Wall Street Unplugged
Episode: 728July 1, 2020

The greatest opportunity for junior miners in a decade

Andrew Horowitz

If you’ve been listening to this podcast for a while, you’re probably familiar with Andrew Horowitz, president and founder of Horowitz & Company. A regular on Wall Street Unplugged, he’s shared profound insights over the years… And today, he does it again—breaking down everything from current market conditions… to the government’s easy money policies… to the possible market effects of the November election. And of course, he shares some of his favorite ideas right now. [19:45]

Then, gold is marching toward $1,800 per ounce. But this isn’t just another blip in a frustrating, years-long bear market. Here are two names that could benefit most from the bullish action we’re seeing in gold. [54:21]

Inside this episode:
  • Guest: Andrew Horowitz, president of Horowitz & Company [19:45]
  • Educational: Is this the end of the gold bear market? [54:21]

Wall Street Unplugged | 728

The greatest opportunity for junior miners in a decade

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: It’s going out there. It’s July 1st. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down headlines and… tell you what’s really moving these markets.

Frank Curzio: We have Adidas, Ben & Jerry’s, Coca-Cola, Clorox, Denny’s, Eddie Bauer, Ford, Hershey’s, Honda, HP, Levi’s, Mass Mutual, Microsoft, Pfizer, Starbucks, Target, Unilever, Verizon. What do all these companies have in common? Anyone? Anyone? Give you a couple seconds. Bueller? Anyone? They all pulled the advertising on Facebook in support of Stop the Hate for Profit movement. I love these corporations. I admire them so much. Suspend your advertising and go out of your way to support such an amazing cause that you care about so much. Man, the hypocrisy here, it’s fucking awesome.

Frank Curzio: Let’s talk about Coca-Cola. Coca-Cola, not only do you sell one of the most unhealthy products on the planet that lead directly to diabetes, but here is a company that has a very long history of having racial discrimination at their company. Paid over $200 million to settle race discrimination suits dating back to 2000. They’re also getting sued, right now, for lying about its recycling process. But hey, let’s drop Facebook. Throw them under the bus. No more advertising. Need to stop the hate.

Frank Curzio: You have Clorox who settles lawsuit because it was only filling their bottles at 80% capacity. A company that intentionally deceived its customers… Also, settled a lawsuit with the EPA, since it lied about one of its disinfectants. It’s used in hospitals. Studies found out that the product didn’t disinfect anything. But hey, Clorox, would throw Facebook under the bus. We’re supporting this movement. And we’re doing it publicly. We want to make a public statement that we’re doing this, because we’re not doing it for ourselves. We want the whole world to know that we’re doing it.

Frank Curzio: Pfizer… Pfizer, you got to be kidding me. Pfizer? Pfizer dropping Facebook… It’s like me getting mad at someone for cursing. They are ranked last among the top 17 drug makers for reputation, who agreed to settle cases over illegal marketing and healthcare fraud. Healthcare fraud, fraud, right? Who, in 1996, conducted an unapproved clinical trial for its drug Trovan. That was on over 200 children with meningitis. Of course, they did this in Nigeria… they thought nobody would find out… where 11 kids died and dozens more were left disabled. Way to go, Pfizer, right? Stop the hate movement. Hashtag… There you go.

Frank Curzio: Verizon, who paid $4 million to settle claims that a third party debt collector made robocalls on Verizon’s behalf to people who were not even Verizon customers. They had to pay $4 million. They probably made over $20 million doing that. But, hey, you got to pay $4 million. You’re okay. They’re cool. They’re a great company. Settled lawsuits for deceptive billing practices, charging its customers for in-network minutes that were meant to be free. Also, settled with the FCC in a, again, fraud… the word fraud… case, where Verizon received excess payments … this is great… from a subsidized program that allowed internet access to school and libraries. They took advantage of that to make money. Hey, pay the lawsuit. Not a problem because all these lawsuits, as you know, they make a lot more money off these lawsuits than they have to pay. It happens all the time. It happens in Wall Street, especially.

Frank Curzio: Then we have the king, which is Microsoft. Holy shit, Microsoft, that tracks information on every person that uses any of their product, right? Office, Xbox, all the computers with Windows… Biggest invasion of privacy ever… You try buying a computer with Windows, which is most of you, right? Most people use Windows, not really Mac’s Safari, but most use Windows. But go through the start process of setting up your computer, and do yourself a huge favor. Please, read everything. Don’t just click yes because you’re so excited you bought that new laptop, and you want to get it to work right away. Just go through it. You’re going to see things like file sharing updates. These are the default options. The default… These are the default. If you don’t change them, these are the options. The file sharing updates, the third parties, notifications all the time… You got that smart add menu come up all the time, targeting adds from third party apps via browsing activity. Microsoft will even give you a unique advertising ID. It says it there. You don’t know that. This ID, those third parties could identify you, especially with apps from the Window’s store. All this stuff is turned on when you buy the… You have to shut this off. Isn’t that amazing? Cortana, setting that up, getting to know you, collecting information, speech, handwriting patterns, typing history… That’s not creepy.

Frank Curzio: You got to shut this stuff. You’re required, in that stuff… When you get a new computer, you have to click off, off, off. The default is all this stuff is on. They’re going to share everything with everyone. That’s Microsoft for you. But hey, throwing Facebook under the… stopping advertising. Stop the Hate movement… You have to be kidding me. What’s going on with these companies? And it’s always got to be public. They have to make sure they let everyone know. The CNBCs and the ABC, everybody… Hey, this is what we’re doing. We have to let everybody know. They’re not just doing the right thing. It’s like a famous athlete that visits sick children and brings a camera with them. This way, they can take picture to show how great of a guy I really am. Or like the person on Facebook that always has to write about how their spouse is the most amazing person, which is usually going to lead to divorce within… I think a timeframe, on average, is probably three months. If you really need to tell the whole entire world on Facebook or social media how great your partner is and how much you love them, it usually means you’re getting divorced pretty soon.

Frank Curzio: Then you have Ben & Jerry’s, who have no idea why they’re doing this. They’re on this list. Seriously, Ben & Jerry’s, you’re not getting any points from suspending ads on Facebook, other than lose tons of revenue. Nobody is like, “Hey, I’m buying Ben & Jerry’s ice cream from now on, since they’re boycotting Facebook.” No. Why? Why even make that announcement? Ben & Jerry’s, give me a break.

Frank Curzio: Seriously, these companies are a complete joke. Everything is fake out there, these days. It’s disgusting. If you really want to do something meaningful, if you really care, if you really care and want to support a cause, why don’t you give back all the money you made through advertising on Facebook, and donate those billions and billions of dollars to the Stop the Hate movement? That would be pretty cool. Take it much more seriously, much more sincere. That ain’t happening any time soon. You know as well as I do, corporations need their profits. That’s the way they do it. But we’re in at world that’s so reactionary.

Frank Curzio: Right now, black people must be looking at the world and saying, “What the F? You got to be kidding me.” Here, we have a massive movement, everyone coming together, bringing awareness to racial injustice with the hopes of ending racial discrimination, respecting one another. Every American needs to be treated the same. All great things, right? All great things that so many of us support in America… But now, it’s super over-the-top. We have companies… the public statements, the media companies holding special magazines and putting black people on the covers. All the talk shows are not just talking about racial injustice every day, but the host are wearing black lives matter shirts. ESPN, every interview, racial injustice… Nickelodeon hosted a racism special, educating our kids on how black lives matter, but it was an over-the-top massive event with celebrities. What’s next? A black SpongeBob Squarepants to really throw it in your face? Black people have to be like, “Really? Most of you, all of you, so many of you didn’t support this at all, three months ago, pre-George Floyd.”

