Last year interviewed Lobo about his thoughts for 2024 with regards to Uranium, Gold, Silver and industrial metals. He was spot on and had a great 2023.
So this time around I asked him for his thoughts for 2024.
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Transcript of “2024 outlook for Uranium, Gold, Silver with Lobo”
LADISLAS MAURICE: Hello, everyone. Ladislas Maurice from thewanderinginvestor.com. So today, I’m really excited to be talking with Lobo. Lobo, how are you?
LOBO: I’m, [laughs] I don’t know, I’m feeling like I shouldn’t follow the schadenfreude right here, but the troubles of the world have worked out well for my portfolio this year, so I’m doing great but a little conflicted on it.
LADISLAS MAURICE: Yeah. So look, we’ll be discussing gold, uranium, silver, and other commodities, so the outlook and your thoughts for 2024. But before we go into this, you were spot on for 2023. You were very bullish uranium, that worked out very well. You were bullish gold, that worked out very well as well. You did not want to play with silver, well, good call. And then when it came to industrials, you were pretty negative. Again, you were right. And when it came to oil, you were just saying, “Eh,” you know, “I’d rather play gold and uranium.” So again, well played. So hopefully, your thoughts for 2024 will be just as good.
Investing in Uranium 2024 outlook
LADISLAS MAURICE: So, let’s start with uranium, because a lot of people are quite interested in uranium. Do you think that 2024 will be just as good as 2023 for uranium investors?
LOBO: Well, it depends on what you mean by good. If you are asking is the price of uranium going to be sufficient to fuel the industry, if you will, the answer will be yes. I mean we’re at an incentive price. I do think that some correction is likely but I don’t see any crash absent, as we always say in this space, a major nuclear accident literally causing our uranium investments to melt down, absent something like that, it looks very good. This is a demand-driven story that is just solid, solid, solid. And on top of that, we’ve got technicals if you like, and on top of that we’ve got the narrative, the Storium, where the powers that be are really getting on board with nuclear as part of the green agenda now in a big way. So this is–
LADISLAS MAURICE: And energy security.
LOBO: Yeah, right, bringing it home. So all of the above, this is extremely bullish. That said, high prices cure high prices, and there is a lot of uranium out there. And on the one hand, you had SPUT and others hoover up all the cheap pounds over the last couple of years, and that was great. On the other hand, with the exception of SPUT, which literally can’t sell without a change in its corporate structure, other people can. And if you bought uranium at $30, $40, $50 a pound, not for the purpose of sequestering it forever but for investment purposes, which means buying low and selling high, well, if prices are higher, why would you not sell higher? So there’s a question mark in my mind about how robust 2024 will be. I’m not bearish, I’m not negative, but there is, you know, we’re at that point where high prices begin to cure high prices, we’re seeing the low-cost producers ramp up production again, we’re seeing low-cost projects going into production. And then there’s this question about secondary supply.
So longer term, extremely bullish. I think uranium is going to make a lot of people a lot of money for many, many years to come. But this particular year ahead, or, A, it’s gone so vertical that it’s normal, it’s natural for a market to correct after a move like that. And then, B, you’ve got these fundamental factors, the incentive price, high prices curing high prices, the swing supply. And some of these people, some of the companies in particular, not just funds, but uranium miners and developers that bought uranium when it was cheap because they believed in it and now they have projects to build, well, they’re supposed to sell that uranium to fund building those projects. That’s what it’s for.
So yeah, I guess I’m just saying I love uranium, and I’m a bull, but I don’t want to be a blind bull. If there’s a red flag waving out there, there could be a sword behind it. I don’t want to go charging into it. So yeah, just I’m cautious in 2024 on the uranium front.
LADISLAS MAURICE: Well, so, look, I’m–
LOBO: Sorry, one more thing. And many of the better uranium stocks are way up. They’re at 52-week highs or near 52-week highs, some of them multi-year highs. And when I say this, I was getting a lot of pushback on Twitter from people saying, “Well, this great uranium stock isn’t up.”
