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  • Brent Cook: Investing During The Era Of Peak Gold Discoveries

    We've hit peak economic gold discoveries, but unlike the new fracking technologies that saved the oil industry, there's no fracking technology to coax mineral wealth from ever-deeper deposits. In the face of this shortage, expert geologist Brent Cook of Exploration Insights is scouting out companies that are cashed up and poised to deliver value when other miners may be left scraping the bottom of the barrel. In this interview with The Gold Report, find out what Cook expects for gold exploration in 2015, and why the next few years are going to be very interesting indeed for yellow metal miners.

    The Gold Report: Brent, you've quoted Goldcorp Inc.'s (NYSE:GG) CEO, Charles Jeannes, saying that we've reached peak economic gold production. What led us to this point?

    Brent Cook: That's a big question that really goes back to what was happening in the global exploration sector 20+ years ago. I don't want to get into the peak gold production idea but instead focus on the discovery curve and what's behind the problem we are seeing in the gold sector.

    Why aren't we finding as many gold deposits as we used to, or at least as many economic deposits? In 1995 or so, the discovery boom in the gold sector peaked and that success is largely tied to the opening of large areas of earth that were previously off limits to serious exploration. Since then, exploration success and new discoveries have trended down. However, in terms of gold production, it's taken about 20 years for all those discoveries to work their way through the system to come into full production.

    So what Charles Jeannes sees is that in 2015 or so, gold production is going to be tapering off as opposed to expanding. That's especially true given the current gold price and cost structure. A lot of these companies aren't making much money, or any money at all. They'll be shutting down loss-making projects over the coming years.

    TGR: Are we running out of gold in the world, or did we just not make an investment in a timely manner, say, 20 years ago?

    BC: No, we're not running out of gold. We're finding gold deposits, but most of them are not economic. That's really the issue here. For example, there are 20 million tons [20 Mt] gold in the ocean seawater, but it grades about 13 parts per trillion and will never be economic. It's that economic hurdle that is really at issue here.

    In the 1990s, the world opened up to exploration. We found a lot of deposits sitting at the surface in jurisdictions that were once inaccessible, basically the low-hanging fruit. But by and large, there is a finite number of outcropping ore bodies and the few remaining are increasingly difficult to find. We've nearly exhausted the surface and are forced to drill for blind deposits through barren rock using really esoteric methods. The odds of success are much lower, and the costs are much higher.

    I'll give you an interesting ballpark figure that is based on how geology and the earth work. For every, say, 10 gold deposits of 1 million ounces [1 Moz] grading 1 gram per tonne [1 g/t], the earth formed one deposit of 1 Moz that grades 2.5 g/t. Those are more or less the odds. The problem is that although a 1 g/t deposit may be economic at surface, when it lies under 200 meters of barren cover, it is no longer economic. The unfortunate reality for us explorers is that those odds mean that we are still going to find about ten 1 g/t deposits for every 2.5 g/t deposit. Our economic success rate has to go down, and the data back up that conclusion. That is also the reason we have so many companies boasting NI-43-101-compliant resources that in my view will never be converted to economic reserves-never.

    TGR: Isn't there just a lot less investment in exploration happening right now, with companies trying to cut costs?

    BC: Yes, that's a really good point. Exploration has been cut to the bone across the sector. In the junior sector, it's almost impossible to raise money for exploration. So, yes, we're not spending enough money to find quality deposits, and this situation is going to get worse. Additionally, consider the fact that new discoveries are going to cost more to make because 1) for the most part they are going to be deeper so they will require more drilling just to have a look, 2) as I mentioned previously, we are going to find more uneconomic or marginal deposits than economic ones, and 3) for the most part those uneconomic deposits will have to be drilled out just to see what they grade. So each new economic discovery will cost the industry more than in the past but we are spending considerably less looking. What does that tell you?

    TGR: What's the lag time? When are we going to see the effect of that lack of investment?

    BC: I think we'll start seeing it next year and, certainly, into the coming years. My investment thesis is that the mining companies that are currently in production are going to eventually wake up to the fact that they have nothing on-line to replace what they've been mining. That's when they're going to have to go out and buy the few deposits that make money. Those are the deposits you want to own early on.

