An Interview With Trevor Newton
Investing (Canada): How did you come up with the idea for Stockscape?
Trevor Newton: I used to be a stock broker and I caught the Internet bug and decided there was a great market niche that I could fill which was focused on the resource investment sector. The strategic partners that we had in place already had quite a bit of influence in that area and so we decided to take that influence and apply it to the Internet. Really our objective was to create a hub that was mainly oriented towards resource investors.
Investing (Canada): When you were a stock broker you were based in San Diego. How did you decide to host the site in Canada?
Trevor Newton: We decided to base Stockscape out of Canada for a couple of reasons. The first reason is that the capitol of the world for mining stocks is Vancouver. From that point of view we thought we really should be located where the action's happening. From the other point of view, one of the reasons we wanted to base it out of Vancouver is because the regulatory environment in the United States is, well - there are a lot of question marks surrounding it. So you don't know what you can say and what you can't say on the Internet. And in fact there are lot more question marks down there than there are in Canada. And so from a pragmatic point of view, we decided it would be more flexible to base it out of a more open environment which is the case in Vancouver.
Investing (Canada): One of the key features of your site are the newsletters you have. Can you tell me how that came to be?
Trevor Newton: The newsletter writers we have are the sort that write about resource investments like Jim Blanchard, Adrian Day, Doug Casey. There’s Rick Rule of course who is my mentor and financier of Stockscape. There's Brian Fagan, Gary North, Jack Pugsley and so on. These different writers all have something in common. They all tend to focus on resource investing.
Some of them happen to be gold bugs, others are silver bugs, others are just plain speculators. Most of them tend to lean towards the so-called 'hard money' school of thought. And we have great relationships with those newsletter writers, in fact Rick is close friends with all of them. And through Rick's associations and ties with them, we decided it made a lot of sense to put the newsletters up on the Internet. So that's what we've done.
Investing (Canada): Are you yourself a gold bug?
Trevor Newton: I'm not really a gold bug. My background as an economist influenced my thought on this matter. I think that you'll see gold do the same thing that you've seen other commodities do over the last one hundred and fifty years. I think the real price of gold, like most commodities, is going to drop over the next thirty, forty, fifty years. However, having said that, I think that you will, at some point, see a fairly significant spike in the price of gold that will coincide with any sort of economic difficulties that we have if they're at all serious. When that is going to happen, whether it's going to be next year or twenty years from now, I don't know.
So I'm not a died-in-the-wool gold bug but I think that it's only prudent to maintain a certain amount of your investment portfolio in precious metals simply to give yourself exposure to the possibility of a precious metals price spike.
Investing (Canada): What percentage of your portfolio do you think that a prudent person should put into precious metals?
Trevor Newton: An extraordinarily aggressive speculator - one who's a borderline maniac - might put as much as forty percent of their portfolio into resource stocks. I would never recommend that. I would say that for most people a maximum of ten to twelve percent makes sense.
Investing (Canada): Do you have any predictions on what gold and precious metals will do in this year of 1998?
Trevor Newton: I don't personally. But I know that there are some people that think about this issue long and hard, and they know a lot more than I do. Frank Veneroso is, I would say, one of the most widely known and respected commentators on what the price of gold is going to do. He has indicated that he thinks gold is going to go a lot higher.
Alternatively, there are other commentators who think that, since there's such a massive central bank overhang of gold that has been stockpiled, the only thing that can happen over the coming years is that gold is going to continue to go down. So, as for what will happen for gold in 1998, I don't really have an opinion on it one way or the other. I just don't know.
Investing (Canada): I know that some commentators have suggested that a lot of what happens with gold will depend on what happens with the Eurodollar, whether they decide to have gold as partial backing for it. Any thoughts on that?
Trevor Newton: Related to that question is an interesting theory that I saw on the Internet, in fact, on my site a little while ago. Here's the theory: what you may possibly see is that the U.S. Central Bank may become a net buyer of gold. What you're seeing right now with the Asian currency crisis and so on - a lot of U.S. currency will be flowing into their economies for several reasons, not the least of which is we're essentially bailing them out. The Asian economies would like to bring in as much U.S. currency as they can to prop up their financial system. And what they're in turn going to do with that currency is invest it in U.S. T-Bills and so forth.
