It’s been an eventful last few weeks across financial markets. Gold has jumped ~$70 per ounce in less than two weeks as financial markets have begun to price in Fed rate cuts during the second half of this year. Meanwhile, trade war turmoil has roiled equity markets and industrial commodities such as copper and oil. However, towards the end of last week we saw a sharp U-turn in many market sectors as optimism around trade tariffs and Fed easing encouraged traders to pile back into stocks and commodities. In my latest conversation with 321gold founder Bob Moriarty we discussed a wide range of topics including President Trump and his trade wars to some of Bob’s favorite junior miners. Without further ado here is Energy & Gold’s June 2019 conversation with Bob Moriarty….
Goldfinger: I was mentioning yesterday after I heard the news about Trump banning travel to Cuba for Americans, and I said, “This is the first time in my life, almost 40 years, that I felt like I’m living in an occupied country.” I feel like our freedoms are being taken away from us more and more, and even though Trump has this guise of being a patriot and pro-freedom, a lot of his policies are not pro-freedom, including tariffs on trade and restricting travel and putting embargoes on countries.
Bob Moriarty: Well, let me put it this way. You do what is in the best interest of your own citizens. And I’ll be candid, do you have any idea when the embargo on Cuba started?
Goldfinger: 1960, ’61?
Bob Moriarty: I think it was 1960. The revolution was in 1959, I think the embargo started in 1960, but it could be ’61. My God, it’s like 60 years ago, what exactly … how are we better off by putting an embargo on Cuba? Haven’t we done enough damage to the Cubans?
Goldfinger: I think we have. They’re living in the prehistoric era driving around 1950s Chevrolets, cars that are actually falling apart. They’ve magically been able to keep a lot of those cars together for so long, but even with their ingenuity, a lot of those cars are falling apart just due to rust and old age. But yeah, we’ve damaged that country tremendously, and embargoes on Cuba are a great scapegoat or a great excuse for the politicians, the leaders of Cuba to blame everything on. If anything goes wrong, they just blame it on the US.
Bob Moriarty: Well, here’s what’s very funny. When Castro, Fidel Castro was running the country, what country in the entire world had never changed leaders at the top? Who had had the same leader for the longest period of time?
Goldfinger: Probably Cuba.
Bob Moriarty: Cuba, of course. You’re absolutely correct. Trump does so many things that I simply cannot see any advantage to, and I see lots of downsides to. This whole thing with tariffs, nobody wins a trade war, period, everybody loses. You couldn’t even figure out how much foreign parts there are in an automobile. Automobiles are international now. The idea that you punish somebody with tariffs … And at the same time, it’s making the president of Mexico look like a hero, because they can say, “Well, see these nasty North Americans are pushing us around.” Trump is a bully. Who ever heard of a bully succeeding in life?
Goldfinger: Yeah, that’s exactly right. And we had a car industry in this country, we still do, but we had an American car industry for, what was it, 70 years, more than 70 years, and it ended, or it got a lot smaller, because of unions and because of the high cost of labor. Who wants to pay somebody $60 an hour to work on an assembly line in Ohio when they can pay them 60¢ an hour in China? It’s just pure economics. So, Americans are not going to work any job, basically, for less than $15 an hour, and a skilled labor job, $50, $60, $70 an hour. You just can’t keep up with foreigners in terms of their willingness to work hard for low wages. And that’s just simple economics. There’s no way around that, there’s no way around that, and if Americans want to pay $100,000 for a Ford, that’s what they’re going to get with these tariffs.
Bob Moriarty: Well, here’s what’s crazy. There actually is a way around this. I went to college after I came back from Vietnam, and I was taking a sociology course and I was talking about the value of the US dollar compared to currencies in the rest of the world. Now, bear in mind it’s going back to 1972 or 1973 and the dollar was on top, and I said, “Look, it doesn’t make any sense whatsoever for the United States to have 45% of the world’s GDP and 6% of the world’s population. There is nothing special about Americans. There are smart people in every country in the world and they would like to eat and they would like to compete. So, either the value of the US dollar goes down or the value of foreign currencies go up, or both.”
