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Veteran investor Jonathan Wellum, CEO of Rocklinc Investment Partners, reveals urgent insights on looming financial challenges—from record-high stock valuations and inflation to escalating debt—that could impact your portfolio. In this eye-opening interview with James Connor, Jonathan explains why he disagrees with Jay Powell’s optimistic economic outlook, critiques Canada’s economic missteps, and explores how Warren Buffett’s cash strategy signals the need for caution. Learn why cash reserves, conservative investments, and safe-haven sectors like precious metals are essential for navigating economic uncertainty in the year ahead.

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Jonathan Wellum 0:00

This isn’t a time to be leveraged up to the hilt and trying to make as much money as possible. In our view, I’d say, be very, very cautious. I don’t really share Jay Powell’s enthusiasm for the overall economy. Inflation is something that, once it gets going, is sticky and it’s not easy to eliminate.

James Connor 0:18

Hi and welcome to wealthion. I’m James Connor. Well, the US election is finally over and a new administration is taking over. So what does this mean for your investment portfolio? If anything, to help answer this question, have a discussion with a wealthion endorsed financial advisor. You can find out more information@wealthion.com slash free. Once again, That’s wealthion.com/free now onto the show. Jonathan. Thank you very much for joining us today. How are things in Toronto?

Jonathan Wellum 0:51

Yeah, things are, things are going well, and we’re just getting all the leaves off the tree. It’s been a warmer fall, as you know, and so we’ve been enjoying that, but we’re getting ready for winter, so things that get a little bit cooler soon.

James Connor 1:03

So even though you’re based in Toronto, much of your portfolio is comprised of US equity. So and so much has happened in the US here. Just in the last couple of weeks, we had a US election with a resounding victory for the Republicans, not only in the White House, but also the Senate and the House. We’ve had another cut by the Fed 25 basis points. We’re pretty well through q3 reporting season, and for the most part, the numbers weren’t too bad. But what’s your take on the US economy? Do you have any concerns?

Jonathan Wellum 1:31

Well, the typical concerns you’re going to have is that the, you know, the overall indebtedness of the economy, so the deficits, the deficit 6% plus of GDP in a time where you actually have economic growth. So this is a big concern. This has been a concern, of course, for quite some time, and so that would be the major concern, just the overall deficit that they’re running and the accumulated debt, you know, 35 $36 trillion is a huge number. Now I’m very much thrilled that Donald Trump was elected vis a vis another four years of the democratic regime, which I don’t think is would have been good for the capital markets. They were talking some of the policies that Kamala Harris was talking about increasing taxation, in fact, even talking about taxing unrealized capital gains, that would have been just a nightmare if something like that would ever been put in place. So I’m certainly happy that they’re going to have a government that’s more geared to growth, less regulation, lower energy costs, because they’re going to sort of open up more more drilling and so forth. So I think those are going to be positives. And clearly the market has responded post election with a little bit more enthusiasm in terms of much more growth oriented agenda back in the United States, having said that. I mean, it’s going to be, you know, Trump’s going to have to be careful. I mean, they have a large budget deficit. He does want to continue to cut taxes that could cause, you know, getting more problems from a fiscal perspective. So we’ll have to see how, how things emerge. But there’s some good people there. There’s some good ideas, and I think that’s going to put a little bit more pressure on other countries, like Canada. Would be a little harder for Trudeau to continue sapping us with more taxes, when our when our neighbors sell the border, getting tax relief, yes,

James Connor 3:17

raising taxes is never a good idea for a politician’s career

Jonathan Wellum 3:21

well, and I, of course, as we’ve talked about before on previous shows, I mean, the government already controls almost 50% of the GDP in terms of the total level of spending on all three levels of government. That’s just excessive. We cannot continue to grow government. And so there must, yeah, we’re gonna have to take a hacksaw to the government in this country, and also United States, it’s, it’s interesting that Elon Musk is talking about taking $2 trillion out of about a $6 trillion budget. Now I think that might be a little bit aggressive, but it would be a wonderful thing if we had some top people actually look at the bureaucracy and the bloated nature of government and start to start to shrink it once and for all, but we’ll see if that happens. I think that’s probably being a little optimistic. But if that were to happen, that would be awesome. That would be absolutely awesome.

