Kaiser Blog: Bob Bishop Roast

Bob Bishop Roast

Presented by John Kaiser on June 16, 2007 during the Bob Bishop Tribute in Vancouver Canada

Good evening ladies and gentlemen,

For more than 2 decades Bob Bishop has operated a hugely successful financial newsletter called the Gold Mining Stock Report. He is in fact without peer, because no other successful newsletter has had to labor with the handicap of a name that has no relationship to what Bob writes about.

I got to know Bob Bishop during the diamond rush of the early nineties which Bob was quick to recognize as a major development for the exploration juniors. We were stuck in what back then was thought to be the worst bear market for resource juniors. Bob went to great effort to educate himself about diamonds and published his wisdom in a pamphlet to which he gave a suggested retail price of $50. I don't think he sold a single copy. In fact, when he mailed it free to his subscribers, it cost him some refunds. Diamonds Schmimonds, we are subscribers to the Gold Mining Stock Report, not the Diamond Mining Stock Report. We don't want diamond stocks like Dia Met which go from $0.60 to $60, or Aber which went from $0.45 to $45. Don't give us 100 baggers. Give us gold mining stocks!

Never mind that a successful gold mining stock recommendation has never graced the pages of the Gold Mining Stock Report. In the early days there were some like Viceroy which became successful mines, but Bob's subscribers made their scores well before the first gold bar was poured.

Bob cut his teeth on the gold as hard money story of the seventies, a story that peaked in early 1980. For more than 3 decades Bob has held the opinion that gold is the only real money. Everything else masquerading as money is a sham that will one day evaporate. But Bob did understand that a gold mine is anything but money in the bank. In fact, most gold mines have proven to be very effective at emptying the bank of money.

So if Bob Bishop did not write about gold mining stocks, and spent two decades recommending a gold ownership strategy whose wisdom has not been confirmed since 1980, what did he talk about that attracted such a big audience?

What Bob understood is that money is made when a stock finds something that might eventually be mined. It didn't matter if it was diamonds or nickel. What mattered was that stuff was being discovered in quantities and grades that might make a profitable mine. And Bob had a good nose for projects that were starting to show signs of a discovery.

You are probably thinking, Bob must be a good geologist, somebody who can tell a good prospect from a dud. Nothing is further from the truth. Bob is a journalist by training. Although not a geologist himself, he compensated for this supposed deficiency by cultivating a network of geologists within the exploration community. This is what journalists are trained to do. Not being a geologist gave Bob a special edge over newsletter writers who are geologists.

Real geologists are horribly handicapped as newsletter writers. When a geologist looks at exploration data, he or she has to know what it means. That's what they were trained to do. Given that only one in a thousand prospects ever becomes a mine, but the exploration of each prospect is recommended by a geologist, a geologist is doomed to almost always be wrong.

Not so a non-geologist like Bob. Precisely because he is ignorant, Bob gets to ask dumb questions about what the exploration data means. For a trained geologist it is supposed to be obvious what the data means. It is an unwritten law among geologists never to ask a question that might reveal how little he or she actually knows. That's how a fraud like Bre-X was able to carry on as long as it did. Sadly, Bob was never invited to Busang.

After getting good answers to dumb questions, Bob takes his investigation one step further. He asks one of his geologist contacts what it all means, and another, and another. That is what journalists are supposed to do.

This is a very effective way to find out why a prospect might not make it as a mine. Because without exception, if it is at all possible, no geologist will pass up the opportunity to pee on a competitor's prospect. Some will first declare, I don't like to bad-mouth another prospect, and promptly proceed to do so. Except when they already own the stock.

So while a geologist newsletter writer has to rely on his own competence to judge the merits of a prospect, Bob gets to draw on a network of geologists to form his opinion. And in that regard Bob has been hugely successful.

Of course Bob has not always stuck to his method, for which his subscribers have been very thankful. There was one bad recommendation in 1997 which shall remain nameless that added 10 years to the Gold Mining Stock Report at a point when Bob had every reason in the world to retire. Thank God that Bob is not perfect! Otherwise I would be very worried about what the timing of his retirement means for the bulls among us tonight.

Bob, however, is a perfect gentleman who has a hard time expressing disapproval. And that has created some interesting situations, one of which I will tell you about.

Bob's coverage of the diamond story made a lot of money for his subscribers, not just because his recommendations of Dia Met and Aber turned into big winners, but because his recommendation of another diamond stock called Diamond Fields turned into an even bigger winner when it discovered the Voisey's Bay nickel-copper deposit. Some of you may recall how Bob tried to appease his subscribers by talking about possible gold in the Ovoid. No such luck. His subscribers had to swallow a huge score that was pure base metals.

One of the diamond stocks Bob subsequently covered was Winspear, which was involved in a joint venture with Aber on the Snap Lake project. Winspear reported a very high value for a parcel of diamonds recovered from a mini bulk sample taken from the Snap Lake dyke. Bob heard through the grapevine that the high value came from the three largest stones which were of exceptional quality, something Winspear had not disclosed. Based on the grade and average carat value of the Snap Lake sample, this dyke appeared to be richer than Aber's A154 pipe, and might even have more tonnage.

Bob's network of experts let him know that 3 stones alone were statistically unreliable, and Bob concluded that the Snap Lake play was being puffed up to be much more than it was likely to deliver. So he expressed his doubts and his relationship with Winspear's Randy Turner soured.

Well, a larger bulk sample vindicated Bob, but overall results were still good enough for Winspear to take Snap Lake to prefeasibility. It had, however, become a struggle for Winspear. Then out of the blue comes a $500 million cash bid from De Beers which hands a badly needed $150 million to Aber and bails out Winspear shareholders at $5 per share.

Within a day Bob gets a fedex package. In it is a mousepad onto which has been laminated a photo of Randy Turner against a Vancouver backdrop holding above him in triumph a banner with the words "King of Diamonds".

Being gracious is what Bob is all about, but here was Randy Turner behaving very badly. Bob did not rant and rave. Instead, for 2 weeks Bob brooded in front of his computer working on an appropriate response to Randy. He ignored suggestions from his assistant Brent to move on. Finding the right words without lowering himself to Randy's level was not easy. He thought of thanking Randy for the seatpad, but decided this was too rude. When the letter finally seemed right, Bob's phone rang and the caller asked: "I haven't heard from you, what did you think of the mousepad I made for you?"

Bob was speechless. For those of you who know that Bob has never prepared a conference speech, and has always delivered a fine speech regardless how late he went to bed, except when he didn't show up at all, it takes a lot to make Bob speechless.

The caller was Ian Rozier, his good friend and surfing buddy.

If I had a friend like Ian, I too would consider not making enemies.

In closing I wish to thank Bob Bishop for the enormous contribution he has made to the industry through his insights, the inspiration he has been for other newsletter writers such as myself, his hard work, the countless air miles he has logged visiting projects, and the legacy he has left in his garden for future prospectors.

If you ever have the privilege of visiting Bob at his home in Lafayette, check out his rock garden. You will notice all sorts of exotic, well mineralized boulders. While the rest of us newsletter writers drag back fist sized samples from property visits to collect dust on our shelves, Bob has somehow managed to drag back boulders which now decorate his garden, washed clean every year by the winter rains. If Bob ever emerges from retirement, it will surely be because his property has been turned into a Super Fund site.

Thank You Bob.