The last safe haven #6 – Richard Mills

2025.05.12

Friday 9^th May 2025

Rick Mills, Editor/ Publisher, Ahead of the Herd:

RM: I believe the United States current economic policies are driving us towards stagflation. And US Federal Reserve Chair Jerome Powell has mentioned, twice publicly, that he also thinks a lot about declining growth and rising inflation. The last time he said, and I’m paraphrasing here, “It’s only a matter of time until Trump’s tariffs stoke inflation, push up unemployment and weaken economic growth.” Which is Stagflation.

The job market and the economy are resilient so we’re not in stagflation yet, but it’s certainly a possibility.

Traditional fiat currencies are falling and commodities and precious metals – I believe you’ll agree – remain the last safe haven standing. Do you think we’re looking at stagflation, which is an excellent environment for commodities, gold, silver and related equities?

Bob Moriarty, Founder, 321gold:

Absolutely we’re looking at stagflation, no question about it and I’m pleased to see that ordinary investors are waking up to the advantages of precious metals. There are some extraordinary opportunities right now if people will act.

RM: I agree 100% and it’s an important part of our message that we need to keep talking about. I know that you’ve got a couple of stocks that you want to talk about.

You like Pacific Empire Minerals (TSX.V:PEMC). Why?

BM: The price okay. Here’s why this is such a perfect example of what we have been talking about regarding market cap. This is a stock everybody hates and the reason they hate it is they’ve been waiting for a drill permit in central BC. The BC government has been very slow to issue a drill permit so investors got sick and tired of waiting, they literally have bailed out of the stock.

You can buy the stock today at a penny and a half. Now then, if you were to look at the price today and compare it to the historic price, if it’s a penny and a half today how long ago was it 3 cents?

RM: I just looked at its chart, not long ago at all.

BM: It was a month ago. The stock was 4 cents six weeks ago, it was $0.03 a month ago okay, there is nothing wrong with the stock that can’t be fixed.

Now obviously to drill they’re going to have to raise some money, they’re not going to be able to raise some money until they get a drill permit but if you’ve got a stock that’s a penny and a half, what can you possibly do to make the stock more attractive?

RM: Tectonic (TSX.V:TECT), another of the stocks we have talked about is doing a financing, and a rollback simultaneously, to make themselves more attractive. Definitely helping.

BM: I’ve been in TECT for years and that’s a perfect example of an aggressive company with a great project that’s making their stock a lot more attractive just by doing a rollback.

Nobody wants to touch PEMC at a penny and a half, so do a rollback. You cannot possibly hurt the stock, it’s already been destroyed because of the lack of a drill permit, but if you do a 10 to 1 or 20 to 1 rollback you’ve either got a 15-cent stock or a 30-cent stock. And a $0.30 stock is always more attractive than a penny and a half stock even if the size of the pie is exactly the same.

Now I’ve talked to a lot of companies in the last 25 years and a lot of types of stocks, all they would have to do to make themselves look more attractive is to do a rollback. Now I can’t control when their drill permits are going to come in, but I can absolutely tell you that management needs to roll back and make it more attractive for investors.

I mean a $0.015 stock is quite bluntly embarrassing. Do a rollback at 10:1, 20:1, give it a price that people will at least take seriously, get a much lower number of shares outstanding and some day the government will get their act together and actually issue them a drill permit.

The crazy thing is if you go to PEMC’s site and you look at the presentation they’ve got some excellent projects right in the center of BC, they’re surrounded by big mines, this is not a bad stock it’s a good stock, it’s being held up by two things: one, investors are pissed off by the lack of a drill permit; and two, investors are pissed off by a price of a penny and a half. So, you can’t do anything about the drill permit but you damn sure can do something about rolling the stock back. This stock was worth 3 cents four weeks ago and 4 cents six weeks ago so it’s worth a hell of a lot more than a penny and a half.

So PEMC should be bought for no other reason than it’s cheap. Some day there will be a drill permit and if the management of the company would get their act together, they can do a rollback right now to make it more attractive.

Now let’s talk about Sitka Gold (TSX.V:SIG) for just a minute, Sitka just came out with results literally yesterday.

