Brien Lundin, publisher of the Gold Newsletter and organizer of the legendary New Orleans Investment Conference & Matt Warder, of Seawolf Research join us to talk about the gold investing narratives that matter.
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John Newtson: All right. Hey everyone, I’m, I’m excited today ’cause we are going to be talking about gold and specifically why be invested in gold? Why are investors choosing not to be invested in gold? What are the stories, the narratives and kind of all of the big trends in, in nuances of the gold investing market.
Both from the psychology of the investor, the trends in the market, and how we all talk about it. And I’m really excited today because joining me, of course, is my co-host Connor Lynch. And we have Brien Lundin from the New Orleans Investment Conference and the Gold Newsletter here joining us.
Who, Brien, you’ve been kind of at the, I’d say like the, the forefront of the gold conversation for several decades now. And we also have Matt Waterer from Sea Wolf Research, who is our, I. Connor and I are promotion and anal and, and emotion. Matt comes into kind of be the rational brain in this whole thing.
So thank you everyone for being here. I’m excited to get this going. No problem. Happy,
Brien Lundin: happy to be here.
Conor Lynch: Great to be here for it.
John Newtson: for it. This is going to be a good one. And so I want to start, Brien. For everybody who maybe doesn’t keep their finger on the pulse of the gold market with, if you could kind of give us kind of a 50,000-foot view of where, where you see gold as a sector is right now.
What are the stories that are being told right now, but mostly from the context of like, you know, we are, we have had several different cycles, obviously in your career. What is this in, within the historical context of where the world is? How do you see the gold sector right now?
Brien Lundin: S you’ve gotten me for the next 30 minutes then to just to pontificate on this, I hope, because I, I’ve got lots to say on that subject.
Right now, gold is in the summer doldrums. That’s the short-term view. Longer term, I think it’s reflecting and about to seriously reflect the kind of the end game of a four-decade plus trend of ever easier money, ever more absurd monetary policy by central banks to the point where either in this portion of the, this cycle or the next cycle or the next one but coming up fairly quickly over the, the, the, the big picture fiat currencies are going to lose Credibility to the point where I think gold will have to be included back into the financial or monetary system in some real way.
So, and that’s because things as I alluded to, are getting more and more absurd as central banks drive all of the markets and all of investor and saver expectations that there will always be a savior out there to rescue them with ever easier money. In other words, more extreme monetary policy to a multiple in fact, than was done in the, the previous crisis because the markets and investors are becoming addicted to this ever-easier money.
Trend. So, it takes more and more of that drug to, to get the same effect. So basically, you know, in 2008 after the great financial crisis, the central banks led by the Fed came up with a lot of things that they had never done before. They’d always lowered interest rates in every previous recession or crisis, but then, and then try to normalize it, but never been able to really normalize it before they had to lower it again in 2008.
They had to go straight to zero, right to the very foundation. Some central banks even went negative on nominal interest rates. And they came up with all these programs to inject fiscal, monetary adrenaline into the markets and into the economy. And then Covid struck in everything that they did post 2008, over four to five years.
When Covid hit, they did it in four to five days in a multiple of what they did before. So you know, watch out for the next crisis, ’cause what they do this time around will really knock your socks off. And that’s coming. We know that because of the way the Fed Guides monetary policy tries to guide the economy and other central banks, that they are going to create the next crisis by whatever policies they are doing today whatever overreactions they are making today.
So there will be another crisis coming. And I think gold right now is, as I said, in the doldrums, kind of stuck in neutral because of the, the fed’s hawkish rhetoric. But it has gained a few hundred dollars over this last eight or nine months. And it is looking ahead, I think, at the other side of the cycle when the Fed is forced to ease.
’cause whether the Fed raises another quarter point or another half point over the next couple months, the interest rate cycle is peaking. We’re within inches of the high. And so the markets, I think gold and the bond market are looking ahead for the down cycle in interest rates. Right. And, and, and we’re going to start seeing that reaction in the price.
John Newtson: So if I could, if I could just interject here then and kind of step this out to kind of like the, the, the narrative here, because this is a core, I would say this is like the core gold narrative that everything kind of works around and, and so many of the news stories today feed into right now, and it’s this, this idea fundamentally that when the fiat currency, when, when.
Fiscal policy, monetary policy has become, has reached a level of irresponsibility, or when the geopolitical, macro conditions are creating so much instability that you’re not sure what’s going to happen and you can’t trust the current kind of monetary regime, then your only real option is gold. I mean, is that it in a nutshell, is the Yeah, in terms of the narrative yeah,
Brien Lundin: exactly.
It, it’s not an inflation hedge per se. It doesn’t track inflation tick by tick. The, the critics who say gold is not an an inflation hedge or Absolutely correct. Gold responds, though, when people are genuinely worried when there’s widespread concern about the future purchasing power of their currency.
And then it makes up for lost time in overshoots. And I think that’s
John Newtson: why, like, when, when we, I mean the people who, who I know who, who. Brought gold up repeatedly in promotional cycles and things like that. One of the kind of constant references are those periods of hyperinflation that have happened in say like, you know, Weimar Germany.
Conor Lynch: Yeah. Weimar, Germany, Argentina, Venezuela, now Zimbabwe.
John Newtson: Right. As kind of proof points that these things can and do happen, and in that environment is the most extreme environment, that is the environment that obviously in that scenario you need gold.
Where else do you think with this narrative right now of, and I referenced this in another conversation, Connor and I had, Randy Smallwood from who’s the head of the world Gold Council, had said something along the lines of, you know, culturally in Asia, right?
Like in China and other folk places you see in India there’s a culture of buying gold right among the citizenry. And you don’t see that as much in the west in terms of like actual physical asset in his. His reasoning on that was, well, those are places where people have fundamentally less trust in their governments and institutions.
In the West, we kind of have a, a higher level of trust in, on, on, on the average day, and so because of that, we don’t tend to buy it. But as that trust arose and kind of in periods of crisis when all of a sudden we don’t trust. The government, we don’t trust fiscal policy, we don’t trust anything. Then we kind of start to flee a goal too.
