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Top Three Videos – June 30 2023

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Investors Face A Coming 'Scramble To Stay Alive' Warns Veteran Wealth Manager Ted Oakley
Wealthion

Investors may face significant challenges and potential losses as the global economy deteriorates, interest rates rise, and indicators suggest a potential recession.

  • 00:00 Investors may struggle to survive as the global economy deteriorates, interest rates rise, and the current economic cycle nears its end, potentially leading to a recession and negative impact on various sectors.
    • Investors may face a struggle to survive as they cannot rely on the Federal Reserve to intervene, leading to potential financial difficulties for many.
    • Ted Oakley discusses the current bull rally and whether it indicates a safe time for investors to enter the markets or if it is a temporary draw before another bear market, and also mentions how he is positioning his clients’ assets for the future.
    • The global economy and financial markets are deteriorating, with the world heading towards a global recession and interest rates likely to slow growth further, although it is expected that central banks are nearing the end of raising rates.
    • Oakley warns that if interest rates continue to rise, it will put a squeeze on businesses and the debt that is coming due, indicating that we may be in the last inning of the current economic cycle.
    • The economy is not able to sustain the current high interest rates, leading to a potential recession and negative impact on commercial real estate, mortgages, borrowing costs, and inflation.
    • Oakley discusses the lag effect in monetary policy and its potential impact on the economy, questioning whether there will be a significant lag effect or if the markets are not concerned about it.
  • 06:52 Investors may struggle to survive as a lot of debt is coming due, the market is propped up by a few stocks, day traders will regret their decisions, Nvidia is overpriced, inflation is rising, and indicators suggest a potential recession.
    • A lot of debt is coming due in the next 18 months, and the speaker believes that people are hoping for a change but he doesn’t think that will happen, which will have a negative impact on employment and various areas of the economy.
    • Ted Oakley warns that investors may face a struggle to survive in the current market, as it is being propped up by a few top stocks and there is a lot of speculation, similar to previous periods that led to losses for many investors.
    • Many people who were making money day trading and investing in one-day options will likely regret their decisions as there is no free lunch in the market, and the average person doesn’t understand the true performance of the market or the influence of a few key stocks.
    • Stocks like Nvidia are overpriced, with a director recently selling $50 million worth of stock, which is concerning given the company’s high valuation.
    • Inflation is rising and will continue to do so due to unfavorable monthly comparisons, putting pressure on central banks to raise interest rates.
    • Inflation is expected to remain sticky, causing the Federal Reserve to potentially keep rates from lowering, leading to a squeeze on consumers and a potential recession due to indicators such as leading indicators being down for 14 months, gross domestic income being down, and a yield curve inversion of 100 basis points.
  • 16:37 Investors may face a scramble to stay alive as a recession looms, with missed earnings, bankruptcies, and potential business closures in the corporate sector.
    • Oakley warns that investors may face a scramble to stay alive as the effects of liquidity in the system take a long time to pass through, despite the belief that a predicted bad outcome may not happen.
    • The weight of evidence suggests a coming recession, with factors such as the Fed’s inability to lower rates and disconnects between the media and stock market indicating that investors may face difficulties in the future.
    • Many companies have missed their projected earnings for Q1 2023, and with higher interest rates and decreased business activity, it is unlikely that there will be a significant increase in earnings in the future.
    • Many companies that were relying on loans at low interest rates will likely file for bankruptcy as the economy continues to struggle, and there may be more collateral damage in the corporate sector as companies have to refinance their debts.
    • A significant number of companies in the Russell 2000 are unprofitable, which could lead to many of them going out of business.
  • 22:03 Investors are in a precarious position, relying on the Federal Reserve for help, but if they don’t intervene, many companies will struggle to survive, and the market is ignoring the Fed’s warnings, leading to potential failures in community banks and a decrease in value for office buildings.
    • Investors are hanging on by their fingernails, expecting the Federal Reserve to come to their rescue, but if the Fed doesn’t intervene, many companies will struggle to survive and the market is shrugging off the Fed’s warnings.
    • Oakley discusses the possibility of the economy struggling under current conditions and questions whether the Federal Reserve will be able to maintain the stability of the banking system.
    • Community banks are facing challenges due to high debt in commercial real estate and the inability of borrowers to pay off loans, leading to a tough banking business in the next year or two.
    • Smaller banks holding a larger share of commercial real estate debt could lead to a wave of failures as properties default or continue to struggle, potentially affecting insurance companies as well.
