There are plenty of signs flashing recession, warns Lobo Tiggre, CEO of The Independent Speculator. He joins James Connor to explain why a recession is already here and why gold and uranium could have significant upside during this downturn. The contrarian investor also breaks down key economic indicators, critiques the Fed’s actions, and shares why gold and uranium miners could outperform in this cycle.
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Speaker 1 0:00
There are plenty of signs that are flashing recession. The money helicopters will fly again. The global economy is in recession. We’re going to see sustained high uranium prices, gold can easily go up 50%
James Connor 0:15
Hi and welcome to wealthion. I’m James Connor. Well, I think you would agree with me when I say the 6040, portfolio is a thing of the past, and in order to beat the market and stay ahead of inflation, you need alternative assets such as real estate, precious metals and thematic investments such as nuclear energy and uranium. My guest today is Lobo Tigray of the independent speculator, and he’s going to explain his thesis for some of these alternative investments and how they can help augment portfolio returns. Lobo, thank you very much for joining us today. How are things in Puerto Rico?
Speaker 1 0:51
Well, life in the tropics us, tax haven can’t complain.
James Connor 0:56
So I have yet to visit Puerto Rico. I haven’t had that pleasure yet, but it’s a place I would really like to go. And I’m curious, of all the places you could go in the Caribbean or other places of the world. Why did you choose Puerto Rico?
Speaker 1 1:08
Well, it is beautiful. I must say, if you’re a beach bum, it really is just heaven. Heaven. Never mind tax haven. You know, I’m not one of those people that has to stick my toes in the sand every day. But I do like diving. And, you know, gorgeous diving. It is, it is beautiful. It is a place worth being anyway. But they’ve instituted tax incentives after the crisis, the GFC 2008 it’s kind of funny. You know, there was a German minister who once joked about the EU trading Greece for Puerto Rico, have some nice beach time there. But you know, the 1865 settled that you can’t leave the union in the US is owner of Puerto Rico, since they stole it from Spain in 1898 fair and square can’t leave so and they can’t print drachma or something. Their dollars circulate down there. So what do they do? No revenue, no money, no nobody will lend them anything. They put tax incentives into place. Long story short, as an investor, if you get approved and you move there, you can get a capital gains tax holiday 100% short and long term, which is as a speculator, who sometimes will move in and out of positions faster or not so fast, you know, it’s spectacular. And if you set up an incented business, then they’ll give you a low corporate tax rate. So I get to live in a beautiful place, not mining capital of the world, but on april 15, there’s no better place for a US tax player to be.
James Connor 2:37
So there’s both economic perks and also lifestyle parks,
Speaker 1 2:41
yeah. I mean, I think it’s important, because honestly, if, if I hated it there, I’m not sure the tax incentives would be worth it on april 15, I probably could suffer quite a bit. But it really is a beautiful place. You know, the only rainforest in the US National Park Service is in Puerto Rico. There are other things like that we have. There are manatees around the corner from where I live, and the sea turtles hang out nearby. You can, you know, it’s like the Finding Nemo movie. They’re so cute, but I can’t understand the word they’re saying. But you know, they’re still fun to see them. So
James Connor 3:16
essentially, it sounds like it’s the opposite of where I am. I’m in Toronto, Canada, and we have cold weather and we have high taxes.
Speaker 1 3:23
Well, come visit when you get tired of the Great White North winters, and I’ll show you where the sweetest coconuts are.
James Connor 3:30
So I want to start a conversation talking about the economy, and more specifically, the US economy. And you have said in the past that you think the US economy is in a recession. We’re heading toward a hard landing. But when I look at numerous indicators, I’m going to start with the GDP number, it came in at 2.8% versus 1.6 in q1 so that’s looks very strong. Inflation is approaching this 2% target rate of the Fed, the NASDAQ and the S P are both up 20% on the year. Give or take, Bitcoin is up 50% on the year. Things look pretty good to me. What am I missing?
Speaker 1 4:04
Well, Dr copper says otherwise, the cracks in the employment market. Say otherwise, the manufacturing recession that the United States has been in for a long time. Say otherwise. There’s plenty of data out there now. Granted, as you and I speak, we just had these new GDP revision numbers, things look rosier as a person of an Austrian bent, if you follow my meaning, I think the GDP is a silly number anyway. The inputs in there are methodologically questionable anyway. And then on top of that, you’ve got the fox reporting on the health of the chickens, ie the government reporting on itself. So I take all of that with a grain of salt, and I just try to look at the reality. You know, I don’t want to be the weatherman just, you know, saying what’s happening based on my model. I want to actually look out the window at the real world. And maybe the short version of this is that. So you can look at these national average statistics. There’s lies, damn lies, and statistics right? It’s not that the statistic is necessarily wrong or, you know, fiddled with from month to month, but what it what does it measure? And a national average is an average like nobody is the average if the center of the bell curve is the most likely number. That doesn’t mean that everybody’s going to be at that number. And particularly, we have the so called K shaped discovery. Never mind the rolling recession that I was describing earlier, the so called K shape recovery. You’ve probably heard that. The audience has probably heard that. You know, where the fat cats on Wall Street are doing great, but the average show, not so much. Well, think about what that means. There’s this divergence, or we’ve talked about, you know, Wall Street and Main Street going in different directions. And just intuitively, anybody can understand, I think, that you can’t have these two streets going in different directions without the map tearing at some point. What the what I’m saying, though, as a I’m not a statistician, though I did study some stats in college, believe it or not, I was a sociology major in statistics, was the only part of it that seemed even remotely scientific to me. But if you have a bimodal distribution, if you understand what I mean, you know, imagine, instead of the bell curve, two humps, right, two lumps like a camel with two humps, and one of it is the people suffering, and one of it is the people partying on Wall Street. Well, you average that together, and gee, the average looks okay, but it ignores the reality of what that K shape means. The people in the unhappy lump, you know, they’re not happy, and by the way, there’s more of them than the guys in the happy lump, and they vote, and it’s an election year, so there’s a lot we can pull apart in this. But what I’m saying is, and I don’t think your audience will take much convincing, if you look at the totality of the data, as Mr. Powell likes to say, there are plenty of signs that are flashing recession. I mean, you know, leading economic indicators, the so called som rule recently, and even though Claudia som herself has sort of dismissed that there’s what I call the gun lock indicator, which is the same thing, but on a three year average, which has basically a flawless track record over 80 years, of not just predicting recession, but it’s a coincident indicator, like the SOM rule, and these indicators are saying we are in recession now. So this isn’t just tinfoil hat Lobos, you know, wanting to be critical of the Biden administration or something like that. I’m saying the data is there for anybody that wants to see it. And okay, yeah, there’s some contralobo data out there, but for MS Yellen to get out there and say, Oh, I see no reason, no sign of recession at all. That’s simply untrue. There is data that is indicating that. And I think any savvy investor should be, you know, not trying to drink one side or the other’s Kool Aid. But look at the world as it really is. What are the trends actually in motion? And right now, I think that, you know, my call is still for the hard landing,
James Connor 8:01
and you touched on the unemployment rate, the last number came in at 4.3% and that’s up from 4.1 the previous month, and this is another indicator that continues decline. But do you think this number’s a lot higher than what the government is telling us, and do you think this trend upward is going to continue in the coming months?
