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  • Resolve To Do Better In 2015: Expert Edition

    As natural resource investors take stock of their 2014 portfolio shifts and make adjustments for 2015, The Gold Report quizzed top experts in the sector on what resolutions they are making and-perhaps more important-what steps they are taking to make sure they will stick to the hard choices they have vowed. We want to know if you are taking the same steps, have your own plan to make the most of whatever happens in the sector or just plain disagree. Please use the comment section to let us know what you will be investing in as we bravely face a new year.

    Porter Stansberry: My annual investment goal never changes. There are two parts.

    First, I strive to save at least half of my after-tax income. I define "saving" broadly. Buying cars doesn't count. Buying gold does. Buying land does, even if it's merely land for recreational purposes like hunting and fishing. That's because I can be reasonably certain that in 10 years I could sell any of the land I bought last year for far more than I paid for it. And, of course, some of the real estate I bought was income producing. Last year, according to the latest numbers from my accountant, I saved 59% of my after-tax income.

    Now, you might complain that saving so much is easy for me, because I have a large income. Bullshit. I don't care how much [or how little] you earn. Saving is always hard. The temptation is always there to enjoy the wealth you've accumulated right now. To save 59% last year I had to give up some of the things I've been able to afford historically. My income has fallen because I hired a CEO for my company and gave up a large amount of my compensation in exchange for his service. To make sure my savings rate didn't change, I had to make big changes to my lifestyle and spending habits. Believe it or not, it is every bit as hard emotionally to give up these perks-even harder, actually-than it was to do without things when I was younger. Back then, I didn't know any better.

    I have always been willing to exchange short-term gratification for long-term wealth. I made the same choices at 26 when my salary was $32,000 per year. Back in 1990, I lived in a walk-up, ghetto apartment at the corner of North Avenue and Eutaw Place in Baltimore. This is one of the 10 or so most violent neighborhoods in the United States. But it's all I could afford at $250 per month. I also drove a 10-year old car and rode a bike when it broke down. I never went out to eat. I didn't have a TV or Internet access. What did I do? I read a lot. I spent a lot of time running, exercising. And I worked around 100 hours a week. I planned what I would do with the money I was saving and the businesses I was starting. That was how I saved half my income when my income was much smaller.

    I would have never become wealthy if I hadn't made these choices. They gave me the financial footing I needed to drive a hard bargain, to make the right deal and to demand the rewards I earned in my business career. It would have never happened for me if I hadn't been willing to sacrifice near-term comfort and convenience for long-term gains.

    If you really want to be wealthy [and there are plenty of other important goals in life], you had better learn to save half of your after-tax income. If you can't do that, then you're deluding yourself.

    So, first goal every year is to save more than half of my after tax income.

    Part II of my annual financial goal is to secure a growing, substantial income.

    Every year, I invest $1 million in one great business that's trading at an incredibly cheap price. Sure, I make plenty of other investments, too. But this is my main financial goal each year: Buy one great business. I don't diversify these investments. I don't try to buy 10 great businesses every year. And, I don't use trailing stop losses on these investments. I normally recommend diversification and trailing stops to all investors for their portfolios.

    So, why don't I use those tools with my own money?

    Well, I do. But just not in the way you're used to seeing.

    I started putting $1 million into a single stock when I turned 40 years old. I figured that if I did this 20 times, by the time I was 60 I would own a pretty incredible group of businesses. Sure, some of them may go bust. But, I'll be diversified over time. My portfolio allocation is still only 5% into each business. If you limit your position size, it's okay not to use a stop loss. I don't want to tell you what I've bought so far, because I don't want you to invest in the companies I know and admire. I want you to buy great operating businesses that you know and admire.

    Pick one a year. Make a substantial investment. Go to the annual meeting. Read the quarterly reports. Correspond with the management team. Think and act like an owner. I promise, this will change the way you think about business and the way you behave as an investor. And it will greatly increase your average returns.

