In this month’s conversation with 321gold founder Bob Moriarty we focused on the big turnaround in precious metals and mining stocks. Gold is up more than $100/oz in the last few days and Bob is of the opinion that the pervasive fear in the precious metals mining sector offers the opportunity of a lifetime. In his words “it’s time to literally make your retirement” by investing in these beaten down stocks. He also has a variant view of how the tax loss selling season in junior mining stocks will play out this year. Without further ado, Energy & Gold’s November conversation with Bob Moriarty…
Goldfinger:
Bob, it’s great to speak with you again and the timing couldn’t be much better. Yesterday, we witnessed a remarkable performance for precious metals and mining stocks. We saw many of the gold and silver miners up 6% or 7% on the session. Gold was up more than 2%. What are your thoughts on this big turnaround in precious metals and mining stocks?
Bob Moriarty:
Well, actually I think the turnaround started at the end of September. If you look at the piece that I wrote a week ago, when I was talking about dollars for pennies, I put in a chart of a stock that I think represents what everything is going to do. We had a bottom and gold at the end of September. We had a test a few weeks later, and then we had a test last Thursday. And then of course on Friday, gold exploded higher. You know I’m a contrarian and you know I’m trying to pay attention to sentiment. I’m very interested in what you have to say.
The way I look at this, the sentiment for gold stocks is still an absolute disaster. The 10 stocks that I wrote about a week ago all had market caps of under $5 million and were selling for under 5 cents a share. And believe it or not, all the article did was generate some kind of liquidity event where a lot of people sold shares just so they could get out. Now that’s what you absolutely look for at the bottom. And I’m absolutely convinced… Not absolutely, but pretty much convinced. Yeah, we’ve seen the bottom.
Goldfinger:
Silver looks like it has formed a pretty convincing bottom. In my morning email this morning I pointed out that $1738 is the big level where we need a weekly close above that to really confirm the bottom is in. And we know that this is a tricky market. Frankly, I’ve been trading for 20 years and this is probably up there in the top five trickiest market environments I’ve experienced. Momentum can be there one day and gone the next. So I definitely want to give a word of caution that nothing is guaranteed in this market environment.
Silver (Daily)
It’s interesting that a lot of people were grasping at trying to explain yesterday’s move. Was it short covering? Was it something to do with the election in the US? Was it money coming from crypto because another crypto exchange has blown up and Bitcoin is back down to $17,000? The crypto market is imploding this week. Do you have any thoughts on what the catalyst(s) may or may not be?
Bob Moriarty:
That’s a good question. And you raised an excellent point. I’ve been trading for 52 years, and we are seeing moves that I never even dreamed of. Did you happen to notice what the percentage move was in the dollar index on Friday?
Goldfinger:
No, I did not.
Bob Moriarty:
It was 2.25%.
Goldfinger:
That’s a pretty big move for the dollar.
Bob Moriarty:
It’s a pretty big move for any currency. The worldwide currency exchange daily is $6.5 trillion. So when you get a over 2% move in the world’s reserve currency in one day, people are making a lot of money and others are losing a lot of money. This is like having a loose cannon on a ship in a hurricane and you don’t know where that cannon’s going to go. You just know it’s going to poke holes inside when it hits.
The only thing I pay attention to is sentiment. The sentiment has been horrible for the metals. It’s been horrible for resource stocks. And that creates a wonderful opportunity for contrarian investors. I think your comment about $1738 gold is absolutely correct. People are going to wake up very soon and realize the only safe haven left is in the junior resource stocks. And if you go back to that chart that I posted a week ago, you’re going to see moves of hundreds of percent in a lot of stocks. I mean indexes are going to go up 300%. So it’s literally time to make your retirement.
Gold (Daily)
Goldfinger:
If you say it’s time to make your retirement, what more specifically do you mean? Obviously, the junior mining sector has had a very challenging last two years. It had a tremendous run higher from the March 2020 COVID crash low until August/September of 2020. It was one of the best five months in the history of the sector. And since then we’ve been dealing with a bit of a hangover. And in recent months, the hangover has accelerated to what some could call a capitulation. Do you agree with that assertion? We’ve seen a capitulation in the sector and if so, how does one actually profit from it?
