Q3 2021 Earnings Call Transcript

Published: 22 Apr 2021

[Operator:]

Good day, and welcome to the FRMO Quarterly Conference Call. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Ms. Therese Byars. Please go ahead, ma'am.

[Therese Byars:]

Thank you, Connor. Good afternoon, everyone. This is Therese Byars speaking, and I'm the Corporate Secretary of FRMO Corp. Thank you for joining us on this call. The statements made on this call apply only as of today. The information on this call should not be construed to be a recommendation to purchase or sell any particular security or investment fund. The opinions referenced on this call today are not intended to be a forecast of future events or a guarantee of future results. It should not be assumed that any of the security transactions referenced today have been or will prove to be profitable or that future investment decisions will be profitable or will equal or exceed the past performance of the investments. For additional information, you may visit the FRMO Corp. Web site at www.frmocorp.com.

[Murray Stahl:]

Okay, thanks so much, Therese. I just want to -- before I start, Steve, do you want to kick it off, or should I kick it off?

[Steven Bregman:]

No, no, please, you go ahead.

[Murray Stahl:]

Okay, great. Okay, so thanks everybody for joining us, FRMO call. And as you can probably see from our financial statements, we managed to get record shareholders' equity, record total assets, and I'd say we're doing okay. So, let me just point some things out, some things that are obvious and some things that are not so obvious. As you can see from the financial statement, the cash level remains relatively robust. We intend to keep it at about that level. I don't expect any radical changes there. Some things that are not so obvious that are worthwhile talking about in the balance sheet that we'll actually go some interesting things on Horizon. The shorts, which we always talk about, but we don't really talk about this part, which we'll talk about in the future. The shorts, at the moment, are about 99% hedged. That doesn't mean if something really bad happened we couldn't take a mark-to-market loss on it. But there are hedges on virtually everything. It actually might be greater than 99%. But whether it's 99.2% or 99%, it's hedged. We always had some hedges on, but at the moment we are as -- full intents and purposes, we're fully hedged on everything. Reason for that is the evaluation in the market is very high, and there is some market exposure there, and we don't want to have too much market exposure, so we undertook some hedges there. The next thing that's also obvious in the balance sheet, as you can see in the line under Total Assets. Look at investment in the Horizon Kinetics, $12.9 million-odd. The Horizon Kinetics itself has over $160 million of cash and marketable securities on the balance sheet. So, and that might be a conservative statement for the reason that just like Horizon itself carries its investment Digital Currency Group at cost, FRMO carries its investment Digital Currency Group of course. Horizon Kinetics carries its investment Digital Currency Group at cost. So, when I quote that number of our cash and marketable securities, I'm quoting the number at cost. The cost basis in Horizon Kinetics is virtually identical. It may be a couple of dollars loss. So, basically, with the difference in rounding error we might have a shared difference or something, we have basically the same investment in Horizon Kinetics and Digital Currency Group as we have in FRMO.

[Steven Bregman:]

No, nope, I'm listening avidly.

[Murray Stahl:]

Okay. So in that case, I don't want to take up too much time because I know there's a lot of questions. I don't know what they are, but I know there's a lot of questions. So, Therese, if you please, you can read them in any order, and I'll try to answer every question. If I don't answer them or if I go over, we'll do an overflow call, like we did last time, and we want to get every question answered.

[Therese Byars:]

Sure, we're happy to.

[A - Therese Byars:]

Okay, the first group I'll have to do is cryptocurrency and mining. And the first one is about Digital Currency Group, and it says that it's a little bit -- it's got four parts to it. And one is FRMO's investment in Digital Currency Group. What is that investment on a look-through basis to Coinbase net of NAC, the promotion to Digital Currency Group? And the last part is if or when Coinbase goes public, do you expect Digital Currency Group to distribute the shares? And then, will those be held on FRMO's balance sheet as public securities?

[Murray Stahl:]

Okay, so let's go backwards. Coinbase is obviously public right now. Just as far as I know, and it might change, but as far as I know, it's the intention of Digital Currency Group to hang on to the Coinbase shares, so in the ownership we have base of Digital Currency Group -- I mean of Coinbase is via Digital Currency Group. So, at the moment, there's no reason to believe that we're going to end up owning any share of Coinbase. So, that's that. So, let's go back with -- so, what was the part right before that, just to make sure I have it exactly right?

[Therese Byars:]

Sure. What is that investment that is FRMO -- well, I guess those two go together.

[Murray Stahl:]

Okay.

[Therese Byars:]

So, what is FRMO's investment in DCG, and what is that investment on a look-trough basis to Coinbase net of any fees or a promotion to Digital Currency Group?

[Murray Stahl:]

So, that's a hard question to answer. So, let me do the easy part first, then we'll go to the hard part. So, we own -- I may be a share off, but we own, as best as I remember, 353 shares of Digital Currency Group, and I may be a share off. And the number of shares outstanding are about 700,000. You can figure out the ownership interest. Horizon Kinetics itself owns, give or take, the same number of shares, might be one share more or one share less, I don't remember. Anyway, so that being the case, there is a lot going on in Digital Currency Group, not the least of which is there's tens of billions of dollars in assets under management to Grayscale, the biggest of which is the Bitcoin Investment Trust. But there are other trusts as well. So, it's a very valuable entity. The general rule of thumb in the world of investment management is to say an asset management company is worth 3% of the assets under management. I think you would, just in the case of Grayscale you'd apply a higher standard. But one can debate that. In any event, let's just use a number. You can look up the actual number on their Web site. So, I'm just giving you a number that's rounded, deliberately, and rounded down so we can just work with it over the phone, and can get the exact number and apply the same calculations and get some -- a little more precise. But in any event, let's say there's $30 billion of assets under management at Grayscale. So 3% of $30 billion is $900 million right there. I personally would say it's a bigger number. That by itself is bigger than the investment in Coinbase, even at its elevated market value. There's a lot of private placements in Coinbase. There's also cryptocurrency, they own directly. So, not that it's not important, but there's a tremendous amount of value in Digital Currency Group from what I know. So, I don't think the investment will stand or fall by what happens in Coinbase. Of course, we're very gratified there was a big success in Coinbase. So that's about as far as I can go without disclosing anything that's proprietary to Digital Currency Group. I hope that's enough information.

[Therese Byars:]

Okay, so the next question. Does FRMO own any Crypto exchanges, and if so which, and how are they valued?