    • The oversupply of office buildings in cities like Dallas and Austin will lead to a decrease in value as subleasing becomes more prevalent, resulting in a scramble for investors to stay afloat.
  • 27:17 The banking system is facing a reckoning, smaller banks are struggling, unemployment is rising, businesses are cutting employee hours, and layoffs are expected to increase as the economy continues to struggle.
    • The banking system is facing a reckoning and despite various crises, the outcome always seems to be that the too big to fail banks get bigger while smaller banks struggle due to an oversaturated market.
    • Unemployment has been seen as a strong defense against recession, but there are increasing signs of stress in the employment system with rising initial claims and continuing claims.
    • Oakley discusses the declining labor leverage ratio and predicts a potential increase in layoffs as the economy continues to struggle.
    • Unemployment rates, declining work hours, and layoffs of white-collar workers are causing businesses to cut employee hours instead of letting them go, leading to a struggle for survival.
    • Unemployment is expected to rise due to slower economic times, as evidenced by a cement contractor experiencing a decrease in business and an increase in job applicants.
  • 32:18 Investors face a potential crisis as the housing market cools down, unemployment rises, and individuals are forced to sell their homes, leading to significant financial losses.
    • Oakley discusses the potential impact of inflation on the job market and the housing market, noting that while the official jobs data hasn’t shown a problem yet, mortgage rates have increased significantly without a corresponding correction in home prices.
    • The stock market and real estate market are in a stuck position due to a lack of sellers, but builders can still do some business by creating supply through selling mortgages, although a change in economic times could lead to an increase in supply.
    • The housing market is cooling down, but home builders are able to move inventory and undercut existing home prices, leading to high stock prices, and there will always be a natural number of sales that will eventually set the new price.
    • If employment starts to decline, it could trigger a wave of selling in the market, and there is a first mover advantage to selling early before prices drop further.
    • Investors in the real estate market, including big institutional investors and Boomers with second homes, may face a potential crisis if there is a trigger event like a rise in unemployment, causing a mass exodus from the market.
    • Investors are facing a potential scramble to stay financially afloat, as job losses and decreased luxury sales are causing individuals to sell their homes and face significant financial losses.
  • 39:28 Investors should be cautious as the housing market faces a correction, variable mortgage rates increase, and consumers face financial challenges, leading to concerns of a recession.
    • Residential real estate prices have been driven up by low interest rates, but the speaker predicts a correction of 15-20% and believes that the era of homes being seen as investments is over.
    • Variable mortgage rates have increased significantly, causing some homeowners to struggle, and while a drop in mortgage rates would be beneficial, it is still a long way from the low rates of the past.
    • Investors should not count on a return to previous market conditions, as there will be a prolonged era of forced sales in the housing market due to the aging Boomer cohort, making it an expensive time to buy a house.
    • Investors should be cautious about buying or paying for homes in the current market as the housing industry is changing and the bottom 80 to 90 percent of consumers are facing financial challenges.
    • Consumers are facing declining real wages, diminishing bargaining power at work, increasing reliance on revolving credit with high interest rates, plummeting personal savings rates, and rising defaults, leading to concerns that they may soon reach their breaking point and trigger a recession.
    • Real wages have declined for 25 consecutive months, leading to a decrease in consumer spending and a decline in restaurant business.
  • 49:11 Lower and middle-class individuals will suffer the most during times of inflation due to reduced spending and a K-shaped recovery, while the Federal Reserve’s attempts to prevent boom-bust cycles have ultimately ruined the system, allowing unprofitable companies to stay afloat with the help of Wall Street.
    • The impact of reduced spending and a K-shaped recovery will disproportionately affect lower and middle-class individuals, causing them to suffer the most during times of inflation.
    • Eventually, there will be a realization that the signs were there and times have slowed down, affecting everyone regardless of wealth, as recessions are a normal part of the business cycle.
    • The Federal Reserve’s attempts to prevent boom-bust cycles have ultimately ruined the system, as delaying the bust only leads to a worse outcome in the future, allowing unprofitable companies to stay afloat with the help of Wall Street.
    • The speaker discusses an interview with Senior Economist Lacey Hunt, who coined the term “other deposit liabilities” and the importance of this term in the shrinking market.
    • Continual money shrinking and the Fed’s impact of tightening by taking money out of the system, along with the need to address the deflation dragon, are key factors to consider in the second half of this year.
    • The market is currently focused on AI and investing in anything related to it, but there are potential challenges ahead that may force the market to reprice itself.

