Rick Rule: Gold, Silver, Uranium — Key Price Drivers and What to Watch Now
Summary
TLDRIn this insightful interview, Charlotte McLoud from investing.com engages in a deep conversation with Rick Rule, a prominent figure in rural investment media. They explore the Federal Reserve's stance on interest rates, the impact of central bank policies on the US dollar, and the significance of gold as a hedge against inflation. The discussion delves into the dynamics of gold and silver markets, the influence of Chinese investment, and the intricacies of the uranium market. Rick also highlights the importance of the Resource Symposium, emphasizing its value for investors seeking macroeconomic insights and investment opportunities in the natural resource sector.
Takeaways
- 📉 The Federal Reserve (FED) is unlikely to cut interest rates soon, as they prefer to discuss the possibility rather than act on it, influenced by political biases and the belief that they are the only branch concerned about inflation.
- 💵 The US dollar strengthens when other countries like Canada and England cut rates, as investors seek a safer haven for their money.
- 🌍 The geopolitical weaponization of the US dollar and the central banks' buying of gold are significant factors affecting gold prices, rather than just retail investor interest.
- 🧘 Gold is seen as a currency without a political constituency for devaluation, making it a stable investment against the backdrop of fluctuating interest rates and inflation.
- 🇨🇳 China's central bank and retail investors are significant players in the gold market, with cultural predispositions towards gold ownership and concerns about economic stability.
- 📊 The gold price is tied to interest rates in terms of maintaining purchasing power, but a disconnect exists between the gold price and gold equities, partly due to central banks not buying gold stocks.
- 📈 The gold mining industry needs to improve margins with the gold price increase, as production costs have risen, impacting profitability.
- 🥈 Silver is following gold's trend, but the reasons behind its price movements are not entirely clear, with speculation and cultural factors potentially playing a role.
- ⚔️ Platinum and palladium are considered undervalued and are essential for internal combustion engines, which are expected to remain in use beyond current predictions of their demise.
- ⚠️ Supply disruptions in platinum and palladium could easily double their prices due to their concentration in a few politically unstable countries.
- 🔍 The Real Symposium is a prestigious event featuring macro thinkers and successful resource investors, offering insights into the natural resource market and investment opportunities.
Q & A
What is the main topic of discussion in the interview between Charlotte McLoud and Rick Rule?
-The main topic of discussion is the Federal Reserve's stance on interest rates, the impact of political decisions on the economy, and the state of various commodity markets, including gold, silver, uranium, platinum, palladium, and nickel.
What is Rick Rule's view on the Federal Reserve's approach to interest rates?
-Rick Rule believes that the Federal Reserve prefers to talk about cutting interest rates rather than actually doing so, and that they are the only branch of the US government concerned about inflation.
How does Rick Rule describe the administration's approach to economic messaging?
-Rule describes the administration's approach as 'schizophrenic,' where they claim the economy is doing well while also benefiting from lower interest rates, and he criticizes the 'election year BS' of taking credit for positive economic stats while blaming others for negative ones.
What is the significance of other countries cutting interest rates before the US, according to Rick Rule?
-The significance is that it strengthens the US dollar as money seeks a relatively safe haven in US dollars, which are perceived as more attractive due to the higher interest rates.
Why does Rick Rule suggest that investors should consider gold as part of their savings?
-Rule suggests gold because it is the only currency on the planet without a domestic political constituency in favor of devaluation, offering protection against the potential negative impacts of political decisions on other currencies.
What has been the trend in retail investor behavior towards gold according to the ETF data mentioned by Rick Rule?
-The trend has been that retail investors in Western Europe and North America have been sellers rather than buyers of gold for the last two years, with foreign central banks being the primary buyers.
How does Rick Rule explain the disconnect between the gold price and gold shares?
-Rule explains that the disconnect is due to central banks being buyers of gold but not of gold shares, which has temporarily changed the audience for gold and created a dichotomy between the gold price and gold shares.
What is Rick Rule's perspective on the role of China in the gold market?
-Rule believes that China plays a significant role due to the cultural predisposition to buy gold among ethnic Chinese, the government's encouragement of savings in gold, and the rapid increase in private savings in China.
What does Rick Rule predict about the future of uranium prices and the market?
-Rule predicts that the term market for uranium will become increasingly important, with producers able to lock in contractual pricing and volume contracts for up to 20 years, which will lower the cost of capital for uranium producers.
How does Rick Rule view the potential impact of social or political discord in platinum and palladium producing countries?
-Rule views it as a contingency worth speculating on, as any significant social or political discord in Russia, South Africa, or Zimbabwe could interrupt supplies and potentially double the prices of platinum and palladium.
What is the Real Symposium and why is it considered valuable for investors?
