Nick Hodge and Rick Rule Unleashed on Gold and Bitcoin

Nick Hodge and Rick Rule Unleashed on Gold and Bitcoin by Nick Hodge – Outsider Club

Publisher’s Note: Last week I was asked to be a part of an “emergency conference call on gold” with industry legends Rick Rule, Doug Casey, and Brien Lundin. We talked for an hour covering many topics I think you’ll find intriguing. What follows are select excerpts between me and Rick. You can listen to the entire thing here.


(Watch on You Tube)


Rick Rule: With gold and gold-related equities accounting for one third of 1% of the savings and investments of Americans… why would anyone care about gold? And, for somebody who makes his living publishing a newsletter, why would you focus on a sector nobody cares about?

Nick Hodge: I think the fact that so few people have money in gold is actually a bullish notion. The gold market is so small compared to the rest of the world equity market that it doesn’t take a lot of money flowing into the sector to make not only the price of gold rise, but the price of associated equities as well. Then, of course, you get the leverage that junior companies provide.

So, I think that Americans are mistaken in only having one third of 1% of their capital in gold stocks. And I think it takes a very small amount of new capital coming in to move the needle. And I truly think we’re heading into that period now. Not only do gold majors need to reinvest to sure up their reserves so they have assets to produce down the road because they’re quickly depleting their assets that are in production… but I also think that it’s one of the few safe havens as Doug Casey pointed out, and has been the mantra of the New Orleans Investment Conference for the past 42 years.

And the notion is it’s something tangible that you can hold in your hand. I look at some of the other things that are going on in the financial market… take the Snapchat IPO, for example. $3.4 billion was raised in that IPO, which didn’t go all that well, and is really based on a product that disappears. It’s a text message that disappears a few seconds after you send it.

Those aren’t the sort of things I want to put my capital into. And gold presents an opportunity to invest in something real.

And then to answer the second part of your question… that’s why I write about it to my readers. It’s why I tell them they have to have a portion of their investment in not only physical gold but in gold equities as well.

Rick Rule: You know, Nick, one of the ways I amuse myself is by communicating with a lot of younger people. In particular, young members of Students for Liberty, a worldwide libertarian organization. And several of them have taken to reminding me, unnecessarily, of my age… and suggesting to me that my fondness for gold is really a function of my generation. And that in fact cryptocurrencies, in particular Bitcoin, obviate any sense in either investing in gold or speculating in mining stocks. In terms of gold, they say that the anonymity of Bitcoin and the fact that it’s a non-government-sponsored currency and the efficiency by which it trades obviates gold as a medium of exchange. And with regards to the junior cryptocurrencies, relative to the junior mining stocks, they say that the efficacy of the cryptocurrencies is demonstrated by the fact that they go up while the gold stocks seem to go sideways. Nick, is the blockchain, are cryptocurrencies, and in particular Bitcoin, substitutes for gold and gold mining stocks?

Nick Hodge: I don’t believe they are; I believe they are complements to gold. And I will tell you that I’ve experienced some of the same things you’re describing. For example, in our publishing offices in Baltimore there are approximately 40 employees, many of which are in their 20s. And I can tell you that for all of 2017, these kids — I call them kids though they’re not many years younger than I am — but these kids have been talking about and trading Bitcoin incessantly.

And when I ask them, you know, do you have your IRA set up, do you have your retirement accounts funded before you speculate on cryptocurrencies… and they say ‘no’. They’re putting any free cash they have in cryptocurrencies.

There is a generational gap there in that these kids have been brought up on digitized and computerized machines… so these cryptocurrencies seem natural to them.

I would say that cryptocurrencies have only been around for a half decade or a decade whereas the monetary value of gold has been around for thousands of years. And so while they think there’s a generational gap… I think they’re forgetting about a much longer history there. I don’t think cryptocurrencies replace gold. I think they’re temporarily distracting some attention away from it. But it’s certainly not a substitute for a physical metal that you can hold in your hand.

Ultimately, we’re talking about ones and zeros. Just look at things that have happened recently with the Yahoo! hack and the Equifax hack. Don’t think for a second that those same vulnerabilities aren’t apparent in cryptocurrencies like Bitcoin and Ether. I just think they haven’t been around long enough for this younger generation to learn a lesson. And when they do… I think you’ll see more of them become interested in gold.


Rick, Doug, Brien, and I will all be at the New Orleans Investment Conference next week. More info on that here.

And you can see more of my current thoughts on gold by clicking here.

Call it like you see it,

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Jimmy is a managing editor for Outsider Club and the Investment Director of the personal finance advisory The Crow's Nest. You may also know him as the architect behind the wildly popular finance and investing website Wealth Wire, where he's brought readers the stories behind the mainstream financial news each and every day. For more on Jimmy, check out his editor's page.