Legendary investor Rick Rule joins Wealthion’s Trey Reik to issue a powerful warning: the U.S. dollar is on track to lose 75% of its purchasing power, and gold’s bull market is just getting started.
Rick explains why gold could rise 4x in nominal terms over the next decade, why he has zero confidence in the Fed, and how the U.S. is quietly defaulting through monetary inflation. He also dives deep into the disconnect between gold and gold stocks, revealing why smart investors are picking quality names over index exposure.
You’ll also hear Rick’s latest thoughts on uranium, silver, and rare earths, and why 99% of investors are missing a generational opportunity due to bad timing, poor discipline, and short attention spans.
Key topics:
- Why inflation is a hidden tax, and the Fed can’t fix it
- How the U.S. is repeating the 1970s playbook
- Why gold stocks lag, and which companies are finally being rewarded
- Silver’s historic pattern in precious metals bull markets
- A structural shift in uranium that few understand
- Rare earths: real opportunity or hype?
- Rick’s timeless investing advice for long-term success
Get Wealthion’s and SCP Resource Finance’s free report on Uranium and investment opportunities in the space, here: https://wealthion.com/uranium-investment-opportunities/
Volatility got you concerned? Get a free portfolio review with Wealthion’s endorsed financial advisors at https://bit.ly/4jKm2m4
Hard Assets Alliance – The Best Way to Invest in Gold and Silver: https://www.hardassetsalliance.com/?aff=WTH
Want to hear more from Rick Rule? Check out his Natural Resource Investment Symposium: https://registration.allintheloop.net/register/event/rick-rule-symposium-2025-ccha
Rick Rule 0:00
I think we have a dishonest default. I think we do what we did in the decade of the 70s. I think we reduce the purchasing power of the US dollar by 75% over 10 years. If I believe that the US dollar declines by 75% over 10 years, I suspect, as a base case, that the price of gold in nominal terms rises fourfold the Trey.
Trey Reik 0:25
Greetings and welcome to our wealthion show. My name is Trey Reich of Bristol Gold Group, and we’re visiting with Rick Rule today, who really needs no introduction, but I’m going to do it anyway. In my mind, Rick has established himself outside the great Eric Sprott, perhaps as the most successful individual investor of all time in the junior mining space. So how’s that? For a humble introduction, Rick’s investment career has been literally mind boggling in its scope, depth and success. I’ve known Rick since I was paying him big commissions at global resource in Carl bad, California, from my pm slot at Bristol partners back in the aughts. Decade after that, Rick sold his firm to Sprott, where he worked for a decade or so, and still remains today, sprott’s largest shareholder. More recently, Rick conducts his far reaching affairs from rural investment media, including his annual eponymous investment conference, the rule natural resource investment symposium, which is going to convene July 7 through July, July 11 in Boca Raton, and we’ll talk a little bit more about that later. But Rick, thanks for taking the time to visit with us today. Well,
Rick Rule 1:51
Trey, thank you for that very generous introduction. I should correct you on part of it, though, didn’t you mean your modest commissions?
Trey Reik 1:58
I thought about that. It was modest commissions over a long period of time. You were on our commission run for several years, but I enjoyed that time. It was really, really fun, as did i So since you do about a podcast or two a day, I thought we could just jump in with some bench clearing questions. So my first is, after rising 27% last year, gold’s up 28% this year. Don’t you find that a little bit surprising?
Rick Rule 2:29
I don’t Trey you and I have been talking about gold for the better part of two decades, and I think both of us agree, at least to some extent, that moves in the gold price real and nominal, reflect investor concern over the maintenance of their purchasing power and Fiat denominated instruments, and the escalation in fear in the last three years, I think, has mirrored the deterioration in the outlook for maintenance of real interest rates in Fiat denominated instruments in the United States. So I think that the move, I think the beginning part of the move in gold, depending on when you trace it back to, had to do with the fact that it was simply oversold. People asked me, beginning in, you know, 2022 2023 you know, when is gold really going to move? And just for fun, Trey, you’ve probably done this too. I scratched my chin sagely. So I think it’s going to move beginning in the year 2000 it was $253 an ounce. By the time people were asking me, was it 2000 I’m thinking, you know, what do you want? It’s eight. You want? It’s up eightfold. What do you need? Gold maintained its purchasing power for 25 years. I think that the escalation, the recent escalation in the gold price, has everything to do with the deterioration in the outlook for the maintenance of real interest rates after inflation in US dollar denominated instruments, and I think, sadly for the country, better for you, and I that that continues and, in fact, accelerates. If
Trey Reik 4:11
you have questions about the current market environment and are looking for guidance on your portfolio, wealthion can help connect you with a vetted advisor to get a free portfolio review, just click on the link in the description below, or head to wealthion.com/free so if you’re going to I’d break the three categories of gold supportive fundamentals into anti dollar sentiment, the US deficit, and what I call fed cred. And you know, it’s deterioration. So if I force you to use those variables, how would you rank them in the you know, the current advance? Well,
