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Mickey Fulp - Tax Loss Means Buying Opportunities

Commentaries & Views

Mickey Fulp, the Mercenary Geologist sits down with Maurice Jackson of Proven and Probable to discuss the values and gains that speculators can make during tax loss selling.  Mr. Fulp covers a number of topics in this interview which was conducted at the New Orleans Investment Conference.  Listeners will want to pay particular attention to a sweet spot, which is fast approaching, that Mr. Fulp has identified as a buying opportunity for speculators.  This interview will also get Mr. Fulp’s introspective on the Precious Metals sector as he will discuss Gold, Platinum, Palladium, and Rhodium.  Concise and easy to employ.

Maurice Jackson:

Welcome to Proven and Probable, where we focus on metals, mining, and more. I’m your host, Maurice Jackson. I’m joined today by a special guest, Mickey Fulp, the mercenary geologist. We’re live at the New Orleans Investment Conference for 2017. Mickey, thank you for joining us today, sir.

Mickey Fulp:

Thanks a lot. 43rd annual in the big easy’s always a fun time, isn’t it?

Maurice Jackson:

It surely is. Mickey, you did a presentation the other day in reference to the Power of Two, and we’ve discussed it as well. Germane to this time of the year, you also mentioned something about tax loss selling. Talk to us about that.

Mickey Fulp:

What we’re seeing, and I just realized this in my weekly interview we just completed, metals, money, and markets, that we’ve started to see some people front run this tax loss selling thing, I think. Because the venture index was down all week, popped up four points but still lost on the week today. We’re seeing higher and higher volumes, so we’re probably back to pretty normal volumes, which we haven’t seen since maybe the late spring. I think that’s tax loss season.

We’re seeing these people start to front run it, and I’m guilty too. If you’re gonna tax loss sell, it’s probably a good time to start right about now. You don’t want to do it, here’s when you don’t want to do it: in the second week of December when it really hits home hard, and that was a bit of what we talked about in my speech on Wednesday evening.

Maurice Jackson:

Talk about that buying opportunity that you alluded to. There’s a certain little sweet spot. Talk to us about December.

Mickey Fulp:

What we’ve done, and people, long term listeners and readers of my work, know that we do this thing with seasonality. We normalize charts for particular seasons, from a year or even two, three months during the year. We’ll do that year after year after year, normalizing meaning we start it, in this case, November one, and we sat our zero percent there, and we calculate the daily changes in indexes and commodities. We’ve done this over and over, over the years.

What we’ve found … And I kind of knew this in the back of my brain a few years ago, that sometime around December 15th is the real push on tax loss selling, and the Toronto venture index will hit a seasonal low sometime on December 15th, plus or minus two to three trading says. That could go anywhere from December 12th to even up to December 20th, depending on weekends, and we’re talking trading days. But it’ll hit the seasonal low, and that’s solely by people bailing on these stocks as tax losses. Well, people will bail on really good stocks that have had a high earlier in the year and now they’re in a seasonal trading pattern in a low, and they’ll sell these stocks. You can go in and pick up these really good gold exporlers or gold miners very cheaply, some December 15th plus or minus two days. You watch the volumes. When the volumes really start picking up in these things, go in and buy them, and you can sell them in the first week in January, and make money.

Just on the index, which is a composite of 400 largest market cap stocks on the venture exchange, you’ll see over our composite, since the exchange was created in 2002, that’s a 16 year period, from that low on December 15th to a high say on January 5th, something like that, about 10 percent return on your money, if you can play the index. But what we do is we go pick off good stocks, and I showed, too, in my talk, that you made 50 to 60 percent on your money by doing this on a short term 8 to 10 day trade last year.

Maurice Jackson:

I won’t put you on the spot and have you mention those companies, but outside of gold, are there other sectors? Is it uranium that’s catching your attention during this time?

Mickey Fulp:

Oh, yeah. It can be gold, it can be uranium, it can be copper stocks. It’s junior resource stocks on the venture exchange, but you’re playing the top tier, and the really good, the cream of the crop sort of stocks that have seen much higher prices. I gave an example, and we won’t mention a name here, but it will be on my website, my presentation will appear on my website under this event, a stock that had a December 15th low in 2015 of 54 cents, and it had a high in 2016 of 3.35. Came off, and you could buy that stock at a buck .47 on December 20th, and trade it at 2.40 on December 29th. That’s a 63 percent return.

Maurice Jackson:

Who doesn’t want that?