    Now the simple fix for what appears to be a fundamental gold supply-demand equation is, of course, higher gold prices. However, I'm not convinced there is, or will be, a gold supply problem that will translate directly into higher real prices that bail out the miners and their marginal deposits. Almost all the gold that has ever been produced is still available in some form or other and much of it potentially for sale at some price.

    So, unless there's a real run on gold, as well as gold hoarding, we may not see the gold price rise to compensate for less economic deposits. Plus, as we saw in the last big boom in the gold price, input costs, labor, equipment, supplies, power-everything-rose in tandem with the gold price. So even with $1,300/ounce [$1,300/oz] gold, miners' margins didn't increase much. I think it's going to get really interesting in 2015, 2016 and 2017.

    Some people are theorizing that new technology is going to change the game, as it did for peak oil. I don't see it. Hard rock geology and minerals mining are much more complex and difficult than oil and gas extraction. We can and do continually make small improvements in technology, metallurgy and such that take a few dollars or tens of dollars off the per ounce production costs, but those aren't anything like the fracking technology.

    TGR: Even when discoveries are made, is it getting more difficult to get permission to mine in many parts of the world?

    BC: That's another consideration. Let's say you do make a discovery. Inevitably, you have social issues to deal with. You have politicians and everyone within a hundred miles yelling for their piece of the pie. You have permitting to go through, and permitting is much more difficult than it used to be. In 1995, it took maybe 10 years to get a big deposit into production. It's now averaging 10-20 years to get a big deposit into production. So these mining companies have to look at a discovery and make some projections, not just as to what the gold price is going to be 15 years down the road but, also, what the labor costs are going to be, what the power costs are going to be. And those unquantifiable risks keep companies from making investments.

    TGR: Are there some places that are easier to do business in than others?

    BC: Most certainly. I think Canada is pretty good, and Quebec is a great place. In the U.S., Nevada, Utah, Wyoming, parts of Idaho are good places to work. Mexico in general and a lot of places in Latin America are good including Peru and Chile, although with Chile one has to consider water and power issues early on. West Africa is generally good. So there are certainly safer places to work. But there's always a risk things will change politically. We recently saw Zambia raise the royalty on companies from 6% to 20%, and Barrick Gold Corp. (NYSE:ABX) shut down its copper mine.

    TGR: Based on all of that, what companies are doing exploration the right way, have the right teams in place and have the money to execute on them?

    BC: Not that many. If you're looking to buy an exploration company, first off is always the people. That's really critical in an exploration company. Are the technical people on the ground smart enough and competent enough to recognize a good system and explore it properly and, more importantly, do they know when to cut bait? Unfortunately, in this sector, people sometimes keep drilling and drilling and drilling on a project because that's how they make their living. You want to own a company that has a technical team that knows what a deposit looks like and knows what one doesn't look like. Then you need a company that has the cash to keep going-there are getting to be fewer and fewer of those-and a share structure that's not blown out in shape.

    TGR: Your next name?

    BC: Reservoir Minerals Inc. (OTCPK:RVRLF) [RMC:TSX.V] has probably made one of the best discoveries in the past few years in partnership with Freeport-McMoRan Copper & Gold Inc.'s (NYSE:FCX) exploration in Serbia. It defined something like 65 Mt grading 3.1% copper equivalent. This thing sits under 400 meters of barren rock. Reservoir has ~$38M in the bank and a number of 100%-owned projects surrounding the discovery that it is testing right now. A successful discovery there would be huge for the company. And they're smart people; they know what they're doing.

    TGR: What about the African projects? Are you watching those as well?

    BC: In Cameroon, it is very early stage. It turned up some very encouraging early results, trenching rock samples, that sort of thing. It is a company that will probably joint venture most projects. Certainly in Africa, it builds them up to the stage where there's a solid drill target and then brings somebody in to drill it and, if it's successful, mine it.

    TGR: What are some other companies that fit your criteria?

