I think silver is the cheapest metal on Earth.
I'm on record for saying that a few times.
I think it's almost ridiculous to be able to be buying silver, sub $30
an ounce.
First of all, it starts with the secret gallery of the industry.
By looking at the fundamentals.
You never seen a peak in this market at very cheap valuations.
Like we're seeing right now the from a free cash flow perspective.
This companies have never be so cheap and I think it starts from
there. I mean, it's not only from a margins standpoint as well.
Those companies are making money like never before.
Or they'll other part of it that really attracts us is just looking at
the cyclicality of the dilution of capital.
When we think about the issuance of debt in the space.
We're seeing the largest repayments of debt in history of the miners,
at least a history of the data, which it goes goes as far as over 30
years. And so looking at that usually compared with 2011.
For instance.
We see no leverage actually companies leveraging up.
Don't lie prior to the very peak of that of that market.
And this time, we're seeing the largest repayment.
The same happens with the equity issuance Equity showing us, is that
multi-year lows.
So there's a quite a lot of signs from the fundamental sighs.
I think about some other other point that is important here which has
to do with Mas.
We have not seen a significant amount of mergers and Acquisitions in
the space.
Like we saw back in 2011.
There's a good chart that we showed that and it's if the
Beginning we're starting to see that heating up.
Usually, you know, I would say that the miners are very gun.
Shy when it comes to spending Capital.
We talked to some of those, a major companies and they're just don't
want to spend the money into into projects that are not delivering
free, cash flow just yet.
And so it's to Kevin's Point made earlier about the under investments
in space and not only in Precious Metals, but their overall
Commodities would say related Industries.
This is this is a very big problem.
I think the covid situation, really accelerated, a lot of this Supply
problems.
But inevitably we're going to go that way the shortage of raw
materials given the fact the catback Cycles have been in a declining
trend for over decades, not only old farming, but energy and you look
at a base metals and precious metals, we happen to be more on the
Nietzsche side of precious metals, because precious metals also look
cheap relative to what
Seen other Commodities.
It's not only Commodities that are cheap relative to equities.
For instance, the Commodities to equity ratio.
Is that a 50-year low, but then when you look at precious metals
relative to Commodities there also and multi-year lows.
And so we think that monetary Metals will truly benefit from this
monetary and fiscal disorder that we're seeing right now.
And look, those companies are I don't think there is a more contrarian
play than buying gold and
Were in the ground today, I think very few smart money or investors
are capital allocators if they navigating the exploration and
development space of this industry.
And so we thought well, let's build a business behind this.
We financed over 90 deals in the space.
We think there's so much value there to be found because of the
inefficient and efficiency is given the fact that no one is
participating in those markets.
And so I think that allowing us to partner with the geologist, which is
Top geologist in space acquaintance Hani, it really gives us this.
This Edge over I would say a lot of other investors in regarding to to
finding those opportunities.
So we're really looking forward to this as I think it's one of the
biggest opportunities as far as I would say, my career I can speak for
mine. At least I would say cabin as well, but it's very exciting.
What's going on.
It feels like you're holding, you know, winning lottery tickets, and
the market is just not rewarding that accordingly.
It's a true.
Through deep value opportunity in our opinion.
I think that time is today, your question before it was, you know,
regarding why tangible assets today, and it has to do with the lack of
Alternatives of Investments that yield more than inflation.
When you have an environment like this.
It drives you to tangible assets.
And so those companies have been, you know, bleeding capital for a
real long time.
And this is the first time that because of this corporate Behavior
that's being forced by investors.
Was managing met the management of those companies to really be much
more conservative with their capital is, is forcing not only a lack of
exploration and in budget and exploration in general development of
Mines, spending in general, in regards to new projects.
And so all those issues are going to be creating implications for the
supply curve of gold and silver.
And on top of it.
We have this Supply.
Cliff.
Kevin has a really good chart on this showing this Supply.
Wyclef of gold of the top 20 or top 10 major companies in space and
what we find there is that in next 10 years or so, we're going to see
our five years.