Bob Moriarty:
Well, here’s what I say. And it’s in all my books. I do not believe there are any gurus, and I do not believe there are any experts. There’s a lot of people who claim that they are and it’s just simply not true. There’s some things that you’re very good at, like picking price points that I’m absolutely useless at. Everything I’d say and everything that I write about my books, anybody could do what I do if they understood sentiment. Now if you go back to the last really bloody market was in March of 2020 and they called that the COVID crash. And frankly, I don’t believe it at all because I had predicted it in January and I predicted it in February and I said in March we’re going to have a crash. Everybody wants something to hang a hook on. The market went up today because of this, or the market went down today, because of this. And it’s all rubbish.
But when I say this is the time that you can make a retirement, if you go back to March of 2020, silver went down to $11.69/oz If you go to August of 2020, it went up to $29.81. So essentially, it moved from $12 to $30. That is a 150% move. And it’s a move in roughly six months. If you go back to January of 2016 through August of 2016, we had another incredible move in gold stocks where indexes were up 300% and lots of individual stocks were up 1,000%. We’re there now. And the key is you’ve got to have courage when you get a crash like we had in March of 2020, or in January of 2016. But you also have to take some money off the table when you get a big move. So my belief is we’re not going to have a silly tax loss season this year because we’ve actually already had it.
Slowly but surely, investors are going to come wading back into the pool. And in six to seven months from now, we’ll have a tradable high. And these numbers are not numbers that I make up, they’re not my opinion. These are hard numbers that there are places that you go to and you can look it up. DSI is one of them. The Gold Miners Bullish Percentage is another one. There’s lots of ways to measure sentiment and sentiment will tell you when to trade.
I’ve said since September, you and I had a conversation on September 1st.I’ve said that I thought it was the bottom. Silver, in fact, bottomed that day. Several of the indexes bottomed. It took gold another four weeks to bottom, but that was the low. And it was the low two months ago. Jump in while there’s an opportunity to profit.
Goldfinger:
So that’s an interesting assertion you’re making. No tax loss silly season this year. I’m going to actually make you a gentleman’s wager. We’ll revisit this in about five or six weeks and see if there was a pretty good chunk of stocks that got hit with senseless selling over the next month or so. Tax loss selling season usually starts in November and can last all the way until Christmas. And so we’re just at the start of what would normally be the tax loss selling season.
So if it’s time to buy right now, how does one know what to buy? And I know that you wrote this blog on November 3rd. You gave 10 stocks. It’s a list of some really obliterated stocks, they’re pretty awful beaten down charts. Is it important that a company has catalysts? Is it important to look at the share structure and the management team? How do you determine what to buy?
Bob Moriarty:
That’s an excellent question. And in today’s piece, I actually talk about that. You have two different alternatives. Now, I would like you to use those 10 stocks that I wrote about, and we will use them as the litmus test for tax loss selling season. And I’ll tell you right now that those 10 stocks are going to be higher in the mid-December period, okay? One of the stocks is up 67% in three days. Now what investors forget, why would I buy some piece of crap stock at 3 cents that nobody wants? And the answer is, are you buying because you care what people think? Are you buying because you want to make a profit? If you invested in that stock last Thursday when I wrote about it, you could have had a 67% gain in three days. Now how often are you ever going to have it? And the answer is not that often.
So we’ve got a situation where I’ve listed 10 stocks and I’ll tell you, I don’t think they’re going to be lower a month from now. I think they’re going to be higher. But what if you’re afraid to buy a 3 cent stock or a 5 cent stock? Tombill Mines, TBLL on the TSX-Venture, it’s half a cent and it had a $800,000 market cap. Now, where does the company go from an $800,000 market cap? Two answers. It either goes away, which I don’t think it’s going to do, or it goes higher and it could go much higher. But if Tombill, that I was buying a million shares of at half a cent, if Tombill went to a penny, you have 100% return, which is, bluntly, pretty good.
And I’m interested in your opinion on this. I believe there are 15 or 20 or 30 or 50 outstanding companies that people can buy into. I talked about them in the piece today. You’ve got Paycore, you’ve got Core, you’ve got Goliath, you’ve got Snowline, you’ve got Lion One, you’ve got Newfound Gold, you’ve got Labrador Gold. And these are not people that necessarily are my advertisers. There are so many stocks that have already been beaten up that I don’t think they’re going to go lower unless the Dow and the S&P go to zero.
