In Energy & Gold’s latest conversation with 321gold founder Bob Moriarty we discuss why the coming US election could result in destabilization that could potentially be catastrophic. We also discuss the Federal Reserve and its recent commitment to creating inflation, as well as the potential for very high, or even hyper-inflation. Investors will want to own real assets that benefit from rising inflation and also help to preserve wealth during times of rising inflation. Bob also takes us through some of this favorite junior mining stocks including Banyan Gold, Novo Resources, and Eloro Resources. Without further ado here is Energy & Gold’s September 2020 conversation with Bob Moriarty…
Goldfinger: It’s good to speak with you today Bob. We’ve had a pullback in the precious metals sector. And we’ve had some volatility in the stock market in the last couple of weeks. You basically called for the pullback in precious metals. You were a little bit early, but you got it pretty right on. Where do you think we’re at now in gold and silver? Do you think that we’re still in this corrective process?
Bob Moriarty: That’s a really good question, and there’s two answers to it. We have absolutely not seen the high in gold and silver. The actions of central banks, and especially the treasury and the Fed, are going to destroy all fiat currencies, and certainly including the dollar. In fact, we’re probably going to go into hyper-inflation. If we turned around tomorrow and gold and silver went up, I wouldn’t be as happy as I would after a good, solid correction that wakes everybody up. Investors vary from being too optimistic to being too pessimistic, and I would really like to see people get pessimistic. Now that doesn’t change anything about the value of gold or silver, it just changes how people look at it. However, with the DSI on both gold and silver, still around 60, that’s very high. I would really love to see it come down to 10 or so. However, I will say the next six weeks or two months could be catastrophic in American history.
Goldfinger: Well, that’s certainly making me get a little bit more interested in what you have to say about that. Why is the next two months going to be catastrophic? And if it’s going to be catastrophic, wouldn’t you want to own some gold and silver?
Bob Moriarty: Maybe. The democrats have made it crystal clear they’re going to do anything to get rid of Donald Trump. Now, whether you agree with that or not doesn’t make any difference. The democrats said literally we’re going to run a coup d’état and we’re going to fight the election if he wins. That of course is exactly what they’ve been doing for four years. It hasn’t worked, but they haven’t learned anything. I’m astonished, Joe Biden is senile, okay I am apolitical, I don’t give a damn about republicans or democrats. I’m not a fan of Donald Trump, but Joe Biden is senile. And I’m just astonished that a major political party would put him up as a candidate for president. And when you think of Kamala Harris as being his vice presidential candidate, to give you an idea of how even democrats felt about her, do you have any idea when they had a dozen candidates running for the democratic primaries, do you have any idea of how much support she had in total, what percentage?
Goldfinger: It was very low, wasn’t it around 10%?
Bob Moriarty: 3.6%. When there were 10 democrats running for the Presidential primary, only 3.6% of democrats believed she was qualified. For her to be a candidate is absolutely remarkable. She comes with so much baggage, it would take a fleet of 747s to get her from California to Washington DC. And she’s playing the race card, and pretending to be African-American. And the only African-American DNA in Kamala Harris came from Willie Brown.
Goldfinger: Okay. So, let’s go back, so you say Biden is senile, we know about Trump, he’s a whole bunch of things. Why is the next two months going to be catastrophic? Does the president really even matter that much? I mean to be honest, the country goes on, people go on with their lives, the economy keeps going. What’s going to be so catastrophic?
Bob Moriarty: Well, that’s a really good question because there’s two questions there. One being does it matter, and the answer is absolutely not. What we have is one snake with two heads. However, we have an ongoing coup d’état. I will be posting a piece tomorrow on September 10th from Hugo Salinas Price, and I have a lot of time for that guy. I’m going to quote from the article, “Revolutions always have interested parties at work, and I regard what’s going on in the US as the beginning of a revolution aided and abetted by a foreign country and its representatives within the US. The American Revolution Two would transform the dead flat broke economy, and disintegrating the social body of the US into military dictatorship.”
That guy is a billionaire, he’s exceptionally bright, he’s exceptionally lucid. I think he’s right. We’ve got a coup d’état going on, it’s organized. All this Antifa stuff, all these riots, somebody is behind that, and somebody’s trying to overthrow the government, and they’re going to succeed. If you go back and study French Revolution 1789 and the Russian Revolution in 1917, they started exactly the same way. We’re bankrupt, people are going to realize how poor they are very soon. We’ve destroyed the currency. Inflation is going to explode higher probably into hyper-inflation. And the next step is a military dictatorship.
