Bob Moriarty, co-founder of 321gold and a well respected market commentator in his own right, has been vocal that October would be a tumultuous month for global financial markets. So far he has been correct that precious metals would undergo a correction which began last month, however, the broader equity markets have remained resilient and there is no sign of even the slightest correction beginning in stocks. I managed to get a hold of Bob last week before he embarked on a trip to Australia to visit Novo Resources – the conversation was wide ranging and I think you will be interested to hear some of Bob’s thoughts on the next junior mining bull market and which stocks will perform the best. Without further ado here is Energy & Gold’s October 2019 conversation with Bob Moriarty….
Goldfinger: It’s been a little more than a month since we talked and a lot has happened, a lot is going on in the world between politics and wars. The last time we talked, the Saudi’s had just been bombed. Their oil had been taken offline. That was pretty clearly a false flag attempt.
It didn’t really work. It seemed like nobody really fell for that.
Bob Moriarty: Here’s what’s funny, and we know that now, because somebody just hit an Iranian tanker with a couple of missiles on Friday. Somebody is trying to stir shit up in the Middle East. That’s all it is. The whole thing.
The attack on the Iranian tanker was a very real attack but it was part of a false flag.
Goldfinger: Yeah. What do you make of this thing? Trump pulling U.S. forces out of Syria, allowing Turkey to just run through Northern Syria.
Bob Moriarty: He scammed Turkey.
Goldfinger: He scammed Turkey?
Bob Moriarty: Sure, of course. He knew he would attack, but he also knew the Kurds would turn to the Syrian government for protection and the Russians. The Russians turned around and said to Turkey “go home”. It’s really funny because it’s a total scam.
He’s managed to get Turkey to back down. He’s by and large got the Americans out of Syria. We were not there legally. We weren’t there doing anything for anybody. The Kurds are just one more gang of people trying to kill other people over there.
Syria has a democratically elected government and we need to leave them alone.
Goldfinger: So, you think it’s a good move for the U.S. to get all of our troops out of Syria?
Bob Moriarty: Absolutely, we were there illegally. We had no strategic interest whatsoever. It wasn’t our war. It was a war for Israel and it was wrong.
Goldfinger: What do you think about Turkey, obviously is not a free country… You could say it’s democratic, but it’s really not.
Bob Moriarty: No it’s not.
Goldfinger: It’s run by one man. They have an interest in the Middle East. They were supporting the Islamic State for several years. Now, they have a chance to help it regroup and let the Islamic State form again.
Bob Moriarty: Not really. Okay. The Islamic State was a creature created by the United States and Saudi Arabia in deceiving the Sunnis in Iraq, okay? The United States, Saudi Arabia and Turkey and Israel, collaborated to attack Syria.
Goldfinger: They were talking about attacking the Islamic State but in fact the United States was paying for the weapons and the people to attack Assad.
Bob Moriarty: We were the terrorists. My nephew was killed as a result of the King of Jordan ordering one of his people to kill some special forces guys to get a message to the CIA that the terrorists wanted air support.
It’s the biggest mess. I’m not a big Trump fan, but he’s finally done the right thing. We have no business in Syria whatsoever. The Russians and the Syrians have stood up to Turkey and we need to go home and stop being so stupid.
Remember those convoys of oil trucks going to Turkey?
Goldfinger: Yeah.
Bob Moriarty: The amazing thing is, from an attack pilot’s point of view, of course I was a fighter attack pilot, flying the F-4, I would have killed to have a target like that. You could have started firing your guns and fired for five miles and created the world’s biggest bonfire.
All that oil was going to Turkey and Erdogan’s son, was selling it. It is just so corrupt over there. The mainstream media was lying about everything that’s going on. They’re so anti-Trump that it’s, “Oh, my God, we deserted the Kurds.”
Goldfinger: Yeah, well I mean, Trump has not been doing himself a lot of favors. I believe that his style of Presidency, the way that he holds the office, so to speak, through Twitter, is really absurd. It leaves a bad taste in my mouth, and I think a lot of other people’s mouths.
Also, the way he’s so willing to attack anybody at the drop of a hat including those people who have previously supported him. He always wants loyalty from people, yet he has no loyalty to anyone. It’s proven over and over again.
