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If you feel like you’ve seen this movie before, you’re not wrong.

The big question is this – is debt now irrelevant?

It might sound crazy to think about, but in a world of near-zero interest rates, does debt really matter anymore?

Right now, down in Washington D.C., politicians are squabbling over the debt ceiling:

Should The Debt Ceiling Rise, or Not?

If there’s no agreement, theoretically the U.S. government could run out of money by the end of the month.

It would lead to immediate credit downgrades and missed payments by the U.S. government…

Can you imagine the carnage?

Below is a chart showing this projection.

Will it happen? Not a chance.

Really though, all this talk about the debt ceiling is just posturing.

We all know it’s going to go up.

Because let’s be real – there are 2 things politicians love: spending money they don’t have (debt) and spending taxpayer dollars (your money).

Most of Washington couldn’t hold a candle to the Wall Street Fixed Income departments when it comes to managing debt finance, but that’s beside the point.

The debt ceiling in the U.S. and around the world will continue to trudge higher.

And why not?

• At today’s ultra-low interest rates, the cost of funding said debt is near all-time lows.

The chart below shows the relationship between the Federal Funds interest rate, the budget deficit to GDP, and net interest payments relative to GDP.

As you can see, the substantial decline in interest rates outweighs the extra debt taken on to stimulate the economy:

• Budget deficits are going up, but the cost of funding that deficit is going down.

Get Stimulated

You would think that having enormous amounts of cheap capital in the system would create a highly stimulative economic environment.

A picture is worth a thousand words, so let’s look at a chart on this idea.

The chart shows current and future net interest payments as a share of GDP.

• It’s forecast that over the next 5 years that net interest payments, as a share of GDP, will be some of the lowest on record.

Lowest on record. And from a politician’s standpoint, that means more room for debt.

As GDP recovers and trudges higher post-coronavirus, interest payments remain low thanks to ultra-low rates.

This allows the government increased financial flexibility and spending power if they so choose (and they will). Big, but Cheap.

However, both you and I know that there’s no such thing as a free lunch.

Eventually, the chickens will come home to roost.

Debt to GDP is One to Watch…

As you see in the previous chart, by 2030 interest payments are forecast to be back at 3% of GDP, That’s the same level as it was in the late ‘80s and early ‘90s.

A central bank buys bonds from the government to inject capital into the system. And when the economy begins to overheat it sells bonds to pull money out of the system.

In September, the U.S. Federal Reserve outlined its plans for tapering its bond purchases.

This means the Fed will begin to slowly rein in the amount of capital it’s injecting into the system.

This type of policy is still considered highly accommodative, but the world we now live in is used to extreme amounts of financial heroine (I call it Financially Transmitted Diseases).

It’s not just the U.S. that has such accommodative policies in place either…

Europe, Japan, Canada, Australia, and of course China are all running highly expansionary policies.

These accommodative policies are fanning the flames of a global economy that’s rapidly transitioning away from under-capacity to overheating.

Commodities Heating Up… and Crossflation

Last week we showed you how natural gas and coal prices are skyrocketing. Ditto for uranium recently.

Real-time data analysis using commodity prices or food inflation paints a far more drastic inflation picture.

After all, commodities are the backbone of everything we build and consume on a daily basis:

I don’t know how often Jerome Powell or Janet Yellen go grocery shopping themselves, but if they do, they’ll notice that prices have gone up.

A lot.

It’s simple math that if the prices of inputs go up, some or all of that cost is going to eventually get passed on to the consumer.

Here’s a chart of the IMF’s World Food Price Index. As you can see, post-pandemic, the index is up 40%.

These high input costs, which translate directly to higher food prices, are now impacting the consumer’s bottom line.

The following chart shows the price of chicken in the United States, up 20% since the pandemic:

A true story: I asked my local butcher why they didn’t have any beef tenderloin the other day.

His response?

“We stopped carrying it because it’s so expensive that no one is buying it.”

In my book The Rise of America: Remaking the World Order, I wrote about “Crossflation.”

It’s a term I coined to describe how some parts of the economy would see inflationary pressures while others would see deflation.

Technology continues to play a deflationary role, while input costs such as oil drive up the price of all commodities which is inflationary.

The global capital markets are at an incredible inflection point.

• I’ve just sent a note to my KRO subscribers this week on how to get in on the largest investment opportunity I’ve ever come across.

This isn’t some rinky-dink dice roll exploration play on a metal you’ve never heard of…

This is the biggest, most de-risked wealth changing opportunity I’ve seen in my career.

There are tens of trillions of dollars being invested into this sector, but right now it’s still flying under most investors’ radars.

If you want a shot at financial freedom…

And the ability to protect yourself and your loved ones no matter where food prices, or other basic commodity prices, end up…

Consider a subscription to my premium research service (the KRO) to learn more.

Regards,

Marin

The post Debt Ceiling Cinema appeared first on Katusa Research.

This is a rare email and opportunity not 1 in 1000 investors get access to.

You’re about to get a first-hand account from an absolute mining legend.

He has created billions of dollars in shareholder value. And his companies have created tens of thousands of jobs.

But before this mining legend accomplished all that…

Rio Tinto was in a predicament.

There was an operating mine that produced 50% gold and 50% silver.

The problem was the mine got ZERO value for the silver production.

Rio Tinto hired a well-respected banking firm to figure out how to unlock value from the silver portion of the production that was getting no value from the market.

The bankers concluded no royalty could be made to unlock value that would be attributable to the owners.

However, the alone accountant read the banking report to Rio Tinto and came up with a novel idea in the middle of the night.

He came up with the plan to create a new entity to put a STREAM on the silver production.

• That was the inception of a $21 Billion MCAP company called Wheaton Precious Metals.

The accountant that pulled off the first streaming transaction and built an empire around that financing model eventually became very well decorated:

• The chair of the World Gold Council,
• a Canadian Hall of Fame Member, and
• The founder of GoldCorp which he merged with Newmont to become the world’s largest gold producer.

Ian Telfer is to Gold Mining what Elon Musk is to Cars

Ian telfer shared how it was no easy endeavor.

Even the biggest silver bugs in the world at the time, like Eric Sprott, didn’t quite understand the streaming model nor did they think it would work.

Fast forward 6 years from the inception of SilverWheaton, and Eric Sprott’s #1 silver stock was Silver Wheaton (Called Wheaton Precious Metals today).

For the first time ever, Ian Telfer shares why he is backing one particular gold stock…

Not just financially but with his time and effort.

Because he believes it will be the next big company in the precious metal Royalty and Streaming sector.

This time, Ian won’t have to wait 6 years to get Eric Sprott onboard…

He has already backed the deal alongside his former partner at Sprott, Rick Rule.

• In addition to those three titans, Jimmy Lee, Rob McEwen, Doug Casey, and Warren Gilman have all written large checks and backed this superb management team.

In this exclusive 1 on 1 video I just recorded with him…

Ian Telfer shares in this video the trials and tribulations in building both GoldCorp and Wheaton Precious Metals.  What he thinks will happen next with the price of gold and what he is doing with his own money.

Do your portfolio a favor and watch this video, it will definitely be worth your while to learn from one of the living legends in the game, Ian Telfer.

Click here to watch the exclusive interview

Regards,

Marin Katusa

The post Before Market Open… appeared first on Katusa Research.

Getting on the right side of a bull market can change your life forever for the better.

Recently, subscribers to my premium research service, Katusa’s Resource Opportunities (KRO), had the opportunity to be part of a stock that – at its peak – was up over 1,547% last week since our entry. (More on that later).

In fact, over a dozen subscribers wrote in that they made 6 figures on that trade in less than 22 months.

Hundreds of others have sent in positive comments to us on the gains they made on just a few of our most recent recommendations. – and we’re truly grateful for all the kind words!

Fortunes like that are made making risk adjusted bets for asymmetric gains.

Risk Adjusted bets for Asymmetric Gains: doesn’t that sound good and sophisticated? Do you know what that even means? Let me explain.

Getting cocky and over leveraging can lead to financial ruin in all markets.

Before you invest, you must understand the mathematical risks associated to the position and the upside of the gain for the risk you are taking.

And then determine, does the pay off warrant the risk.

Right now, the commodity market is incredibly volatile with some sectors nearing their yearly lows.

Meanwhile, other sectors are firing on all cylinders with no signs of slowing down.
Let’s get you up to speed on what I am watching closely right now.

Gold Action

Gold dropped below $1,800 per ounce last week and hit as low as $1,732/oz which sent precious metal stocks abruptly lower.

• A simple indicator I like to use is the percentage of companies trading new 52-week highs and lows for the sector.

As you can see from the chart below, the number of companies near 52-week lows has jumped to nearly 50% in the span of a few months.

The gravitational pull towards the 52-week lows has caused the gold producers and developers to far surpass the declines of bullion.

I have long said that strong balance sheets, scale and margins are rewarded in the gold sector these days, which is proven by the significant underperformance of the junior producers.

Furthermore, passive funds love exposure without operating risk, which again is proven through the royalty group’s dominant outperformance.

The KRO subscribers have been positioned in both the number one performing precious metal royalty company and the number 1 performing energy royalty company in the world.

Considering gold is down 5.4% in September, our precious metal royalty company is up over 25%, and the most liquid and most traded royalty company in its peer group.

Heading in the opposite direction of the precious metals market is the energy market…

Watch For Europe’s Cold Winter: The Colder War

Natural gas, oil, coal and uranium have been on a tear.

Energy prices are soaring around the world. Underinvestment and supply bottlenecks have sent the prices of natural gas and coal skyward in rapid fashion.

• Natural gas inventories in Europe are low and in true Putin fashion, Russia has yet to play all their cards and has left Europe in a tangle.

Watch Gazprom very closely and you will see Putin making some strategic geopolitical moves this winter.

If it is a cold winter, this will further drain natural gas inventory levels and send the prices of natural gas and coal higher.

You can see that natural gas prices have soared in Europe in response to these low inventory levels.

Soaring gas prices mean that it can be economically viable for the socialist green Europe to burn coal to generate electricity. Which is precisely what they are doing.

The price of coal in Europe has gone up 150% this year and is now selling at a 13-year high.

Australian Newcastle coal is up 250%, flirting with 2008 highs. Low Chinese stockpiles coupled with a political fight with Australia has sent domestic prices up 100% for the year while stockpiles remain low.

This week China’s state electricity council stated they would procure coal “at any price”. You can see the price rises in coal below…

There are multiple derivative affects of high natural gas and coal prices.

For one, industries which use natural gas as an input such fertilizer producers are seeing their input costs skyrocket. CF Industries one of the world’s largest fertilizer producers even went so far as to shut down a UK production facility. Average selling prices for urea, an ammonia-based fertilizer have increased 50% since the summer.

Manufacturers will try to pass these costs on to the farmer, who will in turn pass the costs down onto you, the consumer.

Carbon Coming Alive

With more coal being burned we are seeing the price of pollution go skyward.

You can see this through the lens of the European Union Allowance permit, which is compliance market carbon credit. This year we’ve seen prices soar by 80% and by 20% just in the last month.

Note: Many people are asking where to get Carbon prices. The best free resource is www.carboncredits.com and their Carbon Pricing Dashboard.

In North America, carbon is getting more attention…

This week CIBC, one of Canada’s largest banks completed its first successful transaction facilitating a trade between the Nature Conservancy of Canada and a UK commercial bank. I do believe this is just the tip of the iceberg for the carbon market.

Net-zero targets have soared, with over 3,000 companies and over $88 trillion now committed to net-zero emissions.

Take a moment, to consider the magnitude of that dollar figure and the significance of the number of companies pledging these targets.

• KRO readers can look forward to an in-depth outlook on where the puck is going in the carbon market in the coming October issue.

The KRO was the first newsletter in the world to cover the carbon sector and subscribers are sitting on triple digit gains already.

