One of my favorite Doug Casey sayings is that it’s the pioneers who take the most arrows.
Each time a ship landed on North American shores and the European pioneers clashed with Native Americans, the balance of power tilted farther away from the Natives. They might have been better warriors, but they were outgunned. And Europe’s population was vastly greater. Even if the Natives killed two pioneers for every one of their own losses, the outcome would have been the same.
And each wave of pioneers made it less risky for those who followed.
The same pattern seems to hold for many new endeavors. Inventors like Nikola Tesla can be the first to discover or achieve many things and yet die paupers—or nowhere near as wealthy as their achievements merit. It’s usually someone else who comes along later and figures out how to make a profitable business out of the pioneer’s advances.
That’s still true today. Steve Jobs, for example, was the first to market with a graphical desktop operating system for computers. It was a truly revolutionary development that made computers comprehensible to ordinary people. But it was Bill Gates who made the most money on the idea when he copied it and called it Windows.
And so it goes…
What interests me most about this phenomenon is that it also applies in the resource sector.
I can recall many times I’ve been pitched a company that had a marginal deposit that was supposed to gush cash due to some new mining method, or processing chemistry, or some other new technology.
What I can’t recall is any of those stories delivering a success for shareholders.
I bring this up because readers frequently write to me, all excited about some resource company’s new technology. The magic bullets are often new ore-processing techniques, but they run the gamut from new drill designs to new metal detectors.
One company had a high-grade, but “nuggety” (inconsistent) gold project, which they swore up and down would become a cash cow once they deployed their new “gold detector.” They too have gone the way of the dodo.
I’m not, of course, dissing progress.
Mining is an industry ripe for—and in desperate need of—disruption. I’ve written before that there are important technological advances on the way that will change mining forever. I stand by those words.
All I’m saying now is that both history and experience show that there’s no need to rush into any new technology.
In most cases, whoever discovers something first will be the one to run into all the unforeseen problems. The second or third wave of pioneers is much more likely to prosper.
Even as a speculator, I want to invest in a going concern, not a “hail Mary” stab in the dark.
This reminds me of another thing Doug used to say to me: “I don’t speculate on science projects.”
Monday, August 6, 9:00am, EST, 2018