So you really have two choices. If you want to go for percentage gain, buy the piece of shit stocks that you can buy with the market cap of two or $3 million and the share price is $.03 or $.04, or buy the really high quality stuff. I mean, look at Snowline, look at the Western Alaska mining. Look at Southern Cross Gold. Jesus, these guys are coming up with the most incredible intercepts, and everybody’s pretending gold went to zero and nobody noticed.
Goldfinger:
So I’m going to pick one of those stocks you mentioned and then I’m going to throw out another one. So Snowline Gold (CSE:SGD, OTC:SNWGF) is very interesting. And by the way, I don’t own it at this moment. The chart is consolidating in a very tight pattern here, and we know that there’s a seasonality in these Yukon gold explorers. Snowline isn’t drilling right now. They take a break for the winter due to the remote location of the Rogue Project and the shortening periods of daylight. They probably won’t be back until April, I would guess. So you have this five or six month window where news is going to quiet down a little bit. In my mind, Snowline looks look it could be one of the greatest gold discoveries of the decade. Who knows? We need more information. But the results so far are outstanding. And this could be a tremendous opportunity to accumulate the stock while it’s quiet. So that’s number one. I don’t own it, but I understand the cyclicality of the sector and the Yukon. There could be a great opportunity to accumulate Snowline over the next few months.
SGD.CA (Daily)
The second one is Amex Resources, AMX on the TSX-Venture. Now we know that the gold producers, the big guys, need to replace their gold reserves in the ground. And we know that they’ve been afraid to make any big acquisitions, except for the C$2 billion acquisition of Great Bear by Kinross. That’s a notable example. But generally speaking they’ve been afraid to acquire exploration stage companies because they’ve been so bad at acquiring early stage assets in prior cycles. However, at some point some of these companies are going to have to pull the trigger and begin to replace their reserves. We’re starting to see a few deals get done. And Amex, probably has more than four million ounces of high grade gold in a tier one jurisdiction, Quebec. I feel like AMX is one for the tax loss season shopping list. And frankly I’d bet that either Amex or Snowline get acquired at a premium in 2023. Who knows, maybe both get taken out.
Bob Moriarty:
I follow Snowline, but Snowline is not an advertiser. And I will agree with you that from now until probably summertime, there’s going to be a dearth of news. However, it’s going to become increasingly clear that Snowline has an incredible deposit, an incredible discovery. And I think the price is very cheap here. I have not followed Amex, but I just took a look at it and it’s very cheap relative to what they’ve discovered to date.
So what I’m saying is you do not need to pick up a dart and try to throw it in the target from 50 meters away and hope that you hit the bullseye. That’s bullshit. With the market where it is right now, you could go into a dark room, you could put a blindfold on and throw a dart, and the walls can be three inches from your nose. You cannot possibly miss the target. These prices are absurd. So what I’d like you to do, is write down both Amex and Snowline, and we’ll use them as the measure of the really high quality stocks. Now, if you look at AMX and you look at the chart, AMX went from $3.10 a share in April to $1.45 in July. And what exactly causes a stock to go down 60% in two months? And the answer is nothing.
AMX.V (One Year)
Goldfinger:
Well, it’s a capitulation in the gold sector. A lot of money just left the sector because they figured that gold wasn’t coming back and it could go below $1,600 into year end. It’s fear, right? The market, the gold sector, everything is always swinging on a pendulum from fear to greed, and back again. In August 2020, we had greed in the gold miners, and in the last few months we have had a tremendous amount of fear. It doesn’t need to be a lot more complicated than that. Investors should be buying when others are fearful, and selling when others are being greedy. And so I agree with you that you want to buy when there’s fear, you want to buy when there’s not much competition for your money.
So let’s turn to the midterm elections in the US and sort of where this country and maybe the world is going. It looks like the Republicans will take the house. It looks like the Democrats are going to hold the Senate. It’s a win for the Democrats because it was looking like they could lose the Senate. So a small victory there for Biden. Meanwhile, we continue to have a President who continues to make the folly reel on a daily basis. The US continues to draw down on the SPR, without a real plan in place for how to refill it. And despite a lot of talk, there’s not a whole lot being done in terms of expanding oil production in this country or approving new mining projects. Where’s this country headed, Bob?
