James Connor sits down with Rick Rule, Founder and CEO of Rule Investment Media, to uncover why gold remains the ultimate defense against reckless government spending and skyrocketing federal debt. Rick explains how the staggering U.S. debt load is unpayable and can only be eroded away through inflation, positioning gold as the best hedge. In this in-depth conversation, the expert in natural resource investing also shares his insights on the political pressures facing the Fed, his outlook for gold equities and the energy sector, and why uranium could be a game-changer for patient investors.
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Rick Rule 0:00 I own gold because I'm afraid it'll go to $9000 or $10,000 the deficit exceeds $6 trillion a year. The way out is inflating away the net present value of the obligations. Gold helps me sleep nights and stay calm. James Connor 0:29 Hi and welcome to wealthion. I'm James Connor. Today we're going to discuss all things resources, beginning with gold, which is up over 20% on the year, followed by oil, which is flat on the year. And then we're going to end with a discussion on uranium, which is down 15% on the year. And the best person to discuss resources with is Rick Rule of rule, investment media. Rick, thank you very much for joining us today. How are things in the great state of Washington? Rick Rule 0:58 Life is wonderful. The better for talking to you, sir. James Connor 1:02 it looks like you've got some sun. Rick Rule 1:05 The Washington summers, like the British Columbia summers, are sublime. I've been enjoying it. I've been on the water as much as I can, hiking as much as I can, rooting around in the garden a bit. So yes, it's a it's a wonderful time of year to be here. James Connor 1:17 good for you. I am in Toronto right now, and you would not believe the temperature here. I think it's about 70 degrees, and two days ago, it was 90. So it's been a big shift relatively quick, and it looks like fall is approaching us quite fast. Rick Rule 1:31 Well, I, sadly, I tend to be in Toronto most consistently around PDAC. You serve you. Save your worst weather for me James Connor 1:41 That's the worst time to come. So Rick, we finally have something to celebrate, and that is the move in gold. It's finally come out of this long hibernation. It's up over 20% on the year. And there's a few reasons why, and the primary one is because of the stupidity of governments. And you and I always have these conversations, and you've said numerous times that governments spend recklessly, governments print money, governments impose taxes and ensure governments screw things up. So when you look at the current actions of the government and the current state of the economy, why is this good for the price of gold? Rick Rule 2:16 sadly, I think the actions are very good for the price of gold. Not so good for the countries. If you look at your country, your Prime Minister believes that the budget will balance itself. Meanwhile, he doesn't believe that there's a business case for Canadian natural gas, despite the fact that his customers do this type of narrative stupidity, sadly, is good for gold. If you look at my country, I mean, I need to say this will piss off a lot of your viewers. I won't vote for any of the Three Stooges, not for Kennedy, not for Trump, not for Harris. All of them are basically trying to bribe voters with their own money. And the victim is, of course, the unborn. They build up debts when they need to. They engage in quantitative easing, which, if you did it would be called counterfeiting. All of that is good for gold. Gold does well when investors are concerned about the maintenance of their purchasing power in fiat currency denominated issuers, people in Canada and people in the United States who aren't concerned about the performance of Fiat denominated instruments are people who aren't paying attention. I would take issue with one thing you said, Jimmy, which is to say that gold is up this year. I began systematic buying of gold again in 1998 that was a little early, two years early, to be exact. But gold, since 2000 that is to say, in this century, is up about eight and a half percent compounded a year for 24 years, gold, for me, has done is exactly what I wanted it to there's a subset of speculators that own gold owns gold, not because they're afraid, but because they're hoping that gold is going to repeat its performance. Its performance of the 70s, or its performance 2000 to 2010 that is, they're looking for a hyperbolic move. But I would suggest that, in the context of investors with a sense of history, a millennium of history, that gold is doing and has done, precisely what you would want it to do. I'm afraid that the rate of appreciation is going to increase. I say afraid because crises and confidence, particularly deserved crises and confidence, which I think we're having in the United States and Canada, disrupt the rest of your life. I would prefer that my gold holdings went down in price and the security around the rest of my life, uh, increased, but that's not on offer in a politicized world like we live in. James Connor 