Title:   The Mother of All Commodity Supercycles
Show:    In the Money with Amber Kanwar (host Amber Kanwar)
Guest:   Daniel "Dan" Dreyfus (Bornite Capital; ex-Goldman Sachs, ex-3G Capital)
Date:    2026-MAY-14
URL:     https://www.youtube.com/watch?v=MSP2n7HykRw
Length:  ~70 min
Note:    Auto-transcript, timestamps mm:ss / h:mm:ss. Saved for personal study. Concentrated commodity/CapEx-supercycle
         book. Prior picks (April 2025): Cheniere, Ivanhoe, Talen. Auto-transcript garbles names ("Mirian/Meridian"=Mirion,
         "Lumin M Metals"=a Ross-Beaty Poland-copper TSX IPO, "Prairie Sky"=PrairieSky, "Skeena"/"SK Creek"=Skeena/Eskay Creek).

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(00:00) [music] >> I have never seen so many CAPEX cycles [music] happening simultaneously at the same time. Trillions of dollars are being spent on everything [music] from the grid to defense and AI data centers, and it's leading to the mother of all commodity cycles. [music] This is truly what I call a vu ja day moment, meaning the overwhelming feeling that this has never happened before.
(00:23)  If you don't understand this, I think you're going to miss an incredibly important [music] investment opportunity. We speak to Dan Dreyfus of Bornite Capital. He's been following commodities for 25 years starting at joining Goldman [music] Sachs, and working at 3G Capital before striking out on his own. If the tech stocks were the best performers for 20-25 [music] years because they just took in all the cash, then what do you think the best performers are going to be for the next 20 years? Why isn't oil at triple digits with [music] no
(00:51) breakthrough in sight? Since the war in Iran, it has pulled [music] back, and which has made people question, "Well, why were we buying gold in the first place? Shouldn't we be buying it for geopolitical instability?" As a Canadian who's a US investor who [music] plays in commodities, what's the way forward for Canada? When you choose a Raymond James advisor, you're [music] getting more than independent financial management.
(01:20)  You're getting access to complete financial guidance under one [music] roof. From tax and estate planning to trust services for generational wealth and strategies for life's key milestones like buying a home, funding your children's education, [music] or preparing for retirement, they bring it together in one financial plan.
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(01:55) Discover how Raymond James can help [music] you live a life well planned. Visit raymondjames.ca. The content provided in this podcast is [music] for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and the guests are their own and do not necessarily reflect the opinions of any organization [music] or company.
(02:17)  The host and guest may maintain positions in any securities discussed on the podcast. [music] Always consult with a qualified financial advisor or professional before making any investment decisions. Hey everyone, welcome to a brand new episode of In the Money with Amber Kanwar. On this episode, we've got Dan Dreyfus on the show.
(02:34)  He's with Bornite Capital and I met Dan a couple of years ago in Toronto. He's a New York hedge fund guy, but he was coming up every year to pitch at the annual Capitalize for Kids conference, which I host every year and I'm going to be hosting again this October raises money for kids mental health. Now, I mentioned this because, you know, he's a New York guy and he was always pitching commodity ideas and Canadian commodity ideas and I thought, "Oh, that's kind of odd.
(02:58) " Uh but turns out he's not just a New York hedge fund guy, he's Canadian. He cut his teeth at before joining Goldman Sachs and then 3G Capital and then he struck out on his own with Bornite Capital, always focusing on commodities and a pretty good pedigree. That's a very impressive resume. The headline of this episode is he says we are in the mother of all spending cycles.
(03:21)  He has never seen anything like this in his 25-year career and all roads lead to commodities. He runs a concentrated portfolio and he has really high conviction in some of his names and they're not obvious names either. And in some ways, um he really thinks outside the box about what qualifies as kind of a commodity or supply-side beneficiary.
(03:45)  He explains that when he talks about Taiwan Semi being a top holding. But he still uh, obviously thinks a lot about Canada as well. At this moment, he says Canada is one of the most compelling energy investments that he's ever seen in his career. And he has a lot of ideas, a lot of hope for what Canada can do to capitalize on this moment where supply chains are vulnerable, but spending is high.
(04:12)  And we were just going through the disclaimer, as you guys know, I disclose my holdings of all the stocks that we discuss. And unfortunately in this one, I had like na- nothing to disclose, which led the room to say to me that I probably don't own enough commodities. So, I'm going to do some inward thinking.
(04:32)  You guys know this is sort of my Achilles heel. I'm a I'm a based millennial, so I own a lot of tech stocks. Um, but you know, he made a lot of compelling arguments for some of these under the radar commodity names. So, you tell me what you think. As always, drop it in the comments. I love hearing from you. Let's get into this episode.
(04:51) >> [music] >> Dan Dreyfus, thank you so much for joining me on the podcast. Great to be here, Amber. In person. Last time we spoke, it was a year ago, um, and we were remote. So, it's so nice to see you in the flesh. >> Yeah, you know, before I left to New York, to Toronto, I should say, from New York, I have a daughter, she's 13.
(05:14) I told her I'm going down to do the pod. And she says, "Okay, I have two requests." >> Oh, let's hear them. First is, make sure Amber's tough on you. And second, bring me back some In the Money swag. She listens to your pod, so You know what we're going to get her? Girls Just Want to Have Fun. >> Oh, she's going to love that.
(05:29) >> So good. >> Yeah. Yeah, yeah. Jillian's literally getting up now to get it. Okay, what's her name? Katya. Katya. All right, that's for you. Thanks to your dad. Um, now I'm going to give him the tough questions. Uh, the first time that you were on the podcast, um, you were talking about we were in a great bull market it seemed for commodities.
(05:50)  How could it get any better and you said it's going to get better. It's going to continue and we are in a structural shift for commodities. Now that we've seen a tremendous run in copper, in gold, in oil of course. I wonder do you still have that same conviction or has your thesis played out? So first I do have that conviction that we're still very early in this.
(06:16)  You know the philosophy of our investment firm over at Bornite is really simple. We try to figure out where the world is going and then we try to figure out what we're going to need to get there. And what that really means is we try to identify where the big CapEx cycles are, study the supply chains that make up those CapEx cycles, and then try to understand where the pinch points in those supply chains are, and then identify the companies that supply into those pinch points because if you can own the pinch point in any
(06:51) supply chain, that's where all the alpha is generated at a stock selection level. And I can tell you I have never seen so many CapEx cycles happening simultaneously at the same time. Let me just give you a few examples, right? One, we have a gigantic aerospace CapEx cycle. If you look at the backlog of Boeing and Airbus, it's a trillion dollars plus over the next 10 years.
(07:19) If you look at the transmission and distribution infrastructure, that's a trillion dollars plus over the next 10 years. There's so much >> the AI build out? >> Not even. >> That's not even the AI >> This is just we haven't upgraded the grid since really post World War II. You You there's so many examples. You know, every time it you know, the Texas grid isn't attached to the rest of the US grid.
