Sprott Update with Rick Rule: Gold Investor Fatigue Is Going to Lead to a Rally of Epic Proportions
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Rick agrees that there is capital misallocation on locating and extracting gold from the ground. Precious metals historically have been the most volatile part of the resource market. Reasons for this include the narrative around gold and silver being more interesting than say that of copper and coal. There is an allure to it. Thus there is a flaw in the way investors think. Investors that focus on precious metals likely do themselves a disservice.
Gold itself has been strong this past year in spite of the dollar also being strong. This is unusual and encouraging. Investor fatigue in the gold sector is not the fault of gold it is the investor’s fault as they have unrealistic expectations in regards to time. Gold stocks haven’t kept pace this year probably because they did so well in 2016. Gold may never be good enough to satisfy the wild interest of speculators but indeed good enough for contrarians to make a tidy sum.
Mr. Rule discusses battery metals including nickel and why there are opportunities in the space. He likes cobalt as increased supply is unlikely to reduce the price. There is plenty of available lithium worldwide; however, that demand has increased faster than the processing capacity of the lithium industry.
Rick feels that outside of urban areas electric vehicles are unlikely to reach operating cost parity with gasoline based cars. Electric cars are unlikely to be practical for long-range transport.
Platinum and palladium need to see a global, sustained recovery that increases the number of vehicles sold. Since 2008 the market has been constrained worldwide. Demand could rise if China pushes for cleaner diesel fuel standards something they have discussed but so far failed to do.