And the really strange thing is that most of the time, when I came up with a theory, the instructors would agree with me, because they were a lot smarter than the students. But in that situation, everybody from the instructor on down poo-pooed it. We were exceptional, we were the greatest country on earth, we would lead the world forever. Well, that’s bullshit. The German’s built superb cars and Americans realized, “Hey, we’re getting lousy quality, we’re getting lousy paint jobs. You buy a car that’s built either on a Friday or Monday, it’s a piece of crap.”
But you’re absolutely correct and it hit the nail on the head. What destroyed the steel industry in the United States?
Goldfinger: Labor unions.
Bob Moriarty: Labor unions. What destroyed railroads in the United States?
Goldfinger: Labor unions.
Bob Moriarty: What destroyed the automobile industry in the United States?
Goldfinger: Labor unions.
Bob Moriarty: What destroyed the aviation industry in the United States?
Goldfinger: Labor unions.
Bob Moriarty: Exactly. If you go back to the 50s and 60s where there was unlimited demand for American products, they could and did get away with murder, and their demands were excessive. Basically, it meant that if one person working in Detroit cost Ford or GM or Chrysler $100,000 a year total, and you had people in Mexico and you had people in Japan, you had people in Korea who were willing to work for a lot less money. Well, now the cost in Japan is the same it is in the cost of the United States, but the labor unions never gave up their power, they never got reasonable, and they would rather see the industry destroyed than crank it back.
The unions of the people who work for the government, the firefighters, the teachers, the police are what is going to destroy the United States as a country. If you look at Chicago, if you look at Illinois, if you look at Washington, DC, if you look at California, none of these entities can possibly survive, because they’ve made so many promises to the public unions, and if you think the unions are going to back down, they’re not going to. They would rather see the United States destroyed than give up a cent.
So, to the extent, I’m not anti-American, but Jesus, I mean it’s going to get ugly, and now you got idiots like AOC who thinks that Cheerios are donut seeds.
Goldfinger: It’s a very interesting topic and we could spend hours talking about labor unions and human nature and all of this stuff. It’s a very interesting and robust topic, but you’re right, the simple fact is, and it’s not going to change, US is a high cost of labor country, and even though we create and manufacture some amazing products here, those products are very expensive, and China and Vietnam and who knows where else can manufacture comparable, very comparable products for much less.
When an American walks into a Walmart store, they want to get the cheapest price they can, that’s why they’re there. And if Americans want to pay double or triple for all their stuff, then great, let’s have a trade war and let’s have it all made in America. I guarantee you that’s not going to win votes, that’s not going to be popular in 2020, people paying double and triple for everything at Walmart.
So, my question now is … let’s segue this into the market and current events. How does Trump get out of this situation? He’s a bully, we have established that. We know his history, he has a history of getting his way by threatening and bullying people, either financially or through lawsuits, or whatever, and he has a history of getting his way, he became president that way. He’s a unique individual in that he’s able to bend other people to his will, but I think that he’s met his match with President Xi of China. I don’t think China’s going to give in here, so what does Trump do to save face for himself with this whole thing? Or is this just going to spiral out of control?
Bob Moriarty: Okay. When you were six years old and you played with the other kids in the sandbox and you were the biggest kid and you could push everybody around, what would happen?
Goldfinger: I don’t think I pushed other kids around, so I’m not exactly sure, but I think that what happens in those situations is that everybody gangs up on the bully and tells him to stop, right?
Bob Moriarty: Yeah, of course. Okay, here’s what’s crazy. There are some things that are absolutely predictable that and nobody ever wants to ask the right question. Look at the issue in the Middle East between the Arabs and the Israelis. Now, the Israelis are nuclear-armed, they’ve got the most powerful military in the entire world, they’re totally willing to ignore international law, and they’re quite willing to murder 10-year-old children playing soccer on a beach. Are they going to win in the long-term?
Goldfinger: Well, they’re not going to win human hearts in the court of public opinion, but who’s going to make them stop? They have a few hundred nukes and they have 10,000 tanks.