[Murray Stahl:]

Okay, so to begin with, we don't own any Crypto exchanges. That's through deliberate. And the reason is because what is called the Crypto exchange is not an exchange. In SEC parlance, Securities and Exchange Commission parlance, exchange has a precise definition. So an exchange, among other things, is an SRO, that's S, Sam, R, Robert, O, Oscar. SRO stands for self-regulatory organization. So the exchange is responsible, I'm using terminology at this point, but little more loosely just to illustrate the point, an exchange actually has a regulatory aspect. It actually applies rules, and enforces those rules in regard to the people who trade in that exchange. And it does it in conformity with the existing securities laws of the United States of America. If it's a commodity exchange, and it'll be because securities laws and regulations that are promulgated by the Commodity Futures Trading Commission. In any event, in the world of Crypto exchanges there's no regulation. What they really are is they're brokers. They don't have a self-regulatory government function in that sense of the word. So, it's too early to be involved in what people call cryptocurrency exchanges. Oh, I can tell about the changes are. There's been, last year or so, an enormous consolidation some of these so-called exchanges. And again, I call them brokerage firms. They're just matching buyers and sellers, unlike an exchange which regulates the players and rules and enforces it. So, it's not clear how many people have the scale to survive. You'll see in a lot of these so-called exchanges they'll do something in exchange we'd never do, which means they maintain the securities inventory for the purposes of facilitating transactions, just like market maker would. Or a market maker, you could say that they facilitate exchange, but they are taking market risk. One of the characteristics in exchanges; an exchange doesn't hold securities; an exchange doesn't take market risk. Why doesn't an exchange take market risk? Well, one, I personally wouldn't like it, although no one needs to listen to me, because now you're part of the market. But how can you possibly be a self-regulatory organization, and administer the rules and regulations with the level of objectivity which is required if you yourself have positions either long or short. So, there'd be an inherent conflict of interest. So, one of the characteristics to be an exchange would be you got to have no securities' inventory, and you have to have no short positions. You have to be neutral. None of the exchange -- the cryptocurrency exchanges, that I've seen anyway, are that they are not neutral. They actually -- they can benefit or not benefit from certain trends within the cryptocurrency markets. So, I haven't invested, and it's for that reason. And at the moment, we don't have any plans to do so. We had an opportunity some time ago to invest in one of the cryptocurrency exchanges, in -- I say so-called cryptocurrency exchanges, but we declined to reasons that I just enumerated, and I think we're pretty glad to get. So, I think that's a thorough answer to the question. What's next?

[Therese Byars:]

Okay. And the next one, I believe you've covered in a previous question, does FRMO own any Coinbase directly or indirectly?

[Murray Stahl:]

Yes, clearly we do. And I disclosed the amount. It's like give or take a share, 353 shares.

[Therese Byars:]

No. That's of Coinbase. This question was about…

[Murray Stahl:]

Okay, I said they are digital. We don't own any Coinbase, no shares whatsoever, that one share.

[Therese Byars:]

Okay. Next question, also I believe you covered previously, what impact has the IPO of Coinbase had on the valuation of FRMO's investment in the Digital Currency Group?

[Murray Stahl:]

Well, I would say nice that it appreciate a lot in value, but there's so many wonderful things happening in Digital Currency Group. It's not the major driving force, I would say. The major driving force is the expansion of the business of management. And there's a very, very extensive investment portfolio in Digital Currency Group. So there's a lot of good things that could happen. There are some good things that were already happened with that portfolio. So, I wouldn't rate the failure or success of Digital Currency Group on what happens in Coinbase. So, though with Coinbase is really a big success and it's great that it happened, but there's a lot more going on in Digital Currency Group.

[Therese Byars:]

Okay. Since Mr. Stahl is an expert on and a holder of Bitcoin, would you share with the listeners how many years before one Bitcoin Satoshi is worth one $0.01 of USD? What are the greatest risks to not reaching evaluation, whereby one Bitcoin Satoshi is worth $0.01? Would Mr. Bregman respond to the question with his thoughts as well?

[Murray Stahl:]

Okay. You want to go for, Steve, or you want me to do it?

[Steven Bregman:]

I will just say, as I said yesterday for an hour and three quarters talking about our large investments in Texas Pacific Land Trust and Bitcoin. As, and I hope this scare people. I believe in fuzzy thinking, meaning I'd rather be correct as to direction in order of magnitude than with a precision necessarily. So you can be a pretty precise. You're driving at 35 miles an hour at 37 miles an hour, but you're going up the wrong direction on a highway on-ramp. So I don't, I never even considered thinking about like exactly when the price of Bitcoin relative to U.S. dollars will be at a certain level or not. What I'm concerned about is that conditions and circumstances continue to change in a way that lessons the risk of holding a Bitcoin and increases the success of it. And that to my understanding is really governed by the major risk of Bitcoin, which is whether it's accepted or not by people, because that's what makes them money. And all evidence is that day-by-day, there are more people and more institutions and importantly institutions that now have vested interest in its success that keeps building and proliferating. And beyond that there are certain kind of calculations that to me, seem not the best use of my time, as long as things go in the right direction I'm satisfied. But then in that might be a little bit, you might have better idea of that specificity, Murray.

[Murray Stahl:]

