- Resource Bull markets have never been the same. Mid 80's bear toughest. 1993-6 bull most vicious, melt up across the board.This bear market happened when industry well funded, interesting asset bases. Could be very generous, but bifurcating market, many will go to nil. Best 10% will surprise. Expectations very low, should exceed.
- Believes the bottom was made in precious metals last summer and likes the advance, technical backing and filling,stair stepping action since. Only sees new lows if there is a new financial crisis at which point the margin clerks take charge of selling.
- Too many junk companies in HUI, XAU, GDX. Market cap indexes don't work. Sprott qualitatively weighted index.
- People intensive businesses - R&D - concentrate on best people, teams. Oxygen Capital (Mark O'Dea), Lundin, Beatty. There are $10m companies with good assets able to stay funded. When market returns can be $100m +
- How do you know when it's time to get out. Rule relies on intuition, missed absolute tops. Ensure keep 70% of your gains. When you think participants in junior mining are good and kind people sell. Don't try to maximise the last dime.
- Newmont Barrick merger, consolidation of G&A should save $1bn, x10 Market Cap. Less higher quality teams need to manage more.
- Optionality plays. When commodity price turns in favour, junior looks to sell. Really need to watch G&A. Key to success is doing nothing, leaving the gold in the ground and not doing much. Otherwise holding diluted to fund useless project expenditure or corporate spend.
- Uranium requires patience, 2+ years for potential bull. Industry average cost $70/lb including capital.
- Water, localised scarce where can pay for it. Few vehicles to invest. Water rights are being bought up. Sprott may create vehicle.
will have to be extremely selective in their securities purchases, but I also think the rewards will be extraordinary
And Rick Rule in Conversation with Brent Cook at the Colorado Precious Metals Summit - Reported at The Northern Miner