Things I Learned at Gold-Buy-GoldWest
- Joshua M Brown
- June 6th, 2012
Okay, the conference wasn't really called Gold-Buy-GoldWest but if I ran the world, it would've been!
Anyway, I was out in Vancouver earlier this week for the Cambridge House World Resources Investment Conference and it was an amazing event. I was a total tourist there and I have a lot to learn about gold, metals, resource investing etc so it was a good chance to spend some time amidst 600 exhibiting companies and dozens of knowledgeable speakers.
Here are things I learned from my time there:
1. Into each life, a little rain must fall - even if you own a property with proven gold reserves! This is because the cost of mining versus the cost per ounce make it so that not every gold vein is worth following and not every hole is worth drilling - even if you know for a fact that there is gold there. Several experts told me that half of the 600 exhibiting companies at the event would probably not last until the end of the year, which made the conference exciting, like a reality show!
2. Financing is everything. The junior miners are a lot like startups, I suppose that's why they trade on the Toronto "Venture" Exchange. The investors are mainly there to participate in share sales, not necessarily buy common stock. This is about funding projects and adding more with progress and time.
3. The odds are rough - even for those with a trained eye. I met with several veteran gold mine backers who can surgically fine the right companies/management teams etc and even they admit it's a game of buying into ten or twenty stories and counting on the one that goes from 7 cents to 7 dollars to cover all the losses on the rest.
4. There is just as much sleaze in the gold mining space as there was in the boiler room brokerage days of yore here in NY/NJ/FL. What, you think because they're pasty-faced Canadians they can't rob you? Wise up! Brent Cook, who writes the famed Exploration Insights newsletter explained that if a Canadian junior has American flag imagery or pictures of the Statue of Liberty on their website, you should run screaming in the other direction.
5. "Promoter" is not a dirty word: In the gold mining game, there are over a thousand companies many with multiple properties and projects, all of them waving their hands and in need of attention. This is not like stock promoters, this is really an integral service they provide to the industry. Someone has to tell these stories and communicate the goals and needs or else gold simply never gets pulled out of the earth.
6. Peter Schiff is kind of a dick. So I was introduced to Peter Schiff in the media area, I've always been a fan of his commentary and appearances. I gave him a big hello and he could barely muster a handshake, let alone making eye contact. It was so weird, everyone else thought so. I've never had a bad word to say about him and even backed his political run in CT with my blog. So I'll chalk it up to him thinking he's too big a star to be civil. I almost asked him what his problem was, then I realized that I didn't care anyway. Whatever.
7. Frank Holmes is a Rock Star. I've seen Frank Holmes (US Global Investors) speak before at events, he's super-sharp and always has interesting things to say. This was a bit of a doomer crowd and he perfectly toed the line, his message was that yes, things are distorted and sentiment is terrible right now but there are always places to be an investor. As an aside, Frank is amazed at the pessimism in the asset management biz, he looked at a few mutual fund family acquisitions and the valuations would give on the impression that fund flows may never go net positive ever again on the equity side. Good to know, fits with my Peak Apathy thesis.
8. There are bears, and then there is Doug Casey. Doug Casey's in the Misery Business and Business is Good. He's a very nice man in person and his deadpan delivery of why we're all fucked actually comes off a bit comical - even though you know he's dead serious, I think he digs the nervous laughter in the crowd. People are paying Casey Research big money in order to have their pessimism and trepidation about the future confirmed...and he does not disappoint. That said, he's bullish on Africa and he himself is a big junior mining investor and has over a thousands of acres of cattle farming operations.
9. The secret of social media is not about how much money you can make off of it, but what kind of relationships you can forge that would never in your wildest dreams have been possible. People like Rhonda Bennetto (a killer Canadian IR maven), Tommy Humphreys (26-year-old wunderkind organizer and future star) and my friend Dynamic Hedge, who shocked me by saying he was based in Vancouver and would come out for dinner. These people are really special, have taught me so much and it's all thanks to Twitter, blogging and StockTwits.
10. They don't use skim milk in British Columbia. Not even at Tim Hortons! How weird is that? Only 2% and that's if you know somebody. Drank a lot of black coffee this week.
Anyway, I hope to be learning more and more about resource investing going forward. I'm a long-term bull on this stuff provided I can get the execution right.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.