Legendary resource investor Marin Katusa, founder of Katusa Research, is under quarantine.
He just returned home after conducting some boots-on-the-ground research abroad.
And, as I’m sure you can imagine, the rules about coming back into the country are strict.
On today’s show, Marin shares what mandated quarantine looks like—including all the rules involved… and the penalties for breaking them. Plus, he breaks down his contrarian views on the current gold bull market… and walks us through his process for finding the best deals that turn into big winners. [38:08]
Then: There’s a great separation taking place in the stock market right now… and it’s creating a stock picker’s dream. These are the sectors you need to pay attention to right now. [1:18:18]
- Guest: Marin Katusa, founder of Katusa Research [38:08]
- Educational: The Great Separation of the stock market [1:18:18]
Wall Street Unplugged | 730
The Great Separation is upon us...
Announcer: Wall Street Unplugged looks beyond the regular headlines heard on Mainstream Financial Media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on Main Street.
Frank Curzio: How’s it going out there? It’s July 15. I’m Frank Curzio, host of The Wall Street Unplugged podcast, where I breakdown of headlines and tell you what’s really moving these markets.
Frank Curzio: You know the term I’m sick of hearing? We need to follow the science. I mean how many times a week, every single politician, all in media chat, we need to follow the science. I don’t care what side you’re on, left or right, that’s the term. And when you hear that, I want you to think of one word, it’s a pretty simple word, most of you understand it, but when we hear that on TV the next time when someone, I don’t care who it is or what side you’re on, and they said, “We need to follow the science when it comes to coronavirus,” the word that immediately pop into your head is “bullshit.”
Frank Curzio: When we look at the coronavirus, it’s center stage again, not that it’s left, but now it’s dominating the headlines. Some States are starting to close restaurants, bars in California. We have cases rising new records, especially in Florida, Texas. It’s been those news stories, headlines, top of the news. This has some great news this week on the vaccine front from Moderna and Pfizer. We’re going to go through later on a detail why those two phase one studies were very, very positive. But listening to so many people on television, I mean, the doctors, the so-called experts, politicians and even you’ll hear parents, your friends, I mean everyone’s suddenly a know-it-all when it comes to COVID and then they post it on social media or they talk, to whoever and everything they say is like fact. It’s like a religion to them.
Frank Curzio: You need to follow their advice. They’re right. Like “Dude, you need to wear a mask or you’re going to get the coronavirus and die.” Everyone in Florida is not wearing masks. Look what happened to them. I mean others are like, “Don’t ever wear a mask. You don’t need one.” I mean, the opinions vary so much. And how about some middle ground here? Why is everything in black and white, yes or no? I mean, how about wear mask indoors in all stores, which is mandated in Florida now, which by the way, everyone I see in Florida abides by that rule. Most people in Florida wearing masks right now, even though you’re going to see a little picture of someone taking a picture of a couple of kids on a beach.
Frank Curzio: And everybody thinks “It’s all over Florida, they so irresponsible.” It’s crazy. Even when it comes to locking down States again and those opinions are so far apart to where people are saying, “We need to go at lockdown. This thing’s spreading like wildfire” to where, “Hey, we got to send our kids to school right now, August, next month. States need to open. Disney Parks needs to be opened despite record cases in Florida.” It’s all over the place everywhere. I mean, hearing how the case is surging in Florida and Texas. Hospitals are full capacity, no beds left in ICU.
Frank Curzio: And I got a good reach on this guys because this podcast not just goes throughout the country, but globally. I mean, lots of downloads and just people sending me some research from crazy sites and some of them are already crazy sites. Some of them were like proper sites, but you don’t have the facts right. I mean, guys, hospitals are not a full capacity. There are beds in ICU. Actually, I love the report, which was from yesterday with a journalist and this is from Orlando Health reported that from 50 labs, they’re showing a 98% positivity rate, right? There’s even a new story. And they said, “Wait a minute. Whoa, whoa, whoa, wait a sec, wait a sec. All full. It’s not 98%. It’s 9.8% is the positivity rate for COVID cases.” Forgot to carry the one? What happened there? 98% to 9.8%, I mean.
Frank Curzio: And also in Orlando Veterans Medical Center, the same day said they had positivity rate of 76%. I mean, they question the numbers and the data, it showed of positivity rate for the centers actually 6%. I mean, this is data, right? This is data. This is stuff that we’re making key decisions on that impact lives, and we’re all over the place, all over the place. Let alone, we’ll follow the science. Where’s the science? Because right now everyone is a know-it-all and you just you can’t disagree with anyone or it can’t be opinion-based in saying, “Hey, you know what? I’m not going to wear a mask outside. I feel comfortable.” If that’s your choice, that’s your choice. You should be wearing masks indoors. We should, even though it’s not hardcore proof most people that wear masks, I can tell you, are not them wearing correctly.
Frank Curzio: Because when you’re wearing a mask, you think you’re okay, you go into stores or whatever and you’re tapping things. As soon as you get out of that store, everyone does the same thing. As soon as you walk out of those doors, you take the mask off and you’re touching your lips. So, it’s not to say that the masks don’t work, I’m saying maybe they’re not being used correctly and maybe need to upgrade a mask or whatever it is, but that’s what you’re seeing studies all over the place.
Frank Curzio: I could give you studies supporting both. Masks do work and masks don’t work, and from good sources. But why is that? Why isn’t there like a universal? Why can’t we see, get on the same page here? And why does this bother me so much? Because I’m a research analyst for 25 years, and the information we gather as analysts determines the decisions we make. You guys are subscribers. I take pride in my research. Anyone who’s subscriber, look, because I’m doing newsletter videos that are 35 minutes long, seems like a long time, seems as crazy, the positive rate is probably about 96% and I provide a PDF just in case if you hate the video, but I go through why I’m recommending that stocks using my tools, which I pay a lot of money for and you could see exactly why. Not that I’m going to be right all the time, people are wrong, but you’re going to see my thesis with me in a video sharing my screen of why I recommending these stocks and I could tell you it’s not a simple system that’s, “Hey, you do this, this and this and this.” No.
Frank Curzio: There’s thousands of factors that I look at. Some of them are more key to others depending on the industry, depending on the management team, depending on the company, but you get to see it up front. I take pride in that. Again, I’m getting things wrong from time to time, of course, but my job is to find out all the information possible, question everything, interview experts, do boots on the ground research, talk to people that have a different opinion than me and respect their opinion before coming to my conclusion or my thesis that I’m going to share with literally over 100,000 people who are on my platforms. That’s a big responsibility.
Frank Curzio: When I look at coronavirus, this is a subject that I’ve been reporting on thoroughly since January, particularly that COVID problem in China is much worse than what’s being reported, how the virus is spreading from person to person in January, even though WHO, the World Health Organization told everyone that there is no clear evidence of this, right? They even tweeted that on January 14, of course, they deleted that tweet. January, crazy. And I told you how China is lying to us in February about how severe this is, how fast it’s spreading, how every cell site analyst was dead wrong comparing COVID to past pandemics. They say how this time the virus based on what we saw with SARS and the economy bouncing back, this was different than any anything we ever dealt.
Frank Curzio: We weren’t shutting down full economy. China was fully closed, and I predicted it’s going to result in imminent market crash early February, since China, the world’s growth engine, again completely shut down. Saying how the U.S. would have more cases than any other country which many people, including my friends thought I was absolutely crazy, and so, we just had what? A few COVID infections that was on the West Coast. I think that happened like March, very early March. Reporting to see how people getting infected the most with those who have respiratory problems, those over the age of 60, how kids are largely immune. Everybody’s who’s my listeners, subscribers to the Johns Hopkins site, that started track COVID cases and testing at every country, isn’t it amazing? Now everybody uses it. It’s great. Back then, nobody even heard of it.
Frank Curzio: And this was still early February. Our stock was trading all-time highs, right on market. Now, all this is documented. We provided a timeline on everything I said on the Curzio Research website. My podcasts that I take, they’re archived for anyone to go back to see exactly what I was saying. And guys, I’m not saying this, you know me if you’re listening, I’m not saying this because I want to pat in the back. I wasn’t right on everything. I actually called Jim Cramer because I was so concerned that we could close the stock market. We need to close the stock market. If we’re going to shut down economy, we needed to close the stock market. What I didn’t anticipate is the government will go absolutely insane and spend 12-1/2 times $6.5 trillion handing people checks of $3,000 to families, increasing unemployment by an extra $600 to the point where people were making more money on unemployment than they were when they were working. Sorry. I don’t think anybody anticipated that. But that’s on me, I was wrong on that. Again, I wasn’t right on everything.
Frank Curzio: So, those who have listened to the podcasts for many years, I’m not being arrogant in saying this. I just had access to really great sources all over the world. And I spoke to people who lived in China, giving me the real story of what was going on when they were in quarantined. I interviewed people in Italy who were quarantined and provided videos on that Curzio Research YouTube page, you could see them and this is why I learned about the precautionary measures that were being taken in Europe and Asia where everyone, everyone was wearing masks. We’re just doing that now. They were quarantining people for two weeks who traveled into these countries. We didn’t do that. They were taking temperatures of everyone, temperatures at the airports and they had police in the streets organized, making sure people actually were following lockdown rules. None of that was in place in the U.S.