Goldfinger: That’s a lot to digest there. Military dictatorship, so I’m going to disagree with you. I don’t think that will happen. I certainly don’t think it’ll happen any time soon. Americans are staunch advocates of freedom, our armed forces…
Bob Moriarty: What did you say?
Goldfinger: I said Americans are staunch advocates of freedom.
Bob Moriarty:Oh bullshit, come on give me a break.
Goldfinger: Well, I don’t see the armed forces turning on the people and taking power by force. I don’t see that happening.
Bob Moriarty: They won’t turn on the people, they’ll turn on the government.
Goldfinger: Okay. They’ll turn on the government, that’s possible but I still see that as a highly unlikely scenario. So how will this affect us financially? Don’t we want to own hard assets? Don’t we want to own gold and silver?
Bob Moriarty: Absolutely.
Goldfinger: So, if you think in two months the country’s going to be turned upside down, then who cares what the DSI is right now, 60, or 40, or 10, or whatever. You can’t time that, you just want to own hard assets. You want to own metals. You want to own assets that will help shield you from the storm.
Bob Moriarty: That’s true, but to the extent that if the DSI went to 10 two weeks from now, I’d say okay this is low. In a normal market, we could have low any time from now until December, and the longer it would go on, the better it would be. However, we are literally in Earth shaking historic times with some scary things coming. But the idea of Americans loving freedom, Americans are a bunch of fucking sheep.
Goldfinger: So, you mentioned inflation, I think that’s an important point. I’m not sure if you caught Fed Chairman Powell’s speech at the Jackson Hole Virtual Conference in which Powell clearly stated the Fed is committed to creating inflation and they are even ok with letting inflation run hot for a while in order raise inflation expectations and achieve an ‘average inflation target’. The Fed believes they need to unleash inflation in order to combat disinflationary pressures, this seems like a dangerous game in my estimation.
Bob Moriarty: Are you aware of what the Center for Disease Control just came out with? The Center for Disease Control, I expect them to talk about vaccines, I expect them to talk about COVID, I expect them to talk about HCQ. I do not expect them to talk about the economy. The CDC has come out and said there will be no evictions until at least January. Now, what the fuck gave them the right to dictate to landlords who can be evicted? We are absolutely in Never Never Land. We’ve got the government screwing around with things as they’ve screwed up everything in the past and they’re doing it and they’re getting far worse.
Goldfinger: In Boca Raton, Florida, which you probably know is a relatively wealthy suburb of Ft. Lauderdale, about 45 minutes north of Miami. A lot of northerners have houses in Boca. There’s a shopping mall called the Boca Town Center. Very high end stores like Cartier, Versace, Gucci etc. You know what? Half of the space in that mall, half of the retail space is vacant right now. If you walk over there, you can hear a pin drop. The stores are not doing well. The stores that are still there are seeing sales down 80%. The owner of that mall is a real estate investment trust called Simon Property Group (NYSE:SPG).
This is a mega multi-billion dollar real estate conglomerate. How the heck is their stock price holding up? If you pull up the chart of Simon Property group, you can see it. It’s holding up very well, especially in recent days when everything else has been falling. Why is that not going to zero when retail real estate is horrible right now? You do not want to be an owner of shopping malls in the United States of America right now. Well, the answer is the Federal Reserve is buying their commercial debt. They’re subsidizing the interest rate for corporations in this country. Now, what’s the end game to that? The Fed is owning all of this corporate debt and basically the market valuations for these companies are not actually reflecting the reality of their business and the economy.
Bob Moriarty: Of course. Of course. Somebody just sent me something. You follow Tesla. We’ve discussed it in the past. The Swiss Central Bank owns 400,000 shares of Tesla. We are in Never Never Land. Lewis Caroll wrote this story a hundred years ago. You’re going to see things that quite bluntly you don’t believe, and I’m about as extreme as anybody I know and I’m shocked myself at some of the stuff that’s going on.
Goldfinger: Does the virus and the vaccine headlines, does it matter anymore? There was some headline yesterday about a phase 3 vaccine trial had somebody fall ill and they halted the trial. This headlines sent equity futures tumbling for a few hours but then they recovered and went right back up. It seems to me we’ve become numb to all this and that a vaccine, I don’t know if it really even matters at this point.
Bob Moriarty: Well, here’s the deal. 90% of the tests give false positives. In the UK, if you test positive, (and given that there’s 10 times as many false positives as there is actual cases), if you test positive for COVID and you die in the next 30 days, you were written up as a COVID death. In the United States, because the government pays hospitals for people who die of COVID, we have 600% higher case rate than the rest of the world. That’s impossible. You can’t have four percent of the world’s population and 25% of the world’s cases. Everything you’re being told about COVID is a lie. HCQ absolutely does work. The vaccines absolutely do not work.
