Gold at $4,000: How You Survive the Gold Stock FOMO | Michael Gentile
Summary
Gold Market Outlook: The discussion highlights a belief that gold is reasserting itself in the financial system, with the market currently in the early stages of a multi-year trend.
Investor Sentiment: Despite recent interest in gold, many investors remain cautious due to past market volatility, suggesting that the current phase is healthy and indicative of early bull market stages.
Central Bank Influence: The podcast notes the significant role of central banks in the gold market, particularly following geopolitical events like Russia's invasion of Ukraine, which spurred increased gold allocations.
Investment Strategy: Michael Gentile emphasizes the importance of maintaining high investment standards and cautions against lowering them for short-term gains, as this can lead to significant losses during market corrections.
Junior Mining Sector: The junior mining sector is experiencing increased financing activity, although grassroots exploration companies still face challenges in securing funds.
Market Risks: Potential risks to the gold market include a broader market crash or unexpected fiscal discipline from major economies, though these are considered unlikely in the current environment.
Commodity Preferences: While gold remains the favored commodity, there is interest in exploring neglected commodities like nickel and lithium due to their current negative sentiment.
Future Outlook: The expectation is for continued robust performance in the gold sector, with potential for increased M&A activity and further margin expansion among producers.
Transcript
It's becoming again money again in the financial system in a very important way. And I still think we're we're very early, maybe third inning in a a multi-year trend >> and and a really gold reasserting itself in the financial system. Don't lower your standards. Yeah. >> I mean, it's hard. I've had these questions on the road. >> If you lower your standards, you might actually make more money in the short term >> because the the garbage the garbage companies will go up faster than the quality ones. But if you lower your standards and the market does have a correction or does have a big pullback, that's where you lose a tremendous amount of money. Hello and welcome here from Frankfurt, Germany. My name is Kai Hoffman. I'm the Edj Mining guy over on X and of course you're a host of this channel and I'm being joined by none other than Michael Gentilly. Michael, it's great to meet you in person. Thanks. Thanks so much for coming to Frankfurt. How are you? >> Very well, thank you. >> You must be you must be excited. You must be euphoric about what is going on in the markets right now. Um before we dive into some of the details, like give us a sense like how is your road show this week? What is the assessment of the market? Like what what are your thoughts right now? >> Lots of energy. It's this is day five. So, it's been did five five cities in five days. We're still going strong. Um been a lot of interest. Um lot I would say, you know, 70% of the crowd are your diet in the wool hardcore precious metals investors, but encouragingly 30% of people we've met have been either family offices or investors that are new to gold, either buying physical gold but never bought a gold stock before or thinking about allocating to gold. So, we're seeing the early early innings of, you know, generous adoption in the space, which is very, very nice. >> And uh it's great to Europe's a great market. I really happy to be here because a lot of long-term thinking, long-term shareholders which I try to build my companies around like you know cornerstone long-term perspective and so they have that obviously that perspective of being owners these businesses for more than 3 months >> and so that's very very refreshing as well but >> four months in a day. >> That's true. Not with a life offering now three days. >> Good good point. Yeah. >> So it's been great. It's been really nice to be here and um we had a good group of companies, good reception, a lot of good dialogue, a lot of good debate in the one-on ones which has been nice as well. >> What's the feedback you're getting on the market? Like I used the term euphoric which I'm using very cautiously these days because I've been in this market just as long as you have probably 14 15 years and >> I'm scared to get whacked over the head again. >> Correct. >> Jolly analogy somewhere where you're in a city where it's rained 20 days in a row where it's not supposed to rain and the sun comes out for a day and everybody expects the rain to come the next day. Yeah. >> I mean it's it's been a really brutal bare market. And so for all those of us that have been in the trenches getting beat up for seven eight years of apathy and disinterest when you see a surge of interest you instantly think it's over. Yeah, >> but what I So that's a question I've been getting a lot. Is it over? Should I sell? I got somebody saying, is it a bubble? And I'm like, look, the gold allocation globally prior to this rally was about 0.5% of total investor wealth was in gold or gold equities. If you look after the rally, maybe it's 1 and a.5%. Gold's 25% of central bank balance sheets. It's becoming again money again in the financial system in a very important way. And so I don't think 1.5% global allocation would tell you it's the end. And based on what I met the last 5 days, I don't see a lot of new money coming sector. I see incremental steps, but the average investor, I would say, still owns zero >> or very, very little gold. So, I don't think, can we have corrections? Absolutely. $4,000 gold, $50 silver are big scary round numbers. They're euphoric numbers. They're also scary numbers. So, that cost people to pause and think, but I still think we're we're very early, maybe third inning in a a multi-year trend and and a really gold reasserting itself in the financial system. But people obviously are nervous after years of of difficult returns. >> Yeah. I feel like we're the dog chasing a car, barking at it, and all of a sudden the car stops, but we don't know what to do with it. >> Yes. >> Right now we're the dog is like, "Oh crap, the car stopped." Like it. >> So we we need to educate the dog. Like not saying that investors are dogs, but I'm trying to go with the analogy here. Um cuz the investors are nervous. We saw that yesterday in the market. We're recording this on Friday, February October 10th. Um and yesterday we've seen a massive down day. Mhm. >> Gold also retreated but the mining stocks felt like they overreacted almost. So there's a lot of nervousness in the market like what should investors do right now and maybe we'll start with a timing like where are we in this cycle? >> If you look at any bull market they call it the wall of worry right? So if people were not nervous I would say it's probably much more much more negative sign that people are nervous. So bull markets go through these phases where in the euphoria phase people think that nothing can go wrong and they'll never go down and there's there's no fear and there's a lot of risk takingaking. So, I feel like the correction yesterday is healthy. A little correction is healthy. A little profit taking is healthy. Uh skepticism is healthy. That's that was that's what tells me we're early