Lobo Tiggre, CEO of Independent Speculator, says it’s early days in the current commodities supercycle — that means now is the time to buy low.
Independent Speculator CEO Lobo Tiggre has spoken before about the commodities supercycle, and at the recent Sprott Natural Resource Symposium he explained where we’re at right now.
“[It’s] still very early stage. Very early stage, and I think that’s great,” he said. “I do think that we are in the next major bull market cycle, and I do think that it’s still very much at the bottom or still starting.”
That means investors shouldn’t necessarily start to see returns just yet. “These things don’t tend to be V-shaped bottoms, they tend to be U-shaped bottoms, and so it takes awhile for that to begin curving more noticeably upwards,” Tiggre explained. “This is great news for people like me who are still buying and looking for new places to deploy their cash.”
In terms of how exactly to deploy cash, Tiggre encouraged investors to remember to build positions in stocks, not just invest all at once. “It’s building positions. It’s not just, ‘oh, I like this. I’ll buy it,'” he said.
To close, Tiggre offered an idea about why precious metals prices haven’t reacted more to recent actions from US President Donald Trump and other market turmoil. Watch the interview above for more insight from Tiggre, or read the transcript below.
INN: The last time we talked on camera was at PDAC. You were still using the name Louis James at that time; for those who may not be caught up, can you explain what’s going on and why the change?
LT: Sure. I know it sounds a little fishy, but it is what it is. I have gone out on my own now. I was with Casey Research for almost 14 years, and I wrote under the pen name of Louis James. I was just sort of beginning to go out in new directions at PDAC. But the hallmark of my work for people who know me — and at the new website you can see — it’s integrity, diligence, results. That’s our tag line. But the integrity comes first, and people who know me I hope see that that’s how I want to do business. And so if I have a new business that’s about integrity, full of transparency and that sort of thing, I can’t write under a pen name anymore. It just doesn’t work. My real name is a little bit colorful, but it is what it is, so I decided to go ahead and come out of the closet as it were and just tell the world, “here it is.” That’s all there is to it.
INN: We’re here today at the Sprott Natural Resource Symposium in Vancouver. You mentioned it’s going quite well for you so far. How is the mood? What’s the response like?
LT: The conference mood overall I have to say is fairly subdued. People are not jumping with joy, and that’s … no surprise given the retreat. 2016 was so exciting when it looked like the market was coming back. We suffered through 2017, 2018, it seems like it’s dragging on. But for me this is actually a very good time. Under my previous employment with Casey Research I was not allowed to invest in the things that I wrote about, and I was required to sell all my stocks when that … happened in 2015 — a very painful thing for me. But what it means is I’ve been out of the market for a number of years and now I’m on my own. I have my own business, I can put my money where my mouth is, which all of my readers have always told me they prefer, and I like it. I think we’re headed for a major bull market in the resource sector and I want to be involved. I want to participate, not just write about it and watch other people making money. So I think it aligns my interests. I think my readers like that I have skin in the game with them and [that] I want to make a bunch of money. And I have money to invest. I haven’t been able to invest for years, and now that I can everything’s on the sale. For me this is great news. I understand that if you’re all in or you’ve been patiently waiting for … the bull market to get roaring again — I understand that’s difficult. But buy low, sell high is the formula, and I’m so happy.
I’ll give you one quick example. I was required to sell stock in Pretium Resources (TSX:PVG,NYSE:PVG), Bob Quartermain’s uber-high-grade discovery here in BC. I was forced to sell near the bottom in 2015. That was my biggest position, it was a painful thing to have to sell. And then this year … I’m starting out on my own and they had scary news in the first quarter, there were some disappointing results for some people even though it was still in the ramp-up phase. And the stock went on sale almost back to where I was forced to sell it. So I was able to get back in almost at the same price. I was so happy. I know that it was difficult for people who own shares and didn’t want it to go down, but for me it was a wonderful thing to be able to get back in again where I was forced out. And by the way, despite the way the year’s gone, I’m up on that stock this year. So I’m happy and I’m looking to deploy more cash, and of course people can sign up at the Independent Speculator to find out exactly what.