    If you don't know what a great business looks like, I have written about "World Dominating Dividend Growers" on my website. Or, for an even easier black and white list, just consult the PowerShares Dividend Achievers ETF (NYSEARCA:PFM). These are all companies that have proven over many decades to be excellent companies managed by truly talented and honest individuals. The top 10 holdings today are: Wal-Mart, Proctor & Gamble, Johnson & Johnson, Exxon, Coca-Cola, Chevron, Intel, AT&T, IBM and Pepsico. The average price-to-book ratio in this ETF is 2.7 and the average price-to-sales ratio is 1.5. If you're buying equity for more than these prices-and you probably are if you invest in mutual funds-you're getting ripped off.

    My goal is buy companies that can match these firms in terms of longevity, performance, return on assets/equity, profit margin, etc., but are trading for less than 10 times earnings. [The average price-to-earnings multiple in the Dividend Achievers ETF is currently 17.5]. So far I've bought two great businesses for around four times earnings. These opportunities are available, year after year, for folks who are willing to study great businesses and buy them when, for whatever reason, the market turns against them. The key to success when it comes to buying publicly traded stocks is to simply know the business you're buying and never pay too much.

    I could go on for a long time about the types of businesses I admire-they don't have any debt, they don't require much in the way of capital investment, their CEOs make very rational capital allocation decisions [such as buying stock instead of paying a dividend only when the stock is very cheap]. The point is: I only want to invest in businesses that are far, far better than I could build with my own capital. If I buy 20 great businesses over the next 20 years, then, whatever else happens with my companies, or with my career, both my family and I will have a tremendous amount of financial security. I have the luxury of plenty of investment capital because I took the time to learn how to save. That's why saving comes first, and investing comes second.

    Remember, every great journey begins with a single step.

    10 Ways to Make 2015 the Best Year Yet

    Like Porter Stansberry, a lot of investors are focused on spotting bubbles and managing risk in 2015. These 10 sector experts shared their plans for making the most of the coming year. You can share your resolutions in the comment section below.

    Rick Rule: I think we're on the verge of a spectacular resource market place. I believe we will see capitulation in the next couple years, and two years from now we will look like heroes because of all our smart decisions.

    I am really enjoying the opportunities now to buy low, but my resolution is to sell at the right time. That is the key to successful execution. During the large resource resurgence that is coming, I have to be disciplined and sell just when things are looking good. That is very hard, but very, very important.

    Harry Dent: My resolution is to respect bubbles. They grow exponentially, usually over five or six years, which is about as long as this one's been building.

    Most economists don't study bubbles. They don't understand them. People who do understand bubbles tend to call them too early. I've had to keep going back to my subscribers and say, gosh, it looks like it was peaking here, but we're still not getting signs because it still wants to go up.

    I'm going to respect the bubble, stay with it and look for a peak around March of 2015 and the NASDAQ to retest its bubble highs in 2000 of 5,050. If that happens, the Dow could go up to 19,000. If I see that, I'm going to sell and/or short the market come hell or high water. That's my resolution. I always tell people, it's better to get out of a bubble a little early than a little late.

    Chen Lin: The low oil price is here to stay for a while and my plan for 2015 is to focus on companies that can do well at lower prices. Pan Orient Energy Corp. (OTCPK:POEFF) [POE:TSX.V] is my top holding in energy companies and I have high hopes for the stock in 2015.

    Kal Kotecha: My resolution for 2015 is to bet on junior mining stocks while it is still the most undervalued market in the world. This is just like 2008 all over again. I try to keep emotion out of the decision-making process and focus on the fundamentals and the valuations of the individual companies. I compare the downside risk with the upside potential and what I could make by putting the money in a savings account. The bottom line is that this is how riches are made.

