Weekend Show – Matt Geiger and Joe Mazumdar – Investing In Resource Stocks, Recent M&A Opinions, Where These Guys Are Investing
Welcome to the KE Report Weekend Show! It was another good week for markets and on the precious metals front there was an interesting merger/acquisition. We feature a well known fund manger and one of the best newsletter writer’s in the sector to share their investing strategies for metals stocks as well as weigh in on the Calibre Mining and Marathon Gold merger.
- Segment 1 and 2 – Matt Geiger, Managing Partner at MJG Capital kicks off the show by answering the question of if commodities stocks are in a bear market or just a long correction. Matt also outlines what his fund has been investing in after a long period of holding back capital.
- Segment 3 and 4 – Joe Mazumdar – Publisher and Editor of Exploration Insights wraps up the show by first weighing in on the Calibre Mining merger with Marathon Gold. We then take a step back to discuss what Joe thinks about the health of the precious metals stocks, overall valuations and how he views critical mineral stocks vs precious metal stocks.
Trading stocks is a lot like living your life, if things aren’t working out for you or you aren’t happy with your life you must change. The change has to come from yourself and nobody else. We get a lot of interviews here that feature how to trade and what types of stocks to buy but none of it is relevant to you until you find something that makes you happy. We are all different but until you find that niche that works for you in trading stocks as in life the change has to come from within. A simple concept but one that is hard to grasp because nobody can really help you only you can help yourself. DT
At this time of the year we are normally in the middle of tax loss selling
How will it play out this year?
Do we had most of tax loss selling already, like last years?
Our do we still see tax loss selling, because most of the explorers are bombed out?
Just last week there was a nasty tax loss selling event in IPT.V, so there is more to come.
I like tax loss silly selling season, there are a few good gold stocks that are currently selling for .015. I wouldn’t mind buying 1,000,000 shares for .005! LOL! DT BRING IT ON! 🤩
Good thoughts guys on how tax loss silly season will shape up this year. To Thomas’s point, yeah, it is likely that much of the tax loss selling has already be factored in during recent selloffs in many stocks in the sector. It makes sense for investors to go ahead and book the losses now, wait for the 30 day wash period, and then position back in the stock at a much lower cost basis for the eventual run higher when the sentiment shifts.
Personally, I’ve mostly done the lion’s share of my tax loss selling already, except in 2-3 names that I was waiting on to see if they’d get a solid bounce first before acting on it. Since they’ve remained in the basement for valuations, I may go ahead and take them this next week before Thanksgiving, and then get positioned back in them again in late December before Christmas holiday season.
It will be a Turkey to Ham repositioning trade… 😉
Made some errors on Marathon Gold financing – it was a royalty sale to Franco Nevada (1.5% for US$45 M), not a stream and the 4-year credit facility at an interest rate of 7% plus the greater of 2.5% or 3-month LIBOR (5.65%) with Sprott was amended to C$225 M but not pulled. The Sprott facility also includes a payment of US$17/oz for the first 1.6 Moz produced starting on July 2025 and the issuance of 10 million 5-year warrants at a strike price of C$1.35. Given the cost of capital of the facility (12-13% currently), Calibre may look to refinance to fund the Marathon Gold project’s development.
Much appreciated Joe, and thanks for updated notes on the Calibre takeover of Marathon.
It is always nice to get your thoughts on key events in the sector, and what may underpin more M&A transactions in the space. Your comments are also deeply valued as to what to look for with development stage companies that make them attractive takeover targets for the majors and mid-tiers.
I am curious is that C$225 million in debt, amortized over 4 years at 7%. After 4 years can it be re-negotiated as an open debt. Maybe Ex, you could weigh in on this because of your banking experience. I am currently not a shareholder of Marathon. DT
Hi DT. I don’t know the answer to that question, but believe it could be renegotiated at one point.
We did an interview with Ryan King from Calibre on Friday, and will likely be posting it on Monday, but he points out that CXB still has near $100 million in cash, is generating solid cashflow each quarter from both Nicaragua and Nevada operations. The impression I got was that they’ll largely whittle down that debt over time from both current operations, and then especially once Valentine is up an producing. So, it could be that Calibre can pay off much of the debt earlier than many are anticipating (certainly faster than Marathon would have been able to pay it off due to having multiple mine revenues to assist and likely a better cost of capital if they renegotiate part of the debt at one point).
Hi Ex, I am also wondering if Marathon had any other debt, maybe that could be a question for Ryan at another time. Thanks, and Cheers! DT
Everybody here needs to learn how to be a Newfoundlander, they are all about people and they have a lot of valuable gold beneath their FEET! LOL! DT
When Americans bought Alaska from The Russians, they got a good deal but when Newfoundland joined Canada in 1947, we got a much better deal, only this time The Newfoundlanders aren’t going to let Canada screw them out of their birthright. DT
Just to set the record straight at the time Newfoundland and Labrador, (Labrador is a gem waiting to be discovered) joined confederation a lot of Canadians thought we would have to support them, but as it turns out their wealth in precious metal mining, oil, and hydro waterpower generation, as well as a host of base metals and critical metals, has changed the equation. HO, HO, HO, this will be a Merry Christmas! DT
You left something out DT–the hundred year screwing of Newfoundland by Quebec.
