[Music] [Music] I'm Charlotte Mloud with investingnews.com and here today with me is William Middleopee, founder of the Commodity Discovery Fund and author of The Big Reset. Thank you so much for being here. Great to have you. Thank you. Good to be back. Yes. Really good to be Was flying to see you. Yeah. Yeah, was just said how long your flight was. I'm really glad you're here. So, let's let's start by talking about the juniors. I think many people will probably know commodity discovery fund


is focused on discovery investing. So, goal is to invest in exploration companies making discoveries. We're here at VR. Lots of juniors out on the show floor and I think a lot of people would agree that 2023 was a pretty tough year. So, what what factors did you see weighing on the market last year? just to do a little bit of a review. Yeah, actually was maybe the most frustrating year for us as well because gold was pretty strong actually ended up the year a few percent. Um but silver was down, lithium was down 80%.


uh the only outlier was uranium. Uh and uranium is a great example what can happen when the physical demand actually overwhelms the the paper market or and and what we've seen with uranium is a jump in uranium prices 2x 3x within a very short time frame. Same happened with palladium in 2018 and there as well 2018 there was the fiscal demand which changed it all with the ongoing um debasement of currencies and the ongoing crisis tension wars um gold is in play there's huge fiscal demand also for


silver so I think to 20 um uh 2024 could be a year of recovery but 2023 was so frustrating thing because there was a huge wave of selling because of redemptions from funds, investment funds. We still have net inflow. We always had net inflow every year, but there are many funds here in North America have strong outflows. And then fund managers, they don't want to sell, but they need to sell. Okay. So 2024 looking like it will be perhaps a better year for the juniors. And I think, you know, when we get into


these tough times for the juniors, it it people seem to start talking about when they see the sector not very healthy, do we need to see a cleanup? Do we need to see consolidation there? Or do investors just need to do their due diligence and find the companies that are actually winning? What are what are your thoughts? Well, I think the Canadian um exploration scene, the junior mining scene had become very unhealthy after a very strong bull market in the 2000s. Everybody and their neighbor thought you


should start your own exploration fund, get money from investors, and have a nice lifestyle and give yourself a lot of options. And what we're witnessing now is that many of those um companies, exploration companies, there over 1,000 listed exploration companies in Canada can't survive. And actually that's a healthy that's healthy. Um but you still have a few hundred exploration companies working on good projects uh being able to attract money. We still invest in Canadian exploration companies, but


we've been very selective and we got even more selective over the years. So we all we concentrate on the top 100 discoveries worldwide now metal agnostic and not only run by Canadian companies also by AS6 Australian listed companies or London listed companies. So being very selective has helped us to survive in this uh very difficult markets and we've seen many peers here in North America closing shop. Many um resource funds stopped or have used outflows. Yeah. You know I was I was reading up a


little bit on the fund the history of the fund and I was interested to hear about Australia. So it sounds like at first you weren't really focusing on Australia but now it's become quite a focus. So interested to hear a little bit more about that and maybe how how things look different over there. Yeah, in the first 10 years we really focused on North America because there was so many companies here. We we we needed time to learn the landscape to study the landscape. But then we always knew that Australia was mineralrich as


well. But then we learned that yes 4 400 listed exploration companies in in Australia and we learned that many good discoveries were being done in in in Australia. So we started to study it and found that it's an even more interesting market for us because Australia is much more underexplored compared to Canada. In Canada, every rock has been turned three times and um Australia has a large part has a large sand cover and with the current uh development in in in IP and geoysics, it's a we are able to look


through the sand cover and that's the reason why so many discoveries are being made in in Australia and so we like it. Um, we award the our discovery award every year and two out of four years it went to an Australian. Okay. I I want to talk a little bit more about your strategy. So obviously focusing on discoveries, but what I think investors tend to struggle with is their exit strategy, right? Yeah. So for you, do you want to be out after that discovery? Do you want to see a company take it all the way through?


