Louis O'Connor Shares the Opportunity and Risk of Strategic Metal Investing

Hey, it's Mark Podolski the land geek for the favorite niche real estate website thelangic.com and on this week's Art of passive income podcast I am joined by a really interesting guest because it's something that we have not, I think we've talked about it maybe once before, investing in strategic metals. So my guest is Lewis o'. Connor, I'm going to call him Louie because, because that's what his friends call him. Louis o', Connor, the founder and principal of Strategic Metals Invest and he offers rare earth metals to private investors as tangible assets. And I don't know, I didn't know this, I don't know if you know this, but in the past five years rare earths have outperformed gold, the FTSE 100 and the S&P 500 consistently. And Louis Company is the only industry supplier in the world, in the world to offer this option to private investors. So Louis o', Connor, welcome Mark, a.

Pleasure to be here. Thank you very much. Coming to you from Tipperary in Ireland so hands across the Atlantic.

Excellent, excellent. Well I, I appreciate you taking the time. It's, it must be fairly late your time to be talking with me.

It's actually no, it's just, it's 7:30 so you. Not, not too bad. Yeah. And I work a lot with U. S clients and stuff so be normal to, to, to take make calls and, and stuff until 8, 9pm here so.

Well, great. Well Louie, let's just rewind the tape because I don't think most people wake up thinking themselves. Boy, I'd like to get into rare earth metals.

Yeah, you're, you're right about that. You're right about that. Interestingly, they're coming a little bit more into the mainstream. I don't know if, if you're seeing if you're feeling that as well if you will. I mean just an example, I mean every week this, they're in the news now. Just two weeks ago the president of the European Union, Ursula van der Leyen in what we, our version of the state of the union address said that rare earths are fast becoming more important than oil and gas. You know, Europe, as you probably know because of Russia's aggression in Ukraine, now we're accelerating our move to solar power, wind power, you know, the Baltic Sea, the North Sea, the west coast of Ireland and rare earths as we look, learn as we chat are also some people call them technology metals. We're now calling them energy transmission, sorry, energy transition metals. So, so I think you'll Be hearing more and more about the mark. It's funny when you, when we have a conversation like this and they get on your radar all of a sudden, you know, what usually happens is you do start to sort of, your radar is open and you start to hear more. So.

Yeah. So why are you, why is your company the only company in the world to offer this asset class to investors?

Okay, so you, when you made the introduction there, the operative word that you used was industry supplier. If we weren't an industry supplier, you know, if I was just a sales and marketing guy with sort of a good idea, it wouldn't work. It would be a disaster, you know, simply because the only, as you know, the only end buyer for rare earths or strategic metals are industry buyers. So just to give you an idea, that's what comes first for the last 30 years, you know, we, that's pretty much what we do. And on a daily basis like 85% of our business activities are we're buying rare earths mostly from China. We get back to that in a minute. China. China is the dominant market leader in rare earths, but we're buying them directly from producers and then we resell them to industry buyers. So we've clients now in more than 70 different countries. If we didn't do that on a daily basis, if that's, that wasn't primarily what we do, we wouldn't, I'm only using an American term I like here, we wouldn't have this side hustle, as you guys like to call it. So how that came about was as I said, we're in business 30 years, we're in the middle of Europe, we're in Frankfurt in Germany and we're, you know, we're a bona fide, very well recognized industry supplier. But what happened about 15 years ago is our industry buyers, some of them started to ask about the possibility of buying them as an investment. So the, the idea of the investment was born out of, you know, people started to ask for it. So we bought what was a, an under an air raid shelter, a bunker during World War II. Frankfurt was level, you know, World War II. But this bunker we bought 2010, converted it to now a bank level secure facility. It's you know, three, you know, three meter walls and you know, full, fully, fully insured for everything. Armed guard, bank level. Basically it's two levels below ground. And then we built a level above ground as well. So that was in 2010. So since then we've been offering private investors the opportunity to buy rare earth. Exactly as you would gold and silver. It's the exact same paradigm. In fact, we also offer precious metals and we also offer PGMs, the Palladium Group metals. But today we're talking about strategic metals just because of their intrinsic value. So we've been offering it to mostly wasn't that it was exclusive to Europeans, but you know, it's a German company and you know, there's 100 million people between Germany, Austria, Switzerland. So for the first 10 years the focus was basically in Germany and Austria, Switzerland. And why we're talking today, Mark, just in the last sort of six months I've begun. I'm the sales partner for the industry supplier for Ireland, UK and North America and we're expanding the business. We're extending the storage facility and you know, we, you know, I think American, I'm sure in fact, because I already have clients from the US who love the product. Why? Because it's profitable. We can get more into that in a minute. But they do go up in value.

Yeah. I want to talk about the opportunity and the key benefits of owning strategic metal earths. And when I think of it, I think of just putting my head in the sand like, ah, I don't want to hold this strategic metal earth, like what am I going to do with it? It feels very illiquid to me. Can you explain how, how I can own it and then the benefits of owning it?

Sure. Well, Mark, if you had a hundred thousand dollars worth of gallium in, in a, in a safe there behind you in, in, you know, in North America, it really wouldn't be liquid, at least to you. Right. Because the only end, the buyer, you know, the rare earths themselves are extremely liquid. You know, they're, they're. For example, we. Indium is one of them there. You couldn't swipe your phone without indium. There's 12 rare earths in one smartphone. So they're in all modern technology. They're critically needed now for they're a critical raw material for permanent magnets in electric cars, solar power, wind power. But as you quite rightly said, I mean, it depends geographically where they're located. And that's why, you know, we emphasize we're the only industry buyer to offer this. And how we can offer it is so you could say our warranty statement or guarantee, if you will, to the investor. One is you're buying industrial grade high value gallium or germanium, you know, neodymium, whatever it might be, that can be liquidated to an industry buyer. Right, I see. That's the first guarantee, you're getting a guarantee. The assets are industry standard purity levels, chain of custody, original packaging, analysis reports. That's your guarantee. The second part is when you come back to us in three years or five years or whenever, I mean, you own the metals. We guarantee to liquidate them for you. So we will sell them to an industry buyer for you. They can be liquidated in three to five working days. So they're extremely liquid if you're in partnership with an industry supplier. If you're not, you're in trouble. I don't know why, but recently I've got a lot of people who come to me and they've bought, you know, sort of smaller amounts on Amazon and this and, you know, you can buy them online, but. But no industry, you can't liquidate them. Maybe another hobbyist might buy them from you. But you know, BMW, Tesla, you know, the US Department of Defense, if they're putting three quarters of a ton, you know, of rare earth into an F35 fighter jet, unless you have, you know, unless it's an industry supplier and the materials and their original packaging with full chain of custody, they won't buy them, you know.

Yeah. So as an investor in rare earth metals, what are the important questions I want to ask?

I suppose the first one is what's the likelihood of making a profit?

Yeah, right. Yeah, right.

And then if that sounds interesting, safety and security. So I'll give you the historical prices for the. If you invested $100,000. Now, let me just preempt that with. There's 17 rare earth mark. Not all of them are that rare. In fact, most of them are not that rare. But seven of them are not strategic, if you will. There's not a huge demand for them. So we only offer 10 that are considered strategic, which are critically needed in, in technology, in aviation, nuclear reactors, electric cars, solar, wind power, which I mentioned already. So if you had bought the 10 we offer that are strategic, intrinsic to how we sort of live our daily lives, say five years ago, you would be. They've gone up an average of. To be. I'll be exact, they've gone up exactly 34.25% a year every year for the last five years. Now, some are up more than others, but that's the average of the tent. So they have been profitable. And in a minute or two, I can sort of get into, you know, a path of progress going forward. But again, when you, you know, the whole world, the whole world, we're going through this transition. It's, it's like a fourth or fifth or sixth industrial revolution of how we power our daily lives. I mean, every car manufacturer is going electric, Europe is going to go, you know, you know, solar power, wind power, the US is the same. So the demand is not, nobody would argue, not even my mother in law would argue that demand is going to decrease. Right. There's just no way, I mean technology, aviation. So the demand is there. Safety, security I've sort of already covered, which is unless you're buying them from an bonafide industry supplier who can sort of, you know, show you ISO 9001 certificate for the last 20 years consistently, you know, can show you sort of proper legal imprints that you can bring to an attorney for due diligence, stuff like that, which is every, you know, of course we can send all that, but and also that they guarantee the liquidation because you know, again, there's no point in me or you having these raw materials at home in the safe here because they're out of the chain of custody and no industry buyer will purchase them unless they have a full chain of custody.

