Avino Silver & Gold Mines Ltd. (ASM) Earnings Call Transcript & Summary

Welcome to Turning Hard Times into Good Times. I'm your host Jay Taylor speaking to you from the Borough of Queens in New York City. It is the 31st day of May 2023. I titled today's show Michael Oliver loves silver, and Avino Silver has Plenty Of It. David Wolfin, the President and CEO of Avino, will join me in the second segment of today's show to share Avino's progress in Mexico, where they're building, really on their way to becoming a mid-tier silver producer in Mexico. I think it's a very exciting story. The stock is selling at under $1 or around USD 1 trace on the New York Stock Exchange. This one, I think you really should keep your eyes on, and David will be with me in the second segment. But right now, I'm happy to tell you that Michael Oliver, the Editor of Momentum and Structural Analysis, is with me once again. Thanks for joining me, Michael.

Jay, good to be back.

It is always good to have you, one of our more popular guests. And I must say, it's always good to tell people it it's olivermsa.com. olivermsa.com to subscribe to Michael's letter, and I really think you need to consider doing that, and maybe some of the things we talk about today will help you reach that conclusion as well.

Well, Michael, I wanted to focus on silver today, for sure. But 2 major -- the time of your last 360 weekend letter, 2 major tectonic plates, U.S. stock markets and the monetary metals. You seem to be thinking that something big is going on there. When you talk tectonic plate movements, are you suggesting -- what are those 2 tectonic plates?

Well, I've been in the financial markets since I was basically a kid, I didn't know anything. 1975, when gold was legalized, and so I sort of learned from the ground up. I was with EF Hutton then. And I've never seen -- I'm speaking as a technician and also a broad fundamental basis. I've never seen such gigantic asset categories that are moving in such a way that they will impact either negatively or positively another asset category. And you can't just look at gold and silver and say, "Well, I'm going to analyze it." No, you can't. You're making a great mistake. You need to watch the stock market in particular, and we keep restating why. And it still it's not on the tip of everybody's tongue, and I don't know why.

Yes.

In 2021, the markets had risen sevenfold in the S&P from the 2009 low. NASDAQ 100, it rose sixteenfold. There was no bull market in U.S. paper asset history that is comparable to that. The great disasters of the 1929 to 1932 downside. The dot-com collapse. You name any bull market peak and the collapse that followed, none of them, none of the ball markets had sevenfold or sixteenfold increases where they collapsed. They had doubles, triples maybe. Why did you do that? Well, I mean you can debate all you want to about all the great things that were invented or whatever. But look at M2 charts, and you'll see it went off the page. The money went somewhere. Investors chose to put it into the stock market. And when they first put it in, in 2009, that made sense. The stock market was in the 600s on the S&P. It is down from $15.70 high. Okay? It was cheap. So it made sense. Take that river flow of capital that the Central Bank gave you and direct it into the stock model. They kept doing it for a dozen years. Okay? Not only the stock market, but muni bonds, high-yield corporate debt in real estate, et cetera. All those asset categories went up basically parabolic for a long period of time. It was a bubble. The bubble is now broken from our vantage point in early 2022 over a year ago. A few months after the peak in the S&P and the NASDAQ, we put out massive cell signals arguing. It's over. We're going into a major bear market, and the first phase will be an arm wrestling match. And sure enough, it's been that, and you can't decide whether it's up or down. In fact, it is down the course, well off the highs despite the rally. The problem is that to unwind a bubble of that size means there'll be real-world consequences, in your face consequences. Consequences that doesn't affect just people in the 1%, but everybody, painfully. A lot of people made decisions over a long-term period of time about their personal financial outlays, corporate outlays, city state spending, federal government spending, all based on certain assumptions, including money is cheap.

Right.

