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  I'm Charlotte Mloud with investingnews.com and here today with me is Haimea Krasco, senior portfolio manager and senior financial adviser at Harborfront Wealth. Thank you so much for being here. >> Finally meeting. Thank you for having me. >> Yes. Yes. Here in person. We just talked pretty recently, but it was over the computer. So nice to have you in person for the first time. >> We're here at PDAC in Toronto. I know you've been taking a look around. How's it looking so far? We're on the first

day. >> Well, you know what? I haven't seen it this busy in a long time, which is great to see. Last year, you could, you know, the last two years, maybe three years, you could hear a pin drop. Checking in on a Sunday wasn't a problem. I actually had to cut the line because it was it was that many people waiting outside, which is great to see. So, there's definitely an interest. Uh, as I was saying, I just came back. I was in Chile visiting some mining properties and I was amazed at how much of a change we're

seeing even down there. Now, Chile is at the nut of mining. So, to see what's happening there is great because it's a great signal of a bull market that I think is just beginning for all commodities. Chile's mostly concentrating on copper, gold or gold, copper, but there's a lot of other assets that they're finally becoming interested in which actually it's very good to see. Silver is still one of those that Chileans talking to Chileans about silver is like talking about

natural gas with Saudis, you know, because they're more concentrated on the oil. So, it was good to see that they still don't get the silver story, which is good for me because that's what I'm looking for. Also, Rare Earth, uh, Critical Metals is that discussion starting, so the noise is there. So, it's very interesting what's happening. And today, the the the crowd is is amazing. Great to see. >> Yeah. Yeah. Well, I'm glad you made it down here. And I wonder if you can share

anything more about your trip to Chile, the conversations you're having down there. You said you're visiting some mining properties. >> Yeah, what I noticed was that um all the big boys are in Chile. Uh hadn't been there since 2018, so it had been the whole COVID period. Um and it was completely different back then where you know it was it was kind of muted. >> The big boys are there looking for big projects. It's it's really good to see. I'm looking at trying to grab more uh

new projects. um one of the companies that we have Galantas bought two mines in Chile which was also nice to see. So, you know, the catalysts are there, things are starting. Uh, Argentina as well, I think will be a very good place to be. More importantly, the political change in Chile, the fact that they've gone more conservative actually underpins the whole of Latin America very well because I think Chile, Argentina will will really anchor Latin America and they'll follow through with uh really good uh better mining related

uh industry uh going forward which I think is very positive for the industry as a whole. Peru, even Bolivia, I think, is opening up, which is uh which will be a very a place that I've been looking to get in for a while. And I think the politics are turning in a in a in a really good way. >> So, these are areas where politics are turning, as you said, in a good way. I want to ask about Mexico as well. Really important for silver. >> You know what? It's it's it's sad what's

happening in in Mexico. What happened to Vishla, but it goes back to geopolitics, you know? I and I kept everybody kept asking me how come you you don't own Visla and the reason was the the the region when I look at Mexico when I look at Argentina I look at the different uh regions that the assets are at >> and Vistla was always in an area where this was to be expected what is important though is the fact that now it's out in the open. I think now it can be dealt with because the narco

situation in in in Mexico both within the politics is something to be discussed and now we can start that discussion and clean it up, right? Um so so it's about growth in the industry more than anything. I still have my Mexican assets but I'm very happy that I'm also diversified in southern Latin America in Morocco with some assets Mongolia and the US and Canada. You know, I think that um from the geopolitics um I want to see how Canada plays out. The US I love my assets there. I think

the US is opening up. Again, when you're looking at the resource sector, I think you have to take a different a different one one of the problems with the politics today that I've been saying for quite a long time. We're going through that period of the 1930s where the the the whole uh populist globally where everything's in change, everything's in flux, right? And because of that, it's best not to get emotional. Look at the look at the discussion in the US. It's Republicans versus Democrats, right?

