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It usually requires great pain and hitting a major stumbling block for
a person to radically change his ways and seek out refined knowledge,
above and beyond what he now sees as true.
This is mostly how anything in the affairs of humans gets accomplished. We hit a wall and find another way.
Nature’s way of showing us that a better path exists is through pain and failure. The greatest benefit of defeat
is that if you are disciplined enough to recognize the cause of your struggle, you’ll search for an equivalent
benefit – a lesson, a conclusion, a new course of action that is preferred to your losing one.
Its purpose is to provide you with actionable advice – what I would ask of you, had our roles been reversed.
Delve into this, and you’ll be fortified with a toolkit to take full advantage of for the rest of your life.
This is Part 1 of the King’s Wealth: The Complete Gold and Silver Stocks Playbook, and you
should find Portfolio Wealth Global’s Part 2 in this same email.
Many of the best investors of our times repeatedly read the same books, as you change and absorb another nugget
of data each time – please go back to this report in the same exact manner – to absorb the winning disciplines.
Ray Dalio is the CEO of Bridgewater Associates, the largest hedge fund ever, by a wide margin from 2nd place.
His wisdom is the result of what I term “Calculated Trial and Error.”
Studying his achievements, I learned that starting from the kitchen of his apartment in NYC in the early ‘70s, he
began placing “bets,” or trades he had perceived would be profitable, but he took one additional step. He began
tracing his mistakes, learning from them and back-testing his conclusions – nowadays, his computers can run
simulations going back decades, and even centuries.
THIS EXCLUSIVE REPORT SHOULD SERVE AS A PLAYBOOK FOR
YOU FROM HERE ON OUT.
CALCULATED TRIAL & ERROR
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That’s how he was able to avoid repeating many costly mistakes, and it’s the reason why he pioneered many of today’s
best risk vs. reward strategies.
Retaining knowledge is the key to progress – it is the means by which each of us can learn
from others and leverage everyone’s past efforts to our present advantage. In our free market
enterprise system, most, like Dalio, choose to retain the precious lessons they’ve learned, and
this becomes their competitive advantage.
Others write books or allow other authors to write books about them, granting them interviews and appearing in
conferences and lectures before younger generations, thus allowing others to capture some of their insights. Ray
Dalio belongs to this respectable camp.
It is impossible, useless, and hopeless to become an expert on many subjects. That lesson has been reaffirmed
countless times, including by the legendary Henry Ford, who was firmly convinced that the correct road to
riches isn’t to attain personal knowledge, which is limited by nature due to the constraints of time, but instead,
it is your ability to gain access to specialized knowledge that matters most. That’s probably how Ford, a 6th-
grade dropout, became the biggest industrialist of all time, and for a number of years, the richest man in the
world.
Warren Buffett, a man who has basically devoted his life to the sole mission of building a conglomerate and whose
Berkshire Hathaway owns more than 75 private and public businesses, has, from the age of 11, sacrificed all else
(including his own marriage) for the thrill of investing. It consumed him. Now, getting close to the age of 87, he sits in
his modest office for 8 hours a day, reading 5 newspapers, financial reports, and speaking to CEOs and his long-time
partner, Charlie Munger.
Devoting close to 175,000 hours to investments, his sole expertise is insurance.
Warren can look at any insurance company in the world and figure out, in a matter of 30 minutes, better than
anyone else, what the company’s intrinsic value is.
I studied his exact valuation methodology, tracking all his insurance acquisitions, and invested in 2 insurance
stocks 3 years ago.
Both have outperformed the S&P 500 and the insurance sector, as a whole, by a wide margin, and they offer
fatter dividends.
We will be publishing a new insurance stock suggestion to our Wealth Stocks Division this coming May. All previous
suggestions have crushed the S&P 500 so far.
Over the long-term, the average investor doesn’t stand a chance against Warren, so why should he even try?
Instead, he can enjoy Warren’s wisdom, or that of any other expert, by becoming his partner!
The stock market allows you, effortlessly, and without wining and dining anyone, to become
their partner – no convincing is required at all. It is the magic of the open market.