4:48 So you touched on the debt levels, and I want to just expand this conversation a little bit. And the federal debt now stands at $35 trillion that's well documented. It's growing by $1 trillion every 100 days the. Interest on that debt is a trillion dollars a year. That's also going to increase as we go forward. And debt is a percentage of GDP is around 125% now. And I want to get your views on how all this ends. Rick Rule 5:13 Well, obviously not Well, there is a real difference between narrative and arithmetic that people argue over what the money should be spent on. They never seem to argue about leaving the money with the people who earned it to begin with. But the numbers that you mentioned, the 35 trillion, as ugly as that number is, isn't the real problem. The real problem is the net present value of unfunded liabilities around entitlements, Medicare, Medicaid, Social Security, military pensions, government pensions. That number, by the most conservative estimate out there, which is the Congressional Budget Office, exceeds $100 trillion and that number is increasing between four and a half percent and 5% compounded every year. We are not paying down those obligations. They are going to have to be rescheduled. If you look at our aggregate debt, which is to say the unfunded liabilities, plus the on balance sheet liabilities that that number is $140 trillion less $6 trillion on the Fed's balance sheet itself a product of counterfeiting quantitative easing. And as you say, we aren't servicing the on balance sheet liability or the off balance sheet liability. In fact, the aggregate increase in those liabilities is in excess of $6 trillion a year. Now it's fashionable in both your country and my country to say, tax the rich. Make it go away by taxing the rich. It's interesting to note in the United States that the aggregate net worth of American billionaires is $5.6 trillion or dollars that's enough to handle the deficit for two years. It absolutely positively doesn't matter. Bernie tack. Bernie, what's his name? Bernie has suggested that minor revisions of the tax code could raise $5 billion over 10 years in an economy where the deficit exceeds $6 trillion a year. The problem is not revenue. The problem is spending, and nobody on either side of the border seems to care about it. What is the way out? The way out is inflating away the net present value of the obligations. Just exactly what the United States did the decade of the 70s. They reduced the purchasing power of the US dollar by 85% over 10 years, gold, of course, ran from $35 an ounce to $850 an ounce. There is no other way out, save a global depression and a renunciation of the debt. Those are the two choices. I think the former is more likely than the latter. James Connor 8:26 in short, gold is a solution for government mismanagement. Rick Rule 8:31 Absolutely it's, I think it's one of the few tools short of expatriation of your carcass and your money. It is the only time Warren tool to protect yourself. James Connor 8:46 So having said all that, where do you see gold going in this current environment? It's currently around $2,500 an ounce, which to me, is still relatively cheap given what's going on in the world. But where do you see it going in the next year, two years, five years, Rick Rule 9:01 there are so many variables. I don't have targets. I'll tell you this. I don't own gold because I thought it would go to 2600 or 2700 I own gold because I'm afraid it'll go to 9000 or $10,000 that's why I own it. And I legitimately Jimmy hope I'm wrong. I legitimately hope that my concerns are somehow misplaced and that the price of gold goes down. I'm not one of those who subscribes to the world's going to end on Thursday. Here's how you can profit. There's no part of my makeup that's there. And so while I don't have a price target, I do have a feeling that gold helps me sleep nights and stay calm. And at 71 those are great attributes. James Connor 9:46 I want to get your views on the Fed now, your good friend Jerome Powell is living the good life right now in Jackson Hole Wyoming, I hear that's a very nice place, by the way. Have you ever been? Rick Rule 9:56 I love Jackson Hole. I really do. It's you. It's, it's a place where the billionaires are chasing the millionaires out of the market. But it's a it's a wonderful place. James Connor 10:06 apparently, Powell is going to speak on Friday. Are you expecting anything from this announcement? And if so, what? Rick Rule 10:12 I don't pay much attention to the top of the Fed, which is highly politicized. I'm in contact with some of the lower ranked employees of the Fed. Some of them are my subscribers, and I converse with them regularly, and it's been eye opening. I had a very low opinion of them, and I found out I'm wrong. They're well meaning and well informed people. The bias of the employees of the Fed is to keep interest rates high, they see themselves as the only guardian against the destruction of the US dollar by the political class. They don't think and I think they're right that the executive or Congress has any interest in controlling spending, and they think that