From touring mines around globe to investing in precious metals, insights from Obris member and Raymond James Financial Senior VP Larry Scharf
From touring mines around globe to investing in precious metals, insights from Obris member and Raymond James Financial Senior VP Larry Scharf
Afterwards, I toured Macau for a few days on my own. And I joined Robert and the group Ulanbaatar, which is the capital of Mongolia. While the mine itself was still very early in the construction phase, the introduction to the Mongolian culture and history, the sights...it was so fantastic, it's still fresh in my mind.
James Evenson:Welcome to the Global Investor Podcast. The goal of this podcast is to offer investors and entrepreneurs insights and practical advice to dramatically improve the kinds of deals you invest in, and the returns you get. My name is James Evenson. I'm one of the partners at Crown Private and our investor syndicate Obris. Obris is about exceptional people, unique experiences, and bespoke investment. Our membership and community are made up of like minded, yet unique and adventurous individuals, as well as family offices. We invest in a spectrum of deals from established companies to startups. We do so with a proven formula of due diligence, structuring and management. Our guest today is Larry Scharf. Larry is a senior vice president at Raymond James Financial. Larry is one of my favorite people on the planet and a good friend. He and his wife Fran are long standing members of Obris. Larry has a rather unique disposition, in that while he has worked as a financial advisor for 38 years, he has a keen interest in precious metals that dates back to his childhood. In fact, Larry has visited many mines on multiple continents. We will learn about his relationship with gold, silver and other precious metals during this podcast. Hey, Larry, thank you very much for joining us. Where do we find you in the world today?
Larry Scharf:I am at Raymond James Financial in Westport, Connecticut. And I can be reached by phone or by email, which I'll provide those details at the end of our presentation.
James Evenson:Super. All right. Well, let's start by having you tell us about your background.
Larry Scharf:Well, you know, I'm Lawrence Scharf. I've been a senior vice president with Raymond James for a number of years now. And my career and interest really started when I was five years old collecting Lincoln pennies at my mom's knee. And then later on as a teenager, I used to ride my bike to the local bank and pick up rolls of quarters and dimes and nickels looking for silver, and war nickels. That's how I started to understand and learn history through the history of money. My college years were during the great inflationary period of the 1970s and this is when I began reading financial newsletters and following the prices of gold and silver. I began to read everything I could about monetary systems, markets, and the great market legends of the 20th century, all of which has become quite a fantastic library of investment books that I still reference today. At that time, I also began corresponding with the Von Mises Institute studying the works of Murray Rothbard, Frederick Von Hayek and Von Mises himself, who is considered the acknowledged leader of the Austrian school of economic thought, which made more sense to me than other economic philosophies. By introduction from a friend I later became employed at a company called Investment Rarities in 1982, which was a purveyor of gold and silver coins, as well as bullion and whose founder Jim Cook, was very much of the same philosophy. My role was to help those interested in investing in gold and silver related items to purchase the most appropriate items for what they will try to accomplish. Due to my background and interest, I also became friends with the Chief Numismatist, a fella named Dennis Wegley, who allowed me to meet with him in the secure room and handpick the specific, rare coins that my clients were interested in. Later on as my knowledge and understanding of investing grew, I became securities licensed in 1983 and began learning about the stock side of the investment business. Soon after, I learned how purchasing gold mining stocks was another way to gain exposure to the precious metals and researching the history of how the stocks behaved in the deflationary 1930s as well as the inflationary 1970s was fascinating. And I began my journey into the mining world by calling upon the CEOs of various Canadian mining companies, who were very enthusiastic to take my calls as they were eager to increase their exposure to United States investors. I became friends with some of the most successful mining investors and visionaries in the industry, people like Paul Penna of Agnico Eagle, Rob McEwen of Goldcorp and many others. Paul hosted me and my family several times in Toronto at their annual meeting, and we really enjoyed those trips. In fact, my first mine tour was later on in 1995, at Agnico's LaRonde mine, which is near Val d'Or, Quebec. They were, at the time had just finished their drift, which is a horizontal tunnel at the 1700 level, and were preparing to drill deep. And that became a huge game changer for the mine. And it is now one of the deepest mines in North America. Rob McEwen and I became friends because we spoke to each other nearly every month before Red Lake actually began mining because the miners were on strike. And he had to work that out. That took a very long time. But the Red Lake mine went on to become one of the most famous and profitable mines in history. And that made Rob a very wealthy individual. And we're still friends today.
