Marc Faber, Editor, Gloom, Boom & Doom Report
David Webb, President & CEO, Tyhee Development Corp.
Marek Kreczmer, President & CEO, Northwestern Mineral Ventures, Inc.
Allen Ambrose, President, Minera Andes, Inc.

JIM: Hello everyone, I’m Jim Puplava. Welcome to this year’s San Francisco Hard Assets show. They’re calling it Hard Assets because, unlike previous shows which focused mainly on gold and silver stocks, this year you’re seeing a number of exhibits – actually it’s happened over the last couple of years – you’re seeing base metals companies, uranium companies, along with your traditional gold and silver companies. And so that’s why the name of the show has changed – it’s Hard Assets, and we’re going to get sort of a sampling of the companies that are here in the 3 hours that we have going forward.

Now, what I promised earlier, is I said this year we were going to focus more on juniors, and that’s exactly what we’re going to do. We only have 3 of the experts this year: joining me in the first part of the program will be Marc Faber of Gloom, Boom and Doom fame; and then in the second hour, James Turk; and then finally, John Doody in the third hour. But we’re going to be talking to different companies, some producing, some getting ready to go into production; some uranium companies, some base metals companies, gold companies and silver companies – so it’ll give you a wide background; I think we have about 12 or 15 companies we are going to be interviewing.

Now, let met get this disclaimer up front. Some of these companies we own, a good majority of them we don’t own. And as any good investor, we advise you to do your due diligence. And what I’ve done with every company I’ve interviewed is ask them to give out their ticker symbol, their primary exchange in which they’re traded, and then from there to give their website. And that is what I’d encourage you to do: go to the company’s website if you’re interested in learning more about that company – read their financial reports, read their press releases, look at their presentation. But do your own due diligence and form your own opinion. And as always: caveat emptor. Remember, you need to do your homework. But hopefully this year we’ll give you a wide variety of companies to look at, as certainly at this year’s show there were 200 companies exhibiting here. One of the problems we did have at the San Francisco Gold Show is we did have some technical difficulties on day 2. These interviews are being done over a 2 day period and what we did have to do – it’s kind of funny, it felt like Star Trek – we were sitting there in a booth and we were talking on our cell phones, my guests and myself facing each other, and then of course John Loeffler in the studio picking up those phone calls. So if you hear a little bit of difference in the tonality of some of the conversations, we did run into some difficulty, and actually had to do some of those interviews by cell phone. So here’s the show. [2:56]

Marc Faber, Editor The Gloom, Boom & Doom Report

Bio/Archive | The Gloom, Boom & Doom Report

JIM:Will the dollar go up or will it go down? Are commodities in a bubble, are monetary markets tight or loose? Joining me right now is one of our keynote speakers this year – Dr. Marc Faber. Marc, good to see you.

DR. MARC FABER: Nice to see you. Thank you for having me.

JIM: Let’s talk about a couple of issues that are being bandied about in the market right now. There are two I want to address. One is tight liquidity – I don’t see it when the spigots are running full blast at all the central banks around the world. Yes, some are raising interest rates, but in terms of money and credit it’s plentiful.

MARC: Yes, I think you’re absolutely right. The absolute level of interest rates will never tell you whether the monetary policies are expansionary or tight. In Zimbabwe you have interest rates at 600%, and monetary policy is expansionary because inflation is at 1200%. So what has happened is since June 2004, the Fed has increased the Fed Funds rate in baby steps from 1% to now 5 ¼% - but the point is tight money should be reflected in a slowdown of credit growth – a meaningful slowdown. And the fact is, that since the June quarter of 2004 when they started increasing interest rates, at that time the credit growth in the US was running annually at 7%, and now it’s running at annually 11%. So actually, you had an expansionary monetary policy, and it doesn’t take a rocket scientist to see that if money was tight the Dow wouldn’t make a new high, and the dollar wouldn’t be weak. If money is tight, the dollar would be strong and asset prices would go down substantially. [4:42]

JIM: That’s one thing we’ve seen in this monetary tightening cycle which reflects that, because we’ve seen long term interest rates as reflected by the 10 year Treasury note not move very much in the last couple of years; we’ve seen a rising stock market almost every single year; and you contrast that to the last time the Fed was on a rate raising cycle in 99 to 2000 and we had a stock market correction - this has played out differently this time hasn’t it?

MARC: Precisely, because monetary policies are still expansionary. And I wouldn’t say that monetary policies were tight in 1990-2000. The last time US monetary policies were really tight was actually in 79-1980 when Volcker pushed up interest rates, and that led to a meaningful slowdown in the rate of inflation and credit growth, and the 81-82 recession. But since then we’ve had actually expansionary monetary policies that led to the very strong debt growth whereby total credit market debt as a percentage of the economy has increased from 130% in 1980, to now 330%. And if you look at last year, total credit market debt increased by $3.3 trillion and nominal GDP by $751 billion – again then, you have much higher debt growth than GDP, and that doesn’t indicate that money is tight. And also, if you look at international liquidity, you have to beware that as a result of the loss of competitiveness of the US – the growing trade and current account deficit – we have these reserve accumulations in the hands of Asian central banks that are then lent back to the US; and we call these reserves (if they’re dollar reserves) ‘foreign official dollar reserves’ – and if they’re international reserves that would include other reserves – and these reserves are growing at a very rapid pace: dollar reserves at 15% per annum; and international reserves at 18% per annum. No sign whatsoever of any tightening there. [6:53]

JIM: And not surprising as a result we’re seeing new records here in the United States in the Dow and the markets – even the S&P looks like it’s making a run towards its former high.

MARC: Yes, but we have to qualify this statement. If you look at say this year’s performance, which is a continuation of the performance since 2002 when we embarked really on this easy monetary policy, then what we have are rising US asset prices – the stock market going up and until recently the housing market going up – but in euro terms, actually the stock market hasn’t done well. This year the S&P is up more than 12%, but in euro terms (if you measure it in euros) then it is up just 1 ½%. The bond market in euro terms is down, and in gold terms since Mr. Bernanke was appointed in November 2005 we have had the Dow up something like 15%; in euro terms it’s up 3%. And over the same period of time, gold, which has not performed as well as other commodities, is up 36%. So against gold, the dollar has been weak and the Dow has been weak – has declined. And I can tell you how weak the US dollar is, that is evident against the price of lead, the dollar is falling. So it’s very, very heavy on the downside. [8:25]

JIM: So what you’re saying is that you’re seeing nominal increases in the value of the indexes, but in real terms if you’re looking at another currency or another ultimate commodity like gold we’re seeing a declining trend.

MARC: This is correct. And I’d like to add to this one point – we have basically in the United States a conspiracy between the money shufflers (the well-to-do people, the 400 people that are on the Forbes’ list of the richest Americans) and the government, against the middle class of America. Because if you print money what you get is this asset inflation. That shifts wealth from the middle classes to the typical household to Wall Street. This year the 5 major brokerage firms on Wall Street – Goldman Sachs, Merrill, Morgan Stanley, Lehman, and Bear Stearns – will pay out $36 billion in bonuses, including the compensation for this year. These 5 brokerage firms’ 173,000 people will earn more than the entire GDP of Vietnam with 84 million people. Something doesn’t add up in the long run. But this money supply bulge and this money printing shifts wealth from typical households to the elite. And this is of course [in the] long term very unhealthy. [9:50]

JIM: That’s one thing I think most voters don’t see, which is the taxing effects of inflation. If you’re John Q. Public and you’re working at a company and you’ve seen your gasoline costs go up, your food costs go up, your service costs are going up – you can’t walk into your boss and say, “I need a 12% raise to have 8% after tax to keep up with these costs.” But on the other hand, if you have a large amount of wealth, if you have assets which you can invest, you can profit from this inflation.