Frank Curzio: Yes, the world needs to be aware of what’s going on, and this is a great event, not to the point where so many companies… Media are intentionally making it sure it’s in your face that they support this. “Hey, we are behind this cause. No, we’re really behind this cause. We’re really, really, really, really behind this cause.” To the point when they’re not being themselves. They’re being completely fake.

Frank Curzio: The best example of this is our politicians. They took a knee in tribute to the death of George Floyd. Took a knee and made sure the cameras were rolling. They had the perfect angles. Made sure that they sent this to as many media places as possible. This way, it went viral. Because, “Hey, we really need that black vote this election year.” And there’s a lot of black people spoke out about this, saying it’s a joke. But they even went a step further when you saw Schumer and Pelosi dress up in African kente cloth, which they made sure was super bright so everyone could see it.

Frank Curzio: But I’m going to let you in on something, a little history and culture here. Kente cloth comes from Ghana. In that country, bright colors are associated with times of celebration. By wearing those bright clothes and kneeling, you were actually celebrating the death of George Floyd. You were cheering it. What you should have done is did a little homework on it and dress up in black and red. That’s the type of cloth that’s used to symbolize death, to honor death. But hey, who gives a shit when we’re talking about insulting someone’s culture where this clothing has been associated with for over 400 years? Way to mess that one up.

Frank Curzio: But even better, I saw Pelosi… And this is not Democrats or Repub… Republicans aren’t doing anything either. They’re just sitting on the sidelines not doing anything, which is why they’re probably going to lose this election. At least speak out or take a side. Don’t do nothing.

Frank Curzio: But yeah, Pelosi was holding a press conference about George Floyd. This was a couple days ago. This was June 26th. It was supposed to be about adding George Floyd’s name to any new legislation that’s going to be passed on racial injustice. In the press conference… This is the press conference she held. She said she already recommended to judiciary committee and the congressional black caucus that the only way this legislations get passed… again, this is me quoting her here… if you tell me that this legislation is worthy of getting George Kirby’s name on it. George Kirby… Who the fuck is George Kirby? It’s George Floyd. You don’t even know the name of the person. You don’t even know the name of the person that you’re kneeling with, that you’re starting this movement, and how your party supports this. You don’t even know the name. You got the name wrong. This is a couple days ago. This isn’t like, oh, it just happened and maybe, “Okay, let’s get all the facts, because we really want to jump on this story because we need these votes.” But really? You don’t know the guy’s name? You’re kneeling? Wearing clothes that you have no idea what they symbolize? They symbolize celebration. You’re supposed to be honoring George Floyd’s death.

Frank Curzio: Look at our politicians. You talk about scum of the planet. They can do anything they can to get a vote. If you’re black, you should know this. If you’re white, you should know this. No matter what gender, you should know this. Whatever you are, you should know this. They can throw anyone under the bus to gain power. They don’t care about racial injustice. They don’t care about anyone. They don’t care about the people who is going to vote for them.

Frank Curzio: But you know what? It’s not just our politicians. How many groups have used George Floyd as an excuse to further their agenda? The violence, the looting, the chaos, ANTIFA… Taking over neighborhoods? In the United States, you’re taking… You literally take over neighborhoods? Are you crazy? Ripping down statues of people who actually helped free slaves and were against slavery. Yelling directly in the faces of police officers, most who risk their ass every day to make sure that you’re safe. And they also have families and children of their own that they support. You’re taking out the anger on every single police officer? Really? Every single one? It doesn’t even matter. It’s not racial. It’s black. It’s white. If you have that uniform, you’re getting abused out there and yelled, and they cannot fight back. You steal a cop’s taser, your fight, you resist arrest, you take a shoot at him, and then the guy gets shot, and the cop goes to jail for mur… Are you kidding me?

Frank Curzio: I look at where the crime rates are here, guys. Look where they’re going. It’s insane, the numbers. You’re looking at cops retiring early now. Who the hell wants to be a cop? Do you really want that? Look, I live in Florida. I grew up in New York. Guns are not legal in New York. In Florida, they are. I still don’t own a gun. I’m thinking about getting a gun. I truly am. And I’m not a paranoid person. I’m not scared, but it’s my family. What are you going to allow? Are we going to be able to call police where they’re going to show up? Because police forces are going to shrink tremendously, in the face of rising crime in every state, across the board, just about. It’s pretty scary.

Frank Curzio: I just love how over-the-top we get, how everyone suddenly cares about racial injustice, when so many of politician and corporations really couldn’t give a fuck about George Floyd before this. In the end, what are they doing? They’re reacting to polls. That’s what politics is all about is polls, like the one taken by Edelman. This is a couple years ago. Basically, a firm that helps companies with their brand, promote their reputations, global communications company, right? That’s what they list themselves.

Frank Curzio: The poll showed 64% of consumers reward firms which they see as engaged in some kind of activism, which we’re seeing now. But even a more recent poll… And this is really serious. That’s why you’re seeing all these companies publicly come out and make sure that they’re saying it to the masses where you’re going to hear it. Because a recent poll shows 87% of Americans would purchase a product from a company that advocated for an issue they cared about, while… and this the big while… 88% would boycott a company they thought behaved irresponsibly, which is the reason why everyone is throwing Facebook under the bus right now. It makes sense. And I’m not defending Facebook, here. I’m just saying the companies that have thrown them under the bus are not… they don’t have the best reputations out there. Come on. We could all agree on that. Those reputations result in their making tons of profit, so I’m not telling you to avoid those stocks, because they’re probably going higher, because they get away with everything. It’s fine. Those are the companies that donate the most money to our politicians.

Frank Curzio: If you look at these companies, the massive settlements of racial injustice… Just love those public statements about suspending advertising with Facebook and all this, but as a black person, how do you not look at this and see complete bullshit, where so many people want to use your movement, this important movement for their benefit or to service their own agendas? It’s sad. It just shows how our country, America… I mean, losing direction, going through some pretty, pretty crazy times. And I hope it’s just because it’s an election year, and I hope it is going to stop, no matter what party gets elected. But man, the shit that’s going on right now, things that I never saw in my life… And I don’t know if I can speak someone who lived in the 60s and the 50s and stuff like that, but right now, holy cow, man. Everybody gets used for everything, just to further their agenda. It’s right in front of your face. They don’t even care. They don’t even care, which this topic is what we’re going to talk about.

Frank Curzio: My next guest, someone you all love, his name is Andrew Horowitz, who is the host of The Disciplined Investor podcast, the second best financial podcast in the world, behind this one. Andrew is a close friend. He’s been doing a podcast just as long as me. We laugh at it now that everyone has a podcast. But someone that I admire, close friend… We’ve known each other for a long time. Incredible entertaining… Loves breaking down the markets, talking stocks. Again, a lot of the stuff that I talk about relates to your investments. It relates to the election. What’s going to happen if a Democrat gets into your investments? What’s going to happen if Trump gets reelected? This matters. What’s going on right now matters for your wealth. The only thing you need to care about… not the only thing, but the most important thing is that generational wealth is how do you make things better for you and your family? This stuff matters. I don’t care if you’re Republican. I don’t care if you’re Democrat. Whatever… What’s going on right now, even if you’re part of any party, is pretty disgusting, and it’s going to get a lot worse as we approach November.

Frank Curzio: Andrew and I are going to break down that part, how it relates to your investments. Going to also share, like he always does, his favorite ideas. He’s got a pretty good track record, so definitely listen up. In my educational segment, I’m going to break down the huge breakout in gold. I’m not talking about prices that are now at $1,800. We’re floating at $1,700. Almost hit $1,800, back and forth. Price has been gradually going up slow, but the breakout is now in junior mining stocks, which are on fire. When you have a market like this with junior mining stock… And many of you have not seen this because it’s been such a horrible market in gold for such a long time, outside of the last 12 to 18 months. You talk about five, six, seven years, since 2011, the end of 2011 and 2012, it’s been so horrible, but when you go through these markets where you have bullish times, in this cyclical industry, these companies are not ones that go up one 1X or 2X. They go up 5X, 10X, 20X, and especially with the downfall.