If you read the transcript of the Ukraine call, it reads like he was asking them to do a favor for him against Biden, his likely opponent in 2020, which is using the office of the Presidency for his own personal gain, which is not appropriate, not okay.
Bob Moriarty: Yeah, but here’s what’s really funny. There’s a piece that we posted today by Matt Taibbi. Matt Taibbi is not a Trump fan. You should read the piece, because in the piece, he says, as big a buffoon as Trump is, people need to realize, the opposition to Trump is far worse.
That’s true. This is a coup that’s been in progress since before the election. Here’s what’s totally crazy and everybody’s ignoring this. Governments never get better after they start picking whatever thug’s going to take over through a coup.
That’s not the beginning of a democracy. That’s the end of a democracy. I think that Trump’s a jackass. I think he’s a buffoon. The idea of using Twitter as President of the United States, I mean Twitter is for 12-year-olds. However, he’s not as bad as the opposition.
This whole thing… Joe Biden, okay, threatened Ukraine absolutely to protect his son who is being bribed okay? What the hell was a crack head getting paid 50 grand a month for, doing something…The guy knows nothing about the oil business and he’s making 600 grand a year, because his name’s Biden. Biden is as corrupt as Trump is, Biden’s 50 times more corrupt.
Goldfinger: Yeah. It’s an unsavory choice that we face in this country next year. If the candidates really are Trump vs. either Warren, Sanders or Biden. It’s just an awful choice, especially for an investor in the resource sector who may be socially liberal but more of a fiscal conservative.
Bob Moriarty: You’re saying it’s a bad thing for investors in resource areas. You are absolutely dead wrong. This is the end of empire. The smartest Democrat is Tulsi Gabbard, and they just ran her ass out of town, because she said, “Why is the United States fighting all these stupid wars?”
Every other Democrat candidate, sounds like a raging fool. You have Pocahontas, you have Sanders, who just had a heart attack. You’ve got Hilary Clinton trying to come back in. These guys, my God, it’s like going to the circus and watching the clowns perform.
It’s like we got the fat woman, and we got the weird guy and we have the contortionist. These people are incredible, and we’re supposed to be telling the world, these are the best and the brightest? We’ve got the biggest bunch of clowns running for office that we’ve had in American history. Some idiot’s saying, “Free college, free medical care for illegals, free, free, free, free.” It’s going to cost $94 trillion and the one thing she won’t answer is who’s going to pay for it?
Goldfinger: Right. Have you heard of this Yang guy, Andrew Yang?
Bob Moriarty: What’s his claim to fame?
Goldfinger: He’s actually a multi-millionaire. He runs a business that works and actually helps people and he actually has a lot of really reasonable policies. Some of his more, lets say, financially extreme policies are, he wants to give every American a minimum of a thousand dollars a month.
So, no matter who you are, or what you do, you get a thousand dollars a month and he also has a platform of forgiving student debt, which is kind of interesting. So, it’ll cost the government about two trillion dollars.
Bob Moriarty: Yeah, here’s what’s funny. You fell into his trap. That is not forgiving student debt. That is transferring the student debt from the person who incurred it to his mom and dad and the rest of the taxpayers.
Everybody’s lying about everything now. They’re not saying we’re going to forgive student debt. They’re saying we’re going to shift who pays for it. We’re going to put it on the backs of all the taxpayers.
The strange thing is, what they need to do, is they need to say banks are free to loan as much money as they want to for students and if the students go tits up, too bad. We need to put risk back into the economic system.
Right now there’s no risk, you know. If you’re illegal, they’ll pay you to be in the U.S. If you need medical care, we’ll give it to you free. If you want to go to college and study underwater basket weaving, we’ll pay for it.
There’s no risk whatsoever, and we’re going to make sure nobody hurts your feelings. So, if you’re six feet tall and you have a beard and an adam’s apple and you want to be called Missus, we’re going to find people who call you Missus. We have lost it, okay? The United States today makes Robert Mugabe and Zimbabwe look like a bastion of freedom and democracy.
