Rick Rule: Gold & Silver Companies Are Now Free Cash Flow Machines, Oil & Natural Gas Are Best Deals
Summary
Gold Market Dynamics: The podcast discusses the significant rise in gold prices, highlighting the weakening purchasing power of the US dollar and suggesting that gold's ascent is not yet over.
US Debt Concerns: Rick Rule emphasizes the unsustainable US debt levels, with $37 trillion in obligations and a $4 trillion annual deficit, suggesting inflation as the only way out.
Gold Mining Industry: The industry is experiencing high profit margins and free cash flow, with companies like Agnico Eagle performing well, although investors need to be cautious in selecting stocks.
Investment Opportunities: Rule suggests reallocating investments from junior gold stocks to oil and gas, citing underinvestment in sustaining capital in the energy sector as a long-term opportunity.
Uranium Market Outlook: The demand for uranium is increasing due to extended life of power stations, Japanese restarts, and Chinese new builds, with long-term contracts providing stability for producers.
Silver Market Challenges: There are few high-quality silver deposits available, with most located in politically risky regions like Mexico and Peru, making new supply challenging to bring online.
Mergers and Acquisitions: The podcast notes intelligent mergers in the gold and energy sectors, with strategic acquisitions expected to continue, particularly in the copper space.
Currency and Inflation Risks: Rule predicts significant currency turmoil and a potential 75% decline in the US dollar's purchasing power over the next decade, similar to the 1970s.
Transcript
Hi everyone, this is Jason Barack of Wall Street from Main Street. Welcome back for another Wall Street from Main Street podcast interview. Today's special guest is a returning guest and one of my favorite guests. He's been a mine financeier and a credit analyst for many, many years. He's financed literally way over a hundred mines into production over the years. Former vice president, he's worked in the commodity industry for a very, very long time and a credit analyst. though he looks at credit like the US government credit on a day when we're recording this interview on Monday, October 6, 2025 when the US dollar gold price is almost at $4,000 an announce. The last 6 to8 months have been the rally has been absolutely incredible. Rick Ro, thank you for joining me again. >> Always a pleasure, Jason. Thank you for having me back. >> So, Rick, I I have to ask you about this rise in the gold price the last 6 to 8 months. As a credit analyst, what do you think it means if the dollar is this weak um in 2025 and there's been such a rally in the gold price? What do you think this means as a credit analyst when you're looking at the US government debt? >> Well, I'm frankly surprised it took gold so long to get here. Uh certainly the recent move has been violent but we have seen real cracks in the purchasing power of the US dollar for a very long time. If Jason uh you believe the US government's inflation statistics which is to say the CPI number at 2.9% you have less concern. But I don't believe that number. Uh Mike Maloney likens the CPI to the CP lie. Uh among other things as a cost of living index, it doesn't include tax. Most people have to pay tax and it's hedonistically adjusted. I would uh ask you to ask your listeners to as a mental exercise think about the increase in the price of the basket of goods and services that they consume in the period 2000 to 2025. If you do that, you will find that the purchasing power of your US dollar savings, your US dollar wages is declining at about 8% compounded, not at 2.5 or 2.9% compounded. That is, of course, the crux of the dollar's problem uh and the crux of gold's ascendancy. And by the way, uh I don't think it's anywhere near over. I believe, as you suggest as a credit analyst, that with $37 trillion in onbalance sheet obligations and the net present value of $120 trillion, by the way, that's a Congressional Budget Office number uh against well, so aggregate indebtedness over $150 trillion with aggregate federal income at only $5 trillion. uh I don't think there's any way out of this thing other than inflating away the net present value of the obligation. So I believe that the deterioration of the US dollar the purchasing power of the US dollar continues and the gold ascent continues too. Not straight steps mind you. You'll have to endure cyclical declines. You'll have to endure volatility. But I suggest stay the trade. >> Yeah, I agree. Uh those of us in the gold and silver community, I mean, we thought this would have happened many, many years ago where there would be a huge pop in the gold price where the basically the cracks in the dam would just start overflowing. Finally, it looks like we've gotten it. I think a lot of this has to do with the size of the budget deficits, Rick, and the interest payments on the debt, all the things culminating to the point where now there's like supply and demand issues with the Treasury market where um in the past with the policy DC thought that they would have gotten lower interest rates, they could refinance the debt and that's just not happening right now. Isn't the the national debt it's growing? It last year it was adding a trillion dollars every hundred or so days. I think we're below 80 days now. every trillion dollars of debt is added. Now, >> the federal government is suggesting that their deficit will only be only be$2 trillion dollars this year. Let's just for fun take them at their word. But let's remember too that they aren't adding the accretion of value of unfunded Medicare, Medicaid, and entitlement liabilities. The off-balance sheet liabilities of the US government increase by another $2 trillion a year. So the aggregate deficit on and off balance sheet is $4 trillion a year. Juxtapose that against gross federal income before they spend any money on anything of $5 trillion a year. The deficit grows by $4 trillion a year and their gross income is $5 trillion a year. You don't have to be too precise with the numbers to know that there's a problem. >> Well, they're saying the budget deficits the CBO is what$2 trillion. But the interest payments on the debt Rick are over a trillion dollars a year. So the ma the math just doesn't work. I mean last year I think the government in 2024 it spent around 8 trillion approximately 8 trillion and took uh in almost a record of like 4.7 trillion in tax receipts. So and they were claiming the budget deficits were only about 1.9 trillion last year. So the math just doesn't work. >> That's absolutely correct. I'll tell you another piece of math that doesn't work Jason. Uh if you believe in the CPI at 2.9, then the US 10-year Treasury rate at 4.5 or 4.6 doesn't feel too bad. But if you agree with me, never mind shadow stats, who says that inflation is at 12%. But if you agree with me that inflation uh as a phrase that describes the deterioration of the purchasing power of the US dollar, if you agree with me that the purchasing power is declining at 8% compounded and you're getting paid 4 a.5% on your savings, uh what's happening is that you're enjoying, if that's the right phrase, a negative real interest rate. the money that you're saving is costing you three and a half percent a year as opposed to making you four and a half percent a year. What traditionally has taken the gold price higher is investors and savers concerned about the maintenance of their purchasing power in US dollars. Nothing that I can think of should make you more concerned than a government guarantee that you'll lose three and a half% a year compounded for 10 years in the US 10ear Treasury. In other words, if you give the government $100,000 today, they'll give you back $60,000 in purchasing power 10 years from now. Returnfree risk, as Jim Grant used to call it, >> or in the 1970s stackflation, I think they called what the US Treasury bonds were called what? Certificates of confiscation. But I I would argue that a lot of these government bonds, it's not just the US, it's European Union, United Kingdom, Japan. Seems like all these government bonds are all toxic or radioactive. Yeah, >> you make a very good point, Jason. I am not suggesting that the comparable value of the US dollar declines, but rather the absolute value. Uh I think we're in for a period of currency turmoil. The US government uh the US uh currency, the US dollar, has declined about 11% this year against a basket of other currencies. But my suspicion is that the US dollar will do okay relative to other currencies over the next 10 years. But I believe that in an absolute sense, the US dollar will lose 75% of its purchasing power over the next 10 years, much as it did in the decade of the 1970s. decade of the 1970s, according to the Office of Management and Budget, the US dollar lost 75% of its purchasing power in 10 short years. I remember it. It wasn't pretty. >> And the US dollar's purchasing power against gold, I mean, over the last like 5 years, it's lost like 40 or 50%. So, because of the gold price catch up, you could argue that the dollar's already lost an enormous amount of purchasing power just in the last four or five years. And if you go further back, Jason, it's instructive to know that you don't have to pick the last five years with meteoric increases. If you take the gold price back to the year 2000, uh gold has increased in a nominal sense, that is to say in US dollars by 9% a year, compounded for 25 years. That