VRIC: Quality companies are investors’ best bet when valuations fall
“I’m not buying that,” he told VRIC in Vancouver on May 17.
According to the seasoned investor and co-founder of the Exploration Insights newsletter, retail investors should check to see if the small businesses they are interested in have enough cash in the bank.
“It’s going to be really hard to fund anything unless it’s really high quality and proven,” he said. “So if you’re considering a junior exploration company, find someone who has the money and is willing to go, unless you want to help fund it.”
A prime example of such a company, he says, is Liberty Gold (TSX: LGD), with gold deposits in Idaho and Utah. “These are good oxide deposits. The company has about $34 million in the bank and three or four drilling rigs right now,” he said.
Speculative resource investor Rick Rule reminded the public that money has always been made in the gap between price and value. “The value doesn’t seem to change much in the four to six week time frame, but if the price changes, you’re better off seeing a lower value than a higher value if you’re an accumulator, which I am,” Rule said.
“What I love about markets like this where people are scared is that they take a break from their common sense, which is to say that all my competitors seem to unilaterally disarm because of out of fear,” Rule said.
“I’m just pointing out that in terms of the concentration of my portfolio, when the best companies start selling at low prices, I’m less inclined to take risks when the less risky positions become less and less expensive. So maybe depending on my age, I find myself leaning towards the higher quality companies rather than the lower quality companies,” Rule said.
Panelists noted that there always seems to be a gold bull market just around the corner, and right now there are absolutely no exceptions.
The rule was accepted, stating that gold was currently still in a bull market.
“I think people expect gold bull markets to lead to heaven. Most people have a two or three week inclination when living in a 10 year old world,” Rule said. “From my perspective, we’ve been in a gold bull market for four and a half years, not three weeks out of one.”
GoldSilver.com analyst Jeff Clark also agreed that gold and silver benefit from bull markets. “Just because prices are lower doesn’t determine whether the bull market is over or not. It’s not about price lower. For me, it’s about whether the fundamentals are still in place.
“And if they are, that invites me to continue to aggressively participate in the global marketplace,” Clark said.
He cites the crash in commodity prices during the Covid outbreak in March 2020. “If you bought then against every technical signal saying it’s a bear market; the bull market is over. But I bought in March 2020 and literally cleaned up a year later,” he said.