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. Johnny Kovacevic, commodities speculator and author, welcome to the show. There's a ton of topics we're going to dive into today. Gold, silver, other areas of the commodity sector that you're seeing value in. We're going to talk about the broad market, but first I want to talk about silver because back in December, you called the run-up to $100 silver, and you even called the sharp sell-off after you said you believed silver would get to triple digits, and then it would sell off sharply, and that proved to be absolutely dead on. Of course, there were the true believers in the comments section bashing you, saying you don't know what you're talking about. The supply. The supply deficit, the debasement of fiat currencies, the industrial demand, all of the narratives we hear mean that it will never come back down after it hits $100. I'm wondering what gave you the confidence to make that call, and where do you think silver goes from here?
Speaker 2The theme for today's talk, Jesse, is going to be something that the famed philosopher Alexis de Tocqueville said 150 years ago. He said like this, I'll say it very slowly. The more progress you make, the more you're going to be able to get to the top of the list. The more progress we make, the more dissatisfied you become in the insufficient rise of that progress. And where we are right now, it's been the spring and summer of discontent, but if we turn back the clock a year and a half, now I made that call in December, November, December when we were doing our last interview, but if I had told you a year and a half ago that gold's going to go to $4,000 and stay there for a year and a half, I would have said, I'm going to stay there for two years, and silver's going to blast through the old all-time high, go to $60, and stay there for two years. People would be doing cartwheels down Bay Street in Toronto, the champagne would flow like rivers at the PDAC. Here we are. We live in a $4,000 gold environment, and what is effectively $58, $60 silver, and people are crying in their beer. It's amazing. And that saying goes, I think people should write it down and write it down very slowly. The good news is, everything is going to continue to move higher. It's all about untenable debt levels, this continued trend of de-dollarization, and you're going to see gold probably $8,000, $10,000, and you're going to see silver at even a 40 to 1 ratio on gold. So to see $160, $200 silver, I think is not a good thing. Not for me, and I'm a speculator, not more of an if, it's just a question of when. So yes, I still like silver, and I saw your talk with Rick Rule, and you know, when things go on sale, you know, you should love them. The problem for most speculators, Jesse, is they're not sitting in cash. They're usually fully investor, all their positions are taken, so just because everything's rolled over, they may not have the ability, but if you can weather the storm, if you're in highest quality names. Things are going to go from the bottom left to the upper right of your screen. These are two very important macro themes people should be following like Harlequin Romance, gold and silver.
Speaker 1Let's talk about the silver miners for a moment, because you referenced that interview with Rick, and he obviously in the run-up, a lot of people know the story to that triple digit silver price. He liquidated a large portion of his physical silver, and he rotated a large portion of those gains into the silver mining space because he felt particularly bullish. Now, we've seen the sector as a whole get crushed. Same story with gold miners, which I want to get into in a moment as well. Is this an area of the market that's looking attractive to you right now, or do you think some caution is warranted when it comes to the miners?
Speaker 2No, and I'm going to give Rick credit. I listened very carefully. Rick is a very smart man, and as everyone knows, he's eloquent, and he's able to really describe things, but effectively, the takeaway, we are the silver producers. We are the silver producers. The silver producers are discounting something like they live in $35 and $40 silver world, where, as we know, the silver price is $60. So, I've personally been a speculator in Keith Neumeier's First Majestic. That is a stock that, okay, it has a tremendous amount of volatility. It gets pushed around up and down, got in at $7, $8. A wise man once told me, whenever you see First Majestic go to $7 or $8, just buy it because you're going to wake up one day, and it's going to be $20. Now, we went to $44. Now, it's here at $22, but we should see extremely good balance sheets. As they report their quarterly balance sheets, those stocks are going to go higher. So, I think, for me, I keep it simple. It has more volatility, but I'm someone that likes something like First Majestic, but I also want to speculate in drill hole plays. I'm not here to push a bunch of penny juniors, Jesse, but it's not difficult for a stock that's got a $10 million market cap with $5 million. $5 million in cash, actively drilling for high-grade silver. One such name is Silver Pony, just listed, P-O-N-Y. I own that for disclosure, and they're drilling, and it's a cap from 120 years ago worth, you know, 1,000 to 12,000 grams silver. So, I want to be on those two sides of the spectrum in silver. A little bit on the producers, but my heart still beats for speculation because that is where I do believe you have a chance for a 5 or 10 bagger. So, I do like silver.