artificially low interest rates will bring about the demise of the dollar faster than it needs to occur. Powell is between a rock and a hard place. The right thing for him to do is to keep interest rates high. The political pressure on him to do otherwise is overwhelming when he cracks. I don't know, but I think that there's at least a 90% probability that he does crack. If he cracks, then I think, passed his prolog. And when I say passed his prolog, I remember the first part of the decade of the 70s, when inflation in the gold price in the period 1970 1971 went up. In 1975 the Fed decided to raise interest rates. When they raised interest rates, the gold price fell by half. It went from 200 bucks an ounce, 200 bucks an ounce. At the end of 1975 they lost their nerve and lowered interest rates, and you had a ramp in the gold price from $100 an ounce to $850 an ounce. If the Fed capitulates, if the political class makes them capitulate, then I'm afraid gold was really, truly off to the races. James Connor 12:05 And I'm sorry when you say Powell cracks, you mean when he starts cutting rates. Rick Rule 12:09 That's correct, when he does the wrong thing, when he capitulates to the political class. Now, a lot of this has to do with the description of inflation. You and I have talked about this in the interview before, when the political class and I include most of the voters in that discussion or description, pardon me. Look at inflation. They look at the number that's proffered up as the CPI, which you'll recall we described as theCPI, if you believe in the CPI, it would suggest that inflation is creeping along at 2.6% above the Fed target, but manageable. The difficulty is that the CPI doesn't correspond to the basket of goods and services that you and I and other consumers live with. The CPI, when it's inconvenient, doesn't measure food or fuel. As you can tell by my stature I like to eat. It's hedonistically adjusted, which means that they arbitrarily assign values to the place I live in the computers I buy. But the most important flaw with it is that it doesn't include the cost of tax in government, for most North American working families, the largest constituent of household expense is tax, generally larger than rent, groceries and energy combined. A cost of living index that doesn't include the cost of living is a very odd index. The consequence of that is that I believe that deterioration of the purchasing power of the US dollar is compounding at about 7% annually. It's important to consider that cost of living in the context of the yield paid on savings products doing that, if you buy the so called riskless product, the US 10 year treasury, and get paid 4.25 in a currency that's losing purchasing power at 7.5 rather than making 4.25 you're losing 3.25 in purchasing power annually. And I think that's the circumstance that investors came to see in the middle part of the decade of the 70s, which is why we had an absolute route in the long bond and an absolute explosion in the gold price. I think that's what's in front of the Fed today. James Connor 14:41 I want to clarify a couple of points you mentioned. First of all, you think if the Fed starts cutting in September, they're cutting too soon. You think inflation, they're still, we still have a major issue with inflation. Am I hearing you, right? Rick Rule 14:55 Way too soon. Yes. Way too soon. I suspect if. Fed wasn't in place if you had a deregulated credit market, which is to say, if you had a market in money, a market in credit, that the interest rate would be the real rate of depreciation of the US dollar purchasing power, which is to say seven and a half percent, plus a premium for risk, if people are concerned about high, high housing prices, that would certainly fix that. Imagine if a first mortgage was 10% Imagine if the prime rate of interest was 9% Imagine if consumer credit was priced at a premium to prime. Will we get there? I don't think so. And I think that investors need to focus on the delta between the yield on savings and the depreciation of the purchasing power. James Connor 15:51 So this is one of the things that really annoys me, is that these central bankers and politicians, they're out of touch with reality. And the one thing that we've seen in q2 from company after company after company is that the consumer is experiencing economic duress right now, and they're feeling the pain with higher interest rates and also high inflation. And we've seen this from company after company. We saw it out of Amazon, Nike, McDonald's and Starbucks, like, if you can't afford a $5 happy meal at McDonald's, you know, there's serious issues, right? And even at Home Depot and Lowe's, they both came out and said, the consumer is not spending money on renovations. They both took down their guidance for the remainder of the year. But what's your sense on the consumer? And do you think the US consumer is experiencing a lot of pain right now? Rick Rule 16:39 I do. You know, I think the US has a stronger economy than people believe, but it's a two tier economy for people like me, with access to credit, artificially low credit, low price