Weekend Show – 2 Fund Managers Sharing Their Strategies For US Markets, Metals and Energy Stocks

October 14, 2023



Welcome to the KE Report Weekend Show. It was a volatile week for the markets driven by economic data and geopolitical worries. Throughout the week we covered the day to day moves with Daily Editorials, so on this Weekend Show we shift our to the charts and big picture themes.


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  • Segment 1 and 2 – Dana Lyons, Fund Manager and Editor of The Lyons Share Pro website kicks off the show by sharing how he is positioned in a wide range of markets. We discuss US markets, gold and gold stocks, bonds, international markets and the US Dollar.
  • Segment 3 and 4 – Adrian Day, Founder of Adrian Day asset Management and Manger of the Euro Pacific Gold Fund wraps up the show with an update on his outlook for US markets and Fed policy. We tie the discussion into how he is viewing gold and critical metals stocks.




Dana Lyons
Adrian Day
      Oct 14, 2023 14:45 AM

      Agreed Thomas. It was great to have Adrian back on the show again, as it had been a while, and we look forward to hanging out with him again at Brien Lundin’s New Orleans investment conference in a few weeks. Keep us posted if any of the KER crew will be attending that conference so we can meet up for a chat or drinks.

      As far as the topic of why there has been such a disconnect between the price of gold and silver and where the mining stocks are trading, it is a very nuanced answer, but ultimately comes down to poor sector sentiment with regards to PM stocks and the psychology and momentum side of trading.

      Adrian’s point that the Gold price may have gotten a bit ahead of itself compared to the miners is interesting to consider, but that doesn’t come anywhere close to explaining the massive valuation mismatch between where the mining stocks were trading during a psychological and momentum-based mania in 2010 and 2011 in the last cycle. Nor does it explain why gold and silver stocks were valued substantially higher than presently even in that first leg of the “baby bull” in 2016 from January to August.

      >>> The beef I have with the prevailing narrative in the sector and the herd think going on with most analysts we see writing or talking about this topic, is that they’ve boiled it all down to rising costs due to inflation, and the boogeyman of “margin compression.”

      Then everyone just parrots that talking point around as if it is the gospel truth, without actually analyzing it, or even checking if it even is true. Just because something may make sense (ie… higher inflation in the world and costs going up so… yeah… margin compression is the fall guy)


      –> Here is the actual reality and the data that does not bear out this theory in the slightest.

      – In 2010 the average margin for gold producers was around $440 and in 2011 it was around $620 per ounce.

      – Margins did then compress in 2013, 2014, and 2015 sub $400 more in the $350 – $250 range, so the valuations in companies came down accordingly. However, starting in 2016 the margins went back above $400 again (hence the surge). In 2017 and 2018 they pulled back down below $400 again into the high to mid $300s (hence the corrective sideways to downward consolidation).

      – However, since 2019 and moving forward, the margins for producers have been north of $450 to $500 and in 2020 they were the largest ever around $800. Despite that similarity or superiority in margins to 2010 and 2011, the mining stocks got back nowhere close to the rich mania-fueled valuations they saw in 2010 and 2011.

      – One would think 2020 would with those record margins in gold producers and an all-time high in gold, would have translated to all time highs and valuations in the mining stocks but many didn’t even eclipse their 2016 highs, much less their 2011 highs. So something had changed… and it wasn’t just about the margins.

      – Conversely, sure in 2021 inflation got worse and in 2022 it got a lot worse so costs increased, and the All-In Sustaining Costs (AISC) rose from $980 in 2020, to $1000-$1100 in 2021, and then $1250 in 2022, and then around $1350 so far in 2023. Fair enough… but the average annual price of gold was also much higher washing much of the cost increases out.

      – 2022 was actually the highest average annual price of gold on record ever… Q2 of 2023 was actually the highest average quarterly price of gold ever. So while costs have indeed crept up… so has the metals prices and their average selling price of the metals.

      – Just looking only at cost creep and it’s effect on the related AISC increases in isolation is not a complete picture. More importantly, this limited analysis ignores the stark reality that the net margins at $1250 and a $1900 gold price are still $650 (better than 2010 or 2011) and at $1350 and $1900 gold are still $550 (right in the middle of where margins were in 2010 and 2011). So people can bang on about cost creep, but then they should also bang on about metals price creep higher too.

