Episodes

Dan Ferris: Hello, and welcome to the Stansberry Investor Hour. I'm your host, Dan Ferris. I'm also the editor of Extreme Value and The Ferris Report, both published by Stansberry Research.

Corey McLaughlin: And I'm Corey McLaughlin, editor of the Stansberry Digest. Today, Dan interviews Keith Neumeyer, president and CEO of First Majestic Silver.

Dan Ferris: And for today's rant, we'll talk about layoffs, more and more layoffs, and we'll also talk about the insanity that has become Bed Bath & Beyond.

Corey McLaughlin: And remember to e-mail us at [email protected] and tell us what's on your mind.

Dan Ferris: That and more right now on the Stansberry Investor Hour. OK, so a couple of shows ago we did talk about some of the data that we got off of Layoffs.fyi, and it's basically just like a tech route of layoffs, just tens of thousands of people. I don't even know what the total is up to now, but at big companies – Meta, Google, Amazon, everybody just laying people off, Salesforce.com, and that's not done, is it? It's still moving.

Corey McLaughlin: No, the latest one that I am looking at and just heard about was Yahoo, the old search-engine giant from eons ago. But they laid off 20% of their workforce, which is about 1,600 people. But still, that 20% number gets you and kind of shows you, you know, the impact that companies are dealing with right now.

Dan Ferris: Yeah, it does. You're probably not addicted to Twitter the way I am, but recently it's been really buggy. And of course Elon Musk laid off like half the people, [laughs] and now finally, you know, it's starting to have these problems. Like you go in every now and then and I'm told that I can't Tweet anymore because I've reached my daily limit, and the daily limit is something like 2,400. I'm not that crazy.

I don't do 2,400 a day. So I know that it's buggy, and I did some Googling and stuff and there are systems problems. I'm like, Elon, did you fire the person who takes care of this part of the system? I wonder about all of these things.

Corey McLaughlin: Likely, yeah. Very likely that he fired or they quit. What was it? Like 75% of their staff is gone, so it's –

Dan Ferris: It's crazy.

Corey McLaughlin: There's really no way – yeah, Twitter. That's more of a – I'd say that's less of an economic-caused problem. That was more self-inflicted.

Dan Ferris: Sure.

Corey McLaughlin: I think Twitter has been struggling as a business for a long time, and Elon just is lighting it on fire at the moment.

Dan Ferris: Absolutely.

Corey McLaughlin: But yes, point taken. That one's a little different to me than Yahoo, which I haven't honestly thought about Yahoo in a very long time.

Dan Ferris: I know.

Corey McLaughlin: Yeah. These layoffs are piling up, and honestly if Twitter went away, you know, [laughs] –

Dan Ferris: Yeah, so let me ask you this.

Corey McLaughlin: – tomorrow, I think I'd be OK with it actually. Yeah.

Dan Ferris: I know. Yeah. If I could never log in again, I'd be like, thank you, thank you, Lord.

Corey McLaughlin: Yeah.

Dan Ferris: But let me ask you this. So these tech layoffs, it seems like there's a new one every other day of some size, but then you get these big ones every now and then like Yahoo's the latest one. So it kind of makes me wonder about that last Jobs Beat. It was like 8 sigma off the charts. They were expecting like 187,000 or something, and it was like 500,000 new jobs.

Corey McLaughlin: Right.

Dan Ferris: OK. There's some reopening effects maybe still in play, but that much with all those layoffs happening? Who's getting hired? I don't know. It seems strange to me now.

Corey McLaughlin: And we got some good data this week from our NewsWire editor Scott Garliss who basically showed that the data was revised throughout the year, or from the numbers throughout the year. The population estimate increased by almost 1 million people and along with the civilian labor force by 871,000 people. [laughs] So that increased the numbers significantly or skewed the numbers in that year for January, so it took the revisions from last year. So basically maybe we shouldn't get all worked up by that January data.

So to me that says, yeah, these layoffs are happening in tech and the labor market is weakening a bit still to maybe – this is more of an outlier jobs report than anything, so we'll keep an eye on those going forward.

Dan Ferris: OK. Boy, I hate to sort of rain on our own parade here, but I forget what I was doing recently, and the thought popped into my head like, why do I pay attention to all this picayune economic data? Is it really telling me anything and does it really have a chance of changing my view that the biggest mega-bubble of all time just burst? And it's still bursting. We're still closer to the top than the bottom of it.

You know, I don't know. I have to wonder. An example – let me give you an example of what I mean – this Bed Bath & Beyond thing. By all reason, that company should've been bankrupt by now, right? It should've been bankrupt. The stock is worthless. And yet, it recently soared 100% in a single day. And it just so happened the very next day they were able to basically raise $1 billion.

Now they didn't raise $1 billion right away. It's like $300 million upfront and then $800 million later on, something like that, but the fact that they're able to do it at all is crazy, and I think the only reason they could do it is because all of these crazy meme stock people have just run the volume up in the stock and the market cap is much higher than it would've been, right? So you look at this episode and then I have to ask the Fed has tightened? They've tightened faster than ever in their history? This doesn't look tight to me. This looks like the biggest mega-bubble in history is still sailing on. I mean, I don't know. Help me out here, I don't know.

