Bob Moriarty: A Market Crash Is Coming And Cash Is A Good Place To Be
Typically I try my best to space out conversations with 321gold founder Bob Moriarty by at least one month, however, with everything happening very quickly across global markets I felt it was important to have another chat with Bob. Bob also has some interesting views on what is about to take place across global markets which could have far reaching implications for investors’ portfolios. I also managed to glean some insights on several junior mining stocks including Irving Resources, Novo Resources, NV Gold, and Westhaven Ventures. Without further ado I present you with Energy & Gold’s August 2019 conversation with Bob Moriarty…
Goldfinger: There is a lot going on in the world right now Bob and I figured it was as good a time as any to have a conversation. Let’s start with the US/China trade war and the riots that have been taking place in Hong Kong recently. What are your thoughts on the trade war and the Hong Kong situation which some people are calling the black swan of 2019?
Bob Moriarty: Lets break it down into parts because those are different issues. The most immediate concern is the Chinese government’s reaction to the rioting in Hong Kong. There was some kind of switch that was flipped recently, and I mean in the last week. If you read carefully the stories from Hong Kong the police have turned exceptionally aggressive. They are grabbing people and shoving their faces into the ground, breaking teeth and jaws. China is faced with something very dangerous and that is people wanting their independence. We aren’t talking about just a few people, we’re talking about tens of thousands of people. China has moved paramilitary troops to the border with Hong Kong and all they need to do is shoot a few thousand people and China is going to have a revolution on its hands.
Goldfinger: A revolution? Who’s going to revolt in China?
Bob Moriarty: Everybody. If you go back to the book I wrote three years ago I said there would be the first worldwide revolution and it’s already going on. The yellow vests have been rioting in Paris for 40 weeks and it’s still going on. Just because the media isn’t covering it doesn’t mean it’s not happening. This economic situation that you spoke about that makes you nervous is actually going to present an exceptional opportunity for those that are prepared. However, for those that are not prepared it’s going to be depressing. We are in the fourth turning, we are in the period of ten of twenty years where there is extreme chaos and perhaps war.
Now the other issue is China and the South China Sea. China is saying they control the South China Sea all the way down to Malaysia which they don’t. They’ve gotten away with it so far because they’re powerful but there are some people in the neighborhood who are pretty upset and the United States Navy continues to patrol the South China Sea. All it would take is one stupid Ensign making a mistake to start a war between the US and China. The US government is already talking about how our next enemy is China and my thinking is “Damn, don’t we have enough enemies already?”
Not only does the US have plenty of enemies but now we also have trade wars to deal with. I don’t think the Chinese are going to back down and I think the end result is going to be very ugly.
Goldfinger: When someone has an enemy sometimes it doesn’t have to be stated publicly to know that someone or something is ones enemy. My point is that the US and China are clearly in competition for global supremacy whether we like it or not. Does it matter whether China is our stated enemy publicly because frankly they have been stealing American companies’ intellectual property and spying on US interests for years. Isn’t Trump actually doing the right thing here by challenging China and putting his foot down on some of this stuff?
Bob Moriarty: He’s doing the right thing but he’s doing it for the wrong reasons. When you declare war on everybody they don’t give a damn whether you’re correct or not. Your points are correct in that the stealing and spying shit has to stop, however, Trump is a bully and he wants to push everyone around. That’s simply not a good way to negotiate, in fact it’s probably the worst way to negotiate.
Goldfinger: Changing topics to this Epstein story, which is shocking to say the least.
Bob Moriarty: Is there anyone out there dumb enough to think that Epstein actually killed himself in his cell?
Goldfinger: It’s interesting that you say that Bob, because I believe the most likely theory is that he did take his own life. However, the jail where he was being held clearly allowed it to happen which is equivalent to manslaughter. He had been suicidal, he didn’t have much to look forward to, and for some hard to understand reason they moved his cell mate out hours earlier and the guards claimed that they fell asleep for the three hours during which he committed suicide. There is a lot more information that needs to come out but it’s clear to me that he was either purposely allowed to commit suicide OR there was some foul play involved.
Bob Moriarty: Do you know how Epstein amassed his fortune?
Goldfinger: Well he said he ran a hedge fund…
Bob Moriarty: No, he didn’t. He didn’t run anything. There is nobody on Wall Street who knew anyone who worked for him at his “hedge fund” and there was nobody who could say they were on the other side of a trade he was involved in. One day he just had the money and nobody knew where it came from. There are two men who were the likely sources of much of his wealth, Les Wexler and Robert Maxwell. Epstein’s Central Park mansion came from Wexler and Epstein was very close with Maxwell’s daughter, Ghislaine.
