What a Professional Gold Financier Is Buying Now

by Gerardo Del Real

Gerardo Del Real

Editor’s Note: I had the pleasure this week of talking with well-known mining financier and speculator Jeff Phillips. He finances and consults for exploration and development companies across multiple resources. But with gold looking like it wants to break out, I wanted to have him on to get his thoughts and see what he likes in the space right now. 

Enjoy the interview below. 

— Gerardo  

Gerardo Del Real
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me is one of the most respected contrarian voices in the resource space, financier and friend, Mr. Jeff Phillips. Jeff, how are you?

Jeff Phillips: I'm good Gerardo, thank you for having me on.

Gerardo Del Real
Gerardo Del Real: Thank you for taking the call on short notice. We've had a consolidation in the gold price since last August that has been really frustrating for even the most ardent of gold bugs. And it finally seems like gold and silver are stabilizing here. And they actually both look like they're poised to head higher. We've had two months of consecutive gains. Gold right now is flirting with $1,900, silver is flirting with $28.

There's a rising trend globally of nationalization and jurisdiction risk. We've seen hints of it in Peru with the upcoming election. We've seen not hints, but actual election results in Chile that look like they’re going to affect the copper space specifically.

But I had to get you on to ask you how are you positioning your portfolio moving forward, being that gold and silver look attractive, and being that the juniors are still off some 40%, 50% — some 60% off their all-time highs — despite the gold price only being in down 17% from its all-time high? Is that something you look at?

Jeff Phillips: Absolutely Gerardo. I take a longer term view, so I have large positions in different commodity stocks, junior stocks. And I look at opportunities.

To me there's not a question that gold and silver are going higher over time, and there'll be times, with the printing of money, and just inflation in general. There's always inflation, it's just a question of how fast it's running.

But again there's times when gold and silver have continued to move up, but you get more speculation in the junior stocks, like you've seen in cryptocurrencies, like you've seen in tech stocks, like you've seen in NFTs, like you've seen in you-name-it. There's been lots of these speculative bubbles, meme stocks, where people chase things. So that will come again.

The gold and natural resource juniors are famous for that. There's some spectacular values right now for where gold is trading, because the producers are making a lot of money, and they are going to at some point have to replace that production. 

And there's a lot of cheap gold juniors with development assets that have sold off, like you said, since that initial gold run last year,
Well, we're going to have another run. And I suspect the junior resource stocks will wildly outperform this run in gold as more speculative money comes into those stocks.

Gerardo Del Real
Gerardo Del Real:  There's always an order to the rise in the producers, and the mid-tiers, and the juniors. We know that historically the producers tend to see the initial price appreciation, as they have leverage to the rising price of gold. But we also know that historically the juniors — the explorers that have quality assets and quality deposits and now specifically in great jurisdictions — tend to see an overshoot to the upside once that speculative fervor kind of comes back into space. Are there names specifically right now, Jeff, that you like for your investment criteria, your speculative criteria?

Jeff Phillips: Yeah, there's a number. One of those companies that I think has spectacular value right now is Revival Gold (TSX-V: RVG)(OTC: RVLGF). Revival Gold has the Arnett and Beartrack Project in Idaho, which is a very safe jurisdiction. It's 3 million ounces of gold.
They reached in the last up-cycle with gold, and the speculation that came into the juniors, they reached $1.40 a share, or slightly higher, that's Canadian. 

I think they raised $12 to $13 million U.S. at about $1.10, $1.15 Canadian at that time. They still are sitting on a lot of cash.
With the sell off in gold stocks and some of the junior speculators, and the people who, like myself, speculate in that arena, the stock's come off because of the financing. And because they had finished drilling, and results have come in, and we had a gold market that was weak.

But it’s a company with 3 million ounces of gold. I believe it's trading at C$0.65 cents right now, which is pretty near the low range of the last nine months. And I fully expect that company — they just announced that they've begun drilling their Joss high-grade target again — to approach their high prices of last year.

You know I like cars Gerardo, and it's kind of like when you go out to buy a high-end super car or something, you never want to buy it off... There's an appreciation curve, and then there's a good time to buy that car, and then the car starts moving back up in price, these rare super cars or old cars. So again, I like them, and that's a junior stock. So I've been buying Revival Gold here in this range.

