Masochism: "gratified by pain, degradation, deprivation, etc.,
inflicted on oneself either by one's own actions or the actions of
others."
On Friday afternoon, I completed my weekly missive, which was composed of
a detailed analysis of just how magnificently Barrick Gold Corp. (GOLD:US)
had been used by the interventionalists to manipulate the ARCA NYSE Gold Bugs
Index (HUI:US), all of the big ETFs (GDX, GDXJ, NUGT, JNUG) and ultimately,
the prices for gold and silver. Then suddenly, with little warning, I had an
epiphany. Not only was the nine hours of work a complete and total waste of
time, it suddenly occurred to me that a forty-year career spent nurturing a
belief system anchored in the bygone days of Bretton Woods might just have
been an exercise in redundancy and cognitive dissonance.
As if driven to reveal a hidden secret for all the world to see, I have
carried an unalterable obsession with the notion that sound money principles
would, in the end, return to prominence and in fact become seriously
entrenched in the practices of governments around the world with gold and, to
a lesser degree, silver acting as key components of a fiscal and monetary
renaissance. Alas, as the Baby Boom generation fades away into old age and
irrelevancy, it is at once both sad and obvious that the new wave of Gen-Xers
and Millennials and Echoboomers have determined that there is little or no
validity to the concept of sound money and have therefore rendered gold and
silver, as monetary and fiscal canaries in the Modern Monetary Theory coal
mine, as irrelevant and from an investment standpoint, useless.
I have on average about 200 conversations per week with investors from all
over the spectrum in terms of age, wealth, nationality and interests. I
normally make notes of the discussions, a fallback to my days as a financial
advisor, long before email replaced notes as the proof-bearer of action and
intent. What I found astounding is that all discussions pertaining to
cannabis, social media, technology, or the future direction of the S&P500
lasted greater than fifteen minutes. Metals and mining conversations,
including gold and silver, tended to be less than seven minutes and chats
related to junior mining and exploration were less than three minutes with
many instances of "subject changed" or "I gotta go."
Now, as a fervent addict to the thrill of new mineral discoveries
("There ain't no fever like gold fever!"), I have recently begun to
feel like the heroin addict searching through life for that rush of euphoria
that arrived long ago with that first hypodermic injection but the reality is
that the new generation of investors found their hypodermic adrenalin in the
form of technology stocks, then crypto, and finally and more recently, weed.
My friend James West was a gold and mining newsletter writer back in 2010
with the first promotional piece for Tinka Resources Ltd. but has since
evolved into the foremost authority on cannabis and is enjoying a thriving if
not booming career renaissance (and it couldn't happen to a nicer man). The
remaining advocates for investment in precious metals and the related mining
and exploration shares are in effect living a life "gratified by
pain, degradation, deprivation, etc., inflicted on oneself either by one's
own actions or the actions of others." In other words, they are
practicing a form of masochism.
Take the last two companies that I have referenced in this missive, Getchell Gold
Corp. (GTCH:CSE) and Western Uranium & Vanadium Corp. (WUC:CSE; WSTRF:OTCQX).
GTCH is currently raising money and while it is going surprisingly well, it
has not been an easy raise, what with the dismal action in metal prices since
mid-February. WUC, however, began its US$2 million raise three weeks ago and
Tuesday announced that it was significantly oversubscribed and in fact came
in just under the full exercising of the 50% over-allotment option. This was
a terrific development for the company but what surprised me greatly was the
investor reaction to uranium and vanadium that was so diametrically different
than the reaction to exploration for gold and silver in the most prolific
precious metals environment in North America. The average investor "gets
it" when you talk about the uranium (and vanadium) outlook but they
stare at you with glazed-over eyes when you try to describe how Barrick Gold
went from $1.80 to $3,300 per share from its activities in Nevada in the
1982–2010 period.
Here is yet another example of life in the isolated world of sound money
advocacy. I was recently introduced to a private start-up company (that shall
remain nameless, at least for now) and suffice it to say, the best
description is that it is a type of "Facebook for Cannabis users."
I had the pleasure of meeting over lunch with the 30-year-old Millennial
female, exceedingly well trained and very well spoken, with a Master Grower's
License and an MBA from the Ivey School, a couple of weeks ago after which I
was asked to offer consulting advice in the area of capital markets related
to financing. She asked me if I could assist the company in finding a few
investors to participate in its seed round and while I won't mention the
amount, I proceeded to call an accountant friend that uses me for feedback on
mining investments. This very successful fellow has over the past ten years
had his fingers in major real estate deals and crypto deals but also in the
early-stage cannabis deals such as Canopy, so with that knowledge, I decided
to ask him to assess this new non-mining venture as more of an "acid
test" than anything else.
