Ultimate Recession Indicator (Uncut) 04-23-2025

Ultimate Recession Indicator: 300% ‘Violent Move’ Coming | Shawn Khunkhun

If we go back to 2020, is we saw a move from $12 on the low to $30 on the high. Almost a 300% move in the price of silver. That’s the type of move I think we’re setting up for.

But looking ahead, I don’t see the next major resistance until $50. Gold is going through the roof. A new record high today, $3,400 is breached.

What’s next for not just gold but silver? Silver is also a metal that’s been doing very well this year, but not as well as gold. Why not? We’ll find out with our next guest, Sean Kunkun, CEO of Dolly Varden Silver. Dolly Varden is also now listing on the NYSE in the US.

So congrats on the new listing, Sean. Good to have you back. Good to see you, David.

Thanks for having me on. We’ll be talking about your new listing and some new company developments in just a bit. So exciting times for Dolly Varden Silver.

Let’s talk about silver first before we talk about your company in particular. Take a look at my screen here. I showed you this offline.

This is gold versus silver. This is year-to-date gold’s up 30%. Silver’s up 10.7%, so just gold’s going through the moon right now as we’re speaking.

And gold’s been decoupling from the stock market. As you know, the stock markets are going down. Gold’s been going up.

Gold’s also been trading quite in line with the Bitcoin price, which is also interesting. Bitcoin’s been decoupling from the stock market. But anyway, that’s not the topic of our discussion today.

One year, gold’s up 43%. Silver’s up 20%. Silver hasn’t had a bad year by any stretch of the imagination.

It’s up 20%. It’s just not up 40%. So people look at this, and by the way, historically speaking, whenever gold tends to outperform silver in a bull market especially, people tend to see that as a recession indicator.

Let’s address that first. Is that a recession indicator for you? Yes, it is. Look, I was looking at some numbers this morning that the Silver Institute had just published, 2024 data.

And the number that stood out to me was 67% of silver was consumed for industry. And I think that we’ve seen the price of oil, the price of copper all fall with silver. And I think what silver is really demonstrating right now is its industrial component.

It is trading more like an industrial metal than it is a monetary metal. And I think that explains silver’s underperformance to gold. You know, and the questions that I have, David, are, do we need some sort of a catalyst, whether it be a rate cut or some aggressive quantitative easing before we start to see silver outshine gold? Yeah, well, we can address that question in this interview.

I mean, that partly explains why silver went down so much on April 7th or the beginning of April when Trump doubled down on his tariffs on everybody before he took them off for everybody except China, pretty much. Right, so what is your outlook then for the industrial component for silver? On the one hand, silver tracks gold. If gold does well, silver does well.

But on the other hand, like you said, the industrial component is important. If global trade is slowing down, if global growth is slowing down, potentially that means less demand for silver, right? Yeah, look, see, the way I view silver right now is I feel really confident in the price of silver. Like, I’m a value investor.

There’s two ways to make money. You either buy low and sell high, or you buy high and sell higher. And I think, right, you know, I’m built as a contrarian investor.

And so looking at this 100 to 1 silver to gold ratio, I feel very comfortable. And the fact that, you know, industrial demand is set to soar another 30% tells me that there’s going to be an even greater bid on silver. And I’m starting to see some anecdotal evidence talking to some high net worth, some ultra high net worth investors.

They’re starting to make the switch from their gold into silver. And others, you know, and you appreciate this, David, precious metals are so under-owned, right? Like, whether it’s by institutional investors, family offices, precious metals are just invest, whether it’s bullion or stocks, they’re under-owned. And so a lot of investors for the first time are now seeing silver as just an incredible store of value.

So I’m very optimistic for the outlook, because we’ve got declining mine supply. And we’ve got this growing industrial use, even in the face of slower growth. We’re running, you know, last year, we ran 150 million ounce deficit.

And if you factor in ETF demand, that put the deficit over 210 million ounces for 2024. So you really think that the catalyst for silver going forward is a supply story, not a demand story? Am I summarizing that correctly? Look, I think the greatest percentage gain, the reason I’m here is not because of the industrial case. You know, I’m here for the investment case.

I’m here because I think once investors decide to come into silver, we’re going to see a violent move up. Every major big move in silver, where it really, truly outperformed gold, has been on the back of investment demand. And so the biggest price moves are coming.

But that industrial component is just a slow and steady, and it’s really just cleaning up the market for the ultimate big price spike. And actually, if we take this chart and we zoom out just a little bit to the beginning of 2024, silver is already up almost 40 percent. Yeah, 40 percent since the beginning of 2024.

If we go all the way back to the beginning of the year, gold’s up 70 percent. So it’s done very well relative to even stocks. I just wonder if the growth has already been priced in.