Rick Rule 4:52
I guess the most troubling to me is the middle one, fed cred. I never thought the Fed had much credibility. The Fed played trends in motion from 1982 to 2022 when the motion changed, the Fed got exposed, but the second one and Trey. I’m glib about this, but it really bothers me. For most folks, the on balance sheet liabilities of the US government exceed $36 trillion but a much bigger problem is the net present value of off balance sheet obligations, Medicare, Medicaid, Social Security, federal pensions, military pensions. That number according to the Congressional Budget Office, not some cranky old libertarian named Rick Rule, is $100 trillion that’s the net present value, not the nominal value. Now this becomes more problematic if you pay attention to the IRS estimates of the aggregate net worth of Americans privately, which is 141 trillion. We’re worth 141 trillion at the federal level, we owe 130 trillion. But it gets worse, that 100 and 30 trillion on balance sheet and off balance sheet has an annual deficit exceeding $4 trillion now how does this work with an aggregate net worth of 140 141 I’m sorry. The truth is it doesn’t. I believe that we don’t have the political will to have an honest default. We don’t say to the bond holders, too bad. So sad. No money, strong letter to follow. We don’t say to old guys like Rick Rule, you’re not going to get your Social Security. These old guys vote. You know, they’re cranky. I think we have a dishonest default. I think we do what we did in the decade of the 70s. I think we reduced the purchasing power of the US dollar by 75% over 10 years, which is what happened in the decade of the 70s? The second thing I think, that will happen in terms of consciousness, happened in the decade of the 70s. People came to understand that the real rate in the deterioration of the purchasing power of the US Dollar was much greater than the rate that was stated by the CPI. The CPI didn’t exist then, but people came to understand that getting paid 5.5% in a deposit bearing account at an institution, in a currency that was losing 12% compounded was not good arithmetic. Similarly, Trey, you and I have talked about this for decades. The idea that I believe in terms of the basket of goods and services that I consume, and I’m a cranky old guy, I don’t buy much, but I believe that the purchasing power of my savings and my investments in US dollar denominated terms, declining by about seven and a half or 8% a year. So getting paid 4.3 in a currency where the purchasing power is declining by 7.5 means I lose 3% a year. Nothing could make you more concerned about the maintenance of your purchasing power than a guarantee that you lose it, and I think that that will begin to cause disintermediation from a lot of long term fixed rates, instruments, fancy word for bonds
Trey Reik 8:28
to gold. Do you think that’s what’s happening to treasuries in the current environment? I mean, finally happening. Two things
Rick Rule 8:35
are happening to treasuries. You’ll note that they gave a treasury auction very recently, which very few people came to a bad sign. They had to buy their own float. Looking a little further back, the US government disenfranchised their their principal buyers. They did two things. They weaponized the US dollar. They used international organizations like the Swift banking systems for outward expressions of US political will. Other countries had their own political will. They, regardless of what you think of the efficacy of the Russians in the Ukraine, the US government took it upon themselves to steal $300 billion in Russian assets, which caused other governments to think that they might have concern with the US government, say, Iranians, Chinese South Africans, Brazilians, to wonder whether or not they should hold their gold in US Treasuries. At the same time that the math around the holding of the US Treasury got worse, the Chinese see the same thing that Rick Rule sees, the fact that the real purchasing power of the US dollar is declining by seven and a half or 8% and they have a better place to employ the capital. It’s called China, so it’s a no brainer for them to sell US Treasuries, first of all, because to. Not do it gives seniors to the US government, which are showing themselves to be their enemies at the same time, it’s a lousy investment. So
Trey Reik 10:09
I think the best way to look at the budget deficit is the fact that we’ve normalized emergency levels of spending in non emergency times. I don’t know why. Most people, if you just look at the bar chart, it’s pretty clear. You know, COVID came we went up to three two, we came down to, you know, 1.8 and now we’re back to two. What’s going to make that change? I know you, you know you’re a libertarian. We don’t really know. But how can this keep going on, even for the decade that the CBO projects?
Rick Rule 10:44
I think it does, because I don’t think they know how not to do it. What happened in the decade of the 80s is that reality took over. You’ll recall Trey, many of our listeners won’t because they’re too young. In the middle of the decade of the 70s, when inflation became a political issue, they decided to deal with inflation by raising the interest rate. They did that the gold price fell by half in 1975 people forget that one bond market tanked, the equity market tanked from an already low, low basis, and the housing market tanked, and they lost their nerve. By the end of the decade of the 70s, there was sufficient public will to elect Ronald Reagan, who didn’t reduce the size of government, but he reduced the growth of government at the same time that over the course of the decade, the interest rate went up on the US 10 from 4% to 15% I suspect that perhaps past his prolog.