Uranium Breather

Elsewhere in the baseload power sector, life is being breathed into the uranium market. Uranium prices touched $50 a pound; a level not seen since 2012.

The Sprott Physical Uranium Trust continues to build its uranium stockpile and chew up spot market inventory.

To date the trust has raised in excess of CAD$500 million and acquired nearly 10 million pounds of uranium in the spot market.

This major move in uranium has sent the share prices of many uranium stocks ripping higher.

And KRO subscribers have been positioned in the number 1 uranium stock year- to-date…

The commodity markets are experiencing incredible volatility these days.

Markets are moving quickly and its critical to stay on the cusp of what is happening if you want to be successful. I’ve been laser focused on the natural resource sector for over 20 years. Spent millions of dollars and learned painful lessons on patience and especially what to avoid.

As a professional fund manager, I’ve had had countless big wins but I’ve learned many hard lessons along the way.

Right now, I believe I am on the cusp of some very big scores just like our big bets in uranium…

And we are very, very early in one of the most exciting sectors of my lifetime.

It all comes to ahead in exactly one month from today, where World War Zero will start.

I get it that not everybody can afford my research. I come from humble roots, was a teacher early in my career and that’s why I go out of my way to provide research for free.

Here are two very valuable research reports that paying subscribers have had access too.

1. The exclusive interview between me and a gold legend – David Garofalo.
2. Your Education Primer on the Royalty Business – featuring Gold Royalty Corp (GROY.NYSE)

Use them. They are valuable and they may help you make money.

Regards,

Marin Katusa

The post Commodities Rising appeared first on Katusa Research.

This kind of news gets my alligator sense going…

And my attention and action go full throttle.

David Garofalo (CEO) and the team at GROY have pulled off one of the best royalty acquisitions I’ve seen in years in the space.

I must say this team reminds me a lot of the pace Ross Beaty moves at during his formative years.

In fact, GROY is moving a lot quicker than even I expected and things could heat up very soon.

Let me explain…

On September 7, GROY announced a 3-way merger with Golden Valley and Abitibi Royalties.

The largest players in the gold markets (Eric Sprott, Rob McEwen, Jimmy Lee) have signed lock-ups to acquire GROY shares at US$4.80 per share.

What does the share price know that Eric Sprott, Rob McEwen, and Jimmy Lee don’t know? Nothing.

• That’s the point of this alert. This is a mispriced arbitrage opportunity that I personally plan on taking advantage of.

This transaction when closed and completed makes Gold Royalty Corp (GROY.NYSE) a top 10 precious metal and royalty company.

Catalysts:

After this transaction, the new co-market cap of the company will be over $500 million.

• With that, index funds will be required to purchase more shares as per their rebalancing index rules.

In addition, other funds that are required to hold royalty companies will realize that Gold Royalty Corp (GROY.NYSE) is a vastly superior royalty and streaming company than peers with a similar market cap but nowhere near the royalties on quality assets.

• The flow of funds will come into Gold Royalty Corp (GROY.NYSE) and I believe this newly merged entity will rerate post-close.

• The risk is the transaction doesn’t close—that being a larger company is willing to pay more.

• That is possible and in that case, Gold Royalty Corp (GROY.NYSE) walks away with $15 million in break-up fees for their efforts.

There has only been one financing with this company and that was almost exclusively taken down by KRO subscribers.

I am very impressed with David Garofalo and his team thus far.

And I fully understand why the smart shareholders of Golden Valley and Abitibi like Jimmy Lee and Rob McEwen signed hard lock-ups with Gold Royalty (GROY.NYSE) because they see the re-rate potential in the share price.

Click Here to download your full report on Gold Royalty Corp (GROY.NYSE).

Regards,

Marin Katusa
Founder, Katusa Research

 

Details and Disclosures

Katusa Research, Marin Katusa and its directors, employees, and members of their households directly own shares of the following Companies which are described in this publication – Gold Royalty Corp (GROY.NYSE). Therefore, Katusa Research is extremely biased. All publications of Katusa Research represent only the opinion of the respective authors and not of the company. Gold Royalty Corp did not review this report or articles. The information in the publications of Katusa Research do not replace and are not to be taken as individual needs geared professional investment advice and is for informational purposes only.

This report and information are neither explicitly nor implicitly to be understood as a guarantee of a particular price development of the mentioned financial instruments or as a trading invitation. Every investment in securities mentioned in publications of Katusa Research involves risks which could lead to a total loss of the invested capital and—depending on the investment—to further obligations for example additional payment liabilities. Katusa Research does not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. All information published in publications from Katusa Research is based on public filings and news releases.

The post Immediate Release: Gold Royalty (GROY.NYSE) Report appeared first on Katusa Research.

Yesterday I broke the news to all of you… readers of Katusa’s Investment Insights.

“Marin, this is going up multiples.”

That was the line that David Garofalo, the CEO of Gold Royalty (GROY.NYSE) told me at a dinner recently.

He had my full attention from that point on.

David Garofalo (CEO) and the team at Gold Royalty (GROY.NYSE) have pulled off one of the best royalty acquisitions I’ve seen in years in the space.

Today you’re going to see one of the top managers in all of the gold mining in an exclusive 1 on 1 interview with me.

And I want everyone to pay attention to what this is about.

1. First of all, I have never seen, ever in my career, a management team execute with this much precision and time.

1. Secondly, they’re going after a royalty on Canada’s largest producing mine that’s already in operation, talk about de-risked.

FULL DISCLOSURE: I Marin Katusa am a severely biased, large shareholder of Gold Royalty (GROY.NYSE). If that bothers you then do not buy the stock. I continue to be a buyer of the stock. And you’ll learn more about why in my exclusive interview with David Garofalo.

In this interview you’ll learn:

• Why I believe this project is severely de-risked
• Why billionaire mining legends like Eric Sprott, Rob McEwen, and Jimmy Lee have acquired more stock and have agreed to a share lockup (hint: they’re bullish)
• The significance of the Malartic Mine transaction
• The potential of a “Double Bump” and what that means for anyone that owns shares of Gold Royalty (GROY.NYSE)

It’s not often that I release an exclusive report behind our $3500 paywall.

Or a full-out member-only conversational video for KRO subscribers that features someone of David Garofalo’s pedigree.

But you’re getting a seat at the table, so you can see the kind of depth and opportunities we uncover at Katusa Research.

Click here to watch the interview with David Garofalo.

Best,

Marin Katusa
Founder, Katusa Research

 

Details and Disclosures

Katusa Research, Marin Katusa and its directors, employees, and members of their households directly own shares of the following Companies which are described in this publication – Gold Royalty Corp (GROY.NYSE). Therefore, Katusa Research is extremely biased. All publications of Katusa Research represent only the opinion of the respective authors and not of the company. Gold Royalty Corp did not review this report or articles. The information in the publications of Katusa Research do not replace and are not to be taken as individual needs geared professional investment advice and is for informational purposes only.

This report and information are neither explicitly nor implicitly to be understood as a guarantee of a particular price development of the mentioned financial instruments or as a trading invitation. Every investment in securities mentioned in publications of Katusa Research involves risks which could lead to a total loss of the invested capital and—depending on the investment—to further obligations for example additional payment liabilities. Katusa Research does not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. All information published in publications from Katusa Research is based on public filings and news releases.

The post BREAKING: Watch Marin’s Interview appeared first on Katusa Research.

David Garofalo (CEO) and the team at Gold Royalty (GROY.NYSE) are pulling off one of the best royalty acquisitions I’ve seen in years in the space.

The pace at which this team move reminds me of mining legends like Ross Beaty, Lukas Lundin, and Robert Friedland.

This is exactly how those guys ran their massive scores during the early years—only faster.

In fact, Gold Royalty (GROY.NYSE) is moving a lot quicker than even I expected. And I don’t expect anything less than lightspeed with companies I’m involved with.

The details get a little complex, but trust me—it’s worth it…

FULL DISCLOSURE: I, Marin Katusa, am a large shareholder of Gold Royalty Corp. Thus, I am extremely biased. And that’s why I’m buying more shares.

So, let’s get right to it…

KATUSA ALERT:
The is the single best assembly of gold mining legends I have ever seen

Here’s how it went down…

On September 7, Gold Royalty Corp (GROY.NYSE) announced a 3-way merger with Golden Valley and Abitibi Royalties.

Why?

Canada’s largest producing gold mine at 700,000 ounces a year is called Malartic, which is located in the province of Quebec and is ranked as the #1 mining jurisdiction in the world.

It’s owned and operated by Agnico Eagle and Yamana.

• Agnico is a top 5 gold producer in the world and David Garofalo was the CFO at Agnico while it created its first few gold mines in this region.

Abitibi owns a 3% NSR over the Odyssey Underground Portion which is the next portion of the Malartic gold mine.

Currently, the mine is an open pit. Phase two is underground.

The grades are incredible, and it will be the largest underground mine in Canada when in operation.

Now we want you to connect the dots of the billionaire investors in the gold space…

The two companies merging with Gold Royalty are majority-owned by some of the largest players in the gold markets: Eric Sprott, Rob McEwen, and Jimmy Lee.

If you’re not familiar with them, let me put faces to these names…

• Eric Sprott was the largest shareholder of Kirkland Lake, the best performing major gold producer since 2015.
• Rob McEwen is the founder and CEO of Goldcorp, which got a $10 billion buyout. He backed New Found Gold at $0.50 two years ago… and it hit a recent high of $13.50.
• Then there’s Jimmy Lee, a brilliant billionaire investor you’ve probably never heard of. When silent, self-made billionaires like him make huge bets, watch closely.

Each of these men has signed up for hard lock-ups with their Gold Royalty shares.

In other words, instead of cashing in, they’re doubling down.

They clearly see the “double bump” re-rate potential in the share price.

This is Better than Our First Entry

When GROY went public, we had a lot of emails of subscribers asking when they could buy stock.

We said to be patient.

• Now the largest shareholder of Gold Royalty (GROY.NYSE), Eric Sprott has acquired more stock just under the current trading price of $5 per share.

The shares are very liquid and list on the New York Stock Exchange (NYSE).

Patterns To Success

There are certain things the ultra-successful do that the rest don’t. When it comes to investing, the ultra-successful always start with the management team.

Second, is a world-class portfolio of projects that they can buy below its true value.

That is exactly why Eric Sprott, Rob McEwen, Rick Rule, Doug Casey, Jimmy Lee, Ian Telfer, Warren Gillman, and many other incredibly successful and rich gold investors are not only shareholders but also acquiring shares now.

• This transaction, when closed and completed, makes Gold Royalty Corp a top 10 Global precious metal and royalty company.

That is just the start, the company has only been public for less than 6 months.

Other than the Big 4, no other royalty or streaming company have a tier 1 asset like a 3% NSR on a portion of the largest operating gold mine in Canada.

• With this transaction, Gold Royalty (GROY.NYSE) has 72% of their NPV coming from the two best jurisdictions globally in mining (Quebec and Nevada).

The rest in Alaska (3), Idaho(3), Oregon(3), New Mexico(2), Ontario(19), North West Territories(5), Brazil(4), Peru(1), and Columbia(3).

Post this transaction, the company will have 6 royalties on producing assets, 7 royalties in development with near-term cash flow.

This puts it at the top with MCAPs under $1B.

Size Matters

After this transaction, the new co-market cap of Gold Royalty (GROY.NYSE) will be about $500million.

• With that, index funds will be required to purchase more shares as per their rebalancing index rules.

In addition, other funds that are required to hold royalty companies will realize that Gold Royalty Corp (GROY.NYSE) is a vastly superior royalty and streaming company than peers with a similar market cap but nowhere near the royalties on quality assets.

The flow of funds will come into Gold Royalty (GROY.NYSE) and I believe this newly merged entity will rerate post-close.

The risk is the transaction doesn’t close: That being a larger company is willing to pay more.

That is possible and in that case, Gold Royalty (GROY.NYSE) walks away with $15million in break-up fees for their efforts.

