As the market looks forward to a COVID vaccine, we’re seeing bull markets in stocks, bitcoin, and gold.
For the latter two, Frank Holmes, CEO and chief investment officer of U.S. Global Investors, believes there’s room left to run. Listen as he breaks down his research… and the one crypto he believes will outperform bitcoin.
Frank also shares whether he sees more upside for travel stocks in the face of a vaccine. [19:48]
Then, as DoorDash skyrockets during its initial public offering (IPO) today, Daniel and I discuss the bull market in IPOs… and break down the tug of war between large and small businesses during lockdown. [46:58]
Wall Street Unplugged | 751
Could this crypto surge higher than bitcoin?
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.
Frank Curzio: How’s it going out there, it’s December 9th. I’m Frank Curzio, host of The Wall Street Unplugged Podcast, where I break the headlines, and tell you what’s really moving these markets. I want to start today’s podcast with an email I received from a subscriber, and her name is Kim. It’s very interesting; listen up. Kim says, “Frank I’m a big fan of your podcasts. I’ve begun to subscribe to some your services. I really appreciate your honesty and insight. I was a widow and single mom for 10 years and became head of household overnight, and I’ve enjoyed learning as much as I can about finance and investing.” That’s really great to hear, Kim. “You and Daniel both comment about capitalism, and you commented recently that at least, the recent election suggested that Americans favor capitalism.”
Frank Curzio: “I’m enclosing two excerpts from a book that is required reading in Fairfax County, Virginia for high school students. The county paid the author of a $20,000 for an hour long Zoom presentation, and additionally signed a contract to purchase the books. I decided to read the book myself. The school district is one of the largest in the nation. I felt this is important enough to share with you and yours, as it is what our youth is being taught.” Now the name of this book is “How to Be an Antiracist,” and thank you, Kim, for this. It’s written by Ibram Kendi, who was an assistant professor of African American History at the University of Florida.
Frank Curzio: Now, the book is published in August 2019; not really a big deal, it really didn’t get noticed too much, but sales surged after we saw a lot of the incidents including George Floyd. It became a New York Times bestseller, listed as fifth in Publishers Weekly hardcover non-fiction, this is in May and June, and of course, the Washington Post praised the book. Now, here’s the excerpt. He says, “To love capitalism is to end up loving racism, and to love racism is to end up loving capitalism. The conjoined twins are two sides of the same disruptive body. They idea that capitalism is merely free markets, competition, free trade, supplying and demanding and private ownership are the means of production operating for a profit is as whimsical and historical as the white supremacist idea that calling something racist is a primary form of racism.”
Frank Curzio: “Popular definitions of capitalism, like popular racist ideas, do not live in historical or material reality. Capitalism is essentially racist; racism is essentially capitalist. They were birthed together from the same unnatural causes, and they shall one day die together from a natural causes, or racial capitalism will live into another epic of theft and inequality, especially if activists naively fight the conjoined twins independently as if they’re not the same.” He goes on to say, just really quick, he goes, “The efforts to provide a safety net for all people are anti-capitalist. They say attempts to prevent monopolies are anti-capitalist. They say efforts that strengthen weak unions and weaken exploitive owners are anti-capitalist.”
Frank Curzio: “They say plans to normalize worker ownership and regulations protecting consumers, workers and environments from big business, are anti-capitalist. They say laws taxing the rich more than the middle class, redistributing pilfered wealth and guaranteeing basic incomes are anti-capitalists. They say wars and poverty are anti-capitalists. They say campaigns to remove the profit motive from essential life sectors, like education, health care, utilities, mass media, incarceration, are anti-capitalists. In doing so, these conservative defenders are defining capitalism. They define capitalism as the freedom to exploit people into economic ruin. The freedom to assassinate unions, the freedom to prey on unprotected consumers, workers, environments, the freedom to value quarterly profits over climate change.”
Frank Curzio: “The freedom to undermine small businesses and Christian corporations, the freedom from competition. The freedom not to pay taxes, the freedom to heave the tax burden onto the middle and lower class. The freedom to commodify everything and everyone. The freedom to keep poor people poor and middle income people struggling to stay middle income and make rich people richer.” He says, “The history of capitalism of world waring, classing, slave trading, enslaving, colonizing, depressing wages, and dispossessing land and labor and resources and rights, bears out the conservative definition of capitalism.” Okay, let’s dig into this a little bit, because we’re going to talk about this on the podcast. We’ve got a great guest too and cover a lot of topics with Daniel in a few. But I just felt the need that this has to be up top, and I want to dig into this.
Frank Curzio: Because he says to love capitalism is to love racism. So if you believe in capitalism, you’re racist now, right? This is being fed to our kids in colleges and high school as required reading. “Proper definitions of capitalism like popular racist ideas do not live in historical or material reality,” that’s what he’s saying. So, capitalism is basically not real, that’s what we’re teaching our kids. “Racism and capitalism were birthed together from the same unnatural causes, and they shall one day die together from unnatural causes.” So, he predicts capitalism is going to no longer exist, which means what? We’ll have a socialist society. He says, “They say attempts to prevent monopolies are anti-capitalist,” so you believe in monopolies?
Frank Curzio: They say, “Campaign to remove the profit motive from essential life sectors, like education, healthcare, utilities, mass media, incarceration, are anti-capitalist.” So, he believes these industries should not be motivated to make profits? I mean, I wonder how many jobs that are going to be lost if these guys don’t focus on making a profit. We talk of millions, tens of millions, right? He says, “These conservative defenders are defining capitalism. They define capitalism as the freedom to exploit people into economic ruin. The freedom to assassinate unions, the freedom to prey on unprotected consumers, workers and environments.” So, I believe in capitalism, I guess that means I’m racist. I guess that means I’m exploiting people into economic ruin.
Frank Curzio: Really, is that what I’m doing? I never realized that I was a racist piece of garbage who preys on the weak and believes in monopolies and doesn’t want to help everyone listening to this podcast to better their lives with making better and smarter investment decisions. I never knew this before. I’m just getting educated. It goes right into the heart of what my entire podcast is about: Teaching people about investments, ignoring all the bullshit out there that people are trying to take advantage of you. I’ve been through the wringer; I’ve worked on Wall Street. I’ve been doing this for 30 years, my dad did it for 30 years before me. When I was 7, 8, 9 years old, that’s all we’d do, was talk about the markets growing up at the dinner table.
Frank Curzio: It’s my life, my blood. This is what I do, but I’m a racist now. I don’t care about the people, according to this book. And look, everyone’s entitled to their own opinion. You have the right to agree or disagree. This is America, freedom of speech, that’s fine. I have no problem with that. What I do have a problem with, this book is being fed to high school and college kids. The New York Times put it on a list of recommended anti-racist books kids and teens should be reading. North Carolina State, their College of Education, has this as required reading. Public schools in New York City have this as required reading. UC, San Francisco; the list is probably in the hundreds, where this specific book is required reading.
Frank Curzio: Now, forget that you’re a Democrat or Republican for a minute, just for a minute. Because most people who are not on the far right or the far left believe that America is the greatest country on Earth, right? It’s filled with opportunity. We love to live here; it’s safe, we have unlimited resources that continue growing our nation. If you work hard enough, you can succeed, I believe most of us think that, right? Now, Republicans or Democrats, well, we have different ideas on how to make America better, and that’s fine. That’s fine. That’s what our foundation was built on, its debate, always questioning everything. But to promote capitalism as if you are racist for believing it, as if this is some kind of terrible ideology, that’s destroying our nation.
Frank Curzio: That if you work hard, you won’t succeed, and you’re promoting this to our children. To our children: Why is this important? Because our children listen to their teachers. They’re influenced by who’s teaching them. If you’re a terrorist, you’re influenced by the person telling you that America killed your relatives, they’re the worst place in the world, these guys want to destroy you. You’re going to believe what these people tell you, especially since your parents are sending you to these schools to learn. But talking about kids, the future of America, and these kids get influenced very easily. I grew up in Catholic schools; I believe in God, Jesus Christ never committed a sin, religion.
Frank Curzio: Only to realize that the grammar school I attended and the high school I attended, both had priests and coaches who were molesting boys and got removed to go to different schools who do the same thing and covered up it. It doesn’t mean I don’t believe in God or being Catholic, since my daughters do take religion classes. They decided to go to public school this year for the first time, they both wanted to go. They go and take religion class on the side, Catholic. But my youngest talks about God all the time and God punishes you if you curse, if I curse by accident in the house or whatever, because this is what’s being taught to her by teachers; they influence our kids.
