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ELITE MINING CEO -- What is GOING ON in SILVER, GOLD & MINING · SILVER / GOLD / $UFD Meme Coin Investing & Global Economics

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  This is Jorge Genoza, CEO of Fortuna Silver Mines.
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  They're a midtier gold and silver producer.
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  Jorge has mines in Mexico, Argentina, Peru, Burkina Faso,
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  Cote, d'ivoire, and an exciting new advanced stage exploration
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  project in Senegal. Jorge, welcome to Ron's
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  basement. You know, Ron, a pleasure to
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  join you once again in the basement.
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  How about this? Markets, huh?
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  Oh man, it's teaching us how to be thick skinned and tough,
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  right? It's you know, I I was at the
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  Colorado Springs a golf forum. No, it's it's the the golf forum
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  and I was meeting I. You know it it it was overall I
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  think a very quiet conference. It's probably the the most
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  important conference for previous methods in the world,
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  but it was very quiet, very, very quiet.
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  Having said that, we had, we had a full schedule.
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  You know, we did have a full schedule.
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  And you know within the 2526 meetings, we had over 2 days, 2
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  days and a half. I had a very interesting one.
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  I was talking with a large a portfolio manager in a large UK
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  based fund and this fund manages about 25 billion sterling
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  billion, right? 25 billion?
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  And and he manages the gold portfolio within the fund,
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  right. So he according to the overall
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  strategy, they give him money or take away money.
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  But it's not like outside money. No, it's money they get and they
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  allocate within those 25 billion.
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  So he tells me that two years ago he was managing $2 billion
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  in mining equities in in. Precious metals mining,
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  equities. Now he's managing only half a
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  billion. Yeah, yeah.
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  So he went from 2 billion to half a billion.
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  So he's managing 1/4 of what he was managing now.
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  And when I asked him, you know, what do you think is happening?
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  Because there is no appetite for the mining equities and gold
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  still trading close to nominal record highs.
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  Yes, the miners margins have been squeezed by inflation
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  dramatically, but still gold is close to nominal highs.
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  So why so much apathy with the the mining equities and and his
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  answer made a lot of sense to me, he said.
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  The gold price, they believe, is supported by central bank
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  purchases, not by bigger locations of capital.
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  The of of portfolio managers, right.
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  So he thinks the the the nominal this high price around 19118
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  hundred if you will 1800 still a high price in nominal terms.
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  He believes all of that is being supported by by central bank
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  purchases. And the issue is that usually
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  when you have, you know, money managers allocating capital to
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  gold, they also buy mining equities.
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  But central banks, when they buy gold, they don't buy mining
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  equities, they just buy gold. So that's why the discrepancy
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  between gold, where gold is and and the valuations of the mining
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  equities. Because again, the, the, the,
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  the central banks will purchase gold but will not buy mining
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  equities, right? They will not buy Barrick.
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  You know, Fortuna or or or. Like Nico Eagle, right?
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  And they they want. That made a lot of sense to me.
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  But favor and check out Pin Becks, the online precious
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  metals bullion dealer and sponsor of Ron's Basement.
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  I was a happy customer before they offered to support the
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  channel. You'll find they have the best
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  prices, quality, and service. I think Pin Becks is best and
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  you will too and be sure to tell them that you're from Ron's
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  basement. And if you think about and I
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  know also the other statistics are showing that ETF's, the big
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  BlackRock ETF's, the GLD and the SLV, they both have had pretty
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  significant outflows over the last couple years.
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  So right they from in terms of of anything outside of central
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  bank purchases it appears that there's been money obviously
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  coming out of out of of both the physical metal and the mining
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  equities. You know the the silver lining
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  that I like to remember is that you know I guess we have to
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  accept the situation the way that it is.
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  But the fact that we that it's been beaten down so low offers
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  such a huge runway for improvement that you know if
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  individual just a little improvement in terms of capital
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  flows coming into the market from institutional and
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  individual investors could have a major impact.
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  But you know the waiting here is the is the torturous part,
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  right? I think, I think it is a strong
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  case I've been through, you know, I've been in in in the
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  sector for over 30 years now and you know, there are times.
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  You know, if if you're truly a contrarian, this is a perfect
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  scenario. The mining equities right are
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  the perfect, the perfect scenario.
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  But you you need to have a contrarian mentality, right?
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  Yeah. Yeah.
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  If you have a contrarian mentality you you will be
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  comfortable. But certainly investors in in
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  the previous metals mining equities have been put to the
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  test, right? And and you're, you're right
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  when you talk about thick skin, they are all, you know, our
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  investors are being put to the test and I think you know you
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  need to have a strong, strong convictions on your investment
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  thesis and and a bit of a contrary and view, right.
