Economic Collapse or Boom?: Rick Rule Reveals What No One Is Telling You

In this episode, James Connor of Bloor Street Capital and Rick Rule, President and CEO of Rule Investment Media, reveal the critical economic indicators and investment strategies you need to know as we head into 2024. From precious metals to real estate, and energy investments, get direct access to expert insights and strategies designed to protect and grow your wealth in any economic climate.,With potential market downturns and unprecedented opportunities on the horizon, understanding how to navigate the complex financial landscape is more crucial than ever.

Timestamps:
03:15 – Rick Rule’s Warning: What No One Is Telling You
07:30 – James Connor’s Economic Indicators to Watch
10:45 – Gold & Silver: Your Safe Haven?
13:50 – The Real Estate Market: Invest or Retreat?
17:20 – Energy Investments: The Next Big Thing?
21:00 – Interest Rates and Your Money: What’s Next?
24:35 – Building a Bulletproof Portfolio
28:00 – Viewer Q&A: Your Wealth Questions Answered
32:15 – Final Insights: How to Win in 2024’s Economy

Learn more about Rick’s upcoming conferences:
Rick’s Virtual Prospect Generator Bootcamp:
Date: April 20th, 8am to 4am PST
Learn more here: https://events.ringcentral.com/events/rick-rule-2024-spring-bootcamp?utm_source=aff&utm_campaign=9

The 2024 Rule Investment Symposium on Natural Resource Investing
Date: July 7th, 2024 to July 11th, 2024
Location: Boca Raton Florida
Learn more here:
https://opptravel.zohobackstage.com/TheRuleSymposiumonNaturalResourceInvesting2024#/?affl=Wealthion

SCHEDULE YOUR FREE PORTFOLIO REVIEW with Wealthion’s endorsed financial advisors at https://www.wealthion.com.

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Hi and welcome to wealth on I’m James Connor at wealth on we are always striving to introduce you to expert speakers who can provide insights on where to invest and we’re always looking for new speakers to expand our knowledge base so if you have any suggestions on

Who you would like to see on the wealthy on Channel or any subject matters that you would like to see us discuss please let us know in the comments below our guest today is Rick rule rural investment media and we’re going to get Rick’s views on the economy the markets

And where we should invest our capital in the resource sector Rick thank you very much for joining us today how are things in the great state of Washington James things are wonderful the better for being on with you I’ve been a longtime fan of wealth on well it’s a

Pleasure to have you on so Rick before we dive deep into the economy and the markets I want to ask you one question many people are moving from various States and they’re going to the State of Florida because the advantage tax base there including your neighbor

Jeff Bezos he just left Seattle and he’s moving to Miami and I’m curious why did you leave California and move to Washington State I I did it for a few reasons one was arithmetic uh Mr Bezos is anticipating the fact that the Washington governor uh Insley as he is called Grimsley as I

Call him uh is proposing uh an income tax in the state of Washington or more precisely an excise tax on income since the state of Washington uh since the law doesn’t permit an income tax and Bezos is anticipating that moving to Washington uh I moved from California to

Washington for a couple reasons one was AR arithmetic uh California had a capital gains tax and California had an income tax and Washington didn’t uh pretty good arithmetic I also attended University at the University of British Columbia and began my Brit my business career as an American immigrant into Canada and I

Developed a real fondness for the Northwest so it was always my intention after I became less active in business to relocate to the Pacific Northwest where despite the rain uh I really like the circumstance I like the people here I like the terrain here I even like the weather here so a

Combination of arithmetic and lifestyle is what brought me to the Northwest yeah it is a beautiful part of the world and maybe one of these times when we do one of these interviews we can do it in your of the world on a fishing trip I I I

Look forward to that I absolutely look forward to it if if not in Washington then up in Vancouver where I also frequent so Rick let’s move on now and discuss the economy there’s a lot going on in the world and it doesn’t matter if you’re looking at Ukraine or the Middle

East or the Red Sea or what’s happening in China and and the implosion there but why don’t we begin with the US economy it continues to be very strong and it’s catching many people off guard it’s growing at about 5% the jobless rate is also very low we had a very strong CPI

Number come out recently and that would imply that inflation is still a problem and just on the back of that CPI number the FED funds Market was projecting six rate Cuts this year in 2024 now it’s projecting three rate cuts and so why don’t we just start here with the US

Economy what’s your view what’s your sense of what’s Happening well as you point out uh the US economy is performing by most standard s very well uh I myself am amazed that the key stats of hung in as well as they were uh against what is really a doubling of