Bob Moriarty:
We are making an assumption that I don’t think is based on facts. And I try to make the point in interviews and writing and in my books that the question is the most important issue, not the answer. If you ask the right question, you have a chance of coming up with the right answer. If you asked the wrong question, you cannot possibly succeed. And I’m going to ask you a real trick question. Who’s running the United States?
Goldfinger:
Probably the Democratic Party and the big donors of the Democratic Party?
Bob Moriarty:
No, no. Who?
Goldfinger:
Were you talking about one person?
Bob Moriarty:
Yeah. I mean, name somebody associated with the White House who actually we can accept is making decisions. And I’ll be real candid, I don’t think there’s any. The best explanation I’ve seen is it’s Susan Rice that’s really making the decisions and she’s making the decisions on behalf of Obama. But the one thing that I’ll say is absolutely crystal clear. Joe Biden isn’t making any decisions. Some of the things like these strategic oil draw down, it’s so frigging stupid. But I am staggered by this administration. He keeps going out saying he’s going to destroy fossil fuels and then turns around and does everything in his power to do it.
Let me point something out. I’m always trying to find things to study that are important that a lot of people don’t know. Now, if you go back to the dawn of the fossil fuel age, which it’s really like 1820 for coal and 1860 for oil, the curve of energy production is identical to the curve of population growth. Now, what that infers is that all you have to do to reduce population growth is to reduce energy production. And I will say absolutely categorically, there is no energy shortage. There is plenty of energy out there. It’s in the wrong place, and governments around the world are doing the dumbest things they can do. But if you reduce fossil fuel production by 25%, you are also going to reduce population by 25%. And that’s what nobody talks about.
The results of the election are interesting because I think I’m going to agree with you, I think it’s going to be split between the Democrats and the Republicans. And that’s probably a good idea because it takes the power away from both of those stupid fools. So I don’t know. I think Biden’s green energy policy is one of the dumbest things I think any US President has ever done. Clearly, his immigration policy. I don’t know how anyone can defend that. How do you open your borders up for anybody who wants to walk across?
Now the United States is on the wrong path. Now I watched the voting yesterday, and the interesting thing was the exit polls indicated about two thirds of Americans, and this includes both Democrats and Republicans, are very angry at the direction the country was moving. But somehow between yesterday and today, we had a bunch of dead people vote. And it appears to be split. And strange enough, it really appears that the Democrats haven’t lost anywhere near what the party in power would lose in a typical midterm election. I don’t know if our elections mean anything anymore. I don’t think they do.
Goldfinger:
One more thing that I think is an interesting topic. The mining industry is having a lot of issues with labor shortages. There’s a lot of drill programs where the drill contractors don’t keep their promises on timelines, with workers quitting or workers not doing a good job with the drilling. There are extensive challenges throughout the sector. And we talk a lot about battery metals, and how we’re going to manufacture all these Tesla EVs and all these other electric vehicles, whether it’s Ford, General Motors, or BMW. All of the auto manufacturing companies are production constrained due to battery metals. Well, how on earth is this going to happen when we can’t even man a drill rig properly in this country? How are we going to build mines? How are we going to actually make real things when we’ve spent the last 30 years outsourcing our manufacturing base to China? It seems like we’re woefully ill prepared for what we’re talking about.
Bob Moriarty:
I’m not sure woefully unprepared is accurate. How about disastrously, unequivocally unprepared? Certainly the direction of the last 30 years, it’s not been a particularly positive direction because of the climate change fraud and the global warming fraud and the green energy fraud and the electric vehicle fraud, all of which are fraud. When California had an electricity shortage in August because of the heat, the state government literally came out and said, “Don’t charge your electric vehicles because we don’t have enough electricity.” Now, if electric vehicles are supposed to be the solution, what do you do when you can’t charge them? And the answer is, you’re stuck.