Speaker 1 8:20
Yes yes and yes, but never mind. We can look at shadow stats and we can come up with another number. I think that it is actually reasonable to look at whatever unemployment numbers the government reports and double them as a sort of a base case. But you don’t even have to do that. Just look at the u6 number, and Peter Schiff does a good job, my fellow Puerto Rican down here, of explaining that u6 is what the unemployment numbers used to be, until they decided to adjust them, right? So, so this isn’t some made up number, and you could argue with, you know, John Williams at shadowstat and his methodology, but the u6 number is the government’s own number the way they used to calculate unemployment. So when you say, oh, 4.3% that’s still historically low, 50 year low, something like that, whatever, or near there. Well, no, it isn’t. If you’re comparing apples to apples, you’d have to compare the u6 number and the u6 number at over seven. I forget what the number it is. It’s not, not quite double, but it’s a lot higher. And you know, so you see what I’m saying, and you don’t have to come up with some alternative, whatever. Just the government’s own numbers still point towards trouble. And the most important thing is, okay, you know, Europe deals with much higher unemployment when they have problems, even if it was 7% you know, it’s not the end of the world. You might say that’s not. The point is where we’re at now it’s, it’s the curve. It’s accelerating and okay, if you look at the main number that people look at, it was, you know, below 3.5 now it’s over 4.3 that’s a huge increase, and it’s accelerating. And that’s why we get the SOM rule and the gun lock indicate. Are these things telling us that we’re in recession, that accelerating breakdown in labor market? And it’s, by the way, not just one data point. This is a trend. Now this isn’t the first crack appearing. The first cracks appeared in July, and now they’re spreading. And by the way, interesting thing about July the average length of time between the beginning of a policy tightening cycle and recession the United States is around 27 months. And depending on whose numbers, but it’s around 27 months. So if you apply that to this time around, that would have been the average length of time, right? Would have been in July, and lo and behold, that’s when the cracks in the labor market really started becoming undeniable. So I just think that’s interesting. You know, all these people, these cheerleaders on wall street running around saying, Oh, if you haven’t had a recession by now, we’re not going to have one. Well, in the first place, that’s either mendacious, just simply dishonest, or ignorant of the history like this, 27 average length of a long and variable lag, and in this case, with the covid distortions in the market, we could have seen a much longer than average variable lag without it being unusual or strange. So it’s interesting to me that it’s happening already. And you know, if I’m right, we’ll see a lot more interesting times in the remainder of this year.
James Connor 11:18
So let’s talk about the Fed. When we started this year, I think we were expecting six cuts. Here we are in September, and we haven’t had any yet, but the probability of one happening on the next during the next Fed meeting, September the 18th, is, I think it’s approaching 100% now it’s going to be 25% but why do you think the Fed is so reluctant to cut weight rates. Why have they waited so long to do so? You
Speaker 1 11:44
left out the fun part of the story. It went from six or seven cuts to zero almost, and now it’s back up to four cuts, if a cut is defined as 25 basis points. Mr. Market is a psycho sometime. Well, no, always. So just, just keep that in mind. You you run risks if you just follow the investment hurt. Now, why? I don’t think we need to reach too far into speculative territory. Here to answer that, Powell himself has tried to channel Volcker. He doesn’t want to be the next Arthur burns. If anything, you know, he’d rather be the next Volcker than the next burns. I think most of your audience probably knows what I mean by that. But basically, they didn’t want to ease up on the brakes too soon and then have inflation take off again and look like they they, they got it wrong. You know, it was bad enough that the good ship transitory as Powell now jokes about was a popular but misdirected shift. That’s bad enough they made a mistake to make another mistake. Would really, you know, make them look like idiots and leave him with no legacy to be proud of. So I think it’s fairly human for them to resist that temptation. And you know, the mainstream economic models that prove so wrong, right? You know, the stagflation doesn’t exist in the mainstream economic models. Inflation is a sign of a booming economy. You can’t have high inflation and low growth. That just doesn’t exist. So, you know, they’re out there in uncharted waters trying to figure out what to do. So it, it really doesn’t seem very surprising to me that they were slow to react. If I didn’t know what I was doing, I would be very cautious. Anything I did might be wrong. I’d want to, I want to be really careful before I did anything at all. No
James Connor 13:38
very good points. But when you look at these other central banks, and I’m going to see the ECB, also the Bank of England, Bank of Canada, they’ve all cut in the last few months. What do you think they’re seeing that the the Fed is not seeing and and they’re not really concerned about inflation, they’re more concerned about growth, is my assumption. What are your thoughts? Well, I’m not
Speaker 1 13:59
sure they’re actually seeing anything different. The global economy has been much more obviously in trouble than the US economy, and I talked about some of these rolling recession indicators in the US, but as long as the consumer kept spending because people had jobs and the labor market looked good, there was an argument for American exceptionalism. You know, not so much in the EU or Germany, when your GDPs go negative and all these other indicators are very bearish, China has also, in a way, been a bright spot, you know, they can still pull off four or 5% GDP growth. You know, never mind that that’s way down from what it used to be. You know, by global standards, that looks like growth. But actually, I think that’s significant. It’s not just not what it used to be. It’s that, by Chinese standards, that’s kind of anemic. And you look at the trouble they’ve been having, I mean, they really, I think, also made a huge mistake, the really iron fisted lockdowns and intransigence and sticking with those lockdowns in one way. Understandable. You have, you know, billion and a half people there, and you can’t have a highly contagious disease spreading. On the other hand, you know, it was a mistake. It and and they kept it going for so long, they really traumatized their people. So now we, we do an about face, we open up the country, and guess what? People still don’t want to go out. You’ve terrorized them. I mean, you’ve you’ve scared them. They don’t they’re afraid of each other. They want to go to restaurants, right? It takes a long time for people to unlearn that kind of painful lesson. And then, you know, that set off the the real estate problems that they have. So there are serious problems in China. I don’t think anybody denies that who can, who has the freedom to speak about it? And so the global context has been one of much more obvious pain. I have been saying in my writing that the global economy is in recession. The US has been in this rolling a sort of mask recession because of the labor market looking good, looking good, not necessarily being good, but looking good. And that when that final pillar of the US, labor or consumer, gave way, that’s when we’d likely see the fireworks going. And it seems to me that we’re at that threshold right now.