What are your thoughts there? It's very simple. When you focus on the top 100 or best discoveries worldwide, they will always be taken out by a major. There you go. So that's your exit strategy. So when investors ask us, what's your exit strategy? We always say we wait for the buyout. And we've had over 80 buyouts since our start in 2008. So it shows the model works. And we have on average six bios every year also last year. So in good and bad times it works. And we've been concentrating more and more into


the bigger discovery, the more significant discoveries. And now our fund has grown to over 100 million. We need to focus on the larger discoveries, the more liquid ones. And by doing that, you automatically um end up with the best situations, the best companies. And of course, we trade a bit around our position. So if a stock has had a huge run, we take some profit. and and this strategy has been tested now for 15 years. We need to test it in a bare market. We survive the bare market and we expect to do very well in the next uh


bull market which is about to start. Okay, one more note on exploration. So we hear a lot about the role of major miners and one thing I hear all the time is they're not doing their own exploration. So do you think do you think they're doing enough right now? No. Okay. What's about that? Yeah. because we see the shortages shortages developing in most of the metals especially after 25 you see the uranium copper um lithium a and there's not enough expiration being done by majors and some


of the majors are started to come back for example BHP has this program but then then they give 500k to each exploration company as some stimulus to do more research. But what we we would need more money coming in from maybe through governments or majors because the exploration companies simply can't attract enough money to make a new enough new discoveries to supply the world with enough metals for the next few decades. So if you study supply and demand, many shortages developing especially after 25 and this will lead


to much higher prices in the years to come. Okay. Interesting. Interesting. You mentioned maybe we need some government funding for the exploration. A lot of governments around the world though are also making it a little bit harder for companies to actually do it with all the regulations. So any thoughts? Yeah, but politicians will start to understand in the next few years that by telling um telling their citizens that we need to buy an EV, an electric vehicle, um they forget that there's not enough


there not enough metals and commodities around to be able to produce enough of these cars. So something has to give and I think they will wake up because of very high prices. Then the EVs become too expensive and then they have to change their policies and I think in in in two three to four years um this will be a very big story worldwide and now only insiders know about this. Okay. I want to take a look at some of the different metals individually and starting with gold because I think a lot of people here at the show are seeing


gold near record highs. Yeah. And they're wondering why aren't the gold stocks performing a little bit better. So wondered if I could get your thoughts in a disconnect. Yeah, is is a huge disconnect. I think the undervaluation of gold related equities compared to gold has never been larger. This is typical for the end of a bare market where uh the fiscal metal is starting to move and the equities still have to catch up. That's why we predict there will be a very strong rally once the market understands that gold is in a


new bull market. But investors will need to see gold moving through 20100. And this could happen next week, could happen next month, could happen next quarter, but it will happen this year. Why? because there's such a strong divide between the west and the brrics countries the rest of the world and gold is into play. If you look at the BRICS countries like Russia and China, they're all adding to their physical gold holdings and the physical gold demand is is very strong and I think because of


this geopolitical new reality um this new tension between the west and the east that will be the reason gold will be moving much higher in the next few years and gold will more or less return into the monetary system. Um like I have described in the big reset uh gold has been faded out by the west out of the financial system but it's coming back and the debasement of currency will help in that respect. Can you expand a little bit more because I know a lot of people are very interested in how gold could come back


into play in that way. I know it's a really huge topic, but if you can give a brief Well, when central bankists who create the money out of thin air are buying fiscal gold with their fiat money, that's a huge sign. And we've seen record amounts of gold accumulation by dozens of central banks in the last two years. And this reminds me of 1969. That was the end of the London gold pool, an effort of central banks, western central banks to keep the gold price locked at $35 per ounce to support


the dollar. A and that that that failed. So the London gold pool fails in ' 68 and then we saw 69 all these countries fleeing towards gold. And actually we're seeing the same now. And that tells me that the stress within the current fiat the paper money system is getting very large. And even central bankers are starting to hatch themsel and because they are the architects of this system and um you should not listen to what central bankers say but watch what they do. And when they start to buy gold in


huge amounts that's very significant. Even in Europe, we see Hungary growing their gold reserves 10fold. The checks do the same. So, this highly significant. Okay. Very important to be watching for gold. And since we don't have too much time, I'm going to keep moving along through the metals. I had the chance to see your presentation here this morning. And silver, I believe you described as an accident waiting to happen. So, I love that line. Yeah. Can you say a little more about that?


Yeah. If you compare with uranium, I think is a great example. We've been seeing production deficits for decades in silver. We filled the gap by selling the old silver coins which we used in to our monetary system in the 1960s and 70s and early 80s. And the same has been ongoing with uranium. There's been a huge primary production deficits for for decades. And and suddenly the market noticed that that the gap can't be filled. And then you have this these hedge funds uh going all in on uranium.


