Anthony Speciale Stock Market Analyst

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Rare Earth Elements Investing

Speaker 1 (00:02):

Hi, I’m Carter clues and welcome to a better way to wealth. And now let me introduce the man who’s going to lead you to that better way. A wealth manager is going to make you make more money more quickly, more safely than you even imagined possible. Tim Melvin, Tim, welcome

Speaker 2 (00:17):

Carter. Great to see you again today and really happy to be here.

Speaker 1 (00:21):

Let’s talk, let’s talk about an area where there’s a lot of myths out there. A lot of misunderstanding, some of it, I personally think being sewn intentionally by some of the TV talking heads, you know, the, the wall street types, the area of electric vehicles, but specifically the how they’re going to run these things. The rare earth metals, which a lot of people don’t understand. And Tim correct me if I’m wrong, but if they don’t soon understand, they could end up losing a lot of money. What’s the story?

Speaker 2 (00:52):

Well, rare earth minerals are huge part of electric vehicles, especially the battery. We’re talking about things like lithium and cobalt and six or seven other metals that you’ve probably never heard of, but they’re called rare for a reason. There’s not a lot of them around. And these electric vehicles use a ton of rare earth minerals. Now the problem is in three British researchers really kind of just narrowed this down. They did a study, it was called the Evie revolution. The road ahead for critical raw materials demand. What they found is there’s not enough of this stuff to go around. There’s not enough to meet president. Biden’s insane goal of 100% electric by 2030. There’s not enough lithium and cobalt in particular being mined in the world right now to meet those goals, it’s going to substantially slow the widespread usage and acceptance of electric vehicles.

Speaker 2 (01:59):

The other problem that we have is remember if you’re going to be a car company, especially in the United States, you can’t just be building an upper end luxury car, like a Tesla. You got to have a car that you know, for the kid, that’s getting ready to go off to college. You got to have a car for the husband and wife that have two kids and a dog. You got to have a car for everybody. And you’re not going to be able to do that. If demand continues to push the price of rare earth minerals so much higher

Speaker 1 (02:28):

Through the, through the sailing,

Speaker 2 (02:31):

Through the seat. Yeah, cool. Absolutely through the ceiling. And the other problem is it’s not just the rare earth minerals, and we’ll talk more about this another time, but it’s also increased demand for copper and aluminum and some other just traditional metals going into the car where demand is pushing it higher because you can’t meet the demand with the current production supplies, but rare earths are the real problem, especially for the us and European car companies. And there’s a big reason, the wrong folks own most of the rarer. All right.

Speaker 1 (03:03):

Now, were you approached from getting to the nitty gritty or where do you hear what’s coming up next? Okay. Who does own most of the rare earth minerals upon which the politicians and the investors are telling us we should depend. Okay.

Speaker 2 (03:16):

The largest rare earth supply on earth is in Chile. The largest amount of lithium being mined right now and produced is in Australia. Sounds good. United States has great relations with chili and with Australia, we wrong. China got their first China now contracts for the bulk of lithium supplies. The number I’ve heard is it’s about 84% is either directly owned by controlled by or the supplier is contracted by China. Now China is trying to get to all electric vehicles. If you saw the Olympics several years back with the small around Beijing, you know, that China is serious about trying to clean the air up and they believe in electric vehicles, they have exactly zero vested interest in making sure that the U S manufacturers get the rare earth minerals that we need. So that’s an easy problem, right? We just, we just find more minds and open more minds.

Speaker 2 (04:21):

It’s it’s, it’s not really that easy to deal because of where they are, who owns the land. Most of that’s contracted by China. Then there’s another problem. Mining for co cobalt and lithium is nasty, dirty environmentally destructive mining. Cobalt in particular is, is ugly. Most of the supply, unfortunately in the Republic of Congo. And we’ve actually heard accounts of slave labor paying used for COBOL. So in this case, the cure of electric vehicles may be, is environmentally destructive as just choosing an internal combustion engine. We don’t know the big problem here is it’s gonna slow deployment of the electric vehicle markets. It’s not going to happen as quickly as we think because new production is going to have to be bought online. Now everybody’s been hyping all of these up.

