With gold surging to a new all-time high above $2,100/oz, who better to speak with than 321gold founder Bob Moriarty? A few days before gold made it’s short-lived move above $2,100, Bob and I connected for an update conversation. Every year, in early December tax loss selling has a tendency to deliver a multitude of bargains across the junior mining sector. This year is no different, Bob and I discuss some of our favorite junior miners and Bob offers a bullish forecast for the junior mining sector. In his own words, we’re nowhere near the end of this rally in precious metals mining shares. Without further ado, Energy & Gold’s December 2023 conversation with Bob Moriarty…..
Goldfinger
I think the first place to start, Bob, is this incredible move that we’ve seen in gold and silver in the last few days. On Thanksgiving, gold was around $1,990. This morning, it’s about $2,050, and we’re knocking on the door of a new all-time high. What do you make of this gold move and what do you think is driving it?
Bob Moriarty
Well, I can’t say what’s driving it because I don’t know, but we’re in a seasonally best position, and certainly in the resource stocks, they had made a new low in the XAU and the HUI over gold in the last month. Everything was in place for a move.
I have to think what you’ve said in the last couple of days is absolutely accurate. I think we’re going to set a new, all-time high, and certainly from the actual gold shares yesterday, they’re starting to wake up.
Goldfinger
Tuesday was the most bullish trading session in gold mining stocks in a very long time. The big producers, Agnico, Barrick, Newmont, all up 5% or 6% in a single trading session. That’s not something we see very often.
In your experience, is this the sort of thing that you see at the start of a move or at the end of a move, when you have the seniors leading, and making these big gains on heavy volume?
Agnico Eagle Mines (Daily)
Bob Moriarty
It’s the very start. You start off with the biggest and the best, and then you see a move to the penny dreadfuls. We’re nowhere near the end of this rally. The three biggest producers (Agnico, Barrick, and Newmont) added $6 billion in market cap just last week.
I don’t know if you follow West Red Lake Gold (TSX-V:WRLG), but it was up 20% yesterday. For a $100 million market cap stock to go up 20% in one day, that’s pretty remarkable. And that happened without any news.
Goldfinger
Yeah, we’re beginning to see a lot of big moves in some juniors the last couple of days. Really a change of character, a very notable change of character, where you’re seeing stocks jump up 20%, 30% in a trading session on no news.
Everybody’s asking, “What’s driving it? Well, what’s happening?” Well, there’s just money coming into the space from a very low level of participation, and low valuations. These share prices are all beaten down and pretty cheap, so moving up 20% or 30% isn’t even a big deal. Talk to me when they’re up 200% or 300%.
Bob Moriarty
Well, I think they’re going to be up 200%-300%. Now, to the extent that I am never a fan of action/reaction because frankly, I’m just not that smart. But I think something that’s going on in Europe and with the UAE announcing going away from the dollar today, there are some big moves. Something’s about to happen in Europe.
Goldfinger
Something is about to happen in Europe. That’s an interesting comment. What could it possibly be?
Bob Moriarty
Well, here’s what we’ve had. We’ve had the fastest increase in interest rates in history in the last two years. The 30-year Treasury dropped by 53% in the US, It was far worse in Europe.
When interest rates go up that high, that fast, it hurts hedge funds, it hurts banks, it hurts insurance companies, it hurts everybody.
This is hardly scientific, but I just have a gut feeling something’s about to blow up in Europe. It’s not a prediction anybody can bet on, however, I have this feeling something’s going on.
Goldfinger
Something you’re kind of alluding to the banking system, so there’s some sort of stress in the European financial system somewhere.
You don’t know exactly where, but your sense is that there’s something that’s about to happen?
Bob Moriarty
I haven’t seen a report that UBS has stopped literally giving money to clients, and I only saw one or two instances.
But that could be the start of a financial crisis for UBS. But all of the banks, everybody, the government treasuries have been seriously hurt in the last year or two.
Goldfinger
In my last few Morning Emails to premium subscribers, I’ve made a point to talk about this central bank gold buying that has been a big driver to the gold price in the last year and a half. There are some reports that Chinese bank traders have been accumulating a lot of gold in the last couple of weeks.
In fact, there’s a report from TD that says 17.5 tons of gold in one week have been accumulated by Chinese buyers. Meanwhile, China has accumulated $15 billion worth of gold since 2022. This is very clear signal that China wants to continue to increase its gold reserves, and that it is committed to diversifying its foreign exchange reserves away from the US dollar.