Okay, well, I'll give you my view. We don't know how Bitcoin is going to be successful. We're pretty confident it's going to be successful. So how can you say, you'd be confident, you're confident it's going to be successful. We know how it's going to be successful. And because I wrote something a while ago in one of the compendia and it dealt with, there were 40 cryptocurrencies that have essentially the same monetary policy as Bitcoin. Some of them are actually forks of Bitcoin, like Bitcoin cash and Bitcoin Gold. So, you have two possible outcomes. First possible outcome is in the other cryptocurrencies, you just don't get network effect. If you don't get network effect, they may have some value, but they won't have a lot of value. You may make money on those, but the bulk of the value is going to reside in Bitcoin. When that happens, you'll have some truly remarkable value in Bitcoin. I personally don't believe that's the way it's going to happen for Bitcoin. I believe that many of the cryptocurrencies have that 40 and have essentially the same monetary policy are going to be adopt. They may don't have as big a network effect as Bitcoin does, but essentially they have the same monetary policy. And as such, they are not going to have radically different valuations and Bitcoin, even the Bitcoin has the same mock embolization. So what's going to happen is ultimately when they create ETFs for crypto, a much more logical ETF for crypto would be to create an ETF for all of the coins that have the same monetary policy meeting those 40. No, one's done that yet. And I don't want to intimate any product ideas. That's the way it should be done. So let me give you an example of why that's so important. And again, let me just repeat the premise. So you have two coins and have the same monetary policy. They reaching now radically different valuations by the law of no arbitrage, or they might have differences evaluation. Let's compare Bitcoin and Bitcoin Gold. Bitcoin Gold is a tiny fraction of market capitalization of Bitcoin. Now, Bitcoin Gold of course, was a fork of Bitcoin and it will fork in very, very general terms. You might assert is kind of like a spin-off and it is, but it has some important differences. Unlike a spin-off, you have to collect a spin-off. In other words, if security A, which is DTC does a spin-off, you may like to spin-off, you may not like to spin-off. You may retain it. You may sell it, but everything happens automatically other than you buy or retain or sell recommendation. In the world of crypto, you got to go out and get it. So when Bitcoin Gold fork occurred, a lot of people didn't want it. A lot of the, what people call exchanges and I call brokers refuse to support it. A lot of people didn't know how to get it. So there are as many Bitcoin Gold coins on the Bitcoin Gold blockchain give or take a few as on the Bitcoin blockchain, roughly $18.6 million, but it's been over three years since that event. And a lot of people who didn't collect the Bitcoin Gold are probably never going to get their Bitcoin Gold, but let's say, and I don't know the number. I'm just making up a number. Let's say ultimately $4.5 million of the $18 odd million was collected, that's 25%. So if Bitcoin Gold ultimately is going to have a comp or market capitalization, the Bitcoin, well, as a practical matter, you can only get a quarter of the coins at the entirety of coins. So each coin to get comp or market capitalizations, each coin of happy worth four times it. And given the fact that Bitcoin Gold market capitalization is an insignificant fraction of Bitcoin, let's just say was again, I'm making up a number, I don't think it's far from reality, but I just want to make it easy to explain on the phone. Let's say it was 1% of the Bitcoin market capitalization. I think it's actually less than 1% of Bitcoin market capitalization. Let's just say we're 1%. Okay. So it has to appreciate a hundred times just to get to the Bitcoin current market capitalization. And you've got to multiply it by four, because we're going to learn that only one quarter of the coins actually got collected and that's 400 times appreciation just to get the Bitcoin level. Let's say Bitcoin appreciates a hundred times that's 400 times a 100, that's 40,000 times. So theoretically somebody could put a $1,000 in the Bitcoin Gold, if my theory is right, that $1,000 can appreciate 40,000 times. Ultimately, that's how I believe it's going to happen. Now you have to make the same calculation for the other 38 cryptos whose monetary policy was one way or another derived from Bitcoin. And everyone has a slightly different number in the case of Zcash let's say it wasn't a fork. Some more people got the coins; you have to adjustment for that. Let me a hand the market value is a different percent of the Bitcoin market capitalization than a theory. I mean, been then a Bitcoin Gold is you have to make those calculations as well. And it's also now this further far advanced in the issuance policy because we're an issuance practice because Zcash was put out in the market after some years after Bitcoin was put out in the market, so all those things being said, I think ultimately a whole bunch of coins are going to have comparable market capitalizations. So you can make a lot of money on Bitcoin. It may make much, much more money on the others. So that's the way I would choose to answer that question. It's going to happen, you might see, you may rephrase it. I'll take the Liberty of rephrasing the question. When do you think it's going to get much more broad reception? I would say within 12 months of the major countries releasing digital currencies. The China plans to do it, United Kingdom plans to do it. I don't think the other major countries are far behind. Once the central banks of the major industrial powers released digital currencies and people are comfortable using and transacting in digital currencies. I think there'll be a huge move to acceptance of the cryptocurrencies, at least the limited issuance ones. And that's how I think it's going to evolve. So I hope that's a thorough answer to your question.

[Therese Byars:]

Yes, next question, I've read a lot about Bitcoin mining operations being attracted to Texas for various reasons that seem quite natural for the state. I wonder if Murray and the team have ever discussed or thought about how TPLs assets may or may not have opportunity to leverage this development. It seems like a possible and maybe even unintentional collision course with the realm of FRMO's varying businesses, any opportunity to obtain a comment about this from Murray or the team?

[Steven Bregman:]

Obviously given my position as a board member TPL, I can't really say anything about it. All I can say is this. There is a lot of guests in Texas that's being flared. If you have a royalty and your guest is being flared, you get nothing for it anyway; you have the right to ask for your guests in kind. You can actually ask your guests to be delivered at some point. And if it's delivered, you can do whatever you want with it. So that's about as far as I can go in that without -- well, that's about as far as I can go, that's intrigued a lot of people with the state of Texas and with the natural gas market. So obviously a lot of people are thinking about.

[Therese Byars:]

Okay. Next question, similar to the gold rush period, where selling the picks and troubles was a good way to profit from investor appetite for mining, what are some ways that investors can profit from the current interest in crypto assets?

[Steven Bregman:]

Okay. So the short answer is at the moment it's not really easy, so it sounds great. You're going to sell the picks and shovels and you're not going to take the risk of actually owning the crypto. Well, the trouble with it is the primary way people are doing this right now is there's some public trade companies that are really in the financing part of it, meaning trading or cutting deposits or lending to crypto. There is really no barrier to entry. The only barrier at the moment is the reluctance of major institutions, because I'm not sure it's going to be successful within a year or two. I think there's going to be a plethora of institutions involved in it. And it might radically change in a negative way, the profit dynamics with people who want to do to fix and troubles theory. And that way there's mining. The mining is a necessary part of crypto. It's not the only way you can validate transactions, but it's an important way you can validate transactions and pay people for the transactional validation. So we're involved in the mining part of it. Anybody can be involved in mining. So anybody can buy what they refer to as rig. It's really a server, but they call it a rig. Anybody can buy a rig. You don't need to have a whole paraphernalia of mining. You can just put your rig in a hosting facility and your rent so to speak is primarily not entirely, but primarily your electricity costs, you get billed for it. And you can even have arranged that during the mining process, they'll sell enough coins. This is the hosting company on your behalf to pay your so-called rent. Then the rest of is free so to speak. So just to give you an idea in Winland, because it's a state-of-the-art equipment and it's in a pretty good mining location, Winland actually sells the first five days production, roughly five days production of the crypto that it actually mines that pays for electricity and the rest of the month everything is free, just add to the crypto balances. That's how it works there. Now different numbers -- different kinds of machines, different iterations might be a little bit different, but that's one way to do it. If you're looking to enter, I would say, the best way is through mining. You're only going to have one rig. We're not very many rigs. You probably want to join a pool make sure you're paid every day. But that's I think the way it is right now. There aren't a lot of -- there are a lot of companies in developing software. Those are going to be the picks and shovels, not clear at all which software is going to be needed and who is going to get paid for and what's going to become industry standard. We're a long way from that. And one of the big risks in doing that is really great software, including the Bitcoin operating protocol itself is open source code. You may develop some brilliant product and may be paid nothing for it, although might thank you as being a benefactor of civilization. That's where it stands I think the industry.

[Therese Byars:]

Okay. Thank you. Now, the next about 10 questions are all pretty much about the same thing, but I'll read each one of them one at a time. They're pretty much about disclosure and they have to do with the FRMO financials under NOTE 4, there is now listed investment A and Investment B. In the past, there has only been one investment that has been greater than 10% of total equity. Can you tell us the name of the new investment or if not some background on what commercial space that operates within?

