We Study Billionaires - The Investor’s Podcast Network - TIP274: Negative Interest Rate Bonds & Commodities w/ Marin Katusa (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. On today's show, we bring back a guest by popular demand, Mr. Maran Katusa. Maron is an expert in the commodity sector and has financed over a billion dollars worth of deals. We start off today's show talking about the barrage of negative interest rate bonds that are flooding the market and what kind of impact that might have on the markets moving forward. This is a fantastic discussion that you won't want to miss. So without further delay, here's our guest, the thoughtful Maron Katusa. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most.

Starting point is 00:00:40 We keep you informed and prepared for the unexpected. Welcome to The Investors Podcast. I'm your host, Dick Broderson, and as always, I'm here with my co-host, Preston Pes. Today, we have the pleasure of speaking with the famed favorite of TIP, Maureen Ketusa. It's always a pleasure. So today's topic is the negative interest rate policy, and then we'll transition into talking more about gold and perhaps whether or not those two subjects are related. But my very first question from you here today, Martin, is that almost all economists and Maga pundits,

Starting point is 00:01:25 they believe that this negative interest rate policy that we see right now would be a short-lived phenomenon. However, you're of a different opinion. So let me ask you this. Why will this negative interest rate policy perhaps stick around for much longer than anyone expects and perhaps we'll have an even lower interest rate? Well, it's all about stimulating one's economy while they're able to stay competitive on the global scale. So it's very hard for these countries that are having higher unemployment rates. Let's take the euro, for example.

Starting point is 00:02:00 And if you look at the, you know, whether it's Germany, which is the leader in the economy in the euro, they can't have a strengthening currency with a. declining economy. So, you know, how will these bankers stimulate this? And these negative interest rate policy, it's like quantum economics in a way, because, A, it's never been done before on a grand scale. There's been examples in history where they've done it in a short term, but when everyone starts doing it, it's a race to the bottom. And, you know, A, do you ever believe politicians, and politicians, especially in the West, work on four-year cycles. So I've taken a very different view of the markets. And the market is telling you, if you look at the bond markets, and a lot of

Starting point is 00:02:38 people don't realize that the bond market is multiple times bigger than the equity or the stock market of the whole economy. And the bond market is telling you exactly this, that this negative interest rate policy, it's here to stay. Now, the government, they're saying this is a quick fix. It's not. Look at the repo market. All these things are telling you that as we're going into this negative interest rate policy, I call them FTDs. This is a financially transmitted disease because it is significantly impacting. And something that the government's not talking about globally, all the central bankers is this, you would think that negative interest rates that they're just printing money, but the velocity of capital moving around is actually

Starting point is 00:03:19 decreasing more than ever. We can get into that, but that's kind of my fundamental basis of why I believe most people are wrong and NERP is here to stay for a while. So, Mar and I absolutely love some of these comments. Do you have any other points on this philosophy that you think are important or pertinent? Yeah, so ask yourself this question. If you're going to get negative interest rate, are you going to go out to lend? No. So you look at what's happening in the bond markets, the coupon rates across the board,

Starting point is 00:03:47 whether you want to talk about Australia or Austria are. You know, the coupon rates have been slashed in a half, you know, the yield to maturity in the last year. But the price of these coupons are up anywhere between a third. to 80%. So even where's this capital going, it's now, even in the bond market, it's now looking at the price, these bond market guys are now being forced to treat the bond markets as equity markets in a way. And we haven't even started with a corporate debt is going to be redone. Like I've estimated, through my research, about one third of all investment grade corporate

Starting point is 00:04:24 bonds, I think are going to be rewritten down to junk status. because everybody is playing this amend, extend, and pretend gain, where they're just pushing it down the length. And you cannot have higher interest rates to this corporate bond market, and that supports my, we're here for even lower negative interest rates moving down because it's about velocity of capital. So not only are we going to stay negative, I think we're going to go even more negative,

Starting point is 00:04:52 where we'll see, you know, the Austrian bond that went negative 4.5, 0.45 negative. I could see it going now negative six. Now that yield on the Austrian went from, you know, negative point two to negative point four, but the price was up over 60%. So then what are these bankers and, you know, these savvy investors are going to go, wait a second, we can push the line to go to negative one. And maybe the price only goes up 30%. Then you'll go for the price of the coupon.