James Connor 16:16
And to your point, when you look at the price of oil, it’s been vacillating between this 70 to $80 a barrel. Copper was at five. Now it’s closer to $4 a pound. And quite often these commodities are considered barometers of the economy or the global economy. Do you think that’s what these two commodities are telling us, that the global economy is slowing down
Speaker 1 16:37
absolutely especially consider that we have, you know, a hot war in the Middle East, you know, you just if you had said that was going to happen to somebody you know three years ago, I’m sure that if you polled, you know, whoever Bloomberg polls, I don’t know where they find these people. They pull for these numbers. They pull out of their hats or other parts that we won’t mention. But you know, if you had polled people three years ago that that there would be a major blow up in the Middle East, Israel at war. Everybody would have been talking triple digit oil prices. So you may say, oh, 70s, 80s, you know, that’s still pretty hot. Well, okay, yes, historically, it’s pretty high, adjusted for inflation, not so high. But with war, a hot war in the Middle East, that’s actually dirt cheap oil, in my view. So I see that as a very bearish indicator for global demand. And Dr coppers called that for a reason. There have been serious okay, we had new supply coming out of the DRC, but we also had a lot of hits to copper supply coming out of Panama, problems in Peru, kerfuffles and Chile. So there has been actual supply constraint, and so for prices to go down in the face of that is really, you know, a big deal. There was just a report, I forget, who published it just this last week. I remember seeing a report how demand is just not keeping up even with the supply drops. So, yeah, I think these are very powerful indicators. You know, both of them. Oil is the energy of the world, still, and copper, dr, copper is used in so many things. Both of them, I think, are telling something quite clear, if you’re willing to listen about the global economy,
James Connor 18:19
and you mentioned earlier that you you’re expecting a hard landing. What do you mean by that? Exactly?
Speaker 1 18:26
I’m glad you asked, because, you know, hard landing should mean, you know, soup lines, all that sort of thing. Maybe not the Great Depression or Doug Casey’s infamous greater depression, but a real recession. We should see a lot of people out of work and a painful adjustment, typically in a recession, the US recession lasts two or three years. Housing and autos really take it on the chin, other telltale sectors, and I’m not sure. No, no, let me rephrase that. I want mince words. I do not think that’s actually what we’re headed for. When I say hard landing, I think that’s where we’re headed, in that direction, but I do think that the powers that be will not let it happen, or they’ll do everything they can. In other words, the money helicopters will fly again, the money floodgates will open. Pick your metaphor, bazookas, whatever metaphor you want. I think that the Fed is already pivoting in that direction. The time has come, Powell said, to change policy, and don’t forget fiscal policy, even if inflation resurges. And Powell doesn’t want to go down as it burns. He wants to be a Volcker and he slams the brakes back on again. That doesn’t mean that Congress won’t send people stimmy checks. They’ve already established no fault of their own as sufficient cost to send people, not just a, you know, a boo boo kiss, you know, a few 100 bucks or something, but 1000s and 1000s of dollars, you know, material money, not to the banking system, but direct to consumers, because it’s no fault of their own. And obviously a recession is no fault of their own right. So the precedent is there. The very recent message from the powers that be is, if anything goes wrong, we’ll send you free money as long as you vote for us. So I did, I’m didn’t say that we’ll send you free money because it’s the right thing to do. So that can, you know, may paper the problem over I mean, if it blows up, we’re looking at major changes. I suspect that they may be able to paper this over again. As incredible as that may sound, given all that we’ve been through, but if nothing else, I think that’s actually highly inflationary. We’ll see how the economy responds. If the news is scary enough that, and then the powers that be pivot, and they start sending people money. You know, that very thing could actually scare people, instead of making people go out and spend, because now they got more free money in the mailbox. It could have people saying, holy, beep. You know, something is really wrong here. And you could actually see people pay off credit cards again, save again, buy gold. Gee. What a concept. You know. You could see a fear reaction sparked by the very same thing that they hope will just, you know, open the party and get the spending going again. Consumer, rah, rah, rah, we’ll see. I have no crystal ball. I don’t know how that will play out, but my expectation is that it’s not that we’re going to go through a protracted recession, it’s that the recession denial will give way, capitulation of recession deniers will give way as the problems with the labor market spread, and then we’ll have to see what the easy money does. I can’t predict the entire economy, but I do think that’s highly inflationary. I think real assets will benefit and of course, gold is real money. I
James Connor 21:47
want to ask you about gold before we do that. Then I want to ask you one more thing. And now that q2 is or most companies have reported to q2 numbers, the one underlying theme that we saw from company after company was that the consumer is feeling economic duress, and we saw it from Amazon, Nike, McDonald, Starbucks. I mean, if people aren’t paying five bucks for a happy meal at McDonald’s, you know they’re feeling some pain. But if we get this hard landing that you think we’re going to get, where do you see the unemployment rate going?