versus other bull markets where it just becomes, you know, unilateral thinking and you know, if you if you say the stocks are going to go down, you're criticized. It's the opposite. All the globals are questioning themselves and asking themselves. So, I think it's very healthy the little pause we might have. >> We all have PTSD. >> We do have PTSD. Exactly. So, I think it's very very healthy. And like I said, it's I I keep an eye on the general adoption like this. these bull markets grow by more and more adoption and so when I don't sense that all my friends are talking about gold that the average investor is talking about gold they're allocating to gold they're sharing at cocktail parties which gold stocks they own that we're not at all there yet so I don't think it's >> it we're get slowly though like I have a good friend she's a dentist and she recently told me she's like hey Kai I bought a mining stock >> I was like >> thanks for telling me but why didn't you ask me beforehand and then she gave me the name and I was like okay sure great okay move on right but that's sort of what we're seeing They're seeing it in the media as well and >> there we're not at the mass adoption phase. I think we can agree on that. Um, but the banks are changing their tune as well and I'm trying to figure out as well what was the domino that sort of led to that rethinking as well like that first stone that set it all off. Do you have a do you have an idea what that could have been? >> I mean the first first domino for me obviously the the US gold bugs been talking about the debt and the bounds that that's really tired but it's true. It's permanently a fixture and I think it's a permanent mega trend. The real domino for me was when Russia invaded Ukraine and the US free froze their foreign currency reserves. That was like that was the shot the canary in the coal mine so to speak with that really kicked off a major like tense allocation of central bank to physical gold. That's really what's kicked it off and I think now the central and also seeing the persistency of that movement where the US the central banks are consistently selling treasuries. >> I mean it's hard for the big banks to ignore gold when it's now the second largest reserve asset on the central bank balance sheets after the dollar. Yeah, like >> if you're a big bank, that's your job is to understand these things. So, I think those two in combination are forcing the big banks to pay attention. And when they look under the hoods and they say the trends, they kind of look, they're they're kind of undeniable or unstoppable. You know, I use another analogy. I feel like a farmer who was planting seeds for seven years, the sun was shining beautifully, the right amount of water, and no plants were growing and you're questioning what what's going on. Now, all of a sudden, the plants are starting to grow. People aren't paying attention. But these trends have been very very visible for multiple years. This people were not looking. >> Yeah. Like vindication is a term I've been or not I've been using but I've been hearing quite a bit. Um do do you feel vindicated? And it's it's a dangerous >> Yeah. Vindication is a bit of a dangerous word. Yeah. But I feel let's say validated. Let's say valid. I feel like at some point I felt like the guy in the the big short, you know, short mortgages during the bubble in the US and 08 and had to put the headphones on to block out the noise because you're like what am I missing? what the fundamentals are truly there especially with the stocks not following and we've talked about that before in previous interviews like the retail interest just wasn't there because they've been distracted by AI and crypto and different things that were speculative money was going that way I think when gold crossed through 3,000 there's a lot of skepticism there too this is this is and when it when it blew past 3,000 people realized it wasn't going below 3,000 it actually going towards 4,000 that's when when retail the retail market started to wake up or investors said I have to pay attention here >> so for us have been paying attention it is validation Now the fundamentals are fantastic for the industries that are doing really very well. >> Absolutely. Um coming back to the nervousness and the risk management to a degree like how do you manage your risk? You're obviously an insider in many companies. So it's kind of day you can't really get in and out of the stock on a daily basis. And then you see gold price move yesterday. I think gold almost dropped $100 intraday. Um, how do you manage your risk? >> Yes. What I've been speaking about on this tour has really been my approach to portfolio management and allocation. What I look for in companies and also how I allocate capital. I'm a little different >> because I'm I'm more running like a private equity portfolio. Like when I make an investment, it's a 5 to 10 year horizon. I don't trade my stocks. I don't have clients asking me to redeem or increase positions and money. So, it's basically my own capital. >> So, how I manage my risk is making really good decisions on the way in. >> So, part of your risk is managing what you pay, what's your entry point. >> Yeah. And then if you're if you make a good initial purchase price, typically you're in the money and then you're just playing with your profits, so to speak. My exits are because I have a private equity mentality and I own 10 15 20% of a company, it's usually on a liquidity event take out. >> In the last 10 years, I've probably had five or seven takeouts and those are those are obviously very healthy moments for the portfolio where you can take some cash off the table, reinvest it in more junior mining stocks or put some money into, you know, bonds or real estate, whatever you want to do. But in general, I'm I'm quite aggressive. I'm like 90% invested of my personal worth in precious metals equities. I've been preparing for this cycle for many many years. The farmer is finally seeing the plan start to grow. At some point, if it gets really crazy and like we're years from that where everyone owns gold stocks and CNBC is talking about gold stocks and you and I are on as guests every day because people want to talk about it, that's probably when you want to start rotating out. But for now, I'm still in actually more in the planting phase. >> You know, I'm not really thinking about harvesting too much yet. >> Yeah. Have you ordered the combine yet though? >> We need one big one. Yeah. >> Right. No, that's it's true. Like I'm trying to figure out what inning we were in, right, as well and trying to get a sense maybe we can talk about the junior mining cycle in general cuz with the capital moving into the space and uh I think Q3 we've already beaten the previous year, the year before in 2022 I believe in terms of just dollars raised within the oring coverage universe and there's a lot of bigger deals happened as well. We're not in the 2011 on the 2011 stage yet or level yet cuz we started late this year. We we lost the first quarter, >> but the two quarters in between were absolutely phenomenal. We raised close to $5 billion within our space. So where along where on the cycle are we for the juniors um in particular? >> For sure. I think there's been a massive fundraising in in the quarter. I think we have to the way I