What’s the narrative now that’s going to push silver up to $50, which a lot of people say is the next milestone? Well, I think it’s that move from, and again, if you go back and you look at Q1 of last year, where was the demand coming from? And it was twofold. You had the solar industry come in and buy a lot of silver. You also had Indian consumers out of India buying silver.

So I think it was about a third of the entire silver market was taken down by photovoltaics and Indian consumers in Q1 of 2024. That type of demand and those areas are going to continue to drive the silver price. And I think the fact that you do have record high gold prices bodes really well for silver.

I just can’t put my finger on the calendar of when that’s going to show up into a price spike. If you go back to the last time we had a real significant gold breakout, like 2019 was from 2019 to 2020, we saw the gold price move up about 50%. We’ve seen that same type of move in the last 12 months or so.

And it was as that move, as the easy money was made in gold, at the end of that big move is when silver shot up. And what we saw in silver, if we go back to 2020, is we saw a move from $12 on the low to $30 on the high. Almost a 300% move in the price of silver.

That’s the type of move I think we’re setting up for. And the only thing I can’t tell you, David, is it at the end of this spring? Is it in the fall? When exactly does that move unfold? But the fact that you’ve got a market that’s in deficit, growing industrial demand, shrinking mine supply, and not only do you have a strong industrial case, but you have the investor case, the investment case, the stable monetary debasement case. And again, it’s so cheap relative to gold, it makes it very attractive for the value investor.

By the way, if you take a look at the gold-silver ratio, and this is exactly the point that another analyst was making, I’ll show you that article. The gold-silver ratio is not above 100. Last time this happened was during the pandemic.

In 2020, when the pandemic was unraveling, the gold-silver ratio shot up to above 100. It shot up to 124. So it’s basically during a crisis that we see this kind of a dramatic spike.

So I just don’t know what this is signaling. A lot of uncertainty. A lot of people look at this and say this is an indicator for things getting worse.

But on the other hand, you have analysts like Mr. Gleason here from Money Metals Exchange saying that this is a sign of extreme undervaluation. The high ratio between gold and silver prices, analysts said, at current prices, it would take 102 ounces of silver to buy one ounce of gold. The ratio of more than 100 presents a historically extreme undervaluation of silver versus gold.

What do you make of this statement? Yeah, you know, I think the most important thing is what happens after the spike high. You know, you go back to the COVID uncertainty. You know, you could replace the term COVID with tariff, the tariff uncertainty.

And times of uncertainty, that relationship gets distorted. And it’s investors who buy that undervalued opportunity that are rewarded. And, you know, we were in a range for decades from 40 to 1 to 80 to 1. You know, and investors that would buy silver when it got up to 80 to 1 and sold it when it got closer to 41 to 1, you know, that was a very, very good trade for those investors.

We’re seeing, you know, an extreme case that, you know, you’d have if you forgetting the 2020 move, you’d have to go back to the 1990s for the last time where you saw a silver to gold ratio of 100 to 1. So there’s only been a handful of times in recorded history where this has occurred. And what the difference this time, though, unlike 1990 and unlike 2020, the industrial demand is up to 67% of the market. So, you know, all that silver is coming offline.

And now you also have positive ETF flows. And then you’ve got, you look at London and you look at inventories. Inventories have never been lower.

So it almost, David, seems like we’re setting up for the perfect storm. And investors could say, oh, we heard this before, we heard this before, we heard this before. But the last time we heard this, the price shot up to $30.

$30 was the ceiling. Today, we’re starting the move above the last breakout. So where’s the next level of resistance? Looking ahead, it’s easy to talk about what happened in the past, but looking ahead, I don’t see the next major resistance until $50.

Is there a case to be made for silver as an institutional holding and also as a central bank holding? Well, Vladimir Putin has made that case. He’s been one of the first leaders to come out and add silver to his precious metals strategy. And, you know, it’s historically throughout the centuries and the ages, you know, central banks have, you know, owned lots of silver.

And it’s been an instrument of choice. And if you really go back and we take a much broader historical lens and context, you know, that ratio should be measured 10 to 1, 15 to 1, not even 40 to 1. And here we are. And so, you know, I think this is a really, you know, there is no substitute for silver.

And I felt this way about gold about a year ago where I thought, I don’t see the downside for gold. And I’m starting to now say that about silver, because regardless of what political leader gets in where, you know, we’re doing this interview here in Canada, regardless if you’re talking about the conservatives or the liberals, you know, silver is part of our future. Whether that’s a globalist agenda that, you know, really focuses on climate change, silver needs to be part of the electrification of the world.

