RICK RULE - BNN - TOP PICK TOP PICK
Founding family has long track record of on time and on budget. Specialists at building mines in tropical, high rainfall environments.
Company created so that owners could employ expertise for themselves, not just for other companies. Bought a mine from ELD in Brazil to kick things off, now at construction phase. Risk is that implementation phase will not be on time or on budget. No dividend.
MARKET OUTLOOK:
Investor interest in natural resource stocks could be described as tepid, at best, meaning that the sector offers good absolute value but little momentum. In my experience, these conditions are optimal for stock pickers, who operate with rational time frames. I continue to believe that we will experience two bull markets, one in precious metals and the other in industrial materials.
The precious metals bull market thesis involves the increasing lack of confidence in fiat-denominated savings and investment products. Investors' concerns include declining sovereign credit quality, including the recent downgrade of U.S. sovereign risk, the deterioration of the purchasing power of all major currencies, and the “weaponization” of the U.S. dollar, the world’s reserve currency.
The natural resources thesis is simpler, the material ascent of humankind causes demand to grow, even as decades of under-investment cause inevitable declines in raw materials supply. One of the great unheralded accomplishments of the last four decades has been the lifting of over one billion people from the ranks of the desperately poor, although challenges still remain. This process, in China, was the principle cause of the natural resources bull market 2000-2010. This market will be exaggerated by decades of under-investment in many commodity sectors, including conventional energy and the materials required for the increasing importance of electrification.
Challenges to both markets include the threat of a recession and idiotic political decisions around the world.