Speaker 1 22:19
Huh? Well, who watches the watchers? I don’t know, but when these things go up, they are accelerating now, and when you look at the past recessions, you know, the spike is quite high. It’s it’s hard for me to see how they stop the unemployment rate from spiking, you know, much higher without changing the goalposts again. You know they can redefine, you know, discouraged workers as people who haven’t looked today
Speaker 2 22:47
for a job, right? Who knows what they’ll do if
Speaker 1 22:51
they want to try to hide the numbers on an election year. So I’m not sure I would trust the numbers anyway. But you know, high single digits, easy to see. Double digits possibly depends on how quickly things break down, um, compared to how quickly the money helicopters fly this. This is one reason why. When I say hard landing, it’s really this capitulation that I’m looking for. I don’t think the powers that be will wait for the soup lines they know how bad that’s going to get, and I think they’ll let the money helicopters fly before it gets that bad, so that could prevent it. If people start getting checks in the mail, then they don’t need to go down to the unemployment office, even if they’ve lost their job. So I don’t want to predict the unemployment number, but I think it will be obvious the impact of this, and again, the more easily foreseeable trend is the impact on money printing and what that does to real things that can’t be printed.
James Connor 23:51
So let’s talk about that now. And you touched on gold. Gold’s up 20% on the year, which is not too bad. And maybe you can give us your whole thesis on on gold and why you like it in this environment. I’m
Speaker 1 24:03
gonna first and foremost say, okay, you know gold. Bug likes gold. Why are we even talking about this? What kind of, what kind of headline is that? But I’m not a well, I was gonna say, I’m not a perma bull, but I’m talking about gold and versus the dollar, these fluctuations and speculating accordingly. And that’s not a constant. As a person who believes that gold is money, as I just said, there’s no time that I wouldn’t buy bullion just add to my stack. That’s like saying, you know, Lobo, how much is too much money? Or how much is too much savings? You know, I’m never going to have too much savings. I’m always going to want to add to my stack. So, yeah, am I a permeable on gold? Sure, fine, you know. But don’t dismiss me, because last year, gold was not my highest conviction trade on this more speculative side with the stocks and things, that was uranium that worked out quite well. Uranium doubled last year. I’m not saying therefore I’m bullish on gold. So gold’s going to double this year. Yeah, but it’s up already, and in I have to say again, I’m not trying to portray false modesty here. I’m trying to be accurate. And the reasons why I said that gold was my highest conviction trade for this year, like uranium was last year, had to do with what we’re talking about now, the recession, the labor market breaking down, as we’re seeing now. Gold pulled a hockey stick before that happened. So I had a lot of people telling me earlier this year, Oh, you’re such a genius. You know, gold’s up already. Well, yeah, but not for the reasons that I said. And the reason why I’m bringing this up is because another pushback might be, you haven’t asked this, but a pushback might be, well, gee, Lobo gold’s up already. You know, has it priced in what you’re talking about? And so my answer is, no. The points are, recessions, going into recession in particular tends to be bullish for gold. Rate cuts. You know, gold famously doesn’t pay interest. That’s a bullish factor for gold inflation. If you directly correlate inflation and gold C by CPI, it actually has a very low correlation, in my view, though, that this is because gold leads inflation. So gold spikes in 2020 the inflation doesn’t kick in until 2022 and it looks like there’s no correlation, but gold was telling you what’s coming if the money helicopters fly again, as I expect them to use here, I think the smart money knows this, and I think you’ll see a lot more deep pockets piling into gold, even if inflation CPI, at least, continues tracking towards the Fed’s arbitrary 2% Target. And then the money printing, you know, filters through the economy. We start seeing real assets go up and inflation goes back up again. So you know that that’s the leading factor there. I’m sort of losing my thread of thought here for where we’re going with this question. But the argument or that. The key point with this is that all the reasons that I was bullish for gold, which are now we see playing out. I think the evidence is clear in front of us, that the reasons why I said 2024 was going to be a great year for gold, we’re seeing that play out now, as you and I speak, but we’re seeing it play out from an area you know, from gold already at 2500 whereas when I made that call, we were still fooling around with 1900 2000 so I was thinking, hopefully, maybe gold will end up 2500 by the end of the year. We’re already there, and now the things that I think are bullish for gold are starting to happen. So, you know, I don’t want to make crazy numbers out there, but just, just think about it. You know, a modest, let’s say 20% gain from where we are now. And, you know, in a major bull market, gold can easily go up 50% if we just go up 20% from where we are now, that puts us close to $3,000 gold. It’s not a target. I’m not promising it. I’m just saying, you know, that that would not be a huge or outsized increase from where we are now, given the bullish factors that I see ahead of us, and the best news I can say about this is really the extraordinary opportunity that we have is that the investors have been so bearish, even gold bugs, you know, every time gold goes up, they say, oh, it’s going to get crashed. You know, the the smackdown team’s going to come knock it back, or the manipulators, or whatever it is, just, you know, it’s almost like, you know, a battered spouse. It just doesn’t want to admit that, you know, there’s any change there the gold bugs, if the gold bugs themselves are bearish, every time gold goes up or fearful every time gold goes up, what about the mainstream? They’re not gold bugs. They don’t believe it’s money. So that there’s been this really enduring negativity about gold stocks, even though we’ve had nominal all time high, after all time high in the gold dollar exchange rate. That’s creating a terrific opportunity. You’d think, with gold at, and I keep saying nominal all time highs, because in a real term, you know, we’re a long way from an all time high in gold. But you’d think those headlines of all time highs and gold would have gold stocks soaring to the moon, and they’re not now either. You know, this time is different, and gold can go to the moon and the stocks do nothing, which I don’t, I just, I don’t see that happening, or there’s an opportunity there. That’s what I’m trying to say. You know, the good news is, if you feel like I missed it, gold’s already at all time highs. Well, no, if your purpose is to speculate, then there are still great gold stocks on sale. I think that’s fantastic.