Bob Moriarty: If anything, it’s the boy in the sandbox. I don’t give a shit how big you are, I don’t give a shit how powerful you are, somebody’s always bigger or more powerful, or they just gang up on you. Now, the really funny thing is that Trump’s making a giant mistake with Iran, because clearly Iran does not have a nuclear weapons program, they’re not the aggressor in the Middle East, they’ve never invaded anybody. They’re peaceful, nice people. They just want to be left alone, which is perfectly reasonable. And by saying nobody can buy oil from them, he’s telling China, he’s telling India, he’s telling Europe, “You cannot do what’s in your own best interest. You have to do what’s in our best interest.” I’m not sure, have you ever heard of the term paper tiger?
Goldfinger: Yeah, I sure have.
Bob Moriarty: What’s a paper tiger?
Goldfinger: A paper tiger is somebody or something that looks mean and scary, but in reality they’re not threatening at all.
Bob Moriarty: It’s not quite that complicated. When the Chinese have a parade, they make up paper tigers and they get 15 or 20 people to get inside the tiger and they run down the street, and the tiger is scary, right? But it’s a paper tiger. It may look threatening, but isn’t threatening.
When you’re willing to go to the wall against England, against China, against Canada, against North Korea, against Cuba, against Venezuela, against Iran, against Syria, against Afghanistan, what’s going to happen eventually? Eventually everybody’s going to say, “Hey, this guy’s nuts. We don’t have to deal with him. Why don’t we make the rules that’s good for us?” And every country can and should do what’s in their own best interests, but being a bully is never in absolutely best interest even if you have a short-term advantage.
I’m astonished that he’s willing to screw with China and Mexico and India and China, well, China I’ve already said, he’s willing to screw with all these countries on tariffs all at the same time. And the funny thing is, he comes out, he signs a bill and he says, “Okay, there’s a 25% tariff on Mexico,” and you’re operating a company that either buys or sells from Mexico, how long does it take you to figure out how much tax you need to pay or how much you collect? The burden that he’s putting on companies is staggering, and we’ve got an economy that’s so unstable that a butterfly flapping its wings in Mexico can cause a hurricane in China.
Goldfinger: So, you’ve laid it out pretty well, but you still haven’t answered my question in words of one syllable. What is Trump’s move here? He’s painted himself into a corner, he’s clearly a narcissist, he’s clearly a professional liar, he spins everything to his benefit or what he thinks is his benefit. And I believe in my life experience, people who lie a lot, they convince themselves that their lies are the truth and that’s how they’re so good at lying. I believe that Trump is one of these people. Maybe he really thinks that tariffs and trade wars are good for the United States, maybe he really doesn’t understand economics at all.
Bob Moriarty: Oh, wait. Are you kidding? The guy is so ignorant of economics that it’s just flat scary, and it’s terrifying to me that AOC sounds more reasonable than Donald Trump. If you’re holding hand grenades in your hand and you pull the pin and release the spoon, what’s going to happen eventually?
Goldfinger: You’re going to get hit with some shrapnel.
Bob Moriarty: It’s gonna blow up. Now, do you know I have been forecasting the market cratering? I called the top in January of 2018, I called the bottom on December 24th of 2018. I said six weeks ago that we were going to have a top and then a correction. About a week before it happened, I said, “Okay, we’re a few days away from the top, and now we’re in it, and we’ve had a dead cat bounce. This is the most unstable financial market I have ever seen or read about. There are so many bad things, it’s just so out of control that nothing good can happen. So we get another dead cat bounce and then it’s all over.
Now, you get a new job and you go work for a mining company, the boss sends you to town to pick up a barrel full of nitroglycerine. When you drive back to the mine, what’s on your mind?
Goldfinger: I don’t want to shake the car too much, because it could blow up.
Bob Moriarty: This thing is so dangerous, I don’t want to do anything. This is not the time for Donald Trump to be saying, “My dick’s bigger than your dick,” for two reasons. One reason is that nobody gives a damn how big his dick is, and the second reason, the system is so unstable that seeing that little tiny weenie might make people laugh so hard they would crater the system. This system is dangerous, and anybody who doesn’t understand it … You know who Stan Druckenmiller is, don’t you?
Goldfinger: Stan Druckenmiller, yep. He had a great interview last week.
Bob Moriarty: He did an absolutely great interview and he said, “I saw this Twitter from Trump and he’s going to have a trade war with China. I said, ‘Holy shit,’ sold everything I have and put it into Treasury bonds.” Now what instrument is referred to that’s generating the risk-free rate of return?