Frank Curzio: The biggest decline we’ve seen in history when it comes to this stock, one of the worst conditions… This comes from great people like Rick Rule, who have been in these markets for over 40 years, saying that that downturn from 11 to 18-ish, wherever, one of the worst he’s seen in his 40-year career, and now it’s reversing. We saw the majors do very well. We saw the royalty companies doing well. Now, I’m going to tell you why junior mining stocks… This is probably just the beginning. You still have plenty of time to get into these names that are down tremendously, tremendously from their all-time highs, but they are hitting new 52-week highs, and it’s still time. You still have time to buy a lot of these names that have huge, huge upside. I’m going to share some of those names with you in my educational segment.

Frank Curzio: Before we get to that, let’s bring in my buddy, money manager, stock analyst, and owner of a very large boat. He never invites me on it, for some reason. I’m going to ask about that in the interview. Let’s get to the interview with Andrew Horowitz. Andrew Horowitz, thanks so much for joining us on Wall Street Unplugged.

Andrew Horowitz: Hey. Always a pleasure. By the way, Frank, I love your daily live videos on Twitter. That is just something.

Frank Curzio: Oh, thanks, man. We use-

Andrew Horowitz: Yeah, doing a great job.

Frank Curzio: Yeah. You can thank the guy who is taping this for us, who helped me out with that technology, Garret. Yeah, it’s just been amazing for us so we could share the screens and education people. It’s resulting in a lot of people signing up. It’s pretty cool. I really appreci-

Andrew Horowitz: It’s also the educational component. One of the things I’ve been doing is this Monday popup Q&A webinar, where we do it through a Zoom platform, through webinars. Anybody is invited to come and sit in on a quick recap of what’s going on in the week and then ask any questions they want. It’s totally jam packed, up to the level of my subscription of the webinars, each and every week. People are really, I think, yearning for that kind of information. Don’t you think?

Frank Curzio: Yeah, I think so. But people don’t have access to the things that we have access with, that we’ve been doing this for decades, especially our research engines that we pay a lot of money for and stuff. I could see the debt that’s due on any single company in 30 seconds, over the next five years, and the percentage of how much generate cashflow. We see this stuff so quickly that I think when you just have Yahoo Finance or a couple of search engines or something, I think people really appreciate it. Yeah, that’s good. Hopefully more analysts keep doing it. I know you’ve been doing it, too, and doing a great job.

Andrew Horowitz: Yeah.

Frank Curzio: And now in this market where, you’ve mentioned it before we got on the air, nothing is normal or back to normal, except for the stock market. What’s going on? Can this continue? I’m just going to throw one thing at you because I know you love the economy, we always talk about it. We looked at May. Personal spending up 8.2%, but yet May personal income down 4.2%. You just got to think about that for a second, guys. People are generating less but spending more. Why? Because the government is handing out checks. Can this continue? Because now we have this… it’s not a second wave of coronavirus. This should be expected. We’re letting more people out. More people are going to get it. We don’t have a vaccine for it, so we have to develop herd immunity. We don’t know, a vaccine could take 12 months, 18 months. And we all know that we can’t just close the economy and everyone stay home for six months. That’s going to be more damaging than ever. What are your thoughts on what’s going on? And can the market continue on this road of… it’s not even a recovery. We’re trading at all-time highs, pretty much, right now.

Andrew Horowitz: There is a total disfunction when it comes to trying to understand what the numbers are for the stock market and with the economy. The problem is that there is an inability for any analyst to properly predict, right now, the information with regard to the economic analysis, because it’s almost like there’s a lot of data points that have been created out of mid-air, all of a sudden, that are not allowing for normal calculation. As such, there is this question of, hey, wait a minute. If we are going to open up, and if we do see a V recovery or rolling Ws, which we think is more likely, eventually, maybe 2022, we’re going to be back to, quote unquote, normal. Why not just put the money in the markets right now, find decent stocks that can withstand all the problems and pressures, and with all of the excess stimulus that’s being pushed in… I mean, we’re talking about multiple of trillions of dollars, not just here in the United States, but around the world. That liquidity that’s being created out of thin air and is trickling down into various markets, whether it’s the bond market or the stock market, I think there’s a euphoria out there.

Andrew Horowitz: Plus, you have to realize that, by the very nature, there’s a lot of gamblers out there, and there’s not a lot of places to gamble right now, so they’re putting the money into the stock market, which is an open and running gambling process on a daily basis. At least, that’s how they’re looking at it. I think that there is a lot of optimism built in. Every time we get a good number, things really do well. A bad number is like, okay, it’s not so terrible. We’re not really worried that we see this major spike in Texas and Arizona and Florida, and that the EU is saying, “Hey, United States, you can’t come here,” and New York, New Jersey, Connecticut saying, “Hey, you know what? Hey, we don’t want you flying in here. If you do, you have to do a 14-day confinement or quarantine.”

Andrew Horowitz: There’s a lot of mixed messages that are happening here, but I think what the one thing that is the base of all this is that the hope for recovery sometime in the future, whether it be a natural process or pushed in by the government, is helping the markets that may be totally, entirely dislocated from the economic reality, which is a little weird. I don’t know if that’s going to really come back to normal any time soon.

Frank Curzio: And he is the six million dollar question, that’s not a question here. How do you position your clients? Because, right now, you’re seeing more money on the sidelines than ever, right, in money market accounts?

Andrew Horowitz: Mm-hmm, yep.

Frank Curzio: And it makes sense, because you’re a retiree, and you’re giving advice to these people. It’s hard to tell them to buy Disney at 240 times for earnings. It really is trading at 240 times earnings. That might be cheaper than expect, because I have no idea how they generate earnings, right now, with everything closed. And you’re looking at casinos. You’re looking at cruise lines. You’re looking at airline, where now, at least your seeing separation where you have the Delta and the Southwest are in much better shape than the rest of the industry in terms of the balance sheet. But what do you tell your clients? Because it’s almost like you’re basing it on the hope that the Fed is going to continue to extend check, which end July, extend the small business loans, continue to buy bonds in this market, something that we haven’t seen, ever. Right?

Andrew Horowitz: Yeah.

Frank Curzio: We saw a little bit, but just in finance. They backed the finance. Guys, just to put it in perspective, you notice, Andrew, that TARP was originally $700 billion. They only used $480 billion of that. We’re at $6 trillion in monetary and fiscal, right now, and we’re not even close to being… That’s 30% of GDP.

Andrew Horowitz: 30%

Frank Curzio: What do you tell your clients? Because you’re basing this on something that you’re hoping that has to happen, because you have to buy stocks that… I mean, I thought Shopify was expensive at 2,500 times forward earnings. Now, it’s at 5,000 times forward earnings, because it doubled. What do you tell your clients?

Andrew Horowitz: There’s a couple of different things. First of all, we’re flying blind. Let’s just get that straight. We are totally flying by instrumentation only, right? The ILS, I think it’s called. Systems that are going on right now, we don’t know. FedEx came out with earnings, and they blew past estimates by a really wide margin, but I looked at this. From what I saw, that the FedEx earning that came in at $2.63 cents a share, they were 91 cents above estimates, and they saw a little bit of slowdown on revenue. They’re not putting out guidance. Last year at this time, they were at $5 bucks a share. So they had a 50% cut in their overall earnings. Stock is trading at about $155 dollars a share. Last year at the same time, it was $170. Stock is only down about, what, 10, 12% from where it was. Meanwhile, their earnings are down 50%. That’s a little crazy.