credit, and the knowledge of how to deploy credit. This is the best possible economic environment. This circumstance is tailor made for a guy like me, but most of the economy isn't made up of people like me. Most of the economy is made up of people who only have access to consumer credit, which is to say they're paying 20 or 22% on their credit cards, and they're close to maxed out. They're using credit to sustain wants as opposed to needs. They aren't using the credit in a credit in a credit arbitrage. In other words, using that credit to make more money to service the debt. And I think the chickens are actually coming home to roost. The problem with the level of pricing is not that goods have become more expensive, it's that the medium of exchange has become worthless. People don't seem to get that. While wages have been increasing, they haven't been increasing anywhere near as rapidly as prices have. When you look as an example at in my area, the functional minimum wage is $20 an hour. You can't get people to work for less than $20 an hour. You and I think about $20 an hour in the context of 20 years ago. But the truth is, if you make $800 a week, $3,200 a month in this market, you almost can't afford to rent in this market. So this so called princely wage of $20 an hour, compared to the statutory minimum at seven and a half or whatever it is, still doesn't constitute a living wage. And I, I think that dichotomy is increasingly impacting the consumer's ability to finance to sustain the lifestyle that they would like to sustain, and I think that that will yield financial and social problems. James Connor 18:58 And just to reinforce the point that you just made. So the value of a home, for example, that is worth a million dollars back in 2019 early 2020, it's now worth 2 million. The value of the home hasn't gone from 1 million to 2 million. It's just that the purchasing power of the US dollar has been cut in half. Rick Rule 19:17 absolutely correct. Now you know the truth is that there have also been demographic forces and nimbyism that have forced up the price of real estate. Real Estate might not be descriptive of the broad market, particularly because of subsidized credit in real estate, and also in certain markets like Vancouver, British Columbia, because of the extra fees imposed on developers. In development fees, there are certain jurisdictions in North America, Vancouver being one of them as an example, where the construction of a rental unit involves incurring $200,000 where. Of upfront fees before you buy the land or pound a nail. So there may be special forces around housing, but most of what you say, which is to say that the price of goods hasn't really increased. In a real sense, the nominal value of the medium of exchange has declined. You know, I I look at a lot of things. I do a thought exercise a lot, where I value things in gold rather than in US dollars. And if you have been like me, systematically investing in gold, not enough, in retrospect, for 24 years, what you're what you're struck by is that the price of many consumer items that you go to buy in gold terms, has gone down, not up. So the problem is much more the denominator than it is the absolute level of pricing, and investors need to consider that in terms of how they organize their savings in the future. James Connor 21:06 So you're very bullish on physical gold. Let's talk about gold equities now. And when we look at the various names, there's a big range in terms of their performance this year. Newmont, for example, the world's largest gold producer, it's up about 25% of the year. There was a time this year when it was actually down, but Barrick, the second largest producer, it's up 10 or 12% on the year. All of that move just came here in the last two weeks. And then you have igniko, the third largest producer in the world. It's up over 50% on the year. So there's a big divergence, depending on what name you look at and what price do you think a lot of these gold producers are factoring in. And do you think it's still early to get into some of these gold miners? Rick Rule 21:46 I don't think it's early. Let's talk about those names respectively. I, at my conference a month ago, I had the extraordinary good fortune of having lunch with Sean Boyd, the chairman and ex CEO of agneco. They have outperformed the sector because they have outperformed the sector. It isn't just the share price. They've allocated capital. Well, for 20 years, they've lowered their all in sustaining costs. They have a wonderful development pipeline. This is a company that you would buy if they manufactured plastics or sold hamburgers. They out compete others in the sector, and they will continue to do this. The market has become rational. They're asking gold mining companies to be efficient mining gold. Imagine that you're supposed to be good at your business, as opposed to merely being a proxy for the higher gold price with new bond their own sustaining costs have been distressingly high. The market here is speculating that they will do what they say they're going to do, which is to say, sell off all of their tier two