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Rick Rule - Gold & Silver Surging as Takeover Mania to Begin

With gold up $47, trading above the $1,700 level and silver surging about $1.50 to $33, today King World News interviewed one of the most street smart pros in the resource sector, Rick Rule, Founder of Global Resource Investments, which is now part of the $10 billion strong Sprott Asset Management. When asked what is driving the markets and what he sees going forward, Rule replied, “I understand now that the Europeans have had 22 emergency meetings and the market is impatient for them to do something. You and I both believe that the situation they face in Europe is not resolvable so they have probably already done as much as they can.”

Rick Rule continues:

“But the market is impatient and I think the strength today in gold can probably be attributed to nervousness in the European situation. I am surprised that there hasn’t been more of a move to the upside in silver. There was some forced selling of silver because of the hedge fund redemptions, and perhaps the rebound we are seeing in the silver price today is a function of the fact that process is largely completed.

We are bullish on the high quality junior sector, in particular. As I mentioned previously, we think the precious metals stocks are attractive in terms of price and we have positioned our clients to be buyers into this tax loss selling season.

This is a traditionally a cheap time to buy these stocks and we think they are cheap to begin with. We should caution your readers that the markets are going to be extremely volatile. The volatility you have seen for the last six weeks is a down payment. I think this will go on for a long time.

The increased volatility in these markets will unnerve certain participants....

Continue reading the Rick Rule interview below...

To hear which company $10 billion Sprott Asset Management and Sun Valley Gold

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“So make yourself a target list of stocks that you really want to own and buy them on days that are truly and profoundly ugly.

We see really attractive opportunities for certain qualified investors going forward in private placements. Many companies held off on placements in April of this year hoping for better markets. Those markets didn’t come. We expect those companies will need to finance, rather than wanting to finance in the period between say February and June of 2012.

If we are correct, the terms offered to private placement buyers in the first half of next year could be truly extraordinary, similar to the kind of opportunities we saw in 2002 and 2008. So for your readers that are accredited investors, keeping some powder dry for those nice warrants that are offered up when companies truly need money, I think, will be a rewarding strategy.

Investors also need to pay attention to takeovers. The competing bid for Hathor in the uranium space is kicking things up. Finally, in the gold sector, the medium and the large size producers are generating very large amounts of free cash.

That set of circumstances where the senior producers need to replace ounces they are producing is the sort of thing that generates merger and acquisition activity. You will see a wave of acquisitions in the mining stocks, base metals stocks and the uranium stocks.

You are going to see takovers like the acquisition by Guangdong of Kalahari for uranium, where the acquirer isn’t a mining company, but rather is a resource user. I think you will see increasing acquisitions by Korean, Japanese, Chinese and Indian companies to secure resource supplies on a go-forward basis. This will be an important theme this year in the market and in fact for the next five years in the market.”

Eric King

KingWorldNews.com

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