Weekend Show – Sat 1 Feb, 2020

Hour 1 – Treasuries and Precious Metals a Long Term Perspective

Full First Hour

On this weekend’s show I start off by recapping the new of the week and increased volatility in all markets. We then switch focus to the metals sector and an update from Great Bear Resources.

I hope everyone who is going to watch enjoys the Super Bowl! Go 9ers!

  • Segment 1 – Marc Chandler, Managing Partner at Bannockburn Global ForEx kicks off the show with comments on the big drop in yield and the implications when the Chinese markets open next week. WE also look ahead to major data next week and the next round of central bank meetings.
  • Segment 2 – We shift our focus to the precious metals with Doc. We discuss the gold and GDX charts as well as a quick comment on Skeena Resources.
  • Segment 3 – Sean Brodrick, Analyst at Weiss Ratings looks past the recent black swan events to what he thinks are the more significant long term drivers for the precious metals. We also discuss palladium and copper.
  • Segment 4 – Great Bear Resources (TSX.V:GBR & OTCQX:GTBDF) released news on Friday regarding the 2% NSR on the Dixie Project and the Company spin-out. Chris Taylor, President and CEO joins me to provide some more details on the new Company as well as the exploration strategy for this year.

Exclusive Company Interviews This Week


Marc Chandler
Doc
Sean Brodrick
Chris Taylor – Great Bear Resources

Comments:
  1. On February 1, 2020 at 3:48 am,
    CFS says:

    Thanks, Cory. I would root for the 49s if it were not for having watched so many times the team I support snatch defeat from the jaws of victory by a turnover.

    • On February 1, 2020 at 5:22 am,
      Wolfster says:

      Being a long time Vikings fan I know exactly where you’re coming from…….I’ve also been a Leafs fan since 1968….. at least my dad who came over a year earlier to find work got to experience a cup parade.

  2. On February 1, 2020 at 3:53 am,
    CFS says:

    I am hearing that both major Chinese stock markets will not open this Sunday night/Monday as scheduled, but the closing will be extended further because of the virus. This rumor comes from a single Chinese source and I do not have confirmation from an independent source.

  3. On February 1, 2020 at 6:04 am,
    Excelsior says:

    Cory / Big Al / all the KE Report contributors: Thanks for another great week of daily editorials, company interviews, and putting out another great weekend show.

  4. On February 1, 2020 at 6:21 am,
    Excelsior says:

    Eric Pomboy @epomboy

    “Market Value of Global Negative Yielding Debt has risen $3 Trillion in last 13 days”

    https://twitter.com/epomboy/status/1223425125472768005

    • On February 1, 2020 at 2:19 pm,
      Excelsior says:

      Gold Approaching $1600 – Could Next Week Be Take-off?

      January 31, 2020 by Tom Lewis

      “Gold is up more than 4% so far in 2020. As on top of public health risks, geopolitical tensions remain a significant concern on a global basis. Today, the U.S 30-year yield fell below 2% for the first time since October with the addition of global negative-yielding debt ticking back up as it now stands at $13.555 trillion.”

      “Global negative-yielding debt will continue to serve as a major driver for the price of gold this year and the years to come. Some of the best environments that have pushed gold to all-time highs are when we have negative (and declining) real interest rates as investors begin to seek yield. Negative interest rates to be clear is a very damaging policy as it purely punishes savers and leads to further capital consumption. With debt levels already being at record levels on a public and private basis, negative interest rates are the cherry on top, indicating a major debt bubble.”

      “As negative interest rates begin to reach more economies, expect institutional investors to rotate their money out of high growth and back into gold and precious metal mining companies.”

      http://www.goldtelegraph.com/gold-approaching-1600-could-next-week-be-take-off/

  5. On February 1, 2020 at 6:32 am,
    Excelsior says:

    Doc – I agree with the points you made about new investor money that does come into the tiny precious metals space, hitting the larger to mid-tier Producers first, long before the Developers, Explorers, or Prospect Generators get a lift from a rising tide (barring amazing news of course).

    This is because most investing into the sector hits the larger more liquid Major or Mid-tier producers or the ETFs that are mostly crammed full of these same stocks. Then over time, the hot money speculative traders pile in and move down the food-chain into the micro-cap juniors and the real frenzy begins.

    _______________________________________________________________

    We discussed this “Bullwhip analogy” to death the last few years, but it has served me well through a few cycles in positioning heavier in the Mid-tier producers and Smaller Producers on the front parts of new legs to the upside, and then rotating winnings into the developers and explorers as the pace quickens.

