Interview of Brien Lundin, President and CEO of Jefferson Companies and Editor of GoldNewsletter, a Very Prestigious Newsletter, https://goldnewsletter.com/
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By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 8/21/2018
With a career spanning four decades in the investment markets, Brien Lundin serves as president and CEO of Jefferson Financial, Inc., a highly regarded producer of investment-oriented events and publisher of investment newsletters and special reports. Under the Jefferson Financial umbrella, Mr. Lundin serves as publisher and editor of Gold Newsletter, the publication that has been the cornerstone of precious metals advisories since 1971, and as the host of the annual New Orleans Investment Conference, the oldest and most respected investment event of its kind.
Brien Lundin
As editor of Gold Newsletter, Mr. Lundin covers not only resource stocks, but also the entire world of investing, from small-caps of every type to macroeconomics and geopolitical issues that ultimately affect every investor. As host of the New Orleans Investment Conference, Mr. Lundin has annually brought the giants of investing, economics and geopolitics together in intimate presentations, with many of today’s most sophisticated private investors. In all of these endeavors, Mr. Lundin has striven to burnish the brilliant legacy of the late James U. Blanchard III, his great friend and the founder of both Gold Newsletter and the New Orleans Investment Conference.
Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Brien Lundin, President and CEO of Jefferson Companies. He's also the editor of Gold Newsletter, which is a very prestigious newsletter that has great advice and insights for people interested in investing in the resource sector.
Brien, could you tell us, our readers/investors, a bit about your thoughts on what's happening in our resource markets?
Brien Lundin: Sure. Right now, from all evidence it seems like gold is going through another of its periodic and even seasonal long-term bottoms or cyclical downturns. We've seen this kind of a downturn typically during the early summer. Usually the price reverses right about where we are now, or even into late August.
Typically from these lows, we subsequently see a 10 or 12% rebound in the gold price going into the early fall. That's usually a very profitable opportunity for investors, who take the opportunity to buy really top quality junior mining companies at these mid-summer lows. So we're looking at that as an opportunity right now for investors.
Dr. Allen Alper: Oh, that sounds excellent. Could you give us an insight into your thoughts on what's happening, with gold, versus silver, versus some of the other specialty metals?
Brien Lundin: Sure. I look at what's driving gold typically and then once I have a good idea that gold is going to move higher, I tell investors if they're buying the metals themselves they need to buy silver because it offers leverage to gold in any classic bull market scenario.
Right now we see, in the paper gold market, the “managed money” category of speculators, who typically get the direction of the market wrong, have just posted their largest net short position as an aggregate, as a category in the history of records being kept for this. So it's gone back a long ways. They've never been this far net short before. The last time they were anywhere approaching this level of short positions was in January of 2016. From that point on, gold subsequently posted a 19% rally that saw many junior mining stocks multiply three, four, even five or more times in value. We're hopeful that we're going to see the same kind of opportunity right now.
Silver does typically follow gold on these kinds of rallies and moves further on a percentage basis than gold. But the fundamentals for silver are also strong. There is a large net short position by the large speculators. This also indicates and points toward an imminent price rebound.
We're still fairly constructive on gold and silver right now. We think that we're in a bottoming process. There is some downside risk, possibly 5 to 7% on the gold price right now, but you have to balance that against the upside potential of really 100% or more on some of these washed out junior mining stocks. If we do see a 10% rebound in gold and or silver we do think that these junior mining stocks are going to go up quite significantly, some of them 100% or more on any kind of rally like that. So we like the risk-reward trade off in precious metals.
In other metals right now we do like the energy metals. We are looking for vanadium plays and ways to leverage that metal. We like some companies that are in the vanadium space. We also like copper and zinc. I look at the recent sharp declines in copper and zinc prices as being almost wholly due to the trade war rhetoric, particularly with China. I think that's going to be resolved at some point over the next few months because it essentially has to be resolved. At some point that issue is going to go away as both sides look for ways to save face and be able to credibly claim that they won something in the battle. We see that being resolved in the near to intermediate term, and thus that depressing factor on base metal prices will go away. That's why we think that's an opportunity right now in companies that are focused on zinc and copper.
Dr. Allen Alper: Oh, that sounds excellent. Could you tell me a little bit about your thoughts on investing in either prospect companies, exploration companies, juniors, intermediates or royalty companies?
Brien Lundin: Yeah, there are times and places for all of those sectors. I think that royalty companies are great levers on the metal's prices, but you have to be able to buy them at the right price. I do like some upstart royalty companies right now.