Frank Curzio: Now, look where we are today. We saw violent protests all across the nation, or just protests leading up to the election. Most of them, I think, we agree were peaceful, but some were not. And many of those people who are not peaceful that got caught, whether it was looting, burning cars and buildings, beating up old people, which was caught on camera and shouting in the face of police officers saying they hope their kids die. I don’t know if you saw those, that was pretty amazing. Well, many of these kids that got caught, they actually came from privileged families, and their families had lots of money, which they made because America provided them with that opportunity through capitalism.
Frank Curzio: But now, look how everything is changing. Look what’s being fed to our younger generations through our schools now. Guys, this is one of our biggest concerns facing our nation, no matter what side you’re on. This is incredible far left agenda that’s poisoning the future of our country, which are our kids. And for anyone listening to this podcast, you have to admit, it’s an extreme, crazy left agenda that the New York Times, one of the oldest papers in the world founded in 1851, is pushing. And it surprises me that they’re pushing this because the New York Times is actually a publicly traded company;, it’s on the New York Stock Exchange. It has a $7.5B market cap, it trades on an exchange where people could buy and sell shares, which operates as a business that makes profits, which is going to drive their stock higher.
Frank Curzio: Pretty funny because in 1893, it almost went under thanks to a gentleman called Adolf Ochs, which published the Chattanooga Times., He paid $75,000 for a controlling interest when they were about to go under. It’s pretty incredible when you think about it: A person who is a leader in the industry, runs a company that’s a leader in the industry, decided to fund your organization, your paper, and grow it into a world brand. It sounds a lot like capitalism to me. Now, my question is, how are hard working parents allowing schools to get away with this? I mean, you look at these schools, they love money more than anything. You can’t take your kids out of the schools. And these schools that are so in favor of the kid, I mean, they had no problem raising tuition for kids, which increased, by the way, this is a fact.
Frank Curzio: Tuition increases, on average, 8% a year. We’re not even at 2% inflation, so 4X the rate of inflation, more than that… Continue year, after year, after year, right? Again, that’s the inflation rate for tuition, or how much these schools rip off these college kids, while blaming everyone else for these high costs. It’s not the school’s fault, no; it’s everyone else’s fault. These loans that the kids are stuck in, it’s everyone else’s fault, except for the colleges and schools. But these college institutions are making a fortune, profits that Ibram Kendi called racist. They’re making money, they’re making profits, these schools, so they’re racist too, right? They’re racist organizations?
Frank Curzio: And you’re doing this while teaching the kids that capitalism is the enemy? Why would you do that? Well, they have an agenda because they’re funded by state tax dollars. These schools are able to get paid because the government provides students with tens to hundreds of thousands of dollars in student loans that get paid to these colleges. So, of course they want that to happen. They want to be more socialist; that’s how they get paid. That’s how they make more money. That’s what it’s about. Again, I have no problem with anyone’s opinion. but you’re feeding this, this is required reading for hundreds, hundreds of schools across the country right now. This is what they’re being fed. This is what they’re being conditioned to think: That America is terrible, capitalism is terrible.
Frank Curzio: It’s a cancer that needs to be stopped. And not just from parents speaking up, but even college kids who graduated and the ones buying stocks on Robinhood, making a living, learning about trading, entrepreneurs, young entrepreneurs starting new ventures. Work hard: If you do, you’ll get rewarded. That’s what this country provides, but we don’t want to do that anymore based on these books. I mean, this is really required reading? Maybe I’m just naive, but I never knew this is what it’s like in today’s school system. I’d love to hear from you guys. email@example.com. Is this what you’re seeing in your school? This is where you really want your kids to learn that capitalism: If you believe in capitalism, you’re a racist? Are you kidding me?
Frank Curzio: And I can tell you, if teachers start pounding these ideas into my daughters’ head when they go to college, and they start saying, hey, capitalism is terrible, and that’s what they’re teaching them, or you’re racist for working hard, starting your own company, hiring people, and trying to profit off it. If they’re pounding this into my daughters’ heads, I got to tell you, I will rip the pages out of the book they’re teaching and jam it down their throat. That’s how serious I am about this, and how damaging it could be for this country. If you really love this country, if you really work hard… I know so many people right now that are successful that busted their ass, that came from nothing and started their own business.
Frank Curzio: You know how hard it is to start your own business? I never knew until I did. My dad did, but man, when you have your own business, you don’t take a minute off. Every night, you’re working everything, you’re trying to find ways to build your company, to grow it, worrying about the risks, worrying about your employees, worrying about if you’re providing the best service to your customers. I love it. It’s fantastic. It’s a lot of work. But now you’re saying people like this are racist, and this is the enemy, and you should not be thinking like this? It wouldn’t be a big deal if you just had a channel on TV that’s just talking about it, right? It’s a big deal. Okay, fine, that’s their agenda; they want to talk about.
Frank Curzio: You’re teaching this; you’re influencing our kids to believe this. That’s why you’re seeing a lot of these people will riot. Their anger… Have you seen the anger? Look at some of the even the so-called peaceful, a peaceful protest where nobody gets shot, kill the punch in the face, right? But yet, you look at these protests, when they’re shouting in the faces of cops, these kids, and just listen to what they’re saying. I mean, the anger that they have, where did they get it from? Our school systems. It’s just really, really difficult to believe, I’m surprised to hear this. Again, maybe I’m naïve, I heard stories, I didn’t know this was being forced down their throats, especially Fairfax, one of the largest school districts, high school, school districts, in America as required reading, as required reading.
Frank Curzio: So parents, please, you’ve got to speak up. I mean, if you believe this, you shouldn’t even be listening to this podcast because you don’t believe in capitalism, right? And again, it’s not Democrats, it’s not Republicans. I mean, we all have our differences. We just believe that, hey, our country would be better off and be more successful based on certain policies, which is fine. This is something that’s totally different, and right now, it is spreading like a cancer that needs to be stopped. So Kim, thank you so much for sharing. Not the easiest transition here, but we’re going to talk to someone who I admire very, very much. He started his own shop and investment company, he’s been doing this for over 30 years in finance, capitalism.
Frank Curzio: Because of his hard work, dedication, and hiring the right employees over his career, he’s seeing incredible success right now, and I love it, incredible success. Because it seems like in this country, the more successful you get and the more you bust your ass, the more people are going to hate you and come after you, want to take everything you’ve got. But I love to see this: Road to ups and downs, and now his hard work and that dedication, he’s seeing incredible success in the mining industry, the airline industry, since this company runs the largest airline ETF in the world, hold JETS. Now, he has $3 billion in assets. His name is Frank Holmes. Frank is the Chief Investment Officer, and also the Chief Executive Officer, CEO, of U.S. Global. He runs several ETFs, also the executive chairman of Hive Technologies.
Frank Curzio: So, that’s a crypto company that’s up over 1,000% this year who mines for Bitcoin, right? We all hear about Bitcoin, but also mines for Ethereum. And Frank is a good friend; that’s not why I invited him on the show, guys. I have lots of good friends; they’re not coming on the show because of good friends. He’s on the show because he always shares lots of ideas, great analysis, has a history of making my listeners, which are you, a lot of money, especially over the past five years. So, enough build up: And here’s my interview with Frank Holmes. Frank Holmes, thanks so much for joining us on Wall Street Unplugged again.
Frank Holmes: Good to be with you.
Frank Curzio: Well, let’s start out with gold, right? Because you have the gold, gold ETF, and just this past week or two, we saw Korea, Japan, UK, several of Middle Eastern nations, announce that they’re going to expand the stimulus package. The next wave of the U.S is coming out at least a trillion, maybe two trillion, I heard three trillion on the table, but it might be a lot smaller. So, over $10 trillion even before everything that I just said, so far, $10 trillion of money from central banks flooding the global markets. Do you see this trend slowing anytime soon at 2021, even 2022? And what does that mean for gold?
Frank Holmes: I think what’s happened is the trend since this past 21 years, it’s important for investors to remember that gold has been up 80% of the time, and Bullion has outperformed Berkshire Hathaway, and has outperformed the S&P 500 almost 3:1. So, having an exposure gold is actually quite wise because what we’ve seen in this new century is the experimenting with MMT, modern monetary theory. And in different countries, it’s being approached differently. But this idea of using monetary aggregates of money printing, jamming it down into the economic system. And what we saw in the U.S was unique during this past six months, is where the Federal Reserve came in and started buying Muni Bond ETFs and corporate bonds to drive down interest rates so municipalities could roll over their debt and soak up corporations.
Frank Holmes: That’s never happened before. But in Japan, it’s been practiced, that 15% of their stock market is owned by their central bank through the ETF. So, I think this MMT takes time, and if we look at what happened in the last crisis, 2008/2009, the global financial crisis, and the amount of that pretty much was about $3 trillion, the Federal Reserve basically put on their balance sheet, and three years later, gold went from 700 to 1,900. And if you looked at the data today, gold could easily go to 4,000 over the next three years because this money printing ends up going into the system, and there’s really no expression by these finance investors and central bankers to stop it.