There has only been one financing with this company and that was almost exclusively taken down by KRO subscribers and was extremely oversubscribed.

I am very impressed with David Garofalo and his team thus far.

Tomorrow morning pre-market open, I will send you an exclusive interview I just put together with David.

You will want to make time for this interview.

I show up representing the shareholders asking tough questions and David Garofalo delivers big time.

I fully understand why the smart shareholders of Golden Valley and Abitibi like Jimmy Lee, Eric Sprott, and Rob McEwen signed hard lock-ups with Gold Royalty (GROY.NYSE) because they see the re-rate potential in the share price.

FULL DISCLOSURE: I, Marin Katusa, am biased. I believe in the management team and have bought stock in the open market on the NYSE. I am a significant shareholder of the stock and thus very biased. I’m doing this because not everyone can afford my premium research reports and I believe in David Garofalo and the team at Gold Royalty (GROY.NYSE). Go GROY Go.

We will prepare a full report on the company and the breaking news for you.

Regards,

Marin Katusa
Founder, Katusa Research Details and Disclosures

Katusa Research, Marin Katusa and its directors, employees, and members of their households directly own shares of the following Companies which are described in this publication – Gold Royalty Corp (GROY.NYSE). Therefore, Katusa Research is extremely biased. All publications of Katusa Research represent only the opinion of the respective authors and not of the company. Gold Royalty Corp did not review this report or articles. The information in the publications of Katusa Research do not replace and are not to be taken as individual needs geared professional investment advice and is for informational purposes only.

This report and information are neither explicitly nor implicitly to be understood as a guarantee of a particular price development of the mentioned financial instruments or as a trading invitation. Every investment in securities mentioned in publications of Katusa Research involves risks which could lead to a total loss of the invested capital and—depending on the investment—to further obligations for example additional payment liabilities. Katusa Research does not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. All information published in publications from Katusa Research is based on public filings and news releases.

The post [ALERT] Gold Royalty Corp appeared first on Katusa Research.

A couple of weeks ago, I went out for dinner with the CEO of a gold royalty company.

He lowered his voice, leaned across the table…

…and told me something you almost never hear from someone in his position:

“Marin, this is going up multiples.”

There are no guarantees, but I think he’s right…

The ink wasn’t even dry on their last deal before they put out more news.

In short, they are a commando team…

I have never seen, ever in my career, a management team execute with this much precision and efficiency.

But that’s what happens when the best executives in mining, who have skin in the game…

Are backed by the most successful and experienced billionaires in the sector execute their business plan.

Second, they are nowhere near done with their business plan. This is getting exciting as a shareholder.

Thirdly, this one gold stock (that I will reveal tomorrow)… Is going to experience what is called the “Double Bump”.

That is when the big index funds must buy the stock and the shares of the company get re-rated to its inherent and peer valuations.

And everyone has a chance to become an investor at the same price as the richest gold investors in the world who have signed 3-year lock-ups on their shares.

Why would the billionaires sign such a contract?

Because they see the share price going a lot higher and it’s a move to show management their commitment to the deal. Talk about de-risked.

• The biggest names in the gold sector (which I’ll reveal tomorrow) have done the due diligence and have made large financial investments.

Now you get a chance to see what the best in the business get to see.

The “Double Bump”

There are the two words this one gold stock has that NO ONE ELSE has.

Here’s how the double bump works…

It implies the stock will get a re-rating, meaning the share price is expected to go higher, as explained to me by a billionaire investor and shareholder in the company.

One gold titan who is a shareholder revealed something incredible…

• “I want a double bump. I don’t want to cash out. I’ve got enough money. I want to see the potential for a re-rate.”

When insiders don’t want to cash out… and they tell you it’s going up multiples… and they’re executing with lightning speed… pay very close attention.

They know exactly what’s going on.

You should too.

It will be your first-ever opportunity to see the full details of a company behind the KRO paywall.

So, watch your inbox first thing tomorrow morning.

And fasten your seatbelts.

Regards,

Marin Katusa
Founder, Katusa Research

Details and Disclosures

Katusa Research, Marin Katusa and its directors, employees and members of their households directly own shares of the following Companies which are described in this publication – Gold Royalty Corp (GROY.NYSE). Therefore, Katusa Research is extremely biased. All publications of Katusa Research represent only the opinion of the respective authors and not of the company. Gold Royalty Corp did not review this report or articles. The information in the publications of Katusa Research do not replace and are not to be taken as individual needs geared professional investment advice and is for informational purposes only.

This report and information is neither explicitly nor implicitly to be understood as guarantee of a particular price development of the mentioned financial instruments or as a trading invitation. Every investment in securities mentioned in publications of Katusa Research involve risks which could lead to a total loss of the invested capital and—depending on the investment—to further obligations for example additional payment liabilities.Katusa Research does not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect. All information published in publications from Katusa Research is based on public filings and news releases.

The post Gold Stock DOUBLE BUMP Coming appeared first on Katusa Research.

Ultra-low interest rates and non-stop money supply growth are fueling the race to the bottom for global currency devaluation.

Frightening Stats

For instance, did you know that the global money supply has grown by over 5x in the past 20 years?

Here’s a chart that shows global money supply growth over the last two decades:

Massive amounts of government stimulus, negative interest rates, and ultra-low bond yields around the world have paved the way for soaring gold prices these past two years… setting investors up for a run at another long bull market.

The exciting part is that there’s still a lot of room left to run…

A major bull market can make any investor feel like an expert because a rising tide usually lifts all boats.

That said, there are always a few boats that rise much higher and faster than the others.

These are the investments that professional investors, fund managers, and billionaire resource speculators target for big wins.

A License to Print Money

In this crazy world we live in, there are few certainties.

Frankly, anyone peddling you a “sure thing” investment should be treated with extreme caution and skepticism.

But there’s one small corner of the market that’s created an incredible margin of safety for their operations, based around their profit margins.

It’s a unique business model that’s been copied by some of the world’s leading companies.

• Recently, Bill Ackman – one of the world’s leading hedge fund managers – raised billions of dollars trying to break into the sector.

What’s this mysterious line of business, you ask?

It’s the royalty business, and it’s applicable across many different industries.

Music, mining, oil and gas, TV shows and movies, and even oil change businesses are just a few of the many industries where you can find royalties at work.

Happy Birthday, Now Pay Up

Have you ever heard the song “Happy Birthday?”

Of course, you have.

But what you probably didn’t know is that the royalties on the song brought in over $50 million to its owners, most recently Warner Music, just from it being used in movies and T.V.

Yes, the Happy Birthday song, the same one you’ve been singing since you were a kid, used to actually be under copyright owned by Warner Music and cost $25,000 each time it was used.

Songwriting brothers George and Ira Gershwin wrote an entire catalog of hits between 1920 and 1937.

• Today, their heirs make around $8 million per year in royalties from songs written nearly a hundred years ago.

More recently, Michael Jackson’s estate was paid $750 million to buy out 50% of his collection of music royalties.

Here’s the strange part of that story: the bulk of the song royalties weren’t even his. Michael Jackson bought the rights to over 4,000 songs, including 250 Beatles songs.

The Royalty Blueprint & Case Study

Pioneered in the 1980s by two Canadians, Pierre Lassonde and Seymour Schulich started the first gold royalty company in the world, the original Franco Nevada.

They built the company on the simple framework of “exchange cash today, for a share of tomorrow’s production”.

Below is a chart which shows the “old” Franco Nevada’s incredible rise from CAD$0.21 per share and a market capitalization of CAD$2 million…

To the eventual buy-out by Newmont for CAD$2.5 billion at over CAD$33 per share.

That’s an incredible 15,614% return…

Following the exact same blueprint as the original Franco Nevada, a “new” Franco Nevada went public in 2007.

• Over the last 14 years, the stock has appreciated over 1,100% while gold has gone up 130%.

This should help further highlight the tremendous potential offered by investing in world-class royalty and streaming businesses.

By now, it should be very clear that gold royalty companies make for excellent investment opportunities.

The only question left is: which one to invest in?

Royalties and Streams Are Best Made in Hated Markets

Two years ago, I was pounding the table on a company I was buying a lot of.

It was in a sector (uranium) that was cheap… it was hated… and no investor or media company wanted to go near it.

That’s when alligator investors like me spend MONTHS doing our due diligence. Except there were hardly any other investors.

This worked to my advantage.

Subscribers and I were able to position ourselves in a royalty company that was a first mover in the uranium industry.

• Fast forward 20 months later and my subscribers and I are up over 701% on that investment as of this writing.

Most importantly, this isn’t some illiquid nano-cap—it’s listed on the BIG U.S. exchanges. Primetime.

And the party’s just getting started. That was one corner of the resource sector where there was NO competition.

I get a real kick out of the poser gurus on social media who would send out messages in 2019 saying “Katusa failed” with his uranium play.

To all the haters, just look at the score—and nobody is doing better than the Katusa subscribers. Nobody.

Was it high risk and was patience required, yes. Nothing is ever guaranteed.

But if you’re not a subscriber to my premium research letter, you’re probably wondering what the next big score will be…

Well, you’re in luck.

Imagine if Bill Gates, Jeff Bezos and Elon Musk all backed a company in the tech sector.

How badly would you want to be an early investor? – I know I would.

Setups like this don’t happen often. And they’re definitely not like clockwork, but when you spot them, be prepared to act.

Because – if I’m right again – I’m convinced it will be another big score.

Regards,

Marin

The post Boom Signal appeared first on Katusa Research.

Nuclear energy is carbon neutral, powers 1 in 5 homes in America, and is the cheapest operating source of baseload power in America.

After 10 years in a brutal bear market, uranium prices have roared to 6-year highs.

Bloomberg headlines are rolling and YouTube and Twitter algos are blasting uranium stories on everyone’s feeds. Even WallStreetBets (of AMC and GameStop fame) is in on the action, having alerted their members.

Here’s the deal, uranium stocks are at multi-year highs.

So pop quiz: What has changed in the uranium market to jumpstart this frenzy?

1. Are utilities finally waking up and buying physical uranium in the market again?
2. Are nuclear reactors finally going to get the credit for being the only net-zero baseload power option?
3. Or is someone trying to corner the market?

If you answered C, you’re right.

But I’ll add that it’s C with a radioactive twist.

I’ll explain all the details from the perspective of the largest financier of uranium from 2017-2019. And from someone with a Rolodex of the largest players in the uranium sector, globally.

The New Player in Town: Cornering The Uranium Market

The company formerly known as Uranium Participation Corp was renamed and repurposed as an investment trust.

Its name today is the Sprott Physical Uranium Trust and it has now become the largest buyer of physical uranium.

How are they doing it?

It’s a technique called the ATM or At The Market financing.

• An At The Market (ATM) facility allows the company to conduct financings on demand. This capital then is used to buy up physical uranium in the spot market.

Below is a chart which shows the cumulative ATM financing during the last ten days of August via the Sprott ATM facility.

The spot market price traded at $40.25 per pound earlier this week. These levels haven’t been seen in 6 years. Investors are taking notice and it’s become the hottest commodity and dominating the news cycle.

Going back to the ATM money available to Sprott … all the cash raised is then used to buy uranium in the spot market.

The relationship is very clear…

Uranium Stocks are Spiking Higher

I don’t think there is a single uranium stock that has not appreciated in the last 2 weeks.

Out of the 50+ uranium names I follow, none have negative returns since August 2021.

So, What Comes Next?

The initial size of the Sprott ATM is CAD$300 million.

This means they can issue up to CAD$300 million worth of the trust’s stock, which in turn represents CAD$300 million of physical uranium buying power.

Sprott has tapped into $230M thus far of the $300M facility.

• Given the rapid success, my guess is the team at Sprott will likely try to size up the ATM to CAD$500M or the maximum amount allowable without a shareholder meeting (time is of the essence). This could mean hundreds of millions of dollars worth of uranium buying.

