Transcription
[Music] Hi, I am Tom Lassing, Beursbox.nl. I will be discussing a lot of topics together with Jack Hoogland, because there is a lot to say today. Jack, welcome. Good morning Tom. Hey, we have many topics. I actually wanted to start with something that is not in the news at all. And that might be nice to do, because we all know the news items. But one of the things that is not in the news is how wealth is now going to fewer and fewer people. And if I may give a few examples, in India, 1% of the people have 40% of the wealth. In South Africa, 10% of the people, the richest 10% have 80% of the wealth. And in the United States, there are now more than 850 billionaires. So you see more and more wealth falling into the hands of a few people. And there is a study, and unfortunately I forgot to write down who did that study. But they looked at earlier societies and said that in most cases things went wrong because wealth became increasingly concentrated among fewer and fewer people. Yes. And then at some point, things go terribly wrong. And yes, I find it shocking that with all the knowledge we have, we are heading in the same direction. And yes, I don't know, how do you see it, Jack? Well, I don't find it shocking at all. Okay. No. Well, I do, because I had hoped we had learned something. No. Yes. Yes, no, learning, that is generally yes, I am not too positive about that learning capacity. but but it all starts in my eyes, it all starts with governments, politicians who incur too much debt, who and as a result, central banks that pursue too stimulative policies, that we all know, that print money, buy bonds, and because of that money printing, the poorest part of the population suffers from it. They bear the brunt of the inflation that results from it. The poorest part of the population is also not in the stock market. Because inflation is not only consumer prices, but you also see it reflected in the financial markets. So everyone who is in the financial markets, who is in the housing market, benefits from it. And the low-income earners, well, they don't benefit from anything. They only suffer from those rising prices. Yes. Yes. And now that says that those governments, one of the other things that leads to the conclusion, there has been a study, 50% of the world's population does not trust their own government. Well, and that has to do with that too, because among the poor 50%, there will be many who say, yes, I no longer feel heard. And yes, I think that is a very sad matter, and that is why, in the coming years, in my opinion, you will see much more unrest. And perhaps that is the topic we will discuss more often in the coming months, because unrest is increasing alarmingly. And yes, if we look at, for example, America, the unrest there has increased enormously, because the government has effectively run out of money. What can you tell us about that? Well, I have seen that, and it has to do with something with healthcare benefits that are being cut, and that the Democrats do not want to be cut. But as an investor, you could read in the newspaper that it happened in 2018, it happened in 2011, and we as investors can't remember it at all. You know, it's all much more media. At some point, a compromise is reached somewhere, and then life goes on. Yes, you also saw no reaction on the stock market yesterday. So in that sense, for investors, it is a nonevent. It is not a nonevent for the American economy, because those civil servants are doing their jobs, and they are no longer doing that now, because they are at home without money. So things are not moving forward there. And Americans themselves suffer the most from that. National parks are closing, certain services are being cut. And we as investors are only limitedly affected by it, because the employment figures were supposed to come out on Friday, and they are not coming out, because, well, there is no work, no civil servant who can provide that. But regarding those figures, August was officially stated as plus 54,000 jobs. That has now been revised to -5,000. So that is really worse. And they have already looked at September. It was actually thought that, well, there would be plus 11,000. And they are now saying that, well, that won't happen, that we now expect it to be -32,000. And yes, then it is the case that September has only just passed, so it is too early to say that. But it is clear, things are going much worse in the US than they thought. And yes, that is, in my opinion, a shocking matter. I had expected it. I mean, I find Trump's economic policy thoughtless, and I also expected it to have direct consequences for the economy. But I wonder to what extent Americans already realize how bad things are. Well, those 32,000 jobs, that 32, that 32,000 job loss, that is actually not an expectation. That is the ADP. Those are the payroll companies that also provide their figures every month, and they came out yesterday with that -32,000. And what you said, I also happened to see that the revenues for import tariffs were 32 billion in