Jay Martin, CEO of CambridgeHouse and host of The Jay Martin Show, discusses with David Lin, anchor for Kitco News, the outlook for the economy and some of the safest assets to buy in the event of an economic downturn.
We're talking about the future of a resource investments and the resource sector all across the world and how investors should be positioned. In regards to the gold, silver and commodity spaces. Welcome back, Jay Martin. He is a CEO of Cambridge house in the host of the J Martin show. Jake. Welcome back, David.
It's good to see ya. It's good to see you too. I spoke to about a year ago on the show and your own, your own podcast. Jay Martin show has grown tremendously on YouTube. I recommend everybody to check it out. You speak to a lot of prominent investors and economists. Congratulations in that front. Uh, people know you besides your own podcast as the CEO of Cambridge house in your house.
One of the largest resource investment conferences in the world coming up in may, we'll be talking about the Vancouver resource investment conference of what people can expect this year. But first I want to get your take on the economy, investors watching our program right now. We're curious to get your take because you have spoken to a lot of people you've worked with industry insiders.
What have people been telling you in regards to the. Of not just a Canadian economy. I know we're both based in Canada, but the U S economy, uh, most importantly, what's the outlook there. Are we headed for recession? Are we headed for an economic rebound? Yeah, it's a great question. I mean, everybody's got a, got a forecast and an opinion, um, rarely is anybody correct?
Usually what occurs is a blend of everybody's thought process. Right. And what I would share with you and how I'm acting as a consequence is that the majority of the smartest investors that I talk to these days, they've been de-risking for the last year, you know, through, you know, a crazy equities rally, they weren't touching it and they consistently were taking.
Off the table and putting it in safe places. And so I've done the exact same actually I've de-risk my portfolio dramatically, uh, purchased a little bit of real estate, increased my gold holdings, increased my Bitcoin holdings, increased my cash. I know a lot of specifically resource investors, uh, advise you not to hold cash.
I, I disagree with that. I think it was some of the best investment advice I ever got was from a mutual friend of ours, Rick rule. And the purpose is, you know, without a pocket full of cash, you lack the confidence to chase those higher risk opportunities when they present themselves. And so, you know, that's where I've trended as a results.
'cause, you know, I mean, you're, you're very similar, right? You hear, you know, a dozen forecasts in a week, right. 30 in a month. And so what do you do with those? Right? You dissect them the best you can. And you look for where is their consistency? We're going to agree on a few things, disagree on a bunch of stuff, you know, but where is there consistency then that's maybe where I focus.
And the consistency I see is uncertainty, I guess, is where I'm going with that. We'll touch on a few points that you brought up Rick. Well, I have spoken to Rick a couple of times and a funny thing, he would tell you about cash because. From my, from my understanding, he's been embarrassed on the U S dollar for quite a while.
And he also thinks inflation is a problem. How do you reconcile those two viewpoints? That inflation is here to be perhaps a persistent force, but at the same time we should hold cash. I mean, wouldn't your value of cash be eroded by inflation. Absolutely. Yeah. So it's all about how much cash as a percent of your assets, you know, are you looking at, and.
Yeah, I think about it. Like it's, it's dry powder, right? That's the purpose of cash in my life, right? It's it's not savings. Right? My savings is in real estate gold. And, uh, you could question this, but in Bitcoin, I park, I park, uh, you know, uh, I parked, uh, cash in crypto, but you know, actual money that I hold as just the dry powder, David, that's the reason I have it.
And so it's there for the purpose of pulling the trigger. When I see something that I really need, that I really feel like is undervalued and. Uh, what is your view on inflation? We both live in Canada. It's not inflation is not just a problem in the U S even in Canada. It's at the highest level since, uh, since a few decades ago.
Are you noticing that affect your everyday life? Yeah, certainly. Absolutely. I am. And you know, it's really easy to, to feel the immediate impact of expensive, you know, durable goods and groceries and feel like this is a trajectory that's going to go out of control. Maybe it will, but you know, I, I think I try to temper that enthusiasm with an understanding that there's all sorts of variables at play, right?
