These Gold Stocks Could Outperform in the Next Decade

I think all these you could hold for five years um you know there could come a time when the precious metals have run up substantially and and um you know these things are not cheap anymore and and at that point in time I could see that happening three four five years out at that point in time they would not be as compelling as they are right now but I think right now they're quite compelling welcome to the inaugural episode of three ideas I'm Samuel Burke the managing editor at Rio vision and before we get to the three ideas with our guest Larry lipard I just want to tell you a bit about this show and the idea about it because it actually comes from you guys the real Vision Community we've heard over and over again not just in the comments beneath the videos but also I've talked to you guys in person at real Vision events and you say that you want actionable ideas there are a lot of big names a lot of Big Ideas that aren't always accessible to the entire real Vision Community which is why we have this show now three ideas says it right in the name three ideas for investing but it's not investment advice and I'm not just saying that because it's legal mumbo jumbo we at real Vision we don't know what your risk appetite is how much Capital you have available to invest and we don't know how you want to allocate your portfolio so do your due diligence you can take these ideas do your research and figure out what's best for you so with that I want to introduce our first guest Larry lipard he is the managing partner and founder of equity Management Associates he focuses on precious metals he's a big believer in gold and silver specifically mining companies that's his Outlook Larry thanks so much for being on the first episode of three ideas and before we get to those three ideas I just want to get your Global macro Outlook we're coming off of big announcements from central banks not just in the U.S or the bank of England here in the UK all around the world so tell us what that means for this industry at large and the industries that you look at yeah first thing I'd like to thank you for having me on your show I'm a big fan of real Vision subscriber um yeah the global macro right what a mess it's extremely volatile and I don't think we've we're in uncharted waters and nothing new there my belief is that what we're slowly seeing is a change from a system where the central banks could control everything to a system where the central banks are not going to be able to control everything and you know I I describe it as kind of monetary chaos um and we're gonna we're gonna swing back and forth between High inflation and and the risk of deflation and so you know this is the problem that the FED is faced with and as we all know they've kind of packed themselves into a corner right now and with that as a backdrop and understanding the way that you know Democratic and other governments work my belief is that they can never stop printing and although they may be trying to right now and for some time they will eventually the the damage and the pain that's going to cause are going to force them to go back to where they were before and that's because the system is built on ever increasing credit and the alternative is is a is a deflationary depression and so you know although we're in what would look like a a deflationary impulse here a very big one um I think that there'll be a time when they'll have to change policy because um the the conditions will demand it and Larry when you say the system which they used before what do you mean specifically I'm in the monetary system you know the the way the way we've constructed our monetary system using leverage on Leverage and the way the governments operate using continually continual growth and Sovereign credit and so what we're really encountering right now in my view is a sovereign debt crisis um you know it's the bursting of the everything bubble that got created it always kicked off when they went to uh zero percent interest rates from 08 to o15 I mean that was a crime against you know capitalism in a sense um if you can't if you don't have an interest rate on the money then the money has no value intrinsically and so it led to all kinds of capital misallocations and and now we're seeing those we're seeing the the effects of that policy come home to roost on all of our assets and it's what's it's what's making the environment incredibly difficult for all investors you know sadly so but um you know you can't undo I mean what I see is very similar to what happened in 29 I mean people say well I don't want to have a bust well okay you shouldn't have had boom you know yeah you know the big boom that was created you know NASDAQ up 16x from 09 I mean it's got to be corrected and um you know their implications right this is all crystallized on a tweet that you have pinned to the top of your Twitter account two simple lines one says gross domestic product the other one all sectors debt Securities and Loans liability level I think you've made it pretty clear why you've had that tweet pinned up there since then yeah that's right I mean it's it's you cannot increase debt forever because you can't service it and so we were in a big deflationary period for the last 40 years and I think that ended on March 2020 I mean you had you know the tenure was at 43 bips I mean my my view is that we are now in in a new world in an inflationary environment and that um it will only continue to to grow the inflation that we currently experience which is not to say there won't be uh periods when it slows down I mean I think it's going to be very