assets, uh, improve their balance sheets and utilize that capital and love care and attention on their tier one assets. If they do that, I'm not saying they will. I'm not saying they don't. If they do that, what you see in Newmont is just a down payment on what's coming in the future. Barrick has done a better job with AISC, but people are concerned about barracks growth strategy, particularly the decision to deploy capital into copper and in Pakistan, I happen to believe this is a good thing, but time will tell if I'm right, I would urge the people listening to this conversation to own gold stocks. I would urge them to deploy into the higher quality names before they indulge their fantasies with the alpha with the penny Dreadfuls. I'm not saying not to buy the penny Dreadfuls. I'm saying to invest before you speculate. If you believe in higher gold prices and you believe, consequentially, in higher operating margins around gold producers, remember, it's important that they produce. Remember, too the LEC, the lesson of the decade, 2000 to 2010 where the gold price went from $256 an ounce to in excess of 818, $100 an ounce, a seven fold increase in the gold price and free cash flow per share on the X A you fell. It took real skill to screw up a bull market like that. So make sure when you allocate capital to the gold mining sector that you impose the same discipline on the companies that you would in other sectors. And I'm not saying not to come down into the speculative ones. I love to speculate. It's treated be extraordinarily well, but I work hard, so don't come down into the sector if you aren't prepared to read 10 Ks, 10 Qs, proxies, management, information circulars and resource statements. If you aren't prepared to do that, stay with the biggies and stay with the best of the best. James Connor 24:50 All very good points. So you're bullish on gold. What about silver? Now it's currently up 25% on the year, and silver has also performed okay, I guess it's at three. Bucks an ounce. The all time high is $50 an ounce. We're nowhere near that. But what are your thoughts on silver? And are we ever going to take out this all time high? Rick Rule 25:07 Remember that that all time high is nominal. If you adjust that all time high for the purchasing power of the dollar, the all time high is probably closer to $100 I'm afraid I think we're going to see that price. In my estimation, gold doesn't go higher, it goes much higher. And in my experience, gold leads. But when the generalist investor adopts the precious metals narrative, which has not happened yet, silver takes over leadership. And when silver takes over leadership, it rises farther and it rises faster. And the silver equities, with the possible exception of the uranium equities, would seem to be the most volatile natural resource equities of all. Doug Casey observes that the market capitalizations of the high quality silver juniors, a very small universe is so small that when the generalist investor comes in the space, there's not enough room in the silo for that money. I remember the early part of the decade of the 90s, when we had a spectacular short silver price rally, and we had things like silver standard going from 72 cents to $45 Pan American going from 50 cents to $40 you buy these things because you don't know when Silver's going to run, and you are willing to subject yourself to breathtaking opportunities, because when they do run, the gains that you enjoy pay an awful lot of rent in a time Value of Money sense to compensate you for being early. I'm delighted right now to see the hate on social media that the small silver companies are enjoying. I think the problem, and we've described this before, is that investors look at a long term narrative, and they employ a short term strategy. In other words, they think the price of silver is going to go up over three years, but they're afraid to hold the stock for three weeks. I'm old enough now that I've come to enjoy this habit. I seem to be a pawn broker for people who are duration challenged when the narrative gets ahead of itself and the stocks get frothy, you got to sell them a little when the Twitter space on X is full of hate, you got to Betty right now the Twitter space on X is full of hate for silver and uranium. James Connor 27:41 So why don't we talk about uranium? Because that's my favorite topic of ours. And this time last year, in 2023 uranium had a pretty good year. But I remember this time last year, the sentiment toward uranium was also very negative. And then after the WNA symposium in September, uranium just took off. And what are your thoughts on uranium now, Rick Rule 28:03 I think you have to have a two or three year time frame to be really comfortable owning the uranium stocks. I do. I'm delighted with the disgust in the market around uranium, because it's very difficult for me to see any problem with the thesis. I mean, what could go wrong over time? Technology? You know, you could have fusion replacing fission, you could have thorium. Those are 20 year problems in the near term. What could go wrong would be a power plant disaster like Fukushima or Three Mile