Title:   Are Markets Missing The Commodities Boom? | Rick Rule
Show:    Market Insider (host Tiam Kurami)
Guest:   Rick Rule (Rule Investment Media; founder, ex-CEO Sprott US Holdings)
Date:    2026-JUN-06
URL:     https://www.youtube.com/watch?v=dYerUdC2dFg
Length:  ~44 min
Note:    Auto-transcript, timestamps mm:ss. Saved for personal study.

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(00:00) The demand for natural resources are on the rise significantly globally because of the boom in AI and also the straight of hormones being closed. Is there a big opportunity in this space right now? Today we sit down with Rick Rule who's an industry veteran. He's going to tell us what's going on in this space and what kind of opportunities are out there and how to invest in natural resources.
(00:24) The whole world wants to live the same energy dense materially rich life that you and I live. And for that the global consumption of copper is going to increase. Meanwhile, if the future is in artificial intelligence and data centers, the amount of copper that we're going to use compared to the amount of copper that we use today is staggering.
(00:43) Literally, we will use more copper between today and 2050, 24 short years, than we have used in recorded human history. >> I'm Same. Welcome to Market Insider. Rick, it's great to have you on. Welcome back. >> Thank you for having me back. I enjoy these discussions. >> We want to talk to you about the commodities.
(01:07)  You're an expert in this field. You know, mining pretty well and you're tracking what's going on with commodities. What are you seeing right now in the commodity space? Well, certainly the thing that's most, you know, most most appropriate in the news is the conflict in the Straits of Hormuse and the impact that that con that that conflict has had on oil and natural gas prices.
(01:28)  It's also worth noting uh although less wellknown that in addition to being an important trans shipment point for oil and gas, the Straits of Hormuse uh control about 40% of the world's export supply of helium. They're important for nitrogen and nitrogenous fertilizers, sulfur and sulfuric acid. So there's broad broad disruption uh across a whole bunch of natural resource uh commodities as a conse as a consequence of that conflict.
(01:57) Similarly, the damage done to the economy by higher energy prices which act like a tax uh taking uh disposable liquidity if you will out of other sectors has begun to slow the economy as a whole one would suspect on a global basis. And the third impact that we need to talk about that's particularly topical right now is that the conflict itself has renewed interest in energy security.
(02:31)  Uh your older uh listeners will recall the Arab oil embargo 1972 1973 and the impact that had not only on oil and gas markets but on energy and energy security generally. One of the unsung beneficiaries of this conflict I think will be the uranium market. Uranium being the only metal with enough energy density that a smear fairly small quantity of it enough to fit in one warehouse could as an example power Japan for 5 years or more.
(03:03)  Uh there is a forgotten fact that the French nuclear fleet, the fourth largest in the world, and the Japanese nuclear fleet, the third largest in the world, were constructed largely in response to the need for energy security that was evidenced by the Arab embargo. We've had no concern uh about uh energy security for 50 years until now, but those consume those concerns loom large.
(03:27)  So yours is a particularly topical question right now. So do you see uranium u surging and do you see how how would you use this information to invest? >> Uh not surging in the near term because it's already surged. Uh the price of uranium in the last 5 years has gone from $20 a pound which was clearly unsustainable to $85 a pound.
(03:51)  $85 a pound if we don't suffer too much inflation is likely to be an incentive uh price necessary to uh increase supply but demand will absolutely surge um absolutely surge many parts of the world China in particular uh have been building nuclear plants at a pretty good pace and even in the west the fact that nuclear power generates reliable base load power without generating carbon emissions has meant that interest has returned uh in in places like the United States as an example.
(04:28)  But the new impetus that you're seeing will among other things greatly increase the pace of Japanese restarts and will cause other parts of the world to look much more favorably at new plant construction. Will this matter in 2026 or 2027? Likely not. But when you change the demand picture in 2029, 2030, 2031, what happens is that long-term uh natural resource investors can look at the uranium business uh with a certain calm knowing that the ability that we have to increase supplies to meet demand is very limited. And the consequence of that is
(05:12) that price rises in the outears are an inevitability. >> So these are miners, right? So you would you would uh point people towards miners of uranium and say you got to look into this as a potential investment. >> I think there's likely uh potential throughout the value creation stream, but I'm much more familiar with the miners.