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The point is that one can only specialize in 1-2 skills at a genuinely competitive level, but he can seek out countless
experts in fields outside his own circle of competence and gain from their efforts – that is leverage when
implemented wisely.
It’s the reason behind the motto I’ve coined for my own ventures:
China is the best example of this. It was an all-powerful empire 700 years ago. It possessed knowledge, tools, skills,
methods, and wisdom that the Europeans only attained 400-500 years later. China was so rich and powerful that its
leaders wanted to find a way to preserve their country’s fortune, but the Caesars of the Ming dynasty took the worst
course of action towards building a thriving economy.
In order to stay on top, they deduced that their advanced capabilities should be kept within their national borders
and made all contact to the outside world forbidden and restricted.
Information didn’t flow freely -- or even at cost -- in and out, and so it died with the people who mastered it.
Information wasn’t written down or passed on. That was a huge mistake, as by the 20th century, China was
ranked as one of the poorest nations in the world.
After learning these lessons and completing careful research into the mechanisms of the fiat monetary system, my
partners and I decided to launch Portfolio Wealth Global on the premise of publishing our own highest-conviction
ideas.
Our strategy is to avoid mistakes committed by others in the past at all costs and to build
relationships with the most accomplished and proven experts – those whose track records,
and not their mouths, speak for them. We chose to focus on the most ballistic sectors: mining,
cutting-edge technologies, and cannabis legalization.
Small-cap investing requires becoming an expert of people, more than anything else. It will take you forever to
become a master of geology, raising funds, structuring a shell company correctly, staking out assets, negotiating,
motivating a team, attracting quality management, and learning countless other skills needed to make a fortune in
mining.
That’s the reason why we publish our highest-conviction stock suggestions, and it’s why we have our track
record of partnering with companies that outperform their entire sector over the long-term.
BECOMING AN EXPERT AT FINDING EXPERTS
The alternate route is to cut this unreasonable task into a workable investment plan
by narrowing down your lens to studying existing leaders – the top dogs.
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The most important factor driving gold and silver stocks up and down is the fact that national
currencies are not backed by gold. This means that, in nominal terms, the price of gold (as
measured by dollars, euros, pounds, yens, and all other currencies) floats and changes every
second.
In terms of purchasing power, holding gold over
currencies has absolutely been the best option,
but the nominal price has changed constantly
since 1971.
This has major implications. Unlike during the gold
standard days, when miners could easily figure out
the value of their precious metal assets, today’s
miners see the price of their assets fluctuate
immensely, and these swings turn the table between
profitability and losses.
This process is outside the realm of their control,
therefore the boom and bust cycles have become
much more volatile than ever before.
Here’s how you should look at this. In the 1940s, the
price of one ounce of gold was $35, so the company
mining it could simply sum up the costs of their
operations and figure out its profitability. Investors
could also easily evaluate the value of the mine.
THE GOLD & SILVER STOCKS BACKGROUND
1971-2017
Today, the value changes daily, as the bottom line is affected by market players and,
many say, by rigging the price of precious metals.
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In Part 1, we will boil down the various stages in the lifecycle of a typical mining company, and
in Part 2, we will cover how to analyze and research methodically and scientifically, as well as
the timing factor behind buying right and advanced strategies that we ought to constantly be
utilizing.
There’s no logic in doing something that isn’t battle-tested – there’s only logic in sticking with what brings repeated
and predictable results.
The typical lifecycle of a mine consists of 6 key stages:
1. Generative exploration.
2. Primary exploration.
3. Evaluation.
4. Mine development.
5. Mine production.
6. Mine closure and rehabilitation.
Before these 6 stages even gain traction, the company must initially be incorporated. This is a critical part
where the forming crew has the idea to pursue a certain business model.
Portfolio Wealth Global always looks at the preliminary vision of the dealmakers to see whether or not their initial
plan is panning out.
When we speak with management teams, the 1st question we ask
is, “What’s your plan, and who are the executors of it?”
Here are the various typical stages:
1. Generative exploration
is a desktop study with minimal field work.
Geologists probe public and private geophysical data, such as
seismic activity, magnetics, satellite images, and contour maps for
potential targets.
