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 [Music] [Music] I'm Charlotte McLoud with investing news.com and here today with me is Nick Hodge editor at Daily profit cycle thank you so much for joining me great to see you Charlotte always good to be with you really good to be speaking and we're going to begin where we usually begin at these conferences which is I ask you about your talks that you've given so this time they didn't post the names of the talks online or at least I didn't see them so tell me what the names are

usually they're pretty fun and what you've been speaking about here so the main stage talk was a cycle through commodity land and a parked headline warning uh and then in the breakout session with my partner Gerardo we did um an episode of our podcast which you normally do here we record it but the title was what hasn't worked what's working and what will work all right and and what sort of topics did you cover there what are some of the highlights in the in the in the breakout session yeah

let's go for that one yeah yeah um so what hasn't worked was um base metals have been really tough um despite people saying you know the long-term fundamentals for copper are are very robust and we're going to get a copper super cycle we've seen that copper move down from $4 to to closer to 350 and if you look at uh base Metals index it's sitting at 52e lows for example and so um base Metals is is one thing that hasn't worked yet and we attributed that to um sort of like the slowdown in the

economy and the expectation for a recession coming and then uh one other thing that hasn't worked is gold stocks relative to the gold price because um the gold price has been okay especially despite a strong dollar and then High interest rates but um it's up something like uh 18% for the year I think a last check is is what it was and the gold stocks aren't up that much if you look at the GDX so um they're supposed to be showing leverage to the gold price as we expect they're supposed to be going up

by um multiples are certainly higher than the than the gold prices going up in percentage terms and and we haven't seen yet that yet and um I also think that's a function of a of a higher interest rate environment where people can get yield elsewhere so they're not NE necessarily interested in a three or 4% yield from uh like a numont or um a Barrack and I think also still being cautious in the in the stock market in general so um while gold has worked the the gold stocks haven't work okay and

and to be clear when you talk about base metals and gold stocks they haven't worked it's it's kind of a they haven't worked yet situation so these These are coming up you you would see it turning that that's right so um we can skip over what's working and let's talk about what will work um gold stocks was one of the things that that will work um I think we'll see a return to um people wanting to to buy gold equities as uh the price breaks out above 2,000 and so I I expect

that to happen uh it's unfortunate that the Catalyst that that perhaps sparked the the rebound from the low 1800s in in in early October um but despite the geopolitical and and turmoil and then you know wars in the Middle East then Ukraine Etc there's a very strong underlying fundamental reasons to um own gold not the least of which is you know the fast rising debt and and deficits in the in the US but also I'm the very real prospect that after two years the FED is going to have to Pivot in 2024 and I

don't know if you recall talks that we've had over the past 12 or 18 months but I was saying there's not going to be uh a pivot Jerome is very serious about getting to 2% inflation and so um lots of people wanted a pivot sooner than we've gotten it and I think once it finally does come in in 2024 then you're going to see a very robust gold bull market and the equities will finally follow right and I think we I looked back on the interview that we did here last year and we kind of said you know

gold wouldn't really shine until after a recession and the pivot from the fed and you know we just got the fed's latest meeting they left rates unchanged so maybe we talk about that a little bit have we reach the top at this point um it's an interesting question so uh let me Define it in rate of change terms so pausing is not easy um pausing is higher rates for longer and so um even if it is the peak the rates at the levels they're at now are are having very real effects on bank balance sheets and other things Etc

I also think that um again his Jerome pow is very serious about the 2% Target he mentioned it I think six times yesterday the in the or this week when when he gave the uh his speech and so um he very much wants a recession I mean he very much wants the the the inflation to come down to two 2% and it's it's nearly at 4% um do we get another hike is an interesting question I think it depends on the labor market so um that's typically the last thing that goes in in an economic cycle employment is is rearl

looking and so I think when the employment starts to go in 2024 um it's going to it's going to force him to to cut I didn't answer your question um I don't know if it's the top I think he might have to squeak out one more because I see the economy re-inflating um the rate of change inflation coming down sort of stopped right we were all the way um up you know near 9% last June and it came down to to to to the 3% range but it stopped going down and in fact has has ticked back up above expectations for

the past couple of months so um as this as this economy reinflates uh I think he hikes another time yeah and I think you started to say this you know if next year we start to go back down on the rate hikes it doesn't mean we go back down all the way right that's an incremental thing as well that we have to live with so maybe we can talk about what kind of situation we're heading into there because I hear from a lot of people you know this process is going to break something etc etc what are your

thoughts I think have broken I mean you had Bank collapses in March that were bigger than Bank collapses in 2008 and so things have already broken um the consumer is starting to break um they're at record high credit card debt at record high interest on that debt they're starting to fall behind being more delinquent on those um credit card debts and so things are already breaking um as far as what's going to happen for the next couple of quarters you know I think we get back to recession talk

