Month: March 2021

Precious metals markets traded into an important technical juncture ahead of Wednesday’s Federal Reserve policy announcement.

Bank of America analysts stated that this week’s meeting is “one of the most critical events for the Fed in some time.”

The Fed faces mounting pressure to intervene in the bond market as yields continue to rise. It will likely reiterate its commitment to keeping its benchmark rate near zero and vow to continue buying at least $120 billion in bonds per month.

Critics of Fed chairman Jerome Powell’s easy-money stance are warning that monetary and fiscal policy are too loose.

The federal government’s recent $1.9 trillion spending package, combined with ongoing “emergency” liquidity injections by the Fed, risk fomenting speculative asset bubbles and sending inflation on a rapid upward trajectory.

Rising fuel and food costs have economists concerned. Conveniently for Fed policymakers, however, their “core” inflation indicator excludes those components.

The traditional inflation hedges of gold and silver haven’t generated much upside confirmation so far in 2021 – at least not in the futures market where spot prices are determined. But bullion demand from investors who are concerned about inflation risk has been quite robust.

Silver’s Potential Breakout Level

Will another round of intense physical buying follow the Fed’s latest pronouncements on rates and the economy?

There is likely nothing on the Fed’s boilerplate that would dissuade investors from buying precious metals. But spot price volatility in either direction is certainly possible in the near term.

Silver in particular appears to be winding up for a big move.

The silver chart shows prices currently being constrained by the 50-day moving average. The trading range is narrowing underneath it.

One of two outcomes appears to be imminent: Either a big breakout above the 50-day moving average OR a sharp selloff to re-test the $25/oz level and perhaps lower-tier support.

Anyone who follows the silver market closely knows that prices can move dramatically in any direction at any time – regardless of fundamentals or the longer-term trend that may be in force.

Silver put in a major bottom one year ago as broader panic-induced market liquidation brought futures prices to as low as $12/oz – and crude oil futures to an even more absurd (though brief) negative price structure.

That was a truly epic low – the sort the occurs perhaps once in a generation. As further confirmation of the historic nature of the 2020 bottom, silver became cheaper versus gold that any point in our lifetime – and has since significantly outperformed gold on the rally that followed.

Silver has continued to show relative strength versus gold through the consolidation period that has occurred over the past few months. That should give precious metals bulls confidence that the major bull market off last year’s lows remains intact.

Silver has ridden a broader run-up in commodities as prospects for post-lockdown economic growth improve. Industrial demand for the white metal also stands to pick up from the trend toward electrification. Silver is used in virtually all electronics and stands to benefit from accelerating growth in electric vehicles and solar panels in particular.

Silver’s attributes as a monetary metal will also factor into its likely price rise over time as the value and status of the U.S. dollar erodes.

The Dollar’s Road to Ruin

The world’s reserve currency post-World War II is being abused like never before by its issuer. The federal budget deficit along with the Federal Reserve’s balance sheet are spiking to levels that would have been unthinkable just a few years ago.

The Congressional Budget Office recently warned that the government’s mountain of debt, largely financed at ultra-low interest rates, could become completely unmanageable when rates normalize.

The CBO estimates that over the next 30 years, Uncle Sam will have to come up with $61 trillion in interest – and that’s assuming rates only move up modestly.

The CBO bluntly warned lawmakers that the current pace of debt expansion will “increase the risk of fiscal crisis – that is, a situation in which investors lose confidence in the U.S. government’s ability to service and repay its debt, causing interest rates to increase abruptly, inflation to spiral upward.”

The end game, the CBO warns, could be the replacement of the dollar as the world’s reserve currency.

Neither U.S. officials nor globalist bodies such as the International Monetary Fund want to see a disorderly unraveling of the world currency order. Plans for a transition to a global digital currency approved by the Fed and managed by the IMF are in the works.

Needless to say, central planners have no intention of reinstating sound money by backing their new digits with precious metal.

But gold and silver will continue to play they role they always have throughout the ages – serving as solid stores of value regardless of which fiat currencies come and go.

For now, the major currency against which precious metals are measured is the U.S. Federal Reserve note. The more it is debased, the higher and longer the bull markets in gold and silver can be expected to run.