It's not just an expansion of money supply there's short-term situations right now that are massively impacting the availability of goods and that's impacting the price. And so, you know, we, we, you know, hear the debate all day long about like, you know, uh, you know, is this runaway or is it. You know, is this just, you know, temporary symptom and, and again, I think the truth lies somewhere in the middle.
Any, any service product that I enjoy, that's already been attacked by tech has deflated in price over the last decade and we'll continue to do so. Right. And so there's, there's always going to be those two forces at play. Right? Any immediate products you mentioned that you have personally, de-risk your portfolio, you follow the footsteps of a lot of people.
You talk to, what do you mean when you say you've put it in safe places? What are these safe. Yeah. So for me, safe places are our real estate. Um, and so, uh, I, you know, all my principle residents, I don't care how cheap the money is. I like the increased equity in my home. And so I paid down my mortgage aggressively and, you know, friends of mine will argue that and say, you should capitalize on the cheap debt.
You should mortgage your house to the health. Did I just disagree? I like the peace of mind. Yeah, and for me, the peace of mind is more important. Um, and so equity in my home is key. Um, you know, gold for me, it's, it's the safest, most boring place for wealth. Right. And, and, um, so I've increased my gold holdings.
Absolutely. Okay. Now I'm curious to get your take on gold. Now let's talk about gold. Gold has not done well since August, 2020. I look, people are saying I'm hearing different viewpoints. And the one hand they're saying, well, look, it's already done tremendously. Let's zoom out, David. They'd tell me, zoom out the chart.
And you'll see that compared to a couple of years ago, it's still doing very, very well. So yeah, we've had a bit of a blip for the last year and a half, but if you were a longterm investor who got in early are still doing quite well on the other hand, people are disappointed that golden rally above its 2000.
Uh, $2,100 level in August, 2020. And they're saying, well, gold has a gold is no longer an inflation. Hedge. Gold is no longer a safe Haven. Gold is no longer this and that. The paradigm has shifted. They say, where do you stand? Do you think gold is still the preferred safe Haven asset? You mentioned that you hold gold, but, uh, what would you say to somebody who says, look, Jay, I don't know if I should hold gold anymore.
I don't know if it's a safe Haven asset anymore. Yeah, I think that you're, you're, you're questioning, you know, four to 5,000 years of history. You're, you're questioning the rise and fall of hundreds of empires and thousands of market cycles because of what happened in the last 24 months. So time horizon really matters on this one, knowing why you own an asset really matters.
You know, the same reason that I just prefer to, to, you know, I'm buying property now. Housing prices are kind of crazy. I don't plan on trading those right. I don't plan on trading my gold and I don't own gold for the. Yeah, I own it for the peace of mind. Okay. So let me ask you this, given that you have peace of mind assets, like real estate and gold, you obviously prepared for some sort of economic downturn or some sort of market downturn.
What could be the trigger what's going to cause the next economic recession or perhaps just market bear cycle. Well, I think the nature of black Swan events is that you don't know what they're going to be. Right. And I just look around me right now and everybody's angry. We're incredibly divided. Right.
Um, you know, the markets are crazy volatile, you know, and still overvalued, in my opinion, the broad equities market, it's very hard to find anything that's undervalued in price. So, you know, what should you be buying as an investor is not many things. Right. Right. So, um, you know, I don't know what would, what would.
Be that explosion point, that, that trigger point, David, but I feel like there's tension everywhere and, uh, okay. Well, let me, let me, let me just outline some of the risks that some economists I've spoken to. Have told me about analyzing to get your take on what you think is the biggest risk right now. So inflation market, uh, overvaluation people are telling me that it's still the stock markets in the U S are still overvalued, especially the tech sector, um, the U S dollar depreciation and, uh, and sort of the cryptocurrency bubble popping, which will bring down other financial assets with it because of how.
Cryptos are. Um, so we've got a few things here. Inflation the U S dollar depreciating overvaluation cryptocurrency bubble popping. Um, am I missing anything else or is one of those, uh, on your list? Well, you know, You know, what's the U S you talk about the U S dollar devaluing, like in re in relation to what you know.
