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 September 23rd. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. So, I have a great interview set up for you today; someone I respect, someone that’s incredibly smart, someone that always shares great ideas with the audience, and someone who’s a good friend. That’s Frank Holmes, CEO, Chief Investment Officer of US Global Investors. Also, intern CEO, executive chairman, of HIVE Blockchain. So, a person who has exposure to both cryptos and gold, which you usually don’t hear often. Frank, what’s going on? How’s everything, buddy?

Frank Holmes: It’s a great view of you, Frank. It’s the Frank and Frank team.

Frank Curzio: The Frank and Frank team. I’m going to go right into it. Usually, I give you a chance to say how could people reach out to you, but you have your Frank blog, and I just saw it. You have a live feature, Frank blog live. I mean, what’s that about? It’s pretty cool.

Frank Holmes: Yeah. It’s the marketing department about communicating with more demand for hearing what we’re seeing and doing. And I’ve been traveling more now, Frank. Wheels up for the Jets ETF, but I flew to Sweden recently, been in New York. So, people want to know about where you’re traveling, what you’re seeing and doing. And, in addition to our different funds that are basically covering the world.

Frank Curzio: No, that’s great stuff. I know travel has opened up, right? I’ve been traveling to myself. Which it’s nice to see, right? It’s pretty cool. And you’re like me, right those face-to-face meetings are so important than Zoom calls and stuff-

Frank Holmes: And it’s cleaner, Frank. The jets are much cleaner.

Frank Curzio: You would know. You should explain it to everybody. And I know pilots out there, listen to this. They tell me, I mean, how the air gets filtered. People are always worried. I mean, listen, the terminal might be different or whatever. You’re in crowds, even afterwards, I don’t know, in cabs or Ubers, you have to wear masks and stuff, but the airplanes itself are one of the safest places, right? You could be.

Frank Holmes: Yes, and we have a new pandemic. It’s for the anti-un-vaccinated. The un-vaccinated pandemic. The Delta force is hitting them hard. And it’s interesting in Texas 99% of those that were vaccinated and, came down with the Delta variant survived, lived, and it was a bad cold. Only those who passed away had some other serious ailment. So, I think it’s interesting. The jets has really… It’s turned and it’s very positive. Canada’s finally opened up and big news this week was Biden. All of a sudden, stop Europeans that couldn’t fly here directly. They had to go through Mexico for two weeks or Canada for two weeks to get into America. And that was really hurting cross trade. So, that’s opened up this week. So, I think you’re going to see pack airplanes flying there, which I experienced two weeks ago. And coming back, it was only half full. I think you’re going to be totally full today.

Frank Curzio: Yeah. And you would know. Jets ETF, largest airline ETF. Let’s start with gold because we’ll get to gold-

Frank Holmes: And the only one.

Frank Curzio: The only one. Yes. That’s why the largest, but it is. I mean, we’re… The assets in there right now, it’s grown incredibly since, you know, remember probably when you launched the thing, right?

Frank Holmes: Just under three and a half billion. We still have these positive flows on the down days. The big headwind was the negative narrative on the Delta variant and two, was the rising price of oil. So, what you’re seeing is that those airlines like American Airlines, do not hedge. So, there’s a bigger, short position, but on American and hedges are buying jets and shorting American Airlines. So, you see that and if oil starts to fall, they’ll unwind that trade, and I think that that’s what we’re seeing a lot of flows in.

Frank Curzio: Yeah, and I pay attention to flows, analytics and things like that, but a three and a half billion? Good for you. Remember the little guys. Still got to come on the podcast and do this with me, no matter how big you get, Frank. So, but that-

Frank Holmes: Frank, they’re so key… You know what? You’re one of the few writers and commentators that really captured the significance 18 months ago of them coming into and lighting up price discovery, which the markets were long needed.

Frank Curzio: Yes.

Frank Holmes: And that is just the, always a negative narrative, but we’ve shown recently that 30 almost 40,000 Robinhoods, Robinhooders, bought Jets ETF between 12 and $14. And then it doubled. So, they were quite accurate in the forecast, whereas Buffett capitulated the rate at the bottom.

