Nick Snyder, Pete Thomas - VP of Zaner Precious Metals, and Scott Pollan - Scrap Metal Division at Zaner Precious Metals

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Nick Snyder:
But to me, it seems like they're rallying. Is that just because of the sell off or the end of the year stuff?

Pete Thomas:
Well, I think a lot of people were short. I think we saw a lot of short. If you remember not too long after we did that show, the market just nose-dived under 2000 and just went straight down to 1800 so it wasn't a bad call.

Nick Snyder:
No it was right and I think you did, I think you both even said you do think there could be a rally in the first quarter.

Pete Thomas:
Yeah and-

Nick Snyder:
I don't know if that's what we're seeing already.

Pete Thomas:
That's what we're, I mean, that is what we're seeing is first quarter buying and I think the thing is that the numbers came out on production for first quarter chips and everyone was kind of surprised to see that South Korea has been going gangbusters man, and they were producing more chips. They really sent a surprise to everybody in their output and really did a terrific job and because of it, we're seeing PGMs and rarers were railing off of the expectations of continued production.

Nick Snyder:
Because the chips will help the production of the new vehicle.

Pete Thomas:
Absolutely and now think about it. Now remember because you and I have talked about this at length, all those cars sitting that are semi-completed because of lack of parts due to supply chain problems will now be getting chips that they can install and deliver. So it also means-

Nick Snyder:
But all those cars sitting there, did they not have a converter on them already?

Pete Thomas:
Some of them do, some of them don't.

Nick Snyder:
Okay.

Pete Thomas:
A lot of them do but remember, when you move a vehicle out, that means you can make another one.

Nick Snyder:
Gotcha.

Pete Thomas:
So yeah.

Nick Snyder:
Okay, that just opens them up to produce some more. Okay.

Pete Thomas:
Exactly right.

Nick Snyder:
That makes sense.

Pete Thomas:
Yep and there's been, there's a lot of research going on with platinum palladium, both in the usage and Nature Catalysis which is a scientific journal and you know I read all kinds of bizarre stuff...

Nick Snyder:
Mm-hmm (affirmative).

Pete Thomas:
But they're looking, they found a way to crack a fork carbon bond and I know the end result of this is that by using a wafer membrane, which I've discussed in my hydrogen lectures. Using a wafer membrane covered with platinum and or palladium, I think it's going to be more platinum, will produce the end result. They will produce a syn gas, a synthetic gas, right out of the atmosphere from methane in the atmosphere, methane. And what's going to happen is they're going to be able to crack this down and produce ammonia, which means that it's going, we've had a very big shortage of ammonia and the prices have gone up quite a bit for all of our farmers.

Nick Snyder:
Mm-hmm (affirmative).

Pete Thomas:
And if this proves to be so, this will be like another catalytic converter boom for platinum palladium and UE, I think is in Iowa state, is the guy who was leading the charge with this and I'm going to follow it and keep you guys informed.

Nick Snyder:
Yeah that's really interesting.

Pete Thomas:
Yeah.

Scott Pollan:
I'd like to add too that the world platinum investment council, they have prize money available. I think it's $350,000 right now for innovations to utilize palladium for sustainable future. So they set, they earmark funds for new inventions just like Pete is talking about, to utilize these metals for the global clean initiatives and I believe they advertise those to colleges and research scientists as a means of, "hey, if we go down the path on this project, oh there might be some prize money too", and they're that much more likely to get a grant for it.

Pete Thomas:
Wow well I mean, that's a staggering tip Scott and people are sitting here watching Nick's show and they just found out where a third of a million dollars is sitting to pick up, right?

Scott Pollan:
Yeah.

Pete Thomas:
That's not a bad way to start the new year, right?

Scott Pollan:
Yeah it's like when DARPA invests in something. This is a huge consortium, putting some money out to say, "let's spur investment in this sector or this area".

