Finding The Great Opportunities In Tumultuous Markets

April 13, 2020
Chris Vermeulen
TheTechnicalTraders.com

 

Note from Dudley - These Guys Are Good:
Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

 

FINDING THE GREAT OPPORTUNITIES IN TUMULTUOUS MARKETS

 

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research, recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

Kevin O’Leary And Chris Vermeulen On TraderTV Talking Economy & Markets

April 4, 2020
Chris Vermeulen
TheTechnicalTraders.com

"...TraderTV had both Kevin O’Leary and me to talk economy and the markets. Kevin had some really extreme and borderline ethical business ideas, but I do have to admit, if you want to survive as a small business in this environment he has a good point and it could work. I’ll talk about that in a minute, but right now lets takes focus on crude oil, energy stocks, and the Canadian Dollar in the clip below...."

Note from Dudley - These Guys Are Good:
Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

 

KEVIN O’LEARY AND CHRIS VERMEULEN ON TRADERTV TALKING ECONOMY & MARKETS

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research, recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

Doug Casey on the Disturbing Trend to Tax Savings and Eliminate Cash

tax on savings

 

 

 

 

 

 

 

 

 

International Man: Let’s start with the basics. What exactly are negative interest rates? Could they exist in a free market without state intervention?

Doug Casey: Right now, over $17 trillion of bonds, and a lot of bank accounts—especially in Europe—are offering negative interest rates. It’s something that can only exist in Bizarro World, something that’s really a cosmic impossibility in a normal world. It’s especially true since almost all the world’s banks are zombies—bankrupt. Fractional reserve banking—which is only possible in a world where central banks control the money supply—is intrinsically unsound.

The economy is head over heels in debt. If things slow down—as they do now, due to the hysteria over The Virus—lots of loans will go into default. It won’t be because of The Virus itself, however. Coronavirus is just the pin that broke the bubble.

Negative rates are a political phenomenon, not a market phenomenon. It’s quite amazing to see bankrupt governments issuing negative rate bonds. It’s what’s been called return-free risk.

The whole financial world is in a bubble because of the trillions of currency units created since the crisis unfolded in 2008. Bonds are in a hyper bubble—the worst possible place to be. They’re a triple threat to capital—interest rate risk, currency risk, and default risk. And, again, at negative rates, they are truly a return-free risk.

Negative interest rates are being enforced by governments and central banks for several reasons.

First of all, governments are so head over heels in debt that they can’t afford to pay actual market-based interest rates.

If the US government, for instance, was paying even 6%, historically a more or less normal interest rate, on its $23 trillion of debt, that would be about $1.5 trillion a year in interest. That, just by itself, would more than double the current annual deficit.

That’s one reason governments like negative interest rates: it disguises their bankruptcy. They live on borrowed money. Tax revenues are nowhere near adequate to fund their spending—not to mention that spending is going to skyrocket while their revenues plunge for the foreseeable future.

Another reason governments like negative interest rates is that they encourage people to consume as opposed to save, which is also bizarro-world stupid. The only way you grow wealth is by producing more than you consume and saving the difference. The problem is that in today’s world the way to save is in currency in a bank account. If the currency loses value simultaneously with negative interest rates reducing the number of units, savings will drop.

If you’re penalized for saving, you’re going to do less of it. You’re going to go out and spend the money now on a bigger house, a new car, or perhaps a wild party. This is one reason why Third World countries never progress on their own. Their currencies are unstable, worthless, and not worth the trouble of people saving them. So, they never develop a capital base. It’s why poor people with bad habits stay poor.

From every economic point of view, negative interest rates are pure destruction. They make everything worse for prudent savers and better for profligate borrowers. But printing money and lowering rates are the only things that central banks can do to ward off a deflationary collapse. Their actions will only deepen and lengthen the Greater Depression.

International Man: Exactly. By using the force of government to create the conditions for negative interest rates, central banks are giving the signal that the cost of money is less than nothing. They are really stealing the prosperity of the future.