Frank Curzio: We were like, “Hey, we’re Americans. We’re the best, the greatest country on earth. It’s just not going to impact us. Go America. We’re great.” I mean, it was definitely going to spread here. It was spreading in those areas and those guys had all these restrictions in place. We had none. I did an interview with leading doctors, spoke to infection specialists, who did not have an agenda, need to be on TV every two seconds. And one person, we attended John Hopkins and who was a hedge fund manager, a very close friend, told me a month ago when we were deciding to open up bars and gyms in some places, “That’s absolutely crazy. It’s going to spread. That’s absolutely crazy.” Haircuts, that’s fine. You’re monitoring the people that come in, one at a time. Where I’m getting my hair cut, they have people, they have the appointments set up and you’re waiting outside for someone else to come in which is cool. Bars, the music’s loud, you’re yelling, so much interaction, you’re touching, wear a mask, come on. Gyms, come on, I mean, the class that people take right next to each other.
Frank Curzio: But analyzing more data through February and March, I mean, I was getting several reports from dozens of experts daily to the tune reports of 20, 30 pages long and getting like dozens every single day. And this data was different from what I was hearing in mainstream media. And how different? Let’s look at a timeline of what the so-called experts have been telling us about coronavirus. Okay? Let’s start in January. Since we’re supposed to be following the science, that’s what these guys are doing, following the science. We need to follow the science, follow the science. I love that. We need to follow science. At heads up, I don’t care what side of the aisle you’re on, I don’t care what political party you belong to, I’m just going to read through these and it’s going to blow you away of some of this stuff that’s been said in this timeline.
Frank Curzio: January 8, WHO praises China for identifying a novel virus in a short period of time and says that, “This is a notable achievement and demonstrates China’s increased capacity to manage new outbreaks.” On the 14th, January 14, WHO announces “Preliminary investigations conducted by Chinese authorities have found no clear evidence of human-to-human transmission of the coronavirus.” This is the WHO talking to China. This was going on since November in Wuhan when this was spreading. This is January 14. January 22, Trump responds whether he’s concerned about a possible pandemic. He goes, “No, not at all. And we have it totally under control,” quoting it. Anthony Fauci, January 23, “The U.S. wouldn’t implement to quarantining shutdowns of cities,” like what was occurring in China and he says, “There’s no chance in the world, no chance in the world,” quoting, “that we could do that to Chicago, New York, San Francisco, but hey, China’s doing it. Let’s see what happens.”
Frank Curzio: You’re looking at January 27, the Biden campaign, quoting its top coronavirus adviser, Ronald Klain, praised China for being transparent and candid. Oh, really? This was spreading rapidly for Wuhan since November. You closed Wuhan, but yet you allowed people from Wuhan to travel outside of your country, which spread it all over the world. Transparent, huh? Pretty cool. January 31, Trump says, “Hey, you know what? I’m restricting travel from China,” and man, everybody ripped him. Biden says, “No time for Donald Trump’s record of hysterias and of phobia, fear mongering to lead the way, instead of science.” Love that term again. The New York Times said disease outbreak specialists, they quoted that the Michael Osterholm saying that, “Trump’s decision to restrict travel from China was more of an emotional or political reaction.” Fox tweets, “There’s going to be a deadly pandemic? No.” Yes. They deleted it. This is all January 31.
Frank Curzio: February 2, that a virus has infected 50 million Americans across the country and killed more than 8,200 people this season alone. That’s CNN tweets. It’s not a new pandemic, it’s influenza. This is February 2. Same day, Governor Cuomo, Andrew Cuomo, New York Governor, “We went through this before, Zika virus, Ebola, all of this stuff. Let’s have some connection to the reality of the situation. And as a doctor said, catching the flu right now is much greater risk than anything that has anything to do with coronavirus.” New York City Health Commissioner, February 3, Barbot tweets, “As we gear up to celebrate the loony year in New York City, I want to show New Yorkers that there’s no reason for anyone to change your holiday plans, avoid the subway or certain parts of the city because of the coronavirus.” February 17, getting to the end of this, listen to this, this is good guys. Fauci, Dr. Fauci announced that, “The risk of the coronavirus infection in the U.S. is miniscule.” Listen to how close we’re getting, right?
Frank Curzio: March is when it crashed. We’re seeing infections start hitting early March. March 2, Mayor de Blasio tells New Yorkers, he said, “Hey, just get on with your lives. Get out of the town despite the coronavirus.” Nice job. What happened to New York? The worst hit city by far, most deaths. March 4, Anderson Cooper, Sanjay Gupta said “The flu right now is far deadlier, so if you’re freaked out,” again, it’s March 4, “if you’re freaked out at all about the coronavirus, you should be more concerned about the flu, and you can actually do something about it and get a flu shot.” Nice and easy. March 8 on 60 Minutes, Dr. Fauci, “Right now, the United States people should not be walking around wearing masks.” March 17, Cuomo, “That cannot happen. It cannot happen legally. No city in this state can quarantine itself without State approval. I have no interest whatsoever and no play whatsoever to quarantine any city.” How long has New York been on lockdown now? Still mostly on lockdown, right?
Frank Curzio: By the end of March, and into April, guys, here’s where everyone flip-flops. Again, these are people who are supposed to be following the science, following the data, and the flip flop was incredible, it is a totally different tune. Instead of changing their behavior, “Don’t worry, we’re Americans. We’re going to be fine,” to “Holy shit. Lock yourself inside your house. Don’t talk to anyone. If you go outside, you’re going to die.” People said, if you look at the world, I mean, this is a worldwide damage.
Frank Curzio: This is a damage to the U.S., but this is a damage to the world. You had organizations saying, “Don’t go to church, you’ll have to burn them, but don’t go to church.” WHO says we need to keep lockdowns in place. The person that was praising China, right? The organization praising China, everything is cool and their response is great. Coronavirus doesn’t spread from person to person, even though it’s been doing that for three months in China, which is your job to be monitoring, but China didn’t want to share any information or let any doctors in there. And now, Dr. Fauci says recently, “I don’t think we should shake hands ever again.” Ever again.
Frank Curzio: Now, look, I’m not going over that timeline to throw Governor Cuomo, Dr. Fauci, President Trump, or Vice-President Biden, most infection doctors, I don’t want to throw them under the bus. These guys been sharing their forecasts in the media. I truly believe this, guys, that a huge percentage of everyone listening to this, everyone out there, most people, we want to see fewer fatalities, few infections, we want to return to normal lives. Remember when we used to go to concerts, take your family to the movies, having a drink at a bar, social gatherings. And man, it’s hitting us. It’s crazy. We look at COVID. It’s nothing like we’ve ever seen, at least in a generation, right? There’s no playbook here. And going from “Hey, this isn’t a big deal, stay calm” to complete panic hysteria, worst case scenario, it’s kind of par for the course when it comes to something that scares the shit out of us, right? That’s normal.
Frank Curzio: But for those of you who want some facts and listen to my opinion from someone that’s been talking to great sources, again, feel free to disagree with it, that’s okay. You could do that by sending emails to firstname.lastname@example.org. But here’s some things that I hope will be helpful to you. That’s why I’m doing this. I have no agenda here. We all want to save lives. We all want to get rid of the coronavirus, but the things that can be helpful for you, so there are roughly 3.5 million people who have been affected at COVID in the U.S., fact. That amounts to just over 1% of the population if you’re looking at from 320 million.
Frank Curzio: Of those 3.5 million people, close to 140,000 people as of right now today have died in the U.S., that amounts to 4% of the people who contract it. And that might seem like a high number. But if you look from mid-February through May, nearly 80% of these people who passed away from COVID were over 65 years old. That’s 80% with a medium age fatalities were 78 years old. That comes from the CDC. And overall, when we look at fatalities compared to our total population to percent of people in the U.S. who die from COVID amounts to 0.04%. Guys, we cannot shut down the entire economy with a 0.04% fatality rate. The consequences are enormous. We’re seeing that.
Frank Curzio: But how long has this been going on for? It seems like years. The coronavirus? It’s five months if you counting mid-February. It’s five months that’s it and look at what it’s done to our economy. Listen to the banks, on their calls, not Goldman Sachs. I’ll cover that later in my education segment. But listen to what the banks are saying, that they reported, like it’s gone from “Hey, June was really good to getting better a little bit,” to “it’s gotten worse, the coronavirus.” Saying the only thing that’s keeping this up is you better hope the government keeps spending money because people are hurting. They’re hurting, but the consequences of keeping it closed, depression, job losses of tens of millions of people, bankruptcies, including tons of restaurants that can’t even make ends meet operating at 75% capacity. You want them to close down?
Frank Curzio: Rising crime rates. We’re seeing that across the board. Foreclosures, poverty and crazy things you wouldn’t even think of. Where in China, domestic abuse cases are rising since they’re locked down. I’m not going to even make fun of that or whatever, let’s say it’s true based on their research. Suicide rates rise for every 1% increase in the unemployment rate. I mean, this is Oxford University research. Drug overdoses are rising. I mean numerous studies on stuff that will blow your mind just Google it and look for good sources.
Frank Curzio: The consequences of keeping everything shut for 0.04% rate, which by the way is going to go up, and I’m not saying to blindly open up everything and not track the numbers because death is a measure that we need to look at. Why? Because infections are going to skyrocket. This is the playbook, this is normal. This is what stretching out the curve does. What does that mean it? Well, the curve had tons of cases in the first month, month and a half and we didn’t have the capacity for hospitals and that’s why we’re sending ships with hospital beds on the coastlines, California, New York. Now, we have ventilators in place. There is capacity. We stretch it out.
