Currency War Fallout
Stansberry was waiting for the dollar to blink before betting on gold.
"I don't believe we're likely to see a rise in the gold price in periods
where the dollar is radically strengthening. I think it's far more likely to
see gold rally when there is uncertainty in the currency markets, volatility
and a falling dollar." To prepare for an eventual rally, Porter
suggested that this would be "a fantastic time to build expertise in the
resource space."
Boomer Lessons
The son focused on the energy metal space. Chris explained it this way:
"Lithium is an oligopoly. When you look at the major producers, they're
really chemical or agricultural companies with lithium as a side business.
The opportunity lies in the fact the major producers are all facing
challenges. Companies looking to compete will have to meet or beat their
production costs. I think this requires leveraging technology to do so."
The father was willing to take an optimistic long-term view on a larger
commodity suite. "In a world with seven billion people seeking a higher
quality of life, I think copper, gold and silver eventually will be more
valuable than ever. Gold is constant. Gold is going to continue to be
valuable because even now, China is buying as much gold as possible. It is
rumored to have purchased the equivalent of the total mined gold production
in 2014. The Chinese want their currency, the yuan, to be part of the reserve
currency standard, and it will be eventually. They are going to have to have
enough gold to back it. Silver, in addition to its monetary character, is
used in so many industrial and health care products. I think oil will bounce
above $100/barrel again. Prices will go up and down, and you have to play it
as it moves. But I think those liquid markets are easier to manage than
smaller markets like graphite." Michael Berry also had this forecast:
"Technology is coming to mining, and it will separate the men from the
boys."
A Cyclical Perspective
A Silver Lining
Historic Swings
Moriarty credited the "highest bull consensus in recorded history on
the Dollar Index" for depressing commodity—and by extension natural
resource mining stock—prices. "When it turns, they [those betting on the
dollar] will get wiped out," he warned. Still, he had words of hope for
investors in the junior markets. "Miners will be in better condition
over the next year because of lower energy costs and the drop in the price of
iron."
In November
he clarified which mining companies would come out on top. "The
companies aggressively moving projects forward right now are going to be the
leaders tomorrow," Moriarty said.
He also had some choice words for investors. "The people who make
money in investments are contrarians. What you need to understand is popular
psychology. When everybody wants to buy something, sell it to them. When
everybody wants to sell something, buy it from them. It is that simple. There
are no gurus. There's nothing magic about the market. When everybody's
screaming, buy page 1; when everyone is happy, you want to be selling page 1
and buying page 23."