James Connor 4:08

Now, you mentioned that the deficit is running at 6% of GDP. Can you put that into perspective? Is that a record number, or how does it compare to the past? Yeah, I

Jonathan Wellum 4:19

mean, right now it’s running vis a vis the past, probably at the high end of anything that we’ve seen in the past, particularly when the economy is still expanding and growing. Okay, so typically, when the economy is growing expanding, you really don’t want it growing anymore than you don’t want a deficit larger than the actual economic growth, so that your debt to GDP ratios are not expanding. But when you have a 6% debt to GDP deficit each year and your economy is growing at, say, two to 3% that means your overall debt to GDP is growing much more quickly, and this is just not sustainable. So yeah, occasionally you might get up to 6% in a risk. Session, financial crisis, things like that. But we’ve just become used to running these massive deficits all the time now, and that just cannot continue now that you know the debt levels so high, yeah, very, just very, very concerning to say the least.

James Connor 5:15

So the other big news recently was the Fed, and they cut by another 25 basis points after cutting 50 in September, and Jay Powell said the economy is in great shape, inflation pressures have eased. But I have to be honest, I take issue with anybody who says inflation is under control, because I don’t think it is. And we recently saw some economic data out of the US unit labor costs increased by 1.9% versus expectations of 1.1% labor productivity was 2.2% versus expectations of 2.6% so costs are going up, labor productivity is going down. It’s the same thing that’s happening here in Canada, and it’s been going on for quite some time. And then when you look at the number of unions that have negotiated some very excessive pay raises. The longshoremen on the West Coast, they got a 32% pay increase. East Coast longshoremen got 60% but what are your thoughts on what Jay Powell said about inflation and any other comments he said about the economy? Yeah. I

Jonathan Wellum 6:18

mean, I’m skeptical. I mean, I hope he’s I hope he’s accurate, but we certainly are not betting on it or investing based upon what Jay Powell is saying. I mean, we’re being very, very careful. I think you that what you’ve pointed out, you’ve got these labor costs going up, unit costs. What we need to do, and hopefully, again, a new administration in the United States will help this. We must free up the private sector to be able to make more things, produce more things, to be more efficient. Again, productivity has to continue to increase in the United States right now under the again, Biden Harris regime, I mean, private sector jobs are practically non existent. I mean, they’re very, very weak. It’s been the government jobs that have been growing. Same thing here in Canada. And so I’d argue that the economy is weaker than what Jay Powell is suggesting, certainly much weaker in Canada. But even in the United States, you’ve got housing prices that have come down. You’ve got weakness in the job market. People’s discretionary income is low. They’ve been borrowing more money on the credit cards and so forth. So these are all indications of an economy that’s under some stress. And of course, that’s why I think Powell dropped the rates another 25 basis points. But I think he’s, he’s maybe not being 100% honest in terms of some of the challenges underneath the surface. But Well, I mean, some of this might be helped by a better government that starts to cut regulations and get costs down, but that, again, will take a number now, that’s obviously going to take a number of months. That’s not going to happen over going to happen overnight. And so no, I don’t really share Jay Powell’s enthusiasm for the for the for the overall economy

James Connor 7:49

and some of the policies that the Trump administration wants to put forth, such as deregulation and also tariffs. This can be these policies can become inflationary. Do you think as we enter 2025 that there’s a threat that inflation heats up again, and maybe the Fed is not able to cut written interest rates, they’re going to have to pause or maybe even increased interest rates later in 2025

Jonathan Wellum 8:16

Yeah. I mean, we’ll have to see. I think that is a risk. There’s no question that is risk. I’m not sure that that will actually take place. As much as people talk about it, they talk about that, for example, the Trump tariffs. I mean, he uses that as a weapon, as a massive stick. I mean, what he’s trying to do is get the ability for Americans to be able to sell into other countries around the world much easier. And so he’s going to then make it harder to go into your country. So he’s using that as a big stick. I mean, when he was in his first term in office, four years, yeah, he put the tariffs up, but those were selected. They didn’t really cause inflation issues. And so I think you have to, you have to discern between Donald Trump sort of rhetoric and the bravado that he uses, and then how he would actually implement that. I mean, he’s out there to scare people other countries into opening up their markets, so the US can also do, you know, more business. So I think a lot of what Trump is going to do ultimately should lead to lower inflation, not increased inflation. I don’t buy the fact that. I mean, clearly, if he was just going to double and triple tariffs or put them up 100% or 200% like he talks about, well of course that would put prices up. I just don’t think that’s going to happen. He’s using that using that as negotiation tactics. He loves to do that, and I think he’s very effective at it. So I would love to have him running our economy right now in Canada, and change things up here and get things moving. But we’ll see. We’ve got, hopefully, Pierre poilievre in the wings.