    Frank Holmes: Tough markets can take a toll on the intellectual and emotional confidence of anyone in this industry, but tough times don't last forever, tough people do. With that, my investment resolution for 2015 is to have tougher love for the business. A few ways I plan to do this is to hold management accountable for what they control, and also to have the sensitivity to recognize things like poor government policies because government policies are a precursor to change.

    David Morgan: My resolution is to strive for balance in my life and in my investments. I recommend that people be only 10-20% in the resource sector. That way they can have exposure to lots of investing options.

    One way to ensure balance is to put in place trailing stops that force you to take profits. Investors have to reach inside to determine what levels of risk they can afford and weigh that against the volatility of the specific stock. It is a bit of an art, but it is the best way to be successful.

    Doug Casey: I don't put much store in New Year's resolutions. But on this topic, I'd say there's just one right now: Conserve capital. That's going to be hard if the current worldwide asset bubble bursts. I hope to ensure I do that by being extra cautious about getting into any new deals, especially illiquid deals.

    Brent Cook: I resolve to play more beach volleyball. I also will try to be more disciplined in my investment expectations-particularly when it comes to when I buy and sell. I know that more than 90% of the junior mining companies out there will fail, so I try to look for the fatal flaw early and get out of the way. If I don't find a flaw, that is when I know to buy in and then buy more. This is my money I am investing, so I have to be critical.

    Chris Berry: I don't make New Year's resolutions but instead go back to the guidelines that I have set for myself with respect to investing in the commodities markets. I review these each quarter and add or amend as necessary. This allows for flexibility not so much in investing style but in how I approach different opportunities in the metals. To me, investing is more about managing risk rather than generating returns and the guidelines I have set up are designed to aid in this approach.

    Keith Schaefer: Be disciplined in taking losses. My biggest loss in 2014 was actually a stock I bought in 2011 and held on for too long, just thinking management couldn't get any worse, that the company would perform eventually. But of course it didn't. The chart was telling me to sell and I didn't. Shoot your dogs quick!

    This interview was conducted by JT Long of The Gold Report and can be read in its entirety here.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

    DISCLOSURE:
    1) JT Long compiled this article for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this article: None.
    2) The following companies mentioned in the article are sponsors of Streetwise Reports: Pan Orient Energy Corp. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) Chen Lin: I own, or my family owns, shares of the following companies mentioned in this article: Pan Orient Energy Corp. I personally am, or my family is, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8999
    Fax: (707) 981-8998
    Email: jluther@streetwisereports.com

    Dec 31 2:00 PM | Link | Comment!
  • Aussie Toe Cutters Girding Companies For The Long Haul

    In Australia, when companies want to cut costs, they hire what are known as "toe cutters." These managers root out inefficiency and drive profitability. Vincent Pisani, senior resources analyst with Shaw Stockbroking in Sydney, Australia, says toe cutters down under are girding companies by lowering production costs to ensure profitable operations even in the face of further commodity price weakness. In this interview with The Gold Report, Pisani suggests some companies that are well positioned to succeed, even if their toes are somewhat shorter than they used to be.

    The Gold Report: In the last Shaw Stockbroking quarterly report, you wrote that although sentiment in the resource sector is poor, companies have driven operating costs down and reduced capital spending to the point where it could signal the start of a more positive story moving into next year and beyond. Would you please elaborate?

    Vincent Pisani: The Australian gold companies have probably been the most proactive in reducing their cost structure over the 12 months. Since gold peaked at US$1,800/ounce [US$1,800/oz] in September 2011, it's been pretty much a relentless drive on the cost side for a large number of our gold producers. The biggest gold producer here is Newcrest Mining Ltd. (OTCPK:NCMGF) [NCM:ASX]; it produces about 2 million ounces [2 Moz] gold per annum with associated copper. A year ago it was producing gold at an all-in sustainable cost of production of nearly US$1,200/oz. That's OK when the price is US$1,800/oz or even US$1,500/oz, but when the price breached US$1,300/oz, things started to get worrisome.

