[Music] [Music] I'm Charlotte McLoud with investingnews docomo proprietor at rule investment media thank you so much for joining me great to have you here charot it's always a pleasure thank you for having me back yeah it's really good to be catching up with you we're at the New Orleans investment conference and where I want to start so I think that people who follow you will know that you're not really a doom and gloom kind of person so I want to ask about sentiment in the junior resource space so been hearing a
lot of negativity around that and I want to ask you if it's as bad as some people seem to think I think it's better than many people think uh you and I have talked about this before and it's not going to make your sponsors happy but if you looked at the universe of Juniors 1500 Juniors there's probably 200 that have any value at all which means 1300 are valuable pardon me valueless uh I would suggest that the sentiment that the junior mining industry enjoys today if that's the
right word is deserved uh we've had too much TNA we've had a dir of Discovery we've had people wasting money we've had people pivoting from failing in pot to failing at lithium next they're going to fail at uranium so I actually think that the sentiment is better than the industry deserves that belies the fact that % of the issuers generate such incredible value that they add legitimacy and occasionally luster to a sector that loses between two and five billion dollars a year I thought I thought you
might say something along those lines that makes makes a lot of sense to me so the other thing that we've we've talked about before is you know you've said it's not actually that hard for good Juniors to raise money but then one thing that I've been hearing lately is you know the companies that are raising money they're progressing at their projects they relas releasing news when they release news even if it's good it becomes a selling event um because some people want to get out so I wanted to
ask you about that and see you know is there ever a time when it's better for a company to take a breather rather than you know keep pushing news in this environment no you can't take a breather if you are a company that's pre-revenue you always have to raise money and your cost of capital is one variable that is in your control uh I know many of the investors walking on the floor of this exhibit hall and I know myself there is a lot of money right here in New Orleans the Juniors who believe that
they can sit in Vancouver and summons cancord or Haywood and solve their financing needs into a market that's been saturated with lousy offerings are people who Des deserve to and will fail people who have unique selling points uh and cultivate a sophisticated audience who understand the time and trouble it takes to create a junior can find money I am actively trying to increase the risk waiting in my own portfolio I'm actively trying to write checks I am well known as a value added investor if
I invest in a company I make it known I lower their cost of capital and I'm still having a difficult time allocating capital on terms that I find attractive interesting interesting okay so going to step back from the Juniors look a little bit more broadly but sticking with the theme that you're usually not in that Doom and Gloom Camp so we've talked previously about the US economy and you've told us you were pleasantly surprised about how things are going so checking in on that is that still the
case for you I'm still pleasantly surprised at how things are going but I am now noticing strains in the economy from higher interest rates you aren't seeing as an example in most markets declining home prices but what you're seeing is declining volumes which is to say the sellers well some some of the sellers are constrained because they can't sell because they have older lower lower interest rate mortgages others have price expectations that the new buyers can't afford because of higher
interest rates so I think now that you're seeing what you and I talked about six or seven months ago which is the lagging impact of higher interest rates I am still very impressed with the strength of the US economy if you had told me or rather because I'm noisy I had told you three years ago that the economy could stand as leveraged as it is a doubling of interest rates I would have thought that one or the other of us was consuming a newly legalized product I mean it was yeah yeah okay so we also talked in
July about the economy in relation to the fed and I'm going to check my notes notes here because you laid out two scenarios and I want to get them right so one scenario was the FED could succeed in reducing inflation without knocking the economy for a loop number two was that the effects of the rate hikes would eventually catch up in a delayed punch so we're in that delayed punch kind of situation Arrow I I think we are in the delayed punch uh whether or not we could have a combination of
one or two one and two is a very different circumstance if the economy does slow down enough that the can engineer what the economy believes to be a soft Landing uh which is to say that they can bring about lower interest rates without an ugly recession they will have done uh a very good job uh I I think although I'm not a fan of the FED uh I think that given the job that the FED has done in a complete absence of Sanity from Congress is pretty remarkable uh while I don't like them and I don't like what it
is they do for for living I think they've done a remarkably good job and just to get a little bit more specific so cracks in the economy what are where are those cracks appearing what are you a little bit I guess most concerned about I think there's still strains in the US banking industry uh I I think the I think the commercial real estate market this is one we talked about starting to crack and I think that there are a lot of banks that have a lot of commercial real estate mortgages on
their balance sheet that haven't yet been marked to Market uh the banks are allowed to the banks are allowed to publish fictional financial statements in the sense that if they suggest that their bond portfolio or their mortgage portfolio will be held to maturity they don't have to mark it mark their portfolio to Market there are lots of mortgages in bank balance sheets that are performing but were written at lower interest rates and were they pric as bonds they'd be selling at 60 they're