James Evenson:That's a quite a quite a background to bring you forward to today. Can you tell us about some of the mines that you have visited around the world? And by the way, how many mines have you actually visited?
Larry Scharf:Oh, yeah, I was thinking about that. And I had visited, I can recall 22 mine trips, and some of them had multiple site visits. So I'll only mention a couple. But one of the more fascinating trips and most memorable trips was with Robert Friedland, who's another extremely successful and famous mining investor. I've known him since about 1986. And I went to Mongolia to see the Oyu Tolgoi project, which is in the Gobi Desert. I first arrived, arranged to arrive in Hong Kong in early October 2005, I think it was, in order to see the Las Vegas Sands Casino in Macau. I did that because at the time, it was a large position in our client portfolios. And it was important to me to see the transformation that was taking place there. There was an island called the Cotai Strip that was being developed. By the way, that stock has long since been sold, and we no longer have any holdings in the portfolio. Anyway, visiting a company is always advantageous. So I took the opportunity when I was fortunate to receive an invite from the manager Petra Obrachuk to take a personal tour of the facility. And that also included a visit to the architectural layout, which is was in a room... a 12 by 12 room that had the entire on-scale features of what the Cotai Strip was due to look like. And afterwards I toured Macau for a few days on my own. And I joined Robert and the group in Ulanbaatar, which is the capital Mongolia. While the mine itself was still very early in the construction phase, the introduction to the Mongolian culture and history, the sights...it was so fantastic, it's still fresh in my mind. While all the mines infrastructures, by the way, in general are somewhat similar, the settings are quite varied. And it's interesting to see how each one adapts to the local topography and culture and climate. And sometimes it can be quite challenging. Each mine site has to act responsibly towards and work with the local community, environmentally as well. And so the culture and the stories behind each project are very important and unique. For example, Continental Gold recently sold the vertical mine in Medelln, Colombia that was built within a small valley underneath towering mountains, which contain the high grade gold veins with about 14 grams per ton, which is much higher than the typical grades you see in underground mines of about four to seven grams per ton. The infrastructure was very well planned and laid out and it's just a beautiful arrangement. But the differences are quite interesting from 12,000 foot elevations in Chile to the edge of the Amazon rainforest in Brazil. I was in the Chukotka province in Siberia to the edges of the Arctic Circle in Hope Bay, Canada. There have been so many interesting adventures and mine sites with, uh, and traveling with the C-suite professionals, which are the analysts and highly qualified engineers, and geologists, all made these trips very exciting.
James Evenson:Well, you certainly have me beat, I have two mines under my belt at this point in time, one in Australia and then one in the southern Chelyabinsk region of the Russian Federation.
Larry Scharf:Ah, see, I've not been to those two places. You got two up me.
James Evenson:It is fascinating, though, to, to head down into the actual mines and, uh... I was up on some of the the the large equipment that they use in the facilities, but it's absolutely fascinating. And I like what your comment in terms of how unique each one is and how they relate to their the local community that they're that they're amidst. Well, I'm going to ask a rather obvious question of, isn't it rather unusual for a financial advisor to be visiting gold mines? And further to that is why? What are the purpose and reasons for doing so? And what are you looking for when you visit? And then who do you typically travel with and what value do they bring to the assessment, your assessments?