volatile in both directions it's a treacherous environment for investors but the things I conclude pretty solidly are that bonds are a bad place to be and that um you know over time I think Commodities and and equities that are equities were tied to things will do better than equities that are tied to growth and ideas because I think we'll be in a stagflationary period period and there will not be a lot of growth and that's my belief so that's that's how very clearly your Global macro Outlook but how does that apply to the industries that we're about to talk about yeah if you look at it so the the conditions I think are going to be very similar to the 1970s I was a teenager at that time and in those conditions the bonds were just total a total disaster I mean there was no worse investment than bonds equities were very choppy they were pretty much a disaster I mean you you kind of held your purchasing power but barely um and the the areas that did extremely well were Commodities I mean the two top performing industry categories in the 70s were the oil stocks and the gold stocks and of course I focused on the gold stocks and that's the reason why my macro Outlook informs me that gold stocks I think will be the top performing asset category in the next 10 years I mean I've been looking into these companies that we're about to talk that we're about to discuss and as I look at them it seems like they maybe all are in a similar space in part because of what the FED is doing right now so where do you see this entire industry inside that that Global yeah so so to you know to give you some context um gold did extremely well and the gold stocks did extremely well um in the in 2020 as a result of the money Printing and the inflation that was going on um you know the Fed was at the time quite accommodative and that was very beneficial to assets which take advantage of the inflation so they reflected the inflation that we're now experiencing they could see it as we all know the FED has now decided to try the volcker Playbook and uh and and so the theory is that they're going to get inflation under control inflation is going to come down and you don't need gold and you don't need gold stocks that's the theory I think the reality and the practice is that they're not going to be able to control inflation that ultimately their active these are going to cause something to break and that when they do they're going to have to come back in with more money and there will be more inflation and so so the bet we're making is in my opinion that the central banks will not be successful in what they're doing but to your point where we are right now we've just had a huge drawdown in the gold stocks I mean um you know my fund was up 98 in 2019 so 122 in 2020. you know I've given half of that 2020 run back uh throughout 2021 and 2022 so you know these things are volatile and basically when you're looking at um when you're looking at these assets they they React to what they think the future price of gold is going to be they're leveraged bets on gold I mean you could just buy gold and gold you know people knock it but it's actually one of the better performing acid other than cash it's probably the best performing asset category this year I suppose some Commodities have done a tad better but you know bonds are down 20 stocks are down 20 Gold's down six percent during the day you know we're in a correction I guess is the best way of saying it and therefore I think our video here is rather timely in the sense that I think people who buy gold stocks right now almost irrespective of which ones are going to be pretty well rewarded as as we enter the next up wave of inflation and I think that's coming I don't know when we talked about this pre-show it's impossible to know when but I think it is coming hi I'm Ralph Powell the CM co-founder of real Vision the financial world is a complicated world right now it's a really complicated macro picture and there's a lot of risks real vision and our YouTube channel help you navigate those risks so subscribe now to the channel and never miss an update there is simply too much going on so subscribe now thank you Larry let's let's get into the three ideas let's start out with your first pick that's Equinox gold this is a Canadian company dual listed on the nicey eqx there tell me about the company but also tell me from the get-go I assume that you have a exposure to this company you're invested yeah I have exposure to all three of these ideas obviously this is what I do my people pay me to to pick the best names and I've tried to pick the safest largest names and then two of the safest largest names and then one that's a little bit more speculative but quite safe uh are good the first one is Equinox so this is a billion dollar market cap company headquartered in Toronto based in Canada uh Ross Beatty who's kind of a mining Legend you know a billionaire built on mining stocks is the chairman and owns eight percent of it so that's always a nice thing and I think they have one of the best management teams in the business and that's extremely important in this area because I should say mining gold mining is a difficult business you're you're breaking rocks and uh and Murphy's Law applies and and you know there are a lot of things that can go wrong and and sometimes they do it's just a matter of how it works I mean if we take a look at this company it was trading at eight dollars ninety cents back in April and now we're trading somewhere around 350. right so to me it's just it's an incredible bargain at these levels it's just and this is this is a reflection of the macro that we were speaking about earlier