allowed to carry the bond at 100 because of the fiction that they're held to maturity and I I I'm not sure that that has shown up yet uh and that gives me pause higher interest rates uh do two things that are difficult for equities and debt markets they lower the capitalized value of distributions when the interest rate goes up existing you know lower paying obligations are priced of less at the same time that they raise the cost of capital uh to institutions and I don't think that that's been felt
through the economy the malaise that you're seeing in many Equity markets and the the Wipeout that you've seen in the long-term debt Market uh is yet to be reflected in the economy but it's beginning to be reflected in the economy I think too that what you're seeing in the United States is systemically higher budgets because the interest component on the federal debt is repricing we're living today on money that we borrowed two and a half years ago uh when you pay 4.7% interest on that debt as opposed to
1.5% interest on that debt and when the debt itself the denominator is $33 trillion it ends up being a very large number and I think we're starting to see that right now okay so I know I know we're retreading some ground that we've talked about before but I think it's interesting to see kind of those subtle shifts in your thinking so thanks for going over those ones and we do have some new new topics to cover I want to move over to gold and one thing we've seen going on with gold is we have this
war in the Middle East that has erupted since the l ast time we spoke and typically I've always heard you know this type of event results in a rise in the gold price that will fade away I'm starting to hear people talk about you know maybe this time is different it has a longer lasting effect what are your thoughts my experience Charlotte and I'm not a historian I'm a lone shark my experience has been that what gives you much higher gold prices is a lack of faith in the maintenance of purchasing
power in conventionally denominated interest rates I have seen people use War as an excuse to express their fears and buy gold but my own experience has been that fears outside of the maintenance of purchasing power have been short-lived so my suspicion and I can't tell you why because I'm not a historian my suspicion is that any elevation in the gold price is a consequence of um world events the Middle East or the Ukraine will be short term uh what will be longer term is the expectation that US inflation is higher
for longer uh and that if you store your purchasing power in bonds or certificates of deposit that you're guaranteed a loss of purchasing power that's what happened in the decade of the 1970s I also want to ask ask about the impact of the war on oil so we had recently the World Bank come out and say maybe prices could go to 150 per barrel if the conflict spreads I believe is the idea that they're going after and I know you have an interest in in oil stocks so so thoughts on oil prices I think oil
prices are inevitably higher although perhaps not in the near term uh I don't think that they're inevitably higher because of a lack of Middle East peace or a lack of Russian oil coming on the market Russian oil by the market is coming on the market anyway it's just been retitled Indian oil uh it's still there what is going to keep the price of oil high is political correctness uh it's the fact that uh the big thinkers of the world the big governments of the world have told us
that oil is going to end in 2032 they've raised the cost of capital of oils the oil industry as a whole including State controlled oil industry oil companies are underinvestigated and oil and we've talked about the war in relation to both of them and it sounds like other factors are really kind of more important which doesn't necessarily surprise me are there any areas of the Commodities sector that investors might want to look at in relation to conflict well I think longer term it will impact oil uh the
peace that we've seen over the last four decades increasing globalization uh the lack of Need for countries to secure their own geopolitically SEC secure Supply chains those are gone and you're beginning to see a Scramble for Resources by societies the Chinese as an example have restricted access to the west to various rare Earths and small Commodities uh what that means is that we'll have to look for non-chinese sources at the same time we've tried to exert our influence against the Russians as an example by
putting an embargo as silly as it is on their oil there is a geopolitical shift uh what we're seeing now is various countries doing what the Japanese had to do in the 1970s to secure access to supplies what the Chinese did in the decade 2000 to 2010 other societies will have to do that now Middle Eastern societies the Indian societies you'll see a continued competition among societies to secure access to geopolitically strategic resources in a in a broad broad broad variety and people who pay attention to
Trends in that sense will have a lot of investable themes and resources okay I'm going to I'm going to use that as my way to sneak into uranium because we are hearing about kind of an East West divide there as well and I wonder if you want to talk about that well first of all uh Charlotte I think you should brag about the fact that you were one of the few correspondents a year ago that bothered to ask a uranium question the whole Market was bored of uranium or didn't like it and you had the courage
to say what about uranium many of your peers didn't do that which meant that their listeners missed out on a 300% move in the Juniors so congratulations uh very few sectors are up because very few people care about something that's out of favor uranium was out of favor it's no longer out of favor it's not really in favor but it's not out of favor and as a consequence poor Pun It's exploded uh upwards in price that continues I think I need to tell you Charlotte I believe the easy money has
been made the Juniors when you move from hate to tolerance uh you get the move that we've seen the whole range of Juniors is up and I've sold enough of mine that I have my Capital off the table I've paid for my remaining Parcels but I think the uranium Market keeps going there's a couple things that have happened one the price has moved from $40 to $75 Not a Bad Thing more importantly the character of the market has changed uh at $40 all of the transactions or almost all the transactions took place at the spot