doesn't mean that gold has necessarily gone up. What it has done is maintained its purchasing power against a dollar which has lost its purchasing power. So now I want to transition to gold stocks. I want to ask you about profit margins. Uh the industry is claiming around 60 the average uh gross profit margins around 60%. Have you seen a in the past cuz you've been through a lot of bull markets and bare markets over the years. Have you seen a scenario where the industry has this uh this high of profit margins, free cash flow potential uh growth with free cash flow potential to pay dividends before? >> It's important that you segregate between the median and the mean. The average takes in some uh serial outperformers and it also takes in some serial underperformers. Uh the best of the best in the gold mining business is doing a spectacular job. The Alamoses, the Londines, uh the >> Agnico. Yeah, >> Agnico Eagle in particular. But there have been some real lagards too. Uh the truth is that you will remember Jason because we talked about it in two 2023. The um disappointment that gold stock investors had about the fact that the gold price was moving up but the gold shares weren't moving up. That was because in 2023 two things happened. Companies were making up for having been high grading in the period to 2020 to 2022. uh and also the cost of producing gold particularly energy moved up very quickly in 2023. In 2024 the uh increase in inputs particularly energy uh began to increase less rapidly and the gold price uh increased more rapidly. The industry is now as a whole doing extraordinarily well in a financial sense. But investors need to know that they very seldom buy the whole. They normally buy individual stocks and in that circumstance investors need to be very cautious in movie parlance in selecting between the good, the bad and the ugly. >> Yeah, I'm looking up GDX right now and that's a gold miners ETF and that's at all-time high what at 78. So I remember for years many many years when the gold price was rallying the GDX was nowhere near its previous all-time high back in 2011 of like $64 $65 a share. So we have broken out there but relative to the movement in the gold price on a percentage basis the gold stocks a lot of them are still lagging the movement in the gold price. >> That's correct. And it's interesting to note Jason that if you value gold mining companies the way I do which is to say on a net present value uh basis you take the discounted cash flow and then you add back a receivable at the end of the discount life that at today's gold price many gold companies that have doubled are cheaper relative to their valuations than when the move started. We did a calculation on Agniko Eagle at my uh Boca Raton investment conference in July and we found on a discounted net present value basis that the company was cheaper after a double than it was before the double. Now believing that means that you believe that gold at least at least uh holds today's price and doesn't fall. One thing Jason that your listeners will be interested in is I spend a lot of time uh on analyst calls and management calls around the gold business. And it seems that the Wall Street consensus estimate for the gold price, the numbers that they're basing their valuation models on are about $2,700. When you're basing your earnings estimates on $2,700 and the industry is selling the material for $38 or $3,900, it seems to me that earning surprises are almost inevitable. Uh if you underestimate the selling the selling price uh in the near period by $1,200 an ounce, uh I suspect that Wall Street will be very very very surprised by the upcoming quarters and the upcoming year. Well, I'm not sure we should trust any Wall Street estimates about gold because Bank of America just released some research saying that around 40% according to their surviving 40% of institutional investors have 0% gold exposure counting like GLD, uh, any gold miners, ETFs, new moder, they don't have any of of that exposure. But they're they're routinely wrong, Rick. They've been picking some of these Wall Street analysts. They've been calling tops in the gold price every couple weeks over the last like 9 to to 10 months. I mean, there was one of one of the guys, he's now promoting gold. He was on Fox Business today. I saw on Charles Payne show. He was calling it topping gold price last year. He's just swept that bad call under the rug. He was calling for a crash in the gold price and it never happened. Now he's promoting how well gold's doing. >> Yeah. I suspect one of the things that happens in Wall Street is that they spend a lot of time talking about stuff that they think they're going to get some commissions in. Uh there were no financings happening in 202122. So there was no commission. Uh there's M&A work now, there's financing work, there's restructuring work, there's debt issuances. Uh gold will begin to have Wall Street's attention because it has a bid and because there are some fees in it, >> but it's going to take them a while to get it right. You know, there's I I suspect that when Wall Street calls, you know, when one of these big CEOs calls down into the ranks to look for his gold research team, uh he will be in fire. he will be advised that he fired them 12 years ago, you know, due to lack of revenue. >> Well, what do you think about the comments that have come out from the Morgan Stanley chief investment officer and Jeff Gunlock? So, the Morgan Stanley, for our listeners who are not familiar, he said in the last couple weeks, he said that gold exposure for his portfolio, he wants to drastically reduce government bonds, US treasuries, he wants to get his gold exposure up to 20% of the portfolio. And Jeff Gunlock, who's a he has a gold fund, it's smaller, but he's known as what the billionaire bond king. He's a libertarian though. But he said that uh gold exposure for him he thinks 25% going forward. >> He's but he's been doing very good work for a couple years as a matter of fact. Um but let's leave that aside. Um I you know better late than never I guess is what I have to say about that. The most recent figures that I've seen are from JP Morgan Chase. They're about a year old so they could be suspect. But JP Morgan Chase uh found that the market share of precious metals and precious metals securities in total US savings and investment portfolios totaled about 1/ half of 1% which is to say 1 half of 1% of total savings and investment assets in the United States were denominated in precious metals or precious metal securities and that number itself 1 half of 1% was down from a four decade mean of 2%. So if precious metals and precious metals securities ownerships merely reverted to mean 2%, not 20%. You would increase demand for the stuff in the US four-fold. And that's precisely what I think is going to happen. Well, we're seeing that with the nonG7 central banks and the bricks, which uh postRRussia sanctions back in early 2022, the last three and a half years, they've been just steadily accumulating gold tonnage over accumulating US treasuries for their for their foreign exchange reserves. But the the Bank of America survey that came out in the last couple days, Rick, it was saying that 40% of institutional investors, these fund managers with large pools of capital, they have 0% gold exposure. So imagine if we get up to that 2% number. I mean, that's substantial. That is substantial and it uh it wouldn't surprise me if that number is true. If you look at the gold bid for the last five or six years as you suggest it's been foreign central banks. One of the reasons why the gold equities lagged the gold is because foreign central banks buy gold. They don't buy gold stocks and an asset class that had a bidder went up and an asset class that didn't didn't go up. The other thing to note is that the retail flow of funds into both gold and gold equities has been skinny at best. Uh most of the growth in the gold funds has happened organically uh rather than by adding new capital. uh inflows and outflows to physical ETFs and to the equity ETFs in particular have been spotty and in fact in the year 2025 uh the flow of funds into actively managed gold mutual funds uh has been negative which is to say more money has left the sector than has come into it. So I would suggest to you that participation with the exception of foreign central banks uh has been very very very skinny. Are you starting to get contacted more by like um generalist institutional investors about getting exposure to junior gold miners? Because I I think my listeners have seen the headlines, the Financial Times, I think even covered this that tether some of the stable coins. They've started accumulating what uh some of these gold stocks like EMX royalty and others. Are we starting to see regular fund managers want gold stock exposure? >> Uh just beginning. I mean really truly just beginning. What I am seeing is family offices who were clients of mine in an earlier life uh who were always primarily interested in my career in oil and gas uh beginning about three years ago sort of dusted off the gold book said you know Rick it's time and within that uh within that group what I'm seeing now is in particular the multif family offices that serve three or four generations of an extended family. Uh what I'm seeing is if I hop on a conference call with various beneficiaries of the family office, the families, the interest in goal that I'm starting to see among the 25 to 35 year olds is something that I