right I mean everyone thinks that the FED will be successful in containing inflation and therefore you won't need gold stocks I personally think everyone's incorrect in that assumption but obviously that's why they're markets um yeah so these guys are based in Canada and they have seven producing mines and they're in safe jurisdictions and that's important too I mean when you're picking gold mining stocks there's some companies that operate in countries that are not friendly to gold mining or they're going to seize mines or tax mines and so I think Ross has been rather smart here he's his his portfolio of companies isn't the United States Canada um Mexico and Brazil so um in my opinion those are all safe countries even though Brazil South America is a place where well there are others but South America is one of the places where there's some countries that are uninvestable in my opinion and so he's got seven operating uh minds and then he's got four growth projects an expansion in those existing minds and I think the the most interesting thing here to me is I mean to me the lowest risk category of investing in gold stocks and they're they're really three buckets right they're the producers they're the developers and the drill Stories the producers are the safest because they have positive cash flow we have positive cash flow you can't go bankrupt right um you know the development and the drill stories they all need to absorb cash to hopefully produce gold and so this is a develop this is a producer um in this year they should have 250 million dollars of ebitda with a market cap of of a billion that's 4X even though that's not bad right compare that to Apple or some of the others out there but more importantly and as I was saying I think the lowest risk category are producers that are growing because you know you could buy Barrack or you could buy Newmont the problem they have is that they have five million ounces a year of production and remember a gold mine is a wasting asset you're pulling gold out of once you've done it it's not there anymore you got to find more gold so you know it's like it's like being an oil company you're always looking for new resources so you're always exploring and um in my view you know when you're smaller it's easier to replace what you mind because if you're Barrack or Newman it's hard to find five million ounces of gold a year I mean they're managing barely managing do it in some years they're not in others in this particular case Equinox has been able to grow their resources very nicely they currently have all category resources of 30 million ounces of gold that's pretty interesting because if you take the market cap divide by 30 million that means you're paying 33 dollars for every ounce of gold in the ground now if they were above ground they would be worth Seventeen hundred dollars obviously the difference is you gotta spend money to mine them and so you know the thing I think that they've done a nice job with here is is they've got a nice basket of assets and they've got a nice growth pattern this year they'll mine 580 000 ounces of gold and um and next year uh well a few years out I think they're going to get to close to a million ounces of gold so that's 40 growth in the underlying goal that they're they're Mining and and um and that's unusual in this industry so this will you know projected Bloomberg consensus projected ebitda in 2024 is 500 million dollars so that would imply that they're selling at 2x to your out ebit dot which is pretty cheap um so it's it's a good situation and and typically um the way you value a gold company or one of the ways you value a gold company is you you put up you put a price on each ounce that they're mining so gold companies tend to be worth between four and six thousand dollars per ounce of gold that they mine and if you if you applied that I'll just I forgot to do it before the interview but if you apply that to the 580 even if you apply the low end of the Range Five eighty four thousand dollars an ounce and that would be 2.3 billion dollars so that's a double right there at the low end of the range and then you know I think the the number of ounces they mine are going to grow so I think it's got a lot of potential as it re-rates higher um and you know I I like the management team a lot I like their their odds of doing it there's some reasons why it trades cheap one of them is they've got a development project called castle mountain and um people are worried about cost overruns there I'm not again because of the way they've done the project and the way the management the the skill of the management but that probably is part of the discount in the stock right now but I view it as an opportunity and I'm curious I think you've made the why now very very apparent though I should note of reading a note earlier that put lower support at about 325 and but when you look at your time Horizon here that's one of the most important questions that Raul talks about and it really is and that's that's a great question Samuel and that's important with these stocks right I mean look I thought it was cheap three months ago got cheaper right and you could buy it here and it could get cheaper still so I think you've got to keep that in mind and one of the things I advise when people are entering this area is to dollar cost average and you know going into them because we don't know when this will turn I mean it's I think the next run up is somewhat dependent upon gold believing that the FED is going to ultimately have to accommodate the World by not being as as monetarily tight as they currently are and I think that's an almost certain event if