Corey McLaughlin: Well, yeah, I don't think you need much help. You got to figure it out. I'm the wrong person to ask about these sort of things because I have moved past GameStop and all of that stuff. It was fun for a little bit, but personally I've moved past it, so I'm too rational sometimes to get involved in the stories themselves. I don't blame you for writing about it and talking about it though because it is, and it does fit with this boring jobs data too.

These layoffs are happening in tech, but overall the unemployment rate is still at like a 50-year low and you've got Bed Bath & Beyond on its last fumes and still getting attention and money. Yeah, we're not in the bottom of a recession, I don't think, so yeah, there's still a lot – you know, like we've said, I think this bubble, you can see it on a lot of charts, and you just wonder how those charts are going to look five or 10 years from now. At least I do. How long does this deflation ironically of the bubble kind of last and how long does it need to take I guess is the question.

Dan Ferris: Yeah. And all of these things, people look at historical averages, the average length of a bear market and all this stuff, and I don't want to say it's different this time, I never want to say it's different this time, but my point is that really it's not different this time. Because when you've had this past huge mega-bubble events in 1929, March of 2000 for Nasdaq, Japan 1989, the markets went sideways. You know, the affected markets went sideways for years afterward.

So I think it's reasonable to expect the same thing this time. But again, the key insight there, you have to agree that it was one of those massive mega-bubble events. If you don't agree with that, then you're going to be sitting here looking for the bottom and thinking, well, you know, when's the new bull market going to start? I've got to check my watch here. Has it started yet?

You know, your mindset is going to be completely basically opposite of mine. Mine is like not where's the bottom, but how do we get through this next potentially 10-plus year slog of flat returns in stocks? What do we do? This is different. It's different than the last 15 years.

The next 15 is different than the last 15. Nassim Taleb said, and it was in a Bloomberg interview recently, and he said, "Disneyland is over," right? [laughs] The next 15 years will not look like the last. And to me that's the reasonable paradigm. That's the one where you say, OK, it's not different this time. You know, I can be wrong, but that's –

Corey McLaughlin: Well I would say, you know, even if you are wrong or even if somebody doesn't agree with that or think that's going to happen, you could still consider it and prepare for it. Why would you ever think that the past performance does not guarantee future results, you know? Don't assume that. It would be nice if you had another record-long bull market starting right now.

Dan Ferris: Oh, I'd take it all day long.

Corey McLaughlin: Yeah. [laughs]

Dan Ferris: Yeah. Bring it. Hey, I can be long stocks again in a big, bad way. And we're long all the time. We find things all the time in Extreme Value and The Ferris Report, but they're different things now.

Corey McLaughlin: Right. And with interest rates already above their previous cycle peak, things are already different.

Dan Ferris: Right.

Corey McLaughlin: So that's different and that's a big difference. It's not the only thing to look at, but it's a big difference. Again, personally I'm great with a little higher interest rates and able to put my cash into stuff that'll just generate small, relatively not-risky amount of return, but a return. You know, inflation is still eating away at it, but inflation's always going to be there so you've got to keep pace a bit how you can. Personally, I'm OK with the higher-interest-rate environment, but I know not everybody is.

Dan Ferris: Oh, sure.

Corey McLaughlin: If you're taking out loans and that sort of thing, that's not the greatest for you. But my point is as long as you kind of recognize the environment that we are in now, you know, who knows what's going to happen, but we are in now, and just go with it.

Dan Ferris: Go with it, yes.

Corey McLaughlin: Go with it.

Dan Ferris: Recognize the environment and go with it. [laughs]

Corey McLaughlin: Just roll with it.

Dan Ferris: I like that.

Corey McLaughlin: There we go. Very profound words.

Dan Ferris: Yeah. Like my original point though, I was like – I mean, I certainly pay plenty of attention to this data. I feel like I can't look away, I can't not pay attention to it. So I will continue to do so, but I'll question what I think I'm doing every time because my thesis hasn't changed.

Corey McLaughlin: Yeah. I don't think you ever want to – I try not to look too much at one single data point and make too much of it. In the spirit of Jerome Powell, I think about a couple months in a row before saying anything and then be very slow and deliberate. [laughs]

Dan Ferris: Right.

Corey McLaughlin: But in the spirit – he has got the right spirit there. You've got to let these things play out a little bit.

Dan Ferris: That's right. If you're the kind of person who wants to follow a trend or, you know, if you're like Steve Sjuggerud, he likes stocks that are cheap and hated but in an uptrend, so that requires some patience and some confirmation from the market. That's not really how I roll, but I think a lot of people have that basic idea. They want to see how it goes before they commit, and I think it's a typical sort of human thing.

I almost called it a foible, but I don't know if it always is because I'm sure plenty of people – I know Steve. Sjuggerud has made plenty of money doing that, so no worries. Wait and see.