• But, how long will it take for Sprott to get approvals from the regulators to reload their ATM financing?

• In addition, for Sprott to go “Prime Time”—they will need to list on a major US exchange (something I’ve been talking about for years). And I’ll bet my old partner, Rick Rule (who is the brainchild of this at Sprott) that a major U.S. Listing doesn’t happen before U.S. Thanksgiving. Regardless, I applaud the Sprott team for their efforts, strategy, and execution—well done!

It’s a significant tailwind for the uranium market.

The goal is to get the uranium trust listed in the US where it can go after the really big money. The catch there is getting listed is not a flip of the switch, this will take months to sort out.

Whenever you have lawyers involved, you can expect a process of over-promise, overcharge, and under-deliver.

Expect time delays, as it’s part of the training lawyers get during their articling (Billing Success 101). To all the overzealous lawyers, I’m kidding, but seriously, your industry needs a serious wakeup.

In the meantime…

Options Watch: The YOLO traders are coming

Known as WallStreetBets on Reddit, this group of traders infamously created chaos in the markets earlier this year with their Gamestop (GME) and AMC Inc (AMC) short squeezes.

It brought hedge funds to their knees.

It looks like some of them have begun to buy deep out of the money call options.

Call options for September 17th which expire in 10 days with an exercise price of $35 now have an Open Interest of 139,163 contracts.

• Over 50,000 contracts were purchased in the past few days. Making it the largest open interest of any Cameco option contract.

Each option contract represents the right to buy 100 shares of Cameco at $35 per share. Contracts were bought for pennies, rendering it the exact type of trade the WSB crew makes.

Someone has to sell these traders the call options, banks or option dealers will “hedge” their risk through buying Cameco stock in the open market.

Once this WSB engine gets going it is hard to stop, as proved in GME and AMC.

The one Achilles heel of the WSB group is most trade on retail platforms which won’t have access to the Canadian exchanges which is where most uranium stocks trade.

In addition, only a few uranium stocks have options available for the YOLO trade.

How High Can Uranium Prices Go?

The unique part of the uranium market is that demand is virtually inelastic.

Utility companies need to buy uranium to fuel their reactors, regardless of cost.

• Whether uranium is $45 per pound or $450 per pound the cost per kilowatt-hour difference is a rounding error compared to a similar price pop in natural gas or coal.
• For example, a 1000% increase in uranium price will result in a 24% increase in electricity generation from a nuclear reactor.

A similar 1000% increase in natural gas will result in a 720% increase in electricity generation on average for the utility.

The Utilities know this, and so do you now. Team Sprott and WallStreetBets Crew, feel free to quote our math.

Now, uranium has seen some incredible swings over the last 90+ years.

Both major bull markets in uranium saw prices for yellowcake skyrocket by over 10-fold.

You would think the mega booms and busts would attract enormous amounts of capital to the uranium market. Not to mention the fact that close to 20% of America’s electricity comes from uranium.

But in fact, it’s nearly the opposite.

The uranium market is tiny. It’s a mere fraction of its precious metal or base metal miner peer groups and is dwarfed by its older cousin oil and gas.

Enter The Passive Funds

In the last Uranium cycles, the Passive funds (which were a fraction of the amount today) had no way to play the general uranium price with Liquidity.

The uranium ETF option was a joke and wasn’t a true proxy to the uranium price, and didn’t have the liquidity required to meet the passive funds’ criteria.

The miners were debt-heavy and not an ideal option.

But Sprott provides a platform for Passive funds.

And today, Passive funds exceed the amount of capital managed than Active Funds.

That means, algos and computers manage the buying and selling. And when those algos start buying, watch out.

Uranium Returns Can Be Explosive

When uranium heats up the moves in uranium stocks become extremely explosive because there are so few ways to play the space.

In the bull run from January 2004 through June 2007, many uranium stocks soared hundreds of percent.

Cameco, the world’s largest publicly traded producer went up over 300%. While smaller speculative plays soared thousands of percent.

Year to date, myself and subscribers have been strategically rotating in and out of uranium names.

We’ve locked in several good “base hits” and are sitting on a year-to-date gain of over 150% on our largest position.

The uranium market is one of the most hated and loved sectors out there. ’ve made my share of thousand percent gainers.

In fact…

• One of the uranium stocks I and my subscribers to Katusa’s Resource Opportunities had, was up as much as 860% here in 2021.

And we got those shares FOR FREE.

“Impossible” you might think.

But hundreds of people had the same opportunity with this uranium stock (and even a copper stock that’s gone up over 1000% they got for free, too!).

Here’s a sample of what a few of our subscribers wrote to us after their winning uranium profits…

From Ken M.,

“Very pleased with this one and your overall service. Up 250% to date!!

And Bobby M.,

“I believe the bull market in Uranium is still in its early innings. Subscribing to Katusa Research…has been one of the best financial decisions I ever made.”

And Kevin B.,

“I got a little squeamish when this stock had tripled, and so I sold enough to cover my initial cost (a free ride) and kept the rest. I did this just before you sent your subscriber alert about the stock…next time, I might wait a little longer before I lose my nerve and start to sell… It paid for my subscription, and then some!”

And from Calvin W.,

“Thank you!  Not only because you help me make a lot of money, most importantly, Marin and every one of you set up a role model for us – what a decent person should be. It’s truly my honor to (be) a member of the Katusa Research family.”

I’ve been to all the major projects around the world and have contacts at the highest levels of the market.

I am the only resource analyst and investor who was asked by the ‘World Nuclear Fuel Market’ to give the keynote speech at the Paris 2015 Conference, where the utilities meet with the producers and traders to lock in their purchases.

While on stage, my joke was that the conference reminded me of a high school dance…

But rather than the boys on one side of the hall and the girls on the other side, we had the Americans on one side and the Former Soviet Union members on the other. The Russians found my comment funny.

Previously, I laid out the absolute worst case for uranium and proceeded to make significant bets and investments accordingly.

We even did an interview with an executive of the world’s largest uranium producer and a major player in the uranium markets (who never does interviews with people in the west) – back when NO ONE was talking about uranium.

You can watch it right here, for free.

Our patience and bets are being rewarded in real-time.

Because this squeeze is unlike any other I’ve seen in my career.

Fasten your seat belts.

And thank you to all the alligators for believing in me, you deserve every profit you will make, well done, and stay safe.

Marin

P.S. if you’re not a member of Katusa’s Resource Opportunities, click here to learn all about what we do.

The post The Uranium Frenzy is On appeared first on Katusa Research.

He’s arguably the most powerful man in oil, and made a colossal declaration…

Recently, Saudi Arabian Energy Minister, Prince Abdulaziz bin Salman, vowed to drill “every last molecule” and be the last man standing in the oil world.

It’s a bold statement in a world that has become fascinated with hydrocarbon reduction.

Calling consensus building amongst his OPEC counterparts and Russia a “state secret and art” Abdulaziz has orchestrated an impressive return of oil prices since the 2020 pandemic with prices gaining nearly 40% year to date.

This sent the shares of oil producers rocketing higher, many of which are up 50% or more this year.

• KRO subscribers took double digit profits on one oil stock earlier this year. Click here to learn how to become a member.

Global oil production growth has remained muted, while global oil consumption has continued to improve.

This has led to a tighter oil market which has strengthened prices while stabilizing national and corporate balance sheets.

Designed by Abdulaziz, last year OPEC and Russia implemented a massive 9.7 million barrel per day production cut in an effort to thwart massive declines in oil demand and to support crumbling oil prices.

Below is a chart which shows the historical production of OPEC and Russia.

The production cut worked and upon the initiation of global vaccine rollouts, oil demand increased while oil inventories around the world began to decline.

• Today the world is undersupplied by approximately 1 million barrels per day.

It’s a far cry from pandemic demand levels in March-April 2020 when the market was oversupplied by 20 million barrels per day. The chart below shows this dramatic shift in imbalances.

Let’s Look at Oil Inventory…

Inventory levels fall when demand is greater than supply.

Barrels normally held in inventory are released to the market to soak up the excess demand.

• Global crude oil inventory levels have declined by over 200 million barrels, and it is forecast that over the next 3-4 months an additional 100 million barrels could leave storage tanks.

Below is a chart which shows this mega build up in global crude oil inventories followed by the subsequent decline after the production cut.

You’ll notice in 2022+ inventory levels are forecast to rise and likely peaking between 2.9 and 3 billion barrels.

Inventory levels in this range indicate a normalized market when compared against demand considerations.

This can be shown through the Days of Demand indicator which is the ratio of crude oil inventory levels to crude oil demand.

Peak Demand + Peak Supply = Peak Nonsense

You will find a lot of extreme sentiment in the oil market these days. It seems that every day there is both “peak demand” and “peak supply” hysteria.

So, who’s right? Probably neither side.

Simply put, if we removed all fossil fuel consumption today, the global economy would crash to a halt. Will we eventually wean ourselves off hydrocarbons?

Absolutely, but it requires slow methodical change, not flipping a light switch. Electric vehicle adoption continues to improve and that is a key driver for future oil consumption.

Though for the next 5-10 years, EVs won’t displace more than a few million barrels per day of demand globally (1-2%).

Don’t Forget: The US Shale Factor

The concept of peak supply is heard just as often. Many questions whether the US shale revolution can continue, or can the Saudi’s really produce enough oil to supply the market? For years I’ve said to never underestimate US shale.

• It takes roughly 6 months to bring a US shale well from initial spud to commercial production.

This creates an incredibly flexible production environment and allows producers to make decisions over much shorter time frames than offshore oil producers or state-owned national oil companies.

Shale is a mature industry now, which means the focus has changed from a “grow at all costs” approach to one of disciplined capital spending and free cash flow generation.

As a mature industry, the years of 20%+ production growth are gone, likely to be replaced with 1-7% annual production growth.

Other segments of US crude oil production will likely tread water.

Alaskan production has not grown in 5 years, while the Gulf of Mexico (GoM) is only up a smidge.

Current oil prices do make economic sense for increased shallow water production in the GoM… but most of this production is controlled by the mega oil corps (Exxon, Chevron, BP, Shell).

As you may know, those companies are under so much environmental scrutiny and forced changes that it is unrealistic to expect large growth in offshore oil.

Thus, it’s unlikely to see the GoM oil production rise significantly.

• Most if not all US oil production growth will come from shale, rather than conventional sources.

OPEC and Russia have considerable excess production capacity which can and will begin to flow back into the markets.

Starting in August 2021, the group will collectively increase production by 400,000 barrels per day. Each month for the rest of the year, the group will add an additional 400,000 barrels per day to the market.

The goal of this slow, disciplined approach is to try to keep oil prices sustained near the $70 per barrel range.

How Much Oil Can OPEC and Russia Bring to the Market?

The current OPEC excess capacity is over 8 million barrels.

The largest contributors to future oil supply are Saudi Arabia, Iraq, UAE, and Kuwait. Iran has the capability to also add 2+ million barrels per day of supply but this hinges on their Nuclear deal with the US. Furthermore, Russia has at minimum 1 million barrels of additional capacity available.

Even if you exclude any of the smaller OPEC nations citing poor infrastructure, just the core group of Saudi Arabia, Russia, U.A.E, Iraq and Kuwait provides nearly 6.5 million barrels of spare capacity.

This is enough to satisfy the incremental global demand growth for several years.

Huff & Puff

You will hear a lot about ‘Huff & Puff’ technology in the coming years in the oil patch. Contrary to what many may try to sell you on, it’s not new technology.

In the U.S. you will start to see more oil produced through Enhance Oil Recovery techniques. Specifically, this “Huff & Puff” technology which uses CO2 injection to pressurize the formation and bring oil to the surface.

• This CO2 injection is eligible for a tax credit under the 45Q tax code.

I’ve done a lot of number crunching this and I don’t see (barring some new breakthrough that is many years away) the carbon credit cost being less than USD$40/t in the most optimistic model in oil patch.