      

Source: Peter Epstein for Streetwise Reports   03/16/2021

Peter Epstein of Epstein Research looks into the gold, copper, nickel, cobalt, PGEs, REEs and uranium prospects on Marvel Discovery’s properties.

• Exploits Zone, Newfoundland (1. Slip and 2. Victoria Lake—Au prospects)
• Atikokan, Ontario (3. BlackFly—Au prospect)
• Red Lake, Ontario (4. Camping Lake—Au prospect)
• Elliot Lake, Ontario (5. Serpent River/Pecors—Ni-Cu-PGE discovery) and (Uranium—REEs)
• Quebec (6. Duhamel—Ni-Cu-Co prospect and Titanium, Vanadium and Chromium prospect)
• Prince George, British Columbia (7. Wicheeda North—REE prospect)

The above list of Marvel Discovery Corp.’s (MARV:TSX.V; IMTFF:OTCQB) seven main properties/projects covers a lot of bases. Some say that uranium is the next hot sector…. perhaps. However, there’s no doubt about nickel, copper, cobalt, platinum (but not palladium); those four are already very strong—at or close to multiyear highs.

New super-cycle? Great time to be invested in high potential metals

Select Rare Earth Element (REE) prices have moved a lot higher—especially dysprosium, praseodymium, neodymium, gallium and terbium. More about Marvel’s REE projects later….

It’s highly unusual to find a company with a diversified portfolio of attractive (early-stage) opportunities like these, valued at just C$4.6 million = ~US$3.6 million. This is absurd given the company’s existing assets, near-term prospects and expert deal-making team led by CEO Karim Rayani.

If Marvel’s share price were twice as high, I would be writing the same article—describing how undervalued this story is. Management changed the company name to Marvel Discovery Corp. to rebrand and reiterate the compelling risk/reward proposition available to investors. {please see Marvel’s new corporate presentation}

Marvel Discovery continues to be vastly undervalued

Yes, I realize it’s common for companies with multiple assets not to receive full credit for all of them. Asset portfolios can trade at a “conglomerate discount.” Yet, while the valuation of hundreds and hundreds of metals/mining/minerals juniors have soared, Marvel’s share price remains stubbornly below C$0.10.

This unwarranted valuation won’t last, there are too many good things going on, not least of which the proposed spinout of two projects—Serpent River/Pecors and Wicheeda North—into a new publicly traded vehicle.

Both of these assets have significant Rare Earth Element prospects that would benefit from a dedicated management team focused on two projects, instead of seven.

Speaking of REEs, Marvel’s 100%-owned, 1,444-hectare property Wicheeda North in Prince George, B.C., is quite promising. And, CEO Rayani is having conversations about picking up additional land near Wicheeda North.

Make no mistake, this is an early-stage opportunity, but several REE prices have been on a tear lately. For instance, dysprosium and neodymium are up about 180% and 150%, respectively, from 2019–20 lows.

The market has noticed—sending the average price gain of the top eight performing REE juniors up roughly 1,500% (from their 52-week lows). Unlike the >700 North American-listed gold juniors I’m aware of, there are only about 50 or 60 REE juniors, many listed in Australia. Marvel has two REE properties (the other is the polymetallic Serpent River/Pecors).

The 2020’s COULD be really big for REEs and Uranium….

In addition to REEs, there’s an historical (Indicated) resource estimate of 14.8 million pounds of uranium at Serpent River. That’s not a giant size, but if uranium prices take off from the upper $20s/lb, this deposit could provide a launching pad for something bigger and better. Rio Algom reportedly mined >100 million pounds of U308 from similar deposits in the Elliot Lake camp.

Readers should note, the uranium price was 3x its current price, for years at a time, prior to the Fukushima Daiichi nuclear power plant disaster in Japan a decade ago (a tsunami took it out). That incident was a long time ago; a nuclear power renaissance is now underway.

Given a notable uptick in the number and severity of global storms and wildfires, decarbonizing the planet has taken on renewed importance. Nuclear remains the only clean, green, large-scale, baseload source of renewable energy.

But, I digress. REEs and uranium are not the main stories at Marvel, gold is. And, I promise to turn to gold after one more detour—nickel and copper! Two portfolio projects have considerable nickel and/or copper upside. Both metals are high-tech and green, and easy to brag about.

The 2020s WILL be really big for Copper and Nickel….