Goldfinger: The US 10-year Treasury note.
Bob Moriarty: Okay. In all of history, what financial instrument has there been with no risk?
Goldfinger: There’s no such thing as no risk. There’s always risk, just varying levels of risk and different types of risk.
Bob Moriarty: No shit. And you know who Walter Wrinston was?
Goldfinger: No.
Bob Moriarty: He was the head of Citicorp back during the 1970s and early 1980s. Walter Wriston was the George Soros of the time and quoted constantly, and people would talk to him about this debt all over the world, and Walter Wriston was very famous for saying, “Countries don’t default.”
Now, anytime you hear someone say something that is so obviously wrong on the face of it, you owe it to yourself to say, “That’s bullshit.” And as much as I like Druckenmiller, and he’s quoted as being one of the smartest guys in the entire financial world. T-bonds? Nowhere else? Are you shitting me? As soon as you say any market has no risk, the risk doubles. When you’ve got 250 trillion dollars worth of debt in the world and everybody who can add and subtract agrees it’s not going to be paid back, you have a lot of risk. In everything but especially in what is considered risk free.
Now, let me give you a number as far as … I don’t think you would know this, but you got any stupid, wild-ass guess as to how much the Vietnam War cost?
Goldfinger: It’s in the tens of billions. I don’t know, it’s a big number.
Bob Moriarty: Yeah. The number that I’ve heard, and I’m not going to swear by it, I’m just going to say it’s better than anything else that I heard, the number that I heard was $500 billion. Now, if you look at the cost of Syria and Afghanistan, and Iraq, you are up to $5 trillion, so 10 times the entire cost of the Vietnam War. And let me put that into perspective. What single factor caused all of the inflation of the 1970s?
Goldfinger: What was the cost of all the inflation?
Bob Moriarty: No, the cause. What made it happen?
Goldfinger: Probably a lot of that war spending, but it’s hard to understand some of these inflation shocks, because the economy was much different in the 70s than it is now.
Bob Moriarty: Yeah. Well, it caused the oil crisis. In real simple terms, it added a lot of instability to the world’s financial system. The United States had, I think, 55% of the world’s GDP in 1946, and that was unsustainable. It was down to about 30%, I think, by the early 1970s, and it was still unsustainable. You had a potentially big barrel of nitroglycerine, so you wanted to be very careful. And then the United States came along and runs this 10-year war in Vietnam that had no particular purpose and it cost a lot of money, and it’s accurate to say the $500 billion that the United States spent on Vietnam, they just exported inflation to the rest of the world.
When I was a kid, gasoline was 29¢ a gallon. A barrel of oil could be raised in Saudi Arabia for as little as 10¢ a barrel. OPEC was started in 1969 not to raise the price of the oil, they were started to make sure the price of oil didn’t go down any lower. So, with all of the inflation and the explosion in the cost of energy in the 1970s and the decimation of the American automobile industry started from $500 billion, what would something 10 times as big cost?
And I’m going to tell you, absolutely, in hindsight, we’re going to realize that this insane war in Afghanistan, in Iraq, in Syria, when the piper comes to be paid, it’s going to be a price that Americans certainly are going to be very disappointed to pay, because their standard of living is going to go down. Now, can you name a single tax that you pay that goes to pay for the war?
Goldfinger: A single tax that I pay? Well, federal income tax.
Bob Moriarty: Yeah, did that go up when the U.S. went to Afghanistan?
Goldfinger: No.
Bob Moriarty: No, it didn’t. Nothing changed. Nobody increased taxes. We have a $5 trillion obligation over a 20-year period. We never raised taxes, we borrowed money for everything. So, the United States went from the biggest creditor nation in the world during the depression to being the biggest debtor nation in the world today. Now, that simply cannot end well.
Goldfinger: It’s really interesting, Bob, because this brings me to another point. Economists and goldbugs have been talking about the end of the US dollar as the reserve currency for my entire life, literally my entire life. There’s been various prognostications about the federal deficit, the national debt, the unfunded liabilities, yada, yada, yada, yada, even the government shutdown in 2011, government shutdown last year.