Frank Curzio: And now that you’re opening up economies, more people are going to get it. That was the goal all along, wasn’t it? Stretch out that curve. We’re seeing hospitals, they have capacity in Texas and Florida, despite what you hear. There might be a couple in Miami and where cases are a little bit out of control, or in South Florida and even Texas. You look to statistics. You’re looking at the people reporting this. They’re saying, “Hey, and a lot of data coming in is false. It’s crazy.” So, do we need to monitor these numbers? Of course. And since Florida is seeing the largest spiking cases, everyone is wearing masks now, everybody. I don’t care what you see or what you hear. Most bars and gyms are closed again. I wouldn’t have opened up in the first place.
Frank Curzio: I’m going to tell you something and you know I’m being real here, since I make fun a lot of Florida a lot of the times since I’ve been living here for 10 years, shell-shocked, still can’t believe people hate to work here. It’s weird. Florida’s getting this right, opening up their economy, more people are getting coronavirus. The average age though is 37 years old, where COVID has a super low rate of fatalities among this demographic. And most of the time, when again, those symptoms are mild. That’s why you’re seeing low death rates as the percentage of the people getting tested and getting these infections. We’re not seeing as many 60-year-old plus people contract the virus now because they’re staying safe and people understand that, “Hey, we can’t be around these people. We have to wear masks around them.”
Frank Curzio: But we look six months from now, Florida’s going to be one of the leading states with the fewest cases and one of the safest states because we have to assume that we’re not going to get a vaccine for at least another 12 months. That means people need to get the coronavirus, that’s going to lead to herd immunity, which is normal. And by the way, speaking of vaccine, Moderna, Pfizer with BioNTech, both would use mRNA technology, something I’m very familiar with, followed it for a long time. Basically, technology creates proteins antibodies that help attack the virus, so it’s using your own immune system to attack the virus.
Frank Curzio: This is the technology that these two companies are using, both release amazing early stage data this week. Pfizer a few days ago, Moderna last night, incredibly promising to the point where Pfizer and their vaccine produced antibodies. They are 1.8 to 2.8 times higher than the levels of antibodies found in recovering patients. Guys, if that’s too advanced, just know that that’s a huge deal, that’s great news. And at symptoms, were not that great. Headache, fatigue, fever, nothing that was life threatening. I’m skeptical about the hype around vaccines, but it must have been extremely optimistic we were going to get one in a couple of months, but these two are very promising.
Frank Curzio: And Moderna, vaccine produced antibodies that block the ability of the virus to get into the cell, which is again this is phase one, early on. Antibodies, same thing as Pfizer, at or above levels of people who’ve been infected with COVID, vaccine doses across the board well-tolerated phase three trials, geared towards people who need the vaccine the most, but, which is important, they had also said that if everything goes as planned, we get the FDA approval, the quickest we can deliver the vaccine or can be available commercially, they just said 2021. They didn’t specify when in 2021, which was interesting, and say, “Hey, the first quarter, early.” No, they said 2021.
Frank Curzio: And I mentioned earlier, coronavirus has impacted America since around mid-February. It’s five months, and I know it seems like it’s long, it’s only five months. But we’re not likely to get a vaccine for at least another nine to 12 months, which means we need to continue to monitor all the numbers including hospitalization capacity, death rates, two most important, and keep people who are older, more people are getting severe cases isolated and safe. And what I’m going to say right now is very important.
Frank Curzio: Because the way… I don’t know why our sentiment is like this, right? Maybe it’s just social media, everyone has opinions, maybe it’s trolls, but we’re under the opinion when we make decisions that there’s no consequence. There’s consequences to every decision we make, every decision we make. In World War II, once we entered the war, it was going to result in huge casualty of our troops, right? But the alternative was to let Hitler take over the world, and none of us will probably beat him, which is not an option, but people are going to die. People have to make those decisions. With coronavirus, there’s no foolproof solution to this problem. We have to realize that. We want to make the best choice possible and closing state economies across the board, it’s not an option. It’s not going to cause a virus to suddenly disappear or like the CEO of Salesforce believes that if everyone wears masks, COVID will disappear in three weeks, which zero data supports that.
Frank Curzio: The virus isn’t going to disappear. Yeah, the numbers will go down, but it’s not going to disappear until we have a vaccine, and we don’t know if that’s a fact or not. We’re placing so much hope in a vaccine even with those positive phase one results that we saw this week. But remember, the quickest the world has seen a vaccine come to market is four years and that was back in the ’60s. So, it doesn’t make sense to have all this hope on a vaccine. You have to play that, “Hey, we’re probably not going to get vaccine here for another nine to 12 months,” which is longer than the coronavirus has impacted us so far, and look what it has done. Talk to your friends, talk to your families. Yeah, you’re looking at the market going higher because the Fed is providing tons of liquidity, spent 30% of GDP so far to prop things up. But man, you’re looking on Main Street, it’s terrible, it’s horrible. You guys know what I’m talking about.
Frank Curzio: Some of your business happen to be thriving, but I know you have friends that own gyms, that own restaurants, a lot of restaurant owners here. But it’s crazy because when I look at New York and New York reported that it had zero deaths for a full day. I think that might have been Sunday or so. Listen, I love the fact that people aren’t dying, but New York’s economy remains closed for the most part and I have to tell you, my friends, people that I know, I was there living close to 40 years, they’re like in a dire situation. Crime rate’s surging, police retiring, the cost of living crazy expensive, which “Hey, you have access to restaurants and bars, but all that’s closed.” What are you paying for? Commercial real estate, holy cow.
Frank Curzio: There’s a lot of people that aren’t generating income right now, paying the high cost of living in a major city, but New York needs to open up. They haven’t opened up yet. They shut down completely because it was so bad there, with the way they handled it, and who knows who would have did better and again, you want to follow science, but all the science is wrong. I just showed you. I mean, who did I mentioned in the timeline, the WHO, CDC, the President, Biden, Dr. Fauci, all the people that we’re following, follow the science, this is what they’ve been saying and how dead wrong they’ve been. Again, I’m not picking on them because it’s something new, but you have to use your common sense here. New York needs to open up slowly. They’re going to see cases spike which is fine as long as they follow the playbook.
Frank Curzio: Florida got a little out of hand, getting in bars and every single restaurant opened and gyms and stuff, be careful. I mean, you want to slow it down, but you have to monitor the hospitalization rates and the deaths, which are in line. You need to slow it down a little bit, so you see a couple of places closed. But as you see those cases spike, it means more people are getting tested. It’s a good thing. And for example in New York, only 60,000 people are getting tested daily in New York right now. Yet in Florida, that number is close to 150,000. Why is that? New York was the most impacted. More and more people should be getting tested. They don’t have the symptoms because they stayed inside, but again, the virus isn’t going to just, hey, disappear, it’s not. So, they got to go through the whole phase that Florida’s going through. It’s going to be a disaster. You’re going to cases spike.
Frank Curzio: What? You’re going to wait for a vaccine. Listen, I hope we get a vaccine. I hope we get a vaccine tomorrow, but use your common sense here, it’s not going to happen, at least for a while. We need more people to get the coronavirus, it’s going to be a good thing as long as it’s coordinated, as long as we’re looking at the numbers. And for some people living in Florida, hearing the stories out there of people not wearing masks, kids partying, it’s such bullshit. Everyone here is wearing masks, hospitals are open, there are ICU beds in most areas. You’re not seeing infected people on the streets, saying, “Oh, I need a bed to open up or they’re going to die.” You’re not seeing that. You’re not seeing that being reported. It’s crazy.
Frank Curzio: We don’t have ventilators, 25% of the population probably could get a serious case coronavirus and they’re going to be covered. We’re in such shortage that we overproduced, no one’s talking about that anymore, right? Ventilators? No. They’re in huge supply, that’s great. But you’re looking out there and the misinformation out there on COVID, and I know you guys have your own shows that you want, it’s insane. Even when I post data on my social media platform, someone’s been covering this and talking to good sources, again, it’s not going to be right all the time, but we have a very good track record so far. Those Twitter, Facebook, YouTube, on my channels. I get angry emails sometimes of people who are just being misinformed, because they saw a picture of a couple of idiots in Florida on a beach with no masks, it means the whole state of Florida doesn’t wear masks. You can’t get into any place in Florida without wearing a mask at the whole entire time everybody who works in these places. Now, it’s everybody, and to stores, there are signs on all the doors, you need to wear a mask.
Frank Curzio: It’s amazing enough, we’re talking about lives, right? And this is political, when you’re looking at Red States who want to open up and Blue States don’t. I mean, each governor should have his own opinion. And why the fuck is this political? Because as governor, basically you’re not doing what you believe is in the best interest of the people living in your State. You’re doing what your political party believes you should do in order to get votes in November, which is completely insane since we’re talking about lives. How could this be political? This is like a difference of opinion. You’re going after Trump because you don’t like him or you’re going after Biden and all that… This is lives, this is the coronavirus, guys, we got to be on the same page.