would like to look at it would be let's take a three or four year rolling basis because it's been you know three years of starvation. >> You know if you if you fast for two days you're probably going to have a very big meal. >> May I jump in real quick? >> We've raised $4.5 billion on average over the last three years which is twice as much as we raised in 2015. Y >> so that was really dire. I was going to say like the last few years haven't actually been that bad. It's just the question is where did the money flow to? >> Yes. Where did it flow and what type of companies are getting financed most in the junior micro cap space let's say were operated. I would I would like to segment that statistic. >> That's what I'm >> because the bigger companies were raising money when they were delivering their balance sheets. So the last three four years it was IM Gold doing a $300 million deal. Ken Rust doing a bit. So those are deals that were but the funding for the sub 200 million market cap companies just I don't have the numbers in my fingertips but anecdotally it's been very very dire like all the money that my company's raised last 3 years prior to this year was me dialing for dollars >> calling networks handtoh hand one investor at a time there was no bought deals there was no money being thrown at you say this is the first financing cycle since co for my companies where the brokers were calling me saying we have interest would you like to do a bot deal would you like to do a financing so anecdotally it's the first time since co that I've seen actual money being available to the juniors, the micro caps, right? Bigger company's different. Um, but I think we're we've also been starving these companies, the juniors for many years, right? I think since 2015 till today, there's been a few windows to raise money. Maybe 20 2020, 2018 and today. >> 20 was fantastic. Yeah. >> But in general, in general, there hasn't been much money available. So, that would be the first thing. If you see sustained quarter after quarter of big big financings, that that'll be a sign that we maybe siating the market. But, I think for now, it's more a starvation diet. And now these companies can finally get to eat something. They're raising some money. But I don't think we're in a, you know, the doors are wide open. You can find us whatever you want anywhere. >> I think grassroots explorers still struggle. Companies are like, "Hey, we have a dream here in Alaska and we want to see if that tree be that dream becomes a reality." >> I don't think they're it's that easy for them yet. So I'm questioning like where where like on the trickle down if you have the birds on the the telegraph pole like where are we on the on the pole right now? Where's the money at? It's it's probably in the in the resource delineation uh you know PA proven you know deposits or acceleration stories some companies are very successful where the market sees yeah you're having success with a drill bit you have two rigs turning you want to go to four the market is is sanctioning I think projects where they want accelerate I'm also seeing in the silver space a little bit more indiscriminate financing of pretty much anything >> because people are want to get long silver they're they want torque they want data >> and there not a lot of options >> there a lot of options so if you're a silver name you you probably are have the most access to capital right now. But you're right, the grassroots green field expiration, that's typically later in a cycle when investors say, "If I make a discovery, I could have a $200 million market cap." We're not there yet because you'd rather find a company with a proven resource than take that risk of a green field discovery if they don't have a big enough market cap upon success. >> Absolutely. No, I think we're seeing that though discoveries do get rewarded. We've seen Prospector Metals, just to mention one name that was hyped last week, fantastic hole. >> Dural are moving stocks for the first time in many years. >> And even rollbacks get rewarded. We keep joking within our circle like usually you get punished when you do a roll back but now even uh that is looking better. So it's it's a really interesting times. Um one thing this cycle or when there's money available that you know all the tide lifts all boats. Sadly there's some boats that shouldn't be floating. Um how do you or what do you tell investors what to pay attention to? Like I've had quite a few pitch calls last week where I got pitched and I was like oh god. >> Yeah. It's a really good question. So I always say don't don't confuse a bull market with intelligence. Yeah. Right. So don't think because your stocks are going up that you've bought the right business or the right mining company. Remind the viewers of the show that failure is the norm in the space. So if you're if you're actually if you're buying companies to rent them as a short term, that's a different story. But if you're actually buying company with the hope of it becoming a mine one day, that they're very hard to find. So yes, bull markets will allow lowquality projects to get financed. And also you have to be careful not to finance projects that need a very high goal price and high price to succeed. There's reasons certain projects have failed continuously through the cycles because they don't work at lower gold prices. So, if I was an investor saying, you know, this project doesn't work at $3,000 gold, but if it's $4,000 gold, >> I can build this mine. Remember, all the projects that have better economics that worked at $2,000 gold are going to be in front of you in the financing curve, but the big financings when you talk about building a mine are capital. So, don't lower your standards. >> Yeah. >> I mean, it's hard. I've had this question on the road. >> If you lower your standards, you might actually make more money in the short term, >> because the the garbage the garbage companies will go up faster than the quality ones. But if you lower your standards and the market does have a correction or does have a big pullback, that's where you lose a tremendous amount of money. And so there's a question, are you a are you a pure speculator? Are you like an informed speculator investor like myself? Are you an investor? >> Like what are you what are you trying to do with your capital? But if you're buying these lowquality companies, know that they're really rentals and not investments. I like to invest. So I don't typically go near those companies just because I know I can't suspend my intelligence to say this is going to work. >> Yeah. >> And just say, "Well, the stock's going to go up." I it's not able to do that. >> No, it's it's impossible. Like I I I struggle with that and I've been telling my investors that I've been meeting here last week as well like stay true to your principles. >> Please >> do me that favor cuz we see companies raise 10 $15 million with where the founders have 16 million shares at half a penny. >> Y >> I was like >> and you sit there it's like but that stock's probably going to double or triple. >> Yeah. Until they start, right? And then Yeah. So it's really frustrating. Um >> what are you looking for? Like how long do you think this market has? Like I know it's it's a bit of an unfair question, but uh >> how how much >> what's the time scale that you're