Market which guaranteed you the price for a day now 75% of the of the volumes are taking place in the term Market where the producer is guaranteed at least to some of their production minimum price levels for 5 years or seven years or 15 years this gives you visibility as to the Topline number and it's a financeable number if you have high credit utility counterparty the structure of the uranium Market is immeasurably stronger than it was uh 18 months ago not merely because of a change in price but rather because of a
change in structure all right okay so let's let's talk a little bit more about uranium and I have to say you know I'm always trying to listen to what our our viewers want to hear about and they love uranium so if I was asking about it a year ago it's because I think our audience wants to hear about it so can we talk a little bit more about how to approach the equities right now so you said easy money has been made you've done some selling how how does it progress at this point what are you planning sure so we
went from the easy money to this middle section which I call the real money what happens now is that the industry reprices based on the net present value of production they're going to add at the prices that they can sell it for uh and the narrative in uranium has gone from hostile to at least neutral but maybe positive and that means that the generalist money will come into the uranium space it will go into camoo some of it will go into Kaz Adam prom but most generalist investors won't
invest in countries they can't pronounce so although cico is a better company it won't attract us much money it will go into the higher quality developers the nextg of the world it will not go in at least to the same degree into the pen dreadfuls so we go from easy money which has been made to real money then ultimately if we have spective blowoff which I think we will we go to big money and in Big Money leadership returns back to the Junior it goes to the narrative stocks it goes to the story stocks so
right now you have to focus on real companies doing real things companies like NextGen fision that will be taken over companies like boss that are in production and will enjoy much higher prices than their feasibility study suggested that they would enjoy uh countries that legitimate companies that don't enjoy share price escalation will be taken over by companies that have a lower cost of capital after that real money has been made we'll go into the big money which is the speculative blowoff that we saw in the 2008 to 2010
time frame and and when you talk about that speculative blowoff that we saw before are you expecting that kind of does that refer to the price are we going to get that way up in the price that we saw before of uranium we don't need to uh I think we'll have it what many people don't understand is that all those $75 is certainly the incentive price we've only had that incentive price for 3 months and it takes five or six years to change Supply so it would be easy I'm not saying it's going to happen but it
would be easy for the uranium price to go to 100 or 110 or 120 and then Retreat if it went to 110 or 120 the investor expectation is it would go higher from there which is silly but that's the expectation uh over time markets work it gravity will take over but the equity investor won't pay any attention to gravity at all okay one one more question on uranium so we talked it it seems like we talked for years about what were we waiting for and it was Japanese restarts now and it happened and so now now what are we what are the
factors that you're watching most closely now it's easy yeah now all you have to do is look at the fact that the pounds in the industry can be sold in the five year 10 year or 15E time frame for pricing levels that are a economic and B you can understand the second thing we look at is if you build a new nuclear power plant and 40 of them are being built as we speak the people who are providing the debt financing for the plants want the plant to secure enough forward supply to amortise the loan over
15 or 20 years uh this is really easy stuff this is really really really easy stuff uh that's all we need okay and you know I was thinking in my hat I was like maybe we just have to watch those dominoes fall over now and it sounds like maybe we do okay so if we are wrapping up I want to ask hopefully a fun question I think it's a bit fun dos and don'ts for investors heading into the end of 2023 perhaps into 2024 dues if you believe in a bull market in precious metals and commodities if you believe in that start
by investing don't buy the penny dreadfuls if you get a bullar market the best countries the best companies in the Commodities will give you doubles and triples in other words if you believe that we have a continued bull market in oil over the next five years Exxon will give you a triple you don't need to come into into a Penny Dreadful so if you're buying a bull market in Commodities you don't need to buy the Juniors buy the Juniors because you believe that there's some event internal to the company where
they can add a Quantum increase in value pay less attention to the market pay less attention to the commodity and pay much more attention to what that company's doing unless you can find a commodity that is so dreadfully out of favor that it's going to come back of its own valtion and were there don'ts as well well I I I tried to give you the don't I tried to give you the don't in the in the interim uh don't speculate if you aren't willing to do the work uh I've told you before that I think your
listeners need to limit the number of spective stocks in their portfolio to the number of hours per month that they want to work if you have 10 stocks you have to work 10 hours and that doesn't just mean listening to Charlotte McLoud videos which you should also do it means that you need to read the annual report rep you need to read the quarterly reports you need to read the filing statements you need to read The Insider statements if you aren't willing to do the work don't get in the space okay
okay I think that's a great place to wrap it up unless you had any any final thoughts to leave people with no that's it just uh congratulations for the good work you're doing pat yourself on the back about uranium you were there your competitors well well you as well okay thank you so much always great to have you and once again I'm Charlotte McLoud with investing news.com and this of course is rral 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 [Music] time
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