And it stayed cheap, and it stayed cheap. So it became habitual. So a lot of mistakes were made and they're embedded in the economy. And once the bubble breaks, it's like ripping off scabs, you reveal what's underneath, and it's only begun. Okay. Now what does that have to do with gold and silver? Why is it that of all the asset categories on the planet, the stocks S&P was down over 20%. NASDAQ down over 30% from 2021 close to the 2022 close. T-bonds down over 30%, Muni bonds down enormously. Real estate down enormously. What was up? What was steady? Gold was unchanged for the year, 2021 close to 2022 close. That was in the mid-18, 20s, by the way, was the price. Yes, it had been either side of that level, but that's where it was. Silver actually gained 1% or 2%. Yes, it was a volatile market with a downward sort of bias. But actually at the end of '22, it closed higher than it did in 2021. What's going on here? Why was somebody (s) buying gold and silver and selling everything else? What was on their mind? After all the Fed said they're going to beat inflation, right? Part of the monetary metals, they're inflation metrics, right? So if they're going to beat inflation, then why weren't gold and silver collapsing? Because they knew, somebody knew we argue, the bubble is broken. And as it unfolds in charts and makes noise, the central banks will have to out of necessity do what they were invented to do. And that is print money, print money, print money, get money cheap and support government debt market. It's absolutely [indiscernible]. Okay? They have to do that. I don't care what they say now. And already Powell said in his last little speech, it was properly interpreted, I think, by analysts. We can pause, I think, because the banks themselves, he said, they're actually tightening credit. They're sort of doing our job. So in effect, he said Fed's going to back off here, because the banks are doing. Now I think you was also scared about the banking event, which I do not think he anticipated at all. Okay? So we have a bubble that's only begun to burst. I think Powell is beginning to maybe realize that. And when the blood gets thicker, the policy will shift more overtly. And a lot of people like, "Oh, boy, that means that the stock market will go up." Well, go back in history and look at Fed fund rate increases and decreases and overlay them on the S&P, and you'll see when the bear market starts in the stock market after a period of rising rates and starts to crumble. Even when the Fed starts to cut rates, it will not stop that bear market. They started cutting rates in late 2007 around the time the S&P was peaking. They continue to cut rates when the S&P collapsed. It didn't matter. Why? Because the bubble was breaking. This time, we have a bigger bubble than history. So the consequences will be major. And therefore, it's gold and silver people need to be watching the stock market.

Gold has certainly responded well after the 2008 collapse for 3, 4 years or so it beat the equity markets. And this is -- if I'm hearing you right, you're seeing this as being bigger by far than what we had in 2008, 2009. And when you think about it, it was over 10 years or so when they held interest rates at extremely low levels of near 0 or at 0. Essentially, I guess this is what the Austrians understand as mal-investment. You -- how can you have capitalism, I make this argument, how can you have capitalism if you're now allowed to determine what the price of capital is, Michael? And so you have massive amounts of mal-investment, money flowing to areas that are illegitimately flowing to areas that don't make economic sense, right? And then a different -- the wrong people are getting rich, they're getting powerful and they're getting rich, and they don't want it to end. And those people are very influential, so they continue to put pressure on the powers that be to keep the game going, I suppose. But at some point, as you point out, you've been so helpful to me in this regard, Michael, that at some point, mother nature prevails. It doesn't matter how much the communist or the fascist or whatever take over. Eventually, mother nature prevails, right?

Absolutely, there's a reality out there. And you can tease reality for so long and then pretty soon when it snaps get out of the way if you're on the wrong side. So right now, our focus at MSA, and we look at all 4 major asset categories, the debt market, foreign exchange, stock markets and commodities with a focus on gold and silver. But you just can't look at any one of those in isolation. You're making the mistake because there's a lot of information in the side mirrors, not just look out the windshield, the gold and silver. So right now, our prime focus is not so much on gold and silver because gold and silver as far as we're concerned have made their statement. Not only did they go down and wash everybody out by having a false price chart breakout last September. The gold blew through a price chart floor that an idiot could draw, $16.75, $16.75, $16.75 for a period between late 2020, 2021 and early 2022, repeatedly use that level as a floor. It broke it. People ran streaming from the room. Silver also broke low prior lows, went down to low 17s. It's all over gone, gold's gone to 1,400. It depends on what they're only debating and how deep. Nobody is debating whether. We argued then at the time it was occurring, this is a bear trap. And sure enough, it spun its wheels down there for about 4, 5, 6 weeks. And then boom. And by March, you're back to the highs okay? And nobody is sharing that. Everybody is still focused on things like NVIDIA as artificial intelligence is a concept as something new. It's not. It's been around for years. It's only now become popular. That's a bubble market, in our view. It's a mini bubble within tech. And it's not an overall tech bubble because overall tech is not doing what NVIDIA or even Microsoft is doing. So people are focused on these few narrow leaders, and they're not focused on the broad financial sector, which, in our opinion, is technically right to do just about what banks did in March. I'm not talking about banks now. We're talking about things in the financial sector that are nonbanks. Retail is basically laying just above the 2022 lows just like financials. Healthcare sector, second biggest sector in the S&P, it's been the steadiest sector out there, therefore, has attracted a lot of money because it's safer. It looks like a pending disaster based upon our technical work, and it's very close to our trigger numbers. These events can't be happening and the market go up. These are 2 big areas of focus in the stock market. So NVIDIA is a teaser off to the side. Meanwhile, these big sectors are -- they're literally loitering. It'd be as if the S&P right now were trading about 3,800, couple of hundred above its 2022 low and laboring. That's what these sectors are doing. When they go, market goes. When the market goes, the data points go, the Fed starts to panic.