Electric vehicles and wind turbines have been oversold. If you do the math, we don’t have enough nickel, we don’t have enough cobalt, we don’t have enough copper. We certainly don’t have enough lithium to produce what people are saying we’re going to do. Now, I think California said by 2035 you’re not going to be able to sell oil-based engines. You can’t sell gasoline-powered generators or snow blowers or lawnmowers today. It’s okay to be in favor of green energy, but if you’re in favor of green energy, you have to realize you have to transition to green energy. And the fact is, all we’re doing is killing projects. COVID destroyed the supply chains. And right now, the United States is at war with Russia. It’s at war with China. It’s at war with North Korea. It’s at war with Iran. Now it’s at war with Saudi Arabia, and it’s at war with Venezuela, and it’s at war with Nicaragua.
You can’t be at war with everyone unless there’s something really seriously wrong with your society. Quite bluntly, people are waking up to the fact that something is seriously wrong. We need to go back to real world economics. We need to produce real things. We need to get out of the way of people who are trying to produce the commodities that are going to be necessary to help transition to a more green environment. We’re doing exactly the opposite and draining the SPR in the absolute measure. It was done for purely political reasons. And what do they do now? If they fill it up, it’s going to cost American taxpayers a lot more money for oil.
Goldfinger:
Final topic, the cryptocurrency sector has had a really epic implosion in the last 18 months, and a lot of Ponzi schemes and Ponzi economics are coming to light. We’ve also seen central banks continue to accumulate gold actually at an accelerating pace in the third quarter. What do you believe the implications are of the unwinding of the cryptocurrency bubble for precious metals longer term?
Bitcoin (Daily)
Bob Moriarty:
I don’t think there’s any relationship between them. You and I have been talking about cryptocurrency going back to at least 2017, and I have been adamant. First of all, you’re mispronouncing the word. It is not cryptocurrency. It is Klepto-currency.
It’s all fraud. It’s been a fraud from the get go. There’s no way in hell that it’s ever going to do anything. Certainly none of the central banks are going to allow currencies where they don’t have total control. They’re planning on going to Central Bank digital currencies where they can control every single transaction. We’ve had a decrease in market valuation from $3 trillion to $843 billion. So it’s down about 70% so far, and the sooner it goes down 100%, which it’s going to do, the happier I’ll be.
Goldfinger:
Is there anything else that you think is important to state before we wrap up?
Bob Moriarty:
Yeah. There’s something I would like to cover, and this is a general observation on the security of countries. And this has to do with the middle class. In France, when the French talk about the English, they talk about them as a nation of shopkeepers. Okay? The ideal job as far as the French are concerned is to work for the government. So they think that if you own a small shop in the UK, they want to look down on you. But the real key is if you want a safe, secure, stable civilization, you need to have a large, prosperous middle class.
Every society is always going to have some rich people, and every society is always going to have poor people. And those aren’t particularly important. What is important is the size and the stability of the middle class. And everything that we’ve done with the COVID fraud and the war on Russia and the war on China and the war on Iran has been to destroy the middle class. Now somewhere between 50 and 60% of people in the United States, in the UK and in the EU are living paycheck to paycheck now. And we are destroying the middle class and we’re going to pay for it at the end of the day. It’s a giant mistake, and it’s something nobody’s talking about.
Goldfinger:
I recently read that US credit card debt reached a new record of nearly $1 trillion.
Bob Moriarty:
Well, your piece today was really excellent… And I pretty much ignore what other people say because it’s a totally different environment. But you have an ability to gauge and predict price that I don’t even pretend I have, and you do a pretty good job of it. I believe you pretty much nailed it on this. And you’ve done that a number of times.
Goldfinger:
Thank you. I really appreciate that. It’s a tough market. I do my best and try to get it right more than wrong.
Bob Moriarty:
Strange enough, and you just made a really good point, there are people in this industry, and you know who they are, who claim every prediction they make is a good prediction. That’s bullshit. If you don’t make bad predictions on a regular basis, you’re a fucking liar.
Goldfinger:
That’s for sure.
Bob Moriarty:
I don’t pretend to make 100% accurate predictions, but I like to be right more than I am wrong. And quite bluntly, strange enough, you and I make a good combination. And these interviews are good because two people are looking at the same facts and often coming up with similar opinions.
Goldfinger:
Thanks a lot for your time and insights, it is greatly appreciated. Until next time Bob.
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Disclosure: Author owns AMX.V shares at the time of publishing and may choose to buy or sell at any time without notice.
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