TYPES OF MINING COMPANIES
Be very cautious with under-deliverers and
those who over-promise.
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Field mapping, prospecting, and sampling programs are then conducted on promising targets.
What to watch:
At this point, the most important thing to watch is the caliber and quality of the geologists involved – you want
professionals who are committed to a conservative point of view and the facts, as opposed to dreamers, who will
come to overly ambitious conclusions and will lose us money.
Government connections are important to verify if the data available is trustworthy as well. Lastly, it’s
important to see if the bureaucratic paperwork is easy to deal with and make sure that government officials
aren’t spreading the word about this deal because our costs will begin to rise immediately.
2. Primary exploration
involves drilling out the target location to delineate likely zones of mineralization. Drill
cuttings will be sent to the laboratory to assay for geochemical analysis. The main aim is to broadly define the
limits of the mineral deposit.
What to watch:
First, we want the funding rounds to be done with as little dilution as possible. The more creditworthy the
insiders are, the more the financial backers (friends, family, institutions and accredited investors) will be willing to
bring to the table for more reasonable terms.
This is simple to understand: if the people behind the deal have made money for shareholders before, they
get to dictate terms and keep the debt load, dilution, and terms in everyone’s favor.
3. Once a
mineral deposit is identified
, evaluation begins with a scoping study and ends with a feasibility study, on
which a final investment decision is usually made.
The evaluation stage is often lengthy for large mining projects. Not too long ago, a reputable company
commenced a scoping study for their gold project located in Papua New Guinea in 2009, and it has only recently
progressed to final feasibility in 2015! If all goes to plan, production is estimated to begin in 2020.
Scoping studies are typically the first broad economic evaluation of a project, and they aim to highlight any
technical issues that will require specific attention in the upcoming studies.
Pre-feasibility and feasibility studies are comprehensive studies that consider the technical and economic
viability of a mining project, including the mine design, production schedule, operating costs, processing
plant design and performance, and expenses.
A Chinese company recently demonstrated how quickly things can change between the feasibility and production
stages. Their project, located in western Australia, had an initial budget of $2.5 billion but was completed at a cost
of $10 billion and was three years late!
What to watch:
This stage tires and bores most investors. What you want, ideally, is either to avoid owning shares if you were part
of ownership during exploration and discovery, or buy when shares are truly depressed, because once rumors of
upcoming production hit the market, the stock will begin moving higher.
Sell your position on high volume days during the discovery cycle.
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4. Development
of the project begins after the necessary regulatory permits and licensing have been obtained. This
involves the construction of the infrastructure required for a fully operational mine. Critical components include
site access and services, mining production, and crushing facilities and ore handling facilities.
What to watch:
Similar to the evaluation phase, this part is lengthy and offers no upside potential. Be a buyer on dips here when
everyone else throws in the towel. I’ve done that numerous times (even on the same stock) and doubled my
money in months during the 2009-2011 market roars.
Make sure the project manager is an expert. So many things can make this project go over the budget – have
you ever seen a builder on a residential property finish the work on time and within the budget? Rarely!
5. Production
processes vary significantly depending on each individual mine, but they typically involve controlled
blasting, hauling, crushing, and processing of the mineral ore. The final product is then transported off-site.
What to watch:
Here, what matters are the bottom line margins, and I also want to make sure my profits are used to either pay
out a dividend or acquire more juicy projects.
I also want the mine manager to be the absolute best.
6. Mine closure
and
rehabilitation
aim to return the land to a state similar to that before mining commenced. This
stage can be extremely costly, depending on the extent of environmental damage and remediation required.
What to watch:
This is where we must leave a good impression as a company so this country appreciates our business
practices.
In Part 2, I will show you the 3 unconventional mining business models.
Part 2 will also include the initial 7 areas of analysis to examine before even devoting a second to calling the company
or diving into the financial statements.
Disclaimer
This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may
contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The
information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If person-
al advice is needed, the services of a qualified legal, investment or tax professional should be sought.
Please read our full disclaimer at
PortfolioWealthGlobal/disclaimer
Gold and silver are precious metals, therefore, investing in shares of precious metal
mining companies is different from that of commodities.