Is that kinda the dynamic that Yeah. Is at the core
Brien Lundin: of this? Yeah. You know, the, the two big drivers are fear and greed and in gold they both come together unlike really any other asset out there because you, you’ve got somebody who might be afraid for the future value of their wealth, everything that they built up over their lifetime, but then there’s this tingling in the, you know that they get as well that, Hey, I can make an awful lot of money on this trend as well.
Yeah. Asia’s completely different. Asian investors are not investors. They’re savers in gold. It’s a fundamental part of their culture as a means of savings. So actually when the gold price drops Asian buyers jump in and when the price rises, the western. Investors and savers tend to follow the price higher so that, it’s interesting that over decades it’s been this flow of gold going from west to east or east to west, depending on what the price trend is.
And Asian investors really are just essentially have put under the gold market, they support the gold market through their buying when the price is any kind of a significant decline. One of the
Conor Lynch: things I think is really interesting about the gold market as opposed to pretty much every, all, well, almost every other class of investments is you have this core of, of people who, regardless of where we are in the price cycle for gold, whether it’s bullish or extremely bearish or dead, as it as it was for many, many years up until very recently they will still hold gold.
And there’s, there’s a political component to that. There’s a romantic component to that, and that is sort of your, your, your core group of, of gold investors. And then. And so I, I think one of the things I’d like to dive into with you, Brien, is just ’cause you, you know, the gold investor probably better than anyone.
What do they look like? How are they thinking? And, you know, coming into today’s moment in the market, how are they thinking differently than they were five years ago when Gold was in the, is in, was in the trow of, of of, you know, a decade of, of, of misery.
Brien Lundin: Yeah. You know, it’s, it’s interesting his, traditionally it’s been a combination of a demographic and a, and a psychographic.
That what happens is people become, Gold bugs Eddie, this is what used to be the case at license and to some degree it still is as they got older and, you know, became more the, the curmudgeons and get off my lawn kind of people. And, and the world’s going to hell in a hand basket yet this built years of, of cynicism building upon itself and you become a gold bug.
You know, I, I remember literally 30 some odd years ago when we were noticing that the attendees at my annual New Orleans investment conference were showing up increasingly in wheelchairs and walkers that we had to market to younger people. And so we went and spent an awful lot of money, advertising and publications and media that catered to younger professionals, and it was crickets.
Zero response. Absolutely zero response. In another 10 years. We look at it and these, they’re, they’re in wheelchairs and walkers again. I’m like, well, we really have to get some younger people in now. And again, crickets, another 10 years goes by and I’m like, hold on. These are not the same people we saw 20 years ago.
You know? Right, right. I may be slow, but I get the point eventually that these, what ha what’s happening is they’re replacing each other. There’s people mature and they, they get to become gold bugs when they see the world around them not living up to the standards that, that they may be used to. Now, I’ll say that’s the way it’s historically been.
I’ve noticed that we’re starting to appeal through kind of unusual ways to younger entrepreneurs. Primarily really through our focus over the last 10 years or a new focus in last 10 years on real estate investing and young people who are really getting in, getting into real estate as a way to.
Become financially independent. And these are amazing people. They’re, they’re entrepreneurial, they’re independent. They are probably naturally more conservative and libertarian, and they’re discovering gold as a way to, to preserve their wealth. And even as a way to preserve equity or assets capital that they can u then leverage for real estate investments.
So we’re starting to get, at least in our events, a a bit of a younger contingent, which is very encouraging. ’cause I do think the appeal in today’s day where there’s so many unusual things happening, macroeconomically, that, you know, none of what we’re seeing is normal in any way. Mm-hmm. And and I think that’s bringing a lot of people, forcing a lot of people at, at every age and demographic to kind of wake up and say, you know, it’s getting a bit scary.
John Newtson: Well, so that’s the. The fear el element, right? Because gold is, I mean, kind of like it’s your option outta the system, basically. Yeah,
Brien Lundin: yeah. You’re, you’re literally, you, you are opting out. It is independence, it’s it’s
John Newtson: freedom. It’s, you’re basically off the monetary, off the monetary grid, right? And so there is that, that that core like psychological component of, for the core market of this is a way to opt out of the system.
When any trend picks up, then you start to see ancillary groups who are maybe not true believers necessarily Yeah. Who come in because of the price action bugs,
Conor Lynch: but, but other, other, other categories of that, of that both retail and professional
John Newtson: trading audience. Yeah. And, and so right now, I think one of the things that, that you spoke to in terms of the, the, you know, the debt and, and all the things that we, that are happening, and I think geopolitically, this is very true.
Maybe Matt, you can speak to this too, but the, the core narrative then of. This is a way to hedge against failures within the system by step, by by, by saving outside the system. And the fact that that is essentially kind of an option on your trust in the system. And that now when we have these big geopolitical stories that basically, and not just stories, but realities that put the whole system in question, right?
We, we talk about like, you know, the changing global security environment and how that is impacting supply chains everywhere. And we have you know, the, the, the increasing tensions between, you know, the current kind of global order and a changing world order and all these things that are, that are in the news Ukraine and all of its impacts all that, all that.
Story and angst in increases your distrust in the system in the fear component, which I would assume is part of what’s feeding into the retail level buying of gold. But the thing that’s really interesting to me is that we’re also seeing globally central bank buying of gold spike pretty dramatically.
And so is that same dynamic of fear and mistrust in the system true not just for the, the guy in the wheelchair who’s cynical and old and yell at the kids, get off his lawn. Is that also essentially what’s happening at the central bank level?
Brien Lundin: Yeah, I think so. I mean, who, who would know better? Even though I don’t have much faith in the abilities and you know, perceptions of central bankers, ’cause they always make the wrong move.
Over the long term, but they know, they can see what’s going on that. And, and it’s, it’s very simple. You know, I, I tell people yes, you know, the geopolitical crises and, and uncertainty does create some buying and some background buying. But the key thing that moves to gold price is, is basically monetary debasement, you know, or, or currency, debasement rather.
And gold is money is the one thing that stands alone. You know, if you take, and one of the ways I I demonstrate that to people is that if you take any indices or any price and discount it by the price of gold, now just divide it by the price of gold. Do you see that the Dow hasn’t moved for 60 years?