RM: That’s right and Sitka is one that we talked about already, we talked about it on April 8th when you called the stock another Snowline Gold (TSX.V:SGD) and then you changed your mind and said it’s better than Snowline and here they have news out.

BM: Well two things happened, one is very predictable and the other one chaps my ass, okay.

That stock was 62 cents a share on the 25th of April. Prior to the news being released on the 8th it went down 11 cents to 51 cents. Now I caught these guys doing this before, where somebody knew good results were coming out and they front ran the stock.

When you announce that a drill core has 138 samples of visible gold you know they’re going to come out with good results, and a lot of people will buy the stock with the intention of selling it as soon as the results are released and that’s exactly what happened.

So, two weeks ago SIG was $0.62, the day prior to the results being released it was down 20%. And then it was down another 15% yesterday based on the results.

Anytime somebody talks about visible gold, anybody talks about we got 50 meters of mineralization, everybody wants to jump in, buy, and sell as soon as the news releases come out.

Now as far as the project’s concerned it’s a fabulous project there’s no question about it whatsoever. From a technical point of view, it is a Snowline but it’s in a better area with better infrastructure.

RM: Sitka is currently trading at $0.49. Some might think it’s a buying opportunity.

You wanted to speak about Altamira Gold (TSX.V:ALTA), copper-gold in Brazil.

BM: Yeah, this one is a really interesting situation and strangely enough you’ve heard me say many times that I believe in sentiment. The really interesting thing is that they just came out with a news release like three days ago talking about an open pit resource (the maiden open-pit resource consists of total Indicated Resources of 24.19Mt @ 0.46g/t gold, for a total of 357,800oz, and Total Inferred Resources of 25.64Mt @ 0.44g/t gold, for a total of 362,400oz), and the price went up a penny and a half.

What’s really funny is here’s this great project in an area that millions of ounces of gold came out of with placer mining, they’ve got nine targets, they’re going to drill five of them this year, now obviously they’ve got to have money so they’re going to have to do a raise, but they doubled the resource and the stock’s up like 15%, I mean it’s really funny.

RM: Everybody is sleeping.

BM: The entire resource sector is snoring away and one or two kernels are starting to pop but this is another example of something that’s underneath the radar scope, that has economic gold in a great area in a great country, and it’s been totally ignored.

RM: So, you’ve covered Pacific Empire, Altamira and Sitka. Anything else you wanted to bring up.

BM: Well what we’re trying to do is show examples of what to look for and there’s two ways to justify buying a stock: buy it when it’s cheap and cheap is determined by it’s market cap which is true of PEMC, and it can be true in the case of Altamira where they doubled the resource which should double the value of the stock and nobody’s paid any attention to it yet but they’re going to.

RM: Well, we first talked about Harvest Gold (TSX.V:HVG) on the 8th of April and it’s done very well. And its still exactly what we’ve been talking about with a $2 million market cap and room to run, and it has and then they’ve come out with some more news just this week.

Vior management did a deal with them, added more claims. Vior is the guys from Osisko after Gold Fields bought them out, they’re a powerful team out of Quebec, they’ve raised hundreds of millions of dollars and when you look at them and you look at Quinton Hennigh and Crescat Capital it’s just a huge confidence booster in Harvest Gold, and then you see more claims coming in.

I like Harvest Gold because the project, I really think the project has got something that’s worth looking at, and I like the fact that they’re on the Urban Barry Greenstone Belt in the Abitibi.

It seems to me that the stocks certainly in motion towards possibly becoming a premier exploration stock in what is the hugely underexplored Urban Barry Greenstone Belt.

BM: Well, I’m going to say you’re wrong.

RM: Okay.

BM: When we were talking about it a month ago what did I tell you to focus on?

RM: The market cap.

BM: Okay the market cap doubled; the stock doubled. How many times do you get +100% gain in a month? And the answer is not very often, and people ignore this. They want to make it complicated, who gives a shit?

It was so cheap a month ago that it was screaming “buy me” but the crazy thing is, it’s only a $4.85M market cap right now so it’s still obscenely cheap.

The simple reason to buy anything is it’s cheap and it was cheap a month ago and it’s cheap now.