That gives us some framework at what price oil companies will be forced to pay for offsets.

And if you’re not factoring that into your investment portfolio yet… you’re going to fall behind.

Subscribers to the KRO – my premium research service know the oil companies I’m targeting and how I’m playing the Net Zero world in a big way.

• I’ve actually found a company that where the CO2 used to produce its oil is equivalent to taking 8 million cars off the road for a year.

Members have the ticker and all the info – click here to get on the list.

Regards,

Marin

The post Every Last Molecule – Oil Market Update appeared first on Katusa Research.

It was a stunning Sunday selloff that got my attention…

Within minutes, I sent an email to my team at Katusa Research to standby on alert.

Gold bullion cratered in overnight trading on Sunday, falling over $60 per ounce in a matter of minutes, breaching $1,700 per ounce.

Some are blaming it on thin overnight trading due to the Asian holiday, while others are justifying it with recent economic data.

Regardless it’s an uncomfortable feeling for gold bugs…
Watching gold and gold stocks fall while the rest of the market roars higher.

Many of you have seen this song and dance before. Trudged through trenches and held on through bleak times.

A large number of investors are new to the sector…
And it’s the first time you’ve got that white towel firmly in your grips.

This investor was drawn in by last summer’s rapid gold price ascent and the incredible gains gold stocks returned in that rally.

That was then. This is now…

While it can change in the blink of an eye, out of all the major asset classes (many bitcoin enthusiasts will remind you), gold is the worst year to date performer.

Weak: What is Causing the Gold Price Decline?

One major seller in thin holiday trading aside…

The real driver of gold prices right now is the state of the US economy and the outlook for growth and inflation.

Strong U.S. employment data released Friday played a pivotal role in the recent price action for gold.

• The labour statistics point to improving conditions, which indicate a stronger and healthier economy.

In theory, a stronger economy should require less financial heroine, meaning less stimulus and money printing from the government and central bank.

For the record, I don’t think the Fed intends on changing its key accommodative policy stance anytime soon.

However, as an economy strengthens it incentivizes investors to buy growth over protection.

Eventually a stronger economy could provide a catalyst for real interest rates to move closer to 0%, rather than -1.15% today.

If you’re in the camp that one should earn a positive rate of return after inflation on bond investments or at least break even, then you’d be hard pressed to think gold is undervalued at these prices.

It’s not what you might want to hear…

But the numbers speak for themselves.

The chart below shows every weekly gold price relative to US bond yields adjusted for inflation (Real Yields) since 2006.

By this metric, even if you wanted to break even on your debt investments and earn a 0% rate of return after inflation, gold is overvalued by over $200 per ounce.

How Well Does This Gold Price vs Real Yields Model Work?

Very well…

For the mathletes, an R2 of 0.86 indicates strong explanatory power between gold and real yields. Below is a chart which shows actual weekly gold prices since 2008 and the predicted price from the model.

I took a lot of hate from the Twitter crowd a few weeks ago when I said we may not like the current price action in gold, but we must respect it. As it looked like it would go lower from our analysis.

That was exactly what happened.

The gold market is a multi-trillion dollar a year industry. One seller for a few billion dollars on a Sunday is not going to make or break the sector in the long term.

But, the fact that 1 seller can influence the price that significantly is a sign of short-term weakness.

• Again, respect the price action and use the information the price action provides to make investment decisions.

Comparing Gold’s Biggest Corrections

While the recent price action doesn’t look promising, these drops don’t even make the top 20 worst monthly declines for gold.

Below is a table which shows the largest monthly declines for gold, and the subsequent returns 3 months and 12 months later.

Back in June, gold retreated 7.7% for the month when it fell from $1906 to $1770 per ounce.

It was the worst performing month since November 2016.

Given the current price action, buying the dip in June likely won’t prove to be a winning strategy over the short run. Meanwhile, if August continues its trajectory, it’s shaping up to be just as bad as June or worse.

That’s definitely not a stat gold bugs will want to brag about. But the scabs, cuts and open wounds are starting to pour some blood into the streets.

Buy the Dip in Silver?

Silver prices have struggled as well, -11% on the year and so far -9% for the month.

Again, similar to gold, silver’s worst months trounce the current price action.

In the next table, you’ll see the top 20 month over month declines, and the “buy the dip” model results for 3 and 12 month returns.

In the short run…

Like Birds of a Feather: August and Gold

From Nixon closing the gold window on August 15, 1971 to the Fed injecting billions to plug the sub prime crisis on August 9, 2007; decisions by the U.S. fed in the month of August has had profound effects on gold.

• A town with a population of 10,500 holds the keys to golds future success or failure…

In late August the annual Federal Reserve Jackson Hole symposium will take place.

It is often the place of major policy discussions and unquestionably the hot topic will be how to keep the economy running without sending it into an inflationary crisis.

With the coronavirus recession behind us, it is hard to see nominal policy rates getting more accommodative rather than less.

Gold Stocks

A simple indicator I like to use is to see how many precious metal stocks above $100M market cap with over $5M in cash are at 52 week lows Vs how many are at 52-week highs and the ones in neither category.

You can see that there the percentage of companies within 10% of their 52-week lows is rocketing higher.

And that’s where alligators start to come out of hibernation…

• I’m happy if gold goes down because it means I get to increase my positions in my favorite gold stocks at half NAV. That’s smart investing.

To give yourself the most upside with least risk, you have to be a contrarian. Sell when others are manic buying.

And buy when others are heading for the exits and throwing in the towel.

I took cash off the table late in the summer and fall last year. I took a lot of flack for it because “gold was going to the moon”.

The hate doesn’t bother me and neither does the confirmation bias. Cash is king and my subscribers and I are cashed up now and can buy when others who are overleveraged are forced to sell.

Subscribers and I recently began nibbling on my favorite gold stocks again…

Slowly and methodically, we’re building positions over weeks and months. And that is the key in this marathon to building wealth.

It’s all detailed in my premium research service – Katusa’s Resource Opportunities.

In fact, there are 3 gold positions at my buy target price right now. How long they’ll stay at these price levels is anyone’s guess.

But I’m buying using my tranche strategy – and you can learn it too.

Going all in and buying your entire position on the first dip is a recipe for disaster and financial ruin.

It may not be as exciting as going all in, but it sure allows you to sleep better at night.

Regards,

Marin Katusa

The post Gold: Are You Scared? appeared first on Katusa Research.

In 2019 I talked a lot about Quantum Economics.

What is Quantum Economics?

It’s the new world we live in. Negative interest rates, high bond prices, strong US dollar, and a stronger gold price.

When I was on a panel at a large resource conference 5 years ago… I stated in the coming years we would have further negative interest rates and higher bond prices. The other panelists and “gurus” stated that was “metaphysically impossible”.

Well, it’s exactly what happened and we are now in an era of Quantum Economics.

Be careful of following a dated “framework” by a dated guru.

For example, did you know that if you bought a French or German 10-year bond, you’d lose money?

Yes – yields on those 10-year government bonds are negative.

Let’s turn to their neighbor, Switzerland. It’s a pretty safe country so you’d think it would be hard to lose money there right?

Wrong. Lock your money up for 30 years and earn -0.192%.

Yes, you’re reading that right…

• You give the Swiss Central Bank your cash for 30 years, and in 30 years they give you back less than you started with.

The chart below shows the current yields for bonds in France, Germany, and Switzerland. Everything short and medium-term duration is below zero…

• By keeping interest rates negative, the central banks are trying to create an environment that encourages consumer spending.

Or at least that’s the hope. Given EU inflation can barely get above 2% which would be considered healthy in a normal market, things are not even close to back to normal across the pond.

Financially Transmitted Diseases (FTD’s)

The United States has kept with its Zero Interest Rate Policy (ZIRP), even in the face of skyrocketing monthly inflationary numbers.

What was once perceived as an ultra-loose monetary stance is now a disciplined approach compared to Japan and the EU.  And ZIRP and NIRP are critical to keeping the economy going.

Big fiscal stimulus packages and ultra-low interest rates are the new normal both in the US and abroad.

The combination of ultra-low interest rates and inflation leads to negative real interest rates. It is simply the yield on a non-inflation-indexed bond minus the inflation rate.

As you might guess, in today’s world of zero or negative interest rates, once you subtract inflation, you are left with a negative “real” rate of return.

Incredibly there is over $16 trillion in negative-yielding debt these days. The number is almost unfathomable. But that number will increase.

As inflationary pressures on certain sectors of the economy pick up, more and more debt will go negative yield.

In this situation, investors are incentivized to either

1. Spend the cash immediately, so it doesn’t lose value.
2. Or buy physical assets which are stores of value (like real estate, art, and gold).

Gold Price vs Real Yields

The next chart paints a very clear picture of the relationship between “real” interest rates and the gold price. This data goes back to 2006, where each dot represents the weekly gold price and associated real interest rate.

While this is only one metric, the relationship is starkly clear…if negative real rates continue, it is likely supportive of strong gold prices.

It’s not just gold that is doing well these days. The commodities boom is at full throttle, recently taking out the old 5 years high in the Bloomberg Commodities Index.

Where it gets exciting is when you take a longer-term view…

Here is the same index back to 2000. As you can see, we are still miles away from old highs.

• In fact, the index would need to rise by nearly 150% to get back to the old highs.

Commodities investing requires a contrarian strategy. It’s one reason why many on Wall Street shun the sector. Jumping on the meme FOMO bandwagon is a lot easier. These days, commodities relative to stocks, have never been cheaper.

The Chart 60 Years in the Making…

Below is a chart which shows the ratio of the Bloomberg Commodities Index vs the S&P 500 on a total return basis.

It’s a ratio that illustrates the incredible cyclicality of the commodity space. When it’s on you better be involved, and when it’s off, it’s best to keep the powder dry.

I’ve dedicated my entire 20-year career as a professional fund manager to the commodities space, traveling the globe multiple times over. All while building one of the best Rolodexes in the game.

The natural resource sector is as much an investment into the people running the company as it is a bet on the commodity.

I don’t take finders fees, kickbacks, or stock options, and no company can pay to be in my portfolio.

My subscribers and I just started loading up on several of my favorite gold stocks.

Subscribers to Katusa’s Resource Opportunities get to find out exactly what prices I’m willing to buy and sell at before the trades occur.

If you want to give your portfolio an edge, consider becoming a member and giving it a try for yourself.

Regards,

Marin Katusa

The post Ticking Bond Bomb appeared first on Katusa Research.

The global “reopening” trade continues as economies surge on improving consumer demand.

Let’s just hope the delta variant doesn’t shut things down in the fall again.

Today we’re going to look at some current data on everyone’s favorite debate: Inflation. And then talk about what it means for gold.

I get a kick out of experts, fund managers, talking heads and nearly everyone I meet arguing, debating and trying to convince others on their views of inflation, stagflation, transitory inflation, deflation and everything in between.

I bet that “transitory” is the most searched economic term of 2021.

Hell, even doctors are using ‘transitory’ now to explain lingering side effects from the different vaccines.

Most of what you’re watching and reading is verbal diarrhea.

Always question what you’re watching and reading with this simple filter – “What kind of skin in the game does this person have.”

If you don’t have your own money on your thesis, then chances are you’re going to lose my interest quickly.

Now let’s get to it…

Cross-flation

Around the world, inflation is the key focus. With enormous amounts of stimulus and a red-hot economy, inflation in many parts of the economy will happen. I coined the phrase in my book, “cross-flation”.

In the U.S, there are two core measures of inflation.

1. The Consumer Price Index (CPI) and
2. The Core Personal Consumption Expenditure.

You can argue that both methods are rather outdated, but they are bell-weather metrics that politicians and the US Federal Reserve use to help in their decisions.

By either measure, inflation is evident as shown in the dramatic spike over the past 2 months…

However, one should tread carefully because the baseline is data from shortly after the pandemic when economic activity was very low.

