Vancouver Cambridge House Investment Conference – Hour 2

January 30, 2016

Hour 2: 

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    Jan 30, 2016 30:59 AM

    Great interviews and excellent questions!
    Thanks for what you do!

    Jan 30, 2016 30:27 AM

    The interview with Joe Mazumdar was excellent. There were several insights about selecting mid-tiers that I had never heard before.

    His mentioning of Claude and Lake Shore Gold as examples of mid-tiers gold producers, also gave me a little more confidence in the Canadian PM miners I have selected to invest in (Claude, Lakeshore Gold, Richmont, Kirkland Lake)

    The interview (great read)

    I just wish I could afford the yearly subscription fee (sigh)


      Jan 30, 2016 30:57 AM

      With a $136M market cap and just one mine, I can’t call Claude a mid-tier miner. It’s still very much a junior and that is a good thing.

        Jan 30, 2016 30:19 PM

        Claude is growing from a small producer into a mid tier and actually have 2 different mines (Seabee & the Santoy mine). Then the Santoy Mine complex has 2 key deposits the Santoy Gap and Santoy 8. They have all their exploration upside near their current deposits and the Amisk Gold Project, and it is easy to see why they are starting to move into the mid-tier slot over the next few years.

          Jan 30, 2016 30:20 PM

          I should have been clearer. I should have said “just one operation.” To me, a mid tier has two or more completely separate operations preferably in two or more political jurisdictions but not necessarily in two or more countries. Claude has two mines feeding one mill.

          “Currently, the Company is only mining from the Santoy Gap deposit and it is expected to be the main contributor of total production at the Seabee Gold Operation for years to come.”

          I see Claude just the way Claude sees itself. From the homepage:

          “Claude Resources Inc. (“Claude” and or the “Company”) is a fully integrated Canadian gold exploration and mining Company that has the proven ability to “Discover, Develop & Deliver”. The Company has a strong operating base and significant upside.”

          Putting exploration first is a good thing and warranted in Claude’s case.

            Jan 30, 2016 30:30 PM

            That’s true that you could just consider it one larger operation, but it is a large enough operation that it has 2 different mines in the complex and 3 defined ore bodies, and other zones being defined. Maybe when they get their Amisk Gold Project going, and get a mine going, we’ll consider them a Mid-tier. They could also still buy a small explorer or asset of another producer and move to a mid-tier through acquisition.

            Yes, I agree that putting exploration first is refreshing.

    Jan 30, 2016 30:35 AM

    seg.5……..Jayant ” suffocation and gold” . ….Useless consumption ….ghost cities are getting occupied……..great comments on China. Thanks for having Jayant.

      Jan 30, 2016 30:29 AM

      My experience too. I went to an nearly empty city in 2010 and a in a few years it was occupied with a lot of companies and residence. The only reason it was empty is it was under construction and builders want to gradually lease the office out to world class companies. They were extremely selective. It is extremely fancy as well. The West does not understand Chinese way of construction. Western cities will be under construction for decades and Chinese cities are mostly extension of existing cities. It will be done in a few years. Everyone should have seen chinese construction videos. They were lightening fast. There are busy activities going on so it could be dangerous to live in. So builders prefer to build the buildings before having people living in. A well constructed area with all the proper facilities installed can sell with better prices. There is only one city which is truly empty, Erdos, the place Chengis Khan was buried. It is a mistake of city planning. It started with extremely positive growth of coal production and the city did not realize that the area is too remote and coal industry has been in a decline.

        Jan 30, 2016 30:40 AM

        good added points…….

        Jan 30, 2016 30:45 AM

        The city is named Kangba Shi in Erdos district

        Jan 30, 2016 30:13 PM

        Agreed about Jayant’s perspective having followed up and visited many of the cities in China, and other emerging markets. Dragonite, I always appreciate you perspective and insights into China as well, based on your experience, and contact with people in the mix of daily life in the East.

    Jan 30, 2016 30:11 AM

    Jayant Bhandari is well spoken and a real smart guy. Please have more of his view.
    Really realistic in his analysis.