There’s all these doom and gloom things that have come up over the years, and through it all, the US dollar has remained relatively stable and actually a strong currency, and Treasury yields have remained low, and in some cases going lower. As bond prices go higher, people want to buy even more of this US Treasury paper. It’s a paradox that this country that is spending more than ever, running up huge debts and deficits, and the unfunded liabilities, we don’t even comprehend how big they are, federal government unfunded liabilities on the order of $70 trillion dollars now. That is such a large number that it could never be paid or met in any way, shape, or form. We’d have to sell the whole country.
But now you bring an interesting factor into the equation, and that is Mr. Donald Trump. As long as the US is trading freely with the world and has military bases around the world and it’s helping to subsidize other countries’ armed forces, doing all these things to be friendly, it makes sense that the US dollar will continue to be the reserve currency that everybody uses and settles trade and debts in.
However, protectionism, trade tariffs, and the US trying to isolate itself from the world is literally the perfect black swan to blow up the whole system, because if people stop using the dollar, stop buying Treasury debt, then it’s all worthless. The dollar will spiral downward and bond yields will skyrocket and crush the economy. I believe that we are teetering on the brink of the most perfect unforeseen black swan, and not many people are talking about it.
Bob Moriarty: Oh, well, here’s what’s funny. I just read an interesting article but somebody was talking about Americans, and he said, “With all of the information that is available to people today, Americans just no longer have an excuse for being ignorant.” And I’ll be candid. If an American has got a six-pack of beer and his television works, he doesn’t give a shit. And where citizens should be concerned and citizens should be wearing yellow vests and citizens should be on the Mall in Washington, they’re at home watching Monday Night Football. There’s no period in time in American history that’s been so dangerous to freedom as today, and the average American is totally oblivious to it, they’re absolutely couch potatoes. They believe every bit of bullshit that the mainstream media feeds them, and I feel bad because I know that ignorance is never rewarded.
Goldfinger: Let’s turn to precious metals and the junior mining sector. So, we’ve seen gold jump from $1,280 last Thursday morning to $1,348 this morning as the dollar has taken a hit lower, and we’ve seen a lot of gold mining stocks have some big moves this week. Is this a sucker’s rally or is this the start of a much bigger move in mining shares?
Bob Moriarty: I’m of mixed emotions. I think you and I have talked about it, and I’m on record. I believe that gold and silver, platinum are going to continue down into June or July. I would be happier with a lower price at middle or end of July, but there’s no question it’s been a very strong move, and certainly Trump kicking that barrel of nitroglycerine around, sooner or later something bad is going to happen.
Goldfinger: All right. So, you’re being a little coy there with that answer. So, do you think that we’ve put the bottom in? Is the bottom in and it just might go sideways for a while, or do you think that we need another shakeout to make a real bottom?
Bob Moriarty: I think there are 148 people who will tell you what the price of gold and silver are going to do tomorrow, and I am just unfortunately not one of them. Those, from a sentiment point of view, should not be at the bottom. Silver could be, because the speculators have gone net short for only the second time in the last 20 years. Everybody talks about the commercials, which is really funny.
The commercials are the same as the blackjack dealers in Vegas, they don’t have anything to do with the bets. When you walk up to a blackjack table, you determine how much the bet is, you determine what you bet on, et cetera. The blackjack dealers just flip over cards and there’s a set of rules that they have to adhere to. When speculators, not the commercials, when the speculators make massive bets on the price of silver going down, it’s the bottom. They have not done the same thing. I’m going to be equivocal, because for an equivocal situation, these speculators have been more bullish on gold and more negative on silver. So, I don’t think gold has hit the bottom, but I’m going to say maybe it has, it wouldn’t be the end of the world. I will say when the shit hits the fan, you’re going to want to hold some resources.
Gold (Year-To-Date)
Goldfinger: Absolutely. So, now turning to the juniors, there’s two companies in specific I want to ask you about, but I’m also open to you talking about any ones that you want to share. Are there any companies that strike your fancy here? Is there anything that you think is really interesting out there right now? And then if you’d like to comment on Irving (CSE:IRV) and Novo (TSX-V:NVO), I think that Irving is forming a very interesting chart pattern here, and I actually bought some for the first time this week, so that’s interesting. I took a little tiny starter just to get my feet wet.
