Palisade – Sprott Monthly Market Update with Rick Rule: Gold Stocks Have a Long, Long Run Ahead!
Currently gold and gold equities only comprise between .25% and .33% of total US investment and savings while in the 1980’s it was 8%. A reversion to the mean should easily see that figure increase to 1.2 – 1.5%, which would represent a major inflow for the gold market.
Paper gold or GLD, has seen substantial selling for the past 18 months but 2016 has seen this trend reverse. Increasing corporate performance and increasing gold price is to have a positive impact on gold equities.
When gold moves the first thing that moves is gold itself, followed by the big producers then the mid-tiers. The most spectacular moves are always found in the junior stocks, which may take as much as 9 months to move. When they do though the fundamentals show they have a long, long way to run!
Investors that are under allocated need to address that issue and begin to buy. Optionality plays and warrants if well chosen can provide excellent leverage on market gains.
Talking Points from this week’s interview:
• There has been a 63% move in the HUI index in 2016
• Gold is in a race against the dollar and is currently ‘losing less badly’
• The US Treasuries’ 30 year bull run coming to an end
• Why Rick Rule loves optionality plays!
Rick Rule began his career in the securities business in 1974.. He is a leading investor specializing in mining, energy, water, forest products and agriculture. Rick founded California-based Global Resource Investments, Ltd., which grew into a much larger organization with significant affiliated companies. As Director, President, and Chief Executive Officer of Sprott US Holdings, Inc., Mr. Rule leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resource investment management.