And so that doesn't, I don't lose sleep over that. I, you know, I brought her the whole us dollars. I think if you're going to hold cash, you should hold it in us dollars. Um, you know, the inflation narrative doesn't keep me up at night as much as it does many of the economist that I speak to, because I think it's really easy to get excited about what might happen short term.
I don't think we're going to see crazy runaway inflation. I just don't. I just don't know. You know, um, I see the velocity of money continuing to slow down. Um, and, uh, and we'll see it like we're, you know, we're expected to see these rate hikes that make cool the economy a little bit. Um, and you know, more so than inflation.
I think the supply chain issues are what I focus on. Like that's, that's, what's being affected the most in terms of price points. And I'm more concerned about access to goods, I suppose then. What about current events? Like what about potentially war in the U in the Ukraine and the Russian border, for example, would that escalate and what would that be a scenario that keeps you up at night?
Well, I it's, it's fun to watch. I mean, you know, it's a, it's a great distraction for the U S governments. And if they are able to populate the media with those headlines, it's, it's been a strategy. We've seen them. Many many times, um, how likely is it that, you know, the U S is essentially a free agent right now when it comes to war, we pulled out of Afghanistan.
And so that's a trigger that could get pulled, but no, I think that there's, there's a ton of hyperbole and sensationalism in the market right now. Very few of these things that you mentioned, and that's just my opinion, David. Like, I, I work really hard at not getting excited over here. And so when I hear runaway inflation, when I hear war in the Ukraine, when I hear, you know, the us dollar is going to collapse what I hear crypto going to pop, I always try to step back and say, you know, what's really quite similar because I work with people all the time.
And I, and I, and I'm responsible for reading some of these headlines I can talk about. So how do I, how do I take a step back and, and, and moderate my own. Uh, but let me talk about COVID for a minute. Uh COVID is something that I guess society has to live with now. The, who has ruled that it's not going to be eradicated in our lifetimes.
Now, for example, you, as a conference organizer, the vRAC we'll talk about the VRC. It was supposed to be in January, but it got moved to may because of OMA Kwan, just going forward. Do you think COVID is going to be a persistent risk for the economy? I mean, we're still moving conferences around. Yeah, I think, you know, I hope not.
Right. And there's reason to believe it won't be right for everything you just said. You know, now our, our, our health officials and our politicians are saying, we're going to have to learn to live with this. And hopefully that's the case, right? Maybe it is the new reality that we've moved past lockdowns and, and, you know, mandates and all of this eventually.
But I think what's important to remember is that we accepted precedents. And so as a consequence, we can get clawed back overnights. And we couldn't really argue because we accepted precedent all the way through 2020 and through 2021, you know? And so there's, there's reason to believe that could get clawed back at any point.
I hope not. And I don't, I don't think it needs to be. I think you've tweeted about this issue on your own account that, you know, people need to, people need to, uh, the media needs to start respecting this issue a little, little bit more closely. What do you think the correct policies should be going forward?
A policy that guarantees a safety of everybody, but at the same time, it doesn't really damage the economy. What's the middle ground? Well, th the middle ground, I mean, in my opinion, You know, our response to this threat was completely disproportionate. That's what I believe. And we get back to like, you know, we talk about inflation, so we got to talk about runaway inflation.
Right? You talked about some conflict in the Ukraine, so probably going to be war. Like it, it doesn't always get there often. It usually doesn't get there. It doesn't make it past the headlines. Right. And so, yeah, I mean, My personal experience, right? Is that, uh, our, our response to this was completely disproportionate.
My concern is that the precedent we've set is that if anything has any risk of death and, you know, we're talking about like a 0.5% risk of death, we allow complete interruption of our lives, uh, to protect us against that threat. Right? That's the precedent we allowed in, which is horrifying to me, you know, and, and, and.
It's uh, so w what do I think we should do? We should move forward. I was, I was going to, you mentioned my conference in January, the VR. I see. Yeah. And when, on the ground, what happened there? Yeah, well, you know, on the ground started surging and, uh, we were watching the numbers and receiving. More concerned emails from companies planning to be at the show saying, you know, are you planning to dispel?
