Seeking Alpha
View as an RSS Feed

Dr. Stephen Leeb  

View Dr. Stephen Leeb's Comments BY TICKER:

Latest  |  Highest rated
  • NovaGold: The Facts, Please [View article]
    While I don’t know a great deal about the details of building a mine, I believe that logic and history can help mediate the debate over NG. Front and center, an investment in NG is a bet on a non-producing mine with tremendous reserves, making it basically an option on gold. Does it makes sense to have such an option? I believe so. More and more, the Euro seems doomed. Betting on the coexistence in the same union of countries like Germany and Greece is becoming increasingly difficult. With Germany looking East (latest issue of Foreign Affairs), it makes just as much sense to imagine a currency bloc of the Mark, Rubble and Yuan in a basket convertible into gold (ersatz Bretton Woods).
    Equally important, China occupies an increasingly central role in the East. Its accumulation of gold seems to be based on much more than a love of gold jewelry. Probably the Chinese see gold playing a major role in a monetary system that will at least govern the East if not the world. What I mentioned above is just one of a slew of possibilities. In other words, without going into too much detail there is indeed a strong case for much higher gold prices.
    Is Nova a good option on a much higher gold price? Again, I believe that history and logic suggest that it is. Virtually all mines are bedeviled with environmental concerns. Clearly the article and response give no sign that at Nova those concerns are insurmountable. The team running the mine is top drawer. The half owner of the mine has a sterling reputation of dealing with mining industry professionals. The story of the Bolivian mine San Cristobal, which was run by the co-owner of Donlin, is remarkable in how much it helped the indigenous population.
    What is most annoying about the reply is the statement that “your entire ‘rebuttal’ to my valuation argument is that they have inferred resources.” Even assuming the mine were uneconomical at $2,000 per ounce, save for inferred resources, the inferred resources are purported to exist and unless you can make and sustain a claim countering their existence, your argument is fatally flawed. Moreover, if you are just betting on gold returning to the high end of its trading range, $2,000, then there are probably many better ways of getting leverage. The more important discussion is what value NG with gold at $3,000, $4,000, or even much higher prices – probably a lot more than you can make on any other investment.
    The argument concerning capital expenditures also seems flawed. A critical component in the cost of developing and producing any resource is energy – and this certainly includes fracking, big time. Oil prices recently declined by over 50 percent. Without digressing, ABX could assure lower-than-budgeted cap ex costs by buying oil future contracts and for that matter copper future contracts. They would be in good company as China has recently established monthly import records for both oil and copper. Of course China, though the largest trading partner of Saudi Arabia and the biggest gun in the East, could be wrong. But we would not bet against China. Moreover, if China were wrong then you are looking at a deflationary scenario in which gold will likely dramatically outperform all items that make up today’s projected capex. Yes, you would have to smart enough to cover your oil and copper hedges.
    In summary, I believe that NG is an exceptional hedge against today’s reserve currencies including the dollar. After all, how long can a country throw away money on military ventures while the bottom 90 percent of its populace has experienced more than two generations of declining real incomes.
    Jan 16, 2015. 02:59 PM | 1 Like Like |Link to Comment
  • Analyst: Oil slump brings pain for US Steel, gain for Cliffs Natural [View news story]
    Excellent point and illustrates how much energy it takes to get energy with fracking and why fall of fracking is creating so many headwinds when in the past any oil price decline has been an unalloyed positive.
    Dec 12, 2014. 03:01 PM | 1 Like Like |Link to Comment
  • The Energy Paradox: More Is Less [View article]
    Sorry Gary. We posted summaries too long for the spaces allotted. We have submitted shorter ones, and hope the changes will be approved and posted soon.
    Jul 8, 2014. 10:45 AM | Likes Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    Thank you very much. I completely agree with you. So few realize the importance of peak conventional oil. NG is a speculation, but I think a great one.
    Jul 7, 2014. 04:03 PM | Likes Like |Link to Comment
  • Blood And The Street: Do Foreign Policy Crises Matter? [View article]
    A very provocative article and thank you for the mention.
    Jun 19, 2014. 12:09 AM | Likes Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    Hi Chris, I think as with any oil producing investment oil prices are a critical macro consideration and since rightly or wrongly I believe oil is going higher along with other hydrocarbons even including coal, you should be able to find decent royalty trusts. But unfortunately that is much easier said than done especially when the trust have a finite life and have wells located in shale formations where decline rates are very high but perhaps even more important somewhat unpredictable. With a multitude of caveats I would suggest looking at Natural Resource Partners and Lightstream Resources.
    Jun 17, 2014. 04:02 PM | Likes Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    b3player, First I want to say it is a pleasure to talk to someone who is not dogmatic on the issue as so many are. There is no doubt that CO2 is a greenhouse gas that has a warming effect. The doubts occur when you try to mesh those effects with a very complex climate and try to come up with projections. Almost all projections that have been made are unable to account for 15 years of no warming. And again that does not mean the earth is not warming but does suggest that the models need to be improved. A recent New Scientist article for example pointed to heat uptake by the oceans and unexplained aspects of the sun's behavior as possible explanations. Once you involve the sun you are clearing involving something capable of overwhelming virtually any other factors. You might be interested in googling sunspots - they have been at exceptionally low levels for which we have no explanation.