one looks at the math very carefully in the Federal Federal deficits that were running and the cost of servicing those deficits so that in my view will create a higher gold price gold go through 2000 and all these stocks are going to go bananas but I can't tell you if that happens tomorrow or if that happens at three months or if that happens six months or maybe as long as a year I kind of doubt it'll be as long as a year but it could be and so I I think it's important if you buy something like this to have have patience to let this thing play out over a couple years I'm pretty confident that I mean unless you know unless the FED is successful what they're trying to do and I suppose it's possible I'm pretty confident that two or three years out from now this is this is a much higher price on the stock Larry I want to ask you what is the thing that's most likely to upend your view on this idea the fundamental view on this particular company boy not much I mean I like the company's a damn good company I mean I suppose if Canada or Brazil or Mexico decided they wanted to seize the gold mines uh that would be a real problem right and that's always a risk I mean these things are you know they're literally pulling money out of the ground and governments are always very hungry for tax revenue Etc and corrupt governments have seized gold mines in the past we can all debate how corrupt these three governments are you know that's a different question but I think I think that's really the biggest risk is the governmental risk I mean the nice thing when you've got seven Minds operating you know you've got diversity and that's you know that's partly why you know you wanna in general newbie investors in the gold space want to tend to stick to bigger companies because the fact that they have a lot of properties reduces the risk of one property going bad remember I spoke earlier of Murphy's Law I mean things happen in mining you know mines flood the grade Taps out you know there are all kinds of you know you have cost overruns Etc there the mining business is not a simple business it's it's a difficult business and I'm just curious about Brazil I mean you talked about their exposure U.S Canada and Mexico we'll talk about Mexico a little later on but with with with Equinox having the exposure that they have in Brazil and I think of the The Fairly wild political leaps from the the last President to the current one in the Lurch to the right I'm surprised that you say that Brazil is such a sturdy a sturdy Choice here but in terms of mining I mean this is the field that you know yeah well you're right I mean Brazil's Brazil I mean it's not perfect and neither is Mexico by the way and for that matter neither is Canada but but um you know it's it's um my belief the mining business in Brazil you know pays a lot of taxes and pays a lot of royalties and um you know we haven't seen anything in Brazil that would imply that you know you're not seeing the kind of problems in Brazil that you're seeing in Peru or Chile or or Ecuador um you know in general they're taking a Live and Let Live approach and recall that the thing that's a counterbalance to the government's getting aggressive on these companies is that these companies pay governments a lot of money and and the governments you know the governments do not know how to mine these these deposits I mean Venezuela seized all their minds thinking they were going to get rich you know a bunch of years ago and and it didn't work because they didn't know what to do with them so you know it's not risk-free obviously but I but I I think I think Brazil the other thing to keep in mind with some of these South American countries is politically like in many places they talk tough about a lot of things but at the end of the day they know there's money coming out of this these mines that they need and so the the rhetoric is designed to win votes but behind the scenes the activity is not that threatening okay so I want to shift gears now to your second idea this is osisco mining another Canadian company you'll see that theme here um this is a development story and you say this is a company that's run by what you call Canadian mining royalty and there's a big focus in Quebec right now so tell us about a Cisco yeah Cisco's really it's probably one of the best deposits in the world and that's you know it really counts in mining is the deposit the size of the deposit and the grade of the deposit and the grade is great is the measure of number of grams in a in a in a ton of or that you mine and you know there are mines that operate at a grade of 0.4 grams per ton and you know 15 or 20 grams per ton just kind of lights out and very rare this company has an enormous Deposit they have eight million ounces of gold and their grade is 11.4 grams per ton that makes it one of the five or six best mines in the world once it starts operating it's not operating yet it's run by what I consider to be probably the best mining CEO I've ever met a guy named John Brzezinski who helped discover and daylight and produce the largest mine in Canada which is the Canadian one of the two largest mines it might be detour maybe slightly bigger the Canadian malarctic mine and so um you know the guy really knows what he's doing and they've really drilled out a beautiful deposit and the economics on it are quite compelling they are not producing yet which represents a risk and yet the the economics are so strong and they have so so much cash on the balance sheet no debt that I have very little doubt that they will be able to easily Finance the ramp up to production and I just met with John at Beaver Creek the the gold mining