Whether we go to a hard money solution where, you know, we move back to sound money, hard money, where gold and silver will play a role in that environment. So I really think that we’re in a moment right now where I don’t see the negative, the downside risk on silver on a relative basis. Well, let’s talk about how this is affecting mining, and then we can finish off in the market.

And after this discussion, the mining sector is booming with the metals prices so high. But how are you as a miner navigating financing and capital raising in a very volatile, uncertain environment? Because one day the stock could be up, right, because of a surging metals price. But the next day, the stocks would be tanking because of a global equity sell off if Trump decides to, you know, do something with China that nobody saw coming.

Yeah, listen, I think you have to be conservative. I think that’s the key. We’ve been in an environment since 2010, where the cost of capital has been high, and it’s been punitive.

And up until the last two years, it’s almost been uneconomic for most miners, particularly silver miners to operate. So you’ve had to be conservative. You’ve had to play from a position of strength.

And although that’s starting to change now, First Majestic’s Q1 numbers were record high, right? And so we’re starting to see whether it’s on the gold side, miners like Ignico Eagle and the silver side, miners like First Majestic make record earnings. And now what are those miners doing? You know, in the case of Ignico, they bought O3. So they’re being acquisitive.

They’re buying developers. And they’re also making large, significant investments into discovery stories. Ignico making a pretty significant investment into collective mining in Colombia.

So we’re starting to see that surplus of cash for the miners trickle down into smaller names. And in terms of accessing capital, look, I think in mining, the best projects, the best companies seem to attract capital in all price environments. Well, what are you, well, not you personally, but what is Tali Vard and silver doing in today’s environment? Is it time for more expansion? Is it time for more drilling? Are you sticking with your plan? Basically, has a price increase of silver up 40% since the beginning of 2024, has that changed any of your strategic objectives? It’s a really good question.

So, you know, we have a strong adherence to grade, right? And that hasn’t changed. You know, we’re looking for the highest grade material on our project. And, you know, other companies, you know, could take advantage of the move from 16 to 32 by starting to look at ounces that are on the margin, you know, lower bulk tonnage opportunities.

We haven’t employed that strategy. The strategy that we’re looking to take advantage of is I want more prospectivity. I want to start to look out and Dolly’s had a history of being the lead consolidator of ground in the Golden Triangle.

So, you know, in 2022, we doubled our land position by buying the neighboring gold deposit and bringing in a large block of prospective ground. We need to continue to look and investigate those types of opportunities into prospectivity and into getting larger and into really doubling down on the Golden Triangle. And at the same time, we’re looking to initiate one of our most robust exploration programs in the company’s history.

So we’re about to send four drill rigs into the field and start a very, very aggressive discovery focused drill program. Do you think the tariffs have impacted overseas interest in North American silver production? Let’s say we have a North American silver producer who ships concentrates out to Asia for refining and for usage in industry. And now that we have tariffs, perhaps they’re looking into just domesticating their supply chain.

Maybe that’s good for M&A. Maybe they want to buy companies like you so they don’t have to, you know, go through shipping through a foreign company. I just don’t know if this is impacting the M&A landscape at all.

It’s an interesting question. Like, I think gold and silver are really two things that are so universal that they’re almost tariff exempt in standpoint from, you know, and there’s ways to bypass. And really, it’s one country that’s been tariff centric.

It’s the US, right? So if you’re a Mexican silver miner and you’re refining metal in the US, maybe you look to refine that metal in Canada instead. And so you’ll be dealing with higher shipping costs, but you’ll just bypass the US. So, you know, I think for, you know, for most miners, the reason tariffs don’t really matter is because you’ve got a universal market.

We’re not only selling metal to the US. You know, there’s a healthy Asian market. There’s a healthy European market.

There’s a healthy global market that is, you know, universally celebrates gold and silver. Actually, you’re right in the sense that it’s literally tariff exempt for US, Mexico and Canada right now. I’m looking at the USMCA compliance.

So currently, it’s still exempt from tariff silver. Maybe that’ll change. We don’t know.

But let’s take a look at now your company again. Why are you listing in the US at this particular point in time? I believe the ticker is now TDVS. Am I correct? You’re correct.

Yeah. Dolly Barton Silver on NYSE American. Look, when we started Dolly and we started to move the company ahead, we were a $15 million company.

We were tiny. And, you know, we focused and we harnessed as much of that capital in Canada as possible. But Canada only represents like 7% of North American capital.

You know, really, the big money is in the United States of America. And so by listing our shares on the NYSE American, what we hope to achieve is open the company up to the US investor who is looking to gain exposure to silver and gold and that believe jurisdiction matters. You know, the unique part of the Dolly value proposition is the fact that we are located not in Mexico, not in some of the other well-known silver producing countries in the world, but where our project is in Canada.

