Wealthion Sep 21, 2026 31m 18m saved
With Jonathan Wellum, CEO and Chief Investment Officer of RockLinc Investment Partners
Put 3.75% on $42 trillion of US federal debt and the annual interest bill is about $1.6 trillion. On Jonathan Wellum's arithmetic that is 26% of federal revenue, against the 8% to 10% it used to be, and it puts interest on course to pass Social Security within a year or two.
The standard answer to a debt load that size is growth. Wellum's objection is not to the arithmetic of growing out of it but to the conditions it requires, and he pointed at a president promising a $5,000 dividend to every American adult as evidence that the discipline is not there.
"I mean, we're in a debt bubble. So that's what I'm concerned about."
Wellum runs RockLinc Investment Partners as chief executive and chief investment officer, buys individual businesses rather than indexes, and flew to the Northwest Territories to walk an abandoned silver mine the Hunt brothers built and left. The conversation was recorded on September 11, before the Federal Reserve's meeting he discusses as still ahead.
The full interview is covered here so you can skip it. 31 minutes of audio, 13 minutes of reading.
Here are the 10 principles that matter.
Key Takeaways
Higher inflation means price-earnings ratios have to contract, so what you pay matters more than what you own
The businesses that survive it are the ones that can pass costs on
Interest is heading for 26% of US federal revenue, against 8% to 10% historically
He expects it to pass Social Security as a share of the budget within a year or two
Long bonds have been one of the worst trades in recorded history, and that is exactly why he is watching them
A 2004 buyer of the long Treasury ETF has made nothing in 22 years
He is staying short on duration until rates peak, then going longer for the clients it suits
Data centers are pushing energy demand up 3% to 3.5% a year off a base that was flat for decades
He would rather own the metals than the technology companies that need them, because the deficits are structural
Gold is collateral between countries that no longer trust each other, which is why central banks are repatriating it
Demographics are the part nobody prices — Japan has two deaths for every birth and Russia 0.63 births per death
The Hunt brothers' abandoned silver mine still holds $300M of equipment, one machine with 1.6 hours on it
1. Multiple Compression
Maggie Lake opened on a week of US inflation readings that showed prices staying high and asked what it does to the conversations Wellum is having with clients. He said he does not expect an inflation spike, listed the causes, from fiscal overspending and large deficits to money supply growth, leftover supply-chain damage, deglobalization and now Iran pushing oil up, and then gave the consequence for portfolios.
Higher inflation should compress what investors pay for earnings
If inflation is going to remain a little higher that means price earnings ratio should actually come down. That puts pressure on valuations.
Jonathan Wellum
The second-order effect is on margins: companies find it harder to pass on rising costs. His response is to look for businesses with pricing power, with moats, that lead their industries, on the grounds that those are the ones that do not get squeezed.
2. Careful With Duration
The other half of his answer was about bonds, and it was a warning rather than a rejection.
Long-dated fixed income is where he is most careful
I think you want to be very careful about fixed income and longer duration fixed income securities.
Jonathan Wellum
He put the scale of the damage plainly.
Ten years of losses in the long bond
I mean, you've lost money over 10 years. It's been, I think, one of the worst in recorded history.
Jonathan Wellum
His position is short duration for now, with a plan for the turn.
Short until rates peak, then longer for the right clients
What we're doing is we're staying short, but we're looking for the fact when things do seem to peak out on the interest rates, that will allow us for appropriate clients to go a little bit longer on the duration.
Jonathan Wellum
3. The Index Is The Risk
Lake pushed on the buy-the-dip reflex: retail investors have been rewarded for buying every sell-off, and she asked whether that still works. Wellum said the index trade has been a good one and that is precisely the problem, because a small number of companies carrying very high valuations are what move the index.
A great trade that is getting long in the tooth
the index trade has been a great trade but that just means it's getting long on the tooth
Jonathan Wellum
On the largest technology and data-center names, his point was not that the technology fails. It is that nobody can price it: what the algorithms and the tokens eventually sell for, what the margins are, what return on invested capital and return on equity come out at. Trillions are being spent into that uncertainty, and he said booms have a standard ending.
Overspending, overinvestment, write-offs, damage
There's going to be overspending and there's going to be overinvestment and that means there's going to be some write-offs and there's going to be some damage.
Jonathan Wellum
Doing that while rates rise and inflation runs hotter puts pressure on the whole system, and above all on the debt underneath it.
The instruction that follows from all of it
Listen, you better know what you're buying. Be very careful about valuations.
Jonathan Wellum
Keep some powder dry, buy harder assets, stay diversified and stay nimble was the rest of it.
4. When Bonds Come Back
Lake put the second narrative to him: that bonds are simply uninvestable. Wellum said he is not taking them off the table, he is waiting for a price. First, though, he described the behavior that makes people buy at the wrong moment.
