Speaker 1This is the Commodity Culture Podcast, where we interview prominent investors, fund managers, analysts, and company CEOs to give you an edge when it comes to investing in the commodity space. John Fennec, great to have you on Commodity Culture. I want to start with what many are calling a crisis in sovereign debt markets worldwide. Let's focus on U.S. treasuries here, as yields have been rising considerably. The IMF has come out recently and said bond markets are, quote, stable. I'm wondering what your read is on the situation here. And more importantly, what are these rising yields? If this keeps going, what does it mean for gold and silver?
Speaker 2The IMF should be ashamed of themselves. Nothing stable about what's happening with the U.S. bond market right now. I don't follow global bonds as much as the average guy. But I know that Japan's. It's been a mess. Like, there are certain parts of the world that are showing cracks. If you wouldn't mind just showing that chart, Jesse, that we had discussed off camera. I believe it's courtesy of CNBC. It basically will kind of show this for your viewers. This is simply going to their website and clicking at the very top the word bonds and then clicking the 10-year treasury. And as you can see, back in March 1st, where you see the really bad part of the chart, that was. It's right around 3.99 or so, right? Yeah, 3.96. Now look at today, 5.28, right? That is a 130 basis point move, not a 25 basis point move that you've seen from the Fed, right? We've seen one hike. That's it in three years. Yet, this is actually unfolding. So that is why I go on shows like yours, Jesse, and use this as an example to say, look, why would the Fed go on a rate? Hiking, you know, walk me through how they do this. How do you go and rate, you know, hike rates 75 to 100 basis points next year? I don't see how that's possible. When you get to 6.5%, people are going to start freaking out. And then at 7%, they really freak out. And I know that Besant and Trump and the Fed are not wanting that scenario to unfold because they can't control it at that point, right? You have mass chaos in financial markets. So I. I think that August 19th was very important when Scott Besant basically intervened. That has happened since you and I met last time. And that was not an all-in moment for us. But we put a lot of chips in because previous to that, we saw ADP miss on August 5. We saw non-farm payrolls really miss on August 7th. And we were getting much more interested in early August because we were saying on your show, July 14th, hey, this is getting really cheap, you know? And I forget the title you used, but you insinuated that Don and I thought that things were really cheap. And that's correct. I mean, I went back and listened to that. And I was calling for GDX at $73 that day to hold that 61 to 70 range and then test 93 to 100, which it not only tested in August, but it broke through and hit 105. So a move from 73 GDX to 105 GDX, that makes people a lot of money. And that happened in less than a month. So our sector is high octane, right? Right. People need to understand this in the gold and silver world. And if you can't handle that kind of volatility, you shouldn't be investing in this sector.
Speaker 1Yeah, that's some great words of wisdom. I had a follow up there, not a question I had prepared. But when it comes to investing in the mining equities, you know, there's a lot of people out there who talk about, well, you actually have to trade when it comes to these extremely volatile stocks. You don't want to buy and hold. You want to try to look for when there's an upswing, as you discussed in the GDX and perhaps cash your chips. You want to look for when it drops out for the time being and wait for another dip to repurchase. Now, that sounds great in theory, but very few people out there are able to effectively time those sorts of moves and know when they should get in and get out. What's your approach? Do you think it's better to take that approach of trying to to time the peaks and troughs? Or do you think it's better to just hold through the volatility and look at a longer term time horizon when it comes to the
Speaker 2gold and silver miners? We do both. I mean, I can't sit here and tell you that I don't trade. I trade. But we use what's called a hub and spoke structure where we use core holdings as the hub. And that would be GDX, GDXJ, the three silver ETFs, SILJ, SLVP and SIL. We've talked about those on your show just in July. So those five ETFs can cover hundreds of stocks, right? Like you don't need to be out there and thinking about, oh, I'm going to trade First Majestic today versus SILJ. This is Agnico versus Newmont. Like that's a lot of work for the average investor. So just buy the ETFs as a core holding. That's my opinion. That's what we've done for our entire 10 year plus track record. Right. And then we add spokes to that hub structure, meaning some of the names that I'll give you later in this conversation, hopefully, where people can see why we're excited about an explore exploration story or a development story or one that's just entering production. Like these are alpha generators in a portfolio potentially. And those also could be trades, right? Like when one of these stocks explodes up two or 300%, we're usually selling that stock. We're not going to ride it up to a five or 10 bagger. Like I've never used those words for a reason because we don't usually get them. I mean, last year we had one. We had a couple actually last year. But USAS comes to mind. They were trading at a buck. It ran to $11. Yeah, we sold some at nine or 10. And we sold some at five, I think, too, on the way up. I don't sell. I don't sell at once. But now it's trading at $4.20 today. So this is why we don't get married to positions, because there's a lot of people in chat rooms that were saying, this thing's going to 20. It's like, no, it's going to four. However, let me just say, I like Paul. And I think Paul is a turnaround artist. And that stock will continue to do well. It's just that you have to understand how volatile the sector is. And the average investor doesn't get it.