looking at? Like the c we move in cycles. We know that. >> Yeah. >> How long do you think this one is going to be? I >> I still think we have multi-year left to the cycle. Not at the velocity and the intensity we've had in the last 6 months, but I think I said we're going corrections within a bare market are healthy, >> but I think the I always whenever I'm long a thesis, I'm always checking my thesis and saying what could be wrong with my gold thesis. You know, honestly, one of the one of the red flags I had several months ago is when Elon Musk came in as as Doge. I said, you one of my thesis has been runaway spending and controlling debt and deficits are just out of control. I said, if there's one guy in the world that could >> potentially get the US government more efficient, more lean, more uh controlling spending was Elon Musk. And even after 3 months, he did good job for a few months, tried and threw up his hands, and then right after you have the big beautiful bill, big deficits. So, you always got to check your thesis. But I'm I'm saying what's going to shift people away from the trend of diversifying away from the US dollar. What's going to make people believe that, you know, US government spending is sustainable and deficits are going to be under control. I'm not seeing that in Europe, not seeing that in the US. So I think we have a real permanent, you know, bid in gold on a fiscal basis. And like we said earlier, the the rotation of capital by by any stretch does not feel like it's overdone. So that's that's our two underpinninging backdrops. Along the way, we'll have corrections, but I still think we got many years left in this cycle. What could be the biggest momentum killer >> in the short term? >> Like just as a owner of equities, it would be a market crash. >> Yeah. Like like the tech market rolling over, but that would be actually quite positive for for gold. And then maybe a major, you know, structural agreement from the G7 countries to control spending, go through a period of austerity and get their deficits and balance sheets in order. >> Sign a percentage of that happening. >> You know, very 5%. Right. I mean, Warren Buffet says you can you could balance the budget in the US in two seconds. If you told all the congressmen they wouldn't get a salary if the budget wasn't balanced, they would do it pretty quick, but that's not happening anytime soon. >> No, it's uh it's interesting. Um maybe one last question there, Michael, is we're about to get Q3 results from the from the producers. Um what are your expectations? Do you think that'll draw additional attention to the sector? Um what do you make of it? >> Yeah, I think we're going to have very continued robust margin exp. I sound like a broken record, but every quarter you're seeing margin expansion >> and even the Q3 numbers you're going to print are going to be like small compared to Q4. So, we're really seeing sustained margin expansion, like record margins from the producers. And what's really interesting is that usually when old gold prices run, oil prices have run >> and oil prices have been quite subdued. So, one of the major inputs for most mines is oil. And so, you're going to see all the input costs you're seeing on mining are actually relatively tame right now versus the increase in gold price. You're going to see more free cash flow, record margins, you know, more buybacks. We haven't talked about M&A, but I think we're going to see probably more and more M&A because the company's going to start to redeploy their capital, which are going to be healthy for the sector as well. So, I think the general investor who's sort of been skeptical, did I miss it? When they see the Q3 and Q4 results, they're going to ask myself, where else can I get this kind of fundamental increase in cash flow and earnings and duh, and that'll draw, I think, more non- gold investors to take a look at the space. >> Like, one point I've been making in my interviews as well, the analysts haven't really updated their consensus view on gold. Like we're still looking at consensus numbers 25 $2600. I think Ventum is the only one cuz I spoke with their analyst recently said we're at 3,000. It's like okay that's that's better but we're trading at 4,000. >> So there's still a $1,500 to maybe $1,000 >> difference cuz when I look at the PNAF multiples for example like once we get that upgrade or look at spot those are tiny. We still have a lot of catching up. >> Absolutely. Yeah. The consensus gold is about 2,600. If you're looking at the companies I'm traveling with, they have PAS that they were done at $2,200 gold and their upside bull case was like $2,800 gold. Yeah. >> The upside, their upside case, their PA is now $1,200 below where the current price is, right? So, and then like we said, you don't want you running your studies at $4,000 gold. That's not the right way to look at the sector right now. But it does show you how much latent upside is in these stocks. Should we even just settle around 4,000 gold and stay there for three years, there's going to be a huge upward bias to estimates and now have a multiples in the sector. >> Yeah, I think we need to just get used to a new price environment. >> Correct. That's one of my key takeaways from Beaver Creek as well. I was like, I got to think rethink because I have a long list of companies that I didn't like for a long time. >> Yes. >> But they might work at $3,500 or $3,000. So I I have to revisit that list cuz it's just a different environment that we're in. Um >> Michael, thank you so much for joining us on Frank. Good to see you. Thanks so much. And uh where can people get a hold of you if they >> How do they dial for your dollars? >> Yeah, mainly on YouTube. They find me. Um, but mainly mainly on YouTube, you type in my name and gold and I'll pop up a bunch of great content like you're doing yourself here and uh that's the best way to get a hold of me through that. Watch what I'm thinking. >> Um, and people the the companies know how to find me. >> Perfect. Very last question. What's your favorite commodity right now? >> Uh, I would still say gold. Yeah, gold. I mean, I think silver's had a nice run. It's pretty torquy, but I think gold is still my favorite commodity. Um, I'm starting to look at some of the neglected commodities like nickel and lithium. I'm a contrarian. I don't say I like them. I'm not saying I'm buying them. I'm not saying I'm getting long any stocks, but I'll start to look when things get really ugly. And I think there's a lot of negative sentiment in lithium and nickel. That's probably a good time to start look at those as well. >> I've recently deployed quite a bit of capital in a zinc company. Okay, great. >> So, I was like, okay, let's see how that goes. >> Right. Um, talking about contrarian. So, absolutely fantastic, Michael. Thank you so much. Everybody else, thank you so much for tuning in. Really appreciate you watching. Let us know what you think. Where are we in the cycle? What inning are we in? If you want to use a baseball analogy here, are we in the first? Are we in the fourth? Are we in the ninth? Really curious what your thoughts are. And if you haven't done so, hit that like and subscribe button. Really appreciate it. It's a free way to support us and we tremendously appreciate it. Thank you so much. We'll be back with more.
