Latest / Financial Survival Network / Shining Bright or Fading Fast? The Future of Gold Stocks - Bob Hoye #6121

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Shining Bright or Fading Fast? The Future of Gold Stocks - Bob Hoye #6121 · Financial Survival Network

• 0:00
  Speaker 1: And the most liquid items as the US Treasury is
• 0:03
  Speaker 1: shorter than one year, so that puts in a bit
• 0:06
  Speaker 1: to the dollar. Then the other liquid item is gold,
• 0:09
  Speaker 1: so that puts in a bit of gold, and what
• 0:11
  Speaker 1: you want to have the price of gold going while
• 0:15
  Speaker 1: holding as the cost the mining fall and as we
• 0:20
  Speaker 1: use the TRB as the proxy for gold mining cost,
• 0:24
  Speaker 1: and recently here that goal divided by CRB its new
• 0:28
  Speaker 1: highs as one would expect, maybe even a little overbought.
• 0:31
  Speaker 1: But the trend is there, Carry, and the trend is
• 0:34
  Speaker 1: your friend.
• 0:35
  Speaker 2: You're listening to Carrie Let's as financial survival Network where
• 0:39
  Speaker 2: you get valuable information. You just can't find anywhere else
• 0:43
  Speaker 2: to thrive in today's trying times. You need the financial
• 0:47
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• 0:52
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• 0:56
  Speaker 2: Survival Network now more than ever.
• 1:03
  Speaker 3: And welcome. You are listening to the Financial Survival Network.
• 1:06
  Speaker 3: I'm your host, Carry Lutz. We're the second to last
• 1:09
  Speaker 3: day of July. The markets have tended to fluctuate, to
• 1:15
  Speaker 3: put it mildly, but gold is still in that twenty
• 1:17
  Speaker 3: four hundred dollars range. They managed to knock silver down
• 1:22
  Speaker 3: below thirty, but wanted to get an update from Bob
• 1:26
  Speaker 3: Hoy who has forgotten way more than I'll ever know
• 1:30
  Speaker 3: about the sector, that's for sure, and stay tuned because
• 1:34
  Speaker 3: at the end we'll have an offer so you can
• 1:38
  Speaker 3: get Bob's latest, latest, greatest list of miners that are
• 1:43
  Speaker 3: poised to really explode upward when the next phase of
• 1:47
  Speaker 3: the metals bull market is upon us, which will be
• 1:52
  Speaker 3: sooner rather than later. Bob, it's great to have you
• 1:54
  Speaker 3: back on the show. How you doing, Eric doing great?
• 1:57
  Speaker 3: Thanks and my colleague Rock. Sorry for the technical die
• 2:01
  Speaker 3: he does. You know the dollar particles right, But what
• 2:05
  Speaker 3: I've learned.
• 2:07
  Speaker 1: Is that you want to use the real pricycle and
• 2:12
  Speaker 1: that is deflated by the you know, inflation, the CPI index.
• 2:18
  Speaker 1: And the reason why I did that is a decade
• 2:20
  Speaker 1: ago when I did the historical work. There were long
• 2:24
  Speaker 1: periods when England was on a gold standard there was
• 2:27
  Speaker 1: no change in the nominal price, but then over the
• 2:31
  Speaker 1: long period under your years, the real pricycle change is
• 2:37
  Speaker 1: then particularly interesting following a great financial bubble of which
• 2:43
  Speaker 1: we have been in, and one of the features of
• 2:49
  Speaker 1: a post bubble contraction has been gold real price going
• 2:54
  Speaker 1: up as deflated by inflation, and it has been. But
• 3:00
  Speaker 1: then last year in the summer I got I thought, well,
• 3:03
  Speaker 1: why mess around with that, because the only publisher, CPI
• 3:08
  Speaker 1: went the luck. So we then did gold divided by
• 3:13
  Speaker 1: the CRB, the very popular commodities index. So what I
• 3:20
  Speaker 1: assumed was that the CRB index was a proxy for
• 3:27
  Speaker 1: mining costs. And this is easier to point out when
• 3:30
  Speaker 1: when you say, okay, now, energy is a huge cost
• 3:34
  Speaker 1: of mining, and we're all in the proxy for energy prices.