[Steven Bregman:]

Well, I'll give you all the background. So it's no great secret. So just to refresh your recollection, investment A is good old TPL and investment B is good old the Bitcoin Investment Trust. Those are our two. That's investment A. That's investment B. So I think that's pretty complete. You probably should say -- you probably -- I bet you with the ad, we probably should investment A is TPL, investment. B is Bitcoin, but in accounting parlance say don't do it that way. They say investment A, they say investment B. So I don't have any problem telling you what they are and that's what they are.

[Therese Byars:]

Okay. Next one is pretty much the same, from my reading of the third quarter financial statement, there appears to have been a large investment whose name was not disclosed. The most recent statement references in investment A, which was present on the prior statements, now there's a large investment B. Since investment B is such a large percent of equity and thus very material to future returns. Will Mr. Stahl disclose the name of investment B and discuss a bit about why this particular investment was made?

[Murray Stahl:]

Okay, so begin with -- I obviously disclosed it what it is, it's not a new investment. It's just that is appreciated. This is a level that under the accounting rules, it would have required some types of disclosure. And they said the way the world of accounting works, you're not required to talk about the name. The reason you're not required to talk about the name is because let's just say investment B was something else that was in the process of buying some more. So you obviously don't want -- if you were in the middle of buying it, you don't want to tell the world that you're in the middle of buying something that wouldn't be very bright. So the accounting rules provide for that type of terminology. But we bought pretty much what we're going to buy, at least for the time being. And as far as Bitcoin goes, we're creating more and through mining. And we're trying to figure out how to get more involved in mining in a variety of ways. It might increase different sort of way, or if we end up mining a lot of coins. At some point, we'll have to footnote it and will say, the Bitcoin coins are worth X and it's may even combine it in some way to make a clear like we just did in the prepared remarks where we disclose this XBT Bitcoin Tracker, it's not the same thing as GBTC. But it's basically the same thing. So XBT is not part of Security B, but it's essentially economically the same thing. So, anyway, the accounting terminology would refer to investment B as GBTC. But that's why we decided that if we're going to do that, we'll break out the XBT into worth about $1.6 million as I said, and analytically when you think of that, I personally would combine both together.

[Therese Byars:]

Okay. The next one is the same question, what is the second large equity investment FRMO is invested in, could you disclose this Grayscale Bitcoin Investment Trust? Then the next question, can the precise amounts of each Cryptocurrency vehicle that is owned, be broken out in future earnings statements?

[Murray Stahl:]

Well, well, we broke it out in holdings. So the thing is, as far as earnings go, with this appears is this would appear in comprehensive earnings, meaning it just appreciates. So I think we all know how much we can look and see how much Bitcoin appreciated in a month, in a quarter, in a year. So I mean, I could certainly tell you that but I think it's self evident to the planet what happened positively and negatively and that's why we don't say investment be appreciated by X percent, because I think it's fairly self evident, but we can do that if people really need.

[Therese Byars:]

Okay, no doubt this will be covered in Mr. Stahl's opening remarks. But just in case could we get a breakdown of the Crypto positions and where they are distributed through the balance sheet of the limited partnership lines?

[Steven Bregman:]

Yes, well the cryptocurrency stuff is in the cryptocurrency category. It's not entirely accurate however to say that because just to show you how County makes things, sometimes they make things very clear. Sometimes they make things a little bit more complex than we would like. So for example, if you would kindly go to Note 4, let's just take cryptocurrency mining stuff for example. We have Cryptocurrency Mining LLC and that's a cryptocurrency investment, even though it's a little bit different than owning GBTC and that's a little bit different than owning cryptocurrency itself like Bitcoin. Finally, we have Cryptocurrency Mining LLC 2, which is again a little bit different. And there is a little footnote about that. You see the let's take each Cryptocurrency Mining LLC, you'll see May 31 2020 $38,000 roughly value and February 28 2021 $31,000 value. The assets were the assets really are machines, we depreciate the machines. The LLC is more profitable than it's ever been the most recent quarter we had, which ended March 31, most proper quarter we ever had by far in that LLC. And that's continuing so far through April. But machines run down, we have machines that we bought more than three years ago, they fully depreciate, we have no value in them whatsoever. But if we assign them the value of a penny, the return on assets would be, it would be just be astronomical. You just can't use zero as nominator. So, anyway, the answer to your question, I think we gave all the Cryptocurrency amounts in detail and it's not really the moment to mine currencies are not that much money, if they get big enough we're going to create a category, we'll just say mine currencies. It'll be on the balance sheet somewhere. It'll be clear to everybody. Right now, it's just not the biggest value, well let's just say let's put it this way, if you take all the mine currencies together, it's worth something like $5.4 million. So I think that breaks it out. Maybe if it gets bigger, we'll just have a category, mine cryptos be somewhere in the asset side. Anyway, that's number. It's roughly $5.4 million, yet up to values.

[Therese Byars:]

Okay. The next question asks if we can provide an inventory of cryptocurrency and shares of securities owned by FRMO and entities.

[Steven Bregman:]

Well, I think we pretty much did that. We have some small holdings of different securities. It's not like, it's a great secret. Most of our security holdings are through funds. And funds are making great secrets of their holdings. The securities, you're likely to see, that might be the odd exception here or there. But there are securities that you would see in Horizon Kinetics, inflation beneficiaries ETF, we just own them directly. Why do we own them directly? Because we bought them before there was Horizon Kinetics inflation inflation beneficiaries, ETFs, we couldn't buy an ETF didn't exist. Lately, we've been buying shares of Horizon Kinetics inflation beneficiaries, ETFs. It's not a big number. If it gets to be big, I'll certainly break it out and disclose it. Right now, it's just not a big deal. So we leave it the way it is, but we've been buying shares with and you shouldn't forget, we also share the rent fund, that's another security that we don't break it out because the actual share amounts daily are disclosed on the SEC Form-4 filing, but we could do that if people require it.

[Therese Byars:]

Okay. Let's see, in the last conference call, Murray Stahl said that FRMO would provide a table of its holdings, including Crypto, Horizon Kinetics Hard Assets, Texas Pacific Land Trust et cetera. That would be nice as we could follow quarter-by-quarter, the evolution of these holdings and have a clearer idea of the weight of each holding in FRMO net asset value. Are you planning to publish such a table?

[Murray Stahl:]

Yes, I actually at April was prepared, when I read numbers of the reading of that table. So we're going to do either tomorrow, whatever day the folks get around doing it, somewhere on the Web site, they're going to put that table, so people can see it. So it's going to be there.

[Therese Byars:]

Okay. Next, yes, this is a very similar to the last question. On the last call, I had sent in the question instead of only reviewing it verbally on the conference call, can you also please begin to list exactly what the exposures are of the major assets that everyone wants to know about? A small table that shows the number of look through shares of TPL, Bitcoin mining equipment, Winland Holding Shares, et cetera, would be very helpful. If that is not possible for some reason, my question is what specifically prevents you from doing this choice specific regulation. And also Murray mentioned that he was amenable to something like that and that they would look into it. Obviously, I opened this quarterly report hoping to see something like that and it's not there. Is there any update on that?