Island, or perhaps a global depression with a liquidity shortage. Those are things that you need to take into account, but they're unlikely. They're true black swans. What can go right? We have a production deficit. We have a return to favor for nuclear power around the world, the Chinese announced a week ago, eight new builds. Now, announcing and funding them are very different, but the truth is that the pace of Japanese restarts is increasing. The pace of Japanese consumption is increasing the political winds and financial wins around new plant construction are increasing demand two years out or three years out from plants that are under construction today are guarantee strong uranium pricing, but the most important part of it is the part that the market is ignoring entirely, which is that the structure of the uranium market has changed completely. Unlike any commodity in the world, the producers aren't held hostage to the spot market. There's a term market, a nascent producer, a next gen a fission. Uh, can pre sell by contract produced material to an investment grade Counterparty, Tokyo Electric Power, China, general nuclear, Southern Company Duke Power, somebody like that, and literally take that contract to the bank. This is a circumstance that I think fundamentally changes the nature of uranium equities, and dramatically for the better. It'll take five years before this is in the market, because right now, these contracts are opaque. The companies, when they can, won't disclose their contracts, and some companies are avoiding contracts because they want the upside in uranium. They want to be unhedged. I personally believe this is stupid. If you take away all my downside, you can take away some of my upside, and I'm a happy, happy, happy camper. So for those reasons, I believe the next five years, albeit with some volatility, will be excellent in the uranium equity space. And I'm particularly attracted to the fact that, again, people are employing a three month strategy to a three or five year narrative. James Connor 31:15 Well, I think the frustration comes from the fact that, as you mentioned, there's no other commodity it has such a positive backdrop as nuclear energy and uranium, and so, having said that, like, here we are, where is it trading in the 80s? I might, yeah, so, and it got up to, I think, $105 a pound, and with this positive backdrop, like, why isn't it over $100 a pound? Rick Rule 31:40 Because the factors that I talked to you about take time, and speculators don't seem to be able to factor in time. The increase in Japanese consumption with the Japanese restarts takes 18 months to affect the market. The plants that the Chinese are building takes two or three years. A big part of the narrative a year and a half ago was small modular reactors. The SMRs aren't going to make a difference in uranium consumption for 10 years. People got excited about something that was going to happen 10 years from now and then they gave the story three months to have an effect. The problem isn't uranium. The problem is the expectation to the right of the left ear of the speculator and to the left of the right ear of the speculator. The only problem is, in the minds of the speculator, there's no other problem. The structure of the market is superb. James Connor 32:46 Well, I think something else too that comes into play is that you're always comparing one asset to another asset. So for example, if you look at AI, Nvidia, it's up, I don't know, 150% on the year. Bitcoin, it's 60 or 70% on the year. I mean, there's been years when it was up 100 or 200% so people are looking at it from that perspective too Rick Rule 33:08 Ad that's very easy for me to deal with. I have a lot of faults, but fear of missing out is not one of them. I only invest money in areas that I think I understand. I don't own Bitcoin because I don't understand Bitcoin. I hope it goes to a million dollars a coin, because some people that I know own a lot of it, and I hope they come out. But that doesn't bother me. I don't own Nvidia because I don't know very much about their basic business. That is to say, it's a bad business. I don't own it because I don't understand it. I understand uranium, I understand gold, I understand oil and gas. I understand community banks. I'm not always right. In fact, I'm always early. But the truth is that by being a contrarian and studying I take my half right out of the middle, and it's worked very well for me for 50 years. I understand people who are doing comparisons between two industries they don't understand and being frustrated because they don't know why they underperform. But again, I would suggest that the problem lies with the speculator, not with the market, James Connor 34:15 and with uranium down 15 or Yeah, I think it's down 15% on the year one five. Do you see this as a buying opportunity? Are you buying now? Rick Rule 34:25 I'm not buying physical uranium. I'm not buying this brought physical uranium trust because I think that $85 expressed in the contract is an ample price. I'm not saying I can't go higher, but I think it's an ample incentive price. Contracts seem to be