• 3:40
  Speaker 1: And what's happened in the last seven months is that,
• 3:43
  Speaker 1: for example, who all has followed a half relative good
• 3:50
  Speaker 1: that portion of mining costs have been beneficial to the sector.
• 3:56
  Speaker 1: But I'm very content happy to stay with the fact
• 3:59
  Speaker 1: that the RB is probably a good proxy for mining
• 4:04
  Speaker 1: costs as you get and it is up something like
• 4:12
  Speaker 1: you know, the turn of the year. So that is
• 4:15
  Speaker 1: helping quietly helping all miners, anybody who's producing.
• 4:21
  Speaker 3: All right, So that's helping it costs a lot and
• 4:26
  Speaker 3: making these things potentially way more profitable.
• 4:28
  Speaker 1: Right now. Here's here's that point out. An absurdity is
• 4:33
  Speaker 1: that if people are and here's about gold stocks, because
• 4:38
  Speaker 1: the dollar is going to get crashed, and well, I
• 4:41
  Speaker 1: think what happened if in this inflationary world and dollar crashing,
• 4:48
  Speaker 1: if the price of energy for mining gold goes up
• 4:53
  Speaker 1: faster than the price of goal, you're not making money
• 4:58
  Speaker 1: the whole point. And now, the reason why this works
• 5:01
  Speaker 1: in the past is that with the great financial boom,
• 5:05
  Speaker 1: he's got all tons of bonds and debt, junk bonds
• 5:10
  Speaker 1: and all issued doing payable essentially large part of it
• 5:18
  Speaker 1: into the financial center in New York and doing payable
• 5:22
  Speaker 1: in dollars. So one of the features of the post
• 5:26
  Speaker 1: bubble world is a chronically firm senior currency. It used
• 5:33
  Speaker 1: to be sterling, and when London was the financial center,
• 5:37
  Speaker 1: now it's the dollar and New York is the financial center.
• 5:42
  Speaker 1: But then as all over the front of the debt
• 5:47
  Speaker 1: bubble collapses, that is a huge loss of liquidity. But
• 5:53
  Speaker 1: Mother Nature's got a way of increasing liquidity in the
• 5:58
  Speaker 1: banking system. She moves up the real price of gold,
• 6:04
  Speaker 1: the miners make more of it, produce more of it,
• 6:07
  Speaker 1: and then it gets into the banking system from the
• 6:10
  Speaker 1: bottom starts to rebuild liquidity. So as that point out
• 6:15
  Speaker 1: that a typical post bubble depression has lasted for about
• 6:21
  Speaker 1: twenty years with the business with the three to four
• 6:24
  Speaker 1: year business cycle coming and going. The recessions are more
• 6:28
  Speaker 1: severe than the recoveries. And as a matter of fact,
• 6:32
  Speaker 1: in the literature, the first use of the word great depression,
• 6:38
  Speaker 1: but it came in the early eighteen eighties when that
• 6:42
  Speaker 1: bubble had peaked in eighteen seventy three and British England
• 6:47
  Speaker 1: then was the senior economy, and British economists couldn't figure
• 6:51
  Speaker 1: out the prolonged weakness, and then they said, oh, it's
• 6:57
  Speaker 1: a great depression. And that's the first minch in the
• 7:01
  Speaker 1: literature that I stumbled on of that term the great depression.
• 7:05
  Speaker 1: And then of course that great depression ed eighteen ninety five,
• 7:10
  Speaker 1: and then you had the whole recovery fact that nineteen
• 7:14
  Speaker 1: twenty was the high for commodities, in nineteen twenty nine
• 7:17
  Speaker 1: was the high for the bubble, and then crashing all
• 7:20
  Speaker 1: over again. So yeah, mother nature is quite brutal that way.
• 7:26
  Speaker 1: But if you've got the game plan and it helt
• 7:30
  Speaker 1: the whole lot. So our view is for investors to be,
• 7:35
  Speaker 1: you know, fully fully invested in gold stock. They could correct.
• 7:41
  Speaker 1: Recent enthusiasm was quite noticeable and they big for that
• 7:47
  Speaker 1: dock market. The S and P could get hit in
• 7:50
  Speaker 1: the fall, so we wouldn't chase gold docks, but we
• 7:54
  Speaker 1: would look to repurchase selling pressures day in October sometime.