Corey McLaughlin: Different strokes for different folks.

Dan Ferris: Yep. All right. Well, on that note, let's go ahead and talk with Keith Neumeyer who I finally get to talk with Keith Neumeyer. I've been trying to meet this guy at conferences and various places for like 10 or 15 years, and finally he and I are going to speak.

I look forward to doing so because he is one of the absolute tippy-top people in the mining world, and there are a lot of people in the mining world that you should not talk to. Fortunately, Keith is one of the few that you must talk to, and we're going to do that. Let's do it right now.

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Keith, welcome to the show. Good to have you here.

Keith Neumeyer: Dan, it's nice meeting you for the first time.

Dan Ferris: Yeah. Yeah, we've almost crossed paths several times over the years I know at various mining events and things, but here we finally are, so it's good to finally talk with you. And of course, I've been kind of interested in talking with a lot of people in the mining industry lately. I keep hearing things like, you know, commodities are as cheap as they've ever been, for example.

So I want to talk to all the folks like you who have founded and who run mining companies. Of course, you run First Majestic. You guys produce, what, silver in Mexico and gold in Nevada?

Keith Neumeyer: And some gold in Mexico as well.

Dan Ferris: Yeah. But the decision – the first thing I'm wondering about is why silver? You know, First Majestic – the ticker symbol is AG, so you guys are well known as a big silver producer. Why silver? Why wouldn't you go into some other metal?

Keith Neumeyer: Well, I came from a copper company. I put together First Quantum Minerals back in 1992. And before 1992, I was in a high technology company, and so I was really – you know, I had never been – I'm not a geologist, so exploration to me is like going to a casino in Vegas. Not that I haven't made money on exploration stocks, and of course exploration is very important for mining companies, it's just for me, I want to be in revenue as quickly as possible because I don't want to be spending five or 10 years trying to develop a resource or trying to permit an asset to get into production. So I started a copper company, we were in production in Africa.

I was in production within a year or two after me founding that business, and it turned into quite a successful venture. I left First Quantum in 2000 and I put First Majestic together in 2002. And coming from copper, you know, copper is a very important industrial metal, and coming from a high technology company prior to that, you know, revenue is important to me. So I didn't want to become a gold exploration company.

I didn't want to become a gold company because there are just so many gold companies out there. I looked at the silver space. I was actually quite enamored by it and I just couldn't believe that silver was trading at $5 an ounce. I just bought a cell phone a few years earlier and I got a laptop, and I remember buying my first computer, and this kind of ages me a little bit, but fax machines and all the other different technologies that we started to adopt as a human race in the mid-'80s and beyond.

I just kind of put two and two together and I said, well, it's just not copper. You know, copper is the highway. We need that, of course. But silver is the glue that holds everything together, and without silver, none of this stuff is going to work. And there were no silver companies out there. I looked at the supply and demand fundamentals of silver and I was just amazed by it, so I put together a silver company.

Dan Ferris: Right. And when you said none of this stuff is going to work, this stuff being – usually when people say that to me, at this time as we speak in early 2023, they're talking about electric vehicles and everything else that is alleged to be environmentally friendly.

Keith Neumeyer: Well, of course, it's all that, but even go back before we started talking about the Green Revolution. You know, what about your refrigerator? What about your freezer? I remember during COVID in 2020, I was talking to my traders in New York who I deal with selling silver, and the demand from silver from the freezer-manufacturing companies just exploded because everyone's at home and they're all out buying meat and filling up their freezers, and everyone went to Costco and wherever they went to buy freezers. The freezer manufacturers in the United States had a heck of a time keeping up with it because they couldn't get the silver.

I hadn't thought of that actually, but that's what this fellow told me. And whether it's toasters, whether it's automobiles, you name it, your iPhone, your iPad, your computer, all these gadgets that we rely on a daily basis, including this call we're having right now, wouldn't happen without silver.

Dan Ferris: OK, let's ask harder questions now.

[Laughter]

I write two newsletters, and in one of them, I've told my readers that we're probably never going to recommend a mining company because it's just a really – to be fair, I've recommended royalty companies and asset management companies focused on resources, but never a mining company because you know the complaints, right? Highly capital intensive, highly cyclical, possible political problems depending on where you're mining.

Keith Neumeyer: For sure.

Dan Ferris: The list is long – unionized workforces, expensive workforces, just armies of people and extraordinarily expensive machines, and the list goes on and on and on.

Keith Neumeyer: Very cash-intensive business.

Dan Ferris: Yeah. So what can you tell a guy like me? You know, I want to give my readers some good news because I think we could be on the cusp of a serious cycle here and I want to have something good to say about some mining companies. So what have you got?