Well, Michael, I saw a chart yesterday, I can't remember exactly where it was, but Twitter somewhere. They were showing that -- I guess the little guys, the retail people are getting into the markets in a major way. And the NVIDIAs, these kind of AI stocks are really starting to suck in a lot of people. From your experience and history, isn't it true that towards the top of markets, you've got the little -- the retail people always get sucked in last? And those people that are buying -- you said somebody out there who's been buying gold and silver when other things aren't doing very well, they're not necessarily the small guys that are doing that, and I think the big hedge funds perhaps. But anyway, my question is, have you seen this movie before? Essentially, you and I have been around for decades, and it seems to me this is always a classic end of a bull market. It is when there's a mania little people getting into the market. They missed the boat all the way up, and now they're saying, "Oh, goodness. Well, I guess we're on to the next bull market now let's get in now. This time, we're not going to miss it, the fear of missing out.

And the parabolic nature of the move that NVIDIA just had, by the way, it's had a big advance prior to this. It don't -- didn't just start from 0. It had a massive move, a big drop, and now it's zoomed past that high. We did a report the other day showing, arguing, that be careful with these things. So when you see markets make a new high, it doesn't necessarily mean it's good. And we showed some sample charts of markets that we've called over the last few years that had done exactly what NVIDIA did. They hiccuped after having done that, they didn't just pull back. They collapsed. Now I'm not going to argue NVIDIA is going to collapse. I suspect it will because of the psychological nature underpinning it. But yes, it is a distraction. And yes, people are flooding into it. And I think that if it comes undone, they won't know where to get out. That's their problem. There's no clear technical level that says, "Oops, I better put my stop there." You can't tell when you look at the price chart where to get out. And if it starts down, you just -- all you're living on is hope. Anyway, it's something to watch because it will help break the psychology. But I think these bigger sectors are far more important because nobody is watching them.

Yes. Well, and you have the index funds that are heavily loaded into those big or top 8 or 12 stocks or whatever that basically run the market. And so when people buy their mutual funds or their index funds they're are buying into these big things. And they just -- I mean it seems -- nobody is really paying attention to just say. They're not watching them. And at some point in time, they've got to take a tumble, you would think. That said, though, Michael, you and I, remember 2000, the dot-com bubble, there were some survivors there, and they are the powerhouses of today. So I suspect that at some point, when this market finally pays its dues, there will be some great buys. And so how do we make sure that we have some wealth left over to buy up stocks if and when that day comes again if we avoid World War III or something? And somehow, we're still kicking and there's still opportunities, we would like to have some cash and some wealth left. But we've seen the devastation that occurs when these markets collapsed in 2000 and 2008, retail people get hurt the worst it seems.

