A Comment -- General Comments From an Expert (A Commentary)

Effect of Trump tweets on gold companies. The volatility of his tweets, like the steel tariffs, has a direct impact on the economy, trade deficit and the gold companies.

Mining. Gold always gets attention, but silver is picking up. Copper and zinc and also picking up, but not uranium. Cobalt is picking up. Discoveries generate a lot of return, like Ivanhoe which made him a 700% return. He's agnostic about the commodity per se.

Gary Cohn quits White House. This creates uncertainty. Constant change and volatility in the White House is bad for the U.S. dollar and good for gold.

Lithium and cobalt oversupply? He was more bullish on lithium last year before the SQM deal. Now, they're allowed to expand their production. There could be a balanced market in the near term. He picks lithium projects in the lower-cost quartile. He used to play lithium and battery elements (anything with lithium on it) in the beta, but now you need to find an alpha play. Make sure the right people know the technology in lithium.

Bitcoin vs. gold. Last year, Bitcoin was saying, "We're a fraction of the gold market," and they attracted some investors, but he doesn't think Bitcoin has attracted the gold bugs.

Unrest in the Congo on cobalt mines? There's a lot of production here. This is one reason why he sold Ivanhoe--political instability in Congo. This will impact the price of cobalt to the upside--it would be good. Remember that 98% of cobalt is a by-product. So, the copper or nickel price really impacts the cobalt price.

Market. The PDAC is one of the two great mining conferences in Canada. The other the Cambridge House International Mining Investment Conference, which is May 15-16 this year. That is good for small mining companies. PDAC is a great barometer for the market. When the big crowds are coming to the conference, the cycle is probably near its end. This show is busy but not overcrowded. The US tax changes are increasing disparity rather than putting more money into the hands of the consumer. Short term, it sounds good for the economy but the deficit will bring a day of reckoning. The fall of the US dollar will probably be good for gold. Gold moves in a opposite direction to many asset classes, but it is not a safe store of value. It moves widely, from $250 to $1800 per ounce. Similarly, real estate doesn’t store value. It can go up, but it also goes down. One of the best ways to guarantee a good future is to pay off your debts.

Market. Is this just an aggressive tactic that Trump is taking or is it the beginning of what people feared when it look like Trump would be president. Maybe it is a negotiating tactic. Trade anxiety is going to filter into the market and he does not think it is priced in yet. It would be hard for the markets to make new highs right now.

Educational Segment. Volatility and uncertainty in political events around the world. The commentary on the Italian elections was all about uncertainty. The key test is whether the market can make a new high in the next few months. We still have the risk of more volatility and of retesting the recent lows. There is not a strong reason to price in a recession right now.

Floating rate notes will do far better in a recession than high yield. FRN-N and HFR-T are good examples.

Market. There are two types of gold owners. (a) a hedge and (b) investors looking at risk/return tradeoffs. US debt is still increasing and gold is a hedge against the failure of the currency. In 20% draw downs in the markets, gold goes up. Equity markets continue to rise and this distracts people from gold.

There is more interest in base metals than gold right now. Copper, zinc and nickel are all up this year. A lot of the interest is coming in from two longer term demand factors: Electrification of Asia and electric vehicles, which will increase demand for all kinds of metals. He has a lot of exposure to lithium as a way to play electric vehicles. Demand is going to double.

PDAC (Prospectors and Developers Association of Canada's annual mining convention in Toronto): the mood here reflects an industry in rebound after being on life support for a couple of years. There isn't ubiquitous capital like the good, old days, but the current market is not too hot, not too cold but just right. The so-called battery metals--cobalt and lithium--are the hot story this year because of strong demand for electronic components including electric cars. Also, lithium is a new, hot investment, so there is no past disappointing history of lithium for investors. Toronto also is the epicenter of precious metals financing, which encourages gold equities. Cobalt can command higher prices if there was more supply, but most cobalt is produced in the Congo which unfortunately boasts human rights abuses such as child labour. Companies in consumer goods are afraid of tainted cobalt and want to control the production chain.

Copper. He's cautiously optimistic on copper which has had a very good year. The price probably continues to rise during this tepid global economic recovery which hasn't translated into wage increases. He's also concerned about Trump's threats to derail global trade.

Gold. The disconnect between gold and gold stocks this year will resolve in the equities' favour. Why? Expecations of the gold industry are so low, they can only be exceeded. Forthcoming quarters should surprise investors to the upside.