#127: Offering Private Investors the Ability to Own and Profit from Holding Rare Earths
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Welcome back to another episode of the richer geek. I'm happy to have on our podcast, Louis O'Connor all the way from Ireland. He's the founder and principal of strategic metals invest. They're the only industry supplier in the world to offer private investors the option to purchase and profit from owning strategic metals.
In this episode, we’re discussing…
[1:46] What exactly are Strategic Metals, is it in the metal business?
[2:44] What really means rare earth, doesn’t mean they’re hard to find, what is rare?
[4:11] What about the changes of gas to electricity (cars) is there enough the stuff, what would happen in the future?
[6:53] Is it a public company that people are purchasing shares of your stock?
[11:31] How can investors profit?
[15:12] Low risk or High risk?
[19:18] What about supply and demand?
[21:43] Where do you see Strategic Metals invest in the near future, 5 or 10 years out
[28:09] How can people find Strategic Metals Invest?
Resources from Louis
Strategic Metal Invest | Facebook | Louis O’Connor LinkedIn
+ Read the transcript
Mike Stohler
What if you could be doing something smarter with your money that creates income. Now, if you're wanting to get ahead financially, and enjoy greater freedom of choice, if you want a comfortable retirement, and you know you'll have more choices, if you can do more with your money. Now, if you've wondered who else is creating ways to make their money work for them, and you want actionable ideas, with honest pros and cons, and no fluff. Welcome to the richer geek podcast. Where you here helping people find creative ways to build wealth and financial freedom. I'm Mike Stohler, and in this podcast, you'll hear from others who are already doing these things, and learn how you can too.
Alright, everybody, welcome back to another episode of the richer geek. I'm happy to have on our podcast, Louis O'Connor all the way from Ireland. He's the founder and principal of strategic metals invest. They're the only industry supplier in the world to offer private investors the option to purchase and profit from owning strategic metals. How're you doing, Louis?
Louis O'Connor
Very well. Sorry. Excuse me, Mike. I'm very well, I'm very happy to be here. Thank you.
Mike Stohler
So we've had gold in lithium and titanium to some of the other different stuff and different mining things. And strategic metals is the first time we've had that what is I know what strategic is but what is it in the metal business?
Louis O'Connor
Yeah, good question to start, Mike. Because strategic metals, I mean, that's the name of my company, strategic metals invest. But it's basically an umbrella term for rare earth metals, and rare earth elements, which are basically the the powdered form what we call the oxide form of rare earths. And in America, for example, you'd probably you'd also people call them technology. The scientific term is rare earth metals, a lot of people would call them technology metals. Now we're also calling them green metals, because they're critical to electric car battery, electric cars, solar power, wind power. So So yeah, strategic. Strategic metals is an umbrella term for for those metals that are intrinsic to how we power our how we live our daily lives, like for example, indium, you couldn't swipe your phone without Indian visible 12 rare earths in one, one phone, you know, so they're in pretty much everything.
Mike Stohler
Interesting. Now, when you see rare earth, for our viewers, doesn't mean they're hard to find, or there's not much of it. What is rare?
Louis O'Connor
Spoken like a true private detective there, Mike. And most people wouldn't ask that question, because they're called rare earths people. So they're rare, but they're actually they're not all that rare. They weren't considered rare when they were found first discovered first, you know, hence the name. Bush. This there's plenty of rare earths in the US. There's plenty China has 50% of the world's reserves there in Japan or in Australia. But what makes them scarce might be a better word is China has gone over the last 30 years to they produce more than 80% of the world's rare earths. So they're the complete dominant market leader. Basically what happened is China sort of understood before Europe, maybe before the US even that rare earths were going to be the sort of backbone there would only be the raw materials that would be the backbone of manufacturing in the 21st century. And China did what China does with a 2530 year plan and they basically you know, taken over the industry they they refined 87% of the world's rare so nearly complete domination
Mike Stohler
and that's very important I know here in the States with trying to find the the Evie batteries and trying to find the components for that you know, because it's it's kind of weird where there are certain states California being one of sudden they're like, no gas powered cars, everything has to be electric by new guests cars are allowed to be sold by 2035 and but then some of the people like musk and some of the miners are like whoa, whoa, wait women we we don't have the electricity for this. We don't have the rare metals for you to do that. And all of a sudden these other states are jumping on how do you see this they kind of put you into like, oh, well you know, kind of a panic mode or like is it because you We're finding received two different sides of it. Yeah. Is there enough of the stuff? And will China let us have it? Was there enough around the world? And I know South America has some. Is there enough?