-The Real Symposium is a long-standing mining investment conference known for attracting macro thinkers, providing insights from successful analysts and portfolio managers in natural resources, and featuring 'Living Legends' who share their experiences building multi-billion dollar mining companies. It offers a money-back guarantee if attendees do not feel they received value from the event.
Outlines
📉 Federal Reserve's Dilemma on Interest Rates
In this segment, Charlotte McLoud interviews Rick Rule about the Federal Reserve's latest meeting, which showed no change in interest rates. Rule suggests that the Fed is the only US government branch concerned about inflation, while other branches focus on spending. He speculates that the Fed's institutional bias is to maintain market interest rates rather than manipulate them downwards. The conversation also touches on the political pressures affecting the Fed's decisions and the potential impact of rate cuts from other countries like Canada and England on the US dollar.
🌟 Gold's Movements and Central Banks' Role
The discussion shifts to gold, with Rule noting that gold prices have risen without the participation of traditional retail investors. He explains that foreign central banks have been the primary buyers of gold, possibly due to the weaponization of the US dollar in foreign policy. Rule also addresses the disconnect between gold prices and gold shares, attributing it to central banks buying physical gold but not gold shares. He predicts that as the impact of inflation becomes more apparent to the public, retail buying of gold could increase significantly.
🏦 China's Influence on the Gold Market
Rule discusses China's role in the gold market, highlighting the cultural predisposition of Chinese people to buy gold and the government's encouragement of gold savings. He mentions the rapid growth of private savings in China and the concerns about the stability of the Chinese economy, which drive the interest in gold as a savings instrument. Rule also talks about the development of infrastructure for gold distribution in China and anticipates that Chinese retail investors will become increasingly important in the gold market.
📊 Gold Stocks and the Impact of Central Bank Buying
The conversation delves into the performance of gold stocks and the reasons behind their disconnect with the gold price. Rule explains that central banks' buying of physical gold does not extend to gold stocks, which could explain the discrepancy. He also discusses the importance of gold mining industry margins and the expectation that they will improve as gold prices rise. Rule identifies companies with good cost containment records as potential performers in the gold market.
📈 Silver's Market Dynamics and Chinese Speculation
Rule addresses the complexities of the silver market, noting the difficulty in predicting supply and demand due to silver's dual role as an industrial material and a monetary metal. He also comments on the cultural propensity of Chinese people for speculation and gambling, suggesting that this could influence the silver market. While acknowledging the traditional belief that gold moves first and silver follows, Rule expresses uncertainty about the recent silver price increase, hinting at potential generational differences in market behavior.
🔍 Uranium Market Insights and Investment Strategies
The discussion turns to the uranium market, with Rule sharing his views on the importance of the term market for uranium producers. He explains that long-term contracts provide price certainty and volume, which can lower the cost of capital for uranium producers. Rule also touches on the potential for uranium prices to rise due to supply disruptions in countries like Russia, South Africa, and Zimbabwe, and how this could impact investment strategies.
💼 Rick Rule's Portfolio Review and Resource Investing
In the final segment, Rule offers a portfolio review service for investors interested in natural resource stocks. He emphasizes the importance of understanding the term market in uranium investments and how it can provide insights into a company's revenue and margins. Rule also promotes the rSymposium, highlighting its reputation for attracting high-quality speakers and providing valuable insights into the mining investment community.
🎤 Upcoming rSymposium and Investor Opportunities
Rule provides an overview of the upcoming rSymposium, emphasizing its long-standing tradition of offering valuable insights into the mining investment sector. He mentions the conference's focus on macroeconomic thinkers, successful resource analysts, and the unique 'Living Legends' segment where successful mining entrepreneurs share their experiences. Rule also discusses the vetting process for public company exhibitors and offers a money-back guarantee for attendees, showcasing the confidence in the conference's content.
📝 Final Thoughts and Portfolio Review Invitation
In the closing remarks, Rule invites viewers to list their natural resource stocks on his website for a personalized portfolio review. He reiterates the importance of focusing on resource investing and the value of the insights provided by the rSymposium. Rule also encourages viewers to attend the conference, either in person or via live stream, and reminds them of the recording option for revisiting the conference content.
Mindmap
Keywords
💡FED (Federal Reserve)
💡Interest Rates
💡Inflation
💡Gold
💡Dollar Hegemony
💡ETFs (Exchange-Traded Funds)
💡Central Banks
💡Gold Shares
💡Uranium
💡Precious Metals
💡Resource Investing
Highlights
Discussion on the Federal Reserve's latest meeting and its implications on interest rates.
Speculation on the Fed's institutional bias towards maintaining market interest rates rather than manipulating them downwards.
Analysis of the political pressures influencing the Fed's decisions and their potential impact on the economy.
The significance of other countries cutting interest rates and its effect on the US dollar and gold.
The role of gold as a currency without domestic political pressures for devaluation.
Observations on gold price movements and the involvement of foreign central banks as buyers.
The dichotomy between gold prices and gold shares, and the central banks' influence on this.
China's role in the gold market and the cultural significance of gold among Chinese people.
The potential for increased Chinese retail investment in gold due to economic concerns.
Discussion on the disconnect between gold prices and gold mining industry margins.
Predictions on the future of gold mining shares and their potential performance as a leveraged instrument.
China's pause in gold buying and its psychological and actual impact on the gold market.
The potential for a silver bull market driven by Chinese retail investors and speculators.
Comparing the opacity of the silver market to other commodities like copper and uranium.
Uranium market dynamics, focusing on the importance of the term market for uranium producers.
The impact of term contracts on the cost of capital for uranium producers and their investment appeal.
Rick Rule's personal investment strategy in the resource sector, including his diversified portfolio.
Upcoming Real Symposium preview and its significance for investors in the mining and resource sector.
Details on the unique features of the Real Symposium, including its focus on macro thinkers and mining industry veterans.
The offer of a money-back guarantee for attendees of the Real Symposium, reflecting confidence in the event's value.
Transcripts
[Music]
I'm Charlotte McLoud with investing.com
and here today with me is Rick Ru
proprietor at rural investment media
thank you so much for being here great
to have you charl it a pleasure thank
you for having me
back of course really good to be
speaking with you and of course we're
talking ahead of the real Symposium
which we'll make sure to touch on toward
the end of the conversation but where I
thought we can begin today is with the
FED because we had the latest meeting
literally just DRP up so I think as
expected we didn't get any changes in
interest rates and I was looking back to
our conversation at the beginning of the
year where you had mentioned really the
FED would prefer to talk about cutting
as opposed to actually cutting so I was
going to begin by asking how long do you
think they can just keep talking about
it as opposed to actually doing anything
I think that's a good question uh I
should begin by saying I don't know but
I'll be speculative and say that the
institutional bias within the FED is
that the FED believes probably rightly
that they're the only branch of the US
government that's concerned about
inflation that Congress believes that
they get paid paid to spend the
administration wants to spend because
we're an election
year and so from the fed's point of view
the the institution that stands between
the US dollar and Oblivion uh is in fact
the
FED
now from the administration's point of
view there's two different things they
have to do which are contradictory the
first is to tell Americans that they're
enjoying a great
economy and that all of the employment
statistics and all that kind of stuff
are great at the same time uh they would
benefit they know from lower interest
rates so they have a sort of a
schizophrenic uh approach to dealing
with the fed and I really don't know how
it's going to going to work out I I I
was amused at President Biden discussing
the economic statistics uh 10 days ago
taking credit for employment and lower
oil prices and all that kind of stuff um
when it suits them of course they attack
the grocery chains like Trudeau does for
high prices and then they turn around
and say that Jo grocery prices are
moderating through their own effort you
know it's the typical election year BS
and I think that the FED is being pushed
backwards and forwards by all this
politics but as I say I I think the bias
within the fed and I need to tell you
that I don't know anybody at the top
levels of the FED but I know some of the
regional Governors and I know some of
the employees in the fed the the the
bias of the
institution is clearly to um maintain
closer to Market interest rates rather
than manipulating interest rates
down okay so that's what's going on with
the FED at the moment but outside the US
we did get rate Cuts recently from
Canada and from England and I wondered
if you could talk a little bit about the
significance for investors of other
countries starting to cut
first well what that happens is
strengthen the US dollar uh people go uh
people go with their money to where it's
treated well uh for political expediency
for domestic political purposes both
Canada and England uh have lowered the
interest rate they pay on savings which
causes more Canadian dollars and more
British pounds to seek Safe Haven or
relatively Safe Haven uh in the US
Dollars that's why uh Doug Casey has
always said the US dollar is the worst
currency in the world with the sole
exception of all the
others um whether or not for purposes of
political expediency the US will be
forced to do that uh is a different uh
and
you know open question uh it's also
U Charlotte I think a reason why your
listeners need to consider to consider
need to continue to consider pardon me
uh having gold as part of their savings
gold would seem to be the only currency
on the planet that doesn't have a
domestic political constituency in favor
of
devaluation um there are political
pressures that cause countries like
Canada Great Britain United States
uh to deprive savers of a reasonable
return on their Investments gold has no
similar
constituency right and if we look at
gold I think I often begin gold
conversations by talking about the fed
and interest rates inflation Etc we're
just really used to doing that but one
question I've been asking lately more
frequently is is that the most important
thing to consider when we talk about
gold especially given that this year
gold is really on the move without the
rate cuts that everybody said we needed
so what what are your thoughts there two
different questions I think um you are
correct in your latter assumption which
is that the gold prices moved without
the participation of the traditional
saver the retail investor uh studying