Dave Kranzler- Mainstream Says Gold Sucks - A Sign It's Bottomed?
Arcadia Economics

Key insights

  • “Usually the mainstream media’s negative coverage of gold at the tail end of a downtrend is an indicator that the sector is bottoming and getting ready to head higher.”
  • “Usually the mainstream media publishes what I’ll call keyboard diarrhea in connection with gold and whether or not gold is useful anymore at the tail end of a downtrend in the sector and it’s usually an indicator that the sector is bottoming and getting ready to head higher.”
  • “Mainstream considers gold a boring commodity, but it is actually a monetary medal with historical significance.”
  • “Gold has been the best performing asset of any major asset class over a 22-year time period.”
  • The limited number of tier one assets, including gold, suggests that it is highly regarded and trusted by banks as a store of value.
  • The Eastern Hemisphere and the BRICS Consortium are moving towards incorporating gold back into the monetary system, indicating its importance as a reserve asset.
  • “Junior mining stocks have been mercilessly beaten up, but unless the world is going to come to an end, there will be another big bull move in the sector.”
  • “I think this thing’s going to explode upward” – The speaker believes that gold is likely to experience a significant upward movement in the future.

Mainstream media’s negative coverage of gold suggests that the sector is bottoming and preparing for a rise, while the current stock market rally is likely a bear market head fake.

Transcript:

  • 00:00 Mainstream media’s negative coverage of gold during a downtrend suggests that the sector is bottoming and preparing for a rise, while the current stock market rally is likely a bear market head fake due to retail investors pouring record amounts of cash into stocks.
  • 01:40 Mainstream media publishing negative articles about gold may indicate that the sector is bottoming, as the speaker criticizes an article claiming gold is no longer a reliable hedge against economic collapse, stating it is garbage and anyone who believes it is dumb.
    • Mainstream media publishing negative articles about gold is often a sign that the sector is bottoming and preparing for an upward trend.
    • Dave Kranzler criticizes an article claiming that gold is no longer a reliable hedge against economic collapse, stating that it is garbage and anyone who believes it is dumb.
    • Gold is no longer seen as a useful indicator of social and economic collapse, and the speaker is confused by this statement as gold has been considered a boring commodity since it was included in the basket of commodities and started trading in 1974.
  • 05:08 Gold Futures were created to control the price of gold, but gold is not a commodity, it is a monetary medal and has been the best performing asset over a 22-year time period.
    • Gold Futures were created to divert institutional fund flows away from physical gold and are mostly used for price control operations by banks, but gold is not a commodity, it is a monetary medal.
    • Gold is not a boring commodity and is regarded as an investment and a show of wealth in the Eastern hemisphere.
    • Gold has been the best performing asset over a 22-year time period and is not used as a commodity, but rather in monetary systems.
  • 08:49 Gold is a tier one asset held by banks worldwide and aggressively accumulated by Eastern Hemisphere central banks, viewed as an investment and incorporated into the monetary system differently than commonly believed.
    • Gold is a tier one asset used by banks and is one of the few assets they can hold on their balance sheet without holding reserves in cash.
    • Gold is a tier one asset held by central banks worldwide, aggressively accumulated by Eastern Hemisphere central banks, used for wealth preservation, viewed as an investment in the Eastern hemisphere, and incorporated into the monetary system in a different way than commonly believed.
  • 11:02 Gold represents a significant portion of global central bank reserves and is likely to be reincorporated into the monetary system in the future, making it foolish to dismiss it as merely a commodity.
    • Kranzler discusses the currency composition of world official international reserves, specifically the data provided by Dan Popescu on Twitter.
    • Gold represents a significant portion of global central bank reserves and is likely to be reincorporated into the monetary system in the future, making it foolish to dismiss it as merely a commodity.
  • 13:04 Silver Viper’s stock has bottomed and insiders own 23% of the company, making it a potential steal for its optionality potential.
  • 14:45 Gold may be bottoming out and could experience a significant upward movement soon, supported by technical indicators and the end of a seasonally weak period for the precious metal sector.
    • Gold has pulled back to an uptrend line with decreasing volume, indicating a potential upcoming upward explosion, supported by the RSI and macd momentum indicators.
    • Gold is likely to see an upward resolution soon, possibly in the fourth quarter, as the current seasonally weak period for the precious metal sector is coming to an end.
  • 16:49 Gold and silver prices are expected to rise as the market moves higher, and the speaker is excited to attend a celebration for a profitable gold mine and potentially do a podcast from there.