Do you know what the terms were for Epstein’s plea deal with the State of Florida?
Goldfinger: I read it and I know he got off easy considering the severity of the charges.
Bob Moriarty: He had to be a snitch for the FBI.
Goldfinger: Really? You think that’s a fact? Epstein was an informant for the FBI?
Bob Moriarty: I know it’s a fact. He got a deal that nobody in the known universe could have gotten given what they had on him. You had dozens of underaged girls who were prepared to testify against Epstein and when they searched his house in Palm Beach they found incriminating photographs of him with hundreds of girls. Same thing when they searched his mansion in New York City after this latest arrest, incriminating photos of him with underaged girls. This guy was as dirty as you could possibly get which makes one wonder who exactly he was supposed to snitch on for the FBI.
Goldfinger: There are lots of theories and I tend to think that Epstein was also a spy for the Israeli intelligence services.
Bob Moriarty: He was 100% a Mossad agent, that was his connection to Maxwell. He was a pedophile to the Presidents.
Goldfinger: It’s a sick twisted story and it shows how incestuous some of the ultra-wealthy are. Clearly a lot of people knew about what Epstein was doing, some of whom actually took part in his illicit activities.
You’ve mentioned the US is heading for a civil war on numerous occasions and it seems more and more like that with each passing day. We have a President who tweets crazy stuff almost every day and it serves to fire up his base who seem to love him more when he is more controversial. The country seems to be split right down the middle right now and there is not a whole lot of room for moderates. What are the implications for a country that is split in half and the most divided it has been since 1861? Is this also the perfect storm for gold, as not only is the US heading for civil war but we are seeing this crazy negative interest rate bubble that has never happened before? Ray Dalio called it a paradigm shift that tremendously favors gold.
Bob Moriarty: Ray Dalio recently said “If you don’t own gold you neither understand history nor economics.” I think that perfectly sums it up. When I first said that we are headed for a civil war what was your first thought?
Goldfinger: My first thought was that it would never happen.
Bob Moriarty: Well yeah, your first thought must have been that “I know Bob’s lost it now”. But I’ve been saying this for nearly two years, I saw this coming a long time ago. We’ve got politicians calling for the Democrats to go out and murder Trump supporters. I mean this is a crazy time, it’s worse than anything that I thought was possible.
Goldfinger: Let’s turn to the junior mining sector. Novo Resources continues to have a tough time trying to get any traction past this $2.00-$2.50 range it’s been trading in for a while. They put out an NR on Egina recently, what are your thoughts on that?
Bob Moriarty: We have to take a step back a little bit to understand what’s going on with Novo. The hard rock project Novo has at Karratha is one of the most difficult projects to figure out of any project i’ve ever heard of because it’s very nuggety gold in a hard rock environment. The alluvial project at Egina is also quite tricky because for ten months of the year you have no water whatsoever, which makes processing very difficult. You’ve got very nuggety gold so it’s very hard to measure just like Karratha. However, it’s right at surface and i’ve seen areas where it’s 10 meters by 10 meters and they pulled out 10 ounces in total nuggets from that area over a three hour period using a metal detector. Some of what exists at Egina is so special that i’ve never seen or heard of anything like it anywhere else in the world.
Novo is going in and trying to use modern technology to try to figure out these puzzles at Egina and Karratha. They’re using ground penetrating radar and they’re finding out where the ultra-rich zones are should be. At Egina they have something like 1,000 square kilometers, much of which has alluvial potential. The biggest problem Novo has right now is dealing with the government bureaucracy and sorting the native title issues. Quite bluntly there are some areas of Australia that are extremely difficult to work in. Karratha is one of them. Novo is on track and they’re doing a good job, they’re finding gold and they will be producing gold. I think Novo is going to be one of the great success stories in the mining sector over the coming years.
NVO.V (Daily – One Year)
Goldfinger: Let’s talk a bit about the native title issues. I’m not too familiar with Australia but I am familiar with Canada and how things work with the First Nations in Canada. Is Australia similar to Canada in terms of how things work with indigenous groups?