The cost of a college of a Ivy League education is the same today priced in gold as it was in the 1930s. The price of a Big Mac in every major currency has declined if you price it in gold. So gold stands fast and sure there wiggles on the line, but it’s really everything else that revolves around gold and varies in its value relating to gold.
Gold’s value doesn’t shift or change relating to all the other asset classes. Their values shift according to, to gold. So that’s, that’s a key message that I think for people who are trying to promote the message of gold, it, it is the real message, and I think it establishes your credibility. If you can give this message that the first thing you need to do is buy physical gold, nobody’s going to make any money off of that.
The price, the margins in buying gold volume are, you know, like 2%. So nobody’s going to make any money. This is what you need to do, sock away some fiscal gold and silver because you’re insuring against not a possibility. You’re insuring against an inevitability that, you know, in 3, 5, 10 years, your the dollars that you spend for gold now will be worth much less in relation to that, that goal.
So you’re preserving wealth, and if you look at all those other macro trends, there are ways that you can leverage that trend in investments to build wealth. But it’s really, it’s a, it’s a two-pronged approach that I think is, is, you know, very valid and very
John Newtson: effective.
That makes a lot of sense. And then, I guess right now, Matt, like you, you, you’ve had a lot of conversations I know and kind of gone down the road of. Where gold fits in the whole supply chain story and, and kind of the current debt story that Brien was talking about earlier, right? Like where do you see this right now?
How do you, how would you kind of describe the environment that we’re in, where it’s going? What are these catalysts? Because if, if it’s not just the, the price of gold you know, you, you’re socking it away against, you know, the, the lower cost or lower value of your money over time. Like, how are, I would say, like, you know, the, the more institutional analysts in, in, in firms thinking about this right now.
Well, I mean,
Matt Warder: you know, from, from their perspective, they, they move into, they move into gold when they get scared, right? Mm-hmm. They move into gold when they get scared that G D P is going to go down, right? G d P is going to decline. That is kind of the, the first you know, the first. One of the first places that, you know, a professional money manager will look to to park some cash.
Right? And that’s, that’s what’s been really interesting over the past, you know, six, eight months, you know, as, as interest rates have risen typically gold, if you go back over the last, you know, 40, 50 years, gold has this inverse relationship to the interest rate on the 10 year tips. That is that has been really prevalent.
But here over the past few months, we’ve had, you know, rising interest rates and and rising gold prices, which has been, which has been pretty interesting. And the, the, the sort of lesson that I, that I take away from that, like, you know, as, as analyst, I can’t really afford myself to like, you know, buy into any one narrative.
Like the, the price is telling us, you know, all the information that we need to know in terms of rate of change and direction and those sorts of things. Right. But the you know, I, my, my sort of sense of it is, If you look back at the last 40 years when, whenever we’ve had periods of geopolitical uncertainty about economic uncertainty that those sorts of waves of, of sentiment almost act as a bellows for the price of gold, you know Brien, Brien alluded to the fact that, you know, hamburger priced in, in gold is, you know, has changed over time.
Well, that’s, you can see it in, in just these, these base levels of prices that have, you know, kind of gradually ratcheted up over the last 40 or 50 years. So, when you have an event like you know, the global financial crisis, we see an increase sort of in the, in the baseline price for gold where it went from, you know, $400 or, or so in the, you know, in the 1980s up to you know, here, you know, over the past you know, from the, in the mid two thousands we were around 1250, I think we got down as low as about a thousand dollars, but stayed in it, stayed in four digit territory.
And now here after, after Covid, you know, we’ve moved basically from, from that baseline of 1200 up to a baseline of about, you know, $1,750. And, you know, when, when, when the, when the market kind of equilibrates to these new levels, they, the, you know, business cycles are going to cycle, right? You know, G D P is going to go up, G D P is going to come down.
But it’s, it’s when you have these sort of big events that that drive either, you know, sovereign debt or drive geopolitical instability that you see you know, sort, kind of new life. You know, breathed into precious metals. And so, you know, I, I think, like for instance, we had the, the C P I report came in today at 3%.
And the, the, the sort of narrative that’s going to be pervasive in the market right now is that, well, that means that, you know, interest rates are going to come down because inflationary pressures are easing. When interest rates go down, gold goes up. That’s kind of what’s happening today. And we’re back up to this, you know, kind of nineteen hundred and fifty, nineteen fifty level or thereabouts, right?
Pretty, pretty close to, you know, where, where the all time highs have been here around, you know, 2050, $2,100. So when, when we, when we think about inflation, however, once you move, you know, past this quarter, these, the June are the easiest comps for inflation going, going a year back. They actually get harder from here.
And, you know, there’s, there’s a good chance that, you know, some of the materials that we’ve talked about on past podcasts may begin to re-accelerate in value. You know, we, we haven’t had a defacto recession yet because, Consumer spending has been resilient. And part of the reason it’s been resilient is because, you know, the price of energy has fallen you know, almost by half over the past year that that leaves enough money in people’s pockets to go, you know, spend on on other stuff.
Now they’re getting less for it, you know, per, per Brien’s point, which is why kind of gold has stayed at this level. But, you know, the, the next, I think the next narrative that comes in is going to be, well, inflation is sticky. And if inflation is sticky, then there may, you know, the sentiment may shift to see you know, interest rates rise again.
And that might be, you know you know, Brien calls it the summer doldrums. I, I think it’s just going to be kind of a reemergence of an inflationary narrative that happens over the next three months. It’s, it’s really kind of a nothing burger. Like we’re, we’re here between 1750 and 2100 until we get another one of these.
Sort of larger events that that brings new life into it and, and draws investor and, and, and more specifically like institutional focus on. But the, you know, the, the, the tropes that, that Brien’s are talking about from a narrative perspective are, are very real. You know, they play out over the course of, you know, decades, not weeks or months or even years at that point in time, right?
So, like, if you’re thinking about it from, from a narrative perspective, you have these, you know, sort of the macro construct you know, and the, the overtones with which you can, you know, bring people in. But you know, in, in my experience, like what people really sort of connect with is like, well, how does this affect, you know, my life?