Trey Reik 11:51
But you’re not ready to call Trump Reagan. Well,
Rick Rule 11:53
Reagan wasn’t Reagan. Reagan was elected with a broad popular mandate to reduce the size of government. A wonderful man, a good friend of mine named David Stockman, presided over the Office of Management and Budget, which was the Reagan equivalent to the Department of government efficiency. He wrote a book called The triumph of politics, which describes the derailment of the regular the rank the Reagan Revolution by both houses, by both sides of Congress, the Republicans and the Democrats. Within six short months of Reagan’s inauguration, Mr. Trump had nowhere near the mandate that Mr. Reagan had, and I don’t think that he has even Reagan’s level of resolve to lower government expenditures. He wants to differentiate it. He wants to spend stuff on stuff he wants to spend on. But he isn’t interested, Trey, in you making your own spending decisions. He still wants to make your spending decisions for you, as do all the congressmen. So I have a fairly bleak outlook for any near term political solution. I I’m afraid that the decade that’s in front of us, the next 10 years, will resemble in many senses, the decade of the 70s. I think a resolution likely takes a recession, and I think that that recession occurs in conjunction with a major, say, 75% deterioration in the purchasing power of the US dollar. By the way, many of us, myself included, did well in that decade. We were prepared for it, and you don’t have to be a gold bug to prepare you, remember, many don’t that in the period 1968 to 1982 a 14 year period when equity markets at best were sideways, Warren Buffett generated a 20 to 25% compound internal rate of return in equity markets By not speculating, simply by investing wisely. My our mutual friend, pardon me, Robert Friedland has said about the decade coming to us, the situation is hopeless, but it need not be serious. In other words, if you apply yourself, if you make things happen, as opposed to let things happen to you? You could do well, but you need to act
Trey Reik 14:26
before we leave the macro. I just have to ask you to nail you down a little bit more on a scale of one to 10. What’s your competence in the Powell fed? Zero. Okay,
Rick Rule 14:37
zero. I mean, I think Powell is a very competent guy. I think he knows what to do. I think Greenspan knew what to do. I think the politics of the Fed prevent them from doing what they had to do. Trey, my grandfather taught me a rhyme, and I want to share it with the audience today. Goes like this. I. All these fed guys should listen to this. When your out go exceeds your income, your upkeep becomes your downfall. Now the budget is that simple, but Mr. Powell doesn’t have the power or the political will. As you know, I’m starting a bank, and I’m dealing with some low level employees at the Fed, top quality human beings, top quality human beings, intelligent, hard, working, courteous. The Fed, as an institution, believes that it’s the only institution that stands between the US dollar and the abyss, knowing that fiscal policy is not part of the current political reality. But at the top, the Fed is itself a political organ. It has the right will, but it’s not as independent, but as I say, I’m dealing with these lower level fed employees. I am really impressed by them as people.
Trey Reik 16:12
Wow, I wouldn’t have expected that I because I look at the governors and the bank presidents themselves, and I would also also ask you, don’t you think they’re becoming less and less impressive on an intellectual, political, experiential level? I think the Fed is, I’ll say it, you don’t have to, because you’re dealing with them. It’s becoming a bunch of lightweights at the very top. I
Rick Rule 16:37
only know one regional Fed chair or fed member? I don’t want to, I don’t want to identify him, because my identifying him might defame him in his in his circles. He’s an extremely competent human being, okay? And if he weren’t in his current role and you were interviewing him, you would have no objection to anything he said, they It seems their job right now is to maintain confidence in the banking system, right? And that’s a very difficult thing to do. The banking system has real structural problems, different perhaps, than the problems that the general economy has, but the banking system has an accumulation of mistakes that were made in the era 1982 to 2022 which was a very gentle epoch, the epoch that we’re headed into is somewhat Less gentle, uh, maintaining faith in a system that has the structural challenges that the length and breadth of American banking has will be a challenge. That’s why I’m starting a bank. You know. I I want to compete in a sector where most of my competition is
Trey Reik 17:54
crippled. Very interesting. So before we head into metals and stocks, which are really what people want to hear you talk about. My last question is, do you on the macro level, do you think that, after we’ve talked about this for 20 years, that we’re finally on the cusp of a global monetary reset?
Rick Rule 18:15
I don’t know. I mean, I really don’t. I don’t think in apocalyptic terms. I think in arithmetic terms. I don’t know how it plays out. I think it’s more likely than not, but not certain, that we suffer through some confidence driven liquidity event, not unlike 2008 how we come out of that will depend on the policy response. And I I’ve given up trying to figure out how these guys are going to respond. My track record with regards to political forecasting is Unblemished by success. So what I try to do is I try to take the arithmetic of the of the circumstance that I face, and I try to insure against as many contingencies as I can and invest or speculate on as many probabilities as I can. That’s the best I can do.
Trey Reik 19:13
So in let’s say that we are on the cusp, and you avoided the question brilliantly, do you think gold will actually play a role in the in the new monetary system, or
Rick Rule 19:25
you not official monetary system, I think
Trey Reik 19:29
so, just as reserves at central banks, but nothing more.
Rick Rule 19:33
I think what will change is that 10 years from now, people will try to the best of their own ability to personalize their relationship with the world. I Trey, I maintain liquidity in several currencies that I do business in, but I save in gold. And those are very, very, very different things. My gold is for the maintenance of my purchasing power my. Liquidity is for my consuming, my investing and my speculative needs. The last time I looked JP, Morgan Chase suggested that gold and precious metals related investments comprise one half of 1% of total savings and investment assets in the United States down from a four decade mean of 2% I think easily, within five years, that we will revert to mean or overshoot the mean. I’m not ducking your question. I think that people will personalize their relationship with gold. I believe, too, that gold will be an important central bank asset, because although I believe that the US dollar will maintain its status as the world’s reserve currency, it won’t maintain hegemony the Chinese Well, let me rephrase it. I will do what the Chinese have done. I have replaced US treasuries in my own portfolio, with the exception of, you know, notes under two years with other savings instruments, primarily gold.