So, it is easy to juice these numbers and expect inflation to be worse than it appears.

The true test of how inflationary things are will come later in 2021 when Sept-Dec 2021 data is compared to Sept-Dec 2020 data.

In Europe, the CPI shows a similar spike, though the 2% range would be considered healthy under normal economic conditions.

Looking at sources of alternative measures, such as the IMF World Food Price Index, shows major increases in the global price levels of food.

In the real world, you’re seeing everything from gas prices to luxury purses increase in price.

In short, there are certainly inflationary pressures.

But at this point, nothing that requires central banks to alter their course of stimulus packages and interest rate policy.

Golden Hedge for Inflation

Gold has long been argued as an inflation hedge.

Dramatic inflationary conditions can lead to a loss of confidence in the nation which can cause a currency death spiral.

This leads to a very weak domestic currency, while real assets such as gold, art, and real estate will appreciate.

• However, a littleinflation is bad for gold. The reason is that inflation is mainly controlled through interest rate policy.

To curb inflation, central banks raise interest rates.

Higher interest rates incentivize domestic and international investors to buy domestic bonds. This increases the demand for the domestic currency, leading to a higher valued currency relative to its peer nations.

• In this case, if the US Federal Reserve were to raise rates, the US Dollar would rise and because gold is priced in US Dollars, it would fall.

Do I think the Federal Reserve fears inflation and will raise rates in a big way this year?

No, I don’t. For several reasons:

First, the US is not back to full employment. The economy can continue to expand at an above-average pace so long as the country is below full employment.

Second, the era of double-digit interest rates or even 5% money is a long way away.

We are in the realm of low-interest rates (and NIRP) and these policy stances are not going away.

Raising rates to 5% would cause enormous stress on the system and likely lead to catastrophic failure locally and financial contagion.

Will History Repeat Itself?

For the last 20 years, relative to its peer nations, the US economy has emerged stronger from economic collapses.

This can be measured in many ways, such as GDP growth. And another very useful, but not so often mentioned tool is interest rate determination.

Central banks raise interest rates when economic conditions are strong and cut interest rates when conditions are weak.

As you’ll see in the next chart, through the tech bubble, the global financial crisis, and the Coronavirus pandemic the US always had the highest interest rates compared to its peers.

This is especially evident since 2008 when after a brief stint, the EU was forced to cut its interest rates to zero, while the US raised rates a handful of times.

As we look at the global economy, most nations are worse off today than they were pre-pandemic.

For example…

Japan cannot change from the zero-interest-rate policy it struggled with over the last two decades. The EU has negative interest rates, a struggling banking system and many highly indebted member nations. It’s hard to see them as a pillar of economic strength right now.

Canada is a major trading partner of the United States, it will try to closely mimic its interest rate policy. Being a commodity-driven nation, high commodity prices will also justify higher rates in Canada. Given the economic outlook abroad, it is hard to see any developed economy strengthening relative to the United States.

The BRICs (Brazil, Russia, India, China) will show strong economic growth, but none have shown themselves capable of being a responsible global leader when it comes to trade or central banking activity.

US Dollar Importance

• On a global basis, I remain firm in my US Dollar position.

There is a lot of negativity surrounding the demise of the dollar, death of the dollar, destruction of the dollar, and all other fear-driven narratives. I’m not in that camp.

As I’ve said many times before: The US Dollar only has to be the strongest currency relative to its peers.

I see no reason for the US Dollar to lose its reserve currency status. Below is a chart which shows the US Dollar versus a basket of global currencies.

Gold and Potential Headwinds

Gold has struggled for most of the year as investors have bought risky assets and sold safe-haven assets.

This past June was the worst-performing month for gold since November 2016.

• While we may not always like it, we must respect the price action in gold.

Inflationary conditions are not rampant, and US bond prices have weakened sending yields higher. This puts pressure on the gold price.

Below is a chart which shows the gold price versus the real return of the US 10-year bond. You will see that as real yields bottom, gold has a tendency to peak.

At this time a year ago, I was pitched more gold deals, financings and projects than in the previous 3 year combined.

When you start to see the “rounders” coming back into gold after being in crypto and cannabis, still flogging the same exploration moose pasture…

…you know it’s starting to get a little overheated.

That – along with many other underlying factors – led me to take Katusa free rides and profits off many gold positions and rotate into other opportunities with more upside in mid to late 2020.

It wasn’t a popular move, which made me all the more confident about it.

I like to make moves well in advance of others, to take advantage of liquidity and sell into periods of relative strength. And buy in periods of relative weakness.

I anticipated a correction, which now allows me to scoop up shares at a massive discount to last summer’s prices.

While gold was (and still is to some degree) retreating and consolidating, many of my subscribers to Katusa’s Resource Opportunities and I still made money on our gold picks.

One such company is up nearly 5x our money in just over 12 months.

And now the Way of the Alligator is working in real time and I’m methodically buying new tranches in my favorite gold stocks.

If the gold stocks correct further, I am ready, like an alligator to attack. My subscribers who followed my guidance are now strongly positioned with lots of attack capital.

My long-term bullish view of gold is intact. But I’ll use any weakness in the short term to build my positions.

You can read the exact moves I’m making by becoming a member of my premium research letter – Katusa’s Resource Opportunities.

I hope you’ll join me and all the other alligators.

Regards,

Marin Katusa

The post Golden Crossflation appeared first on Katusa Research.

Pop quiz: What do Norway, Nestlé, and NASCAR have in common?

Or what about Leonardo DiCaprio, President Biden… and JetBlue?

They’re all among the companies, celebrities, cities, and countries that have made commitments to curb their contributions to climate change.

Or eliminate them entirely.

And they’re all using the exact same tactic to do so.

It’s one you’ve probably never heard of…

In fact, it’s a commodity so new that it doesn’t even have an official market yet.

There are no quotes or tickers on Yahoo! Finance, Financial Post or Google Finance …Pricing is almost impossible to find.

But it’s on the verge of erupting onto the world stage.

In a few years, even your Uber driver—will know everything about it.

I’m Talking About Carbon Credits

From here on out, the carbon credit news cycle will accelerate.

And it’s going to happen at a breakneck pace.

The tidal wave of government and corporate money that will create this change will put NASA and every other government body to shame.

It’s going to create enormous, long-lasting change in how investing works.

• This is the type of opportunity that—like clockwork—comes along once in a generation.

You are getting a front-row seat to one of the most incredible emerging opportunities you will ever see.

Once you’re up to speed on how the largest entities in the world plan on fighting global warming…

You’ll be set to profit from them in a big way.

So, let’s get you up to speed on the basics.

I guarantee you will be smarter than any of your friends and colleagues by the end of this missive.

How are Carbon Credits Created?

Carbon credits are generated through emission reduction or direct emission removal.

For example: carbon credits can be earned for a renewable power plant that is used to displace coal fired electricity generation.

• For each tonne of CO2 which is displaced, a credit is earned.

Carbon credits can also be generated through removal of greenhouse gases.

This is known as carbon sequestration.

Carbon removal comes from projects such as forest restoration and avoided deforestation. These are grouped as “nature-based solutions”.

Or credits are created through physical removal of carbon from the atmosphere through technology known as:

• Carbon Capture & Store or
• Bioenergy combined with Carbon Capture Store (known as “negative emission technologies”)

Carbon offset projects which sequester carbon (such as reforestation or avoided deforestation) are a function of opportunity cost.

This means the alternative use for the land is what partially drives the value of the offset.

Land which could be used for agriculture or livestock is therefore a function of crop and livestock prices.

The Trove Intelligence Global Carbon Credit Supply Model indicates that prices in the voluntary market will need to rise by an order of several magnitudes…

To continue to incentivize carbon project developers.

Book a Flight

If you try to look at pricing of flights on google or any online portal, under the price of the flight you will now see the amount of carbon emissions that your one seat is responsible for.

This is done for two reasons…

First, to start making customers aware of the amount of carbon emissions they are responsible for their flight.

Second, it’s to condition customers such that when there is a cost now to negate those emissions, the customers know the reason for the cost.

Carbon Credits are an Emerging International Marketplace

The beauty about the carbon market is that it is global.

Greenhouse gases migrate and emissions from one nation end up in the skies of another.

It requires global acceptance and adoption to solving the problem.

• In the Voluntary Carbon credit Market (VCM), a credit produced in 1 country can be applied against emissions of a company located in another part of the world.

For example, the Bonobo Peace Forest in the Democratic Republic of Congo is one of the largest reforestation projects in the world.

Credits earned from this project can be applied against emissions of a company domiciled in Europe or North America.

This creates an incredible opportunity for an international marketplace for credits.

Below is a table which shows the total value of transactions by offset type in the Voluntary market for the past 4 years.

• Total transaction volume in 2020 is estimated to be over 3 times the volume it was in 2017…

And this is exactly what makes it such an exciting place to invest…

All of this is building up a pressure chamber of demand in the VCM that has not yet reached a tipping point.

When it does, there’s a lot of upside to be had.

Because It’s the perfect setup for a long squeeze in the VCM:

1. Rising emissions from a growing population.
2. Tightening government mandates on carbon emissions.
3. Increasing consumer demand for environmental responsible.
4. More transparency in emissions reporting.
5. Corporate buy-in at every level, even from non-emitting companies.

All together, this is going to result in a desperate scramble for high-quality carbon offsets, of which there are few.

If you thought the rise in the price of lumber was crazy in early 2021…

Just wait until you see the VCM market in five years.

Voluntary Carbon Market Pricing

The bad news is that since VCM is such an undeveloped market, pricing information is hard to obtain.

In fact, the term “voluntary carbon market” is somewhat inaccurate. The market itself purely ad hoc.

This is such a new commodity that there is no real, actively traded market.

And that’s great news.

Because it means very few people are actually investing in the market right now.

This isn’t even hitting a blip compared to Gold or Bitcoin on Google Trends…

• As an investor, you know that the time to make your bets is when NO ONE else is looking at a sector.

To start shedding light on what carbon offsets could be worth, let’s start by looking at the price floor.

Carbon offsets produced through means such as reforestation have an opportunity cost.

Breakneck Price Acceleration

Based on this, the Trove Intelligence Global Carbon Credit Supply Model indicates that prices in the Voluntary Carbon Market (VCM) will need to rise to continue to incentivize carbon project developers.

Furthermore, how credits are produced gives them different base values.

The table below shows the variation in global carbon credit pricing across different types of carbon offsets in the voluntary market for 2017–2019.

In 2021, prices in the voluntary market have been hot.

Prices have regularly been quoted above $7.50 per tonne and as high as $15 per tonne for high-quality credits.

Catalysts & Opportunities in the Carbon Markets

They key catalysts for the carbon market are…

1. Government-led initiatives to promote the carbon marketplace.

These include establishing a global carbon price floor, heavily enforcing the achievement of NDCs, and regulating investment in carbon removal technology.

All of these are heavily bullish for carbon offset prices.

2. Corporate-led net neutral and net zero pledges.

Expect to see corporations race to become net zero so that they can remain competitive in the marketplace.

And then watch for additional demand from erasing historical emissions.

3. Demand-driven development of reporting and exchanges.

As outlined, this will include Scopes 1, 2, and 3 emissions. In the near future, it will also require highly liquid, transparent exchanges for both the compliance and VCM.

This has always been the trajectory of any new commodity.

Only this time, you know about it before it has achieved anything close to equilibrium.

The Carbon Market is an Incredible Asymmetric Bet

There’s so little downside—climate change isn’t going anywhere—and incredible upside.

Early adopters, project generators, and holders of carbon credits and offsets can earn substantial returns over the coming years.

Very few people know about this brand-new commodity sector… yet.

But everyone understands it immediately once exposed.

And everyone who understands… will invest, because it makes sense and its cheap to do so now.

Of course, you can stay on the sidelines if you want. But before you make that decision, recall one of Warren Buffett’s most famous quotes.