Goldfinger: Wow, that’s a big statement. Let’s turn to the markets. We had another spectacle last week with the China delegation going to Washington. They didn’t come to any agreement, even though Trump proclaimed they had a deal. It was the biggest and best deal ever.
Nothing in writing. You read the Chinese papers, there’s no agreement. They want to have more talks. Trump says they’re going to buy 50 billion in U.S. corn and soybeans and wheat. China says, “No, we’re not buying anything until the tariffs get taken off.” Again, it’s all a sham. Trump’s a liar. There’s no concrete details of anything. Yet, look at the market today. We’re up another 30 S&P points. What the hell is going on here?
Bob Moriarty: Ah, you’re looking at the wrong market.
Goldfinger: Oh yeah?
Bob Moriarty: Look at gold.
Goldfinger: Gold’s dropping.
Bob Moriarty: Look how much it’s dropping.
Goldfinger: Yeah, about 1%.
Bob Moriarty: Well, here’s what’s really funny, if you remember. How many times in the last six months have we done interviews and I said, “Look for the markets crash in October.” As optimistic as people were on gold and silver, I maintained all along, we’re going to have a correction. We’re going to go down until we get a day with a DSI for gold below 10, it will probably be mid-December.
We’re not in the strongest period of the year for gold and silver. We’re in the weakest period of the year and we’re going to correct until the excess of psychology has been squeezed out of the market. We are so close.
Look what the FED did with QE-infinity. When it started up I think it was $53 billion the first day and it was $75 billion the second day, and then, well we’re going to do this through November. Now they’re talking about buying T-Bills through the second quarter of next year. Something is percolating underneath the surface and it’s going to blow and it’s going to blow PDQ..
Goldfinger: So, it’s interesting because if you told me that they weren’t going to come to a deal last week on China, and there would be false headlines, I would say, “Well the markets going to drop, stocks are going to drop,” because they rallied into the event and now they should sell on the news, especially if there’s no news.
Well, that didn’t even happen. Stocks are still remaining high, there’s no crash. If you look at the S&P it’s almost at the all time high right now. Is this just being propped up by the FED and… They do this temporary repo.
We’re going to say temporary, but if a temporary repo is renewed every two weeks then it becomes a permanent repo and the FED balance sheet is expanding by 150, 200 billion dollars, but they call it temporary. Which, is just BS terminology. It’s not temporary if they keep doing it.
Is this just being propped up by the FED at this point?
Bob Moriarty: Probably.
Goldfinger: Is there going to be a liquidity crisis, or has the FED stopped it with this temporary repo?
Bob Moriarty: It’s not a liquidity crisis. It’s a debt crisis. I don’t give a damn how much money they pump in the system. You cannot solve the debt problem by issuing debt, period.
Goldfinger: Okay, but do you still think that we have a crash in the market in the next couple of weeks?
Bob Moriarty: Yeah.
Goldfinger: Okay. How far can gold fall? Can it fall to $1300?
Bob Moriarty: Oh, I wish it would.
Goldfinger: Okay. I hear you’re going on a trip. Tell us about where you’re going and what you’re going to see.
Bob Moriarty: Okay. I’m going to Australia for a week. I’m going to see all three of Novo’s project. I’m going to Karratha. I’m going to Egina and I’m going to Beaton’s Creek.
There’s a lot going on there. I know it’s been very quiet. What I’m most interested in is Egina. I think he has cracked the code by using ground penetrating radar and a dry form of alluvial mining. I think it will be incredibly successful. The numbers they’re coming up with are absolutely staggering. The market does not get it. I’ve been on record for 10 years, Novo (TSX-V:NVO) is one of the biggest gold projects in history.
We’re actually moving into the summer. Summer is very hot there right now. I wouldn’t be able to go two or three weeks from now. We’re moving into the hottest portion of the year. I’m going to see Beaton’s Creek and Karratha. Of course, I’ve seen them all before. Literally an hour or two there, at each of them, tells me everything I need to know. Keith Barron is going and The Hedgeless Horseman is going. It will be a good tour.
NVO.V (Daily)
Goldfinger: What are the big challenges for Novo this year? What are the milestones that you hope that they achieve?