Rick Rule about uranium, certain stocks and CEOs, gold, silver and more
Triangle Investor

Rick Rule is bullish on uranium, gold, and silver, and believes that the Japanese restart of nuclear plants will benefit uranium equities and increase global demand, making it a favorable entry point for speculators.

Uranium Market Insights

  • The turnaround of the Japanese nuclear fleet not only tightens uranium supplies but also shifts Japanese inventories from fuel to sale, eliminating a market overhang.
  • “The fact that about 75 percent of the transactions in the uranium space don’t occur in the spot Market anymore. They occur in the term market and the term Market settlement prices are markedly higher than spot.”
  • Rule recognizes the importance of optionality in the uranium market, running a $75 case on companies to determine if higher quality companies offer more optionality for free compared to lower quality companies.
  • The nuclear power industry understands three fundamentals: the impact of inventory tightening, the low cost of debt capital for uranium inventories, and the importance of supply and demand dynamics.
  • Utilities recognize the need for uranium in the future and are engaging in prudent activity by front-running the recontracting cycle to secure inventory, indicating a potential increase in demand and pushing the price higher.
  • “The United States has come to recognize in the very badly misnamed inflation reduction Act that nuclear fuel will be an important part of America’s low carbon Energy Future and if you deal with that you have to deal with uranium energy you just have to deal with it.”
  • “I want that hundred million pounds to be in the lowest cost quartile worldwide.” – Rick Rule highlights the significance of low production costs as a crucial factor when considering investments in uranium stocks.

Investment Strategies and Risk Assessment

  • “Robert Friedland is the single most successful exploration speculator on the planet.”
  • Rick Rule’s strategy of leveraging existing databases for exploration is a brilliant and cost-effective approach.
  • “I understand political risk… jurisdictions that seem safe often aren’t.”
  • “We begin by getting wonderful gurus, wonderful big picture thinkers…people that have a unique worldview and not the world view that you would see in the mainstream media.”

Gold and Silver Analysis

  • “Gold, bullish.” – Rick Rule
  • “I like to use Net Present Value rather than price earnings or cash flow. It’s a more conservative metric and by that metric the gold stocks are the cheapest that they’ve been in my career.” – Rick Rule
  • “The silver equities in a bull market outperform any other natural resource equities class.”

