With gold and silver still on the move, today King World News interviewed Rick Rule, Founder of Global Resource Investor now part of the $9 billion Sprott Asset Management. Rick is known as one of the most street smart pros in the resource sector. When asked about the silver market specifically Rule stated, “Well I think part of what’s happening in the silver market is the fact that the market is in backwardation which is to suggest that the spot price is ahead of the futures price. This is the opposite of a contango which is what normally what happens in metals markets. It is obvious that there is incredible tightness in the physical market.”
Rick Rule continues:
“There has been so much physical buying that it’s widely reported that the mints are having difficulty obtaining coin strip in the face of overwhelming coin demand. There has been suspicion with the March settlement and with subsequent near-term settlements that there will in fact be insufficient silver to meet the settlement requirements in those near month futures contracts.
It’s obvious from those statistics that the near-term silver supply, in particular the physical supply, is extremely tight, and as a consequence of that extremely volatile...We’re in an extraordinarily tight market.”
When asked about gold Rule remarked, “It’s very interesting to talk about the dollar and these other currencies in the context of gold because as has been pointed out, gold is the only currency without a political constituency for devaluation.”
When asked about the US dollar Rule replied, “It is true the dollar is the world’s reserve currency so it’s the fiat currency that everybody is reserving special wrath for, particularly in view of the profligate nature of US debt issuances. But there’s a bigger problem with regards to fiat currencies that people have, because if you are going to somewhere other than gold, what is the fiat haven? I don’t see a fiat haven, and that’s problematic.”
Rick Rule is one of the most level headed individuals in the resource world so I take seriously his warnings about tightness in the silver market creating settlement problems in near-term futures contracts.
Rick covered gold, silver, the US dollar, uranium, oil and other topics in great detail, including what he is doing with his own money and his KWN interview will be released shortly. You can listen to it by CLICKING HERE.
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