I am a consultant, I had a large position before that, but I've bought several hundred thousand shares there in the last several weeks. And again, the company's drilling, they don't need to raise money right now, we're going to get results, and we get 3 million ounces of gold. So the price that I'm paying for that gold is really near the industry low. It's well less than $10 an ounce.

So again, there's a lot of upside there, just in the fact they already have this gold, and I suspect there will be more people looking for safe jurisdictions and good assets. So again, everybody's got their own portfolio and how it fits in, but I think a great speculation here at the start of summer, and looking into the fall is Revival Gold.

Gerardo Del Real
Gerardo Del Real: Well, I have to agree. I mean, if you're looking to add, average down, or initiate a position in a quality gold play, I've been to the project, the infrastructure is top notch. I can make an argument that the infrastructure and the gold on the leach pads is worth a lot more than the current market cap of approximately C$46.2 million. It's a buy low, sell high business. 

It's trading at 65 cents. The 52 week low is 62 cents. So it's within 3 cents of a 52 week low, with that 52 week high your reference being C$1.45. 

And again, we're only off 16%, 17% in the gold price from all time highs. And yet you can buy something like Revival Gold at near 52 week lows. It's pretty incredible.

Any thoughts on the gold and the silver price here moving forward? I know that you don't like doing timelines and crystal ball predictions, but you did mention inflation. And you mentioned that you see higher prices. Do you expect to see new all time highs this year?

Jeff Phillips: I don't really put timeframes. It wouldn't surprise me, Gerardo. Again, I think there's more money moving back in. There's so many variables that are unprecedented in what we've seen over the last, not just a year, but last decade since the real estate crisis, or whatever you want to call what we had in 2008.

So there's a lot of things that have never happened before. We've printed lots of money. So at some point people are going to realize that gold, and secondarily silver, have been a long-term good hedge against inflation. And I think people are going to move into that more and more, and as some of these other new, so-to-speak inflation hedges, which I don't believe are inflation hedges, like cryptocurrencies, they could be great speculations, and so far they have been.

I suspect gold and silver keep moving up. But you don't have to have gold move up $500 an ounce to have a raging bull market in the junior resource space. You just need to have that speculative flurry that you've seen in many sectors over the last decade — like cryptos — come back into the gold space as an undervalued space.

And I think as these majors continue to show — and mid-tiers — that they're making tons of money at these prices, you're going to start seeing more speculation. You've also seen a couple of pretty good discoveries in the last 12 months, 18 months. You've had New Found Gold up in Canada that's on to something.     

It’s gone from, what? Below a dollar to — I think it's $11, $12 today, with some great drill results. And it looks to be a legitimate discovery.

You have the world famous mining entrepreneur Lukas Lundin's company, Filó Mining, that is in Argentina, which in the past has been sort of a, depending on what province you're in, can be difficult to develop, but he happens to be in a good province in Argentina, I believe it's San Juan. Filó mining has made a big discovery there, and their stock's done very well. I think it's gone from in the pennies, below a dollar, to $9-$10 just in the last six months on a big discovery.

So that helps the overall market. That helps companies raise capital and gets the speculative juices flowing when you see these 10, 12-fold returns in less than six months.

But I like to look at things that I can have that kind of upside through drilling and discovery, but I also have a solid asset backing it up. 

And that’s why I talked about Revival Gold. They've got a resource there that's already 3 million ounces of gold with past infrastructure, and they're drilling new targets where they can come up with more gold. But I think it's undervalued for the gold they have. It trades at one of the lowest valuations, and a lot of it has to do with timing, and financings. But I think right now you're probably looking at an excellent entry point.

Gerardo Del Real
Gerardo Del Real: Agreed. Well, it's not often that you get in depth into a company. Again, I think the timing is spectacular, I think the setup is ideal for gold and silver. And I couldn't agree more on the value with Revival.

Jeff, hopefully we can catch up maybe next week and we'll have another conversation and we can choose a different topic. I always love and appreciate your insights. So thank you for taking the time.

Jeff Phillips: Thank you for having me Gerardo.

Let's get it!

Gerardo Del Real

Gerardo Del Real
Editor, Resource Stock Digest

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Resource Stock Digest, Junior Resource Monthly, and Junior Resource Trader. For more about Gerardo, check out his editor page.

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