by Rick Rule, Chairman and Founder, Sprott Global Resource Investments Ltd.
industries are very capital intensive, and hence extremely cyclical. It
is not unreasonable to say that as a natural-resource investor, you are
either contrarian or you will be a victim. These markets are risky and
Let’s talk about cyclicality first. Some of the cyclicality of these
industries is a function of their being extraordinarily capital
intensive. This lengthens the companies’ response times to market
cycles. Strengthening copper prices, for example, do not immediately
result in increased copper production in many market cycles, because the
production cycle requires new deposits to be discovered, financed, and
constructed—a process that can consume a decade.
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