International Man: The Federal Reserve has made it clear that it will continue to print trillions of dollars, and the Biden administration is committed to increased spending and creating new programs to address everything from racial inequality to climate change and more.
This is bullish for precious metals like gold and silver. Beyond getting the trend right, how could people be getting the best exposure to gold?
Marin Katusa: It’s always good to have some physical bullion as insurance. But the big upside leverage comes from resource and mining stocks. There is a major misconception that people must buy micro-cap high-risk juniors exploring for gold in unstable jurisdictions to get the “big score” in mining. Nothing could be further from the truth. Look at my track record over the last decade, 5 years, three years and 12 months. I don’t take any of the high risks and outperformed all of the other precious metals’ indexes and portfolios. It’s not a secret, but it’s not easy. Find a mining company with the best management team with skin in the game and the best assets in stable jurisdictions that have major near-term catalysts.
Investors have just gotten a taste of what a real precious metals bull market is like in the summer of 2020, where we saw gains of between 200–1,200% in some of our highlighted companies. But this is only the beginning. We are not even in the early innings of the major leagues. Many investors like to talk about markets with a baseball analogy — we’re in the late stages of minor league ball. Once investors take notice, we will enter the big leagues. And that’s where the real fun and returns will come.
International Man: What type of advantages do the top investors, high net worth individuals and industry insiders have compared to the average retail investor?
Marin Katusa: No doubt rich and connected investors have the best access to deal flow. Moreover, participating in deals via private placements, financings and IPOs is without a doubt the best way to get positioned. Why? There are two main reasons:
- You get your fill without the price getting away from you, and you don’t pay any buying commission to the broker.
- Usually, financings come with a warrant, which is a free option with the right to purchase more stock in the future at a specific price. In many cases, this is how you double your gain with no extra risk.
Getting involved in financings, private placements and IPOs has given me tremendous returns in the past. An IPO we published to our subscribers, for example, has delivered 100% returns in just over 12 months (and rising). If the stock continues to rise, the warrants will add a tremendous upside.
My team and I are constantly scouring SEC filings for details of upcoming deals and opportunities. We financed another major gold deal several years ago that spun out a copper company about 6 months ago; we got free shares (after already being up on the shares and warrants in the existing gold deal). Those free shares were up as much as 1,200%. Finding the right deals can give you many opportunities to increase your upside with no added risk.
International Man: Can you tell us about how they access the best deals before the public even knows about them?
Marin Katusa: There is nothing secret or non-public about financings. But it takes a lot of work to scan all the filings, and I have excelled at that for over 15 years. My subscribers get to participate alongside me at the same price and time. It’s a free perk I provide with my KRO newsletter as an added bonus when the right opportunity comes up. I don’t have a private placement service, but when I participate in a big way in financing I like, I let my subscribers know and they can choose to participate at the same price and time if they like it. It doesn’t happen often, but when it does, you need to be ready and act quickly.
The best deals fill up fast and don’t wait for you to get your act together. You have to be ready. You have to have cash. And you have to move quickly.
International Man: There are thousands of resource companies out there, and the space is extremely volatile.
What types of opportunities offer the best potential for upside with low potential for downside?
Marin Katusa: I avoid management teams who have very little hard dollars at risk. Believe it or not, I can ignore 90% of the public companies based on that data point alone. The bankers, brokers, and management teams hate when I point this out, as their whole cash flow revenue is based on scalping the retail investor.
I also avoid projects that have been recycled with no chance of ever becoming a viable deposit for reasons such as logistical costs, political risk, or metallurgy.
Once you narrow down your focus search and focus only on the tier one deposits, your portfolio will thank you. As I mentioned earlier, I have my set of guidelines I follow and it’s treated me and my subscribers well. I’ll also mention you do not need 40 junior gold stocks. The business of following a newsletter “guru” who has no skin in the game nor owns a specific stock but somehow has a new stock to recommend every month is exactly what you should not be buying.
Editor’s Note: In this rare message, legendary gold investor Doug Casey shows you the secret to how he invests and the most lucrative “insider” way of multiplying your gold mining stock returns.