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  Yeah, yeah. And a lot and a lot most people
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  let their emotions rule their investment decisions.
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  And right now anyone who's been invested in precious metals
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  equities, the emotion associated with it is just a lot of pain,
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  right. I mean even me I'm, I'm probably
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  one of the most bullish, optimistic and I would like to
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  think somewhat objective people when I look at at the metals and
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  I have a big portfolio of precious metal mining stocks.
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  And when I think about there's there's that that silent part of
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  me that says you should you know buy a little more, buy a little
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  more. But it's very difficult because
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  and and you know I'm hearing everybody even you know from the
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  conference that you reference people were saying that some of
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  the executives, the comments from some of these executives
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  was like they're just like throwing their hands in the air
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  and saying this has become, you know, it's become so difficult
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  with sentiment the way it is. You know, you think at some
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  point we're going to reach that capitulation stage where things
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  could turn around. And I've also heard this, it can
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  turn you and I know because we've you've been in it longer
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  than me. But it when it turns, it can
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  turn very quickly as well and things can get better very
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  quickly. And I think again since we're
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  starting from such a low base in terms of interest and sentiment
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  and capital flows into both, you know the, the physical metal
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  from an individual and even institutional perspective and
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  the equities that it's not going to take a lot.
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  You know it's easier to go from having an F grade to A/C grade
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  than it is to go from a B grade to an A grade.
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  I hear you perfectly loud and clear and and I'm 100% with you
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  and you know. There is a lot of money out
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  there and that money is not looking at mining equities.
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  The moment that happens, the movement is going to be
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  exponential because to begin with there is not a lot of
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  product for that money. No.
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  How many really large precious metal producers are there today?
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  How many meat size producers are there?
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  Do they large producers, we can count them probably in, you know
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  in in in in in two hands and that's for the world, right, Mid
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  sized producers, probably in three hands.
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  You know, if you lend me one hand we can count all of them
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  and probably I I haven't done the exercise, but.
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  Probably the market valuation of all the precious metals miners.
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  That's an equate to I can tell you, I'll interrupt you.
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  I read this just the other day. You know Home Depot, the
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  hardware store in the United States, all of the precious
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  metal mining stocks, if you combine all of their market caps
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  together, is less than the market cap of Home Depot, the
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  hardware store. Yeah, Yeah.
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  Yeah. Yeah.
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  Yeah. I yeah, absolutely.
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  So, I mean, so, so you see when when money flows into the
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  sector, there's just so many companies you can invest in that
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  that gives you a sense of of the size of the of the sector.
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  It's very small. It has shrunk dramatically and
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  today is very small. So any, any small inflow, yeah.
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  Will drive it exponentially. And the other consequence of
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  that, and you correct me if I'm wrong, is that because there's
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  so little money coming into the sector, there's been a depressed
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  level of exploration and development over the last 5-10
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  years as well. So from a from a future pipeline
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  of new projects coming on board, sure there's some, but there's
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  not like a massive amount of new projects coming in from a supply
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  perspective as well. Yes, now that is true.
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  And but you know what? I have a bit of a different view
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  with respect to gold. And supply demand fundamentals,
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  I have a bit of a different view because you know every goal that
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  has ever been mined is sitting in a vault and when prices go up
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  that goal starts coming out of the vault the.
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  So I think that really the driver.
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  So I believe what you're saying is right.
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  But what it does impact is the size and the availability of
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  producers. That's why I'm saying this is a
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  sector that over the years it gets more and more concentrated
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  in less product for the investor.
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  Investors don't have a lot of product.
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  If you want to invest in the seniors, who are the seniors?
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  The seniors are Newmont Barrick, Anglo Agnico, Kinross.
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  I might be missing right now. One now you got it.
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  Seven and then you have the mid sized producers that those are
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  you know are I will put Endeavor Mining in the seniors 8, I'll
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  give you 8. And then you go into the mid
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  sized producers. So as there is an absence of
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  discovery, what happens is that these companies merge or or you
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  don't see new ones emerging because there is no goal being
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  discovered. So the amount of product
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  available for the investor in the senior space in the precious
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  metals industries 8 and then if you go to the mid sized
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  producers you probably see 12. 15 companies mid size being half
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  a million oz like us so who who so when money flows in like
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  you're saying you know if if the entire sector has the market cap
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  of and of the Home Depot. Imagine if we get some serious
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  and we saw that in 2008 two thousand and three 2005, two
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  thousand and nine 2010. I could go around the capitals
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  of the world meeting with large institutions.
