Chuca, Oh my! Oh my! Your understanding of risk is OK. Mine is a perspective. If you play russian roulette with a six shooter, you have a 16% chance of being wrong and an 84% chance of being right. Your terminated life is the reward for a wrong answer. If somebody was financing your risk, say putting up money, how much money does it take for you to take the risk. A $million, a 100 $million, A $billion. Remember, your life is worth more to you than someone else. Believe me with most people there is a point where they are ready to take the risk. You weigh the risk against the reward.
In business it the man that has certain developed skills in weighing risks that succeeds the most. Bill Gates isn't where he is without having some of the best risk assessment abilities in business that has come along todate. He at least has control of the parameters that effect his risk. When you invest, you don't have the control over your risk. Therefore all you can do is try to assess the risk from the outside looking in. If there are financial trackrecords, computers can market analysis strategy can help. But, the human factor still plays a heavy roll in success here too. But what if the risk is without precedent?
With gold and silver and PGM deposits as an example, the more conventional a deposit is the less the risk. At least from a technical aspect. Since there are no two deposits exactly alike, there is no true normal standard, but rather a grouping of deposits with similarities.
In gold for example, South African Rand deposits are Archean (very ancient) paleo-placers that have been metamorphosed. Another idea is that they are Archean paleo-placers with an ancient hydrothermal event into the placers when the rocks were young. In either example, it is said that approximately 50% of all the historical gold production of the world has come from these deposits in the last 100 years. Therefore am I to assume that the best prospects are Archean. There are Archean gold deposits in Arizona. The answer is no, the next best success stories are younger hydrothermal deposits followed by placers. There are lots of these deposits. Except for South Africa, the abundance of those others are are my guesses.
Most gold deposits discovered prior to 1950 had about 6 common processes for exploitation. They were cyanidation, concentration and smelting or cyanidation, gravity concentration followed by a next step process or amalgamation with mercury. Or they used a combination of those processes to achieve results. Since 1950 most gold deposits discovered and developed fit one common assay method and one common extraction method with minor variations. In this century, if we step beyond the conventional the risks are increased, if we move into a new assay domain, the risks are increased, if we take on too many deposit characteristics away from the norm? the risks are compounded. Therefore, what are the criteria that make any prudent man move into new territory for exploation. The answer is that the larger deposit types that are the best understood are mostly already discovered. That is part of the reason the world production has been stagnant for so long. Discovery is close to matching depletion. To change this a new model or models have to be developed. With the new models comes the compounded risks. But here is where the potentially large deposits still exist. The types of deposits that might effect the world production in an upward movement have to come from new theory. But the risks are great. So if you want to make a killing in the market, you study all of the companies that are pioneers in attempting to develop new models and pick by the quality of their professionals or by tea leaves or something. If you hit, your reward will be large, I think. On the other hand, spread your pick to a number of these companies and maybe you can hit on the lucky one by being exposed to a number of pioneers. Your investment is spread out, but you will still be with the winner. On the other hand, the new models might come from the company or group that you never heard of. Thats another risk. I believe as you do, the new model is close at hand for somebody. I hope you are right there when it happens. The big rewards go to the ones that take the risk and get in early. There also is where the biggest risk is resident . mike |