It goes like this:

“Someone’s sitting in the shade today because
someone planted a tree a long time ago.”

Those trees are (literally) being planted today—all across the world.

And I’m here to help you make a profit from it.

To find the companies best positioned to make money from the hundred-trillion-dollar war, you’ll want to become a member of Katusa’s Resource Opportunities.

In my monthly newsletter, I’ll be publishing the best carbon investments that come across my desk.

If you want to be among the first—and only—to know, sign up today.

Regards,

Marin Katusa

The post The Adoption Rate of this Obscure Commodity Will be the Fastest of All Commodities appeared first on Katusa Research.

The “BDE” of billionaires is next level.

Jeff Bezos made an announcement that he’s going to space via Blue Origin.

Whether he didn’t want to be outdone or wanted to steal all the spotlight (clever), Richard Branson announced he was doing the same via Virgin Galactic.

Only earlier.

But the billionaire race to space is just a sideshow to the real race to space.

Bezos and Amazon might control a significant portion of e-commerce and even tech infrastructure (through Amazon Web Servers). However…

• There is an even bigger play here: Control over the internet itself.

And it all begins right before the Dot Com boom…

The Battle for Global Signals

In November 1998, a new company called Iridium launched a brand-new satellite communications service.

And just ten months later, the company filed for Chapter 11 bankruptcy.

They’d failed to take into account one pretty simple fact: it requires billions of dollars to launch satellites into space.

Twenty years later, Elon Musk is barging into the exact same space.

Only he’s doing it Musk-style, using his now-typical (and ultra-successful) gameplan.

First, he’s turned the really expensive thing into a commodity, just like he did with electric cars and rocket ships.

His company, Starlink, is on the verge of creating satellites on an assembly line.

Second, he’s his own customer.

SpaceX needs a continually full calendar of payloads to take to space, and Starlink always needs to get satellites up to build out its network. It’s a win-win.

Third, he’s leveraging the U.S. government (okay, your taxpayer dollars) to fund the entire thing.

Starlink has been picking up lucrative FCC contracts to provide satellite-based internet to areas all across the United States.

And fourth, the company is making a ton of money before it has even fully launched, and using that to fund future growth.

• Starlink already has $500 million worth of subscribers and reservations.

Even the founder of Iridium knows the eventual outcome:

“I wish Mr. Musk well,” he said. “I expect him to succeed.”

Iridium was just building a satellite phone service, but Starlink is taking that a few major leaps further.

Starlink wants to be the internet service provider for the world…

And when it’s fully built out, it will upend the world order in much the same way the internet did in the late ‘90s and early ‘00s.

The Starlink concept is really simple. With a small, pizza-box-sized satellite dish, a user can access the internet from anywhere in the world.

Anywhere.

A barge in the Suez Canal… The top of Mt. Everest…

The Sahara Desert…

The service is currently being tested in a few countries. In true Musk fashion, they’re calling it the “Better Than Nothing Beta Test.”

Already, it’s pretty great. Testers are getting better than 100 Mbps speeds. And by the end of the year, that’s expected to reach 300 Mbps.

(For context, the average U.S. internet speed is <200 Mbps.)

And it’s just going to keep getting better…

• Starlink’s original stated goal was 1 Gbps internet—four times the fastest country in the world, Singapore.

And they’ve promised the FCC they will provide the internet with zero contracts, early cancellation fees, and no data caps.

All for the whopping price of $99. But that’s expected to come down.

As Musk tweeted:

• “Starlink is a staggeringly difficult technical & economic endeavor. However, if we don’t fail, the cost to end-users will improve every year.”

Once Starlink is fully operational, a majority of internet users won’t even consider anything else.

Which begs the question…

When and how will all of this unfold?

As of early 2019, less than 5,000 satellites total had ever been launched.

Starlink projects that 12,000 satellites will be necessary to provide reliable global internet coverage at ultra-fast speeds.

Seems impossible, right?

The first small batch of Starlink satellites was sent into space via SpaceX in May 2019.

Right now, there are now nearly 1,500 Starlink satellites in orbit.

Courtesy of https://satellitemap.space/

More importantly, the frequency of launches is accelerating—from six months between the first two is now down to just nine days between launches. Expect that to become hourly.

Yes, hourly.

Further, Musk is preparing a new Starship, which will be able to haul four times as many satellites per trip.

In other words…

• Starlink is going to get bigger than expected, much faster than expected, all paid for by U.S. customers through the FCC.

It gets better. The satellites will be de-orbited after three or four years.

So just like Teslas, SpaceX will be able to upgrade them on a rolling basis.

In an early 2021 presentation, Starlink revealed they plan to reach speeds of 10 Gbps—in part by using lasers to communicate between satellites.

This isn’t about faster Netflix and porn speeds.

• This is going to revolutionize where, when, and how business is done.

And it’s going to have massive ramifications for global politics and the world order.

OK, I’m going to channel President Reagan for this next title:

“Mr. Musk, Tear Down This Firewall”

Once the satellites are in space—remember, more than twice as many have ever been launched—there will not be room for a second internet service provider.

China and Russia fear this in a big way.

The Space Race was in my book, The Rise of America, if you want to know more.

But if Musk is successful: The game will be over.

And the second-order effects of a single, global internet service provider will be unlike anything you’ve seen before.

For example, right now, Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Sundar Pichai (Google), and Tim Cook (Apple) wield incredible power.

As you’ve seen, a flip of the Twitter or Facebook PNG switch can instantly mute someone from the world stage.

• Elon Musk is positioning himself to be the person with power over the people who have power.

Once he controls the world’s internet, he can dictate what is and is not transmitted worldwide.

You can bet that major world powers and governments are watching this closely.

And you’re probably aware of the so-called “Great Firewall of China,” which the government uses to determine what users can access.

Russia, India, Iran, Syria, and Vietnam also have or are implementing similar programs.

With Starlink, users will be able to circumvent that filter. It’s a little difficult to block all of the space.

I’m even willing to speculate that Starlink will open-source the patents for the receiver dishes, just like Tesla did. Same guy in control.

But all of that is nothing compared to the real competition unfolding.

Because the world’s biggest country and the world’s biggest entrepreneur both have the same grand ambition:

• Get to Mars. First.

SpaceX knows the entire space launch industry is only worth about $5 billion in revenue a year.

Global internet access? That’s a $1 trillion+ market…

Or the size of China’s entire GDP in 1999.

With that kind of revenue, SpaceX—and Elon—have a shot at winning this thing.

Over the course of the next year, we’re going to watch a no-holds-barred fight, with Earth as the arena.

Like the founder of Iridium, my money’s on Elon.

And to all those who bash Elon, I ask—what have you done to make society better?

Until next time, stay safe.

Regards,

Marin

The post Starlink and the REAL Space Race appeared first on Katusa Research.

The amount of capital that has and will continue to be deployed into the Carbonomics Sector is mind boggling.

It’s in the hundreds of billions and will reach the trillions.

But few of the corporations that have committed to reducing their carbon emissions have actual plans to reach their committed targets.

Billions of dollars and major company pivots are being deployed towards making net zero carbon emissions a reality.

In fact, I believe Nobel Peace Prizes will be handed out for the efforts.

Just recently…

• Shell, one of the biggest oil producers in the world, lost a Dutch court ruling and must now legally be responsible to cut their greenhouse emissions by 45% by 2030.

What does that mean?

Pay close attention to these next 3 lines…

It means that Shell needs to buy (and/or create) over 100 million carbon credits a year for the next decade.

Let’s put that in perspective…

In 2020, 223 million voluntary carbon market credits were issued

Read that again:

• To meet target emission cuts, Shell would need to buy 45% of ALL the voluntary carbon market credits issued last year. EVERY YEAR.

That’s just the ONE oil giant, Shell.

You can see immediately how the Shell ruling will have implications for climate cases around the world.

Is Shell just a one off?

Not even close.

24 hours after the Shell court ruling, Exxon’s board of directors had a massive shakeup.

Two board seats were won in a bitter proxy fight by an unknown climate fund called Engine No.1. Changes in climate action by the executives at Exxon are underway.

Then the shareholders of Chevron voted, and changes will happen there as well.

Dirty Oil and the Green Bond Bonanza

It’s only a matter of time before other oil companies and large resource miners follow suit.

But here’s my main point—it’s not a bad thing.

The old guard has resisted, yet they overlook the benefits that will come from this.

• For the first time, the oil and metal miners can tap into the low-cost source of capital available in the green bond market.

A major positive will be that their borrowing costs decrease.

Companies who lower their carbon footprint will attract new investors – who have avoided the extraction industries, that create a large carbon footprint relative to their share price…

And thus increase the demand for their shares.

By reducing their carbon footprint there are major benefits to both the cost of interest in the bond markets and the share price of the shares.

It’s a real win-win.

Whether you agree with this or not, there is an opportunity to make a lot of money from this movement.

We’re fine with others getting the credit, awards, and recognition.

Alligators only care about making money while doing positive things that better society.

So how much is at stake?

Here’s what got me very interested…

The amount of money flowing into the space is simply unstoppable…

According to Bloomberg Intelligence, ESG debt issuance recently surpassed $3 trillion this week.

It took 12 years to issue the first trillion dollars and 1 year for the second trillion.

In the past 6 months, a third trillion has been added.

• Already in 2021, more ESG debt has been issued than in the prior year.

Make no mistake, the ESG sector is scorching hot…

Even Russian companies such as PolyMetal are tapping into the Green Bond market.

They are doing this to reduce their cost of capital by committing to reduce their carbon footprint.

Are Carbon Credits a Tax?

There’s a major misconception and wrong belief that carbon credits are a tax or a tariff.

They’re not.

They’re an output commodity cost, and by reducing their footprint, corporations can make money.

How you ask?

By reducing their cost of capital and increasing their potential shareholder audience.

Debt raised with an ESG focus is cheaper on average than non ESG debt.

Don’t believe me? Ask the VP of Treasury of one of the world’s largest pipeline companies…

Max Chan, stated its recent sustainability linked debt came in 5 basis points lower than where regular debt would have priced.

Telus, one of Canada’s largest telecom providers, issued a sustainability linked note. And it came in 6 basis points lower than would be expected in the regular debt markets.

Scope Emissions: Going Green Is Good Business

Now let’s return to some further carbon reduction considerations.

There are more than 5,200 companies with $1 billion+ market caps that are publicly listed and trade on the North American and European stock exchanges.

Of those, 2,410 companies report their Scope 1 greenhouse gas emissions.

A little background:

• Scope 1 Emissions are the direct greenhouse gas emissions from company operations.
• Scope 2 Emissions are the indirect greenhouse gas emissions from energy purchased by the company.

Scope 1 and Scope 2 emissions are within the direct control of a company.

The criteria for identifying and reporting them is well established, transparent, and consistent across industries.

• Scope 3 emissions include the indirect emissions (not included in Scope 2) that occur in the value chain of the company (this includes both downstream and upstream emissions). These remain underreported.

There needs to be more legislation and international body governance on Scope 3 emissions as they include many “grey” areas open to interpretation and debate.

The chart above only includes Scope 1 carbon emissions, as there are no debates or discrepancies concerning these.

• The fact that only 46 percent of large-cap companies report their Scope 1 emissions will change.

Regulatory authorities such as the SEC are on the case.

And it’s only a matter of time before they mandate that all companies include a Scope 1 emissions report in their financial statements.

Scope 2 reporting will follow, and perhaps eventually Scope 3.

But reporting is one thing—action another.

Currently, out of those 5,230 companies with $1 billion+ valuations that are publicly listed in North America and Europe…

• Only 457 (8.7%) companies have publicly announced some kind of plan to reduce GHG emissions as of May 25, 2021.

A Carbon Credit Windfall

This does not mean that the companies have actually achieved any reductions…

Only that they are talking about trying to implement strategies (many of which they have not even started).

