It often seems that the key to successful investing is collecting as much data as possible and reading as many reports as possible.
That is perfectly natural. In many ways, this is how we are taught to learn—first at school and later throughout our professional careers.
All of that is important.
But it is only the beginning.
In my opinion, it is not what gives investors their greatest edge.
Today, financial statements, technical reports, company presentations and market data are more accessible than ever before. Thanks to artificial intelligence, almost every investor can access the same information within seconds.
The real advantage no longer comes from having more information.
Information has become a commodity.
The ability to interpret it has not.
Understanding what lies behind the numbers, how markets work, what drives different commodities, how companies create value, how to think in scenarios rather than predictions, and how to remain disciplined when making investment decisions—that is what truly makes the difference.
Looking back on my own investment journey, I have come to the conclusion that two ideas have had the greatest impact on the way I invest in natural resources.
Every commodity moves through its own cycle.
Every investment should be analysed through multiple possible scenarios.
Understanding these two principles will not eliminate uncertainty.
But they can completely change the way you think about investing.
1. Every Commodity Has Its Own Cycle
Commodity markets are cyclical by nature.
Periods of low prices reduce investment in new supply. Eventually, supply becomes constrained, prices recover and producers begin investing again. A few years later, new production reaches the market and the cycle starts over.
The challenge is that every commodity can be at a different stage of its own cycle.
For example:
Gold has experienced a very strong rally. That does not automatically mean the long-term trend is over, but higher volatility and corrections after such a move are perfectly normal. The recent correction in gold prices is a good reminder of exactly that.
Copper has also reached record levels, supported by the AI-driven demand narrative, and remains heavily influenced by expectations for global economic growth, electrification and infrastructure investment. But how would it react if the global economy slows? And will future supply be sufficient, considering how few world-class copper mines have been developed over the past three decades?
Uranium spent many years at prices too low to encourage the development of new mines, illustrating how the consequences of underinvestment may only become visible years later. Today, supply deficits, challenges in restarting existing mines and the contracting cycle interact with investor sentiment in one of the smallest commodity markets in the world.
Oil has recently moved higher due to tensions in the Middle East. However, if we zoom out and look at the last twenty years, we see a market that has largely traded within a broad range. Has the industry invested enough during that period to meet future demand?
Nickel, after its sharp rally in 2022, experienced significant oversupply from Indonesia, reminding investors that low prices alone do not automatically create an attractive investment opportunity. But will low prices eventually cure low prices once again?
Notice that none of these questions has a simple yes-or-no answer.
That is precisely what makes commodity investing both challenging and fascinating.
The conclusion is simple.
Before analysing a company, first ask yourself:
What stage of the commodity cycle am I investing in?
Not because anyone can predict the future with certainty.
But because understanding the cycle provides the right context for everything that follows.
2. Stop Predicting. Start Thinking in Scenarios.
Markets are complex.
Commodity prices are influenced simultaneously by supply and demand, geopolitics, interest rates, currencies, weather, technological developments, government policies and investor sentiment.
No single forecast can capture all of these factors.
Instead of trying to predict one future, I find it far more useful to prepare for several possible outcomes.
Whenever I analyse an investment, I ask myself questions such as:
What happens if the commodity price rises?
What if it remains roughly where it is today?
What if it falls?
What events could lead to each of these scenarios?
How would each scenario affect the investment?
The goal is not to predict the future perfectly.
The goal is to be prepared for different possibilities before the market forces you to react.
3. Then Comes the Company
If analysing a commodity market is challenging, analysing a mining company adds another layer of complexity.
A strong commodity market does not automatically make a great investment.
That is why I try to answer a few additional questions:
Does management have a clear strategy?
Can they execute it successfully?
What are the key catalysts?
What are the biggest risks?
How is the company managing those risks?
Is management communicating the company’s value effectively to investors?
My experience in strategy development and execution has helped me enormously when analysing businesses. But you do not need decades of experience to start improving.
Simply asking better questions is already the beginning of becoming a better investor.
One of the most valuable lessons I have learned from conversations with management teams is that even an excellent company can remain undervalued for years if it fails to communicate its investment story effectively.
The commodity is only one part of the equation.
The business itself matters just as much.
4. A Simple Framework
Whenever I analyse an investment in the natural resource sector, I usually follow four simple steps.
Step 1: What stage of the commodity cycle are we in?
Step 2: What are the most likely scenarios from here?
Step 3: Which companies are best positioned under those scenarios?
Management quality, strategy, catalysts, risks, financial strength and communication all matter.
Step 4: Does today’s valuation already reflect those possibilities?
This way of thinking does not guarantee success.
But it helps me make decisions based on probabilities rather than emotions.
5. Complexity Can Become Your Advantage
At first, commodity investing feels overwhelming.
Too many variables.
Too many unknowns.
Too much volatility.
Over time, however, I realised that this complexity can actually become an advantage.
Many investors avoid sectors they find difficult to understand.
Those who invest the time to understand commodity cycles, think in scenarios and systematically analyse businesses can develop a meaningful edge.
Not because they can predict the future.
But because they are better prepared for different versions of it.
Uncertainty will always be part of investing.
But if we learn to understand cycles, analyse different scenarios and remain disciplined in our decision-making, market volatility can start working for us rather than against us.
Disclaimer: This article is intended for educational purposes only and reflects my personal approach to analysing investments in the natural resource sector. It should not be considered investment advice or a recommendation to buy or sell any financial instrument.