(05:37)  Uh the miners are probably the easiest part of the value chain to understand. You don't need to know a whole bunch about enrichment technology to understand that miners will do well during a period where demand outstrips supply. So in other words, yes, there are probably other ways to play it, but I would be ill advised to talk to your listeners about them.
(05:56) >> What do you think it's going to happen to oil? The prices are going up and down every day. It's like 5% up, 10% down, 5% up, 10% up. You know, is it going up and down? So what what are you seeing out there? >> Well, you got to tell me what's going to happen in the straits. I don't know. If we don't resolve that conflict quickly, uh you're going to see another surge up in oil prices.
(06:19)  Oil prices right now reflect uh the probability of a shortage. They don't yet, except in a couple parts of the world, reflect a real shortage. So, the price rise that we've seen uh really reflects hoarding and the sense that uh uh real shortages are occurring. But those real shortages are going to occur very rapidly.
(06:44)  Now, if the conflict doesn't resolve itself, I'm not smart enough to tell you uh if the conflict resolves itself. Although I need to say uh not being a foreign policy analyst that it seems to me for at least two parties to the dispute, this being the Iranians uh and the Israelis, that it would seem that the leaderships in both countries view this conflict as existential.
(07:09) Uh and I'm not smart enough to tell you how it ends. If it doesn't end, uh, you're going to see sharply higher oil prices. In North America, we are not going to experience supply shortages. The United States, as an example, is an exporter of condensate and natural gas. Canada is an exporter of oil. So, the two markets, including Mexico, if you will, as one, will not experience supply shortages.
(07:39)  But given the fact that oil and gas are world markets and that both countries are exporters, what will happen is that North American consumers will still have to pay world prices for oil and gas. And if that if the conflict doesn't resolve itself, you're going to see those prices higher. Longer term, uh we have an interesting circumstance coming up.
(08:00)  a lot of the marginal demand for oil uh and the increase in marginal demand for oil occurs in lowincome countries and in those in those countries prices like $120 or $150 a barrel actually leads to demand destructions. Uh you know you haven't seen as an example in California despite higher gasoline prices and sharply higher taxes much reduction in driving.
(08:23)  I'm sure when you drove on your way to work this morning, you didn't notice uh greatly reduced traffic as a consequence of oil prices. But the response of US consumers versus consumers in Sri Lanka or Pakistan uh or some place like that is very different and we will see if this conflict continues and the oil prices go up uh increasing amounts of demand con demand destruction in poor and frontier markets.
(08:52)  Now, do you see these companies, oil companies that that do the work of getting us the oil, do you see them as being good investment here and do you see in the long run um opportunities in this field? >> Uh the answer to that is in the long run yes. Uh in the near term if the conflict resolves itself you will see lower oil prices and hence you will see lower prices for oil and gas companies.
(09:18)  In the longer term, this is a very very good business. If we had been having this interview in December of last year or January of this year, I would have told you this was before the conflict of course that oil was oil and gas were about the only unloved commodities left, which is to say that uh the stocks were cheap.
(09:43)  uh unloved came to a screeching halt uh really as a consequence of excuse me really as a consequence of um this conflict. Looking longer term and I think resource investors need to look in the longer term irrespective of how this uh circumstance in the Gulf resolves itself. The oil and gas industry uh as a whole including the state controlled firms have been underinvesting in sustaining capital for a very long time.
(10:10) What that means is that the price that we're seeing today, we would have seen in 2029 or 2030 anyway because the cumulative effect of underinvestment in sustaining capital means uh longerterm reductions in countries producing profiles. And by the way, that underinvestment in sustaining capital looking at the years 2023, 2024, 2025 was about a billion US dollars a day.