• 8:03
  Speaker 1: But the main thing is that as the rest of
• 8:06
  Speaker 1: industry does and the economy does poorly, the gold mining
• 8:12
  Speaker 1: side does very well. Like in the nineteen thirties or
• 8:15
  Speaker 1: the eighteen eighties, that does well. So you're going to
• 8:20
  Speaker 1: have fund managers out there, the more aggressive equity fund
• 8:24
  Speaker 1: manager guys, they're going to look at a couple of
• 8:27
  Speaker 1: quarters where the EC or DFKA golden neckt is out
• 8:35
  Speaker 1: noticeably outperforming the S and T. So what that means
• 8:41
  Speaker 1: is that carry that the equity fund managers who would
• 8:48
  Speaker 1: not normally look at gold, they're going to say, hey,
• 8:51
  Speaker 1: it's a good sector, I got to get in. So
• 8:54
  Speaker 1: there's a possibility of a new kind of player coming in.
• 8:57
  Speaker 1: So this is why I'm very polish for the longer
• 9:01
  Speaker 1: term on the whole breadth of the gold stocks, and
• 9:07
  Speaker 1: particularly like during your exploration. That's gosh, it was nineteen
• 9:13
  Speaker 1: ninety six when we've got a list of five by
• 9:18
  Speaker 1: during your exploration stocks and one of them turned out
• 9:23
  Speaker 1: to be well we're looking for a good exploration market,
• 9:28
  Speaker 1: and one of them turned out to be er Quippa,
• 9:31
  Speaker 1: which went to thirty dollars rather nice. So we now
• 9:35
  Speaker 1: have our list of eleven small cap gold stocks they
• 9:40
  Speaker 1: seem to have based and what to get with this
• 9:44
  Speaker 1: is potentially when they turn up, you're going to get
• 9:47
  Speaker 1: much better percent gains than say in the senior gold stocks,
• 9:52
  Speaker 1: unless you leveraged and don't care for leverage much. So
• 9:56
  Speaker 1: we've been advising accumulating our list of ele jr. And
• 10:02
  Speaker 1: one of them I'm particularly interested in. It's been not
• 10:06
  Speaker 1: been drilling, but it is now about the start thrilling.
• 10:11
  Speaker 1: So that's that's the plot for one of them. But yeah,
• 10:15
  Speaker 1: and if anybody's interested in our list of juniors, we'd
• 10:20
  Speaker 1: be pleased to send it to them. And also with
• 10:23
  Speaker 1: the provisions that one or two may just get stuck,
• 10:27
  Speaker 1: but within elaborate or twelve of them, there could be
• 10:33
  Speaker 1: some good winners, all.
• 10:35
  Speaker 3: Right, Well, hey, one good winner can make up for
• 10:39
  Speaker 3: a lot of losers.
• 10:40
  Speaker 1: Right. Well, it's hid that Eric Kuipa was the one
• 10:44
  Speaker 1: that worked for us, and that was a long time ago.
• 10:49
  Speaker 1: And any stocks, any stocks that goes to thirty dollars.
• 10:53
  Speaker 1: You're going to kind of like it or remember the experience,
• 10:56
  Speaker 1: won't you.
• 10:56
  Speaker 3: Oh yeah, yeah, we need to see more of them, though,
• 11:01
  Speaker 3: we need some more of them, Bob.
• 11:04
  Speaker 1: Yeah, Well, I think our list is it's pretty good. Summers.
• 11:10
  Speaker 1: There's there's a small producers, there, a small preproduction, and
• 11:16
  Speaker 1: then there's some history exploration stocks. And one of them
• 11:21
  Speaker 1: in which we can talk about separately, is it is
• 11:26
  Speaker 1: just starting to drill on what could be another witwaters
• 11:32
  Speaker 1: Rand geology. Now Whittwater's ran geology. It's in South Africa
• 11:38
  Speaker 1: and that's the system that hosts all of that gold mining.
