Physical Gold & Silver Are Besting Mining Stocks… But Will This Continue?

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up don’t miss our interview with Jeff Clark – founder of TheGoldAdvisor.com newsletter and a globally recognized authority on precious metals. Jeff and Mike Maharrey break down the incredibly difficult and time-consuming process of bringing a mine from the beginning stages all the way to becoming a producing entity and actually getting ounces out of the ground. Jeff also weighs in on the important question about why mining stocks have lagged the physical metals and why we’ve seen such underperformance in that area during this bull run in gold and silver prices themselves.

So be sure to stick around for our conversation with one of the most highly respected gold analysts you’ll find anywhere, Jeff Clark, coming up after this week’s market update.

Well, gold and silver have been bouncing up and down this week, driven by various news headlines.

Gold is currently down $19 here on the day as of this Friday morning recording and trades at $2,673 – up an even 1.0% still for the week. Silver, meanwhile, which was essentially unchanged on the week through Thursday’s close, is off 50 cents here today to trade at $30.69 – down 1.6% now since last Friday’s close.

Concern over potential president-elect Donald Trump’s import tariffs possibly being imposed on various metals, including potentially gold and silver, has prompted futures market pricing divergences between metals already inside the U.S. – and those that might be imported next year from Mexico, Canada, China, and elsewhere.

Also, this week, gold and silver fell on news that the government's inflation report for November did not come in hot as many feared. While the Fed is still expected to cut interest rates next week, the market is tempering expectations for continuous rate cuts. Of course, Americans know they are still experiencing high inflation, no matter what government pencil pushers say. But markets also know the Fed mainly looks to the official numbers when making its decisions.

In other news, Chris Powell of the Gold Anti-Trust Action Committee wrote an article published on the Money Metals site spotlighting a remarkable new report by a central banking insider group in Europe. In it, the Official Monetary and Financial Institutions Forum acknowledges evidence of gold price suppression – along with concentrated short positions and central bank sales that could be manipulative in nature or in practice.

The central banking trade group also wrote about the potential for an explosive short squeeze at some point, especially given the fact that the paper gold market is operating on a fractional reserve system where there are way more gold ounces owned on paper than physical metal that can possibly back the market.

We urge you to go to MoneyMetals.com/news and check out this important article.

Meanwhile, Money Metals customers have one week left to claim a free 1/4 oz Buffalo Silver Round bonus, something we are giving out with every $500+ silver order. This promo ends in a week, so don't forget to act.

And check out Money Metals holiday gift shop for a wide selection of some of the best, most cherished gifts one can find! If you visit MoneyMetals.com, you'll see a big red link right at the top. There's still time to order and receive your package before Christmas, but please don't delay

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Maharrey:Greetings, I'm Mike Maharrey, a reporter and analyst here at Money Metals, and I'm here today with Jeff Clark. Jeff is the founder of TheGoldAdvisor.com newsletter, a globally recognized authority on precious metals. He speaks regularly at precious metals conferences, and he also serves on the advisory board of Strategic Wealth Preservation in Grand Cayman and he does a bunch of other stuff. And I am absolutely delighted to have you on the show with me, Jeff. How are you?

Jeff Clark: Great. It's great to be here, Mike. Thanks for having me. And we've been looking forward to this for some time.

Mike Maharrey:Yeah, absolutely. We've had a hard time getting our calendars coordinated, so I'm glad that we were finally able to do that.

I thought it'd be kind of cool for you just to introduce yourself by way of telling this story that I saw on the about you section on your website, about how you got interested in precious metals and how your dad kind of influenced that. I think that's a cool story.

Jeff Clark: Yeah, my dad was a gold prospector. He didn't work for a company per se. He worked on his own. He had a group of friends. But it was sort of like a second career for him. Anyway, the biggest find he had was this beautiful about five-pound piece of bright white quartz and running through it it was a seam of gold and we estimated it to be about three and a half ounces.

Mike Maharrey:Oh, wow.

Jeff Clark: Not grams, ounces. So it was a beautiful piece and he kept it for a long time, but he eventually made it into some jewelry and things like that.