Andrew Horowitz: What I’m telling clients is that we have to do a couple different things. First of all, we do this whole one foot in and one foot out concept, where we’re going to play along, but we’re not going to be crazy about this. We’re going to be satisfied with getting a decent return, having a lower exposure to equities, trying to position ourselves in a way that is not going to get out heads chopped off in the even that something happens that mimics reality versus what we’re seeing now, but at the same time, being a part of it because it’s not a short-term game.

Andrew Horowitz: The second thing is I think that you have to realize is that, from time to time, in out trading portfolios, in the managed growth strategy that we have, we do some hedging. We’re short the S&P against long position of equities, right now. We have a small position short, for example, Roku recently, and we have a short on Shake Shack. We have longs on, for example… Let’s see what was the long that I was looking at recent… Oh, we have a long trading position in, for example… I’m drawing a blank on the name. Anyway, we have a mixed bag in our portfolio, one foot in, one foot out on all sides, and a little bit more of a conservative posturing, right now, for our other portfolios. Clients are really happy with that. We don’t need to necessarily get all the return of the S&P 500, what everybody is always talking about, as long as we don’t take the downside either.

Andrew Horowitz: We’re positioned that way because these unknowns that we have right now. Frank, if I can’t give you good reason and good rationale for a particular stock or for a sector or for the market itself, and I can’t explain why we are there without saying, “Well, we’re just hoping that this is going to work out,” I’m not doing my job as an advisor. I make sure to keep that really tight.

Frank Curzio: That makes sense, too, because… And that sets it up for this question, too, is even though long names that you’re looking at, what are the next winners in that post COVID-19 world, where you mentioned to me that, “Hey, we already know the stay at home plays. We know that they’re doing well.” We’re seeing a lot of the biotechs really do well. They did well already. They pulled back a little bit. The biotechs associated with vaccine, now that Coronavirus actually… we’re seeing spread again, we’re seeing a lot of those names move higher. But what’s the post plays? Is the Nasdaq deserve to be trading where it is where there a lot of software companies? There’s the Zooms that make sense. The Zoom numbers, yes, it’s expensive, but those numbers were incredibly explosive, that they reported. They’ve been growing like crazy. Good for them. That’s what they want to see. As long as you have that growth, you’re going to have that high premium. But what are the next winners? I guess that’s what all of us want to know.

Andrew Horowitz: I think that you have a lot of things going on, like a FLIR as an example, a company that does thermal imaging. Interesting possibility there for the placement of various devices in whether it’s in casinos, whether it’s in hotels, restaurants, or airports, cruise lines, to make sure that people are not coming in hot, feverish. A company like Trane, the old Ingersoll Rand, which does various heating and cooling for buildings and for homes, whereas you’re going to have a filtration system. Just today, New York said, “Hey, you know what? We’re not really even thinking about reopening dine-in restaurants.” And I think New Jersey, yesterday, said something about they’re holding off indefinitely on opening up the dine-in restaurants. So a company like a Trane… TT is the symbol there. We just started looking at this. The idea about sanitation, cleanliness of air quality, air filtration, it’s an interesting thing.

Andrew Horowitz: Autonomous driving, the whole concept there… Recently, a big purchase by Amazon, trying to get into that realm, where you can have deliveries with people that are not there. I mean just autonomous driving of deliveries or of transportation. There’s a lot of potential winners and losers. I’m having a hard time, though, necessarily trying to handicap all that because you wonder whether or not, once we get back to normal, if a lot of this stuff… if we have a short-term memory, because we do. We do have a short-term memory. We know that. Right? We go through these processes. Remember, back when, that nobody wanted to invest in banks for a while. Then all of a sudden, everybody wants to invest in banks again. Nobody is going to want to invest in cruise lines or airlines for a while, but then time will go by and they’ll invest in those again, and they’ll go on those again.

Andrew Horowitz: I think there are some winners and losers in all of this. The big loser that I see is probably commercial real estate in the metropolitan areas. The winners will be those companies that are building for the de-urbanization process, possibly, throughout the country, where people are saying, “You know what? I don’t want to live in these metro areas.” Restaurant chains are going to have a long time getting back to where it is. Movie theaters are going to be a problem. There’s a lot of, “This one is going to be a problem, but this one is going to benefit, this one is going to be a problem,” and that’s why we’re seeing a buyerficated market right now, whereas the Nasdaq, the growth stocks, the technology, the healthcare, biotech is doing really well. Your oil companies, your banks, consumer staples to a lesser degree are not doing as well. Then in between all that, you have your consumer discretionary that who knows why GAP is up 75% last week. A lot of rumors and things going on there.

Frank Curzio: Kanye West… Kanye West-

Andrew Horowitz: Yeah, well… Yeah, woo hoo. I know I’m buying some GAP clothes, now. But there’s, I think, a grouping of winners and losers, at least, that trying to be handicapped by the market at this present time. But there are some longstanding changes that are going to happen in the next version of the world that we’re in. I think there’s going to be a lot more focus on health. The whole idea of being cooped up, locked down, not able to go out and do as you want to do… I don’t know about you, but this was supposed to be from March to April. Remember? We were supposed to reopen on Easter, the grand reopening. We’re in July. This is much longer than was anticipated getting back to normal. Now, we’re seeing rollbacks in Texas, and Florida, and Arizona, Georgia. But it seems to me that we’re going to be pushed more towards online… markets are telling us that… much more towards software and service, much more towards entertainment at home, and possibly travel locally. That’s why you’re seeing a lot of sales of those Winnebagos. Boats… Can’t get your hands on boats down here.

Frank Curzio: All cars, even cars… Some car dealerships said they’re going to close 4th of July because they have no inventory. People just are not taking public transportation. You can’t really take airline. They’re nervous. So hey, throw everyone in a car and let’s go someplace, because-

Andrew Horowitz: Let’s go. Exactly.

Frank Curzio: It is amazing. It really is amazing to see what’s going on right now. Let’s talk about something that’s going on right now. I had a big rant on it before this, before now, which is the social media. You call it… I think you were mentioning it, day of reckoning. I just love the hypocrisy-

Andrew Horowitz: Did you say-

Frank Curzio: …behind all these companies, all these-

Andrew Horowitz: You’re talking about the sewer media?

Frank Curzio: Yeah, I’m talking about social. Social is-

Andrew Horowitz: Oh, I thought you said sewer media.

Frank Curzio: No.

Andrew Horowitz: I call it sewer media.

Frank Curzio: Social media and Facebook… It’s the same thing, right?

Andrew Horowitz: Right.

Frank Curzio: We’re on these platforms. I see it, as well. I just watch so many people, because it’s just crazy. It’s unbelievable. But anyway, the hypocrisy behind these companies that are coming out like the Coca-Colas, the Pfizers, the Verizons, the Microsofts, and all the racial injustice lawsuits that got launched against them and settled, and all the fraud. I just think it’s amazing. But is this a big deal for Facebook? We saw the regulatory issues with Facebook, and they overcame it. With this, with a platform where everyone is telling you exactly where they are at the second and what they like, what they don’t like, and you have basically, what is it, 30% of the world’s population on it when you include Instagram, is this going to be a trend that’s going to continue, that could really hurt Facebook? Which it’s going to hurt them now. Or is it just like, hey, this is just the flavor of the day, and a lot of companies, of course, they’re not making these announcements. They’re making them as public as possible because they see polls saying that, hey, if you support whatever it is, we’ll… Again, I covered that in my intro. But what are your thoughts on social media companies, including Facebook and Twitter?