(07:45)  So, every time it gets a little bit cold in Texas, the whole thing shuts down. That fire in Paradise, California, Northern California, that killed 300 people. That was caused by a power line in the grid that was over 106 years old. Did you know there's parts of the grid in this in America that were 106 years old? Uh if in California everybody, you know, half the population bought a Tesla and went and plugged it in >> Mhm.
(08:12)  at 6:00 p.m. at the same time, you'd kill the grid. Boom. You'd just kill it. We'd be sitting here in the dark. And so, just for the purposes of getting the grid to a point that it just actually works, forgetting about what's going to happen with the tsunami of demand coming from AI. This is a trillion-dollar plus over 10 years and then probably another trillion or two over the next 10 years.
(08:33)  It took us 75 years to build the grid the way it is right now. And in the next 20 years, we got to at least double the size of it. So, there's that. And then there's obviously there's power generation. That's going to be a trillion dollars plus. Then there's obviously the data centers, which is the big one. I mean, I think this year it's going to be around 800 billion dollars of spending.
(08:55) Next year, it's going to be a trillion per year. Per year. And then probably the most important one of all is the critical minerals. And the reason why I say this is the most important one of all is none of what I just spoke about, whether it's aerospace, whether it's the grid, whether it's power generation, whether it's military and defense rearmament, none of that is possible without critical minerals.
(09:24) And there was a gigantic geopolitical shift around this time last year, April of 2025. This was when China effectively cut off their exports of rare earths to the US. >> Now, we're super close to these supply chains. We were told that we were literally within days of the Ford Motor Company's production line shutting down.
(09:52)  The entire Ford Motor Company >> Because of what China did. >> Because they couldn't get access to these rare earths. Same with McDonald Douglas, by the way. And so it became clear that China has just an incredible amount of leverage over us, you know, and just coincidentally within about a week of that happening, all of a sudden we agreed to send Nvidia chips to them and then the rare earths exports started up again.
(10:16) And so >> exploded. That sector exploded and I I I believe Look, I've been doing commodities now for too long, you know, 25 plus years. Uh this is truly what I call a vuja de moment, meaning the overwhelming feeling that this has never happened before. I have never seen the US government going and knocking on the doors of some, you know, resource owners of critical minerals where they come with three pieces of paper and they say the first paper piece of paper is a check.
(10:55)  US government, Department of War, Department of Energy is going to be an equity investor in your company. Take this check and go and start to build out your resource and convert it into a mine. And then the company says, "I would love to do that, but I don't have the permit." The government says, "Oh, take a look at the second piece of paper.
(11:10) " "Oh, my permit. Thank you. Thank you very much." And then the resource company says, "But uh how do I know I'm going to get a good rate of return on my development because it's going to take me 10 years to build this thing or 5 years?" And the government says, "Oh, take a look at the third piece of paper.
(11:28) " And that piece of paper is a contractual take or pay agreement where the US government agrees to buy whatever the mine produces at a floor price for 10 or 20 years or ever long the mine exists where the resource producer gets to keep all the upside above the floor price and the government guarantees the downside.
(11:53)  This is a real sea change and it's really important to understand. If you don't understand this, I think you're going to miss an incredibly important investment opportunity that I think it's just going to keep continuing and continuing to stay very strong for the next 10 years. >> I mean, this is it sounds like the mother of all capex cycles and it this is your North Star, right? Regardless of earnings, regardless of multiples, regardless of the commodities versus tech debate, this is what keeps you convicted in the market.
(12:27) I think what keeps me convicted is everything [clears throat] you said plus my North Star, I would add to that, is follow the cash. We just came out of this really incredible 25-year period in the US that was almost unprecedented where we created so much economic value, unimaginable amounts of market cap, incredible growth, and we did it with effectively zero capital outlay.
(12:58)  You know, think about the creation of search engines with Google or social networks with Meta or the streaming platforms or food delivery platforms or software as a service. I mean, all of these businesses created tremendous value, but they required absolutely no capital to grow. And so what that meant is these companies were growing at 20 30% required no capex, and so all the cash was flowing into their treasuries and they could do whatever they wanted with it.
(13:29) While we were doing this and having this explosive growth in these areas of the economy, we were going through this deindustrialization period where we were literally tearing down our industrial footprint to move it over to China. And effectively just destroyed the domestic supply chain in the US. And now the world has done a 180° pivot because if you look at these same tech companies that created so much value, today the business model is whatever cash our legacy business generates.
(14:08)  So, Google search engine, Meta's social media platform, Microsoft's enterprise software business, um whatever cash that legacy business generates, we're going to go and reinvest it and build infrastructure, right? Build data centers. >> Mhm. And so now you're seeing trillions of dollars of money that would used to go into these companies and and governments too, by the way, when you add in governments, now those dollars are flowing in to the treasuries of the companies that are focused on infrastructure, upstream commodities.
(14:44)  And so if the tech stocks were the best performers for 20, 25 years because they just took in all the cash, then what do you think the best performers are going to be for the next 20 years when all the cash is going to be flowing into these companies that can produce the infrastructure and make the commodities and make all this happen? Well, that was going to be my follow-up because the tech stocks are still doing fine.
(15:04) Semiconductors, for example, are great example. At a high level, and don't worry, he brought us stock picks, so we're going to find out how we make this all actionable, but at a high level, what are the areas of the market that benefit the most from this thesis? Any piece of critical infrastructure, whether it's a factory, whether it's an upstream critical material, whether it's the picks and shovels, whether it's the labor to actually make all this happen, the craft labor, there's an incredible shortage of craft labor to
(15:36) build all of this out. Basically, [clears throat] study the supply chains, and you brought up semiconductors. I view Taiwan Semiconductor, just to use that as a proxy for the semiconductor industry, I view that as an industrial or infrastructure company. I mean, it's effectively a factory, and it's a factory of one, and they make some of the most valuable products in the world.
(15:55) So, I would classify a semiconductor fab, a foundry, in the same way as I would an aluminum smelter or a copper mine. And we don't really, just because there's a GICS code that tells us that it's a tech stock, to us, you know, we just look at it with a common sense lens and say, "No, this is actually an industrial company where the cash is flowing into.
(16:17) " And so, I think those kind of investments are going to continue to do incredibly well. Well, that was actually going to be my question, cuz I'm looking at your commodity fund, and you've got two seeming outliers, which is Taiwan Semiconductor, and the other is MasterCard. How does that one fit in? So, Taiwan Semi we spoke about.
(16:35) I think that that is just probably an irreplaceable probably the most valuable piece of infrastructure the world has, because if anything happens to their fabs in Taiwan, let's face it, we're all freezing in the dark, right? They power the world. Um, MasterCard is a little bit of a different um situation, where I'm I'm a big believer that we are going to have continued debasement of the currency.