Keith Neumeyer: Well, look, I can tell you the mining sector is likely the most difficult sector in the world, and we could talk for hours. You mentioned a lot of great highlights and pointed at a number of challenges that the mining sector has, and of course – you know, I like challenges and, sure, it gets frustrating sometimes and people in the mining sector, you know, these are some of the most patient and stubborn, of course, individuals that are in business. Because from discovery to production, you know, you could be talking about 10, 20, 30, 40 years, and a lot of people just don't have that patience. But I've made quite a significant amount of money over the last 35 years in the mining sector, and sometimes I hate it because it absolutely drives me crazy.

But this is my career. I've been doing it for a long time and I think the mining sector brings a huge amount of value to the human race. Without mining, we couldn't do anything really. You know, we'd be back in caves. All the stuff that we take for granted, you know, the things behind me in this room, the things behind you in your room, where you're living, and all the things you use every day, we all use every day, just would not simply be there and we wouldn't be comfortable in our own shoes without mining.

Dan Ferris: Sure.

Keith Neumeyer: So I'm proud of the mining sector, I'm proud of what we bring to society, it's vital, and I'm happy to be a part of it. But yeah, there's tons of challenges. From an investor perspective, because we can talk about the importance of mining all day long and have our debates, but from an investor point of view, if your audience is wanting to look at the mining sector to make investments, as you say, we could be going into another bull market, which I actually think we are. I look at today like 2000, 2001, 2002, when the Nasdaq peaked out at 5,000 in March of 2020 and over the next 12 years gold went from $250 to $1,900 and silver went from $500 to $50.

We had a huge bull market that lasted 10 years. A lot of people made a lot of money. I think we're going back into almost an identical setup. But for investors, they have to look at management teams first. So don't get sucked into a promoter that is saying he's got the best thing since sliced bread, because there's a lot of slick guys out there, and any bull market a lot of used-car salesmen end up showing up in the space and sucking a lot of money out of unwitting retail investors' hands thinking that they're going to make 10 or 20 times their money or whatever the case may be.

But always look at the management. Go to the websites, look at what have these people done. Have they made money for investors in the past? Are they 25 years old and this is their first company that they're starting? Be cautious, OK? Are they 50 or 60 years old and they've created a couple billion-dollar companies and made a lot of people a lot of money?

OK, well then at least you've checked a box and your likelihood of making money on that individual or that group's next company is more likely than not because they're not going to float some company that's going to fail particularly late in life. Why does someone in their 50's and 60's want to bring a failure to the market? That's very, very unlikely. So be very aware of that.

Secondly, look at jurisdiction. Jurisdiction is very important, as you pointed out, about political risk and so on and so forth. It's big. And in the mining sector, it's getting harder. So in places like Nevada, Arizona... even Mexico's getting more difficult, but we've been in Mexico for 20 years and we know it quite well. But I would not be going into Peru, Argentina, Bolivia. You know, these places I would just avoid like the plague. China, Russia, even some of the Canadian provinces.

I don't like British Columbia particularly, even though other people think BC is a good place. I find it challenging. Ontario and Quebec are great jurisdictions. So no, just look at jurisdictions is important, and then look at the asset. A lot of people aren't geologists, so they're probably not qualified even to really look at the quality of the asset and understand whether it's economic or not.

Dan Ferris: Right.

Keith Neumeyer: I looked at some drill results the other day on this junior that I own, and the drill results showed 10, 12 grams gold intersections over 10 or 20 meters, which is actually not bad, right? But I looked at the depth. It was 1,500 meters under the surface of the earth. I'm going like, what? Give me a break. This thing will never be in production, and if it is, it's going to be way, way into the future.

You need $5,000 gold prices just to make something like that even economic. And I own another company that's drilling right now. You know, it has half the grades as that company but the mineralization starts to surface and goes down 500, 600 meters. OK, so that's super easy to get to and super cheap to get to. So, you know, these are things that investors just have to do some research about and maybe ask around among people that know the sector a little bit better.

Dan Ferris: All right. Are you sort of committed that you're only going to wind up operating in Mexico and Nevada, or are you sort of thinking about the company in 10 or 15 or 20 years and looking at other jurisdictions?

Keith Neumeyer: Yeah. Well, this year is our 20^th year, and we started in Mexico back in 2003. I like Mexico a lot. If the right asset came up tomorrow and it met all our M&A criteria, we would have no problem buying another asset in Mexico. But we're spending most of our time looking at assets in the United States. We like Nevada quite a lot.

We just bought, of course, a mine in Nevada. We're focusing on silver, we're a silver company, but we are producing more gold than we've ever produced in the company's history. We want to get that kind of leaned a little bit closer to silver, so we're struggling a little bit trying to find a really good, nice-sized silver mine or silver asset. Arizona is interesting... Idaho. These are mining-friendly jurisdictions and we're scouring the databases.

We're also looking into Quebec and Ontario. These are interesting jurisdictions for us. We've got some eyeballs on Australia and some places in Europe as well. So, you know, we're constantly looking for ideas.

Dan Ferris: OK. And you've mentioned – just a moment ago, you were saying most people, they don't know how to look at drill results. Mining is so technical. The average investor looks at it and says, I don't know, I don't know if this is good or not. So I wonder if we could help our listeners get a little bit closer.

