Source: JT Long of The Gold Report (3/30/15)
Chen Lin, author of a renouned batch newsletter What Is Chen Buying? What Is Chen Selling?, knows a intelligent time to demeanour for a subsequent large bullion association is when everybody else has left a sector. With China creation moves to deposit trillions in commodity-hungry infrastructure, Lin is roving a universe looking for a companies with a right projects in a right place creation all a right moves. In this talk with The Gold Report, he shares some of a insights from his new travels and discusses 3 companies with intensity to be a subsequent Goldcorp.
The Gold Report: You’ve combined that a China-led Asian Infrastructure Investment Bank (AIIB) could lead to a bang in commodities. We recently saw that South Korea is fasten a series of European countries and signing on, notwithstanding U.S. reservations. Do we see this as a hazard to U.S. mercantile dominance?
Chen Lin: we consider this is a initial step for China. The nation has a outrageous reserve, $4 trillion, many some-more than it needs on a change piece to stabilise a currency. The rest is wasted, collecting no interest. China done some outrageous mistakes in a past by bad merger decisions given of inadequate lending standards. This is a pointer that it has schooled from a mistakes and wants to make a many of a trillions it has to loan out right now. The bank will work tighten to general standards, and given it has many nations concerned already, delinquent loans will embody reduction risk.
This is a test. If it is successful, it can enhance to Africa, South America, even Europe and North America. China has trillions of dollars sitting, doing nothing. It wants to find a proceed to lend income it can roughly pledge to get behind and afterwards put a income to use in a form of development. China has a outrageous infrastructure network capacity, requiring steel and cement. This creates jobs, that is good for a economy. That was a meditative behind a announcement.
If a AIIB is successful, it will be a large bonus for bottom metals, energy, bullion and palladium sectors. It might even boost china direct and prices given of a industrial use. we don’t consider it will have too many impact on gold, though.
TGR: Does that embody copper? It has been subsequent $3 per bruise ($3/lb) all year.
CL: Yes. Copper is constituent to electric railroads and appetite lines, so copper prices could be definitely impacted.
I have been examination copper closely for utterly some time. Last year we was revelation any bullion association we deposit in to sidestep copper when it was over $3/lb. we consider China’s expansion is negligence down. Copper is really many associated to Chinese housing. China has a law that any new residence has to use new copper for H2O pipes instead of recycled copper for haven reasons. So all this copper has been going into new buildings in China, many of that are sitting empty. When housing construction slows down, copper direct goes down. we saw that entrance for a while. we have not been really bullish on copper and am still not really bullish on copper going forward. This Asian expansion bank could change that potentially, though we have to watch.
TGR: What line are we shopping and offered to ready for a rest of 2015?
CL: Right now, I’m still some-more focused on energy. If my calculation is right, afterwards 2015 will be a discount year for energy. For gold, a year to buy might be 2016 or 2017. It might be sooner, though we need to watch closely. Sometimes, a bottom is tough to tell exactly.
TGR: It sounds as if we are examination bullion companies really closely. You recently visited a integrate of projects. What did we find?
CL: As we told my subscribers final year, we see a bottom of bullion coming. So we wish to spend some-more time questioning that companies will be a subsequent winners. we spent a lot of time visiting bullion companies given final year. we recently visited OceanaGold Corp. (OGC:TSX; OGC:ASX), during both a New Zealand operations and a Philippines operations. OceanaGold is one of a lowest-cost bullion producers. It is generating a lot of cash. If it wanted, it could compensate off all a debt by a finish of 2015. But it might do an merger instead. Right now, a diseased New Zealand dollar and a reduce oil cost are assisting it a lot as well. OceanaGold is one of a acquirers in a industry. It is discount hunting. Last year, it gave a offer to Alacer Gold Corp. (ASR:TSX; AQG:ASX), though it was rejected. We’ll see what it buys this year.
TGR: What about a resources that OceanaGold has now? Is it still looking to enhance a Frasers subterraneous devise and a Didipio project?
CL: Yes. In New Zealand, OceanaGold has been mining with a full three-year haven for 25 years. So it’s really expected it will enhance a haven again. Right now, it’s set to tighten by a finish of 2017. we talked to supervision and saw a intensity scrutiny site and it seems flattering open. we consider OceanaGold will find new resources and new pot and afterwards continue to cave after 2017. It is a mining tenement with many targets on a trend; OceanaGold has been mining this proceed for a past 25 years and we am certain that will continue. In a Philippines, Didipio is a initial cave in a segment and there are many sparkling targets in a area.
TGR: What are some other companies that we visited?
CL: In a Philippines, we also visited B2Gold Corp.’s (BTG:NYSE; BTO:TSX; B2G:NSX)Masbate mine. we visited a devise 3 years ago when it was owned by CGA Mining Ltd. Then B2Gold bought it, and we was a really happy CGA shareholder. It has been good run. B2Gold indeed continues investing in a mine, putting in a new mill. The cave is going flattering smoothly. There is also a devise to enhance a cave going forward. So we was pleased.