Frank Curzio: Okay, let’s talk about that. Or, I was going to talk about gold and get into it. Let’s talk about someone that’s… it’s heavily data analytics, right? Which I love, and I always learn when some of this stuff that you say in volatility and tracking deviations and stuff. We’re seeing this more and more where… You’re a seasoned investor, I’m a seasoned investor, we get it right more than we’re wrong, or else we wouldn’t’ be doing what we’re doing. But we’re seeing a lot of amateur investors come into this market and buy Robinhood right off the start, which I was really pissed off at because it was kind of like, they were just dumping onto them, right? You have the insight of selling. They did the reckless thing. They didn’t go to investment banks. So, they were able to, to sell out a little quicker in terms of the lockup period.

Frank Curzio: But then I was happy that this thing really took off for them. But even the AMC’s, we’re seeing them get in early on a lot of things. And even, you know, you see Warren Buffett capitulating at the bottom. Yet, a lot of these young kids buying airlines. I mean, is there something to be said with that? Especially if your someone in data analytics, where you want to look at the data, you want to make sure you’re not going to make mistakes, but that’s an interesting trend, right? I mean, how… You never thought that would happen, right? She was like, these are the people that are getting killed.

Frank Holmes: It’s transformative. It’s transformative, it’s profound that these young people that love Series 7 are stuck at home. All of a sudden took their knowledge and started going on YouTube. And they get more information from searching a Google and found out that after every global crisis, the airlines fall 70% and the following year, they rise 80 to 120%. Not one major wirehouse was telling you this about the airlines in March to June of 2020. Not one.

Frank Holmes: Everything was bad, everything was negative. There was no idea that hope was at the end of the tunnel. It was always another train coming at you. But these analysts went and did their own research. And a lot of them listened to you and podcasts, such as yourself, and YouTube, and that’s where they’re going out and getting their knowledge and insight. And then, they go and confirm on Google. So, it’s like me watching Netflix, watching the Medicis, and I quickly go to Google to find out is this accurate information? And try to triangulate that information because it’s entertaining to watch it. History of the banking empire of the Medicis, but then a lot of the material in that series was accurate. So, that’s what they do today. They triangulate, they ignore Wall Street.

Frank Curzio: And, I mean, just to see that trend to me is really incredible. Where I think the ESG names, yeah, they got wrong. They went a little crazy on those, but just to see what’s holding up, right? The AMCs and a lot of these meme stocks are not just, hey, we made money on options and things like that. Even Bitcoin’s another good example, right? And maybe we’ll go there and… And we’ll talk about gold in a minute. But with HIVE Technologies, Hiblocks, you’ve been in this trend for a while. We saw recent news come out with the SEC, right? The chairman saying, look, a lot of these… We might regulate the exchanges. They need a lot of these things, trading in securities, which I kind of agree with. How does that impact maybe, your company? If it does, there’s a strength there? Because I would say Ethereum and Bitcoin, no matter what, are not securities, at least, they’re going to be deemed not securities, but there’s a lot of things on there.

Frank Curzio: And those all coins at are, but we’re seeing crypto, especially Bitcoin, go all over the place. What are your thoughts on what’s going on right now? Because I just wish that they would just say yes or no and regulate the freaking thing. But when you’re on the sidelines, it’s hard for institutional money to come in. It’s hard for people to say, okay, what’s next? And you’re going back and forth. It’s kind of frustrating. Let’s just get the rules. Right? Let’s see what the playing field’s all about. This way, investors could make their own decisions and throw money into this. Right?

Frank Holmes: Well, I think there’s some interesting debates. You know, when you go to the socialist politician, the biased mindset is very centralized. Socialism is about centralizing, controlling society. Money in particular. And when do you get congress people and you get senators that are of this leaning, they’re a talking Gensler. As the SEC, who’s trying to be balanced. This is a gentleman that was CSR, CFTC. Then, he taught Blockchain at MIT. And now, he’s the head of the SEC. He sees this big trend on a macro level, but we have… The G-7 countries have basically formed a finance business cartel. Central banker’s cartel, and Janet Yellen is leading it. You saw the first big move was a 15% flat tax between the G-7 countries. Unheard of. That takes away innovation and competition. And so, now you’re seeing a synchronized organized attack on Crypto, as much as they’ve subdued gold.

