- Gold could benefit significantly from the US rising debt, which now exceeds US$130T
- In the 70’s, the purchasing power of the US dollar declined by 75 per cent and the gold price went from US$35 to US$850 an ounce in the same 10 years
- Since the year 2000, the gold price has gone from US$253 to US$2,600 an ounce.
- Rule feels the real rate of inflation is closer to 7.5 per cent which could eventually drive up gold prices
Watch the above video for an in-depth and candid conversation with Rick Rule on the economy, precious metals and Canadian oil and gas following the U.S. election.
Rick Rule, president and CEO of Rule Investment Media, joins The Market Online in the above video discusses his thoughts and insights following the U.S. election.
He touches on precious metals, notes that the strong U.S. dollar performance has mitigated the gold ‘fear trade’ gold, the underestimation of inflation and gives advice on seeing the ‘past is prologue’.
Rule suggest that although gold may not see short-term gains, over the next decade, as the U.S. dollar loses purchasing power due to rising debt (which now exceeds $130 trillion), gold could benefit significantly.
When he gets asked, “When is the price of gold going move”? He says he always responds, “I think it’s going to begin to move,” and points out that since the year 2000, the gold price has gone from US$253 to US$2,600 an ounce.
“It’s (gold) increased by 8 per cent and compounded more than the S&P. Gold has done exactly what it’s supposed to do. If I’m right, that the deterioration in the purchasing power of the US dollar increases in the next ten years relative to the last twenty-four, gold will move more.”
Rick Rule
He points out that the accretion of debt is meeting or exceeding total government revenues right now and we are faced with a situation not as extreme but similar in the 1970’s.
In the decade of the 70’s, he explains, the purchasing power of the U.S. dollar declined by 75 per cent and the gold price in those same ten years went from US$35 an ounce to US$850 an ounce.
He poses the question, “Will it happen in 2024 or 2025?”
Rule also notes that the inflation rate is likely understated by government statistics and that the real rate of inflation is closer to 7.5 per cent which could eventually drive up gold prices.
Rule clarifies that he is anti-partisan and looks at the arithmetic. “The probability that Trump will actually cut spending, I think, is nil. Anybody who disagrees with me should read a book called ‘The Triumph of Politics by David Stockman’, chronicling the destruction of Reagan Revolution in 180 days of politics.” Rule acknowledges that real change doesn’t place in three months, but rather over a ten year timespan.
He also states that the public did not notice the inflation, despite ‘the writing on the wall’ until 1972 when the gasoline price had quintupled and “the price of a McDonald’s hamburger had gone up fourfold”. In other words he adds, “The cumulative and compounding impact of U.S inflation hit folks in the wallet.”
Rick Rule, CEO Rule Investment Media
Rule is a sought-after speaker at industry conferences, and a frequent contributor to numerous media outlets, including CNBC, Fox Business News and BNN Bloomberg. He is known for his straightforward style and investors shouldn’t miss his personal insights.
Want more from Rick Rule? Check out Rick’s expectations for precious metals and his advice on investment reads.
And be sure to check out Richardson Wealth’s Mathis Baumbach’s interview with The Market Online about how the U.S. elections will impact U.S. and Canadian markets.
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