Medical marijuana’s a bubble but with much less substance than others before it, claims Mercenary Geologist Mickey Fulp. Mr. Fulp believes the junior resource bear market is not about to turn anytime soon but provides some stock picks that could outperform regardless.
SmallCapPower (SCP): For the junior mining industry, do you think anything good will come from this medical marijuana trend?
Mickey Fulp (MF): Not much (laughs). This a bubble – we’ve seen this happen before although probably not as with so little substance behind it. Probably about half of these companies that have joined in have just put out a new release saying that they’re looking into it. It’s just a bubble and it’s going to fail. You might get one or two or three companies that make a success out of it but it’s gone from 12 companies two weeks ago to 30 last week and 46 this week. It’s a day trader’s doped up daydream, that’s what it looks like to me.
The flagship on the Bulletin Board will be Growlife Inc. (OTCBB: PHOT) and it was halted recently for stock manipulation and there’s lawsuits pending. Tweed Marijuana Inc. (TSXV: TWD), which was the big IPO on the Venture exchange recently, had one of their ‘pot’ shipments stopped and sent back by the RCMP. A company called Chlormet Technology (TSXV: CMT) was halted recently because it didn’t file a change of business – jeesh that’s amateurish.
SCP: You compared this marijuana trend to the dotcom bubble of the late 1990s. That time turned out to be the bottom of a junior resource bear market and a new bull market run for these stocks began in 2002. Do you see any similarities this time around?
MF: Most definitely, back then for about a year and a half there was a flat market after the crash. We are about seven months into a flat market now if memory serves me correct. It looks like we’ve got a ways to go.
SCP: So, you don’t see any turnaround in the junior mining space anytime soon?
MF: No, there’s too many bad companies. We’ve seen a turnaround with the good companies. But we still need to get rid of the majority of these companies. You look at the companies going into medical marijuana – they’re either going to rollback or they’ve had a rollback. They have no money. They have a failed exploration project. And they have some promoter who’s been around the business before and the list of people that have gone into this is pretty amazing. Some of Vancouver B.C.’s most famous, or maybe even infamous, promoters have thrown their companies into it.
SCP: What’s your outlook for the Venture index for the remainder of 2014?
MF: I look for the market to be better overall this year. We’ve seen the index up something in the order of 12% this year. I expect 2014 to be better than 2013. I do not expect this bear market to end this year, but I will be happy if we just keep floating along this year with some little ups and downs and, at some point, a bunch of bad companies will end up going away and we’ll get a fresh start. Commodities demand remains high and commodities prices are decent. And so the world needs metal.
SCP: Do you have any new junior resource stock picks since the last time we spoke?
MF: I’m bullish on copper so we’re still holding onto Curis Resources Ltd. (TSX: CUV), optimistic that they’ll get permitted in due course this year. And that will be a winner once they get permitted. I’m bullish on another company I cover, Avrupa Minerals (TSXV: AVU). It just made a copper discovery in the Pyrite Belt of Portugal. As a disclaimer I’m a shareholder of both and cover both of those companies.
SCP: When we spoke earlier in the year you recommended some uranium juniors. There’s been a pullback in the stock prices of most of these companies of late. Do you see this as a buying opportunity?
MF: I’m not a certified financial advisor so I can’t tell people when to buy or sell. It was pretty evident that there was going to be a pullback because some of these stocks such as Energy Fuels Inc. (TSX: EFR) doubled in nine weeks. The uranium sector has come off since then. A lot of that has to do with the spot price dropping from US$35 to $33, which is maybe an eight-year low. We’re just waiting for the Japanese to restart their reactors, and we think that will be a catalyst.
SCP: Thank you for your time Mickey.
MF: Thank you.