And until you watching these case rates and all this stuff, and I was the last, the last one standing on the hill, David say, no, we got to get back to life. We got to get back to work. We can't run into. I mean, let's look at the severity rates. Like this is a very benign and mild flu. This is not something we should run from, but we've been conditioned to run from the flu for two years.
So what do we do? We run, right. We focus on case rates, even though it's, it's a flu at this point, right? So I was ready to die on the hill and say, we're going to do this event in January, regardless, but eventually, you know, we'd heard from enough of our delegates. If there's any way you can put a spell on this until the spring, after this wave, we'd love it.
And so that's what we eventually decided to do. Just to be clear, it wasn't the government mandating you to postpone it. It was not, no, those mandates in British Columbia actually didn't impact corporate events. They were focused on personal gatherings like weddings and private parties, but behind the scenes and the way they announced these mandates is a little bit confusing.
They actually protect business. And so a corporate event like ours could have moved forward. But sentiments different. So technically, yes, we could have run a 10,000 person conference at the Vancouver convention center in January, but would anybody have showed up with all the fear-mongering headlines? I don't think so.
Okay. Look, I know you don't have a crystal ball is four months out or three months out actually rather at this point. Yeah. What's the likelihood you'll post. Well, I'd say very small, you know, and, um, something's changed, right? I'm sure you've noticed this sentiment has changed. I think that if there was some pent up demand to get back to live events, you know, in December, January, which is what we were seeing, the demand for that show was greater than I'd ever seen.
You know, that demand is 10 X. Now I think the frustration from the public with the most recent lockdowns is exponentially greater than, you know, the previous center, original ones. And so now, as a consequence, we are seeing our politicians pivot and say, we're now going to start treating this like something we have to live with.
You know, politicians don't set the trend, right. They respond to it. And so they're obviously seeing everything that we're seeing, whether it's, you know, freedom convoys or just just general conversation, it doesn't have to be, you know, extreme, uh, extreme, uh, expressions, just, I think. A bit apathetic towards this at this point.
All right. I'm going to circle back to the victim and what we can expect at the end of the interview. I want to talk about the resource sector. Now, you mentioned that you do like the regional sector, the GDX J for example, the v-neck vector, uh, vectors, junior gold miners ETF, the, the, the, the ETF that tracks the junior sector.
It's not done great in the last year. Uh, as you may be aware, it's, it's been down about 30 to 40% off its highs. I mean, is this, is this a good time to get in or do you think. Evaluations are going to get lower from here. What's your view? Yeah, it's it's well, they might get lower, you know, whether or not they do.
I think it's one of the ones. Sectors that, uh, well, it is one of the only sectors where I'm allocating capital right now. It's, um, it's one of those moments and we get these every now and then. And I mean, you know, every few years where you can buy phenomenal, um, gold producing company. You know, that's amazing valuations and, um, companies run by the best entrepreneurs in the business.
And so what I'm doing right now is doubling down on those positions that maybe I'm down 30% on, but you know, I still love the management and we're talking about companies like pure gold, right? You can do. You know, a producing gold mine, right. Run by Marco de one of the best entrepreneurs in the business at 60 cents today.
That's ridiculous. That's when you enter, that's when I entered anyways, you know, and so I'm looking at companies like that and their peers at price points that I just, I know I'm not going to see again, or, you know, not going to see very often and justice as disclosure. Do you have any positions in. We do.
Okay. And what is your selection criteria? You look at it, a junior or you look at a minor like pure gold and you think, oh, I'm going to buy this company. What do you what's what's what's your thought process? Yeah, I'm, I'm all about the people because I'm not a geologist and not a mining engineer, you know, I'm sector agnostic in my portfolios.
So I can be the expert in the industry, but I talk to people for a living and I watched sentiment for a living. And so, you know, I can understand the individuals and I can dissect the resume, you know? And so for me, it's people over everything, every single time. And my watch list as a company is it's human beings.