    Newcrest has around AU$4.1 billion [AU$4.1B] in debt on its balance sheet, so there is the cost of servicing the debt on top of the other mining costs. About 12 months ago, the company brought in Sandeep Biswas as its new CEO. He is what we in Australia call a "toe cutter." He went to all the Newcrest divisions and started aggressively reducing costs. Now, Newcrest is more comfortable with a gold price of around AU$1,200/oz, which is equivalent to US$1,050-1,100/oz.

    The minnows-companies that produce between 200,000 and 400,000 oz [200-400 Koz], such as Regis Resources Ltd. (OTCPK:RGRNF) [RRL:ASX]-have done some amazing work to reduce their cost structures to ensure that they generate positive cash flow throughout their divisions.

    TGR: What has Mr. Biswas done in more specific terms?

    VP: He's reduced the workforce by 400-500 people over the last six months and I think there's more to come as Newcrest streamlines its operations. The gold price is out of his hands. What is in his control is how efficiently his mining operations work. He's saying to his staff that Newcrest wants to be profitable and produce gold for less than AU$1,200/oz over at least the next 12 months.

    TGR: What will be the trading range for gold in 2015?

    VP: I look at how much economic stimulus has been done in the last three years and what that has done to inflation-and that's basically nothing. It might have spurred a little economic growth or stopped economies from collapsing but Japan has already seen a large stimulus package and it has negative growth. We recently had a G-20 meeting in Australia where global leaders agreed to elevate world economic growth by 2% annually over the next five years. To accomplish that, there could be another round of stimulus packages for big infrastructure projects. Stimulus hasn't done much for the gold price thus far. We've seen unprecedented Chinese demand for gold all the way up to US$1,800/oz and then all the way down to US$1,200/oz, and it hasn't really backstopped prices. Gold's fundamentals need inflation.

    TGR: What are some gold companies that you're following that would be considered relatively low-cost producers?

    VP: Regis Resources has performed over the last three quarters. It has done a great job with reducing its costs.

    If Newcrest gets its act together and shuts down one or two of its projects, the perception of the company being a high-cost producer would change quickly.

    TGR: We're covering a range of mined commodities today. Are the fundamentals for copper positive? Will the red metal stay above US$3/pound [US$3/lb] for most of 2015?

    VP: Over the next six months, copper is going to stay between US$3 and 3.20/lb. There isn't much fundamental demand driving copper prices. If we look at copper and aluminum as commodities, it's probably cheaper to substitute between the two, with aluminum at US$2,000/ton versus copper at US$7,000/ton. There is currently about 400,000-500,000 tons [400-500 Kt] in surplus copper.

    Meanwhile, BHP Billiton Ltd. (NYSE:BHP) is seeing grade declines and cost increases at Escondida in Chile, its main production facility. BHP says it will probably produce 300 Kt less copper in 2016 than it will this year. In general, grades of copper have come down from 1.1-1.2% to below 1% now, and that's a concern. But there are new producers on the market, such as Rio Tinto Plc's (NYSE:RIO) Oyu Tolgoi mine in Mongolia. That's a big player in a weak market. Next year is probably going to be a transition year for copper; 2016-2017 will probably be a better time to be a copper producer.

    TGR: What are some copper miners operating in Australia?

    VP: OZ Minerals Ltd. (OTCPK:OZMLF) [OZL:ASX] and Sandfire Resources NL (OTC:SFRRF) [SFR:ASX] are our two biggest listed copper producers outside of BHP and Rio Tinto. We have a strong Buy recommendation on OZ Minerals with a valuation of AU$4.80. The share price is currently around AU$3.10. OZ has spent about three years getting its mining operations ready for a bigger open-pit and underground operation. It spent a lot of money on predevelopment work. With that work finished, cash flow should improve dramatically over the course of 2015 and 2016. OZ also produces byproduct gold from that same operation and should post much lower production costs going forward. In the last quarter, its average copper cash costs were around $0.60/lb.

    TGR: What about Sandfire?

