Al's Insights – Mon 14 May, 2012

Rick Rule explains gold’s latest trend and the European variables

Click download link to listen on this device: Download Show

From the Hard Assets Investment Conference in New York City, Al and Rick Rule of Sprott Asset Management discuss the latest turmoil in Europe and how the consequences might affect gold in the near to mid term.

Al Korelin

  1. On May 14, 2012 at 8:48 am,
    Mark Alan says:

    Mr. Rule is the man to pay attention to. He is not irrational and not all “happy talk” when it comes to the miners and PMs. He likes to consider both sides and then the really big picture time frame.

    thanks for having Mr. Rule on the show!

    • On May 14, 2012 at 9:51 am,
      Tex says:

      He proves that NOT owning a TV maintains and perhaps improves your intellect.

      • On May 14, 2012 at 7:23 pm,
        castanheiro says:

        Owning or not owning a TV is not the issue as I see it. The TV is just a tool for multi-media communication. It’s discernment that’s needed. The TV can be used for positive and useful purposes or for not so positive and not so useful purposes. You and I are the arbiters of what we watch on it. Just trying to get us to think in constructive ways.

  2. On May 14, 2012 at 8:55 am,
    Marc says:

    Running to the US dollar is like a “dead man walking”. I am sitting tight. There are no other alternatives – oh yeah, one…..corporate bonds. A 3% to 3.5% return….for a corporation that I don’t trust or have no idea what they are doing….no way. I will stick to hard assets WHICH includes income producing real estate…paid for with ALL CASH.
    P.S. Rick Rule made all the sense in the world!

    • On May 14, 2012 at 9:12 am,
      Mark Alan says:


      I ran to the dollar once and found a corpse. Scared me to death.

      • On May 14, 2012 at 9:32 am,
        Marc says:

        What is that song of the 1980’s? “Its a dead man’s party” by Oingo Boigo? (sp)……appropriate for this economic day and age……..very appropriate. I am right there with ya. Oh yeah, I sold all my wheelbarrows recently. Why? Because I won’t have any worthless dollars to go buy a loaf of bread!

        • On May 14, 2012 at 9:40 am,
          Mark Alan says:

          Oh my Gosh! I hadn’t heard that song in years! Those were the days. I honestly think this will be the week we see a change in the direction of the metals. I posted my thoughts and stuck my neck out…hopefully my analysis isn’t off too much. LOL!

          stay frosty.

          • On February 3, 2014 at 7:46 am,
            Udays says:

            That in’sihtgs just what I’ve been looking for. Thanks!

        • On May 14, 2012 at 4:06 pm,
          Jerry O^OTB says:

          MARC….cut the funny business,,,this is a serious site……we only talk about gold and gold stocks MARK…and you be have too….or I will tell Al, to cut off you access button.

          • On May 14, 2012 at 4:50 pm,
            Mark Alan says:

            I’m sorry Uncle Jerry OOTB. Give my regards to Mr. Irish will ya!

          • On May 14, 2012 at 7:25 pm,
            castanheiro says:

            Mark and Marc are pretty good, but there’s no chance that any of us are going to steal you and Mr. Irish’s place….oops, guess I broke the rule too, I just grinned…..

        • On May 14, 2012 at 7:09 pm,
          castanheiro says:

          Well said, Mark and Marc!!

          • On May 14, 2012 at 9:21 pm,
            Marc says:

            All the best to you and yours – Mr. C.

          • On May 15, 2012 at 4:18 am,
            Jerry O^OTB says:

            Marc, Mark, AND the C. HERO.’S……”THE DUDES”
            Now appearing at the New Rant and Rave Club…..
            live, at
            Where all smiles look the same….and a rant a day keeps the doctor away…

  3. On May 14, 2012 at 9:54 am,
    Mark Alan says:
    • On May 14, 2012 at 12:30 pm,
      Peter says:

      I watched the whole thing.

      To nutshell it: Greece does not have any hope of making a turn-around. Greece is a failed state, anyone with skill and initiative is leaving – never to return. There is no one to lead the country out of its economic hell.

      The point was made that Greece business and government were corrupt to the core and that the fabricated numbers were put out systematically, deliberately and continually for years. However, the EU is also to blame because it did not have the will to investigate and do something about the situation.