Larry Scharf:Well, uh...Hm. Okay, so yeah, it is generally unusual for financial advisors to go out in the field and visit the mines. During the last bull market, I knew of only four other US financial advisors that went out to site. Most often I'm traveling with analysts from Canadian brokerage firms, and sometimes a few US funds. Since I focus on the junior mining companies - and I'll give a definition of that later - I found that boots on the ground has been one of the best ways to check my estimates of a company. Because I've been in touch with these companies, at conferences and on earnings calls and calls in between, they know me and my interest. So they're happy to invite me to see their projects. Mining companies, especially junior miners, which are most often based in Canada, are usually looking to expand their investor base in the United States. So when on site, I'm looking at the execution of the mine plan, and potential problems that could cause cost overruns or delays. I'm looking to have continued confidence in the management team, as well as the people operating on the ground, which includes everyone from the drillers, to the blasters to the haulers to the crew in the middle. There's usually a full day presentation made on site, which is quite detailed. And though the information is available elsewhere, hearing both the presentations and especially the question and answer period afterward, firsthand, is invaluable.
James Evenson:Excellent. Were you an outsider to the analysts on the trip?
Larry Scharf:Well, put it this way, traveling together, especially to foreign lands, and sometimes they're very creative transportation, creates camaraderie and often leads to lasting friendships. So most of the analysts are quite open and friendly, a few were close lipped, but I was often taken under their wing, and I earned a certain amount of respect, as I was paying for these trips with my own money. And they acknowledged that level of commitment. They were paid to be there in order to write research reports. So I refrained from asking them specific questions about the particular mine or company we were at and therefore they never felt threatened, that I was picking their brain. But I became accepted as one of them. Interestingly, at dinner and afterwards, the conversation about every other mining company, is quite robust. And as we talked about the pros and cons of people and projects around the globe, I found those insights to be the most valuable part of the trip. And otherwise, all I can say is on each and every tour, I made new friends and important connections. And those have been extremely valuable to me throughout my career, in my investment and decision making process.
James Evenson:How close to the vest were they with their opinions?
Larry Scharf:Uh, you know...So you can ask a question about a particular type of ore that might be being presented or kind of equipment that was being used. And they you know, would answer these types of things. You would never ask what they thought of the project or their assessment of the people. Those were the things that were, you know, off limits, and rightly so. So, you know, I can recall really only one quite successful investment group out of the US that, you know, basically, you know, wouldn't answer any questions and that's fine. We still were social and had a beer together.
James Evenson:Well you're, you're rather astute and insightful so imagine you were able to, to gather a lot of information and details to to help you. So when you got back to the office, what did you do with what you'd gathered?
Larry Scharf:Well, most of it was added to the reams of information I keep on each company, and of course, I go over my notes, as some things need to be followed up on, and there's usually more research to be done. This then may lead to making some adjustments in the portfolio, at an appropriate time and price course. However, on rare occasions, there isn't time to wait to get back to the office and, you know, action needs to be taken immediately.
James Evenson:Okay, well, then, let's talk more about gold and silver today. Clearly I have considerable respect for you and your opinions on those particular precious metals. How and why does a person invest in precious metals and then the corollary to that, what are some of the different ways that they can invest?
Larry Scharf:Well, there are various ways to participate in the precious metals market depending on an investor's goals. That could range from preservation of capital to privacy to insurance to gold capital gains. I'll address each of those way to consider investing for each of those goals. I believe that for the preservation of capital against currency debasement, gold has stood the test of time through the century as one of the ways to protect against the government's inflationary practices. And this is also according to many economists, including Alan Greenspan, for example. Gold has also a history of being a more private form of wealth, and physical gold and silver in one's own possession have no counterparty risk, or statement valuing them. For those seeking a form of insurance against a scenario of extreme social disorder, they might want to own widely recognizable and desirable trading instruments. In addition to US dollars. In addition to other barterable items, physical gold and silver bullion coins have enabled citizens throughout the centuries to obtain food and shelter during times of extreme duress. However, those seeking potential profits in the sector would most likely be best served in trading securities markets on the stock exchanges for convenience, low transaction costs, liquidity and potential capital gains tax preference. To be clear, physical metals are not the best method for those seeking capital gains from price changes in the precious metals. As there are several things working against the investor who's tried to trade in physical metals, such as storage and cost of storage, sales taxes, there's no capital gains tax preference for physical metals, as well as your fiscal risk during transportation. On stock exchanges, there are bullion proxy securities. And these theoretically own the physical metal in a storage warehouse somewhere that back these securities. So they'll basically move one to one with the underlying commodity. Of course, there are also the stocks of the mining companies, which are operating businesses with growth potential. Though not suitable for everyone, many investors have found them to be an attractive way to invest and potentially profit from the price fluctuations of the precious metals.