MARC: Yes, of course, that’s why we have this proliferation of rising wealth and income inequity in the United States. The economy of the super rich that shops in luxury stores, that stays at Four Seasons hotels, that goes to luxury resorts – is doing very well; but the economy of the typical household is not doing well, because their cost of living increases has been much higher than income gains. And I mean it’s obvious Mr. Bernanke doesn’t understand anything about economics when he looks at core inflation: no household in the whole United States lives by core inflation – you have to drive around, you pay insurance premiums, you have energy costs, transportation costs and so forth. I’d just like to mention that in the US, health care costs are 21% of personal disposable income; and since 2001, health care insurance premiums, that reflect essentially the increase in health care, have increased by 68%. So the typical household is actually suffering and the rich people in their world of luxury, super rich ghettoes they are thriving. And I’m not saying that out of bitterness because I’m also in the financial field – I have also benefited from this nonsense – but of course, for a society it is very unhealthy, and it leads to a country becoming a banana republic. [11:52]

JIM: I want to move on to another topic that you hear debated on Wall Street – a commodity bubble, an energy bubble. And there are some that believe that we have reached bubble type prices – oil has gone from 20 to 80 and back down to 60; you’ve seen copper prices go from 60 cents to over $3. But Marc, in my opinion there are two things that are lacking here. One, where are the large stockpiles you normally see when you have the big bubble – the large stockpiles of energy, lead, zinc, copper? And secondly, we’re at a gold show here and most of the gold investors here are gold bugs or familiar with it, but where is the public in on this? I just don’t see John Q. trading sugar futures or buying lead and zinc or things like that. I’d like to get your thoughts on this.

MARC: Basically, it is true we have a bubble. The bubble is a money supply bubble leading to a huge credit bubble, and this credit bubble leads then to at the present time asset bubbles, and at other times excessive money supply growth which in the 60s led to rapidly rising wages, in the 70s to commodity price increases, and now lately in the last 5 or 6 years everything has been going on – stocks up in developed countries, in emerging markets, real estate, commodities, art prices, and also of course equities in emerging markets and of course raw materials (commodities). Now, everything is inflated, the question of course is what is relatively less inflated than other things. In the case of commodities, there are two factors that are in favor of commodities. First of all, the Chinese economy today is much larger than is generally perceived, and increasingly India is becoming a very large economy, and the emerging economies are growing very rapidly. For the first time in history, emerging economies have a higher oil consumption than the G7 countries, which shows that emerging economies are no longer your poor little cousins, they are economically very important.

And secondly, the increase demand from these emerging economies because of the very low per capita consumption for raw materials in China, and even more so in India – in, say China, you have a per capita consumption annually of oil of 1.7 barrels, compared to the US of 27 barrels, and Mexico of 7 barrels, and in India you have just 0.8 barrels of consumption. So this demand will not go away. It may not increase in one or other years, but it is not going to disappear overnight. So essentially, China and other emerging economies – notably increasingly India – they have shifted the demand curve for commodities to the right, leading to a higher equilibrium price.

And then you have another factor and this is a gift of God to hard asset investors: they sent the messiah – Ben Bernanke. Mr. Ben Bernanke will make sure that he prints money like there is no tomorrow, because if you look at his monetary philosophy it is the following: you target inflation. For Mr. Bernanke who lives on government compensation and drives around in limousines and so forth, for him core inflation is inflation; but that is not the inflation of the ordinary man in the United States or anywhere in the world. So he targets core inflation, and he disregards basically so-called asset bubbles. But he stated that publicly – when you have asset prices going up you don’t do anything about it; but should asset prices one day decline – the real estate market, or the stock market go down – then it is the duty of the central bank to intervene with extraordinary measures to support asset prices so as to avoid a deflationary depression as we had in 29-32. This is important to understand: Mr. Bernanke was invited to the birthday of the just deceased Milton Friedman last June, and he made a speech and he said, “yes, we the Fed, we caused the depression of 29-32. We are sorry. But thanks to you, Milton Friedman, and Ana Friedman, we won’t make the same mistake again.” In other words, Milton Friedman in his history of the monetary history of the US he blamed the Fed for having caused the Depression, for having been too tight. Mr. Bernanke says now clearly, if ever asset prices go down, like there was the threat after 2000 when the NASDAQ broke down, “then we would come in and provide every kind of liquidity.” That is a very highly inflationary monetary policy. That’s why I’m reluctant to be short the S&P, because if the S&P drops 10% you can be sure that Mr. Bernanke will cut interest rates – not in baby steps but 1% at a time. You flood the system with liquidity and then what you get is a rising S&P, rising stock prices in the US but a collapse in the dollar. If you look at the pattern – recently stocks have been going up and the dollar has been going down. The only way you will get the dollar to strengthen is to tighten money and then the dollar will strengthen but stocks will go down. But that is not a policy the US will pursue. Mr. Paulson, Secretary of the Treasury, and Mr. Ben Bernanke, do you think they will defend the interest of the ordinary worker in the United States, or that of their buddies on Wall Street? [17:48]

JIM: It’s going to be Wall Street – the financial markets.

MARC: For sure. Plus the Bush family and all these gangs that benefit from easy money.

JIM: Marc, let’s talk about something that was written in your newsletter, a piece by a gentleman by the name of Fred Sheehan [ph.], and he talked about if you were looking at a long term theme to invest in over the next decade, he really hammered home the idea of infrastructure from ports to bridges. And infrastructure is something that we have not invested in. The civil engineers did a rating on America’s infrastructure and they gave us D+, because we’ve ignored it.

MARC: Well, you don’t have to tell me. I travel a lot in the US, and the airport infrastructure, the aircraft infrastructure is a catastrophe – nothing works. Every flight I’ve been on in the US in the last two years has been delayed between 4 hours and 12 hours – every one. And infrastructure is a theme, but you have to also understand what the consequences are of infrastructure investments. As you know, a lot of States are now selling there bridges, their toll roads, their airports and so forth to leverage buyout firms and to infrastructure companies. All these companies that acquire these assets, the first thing that they will do is to increase prices. The increased prices of airports, toll roads and so forth – what does it do? It increases the rate of inflation – so more money printing will be required. And so I think that infrastructure expenditure, yes, but I wouldn’t do them in the US, I’d do them in Asia where actually you have in Asia two factors working for strong economic growth. You have a) the urbanization, with people moving from the countryside to the cities – in India urbanization is just 30%, 700 million Indians live in the countryside. So when they move to the cities they need infrastructure, and so the infrastructure in Asia will grow dramatically. In Asia, we will also have very strong growth in travel – in tourism – as a result especially now of low cost budget airlines – and so the infrastructure in Asia will do very, very well. In the US, I see rather darkly for infrastructure simply because the money is not there, and if the money should be coming it will be because you have an increase in rates for infrastructure that will be inflationary, leading to higher interest rates and will dampen the returns. [20:33]

JIM: When you look out, let’s say this is January, you’re in New York for the Barron’s roundtable, if you were looking out for a theme for 2007 what theme comes to mind?