James Connor 29:43
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Speaker 1 31:44
Well, there’s several things that we can say there quickly it’s actually good for companies to model lower gold, because if they have a very aggressive price in there, I really like to call it the gold dollar exchange rate, because In my mind, gold is money making it a Forex question. It’s not like pork bellies or coffee or something that you have the price of. But as far as the actual business of making money mining gold goes, I like that a company like Barrick has, you know, what is it? They built their minds on $1,300 gold, and I’m not sure what their current model is, but I would bet you gold that it’s well under 2000 it’s nowhere near where we’re at now. And that’s that’s good. You should plan for the worst and hope for the best as a minor because usually you get you don’t get the best. As far as gold underperforming, and why isn’t it higher? Well, inflation is coming down. You know, the mainstream doesn’t believe gold is money for there are many reasons why, particularly from sort of the not gold bug perspective, why gold should be actually lower. I think the fact that gold is any, you know, above 2000 let alone around 2500 is a real testament to a sort of Emperor. Has no closed moment like the mainstream perspective, gold is just a pet rock, right? It has no, no real intrinsic value. There’s no reason for it to be holding on at all. So I think that we’re actually, I see gold as outperforming the metal itself. I see nominal, all time highs in gold right now as a real outperformance given the headwinds that gold has faced. I mean, we have a pivot now with the Fed, but until then, you know, we had higher for longer that was in the mainstream view, bad for gold, and yet gold stubbornly held on and went up anyway, I see that as strong evidence of an emperor has no clothes moment. So I’m pushing back on the the idea that gold is underperformed, you know, given the mainstream perspective, and remember the people who who trade these comics contracts and things that we quote for the price of gold, it’s not you and me going down to the coin shop. Those people who do that, they don’t think that gold is money. They just think it’s another commodity like coffee or copper or whatever. So it’s really impressive to see it do as well as it has. Now to the stocks, you know, I have to say a lot of the companies really mismanaged the last big search we had in gold. My friend Rick Rule, I’m sure you’ve interviewed him before on wealthion numerous times. He likes to point out that in the last big cycle from 2001 2011 you had gold go up sevenfold, and you had the, you know, the major producers as a group, deliver negatively in terms of, you know, actual free cash flow. You know, you never mind massaging the bottom line, but terms of cash flow, you know, where the rubber really hits the road to have your your the commodity your business is based on, go up sevenfold while your cash flow goes negative. And I did the math. On this. I have a chart somewhere on my website on this. You know, they really did manage to lose more money at the same time. So if you’re, again, not you and me, but you’re a warren buffett type or a main street type, and you look at you say, What a crappy business. You know, why would I buy those stocks? That’s the recency bias right now. So gold is up, but the last time gold is up, the gold miners bungled it. Why would you buy those stocks? To me, this isn’t surprising from a mainstream perspective, but here we go. Here’s an interesting thing. You know, I talked about my hard landing call and how that’s starting to happen now, another thing that I wrote about before I wrote an article, it’s available for free on the website called our gold stocks, a broken asset. And in there I said, this was earlier this year. I said, Now the thing to watch for is earnings this year. You know, we have higher metals prices, gold dollar exchange rates up if they bungle it again. You know, they deserve to be in the doghouse, but if they deliver the improved margins, I think they can. That’s the sort of thing that starts getting people to pay attention. And that’s happening. We saw in q1 all three of the major the three largest US gold producers, all beat they didn’t necessarily do spectacularly well. Barrick and Newmont, both the top two have idiosyncratic issues. Is what the talking heads on financial media like to say. So neither of those is my favorite gold company, but they still beat guidance. And in q2 we’re starting to see, you know, margins doing again, margins going up again, you know. So this time, I’m not promising that they’ll all do great. And, you know, I’m not saying all miners are angels, but it seems like as a class, as a group, the gold miners are doing a better job of not fumbling the football this time, of actually doing what they’re supposed to do as minors, which is not to defend you know, you know, the nobility of gold or silver is real Money. Their job is to make money, and they’re doing it. And I think that matters. I think that changes the perception of the industry. And one more thing I know, I’ve gone on a lot on time on this answer, but if I’m right about the recession, the real world was going to hurt earnings, and people on Wall Street are going to be looking around, okay, what really works? And maybe they keep piling into the Nvidias of the world because they love the future of AI or whatever. But when it comes to like, who’s actually delivering the goods? In a world where lot of mainstream companies are hurting, if the gold miners are actually delivering they become a bright spot, and that could actually attract a lot of capital. That is acid agnostic, like they’re not buying because they believe it gold is money or, you know, or they’re just buying because it’s a business that’s making money. I can see a situation by the end of this year, or even Warren Buffett types who dismissed gold as a pet rock, could look at the actual business, which is making money. It’s got increasing margins, has a great moat. Warren likes a moat, right? It takes years to permit these mines. You can’t even if you discover one, you know, it takes a long time to prove it up, deliver feasibility study, finance the project, build it, permit it. All that stuff takes so long. So the people that have the goods in hand now, they have a natural moat that defends them in a business that as long as the management doesn’t screw up, which is not a guarantee, but so far so good, you know, has increasing margins. I actually think that we could see. Well, I don’t want to get too crazy with my predictions and but if gold goes where I think it’s going, the gold stocks don’t get left behind. If in that world, money is looking for bright spots for businesses that are actually working in a tricky environment, I think that could actually provide an extra tailwind for the gold miners out there. So
James Connor 39:01
if you go back to the last cycle, and you look at the NASDAQ, okay, it topped out in March of 2000 took about 10 years before bottomed and started moving up again. Gold at the same time, bottomed in 2000 and then it started moving up for about 10 years. Do you think we’re in that same sort of cycle. In other words, we’re seeing in gold right now. It’s just beginning.
