Opportunities lie for base metals to outperform gold this year, said Kai Hoffmann, CEO of Soar Financial Group. “With Biden moving into the White House, the Green initiative has been taking a lot of the news, so nickel, cobalt, and uranium, to a degree,” Hoffmann said. “Gold might be left behind a little bit in terms of the attractiveness [relative to] the other commodities.”
CEO of soar financial group is back to give us an update on the sentiment of the gold market and important data that investors need to be paying attention to when it comes to deals, capital, formation, and fundraising in the sector. Kai, welcome back. Happy new year. Happy new year, David. Thanks for having me back on.
I appreciate it. Yeah. Let's let's recap your data. You had a busy day with a soar financial groups, a conference here. You spoke with a lot of junior miners today, starting from early in the morning until you know, late afternoon. Give us an update on the sentiment. What they're discussing now. Yeah, it's been a long day.
I've been up since 4:00 AM and we've we've hosted SF online session five. And that we host the 10 companies from junior exploration company grassroots just during their first drill campaigns to a mature major immature producer, that Equinox gold. And it was interesting to see the feedback also in lots of companies are still waiting for essay results.
So that's sort of the sentiment. People are waiting patiently waiting as well as we haven't seen stocks drop off or anything. And they're waiting for results for catalysts in those companies. I was speaking to a junior minor recently who told me that they're wrapping up, uh, exploration in 2021. I, is that, is that something that's a, is that something that's consistent across the sector?
Where are we? Is it company specific? Both. Both. And unfortunately we've seen a lot of influx or inflows in capital the last 12 months. Right? So we phrased as much money. Or we've raised $5.5 billion in the companies we're tracking that's companies with a market cap below $1.5 billion. That's a huge amount.
That's the highest amount since 2011. And of course that money wants to get spent. So they're re revamping or ramping up ramping up drill programs that they're really expanding, adding new assets to it. So there's going to be a lot of demand for drills. And we here in certain areas, drills are. Just booked out, uh, labs are overflowing with assays and of course, lots of activity.
And as a, as an investor, that's exactly what we want to see. Cause we want to see if those projects actually have some merit. If some proper shareholder value can be created, not just, uh, uh, being diluted there. I'd like to get your, uh, get a sense of where capital raising is that today, like last year you said, you know, fantastic year for, uh, for minders in terms of raising capital and no issues there.
What about this year? Gold, the gold price has not done very well. In the last month or so, or three weeks? I don't, I don't know what H what sentiment, like now it's a slow start to the year. A lot of uncertainty around the gold price. First we ticked up. Then we ticked down. We lost quite heavily. So the bankers are not really there yet.
And we're waiting to see what's happening in the U S I think that's, that plays into it like the U S a the presidential election or the, the change in the white house is happening next week, actually exactly a week from now. I just too much of uncertainty. That's why the markets have been slower. And our orange index is slower as well.
Whereas while we're only at 54 points only because we've seen one bigger ProCard financing this week. Other than that, it's been fairly mute. We've seen an influx of capital the last few weeks of 20, 20, 20, 20, a lot of smaller financings though, would float through capital being raised. And so far it hasn't really carried over into 2021.
Also, we hear that the TSX has problems going through a listing applications and a RTO and QT applications. So that's holding back the market may be a bit as well. So what would happen to fundraising this year? It doesn't go as smoothly as last year. What would happen to developments, exploration, projects, drilling, uh, stock prices that some of these miners, what w what would you expect?
Oh, that's a good question. And I think it depends again from company to company, right? So the ones that are active, they're actually able to prove something up within the next three to six months with their drill campaigns. We'll see what the essay's bring. They'll be able to raise more money. The ones that didn't hit, anything that just spent the shoulder's money without.
Proving anything up, uh, they'll have a hard time again, there'll be struggling. So if the market, if the sentiment doesn't improve, as of right now, of course, those smaller companies will be hurting and, uh, which is fine with me cause they didn't prove anything. They didn't create creating shareholder value.
And unfortunately we didn't get rid of enough companies. The last down cycle, they're all coming back and you see a lot of companies coming back to market, even just raising 500,000 to a million dollars, uh, which I'm not too excited about. Yeah, you're not too excited, but I think sentiment has taken the turn.
Uh, this is, this is I spoke last year with you in the summer while we spoke a couple of times. I remember in the summertime, you, you had a much more positive, optimistic outlook, and now it, it doesn't, it doesn't sound that way anymore. It sounds like you're a bit more neutral. Is that mainly due to the price of gold and whereas there's something else.
Personally, I'm quite optimum. I'm happy with the price of gold where we are right now. 1850 is tremendous. I think it was Bemo who put a study together of the gold producers in the cashflow the next four years until the end of 2024. And at 1850 gold, they will be producing over 90 billion us in free cash flow.
