Rick Rule: In A Market Collapse, You Don’t Want an Indirect Proxy, You Want to Own Gold!

Sprott’s Rick Rule joins The Doc & Eric Dubin this week for a special show discussing:

  • Why Rick believes the Bear market appears to be over in junior mining equities:  We are now in the early stages of recovery– We have all of the hallmarks of a market that wants to go higher!
  • Rule explains why Markets Work: The cure for low prices is low prices! 
  • One Final Gift From Mr. Market to Mr. Rule?  Rick discusses the potential for a historic opportunity to invest in the oil resource sector come Q4
  • Does China Believe it is Game On For Resource Materials Acquisition?  Rule Provides Anecdotal Evidence Why the Answer is Yes!
  • Rick explains why In the circumstance of a liquidity driven market collapse, you don’t want to own an indirect proxy for gold (shares), you want to own gold– Selling will be driven by the margin clerk, not the client
  • Finally, The Doc asks Rick to discuss the proposed tender for the assets in Sprott’s Central Gold & Silver trusts

The SD Weekly Metals & Markets With The Doc, Eric Dubin, & Sprott’s Rick Rule is below: 


# # # #

With “bad news is good news” logic governing Wall Street perception that the latest employment report incrementally increases the odds that the Fed will not be raising interest rates as soon as previously expected, conventional equities shot higher following Friday’s employment report.  More on that in a moment.

Amazingly enough, gold and silver managed to get through Friday’s employment report with small gains.  Volatility remains high, but gold and silver have been consolidating with an upside bias since the aggressive end of month April take-down.  Notice the very short-term higher lows in the following charts:


Mainstream media will parse the latest employment report, focusing on the headline 5.4% unemployment rate and not much else.  The U.S. Bureau of Labor Statistics (BLS) hasn’t quite figured out how to spin away ugly labor force participation rate statistics, so the mainstream media pretty much never talks about the data series.  But the data proves the lie that the labor force is healthy.  Once again, the number of Americans not in the labor force rose, reaching 93,194K from last month’s report of 93,175K.   Millions of Americans have simply given up looking for work and are no longer counted towards the computation of the unemployment rate.  The BLS data speaks for itself, and it even understates the problem, as can be seen in this chart from ZeroHedge:

Not in Labor Force

Adding insult to injury, the official numbers report a loss of 252K full-time jobs, and the creation of nearly half a million part-time jobs.  Hooray!  We’re saved.  NOT!

These stats are from the more revealing “household survey,” but that data set is flawed, to say the least.  Nevertheless, the take-home point remains:  even by official government stats, the labor force is hurting, and monthly revisions this year (not that the mainstream media bothers to look back) have all been downward.

full time part time

The Fed might wish to hike rates by 25 basis points later this year just to try to earn credibility.  But asset markets are going to throw a hissyfit.  This week, Janet Yellen suggested that asset valuations were high, and it’s quite likely her jawboning was intended to tame going forward speculation and higher stock prices given the desire to possibly test the market and hike rates.  The Fed has never been able to transition changes in orientation without breaking things and this time is going to be no different.  They’re stuck, and the entire world is going to face the consequences.

Weekend Reading/Listening/Viewing:

If you have never seen “The Century of the Self,” it’s one of the best documentaries of all time.  I was glad to see an article spotlighting it over at the “Who What Why” website, introducing it to a new audience.  Check TND’s introduction:  click here.  Here are some other worthwhile links:

Thanks for tuning in and have a great weekend – Eric Dubin