Bob Moriarty: It’s very similar to Canada but it’s more stringent in some areas. Where Novo has the mining title in Karratha, there’s two 5 square kilometer areas where Novo actually has mining rights right now. These areas are on native reserves. So these are actually areas where natives live right now and until they can make a deal with the native group their hands are tied. They are focused on figuring out where the best places to mine will be and they will eventually come to an agreement with the natives.
The real issue is you go on some of these chat boards and everyone wants to know the grade, the size of the project, and when it will be in production. The problem is that mining simply doesn’t work that way. It takes a lot of work and a lot of time to advance a project to the point where it can be in production. There are many more stakeholders in a mining project than just the shareholders. You’ve got the government, the natives, the financial guys, etc. Novo is doing a great job, it’s simply taking some time to move things forward but I believe the size of the potential prize will more than compensate for the wait.
Goldfinger: Another company we’ve talked about recently is Irving Resources (CSE:IRV). Irving put out an NR last week, what are your thoughts on this news release and how things are going for Irving?
Bob Moriarty: Assay labs around the world are fully backed up and no matter where you send your samples, it takes two months or more to get them back. The 2nd hole has already shown an intercept similar to the discovery hole from Hishikari. I don’t know what people are in such a panic about. All of the drilling so far has been above where the main boiling zone targets are. Irving has a shipment of larger core steel on the way to Japan and they will be drilling to the boiling zone as soon as it arrives.
Irving has made marvelous progress and the couple of assays that were in the press release were high grade. I don’t understand the frustration. Drill programs can take years and are fraught with problems no matter where you work. Of more real importance was the appointment of a manager for Japan. Quinton Hennigh was being spread way too thin doing something a full time manager on site should be doing.
The company will be picking the rocks for the 1,500 ton sample and that’s the next major accomplishment. Irving investors would do well to sit on their hands for now and zip their lips. Irving is a wonderful company run by wonderful and talented people. While the Sinter target is true greenfields exploration program, the Omui property was an existing high grade gold mine in production until 1943. It’s not going to be a mine, it already was a mine. The exploration team have plucked from surface samples that ran over $25,000 a ton rock. Irving isn’t going to become a home run for the company and Japan, it already is a home run.
Goldfinger: Let me ask you about a company we talked about at the end of last year, Westhaven Ventures (TSX-V:WHN). Westhaven put out an NR with updated drill results a few weeks ago which showed a bonanza grade hit as well as a high-grade gold intersection over more than 50 meters in the Second Vein Zone. This was significant because there were some concerns that the Second Vein Zone at Shovelnose was narrower and lower grade, hole SN19-10 seems to debunk those concerns. What are your thoughts on Westhaven Bob?
Bob Moriarty: I think it’s a slam dunk, it’s a great story and I think you’ll do well with Westhaven.
WHN.V (Daily – One Year)
Goldfinger: One more name, NV Gold (TSX-V:NVX). This is a stock that came to my attention through you and I really like how the chart has developed, it looks promising and I recently bought some shares.
Bob Moriarty: I bet you don’t own nearly as many shares as I do. I know NV Gold really well. Peter Ball is the President of the company and Quinton Hennigh is an advisor to the company. I think they’ve got the goods and their projects couldn’t be in a better place, Nevada. They have two potentially company making projects and they have just started drilling at their Frazier Dome Gold Project. It’s cheap right now but may not stay that way for long.
NVX.V (Daily – One Year)
Goldfinger: Let’s conclude with your thoughts on the broader market and where gold is at right now. We’ve had a $250 rally in gold since the end of May and I know that you think gold is due for a correction.
Bob Moriarty: I am on record that I believe the stock market will enter into a liquidity crunch in September and then there will be a full-fledged crash in October. This liquidity crunch will also take the gold stocks down with it as the margin clerks will sell what they can to meet the margin calls that are coming. This is a really good time to be sitting in cash and putting in stink bids on the low hanging fruit.
Goldfinger: How much cash would you recommend people have right now? 50% cash?
Bob Moriarty: I can’t say because everyone is different. However, I do know those who will be able to take advantage of the opportunities that are coming in October can make fortunes.
Goldfinger: Bob, I’d like to thank you for your time and insights. We certainly live in interesting times and if your analysis is correct things are about to get a lot more interesting….
Disclosure: Author (Goldfinger) owns shares of NVX.V and WHN.V at the time of publishing and may buy or sell at any time without notice. IRV.CA, NVO.V, and NVX.V are sponsors of 321gold.com and Energy & Gold has no affiliation with IRV, NVO, or NVX.
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