ETF data suggests that for the last two
years retail investors at least in
Western Europe and North America have
been sellers rather than buyers of gold
the buyer of gold has been foreign
central
banks uh and I think that has as much to
do with a weaponization of the US dollar
the use by our administration of the US
dollar as a means of exerting foreign
policy both through confiscating $300
billion doll worth of Russian treasury
Holdings and Al through also through the
weaponization of the Swift banking
system interestingly too Charlotte away
from your question when people are are
concerned about the dichotomy between
interest in gold and the gold shares the
fact that gold has moved and the gold
shares haven't moved I think that's
explained uh by this by this phenomenon
the central banks have been buyers of
gold but they aren't buyers of gold
shares so it makes perfect sense that
because the audience for gold at least
temporarily has changed that this
dichotomy exists going back to the first
part of the original
question in my
experience uh
gold the gold price is tied to interest
rates only in the sense of whether
interest rates are negative or positive
which is to say when investors are
concerned about the maintenance of their
purchasing power in conventional Fiat
instruments then they become interested
in Gold uh that hasn't happened yet uh
and I will
note as a consequence of my age I was
there that it took five years for this
to happen in the 1967 1972 time frame in
other words while people understood that
inflation was taking place the
perniciousness of it the impact on their
own personal lifestyle wasn't apparent
for five years and my suspicion is that
we're facing a delayed punch with
regards to taxpayers and Savers
understanding the impact of uh inflation
on their own purse uh as they come to
understand that I think that you will
get a layer of retail buying the
traditional retail buyer on top of the
Central Bank buyer uh and if I'm right
with regards to that then you could see
some real fireworks in the gold
price okay a number of points to follow
up on there and I think the direction
I'll go first is You' mentioned the
importance of Central Bank buying lately
for gold and recently we heard that
China paused buying in May the Chinese
Central Bank and that seemed to cause a
reaction the gold price were among gold
investors so I'm wondering do you think
that's significant what what are your
thoughts there it it was significant in
two reason for two reasons one they were
the biggest buyers of gold uh if the
biger biggest buyer goes away it has an
impact on price but there was also a
psychological uh impact there are some
gold investors like myself who buy it as
an insurance policy who buy it out of
fear uh I person personally couldn't
care less if gold goes from $2,275 to
$2,500 I'm not a Trader in Gold that's
not why I own it I invest in other asset
classes for capital gains I invest in
gold for protection but there's a whole
different group of people out there who
are more momentum oriented and for them
the fact that the Hiatus in ch Chinese
buying might last three months as an
example and as a consequence the gold
price might might not move for three
months
that prevents them uh in some senses
from accessing
gold I believe as people come to
understand people in United States and
Canada come to understand that the CPI
is a very inefficient mechanism for
measuring the deterioration the
purchasing power of their savings uh and
of their
salaries that people will begin buying
irrespective of Chinese intention
but until that occurs uh factors like
Chinese buying and the lack of Chinese
buying will impact the market perhaps
more so than the direct impact of
Chinese buying or a lack of Chinese
buying if that makes sense I I think the
psychological impact of it on the
trading community and the speculative
Community was as great as the actual
impact of the impass in Chinese
buying yes yes I think I think that does
make sense so thank you for going into
that and a little bit further on the
note of China so of course we've been
watching the Chinese Central Bank and
you just went to do what that pause in
May buying looks like but I'm also
hearing quite a bit about buying from
China among retail investors and I
wonder if there is anything more you
would add about China's role in the gold
market right now because it seems that
it is getting a lot more attention and
and feeling more elevated at least to me
from what I've been hearing
uh I I think it's a very important
factor it it's very difficult to
quantify I I've seen a lot of estimates
and I've seen a lot of people try to
justify their estimates and I suspect
that most of them like me don't
know but what I do know is that there is
a strong cultural predisposition to
buying gold among ethnic
Chinese uh I've done business with
ethnic Chinese for 20 years at least uh
I mean in China not just in North
America and there's a strong interest in
gold uh it wasn't that long ago that
Chinese were prohibited from owning
physical gold in C in
terms with certain exceptions what
you've seen now is that the government
of the People's Republic of China is
actively encouraging Savings in gold and
I think that there's a lot of appetite
in the citizenry for increasing their
gold Holdings private savings are
increasing rapidly in China and the
Chinese people in general have a
predisposition to save as opposed to
spend and I I think that there's a lot
of concern in China I can tell you this
anecdotally from Chinese people that I
correspond with uh about uh future
economic stability in China and so there
is a nervousness among many Chinese uh
about investing in traditional savings
products they're concerned about Bank
solvency they are concerned uh at least
in their discussions with me about the
opaqueness uh of the Chinese banking
system
and to them uh the traditional role of
gold is a savings instrument an asset
that isn't simultaneously somebody
else's liability is very attractive the
fact that this is
permitted uh in a society with a
predisposition to it and now with
incentive to means for me at least that