Nominal interest rates over the last two and a half or three years uh in Truth uh it is an economy that isn’t benefiting all people uh people like me uh with readily marketable skills and access to credit uh are doing extraordinarily well well in this economy there are other people

Uh people who operate in a service economy that’ll say yes there’s a lot of jobs I have to have three of them to make ends meet so the benefits are probably not being distributed in the economy as well as people would want I I think it needs to be stated too

That part of the strength at Le at least of the US economy has to do with the continued availability of liquidity and credit and if we have a circumstance uh who knows what might cause that that would cause confidence in in itself to fail when confidence fails liquidity falters and so I think

That the there are areas of concern uh around the domestic economy in the United States for me the primary uh area of concern is absolutely out of control spending uh at the federal state and local level which is to say to me the biggest risk in the US economy uh absent

The unspoken risk of nuclear war of course uh is the absolutely outof control level of government spending there are other risks too but I need to say at the beginning that the strength in the US economy is really truly surprising uh again it doesn’t benefit all people I’ll say of interest in the

Little town where I live there’s such a labor shortage that uh entry-level workers at the local supermarket Safeway are paid $20 an hour that seems like a stupendous wage until you consider that the median rental uh in the town that I live in is $2 a foot

A month which is to say a $20 an hour entry level worker at Safeway still has to live with his or her mommy and daddy because they can’t afford the rents uh in our town and I think that’s sort of a uh a way to describe the current state of

The US economy no you raised some very good points there and um I just want to go back and talk about inflation because we saw this CPI number that came out recently there was a lot of strength there and I think a lot of the strength came from the services section or the

Services sector and once again the prices of everything that we consume is going up that’s right I think you and I have discussed before the fact that the CPI while it’s a commonly referred to uh standard for the rate of inflation isn’t uh the CPI first of all is

Hedonistically adjusted uh which means that the people who put together the index assign arbitrary values to the places that you live and the technology that you buy not with the price you pay but rather the value that they ascribe to it uh two when it’s inconvenient it

Doesn’t include food or fuel which makes it to me a useless index because I drive I fly and I eat uh the scariest thing about the CPI uh is that it doesn’t include the largest household expense that Americans face which is tax uh the idea that you have a cost of

Living index that doesn’t include a sector that consumes 40% of many household budgets seems very silly to me when I attempted to create a crude index for the basket of goods and services that I consume uh what I come up with with is that the purchasing power of my US

Dollar savings seems to be deteriorating by about 7% compounded uh that’s gonna that’s going to vary from viewer to viewer but I would really consider that uh both the strength of the CPI is a concern but a larger concern is the fact that for most people it’s an absolutely irrelevant

Index uh it’s it’s a floating abstraction it’s a talking point and one threat that I think investment markets have is that if more people need come to understand the pernicious nature of the deterioration of the value of their US dollar savings in terms of purchasing power that that in and of itself uh

Might create uh a risk I remember uh James I’m enough older than you that I would remember firsthand the fact that in the early part of the decade of the 70s uh while the Hallmarks of inflation were everywhere nobody paid attention because they’d lived through the 50s and the 60s

They’d lived through 20 years of benign economic climate so their expectation of the future was set on a particularly benign past and I think that we have a bit of that uh today I think that what is likely to happen is that at some point in time in

The future people look at the impact of inflation on their savings and their wages and notice the discrepancy between what they experience and what’s stated in the CPI and that the then expectation of and fear of inflation changes uh very much in the way it did in the decade of the

70s and I think that that might that might involve a change in investor and consumer behavior I’m not trying to be an alarmist I I look at the strength of the US economy and I think the conclusion that I come to is that despite uh our faults in the west that

We still have uh a relatively free society and economy and that we still exist in a place where a bunch of pimply-faced kids can take over a garage in Sunnyvale California and out pops Google or out pops apple or out pops Microsoft which is to say I’m delighted

And surprised at the fact that our individual initiative and uh you know resourcefulness and capacity still can Finance our Collective stupidity uh I don’t know how long that lasts but I’m delighted that it has no you raised some very good points there and when it comes to the CPI I agree

100% anything the government whatever the government says I just double it right so if they’re saying inflation’s running at 4% I just round it up to 8% right and even that might be quite conservative now you mentioned something about debt and the record Deb levels really concern you but we’ve heard

People talk about debt levels now for decades and even though the numbers keep going up by trillions every year it really doesn’t seem to slow down the economy it doesn’t really have a negative impact on the economy what are your thoughts on that problem is not a problem until it is a