      >> So again, to state the obvious…. clearly just creeping costs and “margin compression” doesn’t even come close to explaining away why the companies are only valued at 30%-50% of where they were back at the last cycle peak at similar to lower margins. Likewise, it doesn’t explain why valuations are even still quite a bit less than where companies were valued even at the peak of 2016 when the margins were much lower and metals prices were way lower. None of that makes any logical sense and can’t be solved with flippant comments about cost or margins… yet that is what most talking heads are saying… and the lemmings are simply repeating that failed logic.

      – Yes, margins have compressed from 2020 to 2023, but they were still well above the 2010-2011 margins that whole time, and yet at 1/3 to 1/2 of the valuation, so sorry but that doesn’t add up.

      –> What has changed is investor sentiment and the psychology around the PM mining stocks. Period.


      James over at Gann Financial put out an interesting video a week or so back, pointing out that in the mid to late 1960’s, when the gold price was fixed, and with margins not changing that much that many gold stocks went up 300% – 500% just on the sentiment and psychology around gold and the related gold stocks changing, and getting into a mania. The underlying fundamentals hadn’t really changed much, but the desire to pile into gold mining stocks was back in en vogue.

      He pointed out, and rightly so, that over the last few years, the valuations in mining stocks have plummeted even though the gold price has been relatively flat (trading back and forth within a range but essentially flat if smoothed out for the average prices). Many of the larger companies have actually improved their balance sheets, paid down debt, streamlined labor, and improved their operations efficiencies, but were rewarded by selling down for the last 3 years, and again starting the sell-off from levels that weren’t even back to their 2016 levels, and nowhere close to their 2011 levels.

      So essentially while the fundamentals weren’t radically worse, the stock prices and valuations plummeted due to investor interest and psychology and sentiment. It’s the converse of what happened in a fixed pricing environment in the 1960s. So this simply can not be explained away logically with math on margins or costs… there is something more going on than that.


      Now one other thing some folks have done when we questioned them about the disconnect in the mining stocks and the prices of the metals is suggest it is due to the blown out share counts now and dilution over that time period. OK. That tracks and is a factor to consider, but again… not in isolation.

      Sure many companies have blown out the number of shares over that period, but just saying that in a vacuum ignores the reality that yes they diluted, but it was to acquire other projects or take over other companies or develop organic growth projects.

      – Many of the companies today are waaaaaaay better looking than they were at the top of the last cycle in 2011, with more mines, better reserves, better mine life, improved efficiencies, diversified jurisdictions, or derisked major development project. Some companies look far different in size, scale, and quality than they did a decade ago, and may have done 1-3 acquisitions and transformed their pipeline of projects in concert with the share dilution. I never hear anyone make that point when dogging on the mining stocks for having more shares out now.

      The question/concern really isn’t just about just dilution on it’s own, but did that dilution lead to better value creation?

      In the case of many drill plays and exploration stocks…. sadly, no, they didn’t build more value.

      However, in the case of many developers or producers or royalty companies then the answer is unequivocally Yes! They absolutely created more value, better portfolios of projects, divested non-core assets, flipped projects in an accretive way, and have much more information and work completed on their key projects.

      So why is it that gold ounces in the ground were getting $150-$300 an ounce at the top of the last cycle, at similar metals prices and similar margins (as established above), and yet now the top projects are getting $20-$40 an ounce in the ground or less. We’ve seen some development projects getting sub $20 at $15, $10, even $5 an ounce in the ground. Same with Silver projects. They were getting $5-$7 an ounce in the ground, then a few years ago $3 an ounce in the ground, and now some are trading near $1 an ounce in the ground.

      The average industry cost by the big boys for finding gold ounces in the ground is around $50-$60, and for silver around $3-$4, so how in the world do ounces in the ground trading far below their discovery cost for most companies make any sense at all?

      So even if one factors in the larger share counts and dilution, if counterbalanced with their larger resources defined and larger production profiles or larger pipeline of projects or royalties, then that logic is totally whack and doesn’t add up.