According to your website, you have four producing mines, and so maybe – I wonder if you could kind of either outright just kind of sell me on what's great about these mines or just tell me is there a list of a few things that an investor could sort of – a new investor, like a novice mining investor could sort of learn to identify as favorable characteristics? You know, outside of the things that we just – the jurisdiction and so forth that we've already mentioned.

Keith Neumeyer: Yeah. Well, you know, I can't overstate the importance of jurisdiction, so that's obviously No. 1. But grades are also very important. When you talk about grades, it comes down to metallurgy as well, and then we're getting a little bit deep in the weeds here.

Dan Ferris: Oh, yeah. I knew we would. [laughs]

Keith Neumeyer: Yeah. Metallurgy is so important. For example, if silver has got – you know, you're drilling a hole and you hit silver, from a geology point of view, you're going to get super excited and say, oh, we hit some metal and, oh, look at the grades, you know, 200, 300 grams of silver, which is anywhere from seven or eight ounces to 10 ounces of silver per ton, which at 10 ounces at today's prices, that's a $240 rock per ton basis, and you need to extract that ton of ore depending on how deep it is into the earth's surface. And this is where we get to depth again.

If it's an open pit mine, if that ton of dirt, rock is sitting right on surface, it might cost you $15 to mine it and process it, right? Deeper it goes, the costs go up. So in an underground mine that's – and these are just numbers on the back of an envelope, OK? Don't hold me exactly to these numbers. I'm just trying to give you kind of a guideline.

Dan Ferris: Got it.

Keith Neumeyer: So you're down, call it, 300 meters, and so your costs per ton are now $70 all in – extraction, production, from the time you pull that rock out of the ground to the time you get a block of silver is $70. So you're still making good money, right? Because your rock is worth $240. As you go deeper, your costs go up.

Then you get into metallurgy. So we're assuming if you've got 10 ounces of silver in a ton of rock, and silver is trading at $24 an ounce today, you get 100% of that silver out of the rock, and that's what you call metallurgy, OK? You never get 100% of the metal, right? There's always something there to interfere with that.

Because Mother Nature is very complicated, and to extract that you've got to use all kinds of chemicals and blah, blah, blah to get that metal out of that rock. Now the second you add anything else, like copper, it gets complicated, because copper is going to interfere with your recovery of silver, and the silver is worth way more than the copper. So you want the silver.

Copper is important, but you would rather throw the copper in the garbage, into the tailings dams, to get as much silver as possible, right? Lead's there, zinc's there. It gets way more complicated. And Mother Nature, when you drill a hole, you get often a bunch of different kinds of metal in your rock, in that ton of ore, and the recoveries ratchet down. So all of a sudden, you know, as an investor, you're looking at a mining company, one of the things you want to do is see what their recoveries are.

You'll see if it's a complex ore body, you know, that's got silver, copper, lead, and zinc in it, it's not unusual for them to only be getting 60% of that silver, maybe 70% of that silver if they're lucky. And the lead and the zinc are worth nothing to them. It's going to the tailings dams, it's going into waste, and the copper is likely – because of what they have to do, is if they're going to extract it and it has to be a huge ore body – like if you got one of these big, huge, porphyry mines in Arizona where you can build a 100,000-ton-a-day operation, OK. You're a Freeport-McMoRan and you're going to build a $1 billion mill to have multiple circuits where you're going to throw this rock into multiple circuits to get your copper, lead, zinc, and silver out because you got this huge ore body that's going to last 50 years and you're willing to just spend the $1 billion on the mill to get all these metals out.

But that's not very common, right? Most of these junior mining companies that we're dealing with, including First Majestic, we don't have any big mines like that. Our mines are a good size, but they're not that large. So we're producing 3,000 tons a day through our largest two mines. And at 3,000 tons a day, you know, you start throwing some difficult metallurgy or some more difficult metals into that mix and all of a sudden the economics get thrown out because you've got the one circuit that's designed to pull the silver out and the silver and the gold come together.

So you pull the silver and the gold out. You don't have a circuit that pulls the lead and zinc or copper out. All that goes into the waste dump, into the tailings, because it would just cost you way too much money to build circuits that pull all those other metals out. But to my point, metallurgy is very important because all those metals that you're throwing into the waste dump interferes with your recovery of gold and silver. Hopefully that wasn't too complicated. [laughs]

Dan Ferris: That's OK. I always assume that the listeners are taking good notes.

Keith Neumeyer: OK, OK.

[Laughter]

I tried to avoid getting too deep into the weeds, but it's kind of hard.

Dan Ferris: Sure. Yeah. All right, so I do want to talk about silver prices. Our listeners are going to be sitting here saying, is silver going to go up soon? You know, that's what they want to know, right? Is silver going to go up soon?

Keith Neumeyer: Yeah.

