IDAHO FALLS, IDAHO – I spent some time this weekend listening to the copper mining magnate Robert Friedland talking about the future of energy on the Smarter Markets podcast.
He spoke about thorium-cycle nuclear reactors, uranium, batteries, geothermal energy, hyper loop trains, plate tectonics, electromagnetic pulse (EMP) weapons, wind turbines, etc.
Lots of good eccentric billionaire visionary stuff, in other words.
But there’s one idea I found especially compelling from an investment perspective… even though, admittedly, it may be a little crazy…
Leaving Our Idaho Bolthole
Greetings from Ray’s Car Campus in Idaho Falls…
I drove 43 miles today to have our car washed and detailed before we put it in storage. I’m writing to you now from the waiting room.
Here I am on the road earlier…
On the road to Ray’s Car Campus
We’re getting ready to move out of our Idaho bolthole and fly to London, so we’ll have to leave the car behind… along with the Airbnb apartment that’s been our home for the past six months.
We leave in two weeks…
Electrifying the World Economy
Back to the compelling idea I heard Robert Friedland speak about…
He says the U.S. is going to build a new, smarter electric grid.
“The way the world is organized now,” he says, “the only way forward is to electrify the entire world economy.”
This is going to be a huge undertaking over the next 50 or 100 years, Friedland claims.
Now, he’s somewhat biased, since he controls one of the world’s largest copper mines (and copper is an essential part of the electric grid). But I still find this idea very persuasive.
Friedland called the current electrical grid a joke. He said it’s ancient. (For example, the equipment that caused that terrible fire in Paradise, California in 2018 – the deadliest wildfire in California’s history – was over 100 years old.)
He also said China’s grid is so far ahead of the U.S. grid… and because of this, among other reasons, China will soon overtake the U.S. by GDP.
To invest, he said copper would be the biggest winner. Aluminum would also be a big winner (to make vehicles lighter), as well as all the alloys that strengthen aluminum – like magnesium, scandium, and lithium. Then nickel for batteries.
But it’s the copper idea that got me the most interested…
Future Ruling Stores of Value?
A few months back, I explained in these Postcards why I wasn’t interested in bitcoin.
I said money should be a useful commodity. That way, the saver has an assurance that someone will always want it… because it’s useful in the marketplace.
(What inspired me to write about that was Harry Browne’s book on money, called 99% of Everything You Need to Know About Money, which I love.)
Anyway, those posts stirred up a controversy. People told me my argument was too simplistic and not deep enough. One reader even called it “daffy.”
But curiously, Friedland – who is well-known in the finance community for his smart investments, including a mining deal early in his career that made him a billionaire in his 40s – spoke about this.
He suggested that useful commodities like copper, nickel, rhodium, and silver could be the future ruling stores of value.
Again, he is one of the world’s most successful mining financiers, so he’s somewhat biased. But still, I felt a little vindicated.
(He mentioned gold, too, but said it was too expensive to be used for industrial purposes. He was pretty dismissive of bitcoin, though, as it’s so un-green. If governments get serious about reducing greenhouse gases, they probably won’t look to kindly on bitcoin, he reckons.)
Finally, Friedland jokingly suggested building a house out of copper bricks. Hide them in the walls and forget about them, he said.
And that brings us back to the investment idea I mentioned earlier…
Looking for Pennies
That joke started me looking for copper bullion bricks for sale on the internet.
They were very expensive, far more expensive than the international market price of copper (which is currently around $4 per pound).
Then I remembered pre-1983 pennies are made 95% of copper. They weigh 3.11 grams each, which means there’s 2.6 cents’ worth of copper in every pre-1983 penny.
First, I imagined my family and me roaming America, trying to collect as many pre-1983 pennies as we could…
Then, I found the Portland Mint. It specializes in collecting pennies and nickels. And they’re currently selling one ton of pre-1983 pennies for $5,400.
(A ton of pennies has a legal value of $3,000 and a melt value at current copper prices of $7,648.)
So that would be a cheap way to buy physical copper. But what would I do with a ton of pennies, and how much would shipping be? Hmm…
Also, it’s currently illegal to melt pennies or remove them from the country… so that could present a problem for us when we make our way across the Atlantic in a couple of weeks…
– Tom Dyson
P.S. Isn’t it ironic that the lowly penny, the one coin no one cares about – and often gets thrown away – has an intrinsic value 160% greater than its face value, in some cases?
Readers give Tom suggestions on how to keep his family close as his kids grow up…
Reader comment: One of your readers makes a good point: Keep the kids close with a family business. My youngest brother worked at my dad’s construction company. He lived just down the street from my parents. After Dad passed away, my brother looked after Mom as best he could until I moved down and took over her care.
A guy in my brother’s neighborhood has a business that involves a few of his sons. They all live nearby. And, of course, there’s the Trump family. Most of the kids are involved in the family enterprises and are in regular contact with their father.
Reader comment: I think – maybe – that you tell them now that you hope they will be close when they grow up. Plant that “seed” of expectation that you love and want them close when they grow up. Emphasize how important family is. From your “notes,” you already have the basis of a close family. You and Kate have re-committed yourselves to each other (congratulations!) and to raising your children together.
Someone in a reader comment suggested you find a place to “settle” to put down some roots. Become part of a community. That will give your children a sense of home, someplace to call home, and a place to come back to, even if they would go away for a while (for college or travel).
The other thing that takes children away is job opportunities. They have to make a living, so if you can think of some kind of family business that they can be involved in, that probably would be a good idea.
Reader comment: If you want to keep your family living close to you, starting an online business with them is NOT the answer, Tom. The kids could live anywhere in the world and still be part of the business. You need to come up with something that keeps you all in the same location.
Why not buy the resort at Driggs with the profits you’ll make on gold? You could run it in the winter and then travel together (or separately) in the summer months.
Tom’s note: As always, thanks to everyone who wrote in. Please keep your questions and comments coming at [email protected], and I’ll do my best to address them in one of our Friday mailbag editions.