• 11:44
  Speaker 1: And they kept the number carriers that wit has produced
• 11:50
  Speaker 1: some forty percent of all of the gold ever mined
• 11:54
  Speaker 1: in history and it's still even today and that's from
• 11:59
  Speaker 1: eighteen production and still today it's got one of the
• 12:04
  Speaker 1: outstanding reserves in the world. So Witwaters we ran gold,
• 12:08
  Speaker 1: sit and runs wherever you can say. So one on
• 12:13
  Speaker 1: the stock, as I say, we're just starting drill now
• 12:17
  Speaker 1: and we soon should get out of the h lit
• 12:19
  Speaker 1: thing and onto the get the network if they call it.
• 12:24
  Speaker 1: There could be a good run in the stock on
• 12:28
  Speaker 1: two things. One getting up on the recognized lifting and
• 12:32
  Speaker 1: two actually getting results out of the field. So yeah,
• 12:37
  Speaker 1: we can. They can get in touch with the analystics
• 12:40
  Speaker 1: can get in touch and yeah, or just sent me.
• 12:43
  Speaker 3: Yeah, they can just send me an email k l
• 12:46
  Speaker 3: at terry LUTs dot com and say Bob's stocks or
• 12:49
  Speaker 3: Bob's picks in the subject line and I will forward
• 12:54
  Speaker 3: you the link.
• 12:55
  Speaker 1: That's great because Rock, my colleague, is set up a
• 12:58
  Speaker 1: system for with this sore back of it all that
• 13:03
  Speaker 1: were really sat for it.
• 13:04
  Speaker 3: Yeah, excellent, excellent, So just send that email and we
• 13:08
  Speaker 3: will take care of the rest for you. So as
• 13:11
  Speaker 3: far as looking ahead, so you still believe that that
• 13:16
  Speaker 3: belief that the dollar is going to go to oblivion
• 13:20
  Speaker 3: is uh, the dollar's death is greatly exaggerated.
• 13:24
  Speaker 1: Uh yeah, that was my news of the dollars death
• 13:29
  Speaker 1: has been greatly exaggerated. Now let me give you I
• 13:34
  Speaker 1: handed at it a little while ago in in a great,
• 13:38
  Speaker 1: a great bubble the stock market gate. You get your tention,
• 13:42
  Speaker 1: but also the bubble is in that to it, and
• 13:46
  Speaker 1: that bubble like you wouldn't believe now once the party
• 13:49
  Speaker 1: is over, that that is due unpayable in US dollars
• 13:56
  Speaker 1: into New York. You know, all you have to do
• 13:59
  Speaker 1: is they have to sack percent seventy percent of all
• 14:02
  Speaker 1: the debt bubble doing payable in New York and just
• 14:06
  Speaker 1: servicing that dad into New York is a huge bid
• 14:11
  Speaker 1: for the dollar. But also you have investors around the world,
• 14:16
  Speaker 1: the very careful investors, and in a storm, they will
• 14:20
  Speaker 1: go to just the most liquid items. Return does matter,
• 14:24
  Speaker 1: and the most liquid item, as the US Treasury is
• 14:27
  Speaker 1: shorter than one year, so that puts in a bit
• 14:30
  Speaker 1: to the dollar. Then the other liquid item is gold,
• 14:33
  Speaker 1: so that puts in a bit of gold. And what
• 14:35
  Speaker 1: you want to have the price of gold going while
• 14:39
  Speaker 1: holding as the cost the mining fall. And as they say,
• 14:44
  Speaker 1: we use the CRB as a proxy for gold mining costs.
• 14:48
  Speaker 1: And recently here that goal divided by CRB its new
• 14:52
  Speaker 1: highs as one would expect, maybe even a little overbought.
• 14:55
  Speaker 1: But the trend is there carry and the trend is
• 14:58
  Speaker 1: your friend and sector of gold sectors on a longbow market,
• 15:04
  Speaker 1: and there would be times when it becomes fabulous with
• 15:09
  Speaker 1: a potential world scale discovery, and that's the one of
• 15:14
  Speaker 1: the ones you want to have in a sweet city
• 15:16
  Speaker 1: of eleven or twelve gold stars like air Kuiper one
• 15:21
  Speaker 1: that has that could come well very rewarding.
• 15:25
  Speaker 3: Yeah all right, all right, so what about all the debt.
• 15:29
  Speaker 3: We're always worrying about all the debt. Does it just disappear?