Bob Moriarty: I would like to see some progress made on the machines for sorting the alluvial gold. I expect to do that. Rob Humphreyson is doing the tour. Quinton is at home in Colorado. His daughter just had her second baby and he needed to be there for that. Rob actually went to Europe and saw the machine that flicks the gold nuggets over the end. That’s really a big deal. The strange thing is, they’ve known for 140 years there’s a lot of gold in the alluvial flood plain. They just didn’t have any way to pinpoint it.
They literally would go out and they would dig a hole and see if they could find some gold. It’s totally spotting. Now they can identify where the channels are, which is where the richest gold will be. It’s all right at surface and it’s going to be cheap as hell to mine. Now, I’m going to pull some numbers out of my hat, but I think you could be processing for under $300 or $400 an ounce. Processing alluvial gold is really cheap. Keith Barron is processing sapphires in Montana and there’s some special issues up there, because water is a big issue there. They don’t have the kind of drainage that you’ve got around Karratha. Quinton has let’s say… he’s either got 400 square miles or he’s got 800 square miles of alluvial potential.
Australia’s a tough country to deal in. Their regulations there and the native issues and everything. It takes a long time to get stuff done. He’s making great progress there. It just takes a long time.
Goldfinger: Okay. I noticed that you wrote up a company called Nevada Copper (TSX:NCU), and this is one of the uglier charts out there. This stock has just been beaten to hell, but there’s many copper and zinc stories that have had a really bad year in 2019, do you think that this is about to turn and would you be buying copper and copper stocks now?
NCU.TO (Daily)
Bob Moriarty: Nevada Copper is going into production. They’ll be in production probably mid-December. They are absolutely in a sweet spot. Here’s what’s crazy, even though I believe we’re going into a massive depression, when you look at the above ground supply of zinc and copper, I think there’s a 10 day supply of copper and something like a 14 day supply of zinc.
Those are both very attractive numbers. Copper and zinc are going to go up in relative terms and the very best time to buy anything is when it’s cheap. Everybody wants to wait until they go up. Don’t buy a stock when it’s expensive. Buy it when it’s cheap!
Goldfinger: That stock (Nevada Copper) is just about one of the uglier down trends I’ve seen. You really think that this 20 cent area is really the spot to buy this thing?
Bob Moriarty: If it was any better than C$.20, they would arrest you for stealing.
Goldfinger: Okay, that’s a good call. We’ve talked about a lot of other companies. What’s another one that jumps out at you, that has a story that is really exciting right now?
Bob Moriarty: Here’s what’s very funny. You could throw darts, okay? You can be put into a room, blindfolded, throw darts into lists of stocks, not see anything and make money.
Goldfinger: Really, you think it’s that good right now? Everything in the sector is going to fly?
Bob Moriarty: Well, no. I think it’s that bad. Okay? If you take the German two year bond that’s been out for two years. The bond has doubled in price because the interest rates have gone down so much. We’re in absolutely never, never land. Negative interest rates, 17 trillion dollars, worth of bonds in negative interest rates.
Italy having lower interest rates than the United States. We’re in make-believe land. Everybody’s sitting down at a poker table and playing with Monopoly money and nobody sees a problem. You just raised a really good point, okay?
We have the earliest winter that we’ve had in 100 years. The crops in the United States have been destroyed. There’s going to be food shortages in the United States. The entire impeachment thing, it’s the military industrial complex trying to boot Trump.
He’s playing games with the Chinese and everybody’s saying, “Let’s go buy some stocks.” I’m sitting here thinking, “Damn, I wish I could get my hands on some of that weed. That’s some good shit.”
Goldfinger: Speaking of weed, that brings me to another topic. I did a video a couple weeks ago for my subscribers in the Trading Lab. In the video I talked about how the reason why I think the junior money sector has barely lifted at all, even though gold and silver have rallied a pretty good amount, is that all of the really speculative trades of the last year, i’m talking about cannabis, the Uber’s, the Lyfts, the WeWorks. All of these really speculative, hot money, call them dumb money trades, have been disastrous. Uber’s recent IPO down almost 50%, Lyft down over 50%. The cannabis sector in the last year, down over 50%.
