Rick Rule Keynote Speech at the VRIC 2020 on how to make a million dollars with private placements. Get the Art of Investing in Silver & Gold today FREE ➽ bit.ly/CambridgeEmail
Rick Rule on private placing investments: If you have a bit of capital and you’re willing to work, you have no excuse not to make a million dollars in this market. Here are the five critical things you must do in order to make a million dollars in the speculative gold market using private placements:
*Exert disciple
*Show aggression
*Read proxy statements
*Read balance statements
*Pay attention to 43101s
Someone has to be at the ground floor of a new resources bull market. This is simply being at the right place at the right time.
Private placements are a technique to take advantage of a bull market. They become a descriptor, a special way where people do well in a speculative market. Private placements make money if you place money with good companies and use good discretion when picking companies. Providing capital to a junior resource company. Why would you give them the money?
Every speculative purchase involves answering the unanswered questions to the junior developers. The purpose of making an investment is to create a roadmap to own the stock. Which is your assessment of the probability of success.
How much time is required to answer the unanswered questions. This is usually between 12 and 18 months. This is the investment time to achieve your objectives. What is the value of the unanswered question? Management teams are looking for small deposits to show investors that there will be success but this isn’t what real investors are looking for. The management team associated with the company needs to have sufficient capacity to care what investors think. The management team needs credibly at the task at hand. You must take their plans and discount their credibility based upon their lack of expertise.
Here is an example of what not to invest in:
If a company wants four million to answer the question and one and a half million in G&A - which is a typical Canadian junior mining stock ask - working capital is usually zero. Private placement they will need three million dollars.
What is the probability that the company can deliver the answer? Zero. They cannot give you the answers to your questions.
Rick Rule wants you to work and think. Work and think. What you want is irrelevant. What you can have is relevant.
Publicly available documentation of the companies balance sheet, income statement and poxy will give you more information than most investors have or will use.
Balance sheet and income statement review over five years is a great tell for success. If general and administrative expenses consumed over 60% of capital raised. This is bad. 120 -150 thousands dollars is a great expense on general and administrative expenses.
Does the management team believe what they are telling you? The shareholdings will tell the tale. How confident they are with relation to the stock.
If the investors haven’t done anything for themselves don’t make an investment in them.
Why do a private placement?
* Timing - the company is doing something that has the potential to unlock value. Assist you in taking advantage of time value of money
* Able to buy meaningful position in stock at a negotiated price
* The warrant is the single most important reason to invest in a private placement. A warrant is the right but not the obligation to buy more stock at a fixed price at a fixed period of time. Retroactively profit to the yes answers to unanswered questions.
The difference between success and failure to speculators that have private placement is almost 100% because of warrants. Warrants turn a 3 bagger into a 5 or 6 bagger. This is a massive extra return on investment.
Warrant selling strategies are important. When the reason to own a stock goes away, the stock must go away. If the circumstances that creates value goes away, you must move along.
Exercise warrants with proceeds from sales. Don’t double down buy exercising warrants. Use the proceeds and sales to keep your risk under control. Price expectation isn’t met are rare. If the stock stays undervalued you have to buy more stock. This is if you have done the work, you must allocate the capital.
Once the price expectation has been met, what is the next unanswered question. “What have you done for me lately”? The whole path of adding value is answering a series of unanswered questions and keep making money when the stocks and warrants rise in value.
Determining if the management team has sufficient status in knowing the potential value of the development is one of the largest considerations in making a private placement deal.
If you liked this video from VRIC 2020, have a look at some of our other great videos:
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