Problem uh right now we exist uh in a market that’s dominated by confidence the old Parable that uh if you have obligations of a million dollars you have income of $50,000 you have expenses of $55,000 but you have $10,000 in your pocket you aren’t broke till a 10,000

Wears out uh and then in fact you are broke uh my concern is that the impact of the debt won’t be felt until it is my concern is that at some point in time I’m not saying it has to happen soon or that it has to happen at all my concern is that

At some point in time we have a 2008 style event but unlike 2008 we no longer have the financial flexibility to print and spend our way out of it as easily as we did then it’s worthy to note that the fiscal measures that uh occurred subsequent to the 2008 Global

Financial crisis occurred in the context of uh US Government debt being less than 30% of GDP US Government debt is now 115% of GDP which is to suggest first of all that the problem is larger and second of all the scope uh for dealing with the problem

Either by way of quantitative easing or by way of fiscal policy which is to say uh expenditures is substantially more constrained uh I’m not trying to say that this necessarily bites us or if it does bite us and it bites us next week I am suggesting that individual investors and

Savers who don’t take into account both debt and deficits and the possibility of a confidence inspired liquidity squeeze are doing themselves a very broad disservice you’re concerned about the US market and the high debt levels what about when you look outside of the US let’s look at Europe let’s look at Asia

I guess there’s from what I read uh Germany slowing down right now Japan is slowing down are you concerned about any of these events yeah I mean Germany’s an own goal uh it is their own decisions that have contributed to their demise the idea as an example that you rely on Russian

Gas uh or even stranger that you rely on solar in a place where the sun doesn’t shine uh seems extremely odd uh the basics of the German economy German genuity uh the newly liberalized when I say newly 20 years ago liberalized labor markets mean that if the Germans stopped

Being stupid they could start being prosperous again uh pretty immediately the difficulty they have as part of the Euro Community is the bifurcation of Europe which is to say the northern Europeans which generate wealth and the southern Europeans that consume it and it would seem that the southern

Europeans can consume weal faster than the northern Europeans can generate it particularly given the OWN goals that the Germans in particular but also the Dutch seem to be inflicting uh against themselves um I need to say that the relative strength of the US dollar relative to the euro says a lot about

The relative performance of the US economy relative to the European economy uh if the US economy is sclerotic I don’t know what that really means that the European economy is but whatever the word is it isn’t a very pleasant word um I am increasingly attracted to the performance of emerging and Frontier

Markets economies I’m not trying to say that there aren’t risks there but when I look at the growth of the middle class and the gradual liberalization of economies in places like India and Malawi and Nigeria and uh Indonesia I’m impressed with what we have the ability to achieve when I say

We I mean our species has the ability to achieve over the next 10 years you know it’s important that we look back over 30 years and we ascribe much of the increase of global wealth all the way back to dongchao Ping saying to be rich is glorious and the incredible

Advances that we’ve enjoyed as a consequence of the uh increasing liberalization urbanization of the Chinese people and I think one of the undercurrents that we’re seeing around the world is that places that were desperately poor are now merely po and I think part of the

Undertone that gives me a bit of Hope is that uh emerging and Frontier markets will provide a greater boost to the economy over the next 10 years uh than is broadly supposed this is an important part by the way of the Commodities investment thesis too in order for those economies to function uh

There is a whole bunch of material consumption of infrastructure that needs to be consumed if you look at the impact of on commodity production uh around the urbanization of China you will get some sense of the investment that will be required to bring that level of urbanization uh and

Wealth to countries like India and Indonesia and Nigeria but I do think it’s going to occur in fits and starts and that I think is extremely bullish so that’s a good overview of what’s happening in the global economy and how you see it I want to move on now and

Discuss the assets on on how we can invest and how we can make money because that at the end of the day that’s what it’s all about the last time we spoke in Q4 of 23 you were very bullish on oil and very bullish on KN gas are you still

Absolutely I mean the easiest theme to follow for the next five years or so uh is oil and gas that isn’t to say uh uh Global synchronized recession wouldn’t slow down the train uh but the truth is at today’s commodity prices the oil industry in particular makes a lot of money and the

Discrepancy between in BTU pricing between natural gas and oil likely means that that Delta uh resolves upward for natural gas rather than downward for oil the big thinkers would have you say and believe that uh peak oil demand will occur in 20 thou 2030 for political

Reasons they neglect to say that if that happens they won’t be able to fly their private just to Davos because there won’t be anything to fuel them uh as we said in the last interview James but for those people who didn’t listen to it uh their prescription for the future is alternative