James Evenson:Well, let's move over to the production side. What makes mining stocks interesting for investors?
Larry Scharf:The simple answer is that they have the potential to rise multiples of the percentage of increase in the underlying climb. When one buys a mining stock, one is essentially betting on the rise in gold and silver in this case, with a form of leverage. Not leverage in the sense of the traditional sense of using borrowed money. But, um...by the fact that these companies have a fixed cost doesn't change for the price fluctuations of the commodity itself. So when prices rise, margins expand geometrically. Therefore, if you're correct about the underlying commodity, and then the mining stock can move multiple percentages, for that commodity. In addition, these are businesses and companies that seek to grow, and they're growing their annual production, which means they may also be increasing their sales volumes, and higher margins as prices rise. So let me explain that a little further. First of all, it's very important that investors find companies whose management team can successfully execute. As within any other business, investing in good people is crucial. Otherwise, it's hard to know how much a mining stock can appreciate. But it's based on many factors, including but not limited to the rate of increase of the price of the metals mined, how much growth the company's undergoing, their available free cash flow, and what they do with it. How much growth the company is undergoing, as I said earlier, and what they do with it, their inherent leverage to the price of the metals. For example, let's say the price of gold was$2,000 and the miner is producing gold at $1,000 an ounce. Gold now rises to go from 20 to 20%, let's say to $2400. So the miner's profit now increases from 1000 to 1400, which is a 40% increase, because their costs have not increased. So all those higher prices received as a result, are profits and they drop right to the bottom line. This larger percentage increase in the miner's profit is usually reflected in a corresponding increase in the miner stock price. Therefore, leverage in this case is defined and determined by their cost of production. In addition, the unmined ore in the ground is now considered to have the potential to be sold at these higher prices, potentially increasing future profits even further. Previously uneconomic ore may now have the potential to be sold at these higher prices, also potentially adding profits. So, as a result, the stocks usually move about two to three times the percentage increase in the underlying metals. It's very important for investors to understand that this works both ways. So stocks will also fall two to three times as fast during a declining bullion market. Because this volatility can be quite severe along the way, investors should have strong stomachs and be prepared for deep, rapid declines along even an increasing path. Otherwise, this investment isn't suitable for them and they would be better off in what I mentioned before, the bullion proxy securities, which have far less volatility. To answer your question a little further, one final way... during the last cycle, which started in the summer of 2001 and ended in September 2011. The HUI gold bugs index increased from 40 to 630. About a 15 fold increase. Over the 10 year period. While gold bullion rose from 250 to 1900 over the same time for about a six and a half fold increase. Of course, investing in anything involves risk and you can incur a profit or loss regardless of whatever strategy you select.
James Evenson:Are there different mining stocks?