[Steven Bregman:]

Well, and the update is somewhere on the Web site, I think that I'm not going to figure out where in the Web site they're going to put it, but there are other people who put it somewhere to Web site will be obvious to everybody, it's there, it will be properly marked, and you'll be able to click on it and see the table, still be able to see the same table I'm looking at.

[Therese Byars:]

Right, okay. Next question, we see a new section to Note 4, under investment concentration that identifies an Investment B as a concentrated investment for FRMO. It is appreciated, you may not want to or be able to divulge exact details at this point if it's a new investment, but any insight on Investment B would be appreciated?

[Steven Bregman:]

Okay, well, as you see, we're reading that, we're making sure we're answering every question, even though some are very similar to others. I guess lawyers would say asked and answered. But we're here to give you the information. So I think we gave you the information. We'll give you the table and if anything's unclear in the future, we'll make addition set. But we've certainly revealed what Investment B is. And I can't say enough, it's been around for a while, it just it appreciates to a level where the accounting standard required some type of mentioned of it. And that's the way they do it. Now, you know the way we do it.

[Therese Byars:]

Okay. And the fair values of some of the limited partners has exploded, presumably due to TPL featuring heavily in those portfolios, would it be possible to indicate what other investments and relative concentrations those portfolios are comprised of?

[Steven Bregman:]

Well, the concentrations are pretty similar in percentage terms, the concentrations you see in FRMO, they're not, they're not radically different. There are two securities at least as far as poster fund goes. And we're in the process of buying there right now not big positions. But one day, there'll be big positions, and we can explain more in detail what they're, I don't think it's so brilliant idea to tell people what it is, I'll just say that one way or another they're in character, what we've been doing thus far, and they're not radically different to what we've been doing. So little by little, we're adding those positions, and the force of time we'll disclose it, just not our policy that when we're in the process of adding to something, we don't usually talk about it much, but you won't be shocked when you find out what we're up to.

[Therese Byars:]

Okay, moving on to the Rent fund. I've noticed Horizon Kinetics files a Form-4 almost daily for the Rent Fund, the Form list FRMO, Firmex and HK common, who's the beneficial owner and how many shares does FRMO own?

[Steven Bregman:]

Okay, the number of shares that FRMO owns is on that Form-4, so what you need to do is you need to add the shares held by Firmex, the shares held by FRMO, and they give you that amount of time to Form-4. FRMO in total could be off by 1,000 shares because I don't remember every number exactly, FRMO must own 70-ish 1,000 shares, Horizon Common, Horizon Common is not owned by FRMO, Horizon Common is a separate company. Horizon Common is owned by the original partners of Horizon Asset Management. In the original weights when we established a company, if you wonder where those weights are, if you're interested in the names of the people, if you look at the original Form ADV of Horizon Kinetics, you can see the numbers. Basically, we're on the beach about 16.6%, that's not the exact number, it may be off by a few basis points, but my personal holding it was something like 16.6%, something like that. And that's the waiting it is right now, you also observe the Horizon Common is a partner in big partner in HK Hard Assets. But that's as far as relationship between Horizon Common FRMO goes. And also I should say the Horizon Common owns some shares of FRMO. How many shares is owned? I don't remember. But I can get you that number if it's necessary. Anyway, so roughly, let's say of the total shares that we owned, "We," meaning Horizon Common and FRMO and its subsidiary Firmex, let's say, altogether we own let's say 130,000, something like that. Just crudely speaking, let's say roughly 60% is owned by FRMO and subsidiaries and the balance is owned by Horizon Common. That would be about -- it would be about right.

[Therese Byars:]

Okay. Next question is about Diamond Standard. What does the Diamond Standard asset represent for the Rent Fund? Regarding Diamond, how are FRMO and Rent Fund going to invest in this asset class and what does the team and entity in the Rent fund invest in, any general updates on Rent Fund?

[Steven Bregman:]

Yes, yes sure. Okay, so the Diamond Standard first, so the rent fund close end funds, that's one of the reasons we established it, ideal to invest in a private company because we don't need daily liquidity. So the rent fund, if diamond standard were as successful as I personally believe it will be, let's just say -- and that could be wrong. Let's just say it can successfully create the diamond asset class incidentally, not that many weeks ago, diamond standard did its first coin offering. So it actually offered the diamond coins. And I believe again, I'll begin to be off by a few bucks, but I believe they sold $23 million, $23.5 million worth of coins. The idea is to create the coins first. You have to put enough coins in the marketplace that it's actually an investible asset class. So an ETF could actually by trade retain the coins. So the first step is a -- it's pretty good success actually I would say, better than I thought was possible. And there is always the growing teams with technical details to brand an asset class after all. So I won't bore you with the technicalities of custody and transfer. It's brand new. They're always the little issues that you could never have anticipated unless you actually do it and all those and they're really a little issues, they're all being worked out and look forward to the next offering. So if it works, the rent fund being a very small fund has exposure to an asset class nobody else has. And it could -- if it works, it's going to be more than meaningful to the rent fund. It's going to be a very, very big deal, the cost base of the investment that a rent fund is not big. I'm going to be off again. I don't remember the number exactly is too many numbers to keep them all in my head. But I think the number was about $80,000 and maybe off by a few thousand dollars, but something like that.

[Therese Byars:]

And then part of the question says what does the Cayman entity in the rent fund investments?

[Murray Stahl:]

Yes, so the Cayman entity basically -- well it has one primary investment, and I'll tell you why we have, so it owns shares in the Mesabi Trust. Horizon itself, after most owned some shares in Mesabi Trust, it's not that big of an investment. So Mesabi Trust is a trust in some ways kind of like what TPL was when there was a trust. The difference is the Mesabi Trust, whatever its income is just pays it out. That's one thing. The second difference is, it's not oil and gas. It's iron ore. And end up being a good investment because iron our prices are just about at their record high. So basically, Cleveland-Cliffs mining operates their property. And whatever they take out of the ground, they pay Mesabi Trust their pro rata share. And it doesn't require a lot of operating personnel. It requires a lot of work, all kinds of business. So why can't it be in the rent fund? Actually, isn't the rent fund, there's a problem in doing this in the mutual fund. And it's what's known as and this you'll think this term is ridiculous. This is actually a term it's what's known as bad income. The dividend, which is actually very good because the dividend is actually not tax a dividend rate, the dividends tax is a capital gains rate. And the dividend, you also get depletion allowance. So it has a really good tax structure. And but in the mutual fund, it's considered to be bad income. And the mutual fund regulations say, you can only have a certain amount of bad income. And it wouldn't have been a problem where it not for the fact that because iron ore prices went up a lot, the dividend and you can look in their Web site, you can see how much the dividend just went up, went up a lot, it might go up more. It rises to a level that is beyond what is permitted by the mutual fund rules. Don't forget the rules are written in 1940. It's Investment Company Act of 1940. So that would be a problem because it will be taxed at a much higher rate. And we don't want to be taxed at a much higher rate. So what is the remedy? The remedy is that if you buy the shares or you can choose to transfer your shares into a corporation in the Cayman Islands, and then you take the dividend and you either send it out to the corporation itself, or you just leave it in there. It's considered to be good income because now it's the income of the Cayman Islands Corporation. So the Cayman Islands Corporation was created, said we wouldn't have the bad income problem. So we didn't create something to be hidden. It's just that we created it to avoid this tax problem. Now, we all have a tax problem with the Mesabi Trust. So I think that's pretty much the back pattern.