which has sort of been alleviated so uh the US GDP just printed 4.9% from the third quarter that's a pretty robust growth I mean the economy was growing in the third quarter you can argue about what that growth is attributed to which was largely government spending and then not the consumer but let's set that aside for a second as we get through Q4 and we get to q1 that growth is going to come back down to to one to 2% and so you're going to see um a Slowdown um what I was saying in my in my mainstage

talk is that I'm using this this opportunity for the next two to three quarters cuz I've been reserved with a third cach to tr really identify what I believe are going to be the trophy high quality companies that I want to add to my portfolio um ahead of what I see as a pretty booming and strong resource Market post recession which I still expect to come yeah and that was one of the things I wanted to check in with you about because you have said I think it applies start or at least our last two

interviews that cash position that you have so did you say that's about a third of your okay and so where can you talk a little bit about where you'll be looking to deploy that yeah so I defined trophies I was saying I was hunting for trophies and I was defining trophies as um companies that don't have to raise money at companies that are in tier one jurisdictions companies that have top tier um management and so as far as Commodities which may be what you were asking um copper is is one you know I I

think we're going to get a good copper bull market post recession um gold is another one I'm looking at um companies that are cashed up and and and developing assets that they've already financed they only need to raise additional money for so we have a a known resource in the ground and and then like likely a feasibility study so we so we know the economics um and then uranium I I I suppose would be the last one which has been in a bull market and and continues to be um so wouldn't be

opposed to allocating some more Capital there yeah I think it's good to bring up uranium because it feels like this is one we've been talking about probably for years at this point so interesting so you still see opportunities there which makes sense where where do you think we are in the cycle right now oh everybody does baseball parlins so you know um no it's interesting so um uranium has a good has had a good run I mean we had a good run in in 2022 and then it sort of got ahead of itself and

and and and blew off a little bit and the retail crowd got frustrated if you tracked sentiment on you know message boards and and Twitter and things like that people were throwing in the towel they were frustrated with uranium cuz like you said we were talking about it for so long and they thought that run that we had in 2022 was it right um but what happened is it was ended up just being a healthy pullback and the the price of uranium has gone back up um and now it's breaking out it's north of $70

a pound it's it's it's through resistance which was at the 73 or or $74 a pound area and yet the utilities still haven't come back into the market so it's done this on the back of um things like trust spying pounds uh producers uh refusing to produce and instead buying pounds uh and so you still have catalysts ahead for the for the utilities to come back into the market for that uranium price to go higher so um back to baseball parland it's World Series time so you know third is or 4ish

inning okay okay and you know you're mentioning okay so we need those utilities to come back into the market we've had that excess Supply taken up and we're waiting for them to come in so I guess what a lot of people are wondering right now is what happens with the price right are we going to yeah the how or it's going up I think we can agree on that but how yeah so uranium always overshoots to the upside it's like silver in that respect um I'll tell you in terms of my partner

the way I don't have to go on the record with my crystal ball um my partner Gerardo is is calling for for $200 a pound that's not a sustainable price right that's uh the feror gets going it overshoots to that price and then corrects to something more healthy in the in the low $100 range 100 to $120 a pound um there was a report recently and and you have to excuse me CU I forget the group that that it came out from but but they were calling for an Sho to $300 a pound um not some you know Marketing

Group this was a serious Market Market Research uh institution and so um the calls are out there for for triple digit uranium quite High when does it get there is is an interesting question um I think when the utilities come back into the market and and realize that there is a scan Supply to be had and then that word gets out on those circles that they really need to start securing their supply and you know I know it's hard to know what utilities are doing more thinking at any given moment but um do

we have indications that this is happening already I mean you see them starting to come back a little bit there's been companies like Encore Energy that is that is that is already you know sold some some uranium has has pinned some contracts um other companies you know like the U's of the world are unhedged right they don't want to lock in prices now with the utilities because they want to wait for the price to rise so um the short answer is no we haven't seen the utilities come back into in the

market the way we've expected and and the way that they're going to have to yeah okay and you bring up an interesting point there you know companies waiting because they want to get the best price so you know what would you want or expect to see among companies that have Supply that they need to allocate um I'm not sure I understand the question yeah I I think I'm let me try to rephrase it better I think you know do would you want if you're invested in a company do you want to see

them doing deals right now do you want to see them weight what makes the most sense right now so I'm I'll talk in terms of of Encore of which I'm a shareholder so so full disclosure um and have been for a while and it's sort of a two-pronged approach right they're bringing a new facility into production that they have at assigned all the the production to they they haven't gotten rid of it and they're also um storing physical pounds so it's a it's a multi-prong approach and and and that's

likely the the best approach for me as opposed to an entirely unhedged strategy I would say because you're getting you know the hybrid Best of Both Worlds or whatever phrase you want to use yeah I know that does make a lot of sense okay so maybe we can talk a little bit more about how investors may want to strategize when it comes to your because you know some people probably have already made some gains at this point but there's room to go right so where do you see the best value right now I guess

