Podcast Summary
Maren Katusa discusses investment opportunities in gold, silver, uranium, and carbon credits: Maren Katusa highlights gold and silver's strong free cash flow despite inflation, uranium's asymmetric opportunity, and carbon credits' $16 trillion potential. Buffett's sale of Barrick Gold doesn't necessarily reflect its value.
Maren Katusa, a contrarian value investor and New York Times bestselling author, believes that gold and silver are performing well as inflation rises, despite recent CPI numbers showing a 4.2% increase over the last year. From a production standpoint, gold and silver, particularly the right producers, offer strong free cash flow. However, Warren Buffett's investment in and subsequent sale of Barrick Gold is not a definitive indicator of the company's value, according to James Jacobs. Instead, Jacobs suggests that there are other, potentially cheaper places to make money in the gold market. Additionally, uranium presents an asymmetric opportunity but comes with nuances, and carbon credits, the best performing asset of the last 3 years, offer an opportunity worth over $16 trillion, according to Marin. Overall, Marin's insights provide a valuable perspective on various investment opportunities in gold, uranium, and carbon credits, emphasizing the importance of understanding the nuances of each market.
Focus on lesser-known companies with large production potential before they're overvalued: Value investors should look for undervalued companies with significant production capacity in commodities like gold, copper, and uranium, using a conservative price assumption and a three-year payback period. Be aware of increasing government take in key producing countries and consider foreign companies for potential advantages.
Value investors should focus on lesser-known companies with large production potential before they become overvalued by the big money. These companies, which often have higher premiums, are in the "sweet spot" before the market inflates their prices. Investor Lawrence Lepard suggests using a conservative gold price of $1400 for valuations and looking for three-year paybacks. He also warns of increasing government take in countries like Peru and Chile, which produce a significant amount of key commodities like copper. Despite the current crossflation environment, Lepard believes there's no shortage of commodities like gold, copper, and uranium, but rather a time lag and cost to bring them into production. In the case of uranium, which has been underperforming since 2011, Lepard sees potential due to its importance in nuclear energy and the dominance of Kazatomprom in the market. He encourages investors to consider the advantages of foreign companies in key producing countries.
Uranium market shift: Equity companies and new nuclear tech drive demand: The uranium market is improving, with equity companies and new nuclear tech driving demand. Investing in permitted and built uranium assets at a discount to NAV is a viable option due to US uranium production halt and uneconomical conventional mining.
The uranium market is experiencing a shift in demand dynamics, driven by the equity companies and new nuclear reactor technologies. Despite the spot price still being lower than pre-Fukushima levels, the market sentiment is gradually improving, and nuclear is becoming a cornerstone of the solution to combat climate change. With the US not producing any uranium and conventional uranium mining being uneconomical at current prices, investing in permitted and built uranium assets at a discount to Net Asset Value (NAV) is a more viable option. The ongoing development of modular reactors, such as Xenergy's project in Washington state, is expected to drive increased demand for uranium in the next 5 to 10 years, making it a potentially lucrative investment opportunity.
Emerging markets driving growth in uranium market: China, Saudi Arabia, and Middle East are aggressively pursuing nuclear energy, leading to a shift in uranium demand away from North America and Europe. Companies are buying and storing uranium, signaling a potential price increase.
The growth in the uranium market is not going to be in North America or Europe, but rather in emerging markets like China, Saudi Arabia, and the Middle East. These countries are aggressively pursuing nuclear energy and are not deterred by opposition or NIMBY issues. China, in particular, is looking to secure its uranium supply domestically and from Russia and Kazatomp, as contracts with Australia are at risk. The United States, which consumes 25% of the global uranium, does not have the infrastructure to downblend nuclear warheads or create uranium, making it reliant on imports. The market dynamics have led to a surplus of uranium, but this is changing as the Department of Energy and utilities begin to build up their stockpiles. Companies like Uranium Participation Corp and Uranium Royalty Corp are buying uranium and storing it, signaling a potential increase in uranium prices.