Andrew Horowitz: I think what you’re talking about is the idea that or the question of whether or not this is a real revolution or if it’s just virtue signaling by many of these companies that are saying, “You know what? We’re going to pause.” That’s the key word right now, right? “We’re going to pause our advertising on Facebook.” Until when? I don’t know when. Maybe it’s a combination of two things. I think it is some virtue signaling by these companies trying to get in the good graces. The whole ESG thing…

Andrew Horowitz: I also think it’s really good and convenient timing, where these companies need to pull back on some of their advertising, so it doesn’t make it look like they’re doing this because they’re hurting. Right? It’s a really convenient time for Clorox to say, “You know what? We’re going to postpone and cancel or pause our advertising through the end of 2020.” It’s like, “Oh, you’re doing it because you want Facebook to be fixed, and you want to stop all the hate speech and all the misinformation,” rather than, “Oh, wait a minute. Whoa, wait a minute. Are you hurting and you want to clean up some of your expenses?” I think there’s a question there.

Andrew Horowitz: I do believe that Facebook is one of the best… I don’t like it personally… but one of the best places to advertise, because you have targeted advertising. Where else are people essentially providing you all of the information about themselves, where they’re going, what they’re doing, who their friends are, what they like, what they don’t like on a regular basis, where you could just sell the advertising and totally target market them? Facebook has that whole process done better than anybody else.

Andrew Horowitz: A lot of the analysts that are coming out recently have said, “Hey, this is not a problem for Facebook.” I don’t know how it’s not a problem if we have companies like Starbucks and Clorox and the whole litany of companies that have said, “You know what? We’re pausing at least for a month, if not longer, all of our advertising on Facebook and Instagram.” It’s got to hurt. It’s got to be a problem. And Facebook already told us that there’s a problem, time and time again, with the slowdown of their advertising and a requirement to build up, in terms of expense-wise, their overall core grouping to combat this.

Andrew Horowitz: We are entering to a political season where it’s going to be a lot of political advertising that’s going to be spent on that, but yet they may be doing a lot more censorship, so I think the bloom is off the rose a bit for Facebook. I don’t know if it’s going to crater the stock and be the next MySpace. Twitter… There’s much less targeting of advertising available on Twitter. I think that they have some information on you but it’s very, very minor. Maybe their algorithms can pick up who your friends are and start to build a bit of a structure around where you are and what you like and all. But you look at that snap questionable.

Andrew Horowitz: Instagram is still in its infancy of trying to get the advertising, but there you have a much different situation. There, you have a lot more people that are being followed for… People like to follow that particular party, so all they have to do is themselves advertise something, and the buying goes on.

Andrew Horowitz: I think this is a big hiccup for Facebook. Seemingly the markets and the analysts aren’t that concerned. I am hoping, and I’m hoping with a squint because I don’t think it’s going to change, but I’m hoping they do change the platform to a point that there is less hate, there is less misinformation, but I don’t think the probability is that that will last very long. I think the only thing that we have to look at now is the potential for regulators to really get I there and do something. I’m not sure what they’re going to do, but there needs to be some changes. But I just don’t imagine, in the world that we live in, there’s going to be that many changes that’s going to hurt Facebook. There’s really no other alternative. People are not going back to legacy TV advertise, are they?

Frank Curzio: No. You bring up a good point, Andrew, because when you market, it’s usually a percentage of sales, and most companies are seeing a decline in sales, and they have to cut their advertising budget. Where you’re going to see sales explode for some companies, maybe the Microsofts, and software companies, and Amazons, and Walmarts, but most companies are seeing a decline in sales. You’re going to see that. You saw that on platforms on even the bigger names, not so much that the social media is advertising platforms and… and the public groups. That got killed, and it came back a little bit. But yeah, no, it is interesting to see.

Frank Curzio: I know a lot of people own these companies and looking to buy Facebook going to pull back again. Our job is to talk about stocks and everything. We understand-

Andrew Horowitz: By the way, I own Facebook for our managed growth strategy. The reason is that the consistency of earning, the quality of earnings, the growth rates, the comparatives, the margins, the margin expansion, the ability of the company to make money is there. Even though I don’t like the company at all, at all, we own a small piece of it for client portfolios.

Frank Curzio: Let’s move on. I want to talk about two more topics here. One, I want to get your ideas like I always do, but before that, let’s talk about the election. It’s meaningless now to see the polls have the Democrats winning, but if there’s a Democratic sweep, is that price sensitive markets, because we are going to see… Taxes are going to be different. Gun right might be different. Defunding police departments might get even more aggressive. There’s definitely different agendas, just like if… guys who support Democrats or Republicans or whatever. If Republicans win, then you’re going to see whatever agenda. But there’s a lot of things that are going to change, right? Especially with Democratic sweep, which is pricing it in right now. Again, that’s meaningless because there hasn’t been any debates Talk about your thoughts on the election. Say, if Biden does win, are we going to see a big impact on the markets, you think?

Andrew Horowitz: Remember something, that when we were handicapping the last election, the idea of a Trump win-

Frank Curzio: It was so wrong.

Andrew Horowitz: Right.

Frank Curzio: So wrong…

Andrew Horowitz: For five minutes, we were right. Then it was all over because what happened was that Trump came in with all these radical ideas and all these things that were going to happen. Markets freaked out. We did see a drop of the futures on the election results, that locked down the futures for a moment. Then Trump came out at… I don’t know what it was… 3:30 in the morning or some ridiculous time, talking already about tax cuts. The agenda the Republicans were supposed to have, which was supposed to be to rein in the Federal Reserve, to bring interest rates up, to take down the debt of the country, that all turned on a dime into, “You know what? Let’s just have a Federal Reserve that has lower interest rates. Let’s push them to the limit on that. Let’s then go from there, and we’re going to have a tax cut for corporations and somehow benefit the individuals,” which didn’t really play out, but okay.

Andrew Horowitz: Then it’s turned into almost a modern monetary policy, a theory type of government where the spending is more with this administration, even before the coronavirus, than it was with any other Democrat in history. We have a lot of spending that went on. We have tax cuts that went on. There was a big change.

Andrew Horowitz: Now, if a Democrat comes in, and if there is a Democratic sweep, is there going to be a rollback of the taxes? Is there going to be an increase in that? I think that’s what they talk about, but Democrats have really never been able to do that. When’s the last time a Democrat really raised taxes? Very hard-pressed to do so. When is the last time a Democrat reined in spending? I don’t see it.

Andrew Horowitz: Now, if you want to say, “Well, they’ll be more responsible on…,” I don’t even know how the most… I don’t even see how the most fiscally responsible person, at all, right now, could even look at the economy, where we are on the whole, and say we have to rein in spending. It doesn’t make any sense. The economy is running on stimulus.

Frank Curzio: You’re just saying everything to get elected. You’re right. You’re going to say everything, right now, to get elected, but-

Andrew Horowitz: Yeah, so I mean they’re just-

Frank Curzio: There’s no way you could raise, not right now with the economy this bad, and saying you’re going to cut spending and raise interest… Interest rates have to stay low. They have to stay low-

Andrew Horowitz: Yeah.

Frank Curzio: They have to stay on the balance sheet right now.

Andrew Horowitz: I agree.

Frank Curzio: They’re smart about that. They’ll talk them, but again, talking and doing are two totally, totally different things, no matter which party you support. But-

Andrew Horowitz: I won’t even try to get into who is going to win and who won’t, and what is going to be the situation. I don’t really know. Unless there’s a big reversal in taxes and interest rates change dramatically and we pull back spending in an incredible way, maybe that would do something. And it would, obviously. But I’m not ready to call, that being their platform, because to be honest with you, neither President Trump nor Biden has come out with a platform yet. It’s a big rally, rally, “Yoo, hoo. Let’s go. Let’s get it done. The other guy is bad. I’m better.” But we’re not seeing any platforms.

