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Rick Rule continues:

“They are aiming at slashing the debt to 120% of GDP by 2020.  This means if you believe that all of the assumptions they made are correct, then Greek debt will go from unserviceable to barely serviceable by 2020.  It’s important to remember that the people who are making these assumptions are the same people who made the decision to lend money to Greece in the first place.  This lending has Greece 160% in debt vs their GDP.

I suspect that ultimately we are going to see a Greek default.  Right now we are buying time so that more of the private sector and private banks can unload their Greek paper on the ECB.  This will socialize the losses which have occurred as a result of stupidity on the part of the banks.  As I said earlier, this is a bank bailout, not a bailout of Greece....

Continue reading the Rick Rule interview below...


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“Further, the European community is talking about increasing its ‘firewall.’  This is the amount of euros it holds in reserves for difficult times, up to 750 billion euros.  Given that none of the European countries have 750 billion euros floating around that they can move from an operating account into a rainy day account, one would have to assume this fund will be funded the same way it was in the US.

What this really means is this will be a printing facility.  So 750 billion euros will be counterfeited in this scheme.  We are just picking on Greece because they are in the headlines, but certainly there are difficulties in the rest of the economy.  Italy, Spain, Portugal, Ireland and France all have their own problems.

Remember, Eric, that not too long ago Germany had a failed bond auction.  So I don’t think we are out of the woods in Europe.  In this environment the US dollar may remain strong because people are still focused on Europe.  The US problems, while severe, appear to be less time critical than the European problems.  Investors are looking at Europe, but there is a great deal to be concerned about on the US side as well.”

When asked how all of this will impact gold, Rule replied, “I think gold will continue to proceed higher.  That doesn’t mean gold can’t have corrections, but much of that volatility is background noise.  Gold competes with fiat currencies as a medium of exchange and gold competes with sovereign debt claims as a medium of storing wealth.

Given the fact that all around the world the sovereigns are busy inflating, that is counterfeiting, it would seem to me that gold faces no competition.  Over time, the depreciation of the competitor has to favor gold in the two to three year time frame.  You know, some value is afforded by scarcity and certainly with regards to fiat currencies there is no scarcity.”

To read Rick Rule’s “Here is What I Am Doing With My Money Right Now” 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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