Energies we have now spent $5 trillion dollar on alternative energies and we’ve reduced the market share of hydrocarbons from a high high of 82% all the way down to 81% which is to say A5 trillion doll investment has made an infinitesimal impact on the market share of fossil

Fuels as we bring uh the three billion people on the world at the bottom of the demographic curve up the demographic curve uh part of the ascent of humankind in a material sense is all around energy and energy density the oil and gas business I think

Will continue to be a very good business for 40 years but the companies are being priced like the half-life of their economics is in six or seven years which is absolutely wrong uh an intelligently constructed uh portfolio even of oil Majors but better uh including midcaps

On both sides of the 49th parallel will outperform I think almost every index Equity index available in the next five to 10 years and why do you say that well for a bunch of reasons first of all these companies despite the best efforts of their governments to wre them are

Horrendously profitable uh they are making boatloads of money because of the political headwinds that face oil and gas many companies particularly State controlled companies PMX pavesa ypf uh aren’t making the sustaining Capital Investments necessary to maintain their production which means that we will have production shortfalls two or three years

Out which means that prices will stay firm uh even at these prices uh intelligent companies are making a whole bunch of money and there are a bunch of companies on both sides of the 49th parallel that are making the sustaining Capital Investments that will maintain production two years from now three

Years from now five years from now and paradoxically the political policies of Biden and Trudeau guarantee that this will be an immensely profitable business despite all of their efforts to the contrary this is a business that’s doing incredibly well despite the efforts of the politicians to wreck it and I

Believe that voters on both sides of the 49th parallel and in Europe too will come to their census so I think that the politics of oil and gas will get better the business couldn’t get better although it might you have the Belle weather as an example this is not a buy

Recommendation although I own it the bellweather uh Exxon uh probably the best track record uh in capital deployment uh among the majors going back 30 years uh is selling at a very low multiple to free cash flow a very low multiple to earnings they are making uh enough investment to maintain their

Production profile while saying that they’re going to increase returns to shareholders via dividends and BuyBacks by 14% this year at the same time that they made it an extraordinary $60 billion investment in Pioneer over and above their sustaining Capital Investments and while they have a series of Discovery offshore Guyana 11 billion

Recoverable barrels that’s actually big enough to move Exxon I’m not using Exxon as a bu recommendation I’m using it as a uh sort of a classroom style way to describe the overall attractiveness of the oil and gas business in investors portfolio I uh wrote a paper about 30

Years ago which got fairly broad distribution then uh and it called about it talked about the discrepancy between uh yield investors and growth investors and I talked about some of the mature companies and resources the title of the paper is yield or growth why not both

And the beauty I think of the oil and gas industry on both sides of the 49th parallel is that for the next 5 to 10 years there is a subset of companies that will deliver both uh free cash flow and Net Present Value growth and extraordinary current yields um that’s a

Lot of fun and Rick the the price of oil has been hanging in relatively well it’s hanging you in between 70 to 80 a barrel and given everything that’s going on in the world I know you don’t like throwing out price targets but are you surprised it’s it’s not higher no I’m not

Surprised it’s not higher um we have a fair bit of oil uh the price of oil spiked to 90 or 95 uh on the fear of Russian sanctions uh what happened is that we only politically sanctioned Russian oil the Russian oil is Flowing very well it

Just has come to be called uh Indian oil or Indonesian oil or some other kind of oil it is true that the flow of Russian natural gas has been constrained which is why the differentials in European natural gas prices ing in North American uh natural gas pricing uh we actually

Have uh adequate supplies of oil at these prices what we have is unrealistically low market capitalizations and unrealistically high cost of capital as a as a consequence really of politics uh large institutional investors are being asked to reduce their oil and gas portfolios because the portfolios are run by managers not by

Investors uh increasingly they’re complying uh which lowers the market capitalization of companies and also increases the cost of their debt capital for Capital providers like myself people who buy oil and gas shares or lend money to oil and gas companies this is the best possible circumstance so you’re really bullish on

Uh oil and also not gas let’s move on to something else that’s very near and de to your heart and that’s gold and I’m also a holder of gold and gold equities but I have to admit rck I’m a little frustrated with this trade and physical

Gold was up 10% last year give or take but a lot of the stocks were underperforming big time and even now like we’re only two months into the new year newmont’s down 20% on the year Barrack’s down 20% on the year it doesn’t look good give me your thoughts on gold and gold

Equities well despite my age at 71 years of age I’m trying to become richer and trying to become richer involves buying high quality assets asss at fairly inexpensive prices so while you’re discouraged by the gold trade I’m elated by the gold trade uh I would like to buy more gold stocks in particular