Starting point is 00:05:18 Then they're going to push it because they need the velocity of capital. The market is actually craving cash. And everyone is living off, well, the markets, most people are. the corporates, the government's amend, extend, and pretend. When the party ends, the hangover of all hangovers is going to happen, you'll see, like, I know it sounds crazy and I'm not trying to be this, you know, doom and gloom guy, but you're looking at one-third of investment grade debt, realistically, in a normal market would be redone to junk status debt.

Starting point is 00:05:46 Watch what happens to the market then. Very, very interesting. And, you know, I think it's so important what you're saying here that no rational investor you would say would invest in, you know, these bonds with the market. to yields that you just explained, but the other side of the coin, that's the price of the bond. And you can't make money of that even if the yield would go even more negative. So very, very interesting example you brought up there with an Austrian bond. Now, shifting to my next question here, because you expect that this negative interest rate policy

Starting point is 00:06:17 will cause the U.S. dollar to rise while the other making currencies will struggle. Why is that? So if you look at, for example, the rest of the world, people talk about, well, like, what about the Chinese market? Do you not think they're doing quantitative easing in a different way, not like using what the U.S. market of the Europeans do, by subsidizing and having these quasi-government state-owned companies? There's all this kind of moses going around there, and there's actually a shortage of U.S.

Starting point is 00:06:47 dollars in the global market. So if you look at a commodity market, it's a great place to look at that. As they're producing in their local currency, they're sucking in U.S. dollars because it's at a higher price. So the commodity prices will take uranium or even if you want to look at oil, uranium's an easy one to understand because one company produces 40% of the world's uranium. But even though uranium's down 50% in the last five years, that company's still doing better because their currency is down 65, 70%, and their assets are built. And they're getting U.S. dollars in, and their local economy, costs are their devalued local currency, the 10-year for Kazakhstan. So that's an example

Starting point is 00:07:27 of where I see the U.S. dollar moving around. And at the end of the day, you know, you have to ask yourself, where do you want to own the euro? Look at what's going on in the pound. Do you want the ruble, the one, the yen? At the end of the day, there's this fallacy, I believe, that you buy gold because you think the U.S. dollar is going down. But I think there's a different strategy here going on. Now, if you're a U.S. investor, you're okay with the U.S. dollar, but if you're a Russian or in the Middle East or in China, or you want to protect yourself from a devaluing currency, gold is now a currency insurance more than ever before. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:12:30 People are shaking their head going, what is this guy talking about quantum economics and all these bonds? And the bond market's kind of a – it's not as exciting as talking about stock market and all these gains. So I came up with this and someone was asking me, I go, this is the ultimate disease. It's like a financially transmitted disease because what's going to happen here is look at how anemic the European market is and look at the cost of borrowing. So how can it ever go up two or three times? Because it's about rate of change.

Starting point is 00:12:59 And this is the problem where a lot of people go, yeah, historically, we're at super low interest rate. Yes, that is very true. But look at how bad the global economy is going on with historically low interest rates. So even if you wanted to go to 2%, how awful would that be? You're talking about a 200% change in the cost of borrowing. When you think of it that way, that's a very expensive cost for the economy and it just can't handle it. So when I talk about this financially transmitted disease, most people think, yeah, my mortgage

Starting point is 00:13:30 should be lower. That sounds good. But what they don't realize is this is the worst thing to be addicted to because it slows down the flow of capital. So initially it sounds good that interest rates are lower, but without that velocity, without the movement of the dollars, without the ability to take money and borrow it and grow it, there's going to be no money moving around and the economy will go slow. So by definition, this is deflationary and that is the worst thing for government debt, specifically when you're