Staying informed with Yahoo Finance: Accessing financial news and trends: Yahoo Finance offers comprehensive financial news, analysis, and tools for investors, including access to multiple investment accounts, analyst ratings, and customized charts. The platform also provides insights into emerging opportunities, such as the potential $16 trillion carbon credits market.
Staying informed about financial news and market trends is crucial for investors, and Yahoo Finance is a valuable tool for accessing comprehensive financial news and analysis. The speaker shared his personal experience of using Yahoo Finance to stay updated on important company developments, such as Tesla's staff layoffs and iPhone shipment declines. He also highlighted the platform's additional features, including the ability to link multiple investment accounts, access analyst ratings, and create customized charts. Furthermore, the speaker discussed his thesis on the potential $16 trillion opportunity in the carbon credits market due to the world's obligation to decarbonize. He shared his background in investing in green energy and his observation of the growing interest in this sector from millennials with a stakeholder capitalism perspective. The speaker also acknowledged the importance of understanding the validity and reliability of carbon credits. Overall, the discussion emphasized the significance of staying informed about financial news and trends and the potential opportunities in the carbon credits market.
ESG Investing: A New Era for Corporate Responsibility: Millennial investors' preference for ESG funds is driving companies to prioritize sustainability and social responsibility, lowering their cost of capital. However, accountability and effective carbon offsetting methods are crucial for meaningful change.
The shift towards Environmental, Social, and Governance (ESG) investing, driven by millennial investors, will have a significant impact on public companies' commitment to reducing their carbon footprint and addressing social issues. The growth of ESG funds, particularly in the bond market, is massive, and the US government is starting to take notice. Companies that meet the ESG criteria will have a lower cost of capital, making it financially beneficial for them to focus on sustainability and social responsibility. However, the history of international agreements to reduce emissions shows that good intentions alone are not enough. The real change will come when investors hold companies accountable through the cost of capital. The carbon market, which includes carbon credits, is expected to be a major commodity in the next 25 years as the world seeks to offset its carbon emissions. The process of creating and verifying these credits is complex, and simply planting trees is not the solution. The importance of this shift cannot be overstated, as it has the potential to bring about real change in how businesses operate and contribute to society and the environment.
Investing in blue carbon: A new approach to carbon offsetting: Blue carbon refers to carbon sequestration in ocean ecosystems, with growing interest from companies for carbon credits. Prices range from $20 to $170/ton, and the market is expected to expand for retail investors and institutions.
Addressing climate change through land use alone, such as increasing forest coverage, is not enough to offset the carbon footprint of large industries like oil and gas. Instead, there's growing interest in "blue carbon," which refers to carbon sequestration in ocean ecosystems like mangroves. Apple Computer is an example of a company investing in blue carbon projects and earning carbon credits. These credits have significant value, with prices ranging from $20 to $170 per ton, depending on the market. The carbon credit market is growing rapidly, with major verifiers and trading platforms emerging. Companies can directly purchase carbon credits from these platforms or contact the project developers. The carbon credit market is expected to become more accessible to retail investors and institutions as it matures, similar to how Bitcoin transitioned from a niche commodity to a widely-traded asset. Politicians are also expected to implement carbon pricing policies, providing an incentive for companies to invest in carbon offsetting projects. Overall, the carbon credit market represents an opportunity for individuals and companies to take an active role in reducing their carbon footprint and contributing to the global effort to mitigate climate change.
Producing Carbon Credits: A Complex Process: Empowering individuals to make net neutral purchases could lead to a significant reduction in emissions and create a new industrial revolution, particularly in countries with cheap green energy.
The production of carbon credits, equivalent to the emissions of a quarter million standard cars, is a complex process involving certification and high standards. One carbon credit is approximately the absorption capacity of one tree over 40 years. The cost for large corporations like Apple and Microsoft to buy these credits is around $20 per ton. The speaker argues that empowering individuals to make net neutral purchases could lead to a significant reduction in emissions and create a new industrial revolution, particularly in countries with cheap green energy like the United States. This shift could have geopolitical implications and lead to improved stakeholder capitalism.
