How To Invest In Rare Earth And Precious Metals With Strategic Metals Invest

Hey, it's Mark Podolski, the land geek with a favorite niche real estate website, the land geek.com and on this week's Art of Passive Income podcast. He's back. He's back, baby. Louis o', Connor, founder and principal of Strategic Metals Invest. And if you're not familiar with my first podcast with Louis, we talked about all the, the, the benefits of investing in these, these, these rare earths and, and some of the interesting facts about it. But I don't want to go too, too off track on this intro because the strategic metals Invest is the only industry supplier in the world the only industry supplier in the world to offer private investors the option to purchase and profit from owning strategic metals. And the investment plays exactly the same paradigm as investing in precious metals. Instead, the investor is purchasing strategic metals. And as we talked about our first podcast, strategic metals have outperformed gold by 58%, the Footsie 103% and S&P 500 by 112% consistently for the past five years with 175% average return for the same period. Louis, welcome.

Mark, thank you very much. A pleasure to be here with you again. Our prophecies came through.

Yeah, so let's talk about that prophecy because it was really interesting the first time we were talking, we were talking about the possibility that China could actually use their basically monopoly on, on these rare earth metals and, and weaponize them. And this is what, about a year ago we were talking about this, Is that right?

Yeah, it's just under a year. I think it's 11 months, Mark. And you know, we, you know, you're talking about sort of geopolitics here. And you, you know, people would think, well, what do these guys know? But the truth is, I mean, you know, I'm in the metals industry. China has a monopoly. And we sort of saw this coming. The big surprise is that sort of Europe and even and the US have sort of been caught a little bit off guard. And just to give you a brief sort of. I'll just cover briefly what we had. We talked about it, which is when we talk about strategic metals, they all sort of come under the same umbrella. So precious metals, strategic metals, they really are the same umbrella. But to, to give you a simple explanation. So in one smartphone, there's 12 of these strategic metals, and two of them are gold and silver. And everybody knows about gold and silver. Right. But the other 10 you can also own as physical assets. And like Indium, for example, you can't swipe your phone without Indium or You know, alternately, there's a small magnet in the speaker. Well, the same raw materials that are in that magnet are used in magnets for electric cars, for solar, for wind. So I suppose to cut a long story short, we're talking about 10 metals that are critical to all nations economic prosperity and also increasingly military capabilities. So they're essentially the backbone of manufacturing in the 21st century. And then what people probably wouldn't know is that of though of that 10, seven of those are. China completely dominates the supply. Like one of the ones we'll talk about today, gallium, for example. China supplies 98 of the world's gallium and they've just restricted the export of gallium to the US To Japan and to Holland. It's a sort of a, there's a bit of a, there's trade tensions and the stuff is escalating. But you know, essentially this is not good news for, for, you know, for the rest of the world. It only happened once before. In 2011, there was a spat between China and Japan over fishing, you know, in disputed waters. And the Japanese actually detained a Chinese captain of the trawler. And in response, China restricted the export of these metals to Japan. And we saw prices, you know, 5x, like in a, in a few months, you know, so, so, so for that it hasn't happened in a decade for China to be. Things are escalating. As we get into more detail, I mean, tensions are sort of manifest and escalating.

Yeah, I mean two weeks ago you were just on CNBC and there was a four minute interview with you. And by the way, congratulations for finally being on a prestigious type of media like the Art of Passive Income podcast instead of cnbc. But so you're, you're breaking it down for them and you were surprised by how little they even knew about this?