    Bullwhip analogy:
    1) The largest marketcap part of the whip or sector (the #producers) moves first [because they can immediately monetize the metal increases and get the incoming big boy money]
    2) then the next movers are the middle section (the #developers) [because their project economics get re-rated upwards with the higher metals prices]
    3) and lastly the most thinly traded part of the whip near the tip, (the #Explorers) will explode higher in a speculative fervor of “What if they hit it big?”.

    https://media.giphy.com/media/b5ujszyZhfZS0/giphy.gif

    • On February 1, 2020 at 6:44 am,
      Excelsior says:

      Having said that, the market is rewarding the companies that hit paydirt with the drill bit. Just look at the recent moves in companies like Great Bear & Skeena mentioned in this weekend show, or look at how Wallbridge, Balmoral, Adriatic, Compass, Azimut, Osprey, etc… have done when they hit monster holes.

      Those are hard to predict in advance in front of the discovery of course, as investors are just speculating on a particular management team, or jurisdiction, or geological setting, but the drill are the truth machines. However, after a discovery, it can be rewarding to press one’s bet that they’ll keep hitting and that the stock will gain more traction. Conversely, if they miss on the next round, the explorer quite often becomes a round trip.

      The producers and developers at least have a more defined and quantifiable asset, that will have upside leverage to rising metals prices, and they can have plenty of torque for the average investor.

      • On February 1, 2020 at 7:22 am,
        David says:

        Ex:
        I am seeing movement in the Royalty stocks also. It almost appears they are in an even earlier category as some like Franco seem to march up with the price of PMs over time and not necessarily to the daily fluctuations of the paper markets. But, some or all of that may be just relative risk. In any event, I am ready for the most speculative group to join us now.

        • On February 1, 2020 at 7:32 am,
          Excelsior says:

          Great point David. I didn’t mention the Royalty stocks up above, but you’re correct – they are definitely first movers and they receive capital inflows from larger funds and generalist investors directly and through the ETFs as well.

          The Royalty companies have far fewer risks, and really a superior business model to the miners, but are more slow and steady climbers, and the smaller Jr miners will eventually have more torque to the upside once more speculative investor show up.

          There was an article out this week in Investors Business Daily giving main stream investors tips on investing in Gold stocks and they brought up the Royalty companies as well. I’ll try to find that and repost it below. Cheers!

          • On February 1, 2020 at 7:35 am,
            Excelsior says:

            Gold Stocks In Buy Range As Gold Price Nears 7-Year High On Coronavirus

            Jed Graham – 01/28/2020 – Investors Business Daily

            “The spot gold price rose to $1,582 per ounce on Monday, its highest closing level in nearly seven years, as investors sought safe havens amid the rapid spread of China’s coronavirus. This is just the latest threat to give a spark to gold stocks and create a burst of interest in gold investing. Is this a good time to buy gold stocks? If so, which ones?”

            “Gold stocks and gold ETFs are the simplest way for individual investors to bet on a rising gold price. Investing in gold stocks can be a riskier, but also potentially more rewarding, way of investing in the precious metal.”

            “Well-known gold mining stocks include Barrick Gold stock, Newmont stock and Kirkland Lake Gold stock. Another segment of gold stocks are gold ROYALTY companies. These provide financing to gold miners, typically in exchange for below-market-cost purchase rights of gold they produce.”

            “Investing in gold stocks or a gold-mining ETF is, to a large extent, a leveraged bet that the price of gold will keep rising. That’s because a higher gold price can have a dramatic impact on the profitability of gold miners. For example, Newmont Goldcorp said its total cost of production amounted to $907 per ounce of gold in the first quarter of 2019. That meant increases in the price of gold above that level would go straight to the bottom line.”

            https://www.investors.com/research/gold-stocks-investing-price/?src=A00220&yptr=yahoo

        • On February 1, 2020 at 7:51 am,
          Excelsior says:

          Here’s a 1 year performance chart on the Royalty Companies, and the majority of them have done quite well. Some of the larger more established Royalty companies have been chugging along for years now.