(10:40)  It was a very very very >> billion US dollars a day of underinvestment >> per day of underinvestment. Now this includes the stateowned firms uh and the stateowned firms are instructive. If you look at Pedvesa, the National Oil Company of Venezuela, or Pummex, the National Oil Company of Mexico, you can see what systemic underinvestment does.
(10:58) Both of those countries, despite having massive reserves, have lost 80% of their producing uh capabilities as a consequence of underinvestment. to the extent that that goes on uh I mean this can be brought back over time but over time takes a long time and it takes a lot of money. So whether or not oil and gas companies are a good investment depends on whether you own any.
(11:26)  Uh if you are like me uh or people who listen to me uh and you own a lot of oil and gas before the conflict probably in the near term you don't want to be a buyer if you don't have oil and gas in your portfolio thinking as an example that Al Gore or Greta Thornberg were right. We were going to stop using oil in 2030. You need to own these stocks.
(11:48)  you need to own some of them. >> When you mentioned if the conflict wasn't there, you were predicting the price to be at the level it is by 2029 2030. Did are you thinking that the supply would fall by X amount of percentage based on the the information that you've seen under with under investment of a billion a day? >> Yes, absolutely.
(12:11)  Uh systemic underinvestment leads to production shortages and it leads to production shortages much more quickly. uh than most analysts uh are willing to admit. If you'll uh bring yourself back in your memory to 2020 2021, the COVID period, you'll recall that during CO uh there was a lot less demand for transportation fuel, gasoline, jet fuel, stuff like that.
(12:38)  And the oil price fell like a boulder off a bridge, uh actually going to zero for a while before settling out at about $20 a barrel. Now, at $20 a barrel, it was costing the industry about $50 or $60 to make a barrel. They were selling for 20. Fairly obviously, they weren't investing.
(12:55)  And the consequence of that is that when the oil price rebounded, it didn't rebound to 60 or 65. It rebounded to 100. These periods of underinvestment lead to production shortages. And in the near term, these production shortages don't create in the near- term demand destruction. So, you get these price spikes. uh the circumstance that we have been involved with uh really beginning the end of 2024 has been systemic underinvestment uh in sustaining capital investments as well in the United States as a real reliance on shale basins and for reasons
(13:32) that we could go into in another interview. Uh those shale basins which have very high decline rates are particularly susceptible to reductions in sustaining capital investment. And do you see uh where what are we doing right now? What are these companies doing right now? Are they increasing the production capabilities or are they still in the same trajectory of not investing enough? >> Not all companies, but most companies are not investing enough.
(14:04)  Wall Street is rewarding companies that distribute surplus capital to shareholders rather than reinvest. So, ironically, what Wall Street is doing is they're asking the oil industry to in effect cannibalize itself uh either by way of share buybacks or high dividends. These are very popular on Wall Street. You know, shareholder returns, current shareholder returns are very popular on Wall Street.
(14:26) And they're penalizing the companies that are a bit stingier with their shareholders in favor of growing their businesses. So on the one hand uh you have companies like Exxon which are not only making sustaining capital investments but investing billions of dollars in new projects but you have to compare that with many companies uh including almost all of the state controlled companies that are deferring sustaining capital investments in in favor of returning uh capital to shareholders or in the case of uh state
(14:57) controlled companies uh using the free cash flow to maintain politically expedient domestic spending programs. >> So you mentioned Exxon and you mentioned are there any companies that you're looking at or any any categories of companies that you would say these are good potential companies that are investing in the future and they will have benefits down the line.
(15:22)  Exxon is one sizefits-all. Uh it's a very large company. It's an integrated company. So during periods of low oil prices, they make money in refining and marketing. During periods of high oil prices, they make money in exploration and production. They're great capital allocators. Um it's where you start an oil portfolio.