Frank Holmes: And what’s also is interesting about central bankers is, they quite often live longer in their job, than prime ministers and presidents. Look at Greenspan, and he’s one of my favorites because when Greenspan left, everyone criticized them because 6% of the American economy was basically at the debt on the federal balance sheet, they represented 6% of the GDP. Today, it’s 33%.
Frank Curzio: That’s incredible. Hey, let’s talk about gold a little more because we’re going to have low interest rates forever, right? Not forever, but at least for next three years on a short-term side, long-term if they get higher. I think the Fed will implement yield curve control; they just have to. We have too much debt outstanding, which you pointed out. Off-camera, it’s $27 trillion, where our national debt now stands, which is incredible. But what’s the biggest factor to drive gold? We’re talking about central banks and stimulus spending, but also, is it a function of the dollar? Is it a function of the 10-year, which is double, it’s still 0.9; it’s still down 50% from January. But what are some of the factors that are going to drive gold? Because we talked about all three of those, and it looks like all three of them are going to be in their favor. But which one maybe influences the gold price and gold stocks even more?
Frank Holmes: There’s two big things to recognize when it comes to gold: There’s the fear trade, which dominates most of our world, and there’s the love trade. 60% of all gold demand is for love, and this predominantly comes out of Asia. China and India, 30 years ago, were only 10% of the global footprint of buying gold; today, they’re 53%. The rising GDP per capita in Southeast Asia, to the Middle East, to India and China, are very significant. So, every time gold has a big correction, they become this continuous buying. We have the season of life that’s just ended in India, then we’re going to go into the wedding season, and then we’re going to have the Chinese New Year, so you can see this demand cycle.
Frank Holmes: Now, we get these surges in gold, like we did earlier this year, in August and July, and that period is because of negative real interest rates. And there’s a very strong… The greater the negative real interest rates, the higher the price of gold rallies. We saw in 2011: Gold peaked at 1,900, the 10-year government bond yield was -3%, 300 basis points. Earlier this year, the 10-year government bond fell down to 50 basis points, and then it ran up to 97 basis points. Well, that’s not much of a difference, Frank. However, percentage wise, from 50 beeps to 97 beeps, 47 beeps in total as a percentage of 50, that’s a big number. So, naturally, gold would correct with that. Do I think that we’ve oversold? Yes. Gold is down over 20 trading days and 60 trading days over one standard deviation, and historically, you get a rally from that, as gold goes back to trading higher prices.
Frank Curzio: Frank, have you ever in your career, have you seen the large-cap gold companies as strong as they’ve been right now? I mean, you’re looking at production costs lower to under 1,000, where 19, 18, 1700, look, they’re incredibly profitable. The margins, I say, this a lot, if you look at Barrick and Newmont, if you just took those names out and looked at where they’re trading, which is a market multiple, their margins and how fast they’re expected to grow over the next two, three years… You would think these are technology companies. If you just took them out. So. Have you ever seen them this strong in your career? And you’ve been doing this for three, four decades, right?
Frank Holmes: Well, I track 100 of these gold producers around the world, and one of the data points I have always had was free cash flow yield. And last year at this time, they still as a median had a negative free cash flow yield, the best performing gold stocks had free cash flow yield as positive. Interesting enough, the S&P 500 had a free cash flow yield about 2.5% this time last year, and come March of 2020, all of a sudden, it evaporated. There’s no free cash flow yield for the S&P 500. We see this huge bifurcation in stocks, are growing their revenue and cash flow, and having a free cash flow yield, and those are not. And it’s interesting to see that the phenomena take place. However, the gold stocks for the first time went to a free cash flow yield.
Frank Holmes: The median had a +2% free cash flow yield. And then we see Buffett buying Barrick. And we hear more of these gold stocks, like Barrick CEOs, about their free cash flow yield. And I think that is a really important differential in this cycle. There’s greater discipline by boards of directors and CEOs not to hurt that cashflow momentum, and we’re going to have a record this quarter, on a year-over-year basis, will be a record compared to last year on both growth and revenue per share, growth in cash per share, and a median positive free cash flow. And if you just looked at the top 10 best gold stocks every quarter that had revenue last quarter above four quarters and cash flow above four quarters, and a free cash flow yield, you beat all of gold stock funds.
Frank Curzio: Yeah, that’s incredible. And let’s talk about your GO Gold Fund, which I think you launched in May 2017. You invited me to the New York Stock Exchange, I rung the closing bell, and truly a big honor. I still had that picture on my Twitter account, actually, which is amazing. But when you look at your GO Gold, it’s mostly filled with the top holdings are royalty companies, do you still feel that way? Because if you believe gold’s going a lot higher, right, usually, when we see a massive bull market, we’re going to see the smaller names. And again, they’re not going to have the fundamentals of a larger names pretty much outperform that usually happens if you’re looking at historically. Or is it, hey, this is working, and we’re going to continue to have these as our top holdings? How do you adjust? And maybe talk about your methodology for GO Gold, which is kind of incredible.
Frank Holmes: Well, it is quite driven, and 30% are the big royalty companies, predominantly because they have high margins, these stocks outperform. What’s interesting to me is, this the first time in over 10 years that gold stocks in Franco Nevada showed up in the IBD Kansas land model in the top 50 stocks and sold at Kirkland Lake. So, we will go down to the $200 million market caps, when we’re looking at that universe of stocks, but what we have found from all of back-testing is that this type of model goes down when gold corrects and it correct less, but it then marches up in tune with the gold stocks. Only for about three or four months, we saw this GDXJ with more speculative stocks all of a sudden start to outperform. But in this past couple months, GOAU has all of a sudden done what it’s done historically.
Frank Holmes: We back tested GOAU over 8,000 hours to see how it did in up cycles, in down cycles, profit business models, et cetera. And we learn a lot, Frank, from JETS, the JETS ETF is very quant-driven. It’s using mean reversion, and as using… Which is basically gravitational pull, things always revert to a mean, and same time as using inertia momentum. And it’s done exactly what is said it would do: That it would outperform the New York Stock Exchange global Airline Index and that quant approach, even after our fees has done that. So, I’m very happy about GOAU. It’s risen here, it’s sorted through over $100 million, it’s done exactly… It’s outperformed the GDX and the GDXJ since we launched it. So, I’m happy with that.
Frank Curzio: Yeah, I guess let’s talk about JETS. And before I actually get to JETS, I just wanted to get your forecasts on gold. I know you’re extremely bullish, and I’m not going to tell you where to forecast in three, six months. But maybe say to three, four years from now, where do you see gold prices heading?
Frank Holmes: I think it’s quite easy for gold to be at $4,000 if you go and look at what the Fed’s balance sheet has done from previous cycles and how it grew, and the psychology of negative real interest rates, and how they’re sourced here. The CPI number, here, they say is 1.4%, and the 10-year government bond is offering to pay you less than the inflationary rate for the next decade. Gold has always been a great asset class, so $4,000 has been my call. But, important for your listeners is, the DNA of volatility of every asset class is different, like we all have different looks, we have different DNA. The DNA of bullion is actually more similar to the S&P 500, and the DNA of gold stocks is two times that of gold. So, what does that mean?
Frank Holmes: It means that on a rolling 12-month basis is a non-event for gold to go up or down 20%. 70% of the time, that’s a non-event, so that means that bullion next year could easily go up 20% from these levels. And what would that? That would tack on about $400 an ounce for gold, that would take you up to 2200. Earlier this year, when we had all the panic, and the money printing was on steroids, and negative interest rates went to an all-time spread, we saw gold go up two standard deviations, which was a 40% swing. So, that would take gold up from 2200 and up to 2600. So, I think over the next 12 months, we could easily see gold between 2200 and 2600. Over the next three years, I think you’re going to see it test the $4,000 an ounce level.
Frank Curzio: Okay, let’s get to JETS, and I’m going to bring this up right now because this is an amazing number, your net assets. I mean, how is that compared to say two, three years ago? So, you have your U.S. Global JET ETF, obviously, JETS for airline industry, and this is the largest. But I mean, the net assets that are demand right now is pretty incredible. Talk about that. I mean, is it just simply buying the largest airlines? Or… Because this really is incredible to see the growth in net assets and how many people are really interested in airlines now.
Frank Holmes: I’m so blessed. I’m so lucky, Frank. There was no other product out there, so I think we laid out the pipes, cut the information, we created the brand awareness. And what happened is that when it fell 50%, it caught the imagination of Millennials. So, Millennials and Generation X, all of a sudden, they’re stuck at home, they started trading this, they go through Robinhood or Acorn, there’s no minimum amount. And as that volume picked up, we then started seeing more hedge funds that would say, “I want to short American Airlines because it has the worst balance sheet, but I want to hedge my position. I’m going to short $5 million of American Airlines, but I’m going to hedge by going $5 million long in JETS EFT.”