Speaker 1 39:27
It’s it’s possible to look at that huge thing as a Giant Cup and handle. And I’m not a technical guy, but some of my technical friends look at, if you look at this big sweep of the gold dollar exchange rate, as you’re talking about, it looks like a giant cup and handle. And if, as I’m not a TA, but I, as I understand if the handle breaks out to the upside, that that’s extremely bullish, that’s what just happened. If you look at that long, long time chart, now you know the reality is things are different that a lot of people expected the the. Cycle you’re talking about in the early aughts to look like the 1970s but from the beginning in the 70s, the gold dollar exchange rate was pegged. Right? The dollar was defined. It wasn’t a price. The dollar was defined as a certain amount of gold. There was no gold price in dollars. You know? It was just, it was set. That’s what that was what the dollar was until Nixon slammed the gold window in 1971 so, you know, coiled spring. What happened afterwards? That was a unique moment in history. And you know, things aren’t going to happen the same. You know, this time, things are things are different. You know, what happened in that one that you’re talking about, gold actually bottomed in late 2001 but the nuclear winter that had preceded it is nothing like our current context. I mean, gold was so hated that now, you know, I know that there are, there are Bitcoin Maxis that want to hate on gold and and the other way around. But actually, I talk to young people, and they’re not religious about this. They’re interested in opportunities to make money, and having been successful speculating on cryptos, many of them are very interested in metals and mining. They get it, you know, they see the potential hockey sticks and very things. The Crypto crowd has educated young people in ways that gold bugs never could do young people go around complaining about fiat currency. Nobody did that before the crypto guys came along and educated them. So honestly, I think gold bugs have an intellectual debt of gratitude here to the crypto crowd for educating two entire younger generations about the dangers of fiat currency. And when I interact with young people, I hear it all the time. It’s not, oh, gold is evil, you Boomer. Go away. Don’t bother me. It’s Oh, there’s an opportunity to make money here. Tell me more. I forgot where I got off the side point here. I think I was saying that. You know, history may rhyme, but never repeats. And I see that we’re in a very different circumstance now than where we were. So I I’m not going by the charts. I’m just looking at the trends right now. Almost everything I see is actually very bullish for gold, and it makes me, honestly, it makes me nervous to say that we’re at a nominal all time high. You know, the idea is to buy a low, sell high. So if you’re at a nominal, all time high, and I’m saying, bye, you know, I have to ask myself some hard questions, you know, am I, am I going to top tick this thing? Am I going to guide people off the cliff? Right? I don’t want to do that. I don’t want to do it with my own money. So I’m, I’m looking at this very hard every day. And for what it’s worth, all these things that you and I have been talking about, you know, I talk with my my elders, my mentors, the Doug Caseys and the Rick rules of the world. I talk with the young geniuses that I have working with me. I compare notes with my fellow Puerto Ricans, right? You know, Adrian day and whatnot. And I really think that it, you know, we’re going in this direction that I’ve been calling all year. I think the data backs me up now. And can I be wrong, sure, but I am putting my own money into this, and if I’m wrong, I will pay the price with my own hard earned cash. Well, you’re
James Connor 43:12
right about one thing, and that is, it’s all about making money regardless of who you are. And so if gold’s going to go it’s just a matter of time before these Bitcoiners jump on board. So I want to move on now and discuss nuclear energy and uranium. And you’re very bullish on the long term prospects of uranium, but it’s now 15% on the year. And this is quite surprising to me, especially given the recent news out of kazatoprom, which is the world’s largest uranium producer. And before you provide us with your thesis, why don’t you first tell us about the news out of kazatomprom and what it means? Sure,
Speaker 1 43:48
it’s kind of interesting that the market, at least this time, seems to have got it more right than last time. We’ve had two bits of news out of kazatomprom Recently, and it’s important to understand that they’re not just the world’s largest producer, they’re also the world’s lowest cost producer. So if your biggest source of supply is the one really setting the prices or able to undercut all the competition, that it’s sort of like, you know, as Nvidia is to AI, you can’t ignore Nvidia, and whatever they do has a huge impact on that space. It’s like that was kazatomprom and uranium. So it’s really significant. Now they have so large a part in the market that and prices were lower in recent years. It’s sort of like OPEC. They voluntarily cut back their production by about 20% below the permitted level, and that worked. It helped support prices. Other things happened. Sprott came along, hoovered up the cheap pounds. Japan started restarting reactors. The whole world seems to have gotten the memo that windmills and solar panels are not going to be enough. So there’s a nuclear renaissance happening at the same time. But kazatompro. Coms voluntary restraint was a big part of bringing the market back into something, you know, resembling balance. So this was years ago, and they had announced several years ago that they were okay. Uranium prices have started coming back up again. We’re going to start ramping our production back up to our permitted level, subsoil use agreement level. And this year, 2024 they were supposed to bring it back up 10% and then next year, 2025 of the other 10% to go back to 100% of the agreed upon levels. But they ran into trouble along the way. The war happened. The other war in the world, with Ukraine and Russia had trouble getting enough sulfuric acid and transportation issues, construction