And, you know, that’s where I think narratives more, more sort of focused on it’s not an inflation hedge, but inflation affects people and inflation is at least a narrative bridge to gold. That’s one way to kind of, you know, bring interest in. And then the other is you know economic uncertainty.
The more economically uncertain people are, the more unease they have you know, the, the more receptive they’re going to be to you know, to material that, that pertains to precious metals. That’s been, that’s been proven out over time. And you know, it’s, it, it’s something I certainly believe too.
But so I guess, you know, to sort of differentiate my view from Brien’s, it’s, you know, I’m more focused on the market fluctuations and, you know, movements in the, in the pricing goal, but those, those movements happen for reasons that that readers can connect to. And, you know, having, having read Brien’s newsletters you know, for, for years now I know that, I know that he talks about that, that sort of that sort of thing regularly as well as well as he does on his podcast.
And, and at least, at least for me, that’s the, those are the kind of like real world, you know, happening in real time things that, that I really engage with.
Conor Lynch: There’s, there’s another narrative bridge to gold. And, and, and Brien, you kind of touched on it earlier when you talked about how there’s, there’s a fear story around gold and there’s a gold story or, and there’s a greed story.
Story and, and that those intersect, especially it when gold finds itself in a bull market where initially you have people who are focused on, on gold, out of, out of fear, out of concern about stability, lack of confidence, lack of trust. But then eventually a gold, a gold bull market happens and you have a couple junior gold explorers that do a 50 bagger or a hundred bagger or some crazy number, and all of a sudden there’s a greed narrative that starts attracting people, retail investors and, and, and institutions into the space.
So they might not, they might really not have a frame
Brien Lundin: of reference for it. Yeah, there it, we do see more people and some new people. Now the, the people who come to our events throughout thick and thin they’re still there and they’re sure they have a bit of a lilt in their step, you know because they have bought right.
It’s not like they’re lighting cigars up, you know, with a hundred dollars bills or anything, but they are interested and they’re actually often putting their winnings back into the market. So it’s kind of a self-feeding you know, closed loop thing. There you do get some people who are new to the sector and that’s something that has to be managed for me, as somebody that has been through a number of these cycles, you want to temper people’s expectations.
You know, a raging gold bull market for an investor brings other problems. There are the kinds of problems you want to have, but there are still issues that need to be addressed. You know, I’ve been through a couple of these cycles where your, your capital gains are so great there. It’s like an income flow and, but it’s all on paper.
And, and if you really get energized about the sector, you take those and you cash in one position and you plow it right back into another position in the same market. And sometimes, eventually that doesn’t work. Quite often it works very well, but eventually it doesn’t. And so I find myself trying to counsel people to take it out of the market, not just into cash in a brokerage account, but put it into real estate or something to liquid something, two or three steps away from the market.
So you, you have to adjust as somebody who’s advising these people you have to adjust what you’re telling them in different kinds of market environments. But yet it is, it brings in people who are either. You know, either not new to the sector or who aren’t nearly as experienced and concerned about, you know, preserving their
Conor Lynch: profits.
And I guess for that audience, they, do you find that, that they skew younger, less conservative? Or, or, or is it demographically similar in, in your mind?
Brien Lundin: It is it, it runs the gamut. It is typically younger. The, the people who are, who are better speculators, traders as opposed to investors. But they all do get involved.
You know, the typical way to leverage these gains is to get into these junior mining stocks, which is kind of what we focus on in, in Gold Newsletter. So even the, the older crowd, the people that have been around, they’re invested in that sector. And then you have the, the newbies who come in. And really don’t know what to look at.
You have to pardon the background. I’m in the middle of a raging thunderstorm here, so working the mute button religiously here. But yeah, the they, the ones that come in are the ones that can be prone to a lot of promotions, you know, fall victim to some promotions. And what we try to focus on is the education aspect of that and telling people it’s, if you’re going to get involved, you can outwork people.
It’s a, it’s a inefficient market. You can find undervalued opportunities that are, others are missing, but you have to work at it. You have to spend money, you have to spend time and work at it. If not, don’t even bother and just buy the, the, the indices. So, yeah, they, it does attract you know, a lot of people who really don’t experience in the sector.
And that’s something I, I think that has to be managed. It actually
Matt Warder: leads me to a, to a question, Brien. Why, why don’t you talk a little bit about, you know, the, how you think about owning, you know, physical gold versus owning large cap, you know, mining equities that are in production versus small cap mining equities in production versus say, you know, an exploration company you know, is the process.
Do you think about the process of, you know, lever you know legging into those, those investments differently? You know, depending on what it is or, I, I guess just maybe give us a, a little bit of a broad overview because I, I think this is a you know, an issue that is under discussed, you know, in the, in the broader industry outside of outside of
Brien Lundin: your newsletter.
Yeah. Again, I take the two-pronged effect approach. I tell them the first thing you do is get physical metals. You need to have some physical metals in your possession, ready access, not in a safe deposit box because one of the things you’re insuring against would be, say a bank holiday. So you need to have it accessible, some portion of it.
You can build your physical metals exposure through some of the ETFs and physical trusts out there. And I have specific recommendations for them there. But I think it’s important to establish that credibility with people and, and I think it’s important that they establish that foundation. That’s the insurance part of owning gold.
Mm-hmm. Now the other part is the investment part. Now if, if you’re looking at the macro picture and feeling that that’s going to support much higher metals prices over the long term, which coincidentally I think it does right now, then you want to Then you want to leverage that, that macro picture. And the typical way to do that is through, well, a lot of ways to do it.
Futures options ETFs and the like on leverage in mining stocks. And even in mining stocks. Even in mining stocks, you have a wide spectrum from the big producers down to the juniors. The juniors really are a casino, and it is a high risk, high reward area that I tell people you have to educate yourself in before you, you really get involved into it.
Otherwise just, you know, you can leverage just
Conor Lynch: by buying. And there’s a subset of investors for whom that’s extremely appealing.
Brien Lundin: Yeah, yeah. And, and that’s good and that’s fine. But they need to subscribe to, you know, two, three, or four of the best newsletters out there to, to get information that they need to go to the conferences, et cetera.