Doug Casey: That’s right. People have to realize that the government does not represent “we the people”. The government is a discrete entity, as separate from society as General Motors, General Electric, or Google. They have their own interests. There’s no “us” benefitting from all this.

Government is a parasite, it’s not your friend. It’s a dead hand on society. Propaganda has made people think it’s necessary. Many people love the government, however, because it gives them free stuff that’s taken from some and given to certain voters.

International Man: President Trump has repeatedly called for negative interest rates. Do you think the US will see negative interest rates?

Doug Casey: Anything is possible because the US government has its back up against the wall. Worse, the people themselves think government is a magic cornucopia. They all want it to “do something.”

And they’re capable of doing absolutely anything. Why? The people employed by the US government and the Fed actually believe the Keynesian claptrap. It’s a secular religion to them.

Plus, Trump himself is truly an economic ignoramus. Now, as I say that, let me hasten to add that the good thing about Trump is he’s a cultural conservative. That’s why he gets a tremendous amount of support from the red counties. I think that that’s fine, but from an economic point of view, he’s dangerous. He’s an authoritarian with a touch of megalomania, and he’s capable of anything.

Anything’s possible in this country at this point. Not least because Boobus americanus seems to want “strong leadership.”

International Man: Since negative interest rates can only exist from state intervention, they are just a euphemism for a tax on savings. What impact do you believe they will have on the economy as they discourage savings and capital formation?

Doug Casey: The longer it goes on, the sooner the countries that have negative interest rates are going to start looking like Third World countries. One of the reasons Third World countries are backward is that they don’t have any domestic capital. Why not? Because there aren’t domestic savings. And it takes capital to build things.

Governments are actually destroying the foundations of society with their current policies. It will take a while to happen in the West, because of the tremendous amount of capital that’s been accumulated and saved up over hundreds of years. But sure, they can absolutely destroy it. The Romans did it 2,000 years ago. The Venezuelans and Argentines are showing how to do it today.

That said, borrowed money and artificially low interest rates feel really good at first.

If I borrowed $1 million tomorrow morning, I could have a wonderful party for the next year. My standard of living would be artificially higher for a while. But when the time comes to pay it back, it’s going to be genuinely lower, and for a long time.

That’s exactly what the West is doing right now, living out of saved capital and mortgaging its future. That’s what negative interest rates encourage.

International Man: How will negative interest rates impact the average person? Will bank deposits be subject to negative interest rates in the US?

Doug Casey: Well, it would be stupid. When I use that word, incidentally, I mean “showing an unwitting tendency to self-destruction.” A pity, but it could happen.

Artificially low interest rates—or perhaps negative interest rates—drive people out of cash and liquidity and into speculating in the financial markets. It can affect the average person positively for a while, maybe artificially doubling the size of his retirement nest egg. That is, until the bubble bursts, and he loses a very real 90%. It’s a disaster.

There are absolutely no good consequences to manipulating interest rates in either direction.

Money is the lifeblood of the economy, and interest rates are the price of money. It practically guarantees that the Greater Depression is going to be worse than even I thought it would be.

International Man: Do you think it’s possible that people will pay to have their money in a bank account?

Doug Casey: Well, if we had a sound banking system—which we don’t because it’s a fractional reserve system—there would be two very separate and distinct kinds of bank accounts. They’re separate businesses, actually.

One with demand deposits where you pay the bank to store your money safely, paying for the privilege of writing checks against it. In the past, you had to pay banks for the privilege of storing your money—gold—and writing checks against it.

The other kind of bank account is a time deposit, which is totally different. That’s where you leave your money with the bank for a certain period of time at a fixed interest rate, so the bank can lend it to somebody for a fixed interest rate—for a matching amount of time.

Let’s say they give you 3%, and they lend it for 6%, capture the 3% spread as their profit, risk reserves, and so forth. That’s the way a time deposit bank account should work. And that’s how it worked before central banking and fractional reserves.

