Mickey Fulp: Buy the Unknown, Unloved, Unwanted, Undervalued
In light of pandemic conditions, government reactions and the impacts of both on financial markets, Mercenary Geologist Mickey Fulp describes his investment strategy to Maurice Jackson of Proven and Probable.
Maurice Jackson: Joining us for conversation is Mickey Fulp, the world-renowned Mercenary Geologist.
I want to speak to you today about the mainstream financial news networks and the narratives that they're pushing on both sides of the aisle, respectively. And of course, depending on the news program, the blame is always cast on the political adversaries and never, to anyone's surprise, are they accepting blame for championing and implementing policies that have created the U.S. financial pandemic. . .it just seems to be skipping over most people's radar, as we're all focusing our efforts right now on COVID-19. When you look at the U.S. financial pandemic, just how bad is the U.S. economy, and did it begin with COVID-19?
Mickey Fulp: Well, there were certainly financial stresses before spawning of this flu bug in Wuhan, China. Long live frothy stock markets that were overdue for a correction, burgeoning trade, and budget deficits. And I think most importantly, American outsourcing and our dependence on China for fundamental supply chains.
But there's little doubt in my mind that this economy was booming despite some underlying structural weaknesses, and the collapse, in my opinion, was due to draconian government overreaction in response to the immediate crisis.
So no doubt, this is a very bad, deadly flu for the elderly and the unhealthy, which would include people who are morbidly obese, diabetics, smokers, those with cardiovascular disease, those with other immune system disorders, and especially so for people living in communal conditions. But I think it's nothing more than that. I mean, look at the facts. Fifty percent of deaths have incurred in nursing homes. And if you add people who are over 65 who are not imprisoned in nursing homes, it's up to 75%.
I can give an example in New Mexico. Sixty-five percent of the deaths in New Mexico, which are now over 200, are on the Navajo reservation where all of the conditions that I listed above exist. So, my question is, why was the entire state quarantined and creating an economic collapse? And I think it's a nanny state protectionism that is morphed into controlism. And it has progressed in my opinion, to socio-fascism.
Maurice Jackson: If the U.S. financial pandemic didn't begin with COVID-19, does it end with COVID-19?
Mickey Fulp: Well, I think it really did begin with COVID-19, given some underlying conditions, which was a stock market way overdue for a correction, and budget and trade deficits, but certainly won't end there. And the reason is, government actions have wrought major economic damage and, in my opinion, have forever changed our country. We have unemployment now at Depression-era levels, small businesses devastated and exponential increases in the money supply as tax receipts exponentially decrease. We will never recover from this! I saw something the other day: Mark Cuban refers to what's coming as America 2.0, and I don't welcome that.
Maurice Jackson: When you watch the mainstream media channels, what are some of the propagandas that they seem to be pushing from both sides of the aisle that have you just shaking your head in disbelief?
Mickey Fulp: Well, think about it. Does it seem too good to you, what's coming? What has been done? This country will never be the same. Sad, but true, that the Wuhan flu is causing the economic collapse. It is government officials, many unelected, deep-state bureaucrats at all levels, locking down a country with blatantly illegal and unconstitutional fiat orders without legislative input, and that's what's caused the collapse in my opinion.
Maurice Jackson: A prime example of failing economic policy is the unprecedented inflation of our currency by both parties. What type of impact do you see this having on the general equities short term, and then longer term?
Mickey Fulp: Well, some major corporate equities will do well in nominal dollar terms, and a lot will go bankrupt. The rapid inflation [of the] money supply will cancel, in real dollar terms, many of the gains from the corporate entities, and a lot of those are listed on the NASDAQ. NASDAQ is up 4% this year.
But my main concern would be small business entrepreneurial ventures. And that's what drives growth in our country. And especially Mom-and-Pop storefronts. A great majority of these businesses will never open, and the jobs that are associated with those mainly service jobs are gone forever.
It just seems wrong that these lockdowns punished small businesses while allowing the big-box corporations to stay open and prosper, like Walmart and Home Depot. Meanwhile, your neighborhood corner stores, churches, bookstores, gun dealers, whatnot, are shut down, while booze and pot stores are deemed essential. That seems wrong to me. And I think a lot of this has been driven by a political agenda.
Maurice Jackson: Germane to equities, let's shift the focus on a space that you and I love to speculate in. And those are resource stocks. Is this the right time to be in the space?
Mickey Fulp: Well, I think so. This is an opportune time to speculate in resource stocks. And we've seen, when things start to emerge from a collapse like this—and we saw it in 2008, and early 2009—the first thing that goes up is gold. And if it progresses, then gold stocks follow quite soon after that.
Maurice Jackson: Do you favor the miners in the current environment, or junior miners?
Mickey Fulp: I don't favor miners. I think mining's a really tough business. So, my bailiwick is the junior explorers, oftentimes referred to as junior miners. But about one in 10 will ever mine anything. Most of them just mine the stock market. That said, certainly, the gold miners have done well and should continue to do very well, with high prices for gold and very low energy costs.
Even though oil has rallied—it's still at $34 a barrel now—we should also look at the juniors. The Toronto Venture Exchange index is up 60% from its low in mid-March. That's phenomenal. Every day, I watch the value of my junior explorer portfolio increase day after day, and I think I was up 37% in April, and I expect to be up even more than that in a month.
Maurice Jackson: Are there any that have your attention at the moment, and why?
Mickey Fulp: Well, I'm looking at gold companies, gold explorers; I'm looking at copper explorers and developers. A company that I currently cover and covered since, well, actually for three years now, we picked it at $0.65. It closed on Friday at $1.90; it's been as high as $3.14. It has catalysts coming. That'd be Trilogy Metals Inc. (TMQ:NYSE.MKT; TMQ:TSX).
I also picked up another copper company the other day that was at or near its four-year low. A lot of things have gone up, a lot of stocks have popped, especially in the gold explorer space, but there's a few that haven't, and there's a few copper companies that haven't.
So being a contrarian, I like to go in and look at stocks that have lagged, because I think what's coming is going to be good for the resource sector, especially in gold and copper. So, be a contrarian, try to find things that are undervalued and buy them when they're unloved and unknown, and unwanted, and undervalued.
Maurice Jackson: There's another company that you and I both like, and that is Hannan Metals Ltd. (HAN:TSX.V; HANNF:OTCPK). Talk to us about Hannan Metals.
Mickey Fulp: I am a very early shareholder of Hannan Metals; I participated in the pre-RTO [reverse takeover] financings. It's an exploration play, going into the Amazon Basin in northeastern Peru. They're looking for giant, sediment-hosted, copper deposits. It's frontier, it's grassroots, it's early days, but being a very early-on shareholder of that company, I watched it progress from a failed zinc project in Ireland; once that was not going to make it, they quickly shifted focus to this copper play in Peru. And I remain a dedicated shareholder of that company.
Maurice Jackson: Germane to buying opportunities, let's shift the focus now onto physical precious metals. Mickey, why do you own precious metals?