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Buying Gold Versus Buying Well-Managed Gold Companies: Rule, Rickards And Reik

Summary

Highlights Sprott US Media's recent "Will Gold Trump Politics in 2017" webcast with Rick Rule, James Rickards, Trey Reik and Albert Lu.

Regardless of assets, geology, or financing, a bad management team can ruin an otherwise solid gold miner.

Management ethics and quality are important; so is knowing management's skills align with the company's particular projects.

Naturally, management alignment with shareholders through management ownership shows confidence within those teams.

By Albert Lu, CEO of Sprott US Media

Sprott US Media recently hosted a discussion titled, "Will Gold Trump Politics in 2017?" with Rick Rule, Trey Reik and me, Albert Lu, from Sprott, along with James Rickards, a New York Times bestselling author. One of the key topics discussed was the importance of reviewing a management team when investing in gold miners.

When investing in gold miners, as the Sprott Gold Miners ETF (NYSEARCA:SGDM) does, there are many different contextual factors that need to be analyzed, including the quality of the company's assets, the company's overall reserves, and geopolitical risk to name a few. However, while many issues can easily be analyzed, one of the most underappreciated areas for focus when choosing gold miners is understanding the management team.

How management is aligned, management's experience and management's background can be major drivers in determining if a gold mining investment is a wise investment or not.

Below are excerpts of the discussion I'd like to underscore with some added insights:

James Rickards: "…when I look at gold mining stocks, to me geology is geology. Feasibility study is a feasibility study. Finance is finance ... What does vary, however, is the quality of management.

 

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