Chinese retail uh will be an
increasingly important component of the
gold market it's worthy to note too that
the medium mediums for distribution of
gold to retail holders in China almost
didn't exist 10 years ago the whole
range of storage facilities
Banks uh dealers that we have in the
United States had to be created from
scratch in
China uh and at the same time that the
Chinese citizenry began gradually to be
permitted to own gold the infrastructure
allowing them to purchase and uh store
gold has been developing and so I think
it's it's going to be an
increasingly important subset of the
gold
trade do you think it will be for silver
as well I think I've started to hear a
little bit about that Chinese interest
spilling into silver but it seems to be
something that's hard to get information
on I do uh at the risk of being accused
of being racist the Chinese people that
I know are very much gamblers and very
much speculators
uh I have noticed uh in my time on Earth
that precious metals bull markets are
led by fear buyers so gold is the
predominant mover in the early part of a
bull
market as the precious metals narrative
is given Credence by the increase in the
gold price then the speculators come in
the greed buyers come in
uh speculative silver market perhaps
because of its lower unit cost I don't
know uh creates a very a frenzied
environment and there again is a
cultural predisposition in China around
silver uh it hits fertile ground but on
top of that uh Chinese people are
notoriously fonded of speculating
gambling and my suspicion is that a we
will have a silver bull market uh and B
the extent of ethnic Chinese
participation both in the diaspora but
more particularly in the PRC will be
extraordinary this time around whether
or not that participation comes down
into the silver mining
shares uh at least among Chinese and the
PRC is a very different circumstance
certainly you have seen ethnic Chinese
participation in silver equities in
places like San Francisco and Vancouver
for decades whether or not that extends
to the the PRC and whether or not the
infrastructure to distribute uh junior
silver miners in J Junior silver mining
equities in China develops is of course
a different
conversation okay I have a couple more
questions on Silver but before we go
there I want to finish up with gold
where I have one more question as well
so you explained earlier in the
conversation why there would be a
disconnect between the gold price and
the C equities central banks are not out
there buying gold stocks so we talked in
I believe in March about that disconnect
as well and you'd mentioned the the
level of hostility toward gold stocks
and I wondered if you've seen that cool
down or is that starting to alleviate at
all what what is the sentiment you're
seeing for gold stocks uh I've seen it
uh alleviate a little bit but we are
going to need to
see uh gold mining industry margins
improve with the gold price what we've
seen thus far is that the moves in gold
price have been
mirrored by an increase in production
costs you know Energy prices have
certainly doubled skilled miners wages
uh particularly in Ontario and Quebec uh
have been exploding upwards cement
charges have been going upwards and the
social rents uh for producing gold
around the world taxes and royalties
regulation off-site expenditures by
mining companies for social license have
been increasing so what you've seen uh
in the last couple years is despite the
fact that the gold price is up by
20% the margin increases that the
industry was expected to enjoy haven't
occurred yet uh my belief is that that's
going to change beginning this quarter
some of the companies that have a better
record with regards to Cost Containment
I'm thinking anniko Eagle uh Alamos
Endeavor uh uh will I think surprise the
investment Community with the margin
increases that they're going to enjoy
and if I'm right uh I think you will
begin to see a reasonable amount of
money uh flow first into the senior gold
equities
the the sector in the gold equities that
has outperformed in the last 6 months uh
has been you know really sort of
concentrated around the high margin
issuers which is to say the safer
issuers issuers with high Allin
sustaining Capital cost like Newmont
haven't participated particularly in the
rally while companies like wheat and
precious uh agnico Eagle have done very
well and I think that
continues uh if as I suspect the gold
price continues to
increase uh I do think that the gold
mining shares will find an increasingly
sympathetic constituency which is to say
people will buy gold shears in
anticipation of their performance as a
leveraged instrument uh around the
increase in the gold price but time will
tell this this may be a bit of a basic
question but when we talk about margin
for you what what would be good what
would you want to see from the gold
miners
well you're kind of asking me almost a
Santa Claus question um what I look for
in a company is
efficiencies that put them in the bottom
quartile of aisc so I'd like to see
Allin sustaining costs in the $1,200 or
lower
range um you know I want to see bottom
cortile
performers uh I am also interested in
return on Capital employed one of the
ways that you lower your Allin
sustaining costs is that you over
capitalize the capital stack you know
uh so at the same time that I want to
see all-in sustaining costs in the 1200
or 1250 range if possible uh I also like
to see return on Capital employed
numbers uh in the sort of 25% or better
range so I want best quartile return on
Capital employed at the same time that I
enjoy best
quartile
aisc okay okay thank you for explaining
that I'll go back over to to Silver now
and with silver I I hear often from you
and from others that gold performs first
and silver follows and we all got
excited a couple weeks ago at this point
I guess to see silver above 30 per ounce
and I wonder is that simply silver
starting to follow gold or are there
other things going on
there I hate to give you this answer
Charlotte but I don't
know uh in my own experience as I say
silver follows gold I would have thought
that the upward Trend in Gold would need