      What I find most disturbing is that Greece only foreshadows what’s to come in other countries. Add to this shrinking populations and the flight of capital and you realize there is now conceivable way out. A really dark picture. Maybe boring Alberta, with its interminable winters ain’t so bad…

  4. On May 14, 2012 at 9:57 am,
    Tom says:

    So the world is in turmoil Europe is falling apart the US is broke. These are all the reasons I bought gold and silver thinking at this point it would be going through the roof pricewise. how much worse could it possibly get and people still not see that they should be in gold and silver. Are we fooling ourselves at this point into thinking that the metals will ever go higher? I’m just a point of frustration here need some moral support. Tom

    • On May 14, 2012 at 10:08 am,
      Marc says:

      Hang in there. Basically, there are two things going on. Number one, a lot of people are selling to raise liquidity for a whole host of reasons. And number two, in my mind the biggie – they are running now, scared and confused to the US dollar in varying forms of financial instruments – bonds, treasuries, etc. Sure it hurts to see this fall/correction. But, again – like Rosenberg said in an interview -paraphrased- GOLD IS GOING TO 3,000 AN OZ. THAT IS NOT A BEARISH OR BULLISH COMMENT ON MY PART, IT IS A RESPONSE TO THE MACRO CLIMATE THAT THE ENTIRE WORLD FINDS ITSELF IN. I AM IN THIS BUSINESS TO STEER MY CLIENTS CORRECTLY. IF IT WOULD BE DOLLAR-DENOMINATED ASSETS I WOULD DO IT – I AM NOT BIASED, I JUST PLACE INVESTMENT MONIES APPROPRIATELY. Basically, he is saying, let the market, properly analyzed, guide your course of action(s) NOT your emotions! BTW, that is MY interpretation of an interview I saw when researching the internet for financial/economic advice-consultation.
      All the best,

    • On May 14, 2012 at 10:21 am,
      Mark Alan says:

      Howdy Tom

      Believe, I too feel and understand your frustration, but…
      I once made the mistake of selling 500 ounces of silver back in early August of 2010…JUST BEFORE silver began its massive move higher. Why did I sell? Because I listened to my emotions along with a “guru” who said there was going to be a drop in prices of nearly 40%. Lesson learned. And that is not the only story I have. I have learned to shut off my emotions and I do feel a lot of that has been because I am holding physical metals. Go for a walk, go fishing, do some yoga, lift some weights, ride a bike…whatever. But rest assured, if you have the physical you will be fine. Please WAIT regarding the miners, but do make a shopping list. Not investment advice, just some friendly and neighborly ideas.

      stay frosty

    • On May 14, 2012 at 7:48 pm,
      castanheiro says:

      You see what’s going on, I see what’s going on and most of the people here on this site see what’s going on. We scratch our heads wondering why the moves in gold haven’t come sooner. But the reason is because most people still don’t see it, and so they haven’t yet ditched the dollar and its related stocks and bonds. There is still enough faith in the dollar to keep the system propped up and limping along. Just realize that you’re ahead of the curve. You got in early and have a leg up on the average American, which is a GOOD thing, right? The manic phase is still out there in front of us, but like Rick Rule said, I’m not excited to see it come because of what that portends for “life as we know it”. It really wouldn’t hurt my feelings to wake up one morning and find out that this collapse was just a nightmare, and I was back in Kansas. BUT alas, it’s not to be. We are too far down this course to turn it around now. I believe you are on the right track investment wise, so just ‘stay the course’.

  5. On May 14, 2012 at 9:58 am,
    Marc says:

    Mark A.,
    Where do you find this stuff? That picture is really, really amazing. WOW!

  6. On May 14, 2012 at 10:06 am,
    wyn harter says:

    Al, Roger….Richard Russell is warning us to be out of stocks, and I agree! But is a good gold/silver stock different? Should we hold onto these stocks? Really need yours or others comments, as I have both gold/silver stocks as well as bullion.


    • On May 14, 2012 at 12:51 pm,
      Mark Alan says:

      Afternoon Wyn

      Before you get too concerned, go have a look on Financial Sense with Jim Puplava. Just over a week ago, Richard Russell posted an editorial basically saying that the market looked BULLISH. Now how big of a contrast is that compared to what he just said at KWN? He posts a chart of an index that he uses and claims it expresses BULLISH to him. If you are feeling uneasily then you probably may be overexposed in the mining stocks or stocks in general. Not investment advice, but just a friendly suggestion: you need to determine your own comfort level. If you are uncomfortable, then do something that will make you feel more comfortable regarding your investments.

      stay frosty

  7. On May 14, 2012 at 10:24 am,
    frr says:

    Loved Rick Rule’s expression -whom I also count as a personal friend for 20 y’s- “The market isn’t necessarily agreeing with my opinion”! Can you get more truly outspoken and then explain your real personal opinion. As in Gold is catastrophy insurance, hoping I’ll never need it that way …

    And in my opinion, all above is correct except we’re forgetting the history of fiat money; Mark Twain says it best: Take a clean sheet of white paper and have the government slam some ink on it to make it absolutely worth-less (with or without the hyphen)!

  8. On May 14, 2012 at 10:55 am,
    Mark Alan says:

    UH OH!!! This ain’t so good for the miners. Things in Argentina are going to get really shaky.

    • On May 14, 2012 at 11:25 am,
      impeachemall says:

      Argentina wants to maximize local content and local labor? Go ahead, just copy Congo’s “success” model,

      • On May 14, 2012 at 12:54 pm,
        Mark Alan says:

        Now do you see why I posted last week to be VERY selective about investing in miners who work in geopolitically “hot” areas. I don’t care what Yale Simpson said and I don’t mean any disrespect towards him, but when the fecal matter hits the fan and this debt begins to kill every corporate entity leveraged to the gill, you can bet the governments of those “hot” countries are going to do whatever they want and not blink and eye.

        • On May 14, 2012 at 7:53 pm,
          castanheiro says:

          Mark Alan,
          I agree and have stated the same numerous times. This will also make gold and silver resources in Canada and the US more valuable and desirable, which is where I’m focused.

  9. On May 14, 2012 at 12:19 pm,
    Dennis M. O'Neil says:

    I was fascinated by Al and Rick Rule’s conversation. Our own expectations and trading position responses to our perceived economic results should be made realizing that cumulative economic decisions are not entirely like a starling murmuration. Instead of swift quick movements sometimes our anticipation of responses should be made with the realization we are steering a large tanker into port not a ski boat turning to pick a a downed skier. The discussion about ‘expectations and James Dines ‘personal recent history/experience rule’ made me think of a passage written by Murray Rothbard. It was written in the early 80’s when the there was a pitch battle to reduce inflation. To be instructive today we should replace high inflation with low inflation to make the passage instructive for our current situation. Although reversed the lesson is spot on.
    Murray Rothbard wrote the below words in his 1982 Introduction to the Fourth Edition of his book “America’s Great Depression”.
    “The answer is that expectation are purely subjective, and cannot be captured by the mechanistic use of charts and regressions. After several decades of continuing and aggravated inflation, the American public has become inured to expect further chronic inflation. Temporary respites during deep depressions, propaganda and political hoopla, can no longer reverse those expectations. As long as inflationary expectations persist, the expected inflation incorporated into interest rates will remain high, and interest rates will not fall for any substantial length of time.”

    From this I would suggest the inverse is true. “As long as low inflationary expectations persist people will flee to treasuries.”
    There will come a day when low inflationary expectations end….and this is when unsustainable begins.

  10. On May 14, 2012 at 12:44 pm,
    Irishtony says:

    I heard some gossip today, which i can not confirm. I have a friend, whose close relative works for the EU in Brussels. The story going around some of the corridors in Brussels is THEY want Greece out of the euro, THEY dont want to kick Greece out themselves, because Brussels would get the blame for the mayhem it would cause in the banking system, so the plan is to get Greece TO LEAVE, that way they can blame Greece when banks start to fail . I dont know what you people think of that bit of gossip….but i have to say it makes sense to me.

    • On May 14, 2012 at 2:05 pm,
      Peter says:


      Having watched the piece posted on Zerohedge, makes me agree even more with the assessment that Greece is going to have to get out of the euro. The whole documentary seemed geared toward getting people to think that Greece is bad news for the EU, that it’s problems are not transitory, put permanent and beyond the scope of anyone to solve. They will try to spin this to look like Greece must leave to save the EU. This is a big reversal from Greece must stay in the EU in order to be saved.

      The documentary also said that billions in the triple digits have fled Greece (i.e. hundreds of billions).

  11. On May 14, 2012 at 1:15 pm,
    Dennis M. says:

    Argentina today…who will it e tomorrow.
    It is not in the paper bug’s interest to have
    constraints stimmie mine production.
    Eventually the obvious is realized 100% of nothing
    is zero. Today when I think of diversification I am considering
    more on jurisdiction/geographical terms than I am sectors.