Historically, you paid the bank money for a demand type deposit, and you got a return—with some risk—on a time deposit. But those distinctions have been totally lost. Banks now lend out demand deposits. It’s equivalent to Allied Van and Storage lending out your furniture.

International Man: How does the growth of negative interest rates coincide with the trend towards eliminating cash?

Doug Casey: They dovetail perfectly. They go hand-in-glove with each other.

Countries all around the world are moving towards eliminating cash. For example, in Sweden, it’s very hard to get cash. In China, it’s very hard to get cash. Everybody transfers funds electronically, without any form of physical money. All money is in digital bank accounts. A negative interest rate of, let’s say, 1% means that you’re really being taxed 1% in addition to everything else.

It’s even worse than that, though, because when cash vanishes, you have zero privacy. Everything has to go through your bank account. They know precisely what you’re buying, what you’re selling, from whom, what you own—unless you’re going to barter, the way things were done in prehistoric times.

It‘s a catastrophe from the point of view of personal freedom, and another reason why everybody should have a significant store of gold coins, preferably small ones, a quarter ounce or less. And silver coins, too. Silver is a great bargain right now, at a roughly 120:1 ratio with gold.

If they eliminate cash and we go to an entirely digital currency, they‘re in total control of you, because you won‘t be able to do anything, go anywhere, or buy anything without the direct or indirect approval of the authorities.

International Man: What can people do to protect themselves?

Doug Casey: There are two things you can do at this point.

One, you should buy precious metals, in your own possession, or stored securely in some offshore location, so that you‘re diversified politically and geographically as well.

Second, now is an excellent time to speculate in gold stocks. With gold in the $1,600 area, every active gold mine in the world is coining money. In fact, their margins are increasing with the collapse of oil prices, since fuel is a major cost, on the order of 20% for most mines.

And at some point soon, fund managers who now don‘t even know that gold or gold stocks exist, are going to pile in to gold stocks.

There are so few of them, and the market caps are so small, that it‘s going to be like trying to funnel the contents of Hoover Dam through a garden hose. Mining is a crappy business, but right now, it’s a super speculation.

There are no guarantees, but it‘s as good a speculation as I can think of right now.

Those are the two things that you should own. And they both revolve around gold.

Editor’s Note: Unfortunately, there’s little any individual can practically do to change the trajectory of broke governments in need of more cash. There are still steps you can take to ensure you survive the turmoil with your money intact.

New York Times best-selling author Doug Casey and his team just released a guide that will show you exactly how. Click here to download the free PDF now.

 

Are Equities Likely To Rally?

April 1, 2020
Chris Vermeulen
TheTechnicalTraders.com

Note from Dudley - These Guys Are Good:
Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

 

ARE EQUITIES LIKELY TO RALLY?

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research, recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

Month End Blitz With Chris Vermeulen

Dudley Baker and Rick Rule

Chris Vermeulen

 

 

 

 

 

 

 

By Dudley Pierce Baker
Founder - Editor
Common Stock Warrants
Junior Mining News

Investors, we are living in uncharted waters with the covid-19 and the unknow effects on our investments.

We need all of the assistance we can get, particularly now, to assist us and to continue to look for the opportunities which always appear at times like this.

I invite you to explore two investment services which will greatly benefit your portfolio:

Common Stock Warrants - This is my service which offers you access to a database of all stock warrants trading in the U.S. and Canada. We have been in business since 2005 and have many subscribers around the world. Stock warrants will offer investors additional upside leverage as these markets get back on track - CHECK US OUT TODAY!

The Technical Traders - Chris Vermeulen and his team are doing a great job of assisting investors navigate the markets from a technical perspective. Many of my subscribers are also subscribers to Chris' services as am I and I believe that you too would benefit from their knowledge especially at this time in the markets. - CHECK CHRIS OUT TODAY!

Below are some recent articles appearing on both our websites which will be of great interest to you:

2020 is turning out to be a pivitol year - let's not waste this opportunity.

Stay Safe,

Dudley

IS SILVER & GOLD MIRRORING 1999 TO 2011 AGAIN?