• 15:33
  Speaker 3: What happens to you?
• 15:35
  Speaker 1: It ends up massive loss to the only global economy
• 15:39
  Speaker 1: because you're going to have young fonds down to no
• 15:45
  Speaker 1: bed just and defaulting. But then you can't you don't
• 15:51
  Speaker 1: want to own high heeld bonds. Now. The other thing
• 15:54
  Speaker 1: is because the liquidity disappearance be fact that you don't
• 15:59
  Speaker 1: want to own long treasuries are there, but if you're
• 16:02
  Speaker 1: in deposits or short like three months bills, those three
• 16:08
  Speaker 1: months built, they're going to go back down to zero
• 16:10
  Speaker 1: percent again. Then the Fed funds will follow. So the
• 16:15
  Speaker 1: happy point could be say three to four year term
• 16:21
  Speaker 1: good corporate bonds. You get a howl a lot better
• 16:25
  Speaker 1: return than from fee bill or deposit type stuff, and
• 16:29
  Speaker 1: at a four year term you're not going to get
• 16:32
  Speaker 1: whacked too much by price. I really like it. For
• 16:36
  Speaker 1: fifteen some investors, it's the three to four year good
• 16:40
  Speaker 1: great corporate bonds. And if you go to a full brokers,
• 16:47
  Speaker 1: they will probably have a bond desk where they can
• 16:50
  Speaker 1: give you a fill on those bonds and you know,
• 16:54
  Speaker 1: whereas if you are send tree bills going to go
• 16:57
  Speaker 1: to zero, they fed funds. Oh you're there now talking
• 17:03
  Speaker 1: carry about h what's gonna be? Oh, it's a disaster,
• 17:11
  Speaker 1: fed chatter disaster. And I'll explain it is because in
• 17:15
  Speaker 1: a in a boom and I've got to figure even
• 17:19
  Speaker 1: back to five hundred pc, interest rate go up in
• 17:23
  Speaker 1: a boom and they go down in the bus. So
• 17:27
  Speaker 1: the current buzz is that an interesting because it's going
• 17:32
  Speaker 1: to cut and that'll get the party going. Oh, that
• 17:35
  Speaker 1: is dead wrong. And there was a guy with airstrusted
• 17:41
  Speaker 1: in September of two thousand and seven and I got
• 17:46
  Speaker 1: a quote bitten somewhere here, but I've used it and
• 17:50
  Speaker 1: break and rightly he said. He says, it's absolutely certain
• 17:55
  Speaker 1: that the FED pat will help the stock market. Well,
• 18:00
  Speaker 1: the stock market peaked in the middle of that October.
• 18:04
  Speaker 1: They economy peaked that September, and we went into this
• 18:09
  Speaker 1: eighth nine bear market, which was very severe. So the
• 18:16
  Speaker 1: point being, and also we did a chart and I'm
• 18:19
  Speaker 1: updating the study now, and you take it tart of
• 18:22
  Speaker 1: the S and P against the three months Pradier bill,
• 18:25
  Speaker 1: and not only do they fall together, but on the
• 18:30
  Speaker 1: fastest funges with the table rate are associated with the
• 18:35
  Speaker 1: fastest funges in the in the S and P. Really,
• 18:40
  Speaker 1: so they're talking up and they're excited about the FED
• 18:45
  Speaker 1: cut and FED cut will be a disaster.
• 18:50
  Speaker 3: Hell, it's going to ask So that's going to cause
• 18:53
  Speaker 3: the market to collapse. Is that what you're saying here?
• 18:57
  Speaker 1: It is a technical beast and it it became. Now
• 19:02
  Speaker 1: here's the way we look at it. It's easily May
• 19:06
  Speaker 1: and June of the year can be very good for
• 19:09
  Speaker 1: stock prices. And as a matter of fact, the of
• 19:13
  Speaker 1: the five great financial bubbles, if the first the SOUTHI
• 19:17
  Speaker 1: bubble seventeen twenty, the peaks were in May and actually
• 19:22
  Speaker 1: in London, the Southia bubble peaked in that June. So hey,
• 19:27
  Speaker 1: there's empirical stuff behind it. So what you want to
• 19:32
  Speaker 1: do is in June and July, which was what we've
• 19:36
  Speaker 1: been doing. Is if the action was not overbought, you're
• 19:42
  Speaker 1: in a rising trend of able market. But the action
• 19:46
  Speaker 1: we rang all our bells and whistles. This was that momentum.
