“Rick Rule: Leveraged Gold Longs Are Heading To The Sidelines–In Fear Of An October Financial Panic”

Commenting on the elements that suggest a coming October black swan surprise, Rick Rule said, If ever there was a set of circumstances that came together that would give an asynchronous event the ability to take the financial system off the rails again, it would be this month…the dysfunction of the US congress with regards to the spending authorizations and the upcoming problem with regards to the debt ceiling, and the fact that those occur…[during] a psychologically important month raises the specter in everybody’s mind…of a black swan event that takes down all markets and drives everybody to respect liquidity.”
In terms of how he’s preparing for such a panic event, Rick said, For the balance of this month, I am in cash, cash, cash, and cash.
Is an October financial panic dead ahead?  Rick Rule’s full thoughts are below:

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From Tekoa da Silva, Bull Market Thinking:

I had the opportunity yesterday to reconnect with legendary resource financier and investor, Rick Rule, Chairman of Sprott US Holdings.

It was a fascinating conversation as Rick spoke to the likelihood of (and his preparations for) an October “black swan” event, Sprott Asset Management’s investment approach at this time, and what investors should keep in mind in order to successfully navigate today’s resource market.

Commenting on the elements that suggest a coming October black swan surprise, Rick said, If ever there was a set of circumstances that came together that would give an asynchronous event the ability to take the financial system off the rails again, it would be this month…the dysfunction of the US congress with regards to the spending authorizations and the upcoming problem with regards to the debt ceiling, and the fact that those occur…[during] a psychologically important month raises the specter in everybody’s mind…of a black swan event that takes down all markets and drives everybody to respect liquidity.”

An early flight to capital was witnessed in the gold market on Tuesday Rick noted, in that, “Whatever remaining leveraged longs there were in the gold futures markets thought about the fact that there could be a constraint in available capital as a consequence of a broader financial panic…and people decided to go to the sidelines and go to cash.”

In terms of how he’s preparing for such a panic event, Rick said,For the balance of this month, I am in cash, cash, cash, and cash. But if we survive this month I am certainly much, much more inclined to be making some big bets on the best assets in the [resource] sector.” 

When asked about Sprott Asset Management’s firm-wide approach to the resource market at this time, Rick noted that, “I am probably the most conservative in the firm…[but] Eric Sprott who runs the firm is as aggressive as I have seen him since the year 2000. Eric believes we are truly at a tipping point with regards to precious metals prices and as a consequence, he is, as is his style, the style that has made him a billionaire, very aggressively going into the marginal junior producers…Eric believes that gold within 12 months will certainly be above $2000 and could be above $2500. So he’s looking for companies that barely make money at $1400 but would be making $800 or $900 an ounce if the gold price went higher, that are producing 100,000 ounces a year. Eric believes that this is the year where his portfolio will see ten to fifteen, 10 to 20 baggers.”

In terms of what investors need to keep in mind in successfully pursuing those types of returns, Rick indicated that, “[What] people (particularly in the juniors) need to remember is that it’s all about leadership and it’s all about people. Mines are made and you have some people who I regard as “A” players who are consistently successful and to be consistently successful as a speculator, what you need to remember is that you need to buy aggressively the best of the best of people during the worst of the worst of times…”

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“If you do that one thing—which is awfully hard,” Rick concluded, “you will do very, very well.”

This interview, conducted with one of the world’s greatest performing natural resource financiers, is required listening for serious investors and market students.

To listen to the interview, left click the following link and/or right click and “save target as” or “save link as” to to your desktop:

>>Interview with Rick Rule (MP3)

Thanks,
Tekoa Da Silva
Bull Market Thinking

Photo source.

Comments

  1. Another gold bull that prefers the US dollar in market chaos, at least he’s honest.

    • Rick Rule is a smug and deceptive person. He is NOT honest (and neither are you, zman .. if you are into cash, why hang around here?). He is trying to get more sheeple into cash and away from the real protection, which is (FINALLY) gold and silver and hard assets. Don’t be fooled by RR. Another thing about him is that his initials signify 18, 18, as R is the 18th number of the alphabet (and there are many more in the same game with initials RR). And, as for what 18 means, lets look at the biggest programming scam in the history of the world .. the bible … http://www.biblestudy.org/bibleref/meaning-of-numbers-in-bible/18.html
       
      18 means BONDAGE, which is what happens to those who follow his advice about cash.
       