Speaker 1Yeah. And then second follow-up is rising yields. Potential effect on gold and silver prices, because the idea, of course, is that as yields on treasuries rise, gold and silver become less attractive to hold than just putting your money in a US treasury bill and getting your four or five, maybe soon 6% yield as we move forward. How much truth is there to that adage? And do you think things could perhaps be different this time, given the debt and deficit situation and how there's a loss of faith in the quality? Of the US government's credit issuance?
Speaker 2Yeah, I do think it is different this time. I think the backdrop for gold and silver have never looked better in my lifetime. I wasn't an investor in the 80s. I was in high school. So I have no clue about what was going on with the Hunter others or whatever else. But I think now looking at 2000 through 2003, I was living that in the field, you know, getting shellacked through the recession. 2008, 2009. I was in the field for that. A lot of craziness going on back then. And if you remember, Jesse, it took a while for GDX and J to come out of that, right? Like this whole malaise started with Lehman Brothers. Let's call it summer of 08, right? Like it took until I think I'm not looking at the chart, but around March of 09 to have GDX and J take off. It took months, not weeks. So my message to investors is sometimes you think. This should be happening. Why isn't this happening? I get that question all the time. But not everything is aligned to your investment thesis. You have to be patient. Patience is a virtue for a reason. It's a difficult sector, but the rewards are amazing. Let me answer part of that question. Part of your earlier question was, should someone hold or trade? If you held GDX last year, you made 155%. From Jan 1 to December 31st, that is amazing return, right? GDXJ was better. It was up around 175%. So for people that are like naysayers about our sector, let me just say that we're 0.1% of the investable universe as we record this. And we were probably the best sector last year, right? Like I don't know another sector that was up 150% to 200%. I'm sure there could be one. But like, let's just say we're top five, right? Like, yeah, no one cares, right? We're still so small that we're. We're not getting the kind of, you know, notoriety that we deserve because we're in a bull market for tech and risk assets, right? So we need that to change. That's always been my thesis. Every time I come on your show, I'm like, when that changes, we may see a sector rotation. And that's when you get much more interested in gold and silver and equities.
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Speaker 2Yeah. We, you know, I hate to sound like a broken record, but we don't really talk about anything, past like a year at all, because this is too fluid of a market. Like anyone who's telling you, oh, five years from now, gold, 20,000. Like what? Why? How? You know, like we may not even be here in five years of the way things are going with AI and World War III, right? Like it's like you have to take every day, I think, and cherish it, right? Like this is, that's how I live my life. I live day to day. So I can't tell you five years from now what it's going to happen. But I will say that, you know, my gold predictions have been pretty accurate over the last couple of years. Over the last few years, we were $8 off two years ago. My feeling about gold is different than my partner, Don Duretz, right now. Don has been calling for 5,000 by year end, and I don't see it. Goldman has called for 4,900 by year end as of 10 days ago. I don't see that. I think you got to get through like 44 to 4,500, and we're at 4,100 or lower as we record this. So I think you could retest the 3,941 level, which was the previous low. In recent months. And I would love to see us hold that or higher, you know, like make a slightly higher low. Like if we could hold a big round number like 4,000, I think that's extremely bullish. And, you know, again, if we spike through that on one day, who cares? I'm just saying like on a number of closes, right? You want to see that support level of 3,900 to 4,000 held, in my opinion. So that's my support on gold. My thought on resistance is probably at 4,400 and 4,600 is what I'm hoping for by the end of the year, which I know doesn't sound great. But as a younger person, I'm not buying gold hand over fist. You know, I'm buying gold equities hand over fist. I want to get leverage to the price of the gold move because I know it's going to get better next year. I just feel it, you know? And so therefore, I'm putting my money where my mouth is, and I'll give you some gold stocks in a minute. But with silver, we've been saying, you know, 54 to 55 has to hold. And someone just asked me at 6,150, would you buy silver? And I said, no, I'm going to wait to see if it tests 54 to 55. That's called discipline. You know, like you have to have a discipline in everything you do in investing. And sure, 60, 61 looks damn cheap compared to 121, what we saw in February or January, right? But I'm still going to wait because I know this sector. I've been a silver investor for 26 years. It's very volatile.