Trey Reik 21:16
So when you when you share a glass of Chardonnay with Bonnie on the balcony in Vancouver, overlooking the beautiful bay. How do you mold how high gold might go? Or is that just a question we can’t get you to answer
Rick Rule 21:33
with, with the certainty Trey you’ve known me for 20 years, with the certainty that I’m wrong in terms of the absolute number, I believe that it is more likely than not that the nominal price of gold tracks the deterioration the nominal purchasing power of the US dollar. If I believe that the US dollar declines by 75% over 10 years, I suspect, as a base case, that the price of gold in nominal terms, rises fourfold. If we look back to the decade of the 70s, first of all, we need to remember that price, the price of gold, had been legally suppressed. So the first move in the price of gold had to do with ketchup. But in that decade, the US dollar lost 75% of its purchasing power, and the price of gold went up 30 fold. Now, some of that was piling on. Some of that was investor stupidity at the end of the epoch, you know, the price narrative, or the price action, pardon me, justified the narrative, and people paid so much attention to the narrative that they drove the price crazy. But that part in the middle between the dead cat bounce and the overshoot is the part that interests me. It wouldn’t surprise me to see gold in nominal terms, rise fourfold in the next decade. Let’s suppose I’m wrong. Let’s suppose it was only threefold the decade of the 1970s saw the US 30 year treasury, the world’s most allegedly riskless asset, lose about 90% of its purchasing power. So would you prefer to make 250 or 300% or lose 90% the equities markets. If one played the markets as a whole in the decade of the 70s, lost two or 3% compounded over the course of the decade. I believe, because I work hard at it, that I will have a positive performance in equities. But I don’t believe in it enough that I’m willing not to save in gold,
Trey Reik 23:49
moving on to gold, or moving from gold to what I think you and I spend most of our careers on, which are gold equities. I was noticing today in preparing for this that gold’s up 28% year to date, the GDX, which is the vaneck gold miners, ETF, the GDX, as it’s known in the biz, is up 57% this year. And in every month, except for May, the GDX has experienced outflows, which now total 17% for the year. So we have gold up 28 GDX up 57 and people can’t sell the stuff fast enough. So my question to you is, Will gold ever outlive the drawdowns of 2011 and 2000 to 2015 and the mistakes that were made by management. Can we ever get out of this? You know, stalemate? The
Rick Rule 24:50
answer to that is yes, gold. I mean, we said earlier that. Market share of gold relative to other investment classes in those states is one half of 1% in most investment portfolios, gold has the relevance of a pimple on a blue whale. That’ll change. It took in my formative years, a very long time, 1968 to 1972 for the realization to come to the average American that inflation was something other than an academic problem. It took the price of a McDonald’s hamburger going up five fold in five years, the price of gasoline going up threefold, the price of their property tax bill doubling before Americans came to a realization of what the deterioration of the purchasing power of the US dollar meant to them, and that will come. It’s happening. People right now believe that inflation is measured by the CPI, which Trey you and I have talked about this for 20 years. It’s a joke. It’s a manufactured index. And people, people will come to realize this.
Trey Reik 26:06
But, but you’re suggesting, I think gold stocks, excuse me, friend of writing, you’re suggesting gold stocks may not be following gold because people don’t believe the gold price is going to stay here. Is that what you’re saying? Or the
Rick Rule 26:20
gold price has been driven largely by foreign central bank buying. Foreign central banks don’t buy gold stocks. So you have one asset class gold that has a buyer, and you have another asset class gold stocks that don’t that resolves itself when the move in the underlying commodity begins to justify the narrative. And if the gold mining industry continues to generate the margin escalation that they saw in 2024 without repeating the stupid mistakes that they made in the decade, 2000 to 2010 the market will notice the markets acting really, really, really intelligently right now with the gold stocks, they’re selling the index because the index has too many losers in it. And they’re rewarding specific stocks. They’re rewarding the Alamos is they’re recording rewarding the Agnico eagles, the wheat and precious the Franco Nevada’s. They’re rewarding businesses that are good businesses. They are excellent coming down the value chain into smaller companies, and paradoxically, I’ve never seen this before in my career, they’re actually doing good security selection. Companies like Lundeen gold that perform are up four fold, and companies that don’t perform are selling off. Who would have thought that gold equity investors returned to rationality? The market, I don’t think is anticipating M and A yet, but I think that value arbitrageurs are looking at the market and they’re looking at the price of equities relative to their net asset values and their recycle ratio, their ability to add value, and they’re looking down the market cap scale for relative value. They’re finding companies that are $2 billion companies that, by most conventional valuation metrics, are selling at half the valuations of the bigger companies. So you’re beginning to see the transition from the best of the best to the best of the rest. We watched this occur in the 70s. I didn’t recognize it real time because I was too young, but looking back, I saw how that progression worked. I saw the progression work in that brief but violent bull market 1990 to 1996 I watched it work again in the 2000 to 2010 epoch. It’s working more efficiently now.