Speaker 1 (05:18):

So let me, let me put in perspective here for people to make sure they understand. Look, what we’re talking about here is a real world situation where you’re being told to invest in, in electric vehicles, where there might not be the material necessary to filled or run the vehicles and your investment folks goes right down the tubes. Am I right? Attempt right perspective?

Speaker 2 (05:42):

That’s that’s pretty much correct. Carla, let me put this in perspective. Holland is one of the greenest countries on the planet. They want to be green. They want to be green right now, all renewable energy, all electric vehicles. So they sat down and they studied, you know, what is it going to take to get there? Now? Holland has 17 million people total, okay. They’re 5%. The size of the United States. 1% the size of China. When Holland dug into this, what they found is they’re going to need to meet their goal of their 20, 30 electric vehicle goals. They’re going to need to use four and a half percent of current global supply of lithium and over 3% of the supply of cobalt. Well, that doesn’t sound bad. Four and a half, 3%. We can afford it. No, take that same demand. Okay. And United States is going to be 20 times larger.

Speaker 2 (06:40):

You’re going to need 90% China, a hundred times longer, longer. You’re going to need a factor of more than double the current supply to meet your demand. So there’s not enough way of earth metal to meet the demand and produce all the cars. So we either find a way to do this without rare earth metals, which everybody’s looking at. But nobody’s really come up with anything substantial yet. Or Evie, deployment’s going to be slowed in the cars are going to be more expensive. And it’s going to take us a lot longer to get there than we originally expected. That’s why, as we talked yesterday, it’s important to own Porsche instead of an electric vehicle company, because they can still sell through the Volkswagen lines that they own. They can still sell internal combustion engines.

Speaker 1 (07:28):

All right, right there. Right. That I want to stop. If I may, I want to interrupt you for a second, because what you just did was you gave our viewers that Tim Melvin, better way to wealth, despite having told them there could be a looming catastrophe, that there is a way out of this where people like right now, from what you said, I have great doubts about investing, putting my money in electric cars, right at this moment, except you just gave us a better way to wealth by saying, but there’s companies. You can go with that. Even if the men correct me, if I’m wrong, even if the electric car market doesn’t go up because of this rare earth mineral problem, you’re still going to make money because they’re going to keep making combustion engines, but

Speaker 2 (08:10):

You’re still going to be able to sell you know, regular cars, like the ones that we all drive today. And they’ll still be a leader in electric vehicles. It’s going to be slower to, to happen than everybody thinks it will look humans. We’re innovative. We’re going to find a way around the problem, but it’s going to take awhile until we do internal combustion engine is still very much a part of it. Now you’ve been being told to buy all these companies that can give you the checkers of the, of the hot lithium stocks. There’s not really a great way to track the ball right now, unfortunately, but Alvin Marley, the symbols ALB it wall. Street’s been all over it. You need to guide that. You need to buy that. Stock has definitely plateaued analyst are downgrading the stock because you can’t, you know, the stock is trading at 50 times earnings.

Speaker 2 (09:04):

There’s no mining company on earth. That’s worth 50 times earnings. The other way that people have been talking about is Rio Tinto. The symbol, there is Rio. They’ve got mining operations all over the world and yes, they have some lithium operations but it’s a real small part of the business. So I look at Rio Tinto and it’s trading at about 10 times earnings. It’s got a great dividend of 5%. There is a small portion of that business. That’s lithium, but it’s really small. So they’re mining far more diamonds and aluminum and other stuff than they are.

Speaker 1 (09:39):

So what you’re saying is if you’re going to invest in Rio, don’t invest in for the lithium invested. Maybe if you want to, for the other stuff, but investors are not going to say, oh, I’m going to invest in them because their stocks going to go up because of lithium. Is that right?

Speaker 2 (09:52):

That is absolutely correct. And we’ve seen, we’ve seen a lot of hype around another company called the lithium Americas, which is going to mind lithium, supposedly in north America. The key to that story there, Carter is going to mine. I have mine to thing yet, but they’ve got plans to, and they say, they’ve got resources, but this is the mining business. So to get to from turning that first shovel of dirt and actually bringing lithium to the surface where years and years and years away. So it’s just not a great opportunity to own that stock. So there’s just not a lot of lithium stocks. The ones that are there are grossly overvalued, most of them are privately or government owned concerns or very small Australian stocks that frankly here in the United States, we can’t even buy. So is there a way for us to invest?