    • On May 15, 2012 at 7:00 am,
      Dan, calgary says:

      Amen. Canada and the U.S. are the safest places to be IMHO.

      The Fed “is” the American dollar. The con-job is on. If Bernankes voice shakes too much the dollar will react because of all the investors that are trying to read between the lines of a one line play.


  12. On May 14, 2012 at 1:23 pm,
    Jenny says:

    I need help. I use Al Korelin as a contrary indicator. When he posted his portfolio I sold all resource stocks. When he went on a rant about advisors buying stocks for clients I sold TSXV stocks short – the ones my brokerage would let me sell short, and that list is getting smaller – and when Al stated he was certain the conventional market would underperform I sold the TSX short and bought the DJIA. I have made a killing in the past two years doing the opposite of Al. My problem is I cannot stand listening to Al so I stopped listening to the radio show so I havent heard if he is bearish…I need to know when to cover my position and reverse.

    • On May 14, 2012 at 2:52 pm,
      Mark Alan says:

      Well, you definitely are a contrarian investor. Congrats on the earnings. Big Al appears to still be bullish long term PMs and their stocks but is very cautious right now. Does this help?

      take care

    • On May 14, 2012 at 8:10 pm,
      castanheiro says:

      Hi Jenny,
      Talk is,,well,,as they say, not worth much. Put your portfolio up here at this site and prove what you say. You say you sold all resource stocks. Which ones did you sell? and at which time. Al has posted his holdings at different times. Dates and times and stocks please, or else we’ll just have to remain skeptical. Now wait, you say Al’s show was your barometer for knowing when and what to do, and that he had made you ‘a killing’, but you stopped listening to him because you don’t like him. But you were getting all that contrarian advice for free!! Your logic doesn’t make sense. It wouldn’t matter whether I liked somebody or not. If they were making me tons of money, I wouldn’t care. That shows that you allowed your emotions to cloud your better economic judgement, which is kinda sad, if you’re for real. 🙁 ha ha.

  13. On May 14, 2012 at 2:06 pm,
    Marc says:

    Where were you when Gold was at 1923.00 an ounce and silver at just over 49 an ounce last year. Its great to come on in to this site and discuss your real productive moves in hindsight. But, this trade is far from over. It you are using this site as a contrarian indicator, I think that you are not only playin with fire, but an “inferno of fire”. Gold and silver have been heading it a up-mega trend for over 10 years now. What say you about that? Al puts his money where his mouth is…so do I and A LOT of others on this site. We are not “bugs” per se – I don’t believe. Most of us are macro-realists that can not and will not get short on the big moves in this grand cycle of PM’s playin out before us. Don’t get confused with some SHORT-TERM success VS. LONG TERM fundamentally-sound economic, principled investing. The tide can turn anytime -in an instant…..and it will SOONER or LATER.
    All the best,

    • On May 14, 2012 at 3:10 pm,
      Peter says:

      I think Jenny was just pulling your legs.

      On a different note. Have a look at the accumulation distribution divergence we are seeing in silver now!!

      • On May 14, 2012 at 4:56 pm,
        Mark Alan says:

        yes, Jerry

        I have been paying attention to this for some time myself, but remember, markets can remain irrational longer than you or I can remain solvent. I am hoping this week we will discover if $1500 or $1550 is going to be support for gold. I sure hope we can close the week up near $1600 but with deteriorating market conditions, I am not holding my breath. Also, notice that the Open Interest in Silver is huge and the longs are growing. This doesn’t mean a bottom, just gives us hope.

  14. On May 14, 2012 at 2:18 pm,
    shawn says:

    If the hedge funds are the cause of the gold price drop and also some of the stock declines we are seeing I will be sitting on the sidelines for now because there are 8,000 to 10, 000 of these funds worth 600 to 700 trillion dollars. This staggers the imagination and JP Morgan could be the canary; who knows where the bottom is as they cash in their chips to try and remain solvent. This is not going to be pretty!

  15. On May 14, 2012 at 2:19 pm,
    Irishtony says:

    MARC….Love it… have a way with words.

  16. On May 14, 2012 at 4:35 pm,
    Tom says:

    Just wondering if there’s any correlation
    Between what happened to gold in the 70’s and what’s going on now? I’m sure that everyone was convinced that gold was going to go up and up just before it crashed to $200.00 and stayed there for 10 years. Any thoughts? Thanks Tom

  17. On May 14, 2012 at 5:31 pm,
    going down fast says:

    In an earlier lifetime as an owner of race horses, I learned that a race horse whose stable barn is on fire (and who is rescued from his stall during the fire) needs to be securely placed outside of the burning barn. If the horse is merely led out of the stable without being secured, he most likely will go back into the burning stable and attempt to reoccupy his stall. The reason being is that the stall had represented a safe harbor for the animal in his recent past. Although shaken and aware of the fire, instinct tells the horse to seek the safety of his stall.