Yeah, well, well, I suppose the biggest surprise to me and this same, you know, in Europe and the US is that I think what's happened, Mark, is we've just woken up to the fact that for the last two or three decades the world was sort of high, if you will, on the globalization, Brooklyn. And we either forgot or didn't think it's probably not a good idea to let one country monopolize raw material that's critical to all nations economic prosperity. And that's sort of what, you know, because back in the 80s, the US were producing the most of these strategic metals. They're also known as technology metals and rare earth elements. But, but essentially they're, they're critical, you know, to, to manufacturing in the 21st century. And what happened in the late, in the late 80s is China sort of legitimately in front of everybody, moved all the processing to China. And at the time, the US Government said, well, look, China can do. It's a bit complicated because rare earths are, they don't occur naturally like base metals. They have to be extracted, separated and refined. So it's sort of a messy process. And the US Government and Europe said, well, you know, we let the Chinese do it for a lot less money than we can, and we just buy these materials cheaply for our manufacturing. That was globalization. Right. Well, that's completely backfired now. And you know, gallium and indium and brasseo, dumium, some of the, some of the seven that China dominate. I mean, without them.

Is germanium in that as well?

Yeah, yeah. Gallium, germanium, idiom, perseodymium, neodymium, dysprosium and terbium. So there's 10 all together, but there's seven that China, you know, for example, have complete dominance, meaning 90% or more production comes from China.

Okay, so given this new economic reality, and you had predicted it a year ago, if I had invested in these rare earth metals with you through strategic meadows invest.com, what would my return have been?

Depending on which metal. Right. Like Half Moon, for example, in the last year went up, I think 190%. Terbium's up 500% in three years. But we did have some of the prices slide earlier this year for some of the rare earth elements because, like, things sort of slowed down as well in China as people would be aware of. And also some of the goals for electric cars weren't met. You know, we can build them, but with the infrastructure is not there. So not all the metals went up in value in the last year. But, you know, we always recommend people sort of diversify and buy all 10 metals. And that way you're, you're invested in, you know, energy transition, aviation, space industry, all modern technology, medical. I suppose it's easier to say there's not an industry that you're not invested in. You know, so we've had sort of some of them go down, but since about June, July, prices are rising again. And this, this ban or this, this restriction that China introduced just took effect August 1st. So we're only about six weeks into it, and it's yet to be seen exactly how that will play out. I mean, I can tell you the prices are rising because, you know, corporations are stockpiling and countries Are even, you know, what's happening is even the other five metals that China could also restrict. You know, this demand is increasing because companies and nations are realizing, okay, we probably need to stockpile because we don't know what the outcome is going to be. So either way, yeah, you know, products that were already in huge demand, now the demand is increasing just sort of for stockpiling alone, you know. Yeah.

I mean, what is the, the counter to China's weaponizing rare earth metals? Where does the rest of the world say, okay, you can do that, but now we're going to hurt you economically in this way?

Yeah. Well, China's move is a, is a, it's in, it's a response to the US initiated a block on the most advanced computer chip technology getting to China. And the US was backed by Japan and Holland because obviously a lot of the, this technology has dual uses, you know, civilian and military. So, you know, it's a strategic security move on behalf of the U.S. but what's interesting about that is the west, you could say, has the technology, but China has the raw materials. Right. So despite the name, like some of these are called rare earth elements, they're not all that rare. And if you look at, in the US the Inflation Reduction act, which despite the name is all about energy transition, there's about $390 billion available in to support and, and subsidize the rare earth strategic metal industry because the US and Europe have realized they have to wean their dependence off China. But, you know, it's not an overnight matter. Mark. You know, one of, one of the most important things that I think politicians maybe aren't saying or don't know because, you know, they wouldn't know much about sort of energy economics or supply chain, you know, reserves and economics and something they probably, I don't know, don't know or don't want to say is that it took China 30 years to, you know, to get into this position. And during that last 30 years, I'll give you some context. China has, I think, 39 universities graduating degrees in critical minerals, in metallurgy and geology and metallurgic engineering. So the Chinese have been graduating about 200 metallurgists a week, every week for the last 30 years.

Wow.

