Rick Rule: “Don’t live with this kind of regret”

Release Date: 
Friday, April 18, 2014

Gold and Silver Prices

Gold prices fell this week in choppy trading after the release of positive U.S. economic data, while Russia-Ukraine tensions are providing some level of support. “Gold futures fell as signs of gains in the U.S. economy eroded demand for the metal. Consumer confidence rose from a nine-week low as Americans grew more upbeat about the economy, and jobless claims were close to the lowest in almost seven years, data showed today.” (“Gold Drops on U.S. Economy; Platinum Falls on Labor Talks,” Bloomberg, 4/17/14.)

Gold finished the week down $23.80, at $1,295.60. Silver prices closed at $19.75, down $0.31.

Rick Rule: “Don’t live with this kind of regret”

“Gold has made its way down again, to around 1,300 per ounce this month. Rick Rule, Chairman of Sprott Global Resource Investments Ltd. says that a few years out, you will be happy you stuck with gold.

“For context to today’s downturn, look back at the great bull market for gold in the 1970s’.

“During that time, gold rose from $35 per ounce to around $200, and then came crashing down to around $100 per ounce. Weak hands, who lacked the courage or the financial strength to hold on, sold their gold. It was a disaster for them, but a great opportunity for investors who believed in the metal. They were able to enjoy an 850% gain over the following five years. The ‘anti-gold’ investors watched as gold soared.

“As Rick recently put it to King World News, ‘that is the kind of regret that no investor wants to live with for the rest of their lives.’” (“Why Rick Rule Says ‘Anti-gold Investors Will be Destroyed’,” Sprott’s Thoughts, 4/18/14.)

Global Events Point to Gold

Financial writer, Todd Wood, wrote a commentary for Fox News outlining his reasons for adding gold to a portfolio.

“We are witnessing in a multitude of ways the fruits of our fiscal and monetary mismanagement. In addition, gold is at a very attractive place technically. It’s time to back the truck up for gold!

“Let’s start with the old but durable argument about our debt…We have exceeded the historically alarming level of a 100% debt-to-GDP ratio…These numbers do not include other unfunded liabilities, municipal, and state debt. The simple, undeniable truth is that we cannot pay this money back without printing money and devaluing our currency…Now let’s look at this problem globally. The entire developed world is in the same boat. Japan and Europe are worse off than we are. It seems Europe is about to embark on a massive QE program of its own.”

“We are now seeing the diminution of the collective national power of the West in the Russian annexation of Crimea, the Chinese threatening their neighbors, Iran developing a nuclear weapons capability, and on and on…This time in history feels very much like a pre-WWI environment.”

“These are several reasons why I feel one should own physical gold in their portfolio. Individuals, nations, and corporations like to place their wealth in an instrument that will hold its value in the face of adversity and uncertainty. Throughout history gold has fulfilled this role…For a year now, gold bullion has been building a nice base around the $1,300 level and telegraphing a near-term bottom. It's no secret that China, Russia, and other nations have been actively increasing their ownership of bullion and most likely plan on continuing this effort…For all of these reasons, I believe it is time to back the truck up on gold bullion…Empires throughout history have crumbled by devaluing their currency and spending money they didn’t have. I don’t believe it's somehow different this time.” (“Back the Truck Up for Gold,” Fox Business, 4/10/14.)

Davis: Owning Gold “Logical”

Veteran Financial writer and columnist Christopher Davis offered three reasons investors should include gold in their portfolios.

“There are multiple reasons why gold is a good buy for both a short-term trade and long-term investment.

“The Fed’s Dovish Policies—Gold will have support on dovish comments from Federal Reserve Chair Janet Yellen that she has given during recent speeches, specifically the pledge to keep the environment friendly for growth.”

“Inflation is Good and Bad For Gold—Recent inflation numbers have been creeping up as well across the globe. While still not enough to give gold a lift at this point, upcoming U.S. data could spark buying, particularly if we see a continued significant deviation from expectations.”

“Chinese Demand—A recent report was released citing that China’s annual demand for gold could jump around 20 to 30 percent by 2017. This type of demand will lift prices…”

“Given the trajectory of gold prices in the last 20 years, the increasing global demand, record demand growth coming from China, and dovish policies by the U.S. Federal Reserve, I believe that allocating assets to gold is a logical move for your portfolio.” (“3 Reasons to Consider Buying Gold on Recent Weakness,” Wall Street Cheat Sheet, 4/15/14.)

Barron: Gold Moving to Far East

Noted geologist and mining consultant, Keith Barron told King World News his thoughts about rising Chinese gold demand.

“‘The flow of gold into China is massive and it hasn’t abated. If anything, it has picked up speed. If you look at the growth in Chinese gold demand over the past few years, it won’t be long before we see almost the entire annual gold production in the world going to China...This has huge implications for the futures markets such as COMEX. Will they be able to continue delivering gold in that environment? The other big concern for various countries and entities around the world is: If they loan or lease their gold out, will they ever get it back again? Countries and individual entities are becoming less willing to lend or lease their gold because they are losing faith that they will ever get it back. This will cause additional stress in the already strained delivery system as we advance through this bull market in gold.”

“‘For now the Chinese continue to buy all the physical gold they can get their hands on. As fast as the gold is produced, it goes right out of the refineries to the Far East.’” (“The Elites Fear What Will Crash The Global Financial System,” King World News, 4/17/14.)

Goldline’s Express IRA℠ Program

Many Goldline clients choose to include precious metals as part of their retirement planning especially during times of economic crisis and uncertainty.* Goldline’s Express IRA℠ allows clients to acquire precious metals on their schedule; they no longer have to wait for your self-directed IRA to be funded before getting started.

Goldline's Express IRA℠ not only provides clients with the ability to diversify their IRA on an expedited basis, clients can also qualify for Goldline's ground-breaking Two-Way Price Guarantee Program℠ when they acquire $10,000 or more of our exclusive bullion coins. When an Express IRA purchase qualifies for Goldline's Two-Way Price Guarantee Program℠, clients are protected on short-term upside and downside market movement: they can either call to reprice their coins if the selling price falls (up to a maximum of 28 days depending on the size of the purchase) or, if the selling price of the coins increase during the qualifying period, clients can call Goldline to acquire additional coins at the original selling price.

Goldline provides a wrap-up of the week's precious metals news along with important commentary on the American Advisor Week in Review audio program. Listen to the show below:

*Federal IRA tax laws are complex and may change from year to year. Goldline believes it is appropriate to have 5%-20% of retirement portfolio allocated to precious metals. Other individuals and institutions may recommend different percentages. As with any investment, you should consult your tax advisor before making a decision regarding precious metals IRA investments.

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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