          FNV Franco Nevada, RGLD Royal Gold, WPM Wheaton Precious Metals, SAND Sandstorm Gold, OR Osisko Gold Royalties, MMX Maverix Metals, MTA Metalla Royalty & Streaming, RZZ.V Abitibi Royalties, GZZ.V Golden Valley Mines, EMX.V EMX Royalty, FISH.V Sailfish Royalty, APY.TO Anglo Pacific Group

          https://stockcharts.com/freecharts/perf.php?FNV,RGLD,WPM,SAND,OR,MMX,MTA,RZZ.V,GZZ.V,EMX.V,FISH.V,APY.TO&p=5&O=011000

          • On February 1, 2020 at 9:58 am,
            Wolfster says:

            Yes even gzz had some volume Friday ….not much compared to others still but against its recent trading volumes….and it’s happening at highs too….would be nice if they would give an update on their intents regarding casflows from rzz…..like a stock buyback at these still discounted prices

          • On February 1, 2020 at 10:01 am,
            Excelsior says:

            Yep, a few more investor are waking up to the GZZ / RZZ situation. Ever Upward!

    • On February 1, 2020 at 9:34 am,
      Excelsior says:

      A Base & Precious Metals Growth Story – Sierra Metals Inc. (SMT) (SMTS)

      Cambridge House Int’l – Jan 30, 2020 #VIDEO #CorporatePresentation

      Christina Papadopoulos is the Manager of Investor Relations for Sierra Metals Inc. (SMT.TO), a mid-tier precious and base metals producer in Latin America offering a strong value proposition to investors.

      https://www.youtube.com/watch?v=IfKqJPyg0Y4

      • On February 1, 2020 at 12:20 pm,
        Excelsior says:

        Resilience. Initiative. Enterprise. – Avino Silver & Gold Mines Ltd. (ASM)

        Cambridge House Int’l – Jan 23, 2020 #VIDEO #CorporatePresentation

        https://www.youtube.com/watch?v=MjF03jDSCMw

  6. On February 1, 2020 at 9:36 am,
    Matthew says:

    SPY is all set for another multi-month 30%+ decline versus GDX…
    https://stockcharts.com/h-sc/ui?s=SPY%3AGDX&p=D&yr=1&mn=8&dy=0&id=p64159995485&a=717670314

  7. On February 1, 2020 at 9:39 am,
    b says:

    Thx for all the work again Cory.

  8. On February 1, 2020 at 7:23 pm,
    Matthew says:

    Gold is ready to break out of its 4 year uptrend channel…
    https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=8&mn=8&dy=0&id=p54952358080&a=693559276

  9. On February 1, 2020 at 10:08 pm,
    cfs says:

    Catherine Austin-Fitts on USA Watchdog:

    https://www.youtube.com/watch?v=_5AlWQM6RTk

  10. On February 2, 2020 at 10:07 am,
    markedtofuture says:

    ANV HYCT AlliedNevadaFraud here with an update!

    Demand To Hycroft Ad Hoc Committee of Hycroft Warrant Holders

    January 24th, 2020

    DELIVERED VIA EMAIL
    (steve jones hycroftmining, dstone nge dot com
    cc: JOCallaghan mudrickcapital dot com, jackie cohen weil dot com
    Re: Proposed Business Combination With Hycroft Mining Corporation
    Attention: Stephen M. Jones, David Stone

    DEMAND TO HYCROFT MINING CORPORATION
    THE UNDERSIGNED DEMAND THE FOLLOWING:
    I. Hycroft Mining Corporation (“Hycroft”) enforce the Warrant Agreement (“Warrant Agreement”) Hycroft entered into with former holders of Hycroft’s equity securities (“Warrant Holders”). A copy of the Warrant Agreement is attached.
    II. Hycroft obtain, from Mudrick Capital Acquisition Corporation (“Successor Company”), a written instrument similar in form and substance to the Warrant Agreement (“New Warrant Agreement”), in accordance with Article V (d) of the Warrant Agreement. Under the New Warrant Agreement, the Successor Company must assume all outstanding obligations to deliver Hycroft’s Warrant Holders, such shares of stock, cash, or assets the Warrant Holders are entitled to under the Warrant Agreement.
    III. Hycroft amend Article II Section 2.2 (e) of the proposed businessm combination, to represent the Successor Company’s responsibility to assume all outstanding obligations to Warrant Holders under the Warrant Agreement or New Warrant Agreement.