Trey Reik 28:53
So the way I address what you’re saying my term that I coined is negative survivorship bias, and I tell investors all the time that gold’s the only industry with a negative survivorship bias, and I think that’s what you’re talking about, because in the GDX, the top 10 holdings, with the exception of Agnico and maybe one, you know, not sure they’d be the first. Can you talk a little bit about why the negative Survivorship Bias makes say the top 10 companies where you don’t want to may not want to be well,
Rick Rule 29:27
you remember the sort of zeitgeist of 2000 to 2010 was leverage to gold. Mm, hmm, and growth gold, leverage to gold paradoxically rewarded the inefficient producer, the guy with a high cost of production, benefited more from price rises than a low cost producer. So through the latter part, particularly the decade, 2000 to 2010 analysts look to leverage, as opposed to efficiency. And they got what they deserved. They got their ask. It.
Rick Rule 30:05
I think, I think that’s beginning to change. Certainly, the stocks that have done well in the last 18 months are the companies that have done well. I had the good fortune to interview yesterday on my channel, the CEO of Agnico Eagle, and we talked about their outperformance. And we talked about their outperformance as a function of corporate culture, that their corporate culture involved acuity, accretive economic transactions on a per share basis. They didn’t think about Agnico Eagle in terms of the length and breadth. They thought about it on a per share basis. They defined for themselves 10 years ago, what their core competencies were, and went after those they consider themselves to be a construction company, and they talked about their corporate culture, and they talked about the effect of the corporate culture on the bottom line, the fact that they treat their employees well means that their turnover is less than half of the mining industry’s turnover, you don’t have to retrain people who you’ve already trained. And the safety culture that come about comes about from having a workforce where the culture is that they like each other, means it’s very much more likely that people come out of the hole alive, which is a good thing, and this combination of good things is being reflected in the share prices of good companies now. This will change two years from now, two and a half years from now, when we see the lame, the halt and the blind go up, all of the bad habits that existed among gold equity investors and institutions will come back. But there’s that wonderful old saying, just because all of theirs, all of those about you lose their head, you don’t need to lose that yours. You can, if you want, maintain the discipline which is evident in the market today, even as the market gets stupid.
Trey Reik 32:23
Well, as a demonstration, from my point of view, of Agnico recognition of quality, Amar and Sean are our biggest supporters at Bristol. They’ve been my largest client for years, and it’s because they’re interested, you know, in doing a full job in understanding gold and its importance in market. And I do think a lot of gold miners sort of shirk the responsibility of understanding what gold means in the grand picture of things. Mars
Rick Rule 32:54
a superstar, you know, I I’ve gotten to know Sean Boyd reasonably well. And of course, the founder of Agnico Eagle, Paul Pena, was one of my mentors. He taught me a lot about mining, stock analysis. You think about the fact that a company that great for that lifespan has only had three CEOs, it tells you a lot about their corporate culture. And I’m delighted that you maintain ongoing dialog with those people, they’re just absolutely a class above his description.
Trey Reik 33:24
I go all the way back to the first rock slide. Do you remember that I do which was, which was, which was a tough period to live through, but they’ve done a great job. So switch switching gears to silver, which is a popular topic. I’m sure you noticed this morning that silver traded above $36 which is a 13 year high, driving the gold to silver ratio back under 100 it’s been sort of nestling it at 106 or five, and we both read a lot of stuff and prognostications that looking At the 100 year average of the gold to silver ratio, it’s certainly headed back to, you know, 55 and some people even talk about the mining ratio of 16. I personally, you know, don’t think that’s in the cards, but I’m interested. You know, gold, silver is really lagged gold, obviously, during this, you know, central banks don’t buy silver. I get all of that. But where do you think that, no matter what direction you want to talk about this, if you want to talk about it, from the gold to silver ratio, where do you think that’s going, and what do you expect from silver in the next you know, six to 12 months, I don’t follow the
Rick Rule 34:37
gold and silver ratio, not because I don’t believe it’s important on markets, but more because it, it doesn’t take into account cost of production or utility, and besides which, I can’t do it. There are other guys who are better at it than me, but I’m a student of markets, and I would simply note that I’ve been through three prior precious metals bull markets, and in every. But in every bull market, they followed predictable paths. The market was led by gold. When the momentum in gold established, the narrative around generalist investors and the generalist investors came in the space market leadership switched from gold to silver. Trey for the life of me, I don’t know why investing psychology. You should consult Eric or somebody who’s better at stuff that like that than me. I could just tell you that. And when it happens, you don’t need Rick Rule to tell you it’s happening. The silver moves further and it moves faster. I try to anticipate market moves in the speculative part of my portfolio. I don’t know if silver breaks out two years from now, or three years from now, or six months from now, given that I don’t know, and I don’t know how to know, I don’t care. I just know that. And I know from the decade of the 90s, when we built silver standard and Pan American, that when the event occurs, it’s so dramatic that the fact that you had to wait two years or three years for it to happen, even after time, value of money becomes irrelevant. There is no natural resource asset class that I know that is as volatile as the silver stocks. To me, would it be psychologically satisfying to see them move next month? Sure. Do I care? Really not at all. If I’m going to enjoy a tenfold move in a basket of stocks, and that tenfold move begins two years from now. I’m fine with that, by the way, Trey and this is something I hope that your listeners really listen to in the early part of the decade of the 90s, which was the real silver bull market that I participated in. It was a goofy market. Silver went from four bucks to 50, and the move in silver was dwarfed by the silver stocks. Two particular silver stocks, silver, silver standard and Pan American went from 72 cents and 50 cents respectively, to $45 each. A couple things people need to know, but the most important was that during that move, each stock delivered me 50% share price declines more than once in that up move. So you have to be patient five or six years, sometimes seven or eight, if you include being two years early. And it’s volatile these things, these things can decline for 15% for no reason whatsoever. You know, a big fund gets redemptions and they have to sell stock. It has nothing to do with the affairs of the company. It has to do with the whims of a big investor. The stock sells off if you don’t have the psychological wherewithal, if you don’t know why you own the stocks, that price decline is unnerving, and you sell if you’ve prepared yourself psychologically and you’ve taken a right sized bet financially, those perturbations in the market become irrelevant. And my experience in the silver stocks is that when they finally reward you, even during the reward period, they can be psychologically taxing. But why are they financially rewarding?