Andrew Brill 9:38

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James Connor 10:19

So Stanley Druckenmiller recently did an interview. If you haven’t seen it, I would suggest everybody check it out. It was a great interview, lots of interesting insights. Anyhow, he thinks one of the biggest threats to 2000 or one of the biggest threats we’ll see in 2025 is re acceleration of inflation. And he actually said this time that we’re living through right now. He compared it to the early 1970s where inflation took off. I think it got up to 8% then they were able to pull it back. It got down to 3% and then it just reignited again, and it went into double digits. And he said, there’s a threat of that happening in 2025 any comments on that? Did you see that interview by chance? I

Jonathan Wellum 11:02

didn’t see that interview. But Stan Druckenmiller, as you’ve pointed out, is exceptional. He’s a great thinker, and he’s certainly worth listening to, so I’ll absolutely listen to that. Yeah. I mean, look, it’s all see the inflation or whether it’s high or lower, it’s going to be a lot of policy it’s going to be policy driven, and that’s why it’s difficult. So I think if you’re taking standard Drucker Miller’s position, if you’ve got governments continue doing what they’re doing, expanding and making more difficult and pushing green agendas and making energy more expensive and spending more money and so forth, then I think that’s all inflationary and but I guess the the issue will be, is that, what is that? What’s going to actually happen in 2025 we’ll see our view when it comes to again, when it comes back to investing, is trying to find businesses that can push on their costs and are a little bit more of an inflation hedge and can protect our investors as best as possible. Because I’m not sure exactly how it’s all going to pan out. We’ll have to see. I mean, when you look around the world, you look at Europe, it’s really low growth, and you’ve got incredible, incredibly mismanaged governments over there, Germany, France. Now you’ve got Britain, you’ve got a socialist government there. It’s a nightmare. If you look at Japan again, you’ve got very little growth out of Japan. China, as you know, is just starting to put more stimulus in there, and they’re trying to protect themselves, again, from maybe a more aggressive US policy. And so a lot of when you look around the world, there’s not a lot of growth and a lot of activity going on. So again, we’re just trying to be cautious, careful, making sure you know that we our investments, will respond well and and be able to continue growing and adding value to our shareholders, our investors well.

James Connor 12:37

I think his concern is especially when you get these unions that are negotiating these massive pay increases, all these higher prices are going to trickle down to the consumer. Okay, me and you, everything we buy, the price is going to go up. So even though the Fed says we got inflation under control, we got it down to 3% or whatever their number is, all these unions are negotiating these much higher prices, and that’s going to trickle down. We’re not going to see that, probably until sometime in 2025

Jonathan Wellum 13:08

yeah, there’s no question. We’ll have to keep our eyes on that. I don’t deny that at all, but we’ll have to see how that that filters through. And businesses are pretty productive, and they come up with other ways to, you know, to help cut costs and so forth. So we’ll have to see how that fact and how that pans out from our perspective, when we when we look at our fixed income investments, for example, we’re staying, we’re still staying short or, you know, maybe out two, three years. That’s it. We’re very careful in case, again, inflation does pick up. We’re not, I’m not going to take the risk of bond yields backing up further. I’m not making a big bet there, because, again, as I said before, it’s difficult to know exactly how it’s going to pan out. You can, you can listen to the smart people, brilliant people, on both ends of it, talking about deflation and inflation. And, you know, it’s a tug of war. And from an investment perspective, when we’re looking after people’s money, we try to find a good balance in between, then businesses that won’t be too disturbed by either, at least, to be able to protect us as much as possible, because it is a bit of a wild card there, again, based upon policies and how things emerge. Definitely, though, inflation is something that, once it gets going, is sticky and it’s not easy to eliminate. And so I think druckenmiller’s points are well taken. I was in high school back in the 70s. You know, the late 70s, that’s what I was in high school. And I remember of the inflation and the auto companies every six months putting the prices up, and it got indebted in all the contracts, all the all the labor negotiations at the time, and it was brutal to get rid of and to stop it was very difficult once it starts growing. So I think we do have to be attuned to that. But if we can get energy costs down, and we can get people off this, you know, this forced green agenda, not that we won’t, don’t want to be renewable in the green that’s fine, but on a on a reasonable time frame that technology and industry can Can, can absorb properly, like we can maybe get some of these costs down that we. Been foisting upon ourselves because of, you know, sort of more left wing woke agendas. Yes,

James Connor 15:06

it would be nice to see the price of oil crack and head down to 60 bucks or lower. And it’s been hanging in a very tight range all year, somewhere between 70 to 80 bucks a barrel. Right now it’s around $70 a barrel. So any thoughts on energy and oil and where you think it might be going in the next year? Yeah,