      This is simply an inefficient market, and is due to soured sector sentiment and flat out indifference by the generalists, as they do have other areas of the market that have performed better than the mining stocks to speculate in. This too will pass…

      The pendulum will swing back again from way undervalued to way overvalued, and catching that ride in the middle is where the big money will be made. This has been and still is the time for accumulating this silly valuation for the eventual sentiment swing higher, but sadly most have sold into the lows instead of buying them, because they still fail to grasp the concept of “buying low.” Then when the sector does rip higher, they’ll all pile in much later in the move when it feels comfortable and will become the Johnny come lately’s and likely future bag holders… Rinse and repeat…

        Oct 14, 2023 14:08 AM

        Just an additional afterthought to that long rant about the valuation mismatches we see today….

        That was more the high-level macro breakdown, but we see this kind of thing every day with companies on the micro level.

        Erik Wetterling, The Hedgeless Horseman, and I have discussed this for years in our interviews together. You like a junior resource stock at a given price and think it is well worth the risk/reward set up for the work strategy, prior value creation you are paying for, and future value creation you anticipate. Then on bad sentiment days, that same stock will not have changed at all fundamentally but may be down 10% 15% 20% for no apparent reason. No critical news came out, the thesis is exactly the same as the day before, but now 10%-20% of the value of the whole company and market cap just decreased. Does that make logical sense? (No).

        From that standpoint, the risk/reward situation actually greatly improved. Now instead of a potential 3x or 4x gain, if investors were to pick up shares at the new discounted price, the actual upside could have increased to 5x or 6x, assuming it had the same upside as the prior day and nothing else has changed other than share price… and thus market cap. So is the market always right? (nope… it can be very inefficient, and create opportunities for those that can buy into weakness to exploit those inefficiencies.)

        Sometimes we see the same thing where a company puts out bad news, but is punished 2-4 times harder for that transgression than actually deserved from a valuation standpoint. Investors flee for the exit doors selling first and asking questions (or not even asking questions) later, but don’t stop to ponder if the degree and amount of the selloff actually makes sense or if the “market is always right.” This can be a huge opportunity to accumulate fishing line sell-offs that are divorced from logic or math, and are based on investor emotions and momentum.

        Then when such a stock springboards back higher again 30% 50% 100%+ (sometimes in a fairly short window of time), and this whole time no other news comes out and nothing else has really changed fundamentally, then they never ask, well was the market right at the crash low or was it right at the spike high? The valuation of the company was all over the place during that trading whipsaw, but in contrast nothing further had changed with the company micro fundamentals or the background macro fundamentals. It was all emotional investor sentiment swings.

          Oct 14, 2023 14:24 PM

          That was an impressive rant!

          Oct 15, 2023 15:34 AM

          Ex, I was thinking the same thing that you just mentioned on Friday, WRLG West Red Lake Gold opened around 63 cents dropped to 55 cents a 10% reduction and closed at 58 cents on volume of 3,769,476 shares. This stock had been falling prior to that with no change in the fundamentals, it was just poor investor sentiment. A great opportunity for those with their ears to the ground. DT

    Oct 14, 2023 14:19 AM
    NatGas Week : First Turn
    Volume Vector fails.
    Holds the close.

    Oct 14, 2023 14:04 AM

    Two things to take away from the action we saw in the gold market yesterday:



    You can’t print your way to prosperity.

    DT 😊

    Oct 14, 2023 14:34 AM

    Spiraling Toward A ‘Debt Crisis’? Part Tres

    Jesse Felder – The Felder Report – (10/14/2023)

    Oct 14, 2023 14:37 AM

    (this is about a 5 minute read… but really well done from Dan. Some great macroeconomic points.)


    On The Other Hand

    Myrmikan Research w/ Dan Oliver – October 12, 2023

      Oct 15, 2023 15:51 PM

      “Gold investors are the bond bulls of 1980”

    Oct 14, 2023 14:46 AM

    Check out that V-shaped bottom in Gold. What a weekly close!

    Just over a week ago the yellow metal got down it’s recent bottom at $1823.50, and it closed Friday at $1941.50.