Europe, none. The U.S. maybe a handful of universities are graduating degrees in critical minerals. So, you know, I, I, the estimate is there's about 300,000 metallurgists in China. There may be 400 in the US zero in Europe because we're not doing any. So that's you know, that's more. The issue is, even though there may be rare earths in Sweden and there may be probably rare earths in, in the US it's getting them from the ground to refined purity levels that you can put into an F35 fighter jet or an Apple computer. That's going to take 15, 20 years. You know, wow.

So this is an exciting opportunity as an investor. It's also a scary time for the, for the Western world when the prices are going to skyrocket and that's going to affect. We're already in an inflationary environment, but our cars, our computers, everything's going to go up in price. I would imagine if we pull that string.

They are rising, you know, and you know, on top of all that, Mark, even if we didn't have this geopolitical tension, many experts, you know, who know far more than I do and where are to be in the industry far longer would have told me and would tell you that even without this sort of tension, there's not enough of these raw materials to transition to, you know. You know, for example, I'll give you one small example, Austria, one small country in Europe, 9 million people. In order for them to meet their green energy goals or their low carbon economy, say by 2030, they would need, currently they would. Between now and 2030, they'd need the entire global supply of gallium just for that one country. And gallium is 98% produced in China. And China needs plenty of gallium for their own transition. China has huge plans for electric cars, solar and wind power. You know, another thing people might not be aware of is China will produce 9 million electric cars this year. It'll be the largest producer of electric cars. And their goal now is now that they've achieved dominance, that they have the raw materials needed. Their goal now is to move up the supply chain, not supply the raw materials to the world, supply the products, the electric cars, the solar panels and the wind turbines. So, you know, it's, there's a few dynamics involved. You know, you're right, it's not good news. But purely from, from my business perspective, for as an investor, this is good news for people who hold these raw materials as, as physical assets.

Well, let's talk about it from the investment standpoint. So if you are, first of all, do you have to be an accredited investor, make these investments?

No, no. Minimum investment is just $10,000 to begin.

Okay, so you got $10,000 and you go to strategicmetalsinvest.com what's the next step.

Some, you know, a lot of people get sort of some education themselves. They already might like an industry. I mean, most people who are investing are discerning enough that they learn a good bit themselves beforehand. So someone might come to me and say what metals are needed in electric cars? And they might want to focus on that, or energy transition or aviation, for example. The space exploration is becoming a fully fledged space industry. So raw materials needed in the engines for rockets and jet engines would be the same. So there's, you know, people are sort of aware of certain industries, so they could pick one metal or they could focus on one industry, or they could just say, look, I'd rather have an even spread of, of the, the entire range, which would be 10. There'd be four technology metals, or, sorry, six technology metals and four rare earth elements. And if you bought sort of one kilo of each of them, which wouldn't be much more than $10,000, then you'd be invested in. There's not an industry you wouldn't in because essentially you're buying the raw materials, the upstream raw materials, I should say, that ultimately become trillions of dollars in downstream gdp. So you're, there's not a sector you're not invested in. If you bought, if you diversified and bought all 10.

Okay, so I diversify, I buy all 10, and then what do I get to show that I own these 10 metals? And then where's my liquidity event when the prices go up in value?

