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Rule:  “Eric, one of the things that’s been very interesting to me lately is the rapidly increasing dichotomy between rapidly rising oil and gas production, and stable to higher world oil and gas prices.  One would think that if the largest consumer of oil and gas on the planet, the United States, had very rapid rises in production that you would see a decline in oil and gas prices.  But it turns out that hasn’t been the case....

Continue reading the Rick Rule interview below...


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

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“As you know, Eric, most oil is produced by national oil companies, rather than private sector firms.  And I think that part of the explanation of stubbornly high oil and gas prices and the rapidly increasing U.S. production has to do with production declines in places like Mexico, Venezuela, Indonesia, Ecuador, Peru, etc.. 

Another phenomenon we think is very interesting is the great dichotomy in natural gas pricing between market economies in places like the United States and Canada, and in the liquified natural gas trade, particularly with regards to the Far East.  This is easy to explain in one sense because when the Japanese took the Fukushima nuclear fleet out of production, the Japanese had to use natural gas as a replacement for nuclear in order to provide generating capacity. 

But this says a very interesting thing about global energy markets:  In the face of very, very weak demand, engendered by a false recovery, despite rapidly increasing U.S. and Canadian oil output, the oil price is stubbornly high because of the decline in the output of various large oil producing nations.

The other thing is the incredible incongruity of natural gas pricing.  We would expect natural gas prices to normalize on a global basis as the world builds out the infrastructure necessary for liquified natural gas.  We believe there is an opportunity for investors in this space because we expect a catch-up between the smaller Canadian oil and gas producers and their U.S. counterparts as the U.S. cost of capital flows north of the border. 

A circumstance where people model natural gas producers at $3 per million BTU, I think gives way to a situation where people begin to model $4.50 or $5 per million BTU.  This has profound implications for investors in natural gas and oil producers on a global basis, but particularly for Canadian producers.”

Eric King:  “Rick, what about the gold and silver markets?”

Rule:  “There is an old saying that everyone is familiar with:  ‘Buy low and sell high.’  This is the time to buy low.  This is something that the more sophisticated investors need to stop thinking about and starting acting on.  Gold is headed higher over time, and silver moves faster than gold.  As I’ve said before, silver is gold on steroids.  We continue to believe that the fundamentals are strong for the metals, and so we are extremely excited about owning the gold and silver over time because we think time is on our side.”

IMPORTANT - KWN has many more interviews being released today.

© 2014 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 Gerald Celente, Dr. Marc Faber, Egon von Greyerz, Rick Rule, Ben Davies, Rob Arnott, Dr. Paul Craig Roberts, Andrew Maguire, Art Cashin, Eric Sprott, Bill Fleckenstein and John Mauldin are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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