    BC: Sometime early this year, I think we're going to see a bit of optimism in the mining sector, including the gold sector and the junior sector. I wanted to buy some companies that were in safe jurisdictions, were well known and had the cash to move forward.

    Premier Gold Mines Ltd. (OTCPK:PIRGF) [PG:TSX] is a very competent group. It has cash. Its Hardrock deposit actually looks like it's going to work. That's something that I think another company should buy. Premier has projects in Nevada and in the Red Lake District of Ontario as well.

    TGR: You've commented that the gold price has held up surprisingly well in many currencies, with much of the downside behind us. You even ventured that we could see some temporary optimism. Give us something to be hopeful about.

    BC: It's been bad so long that it has to get good. I think it's a reasonable speculation that we're going to see some optimism in 2015, but overall, I'm not terribly positive toward the junior sector or the gold price in the short term. I think 2015 looks a lot like this year did. The upside there is that we're going to have real opportunities to buy the few quality exploration groups and deposits that will be much more valuable come 2016 and 2017.

    TGR: Gold prices and junior mining stocks are often very cyclical. You have tax-loss selling, then you have the "January effect" and then "sell in May and go away." Do those clichés still hold up in today's market? Can we expect a January effect in 2015?

    BC: I think so. That's my bet on those last three stocks we talked about, but who knows. It's been a pretty crazy couple of years.

    TGR: Thanks for sharing your insights, Brent.

    BC: My pleasure.

    This interview was conducted by JT Long of The Gold Report and can be read in its entirety here.

    Brent Cook brings more than 30 years of experience to his role as a geologist, consultant and investment adviser. His knowledge spans all areas of the mining business, from the conceptual stage through detailed technical and financial modeling related to mine development and production. Cook's weekly Exploration Insights newsletter focuses on early discovery, high-reward opportunities, primarily among junior mining and exploration companies.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

    DISCLOSURE:
    1) JT Long conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Premier Gold Mines Ltd. Goldcorp Inc. is not affiliated with Streetwise Reports. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) Brent Cook: I own, or my family owns, shares of the following companies mentioned in this interview: Reservoir Minerals Inc., Premier Gold Mines Ltd. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8999
    Fax: (707) 981-8998
    Email: jluther@streetwisereports.com

    Jan 05 1:39 PM | Link | Comment!
  • The Exploration Companies Bottomfisher John Kaiser Thinks Could Get Gold Investors Excited Again

    The junior resource market is at a historic low point, but Kaiser Research Online author John Kaiser knows it just takes one big discovery to bring excitement-and investor dollars-back to the market. It has happened before. In this interview with The Gold Report, he reveals which companies could lead the way.

    The Gold Report: When we talked in October, you compared the resource sector to a swamp. Is that still a good analogy?

    John Kaiser: The resource sector is analogous to a swamp in that companies in this space are having a very difficult time making any headway. Valuations are extremely low. All the big narratives are either going south or stuck in a rut. There is no capital flowing in to make this swamp a little bit more liquid, so it is really a morass that all the companies are bogged down in.

    TGR: One of the narratives we discussed last time was discovery exploration. Exploration Insights author Brent Cook believes gold supply will start suffering as early as next year due to a lack of investment in exploration. Do you see the same challenge for companies looking to replace high-graded mined ounces, and will that lead to higher gold prices?

    JK: In principle the all-in cost of producing new ounces suggests that if overall demand for gold goes beyond the existing 5.4 billion ounce stock, then gold prices have to go up. Miners simply can't keep mining projects in a loss position, and they really can't push into production deposits that will lose money at the current price. However, it could take a number of years before we see the higher gold price emerge.

    One of the potential surprises for 2015 is not from the usual suspects of fiat currency debasement or hyperinflation or deficit expansion, but from an old standby called geopolitics. What we're seeing with this decline in the oil price, down to below $60 per barrel and possibly lower, is an extraordinarily destabilizing effect on the global power balance. Even the recent North Korean cyber attack on Sony and the subsequent outage of the North Korean Internet could have a destabilizing effect. I think 2015 will be the year that gold may put on several hundred dollars an ounce for geopolitical reasons. Those would be real price gains. They would instantly flow to the bottom line.

