“This is normal, this is natural. There is nothing that has changed about the case for gold,” said Rule about gold’s recent price movement.
The gold price recovered to above US$1,800 per ounce on Tuesday (December 1), but the yellow metal remains far from its summer high point of more than US$2,000.
For those feeling worried or concerned about gold’s recent performance, Rick Rule of Sprott (TSX:SII,NYSE:SII) had the following message: Check your facts.
“I think the probability is that this is a cyclical decline in a secular bull market,” he said on Monday (November 30), when gold was still below the US$1,800 mark.
“While the gold price in the near term is disconcerting to speculators, if speculators familiarize themselves with the performance of gold longer term in bull markets, I think they become much less concerned,” he said. He emphasized that history shows it’s both normal and natural for gold to experience periods of downward momentum, even when it’s in a bull market.
Rule also reviewed the three main factors he believes are behind gold’s positive performance: quantitative easing, artificially low interest rates and government debt and deficits. In his opinion, having a strong understanding of those elements is helpful in understanding when to be in or out of gold.
And when asked about other hated sectors that might perform positively in the future, he mentioned oil and gas. “People all of a sudden seem to believe that the era of oil is over — and they believe that incorrectly,” he commented.
Rule believes there will always be a need for oil and gas, even as clean energy begins to take more of a role in the world. “There is room for all forms of energy, and you can be hugely bullish about the future for things like rare earths and cobalt and simultaneously be bullish on oil,” he said.
Watch the interview above for more from Rule on gold and other commodities in the resource space.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.