[Therese Byars:]

Thank you. All right, next one, how many Bitcoins has Winland mind as of today? And what is Winland's cost of mining as of today and more about Winland, I'll let you answer that.

[Murray Stahl:]

Okay. Well, I think, I revealed. It's not the number of coins as of today. It's number of coins as of a few weeks ago, but I'll just repeat it. So we had that number. As of few weeks ago, it was 18.9282 coins. So it's obviously more right now. So in terms of what is the cost, let's look at it this way. Say the average month, there is 30 days in a month. And by the fifth day of the month, we paid old electricity, so basically five days. And remember it's not exactly five days. It might be 5.31 days or might be 4.92 days. It depends on the price of Bitcoin on those days because we'll sell roughly the first five days to pay electric charges. But if you'll permit me to rounds or for purposes of this discussion, let's say it takes about five days. So it takes about five days and there is 30 days in the average month and therefore follows -- and we pay all the expenses out of five days or 20% in a month. The cost of mining is 20% of the price of the Bitcoin. That's how good it is. It's pretty good, actually, I think.

[Therese Byars:]

Okay, all right. What are the mining economics as of today for FRMO and Winland? Any updates on the Mt Gox litigation?

[Murray Stahl:]

Okay. So FROM, Winland, the mining is -- and I think you just heard the answer to the Winland question. It's as good as it's ever been. Now, depending on the -- you go company by company and tranche by tranche depending on the type of equipment, it might be a little bit better or a little bit worse. So, for example, we still have in some of the crypto entities machines that we bought over three years ago, technically speaking, they're obsolete and nowhere near as profitable as to Winland machines I just gave you, but it's fully depreciated. So it has no value. In terms of return on capital, the return is astronomical anyway. So, it just can't -- it's hard to imagine that it could get any better in the mining where crypto bet as good as it's going to get now, before you get too excited about just bear in mind in the world of Bitcoin in about 1,118 days or so, we're going to enter the period known as having, so what's going to happen. Assuming the Bitcoin price doesn't change, which is probably a bad assumption, but assuming everything remains constant, what's happening is the revenues getting cut in half and the expenses will be more or less the same. And it won't be so great unless the price goes up a lot, which it might actually happen. And in that circumstance, it would be just as great as it is now. So that's basically what's going on mining in terms of the cost of the equipment, because things are so great at the moment. The equipment is expensive. I'm reluctant to buy a lot of equipment and I'm looking to buy a lot of equipment because we're approaching and having it and less things change. The economics equipment is going to be less. That said not like we're not going to buy any equipment, so we might buy some parts, build our own machines like we did previously, might do it that way. We might find a deal on used equipment because we have a repair facility, Hash Master, to be able to repair on equipment, might do it that way. There might be new generations of equipment. We might buy that just to try it out, a lot of possibilities. Anyway, I hope that's pretty comprehensive.

[Therese Byars:]

Yes. All right, the next question is OneChicago is still listed as a security exchange investment. My understanding is that the exchange is no longer in business. Why is it still listed?

[Murray Stahl:]

Okay, because as of the 28th of February, maybe it's the 29th of February, we didn't get our liquidating distribution, and we didn't know what it was. So basically, we got liquidating distribution, or we've been toggle liquidation distribution is unless we got it. We're not taking a loss on it. And that's why we kept it on there. We didn't know what the amount was. The end of the day relative to the totality assets, it's pretty insignificant. So rather than estimated, just left it weekly fine. The two weeks, we get the actual numbers. So basically, I think the liquidation that we got in the amount is, it's a small percentage of what we paid for it, I don't remember what it is. I would have been – there was a lot of cash in the balance sheet. So basically what happens is, they just stop operating the company. And whatever you can get out of it, which is mostly liquid assets, you get of it, the real value is licensing and using license. So, we ended up not doing as well as we want. But the problem is the big holders, interactive brokers, so we're partners basically with three big companies, interactive brokers, the Chicago Mercantile Exchange, and CBOE, we were a little tiny rounding error, and then investment. So we don't have any power to change the outcome, I guess, to us was very interesting. To the three large companies was a rounding error for them. They didn't want to continue. Even though heck of a lot we can do a bet. So that's basically what happened. I thought it was a worthwhile project to continue. But that's just my opinion.

[Therese Byars:]

Okay, thanks. Next question, any update on the uplifting of FRMO?

[Murray Stahl:]

No, we haven't. I mean so many things to focus on. We just didn't focus on that. It's for no other reason not because it's not an important project. There's only so many hours in a day. And we just didn't have the -- we just didn't have the bandwidth to focus on between crypto mining and all that that entails and running the business horizon, and new product, which is the inflation beneficiaries, ETF and doing the research and the writing to send some of this stuff, diamond Standard being one example. So it didn't have the bandwidth to pay a lot of attention to it, that's really the truth.

[Therese Byars:]

If I could add a little something, we also did a couple of years ago, pretty extensive cost analysis of it, and it was more than twice as expensive. In terms of listing fees, and the accounting and regulatory filings, it was more than twice as expensive as being on the OTC market.

[Murray Stahl:]

Okay. Well, thank you Therese. Anyway, didn't devote a lot of bandwidth to it during the quarter, in all honesty.

[Therese Byars:]

Okay. Next question, the status update on ETF offerings after the success of the inflation beneficiaries I am about?