    TGR: Could low prices also lead to more mergers and acquisitions?

    JK: Yes. Something on the order of $140 billion [$140B] worth of Canadian juniors were taken over in the past decade. A good chunk of those involved copper-related deposits. What's left are copper deposits that need a somewhat better copper price to justify being taken over. A lot of the deposits that were taken over are still in the pipeline waiting for a final go signal.

    In the gold space, a number of high profile takeover bids have been written down, but there are still a significant number of advanced deposits owned by juniors that are not very appetizing to the majors at the current gold price. If we start seeing an increase in the price of gold, we would see a scramble to clean out the remaining batch of advanced gold deposits. For investors, it's not going to be much of a consolation to get a 200-300% premium off current levels, which are down 90% from their peak prices in the past four years. However, this could provide a wave of capital into the sector.

    Very few existing gold deposits that work below $1,400 an ounce [$1,400/oz] remain in private hands awaiting acquisition by a public junior, and when the current inventory held by juniors gets cleaned out through takeover bids, it is possible that the resulting capital could go into discovery exploration for new deposits that work below $1,400/oz. Of course, if gold were to go to $2,000/oz, a lot of projects would look good again and capital aimed at feasibility demonstration would flow into gold projects that are hopeless below $1,400/oz.

    TGR: Do you still see the collapse in the resource sector as a good thing because it killed off the dead wood, making it easier to find good values?

    JK: Unfortunately the problem is that the sector is dropping through an extinction threshold that threatens good and bad juniors. Some 700 companies have negative working capital that is never going to be repaid by real money. Another 400 companies have under $500,000 in the bank. These are the ones that are hanging in there, but because it's become so difficult to refinance, their willingness to spend dollars on discovery exploration is very muted. This has created a kind of trap where the high-risk type of exploration programs that deliver the surprise discoveries are not happening with the degree of abundance needed to get investors excited again. That is why we need to put some money into projects where management has been burning the midnight oil to determine the best targets for the few bullets they have left.

    TGR: What are some companies that are giving investors hope?

    JK: One of my favorites from the past year has been Probe Mines Limited (OTCPK:PROBF) [PRB:TSX.V]. This is a hybrid-type company with an existing resource of low-grade disseminated gold at about 4-6 million ounces [4-6 Moz] at 1 g/t. At the current gold price, those resources are not very interesting. But in 2013 the company discovered a much higher grade zone that can be mined underground, and produced a resource estimate of 2 Moz at a good underground mineable grade. The story stalled during 2014 because the ability to chase the extensions of the zone was constrained by the land position.

    For two years the company has been negotiating with the lumber company surrounding the property to acquire that land. A combination cash-and-stock deal finally came through in early December. Probe now has lots of running room to chase the deposit, and this system has the potential to blossom. If we do get a pop in the price of gold, the company benefits because it starts bringing the lower-grade ounces back into the equation, but primarily it is an exploration play where one can hope to see the resource estimate double or triple with similar high-grade mineralization pursued down plunge, and perhaps even in parallel zones on the ground just acquired.

    TGR: When might we start seeing test results from some of that new property?

    JK: At the moment Probe is doing infill drilling. The main drilling is under Borden Lake, which has to wait until the end of January when it is frozen. We will see an intensive lake drilling program from February until late March as long as the ice holds. The goal is to track the zone across the entire lake, see if it makes landfall, and then carry on drilling from solid ground in the summer. Any meaningful assays will not come out until May or June of next year. However, news about where the zone is going and what the nature of the mineralization looks like could get the market excited in the meantime.

    TGR: Talking about timing, often stocks go through a yearly cycle, with tax-loss selling in December and investors returning to the market for the January Effect, positioning themselves for spring advances. Are you planning for a January Effect?

    JK: Last year we saw a selective turnaround in the first quarter, with better juniors starting to trend up. A fair amount of money was raised during this time and we saw some takeover bids, such as Osisko Mining Corp. acquired by Agnico Eagle Mines Ltd. (NYSE:AEM) and Yamana Gold Inc. (NYSE:AUY), which put some money into the system. That rebound was tracking gold's run toward $1,400/oz gold. But by the third week of March, gold started to retreat and we have been in a downtrend ever since. If we do not get a sustained uptrend in gold this year, I question whether we will get any sort of meaningful January Effect in 2015.

