden on the margin what you're drilling is not as good as what you had before you can start to see impacts there the geopolitical concern with Kaza prom of course is that it's it's Kazakhstan which you know is not Russia but is closer to Russia than it is to Canada or the United States uh and so could very

easily fall into the Russian sphere of influence and and to some extent already has uh if you go back a couple of years when China expelled many of its cryptocurrency mining operators uh they all set up shop in Kazakhstan because they had very cheap electricity and it immediately uh overwhelmed the grid and Retail electricity prices doubled and tripled and there was unrest in the street and very very quickly uh the kazak government asked for relief from Moscow Moscow sent troops actually you know on the ground to restore order in

uh in almati so I think that there's a real concern uh particularly with some of the recent you know announcements around the joint venture that kamico has with Kaza prom with inai I think there's a real concern that if you were to draw demarcation lines across the world and if you were to kind of divide us into the United States of the West and the rest um that Kazakhstan might might not be on the right side of that which of course would tighten the Western uranium markets uh substantially okay and also a really

good overview of what's going on with uranium Supply I think when we put those together it's easy to see that the setup for Uranium is looking maybe maybe better than ever and yet you know I have to ask you about what's going on with the price because over this past year we've seen the price go down and kind of consolidate and investor interest seems pretty pretty low so when do you think that changes any any thoughts there I think any day now and the reason that I think that is um you know might might be

oversimplified but but I think that in this case this is pretty much the case um you know for years the spot price and the term price of uranium were always in lock step with each other people like the spot price because they can pull it up on Bloomberg 90% of the market happens on the term price and you know the spot price had a nice feature that it was pretty close to the term price so you could reliably pull it up on Bloomberg and Mark your models and go to your investment committee and say this

is what it is instead of waiting for the monthly you know numbers to come out from um the various uh uranium reporting agenc gencies at the end of 2023 when camoo announced that they would have production shortfalls uh in their at the basa operations and uh Kaz PR there's some concern over there 24 and five projections as well you saw a huge rush of capital into the uranium space you know every hedge fund became really uh experts overnight um yeah I know I know this for a fact because we were one of the very few

investors that had any interest in uranium before that and so I know who the original guys are in that in that trade and I know who the latecomers were in that trade too and there was a lot of late comers they piled in now importantly Capital flowing into a commodity space can sometimes be the kiss of death because it brings on too much Supply in this case we didn't actually see a lot of new capital raised we didn't actually see new a lot of new project sanctioned a few but not many uh but what we saw

was was the money come in very quickly and this and the prices appreciate very very rapidly and where you really thought you know I know the guys at at the Sprout physical uranium trust quite well I spent a few days with John a couple weeks ago um but you definitely saw that as a preferred vehicle where people piled into that and as a result you saw the spot price climb sharply above the term price as much as 25% or so by the end of 23 and into 24 to me that's a measure of the hot money that

flowed into the space uh throughout 2024 I think all of these new hedge fund experts became intimately acquainted with the fact that the uranium Market can move at a glacial speed compared to like the gas markets or the oil markets where you get data coming at you every day uh uranium is kind of this opaque slow moving you know thing including the fact that from when a pound is dug out of the ground to when it goes into a nuclear reactor it might be six years or more right it's a long fuel cycle and so

you don't have the same Dynamics as you do in other markets and I think they kind of got bored and so they they stepped away from the space they sold their shares we've seen um a huge deflation in the the spot price uh throughout 2024 particularly relative to the term price and that's a long-winded way of getting to where I want to end which is the term price continues to move up and up and up that's where 90% of the pounds get transacted that's where fuel buyers are buying from fuel

Fabricators who are buying from the mines right that's the true market and that didn't miss a beat that didn't maybe go up as much as the spot price did in 2023 but it didn't come down in 24 either it's just been a slow and steady March higher and now you actually have term prices slightly above the spot price so to me that tells me that the speculators are pretty much out maybe they're even short I don't know um people love to talk about uranium I don't think people at the end

of the day uh love to buy the shares and so I think that that uh that speculative fever is gone the prices have normalized Consolidated they haven't they haven't been terrible performers but they've Consolidated and I think they're now ready for their next leg higher okay well any day now I think I think that will bring some heart to some of our our uranium investors who are listening here all right so thank you for going through that we've we've really touched on three of our audience's most favorite topics

Gold Silver and uranium Before I Let You Go I know that you're really focused on on staying ahead of the trend and figuring out what's going to be next so any final thoughts that you would leave investors with other things that you're looking at or or just things that you would leave everyone with well you know listen I think I'd sum it up as follows you know we we harped for a long time on trying to be contrarian and trying to be value investors and trying to buy assets when they're at the bottom of their

cycles and we've also told people that in a lot of cases when you can buy really cheap assets it doesn't cost you anything to be early whereas if you're late you end up risking missing out altogether or chasing it higher and higher uh which which can be quite detrimental and so we've argued caution that people should try to get there before the turn you know if you're if you're it's rare that you can get anything spot on and in this case for a few years now we've been saying if you

have to air air on the side of being early because there's really no cost to it whereas the cost of being late is sizable um you know prices right rules or whatever you're getting awfully close you don't want to go over and I think we're now I think the takeaway should be you're right at that cusp as far as I see it I think that the there's the biggest risk to a major Catalyst that would Propel real assets higher in 2025 maybe we'll be wrong and it'll be 2026 I'm very confident that if you look five

and 10 years from now prices have to go much much higher to help attract the capital back into the space but I can see a fairly short fuse uh for for what the Catalyst might be in the next six to eight months and I'll cave at that by saying I'm not always the best Market timer uh but I think in this case you know there's really a risk to not being there um this time because if you could look as as soon as September or October and say you know darn I really started to miss the beginning in that move so I

think the time is now the valuations are very attractive the companies are in really good shape they've repaired themselves stuff like that investors have no interest and and I think that we could be on a really the verge of a really big regime change here okay well I think that's a really good spot to wrap it up thank you so much for for going through what's happening in all these markets it was really good to have you on yeah great to talk to you again and glad to be on of course and once

again I'm Charlotte McLoud with investing.com and this is Adam Rosen swag 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]