Frank Holmes: And I think the big rational part of that equation is Gensler wants to turn around and regulate bad characters in the business. But police the Blockchains, an incredible piece of technology, whereas the socialist mindset is fighting. So, I think you’re going to have to deal with that volatility. I think that every time PayPal comes up with some new edition of how they’re using it, I think this was quite a big event. Today, crypto starts off negative this morning, but Robinhood comes up with new wallets, et cetera, for crypto and sentiment all of a sudden springs into the equation and the crypto stocks like HIVE jumped 10%. We see Bitcoin, Ethereum, all of a sudden have a short race, a surge. So, I think that we’re in a secular bull market. The G-7 countries are afraid of losing control because they want to control all private assets, Frank.

Frank Holmes: It’s just recognizing cash. I think eliminate cash and come with their own digital money, they’d be the happiest, because they could track every penny you make. They don’t like gold or silver. And definitely Bitcoin is one of those other private assets that it’s the bearer secures. Remember, we used to have bearer bonds until 1982, when they basically said all bearer bonds have to be filed a register. So, I think your big wrestle, globally, with this movement at crypto, but it’s not going away. And I think you’ve just got to learn to live with that volatility.

Frank Curzio: Yeah, I hear you. I love the fact that you’re doing this interview and how busy you are because your phones, you hear the bings on your computer. I mean, I’m glad you take the time to do this. I know how busy you are. It’s awesome. Like-

Frank Holmes: I’ve got a big webcast after this with 600 RIAs on JETS industry. So, always in motion.

Frank Curzio: So, let’s talk about HIVE and where you really started from where it is now. And let’s bring everybody in here, pretend that people just learning about crypto mining, they think Bitcoin only, you’re Ethereum in mind for this. Ethereum 2.0, how that’s going to impact, but you guys have been ahead of the trend. It’s something that you need very cheap electricity for in order to… Yeah, it’s not the easiest thing to scale because it comes with more costs. You’ve got to buy more machines and everything. And then the machines, Antminers are very expensive. Talk about the whole thing, because it seems like you’re well ahead of the trends in terms of getting the right inventory, having the cheap electricity, and you could even go into the ESG part, which is really, really huge, right?

Frank Holmes: It is very big. What I’m thrilled about is that when we launched HIVE Blockchain, and being an early investor… And that was very significant and sort of mapping out the strategy that we would have an ESG strategy from the beginning, and we would have green and clean coins. And now, that’s become very important because if you have to go buy carbon credits, that adds between five and $7,000 the cost to mining a Bitcoin. So, we don’t have that headwind, but we all got tagged while Elon Musk was negative on the industry five months ago, and I became involved with the mining community of trying to educate and inform. Crypto mining does not use as much electricity as alleged, one. Two, the biggest polluters using coal were the Chinese. They stopped all of that. Once again, a socialized government. A communist government wants to have their own digital money and doesn’t want any competition.

Frank Holmes: Now, they’ve moved over to Kazakhstan, which predominantly uses coal. So, I think that HIVE, which was the very first public company to go and mine crypto, not have an AML concern, only green energy. So, we’re in Sweden, we’re in Iceland, that’s geothermal, hydroelectricity in Sweden. And we expand it, in the past year, in Canada. And we’re building a big campus in New Brunswick, right on the border of Maine and Grand Falls. And it’s going from 30 megawatts to 50 megawatts to 80 megawatts. And I think, when we’re all finished, it’ll be a hundred megawatts of green and clean energy. And we’re in Quebec. So, we’re a position, we mine Ethereum, and we mine Bitcoin, and we hold as much as possible, as much as we can on our balance sheet. And that’s really helped as Bitcoin and Ethereum rally, every time, our balance sheet explodes in overall liquidity.