delays and things. So they actually produce less, not more, uranium in 2023 than in 2022 which was a surprise. They yanked their guidance for 2024 and said, Well, you know, maybe we won’t produce 10% more. Now, here’s to your question recently. A few weeks ago, they announced, well, we’re actually doing better than we thought, and we now think we’re going to increase our production by 5% in 2024 and uranium stocks tanked around the world. Everybody panic, oh no, because that impromptu producing more uranium, which to my setup here, right? If there’s the world’s largest and lowest cost producer that 5% increase. Boy, that looks like a huge increase. Of course, it will affect prices, which are set at the margins, but they were going to increase 10% so that 5% increase is actually a 50% decrease from what they were going to do and but somehow markets got it wrong or panicked, or whatever, and people sold off on that day. They put out that news, there were double digit drops in numerous uranium stocks. Now, just a few days ago, as you and I recorded this, we had the new announcement, where they announced their results and their forward guidance for 2025 they’re now saying that they are going to continue increasing. They expect to be plus 12% in 2025 but remember, they were supposed that’s up from minus 20, right? So they’re still guiding for less of an increase than they had originally planned. Not only that, they put in the news that they are petitioning to the government to move the goalposts those subsoil use agreements. I talked about the permitted levels. They’re basically saying that their problem supplying enough sulfuric acid, which they use to mine the uranium out of the ground, and their construction delays and things are so protracted that they want to change the amount they’re permitted to produce so they don’t miss it by so much every year they’re moving the goalposts. So this time, the market seemed to get the momentum, and a lot of uranium stocks jumped, you know, you know, high single digits, some of them double digits, on that news. So the answer to the question is yes, because that um, problem is increasing its production, but that increase is less than they had originally intended, and it’s so much less that they’re actually changing their goals, because longer term, they’re still they’re they’re saying that they’re struggling to reach what they otherwise could have done, and that, I think, is forcing all the industry insiders to go back and rejigger their models. They were pounds in their models coming to the market that they now know are not coming. And so I see this as extremely bullish. The day of that news, we got a pop as you and I are speaking, it’s giving it back a little bit. You know, markets are jittery and so on. And at the end of the day, uranium stocks are still stock. So if you have the stock markets wobbling, that can affect uranium stocks as well. Bottom line is I see a tremendous opportunity here as well. Now I’ve just said that about gold stocks, so don’t get me wrong, not everything is great. I’m not one of these people that everything is always fantastic. It’s really pretty much gold and silver and uranium, and that’s it. Almost everything else, copper, oil, other things. Because of my recessionary Outlook. I’m not interested in buying any of those until I’m sure the recession has done its worst. But uranium is different. At least I know that uranium is different. Maybe the people selling uranium stocks today don’t know it. But you know, oil prices are more volatile because the family can tighten their belts, you know, decide to go see grandma less often, use less gas and so on. But uranium, nuclear power, that’s what you use to keep hospitals running and airports and, you know, important things like that. It’s 24/7 365, base load energy, the stuff you always want on so it is much more recession resistant. And I’ve looked at this in the last four recessions, uranium prices were mildly sideways to up, and in the one that it was down, which was the great financial crisis, uranium had actually done a huge spike in 2007 and was, I think, making a rational correction before 2008 hit. So it was not. The 2008 recession that made uranium pull back. And in fact, it was recovering quite quickly until Fukushima hit so I think, I think that one case of the of the one out of four in which uranium went down in a recession, it wasn’t because of the recession. So that makes me willing to buy into Uranium stocks now, which are still on sale. That’s the terrific opportunity I’m talking about. Stocks are on sale. Uranium is still at a price where, okay, it’s down 15% whatever. It’s at a price level where the better companies make tons of money, like this. Is this. Don’t be clear about this. Don’t get this wrong. The current corrected uranium price is not bad for the miners, unless you have, you know, a lowest decile project, the current price levels are great for the actual business of making money, uranium mining. So the stocks are down. The price is good. The supply and demand scenario couldn’t be better. And and it’s only skewing towards the upside that the Chinese just announced 21 new reactors this last week, and they’re already building scores of them. So to me, the writing on the wall here is great. And for anybody that missed uranium doubling last year, you’re wondering, well, gee, is it too late? You know, I think this correction that we’re in now is a terrific buying opportunity,
James Connor 51:21
but I don’t fully understand why we’re seeing these lower prices. Like you already went through the what’s happening with kazatoprom in great detail. So we have constraints on the production side. Then when you look at the demand side, you mentioned China, and what’s happening there, they’re building a total of 150 reactors between now and 2035 that’s going to result in in demand for uranium by, like, millions of tons. And where they’re going to get that from, I don’t know, because they produce so little of it themselves. But when you look at all the tailwinds behind uranium, and then, of course, all these governments pushing this whole green agenda, you know, I wonder why uranium isn’t through firmly, through 100 bucks a pound.
