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Rick Rule on Gold

Posted May 06, 2024

Sean Ring

By Sean Ring

Rick Rule on Gold

Last Friday, I got to speak with Rick Rule about gold. That, combined with my chat with Doug French the night before, means I had a great week brain-wise.

We’ve already posted my interview with Doug on the Paradigm Press YouTube channel, so head over there to watch it when you’re free.

Rick’s interview will be posted as soon as possible, but in the meantime, I had the weekend to reflect on it, and share my thoughts with you here.

Gold is Insurance.

You would’ve also heard this in the Doug French interview since great minds think alike. Rick isn’t excited by gold going from $2,000 to $2,400. Rick’s always owned gold, so he experienced the “Brown Bottom.”

That’s when former Chancellor of the Exchequer (The UK’s equivalent of the Secretary of the Treasury) Gordon Brown announced he was selling all of the UK’s gold. Of course, traders front-ran Her Majesty’s Treasury and knocked the gold price down to $250/oz. This idiotic move cost the UK at least GBP 5 billion. Thanks to this “diversification strategy,” Gordon Brown can’t get an after-dinner speech gig.

Suffice it to say, you hold gold because you’re worried your government will inflate its currency to the moon. Not because you’re looking for a few hundred dollars in profit.

Returning to Average Holdings Means $8,000 - $10,000

This was my favorite part of the interview.

First, let’s define a term. “Mean reversion” or “reverting to the mean” is something finance people say instead of “going back to the long-term average.” Trust me, finance is a cupcake major, so we have a bit of a Napoleon Complex next to economists.

Rick mentioned that a portfolio's long-term average gold holding is 2%. Right now, the average holding is 0.5%. That means if retail starts to buy again to get their holdings merely back to 2%, the gold price will quadruple. At today’s prices, that’s anywhere from $8,000 to $10,000.

This isn’t clickbait. It’s mathematics.

Why $10,000 Gold is Frightening

With the above said, a $10,000 gold price is nothing to celebrate. Yes, if you’re long gold, you’ll have made a ton of money.

But the purchasing power of the dollar will have been quartered. And that’s the stuff of nightmares.

Using the Rule of 72 and the current (erroneously calculated) CPI of 3.5%, the dollar’s value will halve in just over 20 years (72/3.5 = 20.6 years). That’s bad enough.

Imagine the price of a liter of milk going from $1.30 to $5.20. It’s horrifying.

Trump or Biden? How About Neither?

Rick shared a wonderful anecdote about voting for President. He knew the late, great Harry Browne, author of How You Can Profit From The Coming Devaluation, How I Found Freedom in an Unfree World, You Can Profit from a Monetary Crisis, and Fail-Safe Investing: Lifelong Financial Security in 30 Minutes.

Harry was the Libertarian candidate for President in 1996 and 2000.

Rick recounted the pleasure of pulling the lever for his friend Harry.

I remember feeling the same when I voted for Bob Dole instead of Bill Clinton in 1996.

It’s easy to not vote for Biden. Many find it hard to vote for Trump.

Rick will be voting for neither.

To Hell With Retirement!

If there’s one thing Rick has failed at in life, it’s retirement.

While Rick is still Sprott’s largest shareholder, he’s no longer on the board.

This is excellent news for us.

First, Rick will grade your natural resources himself(!) at Rule Investment Media. I will be taking advantage of this fantastic service this week.

Second, Rick, with Albert Lu, founded Rule Classroom in 2022. Rule Classroom is an online learning community for natural resource investors. Here, you will find video courses, interviews, and a community of natural resource investors to learn from. Basic membership is free. 

Third, Rick still hosts his eponymous Rule Symposium every July in Boca Raton, FL. As the nation’s premier annual event on resource and commodities investing, The Rule Symposium has built an unparalleled reputation for delivering the most profitable insights in this sector – year after year. 

I hope you take advantage of these great offers. (FYI, while I wholeheartedly recommend each of these, you must know neither I nor anyone else at Paradigm Press have any financial incentive to do so.)

Wrap Up

We’ll post Rick’s full interview on the Paradigm Press YouTube Channel as soon as possible. It’s chockful of golden nuggets, many of which I’ve not written about here.

And take advantage of Rick’s generous offers. A successful investor like Rick rarely opens up like this. Our gratitude should be our participation.

Finally, I apologize for today’s short Rude. It’s my first time writing from the new house, and I had a hell of a time hooking up to Starlink this morning. It’s not Elon’s fault, but mine.

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