haven't seen for 40 years. It's very very strong. I can't speak to the generalist institutions because the people at the generalist institutions that I've always spoken to have always been people like Will Danoff as an example at Fidelity who were already well aware of the gold trade. Okay, I see. Well, at at the current gold price, Rick, since I know you've financed so many mines into production over the years, are we at now a cost of capital, a gold price where the um a say a junior mining producer, they have one or two assets, maybe it's their first gold mine or it's their second gold mine. Are they going to be able to raise the capital they need without destroying their share count, reverse stock split, you know, the usual games over the years to go and build a gold mine, or are we not there yet? >> Oh, the system's loaded with money. loaded with money. Never mind the responsible juniors. There are issuers in the junior market going out to market now that are worth nothing that are raising 10 or $15 million. Somebody with a truly viable project today will not have any difficulty at all raising the money. Uh they may if the share prices run too far too fast. that is if they have a you know a float to stock problem the stock is too tight and it went up too much the equity holders may be disappointed uh at the price uh that the equity goes out at uh but the truth is that the sector's a wash in money now >> are you surprised we haven't seen more mergers and acquisitions because what we've seen um Equinox Gold what they did acquisition with Calibbre and they added another producer mine that just had a first gold pour in Canada. Are you surprised we haven't seen more of those types of acquisitions? >> I am, but that'll come. You know, you saw just uh you know, you saw Predictive and Robex the other day, by the way, a wonderful merger. Uh what we've seen so far have been intelligent mergers as opposed to stupid mergers, which is a very very very good thing. uh from I mean my my gut feeling is that despite the fact that free cash flows are high and despite the fact that some money is coming into the sector I think that the memory of the sector's stupidity in the period uh 2000 to 2010 is still so strong that the management teams either aren't going to make mistakes or aren't going to be allowed to make big mistakes for another two years. uh two years out, two and a half years out, when people are trying to grow for growth's sake, then you'll begin to see really stupid mergers and really stupid misallocations of capital. But what you're seeing right now are mostly intelligent, strategic, wellpriced mergers. Of course, the merger that's on the industry's mind uh has to do with the fact that the CEOs of both New Pneumont and Bareric resigned. Uh, one would suggest that that would remove one of the human impediments to the biggest of all possible mergers, a dream merger. Not that it will take place, but one can dream. >> Well, didn't Mark Bristo, the CEO of Berkel, didn't he have health problems over there? I think if I remember correctly, he had he had some very serious health problems before the pandemic, like 2018 or 2019. >> Yeah, but I would suggest that health wasn't the reason uh for Mr. Bristo's retirement. Uh I I think uh it is alleged that he had problems ongoing problems with his chairman uh among others. Uh and I think that there was probably well not probably I think that there were rumblings on Wall Street uh about his pivot to copper and about his willingness to continue uh placing company assets in what Wall Street deemed to be politically risky jurisdictions. Now, make no mistake. I've been a friend and a beneficiary of Mark Bristo's work for 35 years. I'm a Bristo fan. Uh, but I would I I would not deny that he can be a fairly uh thorny individual. >> So, so far for gold mining deals or or well, gold stock deals, the largest one is the royal gold takeover for sandstorm gold. So, the the combined company, I want your thoughts on the combined company. the combined company. It looks like it has good diversification, good long-term growth, and a lot of exposure with these gold gold byproduct streams. What to tier one copper assets? >> Uh, absolutely. A synergistic merger, a great merger. Uh, that notwithstanding, the people, some of the people who own Sandstorm owned it for it to get taken over. Now that that's taken place, they'll probably sell stock. Uh, and I'll probably buy it. Uh, >> well, Roal's been lagging, right? having the the role shares have not been keeping pace with some of the other companies. So so the market >> investors investors looked at royal gold and they saw too much concentration on too few assets. Uh this addresses that they also had some concerns about the intermediate term pipeline and the sandstorm acquisition answers that too. There's a third truism uh in today's market where so much of the market volume is passive uh companies do better in the market simply by accreating size getting included as a higher waiting in index and as a consequence of that attracting more index buying. So I I think that this uh merger is good on three counts. Well, also Royal Gold before the merger, Royal Gold was growing their dividend at a what, a 8% clip. They had increased dividends substantially, but um you know, when I was looking at the company, they had a high valuation, but I didn't like their growth. They didn't have a lot of diversification, like you said, and they didn't have a lot of um growth in the pipeline. I mean, they had the nice royalty from Great Bear in Canada, but they just didn't have a lot of uh gold byproduct streams or good royalties on a lot of those tier one mines that you like to talk about. And I think the Sandstorm acquisition when you combine the company together and you look at the investors presentation and where all the growth is coming from in Latin America and Turkey and Mongolia all the different places on really good projects. I think it looks like a a lot better company overall. >> I I don't know that I would say a better company because Royal Gold has a couple of very high quality royalties. But the truth is that the merger of the two companies makes the resultant company much stronger than either of them on a standalone basis. Uh as you point out, the knock on Royal Gold had to do with its intermediate term pipeline and that was Sandstorm's strength. Uh they fit together very very nicely. Do you think then we're going to see a response then from Franco Nevada or Weeden Precious Metals to go and uh target maybe some of these other mid-tier royalty and streaming companies to add additional growth now that royal gold has made a huge move? >> Not yet. Uh because the mining industry is coming into a period of very very large cash needs. Uh people say that the growth in royalty and streaming is behind us because all the big deals have been done and that's exactly wrong. >> Oh yeah. Look at the demands for copper and electricity. Yeah. Now >> that's right where I'm going. Uh the copper industry needs in the next 10 years to invest at a minimum 150 to200 billion. And that's problematic because they don't have it. uh if you take uh a cash flow stream from a gold royalty or a gold stream and you run it through the income statement of a copper company, it's priced at five or six or seven times EBID. If you run that same income stream through a gold royalty and streaming company, uh it's priced at 13 to 15 times EBIT, which means that the royalty and streaming companies can do a transaction that's good for the copper company and good for their shareholders, too. I suspect that there's probably 20 or 30 billion dollar worth of royalty and streaming business to do in the copper space between financing sovereign nation participation and new mine construction and Wheaton and uh Franco are just ideally ideally prepared to capture that business. >> Are there a lot of like tier one copper projects left? So we've spoken about them. The one in Mongolia, Oo Togoy, which is getting to the underground money just started, I think, on the underground after spending billions of dollars from Riyotinto in capital expenditure. You have the the couple good projects in Turkey, which a hotman's one that's just starting construction right now. Are there a lot of other good tier one deposits for copper? >> There's a lot of big deposits. Uh there are very few deposits that are same simultaneously big and have high grade. Uh it's pretty obvious that there is a large capital expenditure coming up in Grassburg as a consequence of the flooding of the of the um um block cave uh and also uh potentially funding an increase in ownership by the state of Indonesia. They could easily fund that increase by selling a stream on their production. Uh there are a number of very large copper pferies uh to put into production. The one that comes most immediately to mind is res resolution in Arizona which the industry says is an $8 billion build. I believe it's a10 billion build. Um but there are uh any number uh of big projects. Another really really really big project uh would be a drastic expansion of Olympic Dam which currently has 75 years of reserves. You need to move that forward. Uh that would cost BHP somewhere between 10 20 billion. It would be easy to fund most of that uh by selling a byproduct gold and silver stream uh allowing BHP to keep the copper a and also by the way allowing BHP not to dilute their own shareholders at a copper multiple or or an iron multiple which is substantially below the gold