Okay, so the chain of custody of these raw materials is very important. And the purchase itself is very much like it's the same paradigm as buying gold or silver. You, you physically own the asset. It's not, you know, a piece of paper. However, we, we're based in Europe. We have our own storage facility in Europe. And you know, we couldn't recommend more strongly you store them in our storage facility. And the reason for that is that it's important that they remain in the original packaging from the producer and that the chain of custody remains intact because we also will offer to liquidate them for you. We can media a sale to an industry buyer. I suppose I should preface that market. Probably the most important thing you need to know about is I'm not. This is not just a sales and marketing company. Our core business is we're an industry supplier of these raw materials. So, you know, 80% of our business activities are buying directly from producers, mostly in China. And then we resell to industry buyers. We've over 2000 buyers in 70 different countries. Worldwide. If that wasn't our core business, it wouldn't be safe to even talk about what I'm talking about. The, the private investor. You could say, as you guys in America like to say, the private investment side is our, our side hustle, our side business. But we couldn't have this side business if our core business, you know, we, oh, I'd like to say if we weren't linked to the industry. But you have to be in this industry in order to be able to, to take advantage of it, you know. So essentially what we do is we invite private investors to participate in the supply chain industry because that's primarily what we do. So we do recommend you store in our facility for ease of liquidation. Now, you know, you own the metals, you could move them, but thing is, if you move them, you've broken the chain of custody. So when you come back to us in five years, you know, they'd need to be retested or so we really, really suggest you store them with us. But they're your metals. You can come over and see them and feel them and touch them and, and visit the vault, you know, but once they're there, they're, they're in the custody of a recognized industry supplier. Even though they're in your name there, you get a, a proper, you know, commercial invoice and you get a safekeeping receipt from the vault to show this is what's allocated to you. And so, you know, you've got batch numbers and purity levels. So you do own the raw materials. But we just for chain of custody recommend you store with us and we recommend three to five years. But you know, they can be sort of volatile in the short term. I mean, we had one metal go up, you know, 180% last year alone. We had some metals go down. So we, we recommend, you know, if you want to make some, you know, comfortable gains is be in there for three to five years. Three.

So three to five years. And I say, okay, I'm ready to sell my, my Gallium.

Yes.

And then you would say, okay, no problem. Here's XYZ company that needs to buy your Gallium.

We'll make an offer right away. Yeah, you'd receive an offer, an official offer, and if you accept that offer, it'll be current market prices. And if you accept that offer, then we send you sales contract, you sign it. So the transaction could complete in three to four working days and funds would be sent within 10 days of, of the closing date. So in actual fact, there it's Very easy to purchase and to resell. You know, the transaction can close, the purchasing can take place within a week if you want and the sale within a week as well. As an industry supplier, you know, we don't want any uncomfortable situations with private investors or primary businesses is you know, buying and selling. So we make, you know, we take those responsibilities very seriously. You know. Yeah.

What's the biggest risk to the investor in this process?

Okay, so I mean in terms of the business, the company itself, it's as safe as any business can be. I mean we're almost 25 years of business. We're sort of very, very well known worldwide as being, you know, we've held an ISO 9100 Quality ISH Quality Management Certificate consistently since 2003. So you know, we, our product is, is increasing in demand and you know, supply is limited. So that side of it is about as safe as any business can be. So what you'd want to watch out for is for example I mentioned Indium, you can't swipe your phone without any, maybe somebody will come on, come along with a better technology. Also China does completely monopolize so they can, you know, they can restrict or allow as much as they please. I mean the reason some of the prices dropped this year is, you know, because of the Inflation Reduction act in the US and the Critical Minerals act in Europe. China want to discourage, I mean there's billions of dollars available in the US to get into this industry. The Chinese allowed some of the prices to drop pretty much down to cost because it didn't make sense. Nobody's going to invest 10 million in a mining company if there's not going to be any profit. So it's not a very transparent industry. It's opaque. Political landscape is increasingly playing a part. But at least the bottom line for me anyway, I mean I'm an investor first and foremost is it's the demand. Nobody would argue, not even the mother, my mother in law would argue that you know, the demand for these raw materials is going to decrease. It's just not going to happen. It's going to continue to increase. And we know at least with seven of these raw materials, China, you know, has that dominance. So, so yeah, you know, one of the technologies could be substituted is what I would say. And there could be at some point it could be, you know, more supply, you know, but what I would say is they all have multiple applications. So you know, and there's new technologies being used all the time. I mean the next generation solar panels and medical devices are all using these, these raw materials, you know.

Yeah, yeah. So the US Government uses their tax code as an incentive to get people to do what they want them to do. And right now the US government wants the taxpayers to invest in energy. And in exchange for investing in energy, you get this massive tax deduction. Will the same apply for Rare Earth Metals?

