Greed is good if it is rational. To become more greedy at the right time takes discipline, conviction and a value investing mindset. Also I think it is important to view stocks as shares of an actual company and not just pieces of paper…
That coupled with the fact that mother nature doesn’t really create more land or deposits makes me to (greedily) want to build an empire. Theoretically one could own a piece of all available mineral rights over every prospective piece of land in the world. However that is of course impossible for many different reasons. With that said it doesn’t stop me from building the largest empire that I possibly can…
In a non finite business the total Market Potential is theoretically every company/person living that has a need that your product or service can potentially meet. In the mining business the Market Potential is made up of all potential within a company’s area of control (land package). A junior that controls 1 Hectare has a very limited Market Potential since it does not own any of the potential outside said hectare. Sure, a deposit could potentially have a footprint of 1 hectare and extend for 3 km at depth but that is not probable, nor is it an ideal situation…
When the gold bull is really on, and the sector is hot again, the “real estate” prices will go up a lot. Tenements that might have sold for $1 M might sell for $10 M and so on. This is why I really like the idea of owning juniors with vast land packages and multiple projects because one is not paying much if anything for the projects outside the flagship project…
And when the day comes when everyone wants to invest in gold mining and start a gold mining company I want to own as much of the finite land as possible. Quinton Hennigh is of he same belief which is one of many reasons why I tend to own many of the stocks he (and Crescat) is involved with…
Examples of Empires:
- Novo Resources: Controls 14,000 km2 of ground in Pilbara along with stakes in many other projects
- Irving Resources: Controls tens of thousands of hectares across >7 projects in Japan
- Eskay Mining: Controls the lion’s share of the Eskay Creek district
… These companies control so much prospective land that there simply is no way for another player to become a rival really.
Then there are other Empires, which QH is also involved with, like Cabral Gold and Altamira Gold. These pretty much control entire gold belts in Brazil. Another example is Signature Resources which has recently picked up more land and now controls the lion’s share of the very large greenstone “blob” around their Lingman Lake project. Yet another example is FireFox Gold which recently added a big portion of land and is now the junior with the largest land package in the Finnish gold rush.
We know there are strategic real estate speculators that buy large swathes of land outside cities in hopes that the city will grow and revalue all that land. I think this concept is applicable to juniors in terms of buying up “golden real estate” that will one day get revalued a lot higher. When sentiment gets really hot all the land will fetch a higher price much like empty land that surrounds city centers will fetch a higher price once the city “grows into it”…
Remember, there are no greenstone belts being made. There are no more porphyries being made. But the demand for metals increases year after year after year…
Which means that the limited land that hosts the finite resources increases over time. One day all the tier 1 mines will be depleted and all the ever increasing demand for metals must be satisfied by other deposits in other areas.
I am trying to build an empire in my precious metals portfolio in order to control as much of the limited land that is prospective for minerals deposits as possible. As such I have direct interest (ownership) of the following:
- 14,000 km2 in Pilbara via Novo Resources
- 52,000 Ha in the Eskay Creek district via Eskay Mining
- 1,000 km2 in the Lapland Greenstone belt via FireFox Resources
- Circa 1,500 km2 in Alaska and Victoria via White Rock Minerals
- 420,000 Ha in Yukon via White Gold Corp
- Over 500,000 Ha in the Macquarie Arc via Inflection Resources
- 36,000 Ha around the Cuiú Cuiú alluvial gold rush via Cabral Gold
- 280,000 Ha across different districts via Altamira Gold
- 648 km2 in the heart of the Golden Triangle via Enduro Metals
- Etc etc
… All in all I have direct interest in the mineral potential of a combined land package that is is comparable to a small country when I add all my holdings together. All that real estate might be worth a lot in the future given how mines are depleting all the time and the demand for metals keeps increasing. The best part is that most of the juniors above are pricing in say a 3% chance that they will be able to find one decent deposit across all that land. This truly is the golden age of precious metals investing.
Imagine owning an entire oil basin before anyone realizes there was oil there. We all know what happened to the real estate prices in the US when the shale boom came along. “Worthless” land suddenly became very valuable and some parts even turned into bubbles.
Long story short I simply want to own as much of the metals market as possible. Before the rush. If all the companies above were able to sit on their projects then on a long enough timeline I would have direct interest in all of the remaining land with conventional mineral potential…
Time is on my side.
Ps. One who is also building an empire is Eric Sprott who is on the way of owning a % of every junior with an interest in silver.
Note: This is not investment advice. I own shares of all companies mentioned and some are sponsors. Therefore consider me biased and do your own due diligence!