Frank Curzio: I love the fact that there’s leading doctors across the board are saying, “Hey, you know our kids need to go back to school.” Because if you’re looking at the percentages of kids, it’s extremely low. They’re almost immune to this thing, which is crazy. Are you going to be able to cite a case of a kid getting it? Yes, of course you are, of course you are, absolutely. But for the most part, when you look at the data, it makes sense for kids to go back to school and if you don’t believe it, I’ve seen that on every kid, that’s like across the board, almost across the board. I’m not talking about far left, crazy right, I’m talking about just the Fox, CNN, and NBC, I mean, a lot of them are together on this saying, “Hey, based on the data with kids going back, it makes sense, it does.” And I think it’s like 65%, 70% of parents agree that this should happen.
Frank Curzio: I know the risks. My kid has Crohn’s, I know the risks, but I believe they should go back to school. I know I could take her off from medicine if anything happens. I also had them tested just in case. Everything came back negative because they had mild symptoms, a little bit of a fever. I was kind of hoping they got it because this way it will be over with because if they had it, that means they had it for a week and they were okay at that point, but no, everything came back negative for all of us, which was cool.
Frank Curzio: But man, when I’m looking at this and seeing how this politically information is there, sorry, this intro is a little bit long, but guys, you have to understand people who say we need to look at the science, just have that sign, that flag go up. It’s bullshit, because you’re looking at the science and the science has been so wrong and as a research analyst who really prides himself on research, getting it right, talking to people, a lot of these politicians are not talking to the people that are disagreeing with them. They don’t care what they say. It’s about an election, it’s about getting votes, that’s how bad they want power. They don’t give a shit about you, they don’t give a shit about me. That’s my theme at least for the past month and a half on this podcast. You have to look out for your best interests of you and your family because the politicians do not care. They don’t care.
Frank Curzio: The only reason why they jumped on Black Lives Matters is for votes. They don’t jump on anything to get votes. You have to be aware of that, but the information out there why we can’t be more on the same page based on data that makes sense, it’s just crazy, especially as political, so be careful out there. I want to set the record straight. Someone who’s been following us for a long time, look at my website, Curzio Research, you’ll see the timeline and you’ll see a lot of things I’m right on, a few things I was wrong on. But everything’s archived. And that’s the way it should be. We should all have timelines of things that we’re saying because we need to be held accountable because if you’re looking at the data and you’re looking at a science, you got to follow science. Anyone who said that has been done wrong. So, if you hear that again, just be careful. Just know everything that comes after he says that or she says that is going to be bullshit and you’ll be fine.
Frank Curzio: Moving on. I have an awesome interview lined up. It’s with Marin Katusa, Founder of Katusa Research, regular on the podcast, have him on probably four months, five months. His track record has been insane as someone who has gotten into so many deals, someone that I’ve learned a ton from the past 10 years. Going on site visits, getting invested in a lot of these names that are finally starting to work out incredibly, because he was smart enough to put five-year warrants in these deals and things like that. But he’s going to go over a lot in the gold industry, a lot of information. He’s going to break down the whole industry. He’s going to explain to you how you need to invest in this industry because everyone blindly thinks they should go into gold and go into gold stocks, because government’s going to spend money and gold’s going higher. It’s not the case. Talk to someone who has been in this position himself for this market for the last four or five years, now is benefiting tremendously is Marin Katusa, but you’re going to be interested to hear what he has to say about gold while everyone else is bullish. Again, a little bit of contrarian opinion here, but this is someone who has been dead on this research.
Frank Curzio: I know he’s made his subscribers, and also me, a lot of money in many of these deals, so we’re going to break down all the steps you need, what you need to focus on before you invest, especially in junior minor stocks and he’s also going to give us the scoop on silver and whether he likes that industry as well, but really, really great stuff. And Marin’s quarantined right now. You’re going to hear a little bit of friction, you could hear the interview perfectly fine, you’re going to be good, but he’s actually in isolation because he visited a project outside the country and came in and the laws, he’s going to go over right at beginning of the interview, of how crazy it is if you don’t quarantine yourself, and you don’t separate yourself from everybody else in Canada. I mean, there’s serious laws that if they’re broken, you’re going to get into a lot of trouble. But he’s doing this from isolation, from being quarantined, it’s a fantastic interview, just letting you know, it’s going to be awesome.
Frank Curzio: And finally an educational segment, I’m going to talk about why it’s separation time. What does that mean? It’s no longer about sector investing. World airlines, casinos, cruises and banks are going to go up because we have hopes in the vaccine. It’s going to be about earnings, it’s going to be about liquidity. Who will survive during these tumultuous times? That are probably going to last well into 2021, even if we listen to Moderna who said, “Sometime in 2021, if everything goes absolutely perfect, sometime in 2021, our vaccine will be commercially available.” Well, if that’s 12 months from now, considering it’s only been five months since everything has started with the coronavirus in America, that’s a long time. A lot of businesses are going to suffer, but you’re starting to see separation among the names within these groups. The names that are going to survive and the names who are in trouble and you’re seeing the difference in their prices in their stocks. And that’s where it comes to being a good stock picker and doing the homework and doing a research.
Frank Curzio: Great segment coming up for the educational segment. But first, let’s get to my interview with the one and only Marin Katusa.
Frank Curzio: Marin Katusa, thanks so much for joining us again on Wall Street Unplugged!
Marin Katusa: It’s my pleasure.
Frank Curzio: So, you are in a quarantine zone because boots on the ground research, you left the country in Canada, and you came back… I guess let’s start there because we’re going to hear you on the phone and the reception is good enough for an interview, but I just want you to talk about that a little bit. Not about the project, just the quarantine process, we talked about just before we got online here and went live. It’s kind of crazy, right? The penalties and explain that process to me. A lot of people don’t know how it is in Canada.
Marin Katusa: Yeah, so a lot of people are saying, “Hey, Marin, after three or four days, if you don’t have any symptoms, just go with your life.” And I would love to do that, but you have to sign documents that say the government, the federal government here in Canada, checks up on us, so if they catch us… They are doing it through phone or your cell phone and if they are tracking your GPS and seeing you’re not at the location you’re supposed to be, if you’re going to come out, it’s a million dollar fine or up to three years in jail. And I just don’t want to deal with that. So yeah, here I am. I’m so bored and lonely that I thought what the hell, I might as well even talk to Frank Curzio.
Frank Curzio: So, if anything happens and you did go out and get three years, is it okay if I like hire all your employees and take over your newsletter? Are you going to be okay with that? Hey, I’m your friend. I’m going to let you know upfront, right?
Marin Katusa: There you go.
Frank Curzio: All right, so let’s get into it here because we’ve been friends for a long time, probably a decade now. And I want to start with gold because everyone’s now have seen all the gold commercials, it breaks 1800, everybody wants to invest in gold. But you have been positioning yourself for this moment for a very long time, investing in so many private placement deals, a lot of those that you shared with me that are doing incredibly well now. From someone that’s positioned themselves and is actually seeing a lot of your investments really take off now because you were in it very early stages, what is your position on it now?
Frank Curzio: Because I always get scared when the whole world is on one side and almost everybody would tell you have to buy gold right now when nobody wanted it probably 12 months ago and even well before that, but are you still bullish here considering we’re definitely going to see governments around the world, central banks, they’re going to continue to flood the markets with cash and that’s not stopping anytime soon, but I wanted to get your thoughts now as someone who’s positioned themselves in different tasks again and letting a lot of these things ride, but what do you think about gold now and gold stocks in particular?
Marin Katusa: Okay, so it all comes down to allocation size, your risk. So many people are now going down what I call the food chain, Frank, going to crappier, weaker management teams, riskier jurisdictions, earlier stage projects, because hey, it’s the gold market, right? And a lot of coconuts that we’re trying to do, other types of deals are not coming back to the gold market, so I’d be very, very careful about what’s going on. I’m seeing every buffoon and moron get financed. And you know my stance, I call a spade a spade and that doesn’t make me the most popular guy in the world.
Marin Katusa: The other thing I’d be very, very cautious about, Frank, for everyone listening to this is a lot of the social media and all these guys trying to pump their returns, well, liquidity is a huge thing and so, many guys are going, “Well, Marin, you did so well with Equinox, but look at my deal, I didn’t as good and I don’t charge,” and this or that. Yeah, well look at your deal. It trades by appointment. It’s a $15-million market cap. You got to be very careful about allocation size. What are you buying? What levels? Now, look, do I think gold’s going to go higher? Yeah, I do actually, but that doesn’t mean a lot of this, the deals on the street are going to go higher. How are they structured? Who are they? What is their costing?
Marin Katusa: We can talk about the deals that you’ve gone in with me. It’s a very simple thesis for my subscribers and I get it at the same price as management and then you’re aligned. You’re still in the game at the same price, go with the right people. And, so like my subscribers, we’ve had an incredible run, but I’ve also advised them that, “Hey, we’ve had an incredible run, it’s time to take and get a free ride.” So, if you sell 20% of the position and you got 80% for free, that’s prudent and that smart.
Marin Katusa: And I’m also looking at now other sectors that people are scratching their heads going, “What the hell is Marin doing?” It’s the exact same thing that they were saying to me a year and a half ago when I was going big into gold. So, you’ve got to keep things into perspective, and like you, said with every newsletter writer who doesn’t have a pot to piss in is talking about all the money that they’re going to make from gold. You got to start thinking other things because there’s a difference between gold and gold stocks, actually like two very different things.