MARC: Well, very difficult to tell. I mean I think as a contrarian we are now in a euphoria – the markets are going up, commodities are going up, stocks are going up, even bond prices have rallied. The dollar has been weak. I would say, looking at the economy you would say the Wal-Marts of this world won’t do well because the Wal-Marts of this world depend on the Middle Class, and the Tiffanys and Nordstroms of this world will do better. But I think something will happen and hit the Wall Street crowd quite badly – in other words, something will give and that asset prices could for a change decline in concert. They all went up at the same time and so they could all go down at the same time. All markets are very stretched. And whereas I think you should invest for the next 10 years more in commodities and more in emerging economies than in the US, near term – maybe starting January or so – you could have quite a big correction in markets. And so as a contrarian, maybe today is not a bad time to actually sell stocks and sell assets. [21:56]

JIM: So maybe build some cash and just watch how it unfolds?

MARC: Yes. Of course, the dollar is a very vulnerable currency, but maybe not so against the euro because in the eurozone money supply is also increasing rapidly. So it doesn’t mean that the dollar will collapse against the euro, the price level in the eurozone is about the same or sometimes higher than in the United States. So, there, I’m not so convinced that the dollar will collapse against the euro. But I think in the last two or three months we have had an important development – I mean we’ve had several important developments. One of them was that the appreciation of the Chinese currency accelerated, and this I think will lead to stronger Asian currencies against the US dollar. Secondly, I think that as has been the case since 2001, the US dollar will weaken against gold and silver. And the third important development has been that over the last 3 months grain prices have been very strong. According to the Federal Reserve Bank of St. Louis, grain prices are one of the most reliable indicators of future inflation. So if grain prices have been strong – and they could explode on the upside if you hit a bad crop (if you have a freeze or a drought, and so forth). If they are a leading indicator and we get into higher inflation rates then the theme would definitely be to avoid long term US government bonds. And I think that is the major theme I would do – at all costs, avoid long term US government bonds. [23:37]

JIM: This is surprising, I’m glad to hear you say that, because one of the assumptions that is being made right now is the US economy is weakening, therefore if the US economy is weakening, the Fed is going to be cutting interest rates. But if you had a situation where the dollar was falling wouldn’t that not be difficult for the Fed to cut, and what would happen to long term interest rates if the dollar had a precipitous decline?

MARC: Well, I think that Mr. Bernanke and Mr. Paulson will not care much for the US dollar decline, initially. And so they will look at the stock market, they will look at the property market and if the property market and real estate market and stocks go down, they’ll cut interest rates very aggressively and disregard the position of the US dollar. It is only in a second instance, when the dollar is very weak and you get rising import prices that put pressure on inflation and you may get as a result of the dollar weakness also weakening bond prices – it’s only at that stage that the Fed will kind of become concerned about the value of the dollar. But since the Fed has been introduced since 1913, the Fed has never been concerned about the purchasing power of the dollar – it’s already depreciated by 92%. So I think, looking at the shape of things, it is most unlikely that the Fed will suddenly become very concerned about the value of the dollar vis a vis foreign currencies – especially given the rhetoric they have been using, namely saying all the time that the Asian currencies (notably the Chinese currency) are undervalued vis a vis the US dollar. They actually want a weak dollar. [25:28]

JIM: You spend a good part of your year traveling – you go around the globe. What is the perception that you’re hearing from people that you talk to about the dollar. We hear more and more in the press about this central bank, or that central bank, is going to start reducing its dollar reserves. I would have thought the dollar would have been much lower by now, and I’ve been surprised it’s remained as strong as it has, given the intention of so many central banks.

MARC: Yes, but we have to see very clearly it is unlikely that the Asian central banks will really sell dollars and buy euros. What they will do is deaccumulate reserves going forward; they will diversify more and more in other currencies. But if you have a current account deficit, the way the US has it, someone will always finance it – that you have to see. Now, it may be financed at a lower dollar level but someone will always come in and buy your assets - in the last few years: funds. So I think that, yes, the dollar will be weak and it may surprise you that the dollar didn’t weaken more against other currencies, but because the price level in Europe is not that much higher, and frequently is the same as in the US, there is no reason for the US dollar to collapse against the euro. But what has happened is the US dollar has collapsed – and this you have to acknowledge – against hard assets: gold, silver, all the industrial commodities, a total collapse against the price of oil. And as was the case in the Mississippi scheme of Mr. John Law, they printed money and eventually this paper money totally collapsed against commodities and real estate. [27:17]

JIM: You wrote a piece two or three years ago, and it was about long term investing. And it was about if you could catch a trend and rise that trend at its inception throughout its rise, an investor could make very few decisions in their lifetime. For example, US stocks in the '50s to the mid-'60s; commodities; then Japan in the '80s; and then technology and US stocks in the '90s. Do you think that still holds true in this kind of environment today, and are commodities – given the global liquidity glut that we’re having – do you think that is a long term trend that investors could ride?

MARC: Yes, I think you have some factors that will work in favor of commodities. First of all, we economists have business-cycle theories and historians have war-cycle theories. I believe that tensions in the world are increasing, and that as a result of that eventually war will break out somewhere in the world – and during wartime, commodity prices go ballistic. We also have to acknowledge the fact that in the 80s and 1990s, the balance of power shifted to the industrialized countries because the poor countries that produced commodities had lower and lower commodity prices and lost all their power. And the Soviet Union collapsed essentially after the oil price collapsed between '85 and '86. But now, in the environment of rising commodity prices, the balance of power has shifted to people like Mr. Putin and Mr. Ahmadinejad, and Mr. Evo Morales and Mr. Hugo Chavez – they have become very powerful people. And maybe Mr. Bush thinks he is the most powerful man in the world, but the fact is Mr. Putin is the most powerful man because he controls 10 million barrels of oil production a day and he can afford to cut it in half any day – he doesn’t need 10 million barrels of oil. If he was actually a hedge fund manager, he could cut production of all commodities by 50%, he’d still have the commodities in the ground, and prices would go up by between 30 and 100% – so it would be a very good trade. And so these tensions are increasing in the world and I think eventually you’ll get war.

Now, the question is as an investor what do you do? Do you own the mines or do you own the physical? In the case of the mines, say Freeport McMoran – there’s a strike at Grassburg – what happens? The stock goes down and copper price goes up. Or you have flooding at Cameco? The stock goes down, uranium prices go up. I have a preference for the physical but I think that investors gradually have to consider that diversification is not just having assets in real estate stocks and bonds and commodities. Diversification is also having your assets held by different custodians in different sovereign states. I think it would be a grave mistake to hold all your assets in the US, because if one day the US dollar becomes very weak, and if things go wrong in this country you can be sure that one day they will introduce foreign exchange controls – of course, after all the rich Wall Street guys and money-shufflers and people on the list of the 400 richest Americans have their assets overseas; that they’ll make sure they have first. [30:48]

JIM: That comes in first. It would be hard for a lot of Americans when you hear stories recently about Argentina to understand that could happen here. But when you look at a country that is now working its way to a trillion dollar trade deficit, we have budget deficits that are much bigger than what is widely reported – eventually you can’t have that amount of money and paper without something happening to the currency.