(15:42)  It was much easier for me to recommend Exxon in December and January at $90 a share. Uh recommending it at $180 a share is not exactly a no-brainer, particularly if the circumstance in the Gulf resolves itself. I also hold personally uh a basket of very highquality Canadian producers which are selling at discounts to their American beers because of the headline political risk in Canada.
(16:10)  That headline political risk being a prime minister who for reasons of his own doesn't like the oil business. I believe that the political circumstance in Canada resolves itself because that same prime minister is a big spender and the best source of tax revenue that Canada has in terms of growing is their oil and gas business.
(16:32)  So I believe that his fiscal need will overcome uh whatever concerns he has about the oil and gas business and that Canada will increasingly facilitate uh transportation options and production options. So, I'm shading my own portfolio to the highquality Canadian names over the American names. Although the American names aren't necessarily overpriced, the Canadian names are selling at a much greater discount to net asset value than those American names are.
(17:04) Do you uh factor in some risks with companies that are operating internationally because of the recent geopolitical issues that we're having or do you um because these companies are probably bigger you you don't look at them much >> uh some of the international companies are in fact are in effect state controlled uh and those are problematic as an example the interference of the French state with total uh and the prior interference of the British state with British patrol him has been a problem.
(17:35)  I know that's not the political risk you're thinking about. Uh you're thinking about small >> geopolitical things, but yeah, >> nationalization, stuff like that. >> You know, we don't like to admit it in the United States, but in the oil and gas business, the United States is a politically risky jurisdiction.
(17:53)  Uh one need look no further than the governor of California, Gavin Newsome, to see what political risk looks like. uh going to war with the state's oil companies, going to war with the state's refining industry, uh shutting down uh drilling in the Los Angeles basin, the Santa Barbara basin, large parts of the Sanwaqin some years ago in the decade of the 70s, as example, when the oil price rose, Washington's response rather than trying to increase production was to put in place excess profits tax.
(18:25)  in other words, deprived the industry of the capital it needed to grow in favor of grabbing the cash for politically expedient domestic spending programs. The same thing happened in the province of Alberta in Canada, allegedly a free market jurisdiction. So the point is that political risk exists everywhere in all stripes, in all languages, in all complexions.
(18:45) Uh before we're too aggressive uh criticizing the political risk that might occur in a place like Kuwait or Angola, we need to look at California and Alberta. >> Let's move on to copper. And you have been talking about copper a lot and you've been recommending it, right? You've been seeing a surge in copper.
(19:03) Can you tell us what's going on with copper now? And >> in copper, we have been systemically underinvested in exploration, in construction, in development, and we've been doing so for 30 years. This is a capital-intensive long-term business. There is nothing we can do right now. Nothing. Not one thing that we can do right now that will prevent a supply a supply shortage within 5 years.
(19:27) The only way that we will get away without sharply higher copper prices would be a synchronized global depression which would reduce demand simultaneously with supply falling. Right now, uh, the world is using more copper than it produces. Um, that's okay for a while. The difficulty is that we don't have enough in the pipeline, enough development projects in the pipeline.
(19:55)  And in the United States, our permitting timelines are so long that there's virtually nothing that we could do. If you and I decided that as a consequence of that, we were going to go out, form a company, and we were going to go explore for copper. Maybe explore for copper in underexplored areas, which is generally where you're the most successful.
(20:14)  It's likely that a regional exploration campaign that you and I funded uh could be successful in 10 years. Uh after we found a mine, it would take us 3 years to drill that mine out. So now we're 13 years. It would take three years after that in a good country to permit and finance the mine and then two years to build it.
(20:36)  So if we started today 18 years from now, you and I could impact copper supply. >> The difficulty is that people weren't doing enough of this 18 years ago. >> Uh I was at Metals week in London at the end of last year, which is a big confab, you know, with all the mining industry guys, and there was an interesting paper presented, and I hope your listeners listen to these numbers.
(21:01)  It was estimated that the 10 largest copper companies in the world need to invest $250 billion dollars over the next 10 years to maintain supplies at current levels. The difficulty is that current levels aren't sufficient to meet current demand. And it is estimated that global copper demand before AI and data centers is growing at between 1 and 1 and a.