And then you see a breakout of the price. And then the the the um then all these um states and companies who need the nucle who need the uranium for their um for the nuclear stations, they they start to panic. And the same could happen with silver. Silver is such uh there's a production deficit for decades now. and you have 60% of silver being used in the industry as a commodity for solar panels or whatever and you could easily have a panic among buyers and then everybody wants to be in silver and silver is such a small market


and central banks don't have silver um um holdings which they can throw to the market that's why I think silver is excellent waiting to happen although you you also said on silver it's so manipulated right so how how do we how do we know I know A lot of people have questions about this. How do we know the price will continue to just be tamped down because of the fiscal demand? Um, in my presentation, I showed a graph of Turkish imports of silver which really tripled and and that's a clear sign. I


also showed in my presentation how future markets are being used to to suppress prices by selling paper silver, paper gold. And I showed that example that in 2017 we had this huge demand for physical palladium and then the shorts got squeezed and then the future markets we saw a huge decline of the open interest in 2019 2020 and that's a clear example of what can happen to silver a short squeeze in which the physical the metal is being demanded and can't be delivered for current prices and that


could shoot silver up to $100 um per ounce in in a relative short period. All right. And I also want to touch on uranium because I know you you've brought it up a number of times, but the price had a really good run in 2023. Where do you think we are in the cycle? You know, is there still room for for Oh, yeah. Okay. Lots because if you look at the last cycles, the last one is 2007, we saw top for uranium at $140. But in current well the after debasement of currency and inflation in current terms you need a


top over $200 per pound to have a similar high well we're just over $100. So I think there's there's room to double. Um but if you look at the shortages in uranium and and and the fact that there's a primary production deficit uh for quite a long time um there's so many nuclear reactors being built around two three 400 are being planned for the next two decades that the demand for fiscal uranium will stay very strong uh for the next few decades. And it's it's a question if if

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production can keep up. And another question on uranium. So you're of course looking on the discovery angle. One point I I often share. So uranium market is so small. Yeah. A lot of people give the advice just stick with the big ones. You know that's how you can do it. So maybe you can tell me. That's a great advice. Okay. because in the last cycle we saw I think 150 exploration companies all promoting their new discovery um or exploration play. If you stuck to to the best discoveries, NextGen Energy um


valued at 4 billion now, but that's 20% of the physical uranium market once in operation. Uh so if you stick with the uh with the winners, um I think that's the safest way to play it. They will do well. And there's also a great ETF, the URRA, uh where you have the basket. Um so I I'm I'm afraid we'll see a lot of promoters coming out and um telling you they switched from lithium or from golds into uranium. Yeah. Uh we stick with the best always and that that has really helped us to survive in the doubt.


Okay. And just as we're finishing up, so I know that you're you're commodity agnostic. You you go where the good good projects are, but you know, if we are looking forward to 2024, we've talked about some of the commodities that may have potential. What else is on on your radar? Uh battery metals. Um so 40% of our investments in the battery metal space and that's mainly copper and lithium. Of course lithium had a huge correction after it ran 4x or 5x so that's only natural from a technical


uh analysis perspective after this correction 80% is a normal correction after such a run and it always stops after 80%. So I think this is the time to add to your lithium positions because we studied the the lithium supply and demand. We need over 40 new lithium mines within the next 15 years to have enough lithium for this EV revolution. So lithium will do very well after this correction is over. And then we have uranium that's less semifa fund and the rest is is pressure metals related. Okay. Very good. any any final thoughts


that you would leave investors with heading into 2024? Well, the mood is so depressed among investors because we've been actually we started the fund in 2008. It was the top of the last cycle the the high. So we all all the people here at the conference were all children of a bare market and actually I was present yesterday at the metal investor forum and a guy gave a presentation. He said, "I experienced two major boom markets in commodities in 2016 and 2020." And then I started to laugh because the bull


market 2016 was 5 months and the bull market in 2020 was 5 months. So he never experienced a real bull market. And once you experience a real bull market in commodities like the ones in the 1970s or the 2000s, you will know it's a bull market and you will be surprised. So we won't have to ask ourselves is it actually happening. We'll know. Yeah, we'll know. And then out of I always tell this to investors out of the next 10 years in a bull market six, seven or eight will be wonderful and


then you go up not with 10 or 15% but 50 60 70% because it's a huge undervaluation and the usual leverage in these kinds of plays. So um I'm looking forward to the next five to 10 years. Uh well I look I I I really look forward to the next five to 10 years. Okay. Very good to hear. Thank you so much for coming on to talk. Really good to hear from you. Of course. And once again I'm Charlotte Mloud with investingnews.com. This is Paul Middle. Thank you for watching. If you like this video, make sure you subscribe to our


channel. We'd also love to hear your thoughts. So leave us a comment below. We'll see you next time. [Music]