Matt Geiger: A V-Shaped Bullish Reversal In Store for Mining Stocks
Matt discusses his latest Investor Letter. In it, he outlines how 2018 seemed like it would be a good year but instead has become a gut punch for investors. Matt describes the development that continues behind the scenes in the mining space including takeovers and acquisitions.
He doesn’t feel that we are in a bear market, but people are beginning to raise the question. Based on the average length of historical bull markets 2018 looks like a consolidation period before another move up.
He thinks the turning point is coming soon and will be V-shaped. There are some short-term headwinds and if the slide continues the reason will be the US Dollar. The rate hikes have propped up the dollar, and other countries have not followed suit. Europe remains a mess and is half of the US Dollar Index basket which is working to the dollars benefit.
The US Dollar has some headwind due to political instability from upcoming elections. If the Democrats take the house, there may be impeachment talks regarding Trump. The US fiscal situation remains poor, and the Republicans have done little to manage the national debt. Massive deficits continue, and the Debt to GDP ratio is forecast to continue deteriorating.
A lot of high-tier companies have sold off recently and are likely good deals at these levels. Royalty and streaming companies are also good deals as they should be able to ride out the rough periods. Lastly, investors should look at private placements because there is competition for capital.
You can find his latest Investment Letters here.
Talking Points From This Week’s Episode
• The intensity of the previous bear market usually reflects the strength of the next cycle.
• Market outlook is a V-shaped reversal, and we are still in a bull market.
• US Dollar and political stability are the factors likely to influence gold.
Mr. Geiger is Managing Partner at MJG Capital which is a limited partnership specializing in long-term natural resource investments. They adhere to bottom-up security analysis and maintain a long-only portfolio of resource equities. The partnership adheres to a bottom-up security analysis within the context of four ongoing macroeconomic themes: global food scarcity, global fuel/energy scarcity, regional water scarcity, and the emerging world’s infrastructure build out. Their holdings include explorers, developer and producers of energy, industrial, precious and agricultural minerals and metals.