Frank Curzio: And it is interesting because we’ve seen gold prices hold up rather well from 2013, ’14 to 2017, ’18, but a lot of gold stocks have gotten crushed over that time. We had a little bit of a bull market, I think, it was beginning of 2016, aside from that. But you’re right, when we see with all bull markets no matter what sector you’re in, right? It’s the shittiest stocks in a bull market you want to buy because they’re going to go up the most, just like they’re going to go down much more than the overall market during bearish times. Is now the time, because like you said, a lot of the lot of garbage companies are getting financed. But when I look at some of the PAs and these studies and again, a lot of these projects where junior minors don’t get developed for over a decade.
Frank Curzio: But two, three years ago, they were based on 1250 gold prices, then they’ve been up to 1450. I mean, if we go through 2000, it seems that some of these projects could be economical when two years ago, they weren’t. Are you looking at from that kind of basis or are you looking at it like, hey, the original price, the original companies in real life are even much more better now and likely to get developed considering gold prices could push through 2000? I mean, let’s start there with the process.
Marin Katusa: Yeah. So, those are more advanced assets if they have like a bankable feasibility study that you’re talking about, right? So, you’re looking at an asset that’s been around for at least five years, it’s seeing at least to get to that level, you’re looking at least $25 to $30, $40, $50 million worth of drilling, so you’ve had a lot of time to look and study in, so let’s just take that, I don’t know if you want to use a real example or not, but you’ve got to lead your team, who’s doing the study? Okay. And then what stage is the asset? So, there’s assets out there that we’re using $1400 gold and economics looked good. But now what happens is, does it refract through yours? Is it? What about cost inflation?
Marin Katusa: Everyone’s forgetting what happened in the last year where it’s just over $600, but the cost inflation, the actual cost to build the mines went up. The governments around the world, they wanted a higher take, the unions wanted a higher take, the royalties, they all wanted a higher takes, the trucks and shovels, they all wanted their little take and thinks that a higher price. Remember, when I took you out to the mines, the tires were trading at $40,000 a pop. You sit there and you’re like, “What?” So, these different things I use, and the guys on the street like the smart guys were using 1450, 1500 to run their economics. Remember, in January, it was 1500.
Marin Katusa: So, the financers, the guys who’ve been around a lot, they’re not using stock prices, and more importantly, if a management team are saying, “Hey, look, we’re going to get bought out because look at our economics at $1800.” The bigger mid-tier companies and the majors, they’re not using $1800 gold, most of them are still using $1400 gold. So, the market is at a wait-and-see-what-happens to gold. Now, I do think gold will eventually go higher, but I’m also pragmatic about it that it could pull back, right? I could see a gold pullback. And I’m fine with that, I actually hope it happens. We’re cashed up and there’s some great value if it does happen.
Marin Katusa: But the M&A and the Mergers and Acquisitions, it hasn’t quite taken off the way people expected because the bigger companies are using $1800 goal because they’re comfortable with the cash flow that they’re getting. So a lot of the stocks have run. And then because of the market caps of these companies, the bigger companies are going well, at $1400 gold, the market caps are expensive. If you use $1800, “Okay, we understand, but we’re not ready to use $1800.” So that’s kind of where the market is at right now.
Frank Curzio: So, what would you tell investors to focus on because majors are going to be a beneficiary, but they went up for a while, they’ve been going up for a good 12, 18 months steady trend upward. Slowed down a little bit. I mean, they’ve been going up and kind of holding steady over the past few months. Royalty companies have surged incredibly, which is just insane valuations, the highest valuations they’ve ever traded at or is it “Hey, we’re being selective in some of the juniors while we’re still finding some ideas.”
Marin Katusa: So, for me, it’s risk mitigation. Like yourself, I’ve traveled the world and I’m really looking at this from a macro perspective. Frank, I’ve done a video and I really urge all your viewers to watch my swap line concept and it’s hilarious. I’ve had so much negative feedback within the industry on the swap lines, yet I’ve had brilliant experienced, super sophisticated guys like Tom Kaplan phone me up and say, “Wow, like, I’ve never thought of it in that way. I really want to talk to you about this.” And I actually recorded a video for my subscriber, sorry, an interview with Tom Kaplan and I talking about it. And I really think with what’s going on in the global macro perspective around the world, I think the big shocker is going to be how the foreign governments are going to treat the foreign mining companies with that gold because gold is money and gold is access to U.S. dollars.
Marin Katusa: And I think this is the first time in my career that I’ve seen analysts across the board be so complacent with basically adjusting the risk tolerance. You’re going to tell me that the risk that you put into a spreadsheet, your discount rate for something in Zambia, Zimbabwe, DRC is going to be the same as in Nevada? Not a chance, but that’s where we’re at in this market, Frank. So, I’ve been around, like I lived on the road for 15 years, man. I’ve sacrificed so much personally to get to where I’m at. And I’m looking at this going, “Yeah, you know what? I wouldn’t bring my daughters here. I wouldn’t bring my wife here. I wouldn’t bring my parents here.” And I think that’s been really forgotten in this market and because so much money is being managed passively through ETFs, so it’s like a fractured market.
Marin Katusa: And I don’t want to get too much into that because I’ve written about it for years. But now you have this fragmented market, wherever and it’s like, “Okay, what’s going to be the next Equinox? What’s going to be the next Liberty Gold?” So, I’m going to go further down the food chain, I’m going to I take more risk tolerance, I’m going to go to Papua New Guinea or I’m going to go to all these different places. Well, I’ve actually been to those places, and I really don’t want my investment dollars there because I don’t think the market has accepted or truly understands or calculated the risk tolerance.
Marin Katusa: The other thing that blows my mind is the gains, the cost of capital, like look at some of these deals that like some of the big streamers are paying up for. If you use $1600 gold, their return is like 3%, so they’re pushing this to their backs because of their cost of capital. It’s just not smart business and when you start calculating potential changes in these negative swap line nations, there’s going to be a rude awakening here, yes. I’m not saying it’s going to happen tomorrow, I’m saying, over the next few years.
Marin Katusa: But where I’m looking at is where the rule of law is respected, where you can just drive up to your mine site and look at things and if I’m comfortable taking my family there, you do like fight through the irony of it. There is this misconception that you have to go to the inner jungles of Africa or some risky tolerant place to make the score. You’ve seen the returns I’ve made, I have outperformed everybody on the street, and I’m not taking any of the risks that the streets are taking. You do not need to take those crazy risks.
Frank Curzio: Well, let’s dig in a little further here, because the five things that I focus on when it comes to investing in a lot of these junior miners, especially are the management team, make sure that they’re fully funded, strong balance sheet. They’re not going to have to raise a ton of cash, at least, right off the beginning. Geography that you’ve been talking about the whole time, right? Also, infrastructure in place. People don’t realize how much it costs to water buildings, roads and lights. Make sure the project is actually good where it could be scaled, but and unless there’s insider ownership making sure they have stake in the game. That’s my playbook, which I’ve learned from you, I’ve learned from Rick Rule, just following you guys around for such a long time and going to projects with you.
Frank Curzio: Take us through this because one of the deals that we’ve actually shared, the private placement in Curzio Venture Opportunities, in one of our newsletters with Equinox Gold, which is a company that you put together. Explain that because to me it’s remarkable and I’m going to pat you on the back here and I love it because every time I pat you on the back, you’re like, “I know, baby.” But what you did for Equinox seriously, it’s going to be painful for me to do, but I pat you on the back because the group of people that you brought together, how you structured this and it’s funny because even I got a little shit from my subscribers in the beginning because the gold market sucked, but now you’re getting economical new high, continue to surge, everything in place.
Frank Curzio: Talk about how you put that deal together because it actually as you talk about that it filters into almost everything that I talked about that you’ve taught me to focus on when you’re investing in these stocks. I think it’s could be incredibly helpful for our listeners.
Marin Katusa: Well, you were actually the initial seat when that happened. I was on the flight back from Pebble. Remember when we were on the Pebble flight, we got it like July 2016 and on that charter plane back, it ended up that David Lowell was sitting beside me. Remember how amazing it was? Remember that dinner? Rest-in-peace David Lowell, but like I’m kind of like my crew these older brilliant minds that I love hanging out with, learning from. And I remember you were sitting beside me and going like, “This guy is drinking more than us.” You’re hanging out late night. You had his dessert. It was 11:30 when we walked out of Anchorage. Remember, it was still sunny. It’s just like a mind twist for all of us.
Marin Katusa: So, then on the way back, he goes about an hour into the flight or two hours or whatever it was. He goes, “You know, man, I really enjoyed this trip.” He goes, “I think you’re onto a monster now.” I said, “Thanks, David. This has been a lot of work. I thank you so much for coming.” He goes, “You remind me of my partner.” And go, “Hey.” He goes, “My first partner in the copper business.” I knew he had an advisor. I didn’t know he had a partner in that copper business early on, and he goes, “He was a ball of energy,” and he goes, “He handled all the business stuff. I handled geology.” And at one point, I think they owned two-thirds of all the copper porphyries in the world. They just made a fortune.
Marin Katusa: Like a lot of people didn’t realize that he was multibillionaire and he was like, one of the down-to-earth guys ever. Someone that I’d loved to model his personality, just how great he was and generous with his time. And he goes, “Let’s do a deal together because I want to be partners with you, because you give me energy.” And I go, “Man, David, my life is so busy right now. I’ve got Altera. I’ve got this another dynasty. I just spun out my own company. I got no staff.” And remember the day before we left, my house flooded. Do you remember that?
Frank Curzio: Yeah.