Well, so the issue is preserving your capital or increasing it. And again, we argue that the monetary metals, and we don't call them precious metals because that would link them with platinum and palladium and so forth. Silver and gold are a place to be. Don't treat it day to day, week to week. Don't panic when silver drops $2. Okay? Gold pulls back $100. Takes it a month to do it. Meanwhile, it went from $16.13 to $20.80 in a matter of, what, about 6 months, okay? Nobody cheered that. It wasn't being -- they weren't pounding the table on CNBC or Fox Business News about how gold -- how come it's back at its highs. Nobody even noticed or they acknowledged it. Why not? Great. I'm all for that. Don't acknowledge it. Let's keep it quiet. But there's something going on there, and the action in and of itself is speaking to volumes. Another arena that we like, and frankly, it's in a pullback, it's been pulling back for the last year or so. Not collapsing, by the way, it's been eroding down, so it's been in a corrective type decline. That's the Bloomberg Commodity Index. And right now, frankly, it's at levels that we think is a [indiscernible] where somewhere around the 100 level and it's below $100 right now. We've got a support zone from roughly $96 up to about $102, somewhere in that zone, which we've been in for a few weeks now. We think the Bloomberg is going to dig in and turn back up again, meaning the commodity category is going to reassert itself. And if you look at the historic price level of commodities in general compared to where they were in 2008 or 2011, they're still dirt cheap. We're talking about the Bloomberg under $100. Heck, in 2008, it was $270. In 2011, it was $170 -- no, excuse me, it was $230 in 2008. It was $170s in 2011. And right now, we're trading under $100, and people are screaming about high inflation. Yes, year-over-year change in the commodity price level was dramatic because prices were so suppressed and depressed between 2015 and 2020, but they were off the page in terms of cheapness. So when they shot up in 2021, well before the war ever happened in Ukraine in 2022, it was a big percent gain, but it wasn't at a high level. And so right now, commodities remain historically cheap, especially cheap when measured against paper assets. So that's another arena, I think, to look at commodity category. So if you want to protect your money, I think it's gold, silver, commodities in general and commodity-related stocks. Go ahead.

We're bullish on, I think, the soft commodities of foods and the fertilizers that sort of thing, right?

Yes. I think, well, we actually -- back in 2020 before the commodity upturn actually began, which is we put out a report on October 2020 called commodity explosion, and it exploded right at that point from about $70 price level to $140 in Bloomberg, took it about a year or so. But everything went up at the same time. Okay? But energy led that month. Oil prices and natural gas went up more than did, let's say, soybeans, corn and wheat. Right now, I think this time around, probably the food components will probably outpace energy in the next upturn, and they've had a good pullback. All the grains have had a good pullback. So -- and our focus, therefore, is on trying to time at what price level and when the upturn is beginning, and I wouldn't just jump in right now. We provide numbers that say, okay, now it's an upturn that we -- that's credible. And I think at that point, then you look to shift some of your capital into that arena, the real world arena, so to speak.

Right. So that makes sense. So I have to ask you before we conclude our discussion today, Michael, about Bitcoin, you wrote something recently about May 25, Bitcoin to Trample Gold? So a lot of the younger people, especially seem to be enamored by Bitcoin, and I understand its appeal in the sense that some people want to have the freedom to move their capital around where they want, somebody paying attention or telling them they can't. But you did a thing showing that Bitcoin really hasn't performed anything nearly as well as gold has.

It was back in, I think, 2021 coming off the high in Bitcoin, which was $70,000. In the mid-50s, we turned negative on Bitcoin, long-term trend negative. So a net trend basis negative. But it was also during that time, especially during the 2021 bull market, where Bitcoin went up to $70,000 rapidly, something that silver could do very easily in a span of a year as well when Bitcoin did back then. The ads on radio and TV for Bitcoin were claiming the following: Bitcoin beats Gold. And it was true because we ran the spread chart showing gold and Bitcoin going back to 2017 anyway when the futures began for Bitcoin. And sure enough, there were big waves up where Bitcoin would beat gold, have a little pull back, go up again, it was an uptrend. But when Bitcoin topped in net trend price, it also topped on a relative performance basis to gold. And at that point, we put out a report that said, okay, it's over. Bitcoin is now an underperformer to gold. Well, since then, Bitcoin went down more to $15,000 from the mid-50s and gold is back to its highs. So it was a true statement. And right now, I think that spread is still positive for gold, still favors gold. One of the problems with Bitcoin is going to be the technological and meaning its ability to be monitored by governments, to make it past laws that say we want to -- you can have Bitcoin, but we're going to watch its transactions in your account, so the regulation. Whereas gold to some extent, can escape that.

Yes. Silver even more, I would argue.

Yes. Yes, I think so.