And then Novo has been a really poor performer in the last several weeks and actually made a new two-year low at C$1.87. And then we learned that one of the board members sold 475,000 shares and he filed his insider filing two months late. Do you have any thoughts on that? And what’s going on that this company has board members dumping stock and then not filing it in the appropriate timeframes?
Bob Moriarty: Well, a lot of times, and I won’t speak specifically about Greg Gibson and Novo, but a lot of times when board members aren’t getting along with the company, they will go out and do something that harms both them and the company, and I think that somebody dumped shares in a very illiquid market, and anybody smart enough to be buying shares in there was given a free ride. I think it’s just an exceptional opportunity, and Greg Gibson obviously sold out at a really poor time, but I won’t miss him.
Goldfinger: Okay, so can you get us up to speed on Irving and what we should expect from that company?
Bob Moriarty: There will be results out in probably two to four weeks. They’re on hole four now, hole three is finished and it’s been sent off to Australia. I don’t think there’s any doubt whatsoever. Nothing has changed in what I believe about Irving. They are going to have one of the biggest and highest-grade gold mines in the world. It’s going to be Hishikari-grade. The initial discovery hole was virtually identical to the discovery hole at Hishikari, and their land package is several times that of Hishikari.
But here’s what’s really interesting, anybody who’s an investor, I want them to think about this. Japan is probably one of the most difficult countries in the world to start a drill program. The Japanese are wonderful people, but they haven’t had any drill programs in the country for 70 years, and they literally have to be retrained. They don’t know how to do things there.
It’s not like Canada. My God, your mother-in-law in Canada knows more about drilling than all of Japan. Japan is a wonderful country to work, the people are fabulous. I just love everything about Japan. I’ve been to Japan probably 15 or 20 times and I think they’re super. From a mineral point of view, the grades and tonnages, it’s absolutely exceptional. But Irving is doing something for the first time, they’re doing it absolutely correctly, and things that would take two days in Peru or Chile take a month in Japan. Investors just have to be patient.
But we should talk about Miramont as well, because they came out with results today too. You have to accept that sometimes time takes longer than you wish that it would. But I don’t doubt Irving’s a deal, Lion One’s a deal, Novo’s a deal, Irving’s a deal. These are just all great companies.
IRV.CA (Daily)
Goldfinger: Are there any other companies that you’ve seen some news from that you want to talk about? Is there anything that’s really standing out to you right now?
Bob Moriarty: Okay. There is signal and there is noise, and when you’re doing a phone call or a Skype call or radio transmission, there is signal and there is noise, and it’s vital in investing that you pay attention to the signal and ignore the noise.
Now, Miramont came out with an update on a four-hole program in Peru at Cerro Hermoso, hole 13, encountered 393.4 meters of breccias with sulfide veinlets and disseminations, and there’s some pictures in the press release. The interesting thing here is let’s look at the facts, let’s not talk about opinions, let’s look at the facts. In the last year, the lowest price Miramont’s been was C$.12. The highest price that it’s been is C$.63. And the interesting there is the C$.63 was before they actually drilled anything whatsoever. They’re in elephant country, they have good management, they have $3.5 million in the bank, and it certainly … it was a crapshoot, but it was a crapshoot with good odds.
Now, as of this morning, when they came out an announced was a 393-meter hole, the shares were at C$.15. So, if the lowest price the stock’s been in the last year was C$.12. If they didn’t find anything in 393 meters, what kind of potential downside is there to the stock?
Goldfinger: Pretty limited.
Bob Moriarty: Three cents. They have C$.06 per share in cash and there’s no reason for them to drop to C$.06. When they had an absolutely disastrous drill program and really poor press release, it only knocked the stock to C$.12. So, if it’s at C$.15 now, maybe it’ll go back to C$.12, but a 3¢ lost on a stock or 20%, that’s no big deal. But let’s say that 393 meters was something attractive, and all the stock did was go back to what it was, say, three months ago. So, then you go from C$.15 to C$.63 or you have an increase of more than 300%. .
A lot of investing is not logic, it’s mathematics. If your maximum downside is $.03 and your maximum upside could be several hundred percent, it seems to me a speculation at current levels would make a lot of sense.