100%. 100%. They're listed as critical. If you look at the U.S. geological Survey and there's an annual report or maybe every two years, the most recent one just came out and seven of our metals are listed on that report as critical to the US national security as well as economic prosperity. The US is even sort of encouraging or subsidizing somehow education so people can get these degrees. So they need geologists as well. U.S. department of Defense signed with the largest producer outside of China is Linus Corp. In Australia. I believe they're going to set up a processing facility in either Texas or Florida just for the U.S. department of Defense. So basically, I mean, the U.S. and Europe, I mean, I mention in the U.S. a lot because I know your audience is North American, but, but they've woken up to the fact that we have to wean our dependence off China. No matter. So there's a lot of collaboration now between other countries and you know, Chile sort of produces some and know Africa, but also China's already in Africa, so you will see more production. But again, the human capital, the engineering expertise does not exist in Europe and it does not exist at the moment in the U.S. so either way, the next sort of five or ten years will be interesting for investors.

Yeah, absolutely. But if I invest that $10,000, do I get bonus depreciation on that $10,000? Are you aware of what happens with the US tax code in that situation?

No, no. You wouldn't want to take tax advice from an Irishman, Mark. Okay, all right.

But it's worth, it's worth looking into though.

Yeah. What I can tell you tax wise in Europe anyway is if you own this, the raw materials for a minimum, if you store them a minimum of a year, there's no taxes, you know, in Europe anyway, because you. The vault is a Zo lager, so it's a duty free zone. So although the vault, it's in Frankfurt's right. It couldn't be more central Europe. Frankfurt is the center of Europe. And if you, although they're sitting there, they technically haven't entered Europe from a tax perspective. So if you keep them a year, you don't pay any tax on, on Purchasing or selling, but obviously then, you know, Uncle Sam has global taxation, so does Australia. So you have to, you know, when you do your report, you have to report your gains, but other than that, I don't know anymore.

Okay, so that, that would be worth looking into for sure. Liz, is there anything I should have asked you? I didn't ask you. This is such a, a fascinating in industry and area of investment.

Yeah, no, I think we covered it very well. I mean, yeah, we pretty much. I mean, the easiest way to think of it is there's 12, you know, of these raw materials in your phone. They're also in all other industries. And you know, gold and silver, the other 10 are the ones we're talking about that are a relatively new asset class. You can physically own them much the same as you would gold or silver. That's, that's it. It's, it's quite simple really.

Okay, great, great. Well, Louis, again, thank you so much for, for coming back and, and, you know, really sounding the alarm on this and as, you know, passive investors, this, you know, sounds like an amazing opportunity, at least even a diversification play. And with a minimum of only $10,000, I can't see why everyone would want to, you know, dip their, their toe in the, the rare earth metals pie.

Yeah. And well, as we said, Mark, a year, like less than a year ago, we, we talked about supply, demand, and we, we predicted more or less that China could weaponize economically rare earths. And that's exactly what happened. It's so far as, from the CNBC interview, you'll see that China's restricting gallium and germanium, but we already know China has plans to restrict the other five. Apparently Biden and the Chinese premier will meet in November. And I would imagine the things, you know, it depends on how things go between now and then, but, but China has just basically fired a warning shot across the belt to saying, look, we, we control these raw materials. You need them, we're willing to restrict them. And, you know, your move, basically.

Yeah, yeah, it's May, May we live in interesting times.

Yes, for sure. Yeah, yeah, absolutely.

Well, uh, we're at that point now, the podcast, Louis, where I'm going to ask you for, you know, a little bit more information or advice. Your tip of the week website, a resource, a book, something else actionable for the art of passive income listeners go improve their businesses, improve their lives. What have you got?