But yeah, I obviously learned a lot of things from him and I then got hired at Doug Casey's firm way back in the day. And that was just, it was so awesome. Those were the good old days for me. I worked with a lot of people that are still active. They were bought out by a different company, so they're a different business now. But we all kind of scattered and it was a blessing in disguise because even though I ended up working for other bullion dealers and newsletters, I just couldn't work for someone. I had to go out on my own. And I had some ideas and I had a good friend pushing me to start thegoldadvisor.com, and so that's what we did.

Mike Maharrey:Yeah. Great story. And you've written a book. I believe it's called Paydirt. Am I right about that?

Jeff Clark: Yeah, yeah. So I started when I wasn't... Before I started The Gold Advisor, I was just speaking at conferences and writing for other people and doing interviews and I would mention this stock or that stock. And people were asking me, the first question I got was, "Well, how did you come to determine that one? Why do you like that one?" So the idea of writing a book came up. And I was working for another bullion dealer at the time, but the video producer there really pushed me to write a book and I said, "Look, I'm just too busy," and I genuinely was.

And then COVID hit, and of course you couldn't go anywhere or do anything in 2020, and so I went into the office, turned on the nightlight and started outlining the book. I spent off and on two and a half years writing it. They hired me an editor after the first draft. He suggested we interview other people in the industry and put them in the book too. And you don't see that very often in books.

Mike Maharrey:Yeah, not at all.

Jeff Clark: But there are 16 other experts, if you will, in the book all the way from the Rick Rules of the world, all the way down to geologists you've never heard of basically giving me advice that I put in the book about what they look for to pick a winning mining stock. So it's entertaining and people can read actually a sample chapter on the website, the Scariest Mine I've Ever Been In. It's on the website. And if you're claustrophobic, be warned.

Mike Maharrey:Yeah, I don't know that I would do well with that. Yeah, so a lot of your work is focused on miners and that makes sense given your background. And one of the things that I thought would be interesting to kind of dig into, pun a little bit intended there, is just what it takes to pull an ounce of gold out of the ground, because I don't think people realize the difficulty and the challenges in the mining industry. And I know you have a chapter in your book that kind of covers some of this ground. Again, pun intended a little bit. But it'd be interesting just to get a... If you could give folks an overview or from a hundred thousand foot perspective of what it takes to build a gold mine from the exploration to discovery development, finance, building it up, scaling, all of those things that are involved.

Jeff Clark: It really is what you say, and it takes a lot of time, effort, sweat, money. You have to be very determined because there are failures and problems along the way. You add it all up and it really makes me and I think a lot of us appreciate that gold coin you're holding in your hand. It's really something about how much goes into it and it makes me appreciate the gold coin in my hand even more.

But it all starts with exploration. And it's really surprising. Yes, I do have a chapter devoted fully to this people can read. It's kind of an interesting chapter. But several of the experts told me that exploration actually starts in the library. They go to the library and do research because most of the ground around the world hasn't been mapped geologically, not everywhere, but many places, and they can use that to kind of pinpoint, okay, where else might be an anomaly. You're looking for an anomaly, which is a concentration of gold or silver or whatever metal you're looking for. And sometimes you're looking for gold and you find copper. That can happen.

But anyway, they're looking for a concentration because you probably have up to maybe a gram of gold in your backyard, a gram, but it's all scattered and it might take you a hundred thousand dollars to dig it up and process it and put it together to get it to a refinery. Well, that's not going to work when gold's at 2,700, so you don't even have a hundred dollars there.

So you're looking for a concentration. And it's sort of like a cake. You have a birthday cake and inside that cake, let's say there's one chocolate chip, and that's what, pardon me, that's what geologists and prospectors and exploration companies are looking for is that one chocolate chip. So then they determine they need to drill, and of course, juniors have no money. They have to raise it, so they have to sell shares of their company, which can be dilutive, to raise funds. There's advantages to investors that jump into that. But anyway, they raise the money, then they go drill, and you need to determine where exactly you want to drill obviously, and not just where, but at what angle.

