Issue link: http://resourceworld.uberflip.com/i/937377
20 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 8 E ric Coffin is a popular speaker at resource investor conferences and has been publishing the HRA Journal (part of Hard Rock Advisories) for 20 years. It is divided into two sections. One covers metal prices, interest rates, trends and similar topics. The other section fol- lows junior resource stocks. He tries to find resource stocks that could double in the next year either based on exploration suc- cess or enlarging a resource and bringing it further toward production. Eric also has an alert service for fast-breaking news. (www. hraadvisories.com) Resource World: Some analysts are say- ing that commodities are a now safer haven than government debt instruments due to the very high debt levels of some govern- ments. What is your take on that? Eric Coffin: With regards to commodi- ties, I'm not really a gold bug as I don't go into a gloom and doom scenario. I'm not concerned about governments going bankrupt. Governments don't go bankrupt; however, it would be difficult to talk me into buying long bonds right now because I think we're getting to that point in the late part of the economic cycle where we will start to finally see a bit of an inflation push. I'm not expecting anything major but if you hold, say, 10, 20, 30-year bonds and inflation goes up a couple of a percent, you just get killed. I would definitely not con- sider bonds a particularly safe holding at the moment. On the other hand, compared to equities and for that matter, compared to bonds commodities were probably at the most underpriced as an asset class com- pared to equities we have ever seen. The whole point of investing is try to buy low and sell high so I don't think commodities are very risky right now simply because they are so undervalued compared to other asset classes. I don't think there's a lot of downside right now for commodities. RW: The Dow Jones Industrial Average is up over 10,000 points since its peak in 2007. Is the Dow looking toppy and ripe for a significant correction? EC: I think so. There's so much optimism out there right now and so much money flowing into US stocks, I wouldn't be sur- prised if we saw the Dow and S&P go up another 10% or 20%. But the valuations are getting so stretched right now and there are a couple of data points in the US that are making me a little uncomfortable. Things are very positive – they did the tax cuts – but we're still not seeing sig- nificant wage increases for your average worker. It's great if you happen to be a CEO of a big company but that hasn't been filter- ing down. Recently you've been seeing the savings rate fall off in the US and we've seen revolving debt like student loans and credit cards going up rapidly in the last couple of months. That's optimism – right? People are essentially living beyond their means because they're optimistic about the future, which is all fine and good, but at some point, somebody's got to start giving these people raises or we're going to have a problem. Everybody's been chasing the market because things like retail sales have been so good. I can see those things starting to level off in the very near future because people will run out of money. It isn't any more complicated than that. RW: Although the Venture Exchange Index couldn't break through 800 for a long time, it is now over 900, although recently slipping a bit. Since the Venture Exchange is a barometer for junior min- ing stocks, would you say that the mining stock recovery is now safely underway? EC: I think that it is. The caveat was the big push at the end of 2017 that was basi- cally weed stocks and then the pullback. That said, I am starting to see a lot more volume across the whole exchange. We're starting to see some real price moves now in resource stocks. I'm expecting 2018 to be a pretty good year. I think we'll see both precious metals and base metals do quite well at the same time. That's what we need to really move the Venture Exchange up. It's not enough to just have gold doing well or lithium or whatever. We need that broad basket of commodities and it feels to me that's what's going to happen. RW: So-called energy or battery miner- als such as lithium, cobalt, manganese and graphite and their related stocks have been doing well. Is this just the beginning? EC: I don't follow a lot of battery stocks; however, I don't think it's just the beginning. I always caution people about specialty minerals because you are dealing with very small markets. The one caveat I put on battery minerals, if you will, is that, (and I'm a long way off being an expert on batteries) is that there's a lot of new bat- tery technologies being developed and I'm not sure we know yet what the ultimate battery composition is going to be. NEWSLETTER PUBLISHER DISCUSSES COMMODITIES, STOCK PRICE TRENDS AND LOOKS TO THE FUTURE Stock talk with Eric Coffin by Ellsworth Dickson Eric Coffin INVESTMENT