Speaker 1Great summary. I want to shift over to gold. Much the same story with silver. Silver just with less volatility, both to the upside and downside. We've, of course, seen both metals sell off in the aftermath of the war in Iran, but central banks still accumulating. Tailwinds behind the sector seem strong. You mentioned you think both metals are headed to the upper right of the screen. You gave a long-term price target for gold. I wonder if you could dive a little deeper into that thesis to help us understand why you think that's going to happen.
Speaker 2Well, as I said before, the overarching master theme is the continued de-dollarization and this propensity for BRIC-type countries to do settlements not in the US dollar. You've also seen the July 24th headline in China where I think I've done some reading on that. I think really that what they're trying to do there, they are the biggest miner of gold in the world, the biggest buyer of gold in the world, both from a governmental level. They've also, the citizens of China have passed the Indians on the total amount of gold that they're buying. So, it makes sense that they should want to be a world. leader talking Hong Kong for the transactions and the holding of gold. And, you know, they're very careful buyers. So, people will tell you, and if you, I don't know how much reading guys are doing on the nuance here, but America should be the largest holder of gold, should be. But China is going to pass America in like five or six years, you know. So, I would, that's a loss of confidence. So, untenable debt levels, when we see where they are right now, when you see what this, the Fed again did not raise rates, but the market, I think, is telling us they're going to want to get paid more. They're going to want to get paid more for anything in the U.S. dollar. So, where do you go? Gold. It's really the only place that all the big money is going. So, if we could see the doubling of the value of gold again, which tells me for me to see gold between $8,000 and $10,000 an ounce, you know, it's when will this happen, not if. And it's because all. All the forces are going that way, and it's one of those big instruments that people want to own. And we're going through what is what I call the spring and summer of discontent. We had a lot of tourists in the trade, particularly in silver. They go away, they come back, and they're going to help push it again to levels they probably don't belong to. But we had to go all through, also through rebalancing, Jesse. I said this before, when those classic Swiss thinking, when those portfolios went from 10 to 30 or even 40% value of gold, because the gold price moved so far so high, they're rebalancing that. I don't think a lot of portfolios want to have that much exposure to gold. So, that's all working its way out of the system, and it's healthy. I think we see this bifurcation at $4,000 gold. My gut tells me the party's going to continue, but you're still getting paid to own these high-quality gold names, because they're discounting something way, way lower than what $4,000 is gold today.
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Speaker 2Yes, I am. Gold also. I'm not in the developers in the middle, the people that, that slow, boring, you know, peg your way forward. Let's do a short little report card on Agnico Eagle. Agnico Eagle went from about $150 a share, went to $350, $345, back down to $180. It's currently at $200 a share. So once again, if I was to go back 18 months and tell you gold's going to go from $2,500 to $4,000 and stay there for two years, and Agnico Eagle only goes from $150, $160 to $200, you'd say you're mad. You're mad. You're mad. You're mad. It's not possible. Those guys are printing money. Yes, they are. Don't worry. You're going to get rewarded for that. Agnico Eagle is going higher. Gold could fall $500 an ounce and Agnico Eagle is going to go higher. But if, but if it stays here and gold bifurcates at 4,000 month after month, quarter after quarter, they're just on a balance sheet. They could be baking bread or making shoes. It doesn't matter. They're going to be, they're printing money. And when, when the market sees that and you see this manic spring and summer and you had the tourists in the trade and people, you know, are getting out and shorting it, but their business is very strong, Jesse. So Agnico Eagle, I don't think you even have to use a pencil and paper. You know, that is something that's probably, you're going to look at it, you know, all things being equal to, for it go, to go back over $300. I'm talking Canadian dollars here on the share price. You know, so I, I think that just tells you all you need to know about what's going on with these gold