Right? And so I look at, you know, directors of companies, management teams, It was the leader, right. Who's the individual, as you know, when you're investing in companies in the junior mining space, you're, you're betting on the integrity and decision-making of one or two individuals. And do you trust them to have an adventure with your cash and surround themselves with other great people?
Okay. And, and, uh, just backing up and talking about a commodity space. So we know you like the junior resource sector, but what metal do you think has the most potential for investments? Right. Yeah, I'm, I'm more aggressive in the gold space right now. I've got some positions in the Spiller sector, um, definitely in the copper space, but, uh, that's more or less the limit in my portfolio right now.
David, I'm hearing a lot of rhetoric about the EMV transition, the transition from petrol cars to EVs and how. A lot of battery metals are going to benefit graphite, lithium. Uh, you mentioned copper cobalt. Manganese is something I've heard recently. Is that, is that something that a, is that a theme that you've been talking a lot about in your own podcast and, you know, with the investors that you work with?
We cover it. Yes. But you know, I think when it comes to my portfolio, I don't know if this is playing it safe, but I I'm betting on the electrification of our world through investing in copper. And, you know, it's just because it's the irreplaceable. Uh, ingredient, right? Not to say that cobalt couldn't perform exceptionally well, as well as lithium, but you know, the supply and demand economics are just way less certain.
And so, you know, the, the aggressive and intelligence speculator can make a killing, picking the right metal, but I play it safe. I buy the proxy, which is. I'm looking at the performance of the resource sector. And as we discussed, the GDX J was down a lot in the last year. And I'm looking at a relatively speaking cryptos have done very well relative to what basically everything else, but the regional sector in particular, people are telling me, well, maybe cryptos have stolen some funds away out of the Rouge or sector.
Have you seen any evidence at all to support that claim? I don't think so. I think, uh, you know, I invest in both and I think it's important to invest in both, uh, You know, we, we talked a bit before you hit record about the demographic, uh, the visible demographic demographic differences. You'll see, in these two markets, like, uh, at the VRC, a resource specific investment conference, you know, what's the average age of investors walked around the floor versus, you know, a crypto investment conference.
All right. 20 year gap between the 22 year olds walking around the crypto conference and the 40 plus year olds walking around my conference. Um, and there's a handful of reasons for that, but I, I don't think that, uh, crypto stealing speculation dollars for gold is something that is really top of mind for me.
Well, you have dozens of exhibitors at the brick, perhaps even more. Uh, how many exactly. I don't, I don't want to speak to the number of exhibitors. You got it. 235. Okay. So of the 235, have you heard from any of those, uh, resource, uh, companies that they're concerned about the crypto space stealing their funds?
Yeah, 100%, but you know, if your, your share price is down 60% and you're having trouble raising money, you're going to find an enemy. Right. And so you'll point the finger. Um, but you know, investors follow return. Right. Uh, and that's, what's occurring here. Crypto's just performed amazingly. Well, it's a new asset.
It's an exciting asset. It's an absolute growth mode. And so the volatility volatility to the upside is an investor's favor. And that's, what's attracting investors. That's not, it's not marketing strategies or sentiment. It's it's they go where the money is. I'm just wondering of the 235 exhibitors. How many are gold and silver company and how many are base metals companies?
Now, 50% are precious metals. Is that, is that a split that's been consistent throughout the years? Where is that something recent, very consistent, very consistent. You don't see that split changing over the next a couple of years, perhaps the next decade, you know, in the, in, in the balance, right? The, uh, the other half we see a lot of shifts over there and certain years will trend towards a heavier population of uranium companies have your population of battery metal companies.
Um, but truthfully the other for the last decade, gold and silver has owned half of that. Regardless of what other trends are occurring. I just, it just occurred to be, would you ever consider opening up Rick to crypto companies as well to be like, it's like a split there. We've done it. Yeah, we've done it.
I mean, you know, it's, it's interesting question, right? Because what's my obligation with that conference. It's to showcase great investment opportunities to our audience, um, knowing they have. Uh, band towards precious metals, but now in 2017, you recall that rally and crypto, we started talking about it and we hosted some of the first, really big crypto versus gold debates on stage because everybody wanted to know, you know?
