Energy & Gold connected with 321gold editor & founder Bob Moriarty one last time before 2017 arrives and the conversation was wide ranging and insightful. Bob is more bullish than he’s ever been on precious metals (PMs) and points to a 20+ year low in investor sentiment on PMs as one of the main reasons why he’s so bullish. Without further ado here is Energy & Gold’s year end interview with outspoken and unapologetic precious metals investor Bob Moriarty.
CEO Technician: It’s been quite a year in the precious metals sector. We’ve experienced the full array of market sentiment throughout the year; beginning the year with extremely depressed market conditions which evolved into euphoric sentiment during the summer, and now we are back to depression. What is your sense for where we are at now in the market sentiment cycle?
Bob Moriarty: As you well know i’m a contrarian, and in 29 years of measuring sentiment in gold the sentiment is the lowest it has ever been. This is exactly the kind of sentiment which marks bottoms, major bottoms. We had a major trading low in December 2015/January 2016 and we’ve got another one forming right now. I believe this bottom is going to be even more impressive than the one in January 2016. I continue to believe that this is the greatest buying opportunity in the history of the precious metals mining sector – the last chance to hop aboard the train before it leaves the station.
CEO Technician: Your sense is that sentiment is at least as depressed as it was last year at this time and the buying opportunity is at least as significant?
Bob Moriarty: Sentiment is actually more depressed right now than it was last year. My opinion is that this is a tremendous opportunity.
CEO Technician: Does the recent decline in gold from ~$1370 to ~$1130 endanger the thesis that 2016 marks the resumption of the secular bull market in gold?
Bob Moriarty: Anyone who has read my book Nobody Knows Anything knows that the deeper the crash the better the bull market that results from it will be. When everybody else is real negative I get real positive and I believe that there is a very good chance that gold and silver are about to make higher lows relative to the January 2016 lows.
CEO Technician: We know you are positive on the precious metals space, are there any other investment themes/sectors that you find attractive heading into 2017?
Bob Moriarty: There are some catastrophic things going on in the world. The oldest bank in existence (Monti De Paschi) just required a $20 billion bailout in Italy and it is still bankrupt. The Spanish banks have been giving loans at variable interest rates since 2009 but they didn’t bother telling anybody that if interest rates went down they didn’t actually lower the interest rate the mortgage borrower was paying. The EU courts have said “sorry guys that’s illegal” and they now have to refund all the interest that people have paid above what they should have been paying going back to 2009.
Then if you look at the American political system we are seeing end of empire type stuff. The things I have seen in this election I would have never believed possible. Hillary Clinton stole the nomination from Sanders and they admitted it and got caught. Then they tried to steal the election from Trump and that didn’t work because there were too many people who despised Hillary Clinton. So they got a 3rd party candidate to go in and demand a recount. The recount not only proved there was fraud on behalf of the democrats, Trump actually picked up votes.
CEO Technician: Turning to the Middle East powder keg, the Russian Ambassador to Turkey was assassinated by a Turkish special operations police officer earlier in the week. It seems that Turkey continues to deteriorate, are we about to experience a catastrophic event in the region?
Bob Moriarty: You said everything that we need to know there; a Turkish special operations policeman shot the Ambassador. I would absolutely bet money that Putin is going to do something about this event. He may pretend like he’s not going to do anything about it, but he’s going to get even.
CEO Technician: Yes, so far the Russian response has been muted.
Bob Moriarty: They have a Russian air defense system in Syria that can shoot down Turkish planes inside Turkey. I would not want to be a Turkish pilot right now. Putin is going to get even.
CEO Technician: From my estimation it’s been a bad year for the country of Turkey and Turkey is probably the most important country in the Middle East because it acts as the bridge between the Middle East and Europe.
Bob Moriarty: The one thing that Trump has done that I absolutely approve of is say that Russia is not the enemy. At the same time he’s acting very stupid by acting like he wants to make enemies of the Chinese.
The irony is that Obama won the Nobel Peace Prize and the US has been at war every day under his administration. The big loser in Turkey is the United States who had been allies with Turkey for a long time. Turkey blamed the US for the failed coup and has moved closer to Russia and away from the US ever since. Erdogan is a fruitcake, he’s nuttier than a shithouse rat. He keeps fooling with people he shouldn’t be fooling with. Turkey along with Saudi Arabia were funding terrorists trying to overthrow Assad, but when Putin came in and said “we’re not going to let you overthrow Assad” suddenly that plan went out the window. Syria is still an extremely dangerous flashpoint and I want to be clear that whatever the US was trying to accomplish in Syria, they just lost.
CEO Technician: We’ve seen a so called “Trump Rally” in the US stock market since the election. What are your thoughts on this stock market rally? Is Trump really going to be great for the US economy and the stock market?
Bob Moriarty: The Canadians started this rally.
CEO Technician: What do you mean?