Bob Moriarty
The Chinese shadow banking itself had one of the big players just totally ran out of money. I see that as a potential cascading collapse. UBS would be exactly the same way. We are in the path of an avalanche, and all it’s going to take is a couple snowflakes.
Goldfinger
Yes, a point that I’ve made in the last couple of weeks, is that the Treasury is going to be increasingly challenged to place Treasury paper as the US deficit continues to come in at about $2 trillion a year. Meanwhile, the national debt is well over $30 trillion and a substantial chunk of that total has to be rolled over in the next year.
There’s a lot of paper that needs to be rolled over in 2024, and who is going to absorb all of that Treasury paper? How is the market going to handle it? I think that every way I look at it and analyze it, it involves the Fed monetizing some of that debt.
Bob Moriarty
Yeah, but that can only continue as long as people are willing to buy it. Now, there’s another thing that you’re probably familiar with. Are you aware that both the EU and the US are talking about taking the $300 billion that NATO and the EU and the US stole from Russia, and selling that and giving the money to Ukraine?
Now, it’s not a question of arguing whether that’s a good thing or a bad thing in geopolitical terms. But in economic terms, it would send a very clear and convincing message that if you own US treasuries, you are going to be held hostage, should the United States decide they want the money more than you do.
I think it would be a terrible mistake for the EU or the US to make. Because it not only would stop people from buying treasuries, it would increase sales of treasuries and help lead to the demise of the dollar.
Goldfinger
Yeah, that’s a good point. No, I didn’t read that, but that’s a good point. That would definitely be a negative for the US dollar as the reserve currency. A few weeks ago, everybody was worried about the Gaza situation. There was one weekend in October where there was a lot verbal jousting from the president of Turkey and the Iranians. They were making threats.
Everybody was talking tough, that if the Israelis invaded Gaza, they would respond. Well, so far it’s happened and there’ve been a few isolated attacks here and there, but nothing really terribly notable. Certainly not World War III. How do you view this situation now with the Israeli armed forces rolling through Gaza, and what’s the endgame there?
Bob Moriarty
That’s a really good question. It’s very hard to figure out, now that you’ve got Turkey, you’ve got Iran, you’ve got Iraq, you’ve got Syria, you’ve got Lebanon and you’ve got Hamas, you’ve got Israel, you’ve got the United States, you’ve got the EU, you’ve got the Hutus. Strange enough, everyone has conflicting interests. I will give credit to Iran and I will give credit to Syria.
I will give credit to Lebanon and to Hezbollah. They have been relatively sane and they haven’t made things worse. In my opinion, Israel has walked into a trap that they cannot win, and I think it was a terrible mistake on their part. While I certainly sympathize with the fact that innocents have been killed on 7th of October, but 20,000 innocents have been killed since then. That’s nothing short of ethnic cleasning and a war crime by any measure.
This has given everyone an opportunity to show whether they actually possess a moral compass. If you are for genocide, you get the opportunity to tell everybody how black your heart is. I think it gives the strength to say in some of the things with the United States sending out more aircraft carriers. How do you fight terrorism with four aircraft carriers and a submarine?
Goldfinger
I mean the death toll is pretty substantial in Gaza. I think everybody expected that to be the case with an Israeli invasion. However, it’s increasingly difficult to see what the end game is. You have Biden saying, “We have to have a two state outcome to this. The only way we can have peace is if we have a two state solution.” But I’m not sure that the Israelis are on board with that.
It’s a very tricky situation. Turning to the US 2024 presidential election, this is also a very tricky situation where I can’t see Biden having a second term. I just don’t see it. Trump is still quite popular, but I also can’t imagine a second Trump term. I just don’t see what the outcome of this election is going to be. It seems highly unclear at this point in time.
Bob Moriarty
I’m not sure there will be an election. The deep state has made it clear and even suggested assassinating Trump, which is a real option. They did that to Kennedy. Why wouldn’t they do it to Trump? That Biden could even finish his term, the guy is senile. Joe Biden is not running the White House. Obama is running the White House, and nobody talks about that.
But this is not the Biden administration. This is the third Obama administration. I’m terrified for the United States because I’ve seen the worst leadership in history across the board. Everybody’s corrupt, everybody’s lying, and nobody’s looking out for the American people. Some of the stuff like the crisis at the southern border no one actually supports but it is happening..
Europe is waking up to the fact that the 37 million refugees that Israel and the United States created, have created a tremendous problem for Europe. You can’t bring in 10 or 20 million illegal immigrants into the United States without that being a giant problem. Nobody’s talking about it. Nobody has the solution.