Everything's black and white and and that's why I tend to more take a an outside look at that when look at it when when looked from a political from a historical perspective. I I tend to concentrate more on where are we going, where are we're heading. And that's where what's happening in Latin America to me is very exciting in terms of uh the bull market that's that's a foot. And again, there's a big picture. We're moving from a credit based economy, a bubble that is that is blowing up to a

resource-based economy, and that's very healthy going forward. >> Yeah. Yeah. Definitely. you can see the opportunity in Latin America as you're saying and maybe it's a good plan to talk as we're at PDAC about Canada as a mining jurisdiction because typically we hear it's a good place to be but it processes do move very slowly here. So how are you looking at it? >> Well, you know again the big question that everybody asks especially in Latin America is uh is nationalization of of

the properties. I don't think that that will ever happen. you know, we we are living in a in a in a socialist system and their approach to everything is to tax it, right? We don't have the money like we're sending more money to Ukraine, but yet, you know, we have food banks even in Collingwood. >> So, so what are we doing? I don't know. All they're going to do is tax, tax, tax. To me, that is important, but I rather own the assets as we go through that period. You know, a good example of

what I'm talking about, my family that stayed in Chile versus me and and my immediate family that came to Canada, how they went through that whole process of cleansing of the credit bubble, right? Those that waited it out did much better once the government changes. So again, I think it's better to take a long-term outlook as to how you position yourself. There's some great assets in Canada. There's there's there's and and and let's not forget that PDAC is important because this is the base of

mining for the world. 80% of all the mining is being financed out of here, right? And that is a a benefit of being in Canada. But then again, you have to be a little bit more cautious of Canada. I like Quebec because at least in Quebec, the government uh the pension plans are invested in the in in the economy of Quebec. The same thing as in Australia. I look at the at the uh performance of the Australian stocks versus Canadian stocks where you know most of our money managers are still riding the the credit bubble. I see it

here on Bay Street. You know, everybody thinks that gold is still a pet rock. They haven't figured it out yet. Well, eventually they will be forced to figure it out because they haven't figured out that gold in Canadian dollars is at 7,000. >> Like what does that mean? I think it's a very important signal, right? Because it's really it's it's not that gold is rising. is is just that the Canadian dollar, the purchasing power of it is dropping at a much faster pace than the

US dollar. We were at par a couple of years ago. You know, it's been easy for them, right? They've been riding the tech wave, the US wave, right? And that's great, but easy markets make bad decisions, bad markets like the resource sector, I would have rather have been in it for the last three years and we're seeing the benefit within the portfolios, right? So, yeah. Yeah, it makes a lot of sense how you're explaining it. And let's talk a little bit more about what's going on with the

gold market right now. So, last time we talked, this was I think about a month ago, maybe not quite. We were talking about how Lunar New Year can be an important time of the year for gold and for silver. So, we got through that. Now, though, we have a lot of tensions arising in the Middle East. For context for everybody, this is on Sunday, so we don't know what's going to happen on Monday. But, how are you seeing the gold market right now? >> Again, that that's part of a geopolitical picture. you know,

everything's being redefined. >> Is it the United States of America or the United States of Israel? >> Right? Americans are asking that question. That that's what the Epstein thing has opened up. You're you're you're seeing it. People are asking me questions. >> Questions that weren't asked three years ago, >> right? The whole Trump's policy with regards to Iran, I I was surprised. I thought that they they weren't going to go into Iran. Well, it's happened.

