Today's Precious Metals Recap with David Erfle: Silver, Gold, M&A and more

Trevor Hall Everybody, welcome to Mining Stock daily, it is Tuesday, December 3rd. Recording this interview with Mr. David Erfle, post marked close after a nice rally in the gold price and the overall market seemed to be in the red. Most last, though, three trading days. So that's been interesting developments. So we're going to catch up with David and talk all things precious metals. He has been making the rounds in the media, in the junior mining industry here as of late. So why not give him one more curtain call. Before we get started, I would like to thank the Association for Mineral Exploration, British Columbia and the advocates for and for most mostly healthy business environment for its members working in mineral exploration through advocacy and leadership.

And he is proud to support mining stock daily as the organization lives up to the January's much anticipated round of conference taking place in Vancouver starting January 20th. More information about AME and the Roundup conference can be found online at amebc.ca Hope you'll join me there in Vancouver for the Roundup conference.

Well, without further ado, here he is, the man, Mr. David Erfle, the Junior Miner Junky. David, you have been making the rounds in the media world of junior mining the last couple of days. He must be a popular guy. We've got a couple of things you and I want to talk about, specifically today's movement in gold. The futures price, February, futures of gold put on 14 dollars, 20 cents. Spot prices up over fifteen dollars. What's all the saying to you today?

David Erfle Well, Trevor, thanks again for having me on, by the way. It's been saying to me for for the last few weeks, what's been saying to me is the silver juniors have been leading the miners and the miners have been leading the metals. That's a very bullish combination. And tax loss season kind of officially started on on Monday. But I think a lot of that tax loss selling wrapped up last week while a lot of people were were on vacation for for Thanksgiving. I think it wrapped up into Thanksgiving weekend. And this is this is kind of an unexpected move here. First for most analyst didn't really expect it, but I've been expecting it based on, you know, what I said about the silver juniors leading here. I mean, the SILJ today had a nearly 5 percent move up today with really good volume. And if today was Friday, it would be closing at a 52 week high. So when you have silver juniors, leading miners and miners leading the metals, that's a very bullish combination. And when Trump came out today and it basically said that, hey, I don't need to I don't need to make a trade deal until after the election. That was that was all the spark that this sector needed to start going higher. And the GDX actually looks like it has a solid floor at that 26 level now.

Trevor Hall Yeah, it's really interesting. There's a lot of things happening that I don't think we expected. We'll get into a little bit of a M&A here that happened. Kicking off the week. But that GDX really gapped up this morning. There's a big gap between it looks like the twenty seven twenty five and opened up just above twenty seven fifty but stayed flat. Do you think there's room for a little correction on the downside here, but there's still that 26 dollar downside level. Huge, huge, huge, huge floor there. I don't think it's going to test it.

David Erfle I think the main thing is that 26 has been tested so many times and each time it has been tested. We've had a strong reversal from it. It looks like a solid floor here. You know, that outside possibility of that gap, that daily gap filling at 24 is now pretty much off the table. So, sure. I think that I think the the the downside possibility is that, yes, the gap today can absolutely fail. But more importantly, I think the miners have been telling us for for the last few weeks that the the bottom is in here for for the mining sector.

Trevor Hall What do you think's going to be a catalyst for the rest of the year? You know, the rest of this month that keep on moving up. Do you think we're going to see more? It's going to be more risk off because of the volatility in the overall markets as this kind of what the game plan is telling you, the first two days of trading in December.

David Erfle Yeah, I think after Trump's trade bombshell today, the market's going to shift towards the non-farm payrolls report on Friday. That's going to be the last NFP before the the the last FOMC meeting of the year next Wednesday, where the Fed is expected to hold steady. But now with this trade talk that this this trade rhetoric placing a lot more risk back into into the marketplace, you know, if if if the Fed waxes dovish on the 11th and puts a rate cut back on the table again, you're going to see gold jump over fifteen hundred before the end of the year. There is really strong resistance there. That 14.80-14.85, which is where it jumped up today. So I think the market's going to look toward the Fed.

Trevor Hall Now, if you are a novice investor here, David, and you're looking at precious metals, where do you think the opportunity lies?

David Erfle Oh, the job opportunity lies in the juniors, for sure. I mean, a lot of these things were decimated because of tax loss selling and because of the capital markets remaining pretty pretty tight going into the end of the year. But the good the good news is the capital markets are are opening up their purse strings big time here the last few weeks. You know, we've had a silver crest announced 80 billion and 80 million dollar bought deal today. Wall Bridge announced a forty two point five million bond deal yesterday and the week before last. We had bought deals jump up considerably. So capital markets are opening up their purse strings. M&A is is getting exciting again. Newmont just announced today that all that money that that they've made from the Red Lake sale and the continental gold sale to Zinjin, which is about a billion dollars, they're going to use that money for a share buybacks for the next 12 months. So this is very good news for the sector going into 2012.

Trevor Hall Yes, really interesting. I don't think we're expecting the first week in December to see both all of this capital flowing into these companies, plus emanate a really heat up because, you know, for the last year, David, you and I have been talking about this MBNA, we thought the M.A. sector was going to heat up all year and it never really did. It was really quiet. But all of a sudden, December 2nd, December 3rd, and we're back in the game. So, I mean, I am willing to say maybe there's more to come here in the next couple of weeks before Christmas.

David Erfle Oh, yeah. I think there is, you know, Endeavour's already, you know, they've already announced it. Endeavor Mining attempting to take over British gold miner Centamin. They rebuffed it. But, you know, that's that's another two billion dollar takeover, which if it happens, you know, if they sweeten the deal and if it happens, that would be you know, there's already been over seven billion dollars in mergers and acquisitions happening over the past few weeks. So I fully expect this to continue to heat up. And yeah, it's it's very bullish for the sector going into 2020. And I'm very encouraged.

Trevor Hall And your newsletter, you have your top ten takeover targets. And for anybody interested in a subscription to that newsletter, you can go to junior miner junky dot com and inquire about a subscription. But with those ten takeover targets that you have is, you know. Would you mind kind of pointing to maybe one or two that you really got your eye on that maybe could be one of those top takeover targets here before the end of the year?

David Erfle Oh, sure. I could give you my top two, which I've been in for quite a while. But I've also recommended to my subscribers over the past few years that Wesdome Gold Mines and Marathon Gold, they're both in in eastern Canada and their share share prices have been bifurcating from the sector for quite some time. And I I I fully expect to do, too. I fully expect either of those or both of them to be taken out within the next 12 to 18 months.

Trevor Hall I tell you what that Wesdome takeover if it does happen, that will be pretty interesting to see the premium on that, wouldn't it?

David Erfle Yeah, absolutely.

Trevor Hall All right, David. Well, hey, I know this has had to be a quick interview. Thank you so much for joining us after the market. We look forward to see what happens tomorrow morning. If you had a prediction on how we open in the morning, what do you think gold's going to trade tomorrow? I'm going to trade safe call safe for. That would be a risk off call and I like it. So, David, thank you so much. Have yourself a great evening. We'll talk to you again maybe before the end of the year.

Any time Trevor. Nice talking to you.