Extrapolating from the recent past adds risk, it does not reduce it
You can actually add more risk to your portfolio because you can chase things right up to the top and overpay and buy at the worst time. And that is what retail investors do all the time.
Jonathan Wellum
He included himself and other institutional investors in the temptation. With the 10-year near 5%, the 30-year above that and the short end around 4%, his expectation is that the weight of debt service eventually slows the economy, and that a slowing economy is what brings rates back down.
The long Treasury ETF has been destroyed
The TLT has been just eviscerated.
Jonathan Wellum
One of his analysts had worked out how far back that goes.
A 2004 buyer has made nothing in 22 years
you would have made no money if you invested in 2004. That's 22 years.
Jonathan Wellum
He was careful to say he is not telling anyone to buy it now, only that the worst trade available is the one to watch for a peak.
5. How He Uses Bonds
Wellum then described what bonds actually do in his portfolios, which is not a duration bet.
A Canadian tax trade in discounted bonds
In Canada we'll buy say a really low coupon bond that's trading at a large discount especially for high net worth investors and then they can buy it at a large discount and they'll collect a small coupon but then the gain back to par is capital gains and so that's taxed at half the rate of interest in Canada
Jonathan Wellum
He uses one- and two-year bonds to meet client obligations coming due, to damp portfolio volatility and as liquid dry powder. Since founding the firm he has stayed at the short end rather than trying to call the curve.
He said he decided long ago he would rather make his money in equities than by guessing yield-curve changes, and named Bill Gross and Gundlach as the people whose job that is.
His broader objection is to the confidence with which the financial media has declared the 60/40 portfolio dead. Diversification matters, nothing is ever 100% or never, and the moment everyone agrees bonds are uninvestable may be the moment to look at going out on duration if a recession arrives. Lake's framing was that the point of the conversation is to arm listeners with sharper questions for their own advisers.
6. Energy Demand Is Structural
Turning to metals and mining, Wellum started from demand rather than from price. Digitization, meaning AI, data centers, robotics and electric vehicles, is pulling energy consumption up in countries where it had been flat for decades because efficiency gains kept pace with growth. That has stopped: he put the growth rate at 3% to 3.5% a year, which he called a large number off a very large base. The grid, he added, needs rebuilding.
His conclusion is to own the inputs rather than the applications.
The technology companies cannot grow without the metals
but they won't survive and they won't be able to grow unless they have the metals and minerals unless they have the copper unless they have the silver and so on
Jonathan Wellum
Some of the technology companies are grossly overvalued in his view, and he owns a couple. What he is more comfortable buying is copper, silver and uranium, where he says there are structural deficits, and he is explicit about the horizon: three to five years, not five minutes, and not conditional on the next Fed meeting.
7. The Debt Arithmetic
This is the section the interview turns on. Wellum named the global figure first.
$350T of debt, and rates are now higher
we are very very concerned about 350 trillion in debt
Jonathan Wellum
He does not believe growth solves it, and said that has been the promise since Ronald Reagan. What convinced him the discipline is absent was a specific proposal.
A $5,000 dividend for every adult is more than $1.2T
he said he's going to give a $5,000 dividend to every, American adult, which is like $1.2 plus trillion dollars. I just about fell out of my seat.
Jonathan Wellum
He said he favors the Trump administration's economic policies in general, and that he does not think anyone believes that particular promise. What it represents is a mentality in which the money simply keeps flowing.
Then he did the arithmetic on air.
$5.5T of revenue against the debt that has to be serviced
So if you look at the US, I mean you have about $5.5 trillion in revenue and 40 trillion in debt that has to be serviced.
Jonathan Wellum
$42T at 3.75% is about $1.6T of interest
take 42 trillion and you put 3.75% on that, which is lower than the interest rates now on the short end of the curve, that's 1.58 almost 1.6 trillion.
Jonathan Wellum
Against a federal revenue line he put at $6 trillion next year, that is more than a quarter of everything the government takes in.
26% of revenue, against 8% to 10% historically
that's 26% of the revenue. It's been eight, nine, 10%.
Jonathan Wellum
Social Security, by his figure, is 22% of the US budget, which sets up the comparison he ended on.
Interest passes Social Security within a year or two
And so now you're gonna have interest maybe in another year or two actually surpass social security.
Jonathan Wellum
Growing out of that, he said, would take discipline, moral courage and virtue in the population, and he described those as dormant rather than gone.
8. Gold As Collateral
That arithmetic is the reason he wants what he called a monetary substitute.
The way out runs through currencies
there's going to have to be financial repression of some sort there's going to have to be pressure on our currencies are going to have to continue to have inflation.
Jonathan Wellum
He was clear this is not only a US problem: Canada has one, less severe; France and the UK are in what he called dreadful condition; Japan and China have their own. What he thinks people miss is why central banks have been bringing their gold home.
Countries that do not trust each other want collateral
if you don't trust your fellow countries, what do you want? You want collateral.
