Doug Loud And Jeff Mosseri: Supply And Demand Will Rescue Gold Soon

TGR: What's your view of the prospects for nickel?

DL: Same as zinc, only maybe a little better.

TGR: How is the export ban from Indonesia playing out?

DL: It makes PolyMet look a whole lot better. People used to joke that Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE) ran Indonesia. Now that country is saying it wants its nickel processed in-country. It has also passed a regulation mandating that expatriates working in the mining business in Indonesia must be able to prove their ability to speak Indonesian. All this makes working in Indonesia very difficult for foreign companies, and this puts producers outside that country ahead of the game.

JM: Looking down the road, a company like North American Nickel Inc. (NAN:TSX.V) (WSCRFwith its Maniitsoq project in Greenland will probably give you the biggest capital gain because when it eventually goes into production, its leverage will come to the fore, assuming it can meet its energy requirements, capital needs and completion of permitting.

TGR: Can you tell us about a company with a unique process technology?

JM: Texas Rare Earth Resources Corp. (TRER:OTCQX). We know the company well, and like it very much, particularly since it has signed a joint venture with K-Technologies Inc. This will allow Texas Rare Earth Resources to use K-Technologies' continuous ion exchange process, rather than the conventional chemical separation method. This way, along with a simple heap-leach process, the continuous ion process, which has already been credentialed by being scaled up in other industries to levels exceeding that required at the Texas Rare Earth's project, should allow the company to produce, individually, the various heavy rare earths that make up 75% of the total deposit. And all this with substantially lower capital expenditures and much lower operating expenses.

In the rare earth space, we also like Commerce Resources Corp. (CCE:TSX.V; D7H:FSE; CMRZF:OTCQX), which recently announced excellent drilling results at its Ashram rare earth deposit in Northern Quebec.

TGR: Assuming that you are correct and that a comeback in gold equities will signal a new bull market in gold itself, what qualities should investors be looking for in gold stocks?

DL: First off, you've really got to take a serious look at country risk and infrastructure risk. The First Quantum Sentinel mine problem is really serious. This electricity shortage could envelop much of Africa, even including the Democratic Republic of the Congo.

We liked a bunch of exploration projects in Mali and Burkina Faso, and then that whole region got caught up in revolution. I would advise sticking to North America and Central and South America first, and then Australia.

JM: Investors should be looking for companies with good management, good projects and lots of cash on the balance sheet. For the time being, you want to avoid marginal producers and marginal explorers that need to keep on financing at lower and lower prices. Those will be the last companies to turn around, if they're not taken out or haven't gone bankrupt by then.

TGR: Jeff and Doug, thank you for your time and your insights.


Douglass N. Loud joined Greystone Asset Management LLC. at its founding in 2005 and has been senior managing director of Axiom Capital Management Inc. since 2009. Prior to that, he was with Murphy & Durieu, where he served as executive director of the Private Clients Group. Loud has over 35 years of investment management and securities industry experience. He holds a degree from Yale University and a law degree from the University of California, Berkeley.

Jeffrey N. Mosseri established Greystone Asset Management LLC. in 2005 and became a director of Axiom Capital Management Inc. in 2009. He was a stockbroker and investment manager at Goldsmith & Harris for 20 years. Mosseri also worked as a stockbroker and investment manager for Carnegie Capital, the investment advisory division of Prescott Ball & Turben, where he ran the international arbitrage division and developed the gold mining research and investment department.

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Disclosure:

1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of  more

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