    I think there is reason to start accumulating companies that can afford to be patient. Those companies may develop modest uptrends heading into 2015. In the absence of a meaningful gold price spike, it's going to be tough to get any broad-based uptrend going. As far as macroeconomic trends, even if copper prices start to improve, the United States economy continues to grow and starts giving heart to the emerging market economy again, it could be another year before any of that washes over into optimism that the commodity cycle narrative is back in an uptrend.

    TGR: You are speaking at the Cambridge House Canadian Investment Conference in January. What message are you going to be giving?

    JK: I'm going to argue that in this type of environment the only way investors can get any significant action is through exploration discoveries. That is why we need to look at companies that are doing exploration, perhaps finance those companies and then monitor to see who is coming up with a significant discovery. These types of discovery plays have always bailed out the Canadian junior sector after some pretty bad bear markets. After a long discovery dry spell, I think the idea that a junior could still make a meaningful hit could inspire investors to take a look at the serious companies with proper exploration teams and with a story that gives reason to be optimistic.

    TGR: John, thanks for your insights.

    This interview was conducted by JT Long of The Gold Report and can be read in its entirety here.

    John Kaiser, a mining analyst with 25-plus years of experience, produces Kaiser Research Online. After graduating from the University of British Columbia in 1982, he joined Continental Carlisle Douglas as a research assistant. Six years later, he moved to Pacific International Securities as research director, and also became a registered investment adviser. He moved to the U.S. with his family in 1994.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

    DISCLOSURE:
    1) JT Long conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.
    2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Probe Mines Limited. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) John Kaiser: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
    5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

    Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

    Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

    101 Second St., Suite 110
    Petaluma, CA 94952

    Tel.: (707) 981-8999
    Fax: (707) 981-8998
    Email: jluther@streetwisereports.com

    Dec 31 3:28 PM | Link | Comment!
  • Resolve To Do Better In 2015: Expert Edition

    As natural resource investors take stock of their 2014 portfolio shifts and make adjustments for 2015, The Gold Report quizzed top experts in the sector on what resolutions they are making and-perhaps more important-what steps they are taking to make sure they will stick to the hard choices they have vowed. We want to know if you are taking the same steps, have your own plan to make the most of whatever happens in the sector or just plain disagree. Please use the comment section to let us know what you will be investing in as we bravely face a new year.

    Porter Stansberry: My annual investment goal never changes. There are two parts.

    First, I strive to save at least half of my after-tax income. I define "saving" broadly. Buying cars doesn't count. Buying gold does. Buying land does, even if it's merely land for recreational purposes like hunting and fishing. That's because I can be reasonably certain that in 10 years I could sell any of the land I bought last year for far more than I paid for it. And, of course, some of the real estate I bought was income producing. Last year, according to the latest numbers from my accountant, I saved 59% of my after-tax income.

    Now, you might complain that saving so much is easy for me, because I have a large income. Bullshit. I don't care how much [or how little] you earn. Saving is always hard. The temptation is always there to enjoy the wealth you've accumulated right now. To save 59% last year I had to give up some of the things I've been able to afford historically. My income has fallen because I hired a CEO for my company and gave up a large amount of my compensation in exchange for his service. To make sure my savings rate didn't change, I had to make big changes to my lifestyle and spending habits. Believe it or not, it is every bit as hard emotionally to give up these perks-even harder, actually-than it was to do without things when I was younger. Back then, I didn't know any better.

    I have always been willing to exchange short-term gratification for long-term wealth. I made the same choices at 26 when my salary was $32,000 per year. Back in 1990, I lived in a walk-up, ghetto apartment at the corner of North Avenue and Eutaw Place in Baltimore. This is one of the 10 or so most violent neighborhoods in the United States. But it's all I could afford at $250 per month. I also drove a 10-year old car and rode a bike when it broke down. I never went out to eat. I didn't have a TV or Internet access. What did I do? I read a lot. I spent a lot of time running, exercising. And I worked around 100 hours a week. I planned what I would do with the money I was saving and the businesses I was starting. That was how I saved half my income when my income was much smaller.