getting done now with a base price of 8% pardon me, $80 and escalators over 15 years, that is sufficient to finance many of these projects into production. So while the price can go higher, it doesn't need to go higher. What I love is the fact that people are saddling your. Uranium projects with the same long term pricing concerns or risks that they use with other commodities, when in fact, the mechanism exists in the term to take this risk out of the market. This is the real, unseen fundamental that makes me bullish about the uranium business. James Connor 35:23 So we talked about gold, silver, uranium. Now we got to talk about oil and nat gas. And oil has been stuck in this range between 70 $80 a barrel. And once again, when you look at various oil producers, is the big range. Exxon's up 10% of the year. Chevron's down. But what are your views on oil here? And there's a lot of commentary now too, that the reason why it's drifting lower is because of a slowing global economy. What are your views? Rick Rule 35:51 I think there is some risk of a slowing global economy. I think that risk is offset by the fact that the oil industry is under investing substantially in sustaining capital, which means you can reduce demand a little bit if you reduce supply a lot in a capital intensive business, if you're under investing, which is what we're doing on a global basis, you are impairing our ability to produce two years out and three years out. Meanwhile, the stocks are priced as though their free cash flow is going to end of 2030 but you have the big thinkers of the world, the Joe Biden's and the Justin trudeaus saying that the end of fossil fuels is upon us, neglecting the fact that people like to drive and fly. Well, I believe that the price of oil could conceivably be stalled or go down. I think that the companies are discounting $60 oil. The companies are making a lot of money, and the better companies, the Exxon Mobil's of the world, the tourmalines of the world, the arcs of the world, are reinvesting enough of their cash flow to maintain their production, while the rest of the industry isn't at the same time that they're doing this, they're increasing the distributions to the owners, to the shareholders. This is a wonderful set of circumstances. It's absolutely impossible for me to understand why investors, not speculators, aren't over allocating to the oil and gas, space, Canadians in particular, speculators need to begin to focus on natural gas. There's an amazing arbitrage in natural gas. The price of natural gas in North American markets, either Henry Hub or eco are insanely cheap because natural gas is being produced or overproduces a byproduct of oil. The same gas, which sells for $2 a million BTU in North America, is selling for eight or eight and a half dollars per million BTU in Frankfurt or Shanghai, and it costs a buck and a half to get there. There's an amazing arbitrage, and that arbitrage is attracting billion dollar billions of dollars in capital to eradicate natural gas gathering and processing and storage facilities in North America, the reshoring of natural gas industrial users from places like Germany to the United States and Canada and the Building, at least in the United States, of natural gas liquification export facilities, understanding that Mr. Trudeau still doesn't believe that there's a business case for taking $2 of gas and selling it for $8 elsewhere. This is a spectacular arbitrage, and this arbitrage will cease to exist five years from now, or seven years from now, or 10 years from now. So those people who are willing to tolerate volatility should be looking to allocate to a more gas centric portfolio. But for Canadians, you don't really need to. You can invest in a package of high quality outperforming Canadian companies generate very high current yields, benefit from share buybacks and benefit from companies that will absolutely be able to maintain their production and hence their dividends for a long period of time. It's very difficult for me to understand why people aren't doing this. James Connor 39:16 And just bring it back to Uranium. I guess if the price of oil does go down to 60 or $50 a barrel, I guess that would be negative for uranium. Rick Rule 39:25 I don't think that they're directly competitive, among other things, very little oil, although a lot of natural gas, is used for power generation, uranium is used for power generation. Uranium, too generates power that doesn't generate carbon the Chinese, well, the Chinese are building more power capacity of all types, in particular, coal capacity and uranium capacity, but I don't regard them as directly competitive. Most of the use for oil in the world is still as a transportation fuel. Uh, natural gas, of course, has broader, broader utilizations around petrochemicals, fertilizer, power generation, stuff like that, but I don't regard them as broadly competitive. I I believe, too that the world needs more of all kinds of energy. James Connor 40:16 So you touched on coal. I gotta ask you about that, because a lot of coal stocks have been performing very well. What are your thoughts? Rick Rule 40:22 