Gold and Silver
I have been flat gold and silver trading positions since early September for no other reason than they "just weren't acting right," and while that could be true for the past three years since the Fed and Treasury opened up the monetary fire hoses, during the summer pullback in the U.S, dollar (USD) neither metal could mount any kind of momentum.
Once the USD bottomed in late August, it began a meteoric ascent driven by rising U.S. bond yields that is still ongoing despite rising energy prices and slowing (ex-food and energy) CPI numbers.
With the USD now firmly in overbought territory (RSI 70.95) and the GLD:NYSE in oversold territory (RSI 25), conditions are ripe for a turn, and with the Gold Miners Bullish Percent Index at 10.71, sentiment for the gold and silver stocks is putrid. Norseman Silver Ltd. (NOC:TSX.V; NOCSF:OTCQB)
In fact, colleagues of mine have been asking me what I think of the current state of the Canadian junior resource market, and my only response is "What market?" because outside of selected uranium and lithium stocks (and lithium came under huge pressure in September), there is little demand and relative to the junior gold and silver markets, there is patently NO demand, whatsoever.
If one is a contrarian, one has to be backing up the truck as one accumulates some very promising juniors likewhose seasoned and very competent management team is scouring the planet for an advanced project within the "Electrification Trilogy" of uranium, copper, and lithium.
I should add (very quietly) that NOC/NOCSF closed at the ridiculous price of CA$0.035 today, which is less than the cost of buying a Vancouver shell.
I confess to having exhibited strong masochistic tendencies since 2020 in the full and unwavering belief that a junior resource bull "to end all bulls" is lurking just around the corner. While I have enjoyed marginal success in the uranium and lithium space, the copper space has been largely ignored and unloved throughout the entire post-pandemic monetary print-fest. Therein lies my next serious hunt, as there can be no successful transition to electric vehicles unless there is a tenfold increase in the transmission grid, and critical to expanding that grid is copper. Ivanhoe Mines Ltd. (IVN:TSX; IVPAF:OTCQX)
It was weak in September, falling over 7.3% before a modest bounce into month-end. Since the big money has found electrical storage in lithium and since they have more recently gone after clean energy in uranium, they have yet to anoint energy transmission and copper as the last member of that very special trilogy. As a warning, I will continue to beat the copper drum until Bob Friedland forces me to buy shares in his behemoth Ivanhoe Mines Ltd., the crown jewel of the Friedland Empire.
As a casual observer of the deal since 2005, I have watched the genius that is Robert Friedland over the years (after meeting him in 1993) amass a large fortune through mining, first leaving North America for Singapore, then managing Ivanhoe Mines Ltd. (IVN:TSX; IVPAF:OTCQX) through intricate deals in Mongolia and Africa with the result being the largest copper producer in the world at Kamoa-Kakula which is situated in the Democratic Republic of the Congo in partnership with the government and Chinmet, the Chinese National Mining Company.
Arguably the finest salesman on the planet, Friedland deserves every penny of accolade bestowed to him by the usually agnostic press, which seem to view him as the fast-and-furious penny stock promoter of the 1980s and 1990s (which he was), but every time I listen to him addressing the Saudi princes or the Chinese mandarins in conferences throughout the Middle East and Asia, I am reminded of the time in 2002 he addressed a bunch of salesmen with the former Yorkton Securities in Toronto shortly after the dotcom market had blown up.
He took off his Armani jacket and rolled up his $300 shirt sleeves, and scolded the demoralized and destitute brokers up one side and down the other with visceral derision for failing to understand that "Technology is effin' DEAD, and you mutts will have no clients left if you do not get them OUT and into commodities!" His vitriol was beyond "frightening."
Within six months, Friedland was bang on, and by 2003, the metals markets were screaming higher, and it lasted until 2011 as China was the top dog in the race, exactly as he had predicted during that meeting.
So, when I start spouting off and tripping the light fantastic over "old guys" that I totally admire, I try to look beyond their self-laudatory idiosyncrasies and focus on their accomplishments, many of which can be attributed to chaps like Bob Friedland.
The reasons that he likes copper are anchored in the reasons he has been successful. The reasons he has been successful are anchored in his understanding of the mining industry. The reasons he understands the mining industry are anchored in the failures that built up the scar tissue early in his career. With that scar tissue, he can withstand the slings and arrows that appear in the mirror every morning of his life in an industry filled with body bags. A remarkable talent at best. . .
Copper is a buy; Ivanhoe Mines is a buy. Bob Friedland is a buy. End of story.
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- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Norseman Silver Ltd.
- Michael Ballanger: I, or members of my immediate household or family, own securities of: All. I determined which companies would be included in this article based on my research and understanding of the sector.
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