Dan Ferris: How much? And my observation just generally over just investing in various things, including mining companies over the last 30 years, is that silver is kind of a strange animal because when you look at a long-term chart of it, it's very spiky. It seems like as an investor, looking at that chart, I think, well, I guess I just always want to own some silver or some silver equities, and I want to look for those spikes and sell into them. That's my big strategy. How does that sound to you?

Keith Neumeyer: Well, you know, you would've been right, I suppose, so that was probably a great strategy, and I don't blame you for doing that. I do that myself. You know, I trade this market – not for Majestic because I can't really trade for Majestic, but I'm in this business, I know it quite well, so I'm always looking at juniors and trying to make a little bit of money on the side by investing in some of these smaller companies. And yeah, you've got to – you know, these things will spike and all of a sudden silver, gold, whatever, uranium, whatever the commodity is that you're trading, the stock will go up 300%, 400%, 500% sometimes, which is fantastic, and that's what the mining sector can do for you if your timing is right.

But you have to be smart as an investor. You know, if you're up 300%, you better be selling some. If you don't, you're an idiot.

Dan Ferris: [laughs] All right.

Keith Neumeyer: So if you're up 500%, I would suggest you're out of the stock completely. I know some people want to wait for that 10-bagger. Ten-baggers don't come very often. They're very, very rare. They do come, but often, a 10-bagger happens so quickly that you might be lucky enough to hold onto it and actually make 10 times your money, but don't wait for that.

Take these profits. When you're investing in these stocks, these mining stocks, you scale in when you're buying and you scale out when you're selling. It's as simple as that. You have to do that because this industry is so speculative and it can move so quickly in either direction, either up or down, and you've got to be there to take advantage of it. It's a challenge.

But when it comes to silver prices themselves, look, I'll give you some fundamental numbers. It might shock you a little bit. So the solar industry in 2022 – now we don't know the exact numbers yet because they're still being compilated, but we're estimating that the solar panel industry consumed 140 million ounces of silver in 2022.

Dan Ferris: Wow.

Keith Neumeyer: We think the electric-car industry consumed around 90 to 100 million ounces of silver in 2022. So there's two industries that consumed around, call it, 250 million ounces of silver thereabouts just for a round-number perspective. The total consumption of silver in all industries in 2022 we're thinking is going to come in at – the lowest is 1.2 billion ounces or it could be as high as 1.4 billion ounces of consumption. The miners, and of course we don't know the number yet, but we think the miners produced at a low side 800 million ounces, high side 825 million ounces.

So you're in a market where the miners produce 825 million ounces and the consumers consumed 1.2 billion ounces. You know, interesting supply and demand fundamentals, right?

Dan Ferris: Right.

Keith Neumeyer: In 2023, estimates are solar panels are going to consume something in the order of 160 million ounces of silver and electric cars are going to break through 100 million ounces of silver. The miners aren't going to produce any more metal. The mining sector is at its limit. It can't produce more silver, so the mines aren't there, the permits aren't there. You're talking about drilling, discovering, permitting, building. This is a long, long process.

Dan Ferris: Decades, yeah.

Keith Neumeyer: Yeah, yeah. So there's 800 million ounces – even if the mining sector could produce 900 million ounces, which they've just never done, the peak of silver production was in 2016 – or pardon me, 2015 – and it produced 880 million ounces of silver. And that was because a couple mines came on line and so on and so forth, but it's never hit that number since. During COVID, it dropped all the way down to 740 million ounces because of all the shutdowns.

So we're struggling as a sector to get our production up, and in a huge environment of demand, the miners just can't fill that demand. So where is the silver coming from? It's coming from hoards, it's coming from wherever it's coming from. It's being found somewhere. But there's not an end – or pardon me, there is an end to the supply and it's going to affect prices in a dramatic way. I did come up with the phrase, you know, triple-digit silver about 10 years ago and people laughed at me when I coined that phrase.

And now the last couple of years I've had a few people join me with that prediction, so I think eventually I will be right. Hopefully I'm alive when it happens.

Dan Ferris: Well, I hope that I'm alive when that happens, and I will be selling aggressively into that. I can't wait. I hope you're right.

Keith Neumeyer: And you probably should.

Dan Ferris: So let's call silver like I'm looking at $23.70 bid, $23.80 ask. Just for round numbers, let's just call it $24. It sounds like you're telling me more silver isn't coming on line. Is $24 not enough of an enticement for new production to come on line or no?

Keith Neumeyer: Not even close.

Dan Ferris: Not even close.

Keith Neumeyer: So when silver hit $50 back in April of 2011, recycling in 2011 hit 250 million ounces. In 2022, I don't know the exact number yet because they're not public, but I would bet you that the recycling was somewhere around 125 million ounces of silver, because 2021 was about that so I wouldn't expect 2022 to be much different. So the purpose of me mentioning that is, you know, so the households – where did all this silver come from? It came from little old ladies' silverware really, you know, quite frankly.

Households started bringing all their silver into the system for melting down and selling, and so recycling spiked. It doubled in 2011 from previous levels. That's not going to happen again because all that silver is gone. It's already been melted. All that silver has been put into industry, put into automobiles, put into computers or wherever the heck it's gone. So, you know, the industry believes, and I'm a believer in what I'm about to say, is that you would have to probably see $100 silver for the same phenomenon to occur.

