General Precious Metals
Legendary Investor Jeff Phillips on Explosive Moves Coming for Gold Stocks
Gerardo Del Real: This is Gerardo Del real with Resource Stock Digest. Joining me today is one of the most respected voices in the resource space — Mr. Jeff Phillips. Jeff, how are you today?
Jeff Phillips: I'm good, Gerardo. Thank you for having me.
Gerardo Del Real: Thanks for coming back on. It's been a bit. A lot has changed. I can tell you by the emails I'm getting that speculators in the gold space are very bored with $1,850 gold!
You've been through multiple cycles. You've been in this business for over three decades if I'm not mistaken. How do you feel about the gold space now… especially in the context of the GameStops and the Bed Bath & Beyond’s of the world doubling in price nearly every day!
Jeff Phillips Yeah, you had a pretty good market. Again, in these markets, people lose patience very quickly. Gold has come off a bottom and has been working its way back up and had a good price move last year. It's consolidating now.
The gold producers are still holding up pretty well and have had nice moves. Their balance sheets are extremely strong. They continue to produce gold at a price that they make quite a bit more money. And I don't think that's at all factored into these companies and the acquisitions they're going to have to make to replace that gold.
When you come down to the development stories and the juniors, they also had moves back in July-August, August-September – you saw some pretty good moves. But again, people aren't in this space to double their money. They're in this space to make 10-fold their money!
When you see something like GameStop, which I think was up another 100% today… I don't know, it's up from $4 to, I think, it hit $250! Or you see AMC, the movie theater chain, up 257% in a day! Again, people are speculating on different things.
My general feeling is that, you have a couple of things going for the gold sector to see that kind of speculation, which we've all seen in the past. One is they're printing money ridiculously, which I think is supportive of the gold price. And I also think some of these speculators will find their way into these undervalued gold and natural resource companies.
Gerardo Del Real: GameStop closed at $347 today, by the way, Jeff!
Jeff Phillips There you go!
Gerardo Del Real: So, what would you say to new speculators, and by new, I'll give you an example... I had a subscriber write in and mentioned that they've been in this space for four or five years now. And with the exception of the recent runup… they're frustrated.
And the consolidation is something where, for someone that just came into the space since 2016, this consolidation makes probably the third or fourth time that they feel gains have evaporated.
What I always try to preach to everyone is that you have to either identify yourself as a trader or understand that you're investing for the cycle. What do you say to the speculator that comes in, is up 100% right away, and now is in the midst of a 30%, 40% pullback and is frustrated?
What do you see happening here in the next several months?
Jeff Phillips Well, I think people have to have patience. What I think often happens is you get a – using the gold stocks in particular – you've had them come out of the gate pretty well. Off the bottom, people made some profits that got into the space. Now they've fallen back, which seems like a mammoth amount.
But that’s what normally happens. And what you see is, in the second leg, these things really take off and act like, unfortunately, like the GameStops and the other companies of the world that are doing that right now, as we've discussed.
So I think the gold stocks will move very quickly.
And yeah, you can be down 30% or 40% if you just came into the space late last year. You could be down more if you came in earlier. You could be up if you came in last summer. But I think when this move finally fully emerges, we're going to see some explosive moves to the upside.
Anyway, I liken it to a horse. When you leave the barn, he gets going pretty good. He gets tired about halfway out and it gets kind of boring. And then, before you know it, you turn the corner to go back to the barn and the horse takes off like a wild animal to get back.
We're about to turn that corner. We're on the slow part of the ride. We came out of the barn pretty nice. Now it's boring. We get rid of the people that don't believe and the
non-patient people. And we're about to head back to the barn, which should be exciting!
Gerardo Del Real: I absolutely agree! I've been adding to my favorite names. You know some of those names. I would love for you to share maybe three or four picks in the space that you really like right now that you find attractive at these levels.