Yes, because it's an industrial metal to a great extent. It's also a monetary metal. Yes, it's -- but there's people -- younger people that haven't looked at history and perhaps aren't really aware of the newest thing to come along is appealing to them. Michael, I'd just like to pass along to our to our viewers, let them know all the things. I looked at my inbox, and there were something like 24 e-mails that I got with your reports since May, May 1. Just to let my viewers know, here's some of the things besides the gold and silver and the equity markets, the bond markets and so forth, it is Bitcoin versus gold, which is just -- you send out a miner shift that really shows the major gold and silver miners and how they're doing relative to each other. And from a technical point of view, which ones are the ones you should get excited about, which ones maybe not right now? Your monthly commodity report, T-bonds update. There was another one on Russia. Another very interesting article where you explain how markets work, inhale, exhale. That, I think, was when gold took a tumble below its triple top. By the way, I want to ask you. Triple tops, when you -- how are you supposed to look at triple tops? If they go up, as we got over $2,000, it seems to have failed now. And a lot of people are saying the bears are getting scared. They're saying, "Geez, you can't hold $2,000. It must be heading back to the graveyard."

Yes. Well, gold was in a box. And if you're a point and figure person no, the technical means of analysis, which doesn't care about time, it just cares about price movement. If you plot a $50 by 3 block reversal, gold point and figure charge. Go back to the $2,000 surge, you hit a high at $2,050. Pullback was a low as $1,700, went back up to $2,050 in March of 2022. Lot of zigzags in that box. You went back down to $1,700 bounced against so you have a box between $2,050, $1,700, multiple bottoms, 2 tops. You broke through the bottom of the box and therefore, "broke out" I think $1,650. So all the price people pulled their hair out, screamed it's a bear market, you've got a triple bottom breakout. Yes, you did. The problem was gold has never in its history created a double top. Meaning if it did, it exploited it to break through. Any gold peak has been isolated, the 2011 peak. Once you made your high at $1,900 or $1,920, you never get back up to $1,900 again. You had multiple rallies to the high $1,700s, but you could never get back to top tick. This time, in March of 2022, we went back to top tick, set a double top, went down blew the bottom of the box, meaning, okay, let's see what's down here. Nothing. Buyers who are down there. Next thing you know, tick, tick, tick, tick, tick, back to top tick $2,050, and we've not had down tick since. You get 3 downticks to go to $1,900. Even if you did, it would -- it doesn't negate it. Our bet is that the reason you're pulling back from that high yet again is to cool yourself off because gold, after all, had a massive move from $1,613 to well over $2,050 and in a straight shot, basically. It needed to cool off. It was overbought. The best thing for bulls to have gold do now is what it's done. That is spin its wheels up, down, up, down, up, down. Same with silver, although silver is in a positive zigzag pattern and cool itself off so that when you do go through and print $2,100, which would break out on the point and figure chart. At that point, you're going to have all these price chart technicians say, "My goodness, it broke out upside. Boy, were we wrong?" And you know what, our experience says whenever we get a range like that with a breakout one way that fails and goes the other way, the next breakout will be valid. You can fool for me once, but it won't fool you twice. So when you see $2,100, you're not already long as you should be. Proud we'll see $2,100 as well. We'll have a lot of people shutting up. Okay?

Well, we will watch very carefully. All I can say to my viewers is that you've been very helpful to me over the years, Michael. And when your gut tells you, you need to get out and everybody is scared to death but your momentum work has been a savior. And it has been so helpful, it's a company from getting whipsawed in and out of the market so often, I can't tell you. It's been very helpful. But again, uranium is another topic. I just want people to know, Canadian banks and munis you commented on. And yes, so there's so much more than what we talk about, and I just want people to recognize that it's olivermsa.com is a place to go to, to sign up for your letter. Michael, you are just so kind, you spend a lot of time with us. You explain your methodology and you help people. That's in -- and obviously, I hope a lot of people subscribe because I think we're -- you say we're at a major tectonic point here where we have these plates bouncing up rubbing up against each other. One of those are going to subduct, the geological term, subduction. It may be in for a subduction moment of 1 of those 2 charts. And I know which one -- which market you think is going to subduct, and thank you. One last word? Anything else you'd like to conclude with?