Trey Reik 38:18
So one of the things that I think is commonly misunderstood is how little silver companies with silver in their name actually mine. It’s rare to find a company with silver in their name that actually mines more than 40% silver. So what would be your advice to viewers who are actually looking for exposure to silver. I mean, can you just give me a range of names that you actually think would represent participation in the silver market, actually agnostic
Rick Rule 38:50
about purity? I like high quality companies as an example. Pan American gets almost 60% of the revenue from gold, not silver, but they’re still limped in the silver basket, and I prefer the corporate performance to narrative purity. Got it. If I wanted narrative purity, it would be difficult for me to find a North American domiciled producer that met my qualitative standards, I’d be penolis Fresno Buenaventura, which evidenced too much social and political risk to occupy 100% of my portfolio. Yes, I own them because they’re, you know, superb companies with the view of reserve and resources. Not always, I would say, spectacularly run, but I’m, personally, I’m less narrative oriented and. I’m much more qualitatively oriented.
Trey Reik 40:04
Got it, and I understand your comments about Pan American definitely, in my opinion, the class of the group. So because we’re running out of time, switching gears, you’ve been a uranium bull for some time. And I always encourage investors and viewers that just because something’s on the front page of The New York Times, you know, like rare earths or uranium, it doesn’t necessarily mean that it’s the right time of the cycle to make investments. So we’ll cover those both briefly. But in terms of uranium, where do we are you as bullish as you were two years ago? Where are we in the cycle? Is this a good time for investors to pay attention, or is it a wait and see?
Rick Rule 40:48
I was more bullish on the equity six months ago because they were so roundly hated. They were stupidly oversold when you knew me at global Well, one of my sentiment tests was if 80% of the current day’s transactions were buys, I would sell something. Some current transactions were sells, I would buy something I love hate. That’s who I am. Six months ago, the internet chatter around the uranium juniors was so hostile, I couldn’t but by that portion of my portfolio, that portion of my portfolio that I bought simply because the sector was hated, I’ve been selling but 75% or 80% of my uranium portfolio holds because there’s a structural change, two structural changes in the uranium market that are really important. The world needs more energy, all kinds of energy. A billion people on Earth have no access to primary electricity, and those of us who do have access are using a lot more of it, data centers, cars, stuff like that. So the whole energy sector is a place I like. But the political winds have turned from hating uranium to these morons actually want to subsidize us. So that’s one thing. The wind is in our sails, as opposed to in our back. More importantly, with regards to the small companies, the structure of the uranium market itself has changed. There’s a term market in uranium. Producers and consumers of uranium can enter into contracts that specify price and terms 15 or 20 years in the future. There’s no other commodity where I can look at a small company and understand how much they can sell and what they can sell it for with such certainty, and if the contracts are with credit grade counterparties, Southern Company, Duke company, China, general nuclear, nuclear, Tokyo, electric power. I know that the other side is going to honor the obligation. I can’t do that in the oil business, the gold business, any other business. This means interesting, that over five years, the cost of capital in the Iranian business will be cheaper than the cost of capital in any other resource business. It means that small companies who wouldn’t be able to finance a mine into production and would have to be taken over by Cameco, Cameco or Cameco, now have the ability to use these purchase agreements and turnkey construction contracts to obtain project financing, which otherwise would have been unobtainable. And what I love about this is that not one speculator in 1000 in the uranium space understands this thesis. This is a true, important fact nobody’s paying attention to
Trey Reik 43:41
so in what Rick’s talking about for viewers, in terms of the term price versus the spot price, the as uranium corrected from 106 to 60 recently, the term price never went below 80 or so correct.
Rick Rule 43:57
And the important, yeah, yeah, importantly, it didn’t correct. Importantly, too. You can Forecast Cash Flows five years, 10 years, 15 years, 20 years out. So if you’re a lender like me, you have this wonderful sense that your loan is going to get repaid. If you’re a lazy equity analyst like me, making your revenue forecast in the out years, when your revenue forecast is contractually stipulated, is a lot easier than relying on the vagaries of the spot market. Trey, as you know, I’ve been making revenue forecasts for mining companies for 45 years, almost always wrong, more right than most people, but that’s damning me by faint praise and having the ability to look at, say, 70 for 70% of a of a company’s revenues, contractually stipulated, makes my life a hell of a lot easier. It gives me a lot more certainty as an investor and as a lender.