Frank Holmes: And that created more volume, and then more volume, and then we saw this group of investors coming in. They were telling us that after the crisis of 9/11, a year later, the airlines are up 80%. After SARS in Asia in 2003, the airlines were up 120%. And after 2008/2009, six months later, they’re up 80% again. So, you had all these tactical people coming in and taking a position, and we have insurance companies abroad, like out of Israel, that have invested $100 million in JETS; they’re up money. And there was lots of negative news in the spring regarding all these Millennials that are bad investors, et cetera. But I can share with you that at that point, you could get data, and in mid-August, they stopped providing it. But you could see how many shares were coming in through Robinhood.
Frank Holmes: And there was something like 25,000 small investors came into JETS, and then Buffett came up with these negative pronouncements, and guess what happened? It exploded. It surged 50%. So, we know that a lot of Millennial investors have made great money, and then it grew to 40,000 people by August, just through Robinhood. And it’s up from those levels today all because of a vaccine, the hope of a vaccine being distributed. And also you’re seeing great economic support all around the world by governments to basically keep this industry vibrant, not having everyone lose their jobs, going on unemployment, because it would take too long for turnaround because the onboarding process of pilots, the onboarding of stewardess, all the training. It’s better for them to get support and keep them in that training mode for the global economic to turn. And guess what? In America, we fell in mid-April to 90,000 people flying. Now, it’s over a million people a day flying in America. So, we did see that turn.
Frank Curzio: It’s kind of amazing how Buffett really bottom tick this, right? He got out at the exact long time. I just want to show something to you guys because we’ve seen the airlines really bounce back off their lows, but still down considerably here from their highs. Which again, the economy will get better. I think it’s just a matter of time, Frank. It could take six months with a vaccine; it could take a year and a half. When it does, the amount of money in the system is going to explode, and people are just dying, dying to get out of their houses, as you know. So, I see this exploding, this trend. I want to get to Bitcoin, which is interesting because you’re one of people, the few people, that like gold and Bitcoin. Usually, you have to like either-or, right? And these people sometimes hate each other, which is kind of fun, even though they’re buying it, I think, most people buy for the same reasons.
Frank Curzio: Now, you have a company called Hive Technologies. I’ve gotten to that financing, and you’re seeing this company really started taking off, along with the price of Bitcoin and Ethereum, right? People aren’t talking about Ethereum. Ethereum is up like 350%. It’s up more than double, I believe, from Bitcoin in a year. But nobody really talks about Ethereum. This company mines for Ethereum and also Bitcoin… Could you explain it? You know what that means, I know what that means, people in crypto know what mining means. But there’s a lot of new people that are starting to get into crypto that maybe don’t understand the mining process. Could you go over that first? And you are the executive chairman, the interim executive chairman, and yeah, let’s start there.
Frank Holmes: Well, going back, Frank, I was trying to launch an ETF in the space of Bitcoin and quickly recognized that the regulatory body was very deeply concerned, that some hacker got paid in Bitcoin, and that would show up in an ETF in the stock exchange. That wasn’t going to happen. So, I went to Canada, same thing. And I had this knowledge, and so my friend Frank Schuster called me. We got all the Franks here talking, and said his young guns had this idea, and this looked really interesting. I had all this knowledge, so I said, “Okay, I’ll put up $5 million. I’ll be the institutional. This will be my proxy in digital currency, that the trend is in crypto.” And so, we partnered with Genesis Mining. It was a raving success: Crypto took off, Ethereum was like $300 and went up to 1400, Bitcoin was 3,000 and went to almost 20,000 in 2017.
Frank Holmes: We raise $200 million, went out to deploy it, and then we have these teething problems, issues with our largest shareholder, and I became uncomfortable with the transparency. So I became the interim CEO, and we repositioned the company. Fortunately, we kept the narrative going strong, and in communicating, what we’re doing, I wanted more accountability and transparency. And this past quarter, this summer quarter from July, August, September, we just reported last week, and we just have record profits. We’ve made $9 million. We showed what happened when we get greater transparency and accountability. We drove down the costs, and Hive is the only public mining company that basically mines these virgin coins. They’re untainted, there’s no concern for AML or KYC with these because these are the virgin coins.
Frank Holmes: We’re the only ones that mine both Bitcoin and Ethereum, and this year, we were up 1200%, much more than any other crypto company. And I was looking at the data yesterday, and we’ve traded almost two billion shares between Canada, over the counter in the U.S and in the German market. So, we’re the most liquid name in that space, and we’ve delivered the profits. And now we’re very, very fast forward of managing the build out that Ethereum is going to need eight giga memory cards not four, and we believe that’s going to be a big opportunity for us because we’re seeing this… What’s it called? Ethereum 2.0 is basically taking supply out of the system, so there’s less coins and what we think that the next 12 months it’s very easy for Ethereum to double from where it is today, and we would be the biggest industrial scale producer. So, Hive is participating in that.
Frank Curzio: Nah, that’s incredible stuff. And here, I just got to bring up, guys, you see the performance of this thing really taking off. Yeah, this is incredible. And we’re looking at Bitcoin right? When were we talking about this again? 2016/17, we’ve had this conversation a lot when I’ve interviewed in the past. Yet, over the past say even nine months, I mean, we’re looking at the news flow, MicroStrategy is taking its cash balance and investing in Bitcoin. So, PayPal, now you could buy Bitcoin through PayPal, which is 400 million people. You have Square, you have VISA partnering with BlockFi to provide a credit card with reward purchases. You’re seeing billionaire hedge fund, very legendary hedge fund manager Paul Tudor Jones, Bill Miller, a bunch of them saying, “Hey, we’re investing in this.”
Frank Curzio: I know you focus on quant, and it’s frustrating to me when I just see Citibank come out and say it’s going to 300,000 in two years and some people think it’s going to 50,000 Bitcoin this year. And then, the Winklevoss twins I think it’s 500,000 in 10 years. Could you put a price tag on this, with your analysis, using your strategies? Or is it just “Hey, it’s more like a guessing thing?” I mean, it looks like it’s going to go higher, there’s so much demand, it’s much different today than it’s ever been, and you know as well as I do that the fundamental landscape, and the tailwind have never been greater for this and gold. But do you actually put a forecast on this and see it rising as much as everybody says? Or is it hard to just say, “Hey, this is definitely going higher, and that’s all that matters?”
Frank Holmes: We talked earlier about gold, and the DNA of volatility, and of the slides that we show is the volatility of Bitcoin and Ethereum over any 10 trading days, and it’s substantially greater than gold. So, when you try to do a forecast, you have to basically explain to investors that it’s easy for it to go up 100% over any 12 months and fall 50%. That’s the DNA volatility. But I think, with a lot of people, are these huge forecasts for Bitcoin Ethereum in particular, is what’s called Metcalfe’s Law. There’s a law that says that as more people use and the supply is finite, then you get this exponential price action, and I think that that’s where a lot of these forecasters are trying to project what they think can happen.
Frank Holmes: I think comfortably, Ethereum can catch up. The silver and gold ratio you saw earlier this year was over 110:1, and it contracted quickly to less than 70, and you have this power surge in silver. Ethereum and Bitcoin are very similar, so I think it’s easier for me to suggest that I think Ethereum can double with Bitcoin where it is today. Because what happened earlier this year for Bitcoin, is in May, was called halving. Can you imagine, Frank, if the supply of gold mines 100 million ounces a year was to half of what it would do to the price of gold? It would be 10,000. So ,we’ve had this, all of sudden, the supply we know as a finite number for Bitcoin, and for the next four years, it’s just halved. So that’s supply, and we know from the number of wallets that are growing, that more and more people are buying one Bitcoin, two Bitcoins, half of Bitcoin. So, that growth suggests an exponential potential move on the upside.
Frank Curzio: Yeah, and great stuff with Hive getting into that. It’s incredible to see the run that that made. Great play on crypto, on the rise of Bitcoin and Ethereum prices. Also-
Frank Holmes: So, there are other players, Frank, there’s other players. Hive is very… There’s NASDAQ, and it’s had a great performance this year. But for investors is to recognize that Hive was the only one that does both… It mines Ethereum and it mines Bitcoin. Ethereum is going through a process called proof of stake, and Ethereum 2.0. This is not going to happen overnight. And what it does do, is almost like a halving taking place early with Bitcoin, is that if you want earn a yield on your Ethereum, then you can post it on a node. But you’ll never be able to sell your Ethereum. Once you post it, you’re just going to get a yield on it.