Speaker 1Great analysis there. I'm sure that will satisfy Zef at the Commodity Culture WhatsApp group. Let's talk about the miners as I mentioned, you're fresh off your own conference in Arizona, the Commodities Global Expo, as well as Beaver Creek. Any new names you can share with us based on meetings you had at those conferences and perhaps updates on miners you've mentioned on the show before would be good as well. Yeah, sure.
Speaker 2I took some time to write down some of the names I mentioned on our last meeting on July. So I'll start there. Just to show people July 14th to the peak of August, how these things did. So BlackRock Silver, BKRRF in the States, BRC in Canada mentioned that at 65 cents, it hit $1 in August. So up 30 plus percent there in literally a few weeks. Now it's right back to where it was. It's at 63 this morning. This is why you have to trade certain names. However, with BlackRock, it's not a tradable one for me. It's more of a core holding because they have 123 million silver equivalent ounces. And they're very, very good. Their PEA was lights out in March. I mean, they have an ASIC of $17.44 silver. So it's $60 silver. This is a very economic project. And this is in Nevada on private land. So that's why we like it. We mentioned Silver 47, which actually got taken out since we recorded. July 14th, it was at 42 cents. It hit 59 cents recently. Now it's trading at 40 cents today. How the heck is this happening? It's lower than the takeout. This sector is mind-boggling. These guys are combining with a company called Bunker Hill. That ticker is BHLL. Silver 47 ticker is AAGAF in the States, AGA in Canada. I met with them at Beaver Creek for a half hour. These guys are combining to become one of the biggest US silver players. I mean, they have 388 million silver equivalent ounces. It's insane. All their projects are in the US. And one is in production now with the merger. So at some point, you have to put bids out there if you're a silver buyer. I mean, those two stocks look juicy at these prices. We mentioned Next Gold, 7 million ounces of gold. NXGCF in the States and NEXG in Canada mentioned it at 83 cents. It hit $1.21. And now it's back to 97. So it hasn't retraced everything because it has so many gold ounces and they're in Canada, which commands a premium. We mentioned Triumph Gold, which hasn't done too much. TIGCF in the States and TIG in Canada. That was at 44 cents. It hit 57. And today, it's back to 48. So that's one of my favorite names, Jesse. I was going to talk about that one. And the reason is because we look for things that are mispriced. This has 2 million ounces of gold in Canada and the Yukon. Really good jurisdiction. A few hundred miles away from Victoria, which gets all the press up there after last year. So it's not even close. But these guys have 2 million ounces going to 3 million ounces next year, in my opinion. They haven't drilled this thing in years, not months. They're going to drill it. They raised $5.5 million, but they're first going to drill silver in Utah this year. So they're only about 60 or 70 miles from Osisko, which is a big player in that state. Utah is actually ranked the number one jurisdiction globally now, which flies under the radar. But these guys have projects in Utah, in the Yukon. Very tight share structure. CEO owns 10%. Big pension fund owns 10%. The Lundin's own 10%. You get on the list and you're like, "Damn, there's hardly any retail flow here." I mean, this looks interesting. And what's really interesting to me about that one is their last PEA was in 2013. So that's going to be a lot of money. And I think that's going to make a lot of sense in the future. It certainly was under $1,500. So at $4,100 gold, how valuable is this project now? I think it's going to be setting up for re-rating next year. Getting through the list, Denarius, DNRSF in the States, DMET in Canada was at $41.5. Don and I both own that one. It hit $59.5 after we mentioned it July 14th. And now it's at $37. It's lower. I visited this place in Columbia. These guys are in production. They're building a huge facility down there. It's, again, long-term hold. That's a core holding for us. I also mentioned a tungsten stock, WSRIF in the States, WSR in Canada. That one's called Western Star. That's been all over the place. I was pretty adamant on that interview. I was like, "I don't know what to do with that." I was like, "I don't know what to do with that." At $22, saying, "This thing has just been shorted into the ground." And then it hit $0.49, Jesse. So in a matter of a month, that thing went up over 125%. And that's the value of understanding when stocks are getting gamed. I do a very good job of calling CEOs and saying, "Why the heck is your stock going from $0.50 to $0.22?" "John, this is temporary. We had a big seller out there. Then the shorts latched on, and it's been a disaster." Is this something the company can control? No. Sell, and then people short, and then it's something you have to contend with. But these guys have 3 projects in the US. They just put out news today, in fact, in New Mexico, where they're putting out grab samples. Grab samples are literally someone grabbing something off the ground. You're not drilling at all. They're putting out grab samples of bigger than 0.2% tungsten, which is the global average. What happens when they start drilling? They announced a 17-hole drill program today. That's exciting. They just bought the thing in June. They have done so much work in New Mexico in four months that it's sort of like the equivalent of someone over a year or two, right? I