September. And that actually corresponds to an expected 350 billion per year. And yes, that, yes, however you look at it, Tom, you know that that remains an ordinary tax increase for American companies. And if they were to pass on that tax increase of 360 billion one-to-one in their prices to consumers, then yes, okay, those prices will go up for everything that consumers buy. But then consumers will buy much less because they are under financial pressure. And so they will pass on those prices as little as possible. But that means that the profit margins of those companies shrink. And if the profit margins of those companies shrink, they will do things to ensure that those profit margins can be stretched a bit. And what will they do then? They will cut costs. And if they cut costs, and you could already see that in the second quarter. Because in the second quarter, the economy grew, and it was fantastic. All of the second quarter, of course, is the quarter where the trade wars were imposed, and all this and then not, and then yes, and then more, and then less. But but the consumer kept spending money in the second quarter. But companies have already started to cut back, because company spending fell by 5.6% on an annualized basis compared to the first quarter. So you already see there, if companies tighten their belts, then you know what will happen at some point. Yes, the last thing they will do is hire new people. Well, you see that in those job figures too. And the worst thing is, and we just talked about the learning capacity. 100 years ago, officially 96 years ago, exactly the same thing happened. President Hoover, to support the economy, imposed import duties and did exactly what Trump is doing now. And we all know what came of that. It became the Great Depression. And it started exactly like that. Those import duties were intended to support American industry. And what it did was that other countries also imposed import duties, which meant that American industry could no longer export. We see that now too. Yes. And then everything collapsed. The whole house of cards collapsed, and the economy went completely downhill. One of the things about Hoover was also, yes, you have to stand on your own two feet. And that is also essentially the basis of what Trump is saying. So Trump is copying Hoover, and that can only be a disaster in my eyes. Yes, and there is one big difference. That was the Smoot-Hawley Tariff Act of 1930. There is one big difference. Back then, in theory, the Bank of England was still the central bank of the world, but England was already in a kind of crisis situation financially. So it did not take on that role. It actually let that role, it did not come to the rescue, because, well, because it no longer had that power. And the Federal Reserve had only been around for 18 years at that time. And it did nothing, because it focused, well, it was not in its playbook, so to speak. So, in terms of central bank reaction, it was all a bit in between, in a transitional phase, so to speak, between the period when the Bank of England was still the world's central bank and the Federal Reserve became the world's central bank. And so what happened? The Federal Reserve did nothing. And Bernanke also studied that. He studied how the Federal Reserve reacted then, but never how it all actually originated. Hm. So and he has actually concluded that, yes, if there is such a crisis, gold must be printed. And he was actually right about that, but he should have also studied those preceding 15 years. That would have been much easier. But in any case, the big difference now is that you have a central bank that will react, that will print money. That also has all sorts of negative consequences, but that is different. That is, you will not get a deflationary depression, so to speak, you will simply go towards inflation. Yes, you will eventually perhaps even go towards some kind of hyperinflation. Yes. Well, I think I am afraid that, well, it is of course never exactly the same, and this is indeed one of the major changes that has allowed us to postpone that fact. But you see now that Trump is moving more towards that Hoover methodology, making it look more and more alike. And ultimately, even with money printing, ultimately there must be a point where it no longer works, and where the money either becomes worth less, or we find ourselves in a deflationary situation where nobody says, "Yes, I don't want to buy anything because it will be cheaper tomorrow." Yes, the money is also becoming worth less, Tom. For a while now. Yes, no, I know that, but it is not a problem yet. And it is heading towards it now. And especially because we now see that America is really seen as a kind of pariah, and that we increasingly say, "We don't want anything from America anymore." We only want weapons from America because we can't make them ourselves yet. But actually, the intention in Europe is also, yes, we have to do that ourselves. And other countries are also saying that. And agricultural products, we say we don't need those