Louis O'Connor
Well, it's a great question. You right. You know, we like you mentioned by 2000. In California 2035. We don't have the infrastructure yet in Europe or the US to cater for that. You know, you know, even speaking militarily, there's three quarters of rare earths in three quarters of a tonne of rare earths in one f 35 fighter jet. And to give you one example, like one of the, there's 10 of them that are strategic one is called is called gallium. Right now, according to the Fraunhofer Institute in Switzerland, they reckon that the demand for gallium is nine times higher than the supply. Gallium has been up 50% 50% a year, every year for the last five years, and it's already 40% a year. So no, there's not enough in the supply chain. But for me, like from my, for my business, and for our discussion tonight, that's good news. Because we offer private investors the opportunity to purchase and hold these, you know, industrial grade high value assets. And, you know, store them just like it's the same paradigm as gold, or silver, except they're rare earths is what you're buying. And they have, you know, there's huge demand in all different industries. So. So, you know, from a philosophical point of view, maybe it's not great news for humanity, you know, but from a business point of view, as a as an investor is good news, you know
Mike Stohler
Absolutely. Yeah. It's because I think everyone even the everyday folk know that gold and silver is kind of the, the steady, Eddie's, you know, it's just, it's, it's going to be there. And as the economy goes up and down, and so does gold, but everyone is learning about the strategic metals or the rare earth metals, and they know that that is the future, correct? Of, of doing everything that you know, especially, you know, the the being more green. Yeah, we need those. Now, when people invest in you, are you a public company that people are purchasing shares of your stock? Or are you how does that work? What are
Louis O'Connor
okay? Yeah. Good question. So, no, we're not a public or a private company. And this might sound contradictory. But the most important thing we do is we are a commodities broker. So this little investment side I'm about to talk to you about, that's not the most important thing we do. Because if we were like, we're an industry supplier. So we're based in Frankfurt, in Germany, I'm in Ireland, but our offices in Frankfurt, we have a vault in Frankfurt, very close to 3000 meters from what was run mine airbase, which you're probably familiar with, right beside the Frankfurt airport. So what we're doing 85% of our business activities, were buying rare earths from producers, mostly in China. And then we resell them back to industry buyer. So we have buyers in more than 70 different countries. We have many clients in the US, we sell them to people who are making medical devices, other other brokers who are selling them to industry, aviation, electric cars, you know, the full gamut, you know, so if we weren't an industry buyer, we couldn't offer the where it's as an investment play. You know, I mean, if I was just the sales and marketing guy here, who was sort of saying, Okay, we're going to buy metals, and then we're going to sell them to the US Department of Defense in 10 years, and we're all going to make loads of money. No, no, it doesn't work like that. Because no industry buyer will buy rare earths without the proper chain of custody, meaning you know, where they were produced, who produced them what the purity levels are analysis reports, you'll only get them from an industry supplier, for example, the US Department of Defense, whoever they're buying their rare earths from for an F 35 or Boeing or whoever's making them, they're not just going to bite them off anybody, you know, they have to be, you know, full chain of custody. So, so what we've done is we're 30 years as a industry supplier.
And what happened was we bought this the vault in Frankfurt, it used to be a bunker in World War Two was an air raid shelter, bought back converted to a bank level secure vault armed security, fully fully insured. And we started this is 12 years ago, we start because some of our industry clients were asking, Could they store? Could we store some of the materials on it, they weren't quite ready for them or they had, you know, they'd ordered an offer a few years. And the powdered ones need certain conditions, you know, so the purity levels don't deteriorate. So industry bars, ask us, you know, could we store them? And then we and then the same? Funny enough, our first customers on the investment side? Were people who worked, who worked in these industries and who were buying, they started, oh, could we buy them as an investment? So it just the idea came from there. We're the only company in the world to do it at this moment in time. But we're the only one qualified to do it.
Because we're an industry supplier. You know what I mean? Like, if we were doing business on a daily basis in rare earths, we couldn't morally contemplate the investment side because well, I suppose I just finished with this my the two guarantees we offer, I suppose our warranty statement, if you will, that say to you, the investor is one, we guarantee you're buying industrial grade high value assets that can be liquidated to any industry buyer, whether that's Tesla, BMW, us, DOD, Siemens, doesn't matter, their industry standard. The second guarantee is we guaranteed to liquidate them to an industry bar when our clients are ready. If we weren't able to do both of those things. This would just be a sort of a joke, if you know what I mean, it
11Mike Stohler
wouldn't work out. So are people buying, like a share of your company or a share of what am I getting a royalty or,
Louis O'Connor
you know, you physically own the metals? Yeah, you actually physically take possession, we highly, highly recommend you store them with us. But once you've paid for them, and they've been delivered, they're your metals, if you want to remove them to the US, you could, but it's just going to cost your money, you know, it's better to store those because one, they're being stored in an industrial standard facility, to when it's time to liquidate them. They can be liquidated in, you know, in a few days, you don't even need to give 30 that are highly liquid product.