Frank Curzio: You know, I wanted to ask, you brought up China, right? Because it’s amazing when I see the ESG angle, which regardless of you agree with it, you have to go that way. Right? Every company, every presentation is, you know, you cover a lot of companies. They all have a dedicated part of the presentation for this. You have to have it now. It’s almost being forced, whether you believe it or not. And there’s that perception out there, like you mentioned, where it comes to crypto mining is equivalent of the operation of a large coal mine, as crazy as it is. But you mentioned China. Now that China said, “Okay, no more mining” and pretty much banned it. How is that reflect for your company? Because I think that’s more demand, that they have to find places they can do this. They need cheap electricity, which is very difficult to find. How does that benefit you? Does it benefit you in any way? And talk about that trend. Because you know, I would think, eliminating people out of this market would be better for you guys, wouldn’t it?

Frank Holmes: Well it surprised me, some of the hedge funds are investing in some of these crypto projects that are in Kazakhstan, and they’ve not really done their due diligence. So, they really don’t compare about ESG, but ESG is big, and it’s growing, and it’s very important to… For HIVE to get listed in Asia, ESG strategy has been very important for us when we’ve explored that opportunity, and the same thing in Europe. And it’s going to only grow here in North America.

Frank Holmes: I think Canada’s percentage of the capital markets has a higher sort of ESG footprint, but it’s a much smaller market than the U.S. But the U.S. is growing that way, and young millennials, they’re basically demanding that you have an ESG strategy and I’m happy that we do. And we have many things that sort of show that. Our technology is very advanced in Sweden. We tuned down at peak energy periods for the community. We can go from 20 megawatts to one in 15 seconds when everyone’s popping their toasters and hairdryers on in the morning, and then at dinner in the evening, once again, go down and go right back up, much faster than any utility company could do.

Frank Holmes: So, from that end, we do have a great sustainable approach. And we’ve been invited into other communities that want to use what we’re doing, our concepts, and we’re working on education of kids of how to run data centers. I believe this Nvidia acquisition of assets to upgrade all of our Ethereum mining facilities is a phenomenal strategy for us because the cloud is going to become very important in many ways, more than one. And data centers are going to grow, with a growth in AI needs, and the needs are growing at an exponential rate.

Frank Holmes: So with that, these Nvidia chips allow us to pivot frame. So, let me give you an idea. Our, five 80 AMD chips, they make $2 a day. And if you were selling that to a AI, that needed that for research, it’s $2 an hour you charge. If you’re at Amazon, they have to pay four to $6 an hour. So, our strategy is to say that these new chips we’ve upgraded with will allow us to be very competitive in mining Ethereum and give us the ability to participate in the big secular move with the cloud and GPU needed chips for data mining.

Frank Curzio: I love that. I love that. So, you talk about things that you can control, right? So your costs, electricity prices, very, very important. Making sure you have the right inventory, the right chips. Let’s talk about things that you might not be able to control, and how do you view that? Because I know you always talk about risk management and use data analytics, but there’s no data that can come out to tell you what the government’s going to do. And the SEC has come out against Coinbase, I mentioned earlier, but more importantly, you have Ray Dalio, who’s a pretty smart guy. I actually like him, one of the richest people on Earth. Investors saying that if Bitcoin gets much bigger, that the government could come after it. In your opinion, do you think that’s something that could happen? I mean, we’re talking about Bitcoin, new technology, but something that infringes on the biggest companies and banks on our banking system in the world, which is lobby dollars, which is a lot of power that people hate giving up. Do you think it’s possible that that can actually happen?

Frank Holmes: Well, they definitely could try, but I think what’s really significant is how big and global the ecosystem is. It’s like the recent conferences when I was in Miami. 13,000 people spending $1,500 a person to go to a conference. Frank, you and I participated in speaking at conferences, no one gets charged that amount and it was sold out. There were scalpers. So, you have to realize, he’d go to New Zealand, has a conference. They’re in South Africa. They’re everywhere in the world. There’s 13,000 nodes around the world in the decentralized mechanism of looking at Bitcoin. When it comes to a theory, we’re talking about 30,000 data scientists around the world that are participating in that growth of Ethereum. So, I don’t think they can turn around and try to stop it, but it’ll just spring back bigger than ever. And they are right now. The G-7 countries are doing everything to dampen, to slow down its adoption by the masses. And it’s really hard for them to turn around and stop it totally because it’s global and it’s decentralized.