LADISLAS MAURICE: Maybe it’s not that great. [laughs]
LOBO: Well, sorry, but I kind of have to push back on the pushback, you know, is it really a great uranium stock? If $80 uranium doesn’t light a fire under your stock, you’ve really got to ask yourself, am I rationally evaluating the risk and reward in this speculation.
Which uranium miners to invest in?
LADISLAS MAURICE: Look, I am a paying subscriber to your newsletter. And I did notice that your uranium picks did a lot better than the average uranium miner out there. So generally speaking, taking into account what you’re saying, for 2024, if you were to play uranium miners, what sort of uranium miners would you rather go for, established miners, miners that are going to enter production soon, there are a few of those, or just complete explorers or developers? What do you think is the play at this stage of the cycle?
LOBO: Yeah. No, I understand the question. I think, in this context, like, okay, if uranium becomes the flavor of the day for the broader markets, if the green agenda really piles into this, everybody and their cousin starts talking about uranium, uranium, I mean, uranium stocks, there’s few enough of them, and the spot price for the metal is so illiquid that it could become like a meme stock. And if it goes vertical even more than it has, if we go to triple-digit uranium and beyond, I think that rush of inflowing tide would absolutely lift all ships, so I don’t think you’d need to be too picky. You could avoid the total crap, that’s a technical description, and it should do okay. There’s only so many choices. And if a bunch of generalist money comes into this space, I have little doubt, or no doubt, really, that pretty much pigs will fly, everything will go at that point.
Now, it doesn’t mean that they’ll all do well over the long run. At the end of the day, this is, again, my very technical description, crap is always crap. By any other name, it smells just as bad. So will those ever become mines? Will a project that has no discovery but just a dream or hope, will it deliver? The change in the spot price makes no difference to those stories. They don’t become less crap just because everybody’s chasing after everything crazily. So, what I’m saying is, I want to be very careful, because I’m not promising that uranium is going to the moon this year or in the year ahead. I actually see that as a possibility, figuratively speaking, with the moon, of course, just because it has that feel, that [Storium 07:25], the number of mainstream outlets that never talked about uranium before.
I mean, the NBCs of the world, the Yahoos, all they want to talk about is Chipotle and NVIDIA, right? They’re starting to talk about uranium. I mean, grudgingly, they might mention gold on some big move, usually in a negative way, but then they talk about gold. It’s a monetary metal, it’s something central banks buy. But nobody talks about uranium, and we’re starting to see that. So again, this is not a prediction. I wouldn’t even give this better than 50/50 odds. I’m saying there’s a non-trivial chance that this could just go nuts. And if it does, great, everybody that’s long already should do well, almost indiscriminately. Almost, not quite. But I don’t actually think that’s the most likely thing. More likely is that high prices are going to start curing high prices. The two big boys are ramping up. The low-cost development stories are going into production now, like the mines are building, some of them are ready to start drumming yellowcake very soon. And the other ones are working on it. So it’s happening now.
And again, the one variable that nobody can answer. Not Rick Rule, not Doug Casey, not Warren Buffett. Nobody could possibly answer is these people who bought pounds at whatever prices they bought them at, what’s their exit price? What do they need that money for? What will trigger them? How much of all that uranium that was hoovered up at low prices will come back on the market now but they were above the incentive price? I don’t know the answer to that. Nobody knows the answer to that. But it’s a reason not to be irrationally exuberant about 2024 in this space.
LADISLAS MAURICE: Yeah. So don’t take a bunch of margin and speculate on some [buying craze 09:17].
LOBO: And don’t forget to take profit.
LADISLAS MAURICE: Yeah.
LOBO: If you got a big win, don’t let it slip through your fingers.
Investing in Gold 2024 outlook
LADISLAS MAURICE: Cool, clear. Thank you. What about gold? Because gold did well but the miners have been a massive disappointment.