Jonathan Wellum
He named the trade war between Canada and the United States as the sign of the times, and said the combination of deglobalization, reshoring and political mistrust is what makes the portfolio question a defensive one.
What he is actually trying to protect
investors need to think about preservation of capital. They need to think about preservation of purchasing power.
Jonathan Wellum
The assets he puts in that category are the ones that are scarce, essential and able to reprice.
Infrastructure, commodities and agriculture
you're talking infrastructure assets, you're talking businesses that represent, commodities, gold, silver, copper, some of the agriculture areas, energy
Jonathan Wellum
9. Demographics
The factor he says nobody overlays on the debt is population. He walked through it country by country.
Japan has two deaths for every birth
you get a country like Japan and it has two to one the ratio of deaths to births. This is a country that's collapsing socially
Jonathan Wellum
China, he said, is almost as bad. Russia's ratio he put at 0.63 births per death, the United States slightly above one, and India around two to one. His reading of the cause is economic rather than cultural: people do not feel able to support another generation, which is what makes it a loop rather than a trend.
That, he said, is why portfolios should be built for change that arrives either by choice or by force.
10. The Abandoned Mine
Lake asked about a site visit he had mentioned last time, to a silver mine. The property is Prairie Creek, in the Northwest Territories, reached by flying north from Fort St. John in British Columbia to a gravel airstrip.
It was built by the Hunt brothers, and then left
This facility was actually developed by the Hunt brothers.
Jonathan Wellum
They never produced. They completed the development drilling, sized the resource and installed what Wellum described as the best equipment in the world, hauled in by winter road and by air because there is no permanent road.
Then silver fell
And the price dropped and they told everybody to leave. Just abandoned it. They just walked away.
Jonathan Wellum
Fifty years later he was standing in front of it. He said more than half the equipment could be restarted, with the electronics and control componentry needing replacement, and gave the detail that stayed with him.
One machine had 1.6 hours on it
one of the equipment had 1.6 hours on it. That's it.
Jonathan Wellum
The economics now turn on access. A road would cost roughly $300 million, and the territory wants one, partly because its diamond industry has largely gone.
The equipment on site is worth more than the road
which is probably about a $300 million road, but they have over $300 million equipment in today's value easily sitting up there.
Jonathan Wellum
The deposit carries silver, zinc and tungsten, plus minerals nobody tested for fifty years ago. The company is Honey Badger, run by Chad Williams, and Wellum said it has hired a firm to work out how quickly a restart is possible, and has relationships with the government and with the indigenous communities nearby, some of whose older members worked on the original project.
The investors alongside him
Eric Sprott's an investor in it. Rick Rule's an investor in it.
Jonathan Wellum
He owns a few shares himself and has put some clients with a higher risk tolerance into it. His takeaway from the visit was about the cost of the metal rather than the stock.
Why he looks at his silver cufflinks differently now
you got to appreciate how much work goes into getting that silver. It is a lot of work, a lot of committed capital, a lot of risk
Jonathan Wellum
Bonus Insights
Why he goes to the site at all
Wellum's argument for physically visiting is that you have to be there with the geologist, the engineers and the chief executive, walk the property and take your own pictures. Lake used the same story to make the opposite-facing point: the Hunt brothers walked away from an enormous investment, which is why the sector carries as much risk as it does potential.
The Hunt brothers, remembered from a lecture hall
Wellum said he was in his first or second year of university when the Hunt brothers were cornering the silver market and the price ran to about $50. He said the exchange and a number of other people did not want them cornering it, and that every layer you peel off the story makes it more interesting.
His sign-off
Asked for a closing thought, Wellum said to stay focused on the real fundamentals, the things that do not move with interest rates or inflation, to make slow adjustments rather than fast ones, and to keep a long horizon.
Wellum's bottom line is that the debt is the binding constraint on everything else: it forces inflation, it forces financial repression, and it means the job of a portfolio is to preserve purchasing power rather than to maximize return, which is why he owns scarce, essential, repriceable assets and refuses to pay index valuations for the things everyone already owns.
Products, Companies & Tools Mentioned
RockLinc Investment Partners (His firm. He is its chief executive and chief investment officer, runs concentrated positions in businesses rather than indexes, and keeps client bond holdings at the short end)
The iShares 20+ Year Treasury Bond ETF (Referred to by its ticker, TLT. His example of the worst trade available: a 2004 buyer has made nothing in 22 years)
Honey Badger (The company that now holds Prairie Creek, run by Chad Williams. Wellum owns shares and has put some higher-risk clients into it)
The Federal Reserve (The policy response he says determines whether inflation stays elevated; the meeting was still ahead when this was recorded)
Books & Resources Mentioned
Prairie Creek, Northwest Territories (The mine the Hunt brothers developed and abandoned, which Wellum flew north to walk; silver, zinc and tungsten, with a road that would cost about $300 million)
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