Matt Warder: What about the, you know, kind of micro cap exploration companies because ex exploration versus development versus, you know, actual production. Very, very different sort of environments. Can you talk about, you know how to think about, you know, building a position in an exploration company versus a minor specifically?
Brien Lundin: Yeah, and the important thing to remember is for, for better and worse, is that this is a story business people, the excitement of discovery is what you get in the expiration stocks and the stories are fun to tell, the fun to get involved in our readers. Typically, I tell the, the mining companies, you know, when you get one of our readers to invest in your company, just be ready.
They’re going to call you up, you know, they’re going to ask you, call you up weekly for the story, get updates they’re going to invite you to Thanksgiving dinner, you know, and things like that. But they’re never going to leave. You know, they’re, they’re, they’re going to be with you for the long term and you, you just have to be ready for that.
Conor Lynch: they, well, what could, what could be more romantic than the, than the hunt for gold? You know, as, as far as investment stories go, I mean, it’s, it’s a literal treasure hunt.
Brien Lundin: It, it really is. And that’s, that’s the fun of it. And that’s, you know, even I get captured by that. I tell people that right now we’re in a very interesting situation.
We’re in companies that have real value established resources at some level of development and may have some economic studies applied or whatever, but they are so undervalued right now, especially relative to metals prices, that you can have four and five bagger potential by buying these companies right now.
So you can have the kind of upside potential of an expiration play, but with the downside, much more secure. And and buying real value. Now, those, however, are more boring than the expiration place. So I still find even myself attracted to the the expiration place a lot, putting my own money into a number of them.
But the situation now is that you can find these companies that you can be fairly confident in two or three years. They’re going to be trading at 3, 4, 5 times their current levels. And that’s a decent return, you know, in any market. And, and they’re just sitting out there right now ready to be bought.
And and they’re interesting stories because they do typically have somewhat of an expiration component to them. But it, there’s a lot of real value out there for pennies on the dollar, pennies on their established value.
I think that’s
John Newtson: a, that’s one of the. Most fascinating things to me about the junior space in, in like, is, is ’cause like to Conor’s point, gold mining fundamentally is exciting and romantic. There is in the, in the exploration and there there’s this excitement that, that comes with just the whole idea of it.
And, and it’s but you’re also like at risk with everything that’s story driven, that the story is often better than the asset. And that’s why, like, to your point earlier, I think people need to understand that like in these kind of very niche markets, it’s, you know, the information advantage that you have is actually, that’s what the newsletters provide, right?
That’s what, like you said, you know, subscribing to the top 2, 3, 4 newsletters covering the space to give yourself the amount, information and relationships going to the conferences. Your conference is phenomenal. And I say this to someone who puts conferences on, like, I love everything that I saw there and how you actually can get.
Not, not just to meet the companies, the CEOs other investors, and really get a deep understanding of the space and the people in the space. But that is a fundamental like you, you need to be able to do that. Otherwise, the stories are great, but the stories have to be matched by actual, like assets and things that are worth investing in.
Conor Lynch: if you’re a retail investor and you’re, you are interested in participating in this space, you, you, you have a few choices about where you can get that information. One is what we’ve been talking about, the, the newsletter side. The other is the publications and the media that the issuers themselves are putting out.
And with that, your interests are not necessarily aligned with the issuer that’s putting that out. So if, if you’re not subscribing to these things, if you’re not consuming media where the editor and the publisher are aligned with the readership in terms of outcomes, then. You don’t know the quality of the information you’re getting, you don’t know how reliable it is.
You don’t know if it’s been framed in a context that’s deliberately misleading or anything along those lines. And I think that’s an important thing that people have to watch out for.
Brien Lundin: And yeah, and, and one way to do that a fairly simple way to do that is, you know, the, the Canadian stock exchanges, the Toronto Stock Exchange, and the Toronto Venture exchanges represent the, the real epicenter of mining finance in the world.
And they have seen every method and form of scam over the decades that, that the human mind could, could imagine. And they have regulated against all of those. That’s not to say there aren’t scams and but, and, and won’t be further ones, but they do a much better job. Of the US exchanges and understanding that market and and through their regulations.
So generally speaking, there are a few exceptions here and there, but generally speaking, I tell investors new to the sector that if it’s only listed if there’s a junior expiration or development company that’s only listed on the O T C, for example, they are doing that by choice to avoid the Canadian markets the Canadian exchanges and the regulations thereof.
So to be leery and most likely not invest in anyone that’s not listed on the Canadian exchanges. ’cause the, the press releases from those companies generally adhere to you know, certain requirements in a certain form and a way of, of presenting information that’s fairly standardized. And once you have a way of understanding what they’re saying and putting it into context, Have educated yourself to that level, then, then you can do pretty well by separating the wheat from the chaff and what’s good news and what’s so, so news and what’s really bad news.
John Newtson: Well, that’s a, that’s a great tip just in terms of the regulatory environments. ’cause often people, especially Americans think, oh, it’s better if it’s the, if it’s listed in the us. But when you’re talking about like the O T C versus some of those Canadian exchanges, that’s like a phenomenal just piece of information that if you don’t know, you don’t know.
And and, and I have a
Conor Lynch: little bit of experience with this because I’m actually in the process of doing a mining direct listing. So, and we’re doing it on a Canadian exchange. There are specific requirements in terms of the qualifying transaction, fear, fear listing that the Canadian exchanges have that are specific to mining that they don’t necessarily have for other categories.
So even within the Canadian exchanges, there are requirements for mining projects that are a little bit different and based on what I’ve seen looks like more stringent. So it’s it’s definitely a real thing.
Brien Lundin: Yeah. And, and in some cases the US exchanges are really don’t understand the market and they are more stringent and to a degree where it really hurts the investor.
For uranium companies, for example, they, they can’t establish reserves or or publicize them until they’re virtually in production. So there’s no real way to gauge them at earlier stages of the process. And you have to look to the Canadian markets to, to get that kind of information. So it’s really just a, a, you know, a level, a level of in expertise and and too many companies for the s e C to, I think, to really adequately reg regulate.