LOBO: [laughs] Yes. And I get a lot of pushback on that, too, but actually think this is, for the contrarian speculator, a fantastic thing. You’ve got a case where the question about the metal is basically been answered. I mean if you think about, never mind the spike up to $2,150 that Sunday night, a week and a half ago or whatever it was. Forget about that. It doesn’t matter. Just think about the average gold price throughout 2023. I mean, it was like a dream come true from back in the day when gold went from hundreds of dollars to four digits and for it to hold plus or minus $1,900 to $2,000 per ounce for most of the year, or average, I mean, the average for this year is going to be in that range. That is a record-smashing gold dollar exchange ratio, as I like to say.
And the context in which that exists isn’t changing. The reasons for that to have happened haven’t gone away. There’s still a lot of pig to go through the economic python there with all the fiscal and monetary policy that we’ve had. We don’t need to get too deep into macro. But my point is, my view is, for whatever it’s worth, is that the reasons why gold has risen as much as it has, they’re all on the table, that, if anything, they argue bullishly for gold. But at the same time, the prices of the stocks are like, these things are in the doghouse. Nobody wants them. People hate the gold stocks. That’s an opportunity. When price in value diverge, there’s an opportunity. Either the institutions and big shareholders that are not buying and/or selling gold stocks, either they’re right and the gold price is coming down, or they’re wrong and the gold stocks will come up to meet the gold price.
At these prices, anybody but the crappiest miner, that word keeps coming up. I’m just Peter Potty Mouth today. But any companies that deserve to be liquidated should be making lots of money at these prices. I mean, the COVID lockdowns are behind us. That’s not an excuse anymore. If you’re a gold miner and you can’t make money at $2,000 gold, there’s something wrong with your mine or your projects.
LADISLAS MAURICE: Yeah. And there’s no valid excuse at this point.
LOBO: I see this as a tremendous opportunity. In the same way, at around this time in 2022, I was telling people I love gold, I love silver, but uranium is the one that I’m really looking for in 2023. That’s the same way I’m looking right now for the gold stocks in particular. I don’t know the future but my sense is that this is like that. I don’t want to say they’ve got to fly but it feels like they sure want to. And by the way, I’m putting my own money there. So I can’t guarantee what will happen. I can tell you that I’m deploying my own cash into this thesis. And if I’m wrong, I will personally pay the price.
Investing in Silver 2024 outlook
LADISLAS MAURICE: Clear. Thank you. What about silver? Because I know you’re not a huge fan of silver these days.
LOBO: Well, that’s not quite right. This Darth Silver thing, sometimes, gets a little bit out of hand. I do see silver as a very viable metal, it has uses that are unique and it’s a great thing. And we’re still looking at dollars per ounce as opposed to pound or ton, the way we look at most industrial metals. My thesis is not silver’s bad. It’s not a bear thesis, by the way, either. I’m not saying the price of silver will go down or that people should sell silver. The thesis is that it is clearly a more industrial metal in the markets, like whatever you or I or the average gold bug or silver bug might think or feel, the COMEX traders, the LME traders, the other people out there, the institutions whose trades we incorrectly quote for the price of gold or silver, those people don’t care about ideology, or Milton Friedman, or any of that stuff. They look at these things like pork bellies, and coffee, or whatever, or copper. And we have seen, time and time again over the last year, particularly strongly silver often on daily charts, weekly charts, it looks a lot more like copper than gold.
Now, the good news is, and maybe this is new for your audience or for you, I have been sounding that alarm, and I haven’t been saying silver’s bad, silver’s going down. I’ve been saying don’t assume silver is going to act like gold. There’s a risk to you if you bet the farm assuming that silver is going to act like gold. And what we’ve seen with particularly the outbreak of the new war in the Middle East and some of the financial shenanigans since then, we’ve seen actually silver start acting more like gold in recent weeks than in not tracking copper so much and tracking gold more. So I’m actually quite encouraged by that as a silver bug. I’m not quite ready to say, okay, cancel Darth Silver. Silver is back in the monetary metal camp here for sure, and it’s going to do great with gold in 2024. I want more data on that. I’m more encouraged by that possibility. But even diehard silver bugs know that in a new bull market, gold always outperforms the first, silver lags. And in the past, it eventually has caught up and surpassed gold on a percent gain basis. It used to be a 100% track record, but now since 2020, silver never caught up with gold in 2020.