mean, they had been busting it to get that complex set. But their primary project is better than that, I think, and that's in Nevada. So again, really interesting tungsten stock. And I mentioned First Phosphate, which I know you know, John, the CEO there. That one was FRSPF in the States and PHOS now on the NASDAQ since we mentioned that. And I was saying, hey, guys, at $0.98, this thing looks bombed out. It hit $2. So again, another 100% gain in a matter of a couple of weeks. I mean, when people understand, like I had to learn about Igneous Phosphate. I'm sure you did too. This is not some household thing, right? But batteries are really important globally. In fact, I called the U.S. government last week. They've actually tabled their tungsten work to talk about batteries first. They're writing a white paper on batteries before tungsten. This is how crazy the shortage is because the LFP battery market is 98% run by China. 98%. So North American players, this company, First Phosphate, is one of three. I mean, there's no one out there. So we like to play in these subsectors, Jesse, where it's very misunderstood. There's not a lot of competition. There's no tracker for tungsten price or phosphate prices. And it takes a little extra work, but you can make outsized returns.
Speaker 1Yeah, great summary of companies there. I wonder what your thoughts are on the overall global economy as we sit here. And the broad market as well, because we were talking about this before we hit record. You said that you think over the next 24 months, we're going to see a lot more interesting commodities as the broad market starts to roll over. Maybe we'll start there, because obviously this has been a contentious topic. I've had a lot of guests on here saying the same things. And obviously, we can all look at the chart and look at the metrics. And by so many metrics, it's grossly overvalued. However, perhaps this time is different. Perhaps the AI. The AI revolution is different. Perhaps passive inflows coming into the broad market through ETFs have changed the game, market manipulation. I mean, it seems to be going on for longer than most people are expecting. What is your take on when that bubble could finally burst?
Speaker 2Well, the setup we have right now is an interesting one. We are sitting here early October. We have CPI and a few other metrics to contend with in October, pre-fed October 28th. But that probability of a Fed rate hike now has gone from 71% at the end of September to about 20% now. So I think October is off the table. That clears the path to December 9th for the Fed. And now that probability has gone from 40% to 70%. So it looks like we're getting a 25-bip hike December 9th. I would love to see that get to a higher percentage just so we don't have drama. You know, it's like when it comes down to like 50-50, it's tenuous for investors, right? Like you want to know. Okay, let me factor this into my decision-making. Let's just get it out of the way. Like if you're going to be that adamant about it, Mr. Fed, just get it out of the way, right? Like because there's no way these guys are raising rates three to four times like some people are saying next year. So if they get it out of the way here, I think it sets up a great 2027. And, you know, partly because of the chart we showed at the onset, right? You're already at 530 on the 10th year. It's like, come on, guys. But there's a lot of uncertainty. There's a lot that can go wrong here. We're still at war with Iran. That is not resolved. I think Trump has really moderated his rhetoric over the last two weeks, if you look. Like we haven't seen hardly anything in the news. But that doesn't mean it's over. That's not Trump's MO. Like this is just put to the side. Let me try to win November 3rd, right? And then I'll start doing whatever I want to do again, which is really something I was – I said on your show in July and other shows. I was hoping that – I was hoping that he would be different than that because it's like we just need – like the average investor needs clarity. We don't have clarity right now. It's very murky. And that's a hard investment backdrop, right, for most investors. Like you want more clarity about certain big items like the war. We don't have that right now. We don't have any clarity in Russia, Ukraine. I think it's gotten worse. I mean, it's been four and a half years. You live in Europe. I mean, it's – I don't know what the feeling over there is. But here it's desensitized, right? It's like, oh, okay, whatever. But we're still backing this war. Like, I mean, so there's a lot of things at play. To answer your question like directly, it's really just a matter of watching the tape and the news every day because that's the kind of environment we're in.
Speaker 1It's fluid. What about energy markets in the face of all these issues with the wars you've discussed because we're seeing a lot of conflicting reports about how much oil is getting through the Strait of Hormuz? Different – you know, we heard about the Saudi oil pipeline supposedly got bombed by the Houthis. Then supposedly they're going to rebuild it very quickly. We've got propaganda coming at us from every single angle. And now the WTI crude price, I believe, has dropped below $90. A lot of the related equities taking a hit. And interestingly to note, even as oil ran up into the triple digits, the equities really did not provide much of a levered exposure to the WTI crude price. Not nearly as much as people were expecting. Given how precarious the whole situation seems. What's your read on the oil and gas market right now?