      We are about to have the MOTHER of all crashes …. listen to Greg Mannarino from yesterday  

      The video cannot be shown at the moment. Please try again later.

    • zman, you are an illuminati traitor working for the overthrow of all civilization and a new Dark Ages. Every comment you post is misinformation. If you were merely stupid, you occasionally tell the truth. 

    • I guess that I didn’t see it that way, Chief.  As in 2008 when ALL investments got hammered, I see Rule’s comment as meaning that he is holding cash temporarily, waiting to see if there is a big asset crash.  If there is, then I can see him and Sprott swooping in and buying $1-2 worth of gold and silver assets for 10-15 cents.  Doing that and holding on until that 10-15 cents worth of assets becomes worth $1-2 is a way to make LOTS of money.  I dunno.  Maybe I am reading this into Rules comments because this is what I am doing with 2/3 of my investable assets?
       
      This strategy will work well during the many market tumbles that have come and gone.  It will not work when we get “the big one”.  So, maybe the question is, “Is this the big one?”.  It could be but I don’t think so.  IMO, the big one is a lot more likely to come sometime between spring ’14 and summer ’15.  But that’s just my gut talking.
       

    • @mexrph, please explain how this post by zman is misinformation?  it appears to me to be a relevant summary of the article,

    • Illuminati is giving him too much credit. At best he spent 1 mo. In a stock broker licensing class and he’s just pro paper. Why? That’s how he makes his living! That’s why a Kirby salesman and a Rainbow salesman both tell you they have the best product… They’re trying to feed their family. Z’s definently a fiat monger though.

    • mexrph and shamus001, chill out guys, what did I say?   RR wants to be in dollars now, so what?   I didn’t say I agree with it. 
      You don’t think many of these Sprott, Sinclair, types don’t own any US dollars?   Sinclair recommends 1/3 of investments in gold, which means the other 2/3 are in US dollar investments!!
      RR wants to buy cheap resource stocks if the market sells off, that’s his choice, and he needs cash for that to happen.  Many of these huge PM bulls will and do sell into strenght, they are bigger believers of cash than they will ever tell the public.

  2. We’re too close to the end of the game to have your money in anything but physical silver.
    I don’t gamble anymore in a rigged casino, so until the game becomes clean again, I’ll wait it out with my heavy metal.

    • agreed

    • I’m with you Hawk, for me it’s “hold, hold, hold!” I also like cash on hand but I would take phyzz before fiat any day. Short term pricing is of little consequence, longer term phizz     izz     a no brainer…… and trying to buy at only the dips or selling at the brief highs can be very detrimental for a stacker unless you can really call those points and are fast in selling and/or buying the amounts you require. I find it safer to just average in and hold for the fan hitting event that is coming without doubt…..IMHO.

    • Was happy to have added modestly back on Tuesday.
      Hold: Yes.
      Add: Yes.
      Wanting to stay consistant: Yes.

    • There ya go!
      10 years ago it would take me 2 weeks to find someone to agree with me.  Now I’m glad to see more and more aboard.  And the longer it takes them to end this dollar ponzie, the more will buy silver in preparation.  Keep Marchas45-ing.

    • Some cash will be needed during the initial stages of the final collapse, fuel, grab whatever last minute food…

    • Good point, Mary.  Cash will be good until it isn’t.  Until then, using it to get the other things we need is good.
       
      Like prepping, stacking really isn’t an all or nothing deal.  Nor do we need only one kind of PM.  Variety is good.  :-)

  3. “Whatever remaining leveraged longs there were in the gold futures markets thought about the fact that there could be a constraint in available capital as a consequence of a broader financial panic…and people decided to go to the sidelines and go to cash.”
    With all due respect Rick, you are full of shit. You sound worse than Bart Chilton, and more like a used car salesman these days.

  4. what someone worth hundreds of millions of dollars does with his investing capital, and what we should do with our meager amounts are 2 different things.
     
    Whoever thinks rick rule doesn’t have more gold and silver in physical form outside the banking system is an idiot, and an a55hole.

    • New Posters don’t know much do they CD!

    • Cd, I think some of these new posters are crossovers from the SLV message board. Bunch of shills for the TBTF’s

    • I’ve known Rick Rule for over 15 years, and have seen him speak dozens of times. What he said above about gold being sold off and going to cash is a joke. Embarrassingly stupid considering the level of recent manipulation and intervention.

    • OK, Everyone, this is the best part of this commentary to insert this, as CDL & Ranger are on the right track here…
      The title says “Leveraged Gold LONGS” selling off.
      THEY ARE GETTING OUT OF PAPER, PEOPLE!!!
      CASH is better than paper PM’s, which the Bank$ter$ can manipulated if an “event” comes up in October.
      So it seems they have found another way to MANIP-MANOP the CRIMEX yet again! GO FIGURE!
      Makes Perfect Sense to Me!  

      Furthermore, Folks like US will convert the CASH to PHYZZZzzz!

    • “What he said above about gold being sold off and going to cash is a joke.”
       
      Nope, RGR has it figured.  Lots of financial types say “gold” when they mean “paper”… as in GLD or some 2-3x leveraged ETF.  The financial news talking heads do it all the time.  Of course, we expect it from them but not so much from someone like Rule.  I don’t know Rule at all but he does have kind of a sly look about him.  Not sure that I would trust him with my money but he is an interesting character and worth listening to in these interviews.  Sprott seems like a decent guy and he and Rule are in business together, so maybe that counts for something.
       

    • ThanX @Ed_B
      Reading into this a tiny bit further, RR & Sprott et al 
      PROBABLY think that this is not “THE BIG ONE” 
      or else it would be time to vacate ALL PAPER Assets. 
       
      In this current Paradigm Of Paper,   U$D still reigns supreme. 
      They are using it as a sponge to absorb all the loose wealth 
      that they can. In the Next Paradigm, all paper will burn. 
      Mark it down, BURN!

    • No problem, RGR.  :-)
       
      “Reading into this a tiny bit further, RR & Sprott et al 
      PROBABLY think that this is not “THE BIG ONE” or else it would be time to vacate ALL PAPER Assets. “
       
      That would be my take as well.  The sky is only going to fall ONCE.  But it hails like mad quite often.  They are preparing for a serious hail storm, not a sky-fall event.  Of course, if the sky does fall this time, then a lot of people are going to look pretty silly.  But not most of us.  ;-)
       
       

  5. And I might add that people that have bought and held jr miners the last few years have been absolutely slaughtered. As in 80-90% losses on many of them. 
     
     

    • Yes, they have.  A lot of those “junior miners” are little better than penny stocks.  They are extremely volatile.  The problem with these is that they can always get cheaper… and have!  I have no interest in gold or silver mining stocks because I know jack about which ones are worth buying.  If I knew which to buy, then I would DCA into a good position over time and then just hold on tight.  Good money can be made in such stocks but patience and knowledge are needed.  As speculative as such stocks are, they just about have to be a very minor part of one’s portfolio… 5% or less?

  6. LMAO Hold the Cash, Lol Ok to be truthful I do have some cash but I have a helluv a lot more in PM’s and I’m a firm believer the cash ain’t going to be worth diddly unless it’s Gold and Silver Coin Cash. Keep Stacking

  7. Maybe Rick Rule ought to listen to Chris Powell, learn something, and come to his senses as to what is going on in the gold market. Amazing they allow Powell to speak in Hong Kong on CNBC World, but not in NYC on the BlowHorn [CNBC]. The western press is a complete flippin joke.
     
    http://video.cnbc.com/gallery/?play=1&video=3000204388

    • How many times over is Rule a millionaire?  It’s likely that he DOES know something and has capitalized on it.
       

  8. Flight from paper silver to a more spendable form of paper, thing is the fiat will lose value fast.

  9. What do we want?
    JOBS
    What do we get?
    BS
    Keep stackin’

  10. @Bay of Pigs and Piglets,
    BOP, everybody here is uptight about what is going on, we are all frustrated. The metals sellers are trying to sell and the article writers are just trying to keep everyone’s spirits up. Yep a lot of the articles don’t mean ZIP and some are B S, but all in all we all know just by common sense that whatever is coming or crashing will happen very soon.
    Regards,
    Ranger

  11. Yep  there you go Ed.  GLD  What a joke.    It just broke 900 tons    899.99 tons exactly  I wonder what twinkle toes got that .01 ton?

  12. Charlie is the culprit, I think   That last screen shot had a bunch of shiny yellow metal

    • Could be.  If Charlie sucks in much more PMs, we may have to rename him “Electrolux” or “Hoover”.  ;-)

  13. I’ll be as forthright as I can. I own most of my savings in silver. I know it’s bottomed, and I’ve lost 30% if I sold today. I won’t sell until it rockets, otherwise it’ll be a,nice buried teasure for my children. I earn more than 93% of Americans, I can’t complain. My family is well provided for, we lack for nothing. A crash would change all of that! I have guns, seed, armor, silver, and I want to use NONE of it. But my gut tells me, before I’m dead, I’m going to be forced to use some of it. Which? Who can tell. The dream is vanishing before my eyes, and men are looting the markets as fast as they can be stocked.

  14. I read that the way you did Ed.
    The one thing that dioes concern me about owning the miners now is the last time the market crashed the miners also went down for the ride. Although i started going ‘all in’ in the PM sector near the supposed June 28th lows, if the market crashes, there is still a long way the miners can fall before the ensuing big rally. Case in point, Silver Wheaton(SLW)was under $3 after the crash and we know where that is today. In that light, thats where i have no trouble with what RR said. Ride out the coming crash with cash and you’re in a great position to scoop up many assets at a huge discount IF you can time it right.

    • @BetterThanNoSN
       
      Whatever else he may be, Rick Rule is no fool.  He seems convinced that he has a good strategy and it is likely that he does.
       
      During the 2008 crash, ALL investments went down, even PMs.  Those who held cash, on the other hand, did not participate in that crash and were able to buy a lot of things cheaply.  Anyone who did made buckets of money between early 2009 and late 2012.  Having currency, even fiat currency, is a good thing.  It allows us to buy PMs, preps, and many other useful items.  Just because we get a large amount of cash from our investments or our work does not mean that we have to HOLD it.  Cash is for spending, not holding, unless for the very short term.
       
      The current stock market is squirrely.  Considering all the manipulation and other BS that is going on these days, why wouldn’t it be?  Because of this, a lot of investors are holding cash and waiting on the sidelines for some of this crap to pass, so the markets can settle down a little.  This whole thing about the debt ceiling, Gov shutdown, and Obama Care could cause the market to take a serious tumble.  A loss of 40-50% would not surprise me.  The economy is barely limping along, yet stock prices are at or near all time highs.  For this valuation to make sense, the economy would have to be humming… and it isn’t!  What we have here is a classic case of inflation masquerading as growth.  More money and fewer shares have combined to force share prices higher than the earnings can justify.  If Bernanke seriously cannot find more than 1% inflation in the US economy, it is clear that he hasn’t looked at stock share prices, shopped for food, filled his own gas tank, paid any tuition, bought insurance, or paid his taxes.  Those of us who have done these things know well that prices for vital items are up and not just a little.
       

  15. shamus001  your comment about your level of income and tax level hit a nerve.  Before I downsized, reducing my tax foot print by about 90%, in any year I was at least the 30% bracket or more, given that Kleptifornia was a 10% tax rate state.  There was a time when I was a jingoistic neo-con who lamented that ‘at least my some of tax dollars is buying cruise missiles to blow up people in other countries’  For that I am ashamed and regret thinking that, given what this government is capable of.  You are totally correct about the government wastefulness.  The USG spends trillions on war and food stamps.  Education is in a shambles.  Roads are broken and whatever we might, in some wild alternative  universe, call prudent spending, is buried under a trillion tons of FIAT horse crap.  That I will write a small check to the UST within a couple of days pains me no end, in the recognition that most will be wasted, some will be used to keep this terrible unreality of sequester and shut down game doing for another 12.86 microseconds and maybe the tinuest fraction use for something useful, like ????  uh, I am not coming up with anything that the government does that is useful and couldn’t be done by we, the people
    Keep stacking with the money the government ‘temporarily’ allows you to keep after they sweep 70% from your pockets.  I am of the opinion that at least 70% of everything we buy is the cost of taxes embedded in the pricing infrastructure.  Your precious metals may be the only thing of value that you, me or anyone else possesses once we are done being force fed this turd sandwich
    Cheers and keep stacking.  Take care of yourself.  Converting FRNs to something of value is the wisest course to protect your family  I wish I had started sooner but have no regrets as to my actions in the last 4 years

  16. Here’s ‘my’ thoughts (lol):
    IMO, 1 of 2 things will happen. Either the debt ceiling will be raised yet again (for the soundness of the economy of course!), maybe even finally removed entirely OR ‘something else’ that has possibly already been planned out ahead of time. Again, nothing within the ‘matrix’ is happenstance.
     
    And what I’m possibly thinking that ‘something else’ could be is as follows:
     
    No debt ceiling deal by Oct 17th, markets crash, interest rates sky rocket, all the derivatives (related to said interest rates) implode, turmoil ensues, anyone that thought they were smart sitting in cash (in the bank of course) expecting a crash gets a rude awakening when they close down the banks pretty much immediately and perform a ‘bail-in’ (that was recently enacted) and take 30, 40 or 50% (??) of whatever was in your account to “fix” the problem.
     
    Got a safe? Got physical hard cash, gold and silver?
     
    We could do a movie….

    • @AGXIIK
       
      “We could do a movie….”
       
      We could but it would be redundant.  You Tube is LOADED with movies of just that type… and a lot of them are really good.
       
      I saw Boner on TV the other day.  He is seriously PO’d at Obama who is seriously PO’d at him.  Because of all this PO’d-ness, neither can work with the other.  I suggest that a small group of 4-5 each of middle of the road Reps and Dems meet, thrash out a reasonable deal, and then sell it to the top dogs before we all have to take a bite from the giant crap sandwich that Obama and Boner are busy making.
       

  17. more  plus more equals less, up is down ,hot is cold, bright is dark, wet is dry,  when you look around and zero adds up, & ask how can so many get a free ride. I think your lucky if you find any solution to truly believe in and focus on. I don’t wish to see the general population suffer, but to try day after day year after year, and not be able to have things add up properly, I say let the chips fall where the may , those with any plan will be far better than those with out, and for those with out any plan such as nature & life , only the strong survive (which in turn will make your family/town/country/world a better place),it is very frustrating to watch it all happen around us ,,so let the madness end.  I doubt most of us on here, were dragged to a silver/gold class, and told listen up! 
     
    peace & love         

    • I try to “school” folks on Silver and Gold all the time, 
      and it’s mostly vast indifference. They want to know 
      the ball game scores, or something stupid like that. 

    • That’s right, RGR, they do.  The reason for that is that to them the current unreality has become their reality and our reality seems totally unreal to them.  So, why would they be interested in anything that currently looks like irrational behavior to them?  This is one of those “through the looking glass” things.  Nothing is as it seems, yet many accept what they see as being real when a lot of it is not.
       
      A lot of people would never imagine needing a wad of cash at home, so keep their money in the bank, S&L, or CU.  These same people have also never experienced a bank holiday or bank bail-in.  Once they do, they will understand perfectly why we have the positions on PMs and cash that we do.  Until then, it’s simply not a situation that they can imagine ever happening.  Most of us have not experienced a bank holiday or bail-in either but we CAN learn from the experiences of others who have.
       
      My wife and I went to our CU several weeks ago and she wanted to get $500 in small bills for her business.  The CU people were very nice but said that they did not have $500 in small bills that they could give her. They said that she could order some and that it would be delivered in 2 days or less from their central vault location across town.  She was stunned.  We drove home and I could feel the wheels turning.  Once we got home, I took her to our safe, opened it, and handed her $500 in ones, fives, and tens.  Then I said, “THIS is why we have a safe and WHY I keep cash in it.  One day, we will go to the CU and find that the doors are locked and that they will not open for days or even weeks.  What will we do then?”.  She got the message I was sending, so now stocks some cash in the safe too. 
       
      Sure, I watch sports sometimes too.  My football team lost today.  OK, I can live with that.  Some they win, some they lose.  But my life does not hinge on whether or not they win.   It’s entertainment and that’s all it is.  Nope, I can’t quote verbatim an endless series of stats or tell you which teams won in years past.  Not my thing.  And that’s OK.  A lot of this is trivia and its fine to have a bit of that in our lives.  But when it BECOMES our lives, look out!
       

  18. My Favorite Quotable Quote from this thread:
    @SilverHawk says:
    Keep @Marchas45-ing...
     
    :D          :D          :D

  19. Mid-October and still no panic – what’s all the hype about?
    These holdings will NOT be hypothecated.
     

  20. Let’s try this one more time:
     

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