So now we have a 90% track record. So it’s still a pretty good bet. It’s just a little disturbing that the exception, the 10%, and I’m making that number up, but something like that, the exception is the most recent one. So you have to ask yourself, is it just 90% odds, or did the market change? And that’s my question.
LADISLAS MAURICE: Aren’t there large silver deficits?
LOBO: You know, it’s funny, I just heard Jeff Christian talking about this. And I know people, particularly silver bugs, love to hate Jeff Christian from the CPM Group. But he’s actually bullish on gold and silver this year. So store the hate for just a moment, listen to what he’s saying. And he makes a really good point. The Silver Institute puts out this deficit number and it includes investment demand and investment offtake. And Jeff points out, and I think he has a point here, like, you can’t ignore the facts. If your goal is to be religious about your favorite metal, fine, go knock yourself out. But if your goal is to make money, you cannot ignore facts. And the fact that Jeff is reminding us of is that silver that is deemed investment use, it’s still there, it’s still silver in bullion form or coin form, it’s available to come back on the market. Whereas silver that got used in cameras, or in photography are now silver that’s in electronics. It’s much harder for that to come back to the market. Harder, much more expensive. It’s not liquid, let alone silver that gets blown up in a Tomahawk missile or something. That that silver is not coming back to the market, it’s atomized, literally.
So the point is that some of these deficit numbers assume that silver that is actually still available the market is off the market. That’s a problem. Right? And it’s a lot. And we’ve seen this, when silver prices– I don’t know about you, Ladislas, I mean, you were probably in the market in 2010, 2011 when silver got up to almost 50 bucks. But more impressive is when it was there in 1980. When I was a newspaper boy buying silver at Morgan dollars. I remember that clearly. I mean, that was a real mania. And I remember, like, people going through the attic to find grandma’s silver. People buying metal detectors left and right. People dumpster diving back in the day because silver was used, you know, it was even before that rally, was a couple of bucks an ounce. It was cheap enough to use in more bulk applications, let’s say. So dumpster diving could be quite profitable.
Anyway, the point is, [laughs] you know, that high prices can cure high prices here. There is a lot of silver out there, that is it’s not just gone or consumed, it’s available to the market. And so I’m not sure that I would be the one to defend the silver shortage thing. And the other thing is, of course, remember it’s a byproduct. I think maybe the most bullish thing I can say for silver, and again, you know, call me Darth Silver if you want. I’m just trying to look at reality. But here’s a positive reality. If I’m right about recession and deepening global recession already, which will not spare the United States, that’s my macro thesis, if that endures, your industrial miners are going to spool down and silver is a byproduct. Like, almost all silver. Even so-called pure silver mines, at best, it’s a gold-silver mine or silver-gold mine but usually it’s a lead, or zinc mine, or a lead-zinc mine with a really big silver credit. If you’ve got kilos per ton of silver, you can almost ignore the lead and zinc, treat it like dirt, doesn’t matter, you’re making all the money on silver, but the actual metal coming out of the ground is lead-zinc with silver in it.
And most of the mines that’s important. Most of the mines they need to get paid for that lead-zinc. And if you separate the lead and zinc there’s even more silver comes from copper mines. And not because it’s high grade, it’s actually a very low grade usually, but just because these giant copper mines are so big, and they recover the silver, and they’re going to sell it into the market whether they get paid a lot or not, which is bad, right, when industrial metals prices are high. But in a recessionary scenario that actually cuts silver supply, and it can cut it at a time where the monetary aspect of silver is pushing prices higher. So you could get this perfect storm of higher gold and silver prices and the silver supply not only not responding to that higher price, but actually declining in the face of that higher price.