    In my world, investors that sense uncertainty in the markets and seek out the safety of the US dollar and US treasuries, exhibit the same type of instinct as the race horse. The difference is that we as humans should be able to do some critical thinking. I am hoping that more investors recognize the fragility of the US economy and its currency and turn to precious metals as the currency and the investment with sustainability.

    • On May 14, 2012 at 8:14 pm,
      castanheiro says:

      Hello going down fast,
      I love the race horse analogy. That’s a powerful word picture for the instinct of the masses. Many thanks.

      • On May 14, 2012 at 9:25 pm,
        Marc says:

        Ditto….Mr. C…..a BIG ditto…great analogy!

  18. On May 14, 2012 at 7:01 pm,
    Keep Stacking says:

    Being a student of price action has made all the difference to me. Find a trend on a daily chart, and follow it until it stops. The price action is the Truth, and everything else is just noise.
    Best to all

    • On May 14, 2012 at 9:26 pm,
      Marc says:

      You are dead on RIGHT!! 🙂
      All the best to you,

  19. On May 14, 2012 at 7:58 pm,
    Jed Davis says:

    WARNING: The problem with all our readers (myself included) is that we know what makes good economic sense and we are expecting the general public to see our point of view. Gold has clearly proved itself. But most people are uninformed about what is happening and in volatile economic times such as these, they rush to the dollar because they always knew it as a source of safety. THat is what happened in 2008 and that is what is happening right now. Fro the short term, hang on.

    • On May 14, 2012 at 9:27 pm,
      Marc says:

      Another valuable word of wisdom!

      • On May 15, 2012 at 7:21 pm,
        Jed Davis says:

        Thank you.

    • On May 15, 2012 at 9:24 am,
      castanheiro says:

      You’re correct IMHO. See what “going down fast” said above. His analogy of the race horse returning to his stall in the burning barn is outstanding and highlights exactly what you are saying.

      • On May 15, 2012 at 7:22 pm,
        Jed Davis says:

        Thanks for ;pointing that out the above. It gives me faith that some people understand this.

  20. On May 14, 2012 at 9:58 pm,
    Dennis M. O'Neil says:

    As far as the Preakness;
    I’ll Have Another!!!!!

    • On May 15, 2012 at 9:20 am,
      castanheiro says:

      Hi Dennis,
      You got the call right the last time. I’m not much into the gambling part of horse racing(yes, investing is different than gambling), but do love to watch the animals run. Nothing more beautiful in the animal kingdom than a horse in motion! So, if I had to bet, it would have to be “I’ll Have Another”, however, did you see the #3, #4, and #5 horses closing in on him. They were coming up fast. Had the race been 1/4 mile longer the outcome could have been very different. What think yee?

  21. On May 14, 2012 at 10:13 pm,
    Jon says:

    Great analogy! For a VERY good read on the subject look at “invesent psychology explained” by Martin pring. I go back to this book again and again to remind myself that my investment decisions must be made for a reason and not just becasuse of how this site and other great PM sites make me react. Oh BTW I personnaly do not use big Al as a contrarian weather vane …. I tend to think that will lead lightning strikes … Ha ha

  22. On May 18, 2012 at 11:18 pm,
    Dr. Mike says:

    I could not agree more with Mr Rule. Gold and Silver are the only thing this is concrete in a paper or even more fleeting the electronic world. I like to beat the money manipulators at their own game by my purchases of PM I take their worthless paper and convert it to a real asset. Has anyone really looked at our currency lately. Has anyone even noticed that the only dollar bill still shows the federal reserve branch on which the bill originates from is the $1.00 bill. All other bills or notes from the 5 to the 100 state they come from the federal reserve system. A true system of a down (if you like a song) This just really shows how worthless they are. My guess is when they finally do devalue the currency the only bill that will be left standing will be the $1.00 bill. How Ironic it will be when the lowest denomination bill will be worth the most. Also has anyone considered the other irony of our currency. Most of the presidents on our money have at one time or another opposed the central bank and often spoke against the United States having a central bank control its money.