Eric King: “Rick, the comments about the mining industry coming from Paulson and Co. were fascinating. Your thoughts on what unfolded.”
Rick Rule: “Well, I think its hugely useful what he is proposing. Marcelo Kim was proposing that some of the bigger mining investors in the world, ourselves included, form a shareholders council — sort of like the World Gold Council — and advocate for change among the major mining companies. I think this is so important, Eric, because the change needs to come from us (investors)…
“If you look back to what started the current sort of paradigm around gold stocks, in my opinion it was the move in the 1970s of the gold price from $35 an ounce to $850 an ounce. And despite that incredible move in the bullion, many of the gold shares generated even larger returns. The consequence of that is that investors have looked at the gold mining industry to provide them one thing, which is leverage to the gold price. Now, amusingly, when you ask a gold company to exhibit leverage, what you are really asking them to do is be marginal because the high cost producer gets the best margin increase from an increasing gold price."
Rick Rule: “Well, I think its hugely useful what he is proposing. Marcelo Kim was proposing that some of the bigger mining investors in the world, ourselves included, form a shareholders council — sort of like the World Gold Council — and advocate for change among the major mining companies. I think this is so important, Eric, because the change needs to come from us (investors)…
“If you look back to what started the current sort of paradigm around gold stocks, in my opinion it was the move in the 1970s of the gold price from $35 an ounce to $850 an ounce. And despite that incredible move in the bullion, many of the gold shares generated even larger returns. The consequence of that is that investors have looked at the gold mining industry to provide them one thing, which is leverage to the gold price. Now, amusingly, when you ask a gold company to exhibit leverage, what you are really asking them to do is be marginal because the high cost producer gets the best margin increase from an increasing gold price."
- Source, King World News, Read More Here
