Rule:  “The thing that is most interesting to me right now is the turbulence in energy markets.  The energy markets are so large and there has been such incredible turbulence in them that it has definitely caught my attention.  The focus of my financial attention has been attempting to get either debt or equity deals done among the micro-cap issuer community in junior mineral or exploration companies.  In that I have been unsuccessful....

Continue reading the Rick Rule interview below...


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

money and which $10 billion company John Embry &

Dr. Marc Faber oversee click on the logo:

Eric King:  “The sentiment on gold and silver is at the dead lows even though the metals have bounced here.”

Rule:  “I think that’s a continuation of an earlier theme, and I don’t think people are paying attention.  In the gold and silver markets you have been seeing the futures market for a substantial period of time setting price, as opposed to the physical market.

At the same time you are seeing the selling pressures that drove the physical market lower begin to abate.  Those selling pressures were the unwinding of leveraged, momentum-driven carry trades.  These involved either gold futures or the gold ETFs.

All of this has resulted in a massive accumulation of physical gold and silver into very strong hands.  This involves players in the Eastern hemisphere, as well as retail investors who are unleveraged, that are buying physical gold and silver.

We are also beginning to see the futures markets bottom out at the same time the physical market is incredibly strong.  We have also seen the gold lease rates have gone up fairly substantially.  This strongly suggests that a lot of the physical gold, which was in bank hands and available for leasing, has been disposed of into the physical markets. 

These are fairly bullish signs.  I can’t tell you exactly how it’s going to play out, but I do believe that at the very least, in the near-term, the gold and silver markets will stabilize.”

Eric King:  “With things as decimated as they have been in the gold and silver space, many times you see markets come out of the hole and it doesn’t really take news to drive it.  The markets just start going higher.”

Rule:  “You are exactly right.  What happens is that you exhaust the sellers.  The interesting thing is that the buyers are somewhat exhausted too.  It’s sort of like two ‘world class’ fighters who have been battling for 13 rounds and only have 2 more rounds to go, but neither have much energy left to hit each other.

But what you just said is exactly what I’ve experienced in past market cycles like these.  The stocks start to move up because they stop moving down.  Again, you exhaust the sellers.  Everybody is looking at tax loss selling this year, but people forget that you have to have some gains to shelter with the losses.  And U.S. speculators haven’t done that.

Furthermore, in Canada where you can take losses this year against gains that you acquired in the three prior years, what you are finding is that the people usually were able to use up those prior gains with last year’s losses.  So I suspect that tax-loss selling this year will be much less pronounced than it has been in earlier seasons.

I strongly believe that the highest quality mining shares will move higher the rest of the year, and I certainly believe that the worst of the pressure is off of the junior stocks.  There has just been a lack of buyers to meet the lack of sellers.”

Rule also added:  “I don’t think the market needs a catalyst.  All of the catalysts that were in place in 2009 and 2010, all of the narrative that drove the gold price higher, has never gone away.  Not one thing has changed.

The only thing that has changed is that Bernanke and company have managed to convince the equity markets that liquidity is a substitute for solvency.  This is something that history has proven conclusively isn’t true.  The bottom line is I think these markets will now rise just because they rise.  We will run out of sellers.”

Rule added this important fundamental for gold and silver: “Increasingly we are seeing companies shutting down their marginal gold and silver production.  This says a lot about the industry’s ability to maintain itself at the current gold and silver prices -- it’s basically non-existent.

This is yet another sign that is perversely very, very bullish ultimately for the gold and silver equities, and also certainly for gold and silver prices.”

© 2013 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 audio interviews with Art Cashin, William Kaye, Dr. Marc Faber, Stephen Leeb, Dr. Benn Steil, Eric Sprott, Andrew Maguire, John Hathaway, MEP Nigel Farage, Rob Arnott and Egon von Greyerz are available now.  Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.

Eric King

To return to BLOG click here.

© 2013 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.

Subscribe to RSS
KWN Blog