You could look at Aurania, they have come down almost a dollar a share because investors were getting bored because they hadn’t had any action, and it’s a lot more attractive at $3.10 than it was at $4 even though nothing has changed. But should gold continue going up from here or should I be correct and the low will be in mid to late-July, the gains in shares are going to be enormous. The next move is going to be a very positive one.
MONT.CA (Daily)
Goldfinger: I think that we’re finally getting to this time when, as you say, a monkey can throw darts at a stock watch list of gold shares and be right, because everything is going to fly, and it will matter a lot less the specifics of the company’s story, it will matter a lot more that you’re just investing in the right sector.
Bob Moriarty: Well, two things to think about there. You’re implying that resources are the right sector, and what I’m going to suggest to you is that the biggest factor is not that resources are going to necessarily going to be the best area to invest in, everything else is going to be the worst area. We have the everything bubble, and the everything bubble is blowing up all around us.
Goldfinger: Final question, your favorite topic. Bitcoin and cryptocurrencies. We’ve seen bitcoin jump to $9,100 last week after falling as low as $3,100 last year. What are your thoughts here on bitcoin and cryptocurrencies?
Bob Moriarty: Anybody that invests in them, you would be better off going to New York City and playing a shell game on 42nd Street. Now, you mentioned the high of bitcoin, but when it hit 9,100, what did it do then?
Goldfinger: It dropped to about $7,600.
Bob Moriarty: $7,654.33. Let’s talk about manipulation for a minute. Can you name a financial market that is not manipulated?
Everybody manipulates every market. You can’t define one that isn’t manipulated, because they’re all manipulated. But arguably, sometimes you could say a market is so manipulated that maybe staying away would be a good idea. I think there’s like 10 guys who are billionaires who have made their money on bitcoin, and these guys saw the potential for fraud. There is no market that I ever heard of that is quite as fraudulent as bitcoin and the very many derivatives of it that now exist.
When I was writing about calling the top, calling the top accurately I might want to point out, in December of 2017, there were about 1,300 variations of bitcoin. There are 2,648 today. So, you can’t actually come up with anything and say, “Here is something unique about this product that makes it valuable.” You can’t say, “You can do this with it or this with it or this,” it just … it’s an electronic Beanie Baby. It’s the most dangerous market that I’ve ever seen and it’s a market that will continue to steal from ordinary investors who think they’re doing the right thing. They’re always going to be buying at 9,100 and they’re going to be selling at 3,000.
People need to be extremely skeptical and they need to do what is safe. I think in my book, you read the book, I said that this was the year of the great reset, and I absolutely believe that we’re right on track for it and I think there’s some really, scary, scary times ahead. And I would love to say, “And I get paid for saying that,” but I don’t get paid. I don’t want to see it happen, I just believe that it is going to happen.
Goldfinger: So, how does one invest safely? If somebody had a million dollars right now and they didn’t know what to do, how does one invest safely in this environment?
Bob Moriarty: I would invest in the safest, most liquid possible investment that I could invest in. I would put half or 3/4 of it into something I could hold in my hand, and I speculate with a very small part of it. But I gave you the mathematics on Miramont. I could talk about Lion One, they got a 10-bagger potential, I could talk about Irving, they have 10-bagger potential, I could about Novo. They are going to have some incredible news this year, and … Or you can invest in T-bonds.
Goldfinger: So, tell me if I’m wrong here. This is what I hear you saying. If I have a million dollars that’s sitting in a checking account right now and getting almost zero interest and I want to invest it, you would recommend putting 500,000 of it, roughly, into precious metals, physical precious metals, a basket of gold, silver, and platinum, putting it in a safe box or a vault somewhere, and then taking another slice of it, maybe 200,000 or 250,000 of it, putting it in T-bonds, and then using the other 200,000 or 250,000 and sprinkling it around various junior mining stocks as the home run speculation side of your portfolio. Is that right?
Bob Moriarty: Correct.
Goldfinger: I’d like to thank you for your time and insights Bob. It has been thought provoking as always. Being extra skeptical and cautious seems to be the theme in your thoughts today and investors would probably do well to pay heed to your cautious sentiments.
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