I see, I see. What would you say is the biggest risk in investing earth metals?

Okay, so with us, I mean, obviously, you know, people have to do their due diligence first. But what I can tell you with certainty what they'll find is that we've 30 years experience in the business. The vault in Frankfurt has more than 200 metric tons of rare earths in the facility right now. It's the largest inventory of rare earths anywhere in the world outside China. That's what you will find to be true. So sort of the biz, the people you're doing business with, it, you know, it couldn't really be any safer. I mean any business can, you know, something can happen. But in terms of experience and, and you know, being a bona fide industry player, that's as safe as it can be in that regard. But what could happen, for example, India, as I mentioned, you know, you need Indian to swipe the phone. Somebody might come along with a better technology for that. And so the demand for Indium could go down from time to time as well. To be honest, they're quite volatile. I don't mean volatile like crypto where they go up huge amounts, but they do go up and down quite regularly. And we, we, we recommend a long term play. For example, hafnium is up 80% this year. Why? Because they're, they're critically needed in for aviation, for, for, for jet engines. And the aviation industry is bouncing back From COVID So we have this massive increase at the moment, you know, you know, 80% in one year. So what could also happen is you could have like supply and demand is in charge here, nothing else. You just could for some reason have more of an oversupply and that, you know, prices can drop or level off. We recommend to our clients a medium to long term play, three to five years, even 10 years. And as I said, if you'd put in 100,000 five years ago, your portfolio would be worth 270 today. So, you know, there's good, good, there's good growth there, you know.

Yeah, yeah. So who is this not for. Who would you say you should not invest in this asset class?

Good question. I haven't been asked that one before, Mark. Well, I suppose the truth being like I love the metals, right, but my, it wouldn't be my first choice, right. My first choice is, is property. You know, I'm, I'm 57. I bought my first property in Ireland when I was 23 years of age. I've since bought properties in Germany and Panama and that would always be my first choice. So I suppose it's not necessarily the first choice. It might be second or third or fourth. But what's interesting about rare earth, Mark, is they have as they've only been available to private investors for 12 years and most people don't know they can invest in them. We're an industrial supplier but we allow private investors, they don't have to buy industrial amounts. They can buy, you know, minimum investment is only $10,000. They can buy like you know, a kilo here and a kilo there, if you will. So I think it's for people who, like, who obviously are into metals and have gold. And also I think it's for people who maybe don't like gold because like gold is in the last 10 years, gold is up 7%. You know, there was a period I think in the early 80s when gold reached $630 and it didn't reach it again for over 20 years. The difference with rare earth and what I'm about to tell you might sound like an exaggeration and it's not. Even though I am prone to exaggeration. This isn't one. If all the gold in the world disappeared tomorrow, it wouldn't make much difference. If all the rare earth stats disappeared, we wouldn't have these devices, we wouldn't have computers, we wouldn't have smartphones, we wouldn't have wearable medical devices. Planes wouldn't fly, buildings, you Couldn't build cars, electric cars wouldn't operate. So they're intrinsic to how we power our daily lives. So they have that demand and that intrinsic value.

It totally makes sense to me now as an investor, for example, if you're looking at a basket of those 10 rare earth metals and someone like me who's ambitiously lazy is not going to spend the due diligence and the time to deeply research the possible risk factors of say, the metal that goes into the electric car battery being displaced by a better technology. So for someone like me, I'd want to diversify into all 10 metals. And because they can be relatively volatile, I'd want a dollar cost average every single month. Is that possible to do?

