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Mickey Fulp, the Mercenary Geologist, on the Latest from the Fed, Tax-Loss Selling Season Strategies & the Commodities and Resource Stocks He Likes Best Heading into 2019

November 28, 2018

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the Mercenary Geologist, Mr. Mickey Fulp. Senor Fulp, how are you this afternoon?

Mickey Fulp: I'm well, Senor Del Real.

Gerardo Del Real: Perfect. Well, thank you for taking the time. The last time you and I chatted, we were in New Orleans. It was a great time. Just 10 to 15 minutes ago, we got a speech by Fed Chairmain Powell. It ignited the overall U.S. indices, the market is up some 550 points. Gold is up, silver is up, copper is up. We're doing this in real time. Some quick thoughts, Mickey? And then we'll talk about tax-loss selling season.

Mickey Fulp: I think it was predictable that Powell was going to have to be dovish, because the economy is not maintaining as we thought it would. The stock market's come down drastically from its record highs in late August. Trump's been beating on the bully pulpit about The Fed. So quite predictable. And as soon as that happened, really the U.S. dollar dropped what? Half a point? More than half a point? As soon as that happened, and now it's down for the day, it's down six-tenths of a point.

Gerardo Del Real: Yes, sir.

Mickey Fulp: And of course, commodities reacted to the upside, because they're all priced in U.S. dollars. Gold jumped about $10. Copper's up a couple of pennies. Oil didn't do so well, but oil's in a bit of a bear market correction right now. Let me put it this way. A bear correction in a bull market. It's significantly off over the last two months.

Gerardo Del Real: Well put. You mentioned copper, the commodity elephant in the room of course is China. There's a big G20 meeting. There's been some posturing by China and by President Trump. Any thoughts on where that goes? You believe that trade wars are sustainable. I know privately you've shared in the past that you believe Trump is negotiating. Do you think that ends well? And if so, do you see the copper market as being also a bear market correction within a broader bull market, as I do?

Mickey Fulp: I think I see it as you do, at least with regards to copper. I don't think this is a trade war. I think that's media hype, hyperbole if you will. There are ongoing trade negotiations. We've already resolved our issues with Mexico. We've resolved our issues with Canada, to our benefit. We've resolved most of our issues in the Eurozone.

In my opinion, Trump's just trying to get a level playing field. Larry Kudlow, who I quite like as an economist, he's Trump's special economic advisor or whatever his title is, he's –

Gerardo Del Real: Sorry to cut in, Mickey. You like economists?

Mickey Fulp: Well, not all of them, but I quite like some of the stuff that Larry Kudlow talks about. He's a free trade guy and he keeps telling us, this is a negotiation. I think it is, and he told us yesterday that China needs us a lot more than we need them. I could not agree more with that take. It may take longer than we're hoping for, but this will be resolved and I trust it will be resolved in the United States' favor. If it's not, it's not going to be resolved.

Gerardo Del Real: Interesting. Now, I mentioned tax-loss selling season. This year has been particularly pronounced, and it comes on the back of an already tough 2018 for most in the junior resource space, with a few exceptions. Can you talk a bit about how this market in the junior resource space specifically, stacks up with some of the other bear markets that you've seen in the past Mickey?

Mickey Fulp: It's pretty deep this year. A lot of it's been exacerbated, I think, by the demise of the cryptocurrencies and the dwindling down, if you will, of a bunch of bad marijuana stocks into a few that have performed outstandingly. So, it's all piled on this year and we all thought 2018 was going to be a very good year for commodities. And in fact, it's been a bad year for commodities.

Everything's down except for uranium and palladium. Palladium hit an all-time high today. It's $50 off parity with gold. Now, explain that, I don't think anybody can. They can attempt to explain it. The commodities space has not made a lot of sense this year, and what we've seen is just a brutal year in the junior space, with most companies I dare say have their 52-week highs in the first quarter. That's not all that unusual in a bear market, but the baby's been thrown out with the bath water. There's some really good stocks that are trading at their 52-week lows as we speak.

Gerardo Del Real: Let's look forward to 2019. In 2018, you had the rise of Bitcoin and other cryptocurrencies, frankly. You had the marijuana sector and the speculative boom there. That's now on the other end of that trade, right? A lot of the air is coming ...

Mickey Fulp: Absolutely.

Gerardo Del Real: ... out of that bubble. Do you see that as favorable for the juniors, being that traditionally we see that bounce post tax-loss selling season in January. And if so, what do you like and why do you like it?