Mike Stohler
So how do the investors profit? I buy gallium from you, or do I give you here's $100,000. And I say, heck, I don't know what any of these things are? Just buy some stuff. Yeah. And make me a profit. You know, how do they, when you sell my stuff? That's when I get the profit?
Louis O'Connor
Yeah, well look, just as an example. $100,000, right, and our minimum investment is $10,000. But if you wanted to invest 100,000, I mean, obviously, we'd spend a bit of time together, I drilled through the metal, there's only 10. And I'd show you look, you know, these are the metals that are critical to solar energy. These are the ones for wind turbines, these are for electric cars, these are the ones from modern technology, all the devices we use. And usually they overlap a bit. And you might say, you'd have a choice, Mike, you could say, Okay, I want I just want to buy gallium, if you want to just buy gallium, that's your choice. But generally what we suggest is buy one of each by $10,000 of each one, because you're then invested in just about every industry that's growing today, technology, sustainable energy, medical devices, aviation, you know, I think it was Elon Musk just said as well, along the lines of don't just invest say, in Tesla, or in Apple, invest in the raw materials that they need, because you're completely covering all your bases. And, and this is what you're doing. So you would then physically own, you know, one kilo or five kilos or waterwise of each one. And, you know, we store we recommend like a three to five year play. It's at least one year is recommended. And I'll tell you why. Because the the storage facility is a free trade zone. And if you keep them there for at least a year, there's no taxes, there's no import duties or VAT when you when you sell them. Now how do you make a profit? Well, to give you an idea, the historical price and for for all metals, I'm not just going to give you one, the average gain for the last five years every year is 34.25%. So they're very, very good returns as of late. So if you'd invested $100,000.05 years ago, you'd be up to 270% at this moment in time and let's say that you came to me, Louis, I've you know doubled my money. I want to take my original investment that or I want to take all my money out. Then you just give us Didn't notice and we will make you an offer that day, what the current prices? If you accept the offer, we send you an invoice you okay, the invoice and we sell them, and you'll get your money in three to four working days.
Mike Stohler
Yeah. And it seems like because of the type of metals they are, it's a little more on the, you know, in the one to 10, the low risk to high risk. I'm saying now that it's I don't see. This is unless we just create some other type of technology. I don't see this going away anywhere. And matter of fact, I see it just getting more rare or something, it's the demand is just going to grow, and it's just going to be exploding exploding because of the green push.
Louis O'Connor
You're absolutely right. We're just at the beginning of it's a new alternative asset class, we've only been offering them to, you know, to in this to sort of private investors for 12 years. It's a long time, but it's still a new asset class. But we're only at the beginning. And, you know, like I'm telling you a lot about the pros, right, but let's, let's talk there's pros and cons to everything. Right. So, you know, you sort of nailed it there at the beginning. And you were just touching on the point of like, let's say, for example, indium I mentioned to you I mean, let's suppose somebody came up with a better technology than Indian for swiping your phone next week. Now, all of a sudden that demand for Indian was going to taper off. So that could bring the prices down.
That's the only like, in terms of, obviously, every people have to do their due diligence, like what I'm telling you is fact, but they have to find all this out for themselves, we can send them all the legal imprints and stuff. But once people do their due diligence, what they'll find is they're buying from an industry buyer, who has 30 years in the industry, and 12 years offering them as private investments. So there's no you're as safe as you can be with any business. That's 30 years in business. And they also, you know, the commodities we sell are in high demand. So there's not much risk there of any, you know, it's a German company, Germany is one of the leading trading economies in the world and the metals they offer and huge demand all over the world. So that part of it is safe, they'll find out. So yeah, the cons could be one better technology for a certain metal comes along to. And this is a bit of a kicker is China can play the right the rare earths economic card. You know, I'll give you two examples, right. And it's all of this is hidden in plain sight, Mike, like you could Google this and you'll find it out in 10 minutes. And people are sort of amazed. Like, in 2010, China had a territorial dispute with Japan and Japan, detained a fishing trawler captain, because he was fishing in disputed waters, right. In retaliation for that the Chinese restricted the export of rare earths. And we saw them we saw the Sonam go five times in value in the space of a few months, because China controls this market. You know, they've, they've won. And now what happened there was the US, Japan, Europe took China to the WTO.
