Rick Rule Says PM Miners Are Headed Substantially Higher
Trader Scott’s Market Blog
March 4, 2017
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Rick Rule was interviewed at King World News, and it was a pretty good listen. Even though his partner is the PM permabull “Billionaire” (his new first name) Sprott, Mr. Rule is pretty sharp and had some interesting things to say. He believes the economy is showing a slight improvement, based on company debt situations. That may be true, but is it their balance sheets improving, or is it the low interest rates? If their debt isn’t looking better now, it never will. And specifically about miners, there are several things which he talked about. The big gold miners “learned their lesson” several years ago, and are running a much tighter ship. And their operations will be more strictly run, which would mean more free cash flow, better dividends? The horrible malinvestment by the miners in the bull market is very unlikely to be repeated for at least a few years. And a strong market for the big miners will help the smaller miners. He added that the miners are attractive now, but lower prices in the miners would offer excellent entry points. The entry point is by far the most important consideration for me. The probability of a very good outcome, and the risk profile, for any trade or investment is greatly enhanced by patiently waiting for the better/”best” entry points. We have zero control over the outcome, only the entry point – meaning the much better outcome potential is enhanced. And I agree with Mr. Rule’s outlook for 2017 to be bullish on the $, but also on gold, but a major $ top would help gold substantially. And interestingly, he mentioned a momentum type of trade. If gold were to trade thru $1270, he would become more aggressive, otherwise it’s about accumulating into weakness.
My outlook remains that the December 2015 low in gold was the secular low, the selling wave into December 2016 was the retest at a higher low, and there will be more volatility in the first quarter of 2017. These are buying opportunities, not reasons to freak out. Some of the miners had big backups from the February 8th highs into the Friday lows after the stupid Yellen speech. I did the videos and left the comments about what I was waiting to see, and the miners of interest. The backups are opportunities to layer in, preparing for a more bullish second half of the year.