So there’s a, a, a lot of things to be wary of on the US exchanges, particularly the O T C. That’s great.
John Newtson: So just kind of like reframe this here ’cause I know we’re coming up on the hour. One thing that I love about kind of the things that you said here is, is one, that there is this core dynamic across all levels of investor that is about trust in the system.
And that all the sub stories that any newsletter is talking about that kind of. Questioning the trust in the system inherently then has a gold story. And I think a lot of, a lot of people who work in like the publishing subscription newsletter industry who are not working specifically with their franchise that has a lot of gold expertise, doesn’t always recognize that or and so that’s, that’s one thing that I think is, is really just interesting is that there is a core set of stories that are always being told that all lead back to gold.
And as the macro stories become bigger and bigger and people are talking about things that, that kind of are a little more fear-based or a little bit more geopolitical that there is a gold story, that that’s kind of the, the, the obvious end result of that. I also think that That, that romance side of it, and this is true of people that I’ve talked to who are from the mining space, the, the companies themselves who are trying to tell their story and the copywriters who are trying to sell subscription newsletters or people who are either trying to raise capital is that I think they miss how important that romance element is to most investors and they miss the most interesting parts of their story because they’re always starting with, If they, if they don’t know anything about gold and they’re trying to sell it from the other side, they instantly go to, well, how many ounces of gold do you have in the ground?
And what’s the gold price? ’cause that’s about the only thing they understand. And then a company is often very much focused on like the minutiae of their results. The geology the numbers, trying to prove that stuff. And they miss, like, wait, there is this like amazing, exciting kind of story that ironically a lot of them probably got into the industry because of their own engagement with that kind of romantic idea.
And that really what you’re communicating is almost like the adventure of your company, right? It, there is this romantic story about what this company is can be and you know, and could potentially become that is. The essence of why within a broader gold story, why someone would go for this one company right here.
And, and I think that that is wildly underplayed by a lot of whether it’s investor relations people, a lot of CEOs and companies that they don’t really get that the, that that is actually a very important part of the story that they tell. I mean, do you find that, you talk to all of them, so I’d be curious to your, your, your thoughts on how companies present themselves and where they kind of fall down.
Brien Lundin: Yeah. It, it is vitally important to have a good story and have someone who can tell it well you know, I, it may not be something I should be doing, but when I talk to companies and they ask me about participating in my New Orleans investment conference, I tell them that if they, if they have a good story and they have, somebody can tell it, well they need to pay for the highest sponsorship level that gets them in front of as many investors at my conference as they possibly can.
If they don’t, then they should just come as an attendee and just get the feel of the conference that they’ve never been there before. And, and I have discouraged some companies from, from participating in sending me a, a check ’cause I don’t think they would get that kind of result ’cause they just don’t have their story yet together yet enough elements to that story.
And, and frankly, they probably did a lousy job of telling it to me. So they’re going to do a lousy job of telling it to somebody else. So I try to help them out in that way. So they need both of those. But there are key hooks. You know, just like any kind of a sales promotion direct response promotion, there are key hooks that you need to have for each story and ways to present it.
And it is a crying shame if you have a a sector like, you know, mining exploration, like gold exploration, silver exploration, that discovery story, and you just don’t recognize it and you don’t have, you leave that tool in your toolbox. You’re really sacrificing it now, even when these companies are presenting in front of institutional investors in and other geologists, and they’re getting into the, the real minutia and the you know, all the lingo.
They still need, they can still weave that into the story. You know, people are people they still get motivated by that, like by that. And you can take a very jaded analyst and give them all the facts and, and all the, the intellectual ammunition and build a great story. But if you throw a little bit of a tinge of that discovery in that a little bit of the romance as well, you can still push their buttons.
And, and I tell companies they just always need to do that. And you can see some of the most successful people in this industry. They, they had to be able to tell that story. ’cause that’s the only way that they could attract the money to, to build a story to begin with.
John Newtson: Yeah. I found Nick, when I’ve talked to anybody who’s, who’s been very successful in this space, it’s almost, it’s almost like.
They speak and copy, right? They, they’ve gotten their ability to tell the story has become so innate and natural that, like, as somebody who, you know, worked as a, you know, direct response copywriter, I can, I can hear the hooks and the credibility elements and the, and like the structure of it and, and it’s just kind of in how they talk and tell the story.
Yeah. And like the, the interesting part, like and that to me is, you know, whenever I talk to a a company and I don’t hear that kind of language, then you’re like, oh, there is a, there’s a, there’s an obstacle here for them, not because of the quality of the company, but just their, the quality, which is,
Conor Lynch: which is a, a big problem for a mining company versus other categories of business because it takes a huge amount of capital and it takes a huge amount of time to go from the exploration stage through development, through permitting, through all of that to actually get a mine built in, in production.
So, and this is something John that, that we’ve talked about a few times. When you’re a mining, a junior mining company, you have two businesses. One, the core business of finding a resource and developing it and getting it ready to actually be a, be a mine. But the other business is the capital markets business of getting out there and raising money and, and, you know, supporting your stock price and, and, and all of those things.
So if you are not capable of telling stories that resonate with investors, whether institutional or retail or both, then you are fundamentally failing at half of your business model.
Brien Lundin: Yeah, and, and one of the things that I’ve grown over, The many years I’ve been been in this industry to respect are the people involved who are successes or even moderately successful.
They, they are truly Renaissance men and women that have to have so many different skill sets. You know, most of them are geologists, so essentially they’re scientists, but they also have to be business managers. They have to be able to, to run a business that puts crews into the field in some, you know, camping out, helicopter supported exploration, you know, a lot of logistics.
They have to be able to pay the bills every month. They have to be, you know, manage the finances or manage the people that are managing that. They have to be salespeople, you know, they have to get money in to, to get all that done. It’s such a wide range of skillsets that, you know, these are people that typically would’ve been successful in.
Any area of business or enterprise. But they’re attracted, you know, to the romance and of, of discovery. So
Conor Lynch: Brien, here’s, here’s a, here’s a question. I don’t know if you can even necessarily answer it. You might not be able to, but you know, everybody in the space of all the leaders in the mining industry that you can think of, who do you think is the best at telling those stories?
