Rick Rule, founder of Sprott Global Resource Investments, is a mainstay at conferences in the mining space, and the recent 2015 PDAC International Convention, Trade Show & Investors Exchange was no different. Rule presented at the event and later took the time to answer some questions from Resource Investing News.
One interesting point Rule made was that executives at companies with sub-$30-million market caps are in some cases preventing M&A activity in the space. “The problem that’s happening is that too many boards of directors have voted in change-of-control provisions for officers and directors where the officers and directors get paid $2 or $3 or $4 million in the event of change in control. A company with a $10-million market cap where the management gets a $3-million going away present precludes any kind of M&A activity,” he said. He sees such companies running themselves into the ground with those policies if the market doesn’t turn around.
In closing, Rule touched on the gold price and why it’s doing well in every currency except the US dollar. “I suspect the strength in the US dollar really has to do with the weakness in all other currencies. The idea that the US economy itself is really strong appears to me, as an American, to be a misnomer,” he said, adding, “I also believe that gold doesn’t need to win the war against the US dollar, it just needs to lose it a little less badly.”
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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