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Rule: Gold Strong, Expect Merger & Acquisition Boom In Miners
With continued volatility in global markets, today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule told KWN that gold is showing signs of strength and we have now started a merger and acquisition boom in the mining sector.
Rule, who is now part of Sprott Asset Management, also discussed the enormous problems both Europe and the US face: “I don’t see how anything has changed in Europe. It appears we’ve had a week go by with no crisis, and that’s the longest period we’ve gone without a crisis in 3 months. So people are beginning to act like the problem is over. I don’t see how you solve a solvency crisis in a week, particularly if there’s no fundamental change.”
© 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 This material may not be published, broadcast,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.
August 14, 2012
Rick Rule continues:
“What does appear to be interesting is that a private German group is suing the German government in the German courts. This is about the proposal to offload a range of European liabilities on the German taxpayer. From a German taxpayer’s perspective this is certainly an intelligent thing to do (sue to stop this).
I’m pessimistic in the near and intermediate-term concerning the ability of the European peoples to agree on who pays the cost of two decades of living beyond their means....
Continue reading the Rick Rule interview below...
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“There’s just no political consensus as to who is going have to pay. The way you adjudicate these type of disputes is politically. Unfortunately the political adjudication of that dispute will take years, and they don’t have years. So I think Europe is going to continue to be in the news.
Further to Europe, the idea that bank solvency, in the Southern European jurisdictions in particular, involves credit lines from the ECB, which replace depositor funds that are pulled from the bank, and then are reinvested in the sovereign debt of those same countries, is a strange way of affecting subterfuge and supporting the bond market with public funds. This is something the public will see through in due course. So I’m fairly pessimistic about Europe.”
Rule had this to say regarding the US: “The US economy is actually showing some signs of life, which is highly amusing to me. It says something about the incredible ingenuity and work ethic of the American people that an economy can show signs of life, despite all of the government’s efforts to throttle it.
American exporters are doing a surprisingly good job. US manufacturing is doing substantially better than most expected. Against that we have the rising tide of municipal bankruptcies. Several communities in California have now filed for Chapter 9.
So there is good and bad news in the United States. The US started with a better economy than the Europeans did, but we’ve now mortgaged our future also. The US and European experience is simply a difference in time.
We haven’t reached our reckoning point yet, as a consequence of being the world’s reserve currency, but we have the same root problem as Europe in that we’ve exceeded our ability to service our obligations. So there will be a reckoning, and I’m not terribly optimistic about North America either.”
Rule also added: “I continue to be a gold bug. The gold market is showing some real signs of strength. Gold has been holding its own, despite recent strength from the US dollar. Momentum players are out of gold, but there has been strong retail support for the gold market.
There is also strong sovereign support for gold, and this is coming at the expense of US Treasuries. So gold is acting particularly well. I would just add that the high net cost of gold production, which is over $1,200, is fairly bullish for the gold price.
Investors need to be extremely selective about which mining shares they choose to invest in. But having said that, the rewards associated with being selective are going to be extremely bountiful. I would also add that we are in the early stages of a merger and acquisition boom. We may see up to 40 companies disappear by way of merger and acquisition activity over the next 18 to 24 months.”
© 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 Bill Fleckenstein, Keith Barron, MEP Nigel Farage, Peter Schiff, John Embry and James Turk are available now. Also, be sure to listen to last week’s line-up of other KWN interviews which included Egon von Greyerz, Micheal Pento, Dr. Stephen Leeb, John Hathaway and Art Cashin ($612 billion UBS) by CLICKING HERE.
Eric King