to be more pronounced before silver
follows on I do note an anomaly which
was 2021 the Reddit silver squeeze where
we had a sort of a nent bull market in
Precious Metals one that didn't have
follow through but Ironically in that
market the normal process which is to
say the metal moves then the major
miners move then the Juniors move was
turned on his head the more speculative
components of both markets moved uh
around an online narrative that I've
never experienced before so it might be
that your generation doesn't do things
the way that my generation does uh I'll
I'll need to observe that but the honest
answer to that question is I honestly
don't know I I need to say from my own
perspective I'm an investor and a
Speculator but I'm not a Trader so the
move in the silver price from2 $9 to $31
while it might be psychologically
important to somebody else is a small
move to me it doesn't matter um I own
gold not because it was going to go from
2750 to 2500 or silver from 28 to 31 I
own it because I'm afraid that gold is
going to go to $8,000 or $9,000 or
$110,000 as a consequence of a lack of
lack of con confidence if that happens
uh I think you can expect gold to the
silver pardon me to out base gold on a
percentage
basis uh which means that $35 is a silly
Target that there's a much much much
higher price that would take place by
the way I'm not saying this is going to
happen I'm not saying that this is a con
that this is a certainty that one
invests in I think that this is a
contingency that somebody who's that
somebody who is financially in cycle
logically capable of uh speculates in I
I think that's a very important
different you know
difference that that actually does help
me so thank you for going into that and
it ties in well to another question I
wanted to ask you I was watching one of
your recent interviews on another
Channel and you're talking about how
silver is really not knowable in the way
that the copper Market is I thought that
was very interesting because I'm so
interested in or I'm so used to hearing
about the uranium market for example is
opaque but I hadn't I hadn't heard it
from the silver perspective so I
wondered if we could talk about that a
little bit if I understand the question
um the silver supply and demand is
really difficult to understand I've been
trying for 50 years
unsuccessfully uh silver is at once an
industrial material uh which means it's
economically sensitive it's a monetary
metal those are very
different circumstances and silver
Supply is difficult to predict too in
the sense that only 16 or 177% of
primary new metal supply comes from
Silver Mines the rest comes from
Recycling and comes from byproducts from
copper you know gold things like that so
to understand what silver Supply will
look like five years from now you have
to understand what capital expenditures
would be in the copper business there's
so damned many
variables uh the second part of Supply
is that most of the silver that's ever
been mined is still Supply and a lot of
it isn't declared it's owned by people
who are afraid of their governments
people as an example in India uh we
don't know how much silver they have we
don't know what are the motivators for
them to buy more perhaps rural incomes
from a good harvest we don't want know
what would make them sell perhaps bad
harvests you know so it's it's a really
really opaque metal with when you look
at Copper you might not get it exactly
right but you can look at the direction
you can understand the lag time between
higher copper prices and higher copper
Productions a consequence of Permitting
and mine construction you could look at
primary Supply you can look at primary
demand you don't have to be fooled too
much by above ground inventories because
there aren't many uh you just need to
look at what it's going to be used for
try to determine what the economy is
going to do and then toose that with the
production that's existing or could be
brought online in the next 5 years while
it's not straightforward in Copper it's
much more straightforward than it is in
Gold pardon me in uh
silver yes that's exactly what I was
hoping you could talk about there I
think that helps I had just never quite
thought about silver in that way so very
helpful and I want to go over now to
uranium and hopefully we can touch a
little bit on this before I let you go
so so the last time we talked about
uranium I believe was back at the
beginning of the year when we were in a
very exciting time for prices and since
then we've seen prices pull back hit a
little bit of a plateau did we did we
just need to see some consolidation
there I think that's right uh Charlotte
you'll remember my saying in that
interview and many times talking to you
previously the cure for high prices is
always high prices and the cure for low
prices is always low prices this uh
retreat in price ing in the uranium spot
Market I think is an important
breather uh I think now as I thought
then that a much more important trend
for Uranium Equity investors is the
rising prominence of the term Market
where uranium producers will be able to
lock in contractual pricing and volume
contracts for as long as 20 years with
investment grade
counterparties this pricing environment
doesn't exist in any other commodity on
the
planet and the certainty around the
price that producers can receive for
their product and the volumes that they
can sell means that over the next five
years the cost of capital for Uranium
producers relative to other commodity
producers will be
lower and that's important I I can't
tell you what the spot price of uranium
is going to be uh a year from now and to
be honest with you I don't
care uh because the spot Market is
increasingly an inefficient predictor of
prices on many days the Sprat physical
uranium trust generates more dollar
volume than the spot Market does which
is to say in some senses the sprot
market has become the spot
Market uh and while it's an important
psychological source of
information the real pricing structure
is being determined in the term market
and increasingly it's going to be uh