Chicago and New York have woken up to the fact that they can’t feed and support the illegal immigrants, but nobody’s stopping it, which is insane. No one ever comes out to support it but millions of illegal immigrants are pouring across the border including Haitians and migrants from Africa. Someone has to be paying for that. Who?
Goldfinger
Yeah, that’s a whole another topic. It is pretty insane. New York City is having to cut its public services budget in order to allot some of the money to taking care of the illegal immigrants that are housed in the city. It’s really a crazy, crazy situation, but we could talk about this for eternity. Let’s turn back to financial markets.
We have a very strange situation where up until about a week ago, the juniors were about as bleak as could be, yet the broader stock market was as bullish as could be, and rising just about every day. Now, things have turned around a little bit this week with the juniors catching a bit of a bid the last couple of days, as gold and silver have moved up.
This is also tax loss season. We’ve talked about this every year for the last five, six years, how this is tax loss silly season. It’s a really great opportunity for investors in the junior mining sector. This is just one time of year where there’s these really bargain-basement opportunities to pick up stocks that are being thrown out for no good reason.
Very often, we see a lift in these names in January and February the following year. Tell me about some of your favorite tax loss picks here.
Bob Moriarty
Well, strange enough, and this is very bizarre, I think we are past tax loss selling season. Everybody’s had the opportunity to unload their losers, and I think they’ve already done it. The moves that I’ve seen in quality stocks are really quite remarkable. I don’t think I’ve seen anything like it, and I’ve been buying gold stocks going back to 1999. Everybody forgets this, but the low in gold $252 was in August of 1999.
There were a dozen or 15 junior stocks selling for less than the cash they had on hand. You could literally pick up stocks for nothing. It took two years after the low in gold, before the gold stocks started moving, but I’m seeing gold stocks move now. There’s a couple of stocks in particular that I just think are extraordinary. You should talk to Shane at West Red Lake Gold (TSX-V:WRLG, OTC:WRLGF), if you haven’t already.
I spent an hour on the phone with him yesterday, and those guys have the most incredible story. They picked up the assets of Pure Gold after Pure Gold went bankrupt. They’ve got a $600 million brand-new mill. They’ve got a high-grade two million ounce resource. They’ve got two different mining projects, Madsen and Rowan. They’ve got a $273 million value tax loss carry forward in a company that you can buy the whole thing for C$120 million.
WRLG.V (Daily)
It’s just the greatest story. We have talked about New Found Gold (NYSE:NFGC) in the past, but how many ounces, how many million ounces is New Found Gold going to end up with? Every time they come out with assays, it’s more high-grade, near-surface gold and they’re going to have many million ounces of gold in a safe jurisdiction. There’s some extraordinary stories across the board.
I don’t think I would even wait for the middle of December, which everybody’s waiting for. I think now it’s the best time to invest, and it’s going to be good for two or three months at least, no matter what happens to gold or silver.
Goldfinger
West Red Lake Gold, that’s a Frank Giustra company. They’ve been very aggressive this year, probably the most aggressive gold junior of 2023. They’ve done a number of financings, and they’ve been really aggressive to get the story out there at conferences. West Red Lake also continues to deliver very high-grade gold intercepts.
That is interesting, because as you mentioned, they’ve managed to buy some valuable mining assets at pennies on the dollar just because the prior company had basically just run out of money. You and I both know that in mining, it’s very often like the fifth or sixth company that has a project that actually makes it work. There’s usually a number of failures, and then people get more information, they get more data.
They learn from what didn’t work in the past, and they finally figure it out. That’s something that happens we see over and over again in the junior mining sector. It’s like the fifth or sixth owner that finally has the big win. It’ll be interesting to see if that’s the same case at Madsen. Then New Found Gold, best drill results of any gold company of 2023, there’s no doubt about that.
The stock is down this year. It’s actually down in 2023. What do you think the market doesn’t get about New Found Gold, Bob?
Bob Moriarty
Well, here’s the deal, I’m sure you’ve run into this. When gold stocks are going up, everybody loves you and me. When gold stocks are going down, everybody hates you and me, but we don’t make stocks go up or down. It has nothing to do with us. I say in one of my books that you need to understand, stocks go up and stocks go down.
There’s too many people in this industry who are trying to pass this message that stocks are always supposed to go up and that’s just not true. But New Found Gold has a C$1 billion market cap. I am very familiar with Newmarket and with Kirkland Lake Gold and with the Fosterville Mine. Now, that went through three owners that I’m aware of.
