Louis James, editor of the International Speculator, still has high hopes for gold and uranium, two metals he was positive about at the beginning of the year. But when asked what he’s most excited about right now, he said energy metals are at the top of his mind.
“The big news in the resource space right now that’s exciting me a lot is … that expected push into energy metals,” he said at the recent New Orleans Investment Conference. “It’s one thing for Volvo (OTCMKTS:VOLVF) to say, ‘we’re going to do away with internal combustion engines.’ It’s another thing though if General Motors (NYSE:GM) says that — that’s really big.”
He added, “and it’s one thing for France to say, ‘by 2040 we’re going to ban gas cars in France.’ It’s another thing for China to say, ‘we’re going to do it’ … these are big pushes, and they have enormous consequences for a lot of commodities.” Copper and lithium are “the obvious ones,” said James, but other metals like silver and cobalt could also benefit from these developments.
“[I’m] very bullish on a number of commodities, and my team is researching these now,” he said. Watch the interview above for more insight from James on gold, uranium and energy metals. You can also read the transcript below.
INN: Way back at the beginning of the year, you said this will be the year of the two yellow metals. How do you think that’s held up so far?
LJ: Well, obviously, one out of two — you know, if that was baseball, that wouldn’t be bad. The two yellow metals are gold and uranium. Gold is having a good year. It could be better. I think it may well soon be much better, but if not it’s coming.
Uranium is giving people pause, it doesn’t seem to be going anywhere, but that’s still — I may have to put my neck out on the line on this one, but that is absolutely a “when” not “if” question, in my view. [If] people want the lights to come on in the next few years, uranium prices will have to go up. That’s just a no-brainer. Farther down the road the energy scenario may change, but in the near to mid term, uranium prices will go up, and the stocks accordingly.
INN: So it’s “when,” not “if.” Is it fair to ask when?
LJ: Our projections looking at the new projects coming on, demand, all this stuff — [they] were actually [indicating higher prices by] the end of this year. So we’re not actually wrong yet. We’ll see what happens by the end of this year.
But we do expect the surplus from secondary supplies to be dried up by the end of this year. I had thought that speculators might have started pushing it up before now … but that hasn’t happened yet. But at the end of day, reality does matter and the lights need to come on. So I’m pretty confident we will start seeing a pickup soon.
INN: For gold I think a big story this year has been cryptocurrencies, and do they compete? That kind of thing. What do you think?
LJ: No, I don’t think they compete at all … the more the merrier. I think there’s absolutely a market for the cryptocurrencies. You know, I worry about the hackability and other issues with them. You can’t hold one — well, you can hold a physical bitcoin in your hand, but it’s not the same as an ounce of gold. Ultimately you’re dealing with ones and zeros.
But there’s still a market for that because they’re not issued by the government, and I think that’s really interesting. The whole reason billions and billions of dollars are going into these markets is simply that governments can’t overprint them.That tells you something about our world today — that there’s that much market for something that’s supposedly inflation proof. But that’s very different from the security of something that for thousands of years has been acceptable as a form of payment or wealth storage all over the world. Any language, any place — gold is gold. It’s the ultimate form of security, and I don’t think cryptocurrencies quite fill that role. So different critters, different things, the more the merrier.
INN: Also for gold a big theme has been the lack of new discoveries. Are there any geographical areas you think are exciting right now where we are seeing discoveries?
LJ: I don’t really believe in peak gold or anything like that. And lack of new discoveries is discoveries of a certain kind. There are lower-grade deposits out there, there’s a lot of gold out there. All you have to do is notch down the grade, and at higher prices those become economic. So no, I don’t see gold being driven by a lack of discovery.
And if you’re, say, Polyus (MCX:PLZL) working in Russia, you don’t care about the Russia risk. There’s tons of gold in Russia. And I’m not sure they actually care that much about how much it costs to produce. They have an interesting relationship with the government there. So no, that’s not the driver’s seat. The driver’s seat is the safe-haven factor, of course, and what’s going on in the world. The world I look at out the window and see doesn’t look safer to me, and I think that’s very bullish for gold.
INN: Earlier this month, or maybe the month before, we had Paulson & Co. say we should have a coalition of people who tell the gold producers what they should be doing. What do you think about that?
LJ: As an advocate of the free market, of course I would oppose anything like that. It’s just … an arrogant assumption that the experts know best. I think the market should determine. The market can be wrong sometimes, but that’s better than some central body making a wrong decision for everybody.
INN: We’re almost at the end of the year. Can you talk about what your most exciting investment has been this year? Doesn’t have to be a specific company, could be a commodity.
LJ: Most exciting investment. I’m still very excited about what we talked about last time, the “Golden Runway.” That’s worked out, we’ve had two examples of first pour this year. One was Pretium Resources (TSX:PVG,NYSE:PVG), which was up 85 percent from construction decision to first pour. Another one was Atlantic Gold (TSXV:AGB), which was up about 192 percent between when they decided to build the mine and when they poured their first bar. So that’s still going well.
But actually, the big news in the resource space right now that’s exciting me a lot is … that expected push into energy metals, and the alternative energy scenario. It’s one thing for Volvo to say “we’re going to do away with internal combustion engines.” It’s another thing though if General Motors says that — that’s really big. And it’s one thing for France to say, “by 2040, we’re going to ban gas cars in France.” It’s another thing for China to say, “we’re going to do it.” That’s big … they’re a totalitarian government. They can just do it, right? As fast as they want.
So these are big pushes, and they have enormous consequences for a lot of commodities. The obvious ones are copper and lithium, and other things that go into batteries, but there’s a lot of silver in the solar panels … too. That’s part of this whole picture. Cobalt — [I’m] very bullish on a number of commodities, and my team is researching these now.
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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 the interviews it conducts. 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.