Rick Rule: Big Institutions are Positioning Themselves for this Gold Bull Market
Rick discusses his early career lessons and how in a bull market, anyone including him can look like an expert. In the 1970s, the incorrect narrative was that the world was running out of resources. What everyone missed was that when prices rise, people learn to conserve, they become more efficient while higher prices encourage new supply. That bull market inevitably led to a bear market for resources in the 1980s. Rick says, “You are either a contrarian, or you will be a victim.”
There has been a shift in the market, and new investors and institutions are coming in, but it’s still early, and this interest is just beginning.
Think about the attractiveness of modern bonds where banks promise “return-free risk” by giving you less money back than you put in, then contrast that with gold.
Ricks perspective with speculating is that the most common outcome is a loss. However, if one carefully spreads bets over several excellent opportunities, the rewards can vastly outweigh the losses. Speculation is all about probabilities and trying to answer some unanswered question.
He is less bullish on uranium now than he was a few months ago. We are overdue for a recession, and the demand for power would likely be reduced in one. Japanese reactor restarts continue to be slow, and the industry is becoming more efficient at recycling. Sprott is working on an improved supply-demand model for uranium.
Rick loves the book Human Action by Ludwig von Mises. While a difficult read he says it is the best book on investor psychology and the economy ever written.
Time Stamp References:
1:20 – Lessons from Ricks investing career.
2:50 – Don’t confuse a bull market for brains.
4:30 – The potential of the resource market.
5:50 – Interest is coming back to the market.
8:45 – Why speculating usually results in loss.
12:30 – Ricks view on uranium.
15:50 – Developing a new supply model for uranium.
16:40 – Favorite book on economices and investing.
Talking Points From This Week’s Episode:
• Don’t confuse a bull market with intelligence.
• The incredible upside for bottom picking this market.
• Bonds are now “return-free risk.”
• Rick is less bullish today than last year on uranium.
Rick Rule has dedicated his entire adult life to many aspects of natural resources securities investing. In addition to the knowledge and experience gained in a long and focused career, he has a global network of contacts in the natural resources and finance sectors. As President, and Chief Executive Officer of Sprott U.S. Holdings Inc., Mr. Rule leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resources investment management.
Mr. Rule is a frequent speaker at industry conferences and is interviewed often for radio, television, print, and online media outlets concerning natural resources investment and industry topics. He is frequently quoted by prominent natural resources oriented newsletters and advisories. Mr. Rule and his team have expertise in many resources sectors, including agriculture, alternative energy, forestry, oil and gas, mining, and water. Mr. Rule is particularly active in private placement markets, having originated and participated in hundreds of debt and equity transactions with private, pre-public, and public companies.
Rick offers a free portfolio review if you email him (no attachments) your natural resource equity list at rrule@sprottglobal.com
If you would like the forty-year Baron’s index chart he mentioned during the interview, email rankings@sprottglobal.com