Contrarian Rick Rule Discusses Bears, Bulls and Vancouver’s World Resource Investment Conference 2013
ResourceClips Feature: Contrarian Rick Rule discusses bears, bulls and Vancouver’s World Resource Investment Conference 2013
A conference in the middle of this market? Investors look shell-shocked. Mining and exploration CEOs wonder whether to eat their children. In times like these, why would anyone bother attending the World Resource Investment Conference 2013? Well, according to Rick Rule, it’s the ideal time.
The May 26 and 27 Vancouver event certainly boasts an ambitious agenda. With nearly 150 exhibitors and over 35 corporate presentations, WRIC will also feature talks, seminars, workshops and panel discussions presented by about three dozen experts and analysts with any number of informal spinoff functions taking place as well. Rule will be there with his own talk and workshop, but also in his capacity as chairman of Sprott US Holdings. As a renowned contrarian, his thoughts might be dismissed as outrageous. But they’ve made Rule and his company very, very rich.
So why WRIC—especially in times like these?
“I think it’s precisely in times like these that conferences like this are most appropriate,” he responds. “The truth is that bear markets cause bull markets and bull markets cause bear markets. The paradigm that was present in 2006 and 2010, in other words bull market tops, is present today in global money printing, global deficit spending, global resource consumption—none of those things have changed. What has changed is the market’s outlook and the price of assets. It makes perfect sense that if you’re trying to make money in markets you follow the old adage: Buy low and sell high.
“If nothing else has changed besides the price, and if the prices are 70% off, you would describe the current market conditions as a sale,” Rule adds. “In all goods except financial assets, people look at sales as a good thing. People who begin to shop for financial assets as rationally as they shop for physical assets will do well.
“Simultaneously, companies who exhibit at times like these will show a forward-thinking nature and will be able to build constituencies that will serve them well, both in bear markets and bull markets. I have found in over 30 years of conference participation—and this is going to sound very harsh—the median IQ at a bear market conference is substantially higher than at a bull market conference, and the median net worth among the people who have the good sense to shop for bargains as opposed to shop when it’s popular is much, much higher.
“The set of circumstances that we’re involved in right now is precisely the set of circumstances which caused Sprott to become a $10-billion organization. Having the foresight and courage to invest aggressively in market bottoms set the stage for the performance we enjoyed coming out of the early ’90s bear market and the bear market that lasted from 1998 to 2002. It’s precisely in markets like these that the intelligent and aggressive application of capital builds performance-driven organizations like Sprott.”
Rule anticipates he and his colleagues at Sprott Global Resource Investments will be busy.
“We’ll have the opportunity to talk with about 100 of our clients, maybe more, who’ll be in attendance,” he says. “We’ll certainly be circulating, and having our geologists circulate, looking for new investment opportunities among the exhibitors, or getting up to speed with exhibitors who we haven’t had the opportunity to spend as much time with as we should.”
Weighted heavily among WRIC exhibitors are junior explorers. A group of them will be present at a double booth hosted by Zimtu Capital (V.ZC), a prospect generator that maintains holdings in several companies with projects ranging from early to advanced-stage and covering a number of commodities.
In addition to meeting with scouts from institutions like Sprott, exhibitors will “meet one-on-one with an analyst and a local contact from a financial institution,” says Karen Renaud, a spokesperson for WRIC host Cambridge House International. “Each public company has been scheduled for meetings in hopes of benefiting these companies and the growth of the industry at large.”
Referring to prospect generators in general, Rule says their “business model differs from the normal business model in that the prospect generators use the acumen and technical capabilities of their management team to develop exploration theses which they farm out to other companies. Other companies fund the heavy lifting of the exploration expenditure. While it’s less sexy than sole-risk exploration, statistically it’s an awful lot more successful.
“I have participated in funding prospect generators for about three decades and the empirical studies suggest the results that I’ve gotten from funding prospect generators have been about three standard deviations more efficient than the exploration market in general. If you have the ability to participate in a technique that’s three standard deviations better than the median, you owe it to yourself to follow through on that course of action.”
The World Resource Investment Conference 2013 takes place Sunday and Monday, May 26 and 27, at the Vancouver Convention Centre West.
Disclaimer: Zimtu Capital Corp is a client of OnPage Media Corp, the publisher of ResourceClips. The principals of OnPage Media may hold shares in Zimtu Capital.