The last week has been a tumultuous one for global markets. The Russian invasion of Ukraine has generated an unprecedented response of far reaching sanctions that seek to cut Russia’s economy off from most of the rest of the world. It would be an understatement to say the world is in uncharted waters, it seems that every day something happens that we previously thought was highly improbable, or impossible. I had the opportunity to chat with 321gold founder Bob Moriarty last Wednesday (just before the invasion began), and we updated the conversation by speaking again on Thursday March 3rd.
We discussed the Russia/Ukraine war, what it might mean for natural resources, and some of our favorite investments in the junior mining sector…..
Goldfinger:
Lets start with the topic du jour, Russia/Ukraine. You’re of the opinion that the U.S. is meddling in Ukraine and they’re causing a lot of this problem. How can you argue with the fact that the people of Ukraine voted for the current president. They are very clearly not in favor of Russia. They want to be a part of the EU. They want to be recognized as part of Europe. You say, “Well, it’s not a real country. Putin was right in reciting history and how the Soviet Union was broken up.” Okay, well that’s one opinion. That’s a Soviet opinion. But it’s 2022, we can’t go back in time. Countries have borders and those borders are recognized. So, we’re just going to go around the world and say, “Well, no, that border wasn’t drawn correctly. We’re just going to take this country over.” No, you can’t do that. We’re here now, and Ukraine is a country. It’s a sovereign country.
Bob Moriarty:
Well, but I don’t disagree with that at all. It’s you that’s disagreeing with it. Are you disagreeing with the 96% of residents of Donbas? Okay, two independent republics who voted and said they wanted to be independent of Ukraine. You can’t have it both ways. If Ukraine has the right to elect this comedian, and he was a comedian, this president. I’m going to say the election was as valid as any election they’ve held in Ukraine. You also have to say, if somebody wants to separate from Ukraine and 96% of the people want to do it, that should be allowed. Everything we’re being told is a lie. Russia had a 99 year lease on Crimea. Now, if they had a 99 year lease on Crimea, how could they invade Crimea? But we’re told they invaded Crimea.
The Ukrainian people, I agree, Western Ukraine hates the Russians. They actually hate the Russian speaking people in Donbas and fourteen thousand innocent civilians have been killed. They’ve been bombarding Donbas for years. They refuse to do the Minsk-2 agreement, which requires them to negotiate with Donbas and it’s the Ukrainians that refuse to negotiate and to stop shelling Donbas.
Goldfinger:
At this point, Donbas is gone. It’s Russian and nobody is really arguing that anymore. Yeah, they’re putting on sanctions and saying, well, it’s an invasion of Ukraine, but what is really the issue now? An illegal invasion of Ukraine that is killing civilians, women and children. Russia has no authority to take over Ukraine.
Bob Moriarty:
This whole thing has nothing to do with Ukraine. It’s very important for you to understand that. This whole thing has to do with two issues. One is the Nord 2 Pipeline, which the United States has been trying to kill, right from the get go. The other is Joe Biden and the midterm elections.
Biden is a fool. He looks like a fool. He sounds like a fool. He craps in his pants when he meets the Pope. He’s senile. He has no business being the head of the most powerful country on earth and nobody wants to talk about it or do anything about it. The Democrats are terrified because their whole COVID bullshit has blown up in their face and they realize in the midterms they’re going to lose. They’re not only going to lose, they’re going to lose big time. Bidens so senile, he thinks, well, I’ll go start a war because presidents are always popular they when they start a war. As you say, why would you attack the guy? He’s got all these tanks and ships and short supply lines, and 200,000 troops ready to go to battle. Anybody who would attack them would be a fool. I do expect Putin to defend Donbas. I don’t believe he has any issue whatsoever about attacking Ukraine.
Goldfinger:
Well, actually that’s what I was going to ask you. Gold is above $1,930 this morning. It’s actually $1,939, as we speak. How much of the recent gold strength has to do with Ukraine?
Gold (1 year)
Bob Moriarty:
I actually hope not. I’d rather have gold rise on its merits rather than some pseudo conflict in Ukraine. Ukraine doesn’t want a war. Russia doesn’t want a war. The United States and NATO do. I hope that the United States and NATO, I hope they don’t get their war. I hope they won’t.
Obviously after all the times Putin has told Ukraine to stop shelling Donbas, they continued. He made it clear that Russia will not allow NATO to swallow Ukraine, and Ukraine told him to pound sand. Also Ukraine said they wanted nuclear weapons. Those are all hot buttons for Russia so Putin invaded.
The US and EU immediately put sanctions on Russia and they are going to have the effect of turning inflation into hyperinflation. Russia just closed their air space to thirty countries and that is going to blow the global supply chains to hell. The sanctions are suicide on the part of the EU and the US. They are going to hurt us a lot more than the Russians.
