The Critical Metals Report: The Gold&Discovery Fund had impressive gains of about 70% in 2009 and 2010, but was down 35% in 2011. Do you believe you fully understand what happened to the junior miner explorers in 2011? Did you learn enough to protect investors from another year of negative returns?
Terence van der Hout: We were overweight in rare earths, which made us a lot richer in 2009 and 2010, but hurt us a lot more in 2011. Despite crashes, however, we still have a compound annual growth rate of 17% over the four years that we’ve been in existence.
We are an investment fund and we don’t take short positions by principle. We take long equity positions in companies that we believe will excel. But that also means that we have to accept crashes as they occur. We still believe in rare earths. The downturn in 2011 provided us with a buying opportunity.