Frank Holmes, CEO, of U.S. Global Investors and executive chairman of HIVE Blockchain discusses with David Lin, anchor for Kitco News, the sectors capital is flowing towards now, and how the mining industry should attract investments, especially from millennials.
Kitco news special coverage of the Denver gold forum is brought to you by new Pacific metals, Frank Holmes, CEO of us global investors and executive chairman of hive. Welcome to the show. Good to finally meet you in person Frank. I'm excited. You and I have spoken many, many times over the last. Well, no, we, you and I have met in person, but first time we're doing a live interview together.
Exciting, exciting. You're wearing a Bitcoin shirt at a gold conference. Isn't that like SAC religious people with your, give your attorney Luxor? What? No, but you've long advocated for both. So we'll talk about both asset classes. What is the theme of your presentation at the Denver gold? Well, as for a lot of these CEOs to, to rethink how they're telling their story to reposition themselves in the hearts and minds of, uh, institutional to retail investors and family offices in particular, the millennial.
The influencers such as Kik goal is an incredible educational platform doing interviews with all the CEOs from the whole spectrum from junior to senior mining companies. Um, they're not going the new investors are not going to Merrill. Lynch's wirehouse to get research on these gold stocks. Uh, they're not going to.
Uh, RBC, uh, with all respect, they're just not doing it, but all these CEOs want to get that research, but really they're using YouTube and they're using other platforms like Reddit to try to see if they can get insight and granularity on the story that you're trying to tell. And it's really respecting that digital world we're living in.
And that's what drove my jets ETF. I mean, jet CTF went from 40,000 shares a day. To F 8 million. It goes from 40 million to 4 billion, uh, which triggered that that's now big institutional is the retail and what were they seeing? And they did their own research on, on the internet sort of decentralized information, right.
That after every crisis, the airlines fall 70%, then they go up 120. So they did their own research and guess what buffet was wrong? And they were. Uh, so we're seeing that the same thing in many technology stocks, you sought a bit it and silver, but I think we have to, the CEOs have to recognize that their story is a vision of what they intend to do.
It's not guaranteed or promissory, but they have to paint a picture. Yes. There's risks of volatile. All these parts, but the story is missed. So you're not attracting the millennial. Yeah. Well, your jets ETF, the AUM grew in part due to the fact that the performance was good. Right? So you do need that. You do need that underlying growth in the no, David, that's a no, that's the phenomenon.
That's in March, right in April. And in may of last year, it went from 40,000 shares a day to 400,000. 10 fold increase in volume. And the S and the ETF stayed flat who were the new buyers of the, of the fund. This was all the Robin hood type of investors or going through Schwab, uh, in particular TD Waterhouse, you can see TD Waterhouse dropped all their commissions, uh, to attract new buyers.
So you saw in particular that the Robin hood is, I think, let me 35,000 of them bought. And so June and. ETF went from $12, average ticket price to 20. So if I were a mining CEO of, I don't know, a mid tier where senior doesn't matter, which, and you're having a meeting with me and I say, Frank, how do I be like you?
How do I get the millennial crowd to invest in my stock? What advice do you have for me? We tell your story and reposition it on all these social platforms, such as Kitco, uh, uh, YouTube is really critical. Uh, the Reddit. Uh, the forums, I was talking to a C CEO this morning and asked him, are you using telegram or a signal?
What is it? I mean, what, what is it? I mean, all the tech people create telegram. They said I actually, my Frank talk is on telegram, a coin, a graph it's also on telegram. So it's another way of telling yourself. They're oblivious to that. And that person that's going to be buying stocks and speculating, and young people should be speculated versus someone.
My age, shouldn't be taking big risks. Let's a younger investor that can speculate. Well, they're all using different platforms to get the research. Well, do you think the price, the underlying price of the metal, the gold silver needs to move first before the retail crowd starts to pay attention to you think it's a chicken and egg problem.
Like first you've got the re you got to get the retail crowd to pay attention, to drive the price, but they're not paying attention because the price is just flat, but why are they buying? Because as decentralized, right? The other, the other reason is private property. What's the other reason because it's private property and it's portable, but it's very important.
So is gold. Okay. So where are they buying gold? Uh, why what's going on here? How come, how come gold investors in particular, these companies are, they're not holding their gold. Micro-strategy comes along and quadruples of stock by sexy six, fold Michael sailor, by saying he cannot grow his top line business faster than the money supplies being printed.
