As chairman of the management team, Willem is ultimately responsible for the investment policy. As a private investor, he started investing in companies that had made significant (commodity) discoveries in 2005. This makes him one of the pioneers in “Discovery Investing”. Willem is also the author of seven books on economics and financial markets. He is also a member of the Advisory Board of the London economic think tank OMFIF. Willem is the founder and major shareholder in Commodity Discovery Management B.V., the manager of our fund.
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1. Are you a fund manager, investor, journalist or entrepreneur?
Many know me as a writer and financial journalist, but I have always been an entrepreneur. In the early 1990s after the fall of the Wall, I went to Russia in my early thirties to try to set up timber exports. Shortly afterwards I bought apartments in Amsterdam that I rented out to expats. In the new millennium, I really spread my wings as an entrepreneur with two companies that made it easier for people to invest in precious metal related investments. I only feel good when I combine those two elements - journalism and entrepreneurship. And nowadays Twitter is my journalistic outlet, and the Commodity Discovery Fund is my passion and life as an entrepreneur.
2. How did you ever come up with the idea of Discovery Investing?
After I was well invested in real estate, house prices soared, and a crisis loomed. In 2002, I decided to invest in a natural hedge, which for me was gold and silver. I also invested in precious metal related stocks. During the correction in 2004, I discovered that you shouldn't invest in the big producing mining companies, but rather be in the small companies that make the big discoveries. These performed noticeably better. From 2005 I decided to fully specialize in this, and to share my discovery with others. I coined the term Discovery Investing and wrote a newsletter, which was quickly read by 1000 investors in 30 countries. In it I tipped them about successful drilling results from Canadian exploration companies. We ignored oil and gas. The focus was immediately on gold, silver and other metals.
3. How were the first years for the fund?
Financial markets work in waves. So I made the biggest “mistake” of my life starting a commodities fund at the top of the previous commodity cycle. The previous trough for commodities was in the 1990s during the tech bubble. Then commodities started to soar between 2000 and 2011, with hindsight peaking in 2008. So, the commodities index peaked in 2008, right in the summer when we started the commodities fund. The entire commodity space entered a downtrend at that time. And that downtrend lasted until March 2020, the moment of the “covid crash”. From this perspective, I should have started this fund in March 2020. We have now cycled against the wind for 13 years and as you may know, you really learn to invest in a bear market. In those years we worked incredibly hard and studied endlessly to literally map the world of raw materials.
4. You are very bullish now, but can you underpin that?
We are now clearly at the beginning of a bull market. These normally last at least ten years, but due to the extra-long bear market, we have now reached valuations of commodity companies against the S&P 500 that have not occurred in 100 years. We have the inflation wave, which is not going away for a while. Furthermore, no one knows how to get rid of government debt. The value of money is being eroded. And then, for the first time in world history, we now have a situation in which raw material shortages become dominant. We've never experienced that. Sometimes short in a single commodity such as in the oil crisis, but we are now entering an era of structural commodity shortages.
You can compare investing in commodities with investing in stocks in 1942 when the Dow Jones was at 100 points. Now the Dow is at around 30,000 and that bull market of US equities has lasted almost 80 years. The same now seems to be happening with raw materials. It is “the perfect storm”; a growing world population and the electric revolution. Everything is going to be electric and that cannot be done without raw materials. For that you need copper, for that you need nickel. That structural shortage of raw materials is our leading story. A technical analyst we follow has calculated with a model that this wave could last until 2050.
5. What are the companies in which the fund invests?
The roughly 1,500 small exploration companies we monitor are almost always listed in either America, Canada, Australia or London. As a result, these companies automatically comply with all kinds of stringent laws in the field of labor law and the environment. In terms of corporate culture, you should think more about startups. The successful players in our market are serial entrepreneurs who often have golden hands literally - successful geologists and management teams who find and produce new mining projects time and time again. That's why it was so good to learn during that bear market and do so much more homework. As a result, we now know all the good management teams and geologists. In addition, we know all the good areas in the world, where major raw material discoveries are still being made.
6. How can you make wise decisions in such a volatile market?
Our entire system is designed to ensure that we are always the first to know when a discovery is made. This can be gold, copper, nickel or even uranium or lithium. Those listed companies are then obliged to send out a news item and we are on top of that. For example, in addition to our head office in Aerdenhout, we have an office with a full-time researcher in Hong Kong and in North America. On top of that, we have a very large group of advisors, such as geologists who write newsletters or brokers, who share a lot of research. Through this system, new discoveries are always known to us within 24 hours.
7. How did you manage to attract so much capital?
As a well-known Dutch journalist, I have apparently built up a reputation that Dutch-speaking wealthy people like to tap into. My network is mainly in the Netherlands and Flanders, where I have also been seen most in the media and on social media. As a result, we have grown from three million at the start to over 100 million euros under management now. We are now also receiving more and more international investors. Especially because of the international interviews we've been doing lately. Stansberry Research's YouTube channel features an interview that has been viewed more than a million times in three months. In that regard, we are now really spreading our wings.
8. Do you also visit the mining projects in which you invest?
Over the years I have visited many interesting areas. It is especially important to build a feeling for a certain area. Relationship building is also the fastest when you travel together. We are often invited to visit foreign conferences, followed by a visit to a nearby mine. Covid has of course slowed down travel, so I have a list of areas I can now finally go to.
Until 2017, we deliberately ignored Australia because we had our hands full with more than 1000 listed exploration companies in Canada. An important discovery in Australia forced me to travel there several times and study the country. It takes a few years to literally and figuratively map such a country and to scrutinize all the exploration companies - several hundred in Australia. But now our highest returns come from our Australian investments. The greatest discoveries are made there. The country is underexplored relative to Canada and the rest of the world. More than a quarter of our investments have already been allocated to Australia.
9. Is there nothing to be found in Europe?
I jokingly say that exploration in Europe is dead, but recently a very nice copper discovery has been made in Spain. Geologists know this so-called Iberian belt. We have already invested in the Balkans. The winner of our first Discovery Award, Adriatic Metals, even had a project in Bosnia. You can say: “The world is our village”. We go where it happens.
10. Can you say something about the environmental aspects of mining?
We have only one assignment and that is to invest money in the best possible way for our participants. And you can take that "good" generously! We want the investments we make to lead to the benefit of the countries where we are located. For example, we sometimes also invest together with the World Bank, in the context of programs to develop countries and regions positively. Look, there are parties that deliberately go to corrupt regimes to do business with. That is a sick business model. And there are also private parties, often Chinese, who go to areas where we absolutely do not want to be. We have the strict criterion of only doing business with companies that are listed on the stock exchange in America, Canada, Australia or London. Then you know for sure that there is no question of child labor or other excesses. However, even in remote countries such as Mongolia or Suriname you are now talking about successful mining projects by companies that work with the most modern techniques.
11. How would you like to go down in history as an entrepreneur?
I hope one day people will say about me, “Look, that was the man who invented and grew Discovery Investing.” They should put something like that on my tombstone.
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