Today one of the wealthiest people in the financial world spoke with King World News about the ongoing war in the gold and silver markets as well as what to expect in the future. Rick Rule, who is business partners with Eric Sprott, also discussed the remarkable gains that lie ahead for investors in gold, silver, and the mining shares.
“Eric King: “Rick, we’ve recently seen historic extremes on the downside in gold, silver, and the shares. Did we get the capitulation you were looking for?”
Rule: “Well, we were on the verge but we didn’t quite tip over the edge, unfortunately. I say ‘unfortunately’ because when you are going through these capitulations they are certainly terrifying events, but they set the stage for a dramatic recovery….
Continue reading the Rick Rule interview below…
“There are people who argue that we hit the capitulation phase with regards to the junior mining shares but I don’t believe it to be so. And the reason it did not happen with the metals themselves is because demand for gold and silver is still incredibly strong.
The same thing appears to have happened with regard to the paper trend in gold that has happened the last three breaks in price, which is that incredible physical buying has come in to both the gold and silver markets. I am not just talking about Chinese buying — I’m talking about the length and breadth of retail buying in places like the United States.
Of course there was official-sector physical buying as well and a lot of that is from the Russians. But what we are witnessing is a continuation of the war that we’ve talked about on your show for the last 18 months between the physical market and the futures market. For 10 years, since the start of the GDX, the gold price has been dominated by the paper futures market.
But the physical market has acted over the last three years to break the most precipitous of the declines in the paper futures market. That’s exactly what has happened again. If you talk to dealers from the local coin shops all the way up to the U.S. Mint, the sheer volume of the physical gold and silver buying for the last five or six weeks during this decline has been spectacular. So we have seen anything but capitulation in terms of physical buying of gold and silver as the savvy individuals are soaking up all they can at these massively discounted prices.”
Eric King: “What should people expect to see in the future?”
Rule: “We should expect to see a lot more of this volatility. If you pay attention to the mainstream media in the United States, there seems to still be an awful lot of confidence in the economy. People still talk about the ‘recovery.’ For the life of me, other than equity prices I don’t see it.
Having said that, right now the gold market is locked in a war with the U.S. dollar, and the U.S. dollar wins as long as there is broad confidence in the economy. But when something happens to shake the falsely held confidence surrounding the phony economic recovery and the dollar, that is when you will see the gold market move significantly higher.
The arithmetic lines up so strongly against the dollar and in favor of gold that I believe the transition from a strong dollar to strong gold is going to be incredibly volatile. We will see violent action both up and down in the gold market as the dollar weakens and gold begins to reverse into a bullish phase. It is then that investors will see spectacular gains in gold, silver, and especially the high-quality mining shares.”
IMPORTANT – KWN has many more interviews being released today.
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The audio interviews with Gerald Celente, David Stockman, William Kaye, Dr. Paul Craig Roberts, Andrew Maguire, Eric Sprott, Bill Fleckenstein, Rick Santelli, Michael Pento, John Mauldin, Egon von Greyerz, and Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf — to listen CLICK HERE.