“Trump’s Gold” from Stansberry’s Investment Advisory

A Quick Check of Stansberry's ad: "Will Trump Open Development of the World's Biggest Gold Mine... Right here in America?"

By Travis Johnson, Stock Gumshoe, January 20, 2017

This is getting a little ridiculous.

I don’t think I’ve ever seen a single mining stock as aggressively endorsed by investment newsletters as Northern Dynasty has been over the past few months. So this is just a short note to let you know that, yes, you can add another one to the pile — it’s not brand new, Porter Stansberry has been sending out this ad for at least a week or so now, and it’s dated January 3, but a recent ad for his Stansberry’s Investment Advisory is pitching Northern Dynasty as “Trump’s Gold.”

The argument is functionally identical to the arguments that have been made in favor of Northern Dynasty Minerals (NAK, NDM in Toronto) by many others over the past several months — that the EPA overstepped its authority by blocking the permitting process for the Pebble Mine, which by many estimates would be the largest gold and copper mine in the world if it is built, and that the EPA is going to back off or lose in court.

The argument was reasonably compelling back in the Summer and Fall, when it looked like there would be movement in the court case (Northern Dynasty sued the EPA), with both sides agreeing to mediation… and it became more compelling after Trump’s surprise election victory, mostly because Northern Dynasty said they had met with Trump’s nominee for the head of the EPA and because candidate Trump pretty consistently talked about rolling back environmental regulations, which was widely interpreted as opening up the floodgates for new mine development (or, at least, for letting Northern Dynasty proceed with the permitting process to see if the mine can be safely built without undue risk to Bristol Bay and the large salmon fishery there).

That’s why I have a position in Northern Dynasty through some derivatives, mostly long-term warrants — I think there’s a reasonable chance that the permitting will be allowed to proceed, either because of executive action or because Northern Dynasty wins in the courts over the next 6-9 months, and the absolutely massive size of the mine means that there’s a chance for large gains if the odds of this becoming a real project again improve in a dramatic way because of regulatory or legal action.

There’s still a risk, of course, that the mine won’t be built (or even released from purgatory so it can go through the permitting process) — and whether the probability of that happening is 10% or 90% or somewhere in between, it’s important to note that if the Pebble Mine can’t eventually get permitted and built (as was the widespread assumption until just a few months ago), the stock is essentially worthless. The huge size of the mine makes it a reasonable risk-reward speculation for me, but I think of it like a spin of the roulette wheel… you know that you’ll win big if they ball lands on black, but you’re not sure whether there’s one black square or 20 black squares on the wheel, and landing on red means your money is gone.

Many people have much, much more conviction than I do that the mine will be permitted and that President Trump will call off the EPA’s lawsuit within moments of taking office, which would give you perhaps more certainty that there are a lot more black squares on that roulette wheel than there are red ones, but remember: newsletter editors don’t get bigger and more successful by being human and uncertain, they thrive by having strong and certain views and positions and opinions that get a lot of attention (Doug Casey hinted that this will be “Executive Order 0001”, after having previously talked about this as his biggest speculation in early November, and Marin Katusa, who also says he has personally invested heavily in Northern Dynasty, has spoken several times over the past year about his certainty that the mine will be built, just to give a couple examples — and yes, Katusa used to work for Doug Casey, which stopped when Casey sold his publishing business to… Porter Stansberry. Everyone’s interrelated in the newsletter world, time for a game of “six degrees of Bill Bonner”).

So that’s the story — “Trump’s Gold” is, of course, Northern Dynasty yet again… and it’s getting both newsletter and mainstream media attention (including this piece in Bloomberg yesterday). It’s still a far-from-production gold and copper mine, still is not allowed to enter the permitting process, and still is certainly a speculation — but a lot of its fate does rest in the hands of the new President and his Environmental Protection Agency appointees, and it could be, if allowed to proceed, the biggest mine in the world. I’ve laid my chips on the table, and will wait to see what happens.

It’s also worth noting that the huge volume of attention piled on Northern Dynasty because of the expectation that President Trump will do something to help them move forward has led not just to a much higher stock price (NAK has jumped almost 500% in six months, and almost 200% just since the election), but also to much higher expectations — including some folks who probably take literally the newsletter promises that President Trump will effectively send the Pebble Mine into permitting on day one (which is today, in case you haven’t noticed). If we assume that things don’t usually move that fast or that certainly when it comes to politics, we should also anticipate that perhaps those who were betting on a “day one” move to help Northern Dynasty could be disappointed and sell if progress is slower than that.

Disclosure: I personally have long exposure to Northern Dynasty Minerals through derivatives (options and warrants), as I’ve noted when covering other teasers for this stock over the past few months (I haven’t sold any yet). I will not trade in those positions or in the stock of the company for at least one week following publication of this note (usually the blackout period is three days, but I often extend it for volatile or illiquid securities).

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