    Again I am not saying that believers in very dangerous global warming are wrong. Instead as with all science I think we need a health dose of skepticism along with cost/benefit analysis to see the best way of addressing the situation.
    Jun 17, 2014. 03:37 PM | 2 Likes Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    I agree that thorium has a multitude of advantages over nuclear reactors. The problems rest on design challenges and the availability of U-233, which is needed to start a thorium reactor. That said America should make thorium research and development a very high priority item - there is clearly the potential to make a major dent in our energy problem
    Jun 16, 2014. 02:35 PM | 1 Like Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    b3player, Please google Richard Lindzen, who retired last year as a chaired professor at MIT in meterology. I think his thinking, which does not deny the effects of global warming, does present a compelling case that the current hysteria is not merited.
    Jun 16, 2014. 02:25 PM | 1 Like Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    Thanks for your comments. I certainly agree that China is far from an A student. But also keep in mind that according to Nature Magazine, this is also a country that has engineered the largest migration of citizens in the history of mankind. That is what urbanization is all about. And urbanization is continuing and will be a vital force underlying growth and providing a lot of lower cost housing, as will building an energy infrastructure. That is not to say - again - that there are not problems and that there won't be setbacks. But I do believe that with $4 trillion in reserves, an extremely high savings rate, and their unprecedented accumulation of gold, they have a lot of shock absorbers. I just have to close with something I saw this weekend: President Obama, who I do believe is a very good hearted individual told graduating students at U Cal to ignore climate skeptics. That is dangerous - flat out. Dangerous not because CO2 doesn't create warming but dangerous because it ignores cost benefit analyses and the many extremely informed scientists at MIT and other elite institutions who say that the current models are wrong and do not account for 15 years of no warming. Again I am not a denier but skepticism is needed and for our President to say no to skepticism does not meaningfully, in my opinion, separate him for the ethos followed by Chinese leadership. As far as resources go a recent white paper from the Congressional think tank noted that there are dozens of minerals which the U.S. is highly dependent on other countries - rare earths are just one example - and that China is the most important supplier of these minerals. My message is that America is a great country and can still lead in this century but has very little chance unless we shed our complacency.  P.S. Heng Seng Bank was recently named the safest bank in the world.
    Jun 16, 2014. 11:58 AM | 1 Like Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    I absolutely agree about over priced real estate in parts of China and danger therein. But I do believe the real story in China is the trillions (say with a T) that they are investing in their energy infrastructure which little to no attention, at least on this side of the world. Between 2011 and 2015 China will put up more grid than in the entire U.S. They have recently raised their targets on virtually all non-hydrocarbons. Just one piece of evidence is the stock chart of Gigasolar, which supplies China with solar materials. The stock has more than tripled in the past 9 months. And incidentally as a sidebar you should compare test scores of Shanghai children with U.S. city children. My point is not that America is finished but we will be if we continue in our complacent ways.
    Jun 15, 2014. 11:52 PM | 4 Likes Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    I wish I knew more about the area, but my abiding feeling is that the owners of the asset will not make decisions that will harm the populace. It is still a long time from now to production. My advice is to make your feelings known.
    Jun 15, 2014. 03:35 PM | Likes Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    I fully agree that Donlin is a very difficult and expensive product, but do think that a full-fledged revival of gold would suddenly make any significant incremental gold not just avidly sought but in some ways critical for a country's financial management. Against this background it is worth noting that the same people that have major positons in Donlin developed a major siver project in Bolivia by responding fully and then some to the concerns of those living near the project. New schools, houses, etc. were built. One reason I like Novagold so much - as a speculation for sure - is that I do feel the development of Donlin, knowing the people involved, would be a major plus for those living in the area.
    Jun 15, 2014. 12:41 PM | 2 Likes Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    It is tough to say that an asset which declined 80 percent (in 2008-2009) is still in the same long-running bull market. Worth noting is that oil is still trading in three figures - roughly tripling from its 2009 low - despite much slower world growth since 2009 that what prevailed during the 1998-2008 period. One reason is that conventional oil has peaked and new oil is very expensive - requires a lot of oil to produce. This trend toward non-conventional oil will likely persist. Hopes for a bear market in oil have to rest on mass substitution of alternative energies for hydrocarbons. The process of substituion will itself take a lot of energy - i.e. oil and other hydrocarbons - and it is likely the uptrend in oil will continue throught that many-year, perhaps decade process, but then there may come a point in which oil muich less in demand will enter a long-term bear market.

    Of course, the other scenario for a bear market in oil would be a total collapse in economic growth as was the case in 2008-09. But then as was the case in 08-09 period Western and other large economies would likely do whatever they could to get growth back on its feet.
    Jun 15, 2014. 12:33 PM | 1 Like Like |Link to Comment
  • The Long Side Of Poor U.S. Policies [View article]
    I agree and think creating a soup to nuts program for producing permanent magnets should be a major priority. Such a program would create a lot of jobs and have many ancillary benefits in addition to making America much more self-reliant.
    Jun 14, 2014. 10:05 PM | 3 Likes Like |Link to Comment