I'm going to steal something from somebody I recently spoke to which is do sweat the small stuff. And what I mean by that is this guy and his company has a buzzword 1% and everybody is always talking about 1%. And, and the idea behind it is, you know, in your daily life from as soon as you wake up until you go to bed. And that could be spiritual practice as well as, you know, time with the family and exercise and businesses try and do 1% better than yesterday. So do sweat that little extra bit of effort. And I guess it's similar to that compound interest type of thing. You know, if you, if you aim to improve by you know, little in those little small things and over time then it, it'll, it should produce a, you know, a better result.

Yeah, I, you know there's a book that's, it has been the, the best selling book I think the last five years is James Clear's Atomic Habits. And that's really what it's about is the value of, of taking something very, very small and compounding it over time and it becomes, you know, a huge gain in your life. And we can do that with, with anything. And there's, there's science, you know, to it. I mean basically all you're doing is Newton's law, right? I mean the object in motion tends to stay in motion. So even if I just say okay, I'm not going to work out for 30 minutes this morning, that's too much, but I could do one push up, right? Well you ended up like okay, that one pushup wasn't so bad. What if I do five? Well that wasn't so bad. And next thing you know, you, you, you're, you're, you had a 10 minute workout and you're like, okay, that, that wasn't so bad. And it increases over time as you get stronger and you can apply that to everything in your life. And that's a great tip of the week. But that.

Tip of the week.

Yeah, go ahead.

I think the important thing as well is to try and include a review every day. You know, at the end of the day just sort of play the tape and that's when you can spot where you, you could apply that 1%. And, and I think just that tower brains work is if we continually, you know, send that message, we just start to pick things up, you know, neural neuroplasticity and stuff. So it's sort of like all good ideas, very, very simple stuff if you just put it into action, isn't it?

Yeah, absolutely. I've started a journaling habit and, and I've actually done the atomic habit of it. I just say, okay, I'LL write for one minute and then of course I'll write for longer. But for, you know, if I was gonna say, oh, I'm right for three pages, it would, and it's late at night, I'm tired, I'm not gonna do it, I'll just skip it. But anybody can write for one minute. Or you know, I could just write one sentence even and, and then next thing you know, I've written and I've, I've been able to review my day and, and see where I was productive, where I could have been more productive, even rate the day. So that's a great idea. Well, as great as these ideas are loose, they're not going to make us any money. But my idea will go to strategicmetalsinvest.com that is my tip of the week, strategicmetalsinvest.com we'll have a link to it. We should have a link to Lewis's interview with CNBC as well. And to give you even more information and you know, not to get too off topic, but we do want to talk at some point about truffles and investors being able to invest in truffles. So I have to have you back.

I'd love to. Yeah, that definitely before the end of the year. We've a truffle farm here in Tipperary and we opening it up to, we have opened it up to private investors. It's sort of a limited amount every year and I'd love to come back before the end of the year and, and talk about that market after.

I, I love truffle oil on some french fries, a little pasta with truffles. What's, what's that expensive taste? Exactly. What is there other, other uses for truffles?

Oh yeah. Oh yeah. In the culinary world are known as well the black Mediterranean truffles known as the black diamond. I mean they're very, very expensive and you know, they're, they're a delicacy there. Yeah. There are multiple, multiple uses in the culinary world, but obviously top dollar, you know.

Yeah, absolutely. Well, we'll have talk more about that as well. I want to thank the listeners. Remind you the only way I'm going to get Louis o' Connor back is if he looks at the podcast says, oh yeah, there's more great reviews. So please follow rate review the podcast, send a screen of shot of that of that review to support the landgeek.com I'm going to send you for free a signed copy of Dirt Rich but if you don't want the book or even have the book. Just do it selfishly so we get great guests like Lewis o' Connor to come or come back. All right, Lewis, thanks again and let freedom ring. Thanks everybody.

Thanks for listening to the Art of Passive Income podcast. Are you ready to learn how you can start building a passive income without renters, rehabs, renovations or rodents? Schedule a free consultation@thelandgeek.com forward slash training. Let freedom Ring.