Marin Katusa: My house flooded. So, I was just like I was up to my eyeballs in stress and headaches. And he goes, “Marin, it’d be really fun. Think about it and let’s do something together.” And I thought about it, I said, “Hey, what happened to your partner? Did it end negatively or what happened?” He goes, “Oh, no. He died of a heart attack.” I’m like, “Oh, no.” I’m like, “Okay, let’s hope that there wasn’t a parallel event there.” And I said, “Look, David,” I go, “Rather than doing a new deal, why don’t I help you solve on your headaches?”
Marin Katusa: Lowell Copper had incredible assets, but it was stuck in permitting and the market cap was pretty cheap. I always wanted to buy it, but it was one of these things like it was so tightly held by David Lowell, Dave De Witt, Marcel De Groot, Catherine McLeod, and the Lukas and the other great names in the game who’ve been around for a long time, and they’ve always finance themselves. And I don’t know if you remember when I took you up to the one’s that’s supposed to be Copper Mountain 2.0 and the vision that I had is when we started Copper Mountain, we created Gold Mountain, which when we were going to sell Copper Mountain, I take that team and build a gold company back then, that was kind of my vision. And then we got kind of stuck.
Marin Katusa: And David loved the idea. I said, “Well, why am I bringing these assets together?” And he goes, “Okay, great. You’re going to run it.” And I go, “No, no, man. I can’t run it.” And then I thought of Greg Smith, who I always had a lot of time for, but we never get a deal together. He was running something called Anthem United and to me, it was like a tool milling agreement in Peru and he was kind of stuck with it, too, because of the whole permitting thing and all that. So, he said he loved the idea. So, as we were working out the deals from the airport we landed, I drove from the airport, I drove David to his hotel.
Marin Katusa: It was within that 20-minute ride from the airport in Vancouver to this downtown hotel. I phoned up Marcel, Dave DeWitt, Greg Smith and Jim O’Rourke, the three majors of each deal principles and I said if we could meet the next day and literally in 30 minutes in a room the next day, there was a photo of it actually, all of us together I took, and they agreed to all the terms. We’ve rendered the money and we called it JDL, named after James, David, Lowell, that was the ticker symbol. And then we went after the first asset, which was Yorzona and then we turned into management to do the merger because we were able to raise the money.
Marin Katusa: So, for my newsletter, we raised $140 million without taking any fees and it went right into the company. That was kind of the advantage that I had over the bankers at that time, not a single brokerage could do that in the business. To give you a perspective, it took two of the largest firms in Canada, two of them combined to work to make 20 million, and we did 80 million on that one financing, so they did 20, I did 80. So, then that’s when Trek was born and I hated the name. That was Christian Milos. It was the only time we ever had a disagreement. He’s a good guy. He became CEO. Greg Smith then became President and Marcel was on the board and that called Jim O’Rourke and they worked together. And the asset was one of those, it was my geo, and David Lowell really liked my geo. The two best geos that are living on the planet today gave it the thumbs up, I’m going to go for it.
Marin Katusa: But like you said, the amount of hate that we got on the street, all the trolls trying to bash it and blah, blah, blah, whatever. Put your head down and get to work, and you saw how much money I invested into it to make it work. So, during that same time, so we’re talking now I guess it was maybe May of 2017, during all these financings because Ross is a good buddy of mine, he likes my style, I put him into all the deals that I would do. And I was in his office, drinking coffee, meeting and I brought up the idea, I’m like “Look you have,” so going back, I was one of his largest shareholders in a deal called out Altera that was doing really well.
Marin Katusa: And towards the end of the meeting, I’m like, “Hey, Ross, I got an idea for you. It’s different, but think about it. You have Anfield.” Anfield Gold, it didn’t work out the way as expected and he has a cash box for about $55 million in cash. I said, “Why don’t you merge that with Trek and become chairman?” And Ross said, “Well, man, I actually have a different plan. It’s about an interesting idea.” And when he shared with me what the plan was, he was going to merge it with his friend Richard Warke’s deal called Castle and I knew the asset. And I said, “Well, that’s a big asset, but it’s not going to be producing for a few years. We’re ready to go. We’re permitted. We’re building it.” And it was really, “I think you better go where I’m going. I’m telling you we’re going to do it.”
Marin Katusa: And Ross sent his crew down, then he went down and he goes, “Look, man, are you open to a three way?” I go, “What? Okay.” We started this with a three way, so there’s a merger of three companies and the merger of two, and then we ended up doing a three way. So we did that many deals 16 months, and Ross became a chairman. But I said, “Let me name it because I hate the name Trek.” So, I remember on the Friday night and I kept emails because Ross, and I said, “You guys will never remember me doing it, so I’m keeping the emails.” And he goes, “Don’t you guys have something better to do on Friday night?” And I said, “Actually, I don’t. I really want to name this.” And I said, “Ross, your first big deal was Equinox. I think this will be your last big deal, so why don’t we call it Equinox.” He loved it.
Marin Katusa: Greg Smith came up with a ticker symbol for EQX, and Ross just took this. He invested somewhere in the order of about $150 million of his own money. He was able to bring Alex Dalla, Richard Warke’s capital, and then it was really Ross Beaty, basically Ross’s takeover. And Alex, he’s done, it’s Ross’s deal, he’s the chairman, he’s the guy, he’s the force of it. Still one of the largest shareholders and this is going to be a million-ounce producer internally, like they don’t have to buy any other deals and they’re fully funded to do that.
Marin Katusa: So it’s an incredible situation and it gives you a real-time perspective of how hard it is, even when you’re doing it, how expensive it is and even if you bring the best people in together, we were trading at like at 0.4, 0.5 NAV for two years, and I kept telling him where I’m like, “This is my number one pick. This is my number one pick.” Now it’s trading a few years 1650 Gold is trading about 1x NAV, but it’s still discounted compared to its peers. If you use $1500 gold, I guess it’s about fair value now at NAV, but if you compare it to another click that we did like B2 Gold that’s run by Clive, it’s a lot cheaper than its peers, but that’s going to change and it’s a great deal.
Marin Katusa: So that’s kind of the people, the projects, every single project that a positive flop line nation. You’ve got, look, man, there’s no one better than Ross in the business and my subscribers’ average cost base is cheaper than Ross Beaty’s by following that pattern. Now, think about that. The guy who’s invested more money than anyone else and he’s the chairman and the market provided you an opportunity to buy stock cheaper than him, that’s how you play this game, right? And it was funny, Frank, like we had so many subscribers saying, “Oh man, this isn’t working out.” And I just keep saying and I go, “Looking at the value of this. This is going to work, but you have to be patient. This game’s not day trading. It’s truly a marathon investment, so that’s kind of the style of what we do.
Frank Curzio: Yeah. And you could see why people were getting upset because the market was surging, right? And they were seeing this position in gold and going, “Wow, I’m sitting here in gold. We’re not doing anything, but the market is surging, with the Microsoft and Amazon is going up 15% a month.” But more to the point here is it checks off all the boxes, guys, and that’s the purpose of Marin going through that story with the management team then of cash, the geography, the actual projects that you put together, the insider ownership, Ross Beaty run the show, and this is 500,000 plus, one of the largest producers and they’re all in costs are at around $1,000, so which is pretty incredible. So great job on that.
Marin Katusa: It’s lower. It’s less than 900.
Frank Curzio: Definitely.
Marin Katusa: And it comes down to it like you got guys that are no longer on the board like Marcel de Groot, Nolan Watson, Greg Smith, Dave De Witt, Catherine McLeod, like Lukas owns both 4% or 5% of the company, Lukas Modine. It was just a great group of guys and there were never any arguments. There was one time that when we were merging JDL the Trek, there was one fund manager that was in there, “You’re the pit bull of the group, what are you deal with them.” And it was an interesting three hour WrestleMania meeting and the deal happened as I wanted.
Marin Katusa: But sometimes, this is maybe one thing that people have to understand. If there’s a large fund that’s shared inside the stock and their cost base in terms of the deal are different than the shareholders, their interests aren’t aligned and that was a big hurdle for the company that we took over beforehand. So many people, like you have these geologists when everyone focuses on their areas of strength, but sometimes you just got to pull back and go, “Okay, who are the players on this chessboard? And what are their interests in this game? What are their cost base? Are they looking to just roll more debt into this and control of the deal and then management are just employees and shareholders are just a nuisance?”
Marin Katusa: So, you’re going to actually and that was something that I took on full handle because my style is, I call myself a positive activist investor where my subscribers are right at the same price as me and I’m the voice for all of us. And you have to be very careful about what type of fees the management teams are taking? What type of bankers are they using? Who are the board? Are they just cronies or are they actually there to represent the interests of the shareholders and moving the deal forward? When you look at Jim O’Rourke and the impact he had on the deal, today, his name’s nowhere on the power deck, because now it’s Equinox and it’s a much larger story, but he was key to early days. David Lowell’s name is nowhere.
Marin Katusa: But let me share about the spin out. So, today, the spin out is going to be worth about $200 million. We financed it is $15 million valuation, and I was being made fun of on the street for doing the deal. That’s make it about that, Frank. And I said, either the copper assets and gold assets that David Lowell, the greatest living geologist, like think about the greatest artists in the world saying like, “Hey.” And you’d know that is trading at half the value of what they put into the ground on this asset and it’s stuck because of permitting delays, it was a no-brainer to me, I wrote this, we will spin this out one day.