Jonathan Wellum 15:24

I mean, a couple. I mean, certainly the oil and gas sector is critically important, absolutely, unbelievably important, and it will be for the next 100 years. I mean, this idea that we’re going to get off fossil fuels is crazy. Having said that, I think that Trump coming in will put the pressure on oil. So I think the prices could drop, and that’s because he’s going to, you know, open up as much as possible. And I think the Saudis and other people around the world are going to have to compete with that, and they don’t want the Americans to take over the market as fast as they did last time. It wasn’t, it’s only four or five years ago, and the Americans were the, basically the swing producer. So it was amazing how they how they develop that injury. So I would be, I would be one that I’d be careful we do have some oil exposure. We’ve got some great oil companies here in Canada. We’re trying to buy ones that, you know, are very profitable at $60 a barrel, but I could see the price of oil, yeah, definitely coming down a little bit. And that would also give us a little bit of coverage in terms of inflation pressures, and certainly help out in terms of businesses, industries that can be very good for the mining industries, whereas, you know, the water costs and energy costs are, you know, 30% more of the cost structure and so that, I think it’s gonna be a net positive.

James Connor 16:34

So you touched on interest rates and bond yields earlier, and the 10 year has ripped from 360 up to 440 in a relatively short period of time. What are your thoughts on that? Why do you think we’ve seen the yield increase the way it has in the last couple of weeks? Well, I

Jonathan Wellum 16:51

think, well, there’s probably a couple of reasons, and one reason why we’d be careful about going out the yield curve, and that is just these massive deficits. And I mean, they’re huge all around the world. It’s not just the US. You’ve got a lot of deficits, and those have to ultimately, not only are paying for the deficits, but you also have a lot of debt that’s coming due. Because, you know, if you take the American situation, a lot of their debt is very short term, so you have trillions and trillions of dollars rolling over constantly. If the Fed’s not going to pick it up, it’s got to go into the market, and the market’s looking at this and saying, Hey, wait a second, we’re not going to absorb this unless we’re going to get paid more for it. So I think that’s the concern. And with Trump, certainly in the early days, it could lead to larger deficits depending on tax changes and so forth. I think there’s some concern that that could, you know, could cause, again, a blowing out of the yields. So I think that’s what’s getting embedded in the the yield curve. And, yeah, I mean, who’s going to buy all this stuff? Who’s Who’s going to absorb all this debt that we’ve created over the last 2030, years? It’s insane the level of debt that’s out there. So, and then if the Fed steps in and starts buying it, then we’re just printing money. We’re depreciating our currency, we’re back to inflation again. So, you know, we’re in this bit of a tug of war here, and it’s going to be quite interesting to see how it all emerges. It’s not going to be it’s not going to be easy. Let’s put it that way.

James Connor 18:09

So you’re a big follower of Warren Buffet and his investment style, and he’s been raising cash. We’ve discussed this before, but he sold another 100 million shares of Apple, which is a massive number, but he’s sitting on 320, $5 billion worth of cash. Now, what are your thoughts on this? And do you see this as a warning sign of what might be coming?

Jonathan Wellum 18:32

Yeah, as we’ve talked about over the last little while, I think anybody who doesn’t take Warren Buffett seriously and process what he’s doing, I think, is very foolish and short term. Mean, buffet is a financial genius. I mean, he’s proven that over 50 plus years. Well, actually 60 plus years, he’s 94 so, so I you know, there’s no question that he is raising cash in order to be more nimble, probably opportunistic, and to protect some of the value that he’s created in Berkshire Hathaway. And so he, you know, he’s, he’s talked about this concerns over valuations in the market, and as we’ve talked also, I mean, valuations, then you have to be careful, because you always, usually, you can always find a company that’s, that’s, you know, more attractive value than others. But overall, I mean, everybody knows that the S, P is trading, and, you know, 20 plus times earnings, and that is at the high range of multiples. We all know that the economy is getting a bit weaker and things like that. So there’s a lot of debt concerns over that. So it tells you that one should be careful. That’s why you know in our own portfolios we’re carrying now, we carry about 30% or so cash, or near cash, short term interest, bearings, investments, and the securities that we’re buying are pretty conservative, and being very careful in terms of that. So I think, yeah, Warren Buffett is a good, good signal of what’s what’s taking place in the marketplace. I think, you know, good, rational approach, be careful. This isn’t a time to be, you know, leveraged up to the hilt, and try. To make as much money as possible. In our view, I’d say, you know, be very, very cautious. There’s lots of changes that are going to be taking place over the next number of months and in year.