MARC: Yes, but you have to see, the US – unlike Argentina and Indonesia and Thailand and so forth – has of course a huge advantage, which is of course also a dangerous point for the US. In the case of Argentina, Indonesia and all these countries, when they have a trade and current account deficit they usually have to finance this deficit in a foreign currency. In other words, you have the Argentine peso, you have the income in pesos – the GDP; and you have the debts in dollars or in yen or in foreign currencies. When the current account deficit balloons the currency collapses. What then happens is an automatic stabilizer – the foreign debts stay at the same level but because your currency collapses your GDP collapses, and therefore imports are cut down and eventually it frequently comes to default. The US will never default, they can just print more dollars, because the US has this great advantage so far – and they may lose it one day – that the US can borrow US dollars and they have their assets in US dollars. No matter how many dollars they own, the income is in dollars and the payments are in dollars, and Mr. Bernanke is there with the money printing press of Mr. Paulson and he can print as much money as he likes. [32:36]

JIM: In your talk that you gave here at the show you talked about 5 major currencies. I wonder if you might just go over that. Do you think it’s just going to become a multi-currency system where the dollar will still be there, but it’ll have less of a percentage ownership by other foreign entities?

MARC: What I think basically is we have lots of currencies in the world but we have 5 major currencies, one is obviously the US dollar and then we have the yen, the euro, the Chinese RMB or Chinese yuan, and then gold (and as gold I would take as a proxy for other say hard or precious metals). And the US dollar is obviously the currency where the supply is the largest in the world through the current account deficit. Through the current account deficit the world is the recipient every year of something like, as you said, close to a trillion dollars that is floating around the world. So any other currency where the supply is less than the US dollar will eventually in the long run appreciate relative to the US dollar. So all I can say is it’s very clear that the supply of gold is not close to a trillion dollars annually – the mining supply of gold in the world is worth something like 40-45 billion dollars. So you get more and more paper money on one ounce of gold, meaning the dollar will go down against the price of gold as it has already done so. People say, “well, the price of gold has gone up from $255 to $630,” but I can turn around and say, “no, no, no – the price of gold is the same. It’s the dollar that has gone down against gold.” [34:20]

JIM: Marc, if you were to give advice to investors now, if there was one thought that you have learned in your travels and working in the investment markets over the last 2 or 3 decades, what would that point be?

MARC: Politicians are inherently dishonest and they will print money. And the second point is you have to look around the world and you have to see countries that are – in terms of prestige and economic might – kind of peaking out; not that they go down, but others are coming up at a faster rate. And the fact is simply that the emerging economies have developed at a faster rate than Europe and the United States. And if you look at the US in the '50s, they were much ahead of the rest of the world, and today many countries have reached almost the level of the United States. And I think that as an investor I would be reluctant to have a significant portion of my assets in the US. I would go and look at so-called frontier markets, whether they are in Africa or in Central Asia or in Asia. For instance Vietnam is a perfect example of a country with a huge potential. You have a GDP that is only about $60 billion, and a population of 84 million people who are very determined, hardworking, disciplined. They have a very high literacy rate compared to say India; and they are a homogeneous race – they don’t have the ethnic problems that India has. I think India has a huge potential – don’t take me wrongly – but in India already the stock market is up more than 4 times since 2003, and you have a huge country with a billion people, but you also have a lot of problems. In Vietnam, you have the equal potential but with less problems. [36:23]

JIM: Marc, finally as we close, why don’t you tell people about your newsletter? I would have to say I would put it in my top 5.

MARC: Well, that’s very kind of you – that’s very complimentary. Basically, I have a website www.gloomboomdoom.com. On the website we put up a commentary monthly, and then there’s the written material which is more for high net worth individuals and financial institutions, and that is called the Gloom, Boom & Doom Report. And both have some contrarian bias and look at unusual investment opportunities wherever they may arise around the world. [37:09]

JIM: And once again the website?

MARC: www.gloomboomdoom.com.

JIM: Ok, thank you, Marc, for joining us.

MARC: Thank you very much for having me. [37:20]

David Webb, President & CEO, Tyhee Development Corp.

Bio | Tyhee Development Corp. (TSX-V:TDC)

JIM: Joining me this year at San Francisco’s Hard Asset Show is Dave Webb, he’s President and CEO of Tyhee mining. Dave, why don’t you for listeners that may not be familiar with the program and the project, tell us about the program, the company and what you’re doing?

DAVID WEBB: Thanks, Jim. It’s nice to be here. San Francisco is a great place to show what you have. We spend a lot of time telling people that our project is in the Northwest Territories of Canada, and the immediate thought is, “we’re remote.” But the point is that the Yellowknife-Greenstone belt has been mining since the 1930s, there’s been over 14 million ounces of gold produced, and we’ve picked up two terrific assets at the North end of the belt. It’s anchored by the old Discovery mine which has produced a million ounces of gold at one ounce per tonne back in the 50s to 60s. [38:08]

JIM: So describe the project scope, the size, how big of a property, what kind of work has been done, and talk about resources.

DAVID: We picked up the property in 2001. We bought it for a ¼ million dollars, it had a ¼ million ounces of gold on it. What we have done since then is we attached another property that also had another ¼ million ounces of gold, and we paid ¼ million dollars for that. And we’ve been expanding that ½ million ounce resource to where we are now: we’ve got a million ounces of measured and indicated gold; and 300,000 ounces of inferred gold to add on to that. And all of this was done with the drill bit. We’re actually operating a little bit over a mile South of the old mine site, and we’ve got a long stretch of land about 14,000 acres that we’re expanding by drilling – expanding our resource into it. [38:59]

JIM: You’ve been drilling this for 2 to 3 years now. You’ve got close to a million ounces in measured and indicated, you have your inferred resources – what about exploration potential out on this project? Is there anything else that you’re doing here?

DAVID: This is fantastic – the easiest exploration that we do is we step outside of our proposed open pit and put a hole down there. So we’re still open a long strike and we’re just simply and easily building up the resource – adding on to that million ounces of measured and indicated by drilling to the South and to the North. It’s kind of closed off to the East and West, but it’s a long, linear strip and we still have a mile to go before we hit the old discovery mine where they got a million ounces of gold out in the past. [39:43]

JIM: Now, your main project so far is the Ormsby. Describe that and then what else you’re doing around the project.

DAVID: The Ormsby zone is a little bit different from Yellowknife, but I’ve been working up in Yellowknife since 1980 – I did my Master’s thesis on the big mines in Yellowknife and I did my PhD on the entire belt – and I’ve found that there’s an extremely, highly mineralized segment of rock that extends through the Ormsby zone, through the Discovery mine zone and along to – 5 miles away – our Nicholas Lake project. That’s the other one I told you that we paid a ¼ million dollars for for ¼ million ounces of gold. The really exciting thing there is we were just looking at the old drill information and we found out when we assayed the entire drill hole there’s all kinds of 1 to 5 gram per ton material that was never sampled in the past. When we assayed it we get segments that are – ultimately I guess the best number that we reported this year is we tested 4 drill holes and we ended up with 112 meters of 3.39 grams of gold per ton. So this is brand new discovery right in the middle of one of our deposits that we’ve been working on for 5 years. [40:53]

JIM: Now recently I’ve noticed that you’ve been staking some other properties, there’s Big Sky and there’s Typhoon. Tell us about those two properties.