March 28, 2020
Chris Vermeulen
TheTechnicalTraders.com

"...Today, we are writing about a pattern our research team is seeing in the Gold/Silver ratio which is correlated to the price movement of Gold.  What does this mean and how can we profit from this setup?  Let’s get started trying to explain this chart pattern/setup...."

Note from Dudley - These Guys Are Good:
Chris and his team are providing investors with a great road map for the direction of the markets, which is why I am also a paid subscriber to TheTechnicalTraders services and encourage you to consider a subscription as well, The ideal service to supplement your other subscriptions as well as my CommonStockWarrants.com.

Stock Warrants - If Not Now, When? GET STARTED NOW

IS SILVER & GOLD MIRRORING 1999 TO 2011 AGAIN? 

Investors don’t forget the great opportunities available with stock warrants which will increase your potential gains and greatly decrease your investment cost by at least half.

E.B. Tucker with Casey Research, recently referred to Dudley as ‘the top expert in the field with over 40 years of experience‘ with stock warrants.

“I also encourage you to check out the work from our friend Dudley Baker. Dudley is the founder and editor of Common Stock Warrants. He’s been trading warrants for 40 years and has developed an exclusive database of all stock warrants trading in the U.S. and Canada. We’re paid-up subscribers as well.”

Jeff Baker
Senior Analyst – Admin/Web Developer
B.Sc. Geological Sciences (UTEP)
Common Stock Warrants & Junior Mining News

How the Global Financial System Could Shut Down, According To Jim Rickards


We are potentially entering an “Ice-9” situation where the entire world may “freeze” over economically, said Jim Rickards, best-selling author of “The Road to Ruin” and “Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos.”

Rickards is using a metaphor, alluding to a Kurt Vonnegut book, “Cat’s Cradle.” In the book, a vial of “Ice-9”, a liquid that has a freezing point of room temperature, leaks into the streams and rivers and turns all water into ice, effectively covering the planet in an ice age and wipes out all life.

Something similar may be underway, financially, when markets halt trading activity, he said.

“If you shut down the New York stock exchange, and I can’t sell stocks and get cash, I’m going to sell my money market funds or redeem my money market funds. Then you’ve got to shut down the money market funds industry, and then people say ‘ok, I’ll go to the banks or the ATMs,’” he said. “And then you’ve got to shut down the banks so the point is, it spreads from exchange to money markets, to brokerage accounts, to banks, and you end up shutting down the entire system.”

At the end of an Ice-9 scenario, the entire global financial system shuts down, and any Federal Reserve intervention may no longer be effective.

Rickards noted that contrary to conventional economic thinking, now is not a bad time to own gold.

“People say that gold does well in inflation, and you don’t want to have gold in deflation, and we may be looking at deflation, that may be coming, but the point I make is the greatest period of sustained deflation in U.S. history was 1927 to 1933 and in that period, gold went up 75%,” he said.

Gains in gold in today’s condition would be even higher, Rickard said, since gold was fixed in 1933, which is no longer the case today.

Additionally, Rickards said investors should store their gold “a bicycle ride” away so that in the worst case scenario, it would become accessible should people need to evacuate cities by bicycle, which would be more effective during a gridlock than cars.

The Coronavirus Hoax

 

 

 

 

 

March 17, 2020
By Dr. Ron Paul

Governments love crises because when the people are fearful they are more willing to give up freedoms for promises that the government will take care of them. After 9/11, for example, Americans accepted the near-total destruction of their civil liberties in the PATRIOT Act’s hollow promises of security.

It is ironic to see the same Democrats who tried to impeach President Trump last month for abuse of power demanding that the Administration grab more power and authority in the name of fighting a virus that thus far has killed less than 100 Americans.

Declaring a pandemic emergency on Friday, President Trump now claims the power to quarantine individuals suspected of being infected by the virus and, as Politico writes, “stop and seize any plane, train or automobile to stymie the spread of contagious disease.” He can even call out the military to cordon off a US city or state.