Nick Snyder:
Yeah no, it's great. It will get some of these young minds, these really smarter than myself people out there to figure something great out with this amazing material that does all these amazing things that-

Pete Thomas:
Yeah.

Nick Snyder:
And had no idea it was capable of doing that. Back years ago when I first heard of platinum, I think of like a platinum record or platinum wedding ring.

Pete Thomas:
Sure.

Nick Snyder:
Not about cleaning the air, keeping our air clean.

Pete Thomas:
Absolutely right. And the whole periodic table, there's probably 40 metals in there which have great potential for helping us have a better future and they're all actively traded and they're all actively being researched now. Everything from injecting radioactive, almost finer than a powder. Copper, which we normally think we're bailing copper but these guys are grinding it down in a pipe, they eradiate it so it has [inaudible 00:07:47] and then they inject it into the throat and they can follow cancer.

Nick Snyder:
Oh wow.

Pete Thomas:
It's fascinating, there's so much stuff going on in metals right now, it's absolutely wonderful.

Nick Snyder:
Yeah no, it's really fascinating to see the different properties of even copper. I don't understand why hospitals don't use copper doorknobs, copper handles for everything because it kills the bacteria for you.

Pete Thomas:
Yep.

Nick Snyder:
Stainless looks cleaner.

Pete Thomas:
Yeah.

Nick Snyder:
But it's not as functional as copper and there's just probably so many different elements out there that we're not utilizing correctly so I think if you have companies, organizations putting money out there to persuade people to figure it out, it's going to create great things.

Pete Thomas:
Oh yeah.

Nick Snyder:
Going back, electric cars, alternative fuel vehicles as you hinted it on, is that still something that we see coming through the shoot as the next thing to take over the gasoline engines and all that?

Pete Thomas:
Well it certainly seems more of a pipe dream than a reality.

Nick Snyder:
Mm-hmm (affirmative).

Pete Thomas:
I mean, if you're a legislator and you go, "hey I passed a law, therefore it has to happen". Well, you've got to find the natural resources first and problem is this. Right now, your average light truck to cars, we all know runs between 10 and 30 pounds of copper [crosstalk 00:09:25] and get down to an EV now, you get an electric vehicle, you're running 90 to 110 pounds of copper. Where's it going to come from? I mean a lot of our guys are running at max. I mean fortunately, our recyclers are doing a fantastic job in this nation, they really are and so they're carrying a big chunk of that weight and so the question becomes at what point will the demand outstrip production and I don't think it's that far away. Two to three years, they're going to start looking around on what happened and there's just not going to be any product around.

Pete Thomas:
And I listened to the CEO of GM and she was about how they were going to go full electric and how everything's going to happen and I was just thinking to myself, where are you going to get the chips? Where are you going to find the copper? Where are you going to get the rare earth for the magnets to drive the electric motors? Where's that all going to come from? You're going to turn this all over to China? Which is pretty much where we're going to be outsourcing a lot of this because we're not developing rarers in America right now so this whole giant movement is going to be dependent on a nation that really isn't our ally. So I don't know, is it going to happen? You tell me but I just look at the numbers.

Nick Snyder:
Gas stations might be around for a little longer than some people think they are.

Pete Thomas:
Yeah. So yeah, reality is tough especially when people are freezing to death and they don't have fuel.

Scott Pollan:
Mm-hmm (affirmative). It's like we just saw on the highway on the east coast, which was a terrible experience and I guess I'll put this out to all your viewers. It's winter time. You should have a bag in the back of your car with some warm winter socks and some water and some snacks and you should fill up your gas tank at half a tank instead of let it run all the way down to the bottom. We don't want to see you stuck on the side of the highway in the winter, looking for help, waving us down.

Nick Snyder:
Absolutely. And you see-

Pete Thomas:
And remember that water's going to freeze so empty them. Empty that bottle about a quarter of the way so when it freezes and expands, it doesn't explode in your car when it warms up.

