Sprott Monthly Market Update with Rick Rule: Base Metals Are Breaking Out, Stocks Are Next
Rick feels that recent negative sentiment in the gold market may be a good contrarian indicator. Gold has maintained its strength this summer in the face of general economic complacency. The mining industry itself has become the financier of choice to high-quality juniors. There is a quiet confidence amongst large investors that is astonishing. This sort of investor has replaced the generalist hedge fund. Capital that is patient and knowledgeable is replacing capital that is ignorant and short term oriented.
Rick discusses Novo Resources (NVO.V) a company that seems to have made a pretty large find. This could be extraordinary for the market particularly if there is a convergence of large discoveries. Rick discusses how the mineral exploration sector is one of the few sectors that can create 100 baggers and what that can do to a market.
The junior market is still overpopulated with companies. He would prefer to see a slower paced saucer shaped recovery that rewards rational investors.
Uranium needs Japanese reactor restarts, $20-$25 is too low to maintain production and mines are clearly loosing money. The Uranium industry is in a negative feedback loop.
Other resource sectors haven’t moved that much because of supply constraints due to an extended period of low prices.
Mr. Rule discusses Bitcoin based technologies. He recently took a position in Bitcoin and made significant gains. He chose to take the gains since he doesn’t understand all of the underlying fundamentals.
Talking Points From This Week’s Episode
• Discusses the US Dollar and how it relates to Treasuries and gold price.
• Negative sentiment in the gold sector may be a good contrarian indicator.
• Uranium industry is in a negative feedback loop with prices too low to maintain production.
• Optimistic on crypto currencies ability to eventually replace exchanges and brokerage firms.
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.