Bob Moriarty: I mean the Canadians started it all by legalizing marijuana up there and it appears that a lot of that stuff got south of the border. Everybody on Wall Street is stoned. (CEO Technician laughs loudly) I don’t know what they’re smoking but i’d like to get a kilo or two. Those people on Wall Street have to be stoned to be buying into this Trump Rally. It’s totally insane.
The powers that be in the congressional/military/industrial complex don’t like Trump because he’s going to bust their rice bowl. I foresee a lot of friction between the powers that be and Trump after he takes office. The market is underestimating the market disruptions that will come with Trump as President.
CEO Technician: What do you think about the recent friction with China? Trump has appointed a vocal critic of China, Peter Navarro, as his head of trade and industrial policy. Then we had Carl Icahn get on CNBC and basically say that we should all get ready for a trade war with China. It looks like tensions are mounting.
Bob Moriarty: It’s extremely dangerous. The important thing to understand about the Chinese is that they are big on face and when someone has just blatantly insulted them. It’s not something you want to do with a country as powerful as China. The thing about the underwater drone was absolutely hilarious because if China wanted to flip the finger to the US that’s how they would do it. They literally plucked the drone out of the water in front of the US Navy personnel operating in the area and said “what are you going to do about it?”
It’s a sign that the US needs to keep to itself in certain areas of the world. What response does the US have? What are you going to do? Nuke them because they stole your drone?
China has interests in the South China Sea and the United States doesn’t. This idea that the US should rule the world and dictate to everybody else in the world is getting a lot of pushback. This is what BREXIT was about, it’s what the US election was about, it’s what the Italian election was about. People are sick and tired of the powers that be thinking that they can rule the world. It’s going to result in the demise of the euro and it’s eventually going to result in the demise of the US dollar.
Insulting your biggest trading partner isn’t a very good idea. Are you kidding?
CEO Technician: We’ve seen gold pressured lower in recent months due to a variety of factors including rising real interest rates and a strong dollar. Can we see gold do well in a generally rising interest environment?
Bob Moriarty: Yes, because gold is an alternative currency. We’re reaching a very dangerous point with the euro and also with the Chinese yuan and the US dollar. We’re going to have a rush to the bottom between currencies and it’s just a question of which one gets to the bottom first. Relative to other commodities gold is actually the most expensive it’s been since 1950. However, it’s the only financial instrument that does not have counterparty risk.
CEO Technician: Going back to investing some of these big picture things take years to evolve and get to the point that a large enough amount of investors pay attention. The Japanese situation comes to mind. For years Japan has experienced deflation and a stagnant economy while being the 2nd most indebted sovereign debt issuer on the planet. And that’s just one example of a major potential black swan circling around right now. How does one invest in this environment and how can an investor protect themselves?
Bob Moriarty: There are so many black swans circling right now that i’m not sure there’s any easy answer. The way I think about it is you don’t want to think about what you want to invest in, you want to think about what you don’t want to invest in.
You want to invest in something real. Not something based on debt. You can do it in corn, you can do it in water, oil, copper, etc.
CEO Technician: How does one invest in water?
Bob Moriarty: There are companies out there that deal with water and offer technological plays on water. But if you want to own something real the easiest way is to hold some gold and silver in your hands. And when you’ve got enough gold and silver in your hands you can then move on to resource stocks. With sentiment on gold at a 29 year low this is the time to be buying and I’ve said it before and I’ll said it again, it’s the greatest time in history to be investing in resource stocks.
CEO Technician: Are there any companies in the water space that you like that you can mention here? Also, are there any other names in the resource sector that you like here that perhaps you’ve invested in recently?
Bob Moriarty: I will give you the most secret stock I’ve ever seen. There’s a company called Irving Gold, the symbol is IRV but it’s a CSE stock in Canada which means it’s hard to trade. If an investor pulls up their website and takes a look at their last seven press releases they’ve got samples that were $26,000 to the tonne. The company has been very quiet and it’s been very hard to buy shares. Eric Sprott has been an investor and there’s a good chance this company could have the richest gold mine in the world and we wouldn’t know it for another one or two years. Over forty percent of the shares are in the hands of three people.
CEO Technician: What’s the last stock you bought?
Bob Moriarty: I bought a stock called Bonterra Resources (BTR.V) with a stink bid at $C.22 and they are going to be announcing drill results in early January. To give you an idea of the potential that I see, on the 8th of December they announced 2 meters of 64.8 grams per tonne gold. They’re going to have 3 or 4 million ounces in Canada and somebody is going to take them over. They have a market value of about C$20 million and they’re really cheap.
CEO Technician: What are some of your favorite websites that you visit daily?
Bob Moriarty: Bob Hoye is a subscription service and he’s nothing short of brilliant. The McClellan Report is also nothing short of brilliant and that’s a subscription service. I go to 30 or 40 sites a day and I try to be as broad as possible. I’m a speed reader and I read up to 100-200 articles a day.
We would like to thank Bob for all of his insights and candidness this year. It has truly been a pleasure and we look forward to a year abundant in opportunity and great success in 2017!
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