James Connor 20:07

And why don’t we do a deeper dive on you and your firm rock link, and maybe you can tell us a little bit more about your investment approach and your style and how many companies you currently own in a typical portfolio, sure.

Jonathan Wellum 20:21

I mean, we’re what you typically would call a value investor. I mean, I wouldn’t say it’s a deep, deep discount value investor. That’s otherwise you’d already have any investments defined. But when we talk about value investing, we’re trying to value companies based upon, you know, there we typically would look at free cash flow and do a present value analysis of the free cash flow, using discount rates and so forth. There are some businesses we’re going to look at it in asset value because of the nature of their business, net asset value. And so we, what we want to do is have 20 to 25 companies that are well researched, that cut across generally five to six industries. So we don’t want to be overly concentrated in just one industry. Have to be careful with that, and find a handful of companies that are run by really good people, smart people. The business model makes a lot of sense, and we can value them and say, You know what, these things are trading at either fantastic values or pretty decent values. And our investors can make some money over the long term. And so we keep it simple and really understand the companies well. And so it’s that’s why we sort of call it a Warren Buffet approach to investing. We’re not interested in the index. We don’t follow the index. I mean, other than, you know, it is a benchmark we want to be beating. And we’re not sort of just ETFs, where we’re just buying, you know, a whole bunch of companies all in one sector and stuff like that. To us, that’s one way of doing it, and that’s that’s no problem. I mean, there are investors that do it, you know, approach it that way. That’s fine. We love the game of investing and researching and talking to companies, getting to know the businesses, building models. We think that’s a fantastic way to do it, and that’s just what we like doing. We’re really research oriented. I got another several guys here that are CFAs and and that’s what they love, you know, doing spreadsheets and talking to all the companies. Right now, it’s been busy because we have the third quarter results coming in, so we’re on the we’re on the horn with all the companies, listening to the reports and getting the information as it comes in. And it’s been a pretty good quarter, although I think one observation I’d make is that organic growth is slowing down in some of the businesses that we own, and we look for companies with, you know, strong organic growth. That’s one of the things that obviously you want in a company, if you could find it. But it is definitely harder to come by in more and more of the businesses just because of the economy being a little bit slower and, yeah, just having to work a little harder, but not a lot of the growth we’ve seen over the last couple of quarters has been price increases. But again, that’s going back to your inflation issue, but that’s not really sustainable. The only way you’re going to grow your business is putting your prices

James Connor 22:54

up. Yeah, everywhere you go, it’s price gouging. Prices are never going to come down. They’re going to stay where they are. They’re going to go higher. And so you made mention of the fact that you own 20 to 25 names in a portfolio. How many of those names would be us versus Canadian?

Jonathan Wellum 23:09

I’d say about 3035. 40% might be Canadian based companies, and then the rest would be US based companies, and then we will have a few European based companies. But when I say it’s important to emphasize, so when I say Canadian based companies, those are generally, I mean what you talk about in Brookfield, for example, that’s a global business, so we really only own one or two companies that might be 100% Canadian and just operate in the Canadian marketplace. So we are trying to buy companies. One of the things when we’re looking at businesses, I think it’s an advantage if they if they operate in a number of jurisdictions, and they give you a bit more, you know, protection of currency, protection, diversity of economies, things like that. So that’s an advantage if you have a company that’s operating in a number of jurisdictions. And

James Connor 23:56

one of the reasons why Canadian investors have to go to the US is because of growth, and let’s just say technology, for example, that’s a massive growth engine in the US, and those stocks have done extremely well here in the last five or 10 years, and we don’t have that in Canada. But what advice would you give a Canadian investor on investing? Because we you know if you’re if you’re buying a Canadian ETF like on the TSX, you’re not doing that well, especially when you take into inflation. Yes,

Jonathan Wellum 24:27

I mean the problem with the TSX. And again, we were blessed with fantastic companies here in Canada. There’s no question about that, but it’s very it’s bit more commodity oriented, as you know. And you know, commodities aren’t necessarily naturally compounding. Companies over time, they’ll they’ll go up, but they’re cyclical, so they’ll do very well, and then they’ll back down again, and things like that. So the Canadian economy doesn’t have the breadth and diversity of the US economy into, you know, into consumer staples and technology companies, a broader races, broader. Base of financial, businesses, infrastructure. There’s a whole host of areas where we just more limited, but particularly we’re heavily weighted in banks and then energy, in some of the resource sectors. And so I think that I would not be buying the Canadian index at all. I mean, I just don’t think if you’re going to buy an index, probably the S and p5 100 or something like that, is a much broader index and gives you good global exposure. The TSX just wouldn’t give you that. I’d be much more selective in buying certain businesses or targeting certain industries, even if you weren’t buying individual companies. Then I would be more interested in picking a few ETFs and some sectors in Canada that might be more attractive, rather than buying the overall index in Canada, which, you know, it just isn’t the best index to be trying to create wealth off of.