    Ad Hoc Committee of Hycroft Warrant Holders

    January 23rd, 2020
    Page 2

    IV. Hycroft, promptly furnish to the undersigned, a copy of any proposed New Warrant Agreement, and thereafter any proposed amendments to the New Warrant Agreement.
    V. Hycroft promptly discloses to the undersigned, in writing, the current adjusted equity value as defined by the Warrant Agreement (“Adjusted Equity Value”).
    VI. Hycroft promptly discloses all quarterly, or other written reports,detailing amendments made to the Adjusted Equity Value, and produce any document related to any such amendment to the Adjusted Equity Value.
    NOTICE OF INTENTIONS TO LITIGATE
    If Hycroft does not take the appropriate measures to enforce the Warrant Agreement; and/or adequately disclose to Mudrick Capital Acquisition Corporation the Successor Company’s obligation to Warrant Holders; and/or provide the requested information, the undersigned may commence legal action,
    including but not limited to: 1) filing legal action to challenge the proposed business combination; and/or 2) filing legal action against Hycroft, Mudrick Capital Acquisition Corporation, and/ or the respective officers, directors, or other representatives of either company.
    _________________ _____________________ _____________________
    Brian Tuttle Jordan Darga Stoyan Tachev

  11. On February 2, 2020 at 10:11 am,
    markedtofuture says:

    ANV HYCT – Ad Hoc Committee of Hycroft Warrant Holders January 24th, 2020

    DELIVERED VIA EMAIL
    JOCallaghan mudrickcapital , jackie cohen weil dot com
    cc: steve.jones hycroftmining dot com, dstone nge dot com
    Re: Proposed Business Combination With Hycroft Mining Corporation
    Attention: John O’Callaghan, Jaclyn L. Cohen

    NOTICE TO MUDRICK CAPITAL ACQUISITION CORPORATION
    PLEASE TAKE NOTICE OF THE FOLLOWING:
    On October 22nd 2015, in connection with their Chapter 11 reorganization,Hycroft Mining Corporation (“Hycroft”) entered into a Warrant Agreement(“Warrant Agreement”) with then-holders of Hycroft’s equity securities (“Warrant Holders”). Attached is a copy of the Warrant Agreement.Pursuant to Article V (d) of the Warrant Agreement, Mudrick Capital Acquisition Corporation, as the successor to Hycroft, must assume, by written instrument, substantially similar in form and substance to the Warrant Agreement,the obligation to deliver Hycroft’s Warrant Holders such shares of stock, cash, or assets the Warrant Holders are entitled to receive under the Warrant Agreement. Hycroft’s Representation and Warranties, outlined in Article II Section 2.2 (e) of the proposed business combination with Mudrick Capital Acquisition Corporation (dated January 13th 2020), violate the terms of the Warrant Agreement. As the successor, Mudrick Capital Acquisition Corporation will assume the outstanding warrant obligations of Hycroft.

    Ad Hoc Committee of Hycroft Warrant Holders

    January 24th, 2020

    Page 2

    In the event the business combination is consummated, the undersigned will take the appropriate legal action to enforce Mudrick Capital Acquisition Corporation’s assumption of the obligations to Warrant Holders under the Warrant Agreement, and protect the entire class of Warrant Holders entitled to relief, and the public thereafter. The undersigned preferred communication is service by email.
    Thank you,

  12. On February 2, 2020 at 12:39 pm,
    Wolfster says:
    • On February 3, 2020 at 10:20 am,
      Excelsior says:

      NIce piece for (PGM) Pure Gold – Thanks for posting that Wolfster.

  13. On February 2, 2020 at 1:11 pm,
    Wolfster says:
    • On February 2, 2020 at 7:32 pm,
      paul says:

      And you lose.

  14. On February 2, 2020 at 7:45 pm,
    Wolfster says:

    When they called that offensive pass interference just before the half I knew where this was headed.

    • On February 2, 2020 at 7:47 pm,
      Wolfster says:

      And I’m a Vikings fan so didn’t care that much as long as it was a good game

    • On February 3, 2020 at 12:34 pm,
      JMiller says:

      Do not know what you are getting at but it was clearly offensive pass interference.

      • On February 3, 2020 at 12:58 pm,
        Wolfster says:

        Clearly???? Lol. Nothing is clear in the NFL. Vikings winning TD against Saints was exactly the same play only the exact opposite call. There’s no consistency to it and you know it will always be a factor in the outcome of the game.

        • On February 3, 2020 at 1:48 pm,
          JMiller says:

          Even 49ers fans at work said it was pass interference.

  15. On February 3, 2020 at 6:21 am,
    Dick Tracy says:

    China suffers most savage market rout in years, despite having pumped US$174 billion into the repo market. https://business.financialpost.com/investing/chinas-worst-rout-in-years-has-3257-stocks-falling-by-daily-limit

  16. On February 3, 2020 at 9:50 am,
    Matthew says:
  17. On February 3, 2020 at 9:51 am,
    Matthew says:
  18. On February 3, 2020 at 2:03 pm,
    Charles says:

    Nice chart. See what tomorrow brings.