Weekend Show – Sat 11 Aug, 2018

Hour 1 – Here’s What’s Wrong With The Metals Sector

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On this week show we focus on the resource sector from the CEO and fund manager perspectives. Resources have been under pressure overall and the stocks have continued to sell off. Recent M&A deals have not wowed the market. Financial results out of the majors have disappointed. All this leading to generalist investors continuing to ignore the sector in a broad sense.

Please let me know what you think of the comments in this hour. I also would love to hear about any companies or guests you would like to see on the show. Please email me at Fleck@kereport.com.

As a note these segments ran longer than our normal segments. We tried to cover a lot of information. Do you like the longer format or prefer the shorter segments?

  • Segment 1: Hugh Agro, President and CEO of Revival Gold shares his thoughts on the trends we will see dominate for resource stocks.
  • Segment 2: Auryn Resources Executive Chairmen Ivan Bebek discusses how he has been able to create liquidity events in prior companies. We address the recent M&A deals and what it is telling us about the overall mood.
  • Segment 3 & 4: Adrian Day and I touch on a wide range of topics – Royalty and Streaming companies outperforming, recent M&A activity, and our grips about the issues with management groups in the general metals sector.

Segment 1

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Segment 2

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Segment 3 & 4

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Featuring:
Ivan BebekAdrian DayCory Fleck
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Comments:
  1. On August 11, 2018 at 4:02 am,
    Wolfster says:

    You know it’s summer doldrums when I’m the first to post…thanks for the show as always gentleman

  2. On August 11, 2018 at 5:04 am,
    Charles says:

    Thanks for the show. Great wide ranging discussion with Adrian Day. Also a good update from Auryn

    • On August 11, 2018 at 2:36 pm,
      Excelsior says:

      Agreed. Adrian had some good macro points about the producers, their acquisitions at different points in the cyclical metals ebbs and flows, about the valuations of the royalty and streaming companies still representing comparative good value when contrasted against the FAANG stocks.

      Good job as per usual to Cory and all the KER contributors.

      Ever Upward!

  3. On August 11, 2018 at 2:24 pm,
    Skeeta says:

    Thanks for the weekend show guys.
    Much appreciated as always
    Cheers

  4. On August 11, 2018 at 2:31 pm,
    archdeacon Andrew says:

    Thanks Cory – appreciate your updates with Auryn Resources.

    • On August 11, 2018 at 4:53 pm,
      Big Al says:

      Cory is doing a great job and thank you Andrew.

      • On August 12, 2018 at 3:09 am,
        archdeaconAndrew says:

        So glad you’re getting better Al, A

  5. On August 11, 2018 at 7:09 pm,
    johnnygeneric says:

    Boy…Bebek makes gold mining look like Peak Oil Drilling/Fracking

  6. On August 12, 2018 at 1:31 am,
    Chris from Oz says:

    8 resource comments
    120+ for politics

    Is Sentiment where you like it Matthew?

  7. On August 12, 2018 at 5:31 am,
    Charles says:

    Interesting how far we still might have to go on the COT commercials.

    http://www.321gold.com/editorials/hoye/hoye081118.pdf

  8. On August 12, 2018 at 5:36 am,
    Charles says:

    It is looking more likely that Ton might be right, but I take solice in his prediction for a coming spike up in early September. I also think the gold stocks will not correct as much and will likely bottom sooner.

    http://www.321gold.com/editorials/rosen/rosen081218.pdf

    • On August 12, 2018 at 7:46 am,
      Excelsior says:

      We’ve been discussing the seasonality patterns in the metals for some time and noted that these trends were back on a more normal trajectory in 2017 and so far also in 2018.

      We discussed at the end of last year and earlier this year that the 2 best rallies would likely be the Q1 run in Jan/Feb (which delivered as per usual), and the mid-August into the month of September rally, so we’ve been consistently been expecting a nice rally in September for a while, but with the weekly charts so bearish, my concern is it may be more muted this year, and could be followed with another leg down afterwards. Much of it will depend on the global currency wars, interest rates, and geopolitical trade circus.

  9. On August 12, 2018 at 5:43 am,
    Charles says:

    Correction: Ron not Ton

  10. On August 12, 2018 at 8:15 am,
    Chartster says:

    Folks might want to put their peepers on copper stocks… It’s looking like a nice move up is coming for copper…
    Not confirmed just yet, but ..close!
    I hope there is more coverage of industrial metals here on KER. As the PMs will be in the doldrums for a while longer. And industrial metals are about to get ( what looks like ) a really nice bid.

    • On August 12, 2018 at 9:58 am,
      Excelsior says:

      Here is a good watch-list of companies with at least some exposure to Copper:

      https://ceo.ca/index?7713f388e7e3

      • On August 12, 2018 at 10:17 am,
        Excelsior says:

        Barrick ‘was almost dead’: Thornton pulls no punches on gold miner’s missteps
        Bloomberg News | 2 days ago

        “The question for us on copper is, ‘Can you take the copper assets, combine them with another party, or even two parties and build a first-tier global copper company over time?’ ” Thornton told employees on Wednesday. “Now in answering that question, the likelihood that your partner in that endeavor will be Chinese is very high.”

      • On August 12, 2018 at 7:04 pm,
        Chartster says:

        Thanks for the list, Excelsior. Whole lot to digest.