And that's just the top 10 gold producers. Right. So I'm extremely happy with the current gold price. The problem is we're waiting for essays. We're waiting for results from those, uh, from the junior. So there's a bit of a lag and a delay in sort of let's call it excitement. Right? Right. Because you can only see what's in the rocks.
Once you have the results in hand, of course you can take a look at it, the core, but you don't know really what's in it. So we were waiting for that. So that's why sentiment has slowed down a bit. And because we've raised so much money in 2020 there's of course not enough money to go around right now, uh, to be invested into some of the companies.
And we're just waiting for, for some more catalysts in the market in general, waiting on the juniors to deliver some results. Before we make a decision. What about the seniors right now? Hi is sitting and they're sitting on a lot of cash built up from last year. What are they doing with all this cash? Oh, I wish I knew avid.
I have a couple, a couple ideas, but no, I'm hoping they're there, you know, my, my personal preference. So of course, mergers and acquisitions, right. Um, I'm not a big shareholder in those big companies. Like I'd rather play the junior game. So share buybacks or so duck doesn't do it for me. But I'm assuming like we will be seeing increase in dividends as well.
So giving back some of the capital to shareholders, hopefully attracting some of the generalist investors back to the space. Um, you know, I got to bring it up by Warren buffet made some news or waves last year when he entered Barrack, we're still scratching our heads. Why he did that maybe as a hedge to the overall market.
Right. But, uh, he, he's not chasing the dividends in this sector and the free cashflow yields in our space are just insane right now at this level. So I'm really curious to see the production financial numbers coming out of the majors in the next few weeks. And it we'll see where that takes us. I'm curious as to why you've decided in your career right now to be more heavily invested in the juniors and seniors.
Um, what does that, what does that preference come from? It's very simple. I used to work at dacha telecom as a, as an intern when I was, I don't know how old was I? 21, 22. And to talking to the CEO, it seemed like you were talking to the Pope. Right. Or Angela Merkel. It has the same level. Right. And, uh, I was missing, maybe I'm a bit of a control freak, but I like having the close relationships to, uh, through the junior miners.
They're accessible. Some of them I have on WhatsApp on, on, or speed dial as you would call it back in the day. Right. And I can get my questions answered. So I have, um, I'm just playing my advantage, like my, my home field advantage. So you feel like you have more access to information because you have, you're closer with the management team.
Exactly. It's like in that could just have my questions answered within a quick period of time. That's what the junior mining space is known for. If they do their job. I, I hear that from, uh, from investors all the time, that management is probably the most critical component. Well, one of the most critical components of an investment when you're looking at the junior, even the senior mining sector.
So when, when you're, when you're, when you're going out to evaluate a stock, a potential gold stock, how important is management for you? Well, it's still number one. Right? So when I do my due diligence or look at a company I haven't heard of before, first page I go on the website is management and directors.
I want to know who's involved. Like who's linked to who, and I've been in the industry for 10 years now. So you do have a bit of a, a network, or you can see the links popping up in your head when you've, when you look at the names and that's extremely important. Right. And unfortunately we can't meet people in person right now that that is completely missing.
And I'm hoping AME, uh, Amy BBC Roundup is next week. So I'm curious to see how they're bridging that networking gap, but, uh, talking to the management it's, it's extremely important. How approachable are they? And in junior mining, like. People would often get that wrong and in Germany as well. Like when I say I talked to the CEOs, they think I'm talking to the head of Docia telecom, but oftentimes there's three people in a company.
So if they're not approachable, they're doing something wrong anyway. Yeah. Okay. Let's talk about the broad markets and, uh, your outlook on the economy now because, uh, you know, I've noticed that over the last year, there's a, well, in general, there's a, there's a significant correlation between. The mining stocks and the abroad equities indices.
Right? So on the one hand for me, it's interesting. You randomize this market on the one hand, if you're positive on gold and bearish on stock, let's say, let's say you have that position. Where would minors fall in, in, in, in, in, uh, in your analysis, would it go up with gold? Where would it go down with stocks?
Oh, that's a very good question. And, uh, my macro is not really my theme, but like in that space that you gotta, you gotta look at the dividend and as a generalist investor, like, it doesn't really matter where that dividend is coming from. Right? Like it's not, Barrick is not a Johnson Johnson. That's been paying dividends for 120 years.
Um, but it is a safe hedge against everything else. Although when we do see a crash and everybody's been predicting at the great reset is the big theme on Twitter right now. And to, in a couple of your interviews as well, but. It's just like, if that really happens, gold stocks will crash as well. At least initially we've seen that in March.
Uh, so we can't escape. It's going to be a run for liquidity, although I'm not sure cash is the right liquidity or the right, uh, uh, currency or right asset to hold at that time. So maybe that'll shift somewhere else, but investors wouldn't know where to put their money, so we will be hurting. Maybe it's not as bad when gold or.
Gold will stay flat, but the main markets crash. Right. And how would you, how would you personally be investing right now? Would you be a more heavily invested in the junior mining space? Where would you be sitting on more cash right now into gold bullion? Um, what are you doing? Good point. Good question is I get my, my personal portfolio, cause I'm still younger, right?