Larry Scharf:Well, that's a really good question. Yes, there are. While there are various nuances and shades of gray, they are generally broken down into explorers, developers, junior miners, senior miners, and royalty companies. Let's work the list backwards. So royalty companies are the bankers to the mining industry. They lend money to companies - and Franco Nevada is a great example of this - they lend money to miners, and they get paid back in bullion when the mind comes into production, and the miners work with Franco because they don't want to issue debt or they don't want to be overly dilutive to their shareholders by issuing new stock. So they enter into a royalty arrangement with a company like that. Typically, the royalty company, as I said, it's repaid in a steady stream of payments of the mined metals. And this comes back to them at very low prices. The senior miners, which are very, very large producers in, uh, with many mines all over the world with large proven reserves, have the most liquidity in their stocks. And they're typically the favorite of the institutional investors because they have a lot of liquidity for them to buy and sell. The one aspect of the senior miners is they produce 2- 5 million ounces of gold per year and replacing those reserves can be quite a challenge sometimes. So it's not infrequent that these companies will buy their ounces in the marketplace by taking over small and mid size miners that have significant and potentially expandable deposits. This is what makes the junior miners so attractive to many investors. Juniors have several things going for them. They have the excitement of turning a discovery into a new ore body that has the potential to become larger through drilling programs. It can be fast growing by the production of more ounces per year, which potentially means higher future revenue and profits. They have the potential to be bought out by the larger companies that need to fill their pipeline. Again, the value of an experienced company management team can make all the difference in what happens to your investment. Further down the food chain, the developers are those companies that have made an initial discovery of a deposit that will likely become a mine. Some of these management teams progress towards and become production companies. Others are just known as exploration companies and are selling their deposit. And they're not...you know, they don't have a production team in place. They're not operationally suited. Lastly, you have the explorers, which come in many shapes and sizes. And they have no proven reserves, usually just an indication of a deposit. But sometimes they're just what we call "moose pasture," in the right neighborhood. And investor has to be very savvy and know what they're getting into because this arena has many slick promoters and they often just mine investors wallets.
James Evenson:Let's dig a little bit further on that particular topic. Because Larry, you've covered a lot of different types of mining mining companies. And it's going to be a very general question. You probably barely just scratched the surface of it. But what are the risks to...uh... in mining stocks?
Larry Scharf:Well, there are many as with any stock investment, there are huge potential risks with the miners. They [risks] are quite numerous as mining itself is an inherently risky endeavor. Companies have to find the ore, delineate a deposit that they can't see, correctly estimate the cost to determine if they can mine it profitably, obtain permits. Develop treaties with indigenous and local populations, develop community relations programs, they have to order the correct equipment, hire the right personnel and management to oversee those personnel, getting the most efficient and cost effective mining methods correct. They have to worry about rock stability, flooding, they have to control the dilution of the ore to the mill. There are metallurgical surprises once you begin, you know operations in the mill. NGOs are a big risk in funny places especially, labor issues, lack of adequate financing and cash reserve for contingencies. You have risk of equipment failures, availability of spare parts... during the last cycle, you couldn't get replacement tires for your trucks. Those are just some of the risks.
James Evenson:I actually remember that.
Larry Scharf:Yeah....Um...Mark Twain had a description of a goldmine as quote a hole in the ground with a liar next to it. That's tainted the industry for many decades. But these days outright fraud is rare, but it does occur. Such as Bre-x back in 1995 was a famous one. There was supposedly a very, very high grade discovery made in Indonesia. And the price rose fantastically, the stock, and during the bubble the geologist supposedly fell out of a plane, after which the whole thing collapsed. And investors who believed the story lost a lot of money. As usual, it sounded too good to be true. And it was. Also another risk is that the mines are finite. And sometimes there that's sooner than expected. And also, of course, the underlying commodity price could decline and immediately cause the mine to be unprofitable and shut down. Resource nationalism, which is when a local or national government sees the potential profits and gets greedy, often happens in funny places. And there, that's a big risk too, and one that should be very high on the list of investors to minimize. For example, during the last cycle, one of the most attractive new high grade large deposits and discoveries was made in Ecuador, only to have the government get involved and cause the project to be shut down and the shares became virtually worthless overnight. In Mongolia, the government has hampered Ivanhoe's Oyu Tolgoi project development for almost 10 years. So those are amongst the risks that investors should look for.
James Evenson:Thanks for scratching the surface on that. Well, let's, let's move back to gold and silver. Tell us about the outlook for those two products.
Larry Scharf:As you know, James, I can' tell you the future, but I can't give you a little. I wish I could, but I can't.
James Evenson:How many times have I asked you that and I always get the same answer.
