Titans in Mining: An Interview with Rick Rule, Part I

Mr. Rule is also the founder of Global Resource Investments, president and CEO of Sprott U.S. Holdings, Inc. and a member of the Sprott Inc. Board of Directors. He has financed many success stories and projects of other titans like Ross Beaty, Robert Friedland, Frank Giustra, and Adolf and Lukas Lundin.

Without further ado, here is the first part of the interview, conducted in London. As it turned out, several more sessions by phone were necessary to provide Rick with enough time to thoroughly answer all questions, and this provided enough material for another three parts, which will be published in the near future. Enjoy:

The Critical Investor: Welcome, thank you for doing this interview at Mines & Money London. Let’s focus on gold for starters. Do you believe in gold fundamentals? In my view there is no single fundamental that has delivered consisting outcomes, not even negative real interest rates. Therefore I prefer to call it a sentiment driver. What is your preference?

Rick Rule: Thanks for having me, my pleasure. My belief is that there are a range of fundamentals that have continued to drive gold. I continue to believe (perhaps it’s an America-centric point of view), that the most important determinant is faith or lack of faith in the ongoing purchasing power of various fiat currencies, but the most important of which on a global basis to the gold price, is the US dollar. The US dollar is the world’s reserve currency, and more importantly, the US dollar as expressed by the US 10-year Treasury is the world’s benchmark security.

My suspicion is that in the last 18 months, while gold has done well against all currencies in the world, the fact that it’s more than held its own against the US dollar suggests that investors around the world, including in the United States, believe that the current interest rate offered up by the US 10-year Treasury is insufficient to compensate investors for the depreciation of the purchasing power of the US dollar, the US CPI estimates notwithstanding. That doesn’t suggest that geopolitical events or fear of equity markets or other fundamentals aren’t drivers. It also doesn’t take into account that by many estimates gold was in a bear market for six or seven years, and that there are investors who in fact are playing gold simply as a consequence of a rebound that has nothing to do with fundamentals like US interest rates or geopolitics.

Read the full interview in the attachement.