>> Yeah. But, you know, it's I think it's important to, you know, have they made a mistake because that's a bit of a can of worms because Persians have been look look at look look at Iraq. You know, you have tribal attitudes between the Shia and the Oh, and I can't remember the other sect, but they're more Persian, >> right? >> Backed by Iran. So, look at them attacking Saudi Arabia, right? Have they opened up a can of worm that they won't a Pandora's box that they won't be able

to to shut? Now, all I know is that in that environment, I think we have to stay flexible. You have to stay invested in good quality assets outside of those areas, right? How does as long as we don't end up with a nuclear war, I think we're I'm I'm extremely optimistic as to the future. But I think you also have to be smart as to how you're positioning yourself, right? And that's why the Middle East, you know, it's been a powder keg forever and everything's up for redefinition. Look at Europe. Look

at what's happening in Europe, what's happening with Ukraine, you know, even Greenland. You know, we talked about that last time we chatted. We did. >> So, you know, I think you have to stay flexible. But I know one thing that when you observe these issues from the comfort of the yellow brick road, >> wearing silver slippers, as I always like to say, you're going to be much better off from an investment perspective, right? And that's all we can control. I have no control over what

decisions the US is going to make, Canada or any other country. But we are living through a period of history where everything's up for redefinition, right? And that is positive. >> Yeah. Yeah. I think when we have these types of geopolitical issues erupt, people tend to focus on, oh, what's going to happen to the price? And usually we see the price go up and then it tends to cool it down pretty quickly. But so you're saying >> gold itself, >> yeah, >> I think it's going much higher and not

because of the geopolitical tensions. is because gold by default is re-entering the monetary system >> because at the core of all these periods is a loss of trust >> and when it comes to money, you know, it's trust in the US dollar that we're losing trust on the currency reserve. So whatever currency reserve we end up using at the end of this transition, all I know for sure after 4,000 years of history, gold will be in the middle. And in that to to function as money, gold has to be a lot higher than $5,000 an

ounce. To to function as trade settlement for the world economy, that number has to be way higher. And in that, silver will outperform and the earnings of the companies will be even better. And that's why to me the the producers are the place to be. Gold and silver I see them as cash. >> Yeah. >> Right. Within within a portfolio. But the real speculation is in in good quality companies, good quality producers that are going to lead us out of this. >> Okay. Yeah. Interesting. Produc. So

producers the place to be for both gold and for silver >> producers royalties. I I also participate in the exploration plays but the core the nut of that my 30% strategy as I always say 30% minimum you know you know we have now uh some companies talking about 10%. I have every I've always had everybody at 30%. And that's from my Latin American experience. 10% is just 10 to 20% is just enough to protect your overall portfolio from a from the decline of purchasing power of the currency itself. Once again, the

problem is not your Microsoft stock. The problem is Microsoft priced in US dollar that is devaluing. That extra 10% to bring you up to 30 is what allows us to have that extra margin that we can redeploy as it grows to 45% to continue to buy the other assets. Yeah. Otherwise, you just have to hold. Right now, when I look at Bay Street right now, the, you know, your average portfolio manager out there, they're like, "Oh, well, maybe I'll add 1% in gold." And I've seen this because people

are sending me their portfolios for review. And yes, they own Agniko Eagle, but it's 1% of the portfolio. To me, that's like having a toothpick for a lifeboat when the Titanic is sinking, right? So, so again, is lack of knowledge about proper asset allocation, which is 80% of our portfolio's long-term return. And it's also that short circuit among western money managers as to what gold is. You know, they've been they were told that it was a um a pet rock or a barbberous relic and

that's it. They never looked into it any further, right? So now they're finding out because and not because they're not trying to really understand why gold's going up. What they are noticing is that Agniko Eagle's earnings are going through the roof and uh free cash flow margin at $4600 gold with 79% beating Nvidia and all the tech companies. >> Uh First Majestic, my my my again I I look at these companies like u like the sales on a Clipper ship. These are my main sales, right? First Majestic, same

thing. They're having stellar earnings and that was at about $40 silver. Well, here we are sitting at se we built a nice base at $70 silver. Everybody, oh no, it's not going to continue. You know, it was going to go back to 50. And I'm thinking, okay, anybody that tells you that it's going back to any number is not even looking at the gold silver ratio. That's back to 100 to1. We're not going to see 100 to1 in my opinion. We're not going to see 100 to1 gold silver ratio again. Here we are again