Marin Katusa: And then all the Equinox shareholders that were with me, remember when we did the financing, you got a full five-year listed tradable warrant, which is called the Katusa word as Rick Rule calls it. And on top of that, for every 10 shares of Equinox you held, you got a one share of a Solaris spin out. Well, that’s trading at a buck 50 today. Our value on that was I think at $0.20 when we spun it out, right? So, think about all of the dividends that you start getting out when you work with the right people with the right assets and you start, you finance it at the right time.
Frank Curzio: That definitely make sense and really great job on that. So, I wanted to get to two more things really quick. The first is silver, which is a market I know that you cover as well. You’re like me when I see people mention the gold-silver ratio, I think it’s completely useless. At least that’s what I’m getting the indication from when a couple of you posts on your Twitter feed. But silver is breaking out here, I mean, it’s closer to its five-year high where it’s over $19. In its five-year, it was a little over $20, that was in 2016, massive move from the March lows which was trading $12. But I’m not seeing the same move in silver stocks as I’m seeing in gold and that gold price has gone up actually slower than when you’re looking off the bottom when compared to silver. Is silver something that’s attractive to you here? It seems like it’s cheap based on where prices are, but again, it’s not gold and not that many people talk about it as much, but I wanted to get your thoughts on it.
Marin Katusa: Silver is an interesting… they call it the currency of gentlemen, right? The problem with silver is it’s mainly a byproduct metal and it’s the split between an industrial and a precious metal meaning about 65, or whatever the percentage is, it’s used for industrial uses and the global economy has been really bad recently, right? Look, I think there’s a place for silver in your portfolio and, like, I’ve got a whole team that handles the marketing and all that. They’re like, “Look, man, you got to do something on silver.” I’m like, “Why? “And they’re like, “Well, because the market wants it.” I’m like, “Well, I don’t do anything the market wants. I do what I like.” But when I put something out on silver, it’s like the magnitude is wild. It’s like the hardest core. They’re like gold bugs on steroids or on crack, right? They’re just believers in it.
Marin Katusa: But here’s the reality of it. Very few primary silver mines are economic. Okay. I’ve been to many, many, many of them. If you want silver, the way I played it in our newsletter, we had a big win was Pan America. And again, it’s not because the chairman’s a good friend of mine, it’s Ross Beaty. I bought it because it was cheap and we recommended it. It pays a dividend. It had no debt. My cost base was at the lowest point of five years. That’s how I like to do things, but I’m seeing so many early stage silver showings, these little crappy sub 50 million out silver assets getting financed. Those are silver value traps, be careful of those.
Marin Katusa: So, yes, I financed a few silver projects, but right now, I’m risk off, taking a practically a free ride on all my silver positions and gold positions. And people say, “Oh, he’s bearish on gold.” No. If you’re in a position where you could sell 20% or even 25% of your holdings, and you get to keep 80% or 75%, for free? You are stupid if you don’t take that. Now, granted, it may go a lot higher. I’ve left some money on the table, but who cares? It’s about risk mitigation. And Frank, if anyone gets anything from listening to this, whatever my track record is there, it’s not about bragging or pumping my tires or doing that, it’s really just explaining to people that this game can change so fast and look how we saw it in 2016, how quickly that market the window closed.
Marin Katusa: So, be careful when the liquidity shuts down, you could see these stocks go from 15 bucks to $7. Look what’s happened with Berik in the past. Gold Corp lost two-thirds of its value, now as the largest gold miner in the world. I’m not saying that’s going to happen, but I’m saying for your own portfolio, for your own family’s future, risk mitigation is the smartest thing to do and specifically retail guys out there, like everyone, specifically your crowd who’s listening to this, they don’t have the position that they’re locked in in a big way, whether they’re an insider or reporting. You really have to take a free ride as quickly because the key to this game whether the management teams like me or not, part of the success of my career, Frank, is having cash available when the market is down. The bankers can’t raise anything because they blew up all their clients in the past
Marin Katusa: And thinking, going back to Altera Northern Dynasty or with Equinox or Liberty or any deals, you are valuable to these management teams winning a bad market, they know you can raise money or invest in this capital. So, having cash when everyone is fearful, that’s the position you’re going to do it and to do that, you need to sell some off the table when everybody’s pounding their chest. And right now, every banker is excited, they’re flying around even though it’s quarantine, they’re still moving around, they’re zooming around, people are making money again in the business. And that’s when you need to reduce your exposure a little bit, take your money off the table, have a strong float. I’m not saying sell it. I’m not saying I’m bearish. I’m just saying be smart.
Frank Curzio: No, it definitely makes sense. So, we got like two minutes left here. And thanks so much for explaining it all because it does make sense. It’s just a greed factor, and also guys, don’t forget when you’re selling some this, it provides liquidity for you to buy more positions or other things you like. But in two minutes, any ideas that you’re looking at, I know you like to share a lot of those ideas, not necessarily there in your portfolio, people pay you for that, for your newsletter, but I could do some research, but anything that you’re looking at that that may look attractive, gold, silver? Any names that you might want to share that, again, you could just be looking into right now?
Marin Katusa: I got two things. Everyone’s bashing Warren Buffett right now and I find that really interesting, that the greatest investor ever is getting disrespect from the market, yet guys who are holding cigarettes and swearing on their promos are getting like more follows then the legends in the business. Stick to the rules of law and gravity and I’m with Warren on this. This market could go higher, probably will go higher because of what’s going on globally, but there’s nothing wrong with taking money off the table and having a lot of U.S. dollars.
Marin Katusa: Number two, I’m looking at an energy deal and people are like, “Why? I want gold.” And I go, “That’s exactly why I’m looking at this energy deal.” It’s in my newsletter. It’s coming closer to my target price. I’ve been waiting five months to get that target price and so again in my newsletter and I’m saying don’t pay it, relax, the market’s going to get bored. And that’s kind of where I’m looking at. To be a true alligator in this investment, when everyone else is chasing the prey, that’s not the way to play. You want to be just sitting there waiting for the right price, for the right time.
Marin Katusa: And then the other thing is I just got a thing in my inbox about the Frank Curzio 12-day body, so that’s what I’m working on right now through my quarantine. I want to look like you, Frank.
Frank Curzio: I’m trying to get in shape. I’m trying, buddy. So listen, as always, thank you so much for going on the podcast. I know that you’re doing this in quarantine, and by the way, you know how close we’re friends ante, so if you need anything. If you need your Playboy magazines or whatever, I promise I won’t tell anyone. I’m not going to tell anyone. I’ll send them to you because I’m your friend. I’m there for you, buddy, no matter. We all get it, I understand, but just wanted to let you know, because I’m always a good friend when it comes to stuff like that, but-
Marin Katusa: I appreciate it.
Frank Curzio: All right, cool, buddy, so listen, thank you so much. Thanks for the explanations. It provides incredible value. We’ve known each other for a long time. I love that you come to this podcast. You always provide value and more important, you provide winners and I know a lot of people respect that. So, thanks so much for coming on, Marin. I really appreciate it, buddy.
Marin Katusa: Stay well, buddy.
Frank Curzio: All right, guys. There’s always great stuff from Marin. I mean, I love that Equinox story. That was fantastic. A little bit long, but it’s important that he went through that to show you the steps that I told you about. And it’s important because this is an industry when it comes to the resource sector, the biggest scam industry that I’ve ever seen out there with utility tokens and Crypto and that’s how bad it is. I’ve seen people who are trying to just feed off of so many people in these crowds and having these major conferences, but some of these deals are just a joke. The promises that they make, these people who are doing these deals, make a fortune and hopefully if gold goes higher, everybody makes money, but if it doesn’t, they make money and nobody else does.
Frank Curzio: And to see if first hand of how much it takes place in that industry, it’s important to listen to the right people. I’ve been fortunate, Jeff Phillips, Marin Katusa, Rick Rule, and these guys have introduced me to some of the leading CEOs of the whole entire industry and certain CEOs of majors, who are taking trips around it. You have to go through that process and I’m trying to help you avoid it, because I’m telling you nine out of 10 times, if you’re going to go into a private placement in this industry or you’re going to buy a stock and Marin will say, “You don’t have a crazy bull market,” when everything’s going to go up, you’re going to get murdered because most people don’t care.
Frank Curzio: And not only that, you’ll see people… biggest red flag to me is when you see someone, “Hey, this is the best project and I’m on the board.” Next thing you know, three months later, they’re pitching you on something else and they will pitch me on marijuana when marijuana was great, they’ll pitching me on Crypto when Crypto is great and Blockchain technologies and mining and all that stuff like data mining. And I’m like, “Wait a minute. If someone’s investing in your company, why are you focused on other things?” I mean, it’s crazy, but you see this a lot.
Frank Curzio: They go to areas where they can make money very, very quickly, and we looked into junior resource companies, remember one out of every 3,000, this is from Rick Rule, one out of every 3000 projects from the point you put a stick in the ground and say, “Here, we’re starting doing studies on this land to the point where you actually are producing mine?” It’s only one out of every 3,000. Think about that next time you go to PAVAC or any other conference which is pretty, pretty crazy.