(17:00)  When we spoke about this last time we got together, I think that we're going to continue to destroy the value of the US dollar, and prices for things in nominal dollar terms are just going to continue to rise at a very elevated rate. And if you think about what MasterCard is, it's just effectively taking a royalty on everything that people buy, right? They charge about a 20 basis point fee uh on anything that's ever bought.
(17:24)  And so, if you believe that just things, getting your haircut, buying a new pair of shoes, going on vacation, staying at a hotel, taking an Uber, if you believe that the cost of doing everyday life continues to rise at the pace that it's been rising at, then MasterCard is effectively like the Franco-Nevada of everything.
(17:44)  They just collect a royalty on that because there's no cash cost associated with swiping your card. They just take that royalty. So, MasterCard to me is just the purest play way that you can play continued currency debasement with a lot of growth behind it as well. That's interesting how you put that in the in the category of kind of how you're thinking about this world.
(18:04)  It's CapEx and just follow follow the money. Um and in commodities right now, I mean, we haven't even gotten into the Strait of Hormuz, right? Like that is the current obsession and and a lot of kind of head-scratching around why hasn't this forced us into a bigger crisis? Why isn't oil at triple digits with no um breakthrough in sight um sending us over the edge? And people say it's a mistake.
(18:32)  We're not thinking about energy the right way. Other people say, "No, this is the way it should be because Hormuz is going to be resolved one way or another and that's the world we want to price in." Um setting aside your kind of view on CapEx, like how do you think about this current geopolitical situation as an investor? So, first, I think we got to take a step back and realize that every single geopolitical flare-up we've had since COVID, right? We had COVID, then we had the Russia-Ukraine invasion, then we had the tariffs, now we have the Iranian
(19:02) conflict. Every single time one of these geopolitical flare- geopolitical flare-ups have happened, prices for everything just take a gigantic step change higher and they never come back down. And that is just a sign that our supply chains are so incredibly fragile. Now, with respect to what's going on in the Straits of Hormuz, I think it's pretty straightforward.
(19:25)  You know, the oil price has been suppressed by the fact that we have been releasing a lot of inventory. And that can continue so long as we have inventory, but we're quickly drawing that down. So, there's going to reach a breaking point where we're going to >> a timeline of that breaking point? >> it's going to be uh by summer driving season.
(19:46)  Uh if we don't have some sort of resolution, then what's going to have to happen is the price of oil is going to have to price to a level where it destroys demand. Now, I suspect in summer driving season, we're going to realize that the price of oil, you know, people's demand for oil is pretty inelastic. And uh it could surprise to the upside.
(20:06) And that's a big left tail risk. Now, it could get resolved and we're already seeing some signs that they're letting some uh countries through with with with their ships. And I think it's in everybody's best interest to get it resolved. But look, this is a really significant left tail that's overhanging the market where I don't really know if anyone knows what the answer is going to be.
(20:25) So, what do you do in the portfolio with energy stocks broadly? So, I think uh by and large uh energy stocks, if you look at them and break it down into two components, the first component is take the current windfall profits that they're earning because of the supply disruption and just come up with a view for how long this is going to last.
(20:47)  Our our view personally is I think we're going to have, you know, $100 oil on average for the rest of this year. Mhm. And take the cash that they're going to generate from that $100 plus oil and do what you want with it. Pay down debt, build a cash buffer, do buybacks. That's real value that's going to go into the company.
(21:06)  But don't capitalize that in the earnings. You know, don't take the earnings at $100 and put a multiple on that. I think step two of understanding how to you know, at least our framework for for for analyzing oil companies, step two is figure out what the right oil price is going to be when the dust settles. And uh run your models using that oil price and then capitalize that.
(21:27) And so, take the cash they're generating today, shrink the share count, pay down debt, do whatever you want with it. And then step two, take your normalized oil price you know, in in our view, I think it's sort of $70 to $80 and capitalize those earnings. And I'd say by and large, most of the companies that we look at and are focused on are pricing in that high $60 to low $70 range.
(21:51)  So, you create sort of a pretty nice asymmetric risk-reward profile where if things really flare up, um you know, I think these these stocks will definitely outperform everything else. And if things settle down and oil you know, comes back into a more normal range sometime next year, that's already priced in to to the equities.
(22:12)  And so, I I think there's some good opportunities. You know, there was something you said in there about how the US government is knocking on doors and saying, you know, we've got um here's some money. Here's Here's the permitting and then we'll buy whatever you do. Um and it's a situation that I think and you invest a lot in Canadian companies that Canada as a nation is asking, where are we in this this golden day for natural resources? And this week, the CEO of TC Energy um quite forcefully came out and said, "The world
(22:46) is calling." The urgency is only growing as energy supply is disrupted around the world. But the world is asking. The world is asking, can Canada deliver? >> [clears throat] >> With all this momentum, Canada has still fallen behind. Francois Poirier speaking saying the world is calling and they don't know is Canada going to answer that call.
(23:18)  As a Canadian who's a US investor who plays in commodities, you know, what's the way forward for Canada? Well, Canada is figuring out the supply chain too too just like everybody else and to so many people the supply chain is just this mystical weird thing. I still think a lot of people think that a ham sandwich comes from a refrigerator.
(23:37) And they don't really think about the 30 million pigs outside of Chicago that are slaughtered every month in a pool of blood that blood I mean like train loads of awful, okay? >> Okay. Um Didn't know that's where we were going to go. But, you know, like my point here is that there's going to be a real realization that Canada absolutely has to play a critical role in repairing our very very fragile supply chains in North America.
(24:05)  And I think if there's ever a moment for these executives to come out and forcefully make their case like the CEO of of TransCanada or the CEO of Cenovus did recently, >> Yes. it's now because everybody wants to listen, right? I think you take this Iranian conflict and you come to the realization that Canada, the US, you know, other countries that have, you know, maybe moved away from wanting to get involved in this part of the supply chain, I think everybody is realizing now that there's a role for them to play.
(24:41)  And so I'm pretty optimistic that really good things are going to come out of this especially for Canada. And I'm really hopeful that they do. I mean it comes down to policy, right? I mean there's there's still reports that you know, a new industrial carbon tax is is still making its way in Canada. The industry has complained about that and just the speed at which some of these projects are being approved.
(25:03)  Um, and I know, you know, when you're a long time following the sector, you know that there's been a time where essentially international investors turned their back on investing in Canada. It was just It was just too hard. I [snorts] think international investors are going to come into Canada. Um, I'm a big fan of Tim Hodgson.
(25:20)  Uh, you know, we overlapped when I was at Goldman and he's a doer. He get things He He gets things done and he understands this. He really understands this and there's always a little bit of a political game that I think you have to play in Canada to appease, uh, you know, a lot of people who may have different interests.
(25:40)  But, my bet is that over the next 2 years, you're going to see things getting done here in Canada. I I really hope I'm not wrong because this is an opportunity of a lifetime. A carbon tax, if that helps appease, you know, some people who are against it, fine. Put on some nominal carbon tax and give them a tax break on their There's There's ways around this.
