In the fifth and final section of the Rick Rule interview with Real Vision, Rick wraps up with a finer view on some of the nuances of becoming a successful investor (hint: the biggest challenge lies just between our left and right ears.) And, as no interviewer can resist, Grant Williams asks Rick a few final questions on gold.

Click here to watch Part 5


In Part 4, Rick says it took nearly five years before his thesis on a rising uranium price took hold. From a net present value standpoint, which considers the time-value of money, five years early means, mathematically, that you’re not just early… you’re wrong. But in the case of uranium, the reward for waiting was so high, that it was enough to ameliorate that long time lag. But how do you differentiate between being wrong and being early?

The common flaw with all value investors is confusing “inevitable” with “imminent.” As it were, the market can stay illogical longer than most of us can remain solvent. But no one can predict timing, and early is better than late. Early allows us time to study, time to build conviction, time to flex both our financial and psychological muscle in order to gain conviction and stay the trade.

But when do we acknowledge we are wrong? We have to distinguish between the facts and the narrative. Coal is an excellent example. Everyone hates coal. The narrative is fraught with negative sentiment: it’s ugly, dangerous and cheap. But the truth of coal is that it generates 33% of US baseload power[1] and all the steel used to build our cars, buildings and infrastructure. It’s vitally important to power and building the US economy and our stocks are dwindling.[2] So where is Rick looking for the long term? Certainly uranium, coal, copper and iron ore.

But investments in these areas require long term capital, and we have to understand the role of such a position in our portfolios. These bets are non-correlated to the broader market cycle, they are likely to be volatile in the short and medium term, and some of them may not work at all. But it’s these huge outside outcomes that not only ameliorate your losses, but can fully alter the shape of your portfolio and net worth. (Lumina Copper was one such example. It was a stock that moved from $0.50 to $160.00 over an eight year period).
But these bets are not easy; if you want a Lumina situation, you have to be prepared to work hard, endure pain, and invest capital. Today is a unique time in resource investing history: there is opportunity across the stratum. The Neiman Marcus goods are at Wal-Mart prices, and a smart investor can build an entire portfolio to realize value.

Finally, Rick mentions his three reasons to invest in gold: insurance, performance, and an inevitable (and imminent?) market rebalancing in gold’s favor.

Thank you for tuning in to this special series. We hope you enjoyed listening to Rick’s insights. You can learn more about Real Vision by clicking here. As always, please reach out to your Sprott financial advisor for any questions about this series or any of your other investment needs.