Miners on the Move
[Music] welcome everybody to navigating the Minefield where we look at everything from mining stocks bullion gold and silver underlying metal Commodities and crypto and macro and once again with me is Eric mazinsky hi Eric how’s it going it’s going well Roger how are you doing very well doing very well indeed it’s been uh there’s been some movements so I’m going to say at the very beginning because we’re going to probably talk about a few individual names that obviously this is not what you’re going to hear today is not investment advice this is for educational and engagement purposes only do your own uh do your own research know what your goals are know why you’re investing and and why you’re picking the stocks that you might and invest accordingly and know your risks and I wanted to get that out of the way because we’ve seen quite a few names actually starting to move it was you know there’s been a lot of news flow it’s always been gold and silver before particularly gold but now the stocks um have been uh kind of GRA a few headlines which are the ones that you think are are the sort of the biggest kind of indicators that that things are starting to get a little bit of traction in the charts the price action the price action always tells the story right I think the uh we just had touched on one of the small pieces that I put out last week to the gold investment letter free e letter list uh which was really just a brief highlighting of a pattern that I’m seeing in the gold and silver mining stocks uh these you know these bull flag and then the ensuing breakout um we’ve been seeing this happen uh you know really for it’s kind of been a building higher highs higher lows but even just recently you know many of these companies are going into new highs certainly on the daily chart uh we’re seeing those bust out into new highs after these healthy little consolidations but when we just started to have a little bit of a pullback in for example Phenom resources which is my biggest position uh I’m like uh oh you know maybe this is uh it was like literally like two cents it came down and then I pulled the chart up and I thought you know this is such a really healthy pattern it probably should come down another Penny and if it continues it’s higher highs higher lows uh that continue to pop in here and a lot of these companies have broken uh any intermediate term highs of after consolidation bull Flags higher highs higher lows so I think that the the activity is very constructive across the board but you are seeing leaders just like we always do and you’re seeing laggards one of the bigger names Newmont I mean that had quite an exceptional break and that think was on the back of its earnings wasn’t it so this was just a you know reported earnings and boom out we go break up when you look at gold trading up here into the 23 $400 level you know a lot of this move from 1900 2000 is going right to the bottom line of these producers so when we start getting this is what I think is going to be a sustainable macro you know trickle down trend from The Producers it’s balance sheets it’s balance sheets that are going to see uh growth in cash flow and net income and when you have just a move like we’ve had so let’s just call it you know the the 1950 2000 area and now you’re seeing companies that for an entire quarter say they starting to print their sales on the gross revenue side of their physical gold at 2300 or above remember these companies have been uh forced to tighten their operations so far down to have a shot at being profitable with their all-in sustaining costs in the High Teens uh in terms of 181 1900 uh you know this this has been an area that has been uh you know sort of a cap and a benchmark uh even a mid for years to get back to and we’ve had dips below it we’ve had pops above it but now with this sustainable I I’m convinced it’s a sustainable breakout in Gold what does it do from here we’ll see uh but I do believe that you know the the amount of earnings Improvement the actual earnings that are coming into these producers is what will be the main driver of share prices higher and I think what was quite heartening about that is that obviously we we had that breakout in Gold to 2 2400 we had had that little bit of consolidation down $100 back to 2300 but the breakouts in a lot of these companies happened whilst the gold price was doing this downward consolidation so what we’ve seen before G tended to be you know these things didn’t really go up when gold went up and then when gold rolled over they rolled over more this time they managed to pop even with gold price consolidating on the downside if we cut to the chase Roger this is an area that’s got tremendous risk reward Potential from here you’ve got you know say it’s even really the further you go down the chain which is where I like to play obviously but down in the junior exploration companies some of these have popped many of them are still dead in the water you know trying to survive on very little money many of those companies we know you know on the Canadian side with the tsxv and the csse and some of these small exchanges if you’re American or you’re in Europe I mean these would be private companies they’re tiny they’re very very small but in Canada and the way that those markets work and even they’re here on our OTC market in the US um they’re publicly traded companies so you can take advantage of that if you believe that you’ve got an operator that can raise capital or has gotten the balance sheet down to keeping it uh to where look we’re steady state we don’t need to raise any capital for the near- term but we really can’t do much work and we’re not going to do that until we can raise money at a reasonable price and you’ve got some discipline that’s there and then you already have an asset base you know an asset base that has been built up in many cases over decades whether it was with previous entities or the entities that are there to me these are real huge opportunities I mean you’re talking about um the reason I got into the junior mining sector initially was when I started to see uh real you know 10 20 50 100x returns from real people who played that cycle and got the Right company uh and had their life changed you know I that intrigued me and it still does I look at it like it’s Venture with a little bit of liquidity not a bad thing and it can turn into a