10/04/2011
December 3, 2017
09/23/2011
December 3, 2017

09/27/2011

What are your thoughts on the rare earth mineral space, and also on Lithium. If it is a field you are watching, what are you be looking for?

I have zero interest in the space. Lithium has massive oversupply and in a few years, so will the rare earths. They’re speculative toys, not real businesses. I think a number of the over-hyped companies will drop 90% from here, and they’re mostly down a ton recently to begin with. I actually wrote a piece on “The Great Rare Earth Bubble of 2011” but didn’t publish it b/c I couldn’t get the time to fact-check all the numbers. I wish I had put it out, as it was about 2 weeks before the top. Caveat Emptor!


Have you done any research on PRTDF.pk. It has plummeted but is difficult to evaluate. What’s the scoop?

I don’t know the details well. They had some amazing holes early on, but seem to have hit a few dry ones since then. If Mongolia does have sizable quantities of oil, it would only be more bullish for my already very bullish thesis.


Kuppy, thanks for the update. In regards to silver, do you think its over priced at $30/oz ? Do you value silver more as a commodity or a currency? If I remember correctly you still had quite a bit of it as a core holding along with Gold. Is this still true or did you unload your physical silver along with your miners?

I NEVER sell my physical gold or silver. I trade around sometimes in the futures markets, but I NEVER sell. At 30, silver isn’t terribly expensive, but it isn’t very cheap either. I’d guess that average costs to produce silver are around $12-$17 for the industry right now. That would imply that at 30, it trades at 2x production cost. How many other commodities trade at similar multiples? There aren’t many–but there are a few. Will it go higher? Of course it will, but I’m in no hurry to buy more for my core position. However, on Friday and Sunday night, I’ve bought a few as a trade in the low 30’s and high 20’s, just like I did last time silver got destroyed. That time, silver rallied nearly 30% from where I bought–let’s hope for similar results this time. (Keep in mind that this is a small trade for me. I am not adding to my core and find gold to be materially cheaper than silver currently).


Wait a minute, I thought you were waiting for silver to do a moonshot? You seemed totally unconcerned when it dropped from $50 to $30, but now it sounds like your bearish. What changed?

Silver will one day do a moonshot. I’ve owned it since it was $4. I’m not going to trade my core position. I’m not bearish, I just realize that silver has run from the teens to the high 40s in a year. It needs to rest and consolidate and there will be strange whippy action along the way. Don’t think I’m unconcerned. I posted this https://adventuresincapitalism.com/post/2011/01/03/Commodities-Gone-Wild.aspx back in January.The low risk part of the move in silver is now over. That doesn’t mean it can’t go crazy still. Remember that when I said “I wasn’t a fan at these prices” on Friday’s ask kuppy, silver was at 37 when i put it to the editor. Today, it’s 30% cheaper. That changes things a bit.


You still on the NBSK thesis given the softness in NBSK pricing Fibrek’s CEO talked about and general global economic slowdown?

There’s a bit of weakness in NBSK pricing, but it’s still up a lot over where it’s been last year. I think this is a secular trend, and not a cyclical one like most people think. However, I’ve been proven wrong about things like this in the past.

I’m not that concerned about MERC. FBK is a bit more scary. I have a few times more MERC than FBK. At 2x cash flow for MERC, I don’t need to be a hero for it to work. I just need them not to stumble too bad and a weak EUR and CAD certainly help.


Market is down a lot. Any new stock picks?

Not really. I’ve spent my whole life focused on smaller companies, but I don’t see lots of bargains. Most are actually priced for big growth in a no-growth universe. The cheap things are large cap American stocks. But I can’t really seem to bring myself to care that Best Buy is cheap because you can’t make multiples on your money investing at these prices…. It must be a lot of fun to be a large cap value guy.


Kuppy,

Every stock market is in collapse and mongolia won’t drop. it’s actually up 30 something percent this yer. What do you make of it?

Buy strength has normally been good advice during market turmoil. Mongolia is booming. Find a way to get long.