(26:02) I'm not I'm not I'm not worried about that. I think you just have to understand, you don't get the bigger picture right, nothing else matters. And I have a hope that, uh, you know, the people in this government are really understanding the big picture and will get things done. We'll see in 2 years if I'm right.
(26:20)  In, um, your portfolio as you look for these energy opportunities, are are you going global? Are you skewing to a particular geography? Um, and I'm I'm basically leading you to like where does Canada rank in terms of the energy producers that you want to buy? I think Canada is the most exciting place in the world right now to invest in energy.
(26:42) Um, we have one position in Canada, um, Prairie Sky, and I think it's one of the most under followed and compelling investments that you can make in in Canadian energy because I think what's going to happen as we look out over the next few years is it's really clear that shale is plateauing and potentially going into decline.
(27:05) And if you're taking out from a market a region that was adding approximately a million barrels a day of supply to the market every year. If that million barrels a day goes to 200,000 barrels a day or zero or negative 200,000 barrels a day, somebody's got to step up and fill that void. Canada is in such a good spot to fill that void.
(27:27) And what I like about Prairie Sky and we like to take more medium-term views and I can paint a picture where over the next 10 to 15 years uh on Prairie Sky's acreage production doubles from where it is today. Uh I believe over the next 10 to 15 years if the oil price goes up with you know inflation and and goes up normally 3 to 5% a year, the oil price can be in the low triple digits.
(27:59) And I also believe in the next 10 plus years, Prairie Sky because they have no cap X, it's just a royalty company. They're just taking the cash and they pay a dividend and shrink their share count. I believe they're going to cut the share count in half. And so when you do the math a 2X in the oil price, a 2X in the production, that's 4X and you cut your share count in half, that's an 8X in profitability.
(28:23) That's what the stock is going to do. It's going to follow the earnings and you can just sort of put this away and not really worry about the minutia and the day-to-day. And I think it's a true way to express how well Canada is positioned for the world that we're going into where shale is plateauing and Canada has to step up and fill that void.
(28:41)  If Canada's so exciting and obviously you love Prairie Sky, uh you know, why just one Canadian energy investment? So we tend to concentrate in our favorite investments. My view is you can have your top three or top five investments, but if you force yourself, and sometimes it's uncomfortable to do this, if you force yourself to put it all in the top investment, um for us anyways over time, that's been the right decision to make.
(29:08)  And I think, you know, clearly there's oil companies with more upside leverage to the oil price, but in my view slow and steady is going to win the race. The capital efficiency, just the structure of Prairie Sky's business model, I think over time from a risk-adjusted standpoint is going to be one of the best energy investments in the world, actually.
(29:28)  Um I we haven't even gotten to gold and copper and your outlook on all of that, but we're going to do that through the mailbag cuz we have a bunch of questions on those stocks. So, let's get into some of those viewer questions. >> [music] >> So, mailbag is brought to you by Hamilton ETFs. The traditional 60/40 portfolio, 60% stocks and 40% bonds, has been a cornerstone of investing for decades, but it relies on one key idea that stocks and bonds offset each other.
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(31:35) com or visit the link in the show notes. >> [music] >> All right, our first question in the mailbag. Let's actually stick with energy before we get into some of those mining questions. Um you mentioned Prairie Sky, that's your that's your key Canadian holding, but but we've got a question from M. Nanda on Instagram.
(31:59)  Does Cenovus have more juice is it time to take some gains? Of course, their growth has exploded after buying MEG Energy. Cenovus would be in my top three, so I think it's has has more juice. Uh I believe that with the uh expansion uh capital that is going to be converting into production, um West White Rose and some of their other expansions, um you're going to see a a pretty significant step up in cash flow alongside a potential step down of CapEx.
(32:29) And we love those situations where you get that big free cash flow wedge coming to you and I think Cenovus is is is a really good investment here. It's a good name. Um let's talk about some of the natural gas players. It's been a um a little bit of a dark land, but but picking the right player has been important.
(32:47)  What does Dan think about natural gas plays like Tourmaline and Paramount? Um, this question coming from Garrett. We can even throw Peyto in there if you want. >> Sure. So, there's one area where we're more focused on the US. So, if we're focused on oil for Canada, we're we're more focused in uh the US for natural gas. Uh I believe that uh the US gas producers are going to have access to better markets with better pricing with the optionality that they may uh enter into long-term take-or-pay agreements with gas-fired power plants if the
(33:18) gas-fired power plant goes into a long-term take-or-pay agreement with the data center. And if you start to do, you know, 10 or 20-year PPAs, purchase price agreements with um with IPPs, you can get a I think a real multiple uh earnings multiple uplift. Now, that could happen in Canada as well. Uh but we just like the certainty of where we think we're going to get uh in terms of pricing for for natural gas in the US versus Canada.
(33:46)  Is there a lot that needs to happen for these Canadian producers to get that higher pricing? Like a lot more than than in the US. >> I I think uh Canada should be building out uh more LNG export capacity. I mean, if there's ever a moment for the US and Canada to be building out LNG capacity, it's right now.
(34:09)  I mean, if you're Southeast Asia, if you're Japan, if you're Taiwan, if you're China, and you just went through what we just went through, and you're getting most of your gas from Qatar, Mhm. just as an insurance policy, you should be calling up Shell Canada or Cheniere in the US and saying, "Hey, we need some capacity from North America because we have to diversify our supply chain now, right? The supply chain has proven itself to be very, very fragile.
(34:39) >> Yeah. And so, there's this whole market where I think it's going to come to North America. And I think it's going to be a game-changer for both the US and the Canadian LNG market. Now, if Canada plays its cards well, and they add um you know, a whole lot of LNG export capacity, that could be so good for the Canadian gas market.
(35:07) That's what they need. The The next question we have is on the on the gold sector, um specifically on Barrick, which I mean, we got to just give you your kudos on um because you basically laid out maybe Barrick was listening, or maybe Elliott was listening, the activist investor. When you were on the podcast last April, you said Barrick could unlock significant shareholder value through its Nevada gold mines joint venture.
(35:38)  Spinning out those assets, and thus get a higher valuation. And then, lo and behold, that's exactly what they're doing now. Barrick shares um have rallied, and there's still some details that that they're figuring out what portion are they going to keep of this um new entity, but um talk to us about what happened relative to your expectations.
(36:00)  Did they do everything you thought that they should? Yeah, it played out pretty much exactly as I thought, but I think there's one more step in this process where they have to figure out a way to merge their Nevada gold mines operations with Newmont's, and create one company, which will be a pure-play Nevada-based uh champion for for for the gold industry.
(36:23) >> Does that mean that Newmont just buys it? Well, there's various ways you can structure it. Newmont could buy Barrick outright. Um Barrick or this new company? >> Barrick outright. One one way to do it would be uh Barrick and Newmont merge. And then they spin out just the Nevada gold mines. And leave the rest of the company, Barrick's non-Nevada assets and Newmont's non-Nevada assets into one uh big company as well.
