After five trying years, RAB Capital Founder and President Philip Richards sees the light at the end of the tunnel. In this interview with The Gold Report, he argues that a continued zero-interest-rate policy from the Fed will be good for gold and silver, while continued quantitative easing will be good for base metals. Many fine mining companies now trade at deep discounts relative to their NPVs, and Richards suggests a half-dozen poised to take off once the new bull market finds its legs.
The Gold Report: For five years experts have confidently yet incorrectly predicted higher interest rates and an end to the Federal Reserve’s zero-interest-rate policy (ZIRP). Janet Yellen announced Oct. 28 that the Fed would not raise rates now, but might do so in December. Even so, some analysts believe the Fed might follow Europe into negative interest rate territory. What do you think?
Philip Richards: The U.S. economy has maintained a reasonable rate of growth. Globally, however, growth has been disappointing, with the emerging markets being particular stragglers. One reason for this is the tapering of quantitative easing (QE) that the Fed announced three years ago. The U.S. dollar has gotten stronger ever since. This has undermined commodity markets and also created something of a debt crisis in the emerging markets, a crisis that has not yet come home to roost. Many emerging market companies have debt in U.S. dollars, and their local currencies have crashed, so servicing those dollar debts has become rather difficult.
“Largo Resources Ltd. continues to ramp up production successfully at its Maracas vanadium mine in Brazil.”
Despite this sluggish global growth, total global debt is now higher than it was in the 2008 crisis. Given the fragile state of the world economy, I believe the Fed simply cannot afford …read more