"Some exceptional companies are selling for pennies when they should be selling for dollars", says Bob Moriarty, co-founder of 321gold.com and 321energy.com, in an interview with SmallCapPower.com. He mentions one junior in particular, which has seen its share price fall by two-thirds despite producing 240,000 ounces of gold a year.
Some of the companies Mr. Moriarty mentions in this interview include Cayden Resources (TSXV: CYD), Pilot Gold (TSX: PLG), Almaden Minerals (TSX: AMM), and Rio Alto Mining (TSX: RIO).
Q: Given the current slump in the junior resource market, what advice are you offering to your subscribers?
A: Okay, I was at the Casey Research conference two weeks ago and I listened to Rick Rules speak and he had some really good advice. He said that bear markets breed bull markets and bull markets breed bear markets. The worst a bull market is, the better the bear market will be. And we’ve gone through a bottoming process, really, for pretty much a year. And with the bottom, I mean, nothing has changed from a fundamental point of view. The world is still bankrupt. Governments are still doing exactly the opposite of what they need to be doing. And gold is going to ebb at a steady pace.
Q: Great, so what junior resource companies do you favour currently and why?
A: Okay, to the extent that taking one or two or three or five or ten companies is kind of a mistake, every resource company is cheap today. There are some exceptional companies that are selling for pennies when they should be selling for dollars. So my talking about a company doesn’t mean they’re the only investment out there. It means that you could invest in anything now, but Cayden Resources (TSXV: CYD) is exceptional, Pilot Gold (TSX: PLG) is exceptional. Almaden Minerals (TSX: AMM) is exceptional. Rio Alto’s (TSX: RIO) down by two-thirds and they’re doing 240,000 ounces of gold a year. There’s just one stock after another after another after another that is dirt cheap.
Q: Great, so which commodity or commodities do you think will outperform over the next 12 months and why?
A: My opinion is that the base metals, copper, lead, zinc, are pretty much dependent on demand from China. And I think that we could reasonably expect to see a slowdown at China. So coal, iron, copper, lead, zinc could go slow. But the world’s on the verge of a monumental financial crisis. And when it hits you’re going to want to be in gold or silver or platinum or palladium or rhodium.
Q: Speaking of which, given the recent uncertainty regarding the U.S. government shutdown and debt ceiling discussions, why do you think the prices of gold and silver have not performed better?
A: Well, I’m not a big believer that gold and silver react to news. I know that we’re used to watching TV or reading something in the newspaper that says gold went up today because-- that’s all bullshit. It’s not true. These things respond in a relatively random way and sometimes they’re going up and sometimes they’re going down. There is no direct tie between the news of the day and commodities. Even though every newspaper and every television show says that’s true, it’s simply not true.
Q: Okay, well, given that, what do you think is a better investment over the next 12 months: gold or silver and why?
A: Silver tends to go up faster and go down faster. So-- gold and silver go up, silver will go up faster than gold.
Q: In a recent online interview you did, I noticed you liked a company called Synodon. What excites you most about this company?
A: Well, Synodon (TSXV: SYD) has a really exciting new technology. They literally have adopted it from the space program but they have the ability to analyze emissions from oil and natural gas pipelines and that’s a really serious issue. I mean, these things crisscross the United States and Canada and when one of these things blows up it causes millions of dollars of damage and actually kills a lot of people. Synodon has an extraordinary process. They have really good management. And the company’s going to explode in value here when people figure out how good the technology is.
Q: Further to that, what are your thoughts on the current investing environment for oil and natural gas?
A: That’s very interesting because that kind of proves that resources don’t respond to news. We’ve got $105 oil, and oil stocks are down as much as gold stocks. I think that natural gas is historically cheap, on a BTU basis, and I think it will do very well. And oil is one commodity that will respond to war or rumours.
Q: So finally, if you could choose one country to invest in currently, which one would it be and why?
A: It would have to be Canada. I don’t like a lot of things about the Canadian government. It’s way too socialistic for my taste. However, when you see what Ecuador’s done and what Peru’s done and what Mongolia’s done, Mexico’s trying to increase the tax, Tanzania has increased its tax. You absolutely have to go for safety and when the Canadian government actually wakes up and realizes how much their resources provide in taxes, I think they have the potential for being very friendly.