State and local authoritarians love panic as well. The mayor of Champaign, Illinois, signed an executive order declaring the power to ban the sale of guns and alcohol and cut off gas, water, or electricity to any citizen. The governor of Ohio just essentially closed his entire state.

The chief fearmonger of the Trump Administration is without a doubt Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health. Fauci is all over the media, serving up outright falsehoods to stir up even more panic. He testified to Congress that the death rate for the coronavirus is ten times that of the seasonal flu, a claim without any scientific basis.

On Face the Nation, Fauci did his best to further damage an already tanking economy by stating, “Right now, personally, myself, I wouldn’t go to a restaurant.” He has pushed for closing the entire country down for 14 days.

Over what? A virus that has thus far killed just over 5,000 worldwide and less than 100 in the United States? By contrast, tuberculosis, an old disease not much discussed these days, killed nearly 1.6 million people in 2017. Where’s the panic over this?

If anything, what people like Fauci and the other fearmongers are demanding will likely make the disease worse. The martial law they dream about will leave people hunkered down inside their homes instead of going outdoors or to the beach where the sunshine and fresh air would help boost immunity. The panic produced by these fearmongers is likely helping spread the disease, as massive crowds rush into Walmart and Costco for that last roll of toilet paper.

The madness over the coronavirus is not limited to politicians and the medical community. The head of the neoconservative Atlantic Council wrote an editorial this week urging NATO to pass an Article 5 declaration of war against the COVID-19 virus! Are they going to send in tanks and drones to wipe out these microscopic enemies?

People should ask themselves whether this coronavirus “pandemic” could be a big hoax, with the actual danger of the disease massively exaggerated by those who seek to profit – financially or politically – from the ensuing panic.

That is not to say the disease is harmless. Without question people will die from coronavirus. Those in vulnerable categories should take precautions to limit their risk of exposure. But we have seen this movie before. Government over-hypes a threat as an excuse to grab more of our freedoms. When the “threat” is over, however, they never give us our freedoms back.

A True Story: How I Ended Up Next to $8 Million Worth of Tequila

Note from Dudley Pierce Baker, founder of Common Stock Warrants and Junior Mining News.
I am the Dudley/Daniel referred to the this article below and yes, it was an incredible day with E.B. Tucker and John and especially meeting Felipe, the owner of G4 Tequila. Being the nature of competition I guess, E.B. did not mention that I have a stock warrant service. We chatted about warrants, others in the business, where we see the markets going and of course, tequila.

CASEY DAILY DISPATCH - Casey Research
Editor’s note: Today, we’re bringing you a classic story from our very own E.B. Tucker.

E.B.’s not just a successful investor. He knows the importance of getting away from your desk… and he’s gone on numerous adventures abroad.

That’s why we had to share his tale from Mexico again. Along with his analyst John Pangere, E.B. got a behind-the-scenes look at a tequila distillery… and winded up meeting a stowaway and an IRS agent.

You can find out more below…


How I Ended Up Next to $8 Million Worth of Tequila

By E.B. Tucker, editor, Strategic Trader

E.B. Tucker

I went to Mexico in February with Strategic Trader lead analyst John Pangere.

After spending a few days in the ritzy Polanco neighborhood of Mexico City, John and I headed for Jalisco state to check on one of his personal investments.

Prior to joining my team, John was working as an analyst focused on private investments. He worked on financing for a startup company that planned to import a new premium tequila from Mexico. He learned the tequila would be new to the U.S., but the family producing it was fourth-generation.

They called the product G4.

John and his father Ross got involved in the upstart distribution company as passive investors. Over time, they got more involved. They met the man behind the exceptional product and ended up taking over the entire business.

To be clear, John is not involved in producing tequila. He merely has the right to coordinate its distribution in the U.S. and Canada. In the U.S., that means choosing which distributor in each state will comply with the local laws and get the product behind the bar or on the liquor store shelf. If the product takes off, it can turn into an impressive royalty business with a remarkably low overhead.