Oh, and Cryptocurrency has had a very bad time since January 2018. For example, Hive (TSX-V:HIVE) is down 95% from its high. All of these hot money trades, the flavor of the week, flavor of the month trades, have been big losers.
I think that this segment of investors, the speculators who are willing to chase 10-baggers while risking 50%+ losses are the ones who have been burned badly in all of the hot money trades in the last couple of years. We need them to get into junior miners, and when they get into junior mining, that’s when we’ll be in the euphoric parabolic final phase. Those investors are nowhere near junior mining right now, because they’re all losing money in all these other trades.
I speculated that the junior mining sector needs a big success story, a Great Bear type of thing, but Great Bear’s not done yet. Great Bear needs to write the final chapter on its story and maybe get bought at a very big premium (50%+). There has to be a really big success, like an Aurelian in 2006, or a Virginia Mines in 2005. Something that gives investors 20x, 30x, 40x gain and can be touted by CNBC or Financial Times, and say, “Hey, look, this junior mining company got bought for a billion dollars.”
What do you think about this theory?
Bob Moriarty: It’s 100% accurate.
Goldfinger: Okay. Do you think that, if we get that, if we have that happen in the next six months, that will really light the match and we’ll be in the midst of a parabolic rally?
Bob Moriarty: Of course. Of course. Here’s what’s crazy and how many times have you and I talked about Cannabis, or talked about Tesla or talked about BitCon. BitCon evaporated $600 billion! And investors still think it’s going to recover. It’s not going to.
That’s such an amazing number, okay? People have no idea of how much money was destroyed in BitCoin, between December 2017 and now. Here’s what’s funny, it’s still popular, okay? They had 1300 of those damn things in December of 2017. They’ve got 2800 now, and idiot investors still haven’t woken up.
It’s fraud! It’s all fraud.
Goldfinger: It’s amazing about the whole thing with Bitcoin and Cryptocurrency. Who were the big winners in the bubble? I want to see if you can get this right.
Bob Moriarty: There were about 10 or 15 guys, who started the thing and they had mutual self interest. The funny thing is, that’s the most manipulated market in history. Everybody’s acting like it’s the best thing you could invest in. It’s all fraud.
Goldfinger: Guys like John McAfee who were able to be in there early and had name recognition, were able to do the promotions. $105,000 a tweet. It’s an unregulated market. These guys who made these various coins, could give somebody like McAfee, here’s a million coins, now tweet about my coin and they could sell into their own tweet, which is actually illegal in the stock market.
This was happening in Cryptocurrency all the time. Then, the hackers, the criminals, made hundreds of million dollars, hacking people’s crypto-wallets.
This is what a lot of people didn’t see coming, that this is not like having gold in a safety deposit box at a bank with an armed guard. This is completely new territory, where your stuff is in the ether and clever hackers can break through security at places like Coinbase and stuff.
This is a boon to hackers and criminals. This is something that people just realized, when they were already buying at the top.
Bob Moriarty: Well, the thing is, I’ve written two books talking about the behavior of crowds, and it was an absolutely classic bubble. BitCon and the 2800 variations are all going to zero. It’s going to wipe another $230 billion away on the way down.
The gold and silver, and the resource stocks are going to do the same thing. You can quote me on this. There are some piece of shit stocks today that are going to stay piece of shit stocks, but they’re going to go up 100 fold.
Goldfinger: Yeah, that’s the amazing thing about the mining sector. We saw this a little bit over the summer. Some of these silver explorers, juniors, had 3x, 4x, gain in two months, when silver went from $15 to $19.75.
I know some of these companies, like the back of my hand and I said, “There’s no way a $4 jump in silver should give this company three times its market cap. It doesn’t make sense.” Doesn’t matter, because when you have so much money trying to pile through a small door, it creates absurd and irrational movements. I think that’s why Eric Sprott owns all these silver companies. A lot of them are garbage to be quite frank.
I don’t even know if he does proper research on some of the stuff he invests in. I listened to one of his recent weekly podcasts and he said Alexco (NYSE:AXU, TSX:AXU) is in the Northwest Territories and is a producer, but it’s actually in the Yukon and not quite a producer yet. I think that he just feels that, when silver goes up, all these companies are going to go up. It doesn’t really matter how good their ore body is, or how good the management team is. If there’s silver in the name, silver in the investor presentation, it’s going to go up.
Bob Moriarty: Well, that’s strange enough and I will state this again. That, the biggest piece of shit stocks out there are going to go up the most. People are always looking for me to recommend good stocks. You don’t want to look at good stocks. You want to look at shit stocks. They’re going to go up the most.
Goldfinger: What makes a piece of shit stock? Is it a bad management team? Is it a shitty project? What makes it a piece of shit stock?
Bob Moriarty: There are many companies out there that are frauds. Some of the frauds will have the biggest rises.
Goldfinger: Okay. Why would you recommend a company that you think is a fraud?
Bob Moriarty: Well, look how much money people made with BitCon.
Goldfinger: This is going to be an interesting interview Bob. People are going to say, “Huh?” But, what’s the key though? You can buy something…but you’ve got to sell it at some point before it round trips back down.
Bob Moriarty: Well, see, that’s what’s really funny. Okay, lots of people are smart enough to get in this stuff, BitCon, three bucks, or five bucks, or fifty bucks. They were smart enough to get in, but damn, it goes up to $20,000 and they’re too fucking dumb to bail out. If you refuse to take a profit, you are going to have to take a loss.
Strange thing is, my book, Nobody Knows Anything, should be a New York Times best seller. It is that fucking good. It is simple. Buy things when they’re cheap and sell them when they’re dear. Nobody wants to do that.
If they’re smart enough to buy cheap, they want to wait until it’s gone up 100 fold and then it’s, “Well, if it goes up a little bit more, then I’ll sell.” Investing has nothing to do with management, has nothing to do with commodity. It has nothing to do with the country risks. It has nothing to do with any of that.
It has to do with human behavior. There is no rush like a gold rush. You use the correct term, there is this little tiny door and everybody’s going to try to squeeze through the door at the same time.
Look at WeWork. There’s a company that’s absolutely classic. It’s fraud. There is absolutely nothing of substance there. It’s the dumbest idea that I’ve ever seen. It had a 50 billion dollar market cap in theory a month ago, and now it’s got a 10 billion dollar market cap, and JP Morgan’s about to dump 5 billion dollars into it.
Boy, if they get a cent of that back, I would be amazed.
Goldfinger: Yeah, it’s financial engineering and playing with numbers and models. We’ve seen this in the Cannabis space. I can’t even tell you how many pitch decks I’ve looked through of Cannabis companies and it’s all incredibly optimistic, faked up numbers and pie-in-the-sky.
And, if you take it at face value then you’re a fool, but obviously when the tide is… the trend is with you, between late 2017 and early 2018, when all these cannabis stocks were rising, it was working. It didn’t matter whether it was real or not, because the market was trending.
Just like in junior mining, when metals prices are rising and money is flowing into this small sector, valuations can get carried away on the upside and on the downside.
Is there anything else that you’d like to add Bob?
Bob Moriarty: The next two weeks are going to be very interesting. I absolutely believe my predictions from January, that this would be the year the bubble would blow up. We’re so close now, I’m not sure, which black swan is going to blow it up, but something’s going to in the next two weeks.
Goldfinger: It’s impossible to predict what it’s going to be, but my God there’s a lot of things that could go wrong in the world, right?
Bob Moriarty: God, every time I take a look at CNN there’s one more. Holy cow, like fix that!
Goldfinger: I am going to conclude this month’s interview with a special offer to 321gold readers to subscribe to my premium Trading Lab service for either US$40/month (for the first month only and then after 30 days you will be asked to renew for a full year) or US$400 for a full year. This is 33% off my normal price and this offer will be good until October 26th and is available only for people who have not subscribed before.
Bob Moriarty: That’s a great offer! I would like to say I think you are one of the few guys who get it and actually gives recommendations that people can make money from. If I didn’t already get it for free I’d pay for it. And I don’t say that about many subscription services.
Goldfinger: That’s very kind of you to say Bob, I appreciate those kind words and all I can say is that I do my best every single day. Thanks for a great conversation and have a wonderful trip to Aussie land. Until next time!
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