I think that in the situation we're presently in, with, I hope, gold and silver about to come off from a bottom and show some price strength, that in the past the first stocks to move in that kind of a situation have been the juniors with large established gold or silver resources. I think that's where there is a great opportunity right now, because a lot of those stocks are selling at really fire sale prices — pennies on the dollar as to where they'll be selling once we have some upward momentum in the metals' prices.
So that's a real opportunity. I think it's also an opportunity because those companies are potential takeover targets. There are five or six companies that are tops on the list for potential takeover targets. We just saw today, as I speak, that one of our top recommendations in Gold Newsletter, Northern Empire Resources, is getting taken out by Coeur Mining at a 70% premium to where our entry price was in Gold Newsletter. That was a big money maker for our readers, but I think it's early in that process. I think we're going to see a number of companies taken over, over the next year to two. Again, right now they're selling for pennies on the dollar.
Also I think there are exploration stocks that have been drilling for a couple months now and we're going to start seeing those results come in. So there are some companies in that sector that I think represent very exciting potential.
Dr. Allen Alper: Oh, that sounds excellent. Would you care to mention any of the companies that people, our investors might consider or would you rather not? I'll leave that up to you.
Brien Lundin: I can mention a couple of them. I like Great Bear Resources. I happen to own that company personally. They're exploring in the Red Lake district and are delivering a bit of results and have an ongoing drill program. I like Triumph Gold Corp. I have a small personal position in that as well, but they've been drilling aggressively and have results coming up in the next few weeks. And I have a couple of new recommendations in Gold Newsletter that I guess people will have to subscribe to get.
Dr. Allen Alper: Okay. That sounds fair. That sounds like a good idea. Could you tell our readers and investors why they should consider going to the New Orleans Investment Conference? I've been there many times. I've been extremely impressed with the people, with the exhibitors with the speakers. It's a magnificent conference. Could you elaborate and tell them what's happening?
Brien Lundin: Yeah, as you know, it's the oldest and most respected investment event around. We're famous for bringing in top notch speakers and experts in every sector. We've featured Ayn Rand, Lady Margaret Thatcher, Barry Goldwater, Milton Friedman, Alan Greenspan and the list just goes on and on.
What we like to do at this event is focus on everything that affects the markets. We cover geopolitics. We cover economics. Then we drill down to the various investment sectors. But we've also had a long standing reputation and legacy of covering the precious metals and mining stocks. In fact, our origin goes back to when gold was legalized and when our organization was instrumental in getting gold legalized for American citizens.
Our founder, Jim Blanchard, decided to have a conference to teach American investors how to invest in gold in 1974. That launched this event, the New Orleans Investment Conference. Over the last 40, nearly 45 years, we've focused on bringing the world's top experts in every sector, but also specializing in metals and mining.
This year we have another outstanding roster of speakers. Guy Adami just signed on. We have Doug Casey, Dennis Gartman, Jonah Goldberg, James Grant, Robert Kiyosaki, Rick Rule, Peter Schiff, and Mark Steyn. We have a special retrospective panel on Charles Krauthammer, who recently passed away and was a dear friend of the New Orleans Conference.
Dr. Allen Alper: Yeah, I heard him many times. He was a favorite of mine. I admired him.
Brien Lundin: Yeah, he was a favorite of just about everyone who came to the conference and a real friend of our event. His people have told us that this was his favorite event. He wanted to come every year, and blocked out his schedule even before we would invite him. So we have a special panel, with some people who knew him well, including myself on that panel and his personal assistant as well. So it's going to be a very moving and memorable presentation.
And of course we have other great panels as well on the economy, geopolitics, mining shares, precious metals, global investing and more. You won't see this assemblage of talent and expertise at any other investment event. As you well know, just walking around the conference, there are so many smart people among the attendees and successful people that there's a lot of value to be had just networking with our attendees through our many social events and other opportunities.
Dr. Allen Alper: Oh, that sounds great. It's a great conference. I would recommend it to all serious investors and also people interested in knowing what's going on in the world of, stocks, geopolitics, etc. Is there anything else you'd like to add, Brien?
Brien Lundin: It's always at key, important turning points in the markets that the New Orleans Conference really shines, where investors can gain an understanding of what the big trends are and where they're going, and discover how to position themselves accordingly. They also find specific opportunities that will maximize their returns as the market shifts. In times of uncertainty — just like we have right now — it's vitally important for investors to attend the New Orleans Investment Conference.
Dr. Allen Alper: Oh, that sounds excellent. I appreciate your taking the time to share your insights with our readers/investors.
Brien Lundin: Thank you for the opportunity. I really appreciate it.
Dr. Allen Alper: You're welcome. We're looking forward to going to your excellent conference.
Brien Lundin: I'm looking forward to seeing you down here.
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