    VP: Sandfire is in the same boat with cash costs around AU$1.15/lb. It is a solid, high-grade producer. It will be mining from three different underground operations inside 12 months. It is expected to maintain a 5% copper grade for quite some time, so its cost of production should stay around AU$1.20/lb. It produces good cash flow and is certainly one of our preferred equities.

    TGR: Moving from copper mining to nickel mining, how is the ban on nickel concentrate exports from Indonesia affecting the fundamentals of that commodity?

    VP: The Indonesian ban started on Jan. 14, 2014. People panicked because Indonesia is a big supplier of nickel concentrate to the Asia Pacific market, particularly China. The nickel price went to US$20,000/ton from US$14,000/ton over five months. The panic wasn't justified because the Chinese had bought a huge amount of nickel concentrate in advance of the ban. Chinese stainless steel producers, which use most of that nickel, were probably in much better shape to handle an Indonesian ban than the stock market expected. Consequently, we've seen the nickel price fall over H2/14.

    Since August, London Metals Exchange [LME] nickel stocks have gone up by about 30%, which suggests a surplus, and producers, in general, have maintained production. But most of the demand is in the Asia Pacific region where we've seen nearly 10 months of zero supply from Indonesia. By April 2015, we could be in another period of technical shortage in the Asia Pacific region, much as we saw with aluminum. There was a big increase in aluminum LME stocks throughout 2013 and into 2014, but premiums in the Asia Pacific market for aluminum have been US$300-400/ton above LME. This is likely to happen with nickel, too. I'm bullish on nickel at current levels. It could move back up to US$20,000/ton. A few of our nickel companies are extraordinarily cheap for the cash flow they produce.

    TGR: What are some of those nickel names?

    VP: The big company here is Western Areas Ltd. (OTCPK:WNARF). It's a producer in Western Australia with high-grade deposits running 5-6% nickel. And with a market cap around AU$1B, it's a robust company for domestic and international institutions to buy because there's always liquidity in the stock, and it is an exceptionally good producer. Those are the two major ones I would look at.

    TGR: Another commodity that you follow is graphite. What's your outlook for graphite, given its growing use in lithium ion batteries, permanent batteries and refractories?

    VP: I'm probably not as bullish as others. Graphite is a bulk commodity. There are plenty of graphite resources around the world. A company with big resources is Syrah Resources Ltd. (OTCPK:SYAAF) [SYR:ASX], which has over 1 billion tons [1 Bt]. The graphite market is still developing. And forget graphene as an investment thesis because demand from the graphene-related technology will be low for the next three or four years.

    Graphite use in batteries is on the rise but analysts tend to get a bit too emotional about how quickly some of these industries are going to soak up all the world's graphite. Tesla Motors Inc. (NASDAQ:TSLA) is going to produce 500,000 units annually; that demands lots of graphite and lithium, but by the time it starts production it's a 2019 story. Tesla is going to be selective and spread its love around the world. Some Canadian producers will probably supply Tesla but projects in Africa have a big advantage. In general, there are bigger ore bodies there at better grades than anything I see in Canada or the U.S. Companies mining graphite in Africa are going to have low operating and capital costs per ton.

    If a company plans to provide flake graphite to the lithium ion battery market, think again because there are probably 15-20 companies negotiating with the same end users. Bulk graphite production is probably a smarter space to be in long term because it has much lower costs of production, so those companies are going to be profitable at lower graphite prices.

    TGR: In your recent quarterly report, you noted that graphite prices dropped 5-7% in the previous quarter. Should investors expect further price weakness?

    VP: Graphite prices are probably going to be fairly stable over the course of 2015. Let's see what happens after any new production comes on-line.

    TGR: You mentioned Syrah. That company recently announced that it had a memorandum of understanding [MOU] with Asmet Ltd. for 100-150 tons per year of graphite at US$1,000/ton. Your thoughts?

