Puplava on Economy, Mining, emphasizing juniors --
Here are those notes on Puplava I mentioned:
Message 23194576;
Here's a very good hour+ discussion with Jim Puplava: netcastdaily.com
Puplava's a big gold bull, but his discussion of junior mining companies at the end of the program applies to all junior miners. I hadn't really listened to him before, but I came away impressed, especially since he seems to recognize the same thing I do in late-stage junior miners -- the best investments in the market today.
Here are my high-level notes.
First 27 minutes or so:
He talks about the big infrastructure buildouts needed over the next decade+, driven by 2 things:
1) Industrialization of Asia, led by China and India
2) Rebuilding of the Western crumbling infrastructure (cites Arnold's $43.3 billion in new bonds to rebuild CA infrastructure)
He then talks about global credit expansion, and how that's really what drives the global economy.
He then talks about the housing market and how the real problems are at the margin with the marginal buyers in the sub-prime lending market, and he doesn't see a bottom until at least end of 2007/early 2008.
Middle part:
Then they take some questions and have a guest who talks in detail about the weather and the moderate El Nino we're having, and how the natural cycle makes some conclude we have global warming now and we should have global cooling talk in 10-15 years when the cycle changes. (I didn't listen very closely to this part, but it should be interesting to those interested in the weather).
Last part:
Then he talks about mining, focusing on gold. He emphasizes that late-stage juniors are the best investments, not the big producers.
He said there have been lots of mergers, and that should continue this year in mining, energy
He said majors are continuing to drop in terms of production.
With environmentalists, geopolitical risks, regulations, it now takes 10 years+ to go from discovery to production while it used to take 3-5 years.
Some companies find a great deposit, raise money, put in capital structure, and then nationalization takes it all away.
He says stick to the safest areas of the world. His 3 favorite places are Canada, Nevada, and Mexico.
Towards the end of the year, there was a breakout of exploration and late-stage development companies, which once again were the best performers in 2006. He expects that trend to continue.
That's where the greatest value lies, in late-stage development juniors -- that's an area people are overlooking.
When gold goes through corrections, they trade the majors because they're more liquid.
It takes a lot of patience to be involved in a junior.
He thinks silver will continue to outperform gold -- Turk thinks it can cross $20 this year.
Majors see production decline, so they go out and acquire companies.
From the beginning, he's been preaching that late-stage junior development companies are the best investments.
You really have to think long term.
His best performer was up 8000% from March of 2006, but was down in 2004, 2005, and beginning of 2006.
Most people are very, very short term focused.
For juniors, you need 3 P's:
1) Patience -- have to be long-term investor, wait as they prove out deposit, taking from Inferred to Measured & Indicated to Reserves to production. Have to look in terms of forward oz -- how many oz will they add.
When you take a position in a junior, you should really get to know management and keep adding to your position -- you have to have patience.
2) People -- want people who can take it to the next level
3) Property -- what is the potential to expand resources?
With juniors, if you don't have patience, you don't belong in the business.
Last 2 years, he's shifted to a higher concentrations of silver, late stage juniors, early producers that will increase production. Doesn't want to own any majors. |
