‘The industry is a destroyer of capital, not a creator of capital’ - Rick Rule on the junior miners

Gold will do very well in the coming years, but few juniors deserve to benefit, according to Rick Rule, former CEO of Sprott Holdings and founder of Rule Investment Media. Rule sat down with Kitco Mining at The Mining Investment Event of the North in Quebec City on June 19. He agreed that gold has been held back because not enough people are invested in its success, but said that’s only a small part of the picture. “I think a bigger problem is that investor perception at all levels was formed in 40 very benign years,” he said. “Gold does well when people are afraid, particularly when they're afraid of the decline of their purchasing power in real terms. They have gone through 40 very, very, very kind years, and I don't believe that people are as afraid as they should be.” “My suspicion is that gold will come to be very well known in the next 10 years, which is, given the rest of the economy, unfortunate.” Rule was also scathing in his indictment of the junior miners, saying the overwhelming majority of juniors don’t deserve a dollar of investment. “If you merged every junior in the world, probably 2500 of them, if you form one company, we'll call it Junior Explorer Co,” he said. “In a very good year, that business would lose two billion dollars, that is expenditures over realizations through M&A or something else. In a very bad year it would lose six billion dollars.” Rule said when viewed this way, every calculation and investment rationale looks ridiculous. “You tell me, how much money would you spend for a business that loses $2 billion a year?” he asked. “Would you invest eight times losses? 12 times losses? What's the right price or price/loss ratio?” He said the industry as a whole is a destroyer of capital, not a creator of capital. “That belies the point that five percent of the issuers, perhaps maybe ten, generate such good performance that they add legitimacy and sometimes luster to a whole sector.” __________________________________________________________________ Kitco Mining is dedicated to reporting on the mining industry. Our mandate is to be the top resource for all mining information and news, offering a clear perspective on where the industry is going through breaking news coverage, mining trends, and in-depth reporting, presented with precious, rare earth, base metals, and industry stock prices. Get important precious and base metal updates while on the go with the Kitco Gold LIVE! app - https://applications.kitco.com Stay connected with us Twitter -   / kitcomining   Instagram -   / kitcomining   LinkedIn -   / kitco-mining   Facebook -   / kitcomining   Connect with the Kitco Mining anchors Michael McCrae -   / michaelmccrae   Paul Harris -   / paulharrisgold   For more in-depth mining coverage, visit us here - https://www.kitco.com/mining Disclaimer: Videos are not trading advice, and the views expressed may not reflect those of Kitco Metals Inc.