Highquality gold stocks and the fact that they’re selling at prices which I consider to be attractive is wonderful for me I realize that I’m Different uh than uh a lot of people I want to differentiate too between investing in gold itself and investing in the gold

Stocks I own gold as insurance I own it because I’m afraid I began adding substantially to my physical gold Holdings in 1998 admittedly a couple years early but I noticed that since 2000 the gold prices gone from $256 an ounce to something like $2,000 an ounce uh an eight or 8.2% compound annualized

Rate of return gold did exactly what I asked it to exactly L what I asked it to and it did it uh in a circumstance where first of all the denominator the US dollar also did well against every other currency in the world which is to say if

You were saving in any currency other than the US dollar including the Canadian dollar uh you did better in Gold than I did but it also did well in a circumstance where people weren’t concerned people weren’t fearful what really moves the gold price is uh a lack of faith in savings instruments

Denominated in Fiat currencies in particular in the US dollar and my suspicion is that as the really truly pernicious impact of inflation true inflation not the CPI begins to bite people that their uh fear of inflation and their receptiveness to uh inflation oriented investment techniques including gold will increase in our last interview

James uh I mentioned that the market share of precious metals and precious metals related Securities in the US market I can’t comment on the Canadian Market but in the US market was less than one half of 1% which is to say that the market share of golden silver precious metals related assets relative

To every other asset class is less than one half of 1% the four deade mean market share was 2% if the fear of inflation among other things uh begins to catch people’s notice my suspicion is that the market share of precious metals will revert to mean it’ll go from 1 half

Of 1% to 2% that would generate a fourfold increase in demand for precious metals and precious metal Securities and that’s precisely what I think is going to occur will it occur tomorrow likely not uh I don’t expect uh a US interest rate cut in the near term uh and I don’t

Expect an immediate diminishment in confidence in the US market which means that 20124 might be fairly benign uh and then and hence demand for gold could be constrained that doesn’t really matter to me uh I’ve come to learn that my life seems to be denominated in five to 10

Years year Cycles not five to 10 week Cycles now the gold stocks are different than gold uh the gold stocks have uh the gold stocks are trading as cheaply relative to the gold price as they have ever been in my career partly I think that’s a function

Of the fact that speculators don’t own gold for the reasons I do they don’t care about 8% compound returns they want some number like they experienced in the 1970s and they think that the fact that they want something is somehow relevant which it isn’t uh but I think too that the

Structure of the Gold stock market which is to say the performance of the of the gold mining companies as companies has left a lot to be desired in the period 2000 to 2010 the gold prices you recall ran from something like $250 to something like $1,750

And the free cash flow among an index of senior gold and silver stock silver producers declined it took amazing skill to take a Sevenfold increase in the selling price of their product and turn it into a decline in free cash flow the consequence of that is that gold investors in general and particularly

General investors looked at the gold mining sector as a place where Capital goes to die uh the me that you would want a rapid increase in the gold price delivered a decrease in the per share cash flow now I would like to point out to investors that the institutional

Investors are keeping the gold mining companies on a much tighter lease now and most of the management teams that provided presided over that diminishment in value have been allowed to pursue other employment activities they’re doing something else coming down from there uh all the way down to the junior companies uh

We’ve talked about this before if you invest in that sector as a sector you will go broke uh the 2500 or so companies that populate the global Universe of Junior mining companies were you to merge them all together call them Junior uh junior exploro or something like that that

Company in a very good year would lose two2 billion dollars uh in a bad year it would lose eight billion dollar so the sector as a whole is where Capital goes to die that obscures the fact that maybe 5% of those issuers generate such superb returns that they add legitimacy and

Sometimes luster to a business that loses between two and eight billion dollars a year this is all about stock picking this is all about disciplining yourself as an investor this is all about regarding gold mining companies as companies not merely as proxies for gold and I think that we’re in a uniquely

Good period to do that because there’s no competition among other investors let’s look at a little arithmetic just for fun to illustrate this Franco Nevada from my point of view the preeminent gold mining equity on the planet lowest mining lowest management expense ratio highest operating margin uh loses Cobra Panama at least

Temporarily which accounted for 15% of net asset value and the stock declines by 40 2% now let’s make this dollars and cents you start with a dollar bill somebody takes away a diamond a nickel somebody takes away 15 cents and the consequence of that is that the company now sells for 68

Cents what kind of arithmetic is this in particular because if you look at the Cobra Panama situation you come to understand that there’s 8 billion dollar invested in that mine that the mine uh constituted 25 or 26% of Panama’s export earnings and seven or 8% of GDP and if

