By Henry Bonner (hbonner@sprottglobal.com)
Is this what a market turn feels like?
“Great opportunities in natural resources occur once per decade,” Rick Rule explained at the Symposium. “They occur at the bottom of a ‘bear market.’
“And this ‘bear market’ is the most severe that I have seen since the mid 1980's. That suggests a very dramatic recovery.”
Despite a down market, our Natural Resource Symposium garnered big numbers. Around 800 people showed, including attendees, exhibitors, and speakers.
The audience was far from gloomy too. In previous years, and at other conferences, attendees have lamented a poor sector. Not here.
From speakers and attendees alike, we saw optimism for natural resources. Some were on the sidelines, waiting for more bottoming for their chance to get in. Others were heavily invested already.
Where are gold and other natural resources headed now?
Speakers were divided. Some believed that a bottom was in, or at least that the sector was cheap enough today.
Others favored sitting it out for now, waiting for a recovery to “announce itself.”
Sprott US Chairman Rick Rule hasn’t given up on natural resources. “A recovery is inevitable,” he said.
Rick revealed that he was still holding “lots of cash” to prepare for future buying opportunities during a major dip.
Agora founder and self-proclaimed “rogue economist” Bill Bonner advocated for owning gold regardless of the price. We’ve been living in a “zombie boom” for the last 40 years, he told the audience. During that time, the “takers” and cronies have gained increasing control over the US economy.
The economy has managed to grow anyway, sparing regular folks too much pain, thanks to the bull market in bonds that has occurred over the same timeframe. But this can’t last forever. As he wrote in Financial Reckoning Day and Empire of Debt, a collapse will occur eventually. “You’ll want to own gold as insurance for your portfolio,” he says.
Steve Sjuggerud of Stansberry’s True Wealth has a more upbeat take on the zombie boom: It will go on for a few more years, so you can still make money in stocks and real-estate.
He wasn’t ready to make a major play in natural resources, he said. “They’re cheap, they’re hated, but I still want to see an uptrend.”
After he sees an uptrend in resource stocks, Steve will be ready to make a big play in the sector.
Eric Sprott was one of the most-awaited speakers at the conference.
Contrary to other speakers waiting for signs of a turnaround, he isn’t holding back. He told the audience that he’d personally taken ownership of a gold mine, along with other big investments in the sector.
Other big-name speakers included Robert Friedland, Chairman of Ivanhoe Mines. He told the audience they’d be crazy to miss this opportunity.
Copper, zinc, platinum, palladium – these metals are priced for the “end of the world,” as he put it, saying China in particular will be a big consumer of these metals. You need copper for electrical grids, platinum and palladium to purify motor exhaust, and zinc as a crop fertilizer. These are all areas where China may have a need for the metals.
“The mining sector cuts are not just skin deep, they are to the bone,” he said. Miners can’t afford to produce if metals prices go any lower, so if they drop from here, it means the world doesn’t want a supply of these metals, according to Robert.
Even Doug Casey said he was getting heavily into resource stocks now – despite his speech title, Mining Is a Dying, Stupid […] Business.
Did the speakers give any specifics about where they’re looking?
Dan Ferris of Stansberry’s Extreme Value gave his “top pick of the year,” Altius Minerals, a royalty company. The company gets a small cut of many different mining operations’ revenues.
Frank Trotter, co-founder of EverBank told attendees to take a look at “metals-backed CDs.” According to Frank, these can increase in value with metals prices, but contain minimal downside risk.
Of course, the conference also featured over 50 resource companies. As Rick explained, he expects at least some of the companies that were at the Symposium to become high-performers in the next up-move.
Some of the most well-followed names were Kaminak Gold, presented by Eira Thomas, Uranium Energy with Amir Adnani, and Sprott Resource Corp, represented by Steve Yuzpe.
Miles Thompson presented Reservoir Minerals and William Lamb presented the Lundin Group.
Dev Randhawa was also there, representing Fission Uranium and Randy Smallwood presented for Silver Wheaton.
David Harquail told attendees to consider Franco-Nevada, the world’s largest royalty company, as an alternative to a gold ETF. Franco-Nevada offers diversification because it has so many separate royalty contracts, he argued.
The resource sector is cheap right now, but it could offer great rewards to investors who are willing to participate.
As Rick Rule put it, the companies in the sector face a bad reputation. But investors forget that some hard-working, ethical, and talented people are doing “real work.” And the price of participating in their projects, as investors, has often dropped dramatically.
“We’ve had a whole lot of fun at this conference,” Rick concluded, “and we’re going to do it all again next year.”
Didn’t make it to the Symposium? All keynote speeches, except Robert Friedland’s Q&A, are available for replay online, along with select workshops. Click here to order.
P.S.: Secure your ticket today for next year’s Symposium! You can pre-order your ticket now at a special rate. Just call Barbara Perriello at 561-243-6276.
This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.
Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and nowadays also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment. Because of significant volatility, large dealer spreads and very limited market liquidity, typically you will not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.