No, I think you made the point there that is you've got to look at the broad picture because it's what the stock market and paper assets related there to do, especially if they roll over again out of this baloney corrective process they've had since June. We've done the upside, downside, upside, downside, upside. It's redundant turf largely. Once that fails and all hope goes out the window, that's when you're going to get the data points that the Fed wants to have it as an excuse to act upon. You're going to get the data points, the negative data points. And at that point, the Fed is going to go print money. And people think, well, that's going to help the stock market. No it's doesn't. Historically, it's demonstrated it doesn't. Where's that money going to go? It's going somewhere...

People are going to be scared. The psychology changes, Michael, at that point in time the psychology changes and people don't want to ever buy stocks again. I've been there a few times in my life. And then at the top, like right now, well, you just got to be in it. There's some fear of missing out, and everybody is trying to.

If that hope ever goes out the window. You're right. That's when they won't touch it.

Then where you're going to go. And we saw it to a degree in 2008, 2009 from that point on, we saw gold and gold shares performed marvelously. And if I hear what you're saying, this is going to be at least a magnitude, at least as great as that. I think it's what you're telling me, right?

Far greater, I think.

Far greater, unfortunately.

And also, I think, far faster.

Yes, far faster.

I'm with the chaos theory people. I don't think this is going to be incremental, an incremental trend. I think this is going to be a chaos theory trend, meaning much of what I'm talking about, and you anticipate as well could unfold in 12 months.

Well, I don't like to hear that, but it is what it is, Michael. I want to be as prepared.

Reality.

Prepare as best we can for the day of reckoning. So thank you very much. once again for being with us. So folks, don't go away because Michael will be with us again sometime soon, I hope. But David Wolfin will be with me next. He's going to talk about Avino Silver & Gold. And they're building a mid-tier gold producer, several projects in Mexico. And David has a very interesting story. The stock is selling at around USD 1, trades on New York Stock Exchange. Want to thank you, owe it to yourself to listen to. We'll be right back.

Welcome back, Turning Hard Times Into Good Times. I'm you host, Jay Taylor. I'm really happy to have David Wolfin with me once again. He is the President and CEO of Avino Silver & Gold. It's a company I have been following for quite a few years, actually. Stock trades in New York and the New York Stock Exchange under symbol ASM. It's the same symbol in Canada as well and recently seeing trading at around $0.70 in U.S. money giving a market cap, if my arithmetic is correct, around $83 million. Welcome, David. It's good to have you again.

Good to be back, Jay.

Your May 23 news release is what really attracted me, and I thought I want to have on to talk about the progress you're making because you're extending on the Avino vein, on your Avino mining project in Mexico. And you see we're making a lot of progress, very good numbers, very good widths too from what I can tell. Would you just comment on how you're doing there? And how is that going? And what does it mean in terms of production for the company?

It means we've extended the life of mine substantially. Yes, we announced some drill holes. We're drilling below the developed area of the mine, which is Level 17. So we were drilling below that because it's never been done before. And Avino's on it for 50 years, for 27 years, our partners ran it. They were a private family, and they never did any exploration at depth. So this is very exciting. The average grade is double our cutoff grade, so it's 4 grade material. We're very excited. We hired 2 structural geologists to help us try to figure it out. Could it -- how deep could it go? Yes, because we -- the total mineralized strike length from the surface is about 800 meters. So it's pretty significant.

Yes. Are you finding the grades higher than at shallower levels?

Getting richer in copper. And then there's some hot zones in gold, and we're trying to figure that out. Silver is going down, unfortunately, but that's typical with these type of deposits, I guess, is what we're told.

Well, there was some talk, I know the last time you and I spoke about your geologists believing that this is -- there may be a porphyry mothership down lower that your copper grades are getting higher. Well, let me ask you, David, are your silver equivalent grades getting higher, even though the...

I mean, yes, absolutely. I mean we're following a model of a porphyry style. But we haven't proven that yet. And as of yesterday, one of the structural guys saying it could be a star. So Pan American has left Colorado, which is a scar. And so I wouldn't mind if it was something like that as well. So -- but yes, our silver equivalent total for the whole property, including our recent acquisition, La Preciosa, is 368 million ounces of silver equivalent, and 60% of that is pure silver.

Okay. So it's still predominantly silver with goodies. And of course -- so are you continuing to drill below these levels now? Or...