They actually uh have to go through International arbitration there will almost certainly be a judgment against the Republic of Panama in favor of uh first Quantum uh and Franco Nevada but more likely uh over two or three years there will be a political resolution to the dispute but even if there’s not a

Political resolution you have a circumstance where sentiment caused a market where 15% of N Net asset value came off to decline by 42% this is a wonderful circumstance if you are an investor that doesn’t require the psychological support of a market uh if you understand that a market isn’t a

Source of information but is rather a facility for buying and selling fractional ownership in businesses the idea that these better businesses uh get sold off continually is if you are a true investor a huge benefit to you yes you bring up a lot of good points there I mean Franco Nevada

Is one of the Premier Royalty companies in the world if not the Premier Royalty company but very unique situation so I want to go back and look at the producers okay let’s look at Newmont let’s look at baric and depending on who research you look at um these stocks are

Trading at $1,600 gold okay and meanwhile the actual spot price is around $2,000 gold do you think the price of gold has been artificially kept up by buying by the central banks because they they have been very aggressive uh buyers in recent years and in to your point earlier all they’re

Trying to do is protect their reserves of US dollars but I guess my question to you is if the if the central banks stopped buying the price of gold I would think would drop quite significantly and therefore producers like Newmont and barck are really factoring in the true

Gold price I disagree with that from two points of view uh the first is that I think that we are coming into a period where while US dollar hegemony does not end it becomes less important I think the uh export of us political will through the weaponization of the US

Dollar and the weaponization of the US Securities markets means that countries outside the US increasingly have to buy gold to trade with each other outside the US dollar I don’t believe that the brics currency will ever get off the ground because I don’t think those companies trust each

Other increasingly they don’t trust us either and I think that gold will uh in terms of international trade regain its status as money uh I don’t think that the Chinese are buying gold because they want to I think the Chinese are buying gold because they recognize that they

Have to they don’t want to settle trade in Russia with rubles uh the ruble is a worse floating abstraction than the US dollar people who buy crude oil from Nigeria certainly don’t want to receive n uh the naira seem to decline at 25% compounding year in year out they want

To do business because they have to outside the US dollar because the US government is making them do business outside the US dollar and the only medium of exchange that has some price stability uh and some liquidity is gold uh so I personally see as long as the United States continues to pursue

Its obnoxious foreign policy that demand for gold will be strong let’s look at a couple of the producers and let’s talk about the decline uh barck was a horrible underperformer for 10 years and it’s viewed by institutional investors historically the same way that they would view AIDS uh meanwhile uh the company has

Made remarkable uh efforts to become a better company but part of those efforts has been that Mark Bristo uh has pursued assets where they are as aars to where the market would like them to be so his moves uh into places uh like Pakistan uh have from the markets point

Of you led to the perception of increased risk if you look at the suggest that Bristo had uh before coming to baric uh at rold which he merged into baric what you will see is that he is remarkably astute in doing business in places that other people would Define as

Risky so I think the market is mispricing the political risk around baric it is true that uh baric will have trouble maintaining production if they don’t increase uh their development spend and increase it fairly rapidly in the case of numont uh I think what you have is numont acquired newrest there were a

Bunch of holders of newrest who owned newrest because they were looking for a transaction when they got the transaction they sold and they sold in new mod shares which is what they acquired if num mod is successful doing what they say they’re going to do which is focus on

Their tier one assets uh and sell their tier three assets and some of their two-tier assets so that they can improve their balance sheet and improve their ability to focus on their tier one assets uh I say if I’m not saying they’re going to do that but if they do

What they say they’re going to do new will really surprise people in the next five years so I I view the selloff in Newmont as very much a one-off event associated with the acquisition of newest which I believe by the way was a good thing I think you need to it’s

Important I think that you need to look at these companies one at a time I don’t think it’s useful to look at the gold mining industry as a group uh I have said before traditionally it’s been poorly enough managed uh and there’s been enough variability in commodity price and if

You invest in the sector you go broke either quickly or slowly if however you do as I’ve done over 50 years and I’m not trying to say I have made some horrific mistakes but if you have done as I have done which is to say invest counter cyclically and invest on the

Basis of real true Securities analysis not merely looking to companies as a proxy for upside in the commodity price this is a very good business and the fact that it’s cheap makes this a good entry point so just to summarize you are bullish on gold and the long term not so

Much in the short term because you don’t expect a cut in interest rates um what about silver what are your views there my experience in silver has been that it lags gold that uh in a precious metals bull market gold leaves and gold leads and then silver