DAVID: Typhoon is really the extension of the Ormsby zone Discovery mine area. It’s a highly anomalous belt of rocks. It’s about 800 meters long, so it’s got some great potential. We actually haven’t even got a drill hole in it yet – we’re waiting for the swamps to freeze so we can drag the drills over there without gouging the land too much. So that will be drilled this winter.

Big Sky is a very exciting property. It basically ties on to a hydroelectric power plant and the other property margin is tied on to the old Giant mine. So we’re really well located. What we found there was a 10 km diameter intrusion that was mineralized, and this is a rock that people in the past would not have sampled – we never sampled granites in the past. This is part of the Nicholas Lake phenomena – that was the very first significant gold deposit in granite found in Yellow Knife – this is perhaps the second. [42:01]

JIM: Where is the company going? You have the Ormsby which is coming along in terms of its development – what are the plans there?

DAVID: We want to make Ormsby bigger. We thought when we hit that million ounce mark that, there, we now have a mine of merit and we can start developing this and going ahead. And perhaps in hindsight that was a mistake. A million ounces is a very interesting gold deposit – two million is more interesting. And why we stopped at a million – it was really just an arbitrary number. So what we did is we did enough development that we think we can demonstrate that it’s economic, and now we’re adding to that as quickly as possible. So we hope to take our million ounces to 1.2 to 1.3 million this year, continue drilling and hopefully with contributions from Nicholas Lake get our entire resource comfortably over 2 million ounces before we turn on a mine. [42:52]

JIM: In this area now, you have the Nicholas Lake, you have the Ormsby, the old Discovery – that’s sort of like one contiguous…this is looking like more like a district play than a single mine.

DAVID: Yes, I’ve always been impressed with mines that you’ll put down one processing plant, one set of infrastructure and then you’ll extract gold ore from many deposits. And this is characteristic of for example Nevada – there’s a number of projects there that are similar. You could do this in Timmons, Ontario where the Panwar [ph.] mill took ore from all the mines around them. I think that by consolidating the North end of the belt, and we are the largest property owner up there, that we can draw from many different operations and have one central infrastructure. It will very much reduce the capital costs, and hence the economics are that much more favorable. [43:48]

JIM: Let me talk about a problem that a lot of companies are having today – as we all know, the environmental controls and restrictions today are much, much tougher than let’s say where they were 30 years ago. What about permitting and bringing this to mine production? Where does the company stand and what is your relationship with the Indian tribes and the government there, because I think that would be important to know?

DAVID: Absolutely. And permitting is one of the biggest issues that we have anywhere in the world. There are some jurisdictions where you can operate on a shoestring and go in there and put a mine in without actually knowing what you had there, but companies I think are a little bit more intelligent, we’re a little bit more careful. So we started two years ago looking at the animal life, the plant life, the fisheries and we started measuring it and documenting it. We want to know what is the arsenic or mercury content of the fish before we start mining it. I think any sane person – certainly any director with any assets – would want to know what is the baseline, what do you start out with? So we’re about $2 million and 2 years into our permitting. We have all the background studies, and we’re very fortunate we do not have any rare plant life or any rare fish or birds or animals in our area. The rock that we’re dealing with is free-milling, which means that we don’t have to roast it or autoclave it – it keeps our production very cheap. It’s a basic rock, which means it doesn’t generate an acid. So we seem to have the most perfect world in this one ore body – I shouldn’t say ore body – in this one deposit at Ormsby. And we think that Nicholas Lake will be similar. [45:17]

JIM: In terms of looking out, if I’m an investor where’s the company going in the next 2 years? What are some of the milestones you’ve set for yourself and what could investors expect?

DAVID: I think first off you’ll see a new resource study coming out. We’re going to be constantly spitting out drill holes, and these drill hole results which are open and we’re trying to make sure everyone knows what they mean, they’re being incorporated into ore reserves or resource estimates, and we’ll build on our 1 million ounce M&I and make that perhaps 1.2 or 1.3, and just build it as quickly as we can – that adds value to the shareholder. Currently, we’re valued at about 50 to $55 per ounce in the ground – measured and indicated – it would be about $40 an ounce if you include the inferred ounces. That compares to our peer group average of $75 per ounce in the ground. So we’re a little bit undervalued there. We could probably double and still be valued within our peer group close enough to the mean. By adding the ounces, we’re going to be adding value. The second thing is a measured and indicated ounce is worth one thing – perhaps $75 per ounce – if we can get a prefeasibility study completed on this project and demonstrate the economic potential, those ounces become worth $100 to $200 in today’s market. So shortly after our revised resource estimate you’ll see us come out with a preliminary economic evaluation and we’ll demonstrate the economics of this deposit – or at least, that’s my belief. [46:49]

JIM: So you have close to 1 million ounces right now – M&I. You’ve got 300,000 ounces in inferred – so a new resource estimate coming out here shortly, is that what you’re saying?

DAVID: That’s what I’m saying and I’m hoping for a 15 to 20% boost in that, and that will come out before the end of this year – sometime in December. And then all this work on Nicholas Lake which is extremely exciting to me with our ability to turn that into a large open pit could potentially add another ¾ million ounces, and that could happen by July of 07. [47:23]

JIM: If you were to stand in front of a group of investors today, give me 3 reasons how you plan to make money for shareholders. Why should I buy your stock right now?

DAVID: First of all, we’re undervalued today by all the common metrics. So on a per ounce basis we’re almost half the price of our peer group. Secondly, we’re going to move out of our peer group, and move towards an economic study on it which will push us into the guys that have completed their feasibility studies or prefeasibility studies. That will add perhaps double the value again on what we’re worth. And thirdly, by keeping the drills turning, and adding ounces by the drill bit we’re adding instantly value to the company. [48:12]

JIM: A lot of times companies will get involved, they’re taking their mine into production and they’re drilling out their ounces and they’re taking them from the inferred to the M&I category, but as you know, Dave, the market likes excitement, it likes blue sky, it likes exploration. What does Tyhee have to offer in that regard?

DAVID: I think as you’re aware with our other properties they’re really grass roots right now, and the best bang for the buck – the most explosive part of any junior company is that discovery stage. I think we have 3 discoveries that we’re working on. As I said, the Nicholas Lake bulk mineable potential, that’s a drill hole right in the middle of our deposit that we looked at and said, “holy cow, we’re over 100 meters of 3 ½ grams on average.” That is pretty decent and that’s a brand new discovery – that’s a bang for the buck you don’t get anywhere else. But Big Sky – Big Sky is an exciting property because of the size. The grades we have off that today are broad areas running 0.1 grams gold per tonne – now nobody’s going to make a mine on 0.1 grams gold per tonne, but when you start looking at the size of it and realize that within that we have 1, 2, 3, 4 grams of gold per tonne, we’re 7 kilometers away from a road and we’re tying on to a hydroelectric power plant. And down here on our booth you can see a photograph of my partner sitting there talking to his honey on his lunch time with the head frames in the background – that’s a very appealing photograph to sell that project. It’s close, it’s big and it’s accessible by power and by road. [49:46]

JIM: Hence, Big Sky.