multiple. And it sounds like Olympic Dam, they could do some type of syndication deal where like Franco Nevada, we precious metals and maybe even the the larger royal gold company could all split like a massive uh gold stream on that deal, then gold or silver stream on that deal. So we could see if a project's that large, maybe Franco Nevada doesn't want to take on all the risk themselves and they split they split the deal uh in in half or in thirds or something. >> I think the needs are so large in the copper space over the next 10 years that syndication will be the norm rather than the exception. And I think syndication will extend all the way out to some large institutional investors like Nores Bank uh CITC uh and people like Black Rockck. There will be I think everything that Weaten and Franco uh and the rest of the industry needs plus some for others. >> So you brought up uh data centers, AI, copper demand. You've been a uranium bull for a long time throughout the the bare market. Now that things have seemed to turn, do you think that this this new growth picture with electricity demand? Do you think that this is uh maybe put in a uranium bull market, nuclear power bull market, electricity demand bull market for decades? >> I don't know about decades. Markets seem to work, but I feel pretty good about the next 10 years. Most of the stories that you've talked about data centers and stuff like that uh aren't going to do anything for demand in the next three or four or five years. You got to permit these things. You got to finance them. You got to build them. What's driving power demand, uranium demand right now is the fact that existing power stations which were supposed to be shut down uh and were supposed to stop consuming uranium are being extended by as much as 50 years. A and that demand gets added this week or next week and next month. Uh the pace of Japanese restarts too. They announced a lot of restarts but they didn't restart them. Now they're starting to do those re those restarts. So when people look at the uranium market right now they're buying the narrative. They're buying uh small modular reactor narrative or they're buying data center narrative. They're buying narrative that's going to be important six or seven years from now. What's important now is uh canceled shutdowns, uh accelerated restarts, and Chinese new builds. The uranium market in terms of demand is screaming, absolutely screaming. And as we talked about the last time you and I interviewed Jason, uh, a new financial instrument, which is the term contract in the uranium business, is going to be an absolute gamecher for the juniors who choose to participate in it. In every other commodity that I know of, uh, prices are set at spot with the exception of, you know, futures markets. But when a guy like me goes to do a net present value calculation on a gold producer, he has no idea what the gold price is going to be two years from now, 5 years from now, 10 years from now. In the uranium business, uh producer and consumer can get together and put together a contract that specifies minimum prices uh and minimum volumes going out as far as 30 years. This is good for the reactors because they need to have a lockedin source of supply that's long enough to amvertise the construction loan to build a nuclear power plant. And is good for the producer because small companies that wouldn't otherwise have access to the capital as a consequence of the pricing and revenue uncertainty can now go to the bank with a contract signed by a credit grade counterparty, a Tokyo power, a China general nuclear, a southern company, a Duke company. This happens in no other commodity and it is I would suggest to you uh the most important factor in the pricing of the 10 or 12 legitimate junior uranium companies and it's also a factor that not one in a thousand uranium speculators thinks about. >> Now let me just push back on some of the data. So a few of the data centers the massive ones. So, the Stargate AI in Abene, Texas, which has 200,000 over 200,000, Nvidia GPUs, and then they're going to stage it up to multiple stages. That one's online. It just came online in I think the last like month or so. And then uh Colossus uh AI data center from XAI that Elon Musk built that has he has a couple of them, but those aren't using nuclear power, Rick. I think those are only using natural gas right now. Now they do want to add nuclear power there, but it was just cheaper and easier, more efficient to build a natural gas pipeline. Especially if you're what in Abene, Texas that's not that far from the Perian Basin. You could just set up a what a uh natural gas turbine substation. You can move some pipelines. So looks like natural gas potentially in the next couple years while these data centers are built out is going to be a beneficiary of the data centers that are under construction first. >> The data centers will be an important part of electrical demand assuming that technology doesn't intervene. five years from now, six years from now, seven years from now. Uh when the Chinese build a new nuclear power plant, they're not little firecrackers like we build in the United States, you know, 250 megawatt plants. These are gigawatt plants. They don't burn uh 200,000 lb like the old American firecrackers. They build they burn a million or 1.2 million pounds. uh the impact on the supply demand imbalance in uranium for the next 5 years. And by the way, five years is most of a net present value curve uh comes as I say from restarts uh from delayed shutdowns and from Chinese new builds. Things like uh uh SMR conversion. And I was just in Keer, Wyoming, which is where uh Bill Gates intends to replace a coal fired plant with an SMR. Those will be important contributors uh to the uranium business in 5 years, 6 years, 7 years. You may recall, Jason, I was a little skeptical of that three or four years ago uh because it seemed to me that SMRs were not really proven technology. It was pointed out to me by a client of mine that the US Navy has run on SMRs for 40 years. Uh, >> you can't invest in those scale. >> Yeah, you can't invest in those as uh >> No, that's right. But I mean what I'm trying to say is that the utility the uh the technology has been well enough adapted that the ability to scale up from a submarine or an aircraft carrier uh to a regional utility SMR is well within our reach. So each interview every couple months when I have you on I ask you because I know you're contrarian and you're looking for undervalued stuff a commodity that's cheap and hated out of favor cycles do turn. We were talking I think about platinum and palladium miners over the last couple interviews and look at the rally we've gotten in platinum and platium price markets as you say all the time markets do work eventually that uh the cure for low prices is low prices. Which um commodities or industries do you see right now are cheap hated out of favor valuations riskreward or looking attractive? >> Oil and gas. Uh, in fact, Jason, in my own portfolio, despite the fact that I think gold is going much higher, I'm selling 25% of my junior gold and silver stocks. Not because I don't think that there's a lot of money left. I'm doing it because over the last 5 years, I built massive positions. Uh, and I can sell 25 to 30% of my speculative portfolio. By speculative, I mean non-producing explorers and developers. and I can recoup all of the money I've invested in the sector. Giving up 25 or 30% of my upside, I eliminate all of my downside. The money that's coming from that sales is going two different places. some of it is going back into the gold space but in the lower risk names gold itself Franco Wheaton uh Agniko because I think uh right now that there's a speculative frenzy that I'm well advised to take advantage of but the other sales proceeds the other half of the money is going into the oil and gas space uh probably doesn't work for two years but as you know Jason uh I'd rather be two years early than two weeks slate and I love uh underowned and unloved stocks and the energy business is underowned and unloved. >> Well, we're starting to see mergers and acquisitions, right? So, some of the larger companies that have that are lowc cost producers, better balance sheet, free cash flow, good profit margins, they're starting to target acquisitions now, they're looking at the valuation numbers, and they're going and buying assets now. Now, their share prices aren't being rewarded for the acquisition, but when the cycle does turn, they will be. You know, I'm an old guy now, Jason, and I think in five-year terms, the acquisition's example of Pioneer by Exxon, uh, this will have benefits for the rest of my life. It was a $60 billion acquisition. Now, the immediate postcript of that acquisition is that many Pioneer holders held it for a takeover. When the takeover took place and they got their Exxon stock, they sold it. So, Exxon sold off. Uh, that comes from people who think by the quarter uh not in three or four or five year time frames. I think in three or four or five year time frames. And I note right now in the oil and gas business, according to the International Energy Agency, that the oil and gas business as a whole, including the state-owned firms, are underinvesting in sustaining capital. Not not new project capital, but sustaining capital to the extent of about $2 billion a day or $700 billion a year. that might not impact their ability to produce in 2025 or 2026, but 2027, 2028 that begins to bite and