Follows uh and usually by some time what happens however is that after the narrative in a precious metals bull market is established by gold when silver does move it moves further and faster uh and the real Jack Rabbit are of course the silver stocks the last movers silver has to move before the

Silver stocks move uh when the silver stocks move or when the narrative extends to Silver what seems to happen is that the combined the combined market caps of the real silver companies you know not the little Penny dreadfuls uh not the silver Pretenders that are looking for silver but don’t

Have any uh but rather the development stage companies the advanced explorers the produc producers the senior producers there is not enough market capitalization in the silver space to handle the influx of generalist money when it comes and the upside explosion that you get in silver prices silver equities prices I’ve seen it happen

Three times in my career is truly staggering um although I don’t expect this event to occur for a couple of years because I have three prior examples I can’t resist uh beginning to buy those stocks now there’s a flaw in my character which means once they’re up off the bottom I’m psychologically

Unable to buy them uh I’m a Perpetual Cheapskate and a credit guy to boot so I have to be early or else I miss the move entirely what that move means is that I am uh assembling a basket of silver equities with the view that I get rewarded in late 2025 early

2026 uh something which many people don’t have either the psychological uh or the financial ability to do yeah I’m I’m one of those people especially for my psychological point of view now Rick why did you attach 2025 2026 onto this trade well if you uh follow the logic that it’s unlikely that

You get a major move in the gold price uh without a move down in US interest rates without the Fed capitulating uh and you believe that gold has to leave lead silver you confine you can sign 2024 uh to be a consolidating rather than a rising year in gold and by Nature

If you think that silver is delayed that takes that trade out to 2025 or 2026 if we have some exogenous shock to the system uh if we have some sort of liquidity panic and the FED reacts the same way it did last time by opening up

The spigots then all bets are off uh I I think you’ll see this thing take off in the same way that gold took off in 1975 remember however that I said if uh if the current trends stay in motion I suspect that we’ll have a lackluster year a sideways here I’m buying

Nonetheless things are cheap enough and in my experience well Bernard baroo once said uh the only investor who absolutely bought the bottom and sold the top was a liar it didn’t happen uh and I I suggest that market timing that is that assigns a higher value to anything that being approximately

Right is a joke uh you can’t do it ER particularly in capital intensive cyclical businesses um you have to remember the dictum that which is is inevitable is not necessarily emminent the fact that you wish it was doesn’t matter wishes aren’t profits uh you have to pay

Attention to the markets as they are not to the markets as you would wish them to be so I just want to summarize your views on commodities for 2024 very bullish on oil very bullish on that gas you’re bullish on gold and silver but more longer term you’re

Expecting a rather benign 2024 for those medals and do I have all that correct uh yeah I I I I’d rather not be constrained to 2024 although I think 2024 will be a lackluster time for precious metals I don’t see a huge upside breakout in the oil Market I just

See a stupidly good business where your current income from dividends finances your quest for long-term capital gains it’s the juxtaposition of RoR reward that I love so much about the oil business and I I can’t let you go without discussing uranium uh in our previous conversations you said the easy

Money for Uranium has already been made we’ve seen massive moves here in the last couple of years maybe you can just tell us briefly what do you think of that sector right now yeah when a commodity goes from hated to tolerated the easy money has been made in a basket

Of uranium Juniors is up two or 300% uh it was impossible to talk people into buying uranium in 2022 and now that the price is up everybody wants to buy it uh I believe that there are structural changes in the uranium business which we could discuss in a a

Subsequent interview it takes 15 minutes to get through the status of the uranium Market as we as we sit but the structure going from a spot Market to a term Market has profound implications for some uranium stocks and they’re all bullish uh the idea that you have price

Certainty around the selling price of your product for five years or 10 years or 15 years means that uranium is unique among Commodities businesses this should for the right companies lower their cost of capital because of the revenue certainty uh and uh provide unusually accurate forecasting around the equities

Uh on a company by company basis uh what I think it means is that structurally the sure money is ahead of us while the big money or at least the easy money has already been made and Rick if there was another sector like uranium was two

Three four years ago what would it be well I think if people are looking for really dramatic upside in the equ equities they need to begin to pay attention to the silver equities I think you’re early uh I think you always need to be early uh if you and I are having a

Discussion 12 months for 18 months from now the Commodities that will be hated then which is to say the Commodities then that you’ll want to be invested in are platinum and Palladium uh which have really underperformed and will continue to underperform and nickel uh remember that my investment thesis is to love

