Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Rick sees a very interesting market, which flirted with an upside breakout, that failed. He feels the GDXJ took quite a hit, damaging momentum traders expectations, in the near term that damage will likely increase. The opportunity this summer is in capital that is increasingly supplied by the ETF’s, towards the GDXJ components. The non GDXJ components are left lagging and that could be an arbitrage opportunity. You should see mergers and acquisitions with the components acquiring the non-components.
Mr. Rule thinks the uranium market wore out all the sellers, once the rally got under way the buyers got in too late and now we have to wear out the buyers. He thinks we won’t see an uptick in uranium prices until Japanese reactors restart, then the first stocks that will move are those in production or nearing production.
In non precious metals we are in the first inning, in precious metals we may be in the third inning. In the 1970’s after an eight year bull market, almost every journal and newspaper were resource centric. Today most investors can barely spell gold, copper, or oil. We are still early on in this market, which has very few new players and hardly any new money, at some point that will change.
Talking Points From This Week’s Episode:
• ETF’s are driving capital flows into the component junior’s.
• Uranium will lag until Japanese reactors restart.
• Still very early on in the precious metals and non precious commodity markets.
Rick Rule began his career in the securities business in 1974.. He is a leading investor specializing in mining, energy, water, forest products and agriculture. Rick founded California-based Global Resource Investments, Ltd., which grew into a much larger organization with significant affiliated companies. As Director, President, and Chief Executive Officer of Sprott US Holdings, Inc., Mr. Rule leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resource investment management.