Quebec receives the hydro from Newfoundland’s Labrador dams and pays Nfld a price equivalent to a barrel of oil in 1970 when the deal was struck. A dollar fifty a barrel. Locked in for 100 years. Just fifty years to go.
Quebec flips the power to the states. Keeps the lights on in the eastern seaboard I suppose. And they might just receive a bit more than $1.50 a barrel equivalent. Poor Quebec…always screwed over by the maudits anglais.
It’s time for the Newfies to pull a Panama on the Quebecers..no need to honor contracts written so long ago.
Tavi gets it which is why he’s extremely bullish. “You don’t want to lose focus at the wrong time.”
https://www.youtube.com/watch?v=akY39RbDnXU
I wonder how many ounces of gold are in NFG’s East-West vein, I have heard estimates of up to 3 million ounces. NFG could be sitting on 25-30 million ounces of AU (or more) by the time their properties are all drilled up. If they make a move on Maritime Resources, I will settle for shares in NFG. Maritimes deep water port and their two mills are synergistic with NFG’s property. DT
Investors Go ‘All In’ On The Soft Landing Narrative, Part Deux
Jesse Felder – The Felder Report (11/18/2023)
A Soft Landing? Are you Kidding?
Jay Taylor – November 19, 2023
“The U.S. is facing a slow moving fiscal crisis for the first time in decades! The equity and long dated US Treasury markets were cheered last week by a reduction in U.S. inflation in October and news suggesting to some that the Fed is done hiking interest rates. Whoever thinks that is not realizing that the Fed doesn’t control rates, especially longer-term rates.”
“A soft landing? Are you kidding me? As Lyn Alden pointed out in her November 12 issue, “The U.S. is facing a slow-moving fiscal crisis for the first time in decades. We’re running 7%-of-GDP deficits despite unemployment rates being very low, and since we are no longer in an environment of structurally falling interest rates, interest expense is starting to become a problem for the first time in decades!” The operative phrase here is ‘slow-moving-crisis.’ But what happens next year to the U.S. deficit to GDP as high interest rates start to bite hard, consumers are tapped out on their credit cards, corporate profits plunge and unemployment skyrockets.”
“For now, things seem to be chugging along okay with major stocks continuing to hold up the major indexes so Wall Street can pretend all is alright. But underneath the façad of rising prices are growing problems of too much debt taken on when the cost of borrowing was virtually free. Watch the commercial real estate market, which I believe is about to suffer cascading defaults as offices remain empty and real estate companies are forced to pay much higher interest rates. And then there are growing geopolitical issues that actually factored into Moody’s decision to lower the U.S. Treasury debt rating. Call it a soft landing if you want. But the writing is on the wall for a much tougher 2024 than 2023.”
https://taylorjay.substack.com/p/a-soft-landing-are-you-kidding
The Interest Rate Shock Will Blow Up the Government’s Ponzi Game
“…the systematic decline in the purchasing power of money, even if short-term relief is granted, is almost certain.”
Quoth The Raven – QTR’s Fringe Finance – Nov 14, 2023
By Thorsten Polleit, Mises Institute
“In the international fixed-income markets, interest rates are rising, and the decades-long trend of declining bond yields has undoubtedly been broken. On August 2, 2022, the ten-year United States Treasury yield was 0.5 percent; on October 9, 2023, it had risen to 4.8 percent. Long-term interest rates in Europe, Asia, and Latin America have also risen sharply. The key reason for the rise in capital market interest rates is the central banks’ interest rate hikes—a direct response to sky-high inflation (caused by the central banks themselves, following a huge increase in the quantity of money).”
“Initially, financial markets expected only a relatively short phase of increased interest rates. At the beginning of March 2022, the US long-term interest rate fell below the short-term yield—so the yield curve became ‘inverted,’ a clear indication that investors expected short-term interest rates to be cut sooner rather than later.”
“However, since July 2023 at the latest, long-term interest rates have been rising strongly and unabatedly. Something very fundamental has presumably happened—investors are no longer willing to hold US government debt at ultra-low yields as before. Where did the change of heart come from?”
“Investors may have become increasingly aware of the enormous debt problem in the US, which investors had taken lightly for so long: Uncle Sam is sitting on a mountain of debt worth more than thirty-three trillion US dollars, which is equivalent to around 123 percent of US gross domestic product (GDP). Plus, the debt dynamic is relentless: by the end of the decade, the debt could reach fifty trillion US dollars. Previous large buyers of US debt—such as Japan, China, Brazil, Russia, and Saudi Arabia—are no longer interested. Who will buy the huge flood of new US government bonds intended to finance deficits of around 6 percent of GDP in the coming years?…”
https://quoththeraven.substack.com/p/the-interest-rate-shock-will-blow
Necessary and Sufficient:
Cooperative data triggers a risk on rally, disinflation resumes, FOMC participants are unimpressed, how to close the market and Fed policy forecast gap.