Frank Holmes: So, what you’re seeing is a lot of people going up from that yield and is basically shrinking the supply faster than what’s being mined, and there’s this new rage back going back three years ago with ICOs, initial coin offerings. Well, a lot of those ICOs used Ethereum as their backbone. Today, it’s not an explosion in ICOs. It’s an explosion DeFi, decentralized financing, and they use the backbone of Ethereum. So, I remain very positive and bullish for the next three years of mining Ethereum, and I think that Ethereum has tremendous upside leverage and potential.
Frank Curzio: And Frank, I just want to say, look, we’ve known each other for a while. You’ve got into financing of Hive, you invited me to the closing bell, which is great because I thought it was going to be there, but I was actually up there on a ledge. I think it was Blue Apron that was the early bell, which had hundreds of people there. But it really was a great experience. And to see the excitement that you have, the success you’re having with everything, it’s great to see how hard you work. It’s inspiring. So, I just want to say thank you so much for coming on.
Frank Holmes: Thank you.
Frank Curzio: You’re a good friend, and I like your research. And yeah, thanks. Hopefully, you join us again soon, buddy.
Frank Holmes: And also, Frank, U.S. Global is a public company, and NASDAQ, GROW. And we reported record earnings in cash flow and all that’s because of JETS exploding, GOAU exploding. And plus, we have investments in Thunderbird, which is also doing spectacularly well in entertainment. With this whole COVID lockdown, more people need Netflix, Amazon, they make content for them. They won an Emmy, and we have a big position in high blockchain.
Frank Curzio: Nah, that’s great, that’s great stuff, Frank. So, Frank, thanks so much for joining us. And hopefully, you’ll join us again soon. Take care, buddy.
Frank Holmes: Happy Holidays.
Frank Curzio: You too.
Frank Curzio: Hey guys, great stuff from Frank. A lot of forecasts there, at least Bitcoin is going to easily double, he sees gold going to 4,000 right? It’s like 1,900 around there. But I think the biggest story and the bigger takeaway here is his forecast on Ethereum right? Nobody really talks about Ethereum. I know crypto diehards, and one of my best contacts does not like Ethereum at all, he thinks it’s flawed, but Ethereum is up 350% this year. More than double Bitcoin, but Bitcoin again, gets all the attention. So, no one is talking about Ethereum. For us, we’re up 178% on Bitcoin in only nine months, and we’re up over 300% on Ethereum in about 18 months.
Frank Curzio: Those positions are in our Crypto Intelligence newsletter, which is easily our best performing newsletters. Something to be said for that because I know if you’re subscribed to Curzio Research Advisory and Curzio Venture Opportunities, I mean, you know we’ve been very, very well. It is a bull market, but we’ve doing very, very well over the past couple years, very smart. We got out of the markets when it was really bad. We got in just a little bit late, but really participated in this move up. I think most subscribers are very happy. But when it comes to crypto, man, holy cow. I mean, some of these gains… We took 500% + gains on a position, we’re up a lot on these names. And we’re very careful to research these things because a lot of them are BS, but there are some good names.
Frank Curzio: In fact, we just recommended our first security token. It’s not Curzio Equity Owners, that’s our token, where you guys know by now, you get an equity stake, we pay a dividend. In fact, we just paid our latest dividend, quarterly dividend, which amounts to more than higher yield, the S&P 500. CEO, our token trades on the MERJ Exchange, everyone can now have access to it. So, you don’t have to be an accredited investor. It took us a while to get that, a couple of hiccups here and there, but pretty much everything is going to be a goal now, and you could buy it on the MERJ Exchange. But the recommendation security token in Crypto Intelligence is a name I really like, a name that I think it could rise 5X or 10X. And I don’t throw those numbers out lightly, you know, you listen to me a lot.
Frank Curzio: When you see the research, you’re going to understand why this name has incredible upside. But more important, you’re going to understand why the security token industry has the potential to become a trillion dollar industry over the next five to seven years. It makes sense on every single level. What we’re seeing finally on the compliance end with the SEC, everything is starting to come together. We’re right in the middle of this trend, a lot, a lot of excitement. But getting back to Frank Holmes, loved having him on. Let me know what you thought of that interview, which by the way, you could watch now along with our entire podcast on our Curzio Research YouTube page, so be sure to subscribe.
Frank Curzio: Quite a few out there, financial podcasts, that you’ll find that we’re doing, where everything’s video. We got the whole studio set up, everything’s really cool. So, again, let me know what you thought of that interview at firstname.lastname@example.org. Now, a lot going on in the markets, right? And Christmas is just a few weeks away, holiday season, and I wanted to bring in senior analyst at Curzio Research, Daniel Creech, to talk about some of these topics. Daniel, what’s going on, man?
Daniel Creech: Hey, Frank. What’s happening? Happy Wednesday. Let’s rock and roll. We got a lot to go through.
Frank Curzio: I know Christmas is coming up. It’s been… Man, so you don’t have kids, do you know what Elf on the Shelf is?
Daniel Creech: I know of it, is that like the countdown thing?
Frank Curzio: I mean, you’re lucky you don’t know about it. So, Elf on the Shelf was this thing, I think it was like 2005 or so, and the elf comes down around-
Daniel Creech: You have to hide it, right?
Frank Curzio: Thanksgiving, and you basically put it in a different place every single day, and that was it. It was like, I would watch the kids and stuff like that. It was really cool. Now, it morphed into something that all of them have masks now in one shelf.
Daniel Creech: Oh, geez.
Frank Curzio: Even worse is, now parents, I guess, because they’re home so much, which is great, is they decided that they bring little gifts every day now. And now, you kind of have to follow because all the kids are talking about it in school and say, “Oh what did the elf bring? What did the elf bring?” And you can’t say, “Well, the elf brought nothing.” I mean, it comes into this, where it’s like a full-time job, Elf on the Shelf. So, just be glad that you’re not involved in that, but I just wanted to throw that out there. But other than that-
Daniel Creech: All the parents are going to sleep in, I’m sorry, kiddos, the elf got COVID. You don’t get any gifts today.
Frank Curzio: And they have masks. We actually have a mask for our… It’s unbelievable.
Daniel Creech: That’s terrible. What, you don’t have the one from last year you used?
Frank Curzio: We do, and my wife just made a little mask because we all have masks now.
Daniel Creech: Well, oh boy, I don’t like hearing that. I’m going to have to talk to her.
Frank Curzio: Listen, she comes in here. You’re in the office, you can tell her to her face, if-
Daniel Creech: I know. I’m going to have to. I can’t wait to see her and the kiddos running through the office. I’m going to be, “Hey, hey, he…”
Frank Curzio: Well, there was an interesting topic. This happened a few days ago, we’ll start with this. We saw a pretty big debate that got heated, and this was Rick Santelli on CNBC arguing with Andrew Sorkin about how the rules are, when it comes to closing some businesses’ down and others are able to stay open, and how Santelli was saying, these rules make absolutely no sense. But Sorkin, who wasn’t even part of this conversation, right? I mean, they had like six people up in the windows and stuff like that, and to the point where he came in and interrupted Santelli, and Santelli was like, “Wait, wait, wait who is this? Who’s speaking right now?” He didn’t even know. But Sorkin felt that he had to inject his opinion, and he just started ripping Santelli, and how big box retailers and restaurants and churches are not the same.
Frank Curzio: They’re not the same, and they require different rules, and he said he used the magic word, which everybody likes to do, “based on science,” even though there’s zero science. Explaining why Walmart should say open, but other retailers that sell similar things can’t in smaller nature, right? There’s no science saying that one would be safer than the other, right? It just doesn’t make sense. It doesn’t make sense why indoor dining would be closed, but again, a Target would be open, right? Which is crazy, but it was pretty heated back and forth, it goes to… I guess what’s going on and the debate on right now, right? I mean, what are your thoughts?
Daniel Creech: Yeah, absolutely. It was a great snapshot and picture of what’s going on. I thought it was brilliant. I mean, I’m a huge fan of Rick Santelli. I mean, I think he’s wonderful. We need to get him on the podcast, you need to talk to that guy. I always enjoy his segments. He’s just a straightforward guy and uses a lot of common sense. The thing that stood out to me there was, you notice what they didn’t say? They didn’t talk about the death rate. They didn’t talk about how many people have maybe gotten it through small dining to big box retailers. And it was hilarious, because when Sorkin led in with the whole… How did he say it? Public service announcement or…
Frank Curzio: Yeah.
Daniel Creech: “Well. As a public service announcement. We want all of our…” And that’s what everybody goes to the heart, to pull on the strings of your heart. If you want to get something through, you’ve got to talk about either children, or the health of everybody, and it’s just hilarious because you don’t talk about any stats. And I thought it was brilliant, how Santelli said, “500 people in a Lowe’s is no safer than 150 people in a restaurant that can hold six people. And well, science disagrees. Well, it’s okay to disagree with that because you have to use the brain God gave you in your head every once in a while.” And that summed up the best argument I’ve seen between somebody that just wants to heed power over others and make all the decisions. Like Santelli said, and who was the… Gosh who’s the economics, economist on… The bald guy, he’s always on CNBC?