(36:49)  I think that could create a tremendous amount of value. I think the way the management teams, because they want to I think they like their jobs, is they're probably going to try to figure out some way to create a joint venture. Um but, you know, either way, I think what has to happen, the end game has to be that there's going to be a pure-play Nevada-based uh gold company, cuz I think that's going to get just an incredible premium valuation in the market.
(37:17)  I think it's going to trade incredibly well. It'll get a sector-high multiple. And if that happens, effectively, you're getting the rest of Barrick for free, or close enough to it. Do you think it's going to happen? It doesn't seem like they're going down that road, but I think some way, shape, or form, uh you're going to see it happen.
(37:36) >> Does a third party enter, or no? I think it is this this is a deal that has to be done between Newmont and Barrick. Um and we actually just saw a gold deal today um this week, Equinox and Orla. So, there is some sort of M&A love is in the air. I'd love to talk just a beat about gold in general.
(37:56)  It's funny, when you were on, you said gold was around 3,000, and you said, "I think it can go to 4,000." And we were like, "Whoa, that's a huge bet." It went to 5,000 4,000, then 5,000. It's interesting that since um the war in Iran, it has pulled back, um which has made people question, "Well, why were we buying gold in the first place? Shouldn't we be buying it for geopolitical instability?" Help us understand why why gold pulled back, and what you see now that it's well above that $4,000 you predicted.
(38:26)  Yeah, I think for me anyway, my interest in gold is the continued debasement of the dollar and all currencies for that matter, and that's going to continue. And so gold's going to continue to appreciate over time. I think it was simply a case that it had run too far, too fast. I think we got into the low $5,000 range and then there was a risk-off moment in the markets.
(38:47) And when there's a risk-off moment in the markets, people tend to take profits and create liquidity in things that have done very well and are liquid. So I don't think it's anything more than that. But look, even if gold just hangs out here for the next 5 years and consolidates this move, the amount of value in the gold equity sector is mind-boggling.
(39:10)  I mean, what's is another way of saying it, what's being priced into the gold equities is something well below the current spot price. So the equities are giving you a second shot at the second bite at the apple, if you will. You can buy gold effectively probably at 3,000, 3,500 through the equities cuz that's what they're discounting. Yeah. Wow.
(39:28)  So that's like um is there well, I think you do have a favorite. You brought us a favorite, right, in pro picks? How you want to Okay, so we won't go there yet. Um let's talk copper. We've got a question from Kyle on Instagram. He did ask about a smaller cap Gunnison. You don't follow. Um but but also asked about large caps like Hud Hudbay.
(39:48) Copper too is having a a lovely time um right now. Is that all on that capex cycle? Yeah, I think copper is going to have a gold moment. Um in other words, copper is going to do what gold did, where it's going to have a move that's going to surprise everybody. Uh my view when copper was at $5 not so long ago was that the price had to double because if you think about what copper goes into, um it goes into the grid, it goes into data centers.
(40:18) Uh China is building out 1,200 gigawatts of solar capacity over the next five or six years. I mean, let's put that in a context. A gigawatt is a nuclear power plant. They're building 1,200 gigawatts of solar capacity, which, you know, if you want to go green and create green power, it takes an inordinate amount of copper.
(40:41)  Uh electric cars consume five times the copper. And we're going into a world where I think where robo-taxis are going to start to really take off, and they're going to be electric. And the issue here is that nobody is building world-class mines. You know, the copper market today is 30 million tons uh of supply, of which 4 million comes from recycled copper.
(41:00) And demand grows at least 3% a year, which basically means that we need to find a million tons of copper every year. That's the size of four world-class mines. And, you know, you can look at what's in the pipeline. You know, the Lundins, who I have an incredible amount of respect for. I love those guys. Uh they're building a project in Argentina, joint venturing with BHP.
(41:27)  I mean, that's not going to come on until 2037 or something like that. And that's going to be a [clears throat] few hundred thousand tons. You know, that's that that's a big one. We're going to need multiples of those every year, and nobody is bringing these on. And so, what's going to have to happen is the price is going to have to reach a level well above the equilibrium price that stimulates the hand-to-wallet reflex of the producers to go and build new mines.
(41:53) It's just going to have to go to a level that's just silly, where the producers say, "Okay, we can't justify doing share buybacks anymore. We have to go and bring on new capacity." And so, my view is, you know, that's about $10 copper, maybe higher. Um and and and the copper equities are certainly not pricing that in.
(42:13)  So, your uh viewer uh asked about Hudbay. I think Hudbay is an excellent speculation. You know, they're bringing on a couple of small mines in the US by the end of the decade. There's Cactus and Copper World. Won't make a dent in the global supply, but for Hudbay, it's going to be a big equity value creation story.
(42:31)  So, I think that's a great speculation. So, the key is that copper does need to remain in a deficit, though, cuz sometimes you have um then there's a rush to oversupply the market. And I feel like copper took a while. Everybody was saying AI, the electrification of the world, but it wasn't yet showing up in the copper price.
(42:52)  Um what was the catalyst for it eventually to catch up in prices? We haven't seen anything yet in terms of the AI demand, really. I mean, the old data center architecture uh with the Nvidia Hoppers didn't actually require that much copper. You know, the grid upgrades are really starting now. But, as we move to the Blackwell architecture, uh as we move to the Vera Rubins, you know, these data centers are going to be consuming inordinate amounts of power as they become more and more, you know, they get the latest generation of chips, which just simply means you
(43:22) need more copper wiring to feed that data center, the electrons coming into the data center. And the numbers are pretty explosive. I mean, now for a Blackwell, um you probably need 50 to 80,000 tons of copper per gigawatt. I don't want to get too technical here, but just trust me, if we're building 15 gigawatts of these every year and they consume 50,000 tons per gigawatt, that's 750,000 tons of copper.
(43:46)  The entire global demand right now is like a million tons. So, you know, we're just not prepared for what's coming on the demand side. There's going to be a demand shock. And, you know, to your point earlier on the supply side, it takes 7, 10, 12 years to build a world-class copper mine now. Um even if there's a demand signal where the price goes crazy, there's nothing the copper industry can do, absolutely nothing to feed that demand signal because it just takes so long to build a copper mine.
(44:15) >> And you know, and that's even with the splitting of US and China, but right, who knows what's going to happen between this meeting of you know, US president is going to China and what if all of a sudden it's a it's a beautiful friendship once again, you know, Nvidia was kind of a last minute ad there.
(44:33)  That could be a whole new market for a lot of these companies. >> Absolutely. Um I wonder if you looked at um uh Lumin M Metals, which was a new IPO um on the TSX uh backed [clears throat] by Ross Beaty who'd been kind of scouting copper in Poland quietly uh for years it turned out, but maybe the fact that it was so oversubscribed signals that like investors are catching up to this kind of demand.
(45:01) Again, getting the bigger picture right because nothing else matters if you don't. If we grow copper demand at 3% which I think is conservative um for the next 20 25 years, we effectively have to double the amount of copper that's mined in the world today. I just don't know how that's going to happen.