[Murray Stahl:]

Well, I'll tell you this much. Obviously, I'm not going to announce, I have this wonderful idea. And I'm going to do something, because somebody will do it first. I think I have one very good idea what to do. I think I've got one idea that's good. I don't know if it's very good. And then there's some other things that they're not far enough along yet to know if they're good or not. So we're working on a variety of things. See the basic problem, special opportunity is. Our business was the mutual funds. And mutual funds have a lot of disadvantages, just as a structure relative to an ETF. The problem in making use for us of the ETF structure is that ETF structure was designed for indexes. And we didn't want to be indexes. We wanted to be actively managed. So the rising x inflation bidding free CTF, you know is a very low turnover is actually actively managed. We can discuss more and add the same questions to that, but we weren't going to do anything in ETFs, unless we knew we could do it in the active management realm. And it took a while before the laws were clarified, sufficiently said we were able to safely undertake an active management venture. Yes, suddenly became, within the last 12 months, apparent that we could do it. Before then, very, very few people attempted it. And the few people that attempted it failed. All kinds of reasons for that, and it's not all entirely because of the laws, although part of it was the laws were very unclear. And when we felt the time was right, we decided we were going to move and so they actually, once we, so there's obviously a period of analysis that has to go into it. And then once we said the word go. From that point forward, it took roughly four months from the word go to the creation of an ETF. There's some fair amount of operational work that has to be done. Anyway, as I said, we have a number of ideas. I look forward to the next opportunity of doing, when that happens, of course it could be foreclosure, and everything else, but the moment, it's an idea we haven't filed yet.

[Therese Byars:]

Okay, the next question returns to the every once in a while we cut, someone asks about changing the name from FRMO to something else. So these shareholders said for what is worth? My humble suggestion for a new name, per Murray's idea request on the call would be Kinetics Chain; it speaks to both the legacy HK assets, as well as to the marketable blockchain assets, together conveying the timeless message that the whole is greater than the sum of the parts. And then there's a quote, a kinetic chain as the notion that these joints and segments have an effect on one another, during movement, when one is in motion, it creates a chain of events that affects the movement of neighboring joints and segments.

[Murray Stahl:]

Okay, well, look, I mean, I, it's the first time I hearing it, so I can need to reflect on, but I certainly will give it due consideration. By the way, I should mention that there were people who emailed in suggestions, and they actually were pretty good. And we would have used one of them. The only problem was, when we actually had our attorneys research the names, each and every name that was suggested to us. And we actually liked names very much. Somebody was using them. And we just couldn't use them. So we would have changed, we would have used one of those ideas. But no go, because somebody was using it wasn't legally permissible. I don't know if anyone's using this. So the first step we do is, before we devote too much time to it, we look and see if anybody is using it, you'd be surprised. The names that people claim proprietary interest in that we actually had an experience. And therefore many years ago, that there was a name we were using. We thought it was, I wouldn't even say the name, because I don't want to start this controversy again, but it was name we were using for something. Someone claimed that it was a proprietary name. We said name that it's part of popular parlance and be proprietary. And it took a few months to resolve that. See, you never know you just got to be careful. Anyway, will suddenly need to be given due consideration, sounds pretty good. But now you know what the first step is?

[Therese Byars:]

Okay. And the last question is, would you discuss your views at length about how the increase in money supply will lead to more dollars chasing the available goods and services to consume for the available goods and services for consumption with those dollars? What metrics do you consider worthwhile? Specifically curious if there is any readily available metrics besides GDP that you would like to use to make that comparison?

[Murray Stahl:]