Transcript:

  • 00:00 Rick Rule is bullish on uranium, gold, and silver, and believes the Japanese restart of nuclear plants will benefit uranium equities and increase global demand, making it a favorable entry point for speculators.
    • Rick Rule, a resource investing legend, is being interviewed by Lucian and discusses his background of opening a bank at the age of seven.
    • The speaker discusses the delay in the grand opening of a venture due to the FDIC’s approval, but expresses hope that it will open in the summer or early fall.
    • Rick Rule is bullish on uranium, gold, and silver, neutral on oil and copper, and has no comment on tech stocks, platinum, and the US dollar.
    • The Japanese restart of nuclear plants and the increase in demand for uranium will remove market overhang and benefit uranium equities.
    • Global uranium demand is increasing due to the pace of Japanese restarts, leading to higher spot and term market prices.
    • The current price of uranium presents a favorable entry point for speculators, but it is important for new investors to continue educating themselves before investing, as there are only 11 or 12 viable companies in the sector at current prices.
  • 08:38 The uranium market is experiencing a decrease in spot market transactions, with utilities strategically stockpiling uranium due to upcoming refueling cycles, leading to potential opportunities for certain uranium companies like Denison Mines and Global Atomic.
    • We prioritize existing producers and developers with solid economic viability at $60 per pound, but also consider a $75 case to determine if higher quality companies offer more optionality for free, and the speaker is asked about the spot price for the next six months.
    • Currently, there is a decrease in transactions on the spot market for uranium, with 75% of new transactions occurring in the opaque term market, similar to the market conditions 15 years ago.
    • The nuclear power industry is experiencing a tightening of supplies due to reduced inventory and low costs of financing uranium inventories.
    • Utilities are strategically stockpiling uranium due to the upcoming refueling cycle, recognizing the economic advantage of anticipating future needs with inventory.
    • New nuclear power plants need to contract for sufficient fuel to amortize loans, causing tightness in the market, and the speaker will discuss the pros and cons of certain uranium companies.
    • Denison Mines is owned by the speaker due to their large interest in the Athabasca Basin and their high-grade discoveries, while Global Atomic was initially not recommended due to instability in Niger, but the speaker acknowledges that Niger has been a long-time uranium producer with no incidents.
  • 16:19 Rick Rule prefers privately owned stocks with large, low-cost deposits and high returns, acknowledging the importance of uranium energy and recognizing the value of stocks like UEC, while highlighting potential in Uranium Energy and Anfield Energy as near-term producers.
    • Rick Rule prefers to own stocks privately, focusing on deposits that are large, low-cost, and have a high return on capital, and while he is not interested in Encore Energy, he acknowledges the importance of uranium energy in America’s low carbon energy future and recognizes the value of uranium energy stocks like UEC.
    • Uranium Energy and Anfield Energy are two US companies with potential as near-term producers, with Uranium Energy having a large investor base that makes the stock responsive to positive news in the uranium business.
    • Rick Rule discusses his investments in Goviex Uranium and Bannerman Energy, highlighting the removal of previous concerns and his comfort with Namibia as a destination, while also mentioning his positive experiences with John Borschoff but expressing concerns about his age and the grade of his deposit.
    • John Borschoff, the CEO of a uranium company, has impressed the speaker with his ability to consolidate the industry and his determination to succeed, leading the speaker to invest in his company.
    • Explore with existing database instead of spending money on exploration, as it already contains valuable information.
  • 23:06 Rick Rule has high regard for certain CEOs in the uranium industry, but has concerns about their involvement in multiple companies, and evaluates good companies based on three metrics while avoiding those with three red flags.
    • John Borschoff, the CEO of Deep Yellow, is a determined individual who is available 24/7 for more information about the company.
    • Rick Rule has a high regard for David Cates from Denison and Amir Adnani, but has concerns about Adnani’s involvement in too many companies.
    • Stephen Roman, a veteran in the uranium industry, comes from a family deeply involved in uranium mining, which has given him a unique perspective and experience in the field.
    • Daniel Major from Govix and Mr. Monroe Brandon are highly impressive individuals, with Major being an expert in exploration and Brandon being a future superstar in explaining topics, but the size of the prize is a concern; Rick Rule evaluates good companies based on three metrics and avoids companies with three red flags.
  • 27:33 Investing in uranium stocks requires considering factors such as valuation, size of the prize, return on capital employed, and all-in sustaining costs, while expertise and experience are crucial for success; however, many exploration companies, developers, and producers are currently facing difficulties in raising money and closing private placements.