show um and he told me he's highly confident that they're going to have first poor in the first quarter of 2025 so that would imply we've got two years where they are not producing gold yet but at that point in time they would produce 300 000 ounces of gold which if we apply you know the metrics we were talking about earlier and the gold price phase in this area goes slightly higher it makes this company worth about four billion dollars and right now the market cap is 650 million dollars U.S if we pull back and look at this company it's come off highs of about five uh five dollars Canadian dollars of course uh osk is the ticker we're looking at 277 now so if it were to go lower would you view that as an opportunity opportunity I doubt that it will go lower but it could it's very well it's pretty well understood and um you know yeah it's it's cheap at this price only if you really understand what the asset is and it's hard because you can't multiply by cash flow here but um you know you have to I guess you have to understand geology and just how rare large deposits of this quality are and he told me when I was there they've done some one of the things you do in mining is you do reconciliation studies where you say okay we've drilled out this area and we think it's got you know a grade of eight percent you know eight grams per ton and and and then you so you you go to and he's got it by the way he's got an underground decline of 12 kilometers already they're already basically setting the mine up I mean he's building it and um he he did two of these studies where they had the black model that showed a certain gram a certain grade of ore underground and they they pulled them out in the reconciliation I think one they exceeded by like 30 the other exceeded by like 70 so I mean the the which which implies that they've been conservative in in the numbers that they've estimated and that's that's again that's why I think he's one of the best CEOs out there you know the good CEOs in this industry they under promise and they over deliver and then what that leads to is the stock doing extremely well because people know that they can kind of trust the guidance coming out of the company you know that some companies even pretty good companies occasionally will over promise and under deliver and then the stock really gets gets in a hole and it's hard for it to get out of there and so the thing you know I think I said it to you on the pre-show I mean if I had to pick one stock that I was going to give my mom and my kids and you know I was going to quit investing and say wake up in 10 years you'll be good and you'll feel good about it this is it I mean this there just aren't any deposits that look like this this company is going to be worth billions and billions of dollars in my opinion and you just mentioned 10 years when we talk about time Horizon with your the first company with Equinox you talked about two maybe three year time Horizon that's a producer story but here this is a development story so would the time Horizon be longer than it is a bit longer with the development stories because you gotta daylight them and the producer stories they have to keep producing what they're producing year after year and this will become a producer but I guess the point and and you know the first one had a bunch of Minds none of which looks like this mine I mean this is this is really I mean this when it's all said and done if we have a bull market in mining stocks I mean this could be Microsoft right I mean this is to my way of saying it's just a really really high quality deposit you just there aren't many of those in the world I mean they're probably five that look this good and that's why I like it so much and and what's most likely to to make you wrong in this scenario I mean I don't think it could be a quality situation in Canada yeah the geology I I there's not much doubt about that most most smart GEOS totally agree with my view on that I mean I think there is a risk although I think John has been quite conservative and I think they've they've um they've been you know careful in budgeting in terms of what it's going to take to build the mine there have been several cases recently of big capex blowouts which is to say people trying to build mines and they discovered it cost them much more I mean in an inflationary environment you know diesels up explosives are up Steel's up Etc and you've had a couple of famous companies that you know I am golden and uh Argonaut uh both of which I own um blow up because the capex really blew out and I think there's a chance the capex will go higher here um it's capex is in the five six hundred million dollar range recently estimated so you know I think he's got the right numbers in there but let's say it's seven or eight hundred I mean in the context of a mine that will be worth you know three four five six billion dollars if it costs 700 to build it instead of 500 to build it it's not going to be the end of the world it's obviously not a good development but and Larry in this environment with with inflation really affecting those those cap that's capital expenditure uh Capital expenditures how often do you want to see updates from from companies more than just their quarterly reports oh absolutely and they're all these companies are very good about it and some of them will even you know yes on a regular basis you know monthly quarterly and and they do I mean they you know they they do the the good ones do and that again that's how you know it's very important you know if people are looking at this area it's very important to be a stock picker and to try to stick to the very best names I