Mickey Fulp:

Yeah, exactly.

Maurice Jackson:

Switching gears slightly here, talk about precious metals, because we’ve heard discussions here at the conference in reference to precious metals. Give us your thoughts right now. I see anomalies right now, and distortion. What do you see?

Mickey Fulp:

Well, I see distortions in the fact that the US dollar is surging right now, so six of the last seven weeks, the dollar’s been up, and gold’s been down. There’s downturn in gold from the high of, I think, 13.50 or something, yearly high hit in mid September. Six of the last seven weeks, it’s down … Or I guess that’d be early September is when it was. Six of the last seven weeks, the dollar index has been up, so I think it’s purely a phenomena of the strength of the US dollar. I’m encouraged by the fact that Trump wants a weak US dollar, it makes a lot of sense for the US economy, especially trade balance, and we’re hoping that he’s gonna not pick a new fed chairman who’s gonna be a hawk on raising interest rates very strongly. Because that’d put the US and world to hurt, I think. Seasonality of gold will demand that somewhere, by about mid December to the first of March, you’re gonna see a seasonal increase in the price of gold.

Maurice Jackson:

Outside of gold, I would like to get your thoughts on the PGMs. What’s going on there?

Mickey Fulp:

I don’t really know what’s going … That’s topsy-turvy market, with palladium trading at about a four percent leverage to platinum, and that’s nearly unheard of. Last time it happened was in 2000, 2001, when the Russians cut off palladium exports, and at the same time, GMC got worried about palladium and they went in and bought a bunch of stockpiles of palladium, ended up with a billion dollar loss. That’s the last time we’ve seen this platinum palladium ratio less than one, and I don’t think that’s gonna last very long. I think market economics … The reason manufacturers converted from platinum in catalytic converters for gasoline engines and moved into palladium is historically, palladium’s been much cheaper. Platinum is a better catalyst. It requires less platinum that it does palladium one for one, so I think … And I’m assuming that that conversion can be made fairly quickly, but if platinum stays below palladium, I think you’ll start seeing more platinum used in catalytic converters.

Maurice Jackson:

Are you buying platinum right now?

Mickey Fulp:

I haven’t bought any platinum for probably about a year, but if I were to buy on dips platinum, or gold, silver, platinum, palladium, I’d be buying platinum, and really that’s all I bought over the last two or three years is platinum, because it’s undervalued with historical respect, not only to gold but also palladium.

Maurice Jackson:

How about rhodium? I mean, we’re looking at what, a 50 percent increase almost here in the last five – six months.

Mickey Fulp:

I think a lot of that has to do with the fact you can now buy rhodium bars, and you never could before. You could only buy rhodium sponge, and sponge is not attractive. It’s about what it sounds like, rhodium sponge, so the fact that you can now buy a rhodium bar I think has probably increased demand for that. Rhodium’s also used in a small way in catalytic converters. It’s necessary, but a very small percent.

Maurice Jackson:

I’m not gonna ask for a number here, but do you see rhodium continuing on this trend, or do you see it cooling off.

Mickey Fulp:

It’s such a small market and it’s so speculative. Compared to platinum and palladium, which are very small markets to begin with, the rhodium market’s minuscule. I don’t think the regular supply demand fundamentals are really gonna be in play there. There’s lots of speculation, there’s a lot of ability, I think, likely, just using logic and science and reason that that rhodium market can probably be manipulated pretty easily.

Maurice Jackson:

Mickey, thank you for your time. In closing, please give us the website.

Mickey Fulp:

Mercenarygeologist.com

Maurice Jackson:

Is this a free subscription?

Mickey Fulp:

Yeah, a free subscription for my newsletter. You get my stock picks, that’s why you want to subscribe. We’re gonna have a couple of new stock picks here in the month of November, and some things I’m playing my own money into this, significant amounts of my own money, and I think they’ll be of interest to my subscribers.

Maurice Jackson:

What is the Twitter feed that you have?

Mickey Fulp:

It’s @mercenarygeo. We’re up over 63,500 Twitter followers, quite active on Twitter.

Maurice Jackson:

Alright. Last but not least, please visit our website, www.provenandprobable.com, where we interview the most respected names in the natural resource space. You may reach us at contact@provenandprobable.com. Mickey Fulp, the mercenary geologist. Thank you for joining us today, on Proven and Probable.

Mickey Fulp:

Thank you, Maurice.

Maurice Jackson:

All the best, sir.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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