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Warren Irwin: Greed and Gold’s Greatest Scam

Tom welcomes back a past guest of the show, Warren Irwin. Warren discusses the valuable lessons from the BRE-X story. He had just graduated from university when the excitement around BRE-X was happening, and it was the poster child at the time being heavily promoted. After investing in the project, it grew significantly, and he decided to go and see it in person.

Once he returned to Canada, he started to question the narrative around BRE-X. Numerous people were fooled, including some of the geologists that had worked on the project. He was building a house, and fortunately sold half of his shares near the top of the market. Warren had concerns and immediately sold the other half when the CEO ‘fell’ out of a helicopter. He shared his concerns, but many were hostile towards him and others stayed in denial. He did manage to talk most friends who invested into selling out of the stock.

The mining industry, today, is much better easier to research than in the past. Bulls want to believe, but greed can easily get out of control. Whenever you feel brilliant and superb about your investments, start selling. The markets can be very treacherous, and you have to exercise caution.

His approach is to find good companies with new resource discoveries. That is what has brought him profits and money is rarely made by just speculating on the price of gold.

People are starting to wake up to the realities of green energy and embrace nuclear. Some additional uranium production is beginning to come online and NexGen and KazAtomProm have quite low costs of production. Every uranium project is quite viable by $75 a pound.

He believes modularity will be key to future acceptance of nuclear power. Plants need to be standardized and simplified to an extent to reduce costs by economics of scale. We all need cheap, clean power that is also safe.

He believes ESG is one of the nuttiest things to ever happen to the mining industry. There is a lot of fantasy as to how environmental ideas should be implemented. We need resources to build out the electrification of the world, but everything ;needs’ to be green already. We’re seeing similar things with the oil business, as we demand the Saudi’s keep up production while we cut our own. The world becomes completely crazy when politicians and do-gooders become part of the decision-making process. The future will be fascinating, but don’t sell your gas or diesel powered vehicle just yet.

Talking Points From This Episode

  • Lessons and observations from the BRE-X scandal.
  • Why you should be concerned if you’re feeling good about your investments.
  • Outlook for uranium and why high prices may not be sustainable.
  • ESG is a fantasy run by politicians and do-gooders.

Time Stamp References:
0:00 – Introduction
0:37 – BRE-X Red Flags
12:00 – Lessons Learned
16:24 – Uranium Pros/Cons
23:23 – Supply Lag Time
27:45 – Picking Equities
29:24 – Anti-Nuclear Drivers
31:18 – Reactor Costs
35:18 – Gold Equities & Price
40:24 – Fed Pivot & Resources
44:34 – Battery Metals
48:40 – Profit Taking?
51:37 – Why ESG is Nuts
59:44 – Greenification Issues
1:06:52 – Wrap Up

Guest Links:

Warren Irwin is President and Chief Investment Officer of Rosseau Asset Management Limited.

Warren founded Rosseau in 1998, after several successful years of proprietary investing at Deutsche Bank Canada. The firm’s flagship Rosseau Limited Partnership was established on December 31, 1998, and has earned a reputation as a top-performing hedge fund.

Mr. Irwin earned a Bachelor of Mathematics degree from the University of Waterloo in 1987. Upon graduation, he worked as a bond analyst for Scotia Capital Markets. At Scotia, Mr. Irwin developed the Universe Bond Index, the Canadian bond market benchmark, as well as Canada’s first bond index fund shortly thereafter.

In the fall of 1989, Mr. Irwin entered the University of Western Ontario’s business school and graduated with an MBA in 1991. Concurrent with his MBA program, he completed his Chartered Financial Analyst studies and was granted the CFA charter in 1990.

Following business school, Mr. Irwin continued to develop his financial analysis and trading skills working in general corporate finance and merger & acquisitions for CIBC Wood Gundy, credit analysis and fixed income management for Scotia Capital Markets and proprietary trading for Deutsche Bank Canada.

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