    It was technically oversold 2 weeks back, and we had also noted the DSI (Daily Sentiment Index) in gold was down to single-digits at 8 for 2 weeks straight. It was looking for any excuse to turn up higher for a relieve rally, and actually started that reversal 2 Fridays back, after the Non Farm Payroll jobs number report. Clearly the geopolitics in the Middle East played into this move, as did the higher than expected CPI and PPI readings for inflation.

    From a technical standpoint though, the “why?” is irrelevant, and all that matters is the numbers on the chart. Where we saw the Friday close to end the week back well above $1900 to $1941.50 is far more constructive than most were expecting out in the sea of opinions in the financial media, and caught most investors (both bears and bulls alike) by surprise and offsides.

    Personally, I was adding to PM positions on Oct 4th, 5th, and 9th, into the carnage, and nice to see some green on the screen in those bouncing out of those lows.


    >> Daily Gold Chart – Look at Friday’s long bullish candle… It closed above both the 50 day and 200 day moving averages.

    Oct 14, 2023 14:20 AM


    Not u Ex DT 😁

      Oct 14, 2023 14:05 PM


      Oct 14, 2023 14:44 PM

      Hi Jerry, I need a Rosetta stone to figure out your Egyptian hieroglyph’s, does it have anything to do with time running out for the greenback dollar. LOL! DT

        Oct 15, 2023 15:10 PM

        😂😂😂 good one

    Oct 14, 2023 14:20 PM

    Why I like the micro-cap precious metal stocks, if Dolly Varden goes to $2.16 CDN from where it is now (.72 CDN) it will be a 3 bagger. If my Bayhorse Silver (small producer in Oregon) goes to .045 it will also be a 3 bagger. Which one do you think will outperform. I currently own both but I believe my best torque for a big return lies with the more speculative stock especially in this environment if you are a trader.

    There are bargains galore, I have been picking up a gold micro-cap stock for 3 cents that has NFG and Dundee precious metals backing them not for the metal they have in the ground but for the assets they have acquired that could be very accretive to someone else. DT

      Oct 15, 2023 15:40 AM

      I wonder Whooooooooooooooo? Is that you Big Al! 😊😉

    Oct 15, 2023 15:36 AM

    Looks like Glendfish called the bottom

    Oct 15, 2023 15:33 AM

    We must keep the possibility open, despite the ongoing, that the agenda of Central Banking may be to promote misdirection through political and social issues, transfer future value of the US Treasury to Banking and Corporate interests, deplete the value of mining interests across the board and possibly nationalize. Acquire both the commercial and general real estate markets into a monopoly structure of property lenders and banks, Undermine the Constitution and associated institutions and agencies, covert to an autocratic system with the elimination of human, Individual and property rights and establish a Fascist system of political and corporate elite.
    Before ruling it out. Consider political and Central banking agendas against the above possible agenda rather than ignore that option and blow off their actions as incompetence.

    Oct 15, 2023 15:23 AM
    NatGas Week : Update
    Gold Included

    Oct 15, 2023 15:16 PM
    Oct 15, 2023 15:21 PM

    On 9/25 before gold dropped about $120 I posted this:
    UUP vs GLD is at important resistance that if broken could send gold toward your 1850 level…

    Oct 15, 2023 15:10 PM

    CDE obtained a weekly close above its 12 week MA for the first time in 5 months.

      Oct 15, 2023 15:41 PM

      After all those red candles its time to go up.

    Oct 15, 2023 15:14 PM

    Gold took back its 50 and 200 day MAs on the biggest daily volume since May and is now at parallel channel resistance which will unleash much more upside once broken.

    Oct 15, 2023 15:09 PM

    oh once again a bottom is in gold. final lows everywhere with sector equities, all explained by the tech savvy pundits, of course nothing to do with a new war.
    Wars tend to do this with gold sector as with the Feb /22Russia invasion. And then nobody cares. That pop up lasted roughly six weeks,

    Oct 16, 2023 16:02 AM

    Nothing like a comment by Jon Syl to drag a lurker/reader like myself out of the woodwork

    I’ll be the first to admit this yr hasn’t gone as well as hoped but a lot of that falls on me being busier than usual with other things so have had limited short term plays this yr to take advantage of pops in sectors that have had moves.