(45:23)  It to me, there's going to have to be substitution, there's going to have to be other forms because we just can't keep up with that kind of demand from a supply side standpoint. So, I think people are being really rational when there's uh equity value creation story where a copper producer comes and says, well, we're going to bring on some amount of capacity and we're going to do it at a reasonable cost within a reasonable time frame.
(45:47)  Um I think a lot of producers can create a lot of value by doing that and Ross obviously has just such an incredible track record. So, to me, that's a completely logical reaction. Um okay, let's rapid fire move through some of these because I want to get your take. We got a question from Sachin on Mosaic.
(46:06)  How will the fertilizer industry do in this high oil price environment? Um especially Mosaic. I mean, we could extend this to the whole fertilizer space because there was also just disruption um in the in the Middle East disrupting um supplies. Mosaic's interesting because it trades uh risk off with war, whereas the other fertilizer companies trade risk on with war.
(46:28) >> Uh because they're derivative, you know, nitrogen's a derivative natural gas. And if natural gas spikes and we take out nitrogen supply in Iran or other parts of the Middle East, that tightens up the nitrogen market and raises the cost curve because gas is such an important input cost to make hydrogen. Uh with Mosaic, where one of their primary, you know, they produce phosphate and potash, but you know, phosphate is uh reliant on sulfuric acid.
(46:56) And uh when we hit Ras Laffan in Qatar, not we, when the Iranians hit Ras Laffan in Qatar just to be clear, uh you know, that took out a lot of the sulfuric acid supplies. And with the strait being closed, a lot of the sulfa- sulfuric acid supply would would would move through the strait. And you need sulfuric acid to make copper.
(47:16)  You need it to make uh phosphate. >> Mhm. And Mosaic does not have access to sulfur. And so, their costs are going crazy, which is why they're trading risk off uh in in in the conflict scenario, whereas the other uh fertilizer producers are trading risk on. And so, ultimately, you know, the conflict's going to resolve itself.
(47:36)  Mosaic's going to get access to sulfur again. The stock's been really badly beaten up, so it's probably going to bounce. Um but I you know, they're >> any of these names long term? >> Yeah, they're okay. I mean, you know, I look I think long term my my and this is to be clear long term. This is not this quarter, next quarter, next year, next 2 years.
(47:57)  I I do believe one of the great uses of artificial intelligence is going to be with precision ag where you effectively have these really smart tractors that know exactly where in the farmer's field to apply the fertilizer and how much to apply because the way the fertilizer you know the farming industry works right now is you have an acre of land that's so valuable that most farmers just over apply fertilizer just to be safe right when you go to the gas station you say fill her up just just to be safe right and so there's so much waste in the fertilizer
(48:32) industry right now and with artificial intelligence that can map out the agronomics of all these fields Which means less than they're using less >> you could look in theory you know John Deere will tell you through their precision ag offering that you could cut fertilizer use by 50% Okay All right that's all you need to say about that then Yeah I want to talk about GFL so to Sandra we got a question from Sandra what do you think about GFL the stock has dropped to the lowest level since 2024 after announcing its acquisition of secure
(49:05) waste which gets it into industrial waste particularly for the energy sector It seems like the market did not like that deal do you feel the same way I think the market's wrong if you believe what I believe that the Canadian oil industry and hydrocarbon industry in general is set for a renaissance because we have to fill that gap of lost shale supply this is actually going to be a brilliant acquisition for them and it's a wonderful business I mean it's a business if you think about it you know there's this term going around the halo
(49:35) hard asset low obsolescence I mean waste collection and landfills are the definition of halo it's it's you know if you have a landfill that's effectively beachfront property because you can't build this stuff anywhere and you know it's a very valuable piece of infrastructure. Your your viewer is absolutely right that they're trading now at some of the lowest valuations historically that they've ever seen.
(50:04)  And look, I think this is a moment to buy them. I mean, I don't think you get hurt if things escalate in the Iranian conflict. Their pricing power is inflation index, so you benefit from inflation. You don't get disrupted by AI in this industry. You know, people are still going to be >> And it's not like energy like I've heard them talk about.
(50:20)  They're They're not saying we're going all in on energy. Like they're only introducing a modest amount of >> of the revenues. >> Yeah, like very small. They've been excessively punished. I don't know, is there fatigue with like debt debt field acquisitions? Is there concerns about their debt level? How do you think about that? >> it's just a victim of just being having more exciting opportunities elsewhere in the market and people are just kind of bored with it. Um, but that's okay.
(50:46)  I mean, if you can own a business like this at this valuation, history would tell you that you'll do very well buying it at this valuation. Let's talk silver. Um, has been a heartbreaking metal as it often is. Um, we're We've got it through the lens of Pan American Silver. A question from Marcus.
(51:06)  What do you do with um silver stocks? Tremendous volatility. Huge run up in 2025 and it's it's pulled back. Well, we're going to have a $2 trillion IPO SpaceX where they're going to be, you know, telling a narrative. >> Well, they're going to be telling a narrative. They're going to be launching these data centers in space powered by, you know, these gigantic solar panels.
(51:26) And solar is silver's biggest industrial use by far. As I said earlier, China's going to build 1,200 gigawatts of solar panels and we [clears throat] need silver for all these semi fabs that we're building to reshore away from Taiwan and build build a semiconductor foundry supply chain in North America and Europe.
(51:46)  I mean, silver is the end markets are just absolutely on fire. And >> a shortage of supply though? >> Yeah, I mean demand is uh 1.2 billion ounces per year. And the mine supply is only a billion ounces per year. So there's a 200 million ounce per year deficit. And we've been getting by because there was a huge stock pile of above ground inventory.
(52:11) And we've been drawing that inventory down each and every year by 200 million ounces per year. Now, where are we today? We have six on our calculations, we have 600 million ounces left that are not spoken for by ETFs. So basically a 200 million ounce per year deficit with 600 million ounces above ground, the clock's ticking.
(52:32)  We got 3 years before we have stockouts. And so just like copper, I think uh the silver price has to double uh from here to induce a supply response. And people might say, "Oh, a double, that's so much." Doubling is no big deal. I mean, I've seen molybdenum go from a dollar a pound to $33 a pound almost overnight.
(52:49)  I mean, in commodities, when there are stockouts for a commodity that you absolutely need to have, the price is going to go where it's going to go. And so silver is a really attractive area to put your money. And again, I think the producers um similar to what we spoke about earlier with the gold producers, you can own silver through some of the producers today.
(53:14) Uh at least the ones that >> We own, yeah. Yeah, maybe not the others, but the ones we own, yeah. Uh Skeena. Okay. >> There's There's so the risk you're taking is they're restarting SK Creek in British Columbia. Wait, don't go into it. That's your pro pick. Yeah, that is my pro pick. Yeah. >> We'll keep it paused.