Speaker 2I think oil looks attractive. I – you know, if you look at the charts since March 1st, it looks really attractive. I mean, we've seen a really nice move in the crude price. And as you pointed out, things like the large cap names as a basket haven't really done great. I mean, they've performed well. But I think that's because a lot of these are mature stocks with a lot of shares out. Like, I look for very tight share structures in everything I do. That's definitely, like, one of my top three check, you know, check the box items. I just spent 45 minutes on a Zoom with a Liberian oil company, like, the other day. I'm always in sectors where I don't have a big position, like Tungsten three or four years ago. Like, I'll challenge myself and put in dozens of hours of research because I really have to learn. And that's how I feel about oil and gas right now. It's like I'm brushing off a lot of things that I used to do. I used to, you know, focus on. And this is a compelling story. I mean, these guys have purchased blocks in Liberia. And since then, Shell, Exxon, Petrobras, major players have surrounded them. And whenever you see something like that, like, you're like, okay, they must have gotten this really cheap. Because I just saw the price tag of what Petrobras paid, and it was close to $500 million. So this is like a junior stock. It's called Blue Energies. B-L-U-G-F in the States and B-L-U in Canada. Really big names in the stock, which I like to see. Like, you know, bigger, you know, commodity guys are owning positions. But not a blown up chart yet, right? Like, you still can buy the stock without it, you know, getting away from you. But, yeah, in a hot oil market, I'm looking for companies like that that are tightly held that can really outperform when oil takes off. One that I've talked about on your show probably for two or three years now has really worked out, and that's ANKOR. That's A-N-K-O-F in the States and A-N-K in Canada. Again, Delaine and her husband own 25% of all shares. That's commitment. Like, you want to see, as an investor, people investing alongside of you. And they're not getting cheap shares. They're buying in the open market, right? They have a 30-year lease in Cambodia. And when I say Cambodia, I'm talking about Cambodia. People are like, "Oh, okay, well, you know, it's Cambodia." You need to do some more research because this country is very supportive of what they're doing. They're like, "We don't want to be dependent on China or the U.S. or anyone else. We want our own source," right? Like, and this company has a huge lease. This is a $0.30 stock right now. I mean, I started mentioning it on your show under $0.10. So, this thing has already been a home run for us. But I think it can go considerably higher because now we're in the sweet spot for oil. When we started to buy this thing, we had no issue. You know, the oil wasn't in vogue. Now it is. So, we look for stuff like that in the micro or small space that has the potential to do
Speaker 1well. Well, John, tell us about venetconsulting.com. Anything else you've got going on, any conferences coming up, or anywhere else people can go online to follow your work, feel free to let us know.
Speaker 2Yeah, sure, Jesse, thanks. Our conference website is topshelf-partners.com. And if you go to events. com, you can see the six events that we led. We've done them all in the US. That may change next year. We might look at international markets. But we have already booked our DC and Florida flagship events. So May 30th through June 1st is Washington, DC. And June 2nd through June 4th, right afterwards, is Four Seasons Fort Lauderdale on the ocean. We've done those for three to four years now. And we hope investors will check it out. And feel free to send me an email. It's just [email protected], or you can hit me up through that website. Then my other website is venetconsulting.com, which talks about our performance over the last decade, talks about our services. And yeah, I hope more investors will take a chance on signing up for a few months because we don't require people to do a year. Like a lot of websites, we say, "Hey, you can come for two or three months if you want and check it out. And if it's not for you, then no problem." I mean, I have a lot of people that use it sporadically. They sign up for three months, they kind of hear from them for a year, and then they sign back up. And so they like that ability to kind of, you know, do it sort of a la carte. Every investor is different. So we encourage people to look at those two websites and, you know, definitely appreciate the support that your audience shows us. Speaker 1Great. Well, I'm going to put links to Top Shelf Partners as well as Fennec Consulting and John's email in the description below. So feel free to reach out. John, as always, great insight shared. Thank you for coming on the show.
Speaker 2My pleasure. Thanks, Jesse.
Speaker 1Thank you for joining us today on Commodity Culture. Earn up to a 4% annual yield on your physical gold paid in gold ounces through Monetary Metals. Go to monetary-metals.com slash commodity to find out how to put your gold to work for you. Link is in the show notes below.
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