RM: I was asked the other day if a guy should sell after a gain like that.

BM: How many reasons are there to buy a stock?

RM: One. Make money.

BM: How many reasons are there to sell a stock?

RM: One. Pocket money.

BM: You buy it to make money. Why do you sell it?

RM: Put the money in your bank account.

BM: Pay taxes, buy a car, take your wife out for dinner. There are a thousand reasons to sell a stock but there’s only one reason to buy a stock.

So, if you buy a stock for $3 and it goes to $6 is it okay to sell?

RM: Yeah, absolutely.

BM: You’re in business to make a profit. What it is the only other alternative to taking a profit on a stock?

RM: Lose money.

BM: Exactly. You either make money on a stock or you lose money. Now I’m not going to say it’s a bad idea to sell any stock. But I will say to take a profit is always a good thing.

It’s found money. But you need to have a plan. I cannot fault people for ever taking a profit.

RM: It’s up to the individual, it’s their money and they decide when they take profits.

Another stock we talked about Silver North (TSX.V:SNAG) just 2 weeks ago weeks ago and it was $0.11 cents, they’re having themselves quite a time in the market, good volume, rising share price and money in the bank to drill a pure silver play in one of the world’s premier mining districts up in Yukon’s Keno Hill silver district.

Their Haldane project is right next to Hecla’s Keno Hill silver mine. I love pure silver plays and the gold and silver ratio is at 101.6. I think this one has the legs.

BM: Silver North has gone from $0.10 to $0.165, that’s always a good deal.

RM: Kodiak Copper (TSX.V:KDK) is, I think, undervalued and I’m definitely looking at it’s market cap.

Just 85m shares outstanding @ $0.42 equals an MC of Cdn$36,000,000.00

Kodiak’s MPD project is a huge land package in British Columbia’s primary copper and gold-producing belt.

The company is going to publish an initial resource estimate that will include seven mineralized zones: Gate/Prime, Man, Dillard, Ketchan, West, Adit, and South/Mid.

Given the positive copper market fundamentals, and how many times copper has been in the news lately, I think there will be a rerating of Kodiak’s market cap based on; the amount of copper in the ground right now; there is more drilling planned on the significant extensions of the zones that will have initial resources; and the fact that there are many other additional zones that will be drilled.

Kodiak Copper’s MPD project has all the hallmarks of a major copper/gold porphyry system with the potential, in my opinion, to become a world -class mine. And they will be coming out with their first resource estimate shortly. The company is fully cashed up for 2025’s large exploration/ drill programs and that means there will be a lot of news flow to keep investors interested.

BM: It’s not a company I know, but I am a big fan of copper.

RM: I was on Project Syndicate, one of my favorite subscription sites, and there was an article saying the Euro had room to ‘grow’ based on Charles Kindleberger’s theory of hegemonic stability which says, an open and stable international system depends on the presence of a dominant world power.

The previous dominant world power, the global and financial military hegemon in the 19th century was Britain.

The British currency was the dominant international one, there was free trade, the gold standard was in place, the Bank of England was a lender of last resort and the City of London seemed like the center of the world, but World War I took its toll on Great Britain and by the 1930s didn’t have the resources to underpin the international monetary system.

The United States was the ascendant power at the time and Britain was descending so what transpired was they had a gap, the Kindleberger Gap, which was the period between world hegemons, and of course we had the Great Depression and the political turmoil that accumulated in World War II.

In 1944 at Bretton Woods there was a transition between the old hegemon Great Britain and the new hegemon the United States, which became the world leader in trading, financial and military power.

And today the US dollar’s is still the world’s reserve currency, the Federal Reserve’s policy decisions and the US economy’s performance still shape the global financial cycle but we have a problem in that the existing hegemon, the US, appears to be self-destructing or at the very least pulling back from the responsibility of having the world’s reserve currency and being the world’s hegemon.

BM: Well, you touched on a couple of things that are very important. First of all, history shows us that a country gets to be the world’s reserve currency for about 80-82 years, and that’s exactly where we are from 1944 okay, so that’s an interesting aside.