Because I can tell you – like this cell phone here, this is an iPhone, and there's about $3 to $5 worth of silver in this thing. And these companies are very good at making it very difficult to get this metal out of that iPhone. It's so expensive. There's not a technology yet that's economic to pull all the precious metals out of this thing. Every company has gone bankrupt trying to do it. You know, the Chinese used to take all this computer waste up until January 1, 2020 – or it could've been 2019. You might want to check that.

They stopped importing electronic waste from North America. So us as North Americans used to just send all our computers to China and they would put it in huge ovens and melt it down and extract all the copper, gold, silver, lead, and zinc and all the other metals that were in the darn thing, but it was creating so much pollution in China that the politicians said, "Hey, we've got to shut these things down," and they shut 17 smelters down in '19 or '20 that their only business was burning computer waste, and they were getting it from Europe, they were getting it from North America. Now all this computer waste is building up and we don't know what to do with it.

When was the last time you recycled a 40-inch television? You know, a 40-inch television has three ounces of silver in it. And have you ever taken one to the Recycling Depot? No. Who's done that? A washer or dryer. When you buy a new washing machine and the company comes and picks up your old one, where does it go?

They try to take out the easy stuff, of course, the copper wiring and all that kind of stuff is simple to cut out, but when you get into the soldering and all the silver components, forget it. Who's going to do that work? Where's the technology to do that? So all this stuff just goes to waste.

Dan Ferris: Keith, all of which is to say that anybody who says that's a source of supply is talking out their ear, to be polite.

Keith Neumeyer: We would need triple-digit silver to incentivize industry, because first off, the technology doesn't exist.

Dan Ferris: OK.

Keith Neumeyer: Because I personally invest in three recycling companies. Two are bankrupt, one is still alive.

Dan Ferris: Wow.

Keith Neumeyer: The one that's still alive, I actually made a little bit of money on it. The other two never ended up going public and I lost money on both of them. We have to, as a human race, figure this out because eventually we're going to be mining waste dumps. Because the mining sector is getting more challenging, and 100 years from now we'll be going into these old waste dumps and pulling out metal. I'm pretty certain of it. But we need the technology to be able to do it.

You know, today, sliver at $24 an ounce, you don't want to incentivize the miners because our cutoff grades at current metal price are around 100 grams, which for your listeners probably doesn't mean very much, but call it three ounces of silver. So the rock has to be worth at least $75 to $100 a ton to make it attractive enough for the money coming to pull it out of the ground to hopefully try to make a profit, right? And you have to have enough of it in the tons-wise to make it economic to build a mill and build the roads and the infrastructure and the town and all the stuff you've got to do.

So there's got to be enough of this stuff, enough of this rock, right? There's lots of projects out there that have silver in them, high up in the Andes. You know, you want to go 15,000 meters up in the Andres in Peru and try to bring water up there and electricity up there and build a mill up there and extract ore up there and deal with the communities up there and get permits up there – oh my god. It's a lot of freaking work.

You're going to spend 20 years doing that to try to get your first ounce of silver out of the ground, and at $24 an ounce – you know, these mines are 30-gram silver, basically one ounce of silver. So the ore is only worth about $25 or $24 a ton, and you're going to have to be $1 billion or more into this mill. No one's going to do it. So there's no new supply coming.

Dan Ferris: Right. Does this mean that you're not making money at $24 an ounce?

Keith Neumeyer:  No, we make money, but I'm saying the margins are tight. Oh, yeah. Our costs are $16, $17 an ounce. And go back three years, and our costs would've been about $11, $12 an ounce. So over a space of about three some-odd years, the cost – and that's inflation. People are a big issue because the kids today aren't being educated in mining.

They're becoming lawyers and accountants and whatever they're becoming. But they're not becoming mining engineers and they're not becoming geologists, so there's a huge brain drain happening right now in the mining sector, and in the oil and gas sector as well, resources across the board. It just seems to be a dirty business that people don't want to work for, unfortunately, which is a real shame. Yeah, so our employee costs are going up, our energy costs are going up.

Dan Ferris: Well, if I were a younger man, I'd change careers. [laughs] So it sounds like, just for our listeners' sake, you understand what Keith is saying here. He's basically got a silver mining company with some amount of margin, tight margins he said, and we're in an environment where there's no incentive for anybody to build a new one. So it's kind of a – and we think that we're on the cusp of a new bull market here maybe, so it's kind of an exciting time to be in your position, Keith, and to be, of course, riding along as a shareholder, it sounds like.

Keith Neumeyer: Well, you know, I think so. Think of it this way. For every dollar moved in silver prices, our top line is affected by something in the order of $37 million to $40 million. So our revenue in 2022 was about $700 million, so we're a reasonable-sized company. So if we see a $5 move in silver prices, which I think we'll see much greater than that, but a $5 is $150 million to $200 million extra revenue on our top line, and our costs are fixed.

