Rick Rule continues:

“I also wouldn’t be surprised to see the dollar rebound in the near-term because you have to look at what it’s competing against.  The joke that we’ve been saying at hard money conferences for years is that the dollar is the worst currency in the world, except for all of the others.

So I would expect that a whole basket of currencies would wobble against each other....

Continue reading the Rick Rule interview below...


To hear what billionaire Eric Sprott & Rick Rule are doing with their own

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“But I would suggest to your readers that they consider diversifying their cash holdings, as we’ve always asked them to do, into some form of physical gold, silver or platinum ownership.”

When asked about the rally in gold and the pessimism that has accompanied it, Rule responded, “I think the negative sentiment is extremely bullish.  Usually when sentiment is positive, people are talking their books, they are already long.  Gold is famous for climbing a ‘Wall of worry.’  Gold is famous for coming out of bear markets where the sentiment is stacked against it.

I hadn’t heard the sentiment numbers that you expressed.  You follow those market indicators much more expertly than I, but what you just told me gives me some sense that this market rally that we’ve enjoyed may have some legs.  If the negative sentiment is that strong, I regard that as extremely bullish.”

Rule had this to say regarding oil, which has now broken above $97 per barrel:  “That surprises me.  There has been strength in oil that I really can’t explain.  The demand side is getting hurt by these high oil prices, and also hurt by the economic malaise in the West.

The only thing that explains this is continued nervousness from refiners about the possibility of hostilities in Iran and the Persian Gulf, and the possible cessation of shipping lanes through the Straits of Hormuz.  This would, of course, propel oil much higher.

I am surprised with the level of oil pricing.  I would have expected, given the world economy we are in, that oil would be much closer to $80.  But as an oil producer myself, I’m absolutely delighted with the price.”

When asked about the new rounds of money printing out of Europe, Rule replied, “I suspect that from their point of view they have no choice.  They have a range of insolvent governments.  They can’t get anybody else to buy their phony paper, so they buy it themselves.  I think the US is in less bad shape, but that’s like saying you are the tallest midget playing basketball.

It just doesn’t make any sense to me that they can get away with not printing.  I wish they would begin to face up to the reckoning that we have lived beyond our means for far too long, but I don’t expect to see that happening anytime soon.”

Rule had this to say regarding the rally in the mining shares:  “Like you and I talked about two months ago, the market was getting oversold.  There was a great deal of pessimism in the market.  The sentiment associated with gold going higher probably pulled the gold stocks higher.

But I think there are other things to consider, Eric.  One is there has been very, very strong institutional selling of gold and gold shares, and we may be witnessing the exhaustion of that institutional selling.  With regards to bullion, the institutional selling may have been exhausted in the short-term because of quantitative easing or counterfeiting. 

Institutions now have adequate supplies of short-term capital to maintain their hedge positions in commodities.  We also have a cessation of selling from the mutual funds because, at least temporarily, withdrawals from the funds have ceased.  The forced selling that we had seen has now ceased.  So the market was oversold on a valuation basis and the sellers are exhausted.

With regards to the juniors specifically, there are a great many high quality projects available to the majors.  The majors have a number of projects available to them, but those are high cost, low grade projects, and these projects are now being deferred because they are not financially accretive.

Those juniors that develop projects which have more moderate up-front capex costs, even if they are not large projects, where their development is financially accretive, will see themselves being taken over.  So we should expect more consolidation in the sector going forward.”

© 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.

Michael Pento just had an extraordinary KWN audio interview.  He lets listeners know exactly what to expect this week from central planners and how it will impact key markets.  The tremendous KWN interview with Michael Pento is available now and you can listen to it by CLICKING HERE.

The interviews with Michael Pento, Gerald Celente, James Dines, Marc Faber, James Turk and Art Cashin are available now.  Also, be sure to listen to last week’s line-up of other KWN interviews which included Egon von Greyerz, Sean Boyd, John Hathaway, Eric Sprott and Jean-Marie Eveillard by CLICKING HERE.

Eric King

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© 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.

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