Hate look for hate and looking ahead people are going to hate the nickel stocks they’re shutting down nickel production capacity worldwide uh and I think once the commodity becomes really and truly hated that it will provide the same type of upside perhaps not as dramatic as uranium

Did always look for hate so Rick so far our discussion has been focused on resources but many people might not know but you’re also very familiar with the US banking system and I want to get your views on on New York Community Bank it it’s kind of ironic because a year ago

Uh it’s when we had the regional banking crisis and we saw the collapse of um Silicon Valley Bank Signature Bank and also the demise of First Republic as we knew it but it’s kind of ironic that New York Community Bank is also getting into trouble because of the assets it bought

From Signature Bank I’m curious to hear your thoughts on on this situation and do you think there’s more to come uh I think there is more come but I think the banking business is a uniquely good business the temptation of the banking business to be stupid because of the

Leverage that’s available is very high there’s a few things that can go wrong with a bank one you can make loans against assets that you don’t understand well because the assets themselves have performed well in years past which does not necessarily make you a more knowledgeable

Banker uh the second thing that could go wrong and this goes wrong much more frequently is time spread uh banks that buy long-term assets long-term bonds or loans with six or seven or eight year durations that are funded with short-term liabilities which is to say overnight deposits if the interest rate

Goes up your cost of capital goes up while the capitalized value of the distributions that you bought goes down this is truly an ugly circumstance and this is what brought down the US savings and loan industry this is what brought down first Republic this is what brought down uh Silicon Valley Bank

H and it’s likely what brought what brings down uh Community Bank of New York there are a lot of Institutions that have done that which is really truly profoundly stupid the prevailing deposit interest rate in the United States is about 4.15% uh the prevailing lending rate in

The United States geared to Prime is some number uh around eight and a half or 9% the idea that you can uh fund floating r assets with floating rate deposits and enjoy a 400 basis point spread in the Middle with 10 to1 leverage if you don’t do anything

Stupid uh is of profound interest to me I mean that’s that’s why at age 71 I’m starting another bank uh unfortunately the temptation to do something stupid in the banking business to employ excessive leverage and employ these time spreads to get into lending sectors that are hot rather than lending sectors where you

Have specific expertise is too high and there is more sin in the community banking sector you can expect more problems because there are more stupid Bankers than there are smart Bankers interesting comments and it’s going to be interesting to see what happens here in the coming weeks with

This whole situation Rick as we wrap up you and your team are always holding various events what events can we look forward to in the coming weeks and months from you and your team as you know James we do boot camps which are eight and a half hour eight to eight and

A half hour long deep Dives around various subjects we did uranium when you should have been buying uranium we’ve done silver we did royalty and streaming we did development stage companies because exploration is so roundly hated the next boot camp that we’re going to do is around exploration I love hate uh

And I think we’re going to have a real exploration Resurgence uh in the next couple of years so we’re doing a prospect generator boot camp which is a unique form uh of exploration compan company pardon be April 20th we’ll do an eight and a half hour long deep dive about analyze exploration

Companies how to invest in them a couple of case studies uh you can attend this conference in the luxury of your own home you don’t have to come to some exotic location importantly the the tapes the recordings will be available for a year after the event because

There’s no way you can absorb over eight hours all of the information we’re going to give you importantly too the tuition which is $999 us uh it comes with an absolute goldplated money guar back guarantee if for any reason you don’t think that you got your $99 worth email me I’ll give

You your $99 back now it’s important to note in 30 years of money back guarantees I’ve had to refund less than one quarter of 1% of the tuition payments paid me because we focus so much on delivering value beyond that of course we have our annual Booker reti investment Symposium

July 7th through 11th I humbly believe this to be the finest natural resource investment conference on the planet for various reasons again you can obtain you can go in person to boar Raton or you can attend like 1100 other people did uh via live stream at home in either

Circumstance you’ll have access to the recordings for a very long time and once again the tuition is 100% refundable if for any reason you don’t believe that you got value for your subscription I’ll give you your money back well those sound like amazing events Rick and I

Want to thank you very much for spending time with us today and if anybody has an interest in either one of those events we will put details in the show notes below Rick once again thank you and I look forward to our next conversation thank you James and I would once again

Invite all of your listeners if you care about my thoughts around natural resources you can have my thoughts about your natural resources go to rule investment media.com list your natural resource portfolios please no crypto please no pot stocks please no tech stocks natural resources only I’ll rank them no charge no obligation rule

Investment media.com list your natural resource stocks all rank them and send you back the rankings by return email James I’m a big fan of wealth on thank you for having me on thank you very much for making the time we do appreciate it well I hope you enjoyed that discussion

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