It is equivalent to the other golden rule in investment: Be content with a small interest if you would invest your money safely.

Another advantage which speculation has over investment, especially if this rule is invariably acted upon, is that a man need not make so profound a study of mining in all its branches. Though a wide knowledge will undoubtedly greatly assist him and diminish his risks, he can get along fairly well by studying the market alone. But in ratio to his ignorance, both of the market and of mining, to say nothing of all the complicated influences that affect it, so must he be content with lesser profits, and all the longer patience will he have to exercise before he enriches himself to his satisfaction. Therefore, I would earnestly advise every man who has made up his mind to speculate in mining shares, not only to be content with small profits, but to make a study of mining, in order that he may be able to calculate with greater safety how small the profits should be; for what is small and sure in one case may be great and risky in another, and it is impossible to lay down any scale that will rigidly apply to every mining share. That scale each individual must draw up for himself, and he can do so only with the help of knowledge, and not with the haphazard method of ignorance.

The illustration I have given does not apply to every mine that is floated, nor even to every company that is floated by a well-known swindler. If we wish to speculate in what look to be honest, sound concerns, administered by boards of repute and managed by experts of recognised ability and standing, the more knowledge of mining we have the surer, of course, will be our success in speculation. It does not follow that every company floated under honest auspices will be a success. Far from it. But, at any rate, we are given every facility to judge of it ourselves, and if we cannot read reports, etc., with any understanding, if they are to us so much gibberish, then we are undoubtedly severely handicapped in our speculations. We ought to follow the developments of the mine week by week, and be able to make our own calculations as to its prospects, and thus we shall be able to speculate with greater safety and success.

Thus, speculation can become quite a scientific art, and it has been reduced to a science by those who study it. Therefore, I earnestly advise the ordinary man not to enter upon it light-heartedly. He must do it intelligently, and to do it intelligently will require assiduous study. It is not so easy a matter as speculating in other classes of shares, the study of which is not so complicated and laborious. But, then, he will be compensated by his greater opportunities. He will be repaid by an earlier and a more substantial reward. The risks are great, but knowledge will minimize them. But if he refuses to acquire that knowledge, and trusts to luck, to certain sections of the financial press, to 'touts,' bucket-shop-keepers, and others, then he must put up with the consequences. And those consequences will frequently be disastrous.

To enumerate the occasions on which, through lack of this knowledge solely, speculators have been ruined, we should have to count by tens of thousands. And I am afraid we shall have to count them by tens of thousands in the future, unless the advice I tender is seriously taken to heart and acted upon. It is mainly on account of the gross ignorance that prevails that speculators and others buy shares at the height of a boom, and when they have already been rushed up to inflated prices. And for this reason they have blamed mining generally, instead of their own folly in speculating and investing in mine shares of whose merits they knew nothing, instead of studying their returns and prospects. A speculator, therefore, should make himself thoroughly acquainted with the mine and the company, should study not only the capital and the directorate, but the area, position, size of reefs, the value of the ore, the expected output, the ore in sight, the expenses of working, the profits made, etc., and I hope to be able to help him do so by further exposition on these essentials in subsequent chapters.