James Connor 25:46

And where are you allocating capital? Now, I know every client is different, depending on age and risk tolerance, but maybe you can give us some sectors where you’re investing, or some specific names. Yeah,

Jonathan Wellum 25:56

okay, in terms of, we think some of the names, some of the as we’re looking at the results that are coming in, some of the infrastructure companies. So we’re just looking at the results from Brookfield infrastructure and very attractive company, five and a half percent dividend yield, trading at a nice multiple, a great growth opportunity. So they’ve got some really interesting opportunities for growth, including their parent company, also Brookfield Corporation, which we think is undervalued and trading at very attractive prices. We’ve We’ve also continue to invest in we just had the results yesterday for Burford capital, and they again, are litigation finance, and it’s doing very well. Things are going very well in that business. They’re really generating a lot of cash. We think that’s undervalued, and they also have an opportunity for some large litigation solutions that are coming through, especially in Argentina. They’ve got a big, big one outstanding there, but that’s a neat business that’ll continue to can prop, you know, move along, and it’s also trading at very attractive prices in the in the technology we’re always trying to look at the technology space, because that is a large, long term growth area. And so software companies in particular are great places to be. We’ve got positions in in Autodesk, which is just, you know, incredible business in terms of CAD and, you know, be used for engineers and anything, anyone that’s doing construction, also Roper technologies. And we have added, I mean, it’s just jumped more recently, but over the last number of months, is going back a little bit. We will pick away a little bit on Amazon. We think of all of the big guys. We still like Amazon. It doesn’t trade at a ridiculous multiple and they continue to grow their business and do amazing things with their AWS and also their cloud business and also their retail business. So, yeah, no, this is some areas, so infrastructure, financial technology, just, you know, hammering, hammering through name after name, a lot of our company. So it’s very name specific, business specific, in terms of it, where we invest and, yeah, just to continue to ferret out opportunities.

James Connor 28:02

And the last time we spoke, you had an allocation towards some gold names. Do you have an still have an allocation toward gold?

Jonathan Wellum 28:08

Absolutely? Yeah, absolutely. I mean, the precious metals we continue to own that, I would say that’s our second largest sector exposure. So it would be a significant exposure, which is unusual for a lot of money managers, but we, as we’ve talked about before, we typically the majority of that would be invested in royalty companies. So basically, the investment bankers to the mining businesses. We have a big position and Agnico Eagle, fortunately, it’s turned out, I mean, Sean boy’s been an amazing executive for many, many years, and that’s why we targeted igniko Eagle a number of years ago. And we’re so happy that we did, because the execution has been just amazing. Amazing execution. His margins are up. We were just looking at his, you know, their latest release from Agnico Eagle, and his costs are up like 1.7% Can you imagine, with the price of gold up 30% and so his margins are just, you know, they’re up. His net margin is up over 70% it’s just phenomenal in terms of the way they’re running that business. And so, yeah, Nick, we go and then we own the royalty company. So we do own, you know, we do have some Franco Nevada. And added to that, when they had, especially the proper the challenges with the copper mine back in the Cobra The Cobra mine in Panama. So Franklin, Nevada, grave wheat and precious metals is another beautiful one. Oscar, royalties also, yeah. So we think that’s a very important space, because when we talk, you know, as we talked about already in this conversation about inflation and deficits and government policies and all that’s going on in the world, we love to have some gold and a little bit of silver too, because it is a hedge, and especially if we can buy companies that can generate lots of cash and cash flow from gold and silver, in which the royalty companies do so, that’s an area that we have no interest in moving from for the foreseeable future, especially give. And what we’re seeing in the world. And if, you know, if Trump does get aggressive and run up more deficits and and you know, try to cut taxes and so forth, then that’s even more of a reason to own some more gold. And if there is inflation, absolutely so.