I want to be in place when that happens. >> Well, especially if those data centers do come online. And I mean, we're going to be using a lot more energy and electricity, especially natural gas. The pipeline companies that are going to be moving the natural gas from the cheap, lowerc cost areas to either a liqufied natural gas export facility or to a what a power station substation near a data center. >> And note that that's happening right now uh in the United States because of an over supply of natural gas for 5 years. We've been investing billions of dollars per month on natural gas takeaway, on peaking plant construction, on gas liquef. The other thing that happens is that gas dependent uh US and uh pardon me European industrial concerns uh have left places like Germany where the gas is expensive and in perilous supply and they've begun near shoring. They've begun to build, as an example, chemical or fertilizer uh capacity in the US to utilize US gas. Thus far, the supply of US gas is a byproduct of oil drilling has been adequate. But at some point in time, at least with current technology, the current US oil price isn't high enough to contain to continue the pace of uh o oil drilling that you've seen in those shale basins. and the byproduct gas production will inevitably uh decline, but the infrastructure a and the consumption of it will continue. Again, not a story for somebody who cares about a quarter. A wonderful story for somebody who's determined to become richer over the next 3 to 5 years. >> Yeah. To use an oil and gas example, normally EoGG Resources, which is a large independent one, normally they're very stingy. the management team with a lot of spending with acquisitions. They've been doing acquisitions the last like 6 to9 months. So they might not like on the exact timing it might not pay off but a couple years from now when the cycle turns they're going to look very very smart. So it it's the top management teams the lowcost producers are targeting the assets now. I think there's a lot of mergers and acquisitions of the Canadian oil and natural gas producers right there's huge consolidation up there in Canada. There is EOG by the way and Exxon uh aren't merely acquirers. Uh what they have been acquiring is assets that complement and interfinger with their own assets. Uh it is common now in these shale basins Jason that the uh lateral reach of an oil well uh goes as far as three or four miles. So if you are able to consolidate uh leases so that you can run your lateral three or four miles as opposed to a mile and a half uh your drilling and recovery becomes much more efficient. When you look what EOG is doing and you look what Exxon is doing, they aren't merely acquiring BTUs. They aren't merely acquiring resources and reserves. What they're doing is making strategic acquisitions to fill in their existing land holdings. This will pay real dividends. These are truly accretive synergistic acquisitions. >> So, so it's similar to what Agnico Eagle when they're buying what land packages of juniors surrounding what can malarctic or some of their other lowcost producing mines. >> Yeah, it's funny. It's funny that you say that. I uh I I interviewed Amomar Aljundi at my Boca Ratan conference in July and we were talking about the smaller assets in the Canadian Shield and I said, you know, there's a lot of assets up there, you know, million- assets that don't make any sense because you can't build processing facilities. And what he said to me is, uh, what you're going to see this time is that people who have fairly close processing facilities are going to buy those. million ounce might not work as a standalone, but if there's a if there's an ore hungry mill five miles or 10 miles or 15 miles away, uh in this cycle, uh mines that can get built uh and get can get built without having to add mills, but rather utilize existing infrastructure are going to get bought. Uh and that was a very interesting observation. >> So, last question here as we wrap up. I get asked all the time about silver companies, silver miners at a $48 an ounce silver price and we've just had absolutely enormous rally in silver and there's rumors of a silver shortage. Can uh a lot of these gold miners or copper miners, can they bring on a silver specific deposit or is there just not a lot of them out there? >> There's very few of them out there and most of the good ones are in the hands of Mexican or Peruvian companies that North American and European investors don't want to touch. Uh if you're truly a silver speculator, you have to look at names like Polises and Fresno and Bueno Ventura. You have to expose yourself to Mexican uh and Peruvian political risk. And many North American investors aren't willing to do that. In terms of pure silver deposits that are controlled outside of Peru or Mexico, we've identified only five that we think are truly truly highquality deposits. uh as we've seen very recently with the takeover of MAG by Pan-American, the takeover of Silver Crest and the takeover of Gatos, uh highquality silver deposits, ones that are solidly economic in the 40s, they're rare as hens teeth, uh and they get taken at huge premiums. It's very worthwhile to note that even after uh attractively priced premiums uh for Silver Crust and Gatos that the acquirers COR uh and First Majestic in the aftermath of the takeovers did well. uh these takeovers while they may not have been accretive on a net present value basis because of the short reserve life that you see at Silver Crest and at Gatos were accretive on a cash flow basis and the market absolutely loved these takeovers. The holders of Gats and Silverest got paid an attractive market premium and the shares that they receive by the acquirers have gapped up. Wonderful set of circumstances. How long can uh how many years would it take then uh at the current silver prices for a uh first majestic silver some of these other producers to bring online say a new deposit? >> Well, they got to find it first. Uh, First Majestic is lucky in that it would appear that their current flagship, which is Sand Demus, which by the way has been producing since the 1600s, uh, it would appear that there's some very valid depth extensions there, which is wonderful because you don't have to permit it, you just have to go get it. Uh, and they are also enjoying uh, pretty spectacular brownfield success at Armatano. So, First Majestic is in the lovely position of not having to bring new projects in production because two of their existing mines uh appear to have pretty substantial brownfields uh expansion. The difficulty is that as I say, we've only identified five at most six deposits worldwide that uh we think are at once attractive and gerine. By gerine I mean uh over a 100red million ounces uh of uh insichu recoverable uh economic reserves and resources. In other words, there aren't many deposits around. Uh if you have the misfortune of having one of those deposits, let's just say that you and I Jason discovered a new 100 million ounce silver deposit uh and let's say it was in Arizona, nice silver state. Uh if the resolution copper mine is any reference point, uh resolution has been in the permitting process for 27 years. That's before you build it. >> But it would still take many years to bring online new silver supply, right? Unless, like you said, it's at an existing producing silver mine. And so like Pan-American Silver, First Majestic, they can increase production at a Brownfields project, but a new silver deposit could take uh at least 3 to 5 years, you would think, or probably longer. >> Yeah. Well, 3 to 5 years would be aggressive. Uh very aggressive. The only the only tier one silver deposit we see in the world that's green fields that we think will be built in the next two two and a half years, uh is in Morocco controlled by uh silver. uh the other deposits that we see uh the Mexican deposits, very very very high quality deposits, but they're going to be a while uh you know in permitting and construction and stuff like that. >> Well, Pan-American Silver has some of the top projects, right? They have the the La Navididad in Argentina in that province and then they also have what the one in Guatemala, but there's issues trying to restart those. >> There's huge issues in both of those. Um, I was informed uh unreliably as it turned out that the political and social issues in Guatemala had been addressed. Uh, but that turned out as a result of the uh intercession by people like uh Oxfam to be not true. Uh there are substantial unresolved political issues in Guatemala. uh Na'viad, the problem isn't so much with the Argentine state, that is to say, the government of Argentina, but rather the government of the state that the deposit itself is in. Um returning uh the Guatemalan asset to production wouldn't be a hard thing to do because the mines's built, the mills built, the power's in place, and it's on what's called hot stop, which means that the mines's been the mine and the mill have been very well maintained. And you could probably bring that mine into produ back into production in six months. Uh at Navididad, uh I've been there. That that deposit's in the middle of nowhere. Uh and there would be a long lead time assuming that you could reach a political accord in that state uh between the time that you were able to permit the mine, finance the mine, and build the mine. That's a that's a long-term project. And the other projects that we see that we like uh Abra silver uh Abra is at very high altitude