Barry C. Knapp – Substack – Nov 18, 2023
“The data cooperated this week, though a literal reading of the constant stream of FOMC participants speeches and media appearances would lead one to conclude they were unimpressed. Nevertheless, the market skated to where the Fed is heading even if they (the Fed) don’t know it yet, by reducing the probability of a final hike to zero, assigning a 75% chance of the first cut by May, and restoring a fourth hike to the market implied policy path in 2024. While this is close to our forecast — we received three inflation reports this week that restarted the disinflationary trend that stalled in 3Q — as we will detail in this week’s note, disinflation is only the necessary, but not sufficient, condition for the Fed policy path to take the final step from policy put, to pause, and then a full pivot…”
https://ironsidesmacro.substack.com/p/necessary-and-sufficient
Succinct Summation of the Week’s Events
Peter Boockvar – Nov 17, 2023
https://peterboockvar.substack.com/p/succinct-summation-of-the-weeks-events-cf8
Gold Corrections Now Shorter on Concerns of a U.S. Debt Spiral
David Erfle – The Junior Mining Junky – Friday, November 17, 2023
“After plenty of hawkish Fed-speak kept pressure on the gold price last week, along with the Middle East war premium being eroded, Gold Futures have quickly moved back up to test the bullion banks’ Maginot Line of critical resistance at $2000 per ounce.”
“The safe-haven metal has now reached the important $2000 level in eight of the past nine months, but has failed to follow-through with a breakout above its all-time high since reaching $2085 in May. After the record high of $2089 was achieved in August of 2020, side-ways price action has kept momentum traders, funds, and generalists on the sidelines.”
“The catalysts for further gains in gold above its record high at present, however, are likely more sustainable. Lower U.S. inflation and weaker jobs data this week has increased investor confidence of an interest rate cut coming sooner, rather than later…”
https://mailchi.mp/84367994b244/david-erfle-weekly-gold-miner-sector-op-ed-1602257
Florian Grummes: Technical Update on Gold – Keynote address PM Summit Zurich 2023
Rick Rule’s Top 10 Silver Stocks & Silver Masterclass
Resource Talks – November 15, 2023
Timestamps
00:00 recap
01:00 why does Rick care about silver?
06:45 how high can silver go?
12:00 does Rick Rule like physical silver or silver stocks more?
15:00 does Rick Rule believe in silver manipulation?
24:20 what is the risk/reward on silver stocks?
32:45 is silver Rick’s favorite precious metal?
37:25 where does silver rank for Rick Rule?
39:30 when will it be time to sell silver?
47:00 Rick Rule’s silver stock rankings
01:21:11 Rick Rule’s upcoming boot camp
Metals Investor Forum Webinar | November 16, 2023
0:00 Chen Lin, What is Chen Buying? What is Chen Selling?
20:51 Goliath Resources Limited (TSX-V: GOT) w/ Dr. Quinton Hennigh
36:10 Q&A
51:00 Lion One Metals Limited (TSX-V: LIO) w/ Dr. Quinton Hennigh
1:09:07 Q&A
1:20:30 Peter Krauth, Silver Stock Investor
The TSX-V finished last week with just the action the bulls needed…
https://stockcharts.com/h-sc/ui?s=%24CDNX&p=D&yr=1&mn=5&dy=13&id=p74347366373&a=1385107328
I have been saying that the PM micros weren’t going anywhere until this index got going. My theory was the accumulation of bad financings and trading irregularities discussed here, took their tolls on investors bank accounts.
The discretion that followed will be ignored if one of the resource sectors in the index took off and haul the whole index up with it until another reality check manifests.
Hi Matthew…My attempt to purchase Impact the ADR is funny…Zero volume…Are M.M. planning a plunge fill or just a skip entirely…interesting…I am agnostic regarding the entire thing…glta
I sure remember having that issue when buying on the pink sheets/OTC years ago and I don’t miss it!
New low for IPT today but not ISVLF…
https://stockcharts.com/h-sc/ui?s=ISVLF&p=D&yr=1&mn=0&dy=0&id=p82450359322
Impact is supposed to report earning on Wednesday which will be interesting since they’ve got over a month of production at Plomosas.
https://stockcharts.com/h-sc/ui?s=IPT.V&p=D&yr=1&mn=1&dy=0&id=p08917424806&a=1461064144
Priced in silver IPT has already reached its 2016 low…
https://stockcharts.com/h-sc/ui?s=IPT.V%3A%24SILVER&p=W&yr=9&mn=0&dy=0&id=p55556256709&a=1538127368
Priced in silver, IPT hit a 21 year low today.
Moved some Hercules profits to add to Benton Resources with good drill results today. Got caught in the middle of a halt, but still added.
Today’s action in SILJ has been perfect especially considering that silver is down about 1 percent…
https://stockcharts.com/h-sc/ui?s=SILJ&p=D&yr=1&mn=0&dy=0&id=p83584541497&a=1512155157
https://tinyurl.com/2c5bevpe
NatGas Week: Pop & Drop
Retest Expected