Brien Lundin: Oh, there’s a few of them that are exceptional. Bob Friedland, Robert Friedland is renowned as best ever. So he’s up there. Ivan Beic is another one that when he’s talks to me, I have to hide my checkbook. It’s, but none of his deals are, are cheap, but they, they generally work. Oh gosh, there’s a bunch of them out there.
There’s a, a few groups out there that are really good. The Discovery Group, the Inventa Capital Group are a bunch of, I wouldn’t say younger I think of them as younger because they’re my age, but they’re not. But or they’re about, but they, they, they have a string of successes and they do things the right way.
And they tell their stories in a very credible way ’cause they’re well built. But yeah, those are some of the ones I know I’m forgetting a bunch of them, but,
Conor Lynch: and, and for those, and for those guys and those groups, what do you think it is that makes the stories that they tell so compelling? What are they doing differently?
Brien Lundin: Well, they approach things. They, they, they’re able to see value and explain value. You know, the typical I would say geniuses in this industry, and it works in direct response too, are people who are just looking at the world from a slightly different angle than the rest of us. So they see, they have a perspective that, that we don’t have.
You know, Bob Friedland, when he was talking about the, the depth of the oil Togo deposit and everything, well, you know, he’d show a slide and he would have the Empire State Building next to it. You know, it, his class. Many people have done it since, but he was the first, you know and, and putting that in that perspective to be able to explain things in a very powerful, simplistic manner.
I think John had it, put it, well, you know, that. These people could have been direct response writers in a, in another life. Because they naturally put it in perspective. They just have a way of, of being able to immediately see those hooks. But then again, you know, they also found those projects that they’re promoting because of that ability to, to see the value that other people missed.
You know, the what if you know, well, this looks great, but look, there’s something over there that looks very similar. Geologists would say, well, just ’cause that’s their, and that’s their correlation is not causation. There’s no reason to mean that they’re connected. But this guy thinks, wow, if they’re connected, then we’re talking about something that’s truly world class and I’m going to sell it on that basis.
I’m going to get money to drill between the two and figure it out. Whereas other people may have just said, that’s. You know too, too far of a bridge to cross.
Conor Lynch: But they’re so they’re, they’re almost narrative thinkers in a way. Yeah. Like they think in terms of the story, the
Brien Lundin: vision, they can explain, they see the, they have the vision and they can explain it.
John Newtson: And that to me is, I think that’s one of those models that is, you know, it, it crosses industries and sectors. ’cause you see that with great copywriters too. It’s somebody who really understands what sells, like really understands what sells. And rather than try and take something that doesn’t fit that narrative and use that narrative to sell it, they try to put together a product or an asset that fits the narrative they know will sell.
Right. Because it’s a good asset. Right. It’s a good structured company. And I think you referred to one of the groups, you know, that they tell good stories because they put good companies together. And that I think is like, that’s the, the height of excellence when it comes to Like investment storytelling is understanding that there is a narrative that the market wants or would be excited about, and being able to actually construct a company that fits that narrative that, and fulfills on it.
Like that’s the goal versus the scam who might be like, have the skillset of the narrative, but doesn’t really worry so much about, does the asset ever actually have any chance of getting to fulfill that?
Brien Lundin: Yeah. It works both ways. You know, the, there are assets or there’s stories that are made then found, and they’re ones that are found and made.
You know, let’s say we’re looking at the whole electrification trend. It’s, it’s almost all powerful, let’s say lithium. Well, let’s. That’s a big part of it. Let’s go out. Well, this is something, you know, you would’ve had to done 10 years ago, but let’s get ahead of that trend. Let’s go out and canvas the world and find the, the best lithium deposits that we can get our hands on to fit that, that theme that, that we think is going to be huge.
And then there are these prospectors or companies that are out there and they just stumble across a property that looks really interesting and that’s found, and then they have to make that. And there’s a lot that goes into making a discovery. Mm-hmm. After it’s discovered.
Matt Warder: And the, you know, the thing that, that, that Robert Friedland does that’s exceptional, at least, at least in my view, is that he will, he will take that asset, you know, and, and talk about you, you mentioned Ou Togo talk about how great the asset is, but he also contextualizes the, the, the company or the mine or the, or the deposit.
In the, in the con in the context of, you know, the global market. You know, Robert is probably better than, than anyone at articulating the story for copper. You know, within, within the energy transition, the electri and the electrification of of the vehicle fleet and, and the power and the you know, the, the future-proofing and the power grid better than anyone.
And he will walk you through that narrative. If he does it in, in Saudi Arabia, wears the Saudi green tie, right? If he does it you know, in Canada he always wears the copper tie. He’s always representing, you know, not just you know, not just with, with concepts, but also visually. You know, he, when he’s evangelizing Ivanhoe Electric, he’s basically, I mean, he’s draping himself in the American flag when he does these, those, those sorts of nuances.
Just, I mean, they, you don’t get them from, from most executives. I mean, most folks are doing good to be able to tell, like their story and their vision for, you know, how to, you know, delineate a deposit. But, you know, Robert gives you that and and a value meal on top of it.
Brien Lundin: He, he can hold the audience in the palm of his hand though.
I remember I was watching one of his presentations a few years back at Rick’s, one of Rick’s conference Rick Rules conferences, and he was talking about copper and the disinfectant. Effects of copper. And he’s saying that, you know, bed rails in a hospital that are coated in copper reduce bacterial infection by 343%.
And I looked around the, the audience and everybody whose eyes are wide, there’s eating it up. And I said, nobody else in here but me realizes he just stated at a mathematical Im possibility. Yeah,
John Newtson: that’s
Brien Lundin: immediately what I thought number.
That’s amazing. But yeah, but you know, you know, forget it, he’s rolling. You know,
Matt Warder: for sure. But it’s you know, it’s, you mentioned Rick rule, like Rick, Rick always says in conferences, all business is people business. But you know, speaking as someone who has learned all these businesses from these you know, exceptional people like the mining business, holy cow, is it really a people business?