And so there's a lot of geophysical work that goes into determining that because a lot of gold is not on the surface. It's under the surface. And so they'll use geophysics and, I mean, there's a whole slew of modern techniques they can use, all of which cost money and take time, but they can use to kind of pinpoint, okay, it looks like there's an anomaly here. And then they'll drill and either they hit or they don't.

If they do, then they'll determine where they want to drill next. They'll do another phase, and at some point they'll start realizing, okay, we need to add up how many ounces we think is here. That takes more drilling and more cash. Once they get there, then they go into development.

Development is a boring phase for us investors, but it's critical. They have to do permitting. They have to make sure that they have... The drilling has to be spaced close together so they can go to the market and do a feasibility study. Sometimes they'll do a pre-feasibility study. All those take time and, again, cost money. They get permitting, and then they got to raise funds to build a mine. And that takes a lot of money. In fact, to build a 200,000 ounce per year heap leach mine, open pit costs around $300 million.

Mike Maharrey:Oh, wow. Yeah.

Jeff Clark: And that quote was several years ago when I was writing the book, and so it's probably half a billion now.

Mike Maharrey:Wow.

Jeff Clark: So you don't see a lot of mines out there that are built for less than a half billion dollars. So it takes a lot of money. And then so what are they going to do? They're going to sell the royalty on part of it. They're going to raise funds. It's difficult to raise funds simply by issuing shares for that much money because you dilute the heck out of your company. Are they going to do some kind of debt offering? There's a myriad of ways they can finance it, but that's what they're going to do is finance it. Then they got to build it, and that's when it starts to get interesting for us as investors. If you want to look at mining stocks, you want to pay attention to what, at least in North America, they call a construction decision. And when you see that in a press release, that might be a good time to buy. We have a very specific strategy in the book on that.

But they'll build a mine. That's going to take at least a year. Most of them are a year and a half to two. And then finally 10 years later...

Mike Maharrey:You get gold.

Jeff Clark: ... they're pouring their first ounce of gold. So it takes a decade from discovery to actually pouring an ounce of gold to commercial production. You should expect that to take a decade.

And so a lot of people aren't going to hold a mining stock for a decade. There are very specific times as an investor to invest and not invest during that process. But Mike, all of that, you look at that ounce of gold in your hand, you can really appreciate just how much had to go into that process for you to hold that in your hand.

Mike Maharrey:Yeah. It's really interesting too if you think about it from a... I have an accounting background, so the thought of trying to project, I've got this potential gold mine here, what am I going to be able to profit loss in 10 years? That's mind-boggling to me in terms of forecasting and price controls and all of those things. So it's a complicated business for sure.

Jeff Clark: Oh, it is. And you have people that are experts in certain phases of that. You have people that are very good at exploration and prospecting, then you have very good people that are engineers at building a mine. You need financing people all along. Then you have people that are actually good at running the mine, operating it. Those are all different skillsets. And so that exploration company that started in the library and ended up making a discovery, they're probably not going to be the same team that puts it into production. They're probably going to get bought out if it's an attractive asset. And so then you have another team taking over and doing it.

So yeah, it's a complicated, complex, expensive, risky proposition, but some people succeed and that's how we get that gold coin in our hand.

Mike Maharrey:Yeah. And the beauty of it, when you really boil it all down, if you get it right, you're literally digging money out of the ground. I can see just from the human being's standpoint how cool that must be to be able to start seeing that gold come out after that long process when you're...

Jeff Clark: I've been on many mine tours and site visits, and I can tell you it is very cool. And I've held large gold bars like 400, 450 ounces in my hand that were produced at those sites. And I'll tell you, those bars are very heavy.

Mike Maharrey:Yes, they are. Yeah.

Jeff Clark: So don't drop it or you bought it, that kind of thing.

Mike Maharrey:Right. You don't want to do that, especially these days with the price going up so fast.

Jeff Clark: Yeah.

Mike Maharrey:Speaking of prices, and this was something that some of our team was discussing. A lot of our audience is going to be probably primarily focused on physical metal. And investing in miners, although it's more difficult, there's more risk involved, there's also the payoff is you're, what's the word I'm looking for? You're building on the price of gold by investing in a company that's digging up gold.