producers. Now with respect to the drill hole place. Oh, I love it. I mean, how do you not like something that, and I'll give you another example, not, not here to push juniors, but just to illustrate how cheap these things are. Abbin Gold, ABM is going to be drilling for gold and tungsten up in the Yukon. If you like Snowline, if you like names like that, if you like Seabridge, you know, this thing was restructured, has 30 million shares or something training at 20 cents with 4 million cash. And the drills are going to start turning next week. You know, what's the market? The market cap is ridiculous. You get, you get it for nothing. You know, they had success 2011, 2012. I love a name like that. You know, so I'm, I'm going to follow them. I'm going to see what they get. I like tungsten tungsten's up 10 X. Anyone that gets a discovery with tungsten is going to do very well, but it's a gold tungsten project and you pay nothing for it. So that's where I'm looking at producers like Agnico Eagle and Pico cap explorers. These are not the guys that already have a real market cap. The market cap has to be basically nothing. And what's your risk a nickel on the downside, a dollar or two in the upside, if they're successful
Speaker 1before we get into some other commodities you're bullish on. I'd love to get your take on the broad market here. We keep making you all time highs as two major wars are raging and the valuation on many of these tech AI stocks holding up the indices are according to many adult analysts in complete and total fantasy land. On the other hand, people have been saying we're set up for a collapse and bear market for years now. Where do you stand right now on the trajectory? Of the broad market? And should it correct dramatically? Do you have concerns for some of these junior mining stocks in the aftermath of such an event?
Speaker 2Yes. If the market collapses, everything goes down. You know, when they raid the house of ill repute, they arrest everyone. Even the piano player won't matter. We have not had a general stock market and I don't still at my age. I'm still speculating. You know, I try to measure what I'm doing. I don't like to be in total rank speculations, but I still buy mining shares. I'm a speculator. I don't own the blue chip, the New York Stock Exchange, NASDAQ and stuff like that. And for me, it's worked out. I mean, my speculations, I've had some good ones, but, you know, it would be healthy and normal for the overall stock market to breathe and give back, let's say 20%. That's it. That's it. They call that a bear market. It was to go down 20%. It never seems to be able to do that other than extreme panic. You know, during COVID, one other time we had it in the last five years. And there are many reasons why that's the case, Jesse. You know, first of all, look at money supply, global money supply. If you look at how it's grown globally, it continues to grow. And what happened in the last six months, if you just imagine there's a chart of two lines, the gold price and global money supply, and they both kind of go lock and step. The money supply just has continued to grow. And the gold price, as we all know, has faded from $5,500 to $4,000. You can see it now in a chart. It's eight months later. It's actually very pronounced. Is it possible that so much money has been created? And where is that money going? The stock market, the US stock market. Now, in a very unhealthy way, it's disproportionately now going to these AI and it's always seems to be a flavor of the year or flavor of the month, tech or what have you. So no one can tell you, but we should. People should embrace a 20%. Correction. Of course, it'll be painful if and when it happens. And history tells us it has to happen. Things cannot go up forever. And that, sadly, if it was to be really pronounced, it is going to affect everything. But the silver lining for us that follow gold and silver, when and if that happens, you're going to have another pulse higher for those things that absorb de-dollarization and absorb people dumping shares. And that is gold. And to a lesser extent, silver and basically the commodity complex. You could even include, as we've talked about many times, the electric metals.
Speaker 1Yeah. And we'll get into that. And obviously, a good reason to have cash on the sidelines, as you alluded to earlier as well. Now, let's talk about copper. Hit new all-time highs in June, currently sitting at a respectable $6.50, somewhere around there. Although it also originally started selling off after the war began, it has since rallied in many ways the opposite of gold and silver's performance. Why the strength in copper versus precious metals? And how do you see copper performing up ahead?