Jeff Phillips Yeah. Maybe we can do multiple interviews. It gets hard to do that many picks and there's different things and everybody's portfolio is different. I consult for some of these companies; I'm a large shareholder.
So, what do I like this week, right now, for a gold company… and because you wanted to keep this interview shorter, I like Revival Gold (TSX-V: RVG(OTC: RVLGF), Hugh Agro's company. Revival is in Idaho. They've got the Beartrack-Arnett Gold Project. Hugh has grown that project from really zero. There were ounces there historically, a million, but he's grown it to 3 million ounces that are 43-101 compliant.
It's made up of oxide and sulfide. They've come out with a PEA on the oxide portion, which shows a production of about 70,000 ounces a year just on the oxide portion.
And they've grown that this year. The numbers aren't super exciting when you see the drilling results but they're growing that oxide profitably. I think their all-in costs, basic cost, is about $1,050 for those gold ounces, and they keep growing that. So I think even their PEA is out-of-date when you look at the ounces they've drilled. I'm guessing they could probably add one or two more years to that mine-life.
Plus you have all of the upside on the sulfide. So you still have plenty of drilling and results coming from that company here in the next couple of months from last year's drill program.
You have a new drill program beginning this summer. There's upside in the Beartrack side of the project for the sulfide and the high grade. Along strike, it's wide open. You also have upside on the oxide, the Arnett portion, where they've continued to hit gold.
So again, I think it's sold off like all of the gold companies. I think Revival Gold is an excellent speculation right here.
Gerardo Del Real: Can I get one more?
Jeff Phillips One more company, another company… Let's stick with Idaho since we're in that area. You know I've liked Midas Gold (TSX: MAX)(OTC: MDRPF). They've gone through some changes lately, which, if you're a new shareholder, creates an opportunity.
Midas has the six million ounce Stibnite Gold Deposit in Idaho. It's in final permitting, which is a risk, obviously. John Paulson of The Big Short fame is the largest shareholder. His funds; he owns about 40% of the company.
They decided to move the offices to the United States. They’ve decided to consolidate the shares and move it onto a US exchange. The communication hasn't been great. The stock has sold off because of that. They’ll be on the NASDAQ in the not too distant future.
Because of this perceived rollback, the stock has sold off. I think it's unwarranted. The risk is in the permitting but I think the upside is tremendous. And when we have someone like John Paulson involved, they can raise all of the money you need to build the mine. They own 42% of the company… you can bet they want to maximize their value!
Gerardo Del Real: I absolutely agree! I'm biased. I own it. I spoke with management this week. I'll be speaking with management early next week and interviewing the incoming CEO, Ms. Laurel Sayer. And yeah, we just got to get it up on Reddit now and I think Midas could be a $10 stock!
Jeff Phillips Yeah, it’ll actually be a US-listed stock; one of the few developments-stage gold stocks with a lot of speculation that's on a major US exchange. So I think that's interesting. And again, I think Revival Gold is probably one of the cheapest per ounce gold deals out there for what they're getting market-value to the ounces. I think that will change very rapidly.
So it's had a high of C$1.40, I believe, and is now trading at C$0.70. I think it can easily go back to its highs and past that.
Gerardo Del Real: I absolutely agree! Jeff, I want to thank you for your time and I'm looking forward to having you back on, hopefully in the not too distant future. And maybe you can share another pick or two next time you're on. Is there anything else that you'd like to add?
Jeff Phillips No. Again, it's speculative. Remember, you can be up or down in the mining stocks. It used to be that the mining stocks were where people played to speculate. And the markets have changed over the last decade because you've had such cheap interest rates and so many wacky things going on with speculations everywhere.
You've seen it from cannabis to stocks that have something to do with COVID — that may or may not! So again, it's all speculation. If you're buying these stocks, and any stocks at this point, I think you're speculating. You better realize that.
Gerardo Del Real: Agreed! Jeff, thanks for your time again.
Jeff Phillips Thank you.