Scott Pollan:
That's right.

Nick Snyder:
Well you see these electric vehicles, especially this time of year, they run out juice and they bring these gas powered generators in to charge them, it's just, the irony of that is you can't ignore it.

Pete Thomas:
I know, it is funny. But the thing is that, I mean, it's real nice when you're in California and you're running down the highway there with all the potholes in it and you're saying to yourself, "oh I'm in my electric car, I'm saving the planet" but in the meantime, they're creating electricity with coal.

Nick Snyder:
Yeah.

Pete Thomas:
So you know you've got to go, whoa. You have to kind of step back and look at it pretty hard.

Nick Snyder:
Absolutely. I got one question I never quite understood. So platinum, palladium, you guys trade in both those commodities. Why is rhodium so different? Why is rhodium not publicly traded?

Pete Thomas:
[crosstalk 00:12:40] Well there's...go ahead, Scott.

Scott Pollan:
Oh the market is very small. The community of people that really use rhodium and are involved in the industrial process, you probably fit them all into one convention center and that's everybody that touches rhodium ever, really.

Pete Thomas:
Got it.

Scott Pollan:
And on top of it, the market, especially the futures and over the counter markets for it, the lack of participants can create an illiquidity.

Nick Snyder:
Cause that seems like a very volatile market. Sometimes I see like today, it's up 9%.

Pete Thomas:
Oh yeah.

Nick Snyder:
It's just crazy and it, not long ago, was 30 grand, 29 grand.

Pete Thomas:
Oh I remember. I called in for a bid and offer at Mettler and I was talking to the CEO and he said, "I'm not going to give you, not going to tell you". I said "What?". He goes, "No it's embarrassing". He goes, "Don't even bother". I was like, "Thank you". I mean it was an old pro and he's the head of the biggest firm, he was just, he said the spreads were insane and I was looking at them on screen and it was $1,600 a wide.

Pete Thomas:
So I mean it was, the problem is too, and Scott will point out, it's very hard to produce and you have nowhere to run. If you're holding a large amount of rhodium, where do you hedge it? There used to be one exchange a long time ago in South Africa that went broke, and I've discussed it with our guys a couple of times about doing some stockpiling, even creating a small exchange for rhodium, but the expenses and the risk are so high. We just walked away from it but if somebody wants to start one and has some deep pockets, well we'll be happy to kick in with you, that's for sure.

Nick Snyder:
So what's, like your Techemets of the world, the people that are getting the rhodium out of our honeycomb, what do they do with it? They selling it back to like the catalytic converter manufacturers?

Pete Thomas:
Oh absolutely or there's some purchasers out there and...

Scott Pollan:
They probably have a pre-arranged off-deck agreement.

Pete Thomas:
Yeah.

Nick Snyder:
Okay.

Scott Pollan:
Believe it or not, they probably already have a prearranged buyer and they're working from the by-side or from their sales side, forward to the buy.

Nick Snyder:
Got it, and are they, what else is it used for? Do you guys know off the top of your head or not really?

Pete Thomas:
I mean it...

Nick Snyder:
I know it's used for cat, that's all I know it was used for.

Pete Thomas:
Yeah. It's used, I've seen it used as a semiconductor in attack fighter planes.

Nick Snyder:
Oh, okay.

Pete Thomas:
And cruise missiles. That's the two things I see right off the top, but you and I don't see those bids. You just the product come off the market. Also, it's melting point is amazing. It's so high, it's definitely a very hard product to work with. You have to have high temperature crucibles, and then you have to authenticate it and ship it so it's a very close circle because everyone trusts each other, there's a certain amount of set demand that Scott was just pointing out. We pretty much know how many catalytic converters are going to be coming in. The honeycomb pressures, they know where they're at with it, so everything is pretty much prearranged in that, which also means that it's not that transparent because there's a lot of deals going on and that even makes it harder to trade.