There has never been a successful covid vaccine in history. The COVID vaccines that they’re talking about alter the DNA and frankly anybody taking those vaccines is out of their mind. There is polio spreading all over Africa because of Bill Gate’s goddamned polio vaccination program in Africa that didn’t work. His vaccination program is not saving people. It’s killing people. Vaccines are not the magic bullet and why they’re fighting doctors who are front line fighters and experienced with it, why they’re saying you can’t use HCQ is insane. Uganda has a lot of malaria. Everybody in Uganda takes HCQ weekly. You can buy the pills. They’re 35 cents a piece. They’ve got about 4,000 cases of COVID total and they’ve had about 40 deaths.
Goldfinger: Yeah, I think we both agree on that, that the virus is way overplayed. It’s become more about politics than about truth. I got some questions from readers. One person asked, “Which candidate, Biden or Trump, is better for precious metals and which is better for the mining sector?
Bob Moriarty: It’s a meaningless question. We have started down the hill in an avalanche and nothing is going to stop that. There’s nothing Trump could do to change things and it’s nothing Biden could do. The revolution may occur two weeks faster if Biden is elected or it may be two weeks faster if Trump is elected, but it’s meaningless. It’s not who the president is that’s important. It’s what the federal reserve has done to the currency and what they’ve done to the currency is, they’ve destroyed it. In my entire life, I cannot remember any time where you could invest in a market where you have the potential return that you have, today. That doesn’t mean it’s going up tomorrow. I’ll be clear about that, but down the road, no question. You do not want to own paper. You want to own real assets.
Goldfinger: Now, let’s get into some specific companies. There was another question from a reader about ANX, which is Anaconda Mining (TSX:ANX, OTC:ANXGF). He’d like to hear your current views and opinions on Anaconda.
Bob Moriarty: Anaconda is a sleeper. It has excellent management. It’s in Nova Scotia and it’s in Newfoundland. They are a producing gold company and the only reason they’re not 10 times higher than what they are is because they’re producing under 100,000 ounces a year. They are well aware that their target is to pick up projects, increase production and to get above 100,000 ounces. I own Anaconda and I love it.
Goldfinger: There’s another question about Banyan Gold (TSX-V:BYN, OTC:BYAGF) and the news that Banyan announced this morning where they staked more claims around their AurMac Project in the Yukon. What are your thoughts on Banyan Gold here and the news this morning?
Bob Moriarty: Tara Christie is one of my favorite people in Canada. She’s excellent. I know her well. I’ve worked with her before on projects. Banyan is a great company. It’s still very cheap and they’re going to do very well.
Goldfinger: I’m sure you’ve seen the big news last week from Kodiak Copper (TSX-V:KDK). This is a gold, copper explorer with a project that is not too far from Vancouver. Probably about a three hour drive from Vancouver, near Westhaven’s Shovelnose project. KDK drilled more than 1% copper-equivalent over 282 meters that was a very high grade .7% copper, .5 g/t gold.I don’t know if you saw, but that definitely caught my attention. I bought some last week. That whole area in southern BC around Westhaven and the Highland Valley copper mine owned by Teck is very interesting and there is another company called GSP Resources (TSX-V:GSPR, OTC:GSRCF) that has just begun a drill program at its Alwin Mine Project next door to Highland Valley.
Bob Moriarty: Here’s a really interesting situation. The stocks that are going to go up the most are the biggest piece of crap stocks out there. When the wind is high enough, even the turkeys fly. Now, I just did look that up and that 282 meters of 1.16% copper-equivalent is very impressive. They’ve got a 60 million dollar market cap that’s still very cheap. These kinds of companies, there are some extraordinary companies out there coming up with extraordinary results. The general investing public has not woken up to resource stocks, but they’re going to very soon and very soon could easily be in the next six weeks.
Goldfinger: What about some of the other companies that I know you follow? I know Novo Resources (TSX-V:NVO, OTC:NSRPF) has made some progress with acquiring a mill and closed a financing in the last several weeks.
Bob Moriarty: Well, Novo has closed on the acquisition of the mill. 18 months from now, Novo will be producing somewhere between 100,000 and 125,000 ounces of gold a year and with $2,000 gold, you could not help but to make a lot of money. Their costs will be somewhere between $800 and $1000 an ounce. Investors can do the math.
Goldfinger: What about Lion One (TSX-V:LIO, OTC:LOMLF) or Irving (CSE:IRV, OTC:IRVRF)?