in Salta in Argentina. I think it's a profound discovery. Uh I think it'll produce for decades. But they aren't even out of the exploration phase yet. You know, they haven't gone into the feasibility stage, much less the permitting phase and the building phase. Uh and it's very high altitude, 12, 13,000 ft. uh in a place that's 40 kilometers from any existing infrastructure uh in Salta Argentina. Uh one that would likely be easier to build would be the Visa silver deposit. Uh it's its challenge is that in the uh western part of the Sierra Oxidental in Mexico uh the local sociology is a euphemism for narot trafficantes which you have to deal with. There's good infrastructure in place there in terms of power, water, roads, labor, but there are sociological challenges. >> It's just sad because if you run the what the net present value of the discounted cash flows for the mines, what the silver mine in Guatemala, Lavid, in Argentina, I mean those mines are worth, Rick, in net present value at at a discounted silver price, even $ 35 now silver, they're worth many billions of dollars. You would think the governments would want to fasttrack this and accelerate it. It would bring jobs and investment to the local economy. It would start to make the tax revenues flush. And yet here we are. There's going to be a lack of supply in these mines. >> That's why you and I aren't in government, Jason. We can add and subtract. >> Well, I mean like the government sees uh the gold and silver price at these levels and their first reaction what look at Molly what they want to confiscate the mine instead of wanting the mine to run and maybe trying to renegotiate the royalty tax. So the their first reaction now what the go after the mind uh some of the governments at least what >> well you know we're getting far a field of what we talk about but I think governments see their job is to steal uh you take money out of the broad economy and you deliver it to your constituency. Uh there are a couple of mining companies in Mali uh B2 Gold being one, Resolute being another that managed to reach accommodation uh with the government of Mali. they uh if you will bent over. Uh Bareric uh elected not to bend over and the Malian government decided to negotiate by seizing the mine, throwing four executives in prison and impounding three tons of gold. Fairly strong negotiating position. >> Oh boy. Yeah. I mean the barracks barric gold stock was lagging for a long time on that news and then it's what it's started a rally lately because that's a large it's a large gold mining stock and what some of these institutional investors just said okay barrack has a large market cap we're going to add beric stock but it was lagging for a very long time on what you were describing there with the mine confiscation in Molly so that's the risk if you invest in the take geopolitical risk in the wrong country in Africa or Latin America these days >> you know the market often overstates risk they don't understand Uh, in the case of Bareric, I would argue that the share price decline was far in excess of the billion dollars that they wrote that they wrote off in Mali. I'm reminded two and a half years ago when the government of Panama uh decided illegally to shut illegally to uh shut down Cobra Panama. Uh, and first of all, it was pretty clear to me that it likely wasn't going to stay shut down because it would expose the Republic of Panama to $10 billion in arbitration settlement. Uh but probably more gerine to our discussion today uh a deposit that was 13 or 14% of Franco Nevada's net present value got shut down and Franco Nevada stock by 42%. >> Oh yeah, I remember I remember having a discussion with you. I thought it was a bargain at 110. I was getting so many so much hate mail um from patrons, from people under social media videos saying anything nice about Franco Nevada back around $110 a share. I thought all the bad news was priced in. They still had a good business minus the Cobra Panama asset. >> Well, Jason, you're still a young man. You'll learn to love hate. Uh if the whole world's lined up against you, it probably means you're doing something right. >> Uh I mean, not when you're trying to sell a newsletter. Well, I don't have to do that, you know. I I I uh >> I'm in a lovely position now after 45 years of managing other people's money where I'm down to one client. Uh his name is Rick Rule. He's a thorny guy, but he understands me. >> Well, that's the whole thing with investing in the natural resource space, Rick, is that when you're a contrarian and you're looking for undervalued growth stocks, good riskreward, good assets that are mispriced, there's going to be a lot of people that don't want to hear that. They're going to talk about the stock charts. They're going to say the oil prices are never going to go up again. It's what wind and solar and ESG that uh people aren't going to use natural gas or or oil ever again. Um I mean when platinum and palladium were in a bare market, there were people telling me that there was no need for platinum and palladium anymore. >> Well, those people are my best friends. They unilaterally disarm in a battle of wits. >> Well, I I really enjoyed our discussion today, Rick. I look forward to speaking to you again in a couple months. I I suspect that um unfortunately the US government is going to continue on this the same pace here and the the debt um we're at what 80 days for every trillion dollars. We might be at 70 days for every trillion dollars the next uh added to the debt the next time we speak. >> We can't reform them. So we just need to take steps ourselves. Before I step off, Jason, I'd like to renew my offer to your listeners, which is to say what I if you like what I have to say about natural resources, uh, I can personalize the discussion. If you go to my website, ruleinvestmentmedia.com, and list your natural resource stocks, I personally, for no charge or obligation, will rank those natural resource stocks, and I'll comment on individual issues if I think my comments might have value. Once again, rural Investment Media, list your natural resource stocks, please. No crypto, no pot stocks, no tech stocks, resource stocks only. >> Well, for crypto, Rick, I mean, Tether, the stable coin, they're even buying gold stocks now. >> They're the biggest buyer of gold in the world. >> Uh, a gold they're what? They're buying gold tonnage now, too. They're not just buying gold stocks. >> They're buying gold uh and using it for their stable coin. >> Wow. >> They're the they're the biggest buyer of US treasuries in the world. Uh that's a discussion for another day about uh what what the plan is the and I'm using air quotes here. The plan is for stable coins and bitcoin and crypto here with uh DC. >> I'm the wrong guy to talk to. I'm uh I'm an old-fashioned credit analyst, pawn broker, resource
Rick Rule: Gold & Silver Companies Are Now Free Cash Flow Machines, Oil & Natural Gas Are Best Deals
Summary
Transcript
Hi everyone, this is Jason Barack of Wall Street from Main Street. Welcome back for another Wall Street from Main Street podcast interview. Today's special guest is a returning guest and one of my favorite guests. He's been a mine financeier and a credit analyst for many, many years. He's financed literally way over a hundred mines into production over the years. Former vice president, he's worked in the commodity industry for a very, very long time and a credit analyst. though he looks at credit like the US government credit on a day when we're recording this interview on Monday, October 6, 2025 when the US dollar gold price is almost at $4,000 an announce. The last 6 to8 months have been the rally has been absolutely incredible. Rick Ro, thank you for joining me again. >> Always a pleasure, Jason. Thank you for having me back. >> So, Rick, I I have to ask you about this rise in the gold price the last 6 to 8 months. As a credit analyst, what do you think it means if the dollar is this weak um in 2025 and there's been such a rally in the gold price? What do you think this means as a credit analyst when you're looking at the US government debt? >> Well, I'm frankly surprised it took gold so long to get here. Uh certainly the recent move has been violent but we have seen real cracks in the purchasing power of the US dollar for a very long time. If Jason uh you believe the US government's inflation statistics which is to say the CPI number at 2.9% you have less concern. But I don't believe that number. Uh Mike Maloney likens the CPI to the CP lie. Uh among other things as a cost of living index, it doesn't include tax. Most people have to pay tax and it's hedonistically adjusted. I would uh ask you to ask your listeners to as a mental exercise think about the increase in the price of the basket of goods and services that they consume in the period 2000 to 2025. If you do that, you will find that the purchasing power of your US dollar savings, your US dollar wages is declining at about 8% compounded, not at 2.5 or 2.9% compounded. That is, of course, the crux of the dollar's problem uh and the crux of gold's ascendancy. And by the way, uh I don't think it's anywhere near over. I believe, as you suggest as a credit analyst, that with $37 trillion in onbalance sheet obligations and the net present value of $120 trillion, by the way, that's a Congressional Budget Office number uh against well, so aggregate indebtedness over $150 trillion with aggregate federal income at only $5 trillion. uh I don't think there's any way out