    I would have never become wealthy if I hadn't made these choices. They gave me the financial footing I needed to drive a hard bargain, to make the right deal and to demand the rewards I earned in my business career. It would have never happened for me if I hadn't been willing to sacrifice near-term comfort and convenience for long-term gains.

    If you really want to be wealthy [and there are plenty of other important goals in life], you had better learn to save half of your after-tax income. If you can't do that, then you're deluding yourself.

    So, first goal every year is to save more than half of my after tax income.

    Part II of my annual financial goal is to secure a growing, substantial income.

    Every year, I invest $1 million in one great business that's trading at an incredibly cheap price. Sure, I make plenty of other investments, too. But this is my main financial goal each year: Buy one great business. I don't diversify these investments. I don't try to buy 10 great businesses every year. And, I don't use trailing stop losses on these investments. I normally recommend diversification and trailing stops to all investors for their portfolios.

    So, why don't I use those tools with my own money?

    Well, I do. But just not in the way you're used to seeing.

    I started putting $1 million into a single stock when I turned 40 years old. I figured that if I did this 20 times, by the time I was 60 I would own a pretty incredible group of businesses. Sure, some of them may go bust. But, I'll be diversified over time. My portfolio allocation is still only 5% into each business. If you limit your position size, it's okay not to use a stop loss. I don't want to tell you what I've bought so far, because I don't want you to invest in the companies I know and admire. I want you to buy great operating businesses that you know and admire.

    Pick one a year. Make a substantial investment. Go to the annual meeting. Read the quarterly reports. Correspond with the management team. Think and act like an owner. I promise, this will change the way you think about business and the way you behave as an investor. And it will greatly increase your average returns.

    If you don't know what a great business looks like, I have written about "World Dominating Dividend Growers" on my website. Or, for an even easier black and white list, just consult the PowerShares Dividend Achievers ETF (NYSEARCA:PFM). These are all companies that have proven over many decades to be excellent companies managed by truly talented and honest individuals. The top 10 holdings today are: Wal-Mart, Proctor & Gamble, Johnson & Johnson, Exxon, Coca-Cola, Chevron, Intel, AT&T, IBM and Pepsico. The average price-to-book ratio in this ETF is 2.7 and the average price-to-sales ratio is 1.5. If you're buying equity for more than these prices-and you probably are if you invest in mutual funds-you're getting ripped off.

    My goal is buy companies that can match these firms in terms of longevity, performance, return on assets/equity, profit margin, etc., but are trading for less than 10 times earnings. [The average price-to-earnings multiple in the Dividend Achievers ETF is currently 17.5]. So far I've bought two great businesses for around four times earnings. These opportunities are available, year after year, for folks who are willing to study great businesses and buy them when, for whatever reason, the market turns against them. The key to success when it comes to buying publicly traded stocks is to simply know the business you're buying and never pay too much.

    I could go on for a long time about the types of businesses I admire-they don't have any debt, they don't require much in the way of capital investment, their CEOs make very rational capital allocation decisions [such as buying stock instead of paying a dividend only when the stock is very cheap]. The point is: I only want to invest in businesses that are far, far better than I could build with my own capital. If I buy 20 great businesses over the next 20 years, then, whatever else happens with my companies, or with my career, both my family and I will have a tremendous amount of financial security. I have the luxury of plenty of investment capital because I took the time to learn how to save. That's why saving comes first, and investing comes second.

    Remember, every great journey begins with a single step.

    10 Ways to Make 2015 the Best Year Yet

    Like Porter Stansberry, a lot of investors are focused on spotting bubbles and managing risk in 2015. These 10 sector experts shared their plans for making the most of the coming year. You can share your resolutions in the comment section below.

    Rick Rule: I think we're on the verge of a spectacular resource market place. I believe we will see capitulation in the next couple years, and two years from now we will look like heroes because of all our smart decisions.