Starting point is 00:14:00 in non-denominative U.S. dollar, because, for example, if you're a company in emerging markets and your currency is getting slaughtered and you've got to pay that in U.S. dollar debt, and this is something people don't realize. Most of the debt globally in infrastructure projects and mining projects, energy projects. It's financed in US dollars. It's still the prime currency of the world. And the cost of that servicing that debt is going to be so incredible that it's a deflationary now. So there's less dollars chasing the same number of goods. That's deflationary. That's not good for the markets. Let's say that we enter this new regime with very lower negative, even more negative interest

Starting point is 00:14:40 rates. And it will just stay down there for a long period of time. Now, we talked about some of the impact in terms of the financial markets. How will we as citizens and as consumers experience the changing regime? People more now than ever are living in this echo chamber and this bipolarization politically. And we see, you know, the activists, whether you believe there's a climate crisis or not, whether you believe the governments are going socialist or even worse, authoritarian. We really see this divide. And I believe that this is more fiscal than people truly.

Starting point is 00:15:14 understand. So I think things are just at the precipitous of getting a lot worse. Everyone's been addicted to cheap debt, but it's been around. But what happens when corporate debt gets restructured to junk bonds and then the party's over? That's going to be the awakening. And, you know, are we a year away from that? I don't know. But you look at the bond market, it's telling you it's happening. We are in a much worse position today than we were in the early 2000s. So, Martin, with everybody addicted to this free money, how does this all unravel once something systematically breaks? You know, at the end of the day, it's going to come out like this.

Starting point is 00:15:54 It's two things are going to happen. And this is going to shock a lot of people because I'm a free market guy, but I think it's going to increase government intervention more than at any point in history. And then you're going to have the other side of the market, which think of it as like the free market would be, you know, guys like you and I and the investors in this podcast looking at real businesses where you're being. able to buy incredible value and guys like Warren Buffett are licking their chops because if you have cash in a market with craving cash, you will be able to get terms that you could

Starting point is 00:16:24 only imagine them. You know, I think that's a great segue to the second part of this interview where we'll be talking more about gold. So if you look at the price of gold, an ounce at the very first day of this year closed at 1,200 and 883. And we were trading higher than 1,500 here back in September. Now, how much of this increase in the price of gold do you think is a reflection of bond investors now taking position in gold as a safe haven?

Starting point is 00:16:53 A lot. What was Warren Buffett's biggest knock on gold? It's kind of funny. People think that Warren Buffett hates silver and gold. People forget that in the mid-90s, Warren Buffett owned one-third of all above-ground silver, but it was even so small that he didn't even need to report it that much in his financial statements. Buffett's about value. Now, his knock on gold, when it was $15 and $16,700 was, it doesn't pay me an interest. What can I buy relative to it that pays me? Okay. So now if you're in Turkey,

Starting point is 00:17:25 or if you're in Argentina, and you're Bolivia, you're in Colombia, you're in Venezuela, Russia, the emerging markets, there's almost like a disadvantage to holding gold because the banks would pay you, the bond market would pay you three points, two points. Now we're in negative interest rate, you're not at that disadvantage of holding gold because whether you had cash, negative interest rates is a way of the government taxing you and getting their money if you think about it, right? So what I'm saying now is that knock on gold isn't there. And people are starting to realize in the emerging markets that way, you know, when you look what happened to Turkey with the devaluation overnight of the lira, the people that owned gold. And there's a huge

Starting point is 00:18:03 market for gold, by the way, not just with the dealers and the banks, but also the government. was willing to buy at market rates, that's where you want to position yourself. So do I see that happening in the U.S.? No, I don't, but I see that happening globally. So, Maura, I'm kind of curious because there's a lot of people that say there's this indicator or that indicator, but what is the canary in the coal mine for you? Some people are looking at the inverted spread between the two-year and the 10-year treasury. Others might be looking at the price of gold. What are you looking at? You have to look at everything. If you look at just, in the last 48 hours, the DXY and how the pound is working and the Euro, you're looking

Starting point is 00:18:44 at there's so much algos, there's so much up-to-date information. I think you have to pay attention to all of it, but history sure does rhyme. Just because something happened in the inverted yields curve that predicted a recession before, doesn't guarantee it's going to happen again, but it sure does rhyme. You know, there's this misinterpretation on the value of how important the US economy and the US dollar is globally, and we have to pay attention. I've never seen so many potential black swans that people are talking about that you're sitting there going, wait a second. Saudi Arabia got bombed in September, took down half of their production.

