Before I even knew who the guy was, Eric Sprott put me through university.
Years later I met him. We were hosting a precious metals panel at a little conference in Spokane, Washington - One of the most difficult towns to get to from pretty much anywhere.
Eric was sitting on the panel, the topic of discussion was “Hedging Wealth”, you’ve made money, now how do you protect it?
The panelists were arguing over the best method of wealth preservation - real estate, various hard asset classes, physical gold and silver.
Most of the panelists had diverse portfolios.
These were all people who had “made it”. They had collectively generated billions of dollars in wealth, and were sharing how they intended to keep those dollars safe - from inflation, currency devaluation, taxes and theft.
At the time, the richest guy on stage was Eric Sprott. When asked about the distribution of his portfolio, he answered with one word,
“Interesting, how much?”
“I’m all in.”
I rarely take these statements at face value. I am an optimist to a fault, but thankfully I hang out with a lot of skeptics. It has made me a much better investor.
I sit on the board of the Entrepreneur Organization, and as a general rule of thumb, entrepreneurs make terrible investors. We live in the conceptual world of unfailing self-belief.
There is always a rabbit in that hat somewhere...
Whereas the best investors I know, try to see the worst in everybody.
They double down on this if they manage other people’s money. Fund managers or financial advisors provide stewardship over other people’s capital. I want someone who questions everything.
After his comments, Eric sat back in his chair and continued to listen to the other panelists.
100% in Silver, I thought?
I questioned Rick Rule about the validity of this statement - knowing that if true, it would be the biggest bet going in the junior mining sector. Rick just shrugged and said, “I don’t know anyone with bigger balls than Eric Sprott.”
I was paying extra attention to what Eric had to say because 10 years earlier, he had sent me a big cheque.
I went to University at TRU in Kamloops. It’s not a “AAA” school, but I had taken a roundabout journey. In highschool I was about 20 years early on the Cannabis market, and was subsequently delayed in my education. Timing is everything.
But I made my way back.
Scholars may go to Boston. I guess entrepreneurs go to Kamloops.
In my second year I won the Learie Sprott Scholarship. Funded by this billionaire, who at the time I had never heard of.
That’s how Eric Sprott put me through University.
My question now is, will he now do the same for my kids?
My last letter referenced my list of names. The shortlist of personalities in the industry that I always stay on top of. More accurately - the list of people that I need to see affiliated with a company before I write a cheque. I have google alerts set for 17 names right now to make sure I keep their moves on my radar.
Granted - this is not the most sophisticated process - I got a lot of responses last week from technical investors and geologists to tell me that they strongly disagree with my people over projects methodology.
But I stand by it - play to your strengths. I am in the people business.
So when Eric Sprott’s name started appearing in every second press release tied to a silver financing, I followed him into many. Not with reckless abandon - I had to cross-reference with my list of safe jurisdictions - which disqualified about 35% of the companies he invested in.
This is one of the hardest things as an investor - not breaking your own rules when you find an “exceptional circumstance”. Especially when it would have served me to do so.
Example: In January Eric put $7M into Jaguar Mining. My google alert hit my inbox with the press release. But I took a pass, as Brazil isn’t on my safe list.
JAG is up over 200%.
But when you take a pass, you keep your cash. There is a new bus every 15 minutes.
Building positions in the companies that met all the criteria - my chosen names, jurisdictions and ideas - have led to the best returns of my investment career this spring and summer.
So make a plan. And trust your process.
Everybody is watching silver right now.
This week Georgia Tucker sat down with David Morgan of the Morgan Report and Bradford Cooke, CEO of Endeavour Silver to talk about whether the market is overheating, or just warming up.
Watch it here.