Frank Curzio: So again, questions, comments, feel free to email me email@example.com. I love having Marin on, and I know that he’s made a lot of money for my subscribers. Equinox Gold, we were able to get into that private placement. I sent that to my Curzio Venture Opportunities subscribers where private placements are open to them. I’m going to be coming up with a couple of more private placements in the next month and a half. Some things I’m looking at and gives you access to that. Again, I can’t collect fees, just like Marin can collect fees. I could only do the introduction there. These are the deals that are vetted by me, Marin Katusa, Jeff Phillips and be very careful before we get into making sure that they’re structured correctly.
Frank Curzio: Again, we don’t collect fees or anything on this. I don’t, Marin does in his newsletter writer, so we want to make sure that our only benefit is if you make money on these. But Equinox Gold has been very good for Marin and that’s also done good for Dollar Stock Club members, which are up pretty close to triple digits on that stock since last time he came on. So really great stuff. Love it.
Frank Curzio: Now, let’s get some educational segment which is about separation. Okay, what does that mean? We’ve seen sectors when we get good news on the coronavirus, like we’re seeing now, like today. We’re going to see cruises go high or travel stocks go high, all these stocks that have been impacted the most by COVID, those sectors are going to go higher when we have positive news, right? Just like they’re negatively impacted as this takes longer and longer, where they got hit the past couple of weeks as more places are deciding to close down and we’re seeing cases spread.
Frank Curzio: But an interesting trend is taking place. Look at the banking industry, right? Goldman came out today reported record quarterly net revenue in their investment banking business. Could the record quarterly net revenue for both equity and debt underwriting? This is something if you’re a subscriber to my services, you should be very familiar with that this is going to happen. Why? Because Goldman is not leveraged to the consumer, like traditional banks. They are leveraged to the stock market. They are leveraged to volatility.
Frank Curzio: In other words, the more volatile the market is the better their systems work, which basically front run the market, which you all know. They don’t care about what stock they’re buying, or who’s running that company. They’re able to see all the orders in the market and act a million times faster than everybody else. Again, it’s an amazing story. I can’t believe that he’s okay with this, but hey, that’s fine, that’s okay. That’s okay.
Frank Curzio: Anyway, that leverage it to SPACs, which are the new vehicle where the new IPOs, just Google that, you’ll know what I mean, Special Purpose Acquisition Companies. They just set up on the exchange as a public entity, and it’s a holding company, like it could 30 million, 100 million, 50 million, whatever and then they’ll go out and buy a private company and immediately, they don’t have to worry about the costs and going through the whole IPO process and they become a publicly traded entity. Draft Kings looking at several, several of these. Nicola was another one. I mean, a lot of that you’re looking at the biggest hedge fund managers and now you have the biggest investment banks are getting into SPACs.
Frank Curzio: Again, everything that they’re looking at. You’re looking at IPOs. I mean, how good that IPOs have been launched been doing? You see that market start to take… Mergers and acquisitions, we’re seeing that, right? Lots of mergers acquisitions because all monster growth markets where the Fed is injecting trillions into our economy and trillions more is coming. That’s going to benefit Goldman, but it’s not going to benefit Wells Fargo, where the numbers are horrible. We’ll be cutting their dividend. CEO Charlie Schwartz said demand growth has largely stalled, it was growing at a nice clip through June. He says the virus unfortunately was also growing. And If you listen to some of the banks, even JP Morgan, JP Morgan, Jamie Dimon said, “Thank God for the government and stimulus spending,” because he’s seeing the trends out there. These guys see the trends of consumers and it’s not pretty, it’s not pretty.
Frank Curzio: You look at airlines. Delta, fantastic quarter considering the market conditions. Cash burns on the 10 billion a year, as close to 16 billion in liquidity. That’s what you want to see. Why? Because the virus, I say in 12 months, we will have a vaccine, and that means Delta is going to survive. I can’t say the same for American Airlines, also $15 billion liquidity but much higher cash burn, all this small airline Southwest is in pretty good shape. You’re looking at American’s still raising money, so that likely need to lay off 20,000 plus employees.
Frank Curzio: Look at rent-a-car companies, Hertz is bankrupt. That’s great news for Avis. Avis is going to take huge market share. You’ll say, “Well, Hertz filed for bankruptcy.” Again, under those bankruptcy laws, they’re allowed to operate, but still, it’s going to be a different business, right? They’re going to have the newest technology, the newest cars, they’re cutting costs, they’re going to have as many people working for them. It’s going to hurt their brand. You’re going to see a difference. Avis was smart. They cut costs a lot sooner than Hertz, and they’re going to take huge market share. They have liquidity. They’re going to dominate this industry, which rental cars is a monster industry. It just got saturated with so many companies. Right now, you saw consolidation in Avis and Hertz buying up a lot of these names. Already recommended Avis in our Curzio Venture Opportunity newsletter late May. The Curzio Venture Opportunities subscribers, don’t get mad because you’re up 35% in just a few months.
Frank Curzio: But if we get a vaccine in nine to 12 months, this stock is going to more than double. The names that are going to survive… Think of the dot-com era, the companies that went bankrupt, the companies that survived. There’s a reason why technology companies had the best balance sheets of the world because they lived through that moment and came close to going bankrupt, but if you go through that process and you get smart as a company, you become lean, you know what to do when the next crisis comes, what you need to cut. It’s an amazing learning experience, if you can get through this.
Frank Curzio: Avis got through it, Hertz didn’t make it. Cruises, casinos, travel-related stocks. Guys, this is what I want you to do during ironing season, pay close attention not just to the sectors, but individual names. They’re going to be reporting earnings over the next few weeks, pay close attention to liquidity because when you look at these sectors, they’ve largely gone up or down over the past few months based on the status of coronavirus. And going forward, assume that’s going to be here for 12 months before we get a vaccine, so it’s going to be about earnings sales liquidity, which earnings didn’t matter now, but sales liquidity is very, very important, because you’re going to see profits come down incredibly. You’ll see sales come down incredibly while we’re closing more places with some of these businesses.
Frank Curzio: And not all these companies will survive within these industries and the ones that do are going to see incredible growth, incredible growth over the next three to five years. That’s where you want to position yourself right now, so be sure. Don’t just say, “Hey, the cruise lines look good. They’re cutting.” No, look at Carnival, look at Royal Caribbean, look at all of them. See which ones… Look at their liquidity and make sure they have enough liquidity to last over the next 12 months because we get a vaccine, these are the names are going to soar. And the ones that don’t have enough liquidity, either they’re going to have to raise money, dilute the hell out of shareholders. If you got to debt, raise money by doing debt markets and pay an insane amount of interest.
Frank Curzio: But if this thing lasts longer, those are the companies that may not survive and when this business starts booming, why is it going to boom because the Fed is spending trillions right now, 30% of GDP to fuel its economy, which is insane and more money’s coming, which means we’re only going to have to operate pretty much at 40% this year in order for GDP to really and all markets to actually grow because the Fed is just, all the policies and stimulus is insane right now, but that’s going to fuel the companies that make it through this over the next three to five years. You want to be invested in those names. You don’t just want to buy sectors or ETFs. Start looking at individual names. That’s what we’ve been doing for our newsletters, and we’ve been nailing it in both, at least for me in Curzio Venture Opportunities and also Curzio Research Advisory.
Frank Curzio: Okay, guys, so times here, we’re launching Unlimited Income this week, if you’re on our email list, you’ll get a notice. If not, just send me an email, firstname.lastname@example.org. Most of you are on our list. Please, if you sign up for that product, you just go to the link that we send you. That’s where you could have a special discount. No bullshit. It’s going to be incredibly cheap guys. Trust me on this. I made it affordable for everyone because this is an area that people are dying for income, rates are going to stay low for a considerable amount of time and it’s going to be trillions flowing into few select stocks.
Frank Curzio: And that’s money that’s going to come out of the bond market, 0.7% of the 10-year which is crazy when you’re looking at 1.7% yield on average SP 500 for the companies that have those safe yields. But it’s not just about yield, it’s not just about income, there’s lots that going to go into the product. It’s going to be run by Genia Turanova, who’s one of the best income analysts out there, and has had several income newsletters over the past 15 years. She’s going to be running this product where we have beta versions going out to some members. The Curzio One members that people signed up for her newsletter, Moneyflow Trader. So, there’s going to be plenty of recommendations already, as soon as it comes out.
Frank Curzio: We’ll also include several special reports showing the mistakes most investors make when searching for income. Please, please, please read all those reports. They’re incredibly valuable. So, I’m launching this this week, in the next couple of days, it will be available to you, very exciting. And of course, we’re going to offer a 30-day money back guarantee for those of you who are on the fence, but definitely take a look at this product, I promise you, it’s going to be worth the value that we’re charging by factor of 10x. When you see the price on this and I’m doing this for you, and this is the product that my subscribers came out that I said, “Hey, what kind of newsletters do you want us to produce?” Income by far 80% of responses, that’s what we’re doing launching this week finally. I’m very excited, so Unlimited Income, be sure to check your emails.
Frank Curzio: Okay, guys, this is it for me. Be sure to check our Curzio Research YouTube page. Posted a lot of videos now. Going to video formatting, more podcasts pretty soon. I’m tweeting a lot more, too, at least three, four times a day and doing live videos, probably two to three times a week. So, if you go @FrankCurzio, feel free to send me a Tweet. But yeah, a lot of great stuff going on, keeping busy and really looking forward to the launch of Unlimited Income.
Frank Curzio: So any questions, comments, email@example.com. Thank you so much for listening. I really appreciate all your support. And as always, I’ll see you guys in seven days. Take care.
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