[REPLAY] Garrett Goggin: All Things Gold & Silver Stocks

Episode Summary

Executive Summary: The episode is a deep dive into Garrett Goggin’s framework for investing in gold, silver, and resource stocks. He argues that superior returns come from focusing on high-grade, shareholder-friendly miners and royalty companies, avoiding dilution-heavy “moose pasture” projects, and sizing positions around management quality, economics, and per-share value creation rather than headline ounces.

Main Topics: How Garrett Got Into Resource Investing (Priority: 4/5): Garrett explains his background in mutual funds, his preference for alternatives like gold/silver, and how years of mine visits and research shaped his approach to the sector. Jurisdiction, Geology, and Mine Visits (Priority: 4/5): The discussion covers why investors overestimate jurisdictional risk, how underexplored regions like Morocco, Bolivia, and West Africa can hold major upside, and why on-the-ground due diligence matters. Why Grade and Free Cash Flow Matter Most (Priority: 5/5): Garrett repeatedly emphasizes that only high-grade deposits and profitable operations can create lasting shareholder value, while low-grade assets often remain uneconomic even in stronger metal price environments. Identifying “Moose Pastures” and Dilution Traps (Priority: 5/5): He warns against long-promoted projects that never get built, criticize companies that rely on endless dilution, and notes that share count growth can destroy per-share value even when deposits grow. Royalties as the Best Business Model in Mining (Priority: 5/5): Garrett argues royalty companies offer fixed-cost exposure to rising metal prices, free upside from exploration success, and frequent M&A takeouts, making them superior to most miners. Portfolio Construction and Position Sizing (Priority: 4/5): He describes equal-weighting a diversified basket, keeping both small and large caps, and holding winners instead of selling too early because a few big winners drive most returns. Macro Setup for Gold and Exit Signals (Priority: 4/5): The conversation closes on the macro backdrop—Fed easing, inflation, debt, and de-dollarization—and Garrett’s exit framework using GLD shares outstanding as a froth indicator.

Key Arguments: High-grade deposits are the key driver of profitability because costs are relatively fixed per ton, so higher grade is the main way to improve margins. Avoid valuing projects purely on ounces in the ground; economic value depends on grade, recovery, tonnage, and processing method. Management quality is the top factor because bad teams can destroy great deposits through dilution and poor capital allocation. Companies that continually issue shares often enrich management and bankers while destroying shareholder value. Royalty companies are structurally advantaged because they have fixed costs, no operating risk, and often receive free exploration upside. Small royalty companies frequently get acquired at large premiums, making them attractive portfolio candidates. In resource bull markets, the biggest returns come from holding winners through extended breakouts rather than trading too actively. The gold market is still early in the cycle; broad public participation has not yet reached euphoric levels. GLD shares outstanding can serve as a proxy for market enthusiasm and potential cycle maturity. Macro forces like U.S. debt, deficits, inflation, and Fed easing support a bullish case for gold over the coming years.

Data Points: Golden Portfolio / GP10X holdings: 30 names - Garrett says his main portfolio is diversified across about 30 mining-related names. Market cap range in portfolio: $30 million to $1 billion - He describes the market cap range of companies he follows in the portfolio. Silver break-even grade: ~250 grams per ton - Garrett states this as an approximate break-even grade for silver production. Pure silver ounces at New Pacific deposit: ~200 million ounces - He cites a newly found silver deposit near Potosi/Cerro Rico. Aya Gold & Silver production increase: 3x - He says Zagounder production is tripling to 2.7K tons per day. Aya Gold & Silver throughput: 2.7K tons per day - Expected production rate increase beginning in the current quarter and into 2025. Aya Gold & Silver prior free cash flow: ~$3 million per quarter - He references prior cash generation from Zagounder at about 700 tons per day. Highcroft shares outstanding now: 24 million - Garrett contrasts current share count with earlier levels to show dilution. Highcroft shares outstanding in 2019: 2 million - Used as an example of dilution destroying per-share value. GLD shares outstanding now: 304 million - Garrett uses this as a froth indicator for gold market participation. GLD shares outstanding in 2020 peak: 435 million - Previous cycle high in ETF shares outstanding when gold peaked near $2,000/oz. Gold price target update: $2,500 to $2,730 - He says he is raising his gold price target. Silvercrest Mining return: ~50,000% - He cites Silvercrest as a major historical winner. Newmarket/Kirkland/AgEco wealth creation: ~45,000% - He describes the compounded return from the Newmarket Gold story through acquisitions. Fed cut reference: 50 bps - He compares current easing to the 2007 rate-cut cycle. Historical gold move after 2007 cuts: $600 to $2,000 - Used to argue gold can run for years after Fed easing begins. Management ownership minimum: 3% - He says he wants management to own at least 3% of shares. Target management ownership: 10% to 15% - He says stronger alignment occurs at this level. Royalty portfolio long-term outperformance: ~13,000% - He claims a royalty portfolio over 13–15 years would have delivered this return.

Pivotal Quotes: "The only way you do that is through grade in order to drive shareholder value." — Garrett Goggin: He is explaining why high-grade deposits are central to profitability and long-term equity performance. "Don’t sell your winners, sell your losers, don’t sell your winners." — Garrett Goggin: He is describing his portfolio discipline and why large winners should be allowed to compound. "Royalty companies, they're managed by three or four people... and that's basically all you need." — Garrett Goggin: He is defending the royalty model as a superior, low-overhead business in mining.

Implications: For listeners, the takeaway is to focus on economics per share, not headline ounces. In this cycle, high-grade miners, aligned management, and royalties may outperform, while dilution-heavy developers could underperform badly.