(53:28)  You have to listen to the very end. To be continued. Okay, so that's how you're going to play it. I want to squeeze in one more question from Najib on Ax. She He um he's been waiting all year for you to come back. That's how much he enjoyed your last episode. I want to ask about Mirian Tech and whether you still hold it.
(53:43)  First, maybe describe what it does and then whether you still hold it. So, Meridian provides uh safety equipment effectively for the nuclear industry. So, whenever you uh build a nuclear reactor or extend the life of a nuclear reactor or restart a nuclear reactor like we're doing with Three Mile Island.
(54:01)  Microsoft Azure brought to you by Three Mile Island. Who ever thought we'd see that? Uh you need to, you know, the first and most important thing at any nuclear site is safety. And they're effectively the 800-lb gorilla. There's a monopoly in safety radiation detection equipment and so forth. And so, they install their equipment and then they charge a recurring uh servicing fee to service that equipment.
(54:25)  And the life of a nuclear plant is 100 years. So, once you put in some of their equipment, you have a 100-year inflation-protected cash flow stream. It's an incredible business. And if you believe that nuclear capacity around the world is going up, then they've got a really incredible growth profile ahead. So, um I think it's I think it's very good.
(54:45) Okay, let's get into your pro picks now. Now, we're going to talk about Skeena. Pro Picks [music] is brought to you by ATB Financial. With over 100 billion in assets, ATB Financial is powering possibilities for more than 843,000 [music] financial services clients. ATB Cormark Capital Markets is a leading North American investment firm providing holistic corporate [music] and capital markets advice and full-service financial solutions.
(55:16)  Visit atb.com/inthemoney for more information. Okay, but before we do that, it's a real slow burn to Skeena. Um we have to go through some of your top ideas. Last time you were around, it was Cheniere Energy, which is up 10% since then. Ivanhoe up 10% since then with a lot of volatility in between.
(55:36)  And then Talen, which has been a home-run up 87% since you were last on. Just a quick beat, you mentioned you like US nat gas players. Cheniere, do you continue to hold it? >> Yes. What about Ivanhoe? And I'm going to do this for our friend Million in the background because he bought Ivanhoe and he says, you know, at one point I'm up double and it comes down, there's a lot of volatility that comes with owning maybe an Ivanhoe.
(56:03)  Um should he switch to something else? I think you're good with Ivanhoe. Uh I think you're good with Hudbay. I think you're good with Freeport. Um do yourself a favor, take it off your screen and look at it in 5 years. Okay, he's nodding. He's going to do that. Okay, now Talen, home-run, um you brought it back as a pro pick.
(56:21)  So, even though it's up 87% you're coming back on and you're saying, but wait, there's more. Tell us First, remind us what Talen does, what you're so excited about, and why you think it can do even better. So, Talen is a power producer in an area called the PJM in the US, uh Pennsylvania, Jersey, Maryland area. And the grid operator of the PJM just came out and said that over the next 10 years uh we need to add uh there's going to be demand for 100 gigawatts of power in one small little region of the United States. Now, 100 gigawatts of power
(56:54) is equivalent to the entire power consumption annually of Japan. And so, I don't see how we're going to go and build out this amount of power, you know, nationally, we don't have the labor, we don't have the slots for the turbines. I mean, the supply chain is just not ready for this tsunami of demand.
(57:17)  And so, the demand is still going to come and so, the power price is just going to have to keep going up and up and up. Now, with Talen, you don't need to assume any further increase in power prices. If you just take what's on the strip today Mhm. and look into 2028 or 2029 because they entered into a contract with one of Amazon's data centers where they're going to supply power at a premium price into that data center, but they have to get that data center built and ramped up. So, that's why I'm saying 2028-2029.
(57:46) The earnings power, um the free cash flow generation per share of this company is going to be around $50. The stock's at 350 today, so it trades at seven times. I believe this asset should trade at 15 times. So, that's just a double if management doesn't do anything and there's no power price increase.
(58:04)  Now, what I think has to happen is the price of power is going to have to increase to stimulate even more supply. And if we get a 20% increase in the price of power, and before you say, "Oh, the utility bills." The actual cost of power in a utility bill is only 20% of the bill. The rest of it is what the utility charges for the transmission and distribution and all the SG&A of running a utility.
(58:28)  Power is actually very small. And so, if we get a 20% increase in the price of power, and power is only 20% of the utility bill, that's only a 4% increase over the next three or four years. That's pretty manageable. But, my point is a 20% increase in the price of power takes the earnings power up to $70 a share.
(58:45)  Again, the stock's at 350. That's five times. I think it should be at 15 times. So, that's a 3X. And then, you have an option uh that they continue to enter into long-term take-or-pay agreements for power at big premium prices as further data centers get built. And that would just be upside. Is is the risk um because these are all Okay, they're saying these are needs.
(59:09) This is how much we need to grow to. This is how much we need to spend. I mean, what if they It's been 100 years, whatever, since we've up What if they just don't do it? Um and they delay or, you know, there's a cash crunch or there's a recession and all of this maybe a risk to Talen, but a risk to your thesis is like, well, what if we just don't spend it? We don't do all this capex spending.
(59:32) I think there is too much of a demand signal to to allow that to happen. There's too much geopolitically at stake Mhm. to allow that to happen. I think it's mandatory for the US to be the global leader in AI. AI is going to control the military, how good your military is. AI is going to AI is going to dictate scientific breakthroughs.
(59:54)  AI is going to have, you know, the physical layer. When robotics comes, it's going to just unlock so much productivity and value that I just I simply don't think that there's a choice. This is mandatory. We have to do this. And so, the narrative is going to have to be uh if the private sector doesn't step up, and trust me, the private sector stepping up in spades.
(1:00:14)  It's these companies are getting funded and they're getting funded at huge valuations, and that capital is being recycled. I just don't see a scenario um where where where it doesn't get funded. I think everybody understands how critical this really is. I mean, there's four companies spending the equivalent of 2 and 1/2% of US GDP.
(1:00:34) >> Right. Like, when you talk about companies stepping up, those four hyperscalers. Um I another question could be like, well, how are they going to pay for all of this, which maybe brings us to your precious metal pick, [laughter] right? For those who do worry about spending and store of value. Um now we can talk about Skeena. Right.
(1:00:53)  Um Skeena uh and I'm happy to talk about how they're spending how they're paying for this, but Skeena is is is restarting the SK Creek mine in British Columbia. This mine used to produce um for a long time, but it was owned by Barrick actually, and Barrick had to shut it down because the gold price was low and they were running the mine using diesel power, and diesel prices were high. So, it just wasn't economic.
(1:01:14)  So, they shut it down and they sold it to Skeena. And uh while Skeena was going through its permitting process and sitting on the asset uh in British Columbia, they actually built a hydro dam. And so now, instead of you know, running having to run the mine on diesel when it starts up, they have access to hydropower, which is some of the lowest cost power in the planet.