reflected in the the term Market
in the fiveyear product the 10year
product the 15-year product and the
20-year product and this is going to
have really profound and positive
implications for those few uranium
Juniors that have developable products
because their cost of capital is going
to be much less than people
understand okay okay so the term market
right now is that your main main element
of the uranium Market to watch at the
moment I remember for a long time it was
Japanese restarts is this the the new
kind of focus yeah the Japanese restarts
are built baked in the cake um they're
truly baked in the cake the next shoe of
fall will be the ability of both kamico
and Kazam prom to lock in enough
production in the term Market that they
can restart their shut in
production uh generating attractive
rates of return for their shareholders
both Boards of directors have said that
the condition precedent
for production restarts is sufficient
term volume to earn attractive rates of
return for the shareholders that's
important the next thing and the really
big thing will be right now these terms
are opaque companies don't have to
report the details of the terms you have
to understand you have to surmise the
term contracts by Looking Backward at
the income statement and the balance
sheets of the big producers like camoo
to figure out what their active cost
what their um
uh what their revenue line is relative
to the spot price which allows you to
back guess on terms what I think happens
over the next five years is that the
companies who report accurately their
terms enjoy a lower cost of capital
because there will be more certainty on
the revenue line uh both both with
regards to volume but also with regards
to price and understanding the Revenue
will give you a better predictive sense
of their margin which will allow lenders
my like myself as an example higher
certainty that they're going to get
their loans repaid and will allow lazy
Equity analysts also like
myself uh to understand the revenue
lines of the company uh better that will
mean that the companies that are more
forthcoming with information about their
terms will have higher share prices and
hence a lower cost of capital and I
think that the market will force
reporting
compliance okay very interesting and
when it comes to uranium you've said
many times at this point that you've
essentially der risked your investment
there which I don't think means you are
out of it so I was wondering what does
your exposure look like at this point do
you have a spectrum from explorers to
producers or or in Broad terms how does
that look I do and I've covered the
Waterfront uh I own the physical
indirectly through the spot the Sprat
physical trust I own the two major
producers which is to say camoo and
Kazam prom and I own either nine or 10
uranium Juniors that have what I
consider to be viable
deposits uh when I say I don't have any
risk in the sector anymore what that
means is that I've sold enough equity
you'll remember Charlotte in 2022 when I
was sort of pounding the podium on your
show uh I was a pretty big buyer of
uranium equities when nobody wanted them
and when that market moved from being
hated and cheap to being at least
tolerated if not loved uh those stocks
were up pretty dramatically I have sold
enough now that I have recouped all my
initial investment uh I sold a little
more so that I could pay the capital
gains taxes uh on the profits that I
enjoyed and in certain circumstan es
where I've noted uh large amounts of
Insider
selling uh I've sold as much as half of
my remaining
position but the truth is that my cost
basis was low enough that I was able to
sell uh stock to recoup my cash outlays
and still retain uh pretty large
Holdings in those companies because as I
say um there is a supply demand
imbalance
and we are going to have some certainty
with regards to pricing and cost and
that should lower the company's cost of
sh cost of
capital okay good to go into that as
well and I have a fun question now or at
least I think it is fun so when we spoke
in March you mentioned you were doing a
lot of research on Platinum Palladium
and nickel and just trying to learn as
much as you could there so it's been a
few months and I wondered if you could
share any any earnings yeah I've been
again uh starting by buying the Sprat
product uh the Sprat physical platinum
and Palladium
trust
uh because I'm attracted to those
markets uh I'm attracted to them
precisely because they fall in 50% in
price I love hate and if you look at
comments in social media around platinum
and padium uh people question your
sanity if you buy them the Topline
Narrative of course is that platinum and
padium are used in internal combus
engines and if you listen to the big
thinkers of the world the Justin Trudeau
the Joe bidens the Angela merkel's they
tell you that the internal combustion
engine is going the way of the
dodo except it
isn't I believe internal combustion
engines will be with us till at least
2060
2065 and platinum and padium are a
necessary
component uh of
anti-mog it it takes at today's Lo low
prices about $1100 worth of platinum in
a catalytic converter to enable the sale
of a 50 or $60,000 car if the price of
platinum or Palladium doubled it
wouldn't change the Shelf price of that
automobile and you don't see a bunch of
kids wandering around downtown Vancouver
with protest signs saying more smog more
smog more smog you know uh so the demand
is going to
continue the other side of that is
supply of course and platinum and
Palladium come primarily from two
countries Russia and South Africa with a
bit player being
Zimbabwe if in any of those three
countries there were greater social
Discord or political Discord uh which
caused supplies to be interrupted it
would be easy for the price to double
let's look at those countries South
Africa which is a basket
case uh Zimbabwe which aspires to be a
basket case uh and Russia which some
fairly obvious challenges I'm not saying
that any of those three countries
sociologically will explode to the
extent that it will
grievously interfere with their ability