INN: So you’ve got a shopping list, you’ve got companies that you’re looking at. I imagine these are companies you’ve done due diligence on. How do you decide when is the right number to jump in at?
LT: Of course there isn’t a right number. If something has made it through my due diligence process — and it’s true, I had a shopping list to start with, and I like to go and kick the rocks myself, as the geologists say, before I buy. There’s so much that you can’t tell looking at financial statements or the company’s PowerPoint. Management’s never going to tell you about all the little problems that they have, or the big ones sometimes, so you have to go look. Fortunately, over the last 14 years I’ve gone to see so many of these projects. I’ve been to the areas. I know a lot of what I already need to know for many of these.
As far as … a right price, there isn’t. I mean, there can be a great price — and then you know, gold can sell off, or copper or whatever, and it gets even cheaper. So I’d say as a floor there does come a point in a true market meltdown, like a 2008-style situation, where things just get stupid cheap. And then at that point you don’t really care if it could get cheaper or not. If something is so vastly undervalued, it’s a screaming buy, you just buy and you don’t worry about that. We’re not at that point now, so yes, there’s potential for volatility. But this is one of the things that Doug Casey taught me over the years — is that you can use that volatility to your advantage. So if I look at something and I like it, it makes it through my own version of Doug’s 9 Ps … and I’m ready to buy and I see a price that I think fits my expectations. Well, I’ll bid under that price on the market and … if you have a crappy market, I think is the technical term for where we are right now, that’s great. I can usually go and bid under, just under the bid-ask spread, and I’ll get filled. Somebody who’s tired of it all, they’ll sell. And then if it goes down after that I’ll buy a second tranche. I won’t buy everything that I want all at once. I’ll go and I’ll buy a first tranche, get an initial stake in the play, and then if I’m fortunate enough to get a second chance at a lower price, then my cost basis is even better than the one I like.
So I will pick … is this a good value proposition? Am I willing to pay this price for this stock? And if the answer is yes, I’ll start the process, and then if I can add to it below that while the story continues to be good — of course, if they have bad news or disappointing results or something, that’s something else. But if the company is delivering and it’s just the market that’s fluctuating, then I will average down, I will lower my cost basis. Of the eight stocks in my portfolio right now, there’s only one of them that I haven’t been able to do that. It just keeps going up and up. But the rest I’ve been able to do that and I’m happy to do that. I like my initial entry point and my average cost now is less than that. What’s not to like?
INN: So even after you’ve decided to invest and get into it, it’s still quite a measured process of moving forward.
LT: Yes, it’s building positions. It’s not just, “oh, I like this. I’ll buy it.” It’s building positions at the best price I can.
INN: Going back to — we’re sitting here at this conference. I know you like to talk to your subscribers, and you mentioned you’ve been having people come to you already. What types of questions are people asking you? Are you seeing any themes emerging that people are wondering about?
LT: Sure. First off, I have to say it’s a great thing that I can even have these conversations now. Under previous management, my prior employment, I was banned from talking to subscribers because I might accidentally give people individual investment advice, which is — I think I’m smart enough not to do that, but it was a blanket policy, and if you came up to me in the hallway and asked me a question or talked to me I’d have to direct you to the desk … “go talk to them and they’ll submit your question in writing” or something. So I’m really happy to be able to talk to the readers again, and many of them I’ve known for years. I have to say, a lot of the talk is really like a homecoming or something, right? It’s old friends coming up — “how are you? How’s it going?” And it’s great, and we can talk. Some of them I remember their children and now they’re in college, things like that. So it’s wonderful to be able to reconnect with old friends.
In terms of markets and things … maybe it’s not a representative sample of the broader market. The kind of person who is a reader or has been for a long time, I think they’re pretty educated and they understand how these markets work. I haven’t had anybody come up wringing their hands or wailing about how bad it is. It’s more like, “oh, you know, this is what I’m buying, what are you buying?” or “when is uranium going to come around?” You know, that sort of thing where they are engaged, they are aware of what’s going on, they want my take on what might come next or how I’m playing it. But so far actually no wailing and gnashing of teeth.
