Wealth Research Group editor talks about why likes zinc, precious metals, and cobalt resource stocks
SmallCapPower | December 16, 2016: SmallCapPower spoke recently with Wealth Research Group Editor Lior Gantz, who discussed how his portfolio uses resource stocks to enhance the returns from his ‘wealth stocks’, and which metals/minerals he likes currently.
SmallCapPower: Welcome to our program, Lior. Your website, Wealth Research Group, is all about building wealth. So what suggestions can you provide our viewers about becoming wealthy by investing in stocks?
Lior: I’m very happy to be here. And when we talk about Wealth Research Group, I wanna give you a background of how we got started so it gives you a more broad view of what our hopes and our goals are with our members. So, Wealth Research Group got started because we are in the process of building the perfect blend between long-term investing, which is the core of every great investor, you know, that ever succeeded, with the added value of smart speculating inside of the resource sector.
So I got my background in investing managing funds for high-end clients, and the stocks that I was investing for them were long-term stocks that are what I call wealth stocks. These are companies that are able… they have such a strong competitive advantage that they’re able to beat the broad indices, the S&P 500, or just the broad indices that most investors choose to benchmark, year over year, with less risk, so a smaller standard deviation and with higher and rising dividends. And that’s what I’ve done for almost a decade. But then, in 2015, the resource bear market in many of the metals that I’ve watched came to such a low valuation that I decided that it would be very beneficial for people to know more about what can happen right now when the market turns.
And so we created Wealth Research Group as a blend between wealth stocks, which are great for compounding over the long-term, and astute speculations, which, in the short-term, can create mindboggling returns. So if you go on our website, on the top menu, you will see one tab that says “Wealth Stocks,” and that’s where we have an assembly of about, I think, six stocks now that are fire-and-forget type, Mark, if that makes sense. Where you buy them, you reinvest dividends, and you see your wealth grow year over year, for decades, at market-beating returns and with less risks than the S&P 500. You got to remember S&P 500 has about 500 stocks, that some of them are overvalued, and some of them are undervalued, and you get a basket. When you invest specifically in stocks and research them more thoroughly, you get to invest only in the undervalued ones. So we have two stocks that are yielding 8.5%. And for your listeners and your viewers that are in retirement or approaching retirement, these kinds of stocks, these kinds of yields, 8.5%, in the ultra-low environment that we live in right now, is very unique.
On the other hand, Wealth Research Group, this year, has profiled resource stocks that are in the gold and silver space, and we’ve profiled a few that are outside the precious metal sector and had a wonderful track record. Between February and this interview, we’ve profiled four companies that have gone up more than 400%, two that went over 200%, and three that have doubled. And none of them have had… all of them have had a very healthy run, and that’s very important. We only profile the most vetted management teams and the most world-class projects, and we stick to the top jockeys. I think that’s very important. So that blend of safety and high yield with smart speculations is what Wealth Research Group is about, and on the top tab, again, of our menu, if you click on “Special Reports”, you’ll find such a rich plethora and wide range of special reports that can help. If you’re a novice to advanced, you’ll find such a wealth of information there that’ll help you understand the world of natural resource much better.
Mark: So, what types of stocks do you like to invest in? Like, what kind of market cap? Any particular sector that you’re fond of?
SmallCapPower: Sure. The one sector right now that Wealth Research Group has spent the last 45 to 60 days researching is zinc. And the reason is… there’s a couple of reasons for it, but the main one is it’s a classic bull market. The supply of zinc worldwide is shrinking — two major mines have closed this year — and the stockpiles, meaning the reserves, are shrinking as well. So that’s on one end. Even though the price has risen a lot this year, the price is still so cheap because of the bear market that preceded this time that new companies are reluctant to form right now, and there’s only a few that are being founded right now.
So the supply side of it will stay very constrained for a few years. In fact, in 2017, we’ll hit peak deficit for worldwide supply and demand. On the demand side, you’ve got China, with such a high demand for zinc it’s insane. All their mega-projects are dependent on zinc coating. Their car industry, which is the largest in the world, is also dependent on zinc. And I would suggest to your listeners to go onto our website, click the “Special Reports” tab, and download the zinc special report we have so you can prepare, learn, and know exactly what to do. And you should hyperlink it into the article because it’ll be easier for people to understand just how incredible this zinc bull market can be. In fact, in the next few days, we will profile a company that we believe is the first all-star team, well, I should say even a dream team of management that are formed to take advantage of this bull market.