mean the industry indexes will do fine in the context of a rising price Rising gold price but within that you know their their names and that's why you know having professionals who are familiar with the area help you in this area is worthwhile there are names within the group that are just significantly better than others I think this is as you said you asked for my three top picks and that's you know this is one of my three top picks and as we get into number three I just want to flag don't stop watching right after number three because there's going to be a little twist in the story that Larry is going to give us but number three your ideas around Guanajuato silver ticker Guanajuato is a city in in central Mexico it's obviously silver it says it right in the name we're talking about uh GS VR traded in Canada here's a company at highs in 2020 run 2021 around 70 cents talking Canadian dollars now they're at about 37 cents tell us about this this company clearly the exposures in Mexico yeah this is an outstanding company with enormous upside leverage probably larger than the other two in in the sense that you know I I expect both of those to very easily be fly Baggers I mean to me this could be a 10 or a 15 bagger but obviously there's more risk associated in a single company you know situation and you're making a bet on Mexico which I think is sound the story here quickly is that James Anderson a gentleman I've known for 15 years um has teamed up with a guy named Ramon De Villa Ramon built um most of the mines he was he was at first Majestic for most of his career and first Majestic is a is one of the largest if not the largest very well run by the way and I like it and hold it Silver Company um and so he he was the CEO CEO for our CEO for a long time and built all of their minds he left them and he came over with James was able to convince him to join him and to build Guanajuato and in a very short period of time only three or four years now um three years now they they were able to buy an asset very uh cheaply from Endeavor silver called el Cuba which by the way El Cubo had paid the Endeavor way back when paid 200 million for El Cubo they sold it to us for 15 million because they had mismanaged it and um and we got El Kubo going in the right direction and then more recently they bought um the assets the Guanajuato assets from great Panther these are assets that were valued at between 80 and 100 million great Panther was in financial distress and James was able to buy them for 15 million so what he was able to do was more or less actually more than double the size of the company he had one mill in one mine at El Cubo and from great Panther he bought two mils and three mines and so now he's got three mils and four mines all in the Guanajuato area and there's a ton of synergy there and so um what he's been able to do he's got it running again and running well his cash cost is running at about 14 bucks uh so in a 20 silver uh environment that's six dollars an ounce that he's pretty you know that he's making and in July he did 144 000 ounces and he just confirmed me on the phone last night that in August he was up 80 percent so he did 256 000 ounces in August which is a three million ounce annual run rate which at six dollars a margin means he's got ebitdov 18 million dollars on a 17 million dollar story our 17 million dollar market cap us or 77 million dollar market cap us um he intends to exit next year at a 6 million ounce run rate I think he can beat that but that's what he's aiming for at six dollars an ounce that would imply even though 36 million for 77 million of market cap means 2X and um you know I think you can build this into a 10 15 million ounce a year producer and I also think you can improve the margins over time so um you know it's it's a really good story with a really good team I mean they bought these assets from great Panthers seven days later they were in one of the great Panthers Stokes mining ore um you know when they bought the first mine it was the cash cost was 22. he's brought it down to 14. and he thinks there's a little bit more that he can bring it down so you know to me this is uh you know and the other thing I don't know how much people listening are aware of this but there's a lot more leverage in silver there's a you know when gold goes up 10 silver is up 30 percent and you know I I believe that silver is not going to stay at twenty dollars I believe it's going to go to thirty dollars so you know silver at thirty dollars cash costs at 14. now you're making 16 an ounce you know multiply 16 times 6 million ounces that's a lot of profit for a company that's valued at 77 million bucks I mean the typical rule of thumb in the silver industry if you go look at the big guys they tend to trade at about 70 million dollars of market cap for every one million ounces produced so you know we're already producing three million ounces that would imply that if we were a big guy which means we're safer and you know Etc had had you know kind of characteristics like them that would apply a couple hundred million dollar market value we're trading at 77 and we get to 6 million ounces you know take the 70 times six that would apply 420 million dollars a market cap again for 77 million so there's a lot of Leverage here what can go wrong obviously if a silver price goes down I mean at 14 you know the margin is not that large and you know a 17 silver price and this thing's gonna you know they'll be fine they won't run out of money but they're you know it won't be that it won't have the upside that we expect and I'm curious about the the political climate in Mexico unlike Brazil that we talked