leveling off between 60 to 50. And in my opinion, the second leg has begun, especially after the last two weeks, right? And after what happened with Iran, I think next week it'll be very interesting to see. However, I think that in the next leg, I've always said uh we were building our buying our our silver companies at about 100 to1 gold silver ratio between 80 to 100. I've always said we're going to ride those until we get above 40. Mhm. >> I think in the next leg up, the second

leg that has begun, we should push from this 50 to 60 to1 gold silver ratio up to about 30. So that should give me about a 40 to 30 nice margin to to to start trimming back. And I'm only talking about trimming, not taking off the table. I think that let's do we get to a 1:1 ratio is really the important thing. Why do I say that? Because the real question first of all is how high is gold going? Backed by that, the average person is going to be buying silver, which was what's happening now because one ounce

of gold, one ounce of silver will do the same thing for your protection. But how long will it take to bring in silver production back online is the real question, you know, six years, 10 years. >> It's pretty slow, right? >> It's pretty slow. So in that environment, you're going to have two things affecting silver. The industrial demand, which is still going to be there for electronics and everything that's going on, then that's going to be a geopolitical play. who controls it

versus the monetary demand for the asset gold versus silver playing out as people fear comes in. >> Okay. Okay. So to clarify, so the next leg has begun, but the important thing to watch is the ratios, not the price that people like to focus on. >> Correct. Correct. Anybody that's pitching the paper price, >> Yeah. >> forget it. It's not about the price. It's about the relationship between the two. And the real question is how high will gold go in the environment that

we're at? And that's the and I personally think that you know it's six years ago when we were talking about a about a monetary shift >> everybody what the hell are you talking about? Now it's different. Now we can see that there is something happening right? So if if gold is re-entering the monetary system like it has in the past it'll reach a level from which it'll never come down. It's 33 71 right? We we haven't seen $35. I don't think we'll ever see $35 goal,

>> right? >> So So it'll stay there. It'll peg. >> Yeah. >> And then everything will rebalance against it. So that that's my strategy and and that's what I've been preparing for all along. That hasn't shifted. >> Yeah. Yeah. All right. And I know you said the real thing to watch is how high is gold going. I I do want to talk a little bit about the silver price because there's been a lot of talk about what's really going on there. all these

discussions around manipulation which we did talk about last time and you said of course and we just had the recent CME group issue that's happened in the past before. What's what's really going on here? >> Well, you know what? Again, force measure of silver is inevitable. Okay, >> we have force measure means that they've run out of physical and they need to stop the market >> and that's when the the the the fan whatever is going to hit the fan is going to really hit it. Yeah.

>> The problem there though is this is that >> if you're sitting on paper contracts, you're going to get the pay, assume that we close today at $80 and then the comx shuts down and you have a paper contract at $80. You're going to be handed that back to you. You're going to get the the fiat price back to you at $80 and then you're going to have to go out and source silver for yourself. Trust me, you're not going to find it at $80. You're going to pay be paying a lot

more. That's why I've always said make sure you have some physical silver out of the system in anticipation of that. Yeah. >> The manipulation I've always said that the price is manipulated. People didn't bother to understand or or question. So So the key is to own the physical and own the producers because at that point you're going to see the massive inflection point that those reserves on the ground that are still very cheap are going to be worth a lot of money, right?