Mickey Fulp: I think you're exactly right, point on there. Those two sectors have come off. They were bubbles, the bubbles are gone. So people, because they're still making good money in the major stock markets, everything's now up on the year now, when last week it was down on the year. Quite volatile, but the one sector that has not participated is the resource sector, the commodities sector. It's just a matter of time. Junior resource sector is always driven by gold, and gold's down something on the order of – doing the math in my head – about 6% on the year.

What we generally see – and we've done extensive research – is from early November to mid-December, when tax-loss selling season is on, there will be a bottom. Those bottoms usually occur in mid-December. December 15th, plus or minus two to three trading days, and then we commonly get a significant bump, especially in good stocks, from that mid-December range through the first week of January, after which they flatten out. That leads to really good trade. You buy good stocks in mid-December, and you flip them in early January. And I've got a bunch on my list right now. I wish I had enough money to buy all of them. I think I'll be able to buy half of them.

Gerardo Del Real: Care to share any names, Mickey?

Mickey Fulp: I just wrote a piece that came out to subscribers, to subscribers only, but once again, all you've got to do is sign up to get it. It's free. Called “Tax-Loss Selling Gives Us This Buying Opportunity.” And the one I point out is GOLD [Goldmining Inc.] on the Toronto Big Board Exchange. And it's had a 52-week low, $0.73, that occurred about a week or 10 days ago. 52-week high of a $1.54, it closed at 78 cents yesterday. And I dare say that if you bought some GOLD, sometime in the next three weeks, you'd have a pretty good flip and likely some nice profits, trading that in the short term in early December.

Gerardo Del Real: Excellent. Any other names? I'd love for you to tell us how we can subscribe, or how people can subscribe. I'm a subscriber to your free newsletter, to get those exclusive insights.

Mickey Fulp: I currently cover a couple of other stocks. I cover Ely Gold Royalties on the Venture Exchange, ELY. We picked that at $0.09 in February, and it's reached a high of $0.16. I think it closed yesterday at $0.13. It's a prospect generator, junior royalty company, that's going to have a couple of producing royalties and increase its cash flow next year.

The other company I still quite like is Trilogy Metals, arguably the two best copper projects in the first world, high-grade, giant, and they got South32 as a partner. That stock has bucked the copper trend all year long, trading at near its 52-week high. But if we're correct and next year is going to be good for commodities, it's likely to be led by copper. If copper goes up, that company has been highly leveraged to the copper price.

Gerardo Del Real: You mentioned that gold leads the commodities sector, and that's certainly true. Are there commodities outside of gold that you're particularly bullish on for 2019?

Mickey Fulp: Copper and uranium and gold. Those are the three.

Gerardo Del Real: Ah, you've crossed over to the uranium good side, Mickey. It's good to have you.

Mickey Fulp: Gerardo, I have been on the good side, or the long side of uranium longer than you have been writing a newsletter. So it's been a long time coming, but it appears it's close to being here.

Gerardo Del Real: Fantastic. Mickey, a pleasure as always. Thank you so much for the insights and for the time.

Mickey Fulp: Thanks a lot, Gerardo. I think I failed to mention, go to my website, to my mugshot, sign up by clicking just below that, and you'll get all my stock picks for free. You can access most of the information on the website, but if you want my stock picks in a timely fashion, you need to be a free email subscriber.

Gerardo Del Real: We'll make sure to put a link up, and Mickey is also really good about answering emails everybody. If you have a question, right? I was one of those writers over a decade ago that was emailing him a question every week or so and he was kind enough to response. Shoot him an email.

Mickey Fulp: I'll respond to everybody that's not a troll.

Gerardo Del Real: There you go. Mickey, thank you so much.

Mickey Fulp: All right, thank you, Gerardo.

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MARKET SUMMARY

INDICES

Name Last Change
DOW 23675.60 0.35%
S&P 500 2546.16 0.01%
NASDAQ 6783.91 0.44%
TSX 14416.89 0.38%
TSX-V 543.19 0.00%

Resource Commodities

Name Last Change
Gold 1251.05 0.16%
Silver 14.69 0.48%
Copper 2.67 0.090
Platinum 793.89 0.07%
Oil 46.24 7.87%
Natural Gas 3.84 8.08%
Uranium 28.63 0.00%
Zinc 1.17 0.00%

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