DAVID: Hence the big sky. And I’m telling you when you’re tying on to 14 million ounces of past production that’s a good neighborhood to be in.

JIM: Alright, Dave, why don’t you give out your stock symbol if our listeners would like to find out and your website.

DAVID: It’s Tyhee Development Corp and we’re trading on the TSX Venture exchange under the symbol TDC. We’re accessible on the web at www.tyhee.com.

JIM: Alright, Dave Webb, thanks for joining us on the program.

DAVID: Thanks for having me here, Jim. [50:21]

JIM: And you’re listening to the Financial Sense Newshour where we’re broadcasting from the Marriott hotel in downtown San Francisco at this year's San Francisco Hard Assets show.

Marek Kreczmer, President & CEO, Northwestern Mineral Ventures, Inc.

Bio | Northwestern Mineral Ventures, Inc (TSX-V:NWT, OTCBB:NWTMF)

One of the things that has happened to the San Francisco Gold Show this year is it’s changed, and it’s now a natural resource show, instead of just gold. And joining me right now is Marek Kreczmer, he’s President & CEO of Northwestern Mineral Ventures. And Marek, tell us about your company, what it is you’re doing and talk about your project.

MAREK KRECZMER: Northwestern company has about C$16 ½ million in its treasury, and we have 3 projects: one is in Niger which is a West African country – number four uranium producer in the world; the second project is North Rae in Northern Quebec; and the third project is land position immediately West and Northwest of Cigar Lake, Saskatchewan.

Niger is a country which has been known for its uranium production since 1957 when the first mine was built by Cogema, the French government agency. And all of the uranium consumed by the nuclear reactors in France actually comes from Niger. We acquired 4,000 sq. km in March of this year. The other companies active in the area is the Chinese Nuclear Corporation which is immediately West of our properties. The first exploration that we did consisted of airborne radiometric surveys which outlined 17 targets. We prospected 4 out of 17 and we found very high radioactivity due to uranium on two of these licenses – two of these anomalies. And actually the uranium content is so high based on the radiometric surveys using hand held scintillometers that we hired Wardrop Engineering – a Canadian consulting firm – to sample all of our water wells in anticipation of maybe some future problems with NGOs, because we expected the uranium content in drinking water in these wells is going to be very high. [inaudible] consulting company is actually providing services to us – we have some local geologists working representing Northwest and we will have drills on the property in the Spring of 2007. [52:50]

JIM: Tell us about your projects in Canada.

MAREK: The Quebec property is actually a very pleasant surprise. We acquired it in July of this year and almost simultaneously Cogema again acquired a very large land position around us. As a first line of business we did a lake sediment survey and it surprised us because the lake sediments actually contained as much as 3 pounds of U3O8 in the bottoms. We then followed it up with airborne radiometric surveys which outlined 13 different anomalies and towards the end of a fuel program we sampled one of these areas which is about 6km long and about 3km in width, and finally a number of graph samples which are up to 0.6% U3O8. Now that is extremely high because we’re looking at the Rossing style of mineralization – Rossing is one of the largest uranium mines in the world that’s based in Namibia. We’re looking at a uranium content which is much higher than that mine. We are only 20 km from the sea and the style of mineralization that we are looking at will be open-pittable. And what is extremely interesting is that the uranium is due to urananite which is a primary mineral and that tells us we’re not looking at some surface enrichment, we’re actually looking at a magmatic source of uranium. So the potential for having a very large total uranium contained deposit is extremely high – and this is only 1 out of 13 anomalies that we have the opportunity to test. So we’ll be going back early next year as soon as the snow disappears and we will be drilling by mid 2007.

And the third property is judged to be very similar to Cigar Lake. It’s under Waterbury Lake, which is the large lake immediately North of Cigar Lake. And I began my career in 1977 in Uranium City and back in the late '70s, the early '80s, we didn’t believe you could mine uranium under lakes, so there was very little exploration done. So consequently, we have a property which is so close to a big deposit but it has not been tested in the past, and we only have 200 meters of sandstone so we can drill a number of targets. We were going to drill in the Spring of last year but the ice conditions were very poor, so we’re going back this year [when] we’ll be drilling. [55:19]

JIM: What ultimately is the objective of the company?

MAREK: Ultimately, we will probably be taken over by one of the large uranium producers, and that’s the reason why we chose our ground very carefully: one in Niger where we have the largest uranium producers on one side, and a Chinese nuclear corporation on the other side; in Quebec we have positions immediately adjacent to Cogema who came after us; and we’re next door to a Cogema-Cameco joint venture in Saskatchewan. [55:47]

JIM: So ultimately it would be to prove out these different properties and then eventually become attractive enough that somebody would want to buy you?

MAREK: That’s correct, yes. And because of our land position we’re not looking for joint venture partners, we can add value with the money we have in the treasury. [56:03]

JIM: If you were speaking to a group of investors today, give me 3 reasons why somebody should buy your stock.

MAREK: We have very good cash position so there will be no additional dilution associated with bringing our projects. The projects have [inaudible] indications of being very good, we’re in a position of being able to spend a million dollars a month on drilling; and we have very large land positions with very good focus on a potentially very high uranium content of the deposit. [56:34]

JIM: So if investors would like to learn more about your company why don’t you give them your trading symbol, where you trade and then if you have a website if you would spell that out.

MAREK: We trade on TSX Venture, over the counter in the US, and the Frankfurt Stock Exchange, the .trading symbol is NWT. And we have a website, www.northwestmineral.com.

JIM: Marek, I want to thank you for joining us on the Financial Sense Newshour – all the best to you, Sir.

MAREK: Thank you, Jim. [57:05]

Allen Ambrose, President, Minera Andes, Inc.

Bio | Minera Andes, Inc.(TSX-V:MAI,USOTC:MNEAF)

JIM: And you’re listening to the Financial Sense Newshour where we’re broadcasting from the Marriott Hotel in downtown San Francisco at this year’s San Francisco Hard Assets show. Well, certainly in the markets today -- where ounces are getting harder to find -- the real name of this gold bull market is exploration. Joining me on the program is Allen Ambrose, he’s President of a company called Minera Andes. Allen, why don’t you tell us the company’s story? When was it founded, where are you located, and your principal project?

ALLEN AMBROSE: We took Minera public back in 95, and we’ve really focused on Argentina and the exploration potential down there. We saw a country that was really underexplored, underdeveloped. We have all of the deposits on the Chilean side; geology very similar in Argentina. We saw it as a great land of opportunity – they were changing their mining laws, and we got in there fairly early and started exploring and met with some very good success by 1997. We took the company public in 95 in Canada and then also we trade on the bulletin boards. [58:16]

JIM: When you think of South America, I think of Brazil, Chile – we’ve seen Ecuador and other areas of South America. Argentina from a mining perspective – give us a little bit of history. There hasn’t been as much done there until recently as I understand it.

