Sprott Monthly Market Update with Rick Rule: I’m Attracted to Sectors that other People Hate
Rick discusses how the Trump administration stated that a weaker dollar would be helpful. Younger generations will bear the decision to provide the boomer generation with 1.5 trillion dollars in tax cuts. The interim spending bill will add 300 billion dollars to this year’s budget as well as considerable commitments to funding infrastructure with no mention of where the money will originate. The US dollars weakness can be summed up in this saying, “When your outgo exceeds your income, your upkeep becomes your downfall.”
Reactions take effect gradually; gold has done very well in 2017 despite the headwinds of no one caring and liquidity being a fix for solvency. The problems are with peoples perception rather than golds performance.
During the recent dow decline, the fact that gold held up well is evidence that there is a bid on the gold side. One shouldn’t read too much into short-term events, however.
Precious metals equities are likely to perform well sooner mostly because they need to catch up to the industrial metals recent move. Portfolios should build exposure to gold equities and economically sensitive commodities whenever those assets are particularly cheap. Very few people hold much in the way of precious metals or the equities. For this to change all that is required is time.
For 2018 Rick still likes the copper business, he likes the supply-demand dynamics. However, he prefers sectors that everyone hates like potassium, potash, and uranium.
Talking Points From This Week’s Episode:
• US Government borrowing remains quite high, and the burden will go to the younger generations.
• Recent dow decline shows that there is still a bid for gold.
• Precious metal equities are likely to catch up to industrial metal performance in 2018.
• As a contrarian, he likes copper, phosphates, and uranium.
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.