Speaker 1 52:02
Well, in the first place, it was through 100 bucks a pound. You know, it did a hockey stick. And you know, markets are, markets are not efficient. No offense to the professor there, but I really don’t subscribe to the efficient market hypothesis. They get overbought and oversold all the time. That’s why we even have those terms, and that’s actually the main way a savvy speculator makes his or her money. You look at something oversold, that’s still necessary, and you buy, because low prices cure low prices. You look at something that’s overbought, you can go short because, you know, overpriced is overpriced, and high prices cure high prices. So A, it’s normal, you know, had just pulled a phenomenal hockey stick. So a correction back to a price level that is actually, you know, very good for the industry, is not a bad thing. B, I think that the lot of the things that I talked about, just go over the heads of many of the investors. Again, stocks are stocks. So if you have concerns about the economy, and most people jump, you know, lump the so called energy sector. When people talk about the energy sector, there’s a lot of different things that go in there that are very, you know, and it’s a very fractured market. I actually think that Bloomberg has these different categories that they break the S, p5, 100 into, and so they actually have a specific definition. When they say the energy sector, they mean a group of stocks grouped together on a Bloomberg terminal. And that expression, the energy sector, has spread from there, and people use it all the time and like, like, it means something outside in the bigger world, but it really doesn’t. It’s just a Bloomberg artifact, but you can use that artifact, and it correlates negatively with the economy, right? The energy sector goes down if you’re bearish on the economy. So if you see what I’m seeing, and you say, Oh, well, you know uranium that powers nuclear energy, the energy sector is, the outlook is bearish if we’re, if we’re looking at recession. So they just don’t know. They haven’t looked at the charts that I have. You know, ignorance, unfortunately, is not that uncommon. We like to say that Einstein, you know, after hydrogen, stupidity, is the most common element in the universe. I’m not saying I’m the smartest person in the world. I’m just saying I’ve looked at data that I think a lot of people haven’t. And if you look at the data, it just, it just seems obvious. Sometimes it you’d think all these big firms on Wall Street buildings full of millions and millions of dollars of computer and, you know, the Fed has hundreds of PhDs running around, you’d think all these people would would see these things that are obvious, but they but they work within constraints of models. So you, dear audience, if you have a contrarian mindset, you don’t have to be obstinately doing the opposite of whatever everybody else does. Sometimes the masses are right, but you have to be willing to think outside. The Boss think differently. And if you can do that, you can compete with Wall Street. Sorry that I got into a bit of a rah rah moment, but I think I answered the question as to, you know, you know, why is the price off? Well, sometimes markets are just wrong, and if I’m right, they’re wrong, that’s an opportunity.
James Connor 55:18
All very good points. So you threw out a target price for gold. You said 3000 that seems pretty low to me. What’s your target price for uranium?
Speaker 1 55:26
That’s not a target price. It’s not a promise. I just said that a 20% increase mathematically takes us within kissing distance of 3000 I think that triple digit uranium is going to be normal going forward, once this correction settles out. Maybe another part of the answer, though, is, if you, if you take a look As a newcomer to the uranium business, and you see the headlines, you see the stuff happening, you start digging in, and then you see, well, gee, because Adam promise we talked about, they’re ramping up production. The other big producers are available to the west chemical they’re bringing huge high grade mines back in online. You know, MacArthur River, cigar Lake, each of which just under 20 million pounds a year like so you see, you know, new the old supply coming back online. And you see the people with the better, lower cost projects building those mines. You know, low prices is the cure for low prices, and that’s happening there. There are half a dozen uranium mines under construction now, or refurbishments under under way now, new pounds coming to the market now. So if you’re a newcomer, you look at you say, Well, gee, this is fixing itself. You know, do do I want to bet on higher uranium prices when all these new supplies coming online? And my answer to that is yes, because it’s not enough. Like a lot of it isn’t really new supply. It’s old supply that was idled, and now it’s coming back and B it’s it’s easier said than done. Look at the problems, because Adam problem largest uranium mine in the world, and they’re struggling to ramp up, let alone these little juniors building these mines. You know, what problems are they going to run into building up? But that’s just, you know, the here and now. You know, we will see more supply now. I don’t think it’ll be enough. I don’t think all of it will come online as advertised. I think we’ll see fewer pounds come to market this year than people are expecting. But then what the next projects, you know, you got to permit them. You got to build them. Between what’s happening now and the next wave of supply, I think we’re looking at five years plus, there’s this huge gap of, you know, the next ones in line, in the pipeline, they’re, they’re not even started. You know, there are big, high grade deposits known in Canada. I’m not going to name any more names, because I don’t want to act like I’m giving out stock tips here. And by the way, none of the companies that I’ve mentioned Am I recommending. I’m just mentioning large players, because they define the space. But you look at what’s coming next, they’re not even permitted, right? They couldn’t have shovels hit dirt tomorrow if they had the money, right? They’re not permitted. So low prices cure low prices. But as soon as the current, you know, low low hanging fruit is picked, there is nothing, or almost nothing, for a long time. So yeah, I think we’re looking at triple digit prices. I don’t want to give a single target, but yeah, I think triple digit uranium prices are going to be with us for years ahead, and by the way, sorry, very long term, the demand just keeps soaring. But very long term uranium is actually not rare. So this is not a forever premise for me. I don’t, I don’t imagine being massively long uranium forever and ever and ever, but until that supply actually comes online and at scale to reach to meet the increasing demand. I think we’re going to see sustained high uranium prices. Well, that
James Connor 58:47
was a very interesting discussion. Lobo, and I want to thank you very much for spending time with us today. If our viewers would like to learn more about you and follow you online, where
Speaker 1 58:56
can they go? Sure. Well, independent speculator.com, and for the three people who didn’t stop listening when you said that, I’ll say, you know, I can’t promise to get everything right. I can’t promise you’ll agree with everything I say. I can promise, though, if you sign up for my free weekly newsletter called the speculators digest, that I will not spam you with a flood of daily advertisements. I hate that kind of hyped up marketing. So it’s free. You can see how I think, see if I get my calls right or wrong, and then decide whether or not you want to hire me to be your your due diligence guy through my paid services.
James Connor 59:29
And I’m sorry, what’s your Twitter handle?
Unknown Speaker 59:32
It’s at due diligence guy.
James Connor 59:34
Very good once again. Thank you.
Unknown Speaker 59:37
Thank you. Well, I
James Connor 59:38
hope you enjoyed that discussion with Lobo Tigray on commodities in the economy. As Lobo mentioned, he’s very bullish on the price of gold. And if you would like to learn more about gold and how it can benefit your portfolio during these uncertain times, visit our sister company, hardassetsalliance.com. Hard assets Alliance is a trusted platform that’s being used by over 100,000 And institutional and retail investors to buy and sell gold bullion and gold coins. Once again, that’s hard assets. Alliance.com don’t forget to subscribe to our channel and also hit that notification button to be kept up to date on upcoming events. And if you like this content, check out this next video. You