Gold at $4,000: How You Survive the Gold Stock FOMO | Michael Gentile
Summary
Transcript
It's becoming again money again in the financial system in a very important way. And I still think we're we're very early, maybe third inning in a a multi-year trend >> and and a really gold reasserting itself in the financial system. Don't lower your standards. Yeah. >> I mean, it's hard. I've had these questions on the road. >> If you lower your standards, you might actually make more money in the short term >> because the the garbage the garbage companies will go up faster than the quality ones. But if you lower your standards and the market does have a correction or does have a big pullback, that's where you lose a tremendous amount of money. Hello and welcome here from Frankfurt, Germany. My name is Kai Hoffman. I'm the Edj Mining guy over on X and of course you're a host of this channel and I'm being joined by none other than Michael Gentilly. Michael, it's great to meet you in person. Thanks. Thanks so much for coming to Frankfurt. How are you? >> Very well, thank you. >> You must be you must be excited. You must be euphoric about what is going on in the markets right now. Um before we dive into some of the details, like give us a sense like how is your road show this week? What is the assessment of the market? Like what what are your thoughts right now? >> Lots of energy. It's this is day five. So, it's been did five five cities in five days. We're still going strong. Um been a lot of interest. Um lot I would say, you know, 70% of the crowd are your diet in the wool hardcore precious metals investors, but encouragingly 30% of people we've met have been either family offices or investors that are new to gold, either buying physical gold but never bought a gold stock before or thinking about allocating to gold. So, we're seeing the early early innings of, you know, generous adoption in the space, which is very, very nice. >> And uh it's great to Europe's a great market. I really happy to be here because a lot of long-term thinking, long-term shareholders which I try to build my companies around like you know cornerstone long-term perspective and so they have that obviously that perspective of being owners these businesses for more than 3 months >> and so that's very very refreshing as well but >> four months in a day. >> That's true. Not with a life offering now three days. >> Good good point. Yeah. >> So it's been great. It's been really nice to be here and um we had a good group of companies, good reception, a lot of good dialogue, a lot of good debate in the one-on ones which has been nice as well. >> What's the feedback you're getting on the market? Like I used the term euphoric which I'm using very cautiously these days because I've been in this market just as long as you have probably 14 15 years and >> I'm scared to get whacked over the head again. >> Correct. >> Jolly analogy somewhere where you're in a city where it's rained 20 days in a row where it's not supposed to rain and the sun comes out for a day and everybody expects the rain to come the next day. Yeah. >> I mean it's it's been a really brutal bare market. And so for all those of us that have been in the trenches getting beat up for seven eight years of apathy and disinterest when you see a surge of interest you instantly think it's over. Yeah, >> but what I So that's a question I've been getting a lot. Is it over? Should I sell? I got somebody saying, is it a bubble? And I'm like, look, the gold allocation globally prior to this rally was about 0.5% of total investor wealth was in gold or gold equities. If you look after the rally, maybe it's 1 and a.5%. Gold's 25% of central bank balance sheets. It's becoming again money again in the financial system in a very important way. And so I don't think 1.5% global allocation would tell you it's the end. And based on what I met the last 5 days, I don't see a lot of new money coming sector. I see incremental steps, but the average investor, I would say, still owns zero >> or very, very little gold. So, I don't think, can we have corrections? Absolutely. $4,000 gold, $50 silver are big scary round numbers. They're euphoric numbers. They're also scary numbers. So, that cost people to pause and think, but I still think we're we're very early, maybe third inning in a a multi-year trend and and a really gold reasserting itself in the financial system. But people obviously are nervous after years of of difficult returns. >> Yeah. I feel like we're the dog chasing a car, barking at it, and all of a sudden the car stops, but we don't know what to do with it. >> Yes. >> Right now we're the dog is like, "Oh crap, the car stopped." Like it. >> So we we need to educate the dog. Like not saying that investors are dogs, but I'm trying to go with the analogy here. Um cuz the investors are nervous. We saw that yesterday in the market. We're recording this on Friday, February October 10th. Um and yesterday we've seen a massive down day. Mhm. >> Gold also retreated but the mining stocks felt like they overreacted almost. So there's a lot of nervousness in the market like what should investors do right now and maybe we'll start with a timing like where are we in this cycle? >> If you look at any bull market they call it the wall of worry right? So if people were not nervous I would say it's probably much more much more negative sign that people are nervous. So bull markets go through these phases where in the euphoria phase people think that nothing can go wrong and they'll never go down and there's there's no fear and there's a lot of risk takingaking. So, I feel like the correction yesterday is healthy. A little correction is healthy. A little profit taking is healthy. Uh skepticism is healthy. That's that was that's what tells me we're early versus other bull markets where it just becomes, you know, unilateral thinking and you know, if you if you say the stocks are going to go down, you're criticized. It's the opposite. All the globals are questioning themselves and asking themselves. So, I think it's very healthy the little pause we might have. >> We all have PTSD. >> We do have PTSD. Exactly. So, I think it's very very healthy. And like I said, it's I I keep an eye on the general adoption like this. these bull markets grow by more and more adoption and so when I don't sense that all my friends are talking about gold that the average investor is talking about gold they're allocating to gold they're sharing at cocktail parties which gold stocks they own that we're not at all there yet so I don't think it's >> it we're get slowly though like I have a good friend she's a dentist and she recently told me she's like hey Kai I bought a mining stock >> I was like >> thanks for telling me but why didn't you ask me beforehand and then she gave me the name and I was like okay sure great okay move on right but that's sort of what we're seeing They're seeing it in the media as well and >> there we're