But did you happen to catch what Peter Schiff said this week according to Jeff Gundlatch? The Secretary of the Treasury [Scott Bessent] is talking about extending Treasury maturities and lowering coupons on Treasuries held abroad. Now let me tell you why that’s important. All debt gets paid. It gets paid either by the borrower or it gets paid by the lender.

The United States has $37 trillion of debt in funded liabilities and over $200 trillion in unfunded liabilities and let me be absolutely clear. The United States is bankrupt. It’s not my opinion. Anybody that can work the math out realizes the United States is bankrupt.

For all of Trump’s talk about lowering the cost of the United States government, he’s actually increasing the cost, he’s increasing the deficit, he’s increasing the total debt. When the Secretary of the Treasury starts talking about extending maturities and lowering interest rates what he is talking about is a default.

Now governments can pay debts in one of three ways. They can either tax, inflate, or they can default.

Now actually nobody is discussing default but that’s something governments have been doing for thousands of years. When the Secretary of the Treasury starts talking about defaulting on debt you may rest assured, we’re very close. That will destroy the US dollar. And we’ve certainly seen about a 20% change in the value of the dollar against other currencies literally in the last few months.

RM: That’s correct, would you be surprised if America is Trump’s seventh bankruptcy?

BM: Well, you’ve got to give the guy credit, okay? Everybody should be good at something and the only thing that I’m good for is flying under the Eiffel Tower, but Trump is a past master. He knows bankruptcy inside and out and it’s like adultery. He could write books about it. He’s cheated on every wife he’s ever had. He’s cheated on all of the contractors that worked for him, the guy is really experienced.

RM: He’s good at bankruptcy is what you’re saying.

BM: Bankruptcy and fooling around with women with big boobs.

RM: I was looking at some stuff here about the dollar and about business conditions and the Fed’s own Beige Book – you know it’s just anecdotal reports about recent economic activity – but it paints a pretty dour picture of suspended business deals, falling demand and rising prices.

In the first three months of the year there was 500,000 layoffs announced and that’s the highest since the first quarter of 2009 when we were at the tail end of the Great Recession, and just a side note more than half of the job cuts were cut in Washington reflecting the DOGE federal government firings and layoffs.

And than of course the Fed kept interest rates steady saying that rising economic uncertainty combined with a still resilient job market made them hesitant to move.

I’ve got a couple of quotes here, this first one is by Mark Dowding, chief investment officer at RBC’s Bluebay Fixed Income team and he said “we had been long the dollar against the euro and closed that position over a week ago, it had lost impetus. The behavior of Trump has diminished appeal for US assets in general.”

Ray Dalio wrote “Many are recognizing that whatever happens with tariffs these problems won’t go away and the radically reduced interdependencies with the US is a reality that has to be planned for.”

That’s pretty blunt talk Bob.

BM: I appreciate we have some business leaders who are stepping up to the plate saying, “Hey wait a minute do we really want to do this?” But we haven’t even started into the disaster the tariffs are causing right now. It’s not shown up yet, but you go into a store in the United States two months from now the shelves are going to be empty. And when that happens, you’re going to see unemployment go through the roof.

RM: Steven Jen, he’s the chief executive and co-chief investment officer of Eurozone Capital, and his co-author put a report out on MarketWatch warning about the possibility the US dollar could be vulnerable to a sudden disorderly depreciation which they actually likened to an avalanche so I’ll just summarize that.

They think the avalanche moment may have arrived because the sudden spike in the value of the Taiwan dollar and other Asian currencies could be a prelude to a much larger selloff in the greenback. And US trading partners could start dumping what is literally a massive store of dollars and dollar-denominated assets that they’ve accumulated since the covid pandemic. The pile of at-risk dollars held by China, Malaysia, Vietnam and other major exporters has topped $2.5 trillion US and it’s been rising by about $500 billion a year recently.

That’s a scary amount of money to get dumped into the market and if it comes home to roost it’s extremely inflationary.

BM: Well, look at what the Japanese said. Now the Japanese hold something like $1.2-1.3 trillion, and they have warned the United States if you mess with us on tariffs, we’ll dump the whole thing. Now that would literally shut the bond market and crash the dollar overnight.