about just before that went left to right Mexico has gone right to left you have amlo as he's known in Mexico Andres Manuel Lopez obrador the president there uh further to the left than any modern Mexican president that I can think of that doesn't concern you it sounds like well it doesn't it doesn't it in general no it does not I'll tell you why that what he's going to do and there's been a lot of talk I talked to Beaver Creek in the Denver gold shows I learned a lot about what's going down on in Mexico the the bottom line is is what they're getting very very concerned about is um doing it right and and environmental stuff and so you know the the message uh from the government has been we're cracking down on mining that's dirty and um you know so you've gotta you know the Mexican Government derives enormous inflow of I mean it's like the number one industry in Mexico is mining so um and and they need that tax income they need that those royalty incomes um what they're doing is is they're gonna you know the the Shady operators or the people who've been skating on the edge in terms of doing it in the correct way they're going to crack down on that but what I heard several of the Mexican people saying you know Mexican miners that I met with saying is you know they've said us look you know you guys are doing it right we're good with you you know what this means is the people who aren't doing it right are going to have to come up with the standards that you guys have already done and I know that James and Ramon you know understand what those standards are so I'm not too concerned about it so it really sounds like silver prices are the wild card and all that they really are silver Silver's a risk I mean no doubt you know as you're probably where your listeners probably were I mean there's a lot of demand for silver and it's growing if we're going to do all the CSG stuff if we're going to go to electric cars um you know we we've got to have a lot of silver and uh you know it's hand them out there's not a huge stockpile of silver out there in the world it sounds like it sounds like even the dogs are excited yeah I got my dog yeah I got my dog chiming and I apologize for that and then your time Horizon for for Guanajuato this is a junior producer yeah I think it could I I think this could work in the next year or two pretty well I mean it's it's deeply undervalued and they're making a lot of progress um you know I personally because with all of these I think the critical thing to do is to find good management I mean if you know the mining business is difficult enough that that without good management you know your your odds of a problem go up substantially and I think you've got good management here and therefore um you know I think all these you could hold for five years um you know there could come a time when the precious metals have run up substantially and and um you know these things are not cheap anymore and and at that point in time I I could see that happening three four five years out at that point in time they would not be as compelling as they are right now but I think right now they're quite compelling and now the twist it's called three ideas but as you were talking to me in the the creator of this show executive producer Jillian Glickman he said three ideas is irresponsible tell us what you mean by that in the context of the industries that that you work in and we're not going to hold you hostage uh to the show format or our community to show form that so we're not going to go as in depth but but tell me why three just isn't sound in your mind here yeah I mean I again so so all of these companies have great asymmetry and great upside okay so that which is to say that you know if they work they should be worth you know multiples of their current valuation um you might say well why is that I'll tell you why because as I've mentioned many times there's always you know Murphy's Law of mining which is things can go wrong and so they also have the possibility that they can blow off and if you go look at charts of mining stocks over the past 20 years you will see that every now and then one of them kind of goes to zero or or really loses a lot of value it turns out to be an unmitigated disaster and that happens with with kind of frequency I mean um and it's it's hard to know which ones would be obviously we all knew you wouldn't buy those ones but and so even these good companies occasionally something will go wrong so therefore I think it's irresponsible if you're looking at these things I believe what you want to do is you want to at least have 10 names and have have your best spread across those names knowing that if one of them fails you know the other nine will probably work and you know they might go up two three five acts and so the fact that one of them went to zero doesn't you know totally destroy your overall rate of return so I've given you three good ones here and as we were talking about I what I asked you to do is I wanted to be able to list kind of my next favorite seven um that go beyond that and and each one has different risks and rewards but I think they're all very very interesting situations I own them in my fund and I believe very much that they're good companies that will do well and so I would encourage people to kind of look Beyond just the Highlight names and I don't know are you okay with me just reading them off yeah absolutely we don't we can't I wish we could do everyone but we we don't have enough time probably but absolutely I think people will be interested to to know these names these are other names that I really strongly believe I think that I think the management team