    I am really enjoying the opportunities now to buy low, but my resolution is to sell at the right time. That is the key to successful execution. During the large resource resurgence that is coming, I have to be disciplined and sell just when things are looking good. That is very hard, but very, very important.

    Harry Dent: My resolution is to respect bubbles. They grow exponentially, usually over five or six years, which is about as long as this one's been building.

    Most economists don't study bubbles. They don't understand them. People who do understand bubbles tend to call them too early. I've had to keep going back to my subscribers and say, gosh, it looks like it was peaking here, but we're still not getting signs because it still wants to go up.

    I'm going to respect the bubble, stay with it and look for a peak around March of 2015 and the NASDAQ to retest its bubble highs in 2000 of 5,050. If that happens, the Dow could go up to 19,000. If I see that, I'm going to sell and/or short the market come hell or high water. That's my resolution. I always tell people, it's better to get out of a bubble a little early than a little late.

    Chen Lin: The low oil price is here to stay for a while and my plan for 2015 is to focus on companies that can do well at lower prices. Pan Orient Energy Corp. (OTCPK:POEFF) [POE:TSX.V] is my top holding in energy companies and I have high hopes for the stock in 2015.

    Kal Kotecha: My resolution for 2015 is to bet on junior mining stocks while it is still the most undervalued market in the world. This is just like 2008 all over again. I try to keep emotion out of the decision-making process and focus on the fundamentals and the valuations of the individual companies. I compare the downside risk with the upside potential and what I could make by putting the money in a savings account. The bottom line is that this is how riches are made.

    Frank Holmes: Tough markets can take a toll on the intellectual and emotional confidence of anyone in this industry, but tough times don't last forever, tough people do. With that, my investment resolution for 2015 is to have tougher love for the business. A few ways I plan to do this is to hold management accountable for what they control, and also to have the sensitivity to recognize things like poor government policies because government policies are a precursor to change.

    David Morgan: My resolution is to strive for balance in my life and in my investments. I recommend that people be only 10-20% in the resource sector. That way they can have exposure to lots of investing options.

    One way to ensure balance is to put in place trailing stops that force you to take profits. Investors have to reach inside to determine what levels of risk they can afford and weigh that against the volatility of the specific stock. It is a bit of an art, but it is the best way to be successful.

    Doug Casey: I don't put much store in New Year's resolutions. But on this topic, I'd say there's just one right now: Conserve capital. That's going to be hard if the current worldwide asset bubble bursts. I hope to ensure I do that by being extra cautious about getting into any new deals, especially illiquid deals.

    Brent Cook: I resolve to play more beach volleyball. I also will try to be more disciplined in my investment expectations-particularly when it comes to when I buy and sell. I know that more than 90% of the junior mining companies out there will fail, so I try to look for the fatal flaw early and get out of the way. If I don't find a flaw, that is when I know to buy in and then buy more. This is my money I am investing, so I have to be critical.

    Chris Berry: I don't make New Year's resolutions but instead go back to the guidelines that I have set for myself with respect to investing in the commodities markets. I review these each quarter and add or amend as necessary. This allows for flexibility not so much in investing style but in how I approach different opportunities in the metals. To me, investing is more about managing risk rather than generating returns and the guidelines I have set up are designed to aid in this approach.

    Keith Schaefer: Be disciplined in taking losses. My biggest loss in 2014 was actually a stock I bought in 2011 and held on for too long, just thinking management couldn't get any worse, that the company would perform eventually. But of course it didn't. The chart was telling me to sell and I didn't. Shoot your dogs quick!

    This interview was conducted by JT Long of The Gold Report and can be read in its entirety here.

    Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

    DISCLOSURE:
    1) JT Long compiled this article for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this article: None.
    2) The following companies mentioned in the article are sponsors of Streetwise Reports: Pan Orient Energy Corp. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services.
    3) Chen Lin: I own, or my family owns, shares of the following companies mentioned in this article: Pan Orient Energy Corp. I personally am, or my family is, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
    4) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.

    5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

    Streetwise - The Gold Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

    Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

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