James Connor 30:13

And one of the other big benefits for Agnico is 75% of the production is in Canada, a country that respects the rule of law, unlike many other countries out there. And then, of course, a lot of their expenses are Canadian dollars, and that really helps. Also,

Jonathan Wellum 30:27

absolutely, absolutely no question, when we’re looking at the companies, the political exposure and, you know, geographic exposure and political risk is absolutely important, essential, especially if you’re just buying a miner that has, you know, a handful of mines. The one of the benefits of buying the royalty companies is that they, you know, many cases, you know, they might have two, 300 different royalties operating across many, many countries. So if there is a problem, even we saw a big one with Franco, which, you know, which is, you know, one of the best of all the royalty companies. Yeah, I took it down about 20, 25% which is not what you want, but then it’s generally working its way back up over time. Whereas if you had a mining company like first quantum, you know, they lose 60% of their value, and they’re basically cooked right for some time. And you can take a massive, massive hit, and might take years to come back, or it might never come back and so again, you when you’re buying miners, we’re finance guys. We’re not geologists. You have to really, really do your due diligence. And I think, from a from from our perspective, we could really never go up to learning curve enough to be out sticking our head in holes in the ground and trying to make, you know, mining, picking, picking, junior mining companies, that’s where we would look to more experts, or at least diversify more and pick up more names, because I think that’s just very difficult, the thing to do over time.

James Connor 31:48

So we had a good conversation about the US economy, and the people have spoken, they were not happy, and let’s talk about the Canadian economy now. What are your views on the Canadian economy?

Jonathan Wellum 31:59

Well, we’re weak, weak, weak. I mean, our governance in this country is not unlike the Biden Harris regime, although the US economy has been more resilient and pushed back against a lot of the policies that they were executing on in Canada. I mean, we’ve got just regulation after regulation, tax increases on tax increases. We have a government that’s sticking its nose into, you know, all, you know, all the areas of the of the private sector and so forth. And so we have money leaving the country. I mean, our greatest resource is our commodity sector. And, you know, the government’s the federal government, that is has made it very difficult for long term capital projects. And so we’ve had so much money leaving the country. I mean, I was just reading an article, I think was this morning or last night on Trans Canada or TC energy, and they’re now building a pipeline down in, I think it’s Texas or something. They’re going to pull almost, you know, less, almost a billion dollars, anyway, hundreds of millions of dollars they’re putting into some projects down there instead of Canada. Why? Because it can’t get anything done in this country. And so, yeah, so Canada is really feeling the pressure. Our GDP per capita, as we’ve talked about before, is falling. I mean, it’s been falling for some time, and the overall wealth levels of Canadians is never been lower when you compare it to our counterparts in the United States. So yeah, it’s, it’s, it’s a difficult situation. Or Canada, unemployment rate is, you know, six and a half percent, and we’ve had very little job growth. We decided those numbers think it was this morning, and you’re talking 12, 14,000 jobs, and again, a lot of those not in the best sectors. So yeah, we’re feeling the pressure, but I think it’s all self induced by very poor management of our economy, particularly by the federal government. If we could get a change in that, I think we could unleash a lot of the resources and the assets that we have in this country. It’s such a rich, rich country, but it’s been grossly mismanaged for the last nine years.

James Connor 33:53

Yeah, it’s quite hard to believe what’s happened. I truly believe we live in one of the greatest countries in the world, but I really don’t know what the hill happened has happened here in the last five plus years. And in spite of the fact the US economy has been doing so well, the Canadian economy has been struggling now for quite a few years, labor productivity has been in decline for 10 years. And I don’t know what it’s going to take to turn it around, but it’s going to take an awful lot. What are your thoughts? What do you think happened? Well, I

Jonathan Wellum 34:22

mean, I think it’s socialism. I mean, you basically have a Trudeau Government that took over, and they have executed nothing but show socialistic policies right straight through all the economy, and they’ve made it very difficult with increased regulations and taxation every time you turn around. And so, yeah, I mean, government’s just too large, too intrusive, and needs to step back and needs to let the free market take over. Yeah, you have to regulate the free market, and you have laws, but you can’t be doing all of that work. I mean, think of the projects that have left this country because of Trudeau policies. I mean, capital people are not going to make 510, year, 20 year. Capital investments, if you’re not, if you’re not feel comfortable with the government’s policies. And so we must, must change those, those policies. And I mean, there’s, there’s other things also, you know, we’ve had the curtailment of our free speech in this country. And I mean, the government’s has passed legislation to limit our ability to even get information and to post it online. I mean, it’s just it on every level. The government’s just overstepped and and so you can’t expect growth in that environment. But look, we are getting some pockets of pushback. You’ve got the Saskatchewan government Mo was reelected, which is great. You got Danielle Smith in Alberta pushing back against a lot of these things. And you have Canadians fed up with the policies of the federal government. So I think if we go to another election, I think it does give an opportunity for Pierre polio, who’s articulating some amazing policies. A lot of them are just more freedom to the private sector and stepping back, cutting bureaucracy, cutting these layers of government, and that would have a dramatic impact on this country, but we’ll just, you know, just hope and pray that those actually take place.