    Jan 30, 2016 30:17 AM

    However I must disagree with his analysis of China. They have real corruption even deeper than our own.

    Jan 30, 2016 30:03 PM

    Gold is looking good here…

    Jan 30, 2016 30:12 PM

    Dragonite, did you see this ultra-bearish China article by David Stockman?

    I generally find Stockmans views worthwhile, but this seems extreme. Maybe you could offer some balance to this perspective?

      Jan 30, 2016 30:20 PM

      I have a lot of respect for Stockman. However, I feel he is more bearish than he should be. On the side of China, all US and western politicians are trained to hate China. I have been here for nearly 28 years and I noticed an overall dislike of China across the whole society. China seems suffers two sources of hatred from western society. First one is that it has been always on the opposite side of Western allies and present a challenge to the west. Western countries have a general frustration of not being able to control China, like what they have done to India and Japan. The second aspect I feel that white population in general do not think other races as equals. So you can see that any time China has succeeded in doing something, it is always accused of copying US even on something China is doing better.
      China’s success in the recent decades is not because of communism. It is because people abandoned communism and chase wealth with great enthusiasm. People work hard to get rich and save a lot of money which can be used as investment. Like my parents for example, their pension is around 7500 yuan a month total but their cash saving is around 800,000 yuans in the bank. There are some mal-investment in China for sure but China does need a lot of construction. If you were in the traffic in China you will agree. In last two decades, China has built huge number of bullet trains, subways and other transportation facilities including rail way and high way to the Tibet plateau. These projects have high demand and people feel really convenient. In the 90s, it was very inconvenient for me to see friends outside of Beijing when I went back. Now I just need to give them a call and many of them will jump on the trains and get there in hours. It is especially helpful when Chinese new year time, like now. As for the pentagon and other western imitations, they sell in China. Chinese in general are reversely racist so they consider white civilization more superior. Copies of the western buildings and even cities sell well. There is a city in South China which copies Paris. So western people don’t understand it and consider it waste but they do bring profit for the builders.
      In general, China is not controlled by bankers since for the last couple of thousand years, bankers assume the status lower than prostitutes. People hate them and consider them immoral. It has improved tremendously but not completely gone away yet. If Chinese bankers behaves like the way Wall Street is doing, there will be massive attacks from the people. There have been already many incidents the workers who lost their job or facing job loss killed the people who sold them out.
      In the last few years, China has slowed down to less than half of the growth like before. First, the previous growth rate is too high and created imbalances, so it is not sustainable. China also suffers impact of global slowdown as an exporter. In addition, the anti-corruption initiative by President Xi has caused a lot of local officials hesitate to act. They now prefer safety over achievements. This was exactly what happened during 1990-1994, after Deng put down student unrest and started clean up corruption. Officials were frozen due to their fear. However, people on the grass root feel better than before. It is the first time I hear that my father say the leader is OK. It is very unusual. So I feel China will have several years’ slow growth but due to the people’s desire to get rich and the government desire to avoid population revolt, the economy will get through this difficult period. Once the world recovers, China will be better as well. Someone say China is the biggest bubble in history ever. I strongly against this notion since people’s lives have been improved a lot and people have huge savings. In addition, China produces most products people can buy in the shopping centres around the world and enjoys large trade surplus. Bubble economy by definition produce vaporware not real products.

      I have seen both worlds. I feel China has a long way to improve especially their perception of their standing in the world economy and their confidence. There will be many up and downs before China is recognized as the leader of world economy. However, the state owned economy is declining since privatize the remaining state owned enterprise is one of the major goals of the current government. However, the way of privatization has changed from selling of the property to distribute shares to the public.

      I still have confidence in China and even the world economy in general. We just need to solve the problem of debt in the rest of the world. China in comparison is relatively light regardless how many times the western economists propose the opposite.

        Jan 30, 2016 30:38 PM

        Thanks for sharing your perspective Dragonite. China is a very complex country and marketplace. The misunderstandings and assumptions arise from making blanket statements about a country, its people, it economy, etc… These kind of statements are always trying to put a label on somethings and are being too simplistic, ethnocentric, and near-sighted.

        Very interesting read, so thanks for taking the time to write it and post it.