According to Cartoon News Network the fearless Ukrainians are beating the Russians at every point. Nothing CNN ever says is true so you don’t have to believe them. Clearly NATO is intending to defend Ukraine against Russia to the last drop of Ukrainian blood.
Wars are incredibly easy to start and nearly impossible to stop. This one is especially stupid because what Putin was demanding was perfectly reasonable and exactly the same as JFK faced in 1962.
No one wins any war. The only thing that happens is that one side loses more than the other.
Goldfinger:
What is Putin’s endgame in Ukraine? You served in Vietnam and know first hand how hard it is to occupy a country of people that hate you.
Bob Moriarty:
I don’t believe he has any intention of occupying the country. He wants regime change and then he will leave. But he is going to get even for the bombing and shelling of 14,000 civilians in Donbas. I am dead set against any war but there are times you have to defend your country. Putin is.
Goldfinger:
How long can Russia’s economy survive with such broad, sweeping sanctions being placed on Russian companies and interests? The RSX Russia ETF is down 80% since mid-February.
Bob Moriarty:
We are doing substantial damage to Russia which is going to blowback onto the US. Remember, the US spent 20 years and $2.3 trillion in Afghanistan and a bunch of lightly armed goat herders defeated the most expensive army in the world. The key to understand here is that we will not defeat Putin or Russia, the only question is what it will do to the west. I think it’s the most important pivot point in history.
Goldfinger:
What are the implications of Russia/Ukraine for natural resources globally? Russia is a huge exporter of metals to the rest of the world and we have seen nickel go from $11/lb to $13/lb, palladium and platinum are also rallying.
Bob Moriarty:
The sanctions are going to destroy the supply chain and easily could bring hyperinflation to the US and EU as people’s faith in the currencies disappears.
Goldfinger:
As someone who professes to be against war, in fact you wrote a book on this topic, how can you justify an illegal invasion into a sovereign nation and the use of cluster munitions in cities, killing civilians?
Bob Moriarty:
I dropped dozens of cluster bombs and controlled another 50-100 airstrikes using them. Putin is targeting Military installations that are in cities. He has no choice. In war there are no safe havens for military command and control centers. 100% of the MSM reporting is lies. And frankly Putin made it crystal clear that Nato was not to have Ukraine join and he wanted an iron clad guarantee. He pointed out again and again that James Baker signed an official document saying that Nato would not move an inch to the East and then lied about it for thirty years. Meanwhile the US and Nato brought in 14 more Eastern countries. When it was proven that the US was lying about the agreement, the US position was that it wasn’t a treaty so it was ok to lie.
No one in the EU or Switzerland or Japan or the pope had any issue with the US using cluster bombs against civilians in Iraq or Afgnastan. Pick any number you want but the US murdered between 500,000 and 1.5 million in Iraq. Putin is going to have to work really hard to even look like a rounding error compared to the blood on the hands of the US and Nato there.
Putin has an absolute legal right under international law to maintain secure borders. And no one from the US or Nato would listen. The Ukranians are paying the price for the stupidity of NATO. NATO was past it’s sell by date 29 years ago and serves no useful purpose.
Goldfinger:
So, you’re a student of market sentiment, market cycles. There’s two topics there. There’s the short term sentiment in the market right now, which based upon the different sentiment readings that I look at, if we look at the S&P and the Nasdaq, the markets in the U.S., sentiment is extremely negative. I’m not sure if it’s at a bearish extreme, but it’s not far. That’s the first question. Do you think that we’re getting close to a tradable bottom here in stocks? Then the second question would be, where are we in the market cycle? If the stock market made a major top at the end of last year, the first week of this year, where are we in this? If it’s a bear market cycle, where are we in the bear market and how much further is there to fall? There’s two parts there to the question, the short term trading sentiment, and then where we are in the bigger picture?
Bob Moriarty:
Okay. Those are really good questions. The sentiment for the S&P is 15. It was 12 two days ago. The sentiment for the Nasdaq is 15. It was 10 two days ago. If that is not a tradable bottom, it’s very close to a tradable bottom. Obviously the market’s down today so I would expect sentiment to be more favorable for a return in the Dow and the Nasdaq and the S&P. Likewise, with gold, gold is up to 79 and silver up to 75, and that’s within spitting distance of a short term top.
Now let’s go to the question of where we are in the cycle. My belief… I’m going to keep this until something changes it… My belief is that we are in a situation much like from 1929 to 1932 in the Dow. That is, we peaked in September of 1929. We started a crash in October of 1929, and we had these violent snapback rallies.
You can look at Bitcoin and see exactly what the market really thinks of Bitcoin and about 10,000 variations as some kind of paper gold. It’s not. I think we will have violent snapback rallies, but I think we’ve seen the top and two years from now we’ll see a bottom and it will be 85% lower. We have the most out of balance financial system in the United State’s history, and it has to be corrected.