is good I think the deposit's good I think the upside is good Etc so I'll just start with IO silver and gold it's an amazing deposit in Morocco just amazing a huge huge silver deposit one of the largest in the world run live Benoit LaSalle he built he built semapho I love it I mean I think it's a it was almost it was almost one of the three another one is I-80 which was actually a spin-off from um from Premiere and and Equinox it's out in Nevada a very safe area fantastic management team they're going to Daylight a ton of value another one is uh GCM slash heiress GCM stands for Grand Columbia mines the ticker symbols GCM they are merging with a company called Eris a-r-i-s you know GCM is trading at three times cash flow and they've got an amazing development pipeline I love it it's a great company another one is K92 they're over um uh in the ring of fire and they have an amazing probably the best operating mine in the world today in terms of grade performance growth and management team it's just I've owned it since 80 cents it's at six bucks now or something just an outstanding situation um two more uh silver cork which is the cheapest Silver Company in the world this is an amazing story 400 million market cap 200 million cash 100 million in marketable security so Enterprise Value is 100 million ebitda is 100 million trading at one times even thought you might say why is that I'll tell you why it's because the mine is in China and so the company's headquartered in Vancouver but the mine is in China everyone's afraid that we go to war with China they grab the mine so but does that really make it one times even though the correct number I mean you know what we're joking about out at Beaver Creek is oh you could short apple and go long silver Cork and you'd have a nice pear tree because if we go to war with China you know Apple's going to zero I mean since they do all the production in China so and then the final one is a nice development story in the united in Canada called cassiar gold c-a-s-s-i-a-r gold uh really great team great deposits they're developing a mine um they've got you know a lot of property and so forth so I mean these are all companies that I own and believe in very strongly um they're more beyond that but those are kind of the ones that were close to the top of the list well Larry the part it's been great getting to know you and to hear the ideas that you have here and and also your your Global macro Outlook I think is really interesting to hear in terms of the industry that you're looking at so thank you very much and when you have uh three more ideas we'd love to hear from you again yeah I'm most welcome to do it uh enjoy it thanks Sammy ask great questions well here are my takeaways from that conversation with Larry Lepard first of all that big picture Outlook that he set out at the very beginning I think is the most important you heard that he's had real pain in this industry and in his own fund for the past couple of years now he sees this as an opportunity to get in the first idea that he talked about was Equinox gold this company he feels is solid in part because of where they're operating the US Canada Mexico and Brazil he sees those four countries as geopolitically safe his time Horizon is about one to two years because this is a producer your company in part conversely the second idea that he had is about osisco now this is a development story you he talked about them developing in Quebec in in Canada he has big faith in the leadership there he called them Canadian mining royalty but because this is a development story he sees the time Horizon there is longer than his first idea he sees about five plus years uh one major risk that he sees there is capex capital expenditures in part because of the inflationary environment that the entire world is in but that puts particular pressure on this industry and this project and the third idea he had was from Guanajuato silver that's another Canadian company though operating in Mexico I thought what was interesting there was again the time Horizon he sees one to two years because it's a producer company and like Brazil and Mexico of course there are people who might hear Latin American countries and paint them with a broad brush he's saying that's a mistake he thinks that Mexico is a safe bet geopolitically speaking I'm really glad we could do the first edition of the show with Larry Lepard he's exactly the type of voice and really industry Insider who has those connections so he can bring us the type of insight that not just anybody can have in this type of space whether it's three ideas or we got the message the new shows that we're bringing you here at real Vision are response to what you've told us you want you want actionable you want interactive and these new formats really mean that you can squeeze even more juice out of every single idea at real vision [Music] we hope you enjoyed the video at realvision we help you understand the complex world of Finance business and 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Channel: Real Vision

Views: 35,667

Keywords: Finance, Markets, Economy, Stock Market, Investing, Trading, Financial Literacy, Recession, Interview, Conversation, Insight, Analysis, Short Seller, Real Vision, Equities, Raoul Pal, Inflation, Stagflation, Monetary Policy, Money, Federal Reserve, Fed, samuel burke, lawrence leopard, gold, silver, gold market, gold is back, gold price, gold trading, equity management associates, 3 ideas, trading ideas, trade ideas, gold stocks, next decade, outperform market, stocks alpha, trade alpha

Id: ccmC4ZKPKLw

Length: 43min 0sec (2580 seconds)

Published: Tue Nov 01 2022