So he's going to turn around and use Bitcoin as a proxy. Well, I'm a gold producer and I've got free cash flow a hundred million a month. Right. Well, why, why am I not keeping 10, $10 million of my goal? Right? That's what's going to resonate with you. Okay. The investor that you're believing with conviction, the money printing that's out there is going to get a bid.
And you're going to see gold take off and silver takeoff because you're actually holding it. But you don't see that happening. The last time we had a gold holder was Rob McEwen in like 98. And guess what he got attacked by all the big banks, gold analysts by saying, but his price went to the highest price to book value, made a lot of money with Rob McEwen.
So he's actually actually quite correct. If you have big free cashflow and you really believe in your. So, which is, which is like gold or you've been Bitcoin, then you should be holding well, do you think a lot of capital is flowing away from gold into Bitcoin, into cryptocurrencies? I mean, you're at a, you're at a gold forum.
And are you a girl? So the executive chairman of a company that mines cryptocurrencies, what's your pitch to the gold crowd? Well, I was at the conference in Miami. They had 13,000. Spend $1,500 to get in the door. And then they were scalping tickets to get in. All right. That never happens at a gold conference.
And their first keynote speaker is Nick size bowl. And he goes through the history of why you want to be long Bitcoin, but also gold. He wrote in 1997, big gold, smart contract. He's a coder, he's a historian and he's a. And so you have, how come all these millennials buy into all this money printing, but they're saying their proxy, their bet is on a Bitcoin because it's capped at 21 million coins.
It's not gold. Right? Well, you have to reposition your story and stop selling all your gold. If you have free cash. You know, I'm going to talk about the minors because a lot of people can invest in the miners. You were telling me offline that they were growing for all the wrong reasons. They were making a bunch of deals since the early 2000 tens.
You were talking about that since 2007, about all the non-creative deals that we're making. And look what happened to the share price. Now the coal price is flat, but their share price continues to fall. Tell us about the deals, the industry. Well, I will work. I spoke at this conference in 2006, seven warning about the M and a work, and the quants are taking over and the quants were able to see that two companies pulled together and yes, the revenue grows and their cashflow.
But on a per share basis, the revenue declined 46% on average for the GDX J uh, and the GDX has something like 35%. So you're seeing that there was massive dilution. So then gold takes off from that point. But those gold stocks. Then we have another rally, 2011, the gold stocks to this rally. And once again, you get these crazy mergers that are non accretive.
I think today they're more accretive and I think there are much smarter today. Absolutely. There's much smarter mergers in M and a work, uh, today, but they don't tell that story. The difference between today and tomorrow. The dilution. If you take a look at the dilution of the number of shares being issued by the ETF of the GDX and GDX J that's why I created go, go, go AAU ETF, because it's really focused on who has the best values per share each quarter or the royalty companies who have the best value metrics per share.
And so what's happening in our world when it comes to golden, these stocks it's much more quantitative. In the analysis on doing comparative work and as much more robust. So how do you tell that story to a millennial that you are more attractive? And, and if by the way that if I'm holding my goal, which we've done, say for hive blockchain, we hold our coins.
Well, not only does our revenue go up because Bitcoin Ethereum. But our inventory goes from 5 billion worth, 130 million, right. That's a big balance sheet asset. Sometimes dumped the seniors need to make a transaction because we're running out of reserves themselves. I mean, in other industries, maybe they have the luxury of picking a creative deals, a certain degree.
Yeah. To a certain degree. Um, it was lots of those mergers. It didn't work. I remember hearing what Franklin Nevada on the royalty in Nevada, the first royalty on Barrick and Newmont assets 30 years ago. Oh, it's going to be gone in 10 years, 30 years. That that $2 million investments made them do 20 billion in valuation growth over time.
So I, I really, you know, I think we have to be very selective and they do better deals. Um, I think if I had, if I'm a junior, I need capital, I'm going to come to. Uh, and I think that this market's going to change. Speaking of millennials, let's close on this. I know millennials personally, who invest in jets, tell us about the airline industry, because they're probably watching this right now and they want to know what's the future of air travel.
What's the future of pricing for tickets. And of course your jets, ETF, how do you pick the airline companies? What's your selection criteria? Well, for the U S in particular for airlines, Delta American and Southwest, they dominate they're about 65% of all passengers flying in America, which was averaging about 2 million.
