Dear

Katusa Resource Opportunities

reader,

Last night, Donald Trump pulled off one of the greatest upsets in political history. 

I won't recount the details of the election here. You can get them from a thousand newspapers.

What I will do is say we are in a new era… the Donald era. 

On the whole, I believe this era will be business friendly. This means less regulations that hamstring the development and operation of resource projects like gold and copper mines. 

Below are my current thoughts on how you can profitably invest during this new era.

FINANCIAL MARKETS IN GENERAL

: In general, the financial markets will become very volatile. I believe they’ll become volatile not just because of the surprise election outcome, but because we are entering tax loss season.  The two combined will cause increased volatility.

Unlike some people, I like volatility. Volatility is great if you have cash on hand to deploy. As you know, I often say we need to act like alligators, stay patient, and buy cheap assets when they go on sale.

With volatility comes a significant decrease in monetary velocity. Monetary velocity is the speed at which businesses and financial markets transact. When people are confused and trying to figure out a new situation (like Trump), they slow down monetary velocity.

OIL & GAS

: I believe this monetary slowdown will push oil and natural gas prices lower. Only the lowest cost producers will do well in this lower price environment. 

The monetary slowdown is also bad for companies with large debt loads. The money will start to flow to big, low-risk producers or juniors with no debt and great assets (like Blackbird Energy). We are well positioned with Blackbird. I expect it will be one of the few oil stocks that rise in the coming environment. 

The coming rough times for high-debt energy companies will give us a great opportunity to buy energy assets on the cheap. We just have to stay patient and wait for the right entry point.

One corner of the oil and gas sector that will likely benefit is the group of companies related to the controversial Keystone XL Pipeline. The proposed Canada-to-Texas pipeline was blocked by Barack Obama, who wanted to please his environmental supporters. Trump will likely give it the green light, which would benefit large cap pipeline company TransCanada, the proposed operator of Keystone XL.

GOLD:

I must say, I thought gold would be trading higher than the current price of $1,306/oz.  Last night, gold reached $1,325/oz on the expectation of a Trump win. After he won, gold pulled back. I expected it to go higher.

I don’t believe the election changes the long-term outlook for gold. The situation in the gold market is bigger than the U.S. president. Over the past eight years, governments around the world have created trillions of new currency units. They have accumulated huge debts. This will lead to more currency debasement over the long-term. The winner will be real money, gold. Gold is the ultimate insurance against a global monetary crisis. Wealthy people and institutions know this, and will continue to accumulate gold. My thoughts in

still stand. 

I have always stated - and continue to believe - that the stock that will benefit the most from a Trump presidency will be Northern Dynasty.  Currently, subscribers who were able to get into Northern Dynasty below our buy up to price have a Katusa Free Ride at a minimum. 

We are sitting in an incredible spot. Trump has stated he will get rid of the EPA, but I do not believe that will happen.  I do believe the “reach” of the EPA will be drastically pulled back.  Northern Dynasty will

definitely

be on the takeout list of any of the majors like Barrick, Gold Corp, Newmont, Freeport etc. 

Coal:

I can see why people expect coal to do well with Trump as President, but the reality is the market is the market and coal price are completely dependent on China.  I am not bullish on coal. I have zero exposure to the sector.  There is a huge amount of coal production in and out of China that can come online at current coal prices. This production capacity is already permitted and built. I expect coal prices to come down.  The coal stocks have had an incredible few months, but I expect that to reverse.

Having said all that, I am openminded and flexible.  If I find a way for us to make money, we will jump in.  I would only take a coal position if it has a specific catalyst. 

JDL GOLD: 

The company is incredibly well positioned with over $60M in cash and no debt.  I expect big things.  This story will take time to play out, but it’s one of my largest investments.  JDL has a world class management team and with lots of cash. We are in the stock at the same price they are. I expect we’ll do very well over the long run.

How will Green Energy do with a Trump Presidency?

If you are a low cost green energy producer that doesn’t depend on government subsidies, you will do just fine. However, all green energy stocks will likely be under pressure in the near term.

This includes Alterra Power, which came out with its financials last night.  I went through the financials while watching election coverage. Overall, the financials were solid, and the net interest revenue improved 26% and the net interest adjusted EBITDA increased 24% from this time last year to USD$19 million. Overall I am very pleased with Alterra’s financial performance and growth to date.  But its only getting better form here.

Alterra has an excellent pipeline of development projects. I do not expect interest rates to be raised in December, and this is bullish for green energy producers that pay yield like Alterra.

I believe ethanol investments will get slaughtered. The sector is completely dependent on government subsidies. Trump has openly stated he is against the sector.  We have no exposure to ethanol.

SUMMING UP

:

In the end, I don’t think the market doesn’t know what to make of a Trump Presidency.  This could lead to a lot of selling. This uncertainty, combined with tax loss season, makes me excited to get the absolute best resource companies on sale.

I do best when others are fearful.  I find the best deals at the best prices when the market is under pressure.  Cash is king right now and I believe I have two incredible ways to play the current market set up.

One is a gold buyout candidate that I am still working on. 

My team and I have gone over the last 35 years of data on gold producer buyouts. I believe we’ve “cracked the code” of what the majors want to see in a buyout candidate.  I think this research is going to blow you away… and make you a lot of money. You’ll see it soon. 

The second opportunity I’m targeting is an unconventional way to play the Trump Presidency. The market has completely overlooked it. We will be first to the story. I will be on the road over the next 45 days completing my due diligence on this project and company.  Again, more on that shortly. 

These are great and exciting times. I expect we will make a fortune during the Donald Era.

Regards,

Marin Katusa

P.S. Please forgive any small spelling or punctuation errors in this note. Katusa Research is a small family owned business. We're not a big media company with a huge staff of editors "on call." We wanted to rush you these idea as soon as possible... even without "polish."