Um, but, uh, yeah, it's, it's, it's nice having a pure focus. Right. And so if we were to open up the crypto, it's like, what else should we open it up to that? Right. Health science, food technology, everything else. Right. Well, that's a great question. What is your mission for the brick? I mean, it is called the Vancouver resource investment conference.
I don't know if you're obligated to perspect that and Hammond stick to only the resource sector. I mean, what's your, what's your plan going forward for hosting? Yeah, we can do anything with it. You know, there's, there's no obligation to keep it the rec or just remove the are and call it the Vancouver investment conference.
We could do any of that for sure. Um, but, uh, you know, when it comes to building the agendas for these conferences, What I want for that show is to be, you know, the flagship event for investors who want to get educated about opportunities in the commodity sector, that's where they can go. You know, and if we were to barn door, the opportunities to include crypto and technology and, and you know, maybe the carbon sector or anything that's hot.
Right. Um, it's a. We do that on our media platforms. And so that's what you'll find on my YouTube channel and our podcasts in my newsletter, that show will remain to the Ric. If we do other physical events, maybe, you know, maybe, but we'll see our tickets still open for the Frick. Oh, a hundred percent. Yeah.
The show is now May 17th and 18th. So where can people go to purchase? Can you read chess.com. Okay, excellent. Uh, before I let you go, I'm curious to get your background, your personal background, your journey from, you know, you're the CEO of Cambridge house. You have a successful podcast now, how did you get into podcasting?
I'm just curious. Well, it was the, uh, it was a tool to become a better investor, to be honest, David, you know, the, the Genesis for the podcast and the YouTube channel was that. I wanted, I wanted more insight into my portfolio. And so I started interviewing money managers who had been in the game a lot longer than I had investors who had way more success than I have.
And I figured if I interviewed as many as I could, you know, I could steal their best ideas here as many strategies as I could. And then apply that, which might work for me knowing that no, one's got the ideal formula, but you know, you hear as many, I get this problem. I want, I want to ask you, you interview to interview.
How are you, how do you, how do you, how do you fix this problem that I have? I talked to a lot of people. I get a lot of information, but then I get like over analysis, like syndrome, you know, it's like, how do I, one person's bullish? What the bearish, what do I do? It's like, I got a lot of information. I, how do you sift through that?
How do you, how do you, how do you, how do you sift through the noise and make a call on your. Yeah, I think you maybe two ways. Number one is I look for consensus, right? And so if I interview 30 fund managers, they're going to agree on two or three things. Everyone's going to be doing something different based on their risk tolerance and time horizon, but there's going to be a couple ideas.
Everyone's like, yes, that makes sense right now. And that's where I spend a lot of my time saying, you know, cause I have, you know, Dr. Lacy hunts on one, you know, um, I've had amazing deflationists on my show who will just convince you right. That the inflation narrative is. Then you can have the counterpoints on the show and be convinced the other direction.
Right. And so how do you deal with that while it's like, yeah. When it comes to placing capital, right. I look for consensus in the smartest minds and then spend more time investigating those theses. Okay. And, uh, a varix who are some of the headliners. The two that I'm really excited to sit down with would be the former prime minister of Canada prime minister, Stephen Harper, and the former president of Mexico, uh, president of fleet, they call drawn.
Um, I think there's so much, uh, sort of turmoil in global events right now, whether we're just talking about local civil unrest or bigger geopolitical events like we discussed earlier, uh, those two individuals having led, you know, a G seven energy 20 countries. Uh, both of them lead their countries through the 2008 crisis.
So the perspective they're going to have on risk management is hard to hard to beat that. Right. And so squaring off with each of those two individuals, I'm very excited about going what that we've collected. Some of the smartest macro finance personalities that you and I both have on our shows from Danielle DiMartino booth.
Um, Robert Kiyosaki. Uh, rental Paul, um, the list goes on and on and on, but it's all up on Cambridge s.com. Well, I look forward to being there and, uh, covering the event with you. Thank you, Jay, for coming on the show today. Excellent insights. Thank you, David. Thank you for watching Keiko news. I'm David Lynn, stay tuned for more. .