China lost, but it didn't matter. I mean, in terms of people who invested in rare earths, they've made a profit, right? So they can play that economic card, right? The second thing China can do is because they've 87% of the world's production. And they did this last year, we had some of our metals double in value last year, sell exactly why that happened is China doubled the value of of electric cars they produced last year. So they're starting to keep more of these materials for themselves. And then prices are rising in the West, you know?
Mike Stohler
Yeah, it's very interesting. And you see that, I think every commodity, you know, we're seeing it in oil. Right now. So it's, yeah, when you make someone mad, or you do something, and they, they have a controlling interest. It's it's up to them, you know, it's how main or
Louis O'Connor
if they, if they're in that position of strength demeanor, I know that myself when I'm when I'm arguing with the wife if I've won or lost. Exactly. You know, when you're in a position of strength, and when you're, you know, what, yeah, you're You're 100%, right. They like I tell you the way China sees this, right, it's not an economic failure. It's a geopolitical strategy. 30 years in the making. And what we offer investors is that's hack China's geopolitical strategy. How do we hack it? Well, they control the rare earths, but you can hold them in Germany as an asset for when China In a escalates or you know, restricts, prices will spike and you can sell and capitalize. That's the strategy. Now, as I always say, Look, I'm an investor first, I first invested in 2017. And as I always say, like, at the bare minimum, on a good day I hold an asset that is in high demand. And supply is sort of limited and subject to disruption. On a better day, I hold an acid, where China dominates and China could restrict quotas. So it's a sort of a win win as long as you're willing to stay in for three to five, even 10 years. And our historical pricing proves that if anybody would invested five years ago, is up, you know, 270% I mean, it's, at way outperformed gold. SMP, you know, so, but it's just people don't know about it. That's why I'm here talking to you. We're a Europe, we, until very recently, we've done zero marketing, even in English, outside of sort of Germany, Austria, Switzerland, but we just been going through, we've extended the storage capacity, we're expanding, expanding the expanding the business. And now we're, we're sort of, you know, going a bit more international, Ireland, UK America. Look, I know, US investors will love this product. I mean, we already have quite a few clients, but us, Look, I'm European, but US investors are more, they're a little bit more innovative, that probably they're, they've a bit more adventure, I think, as well. And, and once they know the full story, here they go. Okay, hold on a minute, you know, this sounds interesting.
Mike Stohler Exactly. Because we are, we do push diversification on portfolios, we do it on our podcast, and a lot of people in the states do that. And we always are, you know, the buy and hold type of speakers. And it's like you don't, I'm not into the day trading, things like that you diversify, put your money in and hold it. You know, you can play with a little bit and things like that. But assets usually always go up. And, you know, where do you see the company? You know, can they invent? Can you find other rare metals? You know, where do you see yourself? Three years from now, five years from now? You touch on a little bit, you know, jumping over here in the States a little bit more? Where do you see strategic metals invest in the near future? And then maybe 5 10 years out?
Louis O'Connor
Okay, great question about the metal too, because just this year, they sort of discovered, if you will, a new named a new metal. And now we'll find out its applications, you know, as we discussed earlier, it's just beginning like the world of, you know, it's almost like rare earths, we're waiting for the world, you know, to be able to use them, you know, for example, you know, we didn't have all this modern technology 30 years ago, so they, they, you know, they weren't being used for that, you know, and our business like, we're a private company, and we turn we do we do a lot of turnover, we do a high turnover, but we you know, there's no, we will only grow to a certain size in terms of what we offer to investors, because it has to be safe for the investor. And to give you just an idea, air vault in Frankfurt has like to over 200 metric tons of rare earths. So we've over 200,000 kilos. In the inventory. It's the largest inventory of Rares, anywhere outside of China, only less than 25% of that inventory mic is investor owned. So that ratio, you know, remember, it's a German company as well, very, very conservative, very, very honest. I mean, I'll need to be honest, but they're completely transparent. So they will never sell more than 25%. And investors, why? Because they have a commitment to be able to liquidate those investors. So the ratio was sort of three to one, you know, so we will grow and we will expand. I'll give you a little bit of a news, I suppose it's very early days to be even saying this. But, you know, we sort of knew 12 years ago that we could see from our business that demand for rare earths is off the charts. And it's not, you know, nobody in the world would argue demand is going to decrease for these raw materials. You know, not even the mother in law would argue that gold would go down, right? But she might but anyway, um, so, you know, demand is, you know, and you know, as well and just in the last six months with Russia's aggression, Europe now needs to wean its dependence off Russian oil and gas, how are they going to do that? solar energy, wind turbines, electric cars, so the more Um, you know, a year ago, you know, demand was off the charts.
