Why Rick Rule Says ‘Anti-gold Investors Will be Destroyed’

stormGold 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.”


By Henry Bonner, Sprott’s Thoughts:

As Rick recently put it to King World News, “that is the kind of regret that no investor wants to live with for the rest of their lives.”

Rick believes the overall bull market will return and produce substantial returns to investors who own gold.

Today, low yields on bonds help maintain confidence in the U.S. dollar and in U.S. bonds.

As of April 16th, 10-year U.S. Treasuries yielded a paltry 2.6% in interest, which is close to historic lows. Low interest rates are a helping hand for the Feds, who have a debt burden of over $17 trillion1, and off-balance sheet liabilities – payments they will need to make, but that are not considered debt – estimated at around $70 trillion2.

Now, if you are an investor that holds a 10-year Treasury, you will make more than the officially-reported inflation numbers3. But those numbers don’t tell the whole story. For one, they leave out food and fuel. They also do not include taxes. That’s fine if you do not eat, drive, or pay taxes.

Using the pre-1980’s inflation index for inflation, we find that your cost of living is increasing at around 5% per year4. So by holding a 10-year Treasury, assuming inflation remains steady, you will be losing 2.4% in purchasing power every year for 10 years.

It won’t be long before investors begin to slow down their bond purchases, says Rick, as they see their purchasing power erode. They will look at other investments to help them avoid that guaranteed loss.

As interest rates grow, so too will the Feds’ debt problem. The more expensive it is to borrow, the more bonds they will have to issue to cover interest payments. And the more dollars the Fed will have to print to soak up the excess.

As the investment public sees rising rates and the Fed picking up the pace on money printing, it won’t be long before they dump their bonds altogether, Rick believes.

As Rick warns, ‘anti-gold’ investors may once again witness gold shining on through the resulting calamity.

1 http://blogs.wsj.com/washwire/2013/10/18/u-s-debt-jumps-to-17-076-trillion/

2 http://www.breitbart.com/Big-Government/2013/08/04/Study-U-S-Debt-Obligations-70-Trillion

3 http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

4 http://www.shadowstats.com/alternate_data/inflation-charts


Comments

  1. With a tip of the hat to cheezy 1960′s Japanese radioactive monster movies, I plan to tune in Sundance channel, sit back with a doubledouble Jameson* and watch  GOLDZILLA VS MOTHRAGATA.  
    A must see for PM bugs
    Now that we have Fukushima blowing up and Ebola just hitting the Euro zone I am reminded of the Steelers Wheels
    song
    Fuku to the left of us
    Ebola to right
    F***** in the middle with you.

    *8 oz tumbler, fill 2/3 with ice. Fill to near top with Jamesons. Splash of water. Seek comfortable chair—TV controller in handle
    Once finished- rinse and repeat. Be careful of your step.
     

    • @AGXIIK
      I had a wee bit o scotch on my birthday last week partner. That stuff will light you up, lol. Mendocino was a blast. Spectacular coastline and a great little town (much like Nevada City is). So great to meet you face to face in Lake Tahoe last weekend. Let me know if you want to come down the hill and tour the Empire mine this week. Im thinking I might go check that out.
       
      Peace and Aloha braddah!  :)

  2. Logic dictates a problem in buying gold silver or anything is thank’s to NSA snoop programs Rword Fed parasites know more about our finances and what they need to do to trigger us to sell than we do. With the push of a button Fed parasites know exactly what we have purchased, where its stored, our income and expenses, debt and at what point a flash drop will force us to sell. If that does not dislodge us from what they want of ours their Plan Bs may include call police to harass us. Buying gold/silver or any investment may be a good idea as long as we realize Fed parasite cowards know more about our finances than we do. Do I know for sure the parasites have these abilities? Nope. But what can be done many times is done. What has amazed me most in the 18 years I have written against the parasites, is parasites have been dirtier than originally predicted. 

  3. “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”.
     
    We can throw our 1970s comparisons out the window. How can we compare the wage inflation of the 70s to the wage DEFLATION we are stuck in right now. Sure, everyone feels consumer inflation from eating apples to wiping our ass (it all costs more). Businesses don’t have to contend with wage inflation, why should big money allocate to PM right now when equities (no matter how retarded and unethical we think) has been rather successful as of late. Big money doesn’t measure inflation by the cost of living of the middle class. 

    With flat/depressing wages of today, the middle class are just a bunch of boiling frogs. I don’t like fiat but I still need to work hard for it. No one is giving me free money yet so I still need it. The dollar is crap? Show me a fiat currency that isn’t. Who cares about the unfunded liabilities at this point. We are being bleed alive: Higher prices, no liquidity. Thus far, they have been highly successful and far more successful than anyone that predicted in the PM sector.

    I still believe hyperinflation is certain but its just not there yet. 
     
     
     
     
     
     

  4. Again Doc  We are just one Block Buster Movie Produced by Michael Moore written by you and other Economist and PM’s  Experts .The American public needs to be exposed to what is money the Feds and our Government and what they are doing to our Economy and Standard of living ,Expose the Debt Slave ‘Ponzi scheme that is about to End soon, Good American people will be Ruined/Destroyed it’s the Christian thing to do ! Shout Aloud warn our people ..who ever makes this Blockbuster Movie will have Great Rewards , Think about it? the Media TV /Radio has dumbed America down  and people are Drunk why hasn’t Alcohol prices NOT risen like Cigarettes, actually the price of Beer has went down a Quart of Beer in 1960 was about a Dollar.Again a Block Buster MOVIE who maybe awake the Citizens without violence imo. 

  5. Stop the rollercoaster, I want to get off.  Getting real tired of all the hype, only to see metals getting smashed down on a regular basis.  All the money spent on metals could have been making me a small fortune by now, if I just invested in something else.  Now I am stuck, and I cannot sell, or I will be taking a huge loss.  So instead of having money to make moves, I am stuck in the mud……waiting…..and waiting. 

    • Waiting……….Waiting. How long? Did you get in in 2011 ? Sounds like that`s about right, 2011. I`m not bragging, but I got in in 1981. And kept buying through the 80`s 90`s and 2000`s. I was laughed at and ridiculed, by the few who knew what i was up to. I waited DECADES……………..DECADES.  Silver and Gold will work out in the end.  If you were buying silver in the low $40`s, you should be buying with every spare cent you get. Never stop looking for deals. You have not waited that long. Or, sell it all and buy Facebook, they`ve never turned a profit either. I`m so tired of listening to people like you who bought in at the latest peak. Hold on a few more years, prices will go back near $40 you and the rest like you will sell, and the price will drop a bit, and then start up again. You will experience sellers remorse, buy back in and…………………………………………………………………………………………………………………………………………….

  6. At this point, I really doubt that anyone is truly ‘anti-gold’. My guess is that even the most vocal Paper-Boyz are secretly ‘stacking’ gold and silver because ‘the writing is on the wall’. The more economically astute, the worse their ‘secret sin’ against paper.

    • Exactly so @PatFields.  A lot of people specialize in SAYING one thing while DOING something that is just the opposite.  Goldman Sachs comes to mind for some reason, although this is probably not at all uncommon anywhere on Wall Street or in DC.  Anyway, yes, gold and silver are excellent in a long term savings plan.  They are not something to day-trade or bounce into and out of hoping to make some money.  Yes, some people have done just that but they are beating the hell out of the odds when they do it.  For the other 99.8% of us, gold and silver are buy and hold items.  Fiat is for daily needs spending, not for holding / saving.
       

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