ALLEN: Correct. You went through various government regimes – the mining laws weren’t really conducive to foreign investment and they recognized this in the early 90s. So then by 93 they put in new mining laws that really kind of rolled out the red carpet for foreign investment, and made it really conducive to get foreign investment in. So you had a wave of companies starting in about 92, 93 that went in through Argentina. And then there were several discoveries made – which we’ve now got two discoveries within Argentina: one a fairly sizeable gold and silver project; and we’ve also got a new copper discovery that we made earlier this year. So the whole development of Argentina, you’ve got one fairly good sized copper mine that Xstrata owns called Alumbrera, and then a couple of other gold-silver projects that are in production – but that’s it. You know the country’s mining potential is kind of coming into its own now. It takes several years to develop and mine these things and move the projects ahead. [59:40]

JIM: We’ve seen companies like Silver Standard, we’ve seen Pan American Silver start to move into this area. What has changed with the mining laws that makes it more attractive now? Is the country finally starting to say, you know, outside of agriculture here’s a great industry that can help the economy grow?

ALLEN: Right. I think the country has recognized that the potential to create wealth and jobs and industry there – a very understated industry typically within the country. The President of Argentina, he was the former governor of Santa Cruz province where we’re located. Santa Cruz province has a very good history of mining and also in oil and gas exploration. So the government realizes the value of the royalties and the job creation of the mining industry, so they’re really rolling out the carpet. We just got our permits for our project which is going to be in production by about June of next year, and it took six months to get the permits – and these are all to World Bank standards – full feasibility. But where in North America it might take up to 7 to 10 years to get a mine into production based on the bureaucratic red tape, they’ve shortened that process dramatically so that just shows how they’re rolling out the carpet to induce foreign investment in the country. [1:01:07]

JIM: What about the infrastructure in Argentina for mining – roads, power etc? How does the infrastructure look?

ALLEN: It’s more primitive from that perspective. It doesn’t have a well-defined mining industry and that was one of the reasons we brought in our joint venture partner, Mauricio Hochschild – Hochschild is a large Peruvian miner, they’ve brought in their Peruvian miners into the country and then trained Argentinean workers to be miners. So we’ve got an Argentinean labor force that’s well-trained by this Peruvian group – that was a big reason that we selected them as a partner down there, because we’re looking at a high-grade operation that’s underground, and it’s a very specialized type of mining. So the industry down there is in its infancy but it’s growing nicely. Barrick just made a $600 million investment in Argentina to develop 2 gold mines in the Northern part of the country, and they should be in production – I think their date now is – January. [1:02:12]

JIM: You mentioned that you hoped to be in to production next year. What are you hoping to produce at that time?

ALLEN: Our project is going to start out at 750 tonnes a day – we’ll be producing 3.4 million ounces of silver a year, and about 160,000 ounces of gold. So it’s a gold-silver project which is about 50% by value of each metal. So we talk about it as a silver project or a gold project. [1:02:43]

JIM: Do you hope to expand on that in the future with adding exploration to it, to build on those numbers?

ALLEN: Yes, our joint venture partner Hochschild just went public on the London Stock Exchange. We announced last week that we were going to do an in house financing with Hochschild. They raised 520 million over in London. They’re doing the financing for our project. And doing it in-house like this we have no hedging, so that’s one important event. And then Hochschild’s other plan as the project is developed and in production, and they’re already talking about increasing the size of the production within the first 12 months of operation. So instead of 750 tons their target is to up that to 1500 tons a day – so all of those numbers I just gave you would double. And that shows some of the robust nature of the project. It’s very high grade. Our internal rate of return at today’s numbers is over 70%, so these very high grade projects are very robust – of course, at these metals prices. They’ve also made the plant and equipment that’s being installed – the construction is about 65% complete – that is being built to be scaled up, in other words the processing facility is designed to handle extra capacity. [1:04:06]

JIM: And finally, Allen, if you were talking to a group of investors right now, give me 3 reasons why they should buy your stock?

ALLEN: Well, I think first off you’re looking at a company that’s transitioning from exploration to production, so we have a strong exploration side with a lot of exploration potential in the company. This project that I’ve been talking about – these vein systems – we’re going into production on about 2 to 3 kilometers of vein; they have another 30 km of vein identified. So they’ve only drilled 10% of the system, so you have huge exploration upside. Then you have the production side of the story, which going into production I think you’re going to get recognition and revalued in the market. Being a producer you’ll limit any further dilution because you’ll have revenue. And then thirdly, we’re repeating that process and we’ve already made a new discovery on the copper side – the copper project has very large potential, and we’re getting no credit that I can see in the market for the copper project. So you’ve got those 3 facets to the company. It’s very liquid stock. And I think we’re starting to get our recognition coming into our own. [1:05:26]

JIM: As we close why don’t you give out your ticker symbol, the primary exchange where your shares are traded and your website if you would?

ALLEN: The ticker symbol in Canada is MAI.V – it’s on the Venture exchange, and in the US we trade on the bulletin board under the symbol MNEAF. And our US volumes I would say are probably double – we’re trading about 500,000 shares a day in the US, and 200,000 shares in Canada. And you can get updated information on our website at www.minandes.com. [1:06:11]

JIM: I want to thank you for joining us on the program and all the best to you, Sir.

ALLEN: Thank you.

PART 2: SAN FRANCISCO HARD ASSETS '06

James Turk, Editor, GoldMoney.com
Cathy Fong, President, Silvercorp Metals, Inc.
Ralph Shearing, President & CEO, Soho Resources Corp.
Michael Curlook, Investor Relations, Farallon Resources, Ltd.
Richard Buzbuzian, Vice President, ECU Silver Mining, Inc.

James Turk, Editor, GoldMoney.com

Bio | GoldMoney.com

JIM PUPLAVA: On the day that we’re sitting here talking – the last day of the resource investors show – the dollar is down, the stock market is down triple digits. I’m joined by James Turk of GoldMoney. Jim, what’s your take on what’s going on here.

JAMES TURK: I think we’re sort of seeing the markets releasing the pressures that had built up prior to the election. I think prior to the election some of the markets had been contained. Gold was in a very orderly and tight trading range under $600 for a long time; the dollar was in a very tight and orderly trading range; interest rates had come down very nicely. Now we’re starting to see economic realities reassert themselves. [00:52]

JIM: One thing that we have seen and there’s a lot of talk about monetary policy being tight, but everywhere that I look around the globe, if you look at the money supply even though they no longer report it – that’s an amusing story in itself – but the last time they were reporting it, it was growing at close to 8%; some people that have reconstructed it are saying it is closer to 10% today. But it’s not just us, the Europeans are inflating, the Asians are inflating and everywhere you look around the globe today there’s nothing to anchor anybody’s currency. And we’re seeing the consequences of that in a rising core rate of all things.