Okay, well, that's a very, that's a deep question. So I'll give a deep answer. So let's begin with this. It all starts with the budget, United States budget, and it's the same problem other countries, so I'll just use the United States as the example, but it's the same everywhere. Basically it's a huge deficit, and it's funding that deficit, that basically leads to a lot of the growth in the money supply. So the Federal Reserve has to buy the securities issued by the government because no one else is going to buy them at almost zero interest. And financially the government wouldn't be appropriately funded. So what's the problem in correcting that, so I understand how difficult it is to correct. But anyway, it doesn't matter who is in the government, you could be for Party A or for Party B, it doesn't really matter. Here is what the problem is, and I'll use this illustration, let's just say this would never happen. This is just taking an extreme suggestion, just for purposes of discussion, it's preposterous idea, to show you how difficult it is to control the budget. Let's just say the United States government decided that we're going to take Social Security, make it zero, their base check, whatever it is, you're just not getting it. It sounds zero. So theoretically, that saves over $1.2 trillion. And secondarily, we're going to take the United States defense budget, and we didn't cut that to zero, immediately. So if you work with a Department of Defense, where you're still employee and military employee, you're fired. And we're just going to do nothing with military anymore, you can save another 10, 100 plus billion dollars. And now interest on debt, which is a little bit less than $400 billion, let's just call it $400 billion for this exercise. Let's just say that we pass a law said, you know what, I know what the bond has a coupon on it. We just passed new law. It's now zero, it'll add up, you say well, we'll save $2.2 trillion. If you did that, you still have a trillion dollar deficit. Now you understand the magnitude of the problem. Now, let's say you actually propagate those losses, would you in point of fact, save $2.2 trillion. Now, those are the cuts, you wouldn't save anything close to it, you might not save anything, why because the people get social security for a lot of it, it's taxable. So you can't cut out $1.2 trillion and save $1.2 trillion because some of that goes right back to the Treasury. As a matter of fact, there are people who work through social security administration, and they're computer programmers or administrators or whatever they're doing. But their income is now going to go to zero. They pay taxes, you lose those tax revenues. And then if you really want to take it a step further, there are companies they're not part of government budget, not government employees. But there are consultants, they sell equipment, there all sorts of things that go on, and their income is going to go to zero, because their clients is social security trust administration, the same thing goes true with United States Department of Defense. So they're people who work U.S. civilian and military, their incomes are going to zero, you lose tax revenue, then all the enterprises that sell things to the United States government, General Dynamics, Lockheed, many other companies, that's going to zero. You won't save anything like that. You might not save anything. And then if you look through the third order effect, well, there are companies that do business with General Dynamics, their incomes going to go to zero, we're nearly so. You can't solve it that way. Same thing holds true, by the way in interest expense, you're not going to get rid of $400 billion of interest expense, because people pay taxes on net interest. Matter of fact, think about all the banks that own treasuries, and their income on that is going to go to zero, that will be a disaster. So, you can't do it much as you might say, you'd like to do it. And then the most important thing, which should be obvious, but I'll say it anyway, those expenditures, which the Federal Reserve has to buy the securities to finance debt. That's a big part of GDP. So take the three areas of government that branches like legislative, judicial, and executive, but areas federal, state, local, arrow up. Those areas are spending over $10 trillion dollars a year. The GDP is about $21 trillion. So cut the expenditures, cut the GDP in addition to cutting the tax revenue, that's what makes it so difficult in math, return for that. They call it Trapdoor Mathematics. So what they mean by that, it's order works one way but not the other way. So normally arithmetic in multiplication and addition is cumulative, so two times three is three times two. It works in both directions. In this, it doesn't work, but you can increase the expenditures, you can increase the GDP. But if you reduce it, the expansion is by that amount, you may collapse the GDP, and therefore you make even a worse deficit, you can't get out of it. So the bigger the economy is, the more serious the problem is, because the more money you have to spend to keep it growing at the 2% or 3% or whatever the rate is. So it's pernicious. There's no solution. I'll pass the point of any solution, that's reasonable. Yes, you could take $2 billion of Program A and $3 billion of Program B, but in the context numbers I cited, it's just irrelevant, it doesn't mean anything. So it's a fairly good bet. The currency is going to lose its purchasing power and in point of fact, it is losing its purchasing power because all you have to do is look at the CRB index, which is a commodity Research Board Index. And you can see it's up as memory serves year-to-date only worth. We're not even halfway mark, matter of fact, we're not even to one-third mark yet to the year. It's up about 15% year-to-date. And if you go to the Supermarket, if you pay attention to prices, you'll see, the prices are up on a lot of different things. Maybe you look at the CRB index you'll see why they're up. So beef is up something year-to-date, up something like 16%, pull freeze up something like 7%, lumber I don't remember number, it's an enormous number. And then one other thing, it's important, what's called strategic materials, meaning things that we normally didn't think about, didn't use a lot. In the past, we always had adequate supplies. Now they're coming into everyday usage. And example, being lithium, lithium is used in the batteries of your iPhone or your iPad. It's also used in electric vehicles. So I would even quote, I would even dare to quote the price change in lithium year-to-date. It's so big that every person is quote, I'm just making up a number. I won't even quote it. But it's an outlandish number. And it's not even four months old. That's how much it's up. And there are materials you haven't even heard of, like neodymium. Those are things that go into electric motors, you got to have it, they create magnetic fields, it's up almost as much as that, it's outlandish kind of numbers. So you just can't move society in the ways maybe it should be moved in that direction. But the supplies just don't exist. Do those sorts of things, that we're getting inflation. That's all there is to it. And by the theory, which is well documented theory, so Thomas Gresham, so Thomas Gresham, Gresham's Law, bad money drives out good. Why would you spend? Let's say it was designed to talk about England in the 16th and 17th centuries. So if you had a recently minted coin of the realm, an old coin that was worn and clipped, meaning in the old days, people would shave off a little silver of the coin and keep it themselves. We sell the clip coin, before you sold a regular coin. If it goes on long enough, that the bad money drives good. Everybody wants to use the base money. And the good coins go into circulation and being a problem. Ultimately, that gets overwhelmed by Hayes Law. So, Hayes Law is actually the inverse Gresham's law, it's hard to imagine it, both things can happen simultaneously, where does, the Hayes Law says good money drives out bad, how's it possible? Well, at some point, people will need to take the bad money. And you can see it in the world of cryptocurrency, it's already happening because people think about Bitcoin and their remark always is, how much did it go up? And it's the wrong metric. Measurement shouldn't be how much it went up. What's really happening is you need to take that chart and turn it upside down. What's actually going on is dollar is collapsing relative to Bitcoin. So someone says what is Bitcoin in just a bit, it doesn't represent anything. Well, it could be so argued. But the dollar is collapsing relative to that. So the more negative the things one says about Bitcoin, I would say, by logical implication, the more negative, those same things are for the dollar. And it also applies to the euro and the yen and every other fiat currencies, that doesn't matter. Those currencies are collapsing relative to these bits. And it's a very serious problem. At some point, people won't take the fiat currencies, and that's what's going to that's basically what's happening. Now, the only alternative to the fiat currencies, I mean to the only alternative currencies or A, the cryptos at least the ones with a reasonable monetary policy, and B part, you could say tangible, we say hard, hard assets. What's the hard asset? Oil, gas, gold, silver, irons, stuff like that. Now, in reality, there's only one asset, and that asset is oil, or I should say energy. So why is it one? Why do I say well, what about gold? What about silver? What about platinum? What about tin? What about zinc? What about copper? Well, each and every one of them has the common feature. The biggest cost of mining is energy go smelted. You don't find iron in mine, you find ferrite, which is iron oxide, get to get the oxide out and affect uranium find silicon to make solar panels. You find quartz. What is quartz? Silicon dioxide. How do you get the pure silicone there? Well, you got to smelt it, you got to heat it just like you would gold or silver or iron or anything else. So when the price of oil rises, price of everything else is going to rise as well. So basically, that's where we are. And unless somebody can do something about the money creation, if the money is rising, the money supply is rising faster than supplied goods and services, and it's just a question of law of supply and demand, the purchasing power of that currency is going to decline. Now, just specifically about the dollar what metric, it changed the metric, they being the monetary authorities have in reserve, they used to until a couple months ago give us into statistic. Now they have something called M2SL that's not radically different than M2. But they only released number once a month that used to release it once every week. So if you go into St. Louis Federal Reserve Web site and look at M2SL, you will find the following shocking observation. What he's talking about roughly 25% of all the money created all the dollars, because this is a dollar base currency. All the dollars created in the history of the United States of America was created and roughly last year. So census buy of goods and services is that rising by 25% annually. And supply of money, at least at the moment is rising by 25% annually. If you believe laws of supply and demand, then the currency must lose its purchasing power. It's that simple. It's negligible. And there's not a lot anybody can do about it. And that's why the situation is so horrific, in my humble opinion. And that's why FRMO and Horizon itself rise organics. Is positioned in an investment sense, the way we are, you know, for a number of years, we've been positioned that way, as people probably realize for a number of years, the world does not have that mind. So it didn't do wonders for our performance until last few months. But that's the way the world was looking at it. And we looked at a completely different way. And that's the way it is not a happy state of affairs in my view. Anyway, I hope that gives you an idea where we stand on the grade inflation question and what metric you want to look at. So, I would say the CRB to summarize the CRB index, you want to pay close attention to that. You want to pay close attention to M2SL and keep your eyes open where you at the supermarket. And the rest is in the process of happening as they say, but I hope that's thorough enough. That's it, Therese. We have more questions in queue?

[Therese Byars:]

No, that was that was the last question. Great answer, we appreciate it.

[Murray Stahl:]

Okay, well -- Okay, Steve, do you want to add anything to anything I said?

[Steven Bregman:]

No, I don't.

[Therese Byars:]

Okay.

[Steven Bregman:]

Well, we are in a time that is -- kept so many fundamental inflection points. And usually people have enough trouble just dealing with one. And changes are afoot. And when changes are afoot, what used to work stops working. And it's very difficult to speak to people who don't have this kind of background to even understand it. And there are going to be a shift of wealth, shift of performance, shift of fortunes, shift of fortunes amongst businesses, and shift of fortunes amongst investment managers and companies. It's kind of difficult to foresee over the next five and 10 years, the depth of change, I think that will be. And far more I think, I hope is a -- seems to me it is, that is on maybe the right edges of some of these changes.

[Murray Stahl:]

Okay, well, thanks Steve. And I guess reminds me to thank everyone for your attention and your support and all the great questions. And of course we'll reprise this about three months, and look forward to answering your questions at that time. So, thanks again for joining us this afternoon. I guess we'll sign off now.

[Operator:]

This concludes today's call. Thank you for your participation. You may now disconnect.