I liked this even though old news found it important~mho! Canadian billionaire investor Eric Sprott has outlined his ingredients for successful investing in early-stage gold companies.
Speaking at the Precious Metals Investment Symposium in Perth yesterday, the renowned gold bull said he looked for out-of-favour companies that no analysts covered and used the internet to research them.
He also revealed he was not averse to investing in companies with “poorly thought-of management”.
“I always say my business is the business of stealing — stealing value,” he said.
“It’s what you want to do, you want to buy something when it’s cheap.”
“If you were right on gold in 2000, on average you made 1700 per cent. Do it once, you’re set for life.”
The 74-year-old is renowned for investing heavily in gold in 2000 when the commodity was trading around $US250/oz and holding on for 11 years as it rallied above $US1600/oz.
In Australia, he has made big paper profits investing in Kirkland Lake Gold, which has transformed the Fosterville gold mine near Bendigo in Victoria into one of the highest grade gold mines in the world and Royal Nickel Corporation, which last month pulled stunning gold specimens from its Beta Hunt mine near Kambalda, sending its Toronto-listed shares soaring.
In a wide-ranging speech which took aim at the mass media, the financial industry, regulators and governments, Mr Sprott said it was difficult for individual investors to win.
“I find it so frustrating dealing in stocks on the stock market because there are so many adverse influences to protecting the average guy, what with high-frequency trading, spoofing, front-running, algo’s and shorting on downticks,” he said.
Mr Sprott said when banks missed earnings forecasts, they often cited a lack of market volatility in the period.
“You know why a bank wants volatility? So it can screw you,” he said.
“He needs things to go up and down a lot because he’s on the right side of the trade all the time. The mantra in banks is ‘whatever your client does, do the opposite because you’ve got more money than they have and we’re going to win this one’.”
Mr Sprott said he was confident the gold price had bottomed in the early part of 2016.
Since then, Poland, India and Russia had bought gold and central bankers had spoken out in favour of the precious metal, he said.
“Currencies depreciate, your currency sucks, you guys lose purchasing power every day,” he told delegates.
“Knowing that they (currencies) all suck brings you to owning gold and silver.”
Mr Sprott was also highly critical of the US government’s response to the global financial crisis in 2008.
“Our solution to the GFC was to take interest rates to zero or negative, and print money,” he said.
“And we’ve all kind of bought into it, but it’s totally inappropriate and it’s going to set the stage for material things to happen.
“You don’t solve a leveraged debt problem with more debt.”