Starting point is 00:19:20 And then who would have thought four months later, their IPO would value the company at $2 trillion. So we're in this place that everyone could sit there and say, what? Like, this sounds like a twilight episode. So expect the unexpected and the best way to protect yourself. And look, you just talked about Warren Buff, one of the greatest living investors ever. US dollars is a great place to be. And I think a little bit of gold, and if you just do the quick numbers, and if you got 1% of the pension funds in North America and Europe, if they just allocated 1% gold

Starting point is 00:19:51 and gold companies, it would value gold somewhere between $3,500 and $5,000 per ounce. We're just talking about 1% allocation. Right now, it's 0.15% allocation. And we're at historic low, so it's not like people are anywhere near fully exposed to gold. So that's really important for people to understand. And speaking of gold, Maureen, you've done some very interesting research where you've been looking at the past biggest S&P 500 declines and what that has done to the price of gold.

Starting point is 00:20:22 And you find that there is a common misperception. What is that? Number one is when the market does sell off, there's this misconception that everyone will flood into gold. That's actually not true. They fleeed into the U.S. dollar. Because it's the most liquid asset on the planet, US dollars, number one. Number two, if we take the most recent, like there's a chart that I published on like going back 100 years of all the recessions and how did gold perform and you look at it.

Starting point is 00:20:52 And it wasn't for it until like a few months that gold started to pick up because at that point, all the smart guys going, get the cash, and then let's figure out what to do with the cash. And let's then just allocate a little bit to gold. And we saw the run from, say, 2010 to 2012 on gold when it went from, you know, 900 to 1800, that's a big move for gold in such a short span of time. I think we'll see something more elongated meaning that I don't think we'll double in a year, but I think every year you'll see, you know, it range bound, but, you know, maybe it'll go down to 1425 and then it'll move back to 1500, 1550. Then the next year you'll see it maybe range bound

Starting point is 00:21:31 from 1450 to 1600. That's where I think we're in a stepwise function as the negative of interest rates keep going lower and there's less liquidity in the market, people start protecting themselves. And as we go from a globalization to more of a nationalization, so the unwind of the free trade in the world, it used to be that gold was a U.S. story. It was, you know, pegged to the U.S. dollars, you said. And when Nixon did the unwind, closed the window. Now this is about a international story.

Starting point is 00:22:00 And I believe that the international markets will want U.S. dollars and gold. And that's the big paradigm shift that I don't think the markets have woken up to. Wow, that's very interesting. So let's talk a bit more about that because as you said, you know, for generation, the truth was that, or quote unquote truth, was that the falling U.S. dollar meant a rising gold price. And the rising U.S. dollar meant a fallen gold price. However, like you just mentioned before, we might be facing a new normal.

Starting point is 00:22:30 So whenever the U.S. dollar would go up, so would gold. Could you please elaborate a bit more in that shift in paradigm? There's a shortage of US dollars in the international markets because of their currencies. And it's costing the international markets more because their currencies are depreciating and their debt is getting more expensive and the Americans aren't flooding the international market the way they were. The petro dollars part of that and there's many other reasons why. But you look at what's going on just in the trade with China.

Starting point is 00:23:01 There's less US dollars moving into Asia. less US dollars in the Middle East because of the unwind of the petrol dollar. So the international markets are actually craving U.S. dollars, and they're starting, you see that the central banks in the emerging markets increasing their gold exposure, but so are the wealthy family offices. So, Marne, you've had a really good 2019 at your portfolio, Catusa Research Opportunities. What were some of the key investments that drove those results? Without a doubt, gold.

