Michael Gentile: Asset Prices Higher Now than Before Any Other Crash
Tom welcomes a new guest to the show, Michael Gentile. He is a strategic investor and President & CEO of Consultant Finaciere Integritas.
Michael started as an investor during the Tech Boom’s final phases and has always taken a contrarian investment approach. He learned it’s best to get involved in a sector when it’s hated. He explains how commodities tend to bounce between extremes of sentiment.
Today, there is excessive optimism across many sectors, and we are in an everything bubble since the Fed is printing like a drunken sailor. This printing is quite concerning as we are reaching ludicrous debt levels. Massive exuberance usually symbolic of market tops, but tops can often last longer than you might expect. When this party ends, it could be very traumatic.
In a rising rate environment, many sectors, including equities, will be affected, so you should be cautious where you invest. You could lose 80% in equities or only take a minor hit if you are in gold. Inflation is clearly picking up on the items that most people buy.
The US just crossed 28 trillion and will soon pass 30 trillion. If rates rose to 5%, the government would be insolvent. The Fed wants to run inflation much hotter to devalue the debt and pay it back with declining currency. Inflation is the best environment for gold.
Copper is an example of a sector that has been unappreciated, and as a result, there has been little exploration or new mines. Lack of development coupled with a green push means that much more supply is needed to build out electrification. There is massive demand while supply is constrained.
He discusses how to find leverage from smaller miners and outlines what to look for in explorers. He sees much more value in the equities and particularly likes the smaller mispriced producers in good jurisdictions.
Michael breaks down how companies obtain financing and the key things like cash-flow and dilution to watch out for as an investor. He also takes us through the process of small companies being acquired by the larger mining companies.
Time Stamp References:
0:00 – Introduction
0:40 – Contrarian Investing
2:10 – Major Cycles & Crashes
4:25 – Rates and selling gold.
9:07 – Printing Their Way Out.
10:18 – Copper & Valuations
13:23 – Leverage in Commodities
14:36 – Gold Investments
17:32 – Jurisdictional Factors
22:50 – Boards & Insiders
27:57 – Company Financing
34:00 – Shareholders Networking
35:22 – PRE-IPO Financings
38:32 – Tight-Capital Structure
40:38 – Mergers & Acquisitions
49:04 – Favorite Stocks/Jurisdictions
50:30 – High-Grade Silver Projects
51:57 – Wrap Up
Talking Points From This Episode
- Contrarian Investing & Sentiment
- Debt, Stimulus & Spending
- Bonds, deficits, and the dollar.
- Finding good opportunities in miners.
Michael Gentile, CFA is President and CEO of Consultant Finaciere Integritas. From 2003 to 2018, he worked as a professional money manager at Formula Growth Ltd., an independent investment management firm established in Montreal in 1960 with a long-term track record of creating investor wealth. While at Formula Growth, Mr. Gentile’s main sector focuses were on mining and natural resources. In 2012, he became the co-manager of the Formula Growth Alpha Fund; a market-neutral hedge fund focused on small to mid-cap equities. Throughout his Formula Growth career, Michael was an early-stage investor in very successful mining and natural resource investments returning multiples of their original investments for their investors. In October 2018, Mr. Gentile retired from full-time money management to spend more time with his family.
Subsequently, he has remained a very active investor in the mining space, owning significant top 5 shareholder positions in over 15 several small cap-mining companies. Michael is one of the largest shareholders and was recently appointed as a Strategic Advisor to Arizona Metals (AMC-V) in December 2020. Michael is currently one of the largest shareholders and was recently appointed a Radisson Mining Resources Director (RDS-V) in February 2021. Also, Michael is the largest shareholder and has been a board member of Northern Superior Resources (SUP-V) since December 2019, Roscan Gold (ROS-V) since January 2020, and Solstice Gold (SGC-V) since June 2020.