Editor's note: It's easy to become a cautionary tale in investing...

While some folks shy away from hated sectors and miss out on big gains... others buy into the hype of a bull run right before it ends and lose everything.

According to natural resource expert Rick Rule, folks often fall into these traps with commodities investing. But if you want to make money in this space, you need to follow one investing principle.

In today's Masters Series, Rick shares the framework to find the best commodities opportunities...

You're Either a Contrarian or a Victim

By Rick Rule

If you're going to invest in natural resources, you have two choices: Be a contrarian or be a victim. There's no middle ground.

That may sound blunt, but it's a truth forged over five decades of living through every kind of cycle in commodities. Resources are volatile, capital-intensive, and politically charged. They attract hype when prices rise and contempt when they fall. And yet, over the long term, they are essential to human progress. That disconnect between perception and necessity is where the real money is made – if you have the courage to invest when others are fleeing.

Most investors get this wrong. They pile in when prices are high and stories are glowing. But that's when the value has already been extracted. In commodities, price action justifies the narrative, but it also removes the opportunity. By the time the mainstream believes in the story, it's over.

Let me say this clearly: The best time to buy a commodity isn't when it's loved – it's when it's hated. When the price is below the industry's average cost of production. When companies are shutting down operations. When headlines scream that demand is dead and that a material is obsolete, or – worse – "toxic." That's when I lean in.

I've seen it too many times to count. In the early 2000s, uranium was selling for $10 a pound. It cost $40 to produce. The industry was in liquidation. People thought nuclear was dead. But what were the alternatives? Coal? That wasn't politically palatable. Wind and solar? Intermittent and expensive at the time. The math was simple: Either the uranium price went up, or the lights went out. Sure enough, the price went to $140.

We're seeing a version of that again today. At one point not long ago, uranium was trading around $20 a pound. It still cost $60 a pound to restart mothballed mines. And yet utilities needed it – more than ever, in fact, as the world rediscovered that baseload, non-carbon energy isn't optional. I said then what I say now: When the price of a commodity is below the cost to produce it, it's not a question of "if" it will rise, but "when."

This isn't a uranium story. It's an investing principle. "Inevitable, even if not imminent." That's the phrase I use. And if you understand the difference between those two words – inevitable and imminent – you'll understand how I approach every investment I make.

You don't need to get the timing perfect. You do need to get the trend directionally correct – and be early. That's where the money is. In fact, being early is the only way to get the kind of asymmetric outcomes that resource investing can deliver. I've had speculations where the worst-performing stock went up 22-to-1. But I was six years early. If you can't tolerate that lag, you're in the wrong business.

To succeed, you must have the stomach to invest when it feels most uncomfortable – when there's blood in the streets, even your own. You need to buy when companies are cutting capital expenditures, not increasing them. When management is despised, not fawned over. When the newsletter writers have all moved on to crypto.

The irony is that risk is lowest when the perception of risk is highest. That's the contrarian's edge. It's not about heroism. It's about math. If a commodity is essential and current pricing makes its production uneconomical, then supply will shrink until price adjusts. That's how markets work. And in extractive industries, supply can't respond overnight. It takes years to permit, finance, and build a new mine or oil well. That lag creates the window for real upside.

Let me give you a mental framework.

When you're evaluating a commodity, ask yourself:

1. Is this material essential to the functioning of modern life?
2. Is it currently priced below the cost of production?
3. Is the industry in liquidation or distress?
4. Is there a credible pathway to demand recovery or continued necessity?

If you can answer "yes" to all four, you're likely looking at a good contrarian opportunity.

If you can also find a company with a strong balance sheet, tier-one assets, and disciplined management that knows the difference between growth and value – well, then you might just have a 10-bagger on your hands.

But don't expect it to come quickly. Commodities move in long, violent cycles. Bull markets can last a decade, but they're born in despair and die in euphoria. And most people – most investors – are wired to buy euphoria and sell despair. That's why I say: You're either a contrarian or a victim.

Now, some will say, "Rick, that's easier said than done." And they're right. It's psychologically hard. That's why it works. Markets don't reward the crowd. They reward the disciplined, the prepared, and, yes – the uncomfortable.

It helps to remember one last thing. The cure for low prices is low prices. Always has been. Always will be. Industries can't run at a loss forever. Capital walks. Supply shrinks. And eventually, price responds. If you position yourself before that happens and can wait it out, the rewards can be extraordinary...

But only if you're willing to buy when everyone else thinks you've lost your mind.

Regards,

Rick Rule

Editor's note: The White House's $10 billion spending spree to stockpile critical minerals is creating a knock-on effect that will cause these resources to explode in value. However, it's important to know where to invest. Today, the man widely considered the greatest resource investor of all time is telling you exactly where you need to move your money before the White House makes its next move. Click here for the full details.