Larry Scharf:Well, but according to Metals Focus and Refinitiv GFMS and the World Gold Council, I can quote some of the data they've provided. Previous to COVID, central banks began an unprecedented buying spree of gold bullion starting in 2012. After being net seller since around 1998 or so, in 2018, they bought a record 651 and a half tons, the highest level in more than 50 years, which was then eclipsed in 2019 when they bought 668 tons. The buying came from many countries and though China and Russia were the leaders list included Kazakhstan, India, Iraq, Hungary, Thailand, Mexico, Turkey, Poland, and some others. And some of these countries we... have not been seen in the marketplace before. Who knows why they were such large buyers. Some speculate that they were hedging against the future dollar decline. Since so many dollars were printed during the great financial crisis. There are many theories. But the central bank certainly were concerned about something. Demand was also strong at the retail level and 2019, US minted Gold Eagles were constantly being sold out. And dealers reported that it had become very difficult to find adequate supplies of gold bullion coins for investors. And by the way, this was true the following year, and again and in 2021, also, now layer the response to the economic repercussions of the COVID shutdowns on top of that. How many dollars, how many trillions of dollars have been created out of thin air so far, six or 7 trillion. And I'll remind you that a trillion is a million million. This is the very definition of inflation. Diluting a currency makes it worth less. Gold is historically one of the benchmarks that paper currency is valued against. Many analysts, some from major Wall Street firms, have suggested that a potential of $3,000 per ounce is possible during this cycle. That level or higher, would not surprise me at all. After reaching a new all time high of $2067 on August 7 2020, it has been trading recently around $1750. The uptrend in both gold and silver that began in October 2019 is still intact, and real interest rates are still negative. That's a huge tailwind for precious metals. And also the Fed has indicated that they will allow inflation to run above target. Maybe they believe that they can put the genie back in the bottle once they let him out. I don't know. By the way, two items that often signal a top are absent today, namely investor sentiment, which is nowhere near a manic stage. And there are no parabolic curves on the charts. Other commodities, by the way, have been rising too, such as copper tin, iron ore, often which accompany a bull market in precious metals, which is what the steadily rising price of TIPS, which are Treasury inflation protected securities, are telling us. All of this would suggest the potential for increasing demand in the marketplace as investors look for safe havens and therefore more potential for increase than decline.
James Evenson:How will one know when to sell?
Larry Scharf:Hmm. Well, if one can correctly determine that it is still early in the trend, then one can accumulate on weakness, on dips. One rarely knows a top until after it's occurred. So let me kind of answer this partially by describing an investing and selling method. As an uptrend continues, there will of course be short term dips, medium term dips, and sizable corrections. If you decide that the price of bullion has not yet reached a reasonable final target that you've estimated, and there is no mania in sight yet, and the shares of the miners also if they've not moved in a manic way, one should probably continue to hold through all these dips, and cautiously buy into them. A sharp trader may be able to sell some of the positions prior to some of these deeper corrections. But that's of course very difficult to do and has tax consequences. Anyway, after the trend has continued for some time, and the prices have progressed, um...one may estimate that at that point in time that prices and values are no longer cheap enough to make a significant gain if the final targets are reached. So at that point, the correct strategy is to begin selling and selling small portions on up thrusts. And being satisfied with the profit because the proud of the knowing you know, the top is still ahead of you. And in this way, one takes money off the table, you lock in gains, while the larger portion of your money is still invested, and you realize actual success. And you reduce risk at the same time. You've also now increased your cash position, which you can now begin investing in new areas that are undervalued. As far as identifying when to sell the precious metals markets, similar the markets tend to go to overbought extremes. After which the bear markets were often quite vicious. They're not known for staying at elevated levels after a major run. So signs of an upcoming top are often similar as in other markets, where by you see more frequent news in the media. You see more broker reports on gold and silver and more outlandish predictions of where the price highs eventually are going to be. You see more ads on TV about how to buy gold, you also possibly will hear cocktail party talk about how much money somebody made in the market and metals related conferences get fully attended or become sold out. Price moves become parabolic on the charts. And you can see that in either or both the bullions and the mining stocks. Sometimes, the metals are leading the shares higher and at other times the shares are leading the metals higher and discerning which one is telling the truth is also very key to understanding where you are in the market cycle. In the year, for example, in the year 2011 bullion went for a final run from roughly 1450 to 1920. During that time, the HUI gold bugs index only increased from 600 to 620. Gold bullion saw its final high in April and the mining shares at that point then basically went sideways until December where they began to collapse. The shares had anticipated gold's high by several months. But hope lingered on and distribution of all those mining shares took up most of the year. By the way, the bottom of that cycle and subsequent beginning of this cycle wasn't reached until the end of 2015. Four years later. So, nuts and bolts, the bottom line is averaging out can be an effective method of selling when prices are looking kooky, similar to the wisdom of averaging.
