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Wilderness of Mirrors
Richard (Rick) Mills
Ahead of the Herd
As a general
rule, the most successful man in life is the man who has the best information
Access to raw
materials has become essential to the functioning of all industrialized
economies. Threats to access and distribution of these commodities could
instability of supplier countries
manipulation of supplies
competition over supplies
worrying, and growing trend, is that countries rich in resources are limiting
the availability of raw materials - commodities that are the building blocks of
modern societies - in order to support their own industries. Such export
restrictions could start confrontations over scarce resources.
restrict the export, or subsidize the import of, raw materials by means of:
and or quotas
import or local purchase of raw materials
a factor and is already infecting commodity prices.
to a very inflationary environment. US President Obama is promising trillion
dollar deficits for years to come and the US dollar is still the world’s reserve
currency. With all exporting countries trying to keep their currencies weaker
then the US dollar - to make their exports competitive - the inflation rate is
going to rise much higher.
governments are creating money and spending to excess inflation rears its ugly
head and investors move into hard assets. The best hard assets to buy during
these periods are commodities.
is we’re living on a relatively small planet with a finite amount of resources,
climate change is increasingly playing a role and we have a growing human
population. Accessing a sustainable, and secure, supply of raw materials is
going to become the number one priority for all countries. There’s no doubt in
this author’s mind we are going to see much tighter supplies of, and higher
prices for, commodities.
It’s a fact in
the mining world that most discoveries are made by a) junior mining companies
and b) old time individual prospectors. In this author’s opinion junior resource
companies offer the greatest leverage to increased demand and rising prices for
If I was
looking for superior investment vehicles to take advantage of what I think I
know regarding the future for commodities I’d be looking at junior resource
companies, not majors, involved in the search for, and development of, the
worlds future sources of commodity supply -
majors are exposed to
various industries such as:
are not correlated directly to specific commodity price rises like junior
resource companies can be.
majors, own the worlds future mines and juniors are the ones most adept at
finding these future mines. They already own, and find, what the world’s larger
mining companies need to replace reserves and grow their asset base.
resource company’s serve an important role in the commodities markets – they
feed the supply chain.
In 1996 the
whole junior bull market was centered around Bre-X. Then there was the
technology stock boom based on the greater fool theory. The last bull market run
for junior companies started in 2002 and imploded in 2007/2008. The TSX (and
TSX.V) has experienced three major boom and bust cycles in the last fifteen or
so years. This author believes we are on the cusp of another bull market run for
junior resource companies.
of Mirrors” is a phrase coined by the 1950s era counter-intelligence chief John
Foster Dulles to describe the intelligence game. In particular, the phrase
refers to the difficulty of separating disinformation from truth.
opportunities in the junior resource sector are significant. But the junior
population is quite large and there are literally thousands of stocks to choose
from that want your dollars.
There is a steep
learning curve and there are serious risks – great rewards come hand in hand
with great risk. You must be prepared to do your own due diligence and uncover
You must be able
to evaluate these opportunities, pay regular attention to your portfolio, manage
the risk and take responsibility for your own decisions.
I keep a vigil in a wilderness of mirrors
Where nothing here is ever what it seems
Vigil in a Wilderness of Mirrors
Is the junior resource sector on
your radar screen? If it isn’t, maybe it should be.
Richard (Rick) Mills
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Richard is host of
aheadoftheherd.com and invests in the junior resource sector. His articles have
been published on over 200 websites, including: Wall Street Journal, SafeHaven,
Market Oracle, USAToday, National Post, Stockhouse, Lewrockwell.com, Casey
Research, 24hgold, Vancouver Sun, SilverBearCafe, Infomine, Huffington Post,
Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald,
Resource Investor and Financial Sense.
Legal Notice / Disclaimer
This document is not and should
not be construed as an offer to sell or the solicitation of an offer to purchase
or subscribe for any investment. Richard Mills has based this document on
information obtained from sources he believes to be reliable but which has not
been independently verified; Richard Mills makes no guarantee, representation or
warranty and accepts no responsibility or liability as to its accuracy or
completeness. Expressions of opinion are those of Richard Mills only and are
subject to change without notice. Richard Mills assumes no warranty, liability
or guarantee for the current relevance, correctness or completeness of any
information provided within this Report and will not be held liable for the
consequence of reliance upon any opinion or statement contained herein or any
omission. Furthermore, I, Richard Mills, assume no liability for any direct or
indirect loss or damage or, in particular, for lost profit, which you may incur
as a result of the use and existence of the information provided within this
Richard Mills does not own
shares of any company mentioned in this report.
No company mentioned in this
report is an advertiser on his website aheadoftheherd.com.