And, I just gotta say, with regards to zinc, it’s very important to understand that it’s an explosive bull market that can happen in 2017, like the kinds that you only see every 5 to 10 years, if ever. Another metal that I’m very bullish about is gold and silver. Gold, for the obvious reason that interest rates, though the Fed is going to raise rates in a few days. If nothing exceptional happens, the real interest rates, so interest rates minus inflation, is close to negative, no matter if they raise or not. Now, historically, there have been three tightening periods: one between ’72 and ’73, one between ’76 and ’79, and one between 2004 and 2006. Every time the Fed has announced the second rate hike, the S&P 500 suffered immensely, while gold rallied higher. And the reason is that interest rates are like weights on asset prices. So it’s easier to understand why the S&P 500 would not act well in a high-interest rate environment, because people can… you know, they have alternatives. Gold goes up because investors realize that though interest rates are rising, they’re rising because they wanna tame inflation. And therefore, the real interest rates stay close to negative. And it will be very interesting to see what will happen this time. But the last three times were epic for gold. And I would say this, with regards to silver: it has two components.
First of all, it is the most resilient precious metal of them all. It’s industrial and has a monetary use to it. So if you’re looking at the industrial part, the part of that, in silver, it doesn’t get recycled that much. You cannot recycle the tiny bits of silver that go into so many projects that we use in everyday life. And so the supply of silver, as compared to demand, is very favorable to silver. And then you’ve got this monetary aspect, and that’s why I think the gold-to-silver ratio can go to around 50:1 in 2017. And that would be explosive for silver stocks, silver companies. So we are gonna profile silver companies in 2017. And I can only say this: our peaks in 2016 have been remarkable performance. Lastly, I would say we’re very bullish on cobalt, and outside of resources, we are taking a look right now at marijuana, very interesting market, and biotech, nanotech companies as well. Because the type of companies that are out there are so valid, this is not the days of, you know, going to your backyard and starting a business in your garage. Companies are funded, companies are legit, and there’s immense opportunities to take advantage of.
SmallCapPower: Okay, so, do you invest in junior mining stocks at all? And if you do, how do you avoid… or what’s your best investing advice for not getting burned?
Lior: Sure. So like I just told you previously, Wealth Research Group, what it does is it takes a 60-day period, does due-diligence on about 100 to 150 companies. We talk to management teams, take a look at the projects, and we drill it down to only the safest and most proven companies, and then we feature that company to our members of Wealth Research Group. And like I told you, we had a very good 2016. In fact, I believe we’re the highest-rated newsletter in the business. And obviously, the membership is free, just to point out. But the junior market is very volatile, as you said. And the way to avoid getting burned is two things. First of all, you need to take profits when sentiment is high.
So, Wealth Research Group, it follows three major matrix to figure out how good is sentiment, and if sentiment gets too good, we always suggest taking profits and waiting for the next cycle to come. So, we talk about that in our emails a lot with the matrix that we look at, and we feature many charts in our emails to members. And so that’s the first thing: market sentiment. These are short-term speculations, though. It’s three to four to five months at best. The junior mining sector is not a long-term play – it’s a sentiment play, where things go from, you know, very low sentiments to euphoric sentiments. And that’s what you wanna ride, basically.
The second thing, and this is by far the most important, is position sizing. You never wanna fall in love with any one stock, no matter how amazing the story is. And you gotta respect that. And so we only put 2% to 5% in every given stock that we suggest. We never suggest doing more than that just because it’s not worth the headache, the risks, or it’s just not a good strategy. The worst thing that can happen is that you invest like 20%, 30% in a stock and it goes up, because that gives you the confidence to do it again. And I’ve seen so many people get catastrophic losses and then just go out of the market as a whole and never come back. And it’s unfortunate. So to stay in the long-term, just be disciplined, and never speculate with more than 2% to 5% in any given stock. You know, stop-losses are always a good idea, but with junior miners, it should be much more on why than your general-type investments.
And remember this: it all comes down to the management team. So there’s only so many proven, vetted serial entrepreneurs who have proven themselves over the years, and you wanna stick to those top jockeys and not deviate to people who have not proven themselves. So that’s how we make sure not to get burned. Remember, this is the most explosive industry, and so you wanna make sure that your asset allocation is not the biggest in that regard. So if you take a look at my personal portfolio, and there’s one special report on our website, which is my personal portfolio, no holds barred. The way I allocate my assets: I have money in cash, I have money in physical precious metals, I have real estate holdings, I have wealth stocks, and I have junior mining or other speculative stocks. So, you know, if something happens there, it doesn’t mean anything about the rest of the portfolio, and that’s important to remember. Don’t be 100% small-cap.
SmallCapPower: Very good. So, what stocks does Wealth Research Group like at this time, and why? And if you own them, maybe you could disclose that for us.
Lior: Sure. So with regards to disclosing stocks, the problem and the challenge with that is we do not want to, obviously, give people who read or listen to this interview a stock without any research. So the best thing to do is just to subscribe to Wealth Research Group, take us for a test drive, and then see our research and realize that we are your partner.