Goldfinger:
So how does that happen? How do these big imbalances right themselves?
Bob Moriarty:
The market crashes. Bonds crash. The dollar crashes. Somebody would have to go back to my site a week or two ago. One of the really great names in hedge funds did a really short video. He said, “Look, the dollar is toast. Bonds are toast. The stock market’s toast. It’s that easy.” It was very easy to understand and I happened to agree with it.
Goldfinger:
Jeffrey Gundlach.
Bob Moriarty:
I’ve seen two or three videos. I believe the most negative commentators now, are going to be correct. I think everybody is underestimating the damage that’s going to be done to the financial system. What Biden’s doing with Russia and what Trudeau is doing in Canada, I think are major turning points and the blow back from both of them is going to be enormous.
Goldfinger:
There’s a lot there. What’s happening in Canada is absolutely insane and very scary.
I want to talk about junior mining. If we are going to see these bonds and the dollar and stocks fall a lot, one has to wonder how that’s going to affect junior mining stocks. We’ve had a very interesting situation where the world needs more base metals, battery metals, like copper and nickel, even tin. A lot of big projects, like in Alaska, there was news, a very big project received negative news (Trilogy). They have to go back to the drawing board in terms of their environmental studies to build a road that is absolutely essential for the mining operation. That stock fell 35%. We need all these metals to fuel the clean energy transition, but there’s the lack of will by politicians and other leaders to green light so many of these big projects. I wonder what your thoughts are. If some of these projects don’t get a green light soon, a few years from now we could be looking at $10 copper.
Bob Moriarty:
You are absolutely correct. Biden, just unilaterally canceled a major copper porphyry project in Michigan on environmental grounds, and you just cannot have it both ways. If you want electric vehicles, you’ve got to have nickel. You’ve got to have cobalt. You’ve got to have copper. You’ve got all kinds of crazy elements. You could be understated. There’s a three day supply of copper right now. Copper could be 10 bucks next week for all we know. The United States in general is making so many mistakes. We’re causing the energy crisis and the solution, I don’t think it’s that effective. The green power solution was killing that too. You can’t kill oil and kill green energy at the same time.
Goldfinger:
Yeah, it’s amazing. The situation that Europe, in particular Germany, finds itself in. They shut down all their nuclear power plants, and they decided to be completely reliant upon Russia for natural gas, putting themselves in a very weak situation, especially with what’s going on right now.
I want to transition to Eloro Resources (TSX-V:ELO), which is a company that both of us have followed for the last couple of years. Eloro put out some news recently that has been received positively by the market. All evidence points to Santa Barbara being a very large polymetallic deposit, perhaps in the neighborhood of 500 million tonnes. What I found most interesting is that they’re going to start stepping out to the south and drill some of these 10 for free targets that they have in the south of the project, where there hasn’t been any drilling. A recent video with Dr. Bill Pearson highlights that Eloro’s thesis of a large tin porphyry system is coming together. What are your thoughts on Eloro and some of these new step out holes to the south of Santa Barbara that they’re going to drill?
Bob Moriarty:
There are three or four or five extraordinary stocks, right now. Eloro happens to be one of the best. It was 15 cent stock two years ago. I think it was 308 meters and I worked some numbers out that looked like it was 308 meters of 140 or $150 rock. They’re going to come out with a 43-101 resource in Q2. I think the initial resource will be in the 500 million ton, but it’s a giant call there. The ultimate resource is going to be in one to two to three billion tons. That is going to be one of the biggest mining projects on earth and one of the most valuable. They are tapping into some great tin numbers.
ELO.V (Daily)
Goldfinger:
Yeah, it seems like the scale here is really almost unprecedented and especially if they hit some of these targets to the south, this could be just mind blowingly large. Hopefully, they have good results with some of these step out holes in the south.
There’s another stock, a Canadian gold explorer in the Yukon that we’ve talked about previously a couple times, that’s Banyan Gold (TSX-V:BYN). Banyan is actually one of the few gold juniors that’s making new all time highs as we speak. They’re going to be coming out with an updated resource for their AurMac project in the Yukon in the next several months, probably in the May/June timeframe.
Speaking of scale, Banyan has some pretty impressive scale too. At Powerline, they put out news recently showing that they’ve extended the power line deposit to the west. We’re talking about a deposit that is over 1,200 meters in strike length (east to west) right now, and they still haven’t found the edges of it. As they step out, they keep finding more and more gold. This is something that is going to be many millions of ounces of gold when it’s all said and done. The market cap is still under $100 million. So, what are your thoughts on Banyan and what is it going to take to get some of these juniors to get more respect?
