Resource World Magazine

24 www.resourceworld.com A P R I L / M A Y 2 0 1 8 That means if you're willing to spend 10 hours a month in actual study – read- ing annual reports, reading press releases, reading proxy statements, reading quar- terlies. If you're willing to spend 10 hours a month, then you can have 10 stocks in your portfolio. If you're willing to spend 30 hours a month, you can have 30 stocks in your portfolio. If you're more interested in things like your kids, golf, reading and gardening, then certainly participate in the sector through an ETF because you aren't devoting substantial time to manag- ing your treasure. RW: Do you favour junior gold explor- ers, growing mid-tier gold producers, senior producers or all of them? RR: I personally prefer less efficient markets because I'm willing to work hard which means I prefer the smaller compa- nies where information concerning the companies is less efficiently distributed and where I can gain a material edge against other speculators. People, who want to work less hard, should go much further up the safety chain. RW: Would you say that investment in gold and gold stocks is underinvested at the moment? RR: Yes, absolutely! I read a story about a year and a half ago, which suggested in my country, the United States, investments in precious metals and precious metals equities constituted between 1/3 and 1/2 of 1% of the investable assets in the United States. Looking back to 1981 at the peak, 8.5% of investable capital among Americans was allocated to precious metals and natu- ral resource stocks. For the three decades I have been in the business it was about 1.5%. That simple number tells you that never mind gold's market share going back to where it was in 1981, if we merely reverted to my three decades, demand for precious metals and precious metals assets would go up between 300 and 400% in the single largest most important investment market in the world. RW: Are high quality gold stocks a bet- ter investment than other industrial sector stocks? RR: No, I don't believe so. If you look at the corporate performance of the gold industry over the last 40 years, unfortu- nately what we've asked gold companies to do is exhibit leverage to the gold price which is ironic because the most leveraged companies are the most marginal. The gold mining industry has become an extremely marginal activity and although there has been a renewed focus, which I welcome, a return on capital employed, cost of capi- tal and marginal efficiency, gold mining is merely a sector in the broader economy. Investors are advised not to overweight gold in their portfolios, although cur- rently, as with the last question, there is no immediate danger of seeing investors over-investing in the sector. Gold mining companies are a subset in an intelligently constructed diversified portfolio. n RICK RULE INTERVIEW

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