INN: That’s good. So you’ve said in the past, and we were talking today about how it’s not the greatest market right now — good for you, good for other buyers. But we’re heading toward the next good phase in the overall supercycle. Can you map out where we are right now and how long it may take to where we are going to?
LT: Still very early stage. Very early stage, and I think that’s great. I do think that we are in the next major bull market cycle, and I do think that it’s still very much at the bottom or still starting. I do believe the price bottom is behind us, we haven’t seen the lows of 2015 revisited. But these things don’t tend to be V-shaped bottoms, they tend to be U-shaped bottoms, and so it takes awhile for that to begin curving more noticeably upwards. This is great news for people like me who are still buying, looking for new places to deploy their cash.
In terms of timing, anybody who tells you “this is when it’s going to happen” … don’t listen to them. Run the other way fast. But I’m highly confident it will happen. I think it’s going to be a multi-year bull market, and I think that there are specifics here that are extremely bullish. Now the caveat would be if my mentor Doug Casey is right and the “greater depression” is around the corner and [we’re] exiting the eye of the storm, all these things that he’s been saying. If that happens, obviously that’s going to be very bearish for industrial minerals of all sorts and many, many investments. And the precious metals in that kind of scenario would take in a hit as well initially for the liquidity crunch before they take off. But absent that, crazy as it seems, it does seem that the powers that be have restarted the global economy, it is recovering. The emerging markets — you know, tremendous demand coming online there — all of this is very bullish for the commodities story overall.
So I do believe that we are coming out of the bottom of the U. I don’t know exactly when it starts heading up in a more exciting way, but that’s coming, and this time here at the bottom of the U is — it’s how you buy low, sell high. It’s the time to begin … building your positions while we’re at the bottom, and I think it’s going to be one for the record books. It’s not going to be a little blip or a bump. I think it’s going to be a mountain. And specific areas that we’ve talked about, like the new energy paradigm and all the minerals that go into that — you’re probably going to ask me, we can just segue into that. I think that’s going to add extra “oomph” in those areas. I’m bullish on all commodities, but [for] those in particular I think it’s going to be a spectacular run, very positive.
INN: Just to close out, we’ve got all this trade war stuff going on, Trump comments just left, right and center. How does that fit into the picture? I feel like maybe especially for gold we would expect to see more upward momentum? [But] we are not.
LT: Yes. Yeah, I have a theory on that. You’re right. Whether you’re pro-Trump or anti-Trump, doesn’t really matter. For or against, you have to see that there’s increased volatility, geopolitical volatility. He’s changing things, and for good or for bad, change tends to upset markets and we’ve seen more volatility in the markets. So with higher volatility, why isn’t there more safe-haven demand for gold? Why aren’t people fleeing to safety there?
I think to some degree we are, but also there’s a specific aspect to this. This is my theory. I don’t know if this is true, I’m not going to try to sell you something. This is just a thought I have. And that is one of the main focuses that Trump has is China, and the Chinese are very sensitive to markets. If they think things are going to go down, they have a tendency to liquidate immediately. They move. They don’t wait. They don’t want to be the last one left holding the bag. And China’s a major source of gold buying. So if you think this trade war — if you’re Chinese and you think this trade dispute could get really bad and could affect your business, you stop spending. You stop — you know, you close the circle of wagons, close the doors, bar the windows. And that impacts a major source of buying.
Now, Chinese, they don’t buy gold out of fear. That’s savings, they get gold. They see gold as wealth and they see gold as prestige. They see it as a place to — like real estate where you put your savings. So when things are bad, they tighten up. They stop spending. They go to cash. When things are good, they buy gold, right? Whereas in the US if things were really bad, we might buy gold out of fear. So it’s kind of opposite … and we’ll see. Because absolutely, what’s going on on the geopolitical stage, on the global economic stage, this should be very bullish for precious metals, and yet prices are going down. But those are defined by paper traders in New York, and the Asian trade I think may take awhile in coming. But what I will say is the good news — whether I’m right or wrong, gold’s not going away, and when it comes back … if things get truly volatile, when that fear trade comes back on … the flight to safety, it should be spectacular for precious metals.
INN: As usual, we’ll wait and see.
LT: We will.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.