Frank Curzio: Economist? Which guy?
Daniel Creech: Nah, I’ll think about in a minute.
Frank Curzio: All right.
Daniel Creech: But what was interesting is that Santelli said, “Hey, where I live restaurants are pushing back, they’re opening up and everything’s fine.” And the guy chimed and said, “Oh, how’s that working out for you?”
Frank Curzio: Yeah,
Daniel Creech: Yeah, I think so. “Oh, how’s that working out for you? How’s that working out for you?” I mean, just being a total rude smart ass, condescending guy. And again, but you don’t talk about facts, you don’t talk about data. You just say, hey, science and trying to keep everybody safe. This is the biggest tug of war over control of individualism easily in the last 10 to 20 to 30 years, and it’s scary, and people need to pay attention. And this is a good segue, we can get into both coasts, on the East and the West. You got people pushing back, and I know you were ranting against the anti-capitalist movement and a lot of the reading here, but small businesses, individualism is awesome. Did you hear about the bar in England? Is it England?
Frank Curzio: No, I heard about the bar in Staten Island, obviously, but not in England.
Daniel Creech: Well, I’ll get to that in just a second because he had a brilliant idea. They did the autonomous zone, correct?
Frank Curzio: Yes.
Daniel Creech: The Staten Island guy?
Frank Curzio: Mm-hmm.
Daniel Creech: Well, the tequila bar, and it’s 400 Rabbits Tequila, and this is over in England somewhere. They are registering as a church so it can reopen. Because I guess in England, churches were still open. I don’t know all the details; this just caught me, so I could be off here a little bit. So, you go from 400 Rabbits Tequila, to “The Church of the 400 Rabbits,” and I guess he was going through the process of trying to get these petitions signed or whatever the hoops you got to jump through over there. But that… So, you’re converting to a church to stay open. Imagine how strong the wine would be, the communion for that, depending on what religion they choose and all that.
Frank Curzio: I think it’s just so amazing when it comes to vices-
Daniel Creech: If you’re at a bar and taking tequila, that’d be awesome.
Frank Curzio: And when it comes to vices, people will find a way.
Daniel Creech: Yeah.
Frank Curzio: I mean, even with strip bars with COVID, they had drive-thru strip bars. They’re going to find ways to drink. They’re going to find ways to gamble somehow, whether it’s online or whatever. But when they have their vices, people will find a way. But that is interesting, I didn’t hear about that with the church.
Daniel Creech: Yeah, that caught me because it goes with the gentleman in Staten Island that did the autonomous zone, that I think he got arrested, and then the people were protesting in response to that. Which, listen, I don’t want any harm to be done, but I would love… Frank, we’re going to start a political Pac or something to help support like… You call it the most peaceful revolution or the biggest and peaceful revolution, but it’d be great to see all small businesses reopen because even in… So, a lady in California was… Did you see that video on Facebook about that-?
Frank Curzio: I did see that. It was very sad. It was very-
Daniel Creech: That damn near made me cry.
Frank Curzio: And it was sad and-
Daniel Creech: This woman is on the verge of tears and is showing her business and all the money she put into it to help do the requirements and make sure she was following all the rules for outdoor dining area.
Frank Curzio: The whole tent area-
Daniel Creech: And I don’t want to exaggerate the story, but when she pans her camera, there’s no way that’s 100 yards away from her do you think? The setup?
Frank Curzio: No, it’s literally right across the street-
Daniel Creech: I mean, it is damn near catty corner like a streetlight that you could walk through.
Frank Curzio: So, basically, they’re allowing it right? What was the get together? What was it for?
Daniel Creech: It was a movie studio, or it was a studio Hollywood of some sort? But it was a catering thing. I guess. They could eat outdoors.
Frank Curzio: It was allowed, which was right across the street.
Daniel Creech: Yeah, because it was exempt.
Frank Curzio: Which was right across the street, which was about 10 times the size of her tent. Same exact thing, same exact setup. But they told her she’s not allowed to run her business, and they said that the other business was perfectly okay. And this is the problem that we have in America. I can’t believe that you do… That thing right there, you just said, you just say, well, we need to start a Pac. We really need to start a Pac to tell small businesses that they should be able to stay open? If it’s the same rules. It’s the same rules. That’s fine if it’s the same, but they’re not the same rules, and that’s what you’re seeing, where even in Staten Island, where you’re looking at two three blocks away all the restaurants, were allowed to stay open, but at this side, no, they’re not. And it really is crazy. And the heart of this matter, the funny thing, Dan, that comes from this is, you’re forcing these businesses to shut down, right? You’re forcing them.
Daniel Creech: Yup.
Frank Curzio: So, what do you do? You say, okay, we’re going to help you out and help them out. Now, that was six months ago. They need more help, and now these asshole politicians, they can’t pass the stimulus package. Why? Why can’t they pass the stimulus package? It’s not because they don’t both sides agree. It’s because a lot of states, if you look at Newsom, you look at Cuomo, I mean, there’s no argument they’re destroying New York, destroying California, right? I mean, just the mass exodus of people, the mass exodus people because of your policies, right? Now, the reason why these stimulus bills aren’t passed is because the states want more funding for all of their policies. So, they want to be funded because they’re getting crushed. And yet, you have these small business owners, where you’re saying you can’t open. But wait, do we know you? Yeah, you cool. Okay, you could open right? Right next to each other.
Daniel Creech: Yep.
Frank Curzio: You’re forcing them to close, and you’re not giving them help now. You’re not giving them help. It’s been two to three months that the second phase of this thing was supposed to come out, and our politicians cannot have this go out. Not because they don’t agree that these people need it, it’s because they’re throwing so much in there that they want, and they refuse to pass it unless these things go through. Which kind of tells you one thing, the importance of the Georgia runoff?
Daniel Creech: Oh, absolutely. Yeah.
Frank Curzio: If that happens, you’re going to have one party regardless, even if it’s on the other side of Republicans, that’s where we do the worst economically because it’s just, “Hey, these are our policies, and we’re going to push everything through.” It’s nice to have that check to be like, “No, no, wait a minute. We got a couple questions about this.” But a lot going on, and they’re sitting back and watching these small businesses get crushed. I mean, I’m in Florida, it’s amazing. People are traveling here and say, “Wow, I just can’t believe it. You guys are open, you practice social distancing.”
Frank Curzio: I’m like, “Why wouldn’t everybody else be doing this?” And I know cases are exploding, but you have a 99.5% survival rate. It doesn’t mean seventy year olds should go out without masks and say, “Hey, go party and hang out.” We know that this disease targets 70 and over. We know that it targets people with underlying conditions. But everyone else… It was over 85% of people that get COVID get very mild symptoms.
Daniel Creech: Yeah.
Frank Curzio: I’m not discounting the deaths out there. I know people that actually died from COVID. I’m not discounting it. But you have to look at the other side. It’s not just black and white. I mean, the other side is keeping people home, keeping kids home, right? Closing schools, when we know that the stats on the kids are a joke, right? I mean, they barely get this, they don’t transmit this disease, right? Very few very, very few cases. I mean, I’ve read all the studies. I’ve looked at tons of research, tons and tons of research on this, but just to see what’s going on out there is pretty insane. I guess I went off a little bit on that, but yeah, I don’t know it’s-
Daniel Creech: You know. What’s a simple minded question I have that’s just beyond simple and goofy? Why don’t you think… Well, first of all, how many people do you think would watch this or tune in or pay attention? Then. How much advertising could you sell alongside this? But why don’t you get the top five pro-lockdown doctors, decorated people, and grab five people that are doctors and dedicated people that are anti-lockdown, and let them have a debate?
Frank Curzio: I mean, I even wanted to-
Daniel Creech: Why would nobody… And, you’re seeing different sides on different YouTube channels and different short interviews and other things like that. You get to the point where you have a group of people just looking at this doctor or this credential and saying, “Ah, he don’t know what he’s talking about. That’s not the disease specialist or whatever that he needs to be.” It’s just pitting people… What’s sad is that in our business, Frank, we’re going to watch in the market, which is what we want in the stock market, is for companies to separate themselves and quit trading all up or all down, depending on the Fed and the stimulus and all that kind of stuff talks.
Daniel Creech: But what we don’t want to see, in my opinion, is in the freakin’ reality that we live in, where you have that huge gap growing. We want everybody to be independent on the stock market. We want equal opportunity in reality, so small businesses can flourish and continue to support millions and millions of jobs. But hey, this is the way the government works. I’m not anti-government by any means, but I am anti-big government, and that shouldn’t shock anybody. But what we’re saying is, there is a silver lining I want to talk about real quick, is the Riverside County Sheriff in California, Chad Bianco, put out a hell of a video. And he used some real strong language against Governor Newsom and his dictatorial attitude and his hypocrisy, about telling people to lock down, and I got this through Zero Hedge link.