Bob Moriarty: Lion One continues to have excellent drill results. That’s going to keep going. They’ve brought in another drill. They have the ability to deliver assays on site and that’s very important from their planning point of view. They can drill today and know what the results are tomorrow. Now, they send the pulps to Australia for backup confirmation, but Lion One has an alkaline system. It’s going to be five or 10 or 15 million ounces. They own the whole damn thing. They have a ton of money in the bank and they’re doing really well. Irving, unfortunately because it’s Japan and it’s so difficult to work there, the drilling is very slow and investors get bored. That’s the only reason Irving hasn’t gone up, but Irving has exactly what I believed for years and that’s a home run.
Goldfinger: Then, what about Eloro (TSX-V:ELO, OTC:ELRFF)? This is one that we’ve discussed before. It’s actually making new highs as we speak and I know they are getting ready to start drilling down in Bolivia.
Bob Moriarty: Yeah, they’re starting to drill literally, imminently. They’ve got two projects. They’re both world class projects. They’re drilling the Iska Iska Project in Bolivia and I think it’s going to knock the lid off the stock when they announce the results. They’ve got excellent management and low share structure, it’s a great company. It’s still a sleeper. Nobody knows anything about it.
Goldfinger: You said you’re worried about inflation. I know some other very notable investors such as Stan Druckenmiller say they’re also worried about inflation. Some even say it could hit 10% in the next several years. What would happen in a world where inflation actually reached 10% when you have the amount of debt that’s out there? High inflation would force interest rates higher and in turn cause a big chunk of that debt to default.
Bob Moriarty: Well, it’s a great way of getting rid of the debt. That’s why people do it. Inflation is a tax. If the government spends a million dollars, they’ve got to collect that million dollars and there’s three different ways they can collect it. They can collect it in taxes, which we hate. They can collect it in a default, which we also hate or they can collect it in inflation. Nobody realizes it, but inflation is a tax. We’re going to look back at 10% inflation and we’re going to think that’s the good old days. You’re missing my point. I don’t think we’re maybe going to have hyper inflation. I’m telling you, we are going to have hyper inflation. Same thing the Russians did, same thing the French did, same thing the Germans did. We are going to have hyper inflation. The federal reserve has destroyed the dollar.
Goldfinger: If we’re preparing for that world where there is much higher, or even hyperinflation and the world is awash in debt, what does an investor want to own in order to not get hyper inflated down to zero wealth?
Bob Moriarty: Well, you don’t want to own paper assets.
Goldfinger: What do you want to own? Real estate, farmland, metals?
Goldfinger: Okay. That’s pretty simple. It’s actually kind of interesting because there are many parallels to the 1970s, I’m going to post a chart on this article of the gold Bull market in the 1970s. Markets don’t exactly repeat history, but they do rhyme. The 1970s saw a surge in inflation as the decade wore on. You could see what happened with gold. It started in 1970 at $35 an ounce and by the end of the decade, it was $800 an ounce. We could very much have a similar sequence of events that would just be a different order of magnitude in terms of the rise in gold and silver.
Bob Moriarty: It’s going to be an order of magnitude higher up. Can you quote the price of gold in Zimbabwe dollars?
Goldfinger: I have no idea. It’s got to be in the trillions.
Bob Moriarty: You can’t even quote it. You’re talking about two commodities. You’re talking about the dollar and you’re talking about gold. We’re going to have hyper inflation. Get used to it. What the federal reserve… I mean, goddamn it. We’ve got the CDC telling landlords, “You’re not going to get paid.” He went to a guy and said, “I want to rent an apartment.” He said, “Okay. I want $1,000 a month and it’s due the 15th of the month.” “No. I ain’t going to pay you. The CDC says I don’t have to pay you.”
Goldfinger: I think one more topic that I just want to touch upon briefly and then we’ll end the conversation. A lot of people aren’t talking about it, but China and the US are not getting along. China is emerging and wants to be the world’s super power. They want to not only be on par with the US, they want to be above the US. China owns more than a trillion dollars of US treasury debt and one of the head of the PBOC literally said last week, “We are going to reduce our holdings to $800 billion of US debt.” That’s going to be more than $200 billion of liquidation of US debt. They will receive dollars from that sale of that debt and they will not hold those dollars. They will reinvest them into other assets. I think that some of those assets are likely to be copper, gold and other hard assets that China can actually use to build its economy.
Bob Moriarty: Absolutely. You are totally, absolutely correct. China and India are very close to war. China and the US are very interested in war. We’re in a dangerous time. Own real assets, not paper.
Goldfinger: Thank you for your time and insights Bob. The next time we chat the United States will be a couple weeks away from an historic election and I hope you’re wrong about the US becoming a military dictatorship.
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