Yeah, 100%. Yeah. The good news as well is they have numerous different applications. Like gallium, for example, is in just about everything, not just in, you know, so they do mostly have multiple uses. But for example, for right now, for about $12,500, you can buy one kilo of every metal. What that means is you're invested in aviation technology. And not just, you know, technology. Samsung, Apple, Tesla, all of these. You know, you've basically gone down to the sort of, practically the beginning of the supply chain other than a miner or producer. So you're invested in, if you buy all of those 10 metals, you're, you're just. I think there's probably not an industry you're not invested in. So you can start with that, that's our sort of minimum. And then you can actually, after the minimum purchase, there's no minimum after that. So you can actually have your own platform nearly of rare earths and you can buy and sell a little bit as well if you like. You know, but generally our recommendation is do diversify the portfolio and, and stay in for three to five years.

Diversify the portfolio, stay in for three to five years. It totally makes sense. So, Louis, what should I have asked you that I didn't ask you.

It's another one I haven't been asked before. Mark. Well, there's a re. Okay, there's a very. I'll try and again. I. I prepped you before that. I'm Irish. It's hard to get a short answer out of us once we get going, but I'm going to try. And the real story here and this, this was told to me by a gentleman in the U.S. his name is Jack Lifton. I'd recommend people look him up. He writes for, is the editor for Investor Intel. Jack is, in my mind, the foremost authority on Rare earths in the world, not just in the US he's been involved in rare earth. He's more of an academic. He's the sort of guy who the U.S. department of Defense calls up when they're, you know. But he's a mine of information and I've learned a lot from him. But the real story with rare earths from this is just from this pers. The investor perspective. You know, how can. Why is this such a, you know, what's the story here? How can it. What's in it for me? Right, right. What's in for, for investors is you're buying a product that China monopolizes China. According to Jack, the war is already over and China has won. China is responsible for 87% of the refining of the world's rare earths. Now, if you do a little bit of Google and you'll see that the US has one facility producing rare earths, Mountain Pass in California, and they still have to send all their rare earths to China to be refined. So what makes them complicated and expensive is the refining process. Because they don't occur naturally. They're always sort of together or they're always a byproduct of another raw material. So they have to be extracted, separated, and refined. And that's costly and expensive. And what people just don't know is even the one facility in the US they still send everything to China. So what has happened in the last 10 years is we've seen very good, you know, from investors point of view. We've seen price increases. So they're doing well. There's two things that are likely to happen now that China has sort of complete dominance. And there's a precedent for both, which is the first thing is China could weaponize economically rare earths. They did it in 2010 when the Japanese, they actually sort of kidnapped a Chinese fishing. You can Google this, you'll find out they kidnapped a captain of a trawler because he was fishing in disputed waters. In retaliation, China restricted the quotas of rare earths. If you look at that period, within five months, some of them sort of went 5x in price. Right. Eventually, the U.S. europe and Japan took, took sort of China to task and to court, and they won, but the damage was done. I mean, in terms of prices, you know, so China now, you know, completely dominates that. And if they, you know, there's tensions at the moment. Biden just met with, you know, the Chinese premier yesterday. If things escalate and China weaponizes rare earths, you know, the prices will spike. But more likely what's happening, what will happen again, which we saw happen last year, is China has big plans for wind power, electric cars and, and, and solar themselves. Last year they doubled the production of electric cars just in one year. And because of that they, they restricted some of the rare earths. The ones they restricted, we saw them double in value last year alone. So the way I see it, and I'm an investor first, like the reason I'm talking today is I first invested in 2017 and became involved as from a business perspective in 2020 is I think and bear in mind as well, Mark, that the demand for energy transition metals is not likely to peak until sometime in the 2000s. So user investors can own an asset where demand is about six times to nine times greater than supply. China controls the complete sort of the world, you know, production and supply of them and demand is off the scales. I mean again, it's just, you know, so that's not necessarily what you didn't ask me, but what people wouldn't know.

