The Amazing True Story of 1,880% Returns in Seven Years
By Matt Badiali, editor, S&A Prospector
July 31, 2008

Greetings from Vancouver, British Columbia...

I'm typing this from a desk overlooking Coal Harbor... one of the most beautiful sights in Canada.

I'm "camped out" here at the resource industry's ground zero for a month. If you want to know what's happening in mining, you've got to know what's happening in Vancouver. I plan on meeting with 40 or so companies before returning home to Florida in August.

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But first, I took part in one of the largest conferences in financial publishing, the Agora Financial Investment Symposium. Attendance at the conference was about 30% larger than last year. When I spoke last week, I faced 900 attendees... all wanting to hear about opportunities in resources and mining.

The highlight for me was listening to one of the world's best investors, Rick Rule, speak about commodities. If you don't know Rick, you should. He knows more about natural resource investing than anyone in the world. And he's behind one of the greatest investing feats of the past decade.
 
The MC introduced Rick by reading a letter. Rick recently sent the letter out to the members of an investment partnership he formed seven years ago. He pooled a pile of money together to invest in small mining companies at the beginning of the commodity boom.

The gist of the letter was, a $20,000 investment over seven years with Rick has returned $69,000 in disbursements (basically dividends). That's a phenomenal yield... But get this: Due to capital appreciation, that original $20,000 has a current value of $327,226. That's a 1,880% return in just seven years. 

So what did Rick have to say?

First, he's sure the commodity bull market is alive and well. He cites the length of the last bear market – 20 years. The resource industry simply didn't invest enough money to bring copper, lead, oil, and precious metals to the market. We're mining discoveries from the 1960s and 1970s. It takes years and years get a giant mine up and running.

Second, he's bullish on small mining stocks today. They've taken a beating this year, which is producing investment bargains.

Rick displayed stock charts of all the mining companies attending the conference. The charts looked terrible. The credit crisis has sent investors running from riskier assets like mining stocks. Financing new projects is getting more difficult as bankers pull in their horns. He says small miners are fairly priced right now... but they'll be downright cheap by December. 

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December is his target because of a wrinkle in Canadian tax law. In Canada, you can write off a loss retroactively back three years. Investors can admit their mistakes and get a check from the government. This tax "overhang" should lead to a lot of investors selling their shares to take the loss. Rick is planning on loading up on the bargains it will create.

So... take it from Rick. It's his job to find the opportunities in small mining stocks. And he says later this year, there will be an amazing one. Stay tuned for updates.

Good investing,

Matt Badiali

Editor's note: Matt Badiali is a regular contributor to DailyWealth, a free investment newsletter focused on the world's best contrarian opportunities. We write with a simple belief in mind: You don't have to take big risks to make big money with your investments.

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AN EXCLUSIVE DAILYWEALTH REPORT ON THE GLOBAL ECONOMY

A "loud and clear" message from a powerful indicator: Financially speaking, things are still pretty good across the globe.

Our indicator is the world's largest producer of high-horsepower diesel engines, Cummins (CMI). CMI makes the engines that power over-the-road trucks, cement haulers, excavators, generators, cranes, and bulldozers. This company's stock is one of our favorite "real world indicators."

Rather than go through government figures, GDP stats, and the like, we prefer checking the charts of Home Depot, Dr. Copper, and Cummins. We figure if CMI's sales and share price are strong, the global economy can't be doing too badly.

Yesterday, Cummins said second-quarter sales climbed 16%. Profits climbed 37%. International sales climbed from 54% of total revenue to 61% of total revenue. Shares popped near all-time highs.