James Evenson:Thank you, sir. You know, you referenced several other precious metals a few minutes ago and my mind is gravity gravitating towards the fact that there have been a lot of precious metals in the in the news, or hype about such metals in the last few years. Would you care to comment on the outlook for some of these metals,
Larry Scharf:I can't really give you much informative commentary, as I've chosen to focus on precious metals almost exclusively during this cycle. If you look at the commodity indexes, published by Incrementum AG or Bloomberg, you'll see that they're at quite a low compared to past levels. It stands to reason that other commodities may be moving in tandem with precious metals. In fact, many commodities from aluminum to zinc, have been reaching new recent highs. The battery metals have had lots of hype for various periods. And, you know, some of those who have come alive recently. Uranium is in the news too, though, the politics behind that are quite noisy. Copper is frequently in the news due to the high demand coming from the electrification of virtually everything. So that's as far as I can really take you on those at this point in time.
James Evenson:I've personally seen the growth of copper in the region of the world where, where I'm actively involved. Well, I just have one last question for you, Larry, and this is my favorite question to ask people and particularly for you. So I'm going to give a little background context. And that is we've known each other for I think about six years. We first met in Medelln, Colombia six years ago. We...I feel very fortunate that we have shared meals together - you, your wife, Fran, and myself - many times on at least three continents. I think our last dinner together was in Budapest. And anyway, I have great respect for you and for your wife. And I also think of you as a very passionate person. In all of life, you've demonstrated that in what you've described to us so far in this podcast. So my last question is, what are you passionate about Larry?
Larry Scharf:Well, my family, my profession, helping people reach their financial goals, is very important to me. But also, in no particular order, I enjoy travel and adventure greatly. And all the experiences that go with that - the sights, the people, the great new foods. I enjoy music, both playing and listening. I appreciate the artists behind and the beauty of certain collectibles. Within my work, I love all that comes with investing in precious metals related investments, the beauty and history of rare coins, discovering new mining stock ideas, and talking about and educating people about the risks and rewards and merits of the various ways of investing in precious metals. Alan Greenspan had a famous quote that reflects part of the reason why I'm so passionate about precious metals. And I'll leave you with this. "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights." End quote.
James Evenson:Quite a quote. Well, Larry, thank you very much for sharing your insights and your time. And I wish you good luck in the markets.
Larry Scharf:James, thank you so much. This was a pleasure to speak with you and answer your questions. If anyone has further questions, please have them reach out to me by phone at 203-635-5409 or email at Raymond James. lawrence.scharf@RaymondJames.com, or by mail at 285 Riverside Avenue, Westport, Connecticut 06880. I have to mention a couple of quick disclaimers. Raymond James and Associates is a member of the New York Stock Exchange/SIPC. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Gold subject to special risks associated with investing in precious metals, including but not limited to price may be subject to wide fluctuations, the market times may be relatively limited. Some sources are concentrated in countries that have the potential for instability, and the fiscal gold market is unregulated. The HUI gold bugs index is an index of publicly traded gold mining companies that is useful for tracking prices. Keep in mind that individuals cannot invest directly in that index. Treasury Inflation Protected Securities or TIPS adjust the invested principle base by the CPI-U at a semi annual rate. The rate of inflation is based on the CPI-U which has a three month lag. Thanks again, James. I appreciate having this opportunity to speak with you today.
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