    However, even I have been able to keep my accounts spinning their wheels with gains from plays in uranium and what have you.. have rotated those gains into some of the laggards I own and now have a lower ave cost in those and am primed to take advantage of that as those come back to life…you laud cash but I’d argue you could have done better in oil and gas dividend plays but to each his own. Your incessant posts putting others down is getting a tad tiresome. We are here to share ideas and opinions to make money. Take your latest post. If you wanted to argue that recent war events caused an artificial pop in gold I could accept that. Putting down others about their technicals is totally unnecessary. Grow up and be contributor here. Be the voice of reason or the bear. No issue with that. Drop the putdowns of others.

      Oct 16, 2023 16:58 AM

      wolf, incessant put downs of others in particular doc, Joe and others at every opportunity with ridiculous assertions of success and market wisdom is what’s tiresome.

        Oct 16, 2023 16:27 AM

        First of all, it’s laughable that you refer to Joe. He only posts whenever gold has a big move down never when it’s making big moves up. Never has he called a top to sell at. In fact his sky is falling cries have coincided with just about ever bounce off of resistance points and have never entailed a basis for his claims.

        As for Doc, I may be wrong but if my memory serves me he has been pretty good on calling a lot of the pullbacks and bear turns but has been overly pessimistic on his downside calls so has not traded fully into the bounces back or the bull turns.

          Oct 16, 2023 16:02 AM

          I concur! DT

          Oct 16, 2023 16:19 AM

          Wolf, saying Joe only posts when the market sells off is akin to the gold bugs posting with jubilation when gold has a pop up rally. They have virtually gone silent with their postings here for some months.

          Anyway with the friendly gold sector news background it should have more than a one day pop into year end. LOL
          Plenty to pick from, especially penny dregs for a flip. Provided they can stay solvent.
          Added knt, hl and hgu a week back with their dump to what I held. All in all going nowhere fast. Remain with a sizeable cash position.
          ya, dividends and rally great with many oil and gas, here I have not taken any advantage but own ung for a while.
          Nothing exciting, but eying the hammered boring pipelines, as with enb trp, at multi year lows and with great dividends and finally showing signs of life.

        Oct 16, 2023 16:26 AM

        Lol, “incessant putdowns”? I should have guessed that jony would consider simple facts offensive.

          Oct 16, 2023 16:36 PM

          hey good to hear from you matthew, good day for another double down on ipt??

            Oct 17, 2023 17:03 AM

            Funny you ask because I did buy more IPT (and KTN) yesterday.

    Oct 16, 2023 16:07 AM

    Powell speaks this week. Same batch of Fed speakers wandering the airways with the same algos getting applied to the “ free and fair” markets. We can only hope the real world shows up. Not sure where the real world has a place in day to day activities except in food prices. After all, corporations are facing xmas bonuses for management.

      Oct 16, 2023 16:32 AM

      Yellen says on national TV that US Treasury is preparing for expanded War in Israel. There goes all the money budgeted for infrastructure repair. Rather, we are going to use it to destroy.
      (Forgot to mention that War is a diversion from past political criminal action.)

    Oct 16, 2023 16:42 AM
    Michael Boutros : Technical Analysis
    02:55 – US Dollar (DXY)
    10:58 – US Treasury Yields (10Y&2Y)
    52:32 – Gold (XAU/USD)
    59:04 – Crude Oil (WTI)
    56:03 – Silver (XAG/USD)

    Oct 16, 2023 16:08 AM

    If /NG on day chart does get reset on the slow stoch w proper light volume characteristics…It will be time for another stab….Normal pullback .618 fib number is 2.87….could become a significant price buy….

    Oct 16, 2023 16:13 AM

    The month chart shows time zone for a recent spanning 3 year low to occur mid 2024….But the 3 year range allows for sooner/ nearby….monthly macd improving but not yet cross over or above the o line for a buy signal….

    Oct 16, 2023 16:02 PM

    Non- Intervention Report: Some up, some down…morning open “gain” retraced to negative – $186.71. (One hour to close).

      Oct 16, 2023 16:40 PM

      Another “All Time Low”. Tap water all around to celebrate!