it's a question um I'm going to give you a long answer and I'm going to start with an example so the reason that I am an encore shareholder is because they bought a company I was invested in called aargo uranium and the reason I was in aaro was because I was invested in a private company called urz that aargo bought and so this is going back some or seven years now and I had a gentleman ask me a question in the workshop here you know how do you think about selling when do you know it's time

to sell and I told him I've been selling along the way um not entirely but that you know when aara took out urz I sold a little bit and when Encore took out aara I sold a little bit but yet I remain an encore shareholder and so um I've one profited two I've reduced my cost basis because I paid myself to own the shares um and three um I can diversify then into um other positions so um I'll tell you one thing I've done is taken some of those profits and reinvested them in less risky position so whereas in the

early part of the cycle back to baseball in you know the first or second inning I was in uh had larger positions and more speculative companies um as I've taken some of those profits off the table I've mve them into less risky propositions like &m like in the ETFs for example so uh I'm more Diversified and I get a little access to physical because that the the ETFs in some cases own shares of trust that own physical pound so uh um I think that answers your questions as far as where I see the value because that's

how I'm sort of rotating capital in the space yeah that was actually very specific so so thank you for that so I think I think this will be my last uranium question we'll see but you know we've talked as I said we've been talking about uranium for years not just with you but with others and you know everybody kind of had their one thing that they were waiting for for it to take up and now it seems like that's less the case it's just kind of factors all together coming to to push the price

up so what are you watching on supply and demand is there anything specific I mean you know I think the a couple of things the Advent of small modular reactors is going to be big because it's going to add to the you know the the entrenched demand that we have from the the established nuclear Fleet in um the world the processing in the bottleneck from Russia is also very interesting so you ask where there's value I mean there's there's value in processing specifically in the Western

World which doesn't want to be getting the uranium from um Russia at this point so um you know maybe taking a look at a at a at a at a couple of processing companies uh might be a smart thing to do do you do you know any examples of those because I was kind of I asked somebody that question right when the whole Russia situation started happening and I don't I don't think I got a very good answer to that from whoever asked yeah there's a there's a there's a couple of companies um there there's

convery which actually just uh reopened a conversion plant in the US um there's a company with the ticker Leu which stands for light and enrich your ium and then so there there is a couple of publicly traded equities that you can look to to to get involved in in the processing space um Cho to some extent is is diversifying vert vertically integrating they acquired westing house and such and so um to get broader exposure without owning an ETF cill might be one place to look as well okay okay I think that's helpful because I

think I think people would be interested in that angle for sure okay so any any other elements of the resource sector that you're watching right now with with interest hm I always watch things with interest um hydrogen is interesting uh where they're going to where they're going to store it and how are they going to make it um I'm of the belief that one real good solution to to decarbonizing is is is is making hydrogen with with nuclear reactors um because it doesn't make a lot of sense to do them with Renewables

um but you have to store that hydrogen somewhere and and so that's an interesting resource angle because there's a couple of companies that are exploring for Caverns um that are able to store hydrogen underground and actually we're here in Louisiana right we're in New Orleans and U the the Strategic petroleum reserve of the US is stored around here in the Gulf area and it it too is stored in underground um caverns and not a lot of people know that they think it's stored in tanks but

it's natural formed underground formations same in in the in the American West like New Mexico and Arizona we store gases underground there like helium and and naturally formed DS and caverns underground and so there's been some exciting companies that are that are looking for for um Underground Salt domes particularly these are because uh salt is you know impenetrable by gases underground that are exploring for salt Dooms to store hydrogen so uh that's something novel that I don't see

a lot of people talking about yeah you know I know that I need to do some research on hyd I always get stuck on the different colors and that's where I get oh sure essentially green and gray you either produce it with fossil fuels or you produce it that's gray hydrogen or you produce it with Renewables and that's green hydrogen okay not not as tricky as I thought so I I should get on that okay just wrapping up here I'm I'm asking this question to all or most of the people I talked to today so dos and

don'ts for investors as we head toward the end of the year into 2024 um don't confuse gold stocks for gold they are not the same thing we just uh covered that earlier in the talk do take your tax losses if you if you're able to harvest them we're heading here into the end of the year there's a lot of debased and and um undervalued equities as all these CEOs will tell you but um you know get rid of your companies that aren't performing um don't be afraid to sell losses um now is the time to concentrate

on winners and you only have to focused on the the best and breed companies and so um make sure you know what's in your portfolio know what you own and and harvest your tax losses okay I think that's a nice place to wrap up so thanks thanks for going through all the different Commodities that we we spoke about this is a good overview hopefully of what you're thinking right now was a great chat I appreciate it perfect and once again I'm Charlotte McLoud with investin news.com and this is

C thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below we'll see you next [Music] time