Now, I think Europe and the US, as soon as this recession becomes obvious, I think that they will pivot, and they’ll throw money at it, and they’ll try to make it go away. But the rest of the world doesn’t have that much capacity to do that. And the rest of the world is where most of the stuff is mined. So I think there’s, again, I can’t put odds on it, I don’t think any mere mortal could, but I think there’s a, not only not zero, I’d say a non-trivial chance that we will see constrained silver supply at a time of increased safe haven demand. If those things coincide, I think, a new nominal all-time high in silver is quite possible. I can’t put odds on it. So just to put a line and a dot at the end, I’m not bearish on silver but I’m cautious about assuming it will catch up to gold and pass it, certainly not in 2024, but I still want one of my claws in that pie, wolf claw, because there’s this possibility of a silver mania.
Investing in industrial metals and oil in 2024
LADISLAS MAURICE: Interesting. What about industrials and oil?
LOBO: Somewhat the same. Oil is different in its speed, you know, the lightning speed. And then you have this big swing of OPEC. There’s no real OPEC for copper. But all of them, if I’m right about we’re going into a recession, they can definitely go lower. And we’re looking, you know, oil has been flirting with the 60s, you know, has dropped below 70 for a while and people are saying, “Oh, 60, that’s a really low price.” Well, in recent history, yeah. But that doesn’t mean it won’t go lower. I mean, remember, most people are still drinking the soft landing Kool Aid out there. I mean, most investors, most institutions, most banks, I mean, Team Soft Landing is out there proclaiming victory every day on financial media, and the reporters are just eating it up.
Despite the fact that the average length of the long and variable lags for recession after tightening cycle is only just about where we are now, it’s astounding to me how many financial professionals are out there saying, “Oh, well, if we hadn’t had a recession yet, we’re not going to have one.” That’s simply contrary to historical data. Like, if we hadn’t had a recession yet, we’re merely average into this thing. So people out there saying, “Oh, it’s not going to happen, it’s not going to happen,” I think they’re in for a rude awakening. But let’s not get too distracted on the macro.
The point is, there hasn’t been capitulation yet amongst the recession deniers. I mean, I could be wrong. I could be completely wrong, in which case, oil and copper are going to have a great 2024. But if I’m right, and if you are skeptical of the soft landing scenario as I am, that there’s plenty of downside in oil and industrial minerals. Uranium is the exception. It’s the odd one out. Baseload power, still just getting to incentive levels. It’s a different thing. But everything else, let me put it this way, I keep saying I don’t know what’s going to happen. I’m not a predictor. I did pretty well in 2023. I was just saying what seemed likely to me and it worked out. I’m not saying that I knew it and, therefore, I know what’s going to happen next year, I don’t.
But let’s say I’m wrong. Let’s say Team Soft Landing is right. It’s not like copper is going to go to six bucks next month, or oil is going to go to $150 or something this summer. If I’m wrong, and it’ll take time for this thing to start curving back up again, to carve out a bottom and head north, there will be time to say, “Yeah, you know what, that old wolf was crazy. He was wrong. He messed this one up, so it’s time to get back into industrial metals.” And I’ll face that music myself. If it becomes evident that I’m wrong, no recession, then I will change my investment marching orders. The point was there’ll be time to jump on the train, like, it won’t just be gone from the station at once. It’ll start, it’ll blow whistles, it will pick up speed. There’ll be time to get on that train if it looks like a trend we’re betting on.
LADISLAS MAURICE: Cool. Okay, clear. Lobo, look, thank you very much. I encourage people to sign up to Lobo’s free newsletter. Personally, I’ve subscribed to Lobo’s paid newsletter for a few years now. I’m very happy with it. I renew my subscription every year, so really I encourage people to go ahead with this. And also if you’re interested in buying mining stocks in different jurisdictions, in Canada, in Australia, and Europe, there is a link to my favorite broker and affiliate link below that can help you invest in those markets as well.
Lobo, thank you so much again. Always a pleasure.
LOBO: Thank you, Ladislas. Have a great one.