Increasing Demand for Carbon Credits Drives Up Prices: The carbon credit market is booming due to rising demand from net-zero companies and government regulations, making it an attractive investment opportunity with limited supply and growing demand.
The carbon credit market is experiencing massive demand due to the increasing number of companies aiming to become net-zero emitters. This demand is driving up the price of carbon credits significantly, making it an attractive investment opportunity. The value of carbon credits derives from their limited supply and the growing demand from companies looking to offset their carbon emissions. The European market, in particular, is leading the way with governments and large corporations actively investing in carbon credits to reduce their carbon footprint. The cost of capital for companies producing carbon-intensive commodities is expected to increase as governments implement stricter regulations on emissions. However, these companies can mitigate these costs by purchasing carbon credits to offset their emissions, creating a significant market for carbon credits. The trend towards stakeholder capitalism and the increasing importance of Environmental, Social, and Governance (ESG) considerations are driving this shift, and the market for carbon credits is expected to continue growing in the coming years.
Carbon offset market's future potential: The carbon offset market is becoming increasingly attractive due to advancements in technology and the shift towards renewable energy, presenting an opportunity for significant growth and innovation.
The carbon offset market is set to become a significant player in the future, especially as technology advances and the cost of renewable energy continues to decrease. This sector was not viable in the past due to lack of verification, high costs, and incentives for companies to produce in countries with cheaper labor and energy. However, with advancements in technology and the shift towards renewable energy, carbon offsets are becoming increasingly attractive. This trend aligns with the interests of management teams and stakeholders, and empowers average American households to support an industrial revolution focused on cheap power and robotics. Despite the challenges, this sector reminds us of the early days of Bitcoin and the adoption curve is similar. Overall, the carbon offset market presents an opportunity for significant growth and innovation in the coming years.
High yield cash account with 5.1% APY and FDIC insurance: Public Investing's high yield cash account provides a competitive interest rate and FDIC insurance, but the value of carbon credits may increase over time due to market demand and scarcity.
Public Investing offers a high yield cash account with an APY of 5.1%, which is significantly higher than many other financial institutions. This account is a secondary brokerage account that automatically deposits funds into partner banks for FDIC insurance. However, the value of carbon credits, which are used to offset emissions, may actually increase over time due to the rising demand and scarcity as global emissions continue to grow. The market for carbon credits is expected to continue its resurgence, with China being a major player despite ongoing competition between nations. While the strategies of political leaders like Trump and Biden may change, the need for addressing global emissions remains a pressing issue.
Secretary of State Blinken's first mission: Building relationships in France and addressing climate change: Carbon credits, a valuable commodity for reducing carbon footprints, will continue to rise in value as more companies and governments prioritize emissions reductions and reporting requirements demand transparency
Anthony Blinken's first mission as Secretary of State involved visiting France, where he was educated, and building relationships with key European leaders. A major focus in global politics today is the shift towards addressing climate change through carbon initiatives. Mark Carney, former Governor of the Bank of England, emphasizes the importance of this issue in his recent book. Carbon credits, a commodity that requires certification and upfront investment, are becoming increasingly valuable as governments and companies prioritize reducing their carbon footprints. The process of creating and verifying these credits is complex and costly, with only a limited number of projects able to produce large quantities over extended periods. The value of carbon credits will continue to rise as more companies and governments commit to reducing their carbon emissions and as carbon footprints become mandatory reporting requirements on balance sheets.
Investing in undervalued sectors like carbon credits: Consider undervalued sectors for high IRRs, ESG factors are important, America's economic potential may lead to global power rise.