And it's all going to be back to the producers, which is exactly what happened in 19 in 33, in the 70s, in the 80s. It's the producers that are producing that have those assets on the ground that going to be worth a lot of money. And that's why I love my producers and I love my the physical that I have that I've set aside all along. Um, where's it going to go right now? I don't particularly care. All I all I know is that the journey has begun. I'm seeing it in the in the

returns of the accounts. Yeah. >> Right. I'm not even posting the numbers because they're a little bit embarrassing, but they're moving higher and that's all that's important. The other thing is that the corrections have become shallow. So, with when when I look at a chart of the performance of my portfolio, the October correction, you can see it. Whatever happened in December, we never even saw it. Right now, it's a it's it continues to be a a vertical line. And that's normal when you hit the

exponential phase because really this is not about gold. It's the credit cycle that's unwinding. and look at interest rates. Long-term rates are not dropping. They continue to rise. Pension plans haven't even come into the to gold yet. When they come in, they won't care if gold's at 7,000 or 8,000. What they're going to say is, "I have 500 billion worth of bonds and I got to put 5% of that in gold. Whatever price it is, just pick up 5%." Because they're they're price agnostic. They think about

allocation. And that's why I always think allocation. So, so I think that in the second leg is when we're going to see those those assets come in. Okay. >> So, this will be the big expansion. The cheap assets, you know, the ability to buy America's gold and silver a dollar. Now, we're almost 12 bucks is gone. >> Yeah. >> But at $12, still relatively cheap in relation to where it should be to $80 silver and never mind wherever it's going. So there's still time, but

eventually it'll be the pension plans that are going to be coming in. And they're going to be looking at the best producers. And that's where having a selection of the best in kind will help. And geopolitically and everything else because I'm thinking like those guys think. I've been covering them forever. I know how they think. I function as a portfolio manager. And to me, it's more important to have a seat at the table at the musical chairs. Yeah. >> Than be dancing around because I'm

worried about the cost of the chair. Yeah. Yeah. This is really helpful because I think people who are in gold might look at the price and think, "Wow, it seems really high." And of course, that correction made people a bit nervous. Some people saw it as opportunity, but I think it made people nervous. But I think it's good to maybe we can talk a little bit more about those external factors like credit cycle factors that show you just how long this is going to continue. >> Well, at the end of the day, the the the

US dollar as we know it is going to be gone, >> right? So, how will it how long will it continue until we fully see what what whatever will take will take shape? But whatever is going to take shape will happen after we get through all of the geopolitical conflicts that are going on, right? >> So, think about it. Think about it that the the last time we went through this was the 30s 40s. We went through the Second World War and we don't really know the end of it until Breton Woods is

set. All I can tell you that if you had owned homestake mining through that period from 1929 on you did really well. You were very well protected and you had a nice healthy dividend coming your way, right? And that dividend at the time was hitting 10% at the very same time that everybody's suffering. So, you know, is it any different this time? I don't think so because, you know, everybody's jumping on board at Nikico Eagle here at $330. My cost in the book is about $70. My dividend at $70 with the 18% increase

we just had is hitting close to 6%. And only getting better. However, I will buy for any new client coming in the door. Have my allocation in Nikico Eagle because even at $330, it's not reflecting gold at 5,000 and never mind where it's going. So, it's still very cheap. I'm an amazing company and there's a whole slew of them behind that, right? So yeah, building a portfolio I think is more important. Again, concentrate not on the price but on the allocation and how you you set up

that allocation. Now we're talking about the producers and royalty companies. Behind that are the explorers. That that doesn't that's not part of the portfolio, but that is also part of the practice because that's where that's the fun part. That's the party. >> Yeah. Well, well, and I the fun the fun question that I've been trying to ask people here is if there was a younger investor who had $10,000, they're new to the resource space, they want to come in and allocate $10,000, how would you do

that? And for you, it sounds like maybe you would ask, okay, well, like what's the allocation? How does that >> correct? What else do you have? Well, with with most um young clients that come in because I do advise that clients if if if their children are over 19, set up a TFSA and start >> putting some money over to them. >> And there I would definitely start with a with with a with a good quality levered silver producer that's going to give me the leverage and and the one

that I do buy in that spectrum, there's one in Argentina and one in Mexico. I don't want to say the name because like Nico, Eagle, First, Majestic, those I've talked about them forever. Yes. >> Right. So definitely start there. And I would say, okay, let's put 10 $7,000 of the 10,000 into that. >> Then take the 3,000 and buy a nice early developer that's still ridiculously cheap, right? Uh there's an amazing one in uh in in Peru that owns the Kodan mine. >> The Kodan mine is a 400year life mine.