(21:27) 5% compounded. If you believe the numbers that people like uh you know Google and Amazon are putting out uh in terms of their data center demands, we will need to produce uh more copper between 2026 and 2050 than has been mined in the history of mankind. Um I don't think we're up to that, by the way.
(21:54)  Um a and the other thing about that $250 billion number is that that's constant $225. It doesn't uh include inflation and inflation in mine construction and for that matter the inputs in mine operations are running at between 8 and 10% compound annually which means that 5 years out that $250 billion number rises by 50%. That's a a lot of money.
(22:21)  a lot of money and that amount of money is necessary to maintain current production which doesn't include anything for an increase in demand or the fact that we're in a current supply deficit. There is no way that I can see short of a global depression that the copper copper doesn't get rationed by price. How much investment is going in right now? Is that the 250 mil billion? Is that is that >> that's what's needed.
(22:52)  We are now coming into a copper construction cycle. For a long time, when copper was languishing at $3 a pound, the industry didn't make enough money to build new mines. Uh $6 a pound is not a bad incentive price. But the fact that we haven't looked for copper for 30 years means that there's not a lot of construction ready projects to build.
(23:13)  Those projects which are construction ready, those projects which are ready to build uh are now getting financed. But in this country, in the United States, uh, where the supply would be of the most concern to you and I, uh, the best copper deposit in the United States, undeveloped, is something called the Resolution Deposit.
(23:30)  It's in Arizona, which is the heart of America's copper country, and it's a huge deposit, well over a billion tons of copper, and the grade of the copper is over 1 and a.5% copper by rock volume. The average mine grade worldwide is about 1/ half of 1%. So, this mine is three times the average grade worldwide.
(23:49)  It's well located uh between a couple of copper mines. There's a highway that goes across the property, a railroad, power, water. And this thing has been in permitting for 28 years. Been stuck in permitting for 28 years. All of this points to uh the fact that we're going to have to get used to higher copper prices.
(24:14)  And for investors who are willing to take the time to identify those few companies that have good project pipelines and the access to the cash uh necessary to develop them, those companies will do very well over the next 10 years. Now, make no mistake, looking further out, this resolves itself. The cure for high prices is always high prices.
(24:38)  uh over time uh if the copper price gets high enough, we'll find a way to use other materials to substitute for some of the uses in copper and people will figure out how to fabricate goods that are made with copper more efficiently. But in the near term, none of those are options. How do the miners benefit? So, when the price goes from£3, $3 per pound to $6 a pound and how does it work for >> miners? At uh at $3 a pound, uh if you were Freeport, as an example, the largest US copper producer, you were probably making copper for a buck 75.
(25:15) So, you were doing fairly well selling copper at $3. But the $3 price wasn't high enough to incentivize new mine construction. If you were doing okay at $3, you are swimming in cash at $6, you are swimming in cash. And the big copper producers worldwide, the BHPs, the Rios, the Glenors, the Freeports, uh the Angloex, these companies are making a lot of money at this price.
(25:46)  A lot of money at this price. The shareholders after some years of drought would like some of that money back. Uh and so the industry is paying fairly generous dividends, but the industry is looking right straight down the barrel at an incredible capital spend to merely maintain their current levels of production, never mind increase it uh to meet the demands as an example uh of rural electrification in the third world or uh data centers, electric vehicles, the electrification of everything.
(26:19)  You know, if you think about your life, uh the wonderful life that we all live in the United States, uh is really among other things a function of our fantastic energy density. The ability that you have to live in a nice home, to drive on a California freeway to work, to broadcast from a studio like this, everything that you do is extremely energy dense.
(26:42)  And by all accounts, it's becoming more dense. The way that that electricity gets generated requires copper. Getting that copper from where it's generated to your home requires copper. Utilizing uh that electricity in your home to enjoy the lifestyle that you enjoy today or to power the studio that you're talking to me from all requires copper.