lot of liquidity as the money starts to trickle down because you do see as long as the gold price if we’re talking about gold miners silver miners if those prices stay sustained in the 2000s uh anywhere you know you’re going to see very profitable producers what do they do they have to secure their future you know they’ve always used exploration and development Juniors as their proxy arm for their own internal explo exploration they let those companies you know uh dissolve their balance sheet and dilute their balance sheet to go find something and Chase these uh potential discoveries then they find them they start to build them up and they get acquired they get snapped up and we’re starting to see that there was a company that uh MCU and Mining uh who I’ve which I’ve talked about here we had Rob on the show uh that stock just went to a new 52e high by the way and you know Rob ended up electing there’s a company that him and I had discussed this probably close to a decade ago uh little tiny one called Timberline resources in Nevada with some really interesting Assets in Nevada but you know that was a a bit more of a troubled uh drama filled board of directors fighting over nothing but real interesting Eureka Assets in Nevada and the mucan mining bought them they bought them it’s a 01 per of mcguan mining’s market cap it ended up being at $18 million purchase price for a company that was trading at about 7 million in market cap before they started that process got them out of their financial problems and now all of the and I I am a Timberline shareholder and I’ll get you know mucu and Mining stock for that but that was the type of pleasant surprise that I think we’re going to start to W up to more and more often and so that’s just going to accelerate the stronger that the top tier the position that they get into the more that they’re going to go shopping this week I’ve seen some macro arguments as to a plausible scenario in which gold May um find some resistance is largely basically that if the central banks have been accumulating gold um because they’re worried about currency debasement then if we get into an environment of a currency crisis they might end up being being selling their gold to support their currencies and there’s been a lot of talk that it looks like China might be laying the ground for um a devaluation of the rimi now no one really knows but you know they’ve been they’ve been hoing copper so they’ve got some big copper reserves that built up they’ve been talking about you know were they buying gold quite recently and it looks like the evidence was no actually not not in the way that people thought but in this environment we’ve seeing the Yen move and we’re seeing you know a lot of other currencies move there has been that talk but I guess the question there is that maybe we do see central banks turn sellers of gold but I think that these sorts of currency crises they build over time and even if you look at the 1997 currency crisis it took two or three years from Japan trying to devalue in 95 to it really having an impact in 97 yes they can be quite dramatic when they occur but may well be that you just see the bid change from being central banks to individuals and institutions who have actually been sellers of ETFs over the last sort of two years I do you feel that you know if central banks did come out and say right we’re going to sell gold to support our currencies now in a currency crisis isn’t that the fear argument where individuals should be then buying into gold and should be supporting the price the dollar denominated debt for com for countries that are carrying that dollar denominated debt that are seeing uh seeing declines in their own currency it’s very difficult for them to pay back that dollar denominated debt so then they it it feeds on itself and these countries end up imploding even further their currencies become even even weaker so for those groups perhaps but uh I don’t really yeah from a net net perspective the largest you know central banks the G7 these these groups are I mean it’s very recently right record uh physical gold buying uh by the central bank so to flip it to where it’s going to be a big concern on when they’re selling um I just don’t see it in the very near to intermediate term what are we going to do sell our gold to to defend our currency and then not have any gold on our balance sheet and just you know $34 trillion do in net debt with unfunded obligations over 100 trillion I don’t know who’s going to borrow US money you know I I think you need that gold I look at things like turkey for instance we’re in the panic mode where you need to sell the crown jewels in order to um try and support your currencies and stuff like that it feels very very early stage but it’s just you know that that was one of the arguments that’s been going on or that’s been out there because you we had this big Surge and now having a little bit of a consolidation in the gold price you’re talking about a situation where like say you’re the Turkish officials and your L is essentially being used as toilet paper but you can still use it to buy real money so are you going to sell your real money to buy the toilet paper they deal with fulo too Roger you know when you start to see that price get away from you especially in your own currency and now when you’re pricing it even in US dollarss is going to alltime highs and you’re thinking to yourself Gold’s getting too expensive for us to build our reserves we better do it now with our our pile of fiat currency changing tax slightly again but you know we’ve been talking primarily about gold and silver but but gold and gold miners but obviously it’s still in the early days yet but the fact that BHP the Behemoth is looking at anglo-american a slightly smaller Behemoth it’s not just in the gold space it’s actually there is stuff happening in the general extraction business particularly in the metals extraction business it feels again like we are you know people have talked about this long-term story which is a bullish story for a lot of metals across the board it feels like some of those stories are starting to forment not just in the gold space but you that that longevity story is starting to play out in in the mining extraction businesses my favorite moniker Phenom resources these guys have um I joked with the CEO for years I’m like you know you have like 20 metallurgists