Bob Moriarty: It Doesn’t Make Any Difference What The Fed Does…“100 years of history proves that the Fed is clueless. The mismatch between interest rates and risk today is absolutely insane. My opinion is that the whole financial system is going to blow sky high.”
EnergyandGold.com
12/17/2015
The Energy & Gold team had the pleasure of connecting with legendary metals blogger and investor Bob Moriarty. As always Bob didn’t pull any punches and delivered a frank and worrisome assessment of the Syrian conflict and the prospects for the global financial system. However, perhaps Mr. Moriarty’s most notable assessment came in the form of the Federal Reserve’s ineptitude. The Fed has essentially boxed itself into a corner from which it cannot escape without extremely negative consequences for the global financial system. Without further ado here is Energy & Gold’s end of 2015 interview with Bob Moriarty:
CEO Technician: We’re in the 5th year of a brutal resource/precious metals bear market and it has lasted much longer than anyone expected. Will 2016 be a year of rebirth for the metals & mining sectors?
Bob Moriarty: Yes I think so. This is the longest bear market in metals we have had since 1970 (when Nixon ended convertibility of the US dollar to gold and gold began its secular bull market). Commodities are the lowest in real dollar terms then they have been in recorded history[1] and then you’ve got the stock market getting ready to tumble. So I think we are at a turning point.
CEO Technician: Do you think that the senior gold producers have finally right-sized their cost structure and ripe to benefit handsomely from some mean reversion in metals prices?
Bob Moriarty: The senior producers are just beginning to adjust. Anglo-American announced last week that it will lay off 85,000 people and sell 60% of its projects. My question is who will they sell these projects to? However, Anglo-American will benefit tremendously from lower labor costs, lower fuel costs, lower steel costs, etc. These benefits have not yet kicked in but the seniors will be the first to benefit, then the mid-tiers, then the juniors.
CEO Technician: What are your favorite names in the junior resource space? Where are you investing your own capital right now?
Bob Moriarty: I am not deploying fresh capital now because I’m already fully invested. I don’t think you can pick juniors in here, I think that you’re really throwing dice by trying to pick individual stocks in the junior space. When we get a turn in the sector we will see a sector-wide increase on the magnitude of 2000, 3000, 5000%. However, a lot of companies are frankly not going to survive to see that turn.
The safest place to invest right now is in mid-tier explorers & producers[2] . You will always get your highest percentage return in the juniors but who knows how many, if any, will survive. The senior companies will still be around but they don’t move much in percentage terms. For now the safest space with the best returns will be the mid-tier producers.
The Rest…HERE