I described the deal as best I could, which was totally lame given my
total ignorance of anything related to social media or weed. His reply after
perhaps three minutes on the phone was "How much as you trying to raise
again?" and after I told him (it was north of six figures), he said
"I'll take it all," at which I choked on the phone and I said would
get back to him shortly. I then proceeded to call a very successful realtor I
know and I got precisely the same result. "I'll take it all. Send me the
forms." I then proceeded to make seven additional calls and got seven
additional "I'll take it all." responses. The point here is that I
could work for a month to set up the best mining deal in the world and it
would take another month or two to finance it but if it is anything related
to the Millennial checklist of "suitable investments" (which
include social media, cannabis, artificial intelligence and blockchain) four
phone calls and it is done. Now, the contrarians would tell me that it is a
sign of a "classic top" but the reality is that for the past
decade, investors have been rewarded by buying more of "what is
working" and selling "what isn't." Pot deals have been working
but more importantly, mining deals, by and large, have not.
So, when I use the term "masochism" to describe the behavioral
quirks of the average gold investor, the term "glutton for
punishment" comes leaping into the forefront. To be constantly searching
for that drill hole in the sky or the ultimate ascendancy of gold to $10,000
per ounce as all politicians, regulators and bankers disappear into a
vaporous hole of failure and disgrace is not only unwise, it verges on
Einstein's description of madness: repeating the same behavior over and over
for the same negative outcome.
Over the years, I have been asked hundreds if not thousands of times
"What would take gold to $10,000 per ounce?" and I always reply
with the same conclusion: "When the USS Nimitz pulls into Gibraltar for
a re-fit and they refuse the credit card." The American Empire dominates
the world; the American "dream" is force fed around the globe; and
the American monetary experiment has been duplicated by central banks
everywhere to the extent that the Bank of Japan will soon own over 50% of the
Nikkei and the Swiss National Bank owns $87.5 billion worth of U.S. stocks
bought with money it printed out of thin air. Back in the days before the
internet, the mere thought of a central bank dabbling in stocks evoked
shrieks of horror; stocks were for gamblers and bonds and bills were for
serious, prudent investors. Back in the day, counterfeiting was considered a
crime and neither citizens OR central banks were allowed to do it. How times
have changed…
While the average American sees little benefit to owning gold, domestic
prices in Australia, Turkey, Russia and India have recently approached or
surpassed their one-year highs. Only the U.S. and China (pegged the USD) have
stayed at or near the levels of 2011. From the numerous charts posted below,
it clearly demonstrates gold's utility as a protector of purchasing power,
particularly in countries such as Turkey that have experienced sever currency
crises. The point here is that gold actually has fulfilled its role as a safe
haven in all countries across the globe except two: the U.S. and China. The
U.S. vigorously defends its currency versus gold and China has a USD peg on
the yuan and yet, the two countries are diametrically opposite in their
actions. China has been a voracious buyer of gold and seller of U.S.
treasuries while the U.S. has done the opposite.
Canada gold price
Australia gold price
Russia gold price
Turkey gold price
India gold price
China gold price
U.S. gold price
The name of my publication was changed last year from "Gold and Gold
Miners" to GGM Advisory for one very simple reason: relevancy. If
actuarial tables conclude that the Baby Boom population is a rapidly
shrinking demographic, if studies of investment demand confirm that the new
generations of investors are decidedly ambivalent (if not hostile) to gold
and silver investment, and if regulators and exchange officials continue to condone
and indeed endorse continued price suppression, then waiting for the USS
Nimitz to become a disabled, unpowered relic leading to a moon rocket in
metals and miners could become a very, very long exercise. Most of us that
are in or are approaching retirement don't have the luxury of time on our
sides to await the arrival of that one singular event that justifies twenty
or thirty years of holding on to the precious metals while the S&P 500,
the NASDAQ, cryptocurrencies and weed make millionaires out of 30-something
messiahs too young to remember the bursting of the dotcom bubble and in some
cases, the 2008 subprime meltdown.
Since 2009, we have had numerous events that should have been the moment
where gold and silver emerged as the "Go-To" asset class with the
most recent being last Christmas Eve when the S&P closed in bear market
territory while gold was screaming higher. With the flick of a switch,
Treasury Secretary Smilin' Stevie Mnuchin stepped up and called upon the
Working Group on Capital Markets to put a stop to the crash in stocks and
since February 20th, every gold rally has been stomped out with
intervention after intervention while every dip in the NASDAQ has been
magically supported.
It is the same narrative whether 2001 or 2008 or 2018: rigging stock
markets are essentially this decade's version of Roosevelt's "New
Deal" back in the 1930s. Instead of building roads and dams, the
policy-makers today build nothing except moral hazard and a generation of the
"Entitled." It is a dangerous precedent and one which cannot last
but the problem for us is that is HAS lasted a great deal longer than we
might ever have imagined and there is nothing near-term to suggest that the
Great American Ponzi Scheme cannot continue.
All right, now that I have concluded my rant on the madness being
inflicted upon us, I have a couple of observations to make about gold.
Earlier last week, I was looking at GLD wondering whether my GLD May $124
puts might hit $5.00 before the end of the week and then it occurred to me
that my "Line in the Sand" at the prior lows of $1,282 and the
subsequent "breakDOWN" was no different in its blatancy than the
"breakOUT" in Barrick. So, I pulled up the GLD chart and lo and
behold, while the sub-30 level for RSI sported two super buying opportunities
in 2018, it has not been much under 35 in all of 2019 thus far.