Frank Curzio: Makes sense. So, let’s change twos here and go to gold, right? So, you have your gold ETF. And we look at Evergreen. Evergreen the story this week on Monday, I’m looking at the markets right now and it seems like everything’s perfectly fine. We’re just recuperating most of those losses. We know the real estate. We see the damage. We see what’s going on with the amount of spending in government, how the Fed’s going to be stuck. Who knows what they’re going to do? Because we’re going to see massive inflation because supply shortages lasting. Now, we’re seeing years, some of the biggest CEOs saying that this isn’t like a couple of quarters, which is going to lead to higher prices of raw materials and everything. It’s almost seems like the absolute perfect environment for gold. It can’t get better than this. Why isn’t gold going higher?

Frank Holmes: So, a great question. I think there is a mechanism in using the future’s market. If you want to go and trade the futures market for Bitcoin or Ethereum, it’s 100%. Gosh, you can’t get any leverage. But gold and silver are highly leveraged. So, it doesn’t take much capital to suppress it. And there’ve been many lawsuits. They’ve been found guilty. Just like they went after traders that worked for the big money center banks for manipulating LIBOR. They were charged and found guilty for manipulating gold prices. So, I think that there’s some form of suppression that’s taking place and it’s even more significant when the G-7 form this sort of cartel of how they’re functioning. So, I believe they can get away with their MMT. If all the countries’ currencies stay in a relative basis, gold doesn’t take off, that they can continue with their M-M-T, modern monetary theory, concept of using monetary printing to drive the economy.

Frank Curzio: So, based on that thesis, should we own gold? I mean, because it’s seen as-

Frank Holmes: Absolutely.

Frank Curzio: Something has to change, right? I mean, it makes sense.

Frank Holmes: Yes.

Frank Curzio: Not only that, I’m not even just talking about the gold price, the equities. When you look at… Their production costs have gone down significantly, right? They’re under a thousand dollars for the majors, most of them, you’re seeing even at current price, their margins haven’t been great. A lot of them have dividends now, the majors. When you look from a growth perspective, in terms of where they’re trading on a piece of price to earnings growth, it’s one of the best sectors you could find based on their growth and how cheap these companies are to buy. But like you said, if that continues and there is manipulation in this market, and we’re not seeing gold go up in a market where it’s almost, I don’t know if it can get any better for this for gold. What do you say to that? What would we do?

Frank Holmes: I think that you’re right, Frank. That it’s the highest percentage of the universe of stocks we follow. There’s about a hundred that have free cashflow. Several of the big caps, throwing off a hundred billion dollars of free cashflow. I think another factor that makes them undervalued is that they… Not being able to capture the price discovery by the millennials. And I spoke recently at the Denver Gold Forum. It was all the CEOs and CFOs of the industry and analysts, and I basically said that if you’ve got free cashflow, you should hold your goal because it’s too cheap to sell. And that is something that the crypto mining companies, they get a different valuation if they hold all their coins. And so you’re seeing, well that concept, I think only Gran Columbia is the only company that started holding back on some of their gold, leaving it would trade higher.

Frank Holmes: But we’ve got to get Barrick and in particular, Newmont, to turn around and do another thing, was not only hold some of their gold, but put Blockchain. Put gold wherever they mine on the Blockchain so they can say “There’s no blood gold.” Like blood diamonds. So therefore, that fits into an ESG strategy because gold mining companies have done a phenomenal job with communities around the world. By far leaders in it. Before ESG, they were already doing what’s required in ESG. But I think they have to sort of change some of that form, not just the substance. And that is, come out with this Blockchain that they’re using Blockchain to monitor where all their equipment is, where all their gold is produced from and start holding their goal when they have free cash flow. And I think these stocks could go through a rerating.

