Today one of the wealthiest people in the financial world told King World News what he is doing right now with his own personal money in the aftermath of the gold and silver smash. Rick Rule, who is business partners with billionaire Eric Sprott and the CEO of Sprott USA, also sent KWN a fascinating note from Hong Kong regarding massive physical gold buying from the public.
Eric King: “Give KWN readers an idea of what you see going forward once this bear phase runs its course.”
Rule: “What KWN readers need to remember is the money that you make coming out of this bear phase, if you were aggressive at the bottom, is truly spectacular. I have every confidence that if you and I are on the phone 3 or 4 years from now we will look back and say, ‘God, the spring of 2013 was the good old days.’
“They need to ask themselves if anything we are facing in the world today is any different than it was in 2010?
The only thing that has changed is that people’s attitudes have gone from aggression to fear, and the market expressed by junior (gold mining shares) is 70% cheaper. Nothing else has changed, which I think is very interesting.”
Eric King: “What are you doing with your own money, Rick?”
Rule: “We allocated about $5 million to the market yesterday to juniors. Ben Graham also famously said, ‘You shouldn’t buy a stock if you wouldn’t be delighted to see it fall 20% of 30% further in the next week so you can buy more cheaper.’
I’ve been tested by that at least 100 times in my career, Eric, and I’m probably going to be tested by it now. But the truth is that it has done me well over time to exercise that discipline. If you understand the absolute values of things relative to the expressed market values, buying extremely undervalued stocks works out well for investors, and that’s what I am trying to do.
I have to allocate customer money at Sprott Asset Management before I allocate my own money. In the partnerships that I manage there is 9 figures of cash to invest. I am the largest partner in those partnerships. But in terms of what I am doing with my own personal money, which is not inside of those Sprott partnerships, to the extent that I invest in microcap stocks, I have to invest after those partnerships have had their fill, and those partnerships are still very, very hungry.”
Rule also added this stunning evidence regarding the extraordinary physical buying in gold from a friend of his over in Hong Kong: