Legendary investor Rick Rule asks: Should we steer clear of the oil sector or look for ways to profit?
During a time in which sentiment towards natural resources is bordering on doom, Rick Rule, Chairman of Sprott U.S. Holdings was kind enough to share a few comments.
Speaking first toward the phenomenon of market capitulation Rick noted that, “Capitulation is a very dramatic event. It’s when most participants in the market give up completely and simultaneously. They are two or three week periods [of] extraordinary [share price] violence. They’re emotionally driven rather than arithmetically driven events.”
One of the more important utilities of a capitulation according to Rick, is that, “In my experience they have marked definitively the end of long bear markets.”
When asked for a prediction on the gold price, Rick concluded that, “[The fight] is between gold and the U.S. 10 yr. treasury—and I don’t see how over 5 years we can possibly lose that fight.”
Now is the time to re-examine our premises on gold.
Are the worst of times yet to come?
At the Cambridge House Canadian Investment Conference in June, The Gold Report Publisher Jason Mallin asked a panel of experts picking a portfolio of stocks with upside potential for the 2014 Streetwise Reports Natural Resources Watchlist what they wanted to see in an equity. As always, Sprott US Holdings Inc. CEO Rick Rule, summed up the ideal beautifully. “We like reality at a discount,” he said. Now that three months have passed, we decided to check in with Rick and co-panelists Joe Mazumdar from Canaccord Genuity and Keith Schaefer from Oil & Gas Investments Bulletin to see how that reality is playing out.
“The market itself is very healthy. You are seeing a transition…a transition that doesn’t suggest, but rather screams that [junior resource issues are] under accumulation—which is a very, very bullish sign.”
For those unable to make the trip to Vancouver last weekend for the Sprott Natural Resource Symposium, you won’t want to miss the summary and recap of keynote speakers from the event, including Rick Rule, Adrian Day, & reclusive billionaire Robert Friedland.
Full recap of the Sprott Natural Resource Symposium from Vancouver is below:
On July 13, gold was still around $1,340 per ounce. Since last Monday, gold has suffered a big drop, falling as low as $1,293 in a few days. Many blame the decline on hawkish comments from the Fed’s Janet Yellen, who recently suggested the Fed could raise interest rates. “Higher interest rates would encourage investors to switch to assets that, unlike gold, pay interest,” said the news service Reuters1.
Following Thursday’s news from the Ukraine, gold has rebounded from its low, but remains under $1,320 as of July 22.
Rick Rule, Chairman of Sprott US Holdings Inc., recently said gold could fall back another 10% as a normal event in this market.
I asked him whether last week’s step down had altered his views on gold for 2014:
Rick Rule, Chairman of Sprott US Holdings Ltd. said in early March that the market looked overheated and was due for a pullback.
Gold and silver had just delivered double-digit gains in a few months. Sure enough, from mid-March until early June, the precious metals gave up much of their gains.
Since early June, resource stocks have surged higher once again.2 So the question on my mind was: Where is gold headed for the remainder of the year? Will this rally pull back?
Rick recently gave me his answer:
Few business leaders are as candid about their strategies to create wealth as Rick Rule, the charismatic chairman of Sprott US Holdings, one of the world’s largest investors in natural resources.
I called up the 61-year-old Carlsbad, California, based executive recently to discuss speculation, Sprott’s due diligence process, Rick’s outlook for the junior resource sector, and the conference he’s hosting in Vancouver next month.
“Most of the junior mining sector’s injuries were self-inflicted,” Mr. Rule said.
A recent internal study by Sprott of 75 sub-$10 million market cap junior mining companies showed that 57-58% of the capital raised went to general and administrative expenses over a 5 year period. Meanwhile, major mining companies, such as Teck Resources, typically allocate 12-15% of project expenditures to G&A, according to Mr. Rule.
The delta between what the industry allows and what the capital markets allow is a full 40%, which goes a long way to explain the chronic underperformance of the junior mining industry.”
I wanted to pick Rick’s brain about Sprott’s due diligence process.
- Platinum & palladium- is the run over, or is the real move to the upside yet to come?
- Rick discusses the “ugly set of circumstances” facing mining in South Africa, and the implications on the supply side for gold, silver, platinum, and palladium over the next few years
- Why water will be the investment story of the next decade
- Rule discusses the pernicious devaluation of the dollar over the past 30 years, and predicts that the impact of the shift in global trade settlement & savings from dollars even slightly (1%) into gold will result in a 100% move in the valuation of gold.
- Rick also provides his outlook for precious metals in the face of continued manipulation, and states: “In my 30 years of experience in the markets, I’ve seen alot of manipulations, and the markets always, ALWAYS win.”
The MUST LISTEN SD Weekly Metals & Markets with Sprott Global Resources Chairman Rick Rule is below:
In this excellent interview with Finance & Liberty, Rick Rule lays out how the end of the London fix in August is likely to affect the silver market, whether we just witnessed another bottom in the PM sector, why platinum and palladium are currently outperforming gold & silver, and why the Fed’s counterfeiting is bullish for gold.
Rick Rule’s full interview is below:
Gold has made its way down again, to around 1,300 per ounce this month. Rick Rule, Chairman of Sprott Global Resource Investments Ltd. says that a few years out, you will be happy you stuck with gold.
For context to today’s downturn, look back at the great bull market for gold in the 1970s’.
During that time, gold rose from $35 per ounce to around $200, and then came crashing down to around $100 per ounce. Weak hands, who lacked the courage or the financial strength to hold on, sold their gold. It was a disaster for them, but a great opportunity for investors who believed in the metal. They were able to enjoy an 850% gain over the following five years. The ‘anti-gold’ investors watched as gold soared.
The next time gold soars, anti-gold watchers may not simply watch…they “will be destroyed.”
Strikes at South African mines have caused a massive drop in platinum and palladium production. And the world’s palladium supply could decline by 41% overnight if the West imposes export sanctions on Russia. Speculators are betting that these events will reduce supply of the metals and drive up prices.
Rick Rule, Chairman and Founder of Sprott Global Resource Investments Ltd., recently weighed in. He believes platinum and palladium could go lower in the near-term, as fears of a sudden crunch dissipate.
The real reason platinum and palladium should rise over the coming years has nothing to do with geopolitics or labor issues, Rule believes.
Thoughts turn to green on St. Patrick’s Day. Rick Rule of Sprott US Holdings believes the resources bull market is about 18 months from arriving and there could be multiple promising entry points in the market this summer. But in this interview with The Gold Report, he says that this rebound may not look like the one investors are expecting and shares tips on how to spot companies that may have pots of gold at the end of the rainbow.
Rick Rule from Sprott Global Resource Investments joins the SGTReport to talk about everything precious metals. This is a must-listen interview packed with lots of bullish info, but towards the end of the interview Rick really cuts to the chase: “The idea that silver can be manipulated down ignores the fact that it could easily be manipulated UP.”
Rick continues, “The consequence of two years of extraordinary physical demand in the face of the unwinding of the leveraged long carry trade in silver expressed in SLV and expressed in the futures markets, tell me that it will be easier to make money manipulating the price of silver UP than manipulating the price of silver down. And my suspicion is that the commercial interests in manipulation will ultimately do the easiest thing to do. If there was $2 Billion employed, not on margin by the way, cash – so the rules could not be changed like they were on the Hunts – $2 Billion in cash employed in the futures markets, which was held for delivery cleaning OUT the good delivery silver that’s available, the short interest would LITERALLY be uncoverable.”