Now, I can’t remember what the company was, but there was a company before Newmarket (Crocodile Gold) and then Newmarket bought it from them. Then Kirkland Lake bought it from Newmarket. When Kirkland Lake bought Fosterville, they paid a billion dollars. Actually, Tony Makuch, who is on the board of directors of West Red Lake, is certainly familiar with story.
That acquisition took Kirkland Lake from being a $3 billion company to being an $18 billion company. Buying Fosterville put $3 billion in the pocket of Eric Sprott. It probably put $100 million into the pocket of Tony Makuch. Frankly, I think West Red Lake, it’s going to do the same thing.
Goldfinger
Yes, Eric Sprott has continued to buy New Found Gold. It seems like he buys a couple hundred thousand dollars worth of a stock a week. It’s pretty incredible, but I guess that’s not a lot of money to him. You gave me a few tax loss ideas. I’m going to give you a couple. I think you know these companies too. First one is White Gold (TSX-V:WGO, OTC: WHGOF) in the Yukon. Even with gold’s rise, White Gold is still trading down ~40% year-to-date.
They have two majors who own big chunks of White Gold. Strong financial backing from Kinross and Agnico Eagle, and the biggest exploration property package in the entire Yukon. Plus, two million ounces of gold at one of their projects in the Yukon, the Golden Saddle & Arc Deposits. Another Yukon company, Banyan Gold (TSX-V:BYN, OTC: BYAGF). If you look at the Banyan chart from Tuesday, you’ll notice it traded some very big volume.
In fact, Tuesday it traded the largest single-day volume day since January. It looks like the selling is done. The last sale order got cleaned up by a buyer of 27 and a half cents. I wouldn’t be surprised if that one is done with its tax loss selling. Banyan has 6.2 million ounces of gold in the inferred category in the Yukon. Banyan also has an excellent management team, led by CEO Tara Christie.
I’ll give you one more, Endurance Gold (TSX-V:EDG, OTC:ENDGF), which has a gold project in the Bralorne Gold District of British Columbia, Canada. Endurance is at C$.175 right now, it’s at a 52-week low. Great high-grade gold drill results at their project in Southern BC, and a very competent CEO and management team. The thing that all three of these companies have in common, is they don’t have a gun to their head to raise capital right now, and they all have excellent management teams, and a track record of exploration success.
EDG.V (Daily)
Bob Moriarty
I happen to be familiar with all three companies. White Gold used to be advertisers on 321gold, I am very familiar with them. The strange thing is, and you pointed something out that’s very valuable. They actually have two built-in companies that will be interested in buying them down the road. You always want two companies competing over you.
When you have a situation where you’ve got a junior that has a major position with one company, you’re not going to get the maximum benefit. But when you’ve got two companies invested, then you’ve got an opportunity for them to bid against each other. But White Gold, it’s a slam dunk. It’s got great management, and projects in a top gold mining jurisdiction.
They’ve done a good job. Tara Christie happens to be one of my favorite people in mining. I love Tara Christie, period. She’s wonderful. She’s done a brilliant job at Banyan. You’ve been following that and talking about it for years, and it’s a great story. She’s doing a great job. Same thing at Endurance. The importance of jurisdiction is beginning to be highlighted, and I think it will only become more important in the years ahead.
You are starting to see, let me think of, I need to think of the term for it. What is it when countries start stealing resources? What’s the term for that?
Goldfinger
Expropritation? Nationalization?
Bob Moriarty
I think it’s called Economic Nationalism. When copper or lithium or gold actually rally, a lot of countries start thinking that it’s so easy to make money mining that they should nationalize the company. Then they can hire everyone in their extended family to work for the company, and they get the profit that used to go to the investors who actually financed the billions of dollars it takes to get into production. In Panama, the government just revoked the license of First Quantum (TSX:FM) who ran a giant copper mine that produces 1.5% of the copper in the world. Others will do the same so jurisdiction is always important.
First Quantum Minerals (One Year)
Goldfinger
What is happening in Panama is very scary. $20 billion of market cap has been wiped away by the decision of the country’s supreme court to declare First Quantum’s mining license to be unconstitutional. The government is shutting down the Cobre Panama mine and losing 5% of Panama’s GDP.
Bob, another great conversation. Thanks for your time and insights. As we wrap up 2023, I’m looking forward to more green on my screen in the juniors.
Disclosure: Author owns shares of Banyan Gold, Endurance Gold, and White Gold at the time of publishing and may choose to buy or sell at any time without notice. Endurance Gold is a sponsor of Goldfinger Capital. Readers are charged with conducting their own investment due diligence and recognize that micro cap stocks can deliver a 100% loss of invested capital.
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