Starting point is 00:23:28 In our portfolio, we've had two losers, and they were non-gold. But on the gold and silver side, every single gold and silver pick we did was up double digits or triple digits for the years. Without a doubt, it was gold and silver. That was the call we made over a year ago. So now what I'm working on is saying, hey, you know, we, for example, one company we were heavily involved called Pan American. It took us six months to get our position. I talk about this, the way of the alligator and the way I buy, be patient, be contrarian. You know, an alligator can go a whole year without eating because it can control its metabolism.

Starting point is 00:24:01 metabolism. You have cash. Cash is king. These companies need cash. People who own them for whatever reason. They may sell. And after about six months, we got picked up our stock. And within seven months, we were up over 70%. And I told all my subscribers, it's time to sell this stock, even though I don't want to. But it's a great gain for seven months. And then I sell, I give my subscribers three days to sell before I do. And then I closed my position after that. So that's kind of where we're at. We've started taking profits on things that have had incredible runs. But I do believe in the near term it could pull back a little bit, and then I want to be cashed up. So, Martin, you've been in this space for a long time, and you've performed well in what

Starting point is 00:24:43 you've done. And I also know that you're big on compounding, you know, keep on learning. So let me ask you this question. What did you learn here in 2019 that you didn't know before and perhaps surprised you? The biggest one was learning about the diamond market. and the opportunities there and how my framework on how the velocity of capital truly decreased. So, for example, in the diamond markets, it used to be the manufacturers would get a two-year loan. They would buy their rough from De Beers or Al Rosa or any of the producers. Then they would go out to the jewelers and they had a two-year window on that loan. Then about a year ago, it went to one year.

Starting point is 00:25:27 And then earlier this year, in the beginning of the year, it went six months. And about five months ago, it went COD, cash on delivery. And the velocity of that in the diamond market, and remember, this is the high end and, you know, where, and that's to me a canary in the coal mine about what's going on globally. And it really shows that my framework on this velocity, how quickly, in less than 18 months, it went from two-year lending to COD, cash on delivery, and it made the spot market go down about 35, 45% in the rough diamonds and how it turned the industry upside down. And I think it starts with the luxury goods and it'll work its way down in the markets.

Starting point is 00:26:07 And if you take that thesis of decreasing value, imagine what happens when, say, 10% of the bonds in the corporate debt, that's valued at investment grade. Let's say triple B or higher. It's the reality of amend, extend to pretend. If we take the framework of what we're seeing in certain sectors happens there, that was a big, big wake up call for me of what could happen over the next 24, 36 months in the bond market and the debt market for what people believe they're buying investment grade and then they find out, oops, when velocity slowed down, I actually own junk, non-investment. I think that to me, if I was to write a big thesis and do a whole, you know, a university

Starting point is 00:26:49 program about it, I think that right there is the biggest potential bomb in the markets. So, Martin, whenever I read the December edition of Couta's research opportunities, the newsletter that we talked about here before, what I really liked was that you've gone on record with 10 predictions for 2020, and what you expect, and also that you expect to be held accountable for them in December 2020, which I absolutely loved. Could you please elaborate on your highest conviction predictions? Let's stick with gold. I've had an incredible run with gold, so I'd probably say my convictions on, like I've talked before on your program about Equinox Gold. I'm one of the founders of the company, one of the largest investors in it. And I do believe when you have people

Starting point is 00:27:35 like Ross Beattie running this company, like we're up 50% now on that story. I'm not taking money off the table yet in that one now. Whoever's listening and if they're sitting on a game, do whatever makes you please feel good and sleep better. But I believe that they're going to get to what the goal of the business was to a million ounces. I think they're going to continue to buy undervalued assets to get to where when we started the company in my office, that was the thesis. So I'm sticking there. And I also think with gold on the show with you, the last time we were doing this a few months ago, I talked about how I became one of a lot of shareholders of Liberty Gold. And it's rare for me not to take any money off the table when you're sitting