Now when you’re conducting aggressive behavior against someone you perceive as an enemy, you need to understand they’re probably going to do something nasty right back at you. But Trump acts like he can throw his weight around and bully everybody but what he doesn’t understand is they’ve got a lot of power too.

RM: There was an article out earlier in the week about countries switching their buying. Canada got hurt in in the tariffs, we lost trade with the US our major trading partner, but in two months we managed to switch 28% of our former US trade to new markets and increase the old markets.

Canada literally, in two months, managed to recover almost everything we lost from trading with the US.

These bilateral deals that are going on such as between Britain and India they could be pointing a way for a new era in trade.

And when I look at mergers and acquisitions there’s a lot fewer of these M&A deals getting signed then even during the worst months of the covid pandemic and the 2008 global financial crisis.

The M&A contracts, the number that are signed, are an important indication of global economic health and they’ve fallen to the lowest level since February 2005.

The delinquency rate on commercial-backed mortgage securities rose to 10.3% in April, that’s near the highest on record.

We’re seeing a slow-motion collapse; a drama is playing out on the world stage concerning the US and it’s starting to get pretty damn concerning.

BM: Well, let me show you something that’s part of the problem. Now you’ve heard me say before, everything we hear from government and everything we hear from the media is a lie. I take it far further than anyone else does, 100% of what you’re told is a lie. So, I go to CNN an hour ago. Trump in a major concession says the tariff on China should be 80%. Now how is lowering tariffs from 145% to 80% a concession?

RM: It isn’t, it’s still a trade killer too high tariff. But the notable and unexpected thing Trump said was “I’ll leave it up to Bessent what the tariff is” meaning that he’s already trying to sidestep and deflect responsibility.

BM: Trump has done things that I think have gone past the point of no return. He had done things that are catastrophic for the US economy. We’re going to see unemployment and inflation shoot through the roof and he’s going to get blamed for it.

These are the most incredible things I’ve ever seen and the way you started today talking about the Kindleberger Gap, I think we’re in the gap. I think the speed of the US dollar decline is about to accelerate, I think the unemployment rate is going to shoot through the roof, I think inflation is about to blow sky high, and underneath the surface —we’ve been talking about this for six weeks — the world’s economy is in some deep serious shit.

And we’re ignoring the fact we’re on the verge of nuclear war in Ukraine, we’re on the verge of nuclear war in Pakistan, and we’re on the brink of war with Iran, possibly China and there is war in the Ukraine, so things are not getting better and everything that Trump is doing is making it worse.

There is nothing Trump has done since his inauguration to make friends with anybody. He has threatened everybody and amazingly he finally did a deal with a country on tariffs, and he agreed to lower the tariffs to the UK.

RM: I posted that the trade deal between the US and the UK was a big nothing burger.

BM: Well first of all the UK only represents 3% of American trade so the UK is a meaningless trading partner. The average tariff that the UK charges is 1% so even if you succeeded you would only lower the tariff from 1% to zero. He’s still charging a 10% duty to the UK, which means he’s going to lower demand for American products from the UK.

If you make enemies out of everyone, if you have no friends you’re going to get attacked from all sides. I saw what Japan said, and I saw what Taiwan said and Taiwan, Korea, Japan have gotten together and said, “You know what if we dump our Treasuries we’re going to take small losses, what’s going to happen to the United States is going to take catastrophic losses.”

You’re going to see stuff two weeks or three weeks from now in terms of unemployment associated with San Diego, with Los Angeles, with San Francisco, with Seattle, with New York, the unemployment is going to go through the roof because trade is such an important part of the economy. Trump is such a jackass, he said “it’s going to cost you more money for your dolls.” Oh, thanks Donald. I didn’t know that.

RM: Sea port traffic is down, and it’s going to drop to pretty much zero within a few days, there’s only five to seven weeks inventory in warehouses and that’s the most you’ll get, most inventories aren’t that far out.

So, what’s going on in the Treasury bond market are we still talking about the carry trade or is something else more sinister going on?

BM: Well, the answer to both those is yes. The carry trade is collapsing because of the rise in the value of foreign currencies especially the Japanese yen. But at the same time, you’ve got Japan, you’ve got China unloading Treasuries. I want to point something out you just mentioned a figure about there being 5-7 weeks inventory in the warehouses. If in fact there are 5-7 weeks of goods in warehouses that can be delivered to stores how long will it take for the stores to have empty shelves?