And recently, John asked if I wanted to go down to rural Mexico and check on the distillery.

Of course I did.

And I ended up in rural Mexico with an intoxicated stowaway and a former IRS agent in a rental pickup truck…

 

We took an early flight into Guadalajara from Mexico City. The plan was to get out to the distillery and back to the airport in one very long day. In retrospect, it was somewhat ambitious.

A Fourth-Generation Tequila Distiller

Having been to almost every part of Mexico looking at gold and silver mines, I’m not at all afraid of traveling there. In fact, in all of my trips I have never once run into trouble. Most Americans cringe when you mention visiting the country. I will rent a pickup and head off to parts unknown without thinking twice.

We took off from Guadalajara heading north, then east, looking for a town called Arandas. Once we found it, we headed down a smaller road to Jesús María. After that, we hit a dirt road looking for the agave plantation.

Agave is the key ingredient in tequila. Besides water, it’s the only ingredient.

The plant looks like a giant pineapple. The core grows in the dirt, while the thick green leaves flare out above. Tequila makers only use the heart of the plant and discard the leaves.

I had seen plenty of pictures of agave plants. After George Clooney invested in Casamigos (which sold for close to $1 billion), tequila ads started popping up everywhere. The ads for premium tequila often show pictures of agave fields.

These big-flared agave plants shown in premium ads are deceptive. Bigger is not always better. Similar to grapes for wine production, the size of the plant does not matter. Weather, rain, and altitude all affect how the agave plant looks as it grows. Time in the ground also varies. Some growers harvest plants in just a few years, while others wait close to a decade.

A skilled tequila distiller knows to ignore the size, shape, and color of an agave plant and focus on just the sugar content. A fourth-generation tequila distiller, like the man pictured below, does it instinctively.


Me, John, and our local gringo friend Dudley with fourth-generation tequila distiller Felipe Camarena

The first thing Felipe Camarena said to me when we met was, “Excuse me; I’ve been drinking a little since Saturday.”

…We arrived on a Tuesday.

Camarena produces tequila in the same region as his father and grandfather did. It’s in his blood… And he had a lot of it in his blood when we met.

The quality of a premium tequila rests solely on the distiller’s instinctive skill. As I mentioned, agave and water are the only ingredients. The rest is art.

I am not a drinker, so I didn’t know a lot about tequila when we arrived. I asked Felipe to arrange a full tour of his operation, start to finish. I wanted to see how the product goes from agave plant to bottle.

Tequila – From Plant to Bottle

The first step in the process is harvesting agave. The distiller is going for the optimal sugar content. Too young, too old, too large, or too small, and the wrong mix of agave can cheapen the process.

The agave arrive without leaves. Field workers remove those with a machete. Again, picture a pineapple without the leaves on the head.

Next, workers at the distillery use machetes to split the agave in half.


Agave plants ready for processing

As far as the workers at the distillery, most speak English and have a technical background. These guys are very sharp. It’s part of what makes premium tequila stand apart from bottom-shelf junk.

The agave plant has very high sugar content. That sugar is what the distiller wants. To extract it, he has to cook the plant and then crush it, which produces a juicy syrup that starts the distillation process.

After workers split the agave in half with a machete, they remove the heart, which you’ll notice littering the ground in front of the split agave pictured above. This heart makes the product bitter if it’s cooked with the rest of the plant.

With the agave plants split, workers load the halves into a stone cooking furnace. This is the traditional way to cook agave. Some mass-market tequila makers use an acid bath to extract sugars from agave. It’s faster and cheaper. If you’ve never had tequila, you wouldn’t know the difference. If you have, there’s no going back.


E.B. inside the agave oven

The stone oven I’m standing in holds 27 tons of agave. That’s about 24,500 kilograms… or over 54,000 pounds. Each 10 kilograms of agave plant loaded into this oven will ultimately produce about one liter of tequila. That means this fully loaded oven will turn into around 2,500 liters of tequila on the store shelf.