to produce platinum and padium but I
think that that is a contingency worth
speculating on if that occurred I think
that you would see an almost immediate
double in Platinum and Palladium prices
I don't own platinum and Palladium
producer well I should say that I
shouldn't say say that uh I owned from a
very old movie uh stock in
nilk which I can't either buy or sell
because of US Government sanctions but I
don't own any South African producers
what I do own is development stage
assets outside of any of South Africa
Zimbabwe or Russia if you experienced
politically or socially originated
disruptions in Supply having access to
supplies that didn't come from those
countries I think would suddenly become
regarded by the investment Community as
strategic and so I am speculating around
that theme
actively okay very very good to go over
that and now I will go back to the r
Symposium which is coming up very
quickly in less than a month at this
point so I'll be attending I'm excited
to be going once again what should
investors
know well investors should know first of
all that they got to watch Charlotte
McLoud plying her trade uh at the
conference which is fun to watch
um on a different note uh I think the
fact that we have put on this conference
for 28 years means that we have pleased
a constituency of the mining Community
it's one of the most venerable mining
investment conferences on the planet and
I would suggest you it's the
finest for the following reasons we have
a long tradition of attracting
big picture macro thinkers who teach our
attendees the way the world really is
not the way the CBC or
CNBC wishes it were Jim Rickards who
talks about strains in Wall Street
because as general counsel for long-term
Capital Management he almost brought
Wall Street down you know a voice from
the belly of the Beast Nomi Prince
talking about the structure of Wall
Street as a former Goldman Sachs partner
and analyst Daniela D Martino boo
talking about the FED because she worked
for the
FED uh high quality insiders talking
about the way the world is truly
structured if you come to that point of
view and I believe you
will
um the resource narrative requires
implementation and to that we have
analysts and portfolio managers with
three decades of success in natural
resources not failed Tech analysts you
know um but people who cut their teeth
and made money and resources more
importantly than that we have a
wonderful feature called The Living
Legends where people who have built
multi-billion dollar mining companies
from
scratch uh tell you how they did it uh
and importantly tell you how to identify
$5 million market caps that are going to
become $5 billion market
caps uh this is critical important you
know listening
to the Robert fredland or or the Bob
quarters telling you how they did it and
what they learned and why that's
important also at our conference every
single public company exhibitor is
vetted if they aren't owned in the
portfolios of the sponsors of the
conference they can't exhibit at every
other investment conference I know the
qualification to be an exhibitor is a
check that cashes that's it
at our conference we have to know you
well enough that we own you finally you
can attend this conference either live
which is what I would prefer or via live
stream in the comfort and convenience of
your own home however you do it we're
going to give you 60 hours of intense
programming over four days more than you
can absorb so we're going to tape all of
the proceedings including the breakout
sessions so that for the balance of 2024
you can revisit the conference again and
again and
again those five
factors allow me to say this to your
attendees whether you attend live or in
person if you don't believe that you
have gotten your money's worth there's a
goldplated money back guarantee no
questions asked just send me an email
saying Rick I honestly don't believe I
got my money's worth I want my money
back and I'll send it back to you
there's no other conference on the
planet that I know of no other
investment conference on on the planet
that I know of where the sponsors have
the confidence in their content that
they can say to the attendees absolute
unequivocal money back
guarantee okay thank you very much for
going through it as I said I'm really
excited to attend and I always
appreciate the recording option because
there is truly so much to see so I'll
leave a link in the video description so
people can take a look if they would
like to and I'll look forward to seeing
you there just before I let you go
usually we go through your portfolio
review option as well so I'll put it
back to you if you wanted to speak about
that I absolutely want to do that uh if
people care what I have to say about
natural resource investing and want to
personalize it all they have to do is go
to my website rinv media.com list your
natural resource stocks there if I know
them and we follow 800 of them in our
service we will rank your portfolio 1 to
10 one being best 10 being worst we'll
comment on individual issues if we think
we our comments have any value and this
service comes with no cost or obligation
uh all you have to do go to rural
investment media.com list your natural
resource stocks please no crypto please
no tech stocks please no pot stocks or
siloc cybin stocks you know leave an old
resource guy what he does well once
again rural investment media list your
stocks we'll rank them
very good and I will leave a link for
that as well in the video description I
I would definitely encourage people to
check that out and I think we will wrap
it up here this is really good thank you
so much for going through all the
different Commodities that I had
questions about and I will see you
soon thanks for the opportunity
Charlotte and I look forward to seeing
you in boar
Rong of course and once again I'm
Charlotte McLoud with investing news.com
and this is Rick rule
thank you for watching if you like this
video make sure you subscribed to our
Channel we'd also love to hear your
thoughts so leave us a comment below
we'll see you next time
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