Frank Curzio: And we’ve seen that it could take longer than… Say the conditions are right. The conditions are really right for the last four or five years for uranium to take off. And finally, we saw price discovery, which has helped from a vehicle from Sprott. But I mean, price go immediately from 29 to 50, where that’s the costs for at least Cameco, to actually mine and break even. You see oil fall below that price. You see, at least supply come off the market, but at these prices, it almost encourages the gold producer to continue to produce because their cost is so low. It’s just, is there a supply demand balance where we saw with Uranium, where a lot of people, very, very smarter than me, people thought that Uranium should have took off two, three, four years ago. Now, we see it all the same time everybody’s rushing in. You think we could see something like that with gold? Because to be this depressed in this kind of market, it just seems like we need a little bit-

Frank Holmes: I agree with you, and I do think that the big infrastructure spend is going to be very bullish for silver. Silver is still, on a relative basis, holding up, I think, quite well. And I think that silver can easily go to $50 an ounce. And because of this, the whole solar needs as 20% of the demand for silver. So, silver is not only money and it’s inexpensive to buy coins and store, it has a much bigger industrial demand behind it. As for gold, we’re in that peak supply period. So, I think you’re going to see acquisitions probably have to take off for companies to maintain their growth rates unless they can find from the existing deposits, more gold.

Frank Curzio: No, that’s cool, that makes sense. So, all right. We’re just finishing up here. I like to get ideas, but I’m going to get ideas right here, right from your blog, because this surprised me. Why we’re bullish on Russia and Eastern Europe right now. Again, this is U.S. global investors. Frank, talk your blog, really Russia, I mean, that’s from left field, right? Not too many people would say, “Hey, Russia is great.” And I read this article, and you make a really good case. It’s not just like, hey, Russia could do that. I mean, there was a lot of great, great talking points. You know, why don’t you tell us why do you like Russia so much?

Frank Holmes: Well, they have a big surplus when it comes from exporting energy and they have real interest rates, real positive interest rates. Whereas most of the rest of the companies have negative, real interest rates. I think that it’s very impressive when you take a look at their surplus. So, Canada was locked down much more severe than the U.S. and they could do that because they’re running a surplus by exporting oil. And companies that are inverted to that need tourism. They need other forms of capital coming in. Russia’s is at an interesting spot, but it’s still gets a negative psychology. Putin doesn’t help with all of his negative talk, but it’s actually quite quiet, now that Trump is not in power. If you noticed that one day, he was blamed for being partners with Putin. The next day, he’s blamed for being an enemy of Putin. All that drama, that narrative has gone and oil and gas, where they are is, is making Russia buckets of money.

Frank Curzio: Nah, it’s cool. And last thing here, which I love is the Frank Talk Live. I love the headset, that the microphone, again, we broadcast this on YouTube as well. We tape all of our Podcasts now and videotape them. So, this is Frank Talk Live. Can I really go on there and ask you a question? I mean, because that looks… If I do, I’m going to ask you a simple question. Is San Antonio Spurs, which you’re a season ticket holder, I mean, what are they doing? They’re ranked 21st in the power ranking last year, which I know is really hard to take for you guys. Because it’s like the Patriots, and these guys always make the playoffs and always great, but what are they doing going forward?

Frank Holmes: Let’s see how these rookies gel, you know? They have so much young talent, and let’s see, it’s like buying a portfolio of junior stocks and seeing if you’ve got enough good winners in there. We’ll see.

Frank Curzio: I hear you. I hear you. Well guys, if you want to take…

Frank Holmes: But management, Frank, has got a great track record of picking particular international talent.

Frank Curzio: Mm-hmm. Oh yeah, they do. I can go… Wow. A ton, right?

Frank Holmes: Ginobili.

Frank Curzio: Ginobili’s amazing.

Frank Holmes: Ginobili. Tony Parker.

Frank Curzio: Tony Parker doesn’t seem like, I don’t know. He seems like an American to me, though. Right? He’s French, but what a great, great point guard. So, amazing in the championships, but yeah, you guys had a lot of fun there for a while. Frank, thank you so much for coming on. If people want any more information, go U.S. Global Investors, Frank Talk Live. Frank, is a lot of information.

Frank Holmes: Thank you, Frank.

Frank Curzio: Love having you on, really appreciate it. And I know you’ll join us again soon. Okay, buddy?

Frank Holmes: Take care, my friend.

Frank Curzio: All right, guys. Aw, thanks. All right guys. So, that’s it for me. Any questions, comments, frank@curzioresearch.com. Thanks so much for tuning in. Love you guys, really appreciate it. And I’ll see you guys next week. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.