        • On August 13, 2018 at 1:04 am,
          Excelsior says:

          Yes, I was surprised at how many companies have exploration appointments with Dr Copper

    • On August 12, 2018 at 11:02 am,
      Excelsior says:

      Uranium Market Shows Signs of Life
      Long in the doldrums, prices for the nuclear fuel are rising amid supply cuts and forecasts for stronger demand

      By Paul Garvey – Aug. 11, 2018

      “A wave of mine closures and the rollout of nuclear-power plants world-wide are fueling bullish bets on the long-depressed uranium market.”

      “Several investment funds have launched this year to wager on a turnaround in the radioactive material used in nuclear reactors… ”

      https://www.wsj.com/articles/uranium-market-shows-signs-of-life-1533992401

  11. On August 12, 2018 at 8:18 am,
    Bonzo Barzini says:

    Why does Bebek say there has not been a major discovery since 2011? Novo may have one of the biggest gold discoveries in history. I own shares in Novo and Auryn, but I like Novo’s chances better. Good luck to both!

    • On August 12, 2018 at 9:36 am,
      Excelsior says:

      Great point Bonzo Barzini. All one has to do is look at some of the takeovers the last few years to notice which companies had made major discoveries: Look at the discovery by Kaminak taken over by Goldcorp, the monster discovery by Reservoir taken over by Nevsun, the high grade Silver discovery by Silvercrest taken over by First Majestic, the high grade gold discovery by Kiska/Aurico taken over by Alamos, or the Tier One Zinc/Silver/Lead deposit discovered by Arizona Mining taken over recently by South32.

      As you mentioned, there have been other discoveries like Nova, Garibaldi, GT Gold, Evrim, etc… that still need more time to determine if in fact they may have a tiger by the tail with a whopper deposit.

      Lastly, the markets shrug off or ignore producers that hit paydirt and make substantial discoveries on their existing land package, but that is the kind of exploration work that is easily transferred into better economics and much easier to monetize. The market is waking up to a few of these stories though, because look at K92 mining when they hit on the Kora deposit, or some of the traction from good exploration around existing mines that Teranga, Maya Gold & Silver, Excellon, or Superior Gold have executed on.

      Other producers are doing good Exploration work around existing mines and some may end up hitting an unknown discovery doing wildcat drilling near their existing mill/processing center, so the tunnel-vision on only explorers is often too myopic.

      • On August 13, 2018 at 9:20 am,
        Wolfster says:

        I believe he was speaking about pure gold plays and size of +10M oz and of the indicated variety not inferred…….and I think Malartic could be added to your list Ex regarding producers firming up an existing reserve….which begs the question why is abitibi royalties still only trading at $10 based on last year of drill results and the fact some royalties will be starting in 2019

  12. On August 12, 2018 at 9:54 am,
    Excelsior says:

    CoT ‘Buy Signal’ For Gold

    by @Goldfinger on August 10, 2018

    “I have explained on numerous occasions that the CFTC Commitments of Traders (CoT) data should not be used as an exact market timing tool. In fact, most of the time the CoT data is noise with virtually zero signal. However, there are rare occasions in which I believe astute market participants can actually derive a signal from the data, but only when it reaches unusual extremes. Now is one of those occasions…”

    https://ceo.ca/@goldfinger/cot-buy-signal-for-gold

    • On August 12, 2018 at 3:59 pm,
      Matthew says:

      GF left out an important “key ingredient”: Weakening stocks.

      http://schrts.co/a4Gfw2

      • On August 13, 2018 at 1:11 am,
        Excelsior says:

        Yes, it will be interesting to see how the general stock indexes hold up and how that correlates to the Precious Metals.

      • On August 13, 2018 at 6:26 am,
        Charles says:

        Negative divergences on SPY:$GOLD chart in RSI, MACD and Slow Stochastic.

  13. On August 12, 2018 at 12:15 pm,
    CFS says:
  14. On August 13, 2018 at 9:38 am,
    Matthew says:

    XAU:SPY hasn’t been so oversold since August, 2015 and looks like it will fill its February 2016 weekly chart gap…
    http://schrts.co/Vc1mXs

  15. On August 13, 2018 at 9:47 am,
    Matthew says:

    SPY:GLD is currently 28% above its 2016 high yet SPY:SILJ is currently 31% below its 2016 high. This divergence is nothing but positive for the gold/silver miners.

    SPY:GLD has not been so weekly overbought since gold crashed in 2013…

    http://schrts.co/VQCxm7

  16. On August 13, 2018 at 10:03 am,
    Matthew says:

    We are finally seeing that “get me outta here” action that tends to come with significant lows…
    http://schrts.co/36jhd8

  17. On August 13, 2018 at 10:37 am,
    Charles says:

    Ouch! ADX looks fairly extreme. It can always get more extreme, but we should be close. Carnage out there today. Selling my DDD on Friday was a good call.

  18. On August 13, 2018 at 11:07 am,
    Matthew says:

    AG took the stairs up and the elevator down…
    http://schrts.co/wcSGeq

    It should be the opposite if things were really bearish for the sector.
    Bull markets smash hope while bears keep it alive.

    I know that no one wants to hear such talk today but the sector is very likely to do very well in the months ahead. Six months or a year from now, no one will doubt that the sector bottomed over two years ago.

  19. On August 13, 2018 at 12:01 pm,
    Charles says:

    Despite the downdraft, Seabridge (SA) is showing strength. That in my mind bodes well for the stock when the sector gets its footing.