Daniel Creech: Like I said, there’s a good video message from Sheriff Bianco. This is from December 4, so just a few days ago. But what’s encouraging to me is that if you have people and… The government ignore rules all the time. I mean, hell, marijuana is still a… Is it still a stage one or federal?
Frank Curzio: It’s a federal crime.
Daniel Creech: It’s a federal crime, yes.
Frank Curzio: So, basically in every state but Colorado.
Daniel Creech: So, don’t tell me we can’t ignore anything at the state and federal level because they still do. This Sheriff was saying how basically, it’s impossible to enforce what you’re asking, on top of being hypocritical. And I don’t know if he says unconstitutional, but it sure as hell is. So, that’s a good silver lining, and the smaller towns you get… I’ve never been out to… Is Riverside, I said?
Frank Curzio: Mm-hmm.
Daniel Creech: I’ve never been there, I don’t know how big or small it is. I’m assuming it’s huge, because it’s in California. But the nice thing is, is that this ain’t the only Sheriff that said things like that. And hopefully, they’ll stand up in a nice peaceful way and get everybody back to halfway normal, and at least have the opportunity to flourish and open their business. So, just like Santelli said, “The individual should be smart enough to make those decisions for themselves, not somebody else looking down their nose telling them they’re not smart enough.”
Frank Curzio: Yeah, I just think it’s an amazing world right now, right? Because earlier today, this is Wednesday, I saw a doctor come on and he’s being interviewed on Squawk Box. And he was talking about how these viruses differ between antibodies and T cells and how these two vaccines coming out, which is Pfizer and Moderna, may not provide long-term immunity compared to the ones coming out from AstraZeneca and Johnson & Johnson, which focus on not T cells, not proteins and stuff. I don’t know if I agreed with that, but I love the fact that he’s throwing it out there, and he’s an expert in a field, and he’s given his opinion. I hope that now that the election is over, we can get back to people, to doc… I can’t say how many doctors email amazing statistics about COVID, amazing stuff, all who say the same thing, “Don’t mention my name.”
Frank Curzio: They can’t mention their name because you can’t speak out against the status quo here, which is… You have to wear masks and everything about the virus, right? You can’t question it. But yet, we’re all still learning about this virus. We still don’t know anything about it, really. We know something’s right. Again, it attacks 70 years old, older people and not kids, but how do you really get this? I mean, do masks really work? I mean, I would think that they may work a little bit, but there’s evidence and plenty of studies… Look, if there was evidence that this worked, that’d be fine, but there’s studies on both sides that question it. We saw major lockdowns across Europe, right?
Daniel Creech: Yeah.
Frank Curzio: Where they were wearing desks and they would go to jail if they would go out. I mean, it’s really enforcing, and much more in the U.S, and look where they are now. I mean, they used to make fun of U.S and say, “Oh, why can’t you be like Europe?” Now, it’s widespread.
Daniel Creech: Yeah.
Frank Curzio: So, how did people get this? I know people who have been in their house that are 70 years old and have gotten it out of nowhere that wear masks all the time. The fact that we can’t question this stuff, and that even goes for my opening, where I was talking about Ibran Kendi’s book. I would love to interview him, and it’s not going to be an interview where I’m destroying him and yelling at him, I just want to see truly how this guy believes that capitalism, if you believe in that, that you are a racist. I just want to understand that and where that’s coming from. Like, what happened in your life to push this agenda, that got further pushed because of a lot of stuff that happened with George Floyd and a lot of deaths took place. But what’s your level of thinking to really say that America, and what we’ve been founded on, and our whole entire country as the greatest country in the world, needs, needs a reset? It should be socialist.
Daniel Creech: Yeah.
Frank Curzio: It’s just pretty insane to-
Daniel Creech: I hope you do interview him, and good luck with understanding that. But no, I hope you do interview him. That would be great.
Frank Curzio: I would like to. I really would. I’ll reach out to him and see if he’ll come on. I’ll reach out to Santelli. We get a lot of great guests because you guys, you guys-
Daniel Creech: By the way, we won’t go down this rabbit trail, but you did say one thing I totally disagree with. Did you say the election is over already? Silly Frank, what are you talking about?
Frank Curzio: Yeah, I was-
Daniel Creech: Did Trump concede yet?
Frank Curzio: I would think it’s over. It’s close-
Daniel Creech: I was talking to a friend of mine, who I guess he still has a Trump/Pence sign up in his yard, and his wife said, “When are you going to take that down?” He says, “I’ll take it down whenever Trump gives up.” He says, “Hell, I might have that thing in my yard forever.”
Frank Curzio: That’s true. That’s true. It’s just, I mean, if it gets-
Daniel Creech: But just real quick, we won’t go into it, but there is a lot of crazy stuff with more lawsuits and stuff. The odds are so far against him, I’m not saying anything, but it is intriguing to see what’s going on in the courts, and what they’re trying to just go right to the Supreme Court. And states are suing states now and it’s a shit show, but it’s entertaining. It’s just sad that so much hangs in the balance, but anyway.
Frank Curzio: It’s funny because if Trump loses, I wonder what all these governors with their terrible policies, who are they going to blame it on? They can’t blame it on Trump anymore, right? He’s not there.
Daniel Creech: Yeah, it’ll be tough. Well, they will. Nah, they’ll blame him.
Frank Curzio: It’s everyone else’s fault. It’s the Republicans fault, it’s everybody’s fault, it’s whatever it is.
Daniel Creech: He ain’t going anywhere. They’ll continue to blame him. It’s not like he’s leaving. It’s not like he’s moving back to one of his penthouses and not going to go on TV. So, he’ll be all right. He’s a big target.
Frank Curzio: Yeah, no, absolutely. So, let’s move on to some of the IPOs. IPO mania, and I remember this, okay. Everyone wants to compare today’s time to other times. I know we have low interest rates and stimulus and stuff like that. The only time I can compare to today’s market too is like 1998/99, where you just had to put .com on your name and have an IPO, you had four pages and two of them didn’t work yet, right? The web. And it was a great idea, it’s kind of like the ICO industry and these things had… Not like ICOs, ICOs would have like a 50 to 100 million valuation, these things have billion dollar valuations. And then you had young people going out there and trading and thinking they’re geniuses and being like, “Oh, we’re making money on this and there were options.”
Frank Curzio: And it was funny because we were managing money at the time, and we were working with TD Ameritrade and Charles Schwab. So, TD Ameritrade and Charles Schwab had this program where they pushed a lot of their assets out to independent money managers. So, we would meet these people, and I had to meet them and basically pitch them our business. And I closed a lot of them, but it was just these guys are sitting back and going, “What could you do?” Well, we’re up an average of 20% annually over the last seven years. “That’s nothing, I beat that myself.” They were just like arrogant, and I feel like right now what’s going on, DoorDash. IPO increased dramatically, right? It’s open today, it was supposed to open at 102. I’m looking now, I don’t know if it’s open on CNBC, I was doing this-
Daniel Creech: Yeah, I don’t think it is yet. I don’t think it’s still trading.
Frank Curzio: But, they’re saying that it’s projected open over $150 I think I saw. Which at 102, it’s like a $30 billion valuation, if it’s over 150, it’s going to be more like 50, 55 billion with sales of one billion, so trading at 55 times sales. Put that in perspective, Netflix, which people say the valuation is through the roof is trading at 10 times sales. Now, you have Airbnb coming out being valued at $42 billion dollars right now, even though you saw revenues decrease dramatically this year. However, I mean, when you look at the fundamentals and the growth potential, compared to DoorDash, and this is expected to come at $60 a share, 42 billion valuation, but they do around three billion, I think three billion in sales.
Frank Curzio: For me, three billion, I think that’s a much better buy in terms of valuation, and you have that growth market. Where DoorDash is an amazing company, captures 50% of the market, but they have very, very high margins in a business that pretty much as easier barriers… It reminds me of Groupon. I mean, there’s services now, Dan, I don’t know if you know this, which is really cool. I got this through Capital One, and there’s another service that you use that you could download or download the app, and every time you order something, no matter what site it is. So, pretty much 80, 90% of the sites, if it’s Dick’s Sporting Goods, if it’s Walmart, Amazon, whatever, right before you check out, as soon as you hit check out, it automatically checks to see if there’s any coupons for you. And I’ve got 10, 20, 25% off, sometimes.
Daniel Creech: Nice, that is a nice feature.
Frank Curzio: When I see DoorDash and the valuation that it’s trading at, and I know they capture a big part of the market, I know it’s a great company, but their margins are incredibly high for something that they’re doing, where it seems like a lot of businesses can really do if they want. But again, it’s a bull market. Who am I to say well these things are probably going to go a lot higher, just like every other stock, right?