    VP: That's a situation where company management asked: "I have a lot of cash flow sitting in this deposit. How can I maximize the sales volume?" Syrah approached Asmet, a big producer of recarburized parts for engines, and said we can provide you with a very good product that you're paying US$1,200-1,500/ton for now. We can give it to you for US$1,000/ton. Syrah's operating cost per ton on large-volume production is going to be around US$200/ton.

    If a company signs an MOU for US$1,000/ton and that becomes a binding contract, it is going to make a lot of money. Is bulk graphite going to be a growing market? Absolutely. If companies can provide bulk graphite at a low price into specific markets, those companies will make lots of money. If companies are targeting niche markets with battery-grade graphite, their costs of production are going to be high and those companies are not going to make as much money as people think.

    TGR: What is next for graphite companies?

    VP: The next question for a lot of companies is will they have the resource good enough to get financing in this environment? Very few companies are capitalized over AU$100 million [AU$100M]. Syrah and two or three others are around AU$100M, then it falls to AU$50M. Capital costs are AU$100-150M to get into production-two or three times current market caps. It's going to be an interesting 2015 for graphite companies.

    TGR: Is it the same story for lithium? Companies in that space are also largely dependent on offtake deals.

    VP: Lithium is slightly different because there are only a few good deposits. If a company is producing lithium and has a track record in lithium, it is probably in good stead. But there are very few. How many producers are there in lithium? A lot less than there will be in graphite, so there's probably a better market in lithium than there is in graphite at this point.

    TGR: What are the catalysts for lithium? Is it all about the electric vehicles?

    VP: That's about it. We will probably see more electric vehicles sold in 2015 than in the history of mankind-and that number will only go up. Tesla is selling thousands of vehicles per annum, and that's just one of many manufacturers. From BMW to Land Rover to Mercedes, just about every car manufacturer is looking at electrical vehicles. Who is going to be supplying those manufacturers? We have to look at the big Japanese car manufacturers and if a company is not aligned with some of those with graphite or lithium offtake contracts, then it doesn't have much of a chance to succeed.

    TGR: Are there lithium companies that you're following?

    VP: One that is listed here in Australia and heavily owned by institutional clients is Orocobre Ltd. (OTCPK:OROCF) [ORL:TSX; ORE:ASX]. It has been very well owned because there are not many low-cost lithium mines in production and that company has one. Orocobre is a good industrial mineral producer that ticks off a lot of boxes: very good ore body, good location in Chile, good production, low cost. It's a very good little company.

    TGR: Thank you for your insights, Vincent.

    This interview was conducted by Brian Sylvester of The Gold Report and can be read in its entirety here.

    Vincent Pisani has been the senior resources analyst at Shaw Stockbroking in Sydney, Australia, for four years and prior to that served as an institutional dealer at Shaw. He was managing director of Cazenove Australia for three years and for nine years was the director of resources research at UBS. He was a Buy Side fund manager with Prudential and Bankers Trust for seven years.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

    DISCLOSURE:
    1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Syrah Resources Ltd. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) Vincent Pisani: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8999
    Fax: (707) 981-8998
    Email: jluther@streetwisereports.com

    Dec 29 2:54 PM | Link | Comment!
  • Best Of The Best: The Most Popular Thoughts From 2014

    As natural resources bounced all over the charts in 2014, readers turned to the experts interviewed by The Gold Report for insights on what was driving these ups and downs and how they could protect themselves or, better yet, benefit from the volatility. Below are some of the most popular experts featured during the year and some thoughts you might want to consider as you prepare for 2015.

    Steven Hochberg, chief market analyst at Elliott Wave International, drew a record number of readers and comments with his chart showing a pending countertrend for gold. "Many indicators are confirming that we're in the end stages of the rally that started in 2009. Sentiment is one. Sentiment tends to get very extreme at trend reversal points. It is extremely optimistic at highs and extremely pessimistic at lows. The bears shrink down to almost nothing when you're coming into a rally high. Recently, the bear contingent shrank down to 13.3%, which was the lowest in 27 years."

