"Get It While The Getting’s Good"
By July 11, 2013– Published in on
In sitting down to write this article, a scene came to mind from Tom Hank’s classic film, “Forrest Gump”. Following service in the Army, the dim-witted yet highly disciplined Forrest Gump returned home with the promise of becoming a shrimp boat captain, in honor of an agreement made to a fallen comrade.
In starting out, Forrest made a large capital investment by purchasing a fishing boat, nets, etc., only to return home to port every day with nothing in hand. After an exhaustive period of catching nothing, a violent hurricane struck the region, wiping out all fishing boats in the industry—except for Forrest’s. Unexpectedly, the storm also “kicked up” the ocean floor, delivering breathtaking amounts of shrimp and fish to the nearby waters.
As a consequence, Forrest was presented with an opportunity of a lifetime. He returned home to port every day with his ship filled to the brim with shrimp. He had all the shrimp he could ever catch—and all of his competitors had been eliminated.
Forrest then chose to purchase a fleet of fishing boats (all dubbed “Jenny’s”), and each day they all returned home filled to capacity. The storyline resolves with Forrest becoming a millionaire and having his picture on the cover of a business magazine.
In reflecting on that story, I think we may be in a similar environment for precious metals, mining shares, and natural resources. The market has been hit by the type of storm which only presents itself once every 15 to 20 years.
The most important item to keep in mind in profiting from this storm however, is the need to continue fishing every day. We need to add new boats, nets, and continue building our investments—as when the tides turn back towards the direction of inflation, the rush of money coming back into the sector will resemble fish and shrimp leaping right into our nets.
The only way to catch anything is by having the nets ready, and the only way to catch obscene amounts—is by having great swaths of netting laid down. As fund manager Rick Rule remarked a week and a half ago—“Don’t be afraid to be right”.
Another take-away from the story of Forrest Gump, is betting on the right ship captain. The idea is to identify captains who are strong enough to weather any storm, remain intact, and come out the other side with greater opportunities as a result. That appears to be occurring with a few operators, as they are going to work every day, and adding incremental value during a time in which most are simply incapable. One might say they’re still returning home to port every day with a catch, while other vessels have been destroyed or abandoned by inexperienced captains.
In simple terms—fish netting is cheap right now in the precious metals sector, so pick some up, lay it out, and the fish might jump right into it. Or if you prefer, invest in the right captain.