Speaker 2So, people that have followed my work for a long time would know that I wrote a book about copper. It was released in 2016. I was doing, and I'll call it, evangelical work. I gave how many? Hundreds of keynotes. I signed, Jesse, 20,000 of my books the exact same way. Go, copper, go. I would typically put a date and the copper price at the time. This is when copper was $2, $2.50. And it was, you know, it was inevitable. Copper eventually had to go, we would always say to, it likes to see an all-time high. We are now at an all-time high in copper. So, what does one do with one's copper shares? Can the copper price double again and go to $13? Yeah, it's possible. A few scenarios have to happen. But one should never forget, nobody wants to pay high prices for commodities, and in particular, copper. And I'm talking about China, China at large. They buy 50% of the world's copper. So, they are now, we globally are paying that. And I think it was always said to be at these higher plateaus. We are now in a plateau where copper is $5.50 to $6.50 a pound. I don't see a scenario where copper goes. It's back to $3, for example. Particularly, when you add in the de-dollarization, the amount of money that's been printed, and what is the value of a U.S. dollar today, 10 years ago, the last all-time high, 2011, and so on and so forth. So, how do you play it? I've sold a lot of my copper shares, and I'm looking at things I think are more mispriced in the market. So, how do I play copper? Now, I'm not in producers, I'm not in developers. I will take a little bit of my portfolio, 0.1%, 0.2%, something like that, and I'll speculate in a drill hole play. And there's, for copper, we're on a bit of a theme here. I like super copper, C-U-P-R. They're going to be drilling two very interesting projects in Chile at low elevation, about 1,000 meters. The first drill program starts now, 5,000 meters, and the second one will start later this year. So, there's a lot of smart guys in the name. They're looking for high growth. They're looking for something that could be I-O-C-G, but that's where I'm playing. And I don't worry as much about the copper price, Jesse, because when you're speculating in a drill hole play, you're speculating in the outcome, not the intraday nuance. So, you could see with a bonanza-type discovery, those shares always, they get repriced at a higher level. So, I like, that's how I'm playing it. I would be a bit more cautious with a developer or a producer. Copper is at an all-time high. time high deserves to be there but it it could breathe it could fall a dollar a pound and it happens very quickly the chinese the last couple times copper reached these all-time highs they told the market they were dumping 20 and 30 000 ton uh lots and sure enough the copper price went down but the takeaway higher plateaus we are now at six and a half dollar copper and probably that's our plateau five and a half to maybe seven dollars let's see can we see eight dollars time will tell meanwhile
Speaker 1lithium's in the corner being the rodney danger field of the commodity space getting no respect it's not so much hated as ignored and forgotten about and that's just from what i'm seeing in regards to sentiment online whenever i talk about lithium as the main focus on this show it just does far fewer views people aren't slinging mud in the comments there just are no comments um so i wonder what your thoughts are there why should investors be paying attention to lithium and what will it take for us to see the sentiment turn around in the space great question jesse
Speaker 2lithium and i cannot underline this enough i'm gonna bold claims require bold evidence and bold milestones lithium is the most missed priced thing on the entire global stock exchange why do i say that you could i could sit here and romance you for an hour on why but if you boil it down bernstein research said it very simply global demand for batteries last year was 1.8 terawatt hours in 2030 they estimate it's going to be 5.7 terawatt hours you don't even need to know what that means it's going to grow by about 20 percent kegger growth rate and it's not going to be sodium ion batteries not yet okay lithium prices are going to go much higher they could be wrong by a power of magnitude the lithium market is going to almost triple two and a half there is going to be and i can't this is a speculation you are going to have yet another lithium boom market whereas when you're a speculator the future where's the lithium going to come from it's not going to come from the salars of north of south america it's not typically going to come from hard rock mining not all of it it's going to come through technological progress dle direct lithium extraction now people analysts out there don't like dle some of them still so let me illustrate this let's say you have two or three of the smartest analysts and they will explain to people for an hour two hours it's not been commercialized here's why here's why i will then bring you 100 technologists from schlumberger now called slb which is the world's largest oil and gas service provider and for two days these hundred people will explain to you how it works how you get the lithium instantly how it uses less water how it uses less energy how the process can give you lithium carbonate or lithium hydroxide instantly and then they'll tell you we're operating today we're operating today we're operating today we're operating today we're operating today as we speak the world's largest lithium um not bigger than a pilot plant then i'll bring you 100 people from exxon and and they'll explain to you this is right now we've