I'm only 36 years old. So I was like, I'm full on risk. Like I'm almost a hundred percent invested in junior space right now because I do expect a bump up later in this year. So I'm quite excited about what is going on. So I've done a lot of private placements personally. Uh, I don't hold too much bullion.
Unfortunately, I haven't had that opportunity just yet. And I don't own any blue chip stocks. Like I shouldn't be saying that I'm not too diversified. Cause I'm thinking I'm too, too young. So if I do, if I do tank tomorrow, if I go back broke, uh, I do have a chance to rebuild. Right. And, uh, uh, set that portfolio up again.
I understand. Okay, well, let's, uh, let's talk about your next call, the soar financial conferences they're happening on a regular basis, right? Th th what are you planning for the next time? When, when when's it gonna be, uh, you know, what, what are some of the themes we'll be discussing? Give us, uh, give us a little sneak preview.
Yeah, I appreciate your asking. So as a phone line, session six is happening February 10th. We've got a, quite a few producers signed up Victoria gold step golden. Others will be joining us. David earthly will be presenting these irregular guests on Kitco as well and a commentator on Kitco. So we're really excited to do that.
Our format, as I said before, is 10 companies, two keynote speakers to make it a compact, very informative session. And it's free to register, obviously soar financial.com/events. So use that. Well, what are, when you organize these conferences? Well, first of all, what was the, what was the, uh, inspiration behind organizing these soar financial, uh, sessions and, you know, w w what do you hope for investors to get out of these conferences?
Good question. And like, we have a bit of a different approach because we didn't want to compete with any of the existing conferences. There are some great conferences out there that target institutional or accredited investors, uh, like at one-to-one and the precious metal they're doing a fantastic job.
And the one-on-one meetings work really well. We were approaching retail. And mostly European I'm German. Like our audience, half of it is European retail, which is really important. It's a nice mix and something very niche-y that not everybody can offer and that's our target. And also I'd like to say, like all the companies we are presenting, we know personally I've either had a beer with them.
I had a coffee with them, or we went through the presentation before we allowed them to present. Have you had a chance to chat with some of the attendees of the conference? What are they feeling right now in terms of the gold price? Are they feeling optimistic? Are they bearish? How are people feeling?
Similar to me right now. They're quite happy where we're at. Um, a lot of, of course, if you've talked to the gold price speculators, they all want to go higher gold price because the fundamentals are there. Right. And there, they can always name 10 reasons why gold should be higher. But what I've noticed today, actually this morning, they asked about other commodities as well.
All right. So with Biden, moving into the white house, the cream, the green initiative has been taking a lot of the news. So nickel, cobalt, but also uranium to degree, uh, came to, uh, came to mention in the chat. And that was quite interesting. Let's fiscal stimulus on the agenda. Uh, not really. So cause Biden speaks tomorrow.
So we're really curious to see what he's about to propose, like besides the $2,000 stimulus check, he hasn't really committed hard to a number in terms of infrastructure spending. So I'm quite curious how that is going to, uh, or how he's going to address that tomorrow. How would that well, that, how would that impact the gold market?
What did have any impact. Uh, it's more on the PR on the, on the commodity base metal side, I, to assume so. Right. And, uh, it's just copper zinc. You'll need all of that infrastructure spending. If you've been to USA, airports, for example, they definitely need an upgrade and they all need new wiring and a gold might be left behind just a little bit in terms of the other, like attractiveness of the other commodities.
But it's a great store of value. Cause because we're printing money, like we're inflating ourselves at one point, that's going to buy it. Well, that's an excellent point that you brought up. Do you think, do you expect the base metals to outperform gold this year? Based on what I just said. Yes. Um, that's, uh, that's the fundamental reason for it.
Right. And that's what seems to the market seems to be playing. If you look at the lithium companies they're running right now, lithium prices up again. Um, Nicole is up, copper's at three 63 or something a pound this morning. So there's a lot of interest in this space based on that. What do you, what do you see, silver?
Is that an industrial metal now? Or is it more monetary metal? Flip a coin David coin and, uh, have that conversation. Like you, you, you have arguments for both sides, right? It is being used in the industry. Uh, I think at Germany I saw at one point there was a deodorant or so that you could use, um, because it has a disinfectant and, uh, like just swept what's felt, uh, transparent.
Let it stop spread spray at respiration. Right. So there's that, uh, yeah, that there are arguments for both sides of the coin. I see it more as the precious metal, but. Then you use it in the industry, so where it gets destroyed more or less. Right. Okay. Perfect. All right. Thanks. Cut. Thank you so much for your updates.
Good luck with the next conference and then we'll speak again, uh, at the next conference looking forward to it. Thanks, David. All right, cheers. Thank you very much, Kai. Thank you for watching Kitco news. I'm David Lynch.