anymore. China has bought zero percent soybeans from the United States this year. Last year, billions in value, and this year zero, because they simply ordered them from other countries, Argentina and Brazil. That's how fast it's going. And yes, then I think, okay, this will naturally lead to a tipping point. In the beginning, you don't feel anything, and then there is that tipping point, and then suddenly there is a crisis. And it's not like every day a little bit more. No, all happy parties. The roaring 20s, and then from one day to the next, the party is over. And I fear we are heading in that direction. Hey, but there is a good saying for it, isn't there? How did you go bankrupt? First slowly, then suddenly. Yes. Yes. Yes. Well, that's true. Hey. We also saw something with those student loans. What can you tell us about that? Yes. Well, I first want to go back to what you said about inflation and so on, about that crisis situation. So, what happens is that the Federal Reserve will print money. But also the ECB, all of them, they are already doing that, they have already done it, but they will print more and more money. And the consequence, you already see it now, is that confidence in government bonds is strongly decreasing. And we saw last week that, look, pension funds, life insurance companies, investment funds, they have all grown up. They have all had 60% stocks, 40% bonds for the past 40, 45 years. Gold, nobody talked about that. Now Morgan Stanley, one of the big Wall Street banks, says, guys, it's better to have 60% stocks, 20% bonds, and 20% gold. And Goldman Sachs has calculated that if just 1% of the investors in US government bonds say, "You know what? I'll exchange 1% of my government bonds, if everyone says I'll exchange 1% of my government bonds, only the American ones for gold, gold already rises to 5000." Hm. So the simple fact that Morgan Stanley comes up with 60-20-20 instead of the traditional 60-40 that we have heard all our lives, that says a lot. And the fact that Goldman Sachs makes that calculation, that they even bother to make that calculation, that also says how much it says that Goldman Sachs also sees the same problem. And why is that important? Those banks have millions of customers. And that means that they are actually advising their customers, saying, guys, be careful with bonds. Yes. Well, that is fortunately not new. But indeed, many investors say, "Yes, I am not in bonds," they think. But then their pension fund is, and so they are heavily invested in bonds. So in that sense, we are almost all in bonds. Only, yes, that is then through our pension funds. Hey. Another topic, perhaps we should touch on it, is Spain, the blackout we saw a while ago. Yes. Well, that is also an interesting development. I read that they have investigated that blackout, and it was of course not due to solar panels. Spain has invested enormously in solar panels, but it was of course not due to that. It was due to the power grid, they said. Because what was the case? For every euro they invested in solar panels, they invested 30 cents in their electricity grid to adapt it. And they are now saying, "Yes, that should have been a euro." So for every euro in solar panels, we should have invested a euro in the electricity grid as well. So we have invested too little in it. So, actually, if you calculate that, they are actually saying that solar energy is actually more than 50% more expensive than we have projected so far. Because, yes, that is a good one, because the funny thing is that they have actually done the same with nuclear energy. Because they have also done such a trick there. Because with solar energy, they said, "Yes, we must include the destruction of solar panels in the calculation." Whereas with nuclear energy, they have never included the decommissioning of nuclear power plants in the calculation. So that is a well-known trick that they have apparently used again. Yes, but they are getting a bit worried, because I also read, and that's why I found it nice to bring it up, that there is discussion again. Spain has always planned to close nuclear power plants at the end of their lifespan. Then they are still a bit less foolish than the Germans who just shut them down like that. But there is now discussion again about that, so it seems they are getting a bit worried and are thinking about adjusting all of that. And that's where my point comes in: ultimately, all those countries that are investing heavily in wind and solar will eventually come to the conclusion, guys, if we want to achieve low CO2 emissions, we cannot avoid nuclear energy. No, I think that is a correct conclusion. And I think it is also smart of Spain to extend it, partly because the amount of energy we use, especially in Extremadura, is many times greater than expected 10 years ago. So in that sense, I think it is also wise to go in that direction. And you need a baseload, you need an electricity grid. And you won't achieve that with batteries. And of course, you can also make batteries in salt. But one thing is incredibly important on the grid, and that is that you also need speed. And what you don't have with, for example, salt batteries, however large they may be, is that speed. The moment the power goes out, you need a solution within a microsecond. Lithium can do that, salt batteries cannot. And that is why, if you were to use net batteries as a basis, you would need such enormous quantities that it wouldn't work. Nuclear energy can do that. So it seems logical to me. Well, if we are talking about nuclear energy, then we might as well talk about China, I think. Yes, China, they announced this week that two more reactors have gone into construction. A 2000 MW reactor. So that is the standard size of a large reactor. More than twice as big as a brush. And they have indicated that the construction will take 56 months. So that is 5 years and 8 months. So less than 6 years they will take to do it. And they are building them for 2.4 billion each. And that might sound a bit optimistically budgeted, but the most, the multiple centers they have built are around that price. And that shows well. And this is where you also have to give Trump credit. Trump said before the elections, "Guys, we are going to have 95 nuclear reactors in the US. There are about 40 different designs. If we now invest in nuclear energy and build 1000 MW reactors, all the same, so that each subsequent reactor we build, we learn, we have a learning curve, we build faster and cheaper than the previous one because you have a standardized process." Well, the Chinese are doing it for 2.4 billion per reactor. I find that, I find it incredible. I also find it incredible that you hear so little from politicians in Europe, for example, saying, "Guys, we should really look at how the Chinese have done it over the past 20 years." Yes. Yes, you say something. I am preparing a video about China, how they have built it and how we cannot copy it. I will make a video about that. I am really busy researching that now. Because what they have done, we simply cannot copy, but we must see what we can learn from it. Because one of the things we cannot do is, for example, create production on the scale of China. Because we don't have the market that China has. Firstly, they have more than a billion people in their own country, and secondly, China produces for the world. And yes, they have actually arranged everything. We will not catch up with that lead they have. But what we can do is work more efficiently, although of course, because that is the dangerous part, if you say, "Yes, we will use one design and do as much as possible," then you miss out on development, because it remains in development. And so you have to find a compromise between standardization and working towards modernization. And yes, that is a fun challenge. Yes, absolutely. And look, China has not only built the same ones over the past 20 years. There has been development there too. But that's where it goes. I read that in the 70s and 80s, and especially in the 90s, they built two reactors each time, and there was always someone who said, "Oh, I have a new design, and this is even better, and this." And then they said, "Okay, we'll do that." And then that whole learning curve, that was actually, yes, it never happened because something new always came up. And here you see, yes, China simply shows that you can build a reactor in less than 5 years. And that was not the case in the beginning. That was not 10, 10, 20 years ago. But by simply repeating the process, the next reactor becomes a bit cheaper each time, and it goes a bit faster each time. And yes, and that is what the US will also do. Yes. And unfortunately, it is almost impossible in Europe because, firstly, we have the language barrier, and secondly, we all believe that we are independent and can therefore independently choose what we want, and perhaps because we all think we know better. That is also possible. Yes. Yes. And especially in the Netherlands. Oh, we know better. Hey, then just to be clear, we have now discussed nuclear energy. There are two metals that are currently incredibly in the spotlight. Uranium, which is of course directly related to nuclear energy. And also copper. And I think it's good that we talk about that for a moment. Then we'll wrap it up. But yes, I think copper and uranium are very interesting for investors at the moment. Yes, copper. Yes, last week we had that news about that mine, that Grasberg mine in Indonesia. 3% of global production disappeared in one go at a time when the copper market was already extremely tight. And I also happened to read this week, and I also wrote that in my newsletter on Tuesday, that the copper stock in the London Metal Exchange was also at a very, very low level at the same time. So, you see, everything is coming together, and all of this is happening at a time when, importantly, the macroeconomic situation is that central banks are stimulating everywhere, and therefore the global amount of gold in circulation is increasing. That there is a huge expansion of AI infrastructure underway. That everyone is investing in defense. That everyone needs to invest in electricity grids because they have done far too little of that in the past 40 years. So, yes, then, yes, I can only conclude that for copper, the future looks bright for the coming years. Yes, I analyzed the BHP share this week, and perhaps that is remarkable. I can, yes, people can of course go and view the analysis there, but I will tell you what my analysis ultimately became. BHP is the largest copper producer in the world. They want to reach 2.5 million tons per year. And in my opinion, that is my opinion, the share is not worth buying. That might be very remarkable, but I think you should look elsewhere. And the reason why BHP is not worth buying in my opinion is the fact that it is the largest producer. And that might sound very strange, but that largest producer is also very vulnerable. And you see that now in China. The Chinese economy is not doing so well. And what do they do? They say, BHP, your ships are not allowed in the harbor. And why do they do that? Yes, they don't need those products now, and they want a better deal in the future with BP, because most copper also comes from there for China. So they are now squeezing BHP. Well, and BHP really wants to sell to China, because that is its largest market. That struggle is now ongoing. But BHP is always the loser. So that's why the question is whether you should invest in it. And my conclusion at this moment is no. Yes, I myself also see much more potential in medium-sized producers that are profitable, that have a good balance sheet, and that are working to increase their production in the coming years. Then you have an ideal, an ideal combination between financially strong, not too dependent on, for example, a major player like China, or not dependent on it at all. Active in a good, what do you call it? Political jurisdiction, a friendly country. And growing. And then, on top of that, if you also benefit from the rising copper price, then in my opinion, you have the ideal circumstances, actually what you, what you are seeing now with medium-sized gold shares, for example, gold and silver shares, the same thing is happening. That is also something that is very simple and that few people think about. I have indicated that before. If you have a revenue, like a gold or copper producer, the same as a gold producer. If you have 100 in revenue, 90 in costs, and the price suddenly rises by 10%, then you have 110 in revenue, 90 in costs. Then you have doubled your profit. That's how fast it goes. And that is the effect you are seeing now. And with copper, you will see that now. I think copper is a bit behind gold and silver in that sense, because it is a more industrial metal. Yes. Well, I completely agree with you. I think you should look at the second tier at this moment. Not at the largest companies in that sector, but precisely those companies that are emerging now. I also think it's not yet time for the prospectors of copper, gold, or uranium. I think that's still a bit too early, but that middle sector is interesting at the moment. And we are seeing enormous movements there now. I deliberately say movements, because in the uranium market, we have also seen enormous downward movements this week. Last week, we talked about Energy Fuels. I have taken a lot of profit there lately because the share became too large in my portfolio. And this week, we saw a decline of more than 18, back to even below 15. And yesterday, at 15.10, I bought shares again, and they closed at 16.07 or so at the end of yesterday's session. So you see those movements, yes, that movement also means downwards at times, but I think you are well positioned in that sector. If you manage to step in at such a downward movement, then you can achieve extra returns. I was lucky again yesterday. I don't know what we will do today, but yesterday, almost a euro on top of it again in a few hours. But I think that is the way to invest. Yes, you had a rebalancing this week on September 30th of a number of ETFs, which meant that larger shares were sold and smaller shares were bought, causing the prices of larger shares to come under pressure and smaller uranium shares to often rise in price. Yes. And UUUU, that is the ticker for Energy Fuels, had of course risen sharply. So they will have put it up for sale for a while, because they had the same problem as me, that it was becoming too large in the portfolio. And I had that problem too, but I took those profits just before September 1st. And yes, you see now that it is rising again, because, yes, and now the question is, and remains so, whatever the cause, that such a share is occasionally put up for sale, whatever the reason behind it. And that can be an interesting buying moment in a market like this. There will come a time when the market is over, but for now, I don't see that. No, neither do I, Tom. Hey, then I would like to thank you very much, Jack. And then I will speak to you again next week. Okay, Tom, until next week. Goodbye. Nice. [Music]