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Rick Rule continues:

“What those officials are saying to the world is that to borrow money, the US government is going to keep interest rates close to zero.  What that means is investors are going to get a close to zero return.  At the same time they will be attempting to cause prices to increase 3%, thus depreciating the value of the currency by 3% per year.  

What the US Treasury is, in effect, saying to entities who buy Treasury securities is that if you buy them you will achieve more than a 9% loss in 3 years.  So the guiding forces behind the world’s reserve currency can say to savers around the world, ‘Send us your money and we promise that we’ll give back 9 to 10% less three years from now,’ and the offer gets accepted on a global basis.  These are truly strange times, Eric.”

Rule also had this to say:  “When conditions are unsettled and when conditions have no precedent, and I think we’re in that period of time, one result is volatility.  There is currently between 8 and 9 trillion dollars sitting on the sidelines, in cash, looking to come into the market....

Continue reading the Rick Rule interview below...  


To hear legendary company builder Rob McEwen, original Founder of

Goldcorp, discuss which company he invested $110 million

of his own money in and why click on the logo:

“So on the one hand there is astonishing liquidity being pumped into the system by the Fed.  At the same time there are all of these events that could come out of nowhere and knock us off our perch.  Other potential worries include the potential for war, municipal defaults, sovereign defaults, economic dislocations and so on.  There are lots of potential shocks to the system.

If you think a roughly $70 billion bankruptcy at Lehman Brothers was a shock, think about a $300 billion bankruptcy in Europe.  So there is going to be extraordinary volatility.  And the most important thing your readers can do is to prepare themselves fiscally and mentally for this kind of wild volatility.

How to prepare?  To begin with you are going to need to maintain liquidity, even though maintaining liquidity, in current terms, is going to cost you some money.  Does that mean you maintain all of your liquidity in US dollars?  Personally I am not doing that.  Personally I am trying to maintain about 1/3 of my liquidity in physical metals or proxies for physical metals.

For the funds I oversee, I am diversifying the cash portions to about 1/3 into physical gold and silver trusts, platinum and palladium ETF’s and a uranium trust.  These will be much more volatile than having cash in a money market account.  People looking at the cash portions of their statements will be, at various times, elated and distressed because the value of these will be all over the place.

Given that I am maintaining liquidity for what I see as two or three years of turbulence, what happens on my statement week to week is irrelevant to me.  The liquidity is maintained so that when we see a psychotic break in the market, which I think is highly likely, I will be able to scoop up bargains that my competitors have been panicked out of.

So from my own standpoint, liquidity, although costly, is critical.  If we see a 30% or 40% psychotic break in the market, I will use that liquidity to buy the highest quality companies imaginable in the resource space.”

To read Rick Rule’s “Critical Differences Between the Gold Bull Today vs 70’s” CLICK HERE. 

© 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.

Eric King

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