of this thing other than inflating away the net present value of the obligation. So I believe that the deterioration of the US dollar the purchasing power of the US dollar continues and the gold ascent continues too. Not straight steps mind you. You'll have to endure cyclical declines. You'll have to endure volatility. But I suggest stay the trade. >> Yeah, I agree. Uh those of us in the gold and silver community, I mean, we thought this would have happened many, many years ago where there would be a huge pop in the gold price where the basically the cracks in the dam would just start overflowing. Finally, it looks like we've gotten it. I think a lot of this has to do with the size of the budget deficits, Rick, and the interest payments on the debt, all the things culminating to the point where now there's like supply and demand issues with the Treasury market where um in the past with the policy DC thought that they would have gotten lower interest rates, they could refinance the debt and that's just not happening right now. Isn't the the national debt it's growing? It last year it was adding a trillion dollars every hundred or so days. I think we're below 80 days now. every trillion dollars of debt is added. Now, >> the federal government is suggesting that their deficit will only be only be$2 trillion dollars this year. Let's just for fun take them at their word. But let's remember too that they aren't adding the accretion of value of unfunded Medicare, Medicaid, and entitlement liabilities. The off-balance sheet liabilities of the US government increase by another $2 trillion a year. So the aggregate deficit on and off balance sheet is $4 trillion a year. Juxtapose that against gross federal income before they spend any money on anything of $5 trillion a year. The deficit grows by $4 trillion a year and their gross income is $5 trillion a year. You don't have to be too precise with the numbers to know that there's a problem. >> Well, they're saying the budget deficits the CBO is what$2 trillion. But the interest payments on the debt Rick are over a trillion dollars a year. So the ma the math just doesn't work. I mean last year I think the government in 2024 it spent around 8 trillion approximately 8 trillion and took uh in almost a record of like 4.7 trillion in tax receipts. So and they were claiming the budget deficits were only about 1.9 trillion last year. So the math just doesn't work. >> That's absolutely correct. I'll tell you another piece of math that doesn't work Jason. Uh if you believe in the CPI at 2.9, then the US 10-year Treasury rate at 4.5 or 4.6 doesn't feel too bad. But if you agree with me, never mind shadow stats, who says that inflation is at 12%. But if you agree with me that inflation uh as a phrase that describes the deterioration of the purchasing power of the US dollar, if you agree with me that the purchasing power is declining at 8% compounded and you're getting paid 4 a.5% on your savings, uh what's happening is that you're enjoying, if that's the right phrase, a negative real interest rate. the money that you're saving is costing you three and a half percent a year as opposed to making you four and a half percent a year. What traditionally has taken the gold price higher is investors and savers concerned about the maintenance of their purchasing power in US dollars. Nothing that I can think of should make you more concerned than a government guarantee that you'll lose three and a half% a year compounded for 10 years in the US 10ear Treasury. In other words, if you give the government $100,000 today, they'll give you back $60,000 in purchasing power 10 years from now. Returnfree risk, as Jim Grant used to call it, >> or in the 1970s stackflation, I think they called what the US Treasury bonds were called what? Certificates of confiscation. But I I would argue that a lot of these government bonds, it's not just the US, it's European Union, United Kingdom, Japan. Seems like all these government bonds are all toxic or radioactive. Yeah, >> you make a very good point, Jason. I am not suggesting that the comparable value of the US dollar declines, but rather the absolute value. Uh I think we're in for a period of currency turmoil. The US government uh the US uh currency, the US dollar, has declined about 11% this year against a basket of other currencies. But my suspicion is that the US dollar will do okay relative to other currencies over the next 10 years. But I believe that in an absolute sense, the US dollar will lose 75% of its purchasing power over the next 10 years, much as it did in the decade of the 1970s. decade of the 1970s, according to the Office of Management and Budget, the US dollar lost 75% of its purchasing power in 10 short years. I remember it. It wasn't pretty. >> And the US dollar's purchasing power against gold, I mean, over the last like 5 years, it's lost like 40 or 50%. So, because of the gold price catch up, you could argue that the dollar's already lost an enormous amount of purchasing power just in the last four or five years. And if you go further back, Jason, it's instructive to know that you don't have to pick the last five years with meteoric increases. If you take the gold price back to the year 2000, uh gold has increased in a nominal sense, that is to say in US dollars by 9% a year, compounded for 25 years. That doesn't mean that gold has necessarily gone up. What it has done is maintained its purchasing power against a dollar which has lost its purchasing power. So now I want to transition to gold stocks. I want to ask you about profit margins. Uh the industry is claiming around 60 the average uh gross profit margins around 60%. Have you seen a in the past cuz you've been through a lot of bull markets and bare markets over the years. Have you seen a scenario where the industry has this uh this high of profit margins, free cash flow potential uh growth with free cash flow potential to pay dividends before? >> It's important that you segregate between the median and the mean. The average takes in some uh serial outperformers and it also takes in some serial underperformers. Uh the best of the best in the gold mining business is doing a spectacular job. The Alamoses, the Londines, uh the >> Agnico. Yeah, >> Agnico Eagle in particular. But there have been some real lagards too. Uh the truth is that you will remember Jason because we talked about it in two 2023. The um disappointment that gold stock investors had about the fact that the gold price was moving up but the gold shares weren't moving up. That was because in 2023 two things happened. Companies were making up for having been high grading in the period to 2020 to 2022. uh and also the cost of producing gold particularly energy moved up very quickly in 2023. In 2024 the uh increase in inputs particularly energy uh began to increase less rapidly and the gold price uh increased more rapidly. The industry is now as a whole doing extraordinarily well in a financial sense. But investors need to know that they very seldom buy the whole. They normally buy individual stocks and in that circumstance investors need to be very cautious in movie parlance in selecting between the good, the bad and the ugly. >> Yeah, I'm looking up GDX right now and that's a gold miners ETF and that's at all-time high what at 78. So I remember for years many many years when the gold price was rallying the GDX was nowhere near its previous all-time high back in 2011 of like $64 $65 a share. So we have broken out there but relative to the movement in the gold price on a percentage basis the gold stocks a lot of them are still lagging the movement in the gold price. >> That's correct. And it's interesting to note Jason that if you value gold mining companies the way I do which is to say on a net present value uh basis you take the discounted cash flow and then you add back a receivable at the end of the discount life that at today's gold price many gold companies that have doubled are cheaper relative to their valuations than when the move started. We did a calculation on Agniko Eagle at my uh Boca Raton investment conference in July and we found on a discounted net present value basis that the company was cheaper after a double than it was before the double. Now believing that means that you believe that gold at least at least uh holds today's price and doesn't fall. One thing Jason that your listeners will be interested in is I spend a lot of time uh on analyst calls and management calls around the gold business. And it seems that the Wall Street consensus estimate for the gold price, the numbers that they're basing their valuation models on are about $2,700. When you're basing your earnings estimates on $2,700 and the industry is selling the material for $38 or $3,900, it seems to me that earning surprises are almost inevitable. Uh if you underestimate the selling the selling price uh in the near period by $1,200 an ounce, uh I suspect that Wall Street will be very very very surprised by the upcoming quarters and the upcoming year. Well, I'm not sure we should trust any Wall Street estimates about gold because Bank of America just released some research saying that around 40% according to their surviving 40% of institutional investors have 0% gold exposure counting like GLD, uh, any gold miners, ETFs, new moder, they don't have any of of that exposure. But they're they're routinely wrong, Rick. They've been picking some of these Wall Street analysts. They've been calling tops in the gold price every couple weeks over the last