(27:06)  Uh the whole world wants to live the same energy dense materially rich life that you and I live. uh and for that the global consumption of copper is going to increase. Meanwhile, if the future is uh in artificial intelligence and data centers, the amount of copper that we're going to use compared to the amount of copper that we use today is staggering.
(27:28) Literally uh if the projections of data center demand are accurate and I don't know whether they are or not by the way if they're accurate uh as I said earlier we will use more copper between today and 2050 24 short years than we have used in recorded human history. >> Wow. And do you recommend any of these international players or do you look at American when you look at the mines and the mining operations? How would you go about analyzing them? >> You need to diversify thinking that you may not get paid in the near term if
(28:03) there's a recession. The most efficient copper producers are companies like Glenor, BHP, and Rio, which are also large iron ore producers. Uh iron ore is particularly economically sensitive. So to the extent that we have a recession, uh it may be four or five years before these companies pay off in a big way, but then they pay off in a very big way.
(28:26) Uh if you are willing to take more chances, you come down the size scale a little bit hoping to own a company that'll be taken over by a bigger company. But that's only for people who are prepared to do the due diligence and to do the work. Uh, as we said with oil and gas, if you haven't invested in the copper business, and most people haven't, uh, it probably makes sense to diversify your portfolio into that, even if you're a believer uh, in AI.
(28:56)  If you're the kind of person who as an example is buying Nvidia as a consequence of the consumption of their product in AI, understand their pro their product requires energy and it requires copper. Uh the materials that are the building blocks of AI are grossly underinvested in relative to the technology stocks that are expected to be the direct beneficiaries.
(29:24)  And I think the market will rebalance over the next five years. >> In terms of the time horizon when you're looking at these mines, uh what's your timeline for investing in them? >> You know, it's very odd that you asked me that question. When I was a young man, I had lots of time on Earth. I was very impatient.
(29:42)  Now that I'm an old man and time is tight, what I've learned is that my time preference is irrelevant. Uh that I have to take what the market will give me. in resources. I would suggest that you have to have a 5-year time frame. Uh I have over the course of my career for free graded almost a 100,000 investor portfolios. People have submitted them to my website and I've ranked their natural resource stocks 1 to 10.
(30:11)  And what I've learned from grading almost a 100,000 natural resource portfolios is that people make very common mistakes. And one of the most common is that while their strategy might be correct, their tactics are terrible. Uh if you are investing in a commodity because it will do well over the 5-year time frame, but you're unprepared to hold stock over a long weekend, the probability that your tactics and your strategy uh can combine themselves for a profit very very very unlikely.
(30:43) Uh, another thing that natural resource investors do is they don't understand in a capital inensive cyclical business, you have to go to what is unpopular. You have to be a contrarian. When the uranium price is at $20 a pound and it cost the industry $40 a pound to make uranium, which is to say when the pees are high because there's almost no E.
(31:11)  Uh that's the point in time when you have to buy the stuff. When the price is already moved uh and the price move uh gives you the excuse to buy the narrative uh most of the juice is already out of the trade. People need to understand that. Um people also need to understand I think that the next 10 years although there will be fits and starts will be kind to the whole industry.
(31:37)  Uh we're heading into a period I think that's reminiscent of the decade of the 1970s uh more than any other period. We're running into a running into a place where the nominal price of commodities uh quoted in the US dollars will go up simply because the purchasing power of the US dollar will go down. Uh we are also heading into a period where we are going to face the consequences of decades of systemic underinvestment in resource supply while the rest of the economy where we use the stuff has grown. Uh those are inescapable trends.
(32:16) Uh what investors need to know is that these markets aren't going to aren't going to increase in lock step. There's going to be volatility. there's going to be cyclicality. Um the markets are going to act like markets used to act before, you know, big tech. Uh and if you will, the investor's road to heaven. Uh so people need to understand that people need to look at these businesses as businesses.