The cooking process takes two days. The first day is the actual cooking, with heat applied through the floorboards below. You’ll notice (in the photo above) the plants are strategically packed so that warm air can circulate through them. The second day, the agave sit in the oven without heat, which allows them to cure.

After two days in the oven, the cooked agave go into a stone pit that looks like a small loading dock. A homemade steamroller crushes the cooked agave, sending the sugary extract into a fermentation area.

It’s All About the Water

Tequila is essentially fermented agave and water… But not just any water.

Felipe Camarena uses three sources of water to make his tequila: rainwater, spring water, and deep well water. He wouldn’t tell me how much of each, but I gathered he mixes on instinct, not formula.

The agave and water mixture heads to fermentation tanks for five days. Then, it goes into a still.

The still hasn’t changed much since people made hooch in the woods during Prohibition. The copper pots shown here have a copper coil running through them that looks like a corkscrew.


Stills turn fermented agave and water into clear alcohol

The operator turns up the heat, making steam from the fermented agave and water mixture. The condensation from that steam drips into the stainless steel tanks in the middle. The distiller tests the alcohol throughout the process to make sure it meets purity standards.

The finished product is clear tequila, also called “blanco.” Some of that heads straight into a bottle and onto a truck. It’s ready to drink.

The rest of the blanco tequila goes into barrels for aging. It turns into three different types of tequila, depending on how long it ages in the barrel. Each barrel holds 200 liters.


E.B. in front of $8 million worth of barrel-aged tequila

G4 sells four types of tequila:

  • Blanco – Ready to drink immediately
  • Reposado – Aged at least six months
  • Añejo – Aged at least 18 months
  • Extra Añejo – Aged at least three years

The longer the tequila ages, the darker it becomes. The Extra Añejo is good for sipping, while the blanco goes in the blender at a pool party.

John’s investment in the tequila business is in good shape. He’s especially taciturn when it comes to discussing specifics. I did manage to get an admission that after its first full year, case shipments to U.S. distributors were up triple-digits in the first quarter.

Back in Florida, I bought several bottles at the local liquor store as gifts for friends. They told me the product was exceptional.

If you’re inclined, the company’s website has a locator that lists restaurants and stores that carry the product.

The Stowaway and the IRS Agent

Things got a little tricky when we tried to leave the distillery.

For starters, we had another gringo in tow, named Dudley. He goes by “Daniel” in Spanish. After I told a friend about the upcoming trip, he introduced us over email.

Daniel moved from Texas to Guadalajara in the late 1990s. He jumped at the chance to come see the distillery with us. He said he loves tequila. I was glad to have him, figuring if we ran into trouble in the Mexican interior, six fists give better odds than four.

About halfway through the drive, Daniel pulls out his IRS badge. Granted, he retired years ago and came to see the agency for what it is. I told him the only difference between the mafia and the IRS is that the mafia headquarters doesn’t fly a big American flag.

Since John barely drinks and I don’t drink at all, we left Daniel to do all the tasting with Felipe. He did great. So great in fact, that Felipe didn’t want us to leave. Determined not to spend the night in the hills of rural Mexico, I told John, “We’re leaving.”

Felipe wasn’t having it and got in the rental pickup truck with us. There’s no reasoning with a man who’s been making tequila for 50 years and drinking it for a week straight. He nearly tore the truck apart looking for a cigarette lighter before we could pacify him with the promise of a stop at the next crossroads.

Things worked out great in the end. We had some of the distillery staff rendezvous with us in Jesús María for an early dinner. Then, we had to tell Felipe we’d be back in a minute and make a run for the car. If we hadn’t, I think we’d still be there today.

Felipe Camarena is a man whose life’s work is making some of the best tequila in the world. Of course, he wants his guests to stay and enjoy sipping it with him for days on end. He’s passionate about his product and it shows.

If you do run across G4 Tequila at a restaurant or your local store, give it a try. It’s nice to know where it comes from.

Regards,

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E.B. Tucker
Editor, Strategic Trader