    He concluded: "For the first time in three years, we were able to count a complete declining Elliott Wave pattern from gold's 2011 high. We saw extremes in sentiment that suggested to us the start of an impending gold rally. I think that rally is in its very infancy right now. Ultimately, it's going to carry gold higher. I think gold has upside potential from here."

    Shadowstats economist Walter "John" Williams also saw good news for gold in 2015 as part of his hyperinflation forecast for the coming year. "Fundamental economic activity as measured in areas such as retail sales, industrial production, housing starts, payroll numbers and the broadest measure of unemployment-all those numbers are going to deteriorate. The economy is going to head down as we get into reporting in early 2015. Along with that will come renewed expectations of action by the Federal Reserve to accommodate the financial system, particularly the banking system, and the combination of those factors will, I believe, help to trigger a massive decline in the U.S. dollar. As a result of that, we will see spikes in commodity prices, such as oil. We will see a flight to quality in areas such as the precious metals-gold and silver."

    Former Federal Reserve Chairman Alan Greenspan also lauded the prospects for gold during a presentation at the New Orleans Investment Conference. "Gold, and to a lesser extent silver, are the only major currencies that don't require a third party credit guarantee. Gold is inbred in human nature. Gold is special. For more than two millennia, gold has had virtually unquestioned acceptance as payment to discharge an obligation. Remember, Germany could not import any goods in the last part of World War II unless it paid in gold.

    "Today, China is beginning to convert part of its $4 trillion [$4T] foreign exchange reserve into gold as a partial diversification out of the dollar. Irrespective of whether the yuan is convertible into gold, the status of the Chinese currency could take on unexpected strength in today's fiat money, floating international financial system. It would be a gamble for China to try to buy enough gold bullion to displace the United States' $328 billion of gold reserves as the world's largest holder of monetary gold. But the cost of being wrong, in terms of lost interest and cost of storage, would be quite modest. If China embarks on a gold accumulation program, global gold prices will rise, but only during the period of accumulation."

    Joe Foster, fund manager at Van Eck Associates, had a global perspective on the source of downward pressure on the commodities in 2014. "At the beginning of the year, gold was being driven by risk concerns. Investors started worrying about risk when we saw problems in emerging markets like Thailand, Turkey and, eventually, Ukraine. The Chinese economy seemed to be slowing down. It was less of a supply-demand story and more one of people looking at gold as a safe haven and a hedge against some of the risks in the world."

    He updated his thoughts in a December note to readers with these insights: "Gold companies are in a better position to operate given lower prices; any significant cut in mining production does not appear imminent. With the stability of the global financial system in question, we believe gold and gold shares may help investors diversify portfolios and preserve value if tail risk becomes a reality."

    Jason Mayer, portfolio manager for the Sprott Resource Class Fund, observed in September that "Investors have been reacting in fits and starts, and everyone is still very cautious. I track a number of funds, and I watch how they perform on a day-to-day basis. What I have found interesting is that a number of resource funds in Canada continue to be underweight, particularly in gold equities. I notice they underperform on days that gold stocks have good moves. The generalists out there among the institutional money have little to no presence in various gold equities. For the most part, people have abandoned the space." He predicted that before investors return, they will want to see some upward trajectory. "I don't know if it's going to be a couple of data points that confirm the arrival of an inflationary environment, or the cessation of this disinflationary environment that we've been in since 2009."

    Harry Dent, editor of Economy & Markets and Boom and Bust newsletters and author of "The Demographic Cliff," shared his simple strategy for surviving withdrawals from markets on crack. He advised readers to get liquid. "I think gold is extremely oversold right now. People are very bearish on it after the recent fall, but this isn't the time to panic and sell. It is due for a bounce back up to $1,300/oz or even $1,400/oz. That would be the time to lighten up before it goes down again."