(32:46)  Uh and if you look at them as a business and you have a five-year horizon, I think life is going to be very kind in the commodity sector. Now Rick, you mentioned that some of the risk for this mining and also oil and gas is the political risk in inside the countries like like the US and other countries as well.
(33:08)  And do you think this kind of risk would go away with with the price of these commodities going up significantly? So, if the oil prices go to $200 a barrel, would California might change their mind or is there going to be pressure when the copper prices go up significantly? Would that mine in Arizona be able to to get their permits? >> I think political risk increases.
(33:30)  Uh I don't think permitting risk increases, but I think the risk of nationalization or in California de facto nationalization through tax taxation uh increases. A politician's job uh put bluntly is to steal from one group of constituencies to reallocate capital to others, those who vote for him.
(33:52)  Oil companies and mining companies have always been attractive targets to steal from uh either by way of domestic politicians and excess profits taxes uh or in other countries uh like Zambia, Peru, and Mexico where they outright nationalize the industry. You don't see politicians being particularly eager thieves in sectors where there's not much money to steal.
(34:12)  And I use steel figuratively. I'm not talking about literally going in with a mask and a gun. Uh I'm talking about changing the fiscal regime, changing the permitting regime, changing the changing the tax regime. And an increase in commodity prices will always be uh accompanied by an increase in the temptation for politicians to divert capital from the shareholders who cause the wealth to occur in favor of the voters who keep the politicians in power.
(34:39)  That's just the way things work. >> Rick, you mentioned you need to be a contrarian and you need to find things when they're hated and they're not priced well. How did you do that? When did you learn that? Uh in the decade of the 70s when I was a very young man, I had the good fortune to be interested in natural resources in the best decade that natural resources ever enjoyed and I made what was for a young man from humble beginnings a stunning amount of money.
(35:11)  Uh and like many young men uh I thought that my success was due to my intelligence and hard work rather than a good market. Uh when that decade ended, uh when the boom ended, I found out just how smart I was, which is to say not very. And I lost all the money I made, plus a bit more. Uh that's when I learned that markets work. I learned that the cure for high prices is high prices.
(35:32)  And the cure for low prices is low prices. I learned that in capital inensive cyclical businesses, not just resources, but things like home builders, uh if you aren't a contrarian, you're going to be a victim. there's there's really no middle ground. And it stands to reason, you know, everybody looks for low PE stocks, but in a cyclical business, there are times when the commodity price is very cheap where the pees are high because there isn't much E. It's all PE.
(36:04)  Uh so conventional investors who think that low PE stocks are attractive need to understand in resources. When the pees are low, it's because the commodity prices are high and there's a reset coming. You need to reorient your thinking to the relationship between commodity price and supply. Uh and you need to learn, it's a slogan, but it's a true slogan.
(36:28)  You need to learn to love hate. Uh in addition to that, if you are willing to do the work and willing to take the risk, in other words, if you're willing to speculate a little bit in in in hopes of outsized returns, you need to understand too that hate extends to regions, not just commodities. And you need to be willing to if you are going to work and speculate, you need to be willing to look at countries without bias.
(37:04) Uh you need to understand that money that's stolen from you by a legislature in English by white people according to the rule of law is just as gone uh as money that's stolen from you uh in more traditional means in the Middle East or Africa as an example. Some of my uh most extravagant gains have come from learning to discount political risk with less social bias uh than I had when I was a 20some.
(37:37)  Now this exposes you to risk and it also requires of you that you do work. And to the extent that your listeners uh want to enjoy their lives, play with their kids and grandkids or garden or something rather than do the work, then just stick to the tried andrude, the biggest of the best. If you're looking for the sort of outsiz gains uh that resource investors frequently are looking for, then you need to do some work.
(38:04)  uh you need to get outside your comfort zone and you need to understand that these are international businesses and that you need to be an international investor. >> And you have some classes on this, right? >> I do. Uh if you go to the rule classroom, ruleclassroom.com, you will see approximately 350 hours of instructional video at a very good price. It's free.
