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Steve's note: If you're not familiar with the name Rick Rule, you should be. Rick is a friend... and one of the world's top investors. His specialty is natural-resource investing. I know many of our readers own commodity-related investments. So when I read a recent interview my colleague Porter Stansberry conducted with Rick, I wanted to share a few of his insights here... Insight From the World's Top Commodity InvestorBy
Thursday, October 30, 2008
Porter Stansberry: I think the most the crucial question, at least for me, is the big picture. How long do you think resource asset prices will fall in this bear market?
PS: In regards to oil prices, over five years, I can see your point. But, in the short term, I think the carnage is going to get a lot worse. What happens to the oil-sands companies, for example, if they have to shut down production because the cost of oil falls below their cost of production? Editor's note: To read the full interview, where Rick discusses the "stealth bull market" he expects to emerge in the next six months, click here.
Further Reading:
A Man You Need to Know
A Man You Need to Know Market NotesTHE GOLD-TO-COPPER RATIO IS SOARING
Real estate investors look at the ratio of rent they can earn versus the cost of a property. Stock investors look at the earnings per share of a company versus how much one share costs. But we'll guess most folks haven't looked at the gold-to-copper ratio...
As we've covered several times in the past, copper is used in cars, electronics, plumbing, and everything else around you. This "in everything" aspect makes the metal rise and fall with global economic health. Gold, on the other hand, has an "oh, crap" component in its price. It tends to rise when investors get scared. It also tends to rise when governments create lots of new money out of thin air to pay for things like wars and mortgage bailouts. The gold-to-copper ratio displays how many pounds of copper one ounce of gold will buy. Right now, gold is holding steady and copper is collapsing. So as you can see from today's chart, this ratio is soaring in favor of gold. It's a classic sign that "economic growth" investments are underperforming "oh crap" investments. |
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