Investors Should Focus On What Trump Has Done For Mining - Mickey Fulp
(Kitco News)- One mining analyst said that hethinks the threat of a global trade war is overblown and investors shouldinstead look at all the good President Donald Trump has done for the mining sector,particularly for companies focused in the U.S.
Mickey Fulp, creator of theMercenary Geologist newsletter, said in an interview with Kitco News on thesidelines of the 2018 Prospectors & Developers Association of Canada (PDAC)convention that he expects Trump to ultimately provide exemptions for criticalallies to his proposed steel and aluminum tariffs.
The threat of a global trade warhas risen as markets reacted to the surprise departure of Trump’s economicadvisor Gary Cohn. However, Fulp said that he is not paying too much attentionto the market chatter. He added that putting tariffs on steel and aluminum fromCanada doesn’t make a lot of sense.
“The two economies are twointertwined,” he said. “Canada needs America as much as America needs Canada.But Trump is the consummate businessman I think he is using the tariffs as anegotiating tool.”
Instead of focusing ontheoretical uncertainty, Fulp said that investors should focus on what Trump asactually done, specifically for the mining sector. Trump’s commitment toderegulation has breathed new life into American mining projects, said Fulp.
“Trump is changing the economicparadigm in the U.S.,” he said. “Deregulation is making mining more attractivebecause companies have to deal with less red tape.”
Because of Trump’s policies, Fulpsaid that he is heavily focused on U.S.-based projects as he thinks these arethe companies with the most growth potential. The list of companies he likesincludes Trilogy Metals (NYSE: TMQ, TSX: TMQ) as it explores its Arctic deposit in Alaska; he is alsowatching Integra Resources (TSX.V: ITR) as it starts its drill program at its Idaho-basedproject; Fulp said he also likes Ely Gold Royalties (TSX.V: ELY) as it develops a portfolioof assets based in Nevada; and Allegiant Gold (TSX.V: AUAU), which also exploring projects inNevada.
Platinum Over Gold
While Fulp sees the potential forU.S. gold explorers, he said that when it comes to the precious metal, he isbuying platinum over gold.
“I have been buying platinum forthe last two or three years because its ratio with gold is out of whack andcan’t last,” he said.
Currently platinum is trading ata more than $300 discount to gold. Historically the grey metal has traded witha premium to gold. April gold futures last traded at $1,330. an ounce;meanwhile, April platinum futures last traded at $957 an ounce.
Not only does platinum has astrong jewelry market, but global growth should help boost the metal’sindustrial usage. Platinum is the critical component in catalytic converters,which is used to reduce harmful exhausted emissions. While platinum is mainlyused in diesel engines, Fulp noted that the metal can be used in gasolinevehicles as well.
“Because prices are soattractive, I think you will start to see companies switch back to platinum. Itis much more effective catalyst than palladium,” he said.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.