Frank Curzio: Yeah. Guys, if you listen to me, or even Andrew, when it comes to the consensus and being the contrarian investor, listen, the consensus right now is for the Democrats to win. If they win, the market is going to crash. That’s the consensus, right?

Andrew Horowitz: Yeah.

Frank Curzio: But the consensus was, when Trump was going to win, the market was going to crash, due to uncertainty, and gold was going to surge. There’s no one that said, “Oh, I hope Trump get…” nobody, nobody I know… I cover the markets. I cover everybody out there. I didn’t see any headlines, “If Trump wins, this market is going to surge.” Nobody said that. The fact that we’re saying it again, that consensus probably means that, if Biden does win, it might be very good for the markets, if you’re a contrarian investor. Again, you want to bring up the positives and negatives, but everybody got that wrong, you’re right, with Trump, including me. It’s just amazing that the markets continue to move higher.

Frank Curzio: Okay, last thing here… Thank so much for staying on for so long. Usually, we try to keep this thing to 20 minutes. It’s a little bit longer, which is awesome. Thanks, buddy. Some of your favorite plays… You mentioned Trane Technologies as one. I like that, air filtration. That’s a good play. You looking at anything else? I know you mentioned… Usually we provide bullets to each other when we’re interviewing, and you said Lululemon’s purchase of Mirror was very interesting, but what are some of the things, individual names, that you could share with some of our subscribers? And some of them you already shared, so I don’t know if you have any more.

Andrew Horowitz: Lululemon is interesting. This is a company that has done really well. It really has great product, great history, great management. Recently bought this Mirror product for about $500 million, which is you stand in front of it and you squat, and you stretch, and you jump, and you run, and you punch, and you do all this stuff. It opens up a really interesting, now, situation where that can be not a competitor, but an adjunct to the Peloton, where it’s the same kind of thing. You buy this Mirror for X amount of dollars, and you pay $39 a month. The company is actually very healthy. This is going to add to the bottom line of Lulu.

Andrew Horowitz: I think, though, there’s the other side of the Mirror, if you will, which is that gyms, like a Planet Fitness… I just do not see how a Planet Fitness, which is a lot of franchise. By the way, they’re a big franchise operation. Most of the franchises make 25 or $30,000 net. Afterwards, they have a big overhead. With social distancing, with the issues that are going on right now, with the people’s desire, first of all, to work at home… Well, they might as well just stay home and have my Peloton or my Mirror or my other workout gym at my house, if I can do so. I think there’s going to be a trend that way, so I’m on a Lulu or a Peloton positive, on a Planet Fitness negative.

Andrew Horowitz: I mentioned FLIR, of course, in that discussion, as well. Trane is something that’s an interesting positioning. Your healthcare, your various healthcare companies I think are also going to have a real good bid to them, not the outlier biotechs, but the core companies. Pfizer had a good announcement about something today. It popped the stock. You can just see that. I’m still a big fan of CRISPR technologies, which does genetic editing.

Frank Curzio: Yeah, for a long time, yep. Mm-hmm.

Andrew Horowitz: Yep. I’ve had that for a while. It’s hit an all-time high just recently. Did it a secondary this week. Stock is holding up really well. I think that’s a really interesting play. Some of the restaurants that are in Northeast, et cetera, like a Shake Shack, short, negative on that for the near term.

Andrew Horowitz: Can I just branch over to something that I want to talk about just for a moment?

Frank Curzio: Yeah, go. Yeah.

Andrew Horowitz: Because I think this is something that… We’ve talked about the whole idea of what the Fed is doing right now and how they’re lifting up by buying ETFs. Now, they’re buying individual securities. And this whole idea of buying individual bonds… They recently targeted and started buying Microsoft and Apple, Home Depot, Verizon, and Visa bonds. Now, tell me something, Frank. Do those companies have any problem going out to the debt markets and getting financing?

Frank Curzio: No, but those are the companies that are going to support the market and keep it high, probably, and spend.

Andrew Horowitz: Correct. Here’s my thinking. The Fed goes out and starts purchasing this though an index style investing. Okay, why do they target these companies? It’s a backdoor bailout of the stock market, because these companies are actively involved in share buyback programs. They could issue debt at very low rates now, take the money, and then do share buybacks. When you have a Microsoft and an Apple and a Home Depot, for example, doing share buybacks, it’s helps the market stay higher, because most market indices are cap weighted. Therefore, when you move up Apple and Microsoft, the whole market comes up with it, right?

Andrew Horowitz: I think that was another backdoor bailout, just like we saw a backdoor bailout of the banks with the PPP program and the continuation of a bank bailout with the bond purchase program through ETFs, because the banks are a big part of what they were buying through ETFs and through their other various programs. The Fed has been very involved with a very heavy hand. The question is, when the music stops, are there going to be chairs for everybody? That’s the big question right now, going into, I think, the next couple of quarters. I don’t know how much longer the Fed can continue doing this without some scrutiny, because we’re already at a decent level on markets. Valuation’s stretched. Just doing what they do doesn’t necessarily help the economy. It helps out the markets. There’s a lot more fiscal that needs to be done, and some of the fiscal is being done because, of course, of low interest rates, you can do so.

Andrew Horowitz: I’m just saying it’s interesting what’s happening, and everybody should just keep their eyes open to the reality of what’s really going on here, to understand that there is a safety net, to a point, but once that stops, where do we go from there? That’s the big question of mine.

Frank Curzio: Yeah. It definitely makes sense. And just to see… And that’s how we’re all thinking like, how do we play this, where there’s a variable that never really existed to move stocks, where it’s usu… earnings drive stock. Earnings are not driving stocks. Earnings are much, much, much, much lower. Now, it’s being pushed out not through 2021, but to 2022, to get the pre-coronavirus levels. Yet, a lot of these stocks are moving higher, which is something that flies in the face, pretty much, of 100 years of market research. It’s pretty crazy.

Frank Curzio: But talked about a lot. Covered a lot. Love that you share ideas, and my audience always love you because you always do so. If they want to find out more information about you, Andrew, how could they do that?

Andrew Horowitz: Go over to thedisciplinedinvestor.com. We got The Disciplined Investor podcast. We go the Friday… I do some technical analysis training on Fridays, through our subsidiary called Trigger Charts. Also, on Mondays, the popup Q&A webinar… If you want to register for that, just go over to thedisciplinedinvestor.com. Yes, we manage money, by the way. If you’re interested in having us manage your money, there’s plenty of information on our various strategies overall, on TDI, or thedisciplinedinvestor.com, so check it out.

Frank Curzio: Awesome stuff… And I’m still waiting for that invite on your boat. I know it’s pretty crazy, and I’ll wear a mask, but I’m sick of watching those pictures of you catching massive fish, and I want to get out there with you. Just let me know when, okay?

Andrew Horowitz: All right. You’re on. You’re on.

Frank Curzio: All right, man. I’ll talk to you soon. Thanks.

Andrew Horowitz: Thanks.

Frank Curzio: Hey, that was great stuff from Andrew. I always say this podcast is about you, not about me, so let me know what you thought of that interview frank@curzioresearch.com. That’s frank@curzioresearch.com.