Starting point is 00:28:15 at over 100% gain. On this one, I haven't sold a single share because I believe they've stumbled upon a world-class tier one asset. So what's the definition of that? It'll have 5 million ounces with the potential to have 500,000 ounces of production a year. For years I've been talking about where a lot of the big companies like Barrick, there was this expansion 20 years ago or 25 years ago into the emerging markets, into the Americas, into Africa, to hire politically risky areas because they were trading at such a discount to NAF. Because of the market move forward, I've seen this opposite trend happen when I picked up

Starting point is 00:28:54 the big position in both of these companies. People weren't valuing the difference of being in the DRC or Argentina as the risk of being in the U.S., in the Great Basin, like Nevada or Idaho. And I'd sit there and say, this market is mispricing this risk. I have nothing against the DRC, but I've been there and done that. I've traveled to over 100 countries, and I've got this philosophy that if I'm not going to take my wife and my children to an area, I probably don't want to be exposed to it financially either. And that's served me very well. And I think I've been that little bit ahead on the

Starting point is 00:29:27 curve here. And what we're seeing is big companies like Barrick are selling off non-core assets in Africa, whether it's in Burkina or Senegal, these different countries that aren't quite AK-47 nations, but they're nowhere near to me as stable as being in Nevada or in the U.S. in the Great Basin, but they're priced on a risk basis in their nav the same. So I see a coming back home into the North America in a big way, and that's what we're already starting to see. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process.

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Starting point is 00:33:18 All right. Back to the show. So that was outstanding. And we'll be sure to put a link in the show notes for people to check out your free research report that you just published in December, which lays out some of your past performance and also your future projections. So let's talk a little bit more about this barracks gold and their deal with Saris. that's a deal that didn't surprise you.

Starting point is 00:33:39 So talk to us about the reason why it didn't surprise you and maybe about any other deals that you might suspect are on the horizon. Well, specifically with what Mark Birstow is doing at Berek, Barrick's the world's largest producer gold company. And this is going to be kind of interesting to kind of show how smart this guy is. He had Rangold, which is all African-based producing assets. He basically, it was a two-thirds, one-thirds. So Barrick shareholders ended up for Bariq 2.0.

Starting point is 00:34:04 They own two-thirds. and Mark was savvy enough to get one-third, but he took over the company. And ironically, I believe what he's going to do is sell off his non-core assets. I actually wrote in the last issue, the December issue, the three moves I think Barrick's going to do. And if I was him, this is what I would do. I would sell off my non-core African assets, which we see him doing. Then I would make a play for Newmont once that joint venture is done. If he's able to get that Nevada gold, so there's a joint venture between Barrick and the World's Second

Starting point is 00:34:35 largest producer called Newmont, and their assets, the Holy Grail is in Nevada. It's called the Great Basin. That's the Holy Grail. I think he's going to end up owning that. I also believe that Barrick's going to buy out Prettium. And Prettium is a very high grade underground, very volatile, variable, meaning this month's head grade or the grade that's produced for mining could be eight grams, it could be 10 grams. It's very difficult for a medium, mid-tier company to own such a big asset with such a variable production because the analysts don't know if it's going to be eight and a half grams or 11 grams, nor does the mining guys at sight because mother nature is so sporadic and it's not uniform. It's just not a pour free that's a simple uniform geology. It's

Starting point is 00:35:19 very high grade spotty. But if you're a big company like Barrick who actually has tax losses that they can put against, remember Barrick's had other companies that they've had mines on. So on their balance sheet, they have an asset that is a tax loss, right? You can put that negative, let's call it, negative value of a tax loss onto the purchase price, and now that variable, they can add on, let's say, 350 to 400,000 ounces coming out of Pretium. And it really doesn't matter to a barrack, whether it's 8 grams or 10 grams, quarter to quarter because they produce 4.5, 5 million ounces.