Compared with OceanaGold, B2Gold has been a really assertive acquirer. It usually bought a Otjikoto cave in Namibia, on time and on schedule, that is a really singular thing these days in a bullion mining industry. It is also looking during a subsequent mine. It’s a cave in Mali, Fekola. we would watch a opening of Otjikoto closely to safeguard a association can continue to perform and build out a subsequent mine. Management’s devise is to spin a 900,000 unit (900,000 oz) annual writer by 2018.
TGR: Are there other projects that you’ve been visiting?
CL: Last year, we visited many projects in a Yukon and in British Columbia. One of a really sparkling arriving projects is Pretium Resources Inc.’s (PVG:TSX; PVG:NYSE) Brucejack. It usually got provincial approval. It substantially will get a final capitulation really soon. Then we’ll see a financing and buildout of a mine. It’s a really high-grade, low-cost, sparkling story.
TGR: Do we feel that a Yukon supervision has spin some-more mining accessible recently?
CL: Last year, we met with Yukon Premier Darrell Pasloski. He told me, “Look, Chen, in a Yukon, there are usually dual industries—tourism and mining.” So we say, yes, a Yukon supervision is perplexing to work as tough as it can to emanate jobs, and that will advantage a mining industry.
TGR: Is there one mining story that people will be articulate about 5 or 10 years from now given they wish they had seen it coming?
CL: With any recession, any crash, there are always a few winners that come out of it. If companies like OceanaGold or B2Gold play their cards well, they will have a possibility to spin winners after this downturn.
Investors remember Goldcorp Inc. (G:TSX; GG:NYSE) when it was still run by Rob McEwen in a early days. We wish to deposit in a subsequent Goldcorp. That is what we have to find.
TGR: You called this a event of a lifetime in a appetite investment sourroundings right now. Do we feel a same proceed about bullion or are we during a opposite theatre in a bullion cost life cycle?
CL: I’m in a wait-and-see mode. Since Goldman Sachs done a matter that bullion will strech $1,000/oz by a finish of 2016, it has combined some shopping opportunities for us. So for now, I’m study companies.
The Chinese supervision is perplexing to buy as many bullion as it can though impacting a bullion price. It substantially is really happy with a crony Goldman. Eventually, a waves will turn. The timing of gold’s miscarry will count on a lot of factors, that I’m examination carefully. Right now, my best theory is substantially 2016–2017.
TGR: Thank we for your time, Chen.
Chen Lin writes a renouned batch newsletter What Is Chen Buying? What Is Chen Selling?, published and distributed by Taylor Hard Money Advisors, Inc. While a doctoral claimant in aeronautical engineering during Princeton, Lin found his investment strategies were so essential that he put his Ph.D. on a behind burner. He employs a value-oriented proceed and mostly demonstrates glorious marketplace timing due to his well-developed technical analysis.
Want to examination more Gold Report interviews like this? Sign up for a giveaway e-newsletter, and you’ll learn when new articles have been published. To see new interviews with attention analysts and commentators, revisit a Streetwise Interviews page.
1) JT Long conducted this talk for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of a following companies mentioned in this interview: None.
2) The following companies mentioned in a talk are sponsors of Streetwise Reports: Pretium Resources Inc. Goldcorp is not dependent with Streetwise Reports. The companies mentioned in this talk were not concerned in any aspect of a talk credentials or post-interview modifying so a consultant could pronounce exclusively about a sector. Streetwise Reports does not accept batch in sell for a services.
3) Chen Lin: we own, or my family owns, shares of a following companies mentioned in this interview: OceanaGold Corp., B2Gold Corp. and Pretium Resources Inc. we privately am, or my family is, paid by a following companies mentioned in this interview: None. My association has a financial attribute with a following companies mentioned in this interview: None. we was not paid by Streetwise Reports for participating in this interview. Comments and opinions voiced are my possess comments and opinions. we dynamic and had final contend over that companies would be enclosed in a talk formed on my research, bargain of a zone and talk theme. we had a event to examination a talk for correctness as of a date of a talk and am obliged for a calm of a interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements though their consent.
6) From time to time, Streetwise Reports LLC and a directors, officers, employees or members of their families, as good as persons interviewed for articles and interviews on a site, might have a prolonged or brief position in bonds mentioned. Directors, officers, employees or members of their families are taboo from creation purchases and/or sales of those bonds in a open marketplace or differently during a up-to-four-week interlude from a time of a talk until after it publishes.
Streetwise – The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unlimited permit to use or disseminate this copyrighted element (i) usually in whole (and always including this disclaimer), though (ii) never in part.
Streetwise Reports LLC does not pledge a correctness or care of a information reported.
Streetwise Reports LLC receives a price from companies that are listed on a home page in a In This Issue section. Their unite pages might be deliberate promotion for a functions of 18 U.S.C. 1734.
Participating companies yield a logos used in The Gold Report. These logos are trademarks and are a skill of a particular companies.
101 Second St., Suite 110
Petaluma, CA 94952
Tel.: (707) 981-8999
Fax: (707) 981-8998
Email: [email protected]