moved the chains forward we are made millimetrical progress but this is going to become 20 to 30 percent of the lithium market on that day in 2030 when the lithium market is two and a half times bigger now how is it that people listen to the smart alec analyst but they don't listen to 100 people at schlumberger or 100 people at exxon this is a layup for me and i'm not speculating that a small company are going to be the ones that do it and to finish this point just to really drive home the value i've talked about lithium bank before i'm a large shareholder of the company their project is in alberta it's dle and they've done a ton of work over the 18 last 18 months schlumberger is working forward a feasibility study for lithium bank on their boardwalk project they've also hired two weeks ago a fellow uh who was in charge of carbon solutions at exxon for 18 years he's heading up he's going to be the liaison between schlumberger and and uh and lithium bank and schlumberger is going to be running the entire operation so when you look at the capex where they're going the market cap that is to me something that is a 10 or 20 bagger waiting and paul matissex the chairman there i don't believe are going to be the ones that build and operate this the question is will one of schlumberger's clients want to have a project like boardwalk 67 million shares out 50 cents a share you don't have to be a rocket scientist that is in my opinion the most mispriced sector but one of the most mispriced names on the toronto stock exchange lithium bank lbnk people need to do more research but that is something that i think it warrants it because it's bold claims require bold evidence or bold milestones all those things have already occurred uh and people just have to take a
Speaker 1look at it along with lithium the setup for phosphate certainly does look interesting here particularly with the growing demand for lithium phosphate iron batteries i know there. Walk us through the thesis as you see it for phosphate.
Speaker 2Well, the same macro philosophy is there where if Bernstein and other companies like Bernstein are seeing basically two and a half X growth, and a lot of that's going to be the LFP battery, the lithium ion phosphate battery. And you want to be looking at deposits that have igneous type setting, very few out there. I've talked about this before. People that have seen my work before know, understand I'm a, you know, a large holder of first phosphate in Quebec, near Tidewater, igneous type deposit. And the share price, of course, is done very well. It's reversed a little bit, but I'm also speculating that that deposit is so special that it too is going to be taken over by a larger company. And it's so important for Europe and for North America. You get, you can convert almost all of that, that phosphate into what they need in the, in the P, which is the PPA, purified phosphoric acid. That's the holy grail, not from sedimentary type phosphate deposits. Think of that, that's fertilizer, even though they are converting some of that into, into PPA. This is a very special deposit, the one that's controlled by first phosphate, and they work together, you know? So I think the, the demand for the batteries is going to grow by two and a half, three X in the next five years. You're going to see a new boom in lithium, but also in lithium and battery tech. So you want to be following something like the, the ETF, LIT. And then together, the two most important components there are going to be new technology lithium, which means you get your lithium instantly using less water, less energy, DLE, and the P, purified phosphoric acid coming from igneous type deposits. So whenever you're looking at a junior or someone, very few, few of them out there, is it igneous? And is it close to infrastructure? Two very important questions. For me, I don't need to look further than first phosphate. To me, they, they, they, they've checked all the boxes. Will the, will this company be around? Both of them, lithium bank and first phosphate will be delivering feasibility studies by the early part of 2027. Important documents for their next steps.
Speaker 1Well, John Pasolacqua, CEO of first phosphate is coming back on the show in a couple of weeks. So people can look forward to that. I also did an interview not too long ago with lithium bank, so be sure to check the channel for that as well. Johnny, fantastic conversation for anyone who wants to follow your work online, who wants to pick up your book. Where's the best place to go?
Speaker 2I try to post things on Twitter that, that matter. People have not read my book. That's it in hard cover. It's also on audible. It's an ebook, a hard cover, soft cover, a few different languages. And, but I'm, I'm going to be trying to be posting things on Twitter that are not easy to find. Now, sometimes I don't post something because I don't like to retweet what everyone's seeing. I want that, that, that graph or that photo or that, that, that quote that people have not seen anywhere else. So you could put a link to my, just look at my name on Twitter and we'll be sharing there.
Speaker 1Great. I'll put that link in the description as well as a link to somewhere where people can buy your book, maybe Amazon, whatever the best link I can find. And maybe you could send that to me. Johnny, fantastic conversation. Thank you so much for coming on the show once again.
Speaker 2Thank you so much, Jesse. Have a great summer.
Speaker 1Thank you for joining us today on commodity culture, earn up to a 4% 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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