Trey Reik 44:51
As a final footnote, I think to viewers, I think you would also agree that your everything in nuclear takes a long time. It’s. A it’s a very long endeavor. It’s probably one of the longest duration endeavors on the planet. And so I do think you would probably agree, as you did talk about silver, that anyone looking to invest in the uranium space better have a five to seven year time horizon at a minimum. That’s what I love about it. I
Rick Rule 45:20
don’t know if you know this, but I’ve been grading individual investors portfolios for free for 30 years. I’ve graded 10s of 1000s of them, and I’ve a lot about how investors make mistakes and don’t make mistakes. And one of the mistakes that I’ve noticed among resource investors, particularly junior resource investors, is there’s a mismatch between their strategies and their tactics. Many investors believe that the gold market will do well over five years, or the silver market will do well over five years, or the uranium market will do well over five years, or the copper market whatever. But they have trauma holding stock over a long weekend. If you have a five year thesis and you have a three week holding period, the mismatch almost certainly will consign you to failure. I acknowledge that in my businesses, the product cycles are very long. That’s one of the things I like about them. And I’ve learned that if I can buy a commodity when it’s out of favor and hold it till it comes back into favor, irrespective of how long that takes, that works well. For me, other people believe that their desired time frame is relevant, and the market really doesn’t care about your desired time frame. You need to allow enough time for your thesis to play out, or you will lose money. I
Trey Reik 46:39
wanted to also let viewers know that SCP resource finance and wealthion have produced an extensive white paper on uranium and exciting investment opportunities in the industry. And if you’re interested in receiving a copy, please click on the link in the description below, and we’ll get it out to you, very important in resource investing, which leads us to our final segment that I wanted to get your thoughts on, which is rare earth. So I think a couple of weeks ago, the New York Times had a rare earth story on the front page every day of the week. And it, you know, I’m sure that you know, rarer trades were booming at retail brokerages. But as another example, my question to you, because I know you know a lot about the area, are there really a lot of publicly traded investments and rare earths that are available for investors, or is that you got to be, you know, a horse owner, to do well at the horse track. I
Rick Rule 47:44
would argue that, as I define investments, there are no investments available in rare earths. I’m partly a speculator, and that’s different. There are a couple of relations which intrigue me. First of all, you need to understand that rare earths aren’t rare. They’re pretty abundant. We haven’t looked for them or produced them because the Chinese are so efficient. But that’s changing. The Chinese efficiency has had to do with their acceptance of unbelievable environmental degradation, and both the Chinese people in the Chinese government have lost their sense of humor for that. So the cost of producing rare earths in China are going up rapidly at the same time that heavy rare earths, at least, have become a geopolitical issue. Those two things the rising floor prices for rare earths and the fact that capital becomes cheaper as a comp as a consequence of geopolitical competition, means that I think that the high quality rare earth deposits outside of China are going to boom. Unfortunately, 10 years of searching have caused me to identify only three. This is one of those where I’ve had to look at about 60 horses, and I’ve had the courage to bet on two. Maybe one is coming. But I think, I think this is going to be an extraordinarily fertile ground
Trey Reik 49:20
when in your tree are you talking about energy fuels? MP, smaller companies. MP,
Rick Rule 49:27
I don’t think will ever be in the best cost quartile in the world, so I won’t go there. Energy Fuels is process and technology. I am trying to learn enough about process and technology to buy Energy Fuels. I’m too afraid of my lack of knowledge to do it. Now, what I’m looking for is extraordinarily large deposits with understandable metallurgy. They occur only in countries. So far that test people’s willingness to invest. What I’m looking for is deposits that with existing off the shelf technology and good operations, will be in the lowest quartile of the cost curve worldwide and will be in the best quartile worldwide in terms of return on capital employed, but at least 25% ROI at current rare earth prices, I want very large deposits because the front end risks. I’m taking political risks, technology risks, financing risks can only be justified if I’m looking at tenfold returns, I’m not looking for a small rare earths company that perhaps can contribute well to Toshiba’s bottom line, but won’t do much for mine. I’m looking for deposits where the odds might be. There might be a probability that I’m wrong, but if I’m right, I make a 20 to one or a 30 to one that requires a tier one deposit. It requires in situ reserves and resources at current rare earths prices that’s in excess of $10 billion hopefully in excess of $20 billion a deposit that benchmarked against existing deposits would be in the lowest cost quartile and the best quartile and return on capital employed, thus far I’ve been able to find two.
Trey Reik 51:29
Are you comfortable discussing them, or is it too early? I’m
Rick Rule 51:33
happy to name names. The first that I’m going to name is out of money they’re going to have to refinance. So you should not rush into this market because there is a financing coming that’s meteoric Australian stock trades in the US too. They’re
Trey Reik 51:50
an SCP client. That’s our colleagues at SCP.