But of late, it seems like that the miners have kind of lagged in terms of the rally that we've seen in physical. We've seen some upward movement in some of the gold stocks, but maybe not what I think a lot of people would expect or hope for. And it does seem too, when we see a selloff in gold, the miners get clobbered too. They're responding more to the downside than the upside. Why do you think that this is? What's kind of going on with this maybe what some might perceive as a little bit of a disconnect between the miners and physical, or is that just a misperception?

Jeff Clark: This is the number one question that is being asked by investors in the mining sector right now, especially in the junior sector. Why is gold at 2,700 or wherever it's at as you and I talk and the miners as a group aren't moving?

Now, first of all, if you look at GDX, which is the mining stock ETF, when I did a conference in Reno last month, I put up a chart showing the gain year-to-date in gold and the gain year-to-date in GDX. Mining stocks were actually up as a group more than gold. And that's what you're looking for is that leverage to gold.

Mike Maharrey:That's the word I was looking for.

Jeff Clark: Leverage, yeah.

Mike Maharrey:Leveraging the price, yeah.

Jeff Clark: Exactly. But again, a lot of people were still disappointed. They felt like it should be a bigger move, especially when you get down to the juniors. But GDXJ, the junior miners ETF had outperformed gold at that time. Now, that was a month ago. I have not updated that. But my point is there was some leverage that we saw. But your question is still valid. We're not seeing a lot of them move a whole bunch yet.

Now, so if you go back in history, which is what I like to do, and you look historically at what gold does and what mining stocks do, you'll see that there is a lag between when gold runs and when the mining stocks start to run.

Mike Maharrey:Yeah, makes sense.

Jeff Clark: There is a lag. Now, I think the fuse has been started in our industry because money flows first into gold. And if you're worried about what the bombing going on in Ukraine and Russia, you're going to buy gold. You're not going to go out and buy a mining stock. But gold moves first. And then you'll start to see money flow into the senior producers, the bigger companies. A lot of funds and institutions have to have liquidity, so they have to go into the bigger funds. Then money flows down to the developers, and then finally money will flow down to the juniors. That's how it typically goes.

And so since gold has already moved, the fuse has been lit for the juniors. It's only now a matter of time. And I'm basing that on history. If you go back and look, you'll see that there is that lag, but mining stocks eventually do respond and do see money flowing into them.

What I think, Mike, is going to be the biggest catalyst for that is probably going to be the other markets, the S&P, the Dow, crypto, all these getting weaker for whatever reason, it won't matter. Once they go weak, investors are going to be hunting around for the next investment that can bring them gains and they're going to see lots of green on the screen, if you will, from the gold producers because of the higher gold price.

So I think that'll happen. It may not happen in a big way until we see other markets get a little weaker. They don't necessarily have to crash. It can just be a bear market or a serious correction that scares people off. But I think that's what is coming. And for what it's worth, I will tell you that I am heavily exposed to miners and I've been buying like crazy the ones I think that are best and could do well when this eventually does happen.

And by the way, we've had a couple doubles in our portfolio already. We've had a triple. So picking the right mining stock is critical because even if we get a gold mania someday, there are some stocks that just aren't going to do well, they're going to lose money. So you still have to pick the best. And so that's what you want to focus on if you want to go into that industry.

And by the way, I was up in 2023, my mining stock portfolio was up. 2023, last year was probably the worst year for sentiment in our industry in a long, long time, maybe ever. And yet, my mining stock portfolio was up. So I detail that on the website how I did that. But it is possible to still win, if you will, see gains as an investor in mining stocks if you are focused on picking the right ones.

Mike Maharrey:Yeah, that makes sense because it's easy to kind of conceptualize miners as this homogenous thing. And obviously you've got different mining companies. And just like you have different grocery companies, some are better than others in terms of... And there's all kinds of things, of course, you're going to look at. You're going to look at their debt loads and you're going to look at their costs and all of these different things. So what you say makes absolute sense.

And it's kind of interesting because as you were talking, I was thinking it's a little bit like the relationship we've seen between silver and gold. And there's a big perception out there that silver is really underperformed, and yet if you look from a pure percentage basis, silver is actually on par, if not ahead of gold in terms of percentage gains. So sometimes when our expectations aren't met, we're starting to think, "Oh, this isn't doing well." Well, it's doing well, just maybe not as well as some people had hoped and dreamed.