Again, this will change.

In the meantime, my major focus right now (aside from resources) is the hottest commodity sector right now.

I believe the Carbon Credit market is in its infancy…

And there is MUCH more information that I’m not sharing here in this alert to you.

I cannot tell you how many calls and contacts my team and I have fielded in this emerging sector.

Just as technology underpins almost every market from grocery stores to car manufacturers…

Carbon credits, emission reduction and green bonds will affect EVERY industry.

I’ve never seen a market quite like this in my career.

And if it sounds like I’m excited and talking my own book – that’s because I am.

After taking profits and free rides in many of our portfolio positions in my premium research service – Katusa’s Resource Opportunities…

I have a significant portion of my net worth allocated in the Carbon sector.

This is only the beginning.

And you don’t get too many asymmetric shots like this. So do yourself a favor and get up to speed ASAP.

Regards,

Marin Katusa

The post Carbonomics appeared first on Katusa Research.

What do many cryptos, cannabis stocks, precious metals stocks, and SPACs all have in common?

The answer might not be obvious at a glance.

But if you’ve personally invested in any of the above before…

Or if you’re familiar with the story of the GameStop short squeeze…

Then you might have a good idea of what the answer is already.

Know Your Risks

When you decide to invest in a particular stock or asset, it’s not enough to simply know what the drivers and catalysts are.

You must also understand the risks.

Risk management is a complicated and in-depth topic.

There are many different types of risks –

• sovereign risk,
• time horizon risk,
• market risks, and many more.

Also important is this: Each investor’s risk profile is different…

The single young investor with stable income and no dependents or mortgage has a much larger appetite for risk than a household’s primary breadwinner with children to take care of, college tuition fees on the near horizon, and a hefty mortgage on the house that needs a major reno.

But setting all of that aside, today we’ll be focusing on a single kind of risk in particular – one that has reared its ugly head time and again to thwart the efforts of many a would-be investor.

I’m Talking About Liquidity Risk…

Quite often, when a particular new sector or asset class hits it big, there’s a massive run-up in prices that causes investors to pile on.

And there’s no sexier story to jump onto than a small-cap company or – lately – crypto ICO.

Small-cap companies are the fresh draft picks on a championship finals team, the underdog stories that everybody loves to cheer on.

Compared to the senior, more well-established companies in their sector, they’re much cheaper, thinly traded, and usually have no analysts following the story… It often means that they have more room for dramatic share price moves if they hit it big.

Apple isn’t going to be providing shareholders with 10x returns in a short time frame. It’s too large, its assets and revenue streams too well understood for that kind of crazy jump in valuation.

But a small-cap biotech company worth pennies? They might just have the idea that’ll turn them into the next Pfizer or Moderna.

Small-cap companies and sh*tcoin crypto’s are a dime a dozen, and many of them never make it past the planning stage.

But when an entire sector takes off, like back during the cannabis and crypto rushes we’ve seen in the last few years, many coins and companies often get lifted up to the top by the rising tide.

For instance, back three years ago, marijuana was on the up-and-up. With volume through the roof and prices flying high, things were looking good. The bankers were flying, high up on their own smoke clipping fees.

But then the other shoe dropped:

• As you can see, prices collapsed over the next few months… and trading volume dried up alongside the meteoric fall in prices.

Here’s the chart for a sample junior (small-cap) cannabis company during that same time frame:

Though there was plenty of volume for this stock at the beginning of 2018, you can see that trade volume tapered off rather quickly.

And by mid-2018 it would’ve been very difficult to exit a large position in the stock.

• Be wary of your paper gains evaporating ultra-fast when liquidity (volume) dries up.

And if you’d decided to buy in, or worse, average down, late in 2018 when volume briefly spiked up… you would’ve been left in even worse shape.

Only months later, by the spring of 2019, trade volume had all but completely dried up.

This hard lesson learned by the crowd in the cannabis boom was felt in early 2021 after many tech stocks experienced a liquidity freeze.

Don’t Get Left Holding the Bag

As mentioned earlier, this is a story I’ve seen once too many times – in precious metals, SPACs, and cryptocurrencies, and cannabis, among others.

Don’t fall for a bearded geo with a box of crayons, a map, and a fistful of promises urging you to “double down and average down”.

In the absolute worst-case scenario, a company that needs to raise money will get its share price wiped up during a period of a liquidity freeze.  The dilution that will occur to the shareholders will essentially wipe out much of the value you thought you had.

A similar analogue for cryptocurrencies would be coins that aren’t being used or developed any longer – you won’t be able to find any buyers for your failed crypto coins.

All too often, amateur investors experiencing their first big win will ride that paper high. (Dogecoin anyone??).

They’ll look at their account statements and feel euphoric over the big numbers and triple-digit gains they see, without understanding one fundamental fact:

• Until you sell, you haven’t made a single penny.

When it comes to my premium newsletter service, Katusa’s Resource Opportunities, I’m not just about delivering the best stock research and picks to my subscribers.

There are simple rules to ensure you do not experience a catastrophic loss.

When you’re overleveraged, can’t sleep at night because of your position sizes, or hold little cash capital – you’re setting yourself up for the potential of a catastrophic loss.

Unless you have a biblical tolerance for risk in crisis situations, you’ll get crushed.

• Keep in mind that 99.99% of people who can fog a mirror should not use any leverage tools for investing.

Taking a mortgage or line of credit to invest in the markets or cryptos is taking excessive risk in any sector. You will set yourself up for hardship and a lot of personal strain; even if it works out.

If you are jeopardizing your standard of living for yourself or your family, don’t even consider it.

There are many ways to reduce your risk and amplify your upside.

I also want to educate my readers, with best practices like the Katusa Free Ride:

By applying the Katusa Free Ride Formula appropriately…

You can reduce your exposure to liquidity risk – and many other types of risk – simply by taking your initial capital off the table.

Here’s how it works…

To learn more about managing your investment portfolio’s risk, as well as to find out what I believe is going to be the largest wealth creation opportunity of our lifetime, consider subscribing to Katusa’s Resource Opportunities.

It’ll be the most risk-free educational investment course you’ll ever make in your life.

Regards,

Marin

The post The MOST Dangerous Trap in Every Investment Market appeared first on Katusa Research.

It’s a cunning strategy.

The US Federal Reserve satisfies the global demand for dollars while maintaining the dollar’s title as the planet-wide currency king.

With one brilliant move, it has divided the world up into allies and non-allies of the US.

Today, everyone needs the stability of the USD in a world turned upside down with economic turmoil.

Granted, that stability may be only relative to other countries’ own currencies. But American allies have to deal with that reality.

They know it. And the Fed knows it.

• That’s why the Fed has created a path to access US Dollars for government-identified real allies of America.

And it has denied access to those identified as unfriendly.

It’s critical that you understand this…

And when you do, you’ll be miles ahead of almost everyone else.

The US has put a system in place where all but the most die-hard anti-American nations will want to be included among the friendlies.

In fact, many will do anything to make the list. How do they do this? Through SWAP lines.

Never heard of them? Then you’re not alone.

For the most part, when I bring up SWAP lines, I have found myself speaking into a vacuum.

I haven’t come across one person in a hundred that knows about them. And that includes business executives, politicians, or even bigshots in the financial industry itself.

Most investors are not even cognizant of the program’s existence, much less aware of its significance.

But given how important SWAP lines are to the global economy, every investor should understand them and how they work.

What Are SWAP Lines?

First things first, here’s how the Fed explains swap lines on its own website:

• If you have access to a US swap line, you are what I call a +SWAP Line Nation.
• If you don’t have access to a swap line, you are a -SWAP Line Nation.

SWAP Lines Are a Financial Lifeline

In the wake of any global panic, the most recent example being the pandemic…

Many central banks request that America provide financial assistance to at least alleviate the stress caused by a lack of US Dollars.

SWAP lines have provided that relief and will continue to do so.

They are, literally, lifelines. And they are also debts.

• All those dollars borrowed must be paid back in US Dollars, with interest, also requiring dollars.

It’s ingenious because demand for the US Dollar breeds further demand.

It will be paramount for nations grappling with deflation to enter the favored group capable of exercising swap lines.

Here’s a list of the nations that have access to US Dollar SWAP lines (as of now):

Countries outside the group—the negative swap line (-SWAP) nations—will struggle to access US dollars.

SWAP Lines are Important for Investors

The result of how this program is set up is that countries receiving swap lines will follow any stipulations they are asked to follow. They’ll have no choice.

• Suppose you want to be blessed with a swap line from the U.S…

In that case, you must be careful not to antagonize the hand that feeds you.

This means not aligning in any way with nations designated as non-friendly and agreeing to follow any restrictions, such as sanctions, that the US government puts on.

The struggling nations that require emergency access to US Dollars, and can’t get them…

• Could engage in the expropriation of foreign-owned assets as the world recession deepens.

For example:

Last year Papau New Guinea revoked Barrick Gold’s social license. Several months ago, Barrick gave the PNG government a 51% stake in the mine. Now the mine is back in production.

The PNG government is not the only nation flexing its muscles…

• Chile is amidst altering its tax code which could see miners be taxed up to 75%

• And just recently, Kyrgyzstan seized Centerra’s Kumtor gold mine.

It’s either that or face crippling depressions or revolutionary uprisings of their citizens (or both).

So, American businesses with operations in these places had better beware (and so should their investors).

SWAP Lines Will Defend American Interests

As global deflation progresses, there will be more nations that will be granted swap lines. But do not forget, swap lines will always defend American interests.

Make no mistake, this is big business…

• By April 2020, the drawdown of USD SWAPS was just under half a trillion dollars.

The last time that foreign central banks took down that amount from US SWAP lines was at the height of the 2008 global financial crisis.

The SWAP lines worked back then to prevent a complete worldwide financial meltdown. Same thing now. But this is just the tip of the iceberg.

Few want to be shut out, and around eighty-five nations have applied for US swap lines (currently, 14 central banks have been approved (EU representing 27)).

In fact, Indian Prime Minister Narendra Modi has publicly confessed to having “swap line envy.” To be approved, all those countries must solidify their positions as US allies by falling into line with our policies.

Think they will? Yep, me too.

More Nations Will be Added

Over time, I expect these critically important SWAP lines to be increased and more nations to be slowly added.

They’ll be subject to the terms set by the US government—both financially and geopolitically. But they’ll accede.

As monetary and fiscal policy are blending into one, it’s just a matter of time before the President uses SWAP lines as a big geopolitical leverage hammer.

SWAP lines are that important, and they will dictate global alliances and policy. So, pay attention to them.

Because I promise you, they will have an impact on companies, investments, and ultimately, the very fabric of our world.

• If you have a producing asset in a Negative SWAP Line (-SWAP) country, you must prepare for potential setbacks and for things to go wrong.

It’s about properly understanding and pricing in risk.

Something that has become overlooked in the resource sector.

SWAP Lines and Your Portfolio

Because I believe nations who do have existing SWAP lines won’t screw with foreign operating entities (American companies) to the extent of the –SWAP Line Nations.

I still expect higher taxes in all countries as it’s the only thing politicians across the world have executed effectively throughout time.

This means mining assets in +SWAP Line Nations won’t nationalize their gold mines, copper mines etc. Those nations won’t screw with America.

Nations with existing U.S. SWAP lines won’t put Forex (FX) restrictions on the foreign (American) companies operating there. –SWAP Line Nations may do so, and many have already.

This will cause less (and in some cases prevent) those U.S. Dollars in –SWAP lines from being sent back home as dividends to the owners of the company.

Know the plan. Read the playbook.

And most of all, be prepared. You can get my team and me to do the heavy lifting for you through my premium research service – Katusa’s Resource Opportunities.

I’ll tell you exactly what I’m doing – where I’m investing – and how you can follow.

Regards,

Marin Katusa

The post SWAP Lines are One of the Most Important Things You’ve Never Heard Of appeared first on Katusa Research.