Once that's up and running, it's going to increase the GDP of Peru by about 10%. It's that big, right? But it's got to be built. Now, that's going through changes in management, but I've always said, I don't care who owns it. I just want to own that mine. >> Okay? >> Right? And that has massive upside because once that mind's up up and ready. So, that's a developer, >> right? And then if if you have a little bit more money than 10,000, then go and

buy um an explorer. And there there's a great one that I just saw in Argentina that is actually figuring out how much more silver they have in their property, >> right? So, so yeah there's a number of them but again geopolitics management the resource on the ground and if it's a producer cost of production is important in assessment now cost of production is becoming much less of an issue >> right >> because at 5,000 when the you know average um all-in sustaining cost what

is around 2,000 for the for the worst companies 2300 at the at the high end so at $5,000 US7,000 Canadian you know that's that that's becoming negligible. >> Do you worry at all that costs will rise with inflation or companies maybe get a bit more? >> No. Throughout history, what you're going to realize is that what's driving gold is the depreciation of money, right? So the depreciation of money will happen at a much quicker pace than the rise of the price of copper for example.

So I like copper, right? And I do have some copper gold assets. But I think that in the rise of gold and silver is going to be 100% tied to the depreciation of the value of money. >> So the price of oil will be affected by geopolitics. It'll be very interesting to see where where oil opens up on on Monday. Yeah. >> Right. >> Yeah. >> Now within that though, that's temporary. >> You know, kind of like the war in Iraq. It lasted a month and then it came back down. I same thing with copper. I think

those prices will rise at the rate of of bringing in online but the but not at the at as fast as money is devaluing which is really accelerating right >> and that's what people haven't figured out yet right that's why gold >> you know >> we had this correction for 5400 how long were we below 5,000 hardly anything right now that should just the the price of gold in in Canadian dollars around$7,000 that's the light that that you know the ping that people should be thinking

about, right? Especially people in my industry, those that are advising clients with their money, >> right? But no, what they're they haven't bothered to even look because the Dow has been doing pretty well and it touched 50,000. >> Yeah. >> Well, how long is that going to last? And and more importantly, another another ratio that I look at is the HUI to the Dow, >> right? >> And that's beginning to outperform and that's coming some anemic period, right?

So there's massive upside. That's like buying Warren Buffett in 1996 97 when nobody wanted to buy him. Even he was in the front cover of Fortune. Warren's lost it because he hasn't bought Microsoft, right? Well, that was the time to be buying Warren Buffett. Same thing with the HUI. We're we're at that at that flatten out period and we're just breaking out versus the Dow and that will be the big rotation. >> Yeah. >> And more importantly, >> it will be a big rotation of money into

the sector, but it's not the big rotation. The big rotation is the loss of money of equity within the bond market which is way bigger. So capital markets, the equity markets are 100 trillion globally, but we're looking at 500 trillion of debt. >> That's the real bubble. And if you look at how much money has been lost there already >> on a global basis, it's bigger than any crash. But people aren't waking up to that. Pension managers aren't, you know, they're like, "Oh, it doesn't matter."

>> Right. Right. Well, I I this is all we have time for today. I'm going to have to send you back out on the show floor, but topics for another time for sure. Any other brief words you would leave investors with? >> No. Again, I go back to uh your allocation. That's important. And and you know, um reserve on the ground, cost of production, management, and geopolitical risk when assessing companies. >> Perfect. >> That's it. >> Well, thank you so much. Great to have

you in >> nice to meet you. Likewise. >> Amazing. Thank you so much. Once again, I'm Charlotte Mloud with investingnews.com and this is Haime Carrasco with Harborfront Wealth.