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Rick Rule continues:
“You see a continued drawdown of warehouse stocks as a consequence of physical demand, and I think that there is an ongoing risk of a physical failure. Meaning that there could be a failure to deliver futures on a going forward basis. There has been extraordinarily strong off-take, physical off-take from investors.
Eric Sprott points out that about as much silver trades every day in paper form as is mined every year in physical form. The chances that sort of disparity between paper trade and physical supply could yield price shocks seems very, very real to me.”
When asked about James Turk’s call for a bottom in silver Rule stated, “Well James has an interesting point of view because he gets to see supply and demand for silver on a real-time basis, and so of course I would defer to him on whether or not we are at a bottom....
Continue reading the Rick Rule interview below...
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“The interesting thing about silver is that it doesn’t respond to fundamentals very well in the sense that most silver that’s produced, is produced as an adjunct to mining other metals. What you are seeing is a slight increase in pure silver supplies as a consequence of the high price bringing production in place at the same time that you are seeing capital constraints in the base metals industry constraining the byproduct supply of silver.
Investment demand for silver has been extraordinarily robust. Both James Turk and Sprott Money have indicated that on a dollar for dollar basis, demand for silver bullion is outpacing demand for gold bullion...It suggests that the silver demand relative to gold demand is extraordinary. And ironically as a consequence of fabrication, silver supplies are lower than gold supplies with demand much, much higher. That would seem to be supportive of a higher silver price to me.”
When asked if the current physical tightness in the silver market makes this bull market different from that of the ’70’s Rule said, “My gut tells me that’s true. And the other thing is that in some senses, some of the increase in silver the last time (the ‘70‘s) was due to an attempt by a very small cabal of investors led by the Hunts to drive the silver price higher. In this particular case, what we are seeing this time is a cabal of three or four million physical investors. The demand is much broader based and much stronger.”
Rick Rule also discussed gold at length, the cornering of the silver market in the ‘70’s vs today and more. The KWN audio interview with Rick Rule is available now and you can listen to it by CLICKING HERE.
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
Rick Rule - Silver Will Trade Like an Internet Stock to the Upside
With gold trying to stay above $1,525 and silver bulls looking for a bottom, today King World News interviewed one of the most street-smart pros in the resource sector, Rick Rule Founder of Global Resource Investor, now part of the $9 billion strong Sprott Asset Management. When asked about the possibility of silver trading like internet stocks to the upside in the future Rule had this to say, “I think that’s the case. I’m not a student of markets, I think Eric Sprott in our organization is the best at that, but I certainly remember the silver market going absolutely hyperbolic in the 70’s.
We were close to a hyperbolic market earlier this year. We had a situation going into that where the commodities exchanges increased very dramatically the margin costs in the futures market, but what they are not able to do really is to control the physical market.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
June 15, 2011