Well, we talked about that. I don't know if you remember. We talked about that on your former show three years ago, the fact that Glencore managed to buy a world class coal asset with 40 years, 35 years of reserve life for one and a half times free cash flow. I mean, this is truly silly. Coal got way, way, way oversold. The market now is catching up with the cash generating capabilities of the coal industry. The Big thinkers still tell you that the world's not going to burn coal, not understanding that there's a billion people on earth with no access to primary electricity, another 2 billion people on earth with access to unaffordable or intermittent electricity. Let me give your listeners a statistic to ponder, because they say, they say the coal is going the way the dodo to be replaced by alternative energies. We have now invested, over 40 years, over $5 trillion in alternative energy generating capacity, that $5 trillion investment has lowered the market share of fossil fuels, including coal, from a high of 82% 40 years ago, all the way down to 81% today, The biggest year on record for coal demand was 2023 so far, coal demand is ahead of 2023 in 2024 so people who are repelled by the coal narrative, people who get their investment information from that noted energy physicist, Greta Thornburg, need to look at the fact that, irrespective of the wish of big thinkers, a billion people on earth want to flip a switch and they want the lights to go on, and that whether the big thinkers like it or not, will require coal. James Connor 42:14 And I have to ask you about tech resources and their recent sale of their coal assets. What do you think of that? Rick Rule 42:20 I understand why they did it. I think a lot of it will have to do with how they deploy the proceeds their basic business. If they can deploy proceeds in the copper business, that's an if, because high quality copper assets are scarce, or if they use it to reduce the capitalization to right size of the company. Perhaps it was a good idea. It's worthy to note that the price that they sold the coal assets for relative to the free cash flow multiple they enjoy in the copper business was not accretive, which is to say they sold those assets for a lower cash flow multiple than they enjoy in their common equity. I think the buyer was very smart, Glencore. I think are probably the best operators financially in the Natural Resources business. And I think that the tech coal assets will be part of what becomes perhaps the preeminent coal company in the world? James Connor 43:21 Well, Rick, once again, that was a great discussion, as always. And as we wrap up, if someone would like to learn more about you and the various services that you offer, if they want to read about your views, where can they go? Rick Rule 43:33 Yeah, if you like what I have to say about natural resources and you can stomach a contrarian, a true contrarian, personalize it. Go to ruleinvestmentmedia.com list your natural resource to natural resource stocks. I will personally, for no charge, no obligation, rank them one to 10, one being best, 10 being worst. If you are an accredited investor and you are interested in private placements, I'm doing a private placement boot camp. Now understand, this is not an entertainment product. We will work you very hard for eight months, and we will give you access to the recordings for a full year. And you'll need the full year to absorb all the information we're going to give you in eight hours. We charge you $99 for this boot camp, and that $99 is fully refundable if you think for any reason that you didn't get your money's worth. But I would caution you, if you're a tourist, if you're entertainment oriented, don't come to the boot camp. If you're a real investor who participates in private placements, either debt or equity. I think this boot camp will be invaluable for you. James Connor 44:36 And once again, that's this upcoming Saturday. Rick Rule 44:39 It's this Saturday. But you if you can't make it this Saturday, you can purchase the boot camp recording, because the boot camp information is timeless. This isn't some penny stock that just drilled a drill hole. These are techniques that you will be able to use to increase your family's fortune for the next 20 or 25 years. James Connor 45:01 o. Well, Rick, once again, that was a great discussion, and I want to thank you for spending time with us today. Rick Rule 45:06 Thank you so much for the opportunity. I look forward to doing it again. James Connor 45:09 Well, I hope you enjoyed that discussion with Rick Rule on commodities, as Rick noted, the future for gold looks very bright. And if you would like to learn more about gold and how it can benefit your portfolio during these uncertain times, visit our sister company, hard assets alliance.com, hard assets Alliance is a trusted platform that's used by over 100,000 institutional and retail clients to buy and sell gold and silver bullion and also gold coins. Once again, that's hard assets alliance.com, there's a link below in the show notes. Thank you very much for being with us today, and I look forward to seeing you again soon.