James Connor 36:04

And you’re right about government over research. Was no greater example of that than in January of 2022 with the truckers and what happened there was just, I still can’t believe it happened, absolutely,

Jonathan Wellum 36:17

and I it’s going to be interesting in conversations with between Trudeau and Trump now, because Donald Trump has, you know, really spoke out loudly against the just the stepping on the of the of the convoy and the truckers, and that was those were peaceful protests, very peaceful protests opposing, you know, government overreach in terms of vaccines and medical policies and to respond the way they did to their own Canadian citizens. It was outrageous. And it’s that kind of behavior, again, that runs money out of the country. And so if we can get a change in policy, I think again, we can get money coming back into Canada, greater projects, unleashing the resources we have in this country, which are just massive. And things could change quite quickly, but we’ll see what happens.

James Connor 37:03

And just a reminder for our American viewers, during that time period, a lot of those protesters, who once again were protesting peacefully, lost their businesses. They lost their bank accounts. Everything was frozen, and this is something you would expect in Russia or China, not in Canada. So, yeah,

Jonathan Wellum 37:21

that’s exactly the case. And I think you know where we’re in the securities market. We had correspondence from the Securities Commission, basically targeting, I think at the time, was 15 or 20 of the leaders of the trucker convoy. We actually got, we actually got notifications from the Securities Commission via the RCMP, and we didn’t, we didn’t have any clients that were, you know, that our clients weren’t on that 20 person list, but basically, you had a government going after their own citizens, just by lead, for leading a convoy, and just to see that and to read those kind of reports coming from the RCMP, and also from the from our Canadian capital capital markets, where, you Know, the government was obviously putting pressure on them, you on them, was very disturbing, very concerning, and you see that the government’s going to target these are little people. They’re average people. They’re just blue collar workers. They’re just fighting for freedom, trying to get their voice heard into a government that doesn’t care about them. And yeah, it’s very disheartening to see that. And so we really do need to change a policy. I mean, again, you look at the US, and you see the situation down there, and I think this is one reason why Trump won with quite a convincing margin, and that is people are concerned about government overreach everywhere. And the Democratic Party is not unlike the Liberal Party here in Canada, they think they need to be micromanaging everything, including, you know, who can go into which washrooms, and, you know, gender things. And it just, it just extends into every area, and it’s just ridiculous. And we need to change. Elitism

James Connor 38:52

does not work. And it doesn’t matter how many celebrities you have behind you, nobody cares. All people are trying to do is just put a roof over their head and food on the table. That’s

Jonathan Wellum 39:01

exactly right. And as you know, as we all know, the celebrities don’t live in the same world as the majority of people, and they don’t face the same challenges. And so if you’re in government or you’re in business, you you you want to be able to identify with real people, the people that are actually making the economy work and and not not celebrities who don’t have a clue what’s really going on.

James Connor 39:22

Well, Jonathan, that was a great discussion. And always, I always enjoy our chat. And if someone would like to learn more about you and your firm, rock link, where can they go?

Jonathan Wellum 39:31

Yeah, our website is a great place to start, which is rock link.com, rock link, with a, c at the end. So R, O, C, K, L, I, N, C, rocklink.com, and you can also email us info@rocklink.com and you can, once you go there, you can get our numbers and all our details. That’s probably the best place to go. And yeah, we’re more than glad to talk with people. We’ve got a lot of people come in from wealthy on different we have different people that have come through this channel. And. Also people that just come in to have us just review their numbers, look at their statements, give them some ideas how they can improve it. That’s fine. It’s all free of charge. We love to talk to people. That’s the business that we’re in, so by all means, pick up the phone or send us an email and we’ll reach back right away and talk to you.

James Connor 40:17

Well, once again, thank you. Jonathan and I look forward to our next chat. Terrific. Thank

Jonathan Wellum 40:22

you very much, Jimmy.

James Connor 40:22

Well, I hope you enjoyed that discussion with Jonathan Willem. And as a reminder, rock link is a wealthion endorsed financial advisor for Canadian investors. And if you need help preparing for your financial future, consider having a discussion with Jonathan or another member of his team. You can find out more information@wealthion.com slash free. Once again, That’s wealthion.com/free if you like this content, please subscribe like and also leave a comment, and if you want to check out more content, check out this video now you


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