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Rick Rule continues:
“But the second reason is, in addition to buying back mortgage-backed securities, they have to continue to issue short-term debt to fund their spending obligations, and they can’t sell that short-term debt to anybody else. They literally have to add liquidity to the system in order to buy their own paper (debt).
I think Michael Pento very correctly identified the fact that in addition to making the commitment to buying $40 billion worth of mortgage-backed securities every month, to keep the mortgage system flowing, they also need to do a type of stimulus which allows them to sell the paper that funds their ongoing operating deficits....
Continue reading the Rick Rule interview below...
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“This is a very strange state of affairs. They seem to be telling us that this period of stimulus and the related period of very low interest rates, will go through at least 2015. When we all ask each other, ‘How will this end?’ We don’t know how it will end.
In my lifetime, I have seen periods of time when the growth of government expenditures declined, but I have never seen a period where overall government expenditures declined. I think what they hope is that they can reign in the growth of government expenditures, and begin to reverse some of these transactions if an actual market for Treasury securities begins to develop.
I’m less optimistic about that frankly, but I certainly hope they can pull it off. I just don’t believe they can.”
Rule had this to say regarding gold: “In this environment, all financial assets, including gold, will be very volatile, but gold will do well because the value of currencies will continue to erode. If you look at history, gold does very well in troubled times.
I continue to believe that investors should hold a significant portion of their liquid assets in gold. Gold is a store of value, it’s a currency, and it will continue to outperform fiat paper currencies around the world over time. This is what sets gold apart from other ways to store your ongoing or your transactional wealth.
It’s interesting that gold is still a relatively under-owned asset. At some point we will see the availability of physical gold disappear when we begin to see widespread public ownership like we witnessed in the 1970s.”
Rule had this to say regarding mining shares: “We’ve seen a much stronger market for mining shares. This has obviously opened the financing window for these companies. Right now a lot of companies are coming to market, and many of these companies really need the money.
Investors have to remember that these types of capital raises may snuff out the rally in some of the micro-cap or smaller explorers. They will be issuing an awful lot of paper. I would also like to remind your listeners that if they have tax losses they are going to take, they should take them now, don’t wait until November or December.
The November to December time frame, when everyone else is taking their tax loss selling, that’s the time when you are supposed to be the buyer. If you do the selling now, you can buy back the position if you like the company in November or December. This is a no-brainer trade for the shares that are significantly lower on a year to date basis.”
© 2012 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.
The interviews with Rick Santelli, Michael Pento, Don Coxe, Pierre Lassonde, Rick Rule, and Nigel Farage are available now. Also, be sure to listen to last week’s line-up of other KWN interviews which included, Ben Davies, Dr. Keith Barron, Jean-Marie Eveillard, Bill Fleckenstein, Egon von Greyerz, and Felix Zulauf by CLICKING HERE.
Eric King
Rick Rule - The Availability Of Physical Gold Will Disappear
Today Rick Rule told King World News “At some point we will see the availability of physical gold disappear when we begin to see widespread public ownership like we witnessed in the 1970s.” Rule, who is now part of Sprott Asset Management, also noted that “... gold will do well because the value of currencies will continue to erode.”
Here is what Rule had to say: “It was a nice catch by Michael Pento the other day on KWN, and I suspect he’s exactly right that we are looking at QE4. It seems to me that regardless of the excuse, the Fed will find ways to add liquidity into the system for a couple of reasons. First, they feel the desperate need to keep the system, at least a big part of the system, liquid, in order to avoid a 2008 style decline.”
© 2012 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.
October 4, 2012