not at the mass adoption phase. I think we can agree on that. Um, but the banks are changing their tune as well and I'm trying to figure out as well what was the domino that sort of led to that rethinking as well like that first stone that set it all off. Do you have a do you have an idea what that could have been? >> I mean the first first domino for me obviously the the US gold bugs been talking about the debt and the bounds that that's really tired but it's true. It's permanently a fixture and I think it's a permanent mega trend. The real domino for me was when Russia invaded Ukraine and the US free froze their foreign currency reserves. That was like that was the shot the canary in the coal mine so to speak with that really kicked off a major like tense allocation of central bank to physical gold. That's really what's kicked it off and I think now the central and also seeing the persistency of that movement where the US the central banks are consistently selling treasuries. >> I mean it's hard for the big banks to ignore gold when it's now the second largest reserve asset on the central bank balance sheets after the dollar. Yeah, like >> if you're a big bank, that's your job is to understand these things. So, I think those two in combination are forcing the big banks to pay attention. And when they look under the hoods and they say the trends, they kind of look, they're they're kind of undeniable or unstoppable. You know, I use another analogy. I feel like a farmer who was planting seeds for seven years, the sun was shining beautifully, the right amount of water, and no plants were growing and you're questioning what what's going on. Now, all of a sudden, the plants are starting to grow. People aren't paying attention. But these trends have been very very visible for multiple years. This people were not looking. >> Yeah. Like vindication is a term I've been or not I've been using but I've been hearing quite a bit. Um do do you feel vindicated? And it's it's a dangerous >> Yeah. Vindication is a bit of a dangerous word. Yeah. But I feel let's say validated. Let's say valid. I feel like at some point I felt like the guy in the the big short, you know, short mortgages during the bubble in the US and 08 and had to put the headphones on to block out the noise because you're like what am I missing? what the fundamentals are truly there especially with the stocks not following and we've talked about that before in previous interviews like the retail interest just wasn't there because they've been distracted by AI and crypto and different things that were speculative money was going that way I think when gold crossed through 3,000 there's a lot of skepticism there too this is this is and when it when it blew past 3,000 people realized it wasn't going below 3,000 it actually going towards 4,000 that's when when retail the retail market started to wake up or investors said I have to pay attention here >> so for us have been paying attention it is validation Now the fundamentals are fantastic for the industries that are doing really very well. >> Absolutely. Um coming back to the nervousness and the risk management to a degree like how do you manage your risk? You're obviously an insider in many companies. So it's kind of day you can't really get in and out of the stock on a daily basis. And then you see gold price move yesterday. I think gold almost dropped $100 intraday. Um, how do you manage your risk? >> Yes. What I've been speaking about on this tour has really been my approach to portfolio management and allocation. What I look for in companies and also how I allocate capital. I'm a little different >> because I'm I'm more running like a private equity portfolio. Like when I make an investment, it's a 5 to 10 year horizon. I don't trade my stocks. I don't have clients asking me to redeem or increase positions and money. So, it's basically my own capital. >> So, how I manage my risk is making really good decisions on the way in. >> So, part of your risk is managing what you pay, what's your entry point. >> Yeah. And then if you're if you make a good initial purchase price, typically you're in the money and then you're just playing with your profits, so to speak. My exits are because I have a private equity mentality and I own 10 15 20% of a company, it's usually on a liquidity event take out. >> In the last 10 years, I've probably had five or seven takeouts and those are those are obviously very healthy moments for the portfolio where you can take some cash off the table, reinvest it in more junior mining stocks or put some money into, you know, bonds or real estate, whatever you want to do. But in general, I'm I'm quite aggressive. I'm like 90% invested of my personal worth in precious metals equities. I've been preparing for this cycle for many many years. The farmer is finally seeing the plan start to grow. At some point, if it gets really crazy and like we're years from that where everyone owns gold stocks and CNBC is talking about gold stocks and you and I are on as guests every day because people want to talk about it, that's probably when you want to start rotating out. But for now, I'm still in actually more in the planting phase. >> You know, I'm not really thinking about harvesting too much yet. >> Yeah. Have you ordered the combine yet though? >> We need one big one. Yeah. >> Right. No, that's it's true. Like I'm trying to figure out what inning we were in, right, as well and trying to get a sense maybe we can talk about the junior mining cycle in general cuz with the capital moving into the space and uh I think Q3 we've already beaten the previous year, the year before in 2022 I believe in terms of just dollars raised within the oring coverage universe and there's a lot of bigger deals happened as well. We're not in the 2011 on the 2011 stage yet or level yet cuz we started late this year. We we lost the first quarter, >> but the two quarters in between were absolutely phenomenal. We raised close to $5 billion within our space. So where along where on the cycle are we for the juniors um in particular? >> For sure. I think there's been a massive fundraising in in the quarter. I think we have to the way I would like to look at it would be let's take a three or four year rolling basis because it's been you know three years of starvation. >> You know if you if you fast for two days you're probably going to have a very big meal. >> May I jump in real quick? >> We've raised $4.5 billion on average over the last three years which is twice as much as we raised in 2015. Y >> so that was really dire. I was going to say like the last few years haven't actually been that bad. It's just the question is where did the money flow to? >> Yes. Where did it flow and what type of companies are getting financed most in the junior micro cap space let's say were operated. I would I would like to segment that statistic. >> That's what I'm >> because the bigger companies were raising money when