Doug Casey, founder of Casey Research, and Rick Rule, president of Sprott Holdings U.S., were recently interviewed by Kitco News. There, Casey and Rule gave their outlook on the gold market. Both men agree that precious metals, particularly gold, will see a bull market in the coming years.
When asked about the gold market, Casey said that we’ve seen plenty of bubbles over the years. He also said he expects the next one will be in gold stocks.
“I’m the first one to look at the bright side whenever that’s possible. The bright side is that gold stocks are very cheap now in both relative and absolute terms. All these trillions of dollars that the government is creating has created bubbles. We’ve seen a housing bubble, we’ve seen a tech bubble, we’ve seen a pot bubble, we’ve seen a blockchain bubble. I think the next bubble that is going to be discovered by the Robinhood kids is going to be these junior mining stocks.
While Casey believes that gold will soar higher, he doesn’t hold many of the junior mining stocks in high regard. Fortunately for investors, that often doesn’t matter during bull markets when everything surges higher.
Casey says of the junior miners, “Most of them are crap.”
He continues, “The mining business itself is a crappy industry for all kinds of reasons, but the good news is that it’s the most volatile class of stocks on the planet and they will discover that since 1971 when gold was freed up there have been five major bull markets, especially in the junior stocks, when the market as a whole has gone ten to one.”
He says this is what will pull in the novice traders.
“So, when the Robinhood guys discover that, they’re all going to pile onto these things, and people like Rick and I are going to make a bundle.”
Rule agrees with Casey’s opinion on mining stocks.
“The truth is that a precious metals bull market is something, as Doug suggests, that’s special to behold. I think that we’re in the early innings of a bull market in precious metals and precious metals equities that will continue to reward investors extremely well.”
When asked about a price target for gold during a bull market, Rule says we can look at past bull markets for an understanding of the wild price swings.
“What can you hope for? Well, the decade of the ‘70s it went from $35 to $850, admittedly price controlled. Maybe a better example would be from 2000-2011 when it went from $250 to $1,900. The gold equities, of course, do better.”
Like Casey, Rule is planning on the coming bull market to be very lucrative.
“My suspicion is that the next 2-3, maybe even 5 years, will be very generous to precious metals and precious metals equities. The surprise, I think for everybody, three, four, five years out… that we will have a supply-led bull market in industrial materials reminiscent of the one we enjoyed in the 2000 to 2006 period.”
He adds, “So I’m expecting actually from my own point of view, two bull markets. One of which I’m enjoying right now, and one of which I’ll enjoy 3 years from now, 5 years from now, at some period of time where we balance supply and demand by obliterating supply.”
Casey says if you are looking to make money and don’t care about the how and why, just buy junior mining stocks.
“People are looking for something that is going to make them money. They don’t care why or any of the details, don’t clutter my mind up with earnings and management and this type of thing, what am I going to buy that’s going to go up. Well, I’ll tell you. Buy into these crappy little junior gold stocks now. They’re going to be the epicenter of the next bubble. And the whole group is likely to go 10-for-1. That would be my advice.”