Excellent. Excellent. Well Louis, this has been so enlightening. Thank you so much for your mentorship. But we are now at that point in the podcast where I'm going to ask you for one more tip of the week. A website, a resource, a book, something else for the auto passive income listeners to go improve their businesses, improve their lives. But before you give that tip, I have to give a shout out to our sponsor which is Flight School. Learn how the next 16 weeks can transform your life by creating passive income without any renters, rehabs, renovations or rodents. Go up that mountain of pass of Land investing with Scott Todd Azure Sherpa. Learn more go to landgeek.com forward/sherpa training the land geek.com forward/training schedule a call. Oh yeah, and that flight School tuition ain't going to cost you nothing. Guaranteed you're going to make it back 180 days or less. Just show us your work the land geek.com forward slash training Louis O', Connor, what is your tip of the week?

Right. I think Mark just, it's just a reminder, right. I don't know if you know over there, but this week or last week in, in, in the UK in particular in Europe they had Sunday was Poppy day and Poppy day is a day to remember all the mostly men that, that fought and died in World War I and World War II. And it's just been on my mind of the fact that we, you know, I really feel philosophically that all of us have Been given a platform, you know, and all we have to do in our lifetime is to try to improve on it a little bit. I think of my parents, my grandparents, my great grandparents, you know, what's in my DNA, the work they did, the sacrifices they've made, you know, 100 years ago, 200 years ago. And the reason I sort of smile a bit at two is I. My two girls, a 16 year old and a 12 year old, you know, and the Ireland that they're growing up in is so different to the Ireland I grew up in. Sure I was, you know, there was still bombs going off in Northern Ireland and we had 20% unemployment. There was no foreign direct investment in Ireland because you know, it was actually technology in America that brought Ireland our first economic prosperity. Up to then we'd had like nothing but emigration, you know, but I just see that, you know, my daughters are, you know, they've been given this platform and, and I've been given this platform and I just think it's good to remember that all we need to do is try and improve on a little bit, you know, like just, you know, leave the world if you will, and in a better place, which is inherent in our DNA because we all want more better, you know, for our own kids and the gen, the next generation that's coming. And all of it, it's just been on my mind because been very touching at all the soccer games you did play that it's called the Last Post, which was what they would have played at the, you know, servicemen's funerals and you have these crowds of 60,000 soccer fans and dead silence and it was very moving and very touching and you just think, wow, you know, These guys were 17, 18 years of age and you know, just off to war with, you know, not much chance likelihood of coming back, you know, yet they went, they fought and here we are today.

You know, yeah, it's, you know, we're recording this coming off of Veterans Day and so often we don't think or appreciate our ancestors and our predecessors sacrifices that they've made to have the world that we, we live in today. And you could argue it's the best time ever in history to be alive. And it's, it's certainly without, you know, it wouldn't have been possible without those incredible sacrifices. So I, I love that. Tip of the week. My tip of the week. As great as yours was philosophically, mine's going to make everybody money. Go to strategicmetalsinvest.com strategicmetalsinvest.com. and only for $10,000. Why not have some diversification in your portfolio? It's a mid to long term play, three to five years and it is the, it's just embedded in our lives today. So it's something that we just don't.

Talk a lot about.

So. Louis o', Connor, thank you so much. Are we good?

Mark, that was wonderful. Yeah. I hope again you, you talking about just, you know, like just, you know, we've been able to connect here because of technology, you know, across the Atlantic and do this and you know, you know, there's so many people responsible for what's being allowed to do this today. So thank you very much. It's been a pleasure and I hope to see you there over the other side of the, the Atlantic there one day soon, you know.

Absolutely. I'd love to come visit and, and, and learn more about Ireland and the history and maybe take me out golfing, anything like that. It sounds good.

Yeah. Oh, you're very welcome. And maybe a trip to Germany to the, to the vault, you know.

Perfect. Perfect. And I just want to thank the, the listeners, remind them the only way, the only way we're going to get quality guests like a Louis O' Connor from strategicmetalsinvest.com is if you do three little favors. Follow rate, review the podcast, send us a screenshot of that review to support thelangic.com we're going to send you, or I'm going to send you personally a signed copy of Dirt Rich, but it really helps, so do it anyways. All right, one, two, three. Let freedom ring. Louise's like, oh, I didn't, I didn't know you could end like that. But thanks, Louie. Thanks everybody.

Thank you, Mark. Thanks for listening to the Art of Passive Income podcast.

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