• 19:50
  Speaker 1: It had sequentials that had all kinds of things on
• 19:54
  Speaker 1: a probable sea at all high. So the first would
• 19:57
  Speaker 1: be a loss of momentum. We've had that, and the
• 20:00
  Speaker 1: next it would take out a correction on the way up.
• 20:05
  Speaker 1: And that's happened. So I take a stock market is
• 20:09
  Speaker 1: going to do it around to August and then typically
• 20:13
  Speaker 1: if you're going to have a financial disaster, it will
• 20:17
  Speaker 1: more likely be discovered in the fall. So our advice
• 20:22
  Speaker 1: is to take money off the table and in long bonds,
• 20:27
  Speaker 1: in avoid young best again avoid just I mean, just
• 20:33
  Speaker 1: don't go there and raise the liquidity from your equity
• 20:38
  Speaker 1: portance bok. Sure that in a hard time liquidity gets
• 20:43
  Speaker 1: to be very important.
• 20:44
  Speaker 3: Yeah, well, liquidity isn't important until it becomes important, right.
• 20:49
  Speaker 1: I think somebody important said something about that's description of
• 20:58
  Speaker 1: going broke. They're going broke right, Oh, and then it
• 21:01
  Speaker 1: was very fast or something like that.
• 21:03
  Speaker 3: Well, it's like bank runs. As long as people believe
• 21:07
  Speaker 3: that they can get their money from their bank, they're
• 21:12
  Speaker 3: happy to leave it there. But the second they believe,
• 21:15
  Speaker 3: where you believe that your bank is going to hit
• 21:18
  Speaker 3: the skids, you'll be lined up around the block. Now,
• 21:21
  Speaker 3: obviously in the West we've done away with bank runs
• 21:25
  Speaker 3: because you're not going to get cash all you're going
• 21:28
  Speaker 3: to get is a check to bring to another too
• 21:31
  Speaker 3: big to fail bank?
• 21:32
  Speaker 1: And what does that do? Right?
• 21:35
  Speaker 3: You got like nada, so so you get nothing from that?
• 21:39
  Speaker 1: Right?
• 21:40
  Speaker 3: But when to.
• 21:42
  Speaker 1: Run into a cartoon in the seventeen to twenty bubble,
• 21:46
  Speaker 1: when it crashed, it left a lot of people broke.
• 21:52
  Speaker 1: And that's what this term lame doc and man and
• 21:57
  Speaker 1: oh yeah, Daniel Depot the writer Robinson Cruso I got.
• 22:03
  Speaker 1: There's a note by him where and the cry he
• 22:08
  Speaker 1: lot nineteen thousand pounds. There's stuffing like that.
• 22:11
  Speaker 3: I was about a million bucks back.
• 22:13
  Speaker 1: Finey and he and then the all three laments that
• 22:17
  Speaker 1: how many times you know, ten times that been rich
• 22:19
  Speaker 1: and ten times have been poor. I don't aim to learn.
• 22:24
  Speaker 3: I can relate to that one. I'll tell you I've
• 22:27
  Speaker 3: been rich and I've been poor, and rich is better?
• 22:29
  Speaker 1: All right?
• 22:30
  Speaker 3: If you want the list of the stocks his top
• 22:33
  Speaker 3: mining picks, send an email to kl at Carrie LUTs
• 22:36
  Speaker 3: dot com. The list has changed a little bit from
• 22:39
  Speaker 3: last time. Make sure you go over to our site
• 22:41
  Speaker 3: Financial Survival Network dot com sign up for your free newsletter.
• 22:45
  Speaker 3: Bob always a pleasure. Thanks for stopping by.
• 22:48
  Speaker 1: I'm glad we got together, carry and look forward to
• 22:50
  Speaker 1: the time.
• 22:51
  Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your
• 22:55
  Speaker 2: solution to today's trying times. For the latest, go to
• 22:59
  Speaker 2: fine Financial Survivalnetwork dot com. Financial Survival Network now more
• 23:05
  Speaker 2: than ever,