Top Stories This Week: Rick Rule’s Thoughts on Gold, the “Real” Silver Squeeze
Gold spent time below the US$1,800 per ounce level midway through the week, but it picked back up and was trading at about US$1,810 at the time of this writing on Friday (December 24) morning.
While the yellow metal is still well above its 2021 low point, its performance has been a disappointment for some.
However, not everyone is concerned. I recently spoke with mining industry veteran Rick Rule, now of Rule Investment Media, who reminded market participants that a higher gold price isn’t necessarily desirable — among other things, typically it means they’ll face challenges elsewhere in their portfolios.
“A circumstance that sees higher gold prices — which unfortunately I think we’re going to see — is one where the rest of your portfolio is challenged” — Rick Rule, Rule Investment Media
With that said, he does expect the gold price to run higher at some point, and noted that it’s important to be positioned beforehand as the precious metal often does nothing for long periods of time and then does “spectacular things” over fairly short time spans.
Rick also spoke about the future for silver, commenting that precious metals bull markets first tend to favor gold as “fear buyers” rush toward it for insurance. Once gold has gained momentum and the precious metals narrative has achieved wider acceptance, investors and speculators enter the market and silver begins to take over.
“The second half of the two (precious metals) bull markets that I have been through have been silver-centric, and I would say to the speculators … that the most upside volatility that you see in precious metals markets are in reasonably high-quality silver equities” — Rick Rule, Rule Investment Media
Part of the eventual rush to silver will involve the market share of precious metals returning to its historic mean. As Rick explained, right now precious metals and precious metals-related investments account for only about 0.5 percent of the total savings and investment market in the US, but the three decade mean is 1.5 percent.
In his view, the “real” silver squeeze will happen as entities like pension funds go from holding no precious metals to bringing their portfolio allocation up to 2 or 3 percent. “If (precious metals investments) return to mean, demand for this asset class would triple — and that’s precisely what i think is going to happen,” he said.
The interview with Rick is 40 minutes long and covers a variety of timely topics, including uranium, so if you have the time I really encourage you to check it out.
On the note of uranium, we asked our Twitter followers this week what level they think it will reach in 2022. By the time the poll closed, the US$70 to US$90 per pound range was in the lead by a small margin, with US$50 to US$70 coming in a close second. Only around 4 percent of participants think it will be under US$50 next year.
I want to close out this week’s video with a quick note on INN’s outlook content. At the end of every year, our reporters reach out to experts in the many industries we cover, from gold to lithium to cannabis and more. In December, we compile the information these market watchers share to give our audience a look at the year ahead.
From now until the end of December, I’ll be highlighting a couple of outlooks every week. This time around I’d like to point you in the direction of our uranium and vanadium outlooks. 2021 was a breakout year for uranium, and now the question is how high it could go in 2022. For its part, vanadium is facing growing demand and threats to supply, factors that the experts INN spoke with believe could bode well for its performance.
Click the links to learn more about what could be coming for these commodities.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.