Rick Rule 51:54
That is correct. They are an SCP client. And they were identified for me by Dave Wargo, who, in addition to being CEO of SCP, is a former metallurgist and one of the found Neo materials, one of the first successes in the rare earth space. The other one, which attracts me is also in Brazil. It’s called a Clara. They, too will need to raise money, but not as immediately as meteoric they are. You know, they’re out of the Buenaventura Hoff shields, Group of Companies less far along, less large, pretty attractive on a project NPV relative to enterprise value basis. Nobody should get near these things that has a short term time frame that is afraid of technical risk, because there’s lots afraid of financing risk, because there’s lots afraid of political risk, although I consider Brazil a fairly good company, there’s lots This is not a province for investors. This is a province for speculators,
Trey Reik 53:03
excellent. Well said. And that’s a great lead in be I, I’ve seen you speak in public probably 100 times. And one of the things that I always tell people at the New Orleans gold Conference, which is where I started to cut my teeth on the gold trade, you know, people who were motivated. Made two or three presentations, but on the course of three days, you made 15, which I always thought was unbelievable. You were always up at 6am with the first presentation after the boat ride or whatever, when everybody had a hangover. But you know, my my question is, you’ve been doing this for so long. Your true passion is these conferences. Why do you do it? And why should people I noticed that the VIP seats are already sold out for the July 5 through or seventh conference. But why should people take a peek at a general admission ticket? And what keeps you so fired up about these conferences, those are different
Rick Rule 54:03
questions. I teach because I have an obligation to those who mentored me that’s simple, what I was able to do I was able to do as a consequence of running into spectacular mentors in my 20s. They didn’t save me from all my mistakes, you know, I had to learn on my own. Everything I lost, I lost due to me. Everything I made, I made due to them. And teaching, in addition to being something that I really, truly enjoy, is something that I believe I have a sacred duty to do. Hence, rule, investment, media, the rural classroom, all those places, the conference has become a labor of love. I appeared at other people’s conferences, and I kept thinking, they could do this better. They could do that better. They could do something else better. I was talking to Bill Bonner to Gore. He says, Well, I got a couple of them, and believe me, there’s a lot to that we could do better. Would you do it for us? And so I began running that conference 30 years ago, and. When agora sort of exited precious metals and went to technology, they gave up that conference, and my customers at global told me it was an important part of the value proposition and that I had to continue it. And if your customers tell you that, that’s what you do. So we’ve put on the conference for 30 years now, and it’s got a little better every year, and I believe that it is the best high net worth retail investment conference, at least with regards to natural resources on the planet. For several reasons, we do the type of macro that you wouldn’t see on CNBC or CBC, particularly, we have players, not journalists or influencers, that do our macro So David Stockman, who ran the Office of Management and Budget, will talk about the budget and its impact on your finances. Daniela DiMartino booth will talk about the Fed, not because she’s a failed journalist, but rather because she was an analyst at the Dallas Fed. Nomi Prins will talk about the corrupt nature of Wall Street because she was a partner at Goldman Sachs. Jim Rickards will talk about the collision between Wall Street and Washington because he was General Counsel of long term capital management, whose failure almost brought down Wall Street. We go from there to and I know you’ll appreciate this Trey portfolio managers and analysts who have been in resources for 30 years, not Wall Street hacks who failed at bonds and failed at supermarkets and were put in a small asset class where they couldn’t do any damage, but rather, people have been through bull markets and bear markets. That’s important. What’s also important is that every public company exhibitor at this conference is owned in our accounts. We turn down more exhibitors than we accept. There’s no guarantee, unfortunately, Trey that because I own a stock, it goes up, but there is a guarantee that I’ve studied them if I own them. And we also have something I really love. It’s called the Living Legends, where we bring together people who have built multi billion dollar companies from scratch, talking to you about how they did it, but more importantly, the lessons they learned, how that makes them better investors, and how it can make you a better investor. How to identify the $20 million market cap that can become a three or $4 billion market cap. And this information isn’t coming from influencers. It’s coming from players, people who did it all that allows me to say to anybody who comes to my conference live or via live stream, that if you aren’t satisfied with the value you received, I’ll give you your money back. There’s no other conference in the planet that I know of that comes with an unconditional money back guarantee. Going back 30 years, we’ve had to refund less than 1/10 of 1% of the tuitions that we’ve charged, but that guarantee is your guarantee that we do our best to give you your money’s worth, and we’re confident that we will. If we don’t, we don’t deserve the money, and we don’t want
Trey Reik 58:12
it as a footnote for those who may look up the Boca Raton conference, the conference in most of those 30 years was in Vancouver and was under a different title. I think it was the Sprott resource conference, or it was a Google then it was Sprott, then it was brought Okay, so I just when people look it up, I think the Boca Raton conference is in its fourth or fifth year, or something like that. But what Rick’s referring to is, you know, two and a half decades out in Vancouver,
Rick Rule 58:42
right? So we look, we look forward to seeing as many people as we can if you can come live. That’s probably your best alternative. There’s lots of communication that’s not non verbal. But last year, we had attendees from 33 countries live stream. Substantial investment in a live stream, and we won’t fail you. We absolutely will refund the money, no questions asked to anybody who believes they didn’t get their money’s worth. We’d love you to tell us what we did wrong, but that’s not a requirement for a refund, and by the way, it’s highly unlikely that you won’t receive the benefit that you’ve contracted for excellent.
Trey Reik 59:24
Well, we look forward to seeing you in mid July. We’ll take a little break here over July 4. Look forward to seeing you down there, and I’ll check in with you in a, you know, three or four months and see how things are going. Fantastic. Rick, thanks for your time. Always a pleasure. Thank you, Trey.
Rick Rule 59:41
My pleasure. I look forward to hosting you in Bucha.
Trey Reik 59:44
Excellent. If you have questions about the current market environment and are looking for guidance on your portfolio, wealthion can help connect you with a vetted advisor to get a free portfolio review, just click on the link in the description. And below or head to wealthion.com/free.