on your board and on your Advisory Board why don’t you take one of them off and get a capital markets guy in there and I’m realizing from discussions uh with him you know as of the last six months um because Phenom was in they were actually they made a pretty shrewd move early on with their deposit of vadium in uh Nevada and they actually during their uh preliminary economic assessment they went through a process a metallurgical process that they passed patented um to create a high Purity vadium concentrate so this is different than obviously you know we’re talking about a lot of the refining and things in in Precious Metals but to your point um I think they’ve been seeing some incredibly large uh Mammoth scale companies that have started to show interest in in that process and in those patents um because that is a very very attract active business going forward for certain folks and so you are seeing a lot of that activity from the top on down at least in terms of conversation movement tests uh a lot of things that really aren’t out there yet that I think could end up really getting the Market’s attention um for some of these different angles that are happening out there in the mining business so yeah we’re seeing it we’re seeing it start but as you know I mean I think this is just early days on the m&a side uh because as you get companies that are in a stronger position from the metals prices and they’ve got more cash on the balance sheet cash flow and then they start to look just like we do as people we start to look what can I go buy now what’s interesting about this space is that you know we obviously talk about it every week and so we sort of see small moves to the upside breaking out we get really excited I was actually talking to another friend um who’s in this space and I was sort of saying how it’s getting very exciting and he is more of a realist having been like yourself but on the institutional side he said well Roger I wouldn’t say it’s it’s it’s hot yet it’s sort of it’s going sort of maybe from lukewarm to slightly less lukewarm because overall the sentiment from the institutional side the individual side Still Remains we hate this sector we’re not involved in this sector and at least up until the last couple of weeks they’ generally been net sellers rather than buyers the awareness is still only just shifting at the margins I mean those are the stages you want to see right early on you still have a lot of skepticism uh some hate um I haven’t felt comp H yet to go back through like comments on the YouTube when we did the uh the piece on the four different individual companies that we I was highlighting and um it’ll be interesting we should probably go through that somewhat soon and see where those are the the reality is that with some of those stocks they’re up but they’re not up like some incredible amount so you know the the the hate though that was spewed out of the gate yeah that’s the consensus that’s been out there with much of trafi um but I think that yeah we’re you know I I don’t like to see a bunch of enthusiasm uh from you know from even the institutions uh broadly on this stuff we’re not going to see that until we are getting you know mature in a bull cycle and there is a lot of fomo and we’re not even close to that yet in the miners I mean this is the beginning there’s still a massive opportunity in my opinion you need to be deploying capital capital into the space into hard assets into monetary assets into the equities that mine and or explore for the assets I think you’re seeing some of the ones that are going to be the Future Leaders within the space they’re getting stronger bids and they’re getting highlighted but the general consensus the the middle of the pack and lower those things are still dead in the water they haven’t budged the Ft in the last couple of days and we’re filming this on the 29th um of April but I think they showed I think it’s a chart from Scotia Bank which showed the valuations of the sector still pretty much being at rock bottom and like you said although some of these price moves are dramatic if you look over six months when you look over six years plus you can see the higher highs from three years ago six years ago are very very clear and obviously from 2011 are way up in the stratosphere compared to where we are today so maybe this is what we do next week is was maybe we just do do a quick review and have a look at some of these names see where they are and see what sort of um price action we’ve seen compared to where their historical prices have been just so people can get a sense of of what’s happened but potentially where where they can still go we had a day you know I believe I forgot which day it was last week where we had gold and gold miners were up the markets were down big I think it was th Wednesday or Thursday and we may see more of that type of activity so that will bring in more Capital into this space on some of the gold mining and silver mining companies I think we’re not quite like at you know you ring the the Bell like you better get on or you’re going to be lost but some of these uh we’re pretty close like you need to be looking here if you want value that actually can provide returns in a cyclical space that has historically proven itself to be so in the beginning of a new cycle it’s where you’re going to make the most money because if gold is going to 3,000 I mean you want to talk about the margins that a lot of these producers going to have at 3 3,00 3200 2800 versus even 23 2400 these are going to be cash flow machines and that is going to be those are things that people want to own institutions and Retail alike we’ll have a chat about those uh next week and uh and put some of those back on the radar thanks very much Eric good to see you again you too Roger thank you [Music]
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The price action in some gold mining stocks has started to pick up, even as the price of gold continues consolidating. We’ve also seen an increase in corporate activity across the wider sector. As part of a series in partnership with the Gold Investment Letter (https://www.goldinvestmentletter.com) and Phenom Crypto Letter (https://phenomcrypto.com), Roger Hirst speaks to Eric Muschinski about the nascent breakout in some of these names and the potential for them to go further.
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