Speaker 1 (10:50):

What is, what is there a better way now? You told us one, you’ve told us one where we get, w w we get the, if we invest in Porsche, we get the electric car with the lithium involved, plus they can still go the combust wins. So it’s the best of both worlds. All right. What’s another better way to wealth. Zero in on lithium,

Speaker 2 (11:11):

Lithium. Yeah. The biggest supplies of lithium in the world are in fact in Chile and Chili’s in the process of dividing dividing it. So let’s do this instead of risking everything on. Let me give you another checker here. S Q M you only give me the ticker cause guys, I can’t pronounce the name of the company. I don’t speak Spanish. And, but that’s the ticker. It does trade here in the United States. They’re one of the larger lithium miners in the world. But again, it’s trading at 66 times earnings. That’s very expensive. It’s tough to make money in a mining stock from that particular level. Especially since we know it’s going to be tough, getting this stuff up out of the ground, it should grow at a nice rate, but a nice, not a nice snowflake to justify a 66% price to earnings ratio in our mind.

Speaker 2 (12:02):

All right, let’s do this. Let’s just buy Chile. Let’s buy all the children. All right. Okay. Chile as this boom explodes, and it’s going to be a boom as mining companies come in, whether it’s SQM or album Marley or whoever it is that comes in and digs this lithium out of the ground and sells it to the Chinese. And hopefully eventually the, the north American and the European markets, the entire economy of Chile is going to explode. This will eventually be a very big business. So if we buy the, I shares MSC, I Chile exchange traded fund currently trading around 28, 20 $9. Okay. The symbols ECH, we get all of Chile, we get SQM, it’s the largest position in the ETF. We also get some of the other chilled Chilean miners that are mining, you know, other metals. In addition to lithium, we get all the banks that are going to process all the cash and all the loans to drive the lithium industry. So that’s one way, we’re just going to buy the country and the economy, the most lithium deposits in the world. And how do I buy again? You buy an exchange traded fund it’s ECH. So rather than being stuck with specific commodity risk, which would you definitely have buying just a lithium miners. And also always the possibility of nationalization because we are dealing with Latin America it’s happened before it could happen again, we’ll buy the entire Chilean economy and have access to every company and institution that’s going to benefit from the lithium boom.

Speaker 1 (13:45):

And so now, even then when China buys it all up, we still make money on our stocks.

Speaker 2 (13:49):

Well, we still make money because money’s still coming in. And unlike the, unlike the other miners, you know, we would get a dividend 2.1 was that the other south American minors don’t pay a whole bunch of of dividend yield. So we have 2.1% and that we can enjoy the growth of Chile that comes from owning a lithium. Then the most lithium in the world’s being processed in Australia, the ETF there is EWA and they own all of the miners, including Rio Tinto, but all the miners doing the processing and the digging up of the lithium and selling it to China for a profit, okay, we get the whole Australian economy, which includes diamond mines and a whole bunch of other stuff. In addition to the lithium and electronic vehicle exposure, this is all going to happen. There’s going to be electric cars. We’re going to find more rare earth metals, or find a way to replace them in the cars. The meantime where we want to be is in a position to profit, no matter what happens, we can do that by buying the whole countries that are going to get the most benefit from the rare earth metals markets. It’s just fantastic. That’s our story today, Carter on rare earth metals and why they’re going to be a problem for the electric vehicle market.

Speaker 1 (15:02):

Yeah. And folks keep in mind, this is coming from a gentleman. And when he says a better way to wealth, keep in mind NBR, Tim. You remember that?

Speaker 2 (15:11):

I do remember that one from back in. Oh, that’s beautiful. Back in 2000,

Speaker 1 (15:15):

You told people buy an a $55. If it reached a high of 5,300 and an investment of a thousand dollars became ready folks, 95,544 bucks. So Tim knows of what he speaks about a better way to wealth. Tim. Thank you,

Speaker 2 (15:36):

Connor. Thanks for talking again today. And we’ll talk again tomorrow, right? We’ll have some new exciting subject for you folks and a new better way to make money.