And, you know, if there’s one thing that, that I think publishers and, and copywriters should sort of take home, you know, from this conversation is that, is that those people are the, are, are the, are part of the story may, maybe even a bigger part of the story than the positive itself because it takes a special breed of person.
You know, not only to, you know, something, but also to bring it, to bring that story to the world. And you know, the, the better the people, the more you know, the more convincing that you know, your story’s going to be. And, and,
Conor Lynch: and for those stories, you know, if you’re a copywriter, if you’re a publisher and you’re sitting down trying to tell a story about, about a mining project, whether it’s gold or anything else you gotta, you gotta sit down with people in the space to hear those stories.
You can’t just, you can’t just look at a, at a pitch deck because they don’t, they don’t tell those parts of the story. Like, I remember the first time that I sat down with Mar Catusa, for example. That guy’s a story machine. He travels all the time. He is been on probably more site visits than anybody. He, he told, and, and John, you were there.
He told us a story about being in Iraq shortly after the Americans went in, in, in 2003 and he was in Northern Iraq check checking out some oil properties. And, and they, they were by the Iranian border and he went, he, he got out of the Jeep to, to relieve himself. And, and they were there with some ex French foreign legion mercenaries.
And the guy dragged him back into the car because apparently they were being cited by Iranian snipers across the border. So just, you know, that story is inherently captivated, but you actually have to talk to people and hear those, those stories. ’cause they’re not in the pitch text. Nobody includes that one.
Brien Lundin: But, but you, you typically have to present that story in written form some way, somehow. Yeah. And then you can make it sing if you, if you do that. And, and that’s why the best of these pitch decks, the best company presentations are narrative in nature. And, and that’s, I think something that, you know, they, they get very formulaic, you know, here’s the share structure, here are the people involved.
Yeah. The people involved almost always go in the appendix, you know? Right. Let’s just get to what, to the hooks and tell it in a narrative story, you know, almost like a, a a, a graphic novel or a comic book or something like that. Present your, your best, put your best foot forward and present those things and, and the beauty and the potential, the discovery right up front.
A good example
Conor Lynch: of that. And, and, and to your point, you know, you as, as you mentioned a lot of the time in these mining decks, the people involved the team are, are buried somewhere deep in the presentation. But what if, for the sake of argument, the geologists on the team has two massive, massive discoveries behind him in his career that have become mines and now he believes this is his third.
That’s your headline. That’s, that’s the piece that you move up to the front and you don’t see that in the decks that, that, that comes out in a conversation maybe as they’re giving the pitch, but it’s not there in the material. And so sometimes that just doesn’t end up being part of the story that gets told.
Brien Lundin: Yeah. That’s why I said almost always in the appendix. ’cause if it’s a discovery group company, if it’s an inventive capital group company or somebody like you say that has bam, bam, two big discoveries is this the next that’s, that’s right up front. That needs to be up there. And, you know, we had a, a huge winner in Gold newsletter with.
Great Bear resources. It was, you know, from our alert services, an 80 something to one winner. And whenever, you know, through our, our advertising supported e-letter, free e-letter, whenever I write up one of the discovery group companies, I’m, you know, I’m sorry, I just go back to, it is just the next great Bear resources to come out of the discovery group.
You have to do that, you know, it’s vere, it’s it, it, it is the biggest selling point because this group has done it before and obviously they know how to do it.
John Newtson: Yeah. And that’s where I think like one of the disciplines from a, just a. Brainstorming like story, narrative kind of approach is almost separating out different elements of the pitch.
And saying, what if I only could sell from this angle? Right? So what if I had to sell this entirely based on the team of people involved? What would you say? What would I say if the only thing I could say was the asset? What could I say if the only thing I could talk about was the, was the share structure.
Like, and then it forces you, like that limitation forces you to think a little bit more rigorously about those specific areas to, to really tease out what is the most interesting, valuable part of that. And then if you do that for all the different pieces, then now you have much more a much richer canvas to work with, right.
Of, of narrative to build like the, the whole story around.
Brien Lundin: Yeah, if you maximize each benefit, and that’s the key thing. You want to, you want to be able to, to to predict to. Handout or present benefit after benefit, after benefit till it keeps building, building, building to really an irresistible close or call to action.
Sometimes those individual sectors are weaker and you make a great point, John, that if you focus on that, separate it all out and, and don’t ignore that weaker point part, but focus on trying to make it stronger. Sometimes you can even tell a company something they can do to make that stronger. Mm-hmm.
John Newtson: Well, I know we’re a little bit over here, so Unless anyone has any final thoughts I really appreciate you guys taking the time to talk about this. I love talking about this sector because it is the Connor, you said this one time offline. It’s the original investment story. It’s the original
Conor Lynch: investment story.
It’s also the original financial newsletter opportunity. James Dimes you know, back in the day taking his newsletter from his brokerage that he was fired from for recommending physical gold when it was, when it was illegal in the United States to own. You know, it, it is very much the original story that our, our space tells.
Brien Lundin: So yeah. Yeah. And, and I would just as my final thought building what Connor just said, you know, this whole business kind of started in the seventies as the alternative media of financial newsletters that were mailed out, et cetera. And that’s, you know, I came in in the mid eighties, but, you know, it was, that was still the viable thing.
And back when I came in, you couldn’t even recommend stocks in financial newsletters and and until we got the low decision. But that was an alternative media today, I think, through prima, primarily financial Twitter in other social media that we’re getting another new alternative media out there that’s very similar to the old newsletters.
It’s much more immediate than it was back then. But I think there are a lot of really big thinkers coming to the fore now because the times are so extraordinary. Right now that they bring out extraordinary people just like it was in the seventies and and eighties. So what we’re going through now isn’t normal and what we’re talking about right now is kind of in the doldrums, but it’s it’s going to wake up pretty soon, I think.
John Newtson: Awesome. Well, with that, let’s wrap it up and I want to, again, thanks guys for doing this. It’s a lot of fun. We love talking to you guys. Yeah, absolutely. These are
Conor Lynch: always great. Cheers guys. Take care.
Brien Lundin: Great, great time guys. Appreciate it. Good to.