like 9 to to 10 months. I mean, there was one of one of the guys, he's now promoting gold. He was on Fox Business today. I saw on Charles Payne show. He was calling it topping gold price last year. He's just swept that bad call under the rug. He was calling for a crash in the gold price and it never happened. Now he's promoting how well gold's doing. >> Yeah. I suspect one of the things that happens in Wall Street is that they spend a lot of time talking about stuff that they think they're going to get some commissions in. Uh there were no financings happening in 202122. So there was no commission. Uh there's M&A work now, there's financing work, there's restructuring work, there's debt issuances. Uh gold will begin to have Wall Street's attention because it has a bid and because there are some fees in it, >> but it's going to take them a while to get it right. You know, there's I I suspect that when Wall Street calls, you know, when one of these big CEOs calls down into the ranks to look for his gold research team, uh he will be in fire. he will be advised that he fired them 12 years ago, you know, due to lack of revenue. >> Well, what do you think about the comments that have come out from the Morgan Stanley chief investment officer and Jeff Gunlock? So, the Morgan Stanley, for our listeners who are not familiar, he said in the last couple weeks, he said that gold exposure for his portfolio, he wants to drastically reduce government bonds, US treasuries, he wants to get his gold exposure up to 20% of the portfolio. And Jeff Gunlock, who's a he has a gold fund, it's smaller, but he's known as what the billionaire bond king. He's a libertarian though. But he said that uh gold exposure for him he thinks 25% going forward. >> He's but he's been doing very good work for a couple years as a matter of fact. Um but let's leave that aside. Um I you know better late than never I guess is what I have to say about that. The most recent figures that I've seen are from JP Morgan Chase. They're about a year old so they could be suspect. But JP Morgan Chase uh found that the market share of precious metals and precious metals securities in total US savings and investment portfolios totaled about 1/ half of 1% which is to say 1 half of 1% of total savings and investment assets in the United States were denominated in precious metals or precious metal securities and that number itself 1 half of 1% was down from a four decade mean of 2%. So if precious metals and precious metals securities ownerships merely reverted to mean 2%, not 20%. You would increase demand for the stuff in the US four-fold. And that's precisely what I think is going to happen. Well, we're seeing that with the nonG7 central banks and the bricks, which uh postRRussia sanctions back in early 2022, the last three and a half years, they've been just steadily accumulating gold tonnage over accumulating US treasuries for their for their foreign exchange reserves. But the the Bank of America survey that came out in the last couple days, Rick, it was saying that 40% of institutional investors, these fund managers with large pools of capital, they have 0% gold exposure. So imagine if we get up to that 2% number. I mean, that's substantial. That is substantial and it uh it wouldn't surprise me if that number is true. If you look at the gold bid for the last five or six years as you suggest it's been foreign central banks. One of the reasons why the gold equities lagged the gold is because foreign central banks buy gold. They don't buy gold stocks and an asset class that had a bidder went up and an asset class that didn't didn't go up. The other thing to note is that the retail flow of funds into both gold and gold equities has been skinny at best. Uh most of the growth in the gold funds has happened organically uh rather than by adding new capital. uh inflows and outflows to physical ETFs and to the equity ETFs in particular have been spotty and in fact in the year 2025 uh the flow of funds into actively managed gold mutual funds uh has been negative which is to say more money has left the sector than has come into it. So I would suggest to you that participation with the exception of foreign central banks uh has been very very very skinny. Are you starting to get contacted more by like um generalist institutional investors about getting exposure to junior gold miners? Because I I think my listeners have seen the headlines, the Financial Times, I think even covered this that tether some of the stable coins. They've started accumulating what uh some of these gold stocks like EMX royalty and others. Are we starting to see regular fund managers want gold stock exposure? >> Uh just beginning. I mean really truly just beginning. What I am seeing is family offices who were clients of mine in an earlier life uh who were always primarily interested in my career in oil and gas uh beginning about three years ago sort of dusted off the gold book said you know Rick it's time and within that uh within that group what I'm seeing now is in particular the multif family offices that serve three or four generations of an extended family. Uh what I'm seeing is if I hop on a conference call with various beneficiaries of the family office, the families, the interest in goal that I'm starting to see among the 25 to 35 year olds is something that I haven't seen for 40 years. It's very very strong. I can't speak to the generalist institutions because the people at the generalist institutions that I've always spoken to have always been people like Will Danoff as an example at Fidelity who were already well aware of the gold trade. Okay, I see. Well, at at the current gold price, Rick, since I know you've financed so many mines into production over the years, are we at now a cost of capital, a gold price where the um a say a junior mining producer, they have one or two assets, maybe it's their first gold mine or it's their second gold mine. Are they going to be able to raise the capital they need without destroying their share count, reverse stock split, you know, the usual games over the years to go and build a gold mine, or are we not there yet? >> Oh, the system's loaded with money. loaded with money. Never mind the responsible juniors. There are issuers in the junior market going out to market now that are worth nothing that are raising 10 or $15 million. Somebody with a truly viable project today will not have any difficulty at all raising the money. Uh they may if the share prices run too far too fast. that is if they have a you know a float to stock problem the stock is too tight and it went up too much the equity holders may be disappointed uh at the price uh that the equity goes out at uh but the truth is that the sector's a wash in money now >> are you surprised we haven't seen more mergers and acquisitions because what we've seen um Equinox Gold what they did acquisition with Calibbre and they added another producer mine that just had a first gold pour in Canada. Are you surprised we haven't seen more of those types of acquisitions? >> I am, but that'll come. You know, you saw just uh you know, you saw Predictive and Robex the other day, by the way, a wonderful merger. Uh what we've seen so far have been intelligent mergers as opposed to stupid mergers, which is a very very very good thing. uh from I mean my my gut feeling is that despite the fact that free cash flows are high and despite the fact that some money is coming into the sector I think that the memory of the sector's stupidity in the period uh 2000 to 2010 is still so strong that the management teams either aren't going to make mistakes or aren't going to be allowed to make big mistakes for another two years. uh two years out, two and a half years out, when people are trying to grow for growth's sake, then you'll begin to see really stupid mergers and really stupid misallocations of capital. But what you're seeing right now are mostly intelligent, strategic, wellpriced mergers. Of course, the merger that's on the industry's mind uh has to do with the fact that the CEOs of both New Pneumont and Bareric resigned. Uh, one would suggest that that would remove one of the human impediments to the biggest of all possible mergers, a dream merger. Not that it will take place, but one can dream. >> Well, didn't Mark Bristo, the CEO of Berkel, didn't he have health problems over there? I think if I remember correctly, he had he had some very serious health problems before the pandemic, like 2018 or 2019. >> Yeah, but I would suggest that health wasn't the reason uh for Mr. Bristo's retirement. Uh I I think uh it is alleged that he had problems ongoing problems with his chairman uh among others. Uh and I think that there was probably well not probably I think that there were rumblings on Wall Street uh about his pivot to copper and about his willingness to continue uh placing company assets in what Wall Street deemed to be politically risky jurisdictions. Now, make no mistake. I've been a friend and a beneficiary of Mark Bristo's work for 35 years. I'm a Bristo fan. Uh, but I would I I would not deny that he can be a fairly uh thorny individual. >> So, so far for gold mining deals or or well, gold stock deals, the largest one is the royal gold takeover for sandstorm gold. So, the the combined company, I want your thoughts on the combined company. the combined company. It looks like it has good diversification, good long-term growth, and a lot of exposure with these gold gold byproduct streams. What to tier one copper assets? >> Uh, