Last Energy Crisis, This Sector Went Up 20x (Ferg Cullen)

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Money miners.
Happy Easter, long weekend.

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We're going to jump straight
into this one.

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We've got our good friend Trader
Ferg Ferg Cullen to talk all

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things that are interesting him
in these very volatile times.

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Spoiler JD, we talk about coal.
The conversation was so good, we

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just started abruptly, so we're
going to jump right in.

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Here we go with Trader Ferg.
Yeah.

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I mean, you can't script it if
you're, if you're trying to

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write this shit, right, Like
you.

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It's, it's like there, there is
no learnings from what happened

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in, in Russia.
There's no flexibility to, to

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adapt.
Like I, I was listening to this

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thing with Marco Pappich the
other day and, and it was really

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funny.
It was like for, for the

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continent that came up with like
Machiavelli there.

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There's no ability to, you know,
deal with someone that you don't

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actually like, like the
Russians, like buying gas from

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them right now wouldn't be the
worst thing in the world to see.

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You know it.
It doesn't mean you support

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what's going on over there.
It's you looking after your own

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people and there's there's no
ability to do that like like

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Mertz in Germany, not having any
flexibility.

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And it's not just him
specifically, it's the structure

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he's within, but having no
flexibility to, to backtrack on

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the how they make made with
nuclear.

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It's it's amazing.
It's it's amazing.

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And they'll pay the price of it.
Dio how's this the timing?

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So both Germany and Taiwan went
anti nuclear as of mid last

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year.
And Taiwan's already trying to

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backtrack as quick they're
trying to restart two of them

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immediately because they're
yeah, they're in deep, deep

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shit.
But they they pretty much

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orientated their whole system
around LNG.

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Yeah, two countries you should.
Know better as well like.

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Yeah, yeah, what's, I honestly
think there's some like

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brilliant kind of like this is
the time you should fast out the

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history books, like the going
back to the oil embargo and

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seeing what was achieved post
that.

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Like you almost need a real like
an absolute train smash to get

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people thinking in terms of
energy security.

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And I think this is it.
And like you look back what was

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achieved and like 60% of the
reactors, nuclear reactors were

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built between 71970 and 1973 and
1990, like 1/3 was built in that

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one 80s decade alone.
Like France went from like 15 to

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55 reactors in a decade just
like crazy.

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It's not a coincidence.
It was a response.

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Yeah, exactly.
Like yeah, if your ass gets

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smacked hard enough, you have to
give away all your ideologies

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and and get back to practical
reality.

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Unfortunately, we need to have.
Spanking every now and again.

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Yeah, it looks like Australia's
going to energy lockdown.

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She's. 100% I think we've got to
say we've started recording

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already, I reckon.
I reckon we're into the good

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stuff.
No, I don't want to.

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I don't want to miss any of
this.

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Ferg, I couldn't agree more.
And that's a silver lining.

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We were having this conversation
just yesterday.

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There's got to be a silver
lining and for, for the world,

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nuclear, these sorts of things
for Australia as well.

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I know you're a Kiwi, but you
had a spell here too.

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And like LNG and, and how we,
how we, you know, use this, this

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opportunity that has presented
itself as Australians to become

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a quote UN quote safer export
hub for the world.

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Or do we, do we take the other
tack and do we, do we tax the

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hell out of them?
It's a it's a big moment.

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Yeah, I think they've already,
they're already moving towards

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taxing it.
There's just the Australian

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mindset or political mindset at
the moment.

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It's just tax anything that
makes profit and they can

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already space it's yeah, it's
just short term stupidity and

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the price will keep going higher
and higher until there's

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something catastrophic happens
and then you get the real

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switch.
Yeah.

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I might become an expat like
Ferg.

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Come over to SO Indonesia where
you don't have to worry about

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electricity, that's all coal.
Come to Indonesia with a yeah,

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don't you have like a Monaco
passport or something like that

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too?
No.

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It gets more appealing by the
day.

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Yeah, I mean, talking about Iran
and all this stuff you started

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one of your recent posts with
with a cracker.

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My, my track record for calling
geopolitical events is

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unblemished by success.
I think I heard Rick Rule say,

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say similar kind of words.
But I love the kind of

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humbleness.
And that was, I think it was in

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your article called 5050 where
you started talking about

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thermal and these sorts of
things.

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And otherwise you're you're
looking at what's playing out in

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the Middle East and the
opportunities that are

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presenting themselves.
But how are you taking this all

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on board over the last month?
Yeah, obviously it's like just

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the titles of my pieces were
like I've got no idea of

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geopolitics.
So first one was 5050, next one

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was 8020.
And now it'd be maybe 95, five

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kind of kind of dilated.
And then like when you see stuff

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like Ruslavan get hit by
missiles and that's force

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majeure, like long term force
majeure.

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Like I think it's going to take,
I think it's going to take five

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years to repair those LNG
trains.

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Then you can really start making
some longer term investment

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calls and not right from the
start.

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My first call was obviously
thermal coal.

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That was just a no brainer to me
that across Asia and what coal

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capacity Europe's got left will
be pushed to its limits of its

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utilization.
And so that would straight feed

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into into fermal prices which
were just coming off a bottom

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anyway.
So it was it was sort of

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brilliant timing.
I always look for a really nice

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risk reward when you're not
taking a lot of risks.

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The the coal company's balance
sheets are already great.

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They're just all cashed up.
So that was just just a really

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clean play to me.
And I didn't think I would lose

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too much from the start, even if
there was a like he did land the

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Taco and just pulled up and took
off.

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And from there, like convictions
only really built.

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I just, the more I dig into
this, the more I think it's

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we're in real trouble like the
particularly the EU, like they

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couldn't have prepared
themselves worse.

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Their storage is at a record
low.

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They've only a month ago signed
a contract to pretty much get

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themselves off Russian gas.
So it goes in stages, the first

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stages and two months that they
had to be off short term

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contracts, two to three months I
think short term LNG and then

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after that short term pipeline.
And then the big one kicks in

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off Russian LNG as of January,
which is the middle of their

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winter when they've got storage
that they're heading into that

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they have to ditch.
And they've put pretty heavy

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clauses in as well.
Any they've made it, they've

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really sort of made it really
hard to reverse, which is just

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going to really bite them.
And then by September next year,

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they have to be off the last of
their pipelines.

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So, and on top of it, like the
even the, the European energy

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crisis wasn't, isn't that great
a parallel because all that

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energy found its way into the
market, whereas now it'll be a

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knife fight between them and the
Asian markets that'll be trying

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to make up a shortfall as well.
So yeah, I think that that's

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probably the easiest call that
I've made.

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And it's it's obviously been
playing out regardless of some

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of the volatility with tacos and
the war being over.

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I've lost count of how many
times US has won.

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It's hard to imagine that, yeah,
like even if you get Taco or

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whatever, it's just hard to
imagine a real scenario where

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where there there isn't still a
mad rush to have more energy

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security.
Where where there, there, there

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isn't, there isn't elevated coal
demand than there was before.

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There isn't elevated, you know,
oil demand than there was before

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as people just become more
prepared, like have have have a

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higher degree of necessity for
for energy security.

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It's yeah, I don't know.
I, I just, I just, I see the

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asymmetry that you can't speak
to there irrespective of Taco.

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Yeah, well, I think now is the
time to pull out the history

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books for the 1970s.
I, I think far too many people

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are getting caught up on what
the latest Twitter posters or

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where this could be in a month
and they should kind of zoom out

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because there's some great kind
of parallels that I see between

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there was some countries were
off the back of the war.

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They were very reliant on cheap,
cheap oil and they were very

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complacent.
So just to drop a few a few sort

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of data points, France was
reliant to the tune of 40% of

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its electricity was generated by
oil going into the oil embargo

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embargo.
Japan was 75% reliant on oil for

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its electricity generation going
into the 1973 oil embargo.

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And they obviously got their
asses handed to them.

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And within a decade, probably
better part of two decades, they

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were both largely offered.
There was no they were no longer

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reliant.
Obviously France was just a

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monster of a nuclear build out.
They built went from 15 reactors

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to 55 in the decade of 1980s
alone of of the entire nuclear

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fleet that we still have today.
Like I think 58% of it was built

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in those two decades from 1973,
just under 2 decades, 1973 to

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1990.
And Japan obviously did it with

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a mix of of nuclear coal and,
and LG and even Japan's coal.

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I didn't quite realize the
history.

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I was just being digging through
it all.

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They had largely got off coal,
so the coal was a big chunk of

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their electricity.
It was sort of 35% in the 1950s.

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They had slowly been weaning it
down because obviously the oil

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was so cheap.
Got down to 5% come 1973 and

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then obviously the crisis had
and that they've took it all the

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way back up to I think it topped
out about 33% of electricity and

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it was like 2017 and it's now
28% of their electricity.

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So they had gone off coal and
heavily back on coal.

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So one of my really big
takeaways from this is we are I

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think a lot of people thrown
around just in time to just in

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case for just supply chains
thinking it's just sort of like

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kind of almost excluding energy
out of it and pretending supply

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chains were resilient with LNG
as the sort of the bridge to

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renewables.
And I don't think renewables

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apart from a few spots, which
can make sense if they have, if

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they have the system in place
like Middle East makes sense

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with solar, for instance,
because they've they've burned a

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lot of oil and they have the
flexibility in their system that

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they couldn't store solar.
But the vast majority it doesn't

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make sense for.
And so there's going to be a

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massive realization that need
energy security.

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And you only get that in a few
ways.

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You need, you need reliable base
load.

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And so you can get that from
coal and the immediate term

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longer term is nuclear or if
you're blessed with domestic gas

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and you could lean into solar
heavily.

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And then you've got the because
the thing, the thing with

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renewables that I don't see
mentioned enough is for every,

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for every sort of GW of solar,
solar or wind you're installing

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you, you generally have to have
one for one backup.

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And whether that's LNG, whether
that's coal, whether that's

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hydro, hydro doesn't work
amazingly because you obviously

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go through prices and stuff like
that's why China has to keep

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adding to its coal fleet, just
runs a low utilization.

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So it can flex up whatever it
needs.

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And I think what we're going
through is the realization that

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LNG is just in time and and that
can be threatened, like Trump is

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already sort of starting to
threaten Europe with sign the

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deal or your LNG, albeit at
risk.

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And obviously how Safers LNG
flows out of the the Gulf going

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to be from here on.
So yeah, I can go anywhere you

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like with that.
But that's kind of one big

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framing of this all.
I love the reading of the

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history that that always kind of
speaks to me.

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I'm I'm curious on the Japan
point.

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Going from coal in the 50s to
60s to really maxing out on on

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on oil, then vice versa, that
was purely an economics

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decision.
It was cheaper at the time to

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use oil to run the nation.
Is that right?

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Yep.
Yeah, It was just oil was dirt

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cheap and they did have domestic
color as well.

226
00:13:17,840 --> 00:13:19,560
They depleted their domestic oil
real quick.

227
00:13:19,720 --> 00:13:22,160
Yeah, they depleted theirs.
So there would have been just an

228
00:13:22,160 --> 00:13:24,400
economic switching at the time.
Yeah.

229
00:13:25,160 --> 00:13:26,440
That's that's fascinating.
The.

230
00:13:28,000 --> 00:13:31,240
Yeah, I I actually remember when
I first stumbled across the

231
00:13:31,240 --> 00:13:32,840
Ferg, it was pre money in mine
days.

232
00:13:32,840 --> 00:13:37,440
It was Yeah, I I got really into
your content like like 22, I

233
00:13:37,440 --> 00:13:43,880
want to say, and and 111 memory
I have was just yeah, you like I

234
00:13:44,040 --> 00:13:46,240
I feel like you've been prepared
for this moment for a long time,

235
00:13:46,240 --> 00:13:48,520
like you were.
Yeah, yeah, yeah.

236
00:13:49,080 --> 00:13:52,080
No one cared about this for a
Yeah I just that one weird dude

237
00:13:52,080 --> 00:13:54,920
on talking about coal.
Yeah, even more than coal, like,

238
00:13:54,920 --> 00:13:57,480
you know, there was.
Yeah, I, I remember it must have

239
00:13:57,480 --> 00:14:02,400
been like October or December or
something 2022 and you're,

240
00:14:02,480 --> 00:14:04,960
you're buying, you're buying
deep out of the deep out of the

241
00:14:04,960 --> 00:14:09,920
money call options on WTI like a
like a 110 strike or something

242
00:14:09,920 --> 00:14:11,720
like that.
When, when, when oil had peeled

243
00:14:11,720 --> 00:14:14,200
back by by like 22, it was, I
don't know where it was.

244
00:14:14,200 --> 00:14:15,600
Maybe it was like 70 or
something like that.

245
00:14:16,400 --> 00:14:19,040
Now, I never that that never
happened, never came in the

246
00:14:19,040 --> 00:14:20,520
money.
But for a long time, you've been

247
00:14:20,760 --> 00:14:21,920
kind.
Of lost a lot of money on those.

248
00:14:21,920 --> 00:14:25,840
Yeah, I bet, I bet.
And most people playing in

249
00:14:25,840 --> 00:14:30,120
options too like, but but but
regardless, like it feels like

250
00:14:30,120 --> 00:14:33,480
you've been ready for a degree
of fragility in the system to be

251
00:14:33,480 --> 00:14:36,320
exposed for a long time.
You've you've you've thought

252
00:14:36,320 --> 00:14:39,240
this like has been an option for
a while, and you've been ready.

253
00:14:40,960 --> 00:14:44,880
Yeah, Well, I just always come
back to like physical realities

254
00:14:44,880 --> 00:14:49,480
will bite at some point.
Like this has been a lot of dumb

255
00:14:49,480 --> 00:14:51,280
stuff done.
And the way the way I kind of

256
00:14:51,280 --> 00:14:57,280
view it is, it's like that whole
like optimizing for efficiency

257
00:14:57,280 --> 00:15:01,360
at the cost of resiliency or
redundancy.

258
00:15:01,360 --> 00:15:05,160
I don't know what call it.
There is a price to pay for that

259
00:15:05,160 --> 00:15:06,600
at some point.
Because I was trying to think of

260
00:15:06,600 --> 00:15:08,480
analogy before this.
I think probably the best

261
00:15:08,480 --> 00:15:10,880
analogy I can think of is like
Boeing, like you keep

262
00:15:10,880 --> 00:15:13,200
outsourcing stuff, you keep
cutting corners.

263
00:15:13,720 --> 00:15:18,800
Like aviation safety has got to
be your front of mind.

264
00:15:18,800 --> 00:15:21,160
They they should sort of have
triple redundancy.

265
00:15:21,160 --> 00:15:23,720
And yet they cut so many corners
and outsource so many things

266
00:15:23,720 --> 00:15:25,760
that they ended up crashing some
planes.

267
00:15:26,160 --> 00:15:30,120
And I feel like Europe is
finding out out the hard way.

268
00:15:30,120 --> 00:15:32,840
Like what?
I can't think of anything that's

269
00:15:32,840 --> 00:15:37,840
more like like the pinnacle of
hubris was Taiwan and Germany

270
00:15:37,840 --> 00:15:39,840
both closing down their nuclear
plants last year.

271
00:15:39,920 --> 00:15:42,760
There was even like like the
kind of crowds standing around

272
00:15:42,760 --> 00:15:44,600
as they blow up the cooling
towers and the nuclear plant

273
00:15:44,600 --> 00:15:46,440
like all cheering.
And now they're going to be in

274
00:15:46,440 --> 00:15:48,480
an energy crisis least than a
year later.

275
00:15:48,800 --> 00:15:54,600
Like it's that's you.
You kind of have to be punished

276
00:15:54,600 --> 00:15:57,440
for stupidity.
And they going to be punished

277
00:15:57,440 --> 00:16:00,200
for it and they're going to make
new decisions moving forward

278
00:16:00,200 --> 00:16:04,760
that are more about redundancy.
And I've just always, I just

279
00:16:04,760 --> 00:16:07,280
always came at it like from I
think one of my first sub state

280
00:16:07,280 --> 00:16:10,640
posts was just going for a sort
of energy return on investment

281
00:16:10,720 --> 00:16:13,080
and like how the system has to
work.

282
00:16:13,080 --> 00:16:15,200
And a lot of people just like,
oh, that hasn't mattered.

283
00:16:15,880 --> 00:16:18,600
But when the whole time, like
you just watching the sort of

284
00:16:18,600 --> 00:16:23,240
redundancy decay, like a a lot
of like people don't realize

285
00:16:23,240 --> 00:16:26,040
like Germany was used to be a
big power exporter and it's a

286
00:16:26,040 --> 00:16:28,600
slowly dipped into sort of
deficit.

287
00:16:28,600 --> 00:16:35,120
Then it's been having more and
more reliance on on imports to

288
00:16:35,120 --> 00:16:37,840
bail it out.
Like one of the one of the more

289
00:16:38,000 --> 00:16:40,040
interesting battles that I don't
see mentioned at all.

290
00:16:40,200 --> 00:16:42,280
People should look at what's
happening with Norway and the

291
00:16:42,280 --> 00:16:44,080
EU.
That's absolutely fascinating.

292
00:16:44,360 --> 00:16:48,880
So Norway has been absolutely
punished by having its grid

293
00:16:48,880 --> 00:16:52,400
connected to the EU.
It's 5 folded it's electricity

294
00:16:52,400 --> 00:16:55,840
prices and it's caused like a
political crisis within Norway

295
00:16:56,240 --> 00:17:00,360
because the South was connected
by the interconnectors and the

296
00:17:00,360 --> 00:17:04,520
north wasn't because it wasn't a
sort of an connector between the

297
00:17:04,560 --> 00:17:08,160
South and the north.
And so one side had had its

298
00:17:08,240 --> 00:17:11,119
power go up five times and the
other side was largely

299
00:17:11,119 --> 00:17:14,280
insulated.
And so the parties have been

300
00:17:14,280 --> 00:17:17,720
kicked out on it and now they're
they're the progress party of

301
00:17:17,720 --> 00:17:21,240
things gone from like nowhere to
like quarter of the votes.

302
00:17:21,240 --> 00:17:24,000
And they're like a sort of the
anti cable crusade.

303
00:17:24,119 --> 00:17:27,359
And they're all the parties are
having to sort of start leaning

304
00:17:27,359 --> 00:17:32,240
that way because it's like
politically untenable to have

305
00:17:33,200 --> 00:17:37,800
their their prices just go go
crazy on them.

306
00:17:38,000 --> 00:17:41,440
And and always like blessed,
like it's absolutely blessed

307
00:17:41,440 --> 00:17:44,840
with 85% of its powers from
Hydro.

308
00:17:44,840 --> 00:17:47,680
It was, I've always just
referred to it as like just a

309
00:17:47,680 --> 00:17:49,760
big battery that Europe's trying
to connect to.

310
00:17:50,200 --> 00:17:54,600
And as soon as it connects to
Europe's system, that obviously

311
00:17:54,600 --> 00:17:55,720
sends their power through the
roof.

312
00:17:56,520 --> 00:18:00,440
And what's also quite
interesting with it is the E US

313
00:18:01,120 --> 00:18:04,520
trying to demand that they
continue integration, whereas

314
00:18:05,040 --> 00:18:07,920
they really don't have like a
don't have much weight in the

315
00:18:07,920 --> 00:18:13,000
negotiations because Norway also
exports 52% of their guests.

316
00:18:13,680 --> 00:18:16,880
So it's if they were to
disintegrate, like, yeah,

317
00:18:16,880 --> 00:18:20,520
they've got, they have the they
have the upper hand.

318
00:18:20,720 --> 00:18:23,600
So yeah, everyone should watch
that because that's that's kind

319
00:18:23,600 --> 00:18:25,480
of a really interesting way to
kind of monitor the whole

320
00:18:25,480 --> 00:18:28,200
situation.
And yeah, as I just ran through

321
00:18:28,200 --> 00:18:31,680
the EUI think they're really in
trouble, particularly some of

322
00:18:31,680 --> 00:18:34,280
them that are like, I don't know
what Netherlands was doing with

323
00:18:34,280 --> 00:18:37,320
their guests.
It's like just like their tanks

324
00:18:37,320 --> 00:18:41,160
pretty much empty and there's
not, no one going to fill them.

325
00:18:41,560 --> 00:18:43,800
And they've, yeah, poured
concrete down there.

326
00:18:43,880 --> 00:18:46,920
They're all gas wells.
You can't, you can't get out.

327
00:18:46,920 --> 00:18:51,760
Yeah.
But though I, I just, yeah, I

328
00:18:51,760 --> 00:18:54,200
think energy is going to come to
the forefront and energy

329
00:18:54,200 --> 00:18:58,080
security is going to be the big
play of the next decade,

330
00:18:58,200 --> 00:19:00,280
minimum.
And if you understood what

331
00:19:00,280 --> 00:19:04,160
happened in the in the 1970s,
there were some absolute monster

332
00:19:04,160 --> 00:19:06,320
winners on the back of that.
Who were they like?

333
00:19:06,320 --> 00:19:10,040
What were the what?
Were the oil services was one of

334
00:19:10,040 --> 00:19:15,880
the the absolute so it went from
it.

335
00:19:16,400 --> 00:19:24,040
There was a point in 1980 where
energy was 28% of the S&P.

336
00:19:24,200 --> 00:19:28,360
So that just I think in the oil
service sector as a whole went

337
00:19:28,360 --> 00:19:31,880
up 2000% over that decade from
1970 and 1980.

338
00:19:32,760 --> 00:19:35,760
And I've had a lot of people
that have like, because I've got

339
00:19:35,760 --> 00:19:39,080
a pretty also this heavy
portfolio and there's been a lot

340
00:19:39,080 --> 00:19:42,040
of analogies like, Oh, you don't
want to be in them if you have

341
00:19:42,040 --> 00:19:45,400
kind of a real bust.
And then they pull up like 2007

342
00:19:45,680 --> 00:19:48,280
type example.
Like I get that.

343
00:19:48,280 --> 00:19:53,280
But like starting point matters
with valuation and oil services

344
00:19:53,280 --> 00:19:56,160
have had absolutely no love.
There's been nothing but capital

345
00:19:56,160 --> 00:19:59,760
destruction in that sector.
Even me, we're like trying to

346
00:20:00,160 --> 00:20:01,760
trying to stop picking and
hanging out.

347
00:20:01,760 --> 00:20:05,680
Like I've largely round tripped
all my gains into liberation day

348
00:20:05,680 --> 00:20:11,760
which was.
Super frustrating and I'm at my

349
00:20:11,760 --> 00:20:16,240
recent counters of my picks.
I've been taken out of like 6 of

350
00:20:16,240 --> 00:20:19,320
my companies.
So stuff that I'm like doing all

351
00:20:19,320 --> 00:20:23,520
the work on, like going through
all the boring stuff like 10K's

352
00:20:24,080 --> 00:20:26,720
hoping for like hang on to the
thing for at least a multibagger

353
00:20:26,720 --> 00:20:30,880
and then I get taken out for
like 1020% just as I'm banging

354
00:20:30,880 --> 00:20:32,400
my head off and it just
happened.

355
00:20:32,440 --> 00:20:34,200
What?
Yesterday matrix.

356
00:20:34,200 --> 00:20:35,640
Was it matrix?
This is This is.

357
00:20:35,680 --> 00:20:38,760
PTSD for JD, he sold the thing
two days before.

358
00:20:43,280 --> 00:20:45,880
It's tough.
I hadn't sold all all the

359
00:20:45,880 --> 00:20:49,600
position and it did go into
other energy stuff but it

360
00:20:49,880 --> 00:20:52,360
genuinely hurts to.
I.

361
00:20:53,040 --> 00:20:56,720
Think we'd spoken about this
maybe 9-9 months ago or so.

362
00:20:56,920 --> 00:20:59,040
I had my head on the desk when
Trev came in.

363
00:20:59,040 --> 00:21:01,400
Katie.
'S like mate, I'm a fucking

364
00:21:01,480 --> 00:21:04,800
idiot.
I don't blame you.

365
00:21:04,920 --> 00:21:06,400
It was a dog up until then as
well.

366
00:21:06,520 --> 00:21:10,760
Like I've spoken to management
and they like they're they're

367
00:21:10,760 --> 00:21:14,320
lovely eyes, but they're just
sitting on all these POS just

368
00:21:14,320 --> 00:21:16,360
saying, oh, they'll come home
one day, they'll come home.

369
00:21:16,360 --> 00:21:19,480
And when you see sort of all
this kick off, I'm like, I can

370
00:21:20,080 --> 00:21:24,440
easily see oil producers, all
the offshore guys just sitting

371
00:21:24,440 --> 00:21:28,080
on their chequebook for another
like 6 months a year easily.

372
00:21:28,080 --> 00:21:30,880
And they'll just be in the same
place without much traction.

373
00:21:31,120 --> 00:21:33,600
So I was like, maybe, yeah.
So I was even looking at that

374
00:21:33,600 --> 00:21:35,360
position being like, do you
still earn your place?

375
00:21:35,360 --> 00:21:37,280
And then I can't do anything
about it.

376
00:21:37,480 --> 00:21:40,000
One of my one of my big skills
has just been lazy with My

377
00:21:40,000 --> 00:21:41,360
Portfolio, which generally helps
me.

378
00:21:42,080 --> 00:21:45,800
There's a there's a big lesson
in in that and like to your

379
00:21:45,800 --> 00:21:48,280
point of how you think about
this, the place in the portfolio

380
00:21:48,280 --> 00:21:50,320
and the part of the cycle we're
in.

381
00:21:50,320 --> 00:21:54,440
More importantly, like even with
like a whatever it was a 70%

382
00:21:54,440 --> 00:21:57,920
premium cash be it's like
conditional and all that sort of

383
00:21:57,920 --> 00:22:01,320
stuff and the rest of it.
But it's the bottom of the cycle

384
00:22:01,320 --> 00:22:03,200
like certain ad on on that
chart.

385
00:22:03,200 --> 00:22:07,080
And it's like, you know, it's,
it only looks good if you're

386
00:22:07,080 --> 00:22:09,520
looking at the chart from the
last six months or the last year

387
00:22:09,520 --> 00:22:12,720
or so or the last couple years.
But you zoom out enough and see

388
00:22:12,720 --> 00:22:14,640
where the company was in the
last cycle.

389
00:22:15,040 --> 00:22:17,400
And it's a it's an eye opener.
And that's what you've done.

390
00:22:17,400 --> 00:22:20,560
Well when you, you constantly
refer to like the, the ETF for

391
00:22:20,560 --> 00:22:23,520
the, for the space which which
got cleaned up and, and all of

392
00:22:23,520 --> 00:22:25,840
that.
But it's just indicative of of

393
00:22:25,840 --> 00:22:27,520
where we are in that cycle, I
think.

394
00:22:28,920 --> 00:22:30,440
Yeah.
Well, as you say, the ETF,

395
00:22:31,360 --> 00:22:33,720
there's a lot of information
when the ETF gets delisted.

396
00:22:33,960 --> 00:22:37,840
Yeah, that was a bit of history
was that was when I really

397
00:22:37,840 --> 00:22:41,320
backed up the truck of coal
originally was when the coal ETF

398
00:22:42,120 --> 00:22:45,720
gone, Yeah, gone.
Like and that actually marked

399
00:22:45,720 --> 00:22:49,920
the bottom because they hated
coal so much that they just

400
00:22:49,920 --> 00:22:52,360
dumped all the equities into the
market.

401
00:22:52,640 --> 00:22:56,000
It's not only like it was just
so rude because anyone that was

402
00:22:56,000 --> 00:23:02,840
trying to apply a like a view on
coal got taken out of the the

403
00:23:02,840 --> 00:23:06,160
vehicle and also got dumped at
the same time.

404
00:23:06,440 --> 00:23:09,640
And they literally put in the
bottom as they were being thrown

405
00:23:09,640 --> 00:23:12,280
out of the ETF.
And then from there coal went

406
00:23:12,280 --> 00:23:13,960
on.
Obviously, yeah, everyone knows

407
00:23:14,240 --> 00:23:18,640
the history went on sort of an
absolute yeah, hell of a run

408
00:23:18,800 --> 00:23:20,920
bottom.
But yeah.

409
00:23:21,760 --> 00:23:25,360
And now we've seen that again
with the range offshore.

410
00:23:25,400 --> 00:23:29,280
They they delisted that what a
week or two after Liberation

411
00:23:29,280 --> 00:23:32,040
Day, which I think was the
bottom and well services, we'll

412
00:23:32,040 --> 00:23:34,080
look back in the decade and that
would have been the bottom,

413
00:23:34,640 --> 00:23:39,200
yeah, unless we have some
absolute GFC type bus coming

414
00:23:39,480 --> 00:23:43,280
coming down the which will yeah.
Trap this Iran crisis, it's

415
00:23:43,280 --> 00:23:46,520
making people think about just
in case, just in time, supply

416
00:23:46,520 --> 00:23:50,520
chains where you're getting all
your your product from and

417
00:23:50,560 --> 00:23:53,040
thinking of our fantastic
partner Sandvik Ground Support.

418
00:23:53,040 --> 00:23:54,960
You don't have to worry about
that because they produce the

419
00:23:54,960 --> 00:23:58,960
stuff right here in Australia,
be it Kewdale or Newcastle or up

420
00:23:58,960 --> 00:24:01,200
in Brizzy.
Make Sandy ground support

421
00:24:01,200 --> 00:24:03,120
absolutely.
You know, knock it out of the

422
00:24:03,120 --> 00:24:06,640
park when it comes to the
production of ground support of

423
00:24:06,640 --> 00:24:10,560
all varieties for all
underground needs by by

424
00:24:10,560 --> 00:24:12,480
literally manufacturing it as
close as possible.

425
00:24:12,480 --> 00:24:14,960
They've and they've also by the
way, mate, got got distributors

426
00:24:14,960 --> 00:24:17,760
all over the world like this
place is they stockpiled ahead

427
00:24:17,760 --> 00:24:18,920
of time.
If I'm talking about

428
00:24:18,920 --> 00:24:20,480
stockpiling, well, you know
who's been stockpiling forever?

429
00:24:20,680 --> 00:24:22,720
Sammy Ground support.
Janie says we were talking a bit

430
00:24:22,720 --> 00:24:25,160
about coal before we had the
privilege of going over to

431
00:24:25,160 --> 00:24:27,160
Newcastle.
We've vetted the production

432
00:24:27,160 --> 00:24:30,000
facilities ourselves.
They are quite something to

433
00:24:30,000 --> 00:24:32,800
behold and like you said Trev,
they're working hard on

434
00:24:32,800 --> 00:24:34,440
supplying all parts of the
industry.

435
00:24:34,600 --> 00:24:38,160
Whether you are producing a base
metal, a precious metal, a bulk,

436
00:24:38,400 --> 00:24:40,600
they have got the ground support
that you we need for your

437
00:24:40,600 --> 00:24:43,920
mindset.
Made lots of bolts go into coal

438
00:24:43,920 --> 00:24:45,080
mines.
We saw it ourselves.

439
00:24:45,080 --> 00:24:47,440
They take the ground support
regime very seriously.

440
00:24:47,600 --> 00:24:50,720
They do indeed.
Keeping keeping mining

441
00:24:50,720 --> 00:24:53,440
underground safe Chuck in an
order for Sandvik ground support

442
00:24:53,480 --> 00:24:55,880
go Sandvik.
When you look at the the

443
00:24:55,880 --> 00:25:01,720
thermal, the thermal names Ferg
because yeah, like it's a

444
00:25:01,720 --> 00:25:03,520
bipolar market.
You look at the screen and it's

445
00:25:03,520 --> 00:25:06,400
like everything's red, but
thermal is green or everything's

446
00:25:06,400 --> 00:25:09,800
green and, and thermals are red.
It's like they're the only two

447
00:25:09,800 --> 00:25:11,400
type of types of days we've been
having lately.

448
00:25:12,520 --> 00:25:15,960
Are you, are you, are you
getting a basket exposure?

449
00:25:15,960 --> 00:25:17,760
Are you?
Are you, are you picking names?

450
00:25:20,880 --> 00:25:24,880
I'm trying to have a bit more of
a basket because of a few risks

451
00:25:24,880 --> 00:25:30,160
I see particularly just diesel
in Australia like that and that

452
00:25:30,160 --> 00:25:33,640
could diesel and sort of
potentially add blue.

453
00:25:34,000 --> 00:25:41,400
So I do have obviously fungala
have been looking at even cool

454
00:25:41,400 --> 00:25:43,920
natural resources.
Granted, that's not yeah,

455
00:25:44,160 --> 00:25:45,800
Fungala screen screen.
'S cheap, right?

456
00:25:45,800 --> 00:25:48,520
Like.
Fungala's a based that's things

457
00:25:48,520 --> 00:25:52,000
that most talked talked coloname
you can come across and it's

458
00:25:52,000 --> 00:25:53,280
obviously closer to Europe as
well.

459
00:25:53,280 --> 00:25:57,840
So they I've yeah, I've had some
I'll put that in my food fine.

460
00:25:57,840 --> 00:26:01,080
Sometimes where they, the EU,
particularly Germany's, trying

461
00:26:01,080 --> 00:26:03,560
to funnel money into South
Africa to close their minds, and

462
00:26:03,560 --> 00:26:06,760
then they just come screaming to
buy, buy what the call they've

463
00:26:06,760 --> 00:26:09,640
got when they get in trouble.
It's just, yeah, you can't make

464
00:26:09,640 --> 00:26:13,560
it up here.
The sort of irony or hypocrisy

465
00:26:13,560 --> 00:26:16,440
of the whole thing.
Time Gal is a big beneficiary

466
00:26:16,440 --> 00:26:18,040
there, yeah.
Yeah.

467
00:26:19,280 --> 00:26:22,880
And, and you've had positions
in, in the likes of Yanko and,

468
00:26:22,880 --> 00:26:27,280
and Glencore in, in the past,
HCC over in the, in the States

469
00:26:27,280 --> 00:26:29,640
as well.
And you, you're just happy,

470
00:26:29,640 --> 00:26:31,360
happy sitting in them.
Don't need to make too many

471
00:26:31,360 --> 00:26:37,080
changes.
So I, I've, I just switched from

472
00:26:37,400 --> 00:26:41,040
Young Cole to New Hope just
because I like the capital

473
00:26:41,040 --> 00:26:42,320
gains.
Granted, it wasn't really the

474
00:26:42,320 --> 00:26:45,400
smartest because Young Cole's
been an absolute Ripper.

475
00:26:45,400 --> 00:26:47,680
I just got pissed off that the
fact that they were trying to

476
00:26:47,960 --> 00:26:50,840
jump into a whole lot of meat.
I just wanted a thermal clean

477
00:26:50,840 --> 00:26:54,520
play and I wanted my capital
returns granted my timing, but

478
00:26:54,520 --> 00:26:56,600
they'll probably pay a big
special dividend then just rub

479
00:26:56,600 --> 00:26:58,720
it in my face.
I probably shouldn't have been

480
00:26:58,720 --> 00:27:04,360
smart and went with a basket
approach, but yeah and I own

481
00:27:04,520 --> 00:27:07,440
decent amount of Glencore.
Glencore was just got silly

482
00:27:07,440 --> 00:27:10,920
cheap for a while there and I
could kind of like like back it

483
00:27:10,920 --> 00:27:16,240
out with felt like you're just
largely getting whatever asset

484
00:27:16,240 --> 00:27:18,800
you wanted to save for free
between the yeah, the the

485
00:27:18,800 --> 00:27:21,800
marketing divisions super
profitable in times of

486
00:27:21,800 --> 00:27:23,920
volatility.
Like we're we're seeing the a

487
00:27:25,120 --> 00:27:27,560
little bit thermal assets and
they've got all the copper

488
00:27:27,560 --> 00:27:33,000
assets and I was like not sure
which is going to pay off, but I

489
00:27:33,000 --> 00:27:35,520
think this is just too cheap and
that's been it's been a pretty

490
00:27:35,520 --> 00:27:38,320
quick double.
So yeah, I continue to hold debt

491
00:27:40,320 --> 00:27:45,640
and yeah, the the met story is
still interesting.

492
00:27:46,200 --> 00:27:49,560
It's actually even interesting
now, which people don't realize

493
00:27:49,560 --> 00:27:54,680
is obviously is a split between
blast furnaces and arc furnaces

494
00:27:54,680 --> 00:27:59,840
and arc furnaces, pre energy
hungry beasts and sort of a

495
00:27:59,840 --> 00:28:02,640
large chunk of them are and
you're in China.

496
00:28:02,640 --> 00:28:07,680
So they do have the coal fleet.
So the IT does feed through into

497
00:28:07,680 --> 00:28:11,240
the intermediate price as well,
which is why why you've kind of

498
00:28:11,240 --> 00:28:15,720
seen the likes of warrior sort
of almost not keep pace, but it

499
00:28:15,720 --> 00:28:18,920
hasn't dumped badly.
There is a sort of a a a

500
00:28:22,080 --> 00:28:27,320
substitution effects I guess.
I'm, I'm keen for, for you to

501
00:28:27,320 --> 00:28:30,240
talk to us about your, your
shipyards exposure.

502
00:28:30,240 --> 00:28:33,480
And, and for the folks out there
that are like hyper fixated on

503
00:28:33,480 --> 00:28:37,640
on mining, I think there's like
a heap of parallels in, in the,

504
00:28:37,960 --> 00:28:41,800
the industry kind of structure
and like it's kind of analogous

505
00:28:41,800 --> 00:28:44,040
to to how you've played coal
and, and all the stuff you kind

506
00:28:44,040 --> 00:28:45,680
of play so.
Capital cycles, right?

507
00:28:46,040 --> 00:28:48,600
Capital cycle.
I'd, I'd love to get the, the

508
00:28:48,600 --> 00:28:51,640
one-on-one on.
I think people listening would

509
00:28:51,640 --> 00:28:53,960
love to just on on how you see
that space and how you play that

510
00:28:53,960 --> 00:28:58,120
space.
Yes, my only shipyard at the

511
00:28:58,120 --> 00:29:03,160
moment is Nam Chong and that is
a heavy, heavy position for me.

512
00:29:03,240 --> 00:29:07,360
That was that was just kind of
my like bread and butter of

513
00:29:07,360 --> 00:29:09,240
something that's gone bankrupt
twice.

514
00:29:09,720 --> 00:29:15,600
It's just completely cleaned
out, cleaned out everyone and

515
00:29:15,600 --> 00:29:16,760
everyone's kind of pissed off
with it.

516
00:29:16,760 --> 00:29:21,040
It's got kind of a Ried or die
CEO who's kind of refinance it

517
00:29:21,040 --> 00:29:24,160
twice had really attractive kind
of treatment of its debt.

518
00:29:24,640 --> 00:29:29,360
It was at one point the largest
I was fee producer in Malaysia

519
00:29:29,760 --> 00:29:35,080
and and now they've just been
doing great things expanding

520
00:29:35,080 --> 00:29:36,800
their fleet.
They're building a few of their

521
00:29:36,800 --> 00:29:39,600
own.
I was fees to use because I've

522
00:29:39,600 --> 00:29:43,240
got carbonage where they they
get priority with their their

523
00:29:43,240 --> 00:29:46,360
own market.
It's largely one client's

524
00:29:46,360 --> 00:29:49,120
largely Petronas, which is like
2 foods gas, one food oil.

525
00:29:49,320 --> 00:29:55,160
So it kind of insulates you
against the weakness in, in oil

526
00:29:55,160 --> 00:29:57,240
as well.
And they've just been doing

527
00:29:57,240 --> 00:30:00,520
great things and kind of
restarting their their shipyard.

528
00:30:01,280 --> 00:30:07,280
I did own Sedrum for a while,
but I just got a bit windy about

529
00:30:07,960 --> 00:30:12,840
the contracts with renewables,
seen some some big cancellations

530
00:30:12,840 --> 00:30:16,080
there and I just decided it was
kind of too hard and took my

531
00:30:16,080 --> 00:30:19,040
guns and plowed it back into the
Nam Chong.

532
00:30:19,680 --> 00:30:22,680
I also have some touch on Nam
Chong is actually no one follows

533
00:30:22,680 --> 00:30:24,440
it.
So I always feel I have a bit

534
00:30:24,440 --> 00:30:28,680
more of an edge when it it's
hasn't even got an enormous

535
00:30:28,680 --> 00:30:31,480
following it.
So it's it's own little niche.

536
00:30:31,680 --> 00:30:34,840
I've got a few few people that
joke it's just my noodles

537
00:30:34,840 --> 00:30:36,720
company.
Nam Chong doesn't even sound

538
00:30:36,720 --> 00:30:41,880
like a.
Company you had this line in in

539
00:30:41,880 --> 00:30:46,120
one of your recent write ups.
The only angles I found that are

540
00:30:46,120 --> 00:30:50,400
Evergreen are having a longer
term time horizon and behavioral

541
00:30:50,400 --> 00:30:53,880
arbitrage and like you're
speaking exactly to it there and

542
00:30:53,880 --> 00:30:58,520
just like knowing your circle of
confidence is super, super

543
00:30:58,520 --> 00:31:01,160
interesting.
I'm just curious, I guess like

544
00:31:01,160 --> 00:31:05,720
what I'm getting at is to
understand when, when markets

545
00:31:05,720 --> 00:31:09,040
are super volatile, heaps is
happening, prices are moving,

546
00:31:09,240 --> 00:31:12,800
how you, how you just maintain
your composure and just kind of

547
00:31:13,080 --> 00:31:15,320
pick off position.
So just how you, you frame

548
00:31:15,320 --> 00:31:19,040
yourself how how you view the
cash portion in your, your

549
00:31:19,040 --> 00:31:20,840
portfolio all of that kind of
together?

550
00:31:22,840 --> 00:31:25,920
Yeah, well, one, one thing is
I'm very lucky to have my mentor

551
00:31:25,920 --> 00:31:29,360
Brad.
So I talk to him regularly and

552
00:31:29,360 --> 00:31:32,960
he's like the most steady hand
at this.

553
00:31:32,960 --> 00:31:34,960
He's been through so many
cycles.

554
00:31:34,960 --> 00:31:38,560
And so having him as a sounding
board has been absolute blessing

555
00:31:38,560 --> 00:31:41,480
to me, but also emotional make
up to a certain extent.

556
00:31:41,480 --> 00:31:47,200
Like I think I'm just kind of,
he's very low on the sort of

557
00:31:47,200 --> 00:31:50,120
emotional spectrum and so am I.
I don't really, it takes a lot

558
00:31:50,120 --> 00:31:54,880
to get me wound up.
And so a lot of this I've kind

559
00:31:54,880 --> 00:31:57,800
of really did compartmentalize
My Portfolio.

560
00:31:57,840 --> 00:32:00,720
And if I see something being
cheap, I'll just put a limit

561
00:32:00,720 --> 00:32:02,520
order in and like not think
about it.

562
00:32:02,640 --> 00:32:06,400
Very rarely do I actually ever
go in and just straight up buy a

563
00:32:06,400 --> 00:32:11,160
position, kind of try and let
volatility take me in and then

564
00:32:11,160 --> 00:32:14,240
never use any leverage or
anything that could cause a

565
00:32:14,240 --> 00:32:17,960
margin call.
And so if things are often going

566
00:32:18,000 --> 00:32:22,200
against me, I've kind of largely
position sized it correctly in a

567
00:32:22,200 --> 00:32:28,120
way that I can put my head in
the sand for a while and know

568
00:32:28,160 --> 00:32:33,280
that the thesis was a long term
thesis and and they not get

569
00:32:33,280 --> 00:32:35,240
forced to make emotional
decisions.

570
00:32:35,720 --> 00:32:40,920
So yeah, I think a lot of people
kind of try and fight themselves

571
00:32:40,920 --> 00:32:44,560
emotionally and it doesn't work.
One of my favorite analogies of

572
00:32:44,560 --> 00:32:48,000
that is probably the greatest
trader of all time,

573
00:32:48,120 --> 00:32:51,200
Druckenmiller just been an
emotional basket case and diving

574
00:32:51,200 --> 00:32:54,320
in at thetopofthe.com and people
sort of say, Oh yeah, I've got

575
00:32:54,320 --> 00:32:57,640
emotional control.
You know, watch the guy that's

576
00:32:58,240 --> 00:33:01,720
like the like ice running
through his veins made that sort

577
00:33:01,720 --> 00:33:03,960
of mistake.
Like I don't trust myself for a

578
00:33:03,960 --> 00:33:07,600
second.
So a lot of this is having a

579
00:33:07,640 --> 00:33:11,040
good framework that defends you
from yourself, protects you from

580
00:33:11,040 --> 00:33:12,800
yourself.
That's I think I wrote a whole

581
00:33:12,800 --> 00:33:15,160
piece on it.
Like rules that protect me from

582
00:33:15,160 --> 00:33:18,160
myself.
Yeah, that was that was an

583
00:33:18,160 --> 00:33:20,000
awesome post.
One of the ones that I think

584
00:33:21,200 --> 00:33:23,480
heaps of the people listening
would be, would be playing with

585
00:33:23,480 --> 00:33:26,000
is, is gold to to kind of put it
into practice.

586
00:33:26,000 --> 00:33:29,560
And the way it the way it like
ripped up through January in

587
00:33:29,760 --> 00:33:32,280
like in into Feb, the very
beginning of Feb.

588
00:33:32,280 --> 00:33:35,920
I think it was just I think too
tantalizing for the people down

589
00:33:35,920 --> 00:33:40,240
here in Perth And, and it just,
it sucked their money in before

590
00:33:40,400 --> 00:33:44,960
crashing back down, you know,
and and now we're at the kind of

591
00:33:45,040 --> 00:33:49,000
lower ebb of of this part of the
the cycle and, and people are

592
00:33:49,000 --> 00:33:51,360
thinking more about selling and
then it that kind of bounces up.

593
00:33:51,560 --> 00:33:53,200
You've written in the past about
gold.

594
00:33:53,200 --> 00:33:55,560
How's that sort of make it's
part of your portfolio?

595
00:33:55,560 --> 00:33:58,160
Yeah.
So it's still part of the

596
00:33:58,160 --> 00:34:00,080
portfolio.
I think it's got a great long

597
00:34:00,080 --> 00:34:03,320
term outlook.
It's just one of the things you

598
00:34:03,320 --> 00:34:06,440
got to be very careful of in the
market is there's no, there's no

599
00:34:06,440 --> 00:34:09,440
such thing as like a sort of a
safe asset or a bad asset.

600
00:34:09,440 --> 00:34:12,480
There's only like sentiment
around it at that particular

601
00:34:12,480 --> 00:34:14,920
point.
And say anything that has a

602
00:34:14,920 --> 00:34:19,080
great outlook at any time can
become speculative.

603
00:34:19,080 --> 00:34:22,239
Too many people cram into it.
I've kind of observed it

604
00:34:22,520 --> 00:34:26,760
multiple times that markets
often, particularly commodities

605
00:34:26,760 --> 00:34:30,560
often move up in like a step
fashion where there is a ramp.

606
00:34:31,480 --> 00:34:34,679
2/3 of that is the first food is
like the early people, the

607
00:34:34,679 --> 00:34:37,800
insiders, people that did the
work and they were off often

608
00:34:37,800 --> 00:34:40,280
taking a lot of volatility.
There's people that trade the

609
00:34:40,280 --> 00:34:43,239
metal that kind of bought the
breakout and got in and then

610
00:34:43,239 --> 00:34:45,520
there's the tourist that will
jump in on the last food.

611
00:34:46,760 --> 00:34:51,000
Often that last food has to get
worked out whether it's by

612
00:34:51,000 --> 00:34:54,679
volatility or time.
And so that's when you often see

613
00:34:56,520 --> 00:35:00,760
other kind of time pass and the
tourists slowly give up and

614
00:35:00,800 --> 00:35:03,480
chase the next shiny thing or
enough of a drawdown that they

615
00:35:03,520 --> 00:35:08,160
throw in the towel.
And, and I just see this again

616
00:35:08,160 --> 00:35:12,040
and again and again in markets.
And then after enough time or

617
00:35:12,040 --> 00:35:15,520
enough for drawdowns past, then
it makes the next leg up.

618
00:35:16,040 --> 00:35:19,880
And I feel like gold's there.
And it's, it's on a big scale as

619
00:35:19,880 --> 00:35:25,760
well because obviously there's a
lot, there's a lot of even

620
00:35:25,760 --> 00:35:30,080
central banks in the world that
are looking at their gains and

621
00:35:30,080 --> 00:35:33,120
deciding that they need the
money now, whether it's Turkey

622
00:35:33,240 --> 00:35:35,200
has sold some of their gold to
defend their currency.

623
00:35:35,200 --> 00:35:39,120
You've got the Polish central
bank has started eyeing their

624
00:35:39,120 --> 00:35:43,080
gold to prop up the defense.
And undoubtedly some of the Gulf

625
00:35:43,080 --> 00:35:45,400
countries are going to be liquid
and a bit of their gold for

626
00:35:46,400 --> 00:35:48,840
their domestic needs moving
forward.

627
00:35:48,960 --> 00:35:57,160
And none of it breaks a thesis,
but it's, it's, I say the decent

628
00:35:57,160 --> 00:36:00,000
likelihood that we kind of tread
water for a period before

629
00:36:00,000 --> 00:36:03,240
starting the next leg up.
And that's just the way markets

630
00:36:03,240 --> 00:36:05,080
work.
It's the way coal worked

631
00:36:05,080 --> 00:36:08,960
honestly.
Absolutely made bank from 21 to

632
00:36:08,960 --> 00:36:15,960
22 and then tread treaded water
for from 22 to whatever three

633
00:36:15,960 --> 00:36:19,360
months ago.
Yeah.

634
00:36:19,680 --> 00:36:25,200
I, I, I, I do see that in, in
Kmart's markets, it's, it's,

635
00:36:25,320 --> 00:36:27,680
it's, it happens all at once
when it does happen.

636
00:36:28,560 --> 00:36:31,360
But yeah, super rapidly on the
way up and on the way down.

637
00:36:32,720 --> 00:36:36,560
And in gold's case, you've got
like, yeah, you've got, you've

638
00:36:36,560 --> 00:36:38,600
got the moderating everything
commod price.

639
00:36:38,600 --> 00:36:41,640
But then you've got the, the,
the unfortunate realities of

640
00:36:41,640 --> 00:36:45,400
earnings compression because,
because cost will be be under so

641
00:36:45,400 --> 00:36:47,600
much pressure in this
environment too.

642
00:36:47,680 --> 00:36:50,880
Yeah, yeah.
There is that as well as the

643
00:36:50,880 --> 00:36:55,160
playing the game of kind of
whack them all commodities is

644
00:36:57,040 --> 00:37:01,200
historically you got to be
really careful with miners and

645
00:37:01,200 --> 00:37:05,040
projecting forward sort of
profits because yeah, as you

646
00:37:05,040 --> 00:37:08,240
rightly point out, margins get
squeezed and that's happened.

647
00:37:08,240 --> 00:37:11,160
I've got a great chart of that,
that even though the commodity

648
00:37:11,160 --> 00:37:15,280
kept going up, the margin got
squeezed largely often on the

649
00:37:15,280 --> 00:37:18,080
back of sort of cost inflation.
Energy is a large percentage of

650
00:37:18,080 --> 00:37:19,520
that.
So that's not hard to understand

651
00:37:19,520 --> 00:37:26,320
now that and yeah, I've I was
actually just reading like I've

652
00:37:26,320 --> 00:37:29,480
got large positions and PGMS and
they're just getting some

653
00:37:29,800 --> 00:37:34,000
regardless of the price running
their their costs of running

654
00:37:34,000 --> 00:37:37,440
just as fast.
So yeah, it's it's the reason

655
00:37:37,440 --> 00:37:40,880
yeah, we have these long bull
cycles and I'd kind of recommend

656
00:37:40,880 --> 00:37:44,360
everyone the platinum charts
actually a great example of

657
00:37:44,360 --> 00:37:47,040
that.
As you got you had to suffer if

658
00:37:47,040 --> 00:37:50,800
you'd ordered in two thousand
2001 yet to suffer sort of a 30%

659
00:37:50,800 --> 00:37:52,760
drawdown.
And then it went on to sort of

660
00:37:53,080 --> 00:37:56,560
6-7 bag from there.
And it was because it needed to,

661
00:37:56,560 --> 00:38:00,840
because it was, it was cost
inflation, grades were running

662
00:38:00,840 --> 00:38:03,600
down, have to find more just the
way commodities work.

663
00:38:03,600 --> 00:38:06,080
And we've got the exact same set
up today.

664
00:38:06,280 --> 00:38:09,440
And if anything, we've got a bit
more of geopolitical risk

665
00:38:09,440 --> 00:38:15,000
fronting the mixing pot as well.
Yeah, I look at some of the

666
00:38:15,000 --> 00:38:19,400
plats stuff and it's, yeah, it
feels like there are some

667
00:38:19,400 --> 00:38:22,600
bargains there again with the
amount some of those, some of

668
00:38:22,600 --> 00:38:26,520
those charts have come off.
Are you tempted to add?

669
00:38:28,400 --> 00:38:30,720
I wouldn't so heavy at start.
I don't really need to.

670
00:38:30,840 --> 00:38:33,800
Yeah.
I I just, that's my whole style

671
00:38:33,800 --> 00:38:37,960
is to try and like, rhodium is
kind of the perfect example.

672
00:38:37,960 --> 00:38:40,720
I just try and jump in when the
thing's dead and when it first

673
00:38:40,720 --> 00:38:43,600
sets up and they resuscitate it,
then I just leave it and let it

674
00:38:43,600 --> 00:38:44,960
do it.
Something for the next few

675
00:38:44,960 --> 00:38:47,520
years.
Yeah, I'm terrible at like

676
00:38:47,520 --> 00:38:52,040
trading the wiggles from there.
I think the I think the 70s

677
00:38:52,040 --> 00:38:54,760
again to to your earlier point,
what you, you mentioned about

678
00:38:54,760 --> 00:38:56,840
studying that era for gold as
well.

679
00:38:57,480 --> 00:39:01,080
I forget the exact number, but I
think from when, when the, in

680
00:39:01,080 --> 00:39:05,040
1971 when the peg came off to
1980, that era of stagflation

681
00:39:05,800 --> 00:39:08,080
gold went from like 35 to 800
plus.

682
00:39:08,800 --> 00:39:13,720
But there was four or five draw
downs of 30 + 40 plus percent

683
00:39:14,000 --> 00:39:15,640
along there.
And, and it just shakes, you

684
00:39:15,640 --> 00:39:19,280
know, like you said, that third
that gets in there just shakes

685
00:39:19,280 --> 00:39:21,240
them out and then, and then
rides back up.

686
00:39:21,240 --> 00:39:24,200
It's, it's amazing to, to kind
of look and and study that

687
00:39:24,200 --> 00:39:26,000
history because it gets
forgotten along the way.

688
00:39:27,240 --> 00:39:29,000
I think there was one nearly 50%
draw down.

689
00:39:29,000 --> 00:39:32,600
I think it was like 320 fives
and and then nearly A50.

690
00:39:32,760 --> 00:39:34,760
Yeah.
And, and gold should mention

691
00:39:34,760 --> 00:39:37,600
gold miners did like the end of
that.

692
00:39:38,520 --> 00:39:43,760
I think it was like 8078 and 79.
They absolutely exploded.

693
00:39:43,760 --> 00:39:45,280
They were like the best
performer.

694
00:39:45,640 --> 00:39:49,480
But in the end they did
something absurd in those last

695
00:39:49,480 --> 00:39:52,400
two years.
But whereas services had been

696
00:39:52,400 --> 00:39:56,320
the a bit more of a linear
trade, I, I, I get a lot of

697
00:39:56,320 --> 00:39:59,520
kicks out of looking like the
sort of what do you call it,

698
00:39:59,520 --> 00:40:02,920
like the, the order of
operations with what works when,

699
00:40:03,120 --> 00:40:06,320
yeah, try and try and draw some
parallels to today.

700
00:40:07,080 --> 00:40:08,680
Yeah, so I can stop myself doing
dumb stuff.

701
00:40:11,120 --> 00:40:12,640
Looking around for other
opportunities.

702
00:40:12,640 --> 00:40:15,880
You mentioned fertilizers to us,
it's it's commodities, it's out

703
00:40:15,880 --> 00:40:18,960
of our wheelhouse, but it is
pretty interesting.

704
00:40:18,960 --> 00:40:21,040
It's super topical.
How are you thinking about it?

705
00:40:23,560 --> 00:40:28,600
Well, for me, it's just looking
for an angle to apply it.

706
00:40:28,600 --> 00:40:33,480
Like I, it was easy to jump
across to it when I was

707
00:40:33,480 --> 00:40:38,240
researching Europe because they
at the same time they put in

708
00:40:38,240 --> 00:40:41,080
their plans to get off Russian
gas, they also got themselves

709
00:40:41,080 --> 00:40:45,440
off Russian fertilizer at the
same time that their fertilizer

710
00:40:45,440 --> 00:40:49,480
is completely reliant on energy
the way they produce it.

711
00:40:49,840 --> 00:40:58,480
So yeah, just lumping some more,
some more hate on Europe like

712
00:40:58,480 --> 00:41:00,160
that.
They really have just shot

713
00:41:00,160 --> 00:41:04,080
themselves in the foot there.
But zooming out with fertilizer,

714
00:41:04,080 --> 00:41:11,040
it's, it's going to like there
isn't a big window globally for

715
00:41:11,040 --> 00:41:15,320
the planting season, which is
between sort of now and May and

716
00:41:15,320 --> 00:41:18,120
it's going to massively impact a
lot of crops.

717
00:41:18,440 --> 00:41:23,240
And so I think the obvious trade
to me was just to go after a few

718
00:41:23,240 --> 00:41:26,240
of the grains.
And the more I've kind of dug

719
00:41:26,240 --> 00:41:32,800
into it, the more I've kind of
come to appreciate the the lack

720
00:41:32,800 --> 00:41:35,600
of fertilizer going in is on the
supply side.

721
00:41:35,680 --> 00:41:39,120
And also with oil running on the
other side, there is also the

722
00:41:39,120 --> 00:41:42,800
whole sort of biofuel, ethanol
pulling up supply.

723
00:41:42,800 --> 00:41:44,680
So there's obviously like a
substitution effect.

724
00:41:44,680 --> 00:41:49,680
Once oil gets crazy expensive,
people switch to ethanol and

725
00:41:49,680 --> 00:41:52,680
that ethanol runs and then that
pulls up corn and see, you've

726
00:41:52,680 --> 00:41:56,280
got this nice.
I kind of viewed it as a nice

727
00:41:56,280 --> 00:42:01,520
hedge and see I own a decent
amount of corn calls.

728
00:42:01,520 --> 00:42:07,440
Also looking at even sugar.
So of global biofuel bioethanol,

729
00:42:07,560 --> 00:42:13,080
it's like 40% is corn and like
nearly 20% is sugar.

730
00:42:13,880 --> 00:42:18,160
And both of them are pretty
fertilizer heavy crops and see

731
00:42:19,000 --> 00:42:21,760
massive amount of global
fertilizers just being stuck

732
00:42:21,760 --> 00:42:25,520
behind the straight.
And so that's that's easy call.

733
00:42:25,560 --> 00:42:28,480
And the volatility is quite
cheap, a lot cheaper than if you

734
00:42:28,480 --> 00:42:30,640
were to try and play fertilizer
directly.

735
00:42:30,960 --> 00:42:33,760
I wonder the sort of the no
brainers for me was like looking

736
00:42:33,760 --> 00:42:38,440
at my CF industry is like a
fertilizer producer that has its

737
00:42:38,440 --> 00:42:42,440
own feedstock that's not
affected by the closure of the

738
00:42:42,440 --> 00:42:44,520
straight.
But as soon as I looked at that,

739
00:42:44,880 --> 00:42:47,560
it already spiked and volatility
had already gone up to sort of

740
00:42:47,560 --> 00:42:50,600
like half.
It's sort of stark high, whereas

741
00:42:50,600 --> 00:42:55,400
corn was down in like a bottom,
not even 1/4.

742
00:42:55,640 --> 00:42:58,040
It was.
Yeah, Get a really nice payoff.

743
00:42:58,200 --> 00:42:59,800
So just hit it.
Hit it there.

744
00:43:00,280 --> 00:43:01,520
Yeah.
Corn and coal corn.

745
00:43:02,000 --> 00:43:04,560
Come on.
Long inflation.

746
00:43:05,600 --> 00:43:07,440
Yeah, yeah.
Very long inflation.

747
00:43:07,440 --> 00:43:11,560
Food and energy like, yeah, it's
that's, well, I mean, that's

748
00:43:11,560 --> 00:43:13,680
another reflection of the the
70s, like.

749
00:43:14,880 --> 00:43:18,280
Yep, Yeah, yeah, exactly what
food is.

750
00:43:18,680 --> 00:43:21,840
Yeah, I, I wrote a piece on it
and that's just, I start with

751
00:43:21,840 --> 00:43:23,000
this chart.
That's one of my favorite

752
00:43:23,000 --> 00:43:24,560
charts.
That's just half of us wouldn't

753
00:43:24,560 --> 00:43:28,680
be here without synthetic fuel,
synthetic fertilizer, Like it

754
00:43:28,680 --> 00:43:33,720
literally feeds half the world.
And what we've seen like the

755
00:43:33,720 --> 00:43:35,960
damage by coming back to Russ
laughs.

756
00:43:35,960 --> 00:43:43,160
And that's just a damage that's
taken and how long it's going to

757
00:43:43,160 --> 00:43:48,200
take to come back on.
And some of that, I just don't

758
00:43:48,200 --> 00:43:51,760
think this can be fixed.
I was actually running some like

759
00:43:51,880 --> 00:43:55,520
how quickly could shut in oil
even come back online like each

760
00:43:55,520 --> 00:43:56,920
of the each of the shut
insurance.

761
00:43:56,920 --> 00:44:00,120
And what is their latest report
and how long have they

762
00:44:00,120 --> 00:44:01,640
historically taken to come back
on?

763
00:44:02,360 --> 00:44:09,520
And it's takes like at least a
month, if not two months to get

764
00:44:09,520 --> 00:44:12,800
back to sort of 50%.
And then, yeah, by sort of the

765
00:44:12,800 --> 00:44:16,560
two to three months, you'd be
back at 75 and then sort of over

766
00:44:16,560 --> 00:44:22,960
a year to get back to 100.
And all that means like largely

767
00:44:22,960 --> 00:44:26,160
already missed a lot of these
windows for a lot of the stuff

768
00:44:26,160 --> 00:44:29,920
to go in.
So the, the, it's already baked

769
00:44:29,920 --> 00:44:31,920
in the cakes.
That's why I think a lot of

770
00:44:31,920 --> 00:44:37,120
these positions will just keep
gaining traction as people

771
00:44:37,120 --> 00:44:39,920
realize like, there's there's no
Taco here.

772
00:44:39,920 --> 00:44:42,960
I was listening to Trump's call
this morning and he's like my

773
00:44:43,600 --> 00:44:46,840
reading between the lines there
was, he was just trying to say

774
00:44:46,840 --> 00:44:49,400
like, we'll get this done
quickly, but it'll be another

775
00:44:49,640 --> 00:44:52,760
two to three weeks.
And he listed off all the how

776
00:44:52,760 --> 00:44:57,600
long all the other wars went for
or like multiple years and how

777
00:44:57,600 --> 00:45:00,040
he is proud that this was going
to be done within two to three

778
00:45:00,040 --> 00:45:02,200
weeks.
I was like, OK, well, even even

779
00:45:02,200 --> 00:45:05,000
if it even if he nails it and
it's 3 weeks, like there's

780
00:45:05,000 --> 00:45:09,200
massive ramifications from here
if it's everything's closed in

781
00:45:09,200 --> 00:45:11,480
three weeks time.
I always feel a bit more

782
00:45:11,480 --> 00:45:15,200
grounded for talking to you and
just just just getting, getting

783
00:45:15,280 --> 00:45:17,840
a, a level headed sense of the,
of the market.

784
00:45:18,680 --> 00:45:22,400
I feel I feel more patient and
like less, less, less reactive,

785
00:45:22,400 --> 00:45:26,320
less, less of an urge to, to, to
make a knee jerk decision.

786
00:45:27,360 --> 00:45:30,560
Yeah, I love doing it every time
and kind of always, always just

787
00:45:30,840 --> 00:45:34,080
have a have a fond reflection of
of talking, talking about the

788
00:45:34,080 --> 00:45:35,760
cyclical industries that we do
enjoy.

789
00:45:36,320 --> 00:45:37,680
JD, if you got anything else you
want to ask?

790
00:45:38,160 --> 00:45:40,760
There's one more we've talked
around Ferg, which I'm, I'm

791
00:45:40,760 --> 00:45:43,160
curious to, to hear you speak
directly to.

792
00:45:43,160 --> 00:45:46,680
We've spoken about nuclear, but
uranium's been a core part of

793
00:45:46,680 --> 00:45:48,920
your thinking for, for a long
time.

794
00:45:48,920 --> 00:45:52,520
And the long term is, is again
looking good.

795
00:45:52,520 --> 00:45:57,360
But there you know that it's
been a kind of muted reaction in

796
00:45:57,360 --> 00:45:59,800
in the interim.
Are you thinking there's

797
00:45:59,800 --> 00:46:02,640
opportunities there or you're
just happy to stay camped out

798
00:46:02,640 --> 00:46:04,640
and and let the long term play
out there?

799
00:46:06,800 --> 00:46:11,280
Yes, my my take on uranium is
it's, that is the future.

800
00:46:11,360 --> 00:46:16,360
It's it's gonna do something
absolutely silly at some point.

801
00:46:16,640 --> 00:46:18,480
But the miners are an absolute
disaster.

802
00:46:18,520 --> 00:46:21,680
They're a mess.
Like a, I've actually got a

803
00:46:21,680 --> 00:46:24,440
chart that I created that I
think kind of maps us out really

804
00:46:24,440 --> 00:46:30,360
well, which is the percentage of
ISR that's now obviously

805
00:46:30,400 --> 00:46:33,120
supposed to come on the future,
all the Ford projections of

806
00:46:33,120 --> 00:46:36,280
that.
And then you just, I just

807
00:46:36,280 --> 00:46:40,960
dropped in all the current ISR
companies and their targeted

808
00:46:40,960 --> 00:46:42,520
guidance versus what they've
achieved.

809
00:46:43,120 --> 00:46:46,360
And yeah, you guys probably know
what I'm talking about with the

810
00:46:46,400 --> 00:46:51,520
likes of Boss Encore, you are
Energy Peninsula, just the

811
00:46:51,520 --> 00:47:00,920
absolute like absolute disasters
one after the other of and I

812
00:47:00,920 --> 00:47:03,960
just see that that gaps is
getting wider and wider.

813
00:47:04,080 --> 00:47:09,040
And so my, my strategy has just
been to be heavy physical and

814
00:47:09,040 --> 00:47:15,080
then come at it with more
conventional sort of green

815
00:47:15,080 --> 00:47:17,920
fields is that's kind of my
approach.

816
00:47:17,920 --> 00:47:21,880
I'm using them as almost a call
option without the time decay

817
00:47:22,160 --> 00:47:25,760
and sort of management's I trust
and it's been working well so

818
00:47:25,760 --> 00:47:30,680
far.
And yeah, I think a lot of a lot

819
00:47:30,680 --> 00:47:33,920
of people don't realize like
this the position that some of

820
00:47:33,920 --> 00:47:35,320
these companies have got
themselves in.

821
00:47:35,840 --> 00:47:42,760
I really enjoy the friendship
with his name.

822
00:47:42,760 --> 00:47:45,360
He ran a sub stack for a while.
How do I just forget his name?

823
00:47:47,480 --> 00:47:51,120
Tim Chillery.
And he he did some absolute

824
00:47:51,120 --> 00:47:53,840
fantastic work when he was
running his sub stack and just

825
00:47:53,840 --> 00:47:56,880
pointed out that the likes of
Encore have just sold the entire

826
00:47:56,880 --> 00:48:00,320
contract.
But like it is, I'd see a future

827
00:48:00,320 --> 00:48:05,320
where where uranium prices are
going to jump up.

828
00:48:05,320 --> 00:48:12,000
New floors will be maybe 120 new
ceilings will be 182 hundred,

829
00:48:12,000 --> 00:48:15,440
sort of that that kind of range.
And this is kind of a reflection

830
00:48:15,440 --> 00:48:17,880
of what John Borstov here is
just kind of pulling the fingers

831
00:48:18,120 --> 00:48:23,680
to the of anyone trying to get
him to do any in the off take

832
00:48:23,680 --> 00:48:26,200
agreements and saying like,
that's not economic, like what

833
00:48:26,200 --> 00:48:28,280
you're offering.
Like, I'll I'll wait till

834
00:48:28,280 --> 00:48:29,960
something's economic for a
Greenfield.

835
00:48:30,440 --> 00:48:37,480
And and a lot of miners have to
survive had shot themselves in

836
00:48:37,480 --> 00:48:38,720
the foot with what they've
signed.

837
00:48:39,320 --> 00:48:41,280
And they're increasingly
shooting themselves in the foot

838
00:48:41,280 --> 00:48:45,200
by continuing to sign contracts.
And so trying to trying to avoid

839
00:48:45,200 --> 00:48:47,040
that as well.
Because I honestly think this

840
00:48:47,040 --> 00:48:52,760
will like the more, the more
shortfalls we see out of ISR.

841
00:48:53,160 --> 00:48:56,920
And this is also overall bigger
picture as well because this

842
00:48:56,920 --> 00:49:00,120
fits into that whole framework
of kind of just in time.

843
00:49:00,440 --> 00:49:03,680
Like ISR is just in time,
fracking is just in time.

844
00:49:04,040 --> 00:49:07,400
And yet on the back end of those
curves, like you've all seen how

845
00:49:07,400 --> 00:49:12,920
steep those decline curves are.
Whereas like conventional long

846
00:49:12,920 --> 00:49:16,600
cycle oil, whether it's or
conventional resources, you've,

847
00:49:17,120 --> 00:49:20,520
you've got slow decline rates,
whereas ISR and fracking have

848
00:49:20,520 --> 00:49:26,080
got nasty decline rates and no
one seems to know we're able to

849
00:49:26,080 --> 00:49:29,880
like I could to make my point,
I'd probably bring up a chart of

850
00:49:29,920 --> 00:49:34,320
Gazeta Proms decline rates, like
who's replacing that?

851
00:49:35,120 --> 00:49:39,520
And so I remain a raining ball,
but I think it's just be really

852
00:49:39,520 --> 00:49:42,720
careful how you position.
Love the commodities hate the

853
00:49:42,720 --> 00:49:45,880
miners.
That is a fantastic way to to to

854
00:49:45,880 --> 00:49:47,440
capture it.
I love it Ferg.

855
00:49:47,680 --> 00:49:50,000
We're big fans of yours mate.
I always appreciate you coming

856
00:49:50,000 --> 00:49:52,040
on the show.
It's great to chat as always, so

857
00:49:52,040 --> 00:49:54,840
thank you I'm.
A big fan of the show, it was.

858
00:49:55,000 --> 00:49:58,040
I love what you're doing.
And yeah, it's always an honor

859
00:49:58,120 --> 00:50:00,040
to jump on.
Chat out to our fantastic

860
00:50:00,040 --> 00:50:02,920
partners Trev Sandvik, ground
support in the show Metals hub,

861
00:50:03,200 --> 00:50:06,280
introlinks and focus, the
platform by market tech Hodoroo

862
00:50:06,560 --> 00:50:08,560
Hodoroo.
Enjoy your Easter long weekend.

863
00:50:09,040 --> 00:50:12,440
Go Australia now.
Remember, I'm an idiot.

864
00:50:12,720 --> 00:50:15,120
JD is an idiot.
If you thought any of this was

865
00:50:15,120 --> 00:50:17,680
anything other than
entertainment, you're an idiot

866
00:50:18,000 --> 00:50:19,160
and you need to read our
disclaimer.