they were delivering their balance sheets. So the last three four years it was IM Gold doing a $300 million deal. Ken Rust doing a bit. So those are deals that were but the funding for the sub 200 million market cap companies just I don't have the numbers in my fingertips but anecdotally it's been very very dire like all the money that my company's raised last 3 years prior to this year was me dialing for dollars >> calling networks handtoh hand one investor at a time there was no bought deals there was no money being thrown at you say this is the first financing cycle since co for my companies where the brokers were calling me saying we have interest would you like to do a bot deal would you like to do a financing so anecdotally it's the first time since co that I've seen actual money being available to the juniors, the micro caps, right? Bigger company's different. Um, but I think we're we've also been starving these companies, the juniors for many years, right? I think since 2015 till today, there's been a few windows to raise money. Maybe 20 2020, 2018 and today. >> 20 was fantastic. Yeah. >> But in general, in general, there hasn't been much money available. So, that would be the first thing. If you see sustained quarter after quarter of big big financings, that that'll be a sign that we maybe siating the market. But, I think for now, it's more a starvation diet. And now these companies can finally get to eat something. They're raising some money. But I don't think we're in a, you know, the doors are wide open. You can find us whatever you want anywhere. >> I think grassroots explorers still struggle. Companies are like, "Hey, we have a dream here in Alaska and we want to see if that tree be that dream becomes a reality." >> I don't think they're it's that easy for them yet. So I'm questioning like where where like on the trickle down if you have the birds on the the telegraph pole like where are we on the on the pole right now? Where's the money at? It's it's probably in the in the resource delineation uh you know PA proven you know deposits or acceleration stories some companies are very successful where the market sees yeah you're having success with a drill bit you have two rigs turning you want to go to four the market is is sanctioning I think projects where they want accelerate I'm also seeing in the silver space a little bit more indiscriminate financing of pretty much anything >> because people are want to get long silver they're they want torque they want data >> and there not a lot of options >> there a lot of options so if you're a silver name you you probably are have the most access to capital right now. But you're right, the grassroots green field expiration, that's typically later in a cycle when investors say, "If I make a discovery, I could have a $200 million market cap." We're not there yet because you'd rather find a company with a proven resource than take that risk of a green field discovery if they don't have a big enough market cap upon success. >> Absolutely. No, I think we're seeing that though discoveries do get rewarded. We've seen Prospector Metals, just to mention one name that was hyped last week, fantastic hole. >> Dural are moving stocks for the first time in many years. >> And even rollbacks get rewarded. We keep joking within our circle like usually you get punished when you do a roll back but now even uh that is looking better. So it's it's a really interesting times. Um one thing this cycle or when there's money available that you know all the tide lifts all boats. Sadly there's some boats that shouldn't be floating. Um how do you or what do you tell investors what to pay attention to? Like I've had quite a few pitch calls last week where I got pitched and I was like oh god. >> Yeah. It's a really good question. So I always say don't don't confuse a bull market with intelligence. Yeah. Right. So don't think because your stocks are going up that you've bought the right business or the right mining company. Remind the viewers of the show that failure is the norm in the space. So if you're if you're actually if you're buying companies to rent them as a short term, that's a different story. But if you're actually buying company with the hope of it becoming a mine one day, that they're very hard to find. So yes, bull markets will allow lowquality projects to get financed. And also you have to be careful not to finance projects that need a very high goal price and high price to succeed. There's reasons certain projects have failed continuously through the cycles because they don't work at lower gold prices. So, if I was an investor saying, you know, this project doesn't work at $3,000 gold, but if it's $4,000 gold, >> I can build this mine. Remember, all the projects that have better economics that worked at $2,000 gold are going to be in front of you in the financing curve, but the big financings when you talk about building a mine are capital. So, don't lower your standards. >> Yeah. >> I mean, it's hard. I've had this question on the road. >> If you lower your standards, you might actually make more money in the short term, >> because the the garbage the garbage companies will go up faster than the quality ones. But if you lower your standards and the market does have a correction or does have a big pullback, that's where you lose a tremendous amount of money. And so there's a question, are you a are you a pure speculator? Are you like an informed speculator investor like myself? Are you an investor? >> Like what are you what are you trying to do with your capital? But if you're buying these lowquality companies, know that they're really rentals and not investments. I like to invest. So I don't typically go near those companies just because I know I can't suspend my intelligence to say this is going to work. >> Yeah. >> And just say, "Well, the stock's going to go up." I it's not able to do that. >> No, it's it's impossible. Like I I I struggle with that and I've been telling my investors that I've been meeting here last week as well like stay true to your principles. >> Please >> do me that favor cuz we see companies raise 10 $15 million with where the founders have 16 million shares at half a penny. >> Y >> I was like >> and you sit there it's like but that stock's probably going to double or triple. >> Yeah. Until they start, right? And then Yeah. So it's really frustrating. Um >> what are you looking for? Like how long do you think this market has? Like I know it's it's a bit of an unfair question, but uh >> how how much >> what's the time scale that you're looking at? Like the c we move in cycles. We know that. >> Yeah. >> How long do you think this one is going to be? I >> I still think we have multi-year left to the cycle. Not at the velocity and the intensity we've had in the last 6 months, but I think I said we're going corrections within a bare market are healthy, >> but I think the I always whenever I'm long a thesis, I'm always