Nick Snyder:
Gotcha okay, well that makes more sense. I've never quite understood why it was so different than the platinum and palladium markets.

Scott Pollan:
Now I do see some growth in rhodium in the space industry.

Pete Thomas:
Okay.

Scott Pollan:
Because rhodium has this wonderful corrosion resistance property.

Pete Thomas:
Yes.

Scott Pollan:
And as an alloy in other metals, it brings out this corrosion resistance and this high temperature component that Pete was bringing up. The space industry might lean on rhodium a little bit.

Nick Snyder:
That makes sense, yeah. Okay that makes a lot of sense.

Pete Thomas:
Yeah.

Nick Snyder:
All right. Well, predictions for platinum, palladium in March.

Pete Thomas:
In March?

Scott Pollan:
Oh, March.

Pete Thomas:
End of the quarter, I mean, where are we going to be? I think we're going to be above 2000 if we see the demand getting cleaned up in the light trucks and cars. It's a tough call because that's going to depend on the employment figures.

Nick Snyder:
Mm-hmm (affirmative).

Pete Thomas:
My crystal ball isn't that deep, I have no idea where we're going to be as far as hiring firing goes. So if I had a better handle on that, I could probably give you a much closer number because when guys have money coming in, they're buying new trucks to get to work and get to the job site and then hence the demand goes up and that's a real tough call right now.

Nick Snyder:
So we're hoping for north of 2000 on palladium.

Pete Thomas:
Yep.

Nick Snyder:
Do you think we're geared to north of 1100 on platinum?

Pete Thomas:
I think we'll stay above a thousand, that much I'd be willing to roll, yeah.

Nick Snyder:
Okay, great. I'd love to see that.

Pete Thomas:
Yeah.

Nick Snyder:
All right guys. Well, anything else to add?

Pete Thomas:
Scott? Any speeches, you been writing any papers? What are you up to?

Scott Pollan:
Well in February, we'll be giving a short presentation on electronics recycling and how metals are recovered out of e-scrap at the Trade Fox conference, so your viewers are welcome to tune into that. Trade Fox is a network of international recyclers and it's a fantastic wealth of information of people all around the planet.

Pete Thomas:
Yeah.

Scott Pollan:
And it's kind of like a peer reviewed a network of industrial participants, so it's a great group to speak in front of because they always ask the best questions.

Pete Thomas:
Yeah they-

Scott Pollan:
I'll just get curve balls where I just have to sit and go, okay let me...

Pete Thomas:
Yeah well, you-

Scott Pollan:
Let me write down your name, I'll be calling you later.

Pete Thomas:
You're speaking to 1100 recyclers and you get two guys that are biochemists holding up their hands going, "Oh, by the way..." And you're like, "Oh, wait a minute". That is, Trade Fox is a very good source and I've been fortunate enough to speak at one or two of those.

Nick Snyder:
Yeah I didn't speak, but I was able to go on there and check a few things out a few times, it's pretty cool.

Pete Thomas:
It is, yeah and they do a good job. It's a real good team and they're very conscientious so they're worth working with, if anybody watching your show is asked to attend or speak, please do. [crosstalk 00:19:28]

Nick Snyder:
If that's in February, let's do another one of these before then.

Pete Thomas:
Okay.

Scott Pollan:
Of course.

Nick Snyder:
And share that link.

Scott Pollan:
And that's February 15, 16, and 17.

Pete Thomas:
Okay, great.

Nick Snyder:
We'll share it with our viewers and...

Pete Thomas:
Cool.

Nick Snyder:
Until then, let's do this again in a few weeks or before February 15th.

Pete Thomas:
That sounds like a deal.

Scott Pollan:
Yeah we'll have a better idea of where the markets are headed towards the end of this month. There's a lot that's going to get flushed out this January.

Nick Snyder:
Okay we'll have to wait and see. Thanks gentlemen.

Pete Thomas:
Alrighty.