With that influx of U.S. currency back into the U.S. economy, and with gold falling to close to production price levels, if the U.S. wants to basically move forward as being sort of a supreme world currency or the currency of choice, super currency if you will, then it might make sense for them to become net buyers of gold at these prices. So that's an interesting theory. I don't know if it's going to be the case, but it's something that could be interesting to watch for.
Investing (Canada): What about the stock market in general for 1998? We had a pretty boom year last year with the Dow Jones and the TSE reaching record levels, do you think the boom is going to continue or do you think we're in for shakier times?
Trevor Newton: I've not been able to accurately call this market for the last three years, quite frankly, because I've looked at historic valuations. Based on historic valuations the stock market is absurdly over-priced. But having said that, there's every indication that there's a lot of underlying strength there. And I suppose the reason for that is the demographics.
You've got baby boomers with quite a bit of cash. In many cases they've paid off their house, and they have to save for their retirement. They know the government's not going to take care of them. They're in a position where if they put it in the bank they've got miserably low interest rates. So they typically use the argument of "Well, just because the stock market is overpriced isn't going to stop me from buying stocks, because I basically have no choice - I have to invest in the stock market just in order to save for my retirement."
So while that argument may not be sound, it's the argument that I think a lot of people are using. It may result in the broad market going to even higher levels. But there are certain economies in the world where their stock markets are a little better valued than the U.S. market. Investors looking for value are probably going to continue looking overseas a little more than maybe they were five or ten years ago.
Investing (Canada): If you had, say, $10,000 of extra money today to invest, what would you do with it?
Trevor Newton: Well, what I would do with it is probably different than what most people should do with it. If somebody asked me what they should do with it, I would tell them to put it in something very, very safe like Pilgrim Prime Rate Trust on New York, and just collect eight percent or whatever it is that it pays.
However, personally, since I'm very involved in the mining community and I know the people and I know the deals, I would probably speculate with a very large percentage of it. But that's just because I have an extremely high risk tolerance and I think that a lot of the mining issues are severely undervalued in light of the sell-off we've seen over the last twelve months.
Investing (Canada): So what's new on the Stockscape Website and what plans have you got for the future?
Trevor Newton: What my objective is with Stockscape - and this is not just a plug for my site - is to continue to have great content, with great newsletter writers on our site, full news releases and stock quotes and all the sorts of market information that a person wants. But in addition to that I think it's critical to develop a sense of community. We really focus on providing extremely high customer service to our clients, our members and our non-members, and give them a sense that when they go to Stockscape they're getting involved in a community of individuals.
It's something that the Motley Fool Website has been able to do extremely well, it's something that America Online has done extremely well and it's also something that the Mining Company is doing extremely well with and will continue to do well with. Geocities has done well with it too. So it’s something that we also want to develop and the only way to do that is by trying to find out what your users want and address it and give them the best service you absolutely can. So that’s what we’re focused on doing.
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A Guide to Stockscape
Stockscape has many interesting features for the resource investor. Here are quick links to some of them:
News on the Resource Sector - The front page at Stockscape features all the latest news from the resource sector. For a small monthly fee you can subscribe to a real-time newswire feed.
Insider Trading Report - Stockscape's Insider Trading Report tells you who is buying and selling what. Enter the name of the company or executive in the search engine for a detailed report. Currently covers only the VSE but plans are to expand this service.
Newsletters - Stockscape plays host to over fifteen financial newsletters, most dealing with precious metals and the resource sector. All offer the opportunity to subscribe and most have back issues archived here free for your perusal.
Personal Stock Quote Portfolio - Register for a free portfolio tracking service.
Discussion Forums - Everything to do with resource investing from individual companies to general discussion on the price of gold shows up here.
Canadian Company Database - Retrieve stock symbol, address and phone and fax numbers for Canadian companies.
These are just a few features at this excellent site. Others include a Companies Booth, Ticker Symbol Search, Daily Gold & Stock Quotes, an archive of past Daily News plus paid services as well.
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Investing (Canada) Notes
You probably noticed the new look to our main page. Instead of listing five selected categories from our Library of Net Links, we now list 25! (Which in the case of Investing (Canada) is alamost all of them.) This should make it easier for you to access the category you're looking for. Please note that the annotated list of categories is still available. There are now over 250 links in our Library of Net links!
If you haven't yet tried out the Investing (Canada) Bulletin Board, we invite you to do so. Ask questions, leave comments, engage in debate, whatever. Maybe you have some thoughts on mutual fund buying strategies. Or a hot stock tip. Share those ideas with the world!
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