Nickel is increasingly used in rechargeable Li-ion batteries that power electric vehicles. These complex batteries use a range of metals (mostly cobalt, lithium, nickel, manganese). Of these four critical elements, only nickel content is known to be increasing.

More important than the metals mix is the incredible growth profile for global EV adoption. If one believes in the paradigm shift to EVs, one should be very bullish on nickel. Of course, no metal on earth is more hi-tech and green than copper. Fully electric vehicles use about 4x as much copper as conventional cars.

City-scale energy storage systems that store energy from wind and solar farms use copious amounts of copper for wiring and cables, and electrical for grid expansions. Tens of trillions of US$ will be invested in copper-intensive projects in the 2020s.

Readers may notice that I’m excitedly describing several metals/commodities. Some have brighter futures than others. Arguably, oil and thermal coal are not looking so good.

There’s been a great deal of talk lately about the beginning of a new super-cycle in commodities. Inflation is very likely to increase this decade, possibly by a lot. Commodities (hard assets) perform well during inflationary periods.

Precious metals poised to move higher, will gold hit US$2,000/oz. again?

Inflation, deficit spending, massive debt issuance, economic stimulus (infrastructure) plans… all of this brings me back to gold. Marvel has four gold properties/projects, a Red Lake district property, an Atikokan area property and two Newfoundland gold prospects.

Newfoundland is one of the hottest jurisdictions in North America for gold. Marvel’s management team successfully negotiated and secured two properties over the past six–nine months. These are promising properties near both Marathon Gold’s 4 million ounce, prefeasibility study-stage project and New Found Gold’s very high-grade, pre-maiden resource project.

Grab samples at Victoria Lake range from 15 to 25 g/t gold and up to 140 g/t silver. Slip Gold has seen surface samples as high as 44.5 g/t gold. Both properties are planned to be drilled this year.

In the Red Lake district, Marvel is earning into a 51% interest in the Camping Lake project. Camping Lake is within 20 km of Great Bear Resources’ blockbuster Dixie Gold project.

From 2010 to 2013, the Camping Lake property area saw extensive programs completed by Laurentian Goldfields Ltd., Kinross Gold Corporation and Anglo Gold, including diamond drilling and (rock, soil and lake sediment) samples.

Last year, Marvel entered into an option agreement to acquire the Blackfly Gold 1,296-hectare property (BGP) near Atikokan, Ontario. The project is west of Falcon Gold’s Central Canada project, which last year reported 10.2 g/t Au over 3.0 m.

NOTE: {Karim Rayani is CEO of both Marvel Discovery Corp. and Falcon Gold, and he’s been actively buying shares in the open market of both companies}

Blackfly is ~14 km southwest along strike of Agnico Eagle’s 32k hectare, 5.6 Moz. Hammond Reef deposit. Mineralization at Blackfly is traceable over a 4.4 km strike length on the property. The best gold values come from prior operator TerraX Minerals about a decade ago. Grab samples include assays of 167 and 85.6 g/t gold.

In addition to Agnico and Marvel Discovery, companies including Abitibi Royalties, Greencastle Resources and Maxtech Ventures have also secured properties in the district. Some juniors with just one or two properties in the camp (and no other assets) have market caps as large or larger than Marvel’s.

Conclusion

Investors in Marvel Discovery Corp. (TSX-V: MARV) / (OTCQB: IMTFF) stand to benefit from very strong prices, not just among precious metals, but potential all-time highs in copper, nickel and select REEs. Even accounting for the conglomerate discount, Marvel is tremendously undervalued.

Make no mistake, there are a number of high-quality, diversified natural resource juniors, but many have seen their valuations climb by 1,000%+ from last year’s lows. Marvel’s market cap of C$4.6 million = ~US$3.6 million is hardly a stretched valuation, especially if we’re headed into an epic bull market run, a new super-cycle, in commodities. {please see Marvel’s new corporate presentation}

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University’s Stern School of Business.

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Disclosures / Disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER], (together, [ER]) about Marvel Discovery Corp. (formerly named Intl. Montoro), including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Marvel Discovery Corp. are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this article was posted, Marvel Discovery Corp. was an advertiser on [ER] and Peter Epstein owned shares in the Company.

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events and news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

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( Companies Mentioned: MARV:TSX.V; IMTFF:OTCQB,
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