And so for investors where jurisdiction and safety matters, you know, that’s that’s and really, David, we’re one of maybe 10 companies that are giving US investors exposure to silver on the big board. OK, there’s a few ways that an explorer can add value to the company. Expanding the the deposits is one actually proving reserves is another.

I’ll let you fill in the blanks. But basically, what is your path for value expansion here? Value growth? Yeah. So, you know, what I had identified five years ago when I started the journey at Dolly Varden was we were in a price environment back then where the larger entities weren’t replenishing their mineral inventory.

So the goal has was really just to try to shore up as much metal in the ground as possible. Yes. And, you know, today, as I talked to you, we’ve we’ve amassed about 65 million ounces of silver and a million ounces of gold so far.

And so to continue in that strategy, how we’re successful at building that mineral inventory is through exploration, but it’s also through acquisition. So those are our two primary mandates in order to continue to grow that inventory. You have a drilling program, though, that’s underway.

Give us some recent updates. So, look, we’ve we’ve invested a lot into the ground in the last few years, something in the neighborhood of about 100 million dollars of exploration, predominantly drilling. And what we’ve learned is we’ve learned a lot about the orientation of the mineralization where it’s plunging, where it’s expanding, where to fingerprint on the property, where we could potentially make new discoveries.

So we want to take all of that information that we’ve learned with all the modern science that we employ. We want to also take some of the analogies of other deposits that are in the district. So there’s some really significant deposits that are producing like Bruce Jack and deposits like Escape Creek that were in production.

Take that historic information, take the analogs of the area, take our our data and go in. And we’ve got a we’ve got about a 20 million dollar spend that we’re investing this year in exploration. And so we’ll have four drill rigs.

We’re going to be looking to continue to expand and extend known veins. We’re going to be looking to make new discoveries. And it’s it’s one of the most exciting drill programs we’ve had in the company’s history because we are taking shots on parts of the project that has seen very little work.

This is not merely a de-risking exercise. This is not merely, you know, taking resources and putting them into the reserve category and increasing our confidence. This is really about trying to go out and find new mines on the property.

Well, the American investors watching the show right now who can now access your stock directly through an American exchange, they’re probably used to jurisdictions in Arizona, New Mexico or Nevada. What’s different about B.C., particularly the Golden Triangle? So we can permit a mine in half the time that it would take to permit a mine in the United States. So that’s, you know, that’s that’s competitive advantage we have is that the time to permit we also we can get a lot done.

You know, you look at drill costs, B.C. versus Nevada. You know, it is very, very cost effective to explore here. And then lastly, you know, I think what for the U.S. investor particularly, we’re home to the richest deposits in the world.

So we’ve got some of the best geology in the world. Now, what’s held us back is a lack of infrastructure. You know, being in the north, you know, we lack the roads, we lack the power, and a lot of our ground used to be covered by glaciers and snow and ice.

And so what we’ve seen in the previous decades is our governments, our companies have invested a lot into bringing in that infrastructure, which has also further reduced the cost of exploration and development at a time where the glaciers and the snow are melting and receding. So it’s a new area in terms of its new exposure. And we can now access it in a costly, effective manner.

Can you give us a summary of your balance sheet now? How much cash are you sitting on? What do you plan to do with this cash? So as of today, we’ve got about $32 million Canadian dollars in the Treasury. I talked about a $20 million exploration spend. And so it’s going to be an intense drill season where we’re looking, we’re making the bet that we can take that $20 million and we can, in a cost-effective way, advance our project and make new discoveries.

One might speculate if you’re opening up your stock to U.S. capital markets, are you expanding in the U.S.? Are you planning to acquire any deposits in the U.S.? Our goal is to bring in as much high-grade inventory in what we describe and define as safe jurisdictions. And the U.S. does fall into that definition. But our main focus today is in our backyard where we have a competitive advantage and we’re looking to grow regionally in B.C.’s golden triangle in Canada.

Okay. Well, very good. What’s the next milestone we should be looking out for? You’ve already opened it up to the U.S. market and now there’s a new drilling result that you’ve just talked about.

What’s next for you? Well, if all goes to plan, we’ll be putting out drill results and those drill results will identify how much expansion and extension potential we have. So that’s a major near-term catalyst. And then again, we’ve had a history of M&A activity in the district, so hopefully we can find some accretive opportunities to continue to grow and expand.

And at the bottom line, my goal is to keep increasing that mineral inventory, giving investors exposure to as much high-quality, high-quantity gold and silver in a safe jurisdiction. Great. Good stuff, John.

Thank you very much. Congrats again on your NYSE ARCA listing and we’ll have you back on again soon for the next update. Take care for now.

Thank you, David. Thank you for watching. Don’t forget to like and subscribe.