RM: A couple of days.

BM: Exactly, here’s what’s crazy. One day soon there is going to be a run on Walmart, Kmart, Macy’s, everybody else and all those no longer cheap Chinese goods, they’re going to be dragged off the shelves, so no more iPads, no more iPhones no more computers, no more blue jeans, no more anything that comes from Japan, or Taiwan, or China or Thailand or Vietnam. And Americans are going to find that it’s going to take a long time to rebuild those markets.

So, what Trump has done is hurting all the other countries in the world. What he doesn’t realize is what he’s done is the United States is going to get hurt the worst.

RM: We’ve been saying that all along up here in Canada. You know we’re 40 million people and we’re arguing with 340 million people to the south of us.

But we punch way above our weight class.

Because it’s not about how much, they talk about money amount for this and money amount for that but in trade it’s not so much the dollar amount as it is what you supply.

And when you’re supplying metals, potash, fertilizer, when you’re supplying rare earths, when you’re supplying energy, I mean it’s what you’re supplying that counts on how powerful the impact is going to be.

And when President Trump says ”Well we don’t need Canada we just don’t need this from them, we don’t need that from them” I don’t think he realizes the impact that it’s going to have when you actually gut the bottom of all your supply chains and as a consequence all the up-market stuff gets shut down as well.

I just don’t think they really understand trade the way they should of before they started down this path.

I’m looking at a China- US planned trade meeting in Switzerland that’s going to be ongoing very shortly. Is there going to be any forward progress?

BM: I don’t think so because one, I think the Chinese understand the economics of tariffs a lot better than the United States does. If you have tariffs against anyone of 145%, the amount of trade being done would be zero. If you lower those tariffs from 145% to 80% trade is still going to be zero. Now if you lowered it to 25% obviously that’s something that you could discuss, but lowering tariffs from 145% to 80% is absolutely meaningless.

I believe that the Chinese economy has been hurt seriously. However I think the US economy has been hurt a lot worse and some of the things that the Chinese have done like the soybeans like the rare earth elements, like the magnets are catastrophic for the United States economy. So, it’ll be seen what happens in the talks. Both economies have been hurt, I think that the US economy is in actually worse shape than the Chinese economy.

RM: I agree with that because the US just doesn’t have the manufacturing in place, they don’t have the supply chains in place, We’ve said all along that that starting a trade war with your largest suppliers of goods that you don’t have seems to be a foolish endeavor and one that’s akin to playing Russian roulette with six bullets in the gun instead of one.

BM: Or using an automatic.

RM: Charles Kindleberger’s theory of hegemonic stability says an open and stable international system depends on the presence of a dominant world power.

It does seem to me that at the very least our dominant world power, our hegemon, is pulling back, doesn’t want the responsibility and that’s got an awful lot of consequences coming.

I looked at some new polling by Gallup and only 16% of Americans now consider stocks the most lucrative form of long-term investment. There’s a sea change going on with the American investor.

What do you think the two most important investments are today with American investors?

BM: I know one is gold and probably the other one is cryptocurrencies.

RM: Well, they’ve smartened up, now you’ve got real estate and gold.

BM: Yeah, that’s interesting. I hate to say it, but real estate is not going to be a good place to be. Real estate is so overblown you’ve certainly seen it in Canada, real estate in the UK, Canada and the United States is an accident waiting to happen.

RM: Great talk, Bob, thanks for your time.

BM: Thank you.

Rick Mills
aheadoftheherd.com

Bob Moriarty
321gold.com

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Rick owns shares of Harvest Gold (TSX.V:HVG) and Tectonic Metals  (TSX.V:TECT). HVG, SNAG and KDK are paid advertisers on his site aheadoftheherd.com

Bob owns shares ofPacific Empire (TSX.V:PEMC), Tectonic Metals  (TSX.V:TECT), Sitka Gold (TSX.V:SIG), Altamira Gold (TSX.V:ALTA), Harvest Gold (TSX.V:HVG).