We are a long-term newsletter company that is looking to increase the financial fortress of our readers. You gotta realize, my personal story is that my passion was to help not just high-end customers, but the broader base of people who do not have the time to dive in and research a hundred companies in 60 days. So the idea behind Wealth Research Group is to help the average investor who is looking for exposure to the resource sector but does not have the tools to do it. And so with regards to that, make sure that if you wanna read our research, go in and just take us through a test drive. We are, right now, focusing on zinc, and in the next week, if this interview will be up and people who read it join the membership, they will absolutely be amazed by the company that we found.
Because the idea behind the zinc bull market is simple. Because zinc prices have gone up 80% this year, many companies have gone up as well, so they’re not undervalued anymore. What we have done is we’ve taken a look at what companies are new to the sector and have not enjoyed the run up, and have world-class projects. So we’ve looked at the undervalued place, and one company is just so outstanding, it stands out, that we are featuring it next week to our members. Going into 2017, you will see more gold companies. What we are looking for in a gold company is a special strategy and some competitive advantage.
So, one company that we’ve featured this year… You’ve probably heard the story of Levi Strauss, the guy who invented the jeans, and how he profited from the gold bull market much more than any prospector or any miner, for that matter, without getting dirty a day in his life. The way he did it was he created a satellite business. And a satellite business is basically when you are able to facilitate a service and give value to the entire industry without taking the traditional risks of mining.
And we’ve featured a company this year that does exactly that. And we call that a satellite business, I hope that makes sense, where you have a company that benefits from the upside of gold, without taking a lot of the traditional risks that come with, you know, the mining business. So we look for these special situations and, you know, it takes a certain type of entrepreneur and a businessman to build these companies up. I hope that answers your question. We are gonna feature in 2017, we are gonna feature silver companies, cobalt companies. Potash is very interesting to us, and we are leveraging our contacts in the resource sector to getting to the nanotech industry and biotech industry, and we are taking a look at a marijuana company that… you know, we’ve looked at marijuana companies for about 120 days now. No company is profitable, and everything is very, very risky, so we’re so meticulous with our research. We only wanna profile the safest winners that we can. So, you know, in the first quarter, we are gonna feature a company that we believe is a game-changer.
SmallCapPower: Okay, so, I take it that we need to subscribe to find out maybe one or two of your favorite stock picks.
Lior: Sure. Look, you know, throughout February to June, we’ve enjoyed a great run up, and some of the companies we have already taken profits on, and I don’t mind telling you that we invested. Our first pick was IMPACT Silver Corp. (TSXV: IPT); it went up like 1,100% this year bottom to top, but we don’t cover it anymore, and therefore, I don’t want to just throw out a ticker out there and people would act on it, that we do not cover it anymore. So I don’t see the added value to your listeners to invest in this company because we’re not going to feature it, and could be overvalued at his moment for all I know. If they want do their own research on this company, then I think it’s a great company, but I didn’t research it in about six months, so I don’t know the price of it right now, and if it’s undervalued, in our opinion, or not. So if you understand, the type of defense that I’m trying to give to your readers is that I don’t wanna throw out tickers and then people go out and invest according to my words, because it’s my words and they never see the added value in it.
SmallCapPower: Right. I understand. So, how can viewers learn more about Wealth Research Group and your service? You previously mentioned that membership is free, so how do you monetize things there?
Lior: With regards to our members, everything is free, and we keep it that way because we just… we do this with one goal in mind: we wanna increase the financial fortress of our readers. We want them to be daily more knowledgeable, more emotionally wired and prepared to invest in the stock market, and we do it by providing a rich plethora of information. We talk about the timeless principles of investing success in our emails, and we occasionally provide a stock suggestion, which is called a “Wealth Stock.” As I told you, these are more large-cap companies that we feel are great for people who are looking for the long-term. And then we have the more explosive side of the natural resource sector. We also do a lot for retirees and people who are looking for solutions on how to work their way through this ultra-low interest rate world. So we give a lot of practical advice with regards to that, all the way from extra income ideas and how to develop side income streams to various to do with life insurance policies that people can take out – especially in the U.S. I mean, it goes on and on. Our idea is to really make people aware that this debt cycle that the U.S. and the Western World is in is so dangerous that only people who are very conscious of the dangers in the overhanging cloud of fiat monetary system that hangs above us all daily… only people who are very conscious to this will be able to weather what could be the worst crisis that will hit the Western World in the next few years.
SmallCapPower: Wow! So, that was a lot of really good advice and information, Lior. Thanks for taking the time for today’s interview.
Lior: Thanks, I appreciate it.