With gold stabilizing near the $1,600 level and silver below $30, today King World News interviewed one of the most street smart pros in the resource sector, Rick Rule, Founder of Global Resource Investments. Rule had some fascinating things to share with KWN, but in particular with regards to what he is doing with his own money right now. When asked about the recent plunge in the price of gold, silver and the mining shares, Rule replied, “For a lot of the financial interests in gold, they’ve had their credit lines cut, they can’t hold it. We saw that in 2008 also. Because of recent weakness in the euro, the dollar has become the safe haven trade. So there has been strength in the dollar, hence the weakness in gold.”

“I personally don’t see that continuing for reasons that you and I have talked about many times, but could it continue for two or three more months? Absolutely. I’m delighted to see it as a buyer. With regards to the smaller gold and silver companies, you’re seeing declines in all of the peripheral investments.

I need to say, Eric, and you’re the first to hear this, it’s my belief that markets will break sharply lower in the very near-term because this week I’ve personally committed $10 to $15 million in money to the sector and normally I buy too soon.

I believe as you do, Eric, that if you have a choice in troubled times, and make no mistake these are troubled times, you would own gold and silver in preference to any fiat currency. So I think in the intermediate and long-term gold does pretty well.

As I alluded to earlier, the junior gold and silver miners in many cases are very cheap. I’m not talking about 3,000 companies, I’m talking about the best 10% of the issuers and those are cheap....

“Cheap enough, as I said earlier, for me to commit between $10 to $15 million of my own money this week to buying them. That’s almost a guarantee that in the interim they go lower. I’m not a technician, but I’ve been told the gold and silver charts have broken down and I suspect that precipitated a bit of selling.

From my viewpoint I’m not buying these things because I think the market response will get better. I’m buying junior gold and silver stocks that I think will be taken over by larger gold and silver producers in the 12 to 24 month time frame. From that point of view I welcome the bargains I see in the sector.”

When asked about silver specifically, Rule stated, “Eric (Sprott) continues to point, I think wisely, to the fact that there is a very, very broad paper market in silver and a much more constrained physical market in silver.

He (Sprott) has also said that to the extent the silver price has declined, financial interests would continue to buy silver and this is exactly what has taken place. The tipping point where the paper longs exhaust the physicals could come and if we had a failure to deliver in the futures market, the upside would be truly explosive. If it does occur it will be a spectacular financial event.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/16_Rick_Rule_-_I_Personally_Bought_Over_$10_Million_This_Week.html