Bob Moriarty:
Both good issues, really important. I’m actually glad you brought that up. I happen to know Tara Christie really well, and I’ve known her for 15 years. I have the utmost respect for her. Tara Christie is absolutely a wonderful person and a brilliant geologist. They’re doing great stuff up there. They’re finding lots of gold. Yes. It could be multimillion ounces and I’m thrilled that the stock price is performing so well.
Now, you raised an issue about juniors and it was kind of what’s happening with juniors. The delays in assay results are absolutely destroying the junior minor sector because it is taking months and months and months and months to get assay results back. You just can’t do that. You cannot run a drill program where it takes you six months to a year to find out what you’ve hit.
The assay companies need to get their act together because they are costing investors billions of dollars. That said, there are more good stories right now than I have ever seen in my life. You’ve got Eskay. You’ve got Eloro. You’ve got Newfound Gold. You’ve got Labrador Gold. You’ve got Lion One. You’ve got Irving. These are all extraordinary stories and for the most part, most of them are very near all time lows. When the financial risk is highest, which it is in my opinion, and you’ve got these stocks that are already in the bargain basement, I don’t think you can go wrong. When you’ve got the opportunity to invest in somebody like Tara Christie, I love Tara Christie. She is just wonderful.
Goldfinger:
It’s interesting that you mentioned the slow assay labs. Banyan’s actually working on getting their own third party lab right near their project, because they’re doing so much drilling and Victoria Gold is not too far away either. They can team up and pay the expenses for having their own third party lab there in the Yukon. I think we might see more companies start to do that. To sort of take this lab situation, this problem into their own hands and say, hey, we’re just not going to be a victim to these slow labs. We’re just going to have to handle it ourselves.
You said that there’s a handful of really exciting juniors. There’s Eloro. There’s Banyan. Can you give me one more that you’re really excited about right now?
Bob Moriarty:
Sure. Eskay Mining.
Goldfinger:
That’s in the golden triangle. Give me the one minute summary of Eskay.
Bob Moriarty:
Okay. It’s 10 kilometers away from the Eskay Creek Mine, and those kinds of deposits do not occur by themselves. Okay, they occur in clusters and it appears that Eskay has found the center of the cluster, and quite bluntly, Eloro is doing the same thing. Eskay should have 10 drills turning and Eloro should have 15 drills turning. They need to find the resources because we need the metal.
Goldfinger:
All right. It’s an interesting time in the market, especially in the gold mining sector. I guess I’m going to ask one more question.
We’re obviously looking like where we’re going to be in the middle of a fed rate hiking cycle in 2022. How far do you think the Fed is going to hike rates and how will it affect the gold price? Do you think that gold will make a new all time high this year?
Bob Moriarty:
The answer to will it make an all time high, I will say I’m certain of it. I’m not even sure there will be rate hikes because everything going on in the United States today, the reaction to Canada, the reaction to Ukraine, the reaction to COVID, it’s all political. It no longer has anything to do with basic economics. I think the fed is going to back off and they’re going to keep printing money and inflation going to go so far out of control that it’s only going to be dragged down when everything crashes. We have a monster crash coming. It is going to affect everything and everybody, and no matter how well you’re protected, you’re going to lose in some things.
Now, the liquidity among the resource stocks is very high. Rick Rule did an interesting interview lately. When the liquidity is high, you need to be thinking about taking some money off the table. We’re fairly close to a tradable top for gold and silver. The medium term outlook, I think, is much higher. I think the short term outlook would be a good time to be conservative.
Goldfinger:
So we will leave it there, Bob. Thanks for your time and insights and definitely some exciting stories to watch for in the next several months between Eloro, Banyan, and Eskay Mining. Three very exciting stocks that could have a lot of upsides ahead. And I pray for Peace in Ukraine and that the World will find peace.
Disclosure: Author owns BYN.V and ELO.V shares at the time of publishing and may choose to buy or sell at any time without notice.
______________________________________________________________________________________
Disclaimer
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Banyan Gold Corp. is a high-risk venture stock and not suitable for most investors. Consult Banyan Gold Corp’s SEDAR profiles for important risk disclosures.
EnergyandGold has been compensated to cover Banyan Gold Corp. and so some information may be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
This article contains certain forward-looking information and forward-looking statements within the meaning of applicable securities legislation (collectively “forward-looking statements”). Certain information contained herein constitutes “forward-looking information” under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “believes”, “aims to”, “plans to” or “intends to” or variations of such words and phrases or statements that certain actions, events or results “will” occur. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed by such forward-looking statements or forward-looking information, standard transaction risks; impact of the transaction on the parties; and risks relating to financings; regulatory approvals; foreign country operations and volatile share prices. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. Accordingly, readers should not place undue reliance on forward-looking statements and forward looking information. The Company does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.