Daniel Creech: And is silly and macro is this is going to sound, there’s risk and successes to be in first to market as an IPO in a sense of what they’re trying to do, but they are… How much of the market share did you say? Over 50?
Frank Curzio: I think it’s 50%.
Daniel Creech: And it’s a great name, I mean DoorDash, and if you can get that brand, if you can be the Nike of it, would you rather be Nike or Adidas? It’s not that Adidas is unsuccessful, but Nike is bigger, right?
Frank Curzio: I mean, Nike’s yeah, much bigger. It’s so funny. I don’t know, did you see-
Daniel Creech: It’s not like there’s not a big enough world for a lot of people to compete, but the interesting thing with the DoorDash, they got a real young CEO, I saw just a clip of him on CNBC today. But man, if you can capture that, that brand, and you can’t really value that in my sense. I mean, it’s just amazing, and I think as long as people are going to continue to use it word of mouth… Have you used DoorDash?
Frank Curzio: Yeah. I mean, I’ve used it where not on purpose, but I’ll be honest with you I don’t… It’s not like-
Daniel Creech: What do you mean not on purpose?
Frank Curzio: No, where there just happened to be delivery service for them, something you order, and they’ll just drop it off-
Daniel Creech: Oh gotcha, gotcha. Okay.
Frank Curzio: It’s not like they come to the door and there’s some other service, and I’m like, “Wait a minute, you’re not DoorDash? No way, oh my god, the food must be bad.”
Daniel Creech: Do you have my food?
Frank Curzio: It’s not like Amazon, where Amazon the customer service of Amazon is the greatest ever. I mean, you call them and say, “Hey, there’s something wrong with the box.” They’re like, okay, just give it back and give you your money back. They don’t even ask a question.
Daniel Creech: Right, yeah.
Frank Curzio: So, it’s when it comes to brands, but maybe this explodes even more, but we have to realize a lot of restaurants are going out of business. COVID is not going to be as big of a deal, but people are going to go out a lot more than just order right? And have restaurants closed. So, that should result in lower total addressable market, I would think.
Daniel Creech: All the better reason to go public now.
Frank Curzio: Oh, you got to go public now-
Daniel Creech: I mean it’s genius. It’s smart. It’s a great move, and hey, that’s capitalism, and I know that’s angry right now, and that’s your talking point there, Frank. But, yeah, I think it’s great. So, I don’t know if the stock is going to go higher or lower, or be higher or lower in six months, but investor beware. But that’s okay. That’s what markets are all about.
Frank Curzio: Yeah. Well, you know what? You have to Airbnbs, you have the DoorDashs, which are getting the most attention from the Robinhood crowd. But for those of you out there you should take a look, there’s another IPO coming out. I’m not too sure if it’s this week or next week, but it’s called AbCellera Biologics, and it’s pretty big. They intend to raise over $300 million, but this is a machine learning drug discovery platform to find antibodies that can be developed drugs. And it sounds like it’s difficult, it sounds like it’s crazy, but these guys have like, I think, Eli Lilly, somebody pitched this to me. I was like, wow, because everyone’s focused…
Frank Curzio: And I love that everybody’s focusing on DoorDash and Airbnb, and they want to get in it, but here’s something that I think could really, really… Maybe you’re not going to see the huge movement up front, but the business just makes sense in today’s world. And the fact that they have that many customers, it looks really, really cool. I mean, this is a $5 billion market that they’re going to be in, which is pretty incredible. But yeah, you always do your research and stuff, I just want to read some more ideas there.
Daniel Creech: Yeah, that’s fine. I mean, like you said, it’s hot and you’d be silly not to look at them. But just understand that most of them are probably a pass at current prices, depending on your level of risk and how much you can stomach seeing volatility go up. Everybody’s comfortable volatility until your damn stock opens on 20% one day, and you’re like, “Whoa!” That makes you fill out the next bubble of yeah, maybe I’m not that risky. So yeah, but it’s good.
Frank Curzio: I mean look at volatility, I mean, you have Bitcoin, I’m looking at today it’s 18,400. It was 18,000 when I started this podcast. I know that the CEO of MicroStrategy, who’s been a big fan of Bitcoin, bought at 10, $11,000 has done incredible on it, putting his cash position in it. But he also bought a lot more at 19,000, right? So, it’s interesting-
Daniel Creech: They offered what? 550 million in convertible notes to raise more money to buy more Bitcoin.
Frank Curzio: Yeah, I mean, maybe they just go out from being-
Daniel Creech: And again, there’s another brilliant idea, depending on whether it works or not, what a way to think around to try to get exposure, another publicly traded company. I mean, a lot of people, I think, Citron Research put out a tweet about how that’s an easy way to get exposure to Bitcoin. And it is, so it wouldn’t shock me if Bitcoin goes down 10%. MicroStrategy is probably going to go down along with it.
Frank Curzio: Yeah, no, that’s a good point. I mean, listen, that’s all fine and dandy because it’s a way of thinking out of the box. But what happens if Bitcoin goes to 5,000?
Daniel Creech: Exactly, yeah. Or 3,000 again.
Frank Curzio: And you know people who are Bitcoin fans might say, “Well, that’s not going to happen. That’s going to have is limited supply and just everyone’s getting more notice Pay Pal.” Let me tell you something-
Daniel Creech: But it could.
Frank Curzio: The government could just say, not allow Bitcoin and say, hey, just shut everything down. Especially if it’s a threat to the monetary system, which it is becoming. But be careful of governments. I mean, you invested, I’m sure there’s a lot of you out there. I’ve seen it: People invested in great mining companies in Venezuela, and they happen to have a major discovery, and the government said, “You know what, we’re going to take 90% of that,” and the stock went to zero.
Daniel Creech: Yeah.
Frank Curzio: So, you always have to prepare when you see a stock or market, where it is where it’s that high, always. I know, it’s hard to do because you’re exciting, it’s just like when the market is crashing, and you want to sell everything. You always want to look at your risks up here, like, what can happen where this doesn’t work out? Do you know a bear case on Bitcoin right now? I mean, I own Bitcoin, I told you I used to buy for what? Three, four years, we have it in our newsletter. Do you know anyone with a bearish thesis right now?
Daniel Creech: No, other than like you just said, about the end all be all of getting barred from governments. Ray Dalio, the Bridgewater guy, he kind of said that a couple weeks ago, like that’s a big risk, but no other that I mean… Well, and it’s hard to talk about fraud and all that kind of stuff, and a lot of the… You could call legit arguments as this thing was rising up, but it’s a decade old now give or take, a little older than that. But I mean, it is proving itself for people to continue to buy and hold it. So, it’s hard to argue that it’s a scam or it’s going to zero. Anything could happen, of course. But yeah, I mean, I know it’s, nah, it’s popular right now and near all-time highs. So no, of a lot of the bulls are in trance, not the bears.
Frank Curzio: Yeah, no, bulls have gained control so… All right, so listen, Dan, we covered a lot of stuff today. I love having you on. What are your plans for the holidays?
Daniel Creech: I’m heading to Ohio for Christmas this year. That’s where the majority of my family is, and we’re from… So, I’m looking forward to that. And then I’ll be back before New Year’s.
Frank Curzio: Nah, that sounds good.
Daniel Creech: Go see the little kiddos and my nephew and niece, and I have some cousins that are younger, so I’ll manipulate them in being young capitalist minds and help them fight the good fight.
Frank Curzio: I can’t believe you’re going to see your family-
Daniel Creech: No elf on the shelf with a mask either.
Frank Curzio: I can’t believe you going to see a family for Christmas. You’re so irresponsible.
Daniel Creech: I know. I know it’s terrible, but a lot of can happen before now and then. They might take away Christmas.
Frank Curzio: Yeah, and maybe that’s next. All right guys, so that’s it for me. Be sure to check out this podcast, again, you can see us talking, it’s great, we have video. I spend a lot of money this technology, which is really, really good. We’re getting a lot of positive feedback from it. But it’s all on Curzio Research YouTube page, so be sure to subscribe. You can see our interviews. You can see everything now in video, which is awesome. We’re going to have, like, whiteboards in here. We’re going to be bringing up different… We’re going to make this a lot of fun, soundboards. It’s just now that everything is set up, we’re about to go crazy and make this a lot of fun. And of course, we want to hear your feedback as well, email@example.com. So guys, thank you so much for listening. I really, really appreciate all your support. And I’ll see you guys in seven days. Take care.
Announcer: The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decision solely on this broadcast. Remember, it’s your money and your responsibility. Wall Street Unplugged produced by the Choose Yourself Podcast Network, the leader in podcasts produced to help you choose yourself.
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