Frank Curzio: But just an interesting point, really quick, to sum it up… Even at the last part, when Andrew was talking about the markets and the bond buying and all over the place because that’s where we are right now. They’re buying bonds of big name companies. Valuations are surging. You need the government to continue spending or this market is going to crash probably more than 30, 40% here. The earnings just don’t support it. They support it for some of the companies, but not all of them. I’m curious to see what Apple is going to report. Hopefully, their services are really killing it because they’re giving away the 11 for free right now, ff you sign accounts at T-Mobile and AT&T and things like that. It’s interesting to see what is going on. Now, you’re seeing the Fed buy high yield debt, as well, but what’s different from this, compared to the credit crisis, the credit crisis was a complete unknown. The banks completely fucked up, and they were not telling anyone anything. Nobody even knew AIG was insuring the whole entire world until later on. You look at a crisis where it really hit. This is Lehman going bankrupt. AIG wasn’t really part of the story, yet. It was like September, I think, late August, September, with Lehman going bankrupt, 2008.

Frank Curzio: But the thing is, nobody knew what was going on. Today, the Fed, the president, they’re meeting with the banks’ executives every week and have them on speed dial and saying, “What’s going on?” These banks, since it’s not them… They’re stronger than ever, thanks to all the law that were in place, because they messed up so bad. Even the stress test proved that for most of these banks. But they’re saying, “Listen, the high yield market, man, that things going to crash.” Right? It’s nuts. They’re talking about different loans every place, that are nuts. They’re talking about here’s all the markets that you have to be concerned about. That’s why it’s more where they’re not being forced to react after the fact, but before the stuff even happens, because the high yield debt and purchasing the high yield debt wasn’t even on the table when they came out with the $2 trillion stimulus. Then all of a sudden, it went form $2 trillion to $2.4. Nobody blinked an eye. Nobody blinked an eye. That extra $400 billion dollars… Think about that.

Frank Curzio: I mentioned in that interview with Andrew how TARP was $480 billion. That’s how much it wound up being, when all was said and done, to backstop the entire financial system. We added $400 billion to that $2 billion stimulus, which was supposed to be $2 billion, overnight. Nobody blinked, like it was nothing. And you’re looking forward. It’s just the beginning, guys. We’re going to see much, much more spending. All essential banks are spending. Evercore’s research, great when it comes to the economy, one of the firms that I follow… get sell side research that’s expensive, but just highlighting, there was 19 initiatives just this past week of companies either lowering interest rates or either just initiating some kind of stimulus for central banks to stimulate their economy. That’s not stopping anytime soon. You could hear, even in Andrew’s voice, how it is confusing. It’s not that easy. You’re hearing lots of ideas that he shared with you, which I love. I love when everyone shares ideas with you. And of course, we take one of those ideas that I think is the best one out of all of them, and we put it in our Dollar Stock Club portfolio, which is one of our cheapest newsletters out there. If any of you are interested in that, you can go to our website at curzioresearch.com.

Frank Curzio: Now, let’s get to my educational segment. It’s on gold. I know a lot of you own gold. It’s an industry that I’ve followed for over 15 years and especially in the past 10. There’s more projects in this industry than anyplace else, than any other industry, I would say. I do a lot of traveling, and I do a lot of hands-on research. If you’re a new subscriber or a new listener, and you’re not too… whatever. People that have followed me for a long time know I’m going to send you pictures of places that I’ve been. I believe in hands-on research, boots on the ground. That’s where you find out the best information, not by reading something someplace that anyone else could read, because it’s usually factored in. You want to be at these places, and not just talking to management, but try to talk to the employees. Every management team that I’ve ever talked to is always going to talk positive about their company. It’s natural. I’m going to do it about Curzio Research. You’re going to do it about your company. You want to get a perspective from both sides. Sometimes, it’s employees. Sometimes, it’s people at a bearish or something. But when it comes to gold and the access that I’ve been able to give you because of knowing the right people in this industry… Because, man, this is one of the craziest industries in the world.

Frank Curzio: It’s like crypto. It’s similar to crypto. It really is, in terms of fraud, in terms of people getting destroyed, in terms of people lying about what they’re doing, backstabbing. And I worked on Wall Street, man, for a long time. You can’t even compare it to the mining industry. Everyone is looking to generate huge profits right away, and it’s crazy. If you listen to the wrong people, you can get in a lot of trouble. But right now, where gold is… and we’re pushing $1,800. Pull back a little bit on those level today, but whatever, four, five year, whatever it is. Closing in on an all-time high. The gold producers have done great. Gold royalty companies have done great, which makes sense. They’ve been up from the entire market, past 24 months, because they’re direct beneficiaries of higher gold prices, where they’re actually producing. Right? For the gold producers and the majors, that’s why you see them go up so much. The royalty companies, the gold royalty companies, the big ones… If you’re looking at Franco-Nevada, Sandstorm, Royal Gold, they were able to lock in amazing royalties on some of the biggest projects in the world owned by the majors, because the majors, a lot of those companies almost went out of business in 2013, ’14, when the market really, really crashed, because they were so freaking leveraged. They were buying stupid projects that weren’t profitable, at $2,200 gold prices.

Frank Curzio: They needed money. They needed cash. And that’s what royalty companies do. They’re basically finance companies. They don’t produce anything. They’re not producing anything at all. They’re just finance companies. They finance a project, and we’re going to give you money for this asset. When it’s producing, we get to buy the gold for $300. They have all kinds of stipulations where… Again, there’s so many deals, and you have to really structure these deals. You need someone who is amazing in finance, that understands this stuff. But they could really get whatever terms they want, back in the day.

Frank Curzio: Now, royalty companies are having a ton of trouble. Companies are launching royalty model. I’ve seen some companies where a lot of these projects won’t be producing for five, seven years, and they’re going up 200% to 300%. But this isn’t about gold producers, because we own Newmont Mining for our portfolio for well over a year, year and a half. We did fantastic. We’re up 100%. Got into that earlier than most people. Gold royalty companies have been doing great.

Frank Curzio: But let’s talk about the one area that hasn’t really performed until the past few months. That’s junior miners. Guys, this is a market where many of you may not have been part of a bull market in this. It’s supposed to be a cyclical market, but it’s been so horrible for so long. Some names have done well over the past 12 months, maybe even 18 months. Some, not many, only a few…

Frank Curzio: Now, these are companies. They’re very early stage companies that are not going to produce gold, or their sites aren’t going to be developed, pretty much, for over 10 years. One out of every 3,000 projects, guys… Think about this when you walk into the PDAC and you see 30,000 companies, or whatever, that are going to pitch you on their projects, these junior miner companies. One out of every 3,000 goes from the early start where you’re planting a flag in the ground to actual production. Pretty crazy stat when you think about it…

Frank Curzio: Why is this industry doing so amazingly now? Because they own assets that you really need to see 1,600, 1,700 gold, 1,600, probably around there, to really be worth is. They’ll have these studies and say, “Look, at 1,250, 1,300, 1,350, it works,” but remember it takes 10 years and hundreds of millions of dollars, sometimes even more than that, to build up these project, and you’re not going to take a chance with gold at $100 more than where their PA study suggests that these mining operations and these drilling are going to be profitable.

Frank Curzio: Now, when you have 1,800, a lot of these companies, these junior miners, they all modeled… All of them were modeling for 1,350, 1,250. Right? This is what’s going to be our project, at 1,250, 1,300, and we’ll be produ… We’re looking at 1,800. You’re talking about companies that were not economically sound and would never get developed to, now, these projects look incredibly attractive, some of them. Some of them still don’t. Some of them are in the middle of an area where the government could just take you over. It’s crazy. You have no infrastructure, which costs, sometimes, tens to hundreds of million to build. Water, plants, electricity, all that stuff… nobody talks to you about that. But there are junior miners in the right space.