checking my thesis and saying what could be wrong with my gold thesis. You know, honestly, one of the one of the red flags I had several months ago is when Elon Musk came in as as Doge. I said, you one of my thesis has been runaway spending and controlling debt and deficits are just out of control. I said, if there's one guy in the world that could >> potentially get the US government more efficient, more lean, more uh controlling spending was Elon Musk. And even after 3 months, he did good job for a few months, tried and threw up his hands, and then right after you have the big beautiful bill, big deficits. So, you always got to check your thesis. But I'm I'm saying what's going to shift people away from the trend of diversifying away from the US dollar. What's going to make people believe that, you know, US government spending is sustainable and deficits are going to be under control. I'm not seeing that in Europe, not seeing that in the US. So I think we have a real permanent, you know, bid in gold on a fiscal basis. And like we said earlier, the the rotation of capital by by any stretch does not feel like it's overdone. So that's that's our two underpinninging backdrops. Along the way, we'll have corrections, but I still think we got many years left in this cycle. What could be the biggest momentum killer >> in the short term? >> Like just as a owner of equities, it would be a market crash. >> Yeah. Like like the tech market rolling over, but that would be actually quite positive for for gold. And then maybe a major, you know, structural agreement from the G7 countries to control spending, go through a period of austerity and get their deficits and balance sheets in order. >> Sign a percentage of that happening. >> You know, very 5%. Right. I mean, Warren Buffet says you can you could balance the budget in the US in two seconds. If you told all the congressmen they wouldn't get a salary if the budget wasn't balanced, they would do it pretty quick, but that's not happening anytime soon. >> No, it's uh it's interesting. Um maybe one last question there, Michael, is we're about to get Q3 results from the from the producers. Um what are your expectations? Do you think that'll draw additional attention to the sector? Um what do you make of it? >> Yeah, I think we're going to have very continued robust margin exp. I sound like a broken record, but every quarter you're seeing margin expansion >> and even the Q3 numbers you're going to print are going to be like small compared to Q4. So, we're really seeing sustained margin expansion, like record margins from the producers. And what's really interesting is that usually when old gold prices run, oil prices have run >> and oil prices have been quite subdued. So, one of the major inputs for most mines is oil. And so, you're going to see all the input costs you're seeing on mining are actually relatively tame right now versus the increase in gold price. You're going to see more free cash flow, record margins, you know, more buybacks. We haven't talked about M&A, but I think we're going to see probably more and more M&A because the company's going to start to redeploy their capital, which are going to be healthy for the sector as well. So, I think the general investor who's sort of been skeptical, did I miss it? When they see the Q3 and Q4 results, they're going to ask myself, where else can I get this kind of fundamental increase in cash flow and earnings and duh, and that'll draw, I think, more non- gold investors to take a look at the space. >> Like, one point I've been making in my interviews as well, the analysts haven't really updated their consensus view on gold. Like we're still looking at consensus numbers 25 $2600. I think Ventum is the only one cuz I spoke with their analyst recently said we're at 3,000. It's like okay that's that's better but we're trading at 4,000. >> So there's still a $1,500 to maybe $1,000 >> difference cuz when I look at the PNAF multiples for example like once we get that upgrade or look at spot those are tiny. We still have a lot of catching up. >> Absolutely. Yeah. The consensus gold is about 2,600. If you're looking at the companies I'm traveling with, they have PAS that they were done at $2,200 gold and their upside bull case was like $2,800 gold. Yeah. >> The upside, their upside case, their PA is now $1,200 below where the current price is, right? So, and then like we said, you don't want you running your studies at $4,000 gold. That's not the right way to look at the sector right now. But it does show you how much latent upside is in these stocks. Should we even just settle around 4,000 gold and stay there for three years, there's going to be a huge upward bias to estimates and now have a multiples in the sector. >> Yeah, I think we need to just get used to a new price environment. >> Correct. That's one of my key takeaways from Beaver Creek as well. I was like, I got to think rethink because I have a long list of companies that I didn't like for a long time. >> Yes. >> But they might work at $3,500 or $3,000. So I I have to revisit that list cuz it's just a different environment that we're in. Um >> Michael, thank you so much for joining us on Frank. Good to see you. Thanks so much. And uh where can people get a hold of you if they >> How do they dial for your dollars? >> Yeah, mainly on YouTube. They find me. Um, but mainly mainly on YouTube, you type in my name and gold and I'll pop up a bunch of great content like you're doing yourself here and uh that's the best way to get a hold of me through that. Watch what I'm thinking. >> Um, and people the the companies know how to find me. >> Perfect. Very last question. What's your favorite commodity right now? >> Uh, I would still say gold. Yeah, gold. I mean, I think silver's had a nice run. It's pretty torquy, but I think gold is still my favorite commodity. Um, I'm starting to look at some of the neglected commodities like nickel and lithium. I'm a contrarian. I don't say I like them. I'm not saying I'm buying them. I'm not saying I'm getting long any stocks, but I'll start to look when things get really ugly. And I think there's a lot of negative sentiment in lithium and nickel. That's probably a good time to start look at those as well. >> I've recently deployed quite a bit of capital in a zinc company. Okay, great. >> So, I was like, okay, let's see how that goes. >> Right. Um, talking about contrarian. So, absolutely fantastic, Michael. Thank you so much. Everybody else, thank you so much for tuning in. Really appreciate you watching. Let us know what you think. Where are we in the cycle? What inning are we in? If you want to use a baseball analogy here, are we in the first? Are we in the fourth? Are we in the ninth? Really curious what your thoughts are. And if you haven't done so, hit that like and subscribe button. Really appreciate it. It's a free way to support us and we tremendously appreciate it. Thank you so much. We'll be back with more.