(1:01:35)  And obviously, the gold price has gone up a lot, the silver price has gone up a lot, and the antimony price has gone up a lot for antimony goes into military applications. And those are the three commodities they produce. And so, in US dollars, the stock is in the lowish 30s. We think that at the spot price this mine will spit out $8 to $9 a share of free cash flow.
(1:01:57)  It'll get capitalized at 12 times cuz that's what a good low-cost long-life mine in Canada gets capitalized at these days. So, you're looking at a $100 stock versus sort of low 30s today. Now, if I'm right and the silver price doubles, this is how 10Xs are born. What phase of development are they? And I ask that like does a lot still have to go right before they can hit some of these milestones? So, the most challenging aspect of it was the permit.
(1:02:23) They got all their permits. Now, they just have to go through the process of restarting an old mine. It's It's already built. It's just You just got to restart it. And And so, there's some obviously some startup risks and so forth that you're you know, you're getting paid to take those risks. And that that could be a risk if it doesn't work out.
(1:02:43) You know, might might be over budget, might be delayed. But the mine's going to ultimately produce. And we think they are going to bring it on time. And so, 2028 should be the first real year of production. Okay. And the stock you think can move ahead of that. Absolutely, yeah. Do you want to touch on just gold in this environment where everybody is spending and has no choice but to spend and debts, deficits get out of control? Yeah, I mean, I think that it's just going to be really difficult to fund the interest expense on the debt as
(1:03:15) as as these bonds roll over from low coupons into higher coupons because interest rates are higher now, you know, interest expense is just going to take up a bigger and bigger portion of the US government's revenues. The US government takes in about $7 trillion of revenue today.
(1:03:32)  You know, 5 years ago we were spending about 250 billion on interest expense. Today that number's closer to a trillion. And in 5 or 6 years from now because we're going to be adding more debt and resetting low coupon to high coupon, that number's going to go from a trillion today to two trillion versus 250 billion 5 years ago on a $7 trillion revenue base.
(1:03:51)  And it's going to squeeze out >> Well, let's that's assuming the revenue stays constant. >> will grow, right? The revenue will grow 3% or something like that. But, you know, the zip code is is the the the interest expense is growing much much much quicker than the revenues are growing. And so, to me really the only way out is through continued monetization of the debt.
(1:04:11)  It wouldn't shock me um you know, this might sound controversial where the Fed prints a bunch of money, buys debt from the Treasury, and then one day the Treasury just wakes up and says, "You know what? You don't need to pay us back." That debt is just gone. And and that's the holy grail for owning hard assets and infrastructure and precious metals because the other alternative is obviously austerity.
(1:04:34)  We tried that with Doge. It lasted 2 weeks with the smartest person in the world in charge of it. Doesn't work. It doesn't work. >> Yep. Um is that a crisis if that happens or is that a few? No, it's risk on. >> It's [clears throat] risk on. Right? You want to get out of dollar I mean it's a crisis for if you own dollars, right? If you're If you're sitting in If you're sitting in cash, it for it's going to feel like a crisis because all of a sudden, you know, instead of, you know, going to Starbucks and that coffee that used to cost two
(1:04:59) today cost six, it's going to cost 12. So, if you're sitting in cash, it's a crisis. But, this is why I think it's mandatory for people to allocate capital today to infrastructure, hard assets, and commodities because it's going to protect you against this debasement that's coming. And also, we're in the biggest infrastructure cycle in modern history.
(1:05:20) So, you get the demand and you get the protection from the debasement. I just but I just feel like is that too doomsday? Because it it overly um it it overly downplays the growth that could come out. There's got to be huge growth at the other end of this capex cycle, is there not? Oh, there'll there'll be growth.
(1:05:41)  I'm not I'm not I'm not trying to be dooms- In fact, I'm I'm massively optimistic. You know, all of this leads me to just be maximum risk on. >> Okay. Because for those people that are hiding out in cash and trying to wait out the storm because they're negative and doomers and waiting in cash, that is where I am the most concerned.
(1:06:00)  But, if you own the areas of the market that are tied to the explosive growth and the explosive productivity and the amazing things that we're going to do in the future, you're going to really protect yourself against this debasement. I don't think debasement is necessarily about Look, I would be much more concerned if we were talking maximum austerity. Yeah.
(1:06:25)  Right? We're talking debasement. That is very pro-growth, pro-cyclical, pro-risk. So, uh one of the ways to play that is a company called Carpenter Technology, not a household name, but decent size, 21 billion market cap. Tell us what they do and what you're excited about. So, at the beginning of our talk, I spoke about the aerospace supply chain, Boeing and Airbus having a trillion plus in backlog over the next 10 years.
(1:06:50) We studied that supply chain and we believe that by far and away, the most acute pinch point in this aerospace supply chain is the nickel superalloy that Carpenter makes. It's effectively a critical mineral. Okay. And uh this is going to be an acute shortage for a very long period of time. And what I love about it is that this is not an industry where Boeing and Airbus are going to say, "Oh, let's try to buy some cheap Chinese nickel alloy.
(1:07:20) " Right? You don't want to put, you know, the the certification process to get any part on a moving part of a plane is you know, almost insurmountable. And so, effectively, a business like Carpenter, uh and they have, you know, one or two other players in the US that can do this, it's effectively a monopolistic position selling a product where they have pricing power, volume growth every year for the next 15 years.
(1:07:46)  So, regardless of how excuse [clears throat] me, regardless of how Airbus and Boeing hold up, like do their cycles need to hold up for Carpenter to do well? We've underproduced new planes for such a long period of time. First, it was COVID that impacted the supply chains, and then Boeing had some idiosyncratic issues with safety.
(1:08:03) And so, during those last 5, 6, 7 years when we should have been building a lot of new planes, Boeing and Airbus were fixing the supply chain and fixing problems on their legacy planes. And so, just now we're starting we're restarting that supply chain, and we've got 5, 6, 7 years to catch up.
(1:08:23)  And in the meantime, demand for air travel is growing at GDP plus plus plus. So, this is going to be irrespective of what happens with Boeing and Airbus. Obviously, they can't have another accident with a plane, that's a right that's a that's a left tail risk that you have to consider if you're looking at this stock. But, if they don't >> higher fuel prices could curb or that's like too short term? Yeah, I think it's too short term.
(1:08:46)  Um is it expensive? Too expensive Carpenter? >> but you know, you have to look out and you have tremendous visibility. Uh I think they're going to compound their earnings somewhere between 15 and 25% a year depending on the kind of pricing that they take. And it doesn't take that many years of compounding at that rate to actually make the stock look pretty darn cheap.
(1:09:06) All right. I like this and not an idea that we hear all the time. It has been an absolute pleasure. Dan, thank you so much for joining me. Thanks, Amber. That's Dan Dreyfus joining us at Bornite Capital. Make sure you tune into our next episode. We're talking thematic investing with Sigurd Wealth. Steven Harvey will be our guest.
(1:09:24)  We'll catch you on the next episode. >> [music] >> This is what This is what >> [music]