Jim Mellon: Why I'm Loading Up On Energy Stocks

**Jim Mellon** (0:00)
So there's all sorts of reasons why gold and silver have gone up, but I did not expect it to go up as much as it did. And it was a four year call for me. So it's worked out very well. And sometimes you take your, you don't say for the last dance, and that's my philosophy. So if I said that we have reduced our position in gold and silver exposure by 80%, I think that would be about accurate. Those seven stocks represent about 40% of the market capitalization of the S&P, which is just a huge and very dangerous concentration risk at a time when they're all doing essentially the same thing. I wouldn't be playing in that area because there's plenty of, my view in life is that, you know, you don't need to be in the game that everyone else is playing. There's plenty of other things to do. And that's what I try and do. What's the next unloved sector as gold and silver were four years ago, that, you know, will actually pay you to be part of it and get dividend yields in most oil and gas stocks of any note, that is very lowly represented in the S&P and in other indices around the world. And of course, it's oil and gas. And so we've been loading up, I mean, literally loading up on oil and gas.

**Wilfred Frost** (1:18)
Welcome to The Master Investor Podcast with me, Wilfred Frost, where we celebrate and learn from the success of the greatest investors, business leaders and politicians in the world, giving you, our listeners, the edge and a very happy new year to you. The Master Investor Podcast is sponsored by BNY Investments, ELSEG and Interactive Brokers. Please do remember the views expressed in this podcast are for general information purposes only. Nothing in the podcast constitutes a financial promotion, investment advice, or a personal recommendation. More on that in the show notes. I'm delighted to welcome back to The Master Investor Podcast, my good friend and podcast founder, Jim Mellon, the chairman of The Burnbrae Group. And nobody, Jim, I would rather kick off the new year with more than you. Welcome back to The Master Investor Podcast and happy new year.

**Jim Mellon** (2:14)
Happy new year to you, Wilf. And thank you very much for having me on. And hi from the the Wintry Isle of Man.

**Wilfred Frost** (2:22)
Well, I know that the weather and it's wintry here in London as well is what's prevented you from being here in person. But great to catch up either way as it always is. So much for us to get to and including some of the most more specific latest developments relating to Venezuela, because I know energy is a big theme you want to touch on. But I wanted to start by talking about gold and silver, which for me were the stories of 2025 And I know they're a theme that you've been incredibly bullish on for a number of years. I guess the first question is, did you expect quite such a big rise as we saw in gold and silver last year?

**Jim Mellon** (3:03)
Actually, no. I mean, to be quite honest, when we conversed at The Master Investor Show last year, I think we kind of came to a consensus that gold over 3,000 was a likely prospect, but now it's 4,400. And that is significantly higher than I would have thought. And silver was, as you remember, I was kind of rotating a bit out of gold and into silver. The move in silver has been absolutely extraordinary. And I didn't expect it to go this far. So actually, I've been trimming my gold and silver positions, and we don't have, we still have quite a reasonable exposure, but we don't have as much as we once had. And I've got new pastures to plow at the moment.
So yeah, I mean, I'd be very happy to go through the reasons why I think gold and silver might be overdone it, overcooked, if you so wish.

**Wilfred Frost** (4:01)
No, I'd love to. I mean, I think, look, kudos for a great call either way over the last couple of years, because they've really taken off. Why do you think, first of all, they rocketed quite to the extent that they did? Because there's a sort of simple argument, which is G7 economies are monetizing the debt. And then there's a sort of bigger fear of, is the financial markets going to implode? That the move we saw at the end of the year would almost imply the latter, unless it's just a trading squeeze, and that's why it was such a big surge.