          Jan 30, 2016 30:47 PM

          You are absolutely right. Both China and US are complex societies. Good and bad coexist.

            Jan 31, 2016 31:36 PM

            Bass is most likely to have a good bet. Chinese yuan has been rising with US dollar so china suffered as an exporter. Chinese government has been saying the target is a basket of currencies but it still follows dollar more than others. This is a difficult problem to solve. China either keep the strength of yuan so it loses industry or devalue so it suffers capital flow. I think their government will find a compromise so it devalues to certain value but to to the degree to scare all capital way. This is the way US fleece the Asian countries in 1997 and Latin American countries in 1980s. World reserve currency has a lot of benefit.

            Jan 31, 2016 31:06 PM

            What makes me laugh is Soros is called a brave soul fighting PBOC. This is sad. Anyone here has a favorable opinion of him? He must the most hated man.

    Jan 30, 2016 30:25 PM

    Gold finished January up 5.5%…

    Jan 30, 2016 30:11 PM

    Gold:Trans (my “economy is entering recession” chart):

    Jan 30, 2016 30:11 PM

    Not Yet Time For Champagne Just Yet But Break Out Some Sparkling Water
    January 29, 2016 – 5:49pm
    by Gary Wagner

    Jan 30, 2016 30:39 PM

    Not all cultures are equivalent….

    What about tolerance?

    Jan 30, 2016 30:34 PM

    The $TNX:!PRII weekly chart is showing a rare technical condition which has been discussed in Institutional Advisors’ newsletters, which is a very reliable assessment of impending reversal, either at the top of a market, or at the bottom. Mostly Institutional Advisors has been relying on Tom Demark, since this technical condition can give you a signal and then go a year without seeing the trend change, but I think this particular technical indication is best with commodities related markets.

    When the CCI(8)and the RSI(14) cross simultaneously from overbought or oversold conditions, this is a sign of upside exhaustion, or springboard rally. This technical condition is lined up with a grey dashed line. Often times you can get a ‘close, but no cigar’ but this time is a clear crossover.

      Jan 31, 2016 31:13 AM

      Thanks a lot FranSix, that is very interesting and most likely not something I would have noticed anytime soon.
      It sure lines up with my current view of things.

      Jan 31, 2016 31:33 PM

      FranSix – Interesting thoughts on the reversal due to the CCI and RSI.

        Jan 31, 2016 31:06 PM

        CCI(8) and RSI(14), probably the observations of Ross Clark.

    Jan 31, 2016 31:19 AM

    A blogger published the recent article by famous Chinese political economist Sibo Lei. According to him, gold is used as a ultimate weapon by China, Russia, India, Germany, etc As a means to win a currency war. He is famous in China to use political analysis to predict movements by major countries to influence world economy. He correctly predicted the economical and financial policies employed by Japan and Europe in recent years in his books. In a sense he is the equivalence of conspiracist like Jim Richards. His prediction is that US has launched a major attack on world financial system by squeezing capital to flow to US to take over from the FED easing policy at high price. Japan and Europe behave like foot soldiers and coordinated major currency devaluation to assist this attempt. Chinese currency is the major target and is attacked by the major countries. To counter this, it look like the core opposition countries have pick gold as the weapon to defeat the attempt by US, Japan and Europe. Physical gold has been withdrawn from New York at accelerating pace. Gold appears to be the weak link in the US attempt and is used by opposition countries. Not sure why he puts Germany in the mix. If his analysis turns out as his other predictions, gold will become really interesting and a physical gold withdraw from US financial system will be an unbeatable tool. Gold’s good days are coming.

      Jan 31, 2016 31:24 AM

      Sorry his name should be sihai Lei not Sibo Lei. Cell phone has a habit of changing spelling.

      Jan 31, 2016 31:45 AM

      Another major evidence he mentioned is unusual weakness of dollar in the currency flight in addition to gold strength. This is against FED plan. He thinks this is because major players know the game and move asset outside USD. The foundation of this attempt by FED relies on two factors – relative good US growth and low inflation. If these change, FED can not continue with their game. I am not sure i agree but there are some valid points.