Jeff Clark: Yeah. And that's actually common. If you look, again, through history, you'll see that gold moves first. And so gold leads, silver lags when a bull market gets started. So silver does underperform gold typically in the beginning stages of a bull market, but before that bull market is over, silver has typically outperformed gold on a percentage basis. And so I would not get discouraged if you own silver and you're looking to make a big profit. Silver is so darn spiky and volatile that... I mean, watch out. When it happens, it'll be very quick and sudden and almost violent. And if you're not in, you're out.

So I really encourage people to hold onto silver. Obviously, it's been a form of money for thousands of years for that reason, but I still think there's going to be a big gain in silver. I think over the next, I don't know, one to three years, whatever, silver's going to be well above $50 and making new all-time highs like it should be.

Mike Maharrey:Yeah. Yeah, I'm absolutely with you on that. I'll get you out on this one and I'm going to make you put on your prophet hat or maybe get out your crystal ball a little bit. But we've just had a pretty significant change in political administration here in the United States. We've got Trump having won the presidential election. We saw a pretty healthy selloff. One of the guys that writes for us called it the Trump shock. And now we're starting, I think, to see a little bit of a recovery in the gold market. And of course, we've still got inflation, so that's a whole other ball of wax.

But how do you see the gold market playing out as we move into the Trump era? Do you think that it's going to keep moving upward as it has, maybe bigger bull market or maybe a little slower? What's kind of your thought? And giving you the grace to say none of us knows for sure. We don't have a crystal ball, especially when it comes to Trump, you don't really know what he's going to do sometimes.

Jeff Clark: Yeah, exactly. Mike, did you know that the Trump shock and how gold sold off, that gold has gained back almost all of that now as you and I talk today?

Mike Maharrey:Yeah.

Jeff Clark: I mean, that's amazing. It was a very short-lived thing. It's back. And that really tells me, tells all of us that look, gold is not just about politics or even geopolitics. It'll react to those things, but it's really crisis insurance. And so that's when gold is really going to see its biggest gains. And so if you are someone who thinks a recession is coming, well, gold usually rises in a recession. If you're someone that thinks a stock market crash is coming, well, gold usually has risen in a stock market crash or at least fallen less than the markets have.

So there's a lot of reasons to own gold. The Trump thing is just one of them. I think he'll... I'm not a political person. I don't follow politics. I make a point not to.

Mike Maharrey:You're probably more sane for it. Yeah.

Jeff Clark: Yeah. Yeah. But I think in some ways he'll be good for the country. In other ways, he may not be good. But I don't care. Mike, I own gold and I own a meaningful amount of gold that no matter what happens, I've got physical gold at a materially critical level that can buffer me and shield me through whatever may come, Trump or otherwise, it doesn't matter.

And some of that gold is close by. I don't keep any in my house because I'm in the public eye. But some is close by and I source some outside my country. I source some overseas. So I have a shield in place that whatever crisis may come our way, I'm ready to go. In the short term, Trump will be a factor. He'll be a factor during his presidency at times, but there'll be many other things that happen that I think will make us all grateful we own a good amount of gold.

Mike Maharrey:That's a really, really good way to look at it because I do think a lot of times we get caught up in the politics of the moment or even the crisis of the moment, especially in a world... We live in a world now where when you and I were younger, you had a 24-hour news cycle, and now it's about a five-minute news cycle on X and some of the social media. So it is easy to get caught up and forget that long-term perspective. And there's certain things that we know are going to continue. We know that the government and the central bank are going to continue to devalue the dollar. That's a given. They're going to keep printing money. They're going to keep spending money. That's what politicians do.

Jeff Clark: Yeah, exactly. And speaking of inflation, by the way, I did a chart, the article's on our website, but the chart basically tracked inflation from the late 60s to 1980. And then I had our chart person overlay the current CPI starting back in 2016, I believe it was. Anyway, that chart, Mike, looks identical.