    • Valuation, size of the prize, return on capital employed, and all-in sustaining costs are important factors to consider when investing in uranium stocks.
    • Investing in uranium in certain countries is important, but expertise and experience in the specific task at hand is crucial for success.
    • During the bull market, the probability of a company having a successful team in the uranium business was favorable, but as the number of companies increased, the probability became unfavorable, and currently, exploration companies, developers, and producers are facing difficulties in raising money and closing private placements.
    • Companies looking for uranium but don’t have any experience finding it and can’t raise money don’t deserve to raise money, which is good for the market, but companies like Denison and John Borschoff have no trouble raising money.
    • The speaker discusses the relative strength of the US economy against higher interest rates and expresses surprise that it hasn’t been more seriously impacted, while also expressing a preference for the market to set interest rates.
  • 33:50 Gold equities are currently undervalued, with 80% of gold junior issuers having no value, but the remaining 10-20% are fairly priced or cheap, and investing in tier one or strong tier 2 gold and uranium deposits with low costs and high return on capital is preferred, along with buying physical gold in bars; silver equities are not plentiful, but the silver business has been profitable due to the production of silver as a byproduct in mines, and in a true silver bull market, there is explosive upside potential for patient investors who can handle volatility.
    • Gold equities are currently very cheap compared to their net present value, making them an attractive investment opportunity.
    • There are wide valuation discrepancies among gold junior issuers, with 80% exhibiting no value, but the remaining 10-20% are fairly priced or cheap, and while political risk is a concern, it is preferable to technical risk.
    • The speaker prefers tier one or strong tier 2 gold and uranium deposits with low costs and high return on capital, and prefers buying physical gold in bars rather than coins.
    • Silver equities are not plentiful, but the silver business has been profitable due to the production of silver as a byproduct in mines.
    • In a true silver bull market, there is a lack of silver equities and market capitalization, leading to explosive upside potential for patient investors who can handle volatility.
  • 40:15 Rick Rule primarily invests in conventional energy and industrial materials companies, such as Rio Tinto and BHP, due to their potential for price recovery and high dividends, while also exploring opportunities in gold and other commodities; he emphasizes the importance of mergers and acquisitions and the self-interest of management teams in the industry.
    • The speaker has primarily invested in conventional energy such as oil and gas due to his comfort and belief in the potential for price recovery and increased share prices.
    • Investing in producers in the industrial materials complex, such as Rio Tinto, BHP, and Glencore, is a strategic move due to their low Enterprise Value to Net Present Value relationships and ability to pay high dividends.
    • I am betting on the increasing global population and improving living standards, and as an experienced speculator, I am attracted to exploring for various commodities, particularly gold, due to the potential for mergers and acquisitions and the belief in a forthcoming bull market for precious metals equities.
    • Big companies have a competitive advantage due to lower cost of capital, and smaller management teams can benefit from mergers in the exploration space to lower expenses and increase liquidity, but most management teams prefer to be the surviving manager.
    • Most managers act in their own self-interest rather than in the interest of shareholders, resulting in fewer mergers; Rick Rule’s biggest loss was investing in a Canadian company called heating oil Partners due to the management team’s irrational actions; the benefit of attending the Symposium is its longstanding existence for 30 years.
  • 46:39 Rick Rule emphasizes the importance of a contrarian worldview, experienced analysts, and learning from successful entrepreneurs in the natural resource industry, while also mentioning the live-streaming of the conference and offering personalized rankings and comments on stocks.
    • The speaker discusses the importance of having a unique contrarian worldview, experienced analysts and portfolio managers, and learning from entrepreneurs who have built multi-billion dollar natural resource companies.
    • Every public company exhibitor at the conference is owned by the sponsors, and attendees can get a refund if they feel they didn’t get their money’s worth.
    • The conference will be live-streamed this year, allowing attendees to access the recordings for six months, which has been personally valuable for the speaker who has replayed last year’s conference multiple times.
    • Rick Rule offers personalized rankings and comments on natural resource stocks at ruralinvestmentmedia.com, excluding text talks, pot stocks, and crypto, and looks forward to engaging in conversations about them.
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