Now, notwithstanding that the stock markets are getting somewhat
stretched, I have to respect two things: 1) the dotted red line in the RSI
window in the chart below and 2) that only in the perverse world of precious
metals are technical "breakdowns" to be BOUGHT while technical
"breakouts to be SOLD. Therefore, I have covered all of my shorts in
both gold and the mining shares and initiated 50% long positions in JNUG,
NUGT and the GLD June $120 calls. The chart below pretty much says all that
is needed: we are at an inflection point that represented tradeable bottoms
in mid-November and early March.
As a final observation (which could also be seen as a
"confession" of sorts), I use my own behavior as a market barometer
and with the benefit of time and age, I always go back and re-read my
missives because they give me a sense of perspective on markets in the same
way Anne Frank's diary provided perspective of a different time and place.
Both diaries are extremely personal but both give the reader a wonderful
window into the mindset of an era.
My entries from the week of October 19, 1987, revealed a relatively young
financial advisor (34) coping with the total destruction of client assets,
and to go back and re-visit the emotions contained in the words and syntax is
still to this day painful. Anyone reading the diary of a young girl trying to
avoid extermination is emotionally impacted far greater than by the musings of
a stressed stockbroker but both messages allow reflection. I carry the utmost
of conviction that sound money principles will prevail and I promise that I
won't go into a seventeen-paragraph repetitive blather as to "WHY?"
but if people are going to listen to what I have to say, I have to provide
"actionable ideas" that carry logic, excitement, and weight.
My dad died in 2013 at the ripe old age of 89 and one of the things he
drilled into me was that one of the things he learned as a WWII navigator in
the RCAF was that many times, people tend to "think too much" as
opposed to simply "reacting. As an example, as a fifteen year-old
hockey-playing "sniper" (goal-scorer), I was going through a
particularly painful slump where everything I fired at the net was getting
blocked, saved, or veering wide. On the drive home from the venerable St.
Michael's Arena, after hitting four goal posts and extending the dry spell to
six games, I finally asked my dad (who never played the game except shinny on
Grenadier Pond) what I was doing wrong, to which he responded "You're
thinking too much—just fire the biscuit." The next game, on my first
possession, I didn't even look at the net or the goal—I just ripped it from
outside the blue line and, as if it had eyes, it pinged in off the far right
post and into the goal.
As traders and investors, we all tend to "think too much" so
when I launch one of my invectives upon all of you, try to remember that in
the big picture, 5,000 years of fiscal history would validate the logic of owning
gold but within that window, numerous generations have perished in poverty
while bequeathing tonnes of it to their heirs, who sold it, bought (and
smoked) cannabis, traded Bitcoin, and lived happily ever after.
Food for thought...
Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University
where he earned a Bachelor of Science in finance and a Bachelor of Art in
marketing before completing post-graduate work at the Wharton School of
Finance. With more than 30 years of experience as a junior mining and
exploration specialist, as well as a solid background in corporate finance,
Ballanger's adherence to the concept of "Hard Assets" allows him to
focus the practice on selecting opportunities in the global resource sector
with emphasis on the precious metals exploration and development sector.
Ballanger takes great pleasure in visiting mineral properties around the globe
in the never-ending hunt for early-stage opportunities.
[NLINSERT]
Disclosure:
1) Michael J. Ballanger: I, or members of my immediate household or family,
own securities of the following companies mentioned in this article: Getchell
Gold Corp. and Western Uranium & Vanadium Corp. My company has a
financial relationship with the following companies referred to in this
article: Getchell Gold Corp. and Western Uranium & Vanadium Corp. I
determined which companies would be included in this article based on my research
and understanding of the sector. Additional disclosures are below.
2) The following companies mentioned in this article are billboard sponsors
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for important disclosures about sponsor fees. As of the date of this article,
an affiliate of Streetwise Reports has a consulting relationship with Western
Uranium & Vanadium. Please click here for more information. Within the last six months, an
affiliate of Streetwise Reports has disseminated information about the
private placement of the following companies mentioned in this article:
Western Uranium & Vanadium.
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4) This article does not constitute investment advice. Each reader is
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This article is not a solicitation for investment. Streetwise Reports does
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees
or members of their families, as well as persons interviewed for articles and
interviews on the site, may have a long or short position in securities
mentioned. Directors, officers, employees or members of their immediate
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Streetwise Reports LLC (including members of their household) own securities
of Getchell Gold Corp. and Western Uranium & Vanadium Corp., companies
mentioned in this article.
Charts courtesy of Michael Ballanger.
Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of
the data provided. Nothing contained herein is intended or shall be deemed to
be investment advice, implied or otherwise. This letter represents my views
and replicates trades that I am making but nothing more than that. Always
consult your registered advisor to assist you with your investments. I accept
no liability for any loss arising from the use of the data contained on this
letter. Options and junior mining stocks contain a high level of risk that
may result in the loss of part or all invested capital and therefore are
suitable for experienced and professional investors and traders only. One
should be familiar with the risks involved in junior mining and options
trading and we recommend consulting a financial adviser if you feel you do
not understand the risks involved.