Mike Maharrey:Oh, wow. Yeah, not surprised.

Jeff Clark: So far.

Mike Maharrey:Yeah.

Jeff Clark: And what happened next at this juncture was higher inflation. Inflation reversed and went back higher. And I'm referring to the CPI. Inflation is really money printing. But the CPI actually reversed and went higher. It was a significant jump. And so if we were to follow the same pattern, the CPI is going up, not down. Now, who knows? But with some of the policies that are coming from Trump, it's easy to see how we could have a reversal in the CPI and it head higher. So we'll see.

Mike Maharrey:Yeah, absolutely. And I'm very much of the view that so much of the inflation, as you really very importantly pointed out inflation is really the increase in the money supply, the CPI is a reflection or a symptom of that monetary inflation. There's still a lot of that that's bubbling around in the system from not just the pandemic, but even going back to 2008. The Fed has never meaningfully decreased the balance sheet in comparison with the amount of money they [inaudible 00:27:03].

Jeff Clark: Oh yeah, there's that factor. There's debts, there's deficits, there's money printing. I mean, there's so many vulnerabilities in the system right now that holy crow, you'd be hard-pressed to find a more important time to own gold in history than right now.

Mike Maharrey:Yeah, for sure. So what I would like to do before we go is you've got a lot of stuff for people to check out and I want you to take a moment and give us where people need to go, where they can find your book, your website addresses, how they can get access to your newsletters, all of these things that you're involved in. Where can people follow all things Jeff Clark?

Jeff Clark: You know what? A lot of people may not know that we did purchase Gwen Preston's newsletter business. It was called Resource Maven. So we had a little M&A in the newsletter sector, just like M&A in the mining sector.

Mike Maharrey:Nice.

Jeff Clark: So we did that. We've worked out all the bugs. We've built a whole brand new website. It's fantastic. I love it. It's nice. It's easy to navigate. Everything is there you need. It all starts at thegoldadvisor.com, and everything's there, our free letters, our paid letters, our books. Peter Krauth came over as well from Gwen's business. So he's working with me too. He focuses solely on silver. He's got a free letter. We're launching a new free letter for him next month, January. I'm also launching, or we are launching, I should say, a premium service for high-net-worth investors that want to invest in private placement. So we cover the gamut all the way from free to pay letters to stuff for high-net-worth people.

So we're excited. We're ready to rock and roll. And Mike, I'm here... I'm doing all this because I think we're in the right place at the right time and the right metals, the right investment. So I think this is our time. And I think if you and I have an interview this time next year, we'll be a little happier with our investments.

Mike Maharrey:Yeah. Well, I expect that as well. And I know Peter, we've had Peter on this show, so he's fantastic on the silver side. Folks that are listening, make sure you check out all of Jeff's stuff and avail yourself to that information because I think you'll find it valuable. And what a great resource. For me, I'm much more in tune with the physical investment side. I'm not an expert in the miner, so that kind of information is really valuable for me to better understand that side.

Jeff Clark: Yeah, and the book Paydirt it's on the website, but a third of it is devoted to just why owning gold and silver, how it's important in our society, where it's going. So there's a lot of information in there I bet people don't know, as well as building the mine that we talked about. So you can get it. It's on the website. You can get it in digital form or you can click on the link there and buy it on Amazon. And we lowered the price recently, so it's only 25 bucks now.

Mike Maharrey:Nice. And that is at thegoldadvisor.com. So folks, check that out. Jeff, thank you so much for taking time out of your busy day to chat with me. I really appreciate it. I've enjoyed it. And we'll definitely try to make you a regular guest here because you've got a lot to offer and always looking for more better wisdom. So appreciate it.

Jeff Clark: Thank you, Mike. I loved it and I look forward to the next one.

Mike Maharrey: Outstanding. Well, thanks again.

It was great to hear Jeff Clark’s thoughts, and we will definitely try to have him back on in the future.

Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. And don’t miss our second weekly podcast, the Money Metals Midweek Memo, hosted by Mike Maharrey and available each Wednesday. To check out any of our audio programs just visit MoneyMetals.com/podcasts or find them on your favorite podcast platform of choice.

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