(38:28)  Uh rule investment media, pardon me, ruleclassroom.com. If you are a resource investor right now, uh, and you like what I have to say, you can go to ruleinvestmentmedia.com. That's ruleinvestmentmedia.com. List your natural resource stocks and I will rank your portfolios. I've done almost a 100,000 other portfolios over 35 years and I'll do that absolutely free, too.
(38:53)  Uh, that's a very good price, you know. Um, uh, both services are absolutely free. If you want to pay me, uh, I'm happy to take money. Uh, every 90 days, we do a boot camp on one natural resource topic or another. These are eight-hour long deep dives that take place over a Saturday. They cost $99. You can get the information at the rule classroom, ruleclassroom.com.
(39:15) And by the way, that $99 is fully refundable if you don't think at your sole discretion that you got your money's worth. >> Rick, what are you seeing in gold and silver? you know, they did their run, they they went up significantly and now they're kind of coming back down or they're st leveling. >> Traditionally, gold in particular has done well during periods where people concern are concerned about the maintenance of their purchasing power in fiat instruments uh particularly US dollars.
(39:47) The weakness that you see in the gold price now I think is wholly due to higher US interest rates uh and the consequential uh increase in the US dollar. The gold quote is of course done in dollars but the higher interest rate makes yieldoriented products uh more desirous than they would have been say in December of last year.
(40:11)  Looking longer term, uh it's my belief that as a consequence of debt and deficits in the United States, the fact that we spend more than we earn, that we will debase the dollar. Uh I think that we're going to inflate our way out of the government's debt and the unfunded entitlements problem. Um unfortunately, um I I I think that's inevitable.
(40:38)  I think that the next 10 years will resemble nothing so much as the decade of the 70s where the US dollar according to the Congressional Budget Office lost 75% of its purchasing power in 10 years. This is not Rick Rule saying this. This is a Congressional Budget Office. Given that we owe $40 trillion at the federal level and given that we have $120 trillion in unfunded entitlement liabilities, Medicare, Medicaid, Social Security, that kind of thing, I think it's inevitable uh that we print our way out of that circumstance.
(41:13) That will be very hard on pensioners. It'll be very hard on people with negligible savings. If the US dollar loses 75% of its purchasing power, $1,000 worth of goods and services today will cost you $4,000 10 years from now. Now, think about the impact of that on a fixed income person. Conversely, uh I think that gold will maintain its nominal purchasing power.
(41:39)  Um I, you know, a very very very fine men's suit today cost you an ounce of gold. A very very fine men's suit 10 years from now will cost an ounce of gold. But in US dollar terms, I suspect that the price of that suit will be up three or 400%. >> And what about silver? Do you uh do you look at gold and silver in the same way or do you >> I don't I save in gold.
(42:03)  I maintain liquidity in US dollars, but I save in gold. I've been systematically saving in gold since the year 2000. By the way, that's returned over 9% compounded for 26 years. It hasn't been a bad savings instrument despite the fact that it pays me no interest. I speculate in silver. Uh I buy silver during those periods where it's really truly hated.
(42:24)  So the physical silver that I owned uh when it had that real spike up in January, uh I decided that it was no longer hated. You know, I mean, the price had moved from what $18 to $75 on its way to 110. That's hardly hate. Uh and there was a hyperbolic chart uh straight up. those charts usually resolve themselves to the downside.
(42:47) And so for me, uh, silver no longer had a role in my speculative portfolio because I was speculating on the fact that silver would cease to be hated and it ceased to be hated and I found other places to express my fondness for speculation. Uh, I maintained all of my gold holdings and in fact, I've been increasing them.
(43:09) >> Rick Rule, it was great to have you back on. Thank you so much for being here. >> Pleasure. Thank you. >> What do you think about investing in natural resources? And what do you think of this conversation with Rick Cruel? Do you think it's a good time to invest in in these resources or not? Make sure to tell us in the comments.
(43:30)  I'm Tiam Kurami. This is Market Insider. We'll see you next time.