07/05/2011
December 3, 2017
06/18/2011
December 3, 2017

06/24/2011

Given your enthusiasm for Mongolia, what are your thoughts on investing in Ivanhoe Mines? Presumably, since it hasn’t been mentioned, you have reservations, so have you considered using options to express your opinions?

I have no reservations. It seems very well run. I just want to focus on the Mongolian consumer and Mongolian GDP and ignore the mining sector that is responsible for the growth. I rarely use options.


In Jim Rogers’ book “Hot Commodities” he talked about a study showing that during previous commodity bull markets, commodity prices rose 3x as much as commodity producer’s stock prices.  He had his theory as to why this was the case related to rising costs.  Today the same is holding true so far for gold prices vs. gold miner’s stock prices over the past five years.  (See my chart below).  Below the chart are two comments from Fleckenstein’s site today from gold bugs thoroughly frustrated (and surprised) that mining stock are lagging gold’s appreciation.  They should not be surprised this is happening.  This is not abnormal.

Rogerswas right, as usual.  But keep in mind that according to Fred Hickey’s research the gold miners will significantly outperform gold for about 1 year beginning AFTER gold finally peaks and starts heading down.  But who will have the balls to buy them when gold is falling?  Very few because it won’t ‘make sense’ as they will look like they are getting more expensive not cheaper.  And who among those few will be nimble and disciplined enough to know just when to exit?  Even fewer.

That, in a nutshell, is why am long a few key commodities (palladium, oil, gold and silver) but do not own any of the producers of these commodities.  There is no return to compensate you for the company-specific risks you take on when owning these “businesses.”

This is from a very smart friend. Wish I had thought more about this back in 2004, I would have saved a whole lot of grief…


Last week Bill Fleck thought the high volume selling was cause people just got tired of waiting. My thought at the time, someone knew something which was NOT PUBLIC. Insider trading???
Now today a News release from Andean says “Seven month DELAY for further completion of an upgraded Feasibility Study. Plus an anticipate INCREASE in capital to build the mine. What is your current take on this News?

Welcome to mining…. I’ve owned this for 3 years now, what’s another 7 months. Just remember, there’s a reason that this company trades at a very small fraction of NPV. They have a lot to prove in order to become a mine. I think they’ll make it. I think the selling in the prior weeks was because people thought Humala would win, not because of insider trading.


Simply fascinating. How long do expect to be living in Mongolia??  I am simply amazed and in awe of your incredible commitment to Mongolia as an investment concept. To think that you would actually pick up and relocate in order to be on the ground, in the trenches, is great. I wish I could be there with you.

A hundred years ago, my ancestors left quasi-serfdom in Eastern Europe for better opportunities in America as that was the place you went to get rich. Now, America has serious issues to face, the new frontiers are the smaller emerging economies with good governments. I’m just following the family tradition I guess…

I haven’t decided how long I want to stay in Mongolia for. This is the best opportunity I have seen in my investing career. Unless that changes, I think I will stay here for a while. I actually enjoy the lifestyle quite a bit.


My “ah-ha” moment on Oyu Tolgoi was this video on Ivanhoe’s web site: http://www.ivanhoemines.com/i/Oyu_Video.html
The scale of OT is like something out of NASA or Star Wars. Capitalism works.

It is simply huge.


thanks for the tour. awesome that you are living in mongolia now. are you learning the language?

I can order beer and tell the taxi how to get home at night. I’m pretty useless in language… It’s embarassing that in the past month, my driver has effectively learned english from me, and I have learned about 5 words from him…. It was an effort teaching me to count to 5. HAHA


Hey Kuppy,

Congress passed a new law requiring banks across the world to report all assets of US citizens.  any thoughts?

here’s the articles

http://www.ft.com/intl/cms/s/0/60896702-9521-11e0-a648-00144feab49a.html#axzz1PAbY2Cte

http://www.ft.com/intl/cms/s/0/4e6e31a6-95e4-11e0-ba20-00144feab49a.html#axzz1PVrSeQ4T

any advice how to handle the such?  most smart people i know have their assets in company accounts so it doesn’t affect them.

It’s rather arrogant to ask a bank outside of your country to do something. Imagine if a little country asked America to report on all bank accounts owned by their citizens? The best way to handle all intrusions is to just fill in the little form and treat it as another inconvenience of being an American. It’s not the type of thing that anyone should try to lie about. I already have to “check the box” about foreign bank accounts.