Frank Curzio: Two of the names that I love, right now, that I want share with you… And I’m going to give you just a format of how to look at companies, because a lot of these names are trading at 52 week highs, still down from all-time highs, well below all-time highs. One of the names, hesitant to give you because we stopped out, and I was wrong on this one. And I hate, hate, hate giving you stocks and people lose money. It bothers the shit out of me. I can’t sleep. That’s just the way I am, because I care. But one resource is I’ve had Ivan Bebek on a lot of times. That stock is just going up and up and up, right now. But that’s a company where, look, we recommended, recommended it early, which means we were wrong. Right? Early means wrong in this industry. Spent a lot of money develop these projects, but these projects that they are in with Auryn Resources, with Ivan Bebek, these are super high grade gold projects. It made sense at 1,450, 1,500. Then 1,600, you’re like, “Wow.” 17, 18… I told you guys over a year ago. This was even before COVID. With the amount of money being spent and they’re not pulling back, our government, gold government 2,000. COVID just pushed it much, much faster, way over 2,000 with gold. Just makes central banks. They’re not done.

Frank Curzio: We’re in the third inning of spending here, and it’s resulting in anywhere from 15 to 50%, if you’re Italy, of GDP that’s been spent on fiscal and monetary policy, where the U.S. is at 30%. But most countries are over 15%. Many are over 20%. And it’s going to continue. It’s definitely going to continue, because the earnings aren’t there. We’re pushing everything out to 2022. That’s the only way to support the markets, which means that’s going to be very good for gold and even Bitcoin. We may see Bitcoin surge, as well. Bitcoin has been doing well. Pulled off from 10,000. Probably 9,200, 9,300.

Frank Curzio: But getting back to gold specifically, when you’re getting back to the junior miners, this is a market. Yet, many of you maybe listen to this, and you’ve listened to me for the past five, six, seven years. But those of you who have experienced a bull market in junior resources, when that cyclical market turns, you know what I’m talking about. These are stocks that don’t go up 1X, 2X, 3X. They go up 5, 10, 20X. It’s normal, when it happens. It doesn’t happen often. Right now, it’s starting to happen. Now you have the wave behind you. You have a lot of positives. The trend is in your favor. Yes, we’re going to see gold prices go high. The government is going to continue to spend money. You’re looking at the majors that underproduce tremendously. Now, they’re generating more profits, record profits, than they ever generated, and they need… they need to buy up assets right now. They need to. Now, they’re going to look at the juniors. With prices where they’re trading, a lot of these guys upgrading those studies and saying, “Hey, this is where we were at 1,450. Now, here’s where we are at 1,700.”

Frank Curzio: Now, these companies are worth taking over, because that’s what the junior mining market is. That’s what it’s built on. It’s built on you just drilling and providing that asset and more details. The goal is to get taken over by a major. The goal for 99% of these companies is not to develop these assets and go crazy. No, that’s not what they do. They’re looking to sell these assets to majors. But Auryn Resources is one name that I love, loved for a long time. Ivan Bebek is just a big owner of this stock. He’s always been upfront. I love this guy. He’s someone I trust. I don’t trust a lot of people in this industry.

Frank Curzio: The other one is GoldMining, a stock that Amir has come on numerous time on this podcast. If you bought it any time, you’re definitely up, because it’s at an all-time high. The reason why I love that… And Amir is a great friend, which has nothing to do. I don’t get paid for any research, from anyone. If I don’t like your company, I don’t care if you’re my best friend, I’m going to short on you. That’s the reputation we have, where people trust us. We’re an independent research firm. We don’t get paid by anybody to recommend their stock. But when you’re looking at GoldMining and the projects that they built up… Now, they just turned into a royalty model, which was incredible because… I won’t get into too much into details because I really got into the details on the special exclusive interview with Amir, to my Curzio Venture Opportunity subscribers, who were doing very, very well on that stock.

Frank Curzio: But I said here’s why this is a big deal. They just announced it, but they have such a huge portfolio that, now, if they decide to sell out certain projects, they’re going to be able to keep their royalties on those projects, which is amazing. It’s a different business model. People are loving it. I didn’t understand that, at first. I thought, “Is this like a dot com thing where you just turn into royalty because they command a higher premium?” No. It’s be they’re sitting on massive assets, 14 projects. Now, with gold prices going higher, maybe half of those… half of those are economic, where economics worked at 1,400, 1,450. But at 17, 18, all of them work.

Frank Curzio: Those are two names I wanted to share with you, two names that I like. Again, Auryn, we didn’t do well on, if you listened to… It’s doing well now, if you held onto it. I know we stopped out in our portfolio, which was good, because it went down a lot further. Again, junior miners are now in favor. If you’re going to buy them, guys, you need certain characteristics. You need them. You need a great management team. You need high insider ownership. Okay? These guys got to be in the same boat that you are. That’s both of these companies. You want to make sure they have great projects. All right? That’s very, very important.

Frank Curzio: Also, even those projects, you want to make sure there’s infrastructure around them, because that could amount to tens, to hundreds of millions of dollars to build that infrastructure. That management team, you want to make sure they’re in good jurisdictions. That’s these two companies. You don’t want to buy a great asset that’s worth a fortune, if it’s in the middle of Beirut, because the government could say, “Hey, we’re taking over the whole project.” Good luck. And your stock goes to zero. I’ve seen it happen. It happened numerous times in this industry. Those are the things you want to focus on. It’s not too hard to find that. You can go to their websites. Do their presentations. Make sure that insider ownership is good.

Frank Curzio: Also, what you’re going to see in both of these companies… You want to see if there’s a major that’s already invested in the company, if they already took a stake. That means they’re interested. They’re interested to see this thing develop. If they’re interested in the project, it’s going to make it a lot easier for those guys to come in and buy the whole company. That’s Auryn Resources, AUG, and then you have GoldMining. We had Amir on numerous, numerous times. If you follow, that’s where you get it. You can also buy GoldMining on the over-the-counter exchange, which I don’t recommend. I’d rather you go on Toronto Exchange. It’s GOLD.TO is the symbol, but you can also find it and it does trade pretty good by GLDLF. That’s for people who have trouble buying I Toronto Exchanges, some of your accounts. Those are the two stocks I’m looking at right now that look good.

Frank Curzio: But if you’re going to do it, start doing your homework now. Yes, you’re going to see these things up and doing well. But remember, when this industry turns… Again, a lot of the people listen to me that have 20, 30 years’ experience, that have lived through those markets. Holy cow, they make up the seven, eight years of negative returns, because those returns can make you rich, and it doesn’t take long. It’ll take 12, 18 months, and you see 5X to 10X. The risk reward is tremendously in your favor, right now, for gold in junior mining stocks. You’re going to see a lot more of those companies make their way into our portfolios at Curzio Research.

Frank Curzio: Guys, questions, comments… I’m sure you’re going to have a lot. Had a lot last week with my rant, just telling it how it is, frank@curzioresearch.com… Positive, negative, whatever it is… “Stop talking politics. This is investment,” but whatever, keep them coming. It relates to your investments, believe me. You need to understand what is going on out there. Companies just throwing Facebook under the bus here, which, yeah, maybe they deserve, but the companies that are doing it… and everybody just trying to further agenda on what’s going on right now when, in reality, most of these people don’t care, it’s just sad. I see it a mile away. I grew up in New York. You smell bullshit right away. You learn that. But it’s just incredible to see what these companies are doing and just playing so many people. It’s very, very sad, especially when we have such great movement going on right now.

Frank Curzio: Again, question and comments… Feel free to email me at frank@curzioresearch.com. Thank so much for listening. As always, I appreciate all your support. I’ll see you guys in seven days. Take care.

Announcer: The information presented on Wall Street Unplugged is the opinion of its hosts and guests. You should not base your investment decisions solely on this broadcast. Remember it’s your money and your responsibility. Wall Street Unplugged, produced by the Choose Yourself Podcast Network, the leader in podcasts produced to help you choose yourself.

Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His weekly Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 9 million times.

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