There are opportunities in investing in undervalued companies in sectors like carbon credits, where IRRs can be significantly higher than average, despite the current market price being a fraction of the projected future price. The speaker also emphasized the importance of considering Environmental, Social, and Governance (ESG) factors in investing, as this trend is expected to grow with increasing government regulations and consumer awareness. Additionally, the speaker shared his perspective on the potential rise of America as a global economic power, based on his observations of the data and the country's economic potential, despite any perceived anti-American sentiment.
A New Normal for the US Dollar and Monetary System: The speaker argues that we're in a new economic reality, with significant changes to the US dollar and monetary system. Understanding this context, particularly regarding the US dollar and gold, could provide valuable insights for investors and economists.
The speaker presents a contrarian view on current economic trends, believing that we are in a new normal and that the US dollar and monetary system are undergoing significant changes. He emphasizes the importance of understanding this new context, particularly in relation to the US dollar and gold, and argues that the speaker's unique perspective, gained from building energy projects and experience with critical metals, provides an advantage. He also challenges common beliefs about negative interest rates and deflation, and encourages readers to look beyond negative perceptions of America and consider its historical resilience. The speaker's book, with its unconventional ideas, may be controversial but could offer valuable insights for investors and economists.
The US dollar's role as the world's reserve currency and its connection to oil may change with the transition to renewable energy.: The US dollar's role as the world's reserve currency, linked to oil since the '70s, could face challenges as renewable energy replaces petroleum. Potential solutions include backing it with renewable energy or making deals with resource-rich countries.
The US dollar's role as the world's reserve currency, backed by oil since the mid-'70s, has led to a significant loss of manufacturing jobs in the US and the growth of other countries like China. However, with the transition to renewable energy and the decline of petroleum, maintaining the reserve currency status may become challenging. The US could potentially back it with renewable energy or make deals with countries rich in renewable resources. Additionally, the rise of platform companies and automation technology is leading to a shift in manufacturing towards low-cost, robotic operations, which could change the global economic landscape.
Global Economic Power Shift: US vs China: Despite challenges, the speaker believes America's best days are yet to come. China is emerging as a strong economic player, but the US dollar's global influence remains significant. Tensions between China and India, as well as India's alignment with the US, add to the complexities of the global economic landscape.
The speaker believes America's best days are yet to come despite its current challenges, and the global economic landscape is shifting with China emerging as a strong player. The speaker also emphasizes the importance of the US dollar as a global reserve currency and the challenges of dealing with multiple nations in the Eurozone. China's growing economic power and efforts to reduce reliance on the US dollar are noted, but the speaker argues that America's influence remains significant. The ongoing tensions between China and India, as well as India's efforts to align more closely with the US, are also discussed. Overall, the conversation highlights the complexities and dynamics of the global economic landscape and the ongoing power struggle between major world powers.
Learn from Jerome Maldonado's book and resources: Check out Jerome Maldonado's book 'The Rise of America' on Amazon or Barnes and Noble, visit katusaresearch.com for more resources, and follow Trey Lockerbie on Twitter @TreyLockerbie. Submit questions for future episodes at asktheinvestors.com, access the TIP Finance tool, and visit theinvestorspodcast.com for show notes, transcripts, and courses.
Learning from this episode of TIP is that Jerome Maldonado, the author of "The Rise of America," was a guest on the show. He encouraged listeners to check out his book on Amazon or Barnes and Noble, as well as visit katusaresearch.com for more resources. Trey Lockerbie, the host, thanked Marin for joining and encouraged listeners to follow him on Twitter, @TreyLockerbie. He also mentioned the TIP Finance tool, which can be accessed by Googling it, and invited listeners to submit questions for future episodes at asktheinvestors.com. The show is available for entertainment purposes only and should not be considered financial advice. Listeners are encouraged to subscribe to Millennial Investing by The Investors Podcast Network and visit theinvestorspodcast.com for show notes, transcripts, and courses. The show is copyrighted by The Investors Podcast Network and requires written permission for syndication or rebroadcasting.