Starting point is 00:35:52 It increases their production by 10%, but that variability is not a big thing. So I think those are the two where Barracks at. I also think that when you look at the Great Basin, I think gold standard ventures, but I think that's going to be bought out in 2020 for the same reason. How do I break this down? Go to site. Then you do another study called the PFS, a preliminary financial. And then you kind of look at this and say, okay, but it's not the next study, which is the

Starting point is 00:36:17 most important one, a bankable feasibility study. And as these companies move the asset up the food chain and de-risk it, the market actually gets bored of the story because now the reality of the assets. And that's where you make your biggest scores if you're patient and you know what you're doing because now you've de-risked your asset. And the big, like the mid-tier and big companies, they look at and go, now we have something to truly assess and they can see the metallurgy, the recovery rates, the true costs, you know, and all of the fine details that you don't have as the story is growing.

Starting point is 00:36:50 So I think 2020 is going to be a true M&A year and the sweet spot are going to be companies that are either producing that are going to be bought out, like Prettium being bought or a company like Gold Standard that has now done the studies and they've de-risked it for a bigger company to take it on because it's all about cost of capitals. You know, a one-mine company, their cost of capital to go and build it. And I've been part of teams that have built mines. Today, the cost of capital to build a single asset company with just one mine is way more than at any point in the last 20 years of my career.

Starting point is 00:37:22 So when we started Copper Mountain, which was the third largest producer in Canada, We were able to do it at, let's say, you know, the cost of capital of what would be half of today, meaning dilution to the asset. Right now, producing base metal companies are trading at 0.3, 0.4, 0.5 nav. Back then, we were not producing and we were trading at 0.6 nav. So the cost is half, right? That's where if you're a mid-tier and you have more assets, capital, remember there's less capital, the velocity capital slowed down, so they want D-risk with still upside.

Starting point is 00:37:55 So a company that has four or five producing assets, their cost of capital is going to be way lower and they're going to start picking off these undervalued companies like GSV, which has one major asset to put into production. That's where we are for 2020 in my opinion. Now we've talked about Katoos's resource opportunities quite a few times here on the episode. And before we let you go, Maureen, we would like to give you an opportunity to talk more about that product and what it does for the investors and the investing community. Did you please elaborate on that?

Starting point is 00:38:25 Sure. It's more than anything, a very technical-based newsletter that I try to make fun with my experiences and stories, because this to me is my life. I love it. But it's also a personal journal of you get to buy at the same time, at the same price, into deals with me. For example, about a year ago, you and I talked about why I was so bullish on Uranium Royalty Corp, and at the time your subscribers could get in at a dollar in the financing.

Starting point is 00:38:51 Well, this past week, the IPO happened at $1.50. So the way I decided to play the uranium market was pick up the royalties when nobody wants it and then in five and ten years, I will have a massive score because it's like buying gold royalties at $300. That's where we are in uranium. Another angle was I like at bringing new technology or new efficiencies. So these are creative things. And in every deal, I'm the largest investor at the same price.

Starting point is 00:39:17 So I'm able to structure these things because I don't actually have that much competition in the market. So those are kind of just experiences of where we go through in the newsletter and I talk about and you get to see every stock. I have a film crew. I got a studio here in the city. When I do my site visits, I bring the crew. So what we do is I bring the crew with me and you get to go underground with me.

Starting point is 00:39:37 You get to go to the open pit. You get to go into the shovels. You get to go to the refineries or the smelters. You get to see what I see, but in a fun 30-minute video, not a three-day travel, whether it's going to Africa or up north, wherever. So it's kind of just having fun. And we do our own thing. We only have eight companies in our portfolio.

Starting point is 00:39:56 We're very disciplined. And like I just said in the December issue, as you read, we closed the gain of 70%. It's time to move on. And that's the biggest thing is you don't need 40 stocks in gold. Just pick the best five. Right? Like, why do you need 40? Just pick the best five.

Starting point is 00:40:13 And when you have a big win, sell it and hold cash. So that's kind of my style. Well, folks, make sure you check out the show notes and dig into Maron's research through the links that we're providing. It's outstanding stuff. Maron, we really enjoy these chats with you and we can't thank you enough for always making time for us. That's always fun. Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions consult a professional. This show is copyrighted. by the Investors Podcast Network. Written permissions must be granted before syndication or rebroadcasting.

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