JAMES TURK: Yes, and even more so we’re seeing rising commodity prices, because what we’re seeing in fact is a flight out of national currencies into tangible assets like commodities, like gold, and even to a certain extent the stock market although it’s down 100 points today – we just did make a new high. People would rather own a million dollars of zinc than have a million dollars in the bank account; and similarly, people would rather own a million dollars of Exxon than have a million dollars in the bank account. [1:57]

JIM: There’s talk we’ve seen oil go from $20 a barrel to $60 a barrel – at one time it was close to 80; we’ve seen copper go from 60 cents to over $3. And there’s a lot of talk in the financial circles that this is a bubble but I don’t see any large stockpiles of commodities anywhere around the globe. And if you look at day’s use, there’s a very disturbing trend, whether you’re looking at oil, copper etc; and I don’t think the public is buying into commodities the same way that they were doing tech stocks in 1999.

JAMES TURK: Yes, I agree. The fundamentals on commodities across the board are still very attractive and on a relative basis a lot of these commodities are still very cheap. In 1980 dollar terms, gold is only $250, which is less than a third of the $800 plus price it reached that year. So we’re still very cheap in commodities, and there is a bubble out there but it’s not commodities, it’s the dollar. The dollar is in a bubble and I think starting to pop. People are recognizing that there’s no value there and the demand for the dollar is dropping. [3:03]

JIM: As we see this movement in commodity prices that we’ve seen since 2001 – certainly we’ve seen other assets rise as well: the stock markets up, the bond market’s done well – but it seems to me that those that can look at monetary conditions around the globe are starting to sense this monetary inflation that we’re seeing around the globe. And it looks to me like the smart money has been moving in, and is continuing to move in to the commodities sector or tangible assets.

JAMES TURK: I agree. And in fact, one of the things that I’ve been doing is studying the early 1920s in Weimar Germany, and there are an awful lot of similarities between what is happening here and what happened back then that ultimately led to the hyperinflation – even the way Mr. Bernanke speaks, he talks about liquidity but that was basically what the German central banker was saying at that time – they added more liquidity into the markets to keep the economy going and keep putting purchasing power into people’s hands. I’m afraid that we’re going to go to the same type of situation as Germany: that the currency is just going to be in a crisis and lose purchasing power, which is the basic theme in my book The Coming Collapse of the Dollar. [4:16]

JIM: This is something that I think people don’t realize: there’s a lot of people that have been bearish on the stock market over the last couple of years. And much to their chagrin, they have seen the stock market head higher as we’ve seen this year with new records in the Dow. But when you’re printing a lot of money that money is going to go find a place. And I remember reading a piece in one of your newsletters where you talked about for somebody trying to hold on to value that holding on to for example shares of Exxon that may own tangible assets around the globe is probably a lot safer play than just having pure vapor in a CD or a government bond.

JAMES TURK: And if you’re aware where monetary crises have occurred in the past that’s exactly the way people would act to protect themselves. It happened in Germany in the 20s, it happened in Argentina just a few years ago, and I think we’re seeing that now. That’s why we’re seeing some of these unusual moves in the market. The stock market is not going up because of good economic conditions, the stock market is going up because of bad conditions with the dollar. [5:17]

JIM: You’ve been in the investment business, you’ve followed the markets globally for decades now, if you were speaking to a group of investors – which you will be doing later on this afternoon – what would you be telling them to do right now with their money?

JAMES TURK: In terms of general trends you have to be moving wealth out of financial assets, out of dollar denominated assets, out of bank accounts, outside of insurance policies – out of those types of things. Out of annuities. Stay away from anything dollar denominated – no T-bills, no bonds. And move into preferably tangible assets, or at least other currencies that have better prospects than the dollar. The problem with other currencies is that most of them hold the dollar as reserves, even though some central banks have been diversifying. So if the dollar goes over the edge of a cliff the other currencies are going to be adversely affected as well. So the safest place is basically gold and silver, and that’s going to be the theme of my presentation this afternoon. My expectation is we’re going to see a 4 digit gold price within the next 18 months and I’m going to lay out the basic reasons why trends that have been underway for the past several years are going to continue for a few more years and taking gold much higher. [6:22]

JIM: You see gold crossing the $1000 mark? What about silver?

JAMES TURK: I’m very bullish on silver, even more so than gold, and I recommend following the ratio between the two. We’ve been in a very long bull market in silver in the sense that we’ve come from 100 ounces of silver to buy an ounce of gold 15 years ago, to the present where it only takes 48 ounces of silver to buy an ounce of gold. My guess is we’re going down below 20. So let’s say that within the next 18 months if we see a 4 digit gold price – for the sake of argument, $1200 - and we get down to 20, we’re talking about $60 silver. Longer term, I think silver is going a lot higher than that. We could talk about a 3 digit silver price, just like we could talk about a 4 digit gold price. [7:03]

JIM: If you were to tell somebody that today they would say, “well, that’s just sounds crazy,” as it would have been if we were to go back to 2001 and you were to tell people that oil prices would go to $80, or gold would be over $600 – they would have looked at you with that kind of glossy look in their eyes: “oh, you’re one of those people!”

JAMES TURK: You can go further back to 1971 when gold was $35 and if you had said you had perfect knowledge and gold was going to 850 in 8 or 9 years, everyone would have just said there’s no way, but in fact that’s exactly what happened. And what we’re seeing today is essentially a replay of what we saw then: monetary problems drove people out of financial assets into commodities; we had a huge big bull move in tangible assets of all sorts. And we’re seeing the same thing today: monetary problems, particularly those with the dollar are driving people out of dollar denominated assets like T-bonds, T-bills and what not, in to real tangible things as a way to protecting their wealth – and gold and silver are the easiest way to do that. [7:59]

JIM: And speaking of gold and silver, let’s talk about GoldMoney, because you have a unique program which offers a lot of safety for investors. Why don’t you talk about that for a moment?

JAMES TURK: We’re growing very well. We have over $160 million of gold and silver stored in GoldMoney now. We have customers in over a hundred different countries around the world. The advantages are it is very convenient and economical and most importantly very safe way to buy gold and silver online. And you have the additional advantage that you’re diversifying your gold and silver by storing it in the UK. The UK does not have a history, for example, of confiscating assets which of course is different from the states where gold has already been confiscated once before. [8:41]

JIM: And Jim, if our listeners would like to find out more about GoldMoney, tell them how they could do so.

JAMES TURK: The best thing to do is just go online to www.Goldmoney.com, we have a lot of disclosure on the website. We also have a very active customer support so if there are any questions just go to the customer support link at goldmoney.com and mail in your questions and we’ll be able to help you any way we can. [9:01]

JIM: Well, Jim, I want to thank you for joining us here on the Financial Sense Newshour we had a little bit of a technical difficulty. Jim and I are sitting in a booth talking on our cell phones.

JAMES TURK: A pleasure to be interviewed by you.

JIM: Thank you very much.

JAMES TURK: Thank you.

Cathy Fong, President, Silvercorp Metals, Inc.

Bio | Silvercorp Metals, Inc.(TSX:SVM)

JIM: And you’re listening to the Financial Sense Newshour where we’re broadcasting from the Marriott Hotel in downtown San Francisco at this year’s San Francisco Hard Assets show. Silver has had one heck of a run up this year, we saw it from a low of $9.20 in the futures market beginning in January, to the day we’re talking at the show at $14.16. My next guest runs a silver company: Cathy Fong of Silvercorp. Cathy, as we begin, tell us about the Silvercorp story. What is it that you’re doing, where are you mining? – and let’s begin with that.