You know, our costs don't go up. So all that extra revenue just drops right to the bottom line as pure profit, and that's the beauty of being on the right side of a mining investment. If your timing is good, your leverage is just incredible because the market – you know, we have an increase in revenue to that degree, then the market puts a multiple on that, right? So whatever that multiple the market puts on, that adds right to your market cap. So that's why you get these crazy moves in the mining stocks, because the leverage is just amazing.

Dan Ferris: Wow. And, you know, in a really nice bull run in a year or two, that's how a stock like yours can be a multibagger just like that.

Keith Neumeyer: Yeah.

Dan Ferris: So Keith, we've come to the end of our time here, but I just have one more question, and that is – my standard final question is the same for every guest no matter what the topic, even if it's a nonfinancial topic, which it sometimes is. Same question for everybody. And that is if you could leave our listeners with a single thought today, what might that be?

Keith Neumeyer: Investing is a very personal thing and don't fall in love with an investment, for one, but also don't let anyone convince you to make an investment or make a decision to sell an investment. You're your own maker, and everyone has their own personal financial needs and requirements, and you just take care of yourself and you make your own personal investments based on your own personal criteria. Do your due diligence. Spend the time.

This is your money. You know, people go to the shopping center and try to find the best deal in the shopping center. I don't know why they don't try to find the best deal when they're buying a stock. Treat your investments like you would treat any kind of spending that you would do. Spend the time, the energy, put the work in and make a decision, and then keep up to date on it.

Sometimes fundamentals change. Sometimes your investment could be the wrong decision, and you have to be willing to sell it if you're wrong, but if you're right and the stock goes down it doesn't mean you would sell it. Don't get sucked into selling low and buying high. Try to listen to guys like yourself and try to educate yourself and hook yourself into the different podcasts.

There's lots of great people out there. I don't know. Maybe I said too much, but –

Dan Ferris: No, no, no. The message is clear, right? Take responsibility. It's your thing. It's a personal thing. It's not off the shelf. Nobody can really tell you how to do it.

Keith Neumeyer:  No.

Dan Ferris: I've said the same thing many times.

Keith Neumeyer: OK.

Dan Ferris: You know, it's very personal thing. It's up to you how you want to do it, etc. So yeah, so hopefully that will be a well-received message. But thanks for being here. Really good to talk to you.

Keith Neumeyer: Yeah. Great talking to you, Dan, and our first time obviously we spoke, and thanks for the opportunity and maybe we can talk again in the future.

Dan Ferris: Yeah, for sure. We will do that.

Keith Neumeyer: Great.

Dan Ferris: All right, thanks.

Keith Neumeyer: Thanks, Dan.

Dan Ferris: Many mainstream analysts are predicting that stocks will recover soon, but I say we'll instead witness a cash frenzy unlike we've experienced in 21 years before stocks recover, and I'm urging Americans not to buy a single stock until they see it. I predicted the Lehman Brothers crash in 2008 and I called the top of the Nasdaq in 2021, but this is the No. 1 most important thing to pay attention to for 2023. And I'm not talking about another market crash or politics or inflation or any of these other things. As all this unfolds, the financial consequences of what I'm talking about could last for several decades if you don't understand what's happening.

There will be winners and losers, and now is the time to decide which one you'll be. This is why I strongly encourage you to read about my warning totally free today. It's all spelled out in a free report we've put together. Get the facts yourself. Go to www.StockDeadzone.com to get your free copy of this report. You can learn how to get my four steps to prepare for what's coming. Again, that's www.StockDeadzone for a free copy of this new report.

Well, that was a lot of fun. As I said at the beginning, I've been trying to meet Keith for years and been very close to doing so, and people have said, "Hey, you should meet this guy," and we finally – this is the first time we've ever spoken, and I hope you were taking some good notes because he gave you a lot of information there and a lot of really good guidelines about grades and political jurisdictions and the quantity. Remember he talked about 100 grams per ton sounding like a kind of minimum grade? And he explained some of the dynamics with some hypothetical pricing and expensing and things.

So that was really informative, and it was really informative in an area that we hardly ever talk about. I think we've had one other guest in the, what is it, four or five years I've been doing this – three or four, something like that, I don't know – talking about silver. So this is like silver guest No. 2. Maybe we'll try to fix that and find somebody else in the silver industry. But yeah, Keith is like one of the top guys.

If you're interested in silver as an investment, you really should pay attention to his company. Even if you don't buy the stock, you should go on their website, First Majestic Silver, and just read the presentations and the documents and everything, and you'll learn a lot about silver. You can follow him on Twitter, too. I follow him on Twitter. But that was great. I really enjoyed that.

All right. That's another interview and that's another episode of the Stansberry Investor Hour. I hope you enjoyed it as much as I did. We do provide a transcript for every episode. Just go to www.investorhour.com. Click on the episode you want, scroll all the way down, click on the word "transcript," and enjoy.

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