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  I I remember meeting in Austin, TX with the US Army pension
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  fund. I don't know how many trillions
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  of dollars they managed and they wanted to invest in mining.
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  Texas teachers pension fund. The you know, I mean just
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  generalists who manage billions of dollars wanting to put money
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  into mining equities. That has disappeared.
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  We don't see that anymore. First, Mining Gold is a
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  development company advancing 2 of the largest gold projects.
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  In Canada, Spring Pole in Ontario and Du Parquet located
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  in Quebec, each already has five. 1,000,000 ounces of gold
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  reserves. But exploration initiatives are
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  underway at both. Projects to find even more gold.
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  First, mining is well financed, has zero debt.
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  And owns an interest in four additional Canadian Gold
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  development projects. Correct me if I'm wrong, because
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  I've never you said something that was a new concept to me
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  that I've never thought of. Like there's a difference
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  obviously between all the gold that's in the vaults and the
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  mining sector itself. And as the mining sector becomes
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  smaller and smaller, it it, it will, it will act obviously even
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  more independently from just the physical gold that's, you know,
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  like you said, every ounce of gold that's ever been mined is
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  sitting somewhere and evolved. But this mining sector just
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  continues to contract in size. And at that point when there is
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  new interest that that could could result in some rather you
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  know explosive capital flows because the number so small, you
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  know when you get to a small number it's easier to increase a
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  small number by two or three or four times than it is starting
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  from a huge number and and it. Yes and and you don't get as I
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  said dilution, right, because they're not how many large, you
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  know I mean how many multi billion dollar portfolio
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  managers are out there. You can make sure that not in
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  hundreds but in thousands probably.
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  Yeah and you and you know it's something.
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  Go ahead, go ahead, Jorge. No, no, no.
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  And and and those guys, when they say, OK, I need to have 5%
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  of My Portfolio in gold and equities, how many senior
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  producers are there? 8, right?
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  Yeah. OK.
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  And and if I put. You know, then they'll inflate
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  those rather quickly and then they say, OK, what's the 2nd
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  tier of producers, the meat size, OK, how many are there, 14
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  And what's their market caps? You know, their market caps is a
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  billion to $2 billion and they are like well, but I manage you
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  know 25 billion if I put you know 1% of the portfolio.
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  No, it's it's 250 million. So how do I invest in this
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  sector, right, You can buy the whole thing.
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  You can have it all. You know, the other thing I
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  wanted to interject is that that that as you were speaking
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  another, you know, something that dawned on me as you were
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  speaking as, yes, there's only so many intermediate size
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  companies. There's only the eight large
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  ones like you talked about, but there's a big Moat around those
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  companies. You you know just because more
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  capital comes in at some point you can't just out of nothing
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  build a mid tier gold and silver mining company.
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  I mean it's a, it's a it's a decades long process at best.
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  You know what I'm saying now exploration company, sure they
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  can pop up, but when you, but when you talk about midsize and
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  large companies, so you just can't, you know you can't make
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  one up overnight. So directly to the point that
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  you brought and led us to this conversation is there have been
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  no discoveries. So if you're not making
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  important discoveries, you cannot grow the pool of mining
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  companies. You know what I mean?
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  Yeah. So are those discoveries.
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  The few discoveries out there end up being taken by the the
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  large producers, no, but you don't have a pipeline that lends
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  to to diversified small universe of multiple meat size and and
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  and large producers. It's a small concentrated world
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  in, you know, if you want to take producers from half a
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  million publicly traded companies, half 1,400,000 ounces
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  and onward, you'll probably stop counting in 20 at #20.
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  So, you know, how? How can you invest if you're a
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  large trillion dollar, $50 billion?
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  Fund management firm with a mandate to put 5% on gold
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  equities or gold and equities. So that that's what we're
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  talking about, right. So I think that the main, the
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  main impact of the absence of discoveries is not so much on
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  the supply and demand fundamentals of gold per se, but
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  more on the pipeline of discoveries to have a
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  flourishing. Mining sector with multiple
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  companies competing, growing. No, it's really a pool.
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  I know all the CEOs, I know all the guys, I know everybody.
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  And it's just a very small gathering, really, right?
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  And it's taken you a decade plus to grow Fortuna.
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  To the size that you've that you've accounted almost 20
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  years, almost none more than a decade, 20 years.
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  Because it's not only about making a discovery these days is
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  the time it takes to permit. That's why I went to West
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  Africa. Because in West Africa I can
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  permit under five years. I can go from from resource to
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  production in under five years. In in North America or other
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  jurisdictions, that process takes 10 to 15 years, right?
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  Mmhmm. Mmhmm.
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  Mmhmm.