    Chen Lin, author of What is Chen Buying? What is Chen Selling? newsletter, is also busy doing his homework so he is ready when the market turns, something he sees as inevitable. In the meantime he is focusing on companies that can actually make money at $1,000/oz gold. "One thing for sure is that I sleep well at night holding companies that can flourish even at $1,000/oz. And when the bottom happens, companies with cash will be able to buy out the overleveraged companies," he said.

    Bob Moriarty, founder of 321.gold.com, called the current volatility in October when he said: "There is a flock of black swans overhead, any one of which could be catastrophic. The fundamental problems with the world's debt crisis and banking crisis have never been solved. The fundamental issues with the euro have never been solved. The world is a lot closer to the edge of the cliff today than it was back in February." He had some sheltering advice: "The U.S. Dollar Index got irrationally exuberant, and it's due for a crash. When it crashes, it's going to take the stock market with it and perhaps the bond market. If you see QE increase, head for your bunker."

    As far back as March, Sprott US Holdings CEO Rick Rule warned about a bumpy ride ahead. "My suspicion is that we have put in lows in the precious metals and they will trade higher, but not straight up. The gains will need to be consolidated. It will be volatile on the way up. The long-term thesis has a lot to do with the increasing ability of the bottom of the demographic pyramid to increase its standard of living, which involves more commodities. I'd say that the great unsung hero of a rebound in the fortune of commodity producers has been the increasingly constrained supply of resources. The demand side on resources has been very slow because this recovery in the West has been a false, paper recovery. It hasn't been accompanied by capital spending or jobs. It's an interest rate-led recovery with flat auto sales and home starts."

    On the critical metals front, Simon Moores, manager of data for Industrial Minerals, was optimistic because of the possible impact a Tesla battery Gigafactory could have on demand for graphite, lithium and cobalt, perhaps even copper and aluminum. "Should Tesla choose to use natural flake graphite, the demand for battery-grade material could go up 154%," he said. He advised forward thinking. "If we look at the history of graphite prices, or any commodity for that matter, it's in the times of inactivity that we should be preparing for the next boom. We should try to see where new demand is coming from and identify any supply issues. But most people don't. They usually only act once there's an issue, not before."

    Adrian Day Asset Management founder Adrian Day tried to put the gold price in perspective. "Let's not forget where the price of gold was a decade ago: $250/oz. It has done very well to be stuck at $1,200/oz. The number one thing for gold is the dollar, particularly in the near term. The dollar has to turn. Several Fed officials are now expressing concern about the strength of the dollar. If we see several weak economic reports in the next few months, the Fed is going to make noises about continuing to ease. That would push the dollar down and push up the price of gold."

    Silver-Investor.com Editor David Morgan got more personal with his advice in October. He pointed out that he is grateful that he is part of the small minority of people on earth who have a portfolio to worry about. "Money is important, but it needs to be put in the proper place. There is more to life than how much money you can make. Nature preaches balance and when things get out of balance, it has a way of bringing them back into equilibrium. This is most evident in the natural resource sector. We're acting as if the earth is income rather than capital. The result is that we are using up our base capital in the form of forests and water and metal and not replacing them. That is unsustainable. I'm afraid we are going to pay a high price for that. We need to live within our means rather than getting all we can. It's more about what you can contribute, maintain and sustain than who has the most toys."

    This interview was conducted by JT Long of The Gold Report and can be read in its entirety here.

    Streetwise Reports/The Gold Report's goal is to provide you with innovative, high quality investing ideas from the top minds in the natural resources space.

    Starting in January, The Gold Report will roll out new features focusing on more investing insights, expanded company information and new expert perspectives.

    But first we would like to hear from you. How are we doing? What is important to you and your investing future? Let us know. Simply email company president Karen Roche here and tell us what you need to know to be Streetwise in 2015.

    Thank you for sharing 2014 with us and all the best in the new year.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

    DISCLOSURE:
    1) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
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