We're going to see a major decline of those reserves are going to be
depleted, due to production.
And so when are they going to be looking for new projects to
replenish?
That production pipeline is going to be the key.
So, when you're seeing a fundamental sir, the optionality comes from
number one, the macro Theses, the macro thesis for goal.
This probably is a strong.
Says ever been before and that can drive a lot of the liquidity to the
space.
The second part is the major companies becoming more profitable of all
73 percent of the companies of top 50 miners today are profitable.
And so, the more the profitability drives the Improvement of the
balance sheets of those companies, we may see liquidity towards the
developer and exploration companies in this industry.
And so that's the second form.
And you know, even in a deflationary environment are inflationary
environment, gold camp,
perform very well, which is the optionality for the asset is really
what? Attract us.
I think the only way you could be wrong here in our opinion is if
we're going to be the next one, you know three years or so.
We're going to see organic growth in the economy or in other words no
need for further monetary and fiscal stimulus to drive growth that's
on our view.
I think that when you reach the levels that we have reached as far as
the debt imbalances and valuations in equity, markets and risky
assets.
Those tend to create Reckoning moments.
And so we are very concerned about that part of it.
And so that's that's what drives us to be allocating capital.
And what we think it's going to be the next growth and value
industries.
That would be leading the market in the next 5 to 10 years.
Even I think the chart you're referring to is the one that looks at
the monthly price of gold, which is already above the levels.
Again after the sell-off that we saw recently.
It's actually above the levels.
We saw in the peak of 2011, and if we just apply the same idea that
miners are going to go back to retest the 2011 highs that that really
implies a 60-plus percent returned from here.
Obviously, we think that given the risk and The Leverage to the gold
and silver price.
We think that miners are going to go much higher and on top of it.
The fundamental story is nowhere close to where it was back in 2011.
It's significantly better to a Kevin was talking about the great
rotation in this.
Prioritization to profitability.
If there is one profitable place to be invested in, that's the mining
space in the precious metals and base Metals.
Basically, most of commodity companies are in that space of
profitability.
So we think that that's, you know, that that's a big part of it.
I think the prep that the miners could potentially become the new
growth stocks of the next ten years or so.
And so that's why we like to be taken up risk here and go into it more
illiquid and perhaps more of a deep value opportunity.
T, where we think the liquidity is going to come in to wear or
Investments are today, so, there's certainly a need for exploration.
There's certainly a need for development of mines and with gold and
silver prices going higher.
In our opinion, regardless, if it is through real rates or further
disorder in the monetary, and fiscal side or further amounts of
leveraging, the system.
We think that that's going to be driving tangible assets higher and at
some point will drive also liquidity to the minors.
So, minors.
Our favorite industry right now to be to be long at this point.
I think silver is the cheapest matter on Earth.
I'm on record for saying that a few times.
I think it's almost ridiculous to be able to be buying silver, sub
$30, an ounce, some days even sub twenty-five dollars an ounce is is,
is a huge opportunity in our opinion.
And so, you know, we have, you know, you find a few projects to have a
very large silver discoveries, you know?
Imagine
And the value of those, if silver goes to $50 an ounce, that's knots
too much too much of an ass of a stretch.
If you look at the history of what you just said, which is the golden
silver ratio.
That is at about 70, 70 or so.
I would say 75 or 74 depending on the bay.
And, you know, when you look to that through all history, taking out
that what we saw in March of 2020, which was, I would say, perhaps, a
different period, you know, those are times that are very unique.
In terms of the timing for you to be allocating Capital towards
silver.
I think that if there was ever a time again, to be allocating capital
and silver that time is today and so we are very focused on that.
And in regards to the supply side of silver is also very interesting
because Silver Falls into not only the monetary metal aspect of it of
a trade but also into this Green Revolution situation where it really
fits in
Into as a metal that may serve as as Supply to, to a lot of the
developments in electrification Period that we may see in the
following years, which falls into the fiscal agenda and so forth.
And so we think that, you know, silver is, is it a very interesting
play and something that we are really long.
We have a very large exposure in our in our portfolio today as well.