I reached out to Collin Kettell this week and we talked about Uranium, Gold, the art of speculation, and the success of his conference at Jekyll Island. Enjoy!
Hey Collin, welcome back to The Next Bull Market Move and congratulations on the success of your conference at Jekyll island - lots of great interviews via your channels Palisade Radio and Palisade Research. Describe what you learnt from the conference, and will you be doing it again next year?
Kerem, thank you! The conference was an absolute success by all metrics. The setting of the conference was of historical significance – Jekyll Island is the founding place of the Federal Reserve.
The speakers were world class. Eric Sprott gave an enlightening keynote address to our audience and spent the weekend socializing with attendees. G. Edward Griffin, the cult followed author of The Creature From Jekyll Island gave a memorable talk in the Federal Reserve Room, the very room where secret meetings took place over 100 years ago! Other notable speakers included Mike Beck, Matt Geiger, Adrian Day, Greg Orrell, and Gregor Gregerson.
The attendees came from all walks of life. In addition to all being accredited investors, their defining bond was an active participation in the resource sector or a keen interest in getting involved. The result was a kindred group of individuals with similar interest, speaking on the same wavelength. This is in stark contrast to the disjointed meetings that often occur at some of the larger resource events.
Friendships were forged, businesses were consummated, and fun times were had all around. What better result can you ask for? We will definitely be making this an annual event. More information on that to follow! I have enclosed a photograph that shows the group in front of the hotel.
We have talked about Uranium many times in the past, but I don’t remember the sentiment being as bad as it is now. This asset class is simply hated-even more so since all the gains from the recent run up at the beginning of the year have now evaporated. What are your current thoughts on Uranium?
On November 8, Cameco announced a significant cut to production. This represents further supply destruction – the result of a multi-year bear market. Surprisingly, all the uranium stocks, including Cameco, are way up! I don’t expect these gains to hold short term, but the long term picture keeps improving.
You are right in that the uranium bulls have seemingly gone bearish. It’s an internal fight when one’s thesis is wrong for so long, to reconsider. Ultimately, I still stand in the bull camp. Uranium makes up a considerable slice of global base load power. The fuel must come from somewhere. The opaqueness of the nuclear market makes it tough to know when an inflection point will be met that will drive the prices up.
But remember, uranium users are incredibly price insensitive. When this thing gets going in earnest, investors who have positioned properly will reap serious rewards. When that will be, I cannot predict. Instead, I am using this time to accumulate long-term positions both through buying physical assets that contain uranium, with low holding costs, and with 5 year warrant exposure. I would not touch these stocks without a long term warrant.
The great thing is that there are other commodities with similarly compelling drivers that are moving right now in a big way. Commodity speculators would do well to seek exposure to not just uranium, but a suite of metals that have similarly compelling supply/demand dynamics.
Gold is still consolidating this year, and looks like this may continue for the rest of the year. So is 2018 the year gold finally heads back to 1400 and above?
I think 2018 has the potential to be very exciting. I would venture to guess that the yellow metal will climb above $1,400 next year, which would make for some sensational times.
Picking up on data provided to me by my good friend Matt Geiger, 51% of global exploration expenditures are directed towards finding gold, despite the fact that only 15% of worldwide metal value extracted is from gold. That is a shocking ratio!
As an investor, what is important to garner is that gold moving up in price is what is needed to kick this commodity cycle into high gear, and ultimately into a frenzy. Until gold goes, retail demand will not come flooding into the sector.
I’m always interested in the psychology behind speculating in the markets and there is a story I recently heard about a poker player who took 50 dollars and turned it into 5 grand. With that 5 grand he could pay off all his debts and still have some capital to keep playing. However, he took all his winnings and bet one more time. Predictably, he lost all his money and when someone asked him about it he said it was fine. Why was it fine? I only lost 50 dollars, he said.
And this reminds me of how quickly you can make money in bull markets but also lose it just as quickly, when you have no risk management. Your thoughts on this?
I had a discussion with Rick Rule a couple years back and I posed to him a similar question – “The resource sector is far from reaching a peak, but when it does, how will I know its time to get out?” His response went something like, “You won’t. You’ll be having so much fun that you will ride right over the cliff along with myself and everyone else.” He was being cheeky of course, but it points to the same dilemma.
Making money as a speculator or gambler is more about the thrill of the win than the capital made. Spending that $5,000 on a new bet probably trips off more endorphins than buying a new toy. It is certainly a heck of a lot more fun than stashing that money under the mattress.
Of course, to be successful as a speculator, one must set chips aside for the next time a truly contrarian bet unfolds. What that means is slowing down your bets, often for years at a time, which equates to cutting off the heroin supply. Junkies don’t like to do that. However, the rush that will come if you are positioned to take huge advantage of a future misprice in assets when nobody else is able, is where the real fun happens.
Don’t believe me? Just look to Eric Sprott. He has had the best year of his entire career, up hundreds of millions of dollars in the past few months! Some luck might be involved, but I think there is a formula in place, a key component of which is keeping some dry powder set aside.
I have had first hand experience with a bear market. It is violent. What takes years to accumulate can be ripped away in a matter of months. The solution is discipline – methodically stack chips in another asset class as your winnings build in mining.
What are your thoughts behind such stories as Novo Resources and Garibaldi Resources?
I don’t know enough about them to make an educated comment. Eric Sprott addresses both of these stories in a recent interview we recorded during the conference.
Bigger picture, Novo and Garibaldi act as much-needed reminders to stick in the space, even when times are tough. Discoveries trump market sentiment and 100x wins can be made. These are the type of wins we get up for everyday!
And finally, what is next for Palisade Global?
Palisade continues to grow at an accelerated rate. We recently added a couple new members to the team. Many of our investments are on the cusp of really shining in the market. As an example, Mexican Gold Corp (TSX-V:MEX) recently released a 77 meter mineralized drill hole. The core looks astounding (see below). Assays are pending and it’s only a matter of time before the market takes note.
More conferences are to come. Some new big investments will be announced. Stay tuned and as always, thanks for the recognition and support of our group, Kerem.
Many thanks Collin.
I would recommend everyone to check out Collin’s show at http://palisaderadio.com/ as he constantly interviews the best people in the resource space.
Collin can be reached at http://palisadeglobal.com/
Go to The Next Bull Market Move for my interviews and analysis with Rick Rule, Collin Kettell, Nick The Mining Book Guy and many others.
Disclaimer - Interviews are conducted in the name of research and learning from the best. Only you can decide what makes a good speculation/investment.