Now it's come back to that number. There's 700,000 extra flyers are not there yet. Uh, and that's inbound from Asia and from Europe and Latin America. America has put on these, these sort of challenges from Europeans to come into America, like 14 days. And so they have to go to Mexico or candidate come in and that's delayed the overseas.
I just flew to Sweden this year, our operations, uh, 10 days ago in Boden for sold out, going over to Europe and pretty well, half, half full coming back in. Right. So I think there has been a, through a law and trying to understand, uh, this sort of Delta. But what's really profound in Texas. And the data points is that those people that have died from the Delta variant 99% of them were not.
And, and so what, what this whole drama is saying that you have a lockdown, it doesn't stop COVID from going away. It just helps the healthcare system. So the longer the lockdowns by governments is really a reflection of how bad their networks are. Are you seeing healthcare correlation between the vaccination rate in airline travel?
Absolutely. TSC published that every day. Yeah. So now the psychology of the. Coming back on Delta, it's such an immediate, like sort of go with this negative narrative, uh, and it's impacted, but the TSA says no, the numbers are clearing every day and hitting. So we've went through 1.7 million. This is very important.
Now Canada's open Porter, just opened Porter airlines shut down for 18 months. Right? These are very positive, ethical capital formation. There's been seven new companies gone public they're in the airlines industry. So there's something happened as positive, but I think the psychologists. The sentiment is negative over the headlines, but I think it's temporary TSA throughput.
We're obviously up a lot since 2020, but still not at pre COVID. I just told you why. So you say, so you're saying airline travel has a lot of room to grow? Absolutely. Absolutely. And people are speculating. By putting new companies like breeze, the guy that created WestJet and then the guy behind jet blue started a new company for a tourist called breeze money came in from everywhere.
Why are you going to invest in those companies? Okay. Are you going to add that to your jets, ETF? Uh, if it's look what model then it shows that growth. It definitely will. Let me, let me, let me throw two, just an idea. A bearish. Please correct me if I'm wrong, we're never going to go back to pre COVID levels of traveling because that's not the norm anymore.
People want to stay home. They're afraid where maybe they just want to do work virtually. They don't like travel. I think it's only a small portion of people. People want to communicate. There's more depression. There's more depression medicine given out that you could ever think of during. People being stuck at home have aged rapidly.
Uh, actually they thought be more babies. There's more divorces. Do you think there's any opposite? Everything's sort of contrary at this time. Um, but what's been good for the stock market has been the huge price discovery due to millennials. That is a phenomenon. Well, one thing that was worrying me as somebody who is looking at the sector is inflation.
I mean, if, if high inflation persists your, your, your disposable income is going to be eroded away, how do I have money to travel? What do you think? Oh, I don't that's that's not an argument. That's anecdotal. That's not a big number to share with you. Um, but I do know this, that those kids that took Trump's 1200 bucks and put it into Bitcoin may 10,000 and they did it on PayPal and they could buy a fraction of, of it.
And now it's gone up and they can buy that holiday. Yeah. So there's no gold story like that. Yeah. There is in the crypto space. So there used to be when I first got in the business. In 1978, there were stories like that in the mining world where people became, made fortunes on a relative basis, uh, of being early on exploration and success.
That story is now being taken over by new technology. The new software is how do you work from home? That's a big boom, a healthcare tele telecom. Uh, how you don't go to see your doctor, but you do it over, uh, over video streaming and the doctor does a diagnosis from there before they let you come in.
Right? They're the, they're the new opportunities. I think the data points is 65% of my kids are going to have new jobs that are completely new. Just being created today. Yeah. Excellent. Right. Nice meeting you in person. Thank you so much for coming to our booth. And I look up, that's how all these prices are going.
Cause we got big inflation, David, and I've been telling you this a long time, right? There's it's hidden is coming out. Yeah, that's right. Alright. Big inflation will follow up in that story and you and I are doing a live interview soon in October. Stay tuned for that on kitco.com. It'll be fun. Viewer questions are are going to be submitted live and you'll be answering questions from the audience I'm looking for.
Yes, that's great. That's going to be great. Thank you for watching kickoff news. We'll have more. Kitco news special coverage of the Denver gold forum is brought to you by new Pacific metals.