Now we're looking at so you will see more production in the US, the US has rare earths The only problem is the US mountain pass and California, the only producing facility in North America, they still have to send all the raw materials to be refined, because China has 30 years more experience. Like, as you pointed out, no, you're asking me, Are they rare? And you're trying to figure out why, you know, why would this make it a good investment? I can see where you're gonna, here's, here's the answer to the whole thing. And I guarantee you, Mike, right? There's no more than 200 people in all in North America know this, or are aware of this, even though it's only a couple of Google Alerts away to find out, right. So here's the real deal. And what makes them expensive, is, as we said, there's plenty of them in the US, they're in Australia. But they're never, they don't occur naturally. They're all together. And they're always a byproduct of another raw material. So gallium, for example, is a byproduct of aluminum. You know, mining, so they'll never be more gallium with no without an overproduction of aluminum. So they have to be extracted, then they have to be separated. And then they have to be refined. That's what makes them expensive.
Now, in the 1980s, you were the US was producing 60% of the world's rare earths. China wasn't producing much at all. And I think what happened was China understood before Europe and before the US how critical they were going to be for the 21st century and what China legitimately did. They partnered with these companies in the US and different places in the world. And they legitimately moved all the refining to China. And they now have 30 year advantage on that. The crucial role is you need not just geologists, but you need what's called a metallurgist. And there's only a handful of universities in the US for the last 30 years graduating, you know, degrees and critical minerals and metallurgy. I'll give you an idea on the scale of like, the US has been graduating about 200 a year. For the last 30 years, China's graduating 200 a week. So we don't have the human capital in the US or in Europe. I'm sorry, I'm not picking on the US. I'm talking about the US because you're in the US, Europe is no better. In fact, Europe, we have no production near you guys, at least half production. Now, what's gonna start to happen, though, is you will see, you know, in fact, if you look, you'll see that in a very rare occurrence of agreement of President Trump and President Biden probably the only thing they ever agreed on, they both signed executive orders, recognizing the US needs to wean their dependence off China, right. So you're gonna hear a lot of the politicians say, We're gonna, you know, we're trying to, you know, we're going to solve this, what the truth is, that war is already over that race is won, and China has won. And then we, as investors can profit from that.
Mike Stohler
Sounds very, it's very entertaining. Very knowledgeable. You know, I appreciate you coming on. It's something that we've all heard the terms, you know, but we just kind of pass it Yeah, you know, rare earths and the, okay, whatever, you know, but to sit there and get down to the, the nitty gritty of why it's important. And everyone wants to know how you can profit off of something that's just human nature, right? It's like, Hey, how can I take advantage of all this stuff that's going on, and profit from it, instead of just seeing everyone just spending money, trying to develop these things? So I appreciate you coming on. Before I let you go, Louis, how can people find strategic metals invest?
Louis O'Connor
Okay, so while they can go, that's the website so they can go to the website and download a brochure, leave their name and email and I'll contact him for some follow up. And they can even email email me directly, Louis, at strategic metals, investor calm LRU is and if they mentioned, you know, Mike, that you know, podcasts are, you know, we look after him very well, of course, you know,
Mike Stohler
yeah, thank you and LinkedIn.
Louis O'Connor
Yeah, I'm not I think it's
Mike Stohler
Yeah, I see your linkedin.com and then, Louis O'Connor, and everybody again, strategic metals with an s invest.com. And Louise Liu is at strategic metals. invest.com. Louis, it's been absolutely wonderful. I'm thinking I might just check out the strategic metals invest.com myself, and look at diversifying A little bit of my portfolio. And I appreciate you coming on and have a wonderful evening in Ireland have a Guinness for me. Take care.
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ABOUT LOUIS O’CONNOR
Louis O' Connor, Founder, and Principal of Strategic Metals Invest. We are the only industry supplier in the world to offer private investors the option to purchase and profit from owning Strategic Metals. The investment play is exactly the same paradigm as investing in Precious Metals, instead the investor is purchasing Strategic Metals.
Strategic Metals have outperformed Gold (58%) , FTSE100 (3%), and S&P500 (112%) consistently for the past 5 years with a 175% average return for the same period. Right now, in North America the only obstacle to investors profiting from owning Rare Earths is that they don’t know they can. We are Europe based therefore providing North American clients portfolio with much needed geographic diversification.