MICKEY FULP | Trade Wars, Metals, and You
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Welcome to “Proven & Probable“, where we focus on metals, mining and more. I’m your host, Maurice Jackson. Joining us for a conversation is Mickey Fulp, the¬†Mercenary Geologist, to discuss trade wars and how you may benefit. Mr. Fulp, welcome to the show, sir.
Thanks a lot, Maurice. Always my pleasure to be here.
Always a pleasure to have you on our show. Mickey, the United States and China appear to be heading into a trade war, with both countries looking to impose tariffs on imports, respectively. What are your thoughts on the brewing tension between the US and China? Is this more rhetoric, or do you see this as just the beginning?
Well, I think it’s both. It’s rhetoric and the beginning, in the fact that Trump starts the war or the dispute, and China responds. I think at some point both countries will realize in some way, shape or form that they need each other, and they’ll get down to business. You know, really what this is about,¬†the US is basically demanding equal access to Chinese markets as we provide to China now.¬†It’s about intellectual property theft, where anybody that wants to manufacture or put plants in China, US has to give up its intellectual property, and that’s really not fair.¬†And so Trump’s began by drawing a line in the sand, and we’ll see where it goes from there. We had a record trade deficit, $375 billion, with China last year, and that’s not good for American or American consumers.
Mickey, for those of us seeking to identify deep value propositions for our natural resource portfolio, what type of implications do you foresee the impending trade war having on base metals? Are there any that we should be paying particular attention to?
I’m really not sure what’s going to happen in that regard. We know that China is the biggest user of all base metals, of iron, steel, aluminum, copper, lead, zinc, etc., etc. It has immediately affected the prices of base metals. Copper went below $3 today for the first time since early December, so a three and a half month low for copper. About the same for zinc, about a three month low for zinc at 1.46, and lead, which is below 1.07 right now, that’s a six month low. I’m not sure if the trade tariff talks and the bully pulpit going back and forth is all to do with those drops of metals, but we’re looking at something on the order of a 10% drop over the last month and a half or so, so certainly has affected the metals markets. It certainly has not affected the oil market. Oil is at 65.40 as we speak this morning, and last time it got this high was probably six or seven weeks ago.
Speaking of energy and base metals, how about uranium?
Well, I don’t know what to tell you about uranium. Eventually, it’s going to turn around, but we’re still saddled with a $22 spot price. There was some very good news over the last couple of days, and that’s DOE Secretary Rick Perry has determined that the US will no longer sell its supplies of U-308 into the spot market. During the Obama administration, they were selling $5-$7 million pounds a year into the spot market and totally disrupting the spot price when they did that. So that’s going to end. There’s rumors floating about that the DOE or President Trump may make an executive order that’s going to require US utilities to use some significant percentage of US-mined uranium for their nuclear fuel sources, and certainly that would help the market too.
It certainly will. How about this? Are there any base metal issuers that have your attention at the moment?
Well, I cover one company, Trilogy Metals Inc. Some people may remember it under its previous branding, Nova Copper, arguably two of the best undeveloped giant high-grade copper and other metal deposits in northwest Alaska. I’m very bullish on that company. And we’ve had some really good success on that company. Picked it about, what, 10 months ago at 65, 66 cents, and it’s been as high as a $1.64 since then. It’s come off as the price as the price of copper has come down, so it could present a buying opportunity at this point.
Mickey, would you share the ticker symbol for us?
Sure, it’s TMQ. It’s listed on the New York American Exchange under that symbol, and it also has a concomitant listing on the Toronto Big Board, also TMQ. Bear in mind, though, it trades very little volume in Toronto. Probably 90, 95% of the volume’s traded in New York.
Switching gears, Mr. Fulp, how about precious metals? How do they fit into this narrative?
Well, certainly trade tariffs, a trade war specifically, I think would be good for gold, because it will introduce a wild card into the economic equation, and people will go to gold as a safe haven or insurance policy, and perhaps we’re seeing that today. Gold’s up to almost 1,350 as we speak. So geopolitical risk, geopolitical turmoil, the threat or the idea of such is always good for gold.
You know, since we all have our favorites, can you share your thoughts on gold, silver, platinum, palladium and rhodium, and which ones are you buying right now?
I’m not buying any right now, because I only buy when the prices dip or go lower. When gold was at 1,312 or 13 over the last couple of days, it didn’t reach my mark of the price I wanted to buy it at, so only buy on dips. Certainly platinum remains undervalued, both with respect to gold and with respect to palladium. Silver is still being flushed down the toilet, and I’m not a silver guy, so I’m not very bullish on silver going forward.
All right. How about rhodium?
I don’t really follow the rhodium market. It’s a very small market, hard to get a decent bid-asked on it. It’s difficult to buy it. You can buy it in bars now. In previous years, you could only buy rhodium sponge. Rhodium really does not have a lot of demand. It’s used mainly as a very minor component of catalytic converters, so it’s very much dependent, I think, on platinum-palladium markets. It’s a by-product of mining of both those metals. So not really a metal that I follow. I do not own any physical rhodium.
Are there any precious metal issuers that have your attention at the moment?
Well, I can tell you the four that I cover, and this is as good a time as any to make a full disclosure. Every stock that I cover pays to sponsor my website, and I’m also a committed shareholder of those companies, so I have plenty of skin in the game. I’m putting my money where my mercenary mouth is. The companies I cover in precious metal space very much focused on US advanced gold explorers, that would be Allegiant Gold, Integra Resources and Ely Gold Royalties, and I cover one Canadian gold explorer, Eagle Plains Resources.
Would you also share the symbols with us?
I can share their Toronto Venture symbols, but quite frankly, I do not remember their OTC, QX or QB listings. Those five symbols are hard to remember. The Allegiant Gold would be AUAU, Integra Resources is ITR, Ely Gold Royalties is ELY, and Eagle Plains Resources is EPL, all listed on the Venture Exchange.
Sir, before we close today, last question: what did I forget to ask?
I don’t know. You tell me. I have no idea, Maurice.
Well, Mickey, you’re a world-renowned speaker. Where will you be speaking next?
I will next be speaking in New York at Mines and Money on May 8th and 9th, then I will speak at the International Mining Investment Conference in Vancouver, if memory serves, on May 15th and 16th. I might be a day off on that one. And I will be speaking at the Sprott Conference, also in Vancouver, July 17th through 20th, if memory serves.
Will you also be speaking this year at¬†Capitalism & Morality?
I will not, but I will be attending. Jayant Bhandari likes to rotate his speakers, so apparently, I’ve fallen off the rotation for a year. Won’t be speaking, but I certainly will be attending.
We’ll look forward to seeing you there.
And I look forward to seeing you there.
It’s mutual, sir. All right? Mickey, for someone listening that wants to get some more information on your work, please share the contact details.
I can be reached at¬†MercenaryGeologist.com. If you want my stock picks, you need to become an email subscriber, but it’s free, so the price is right. You go on the website, click on the box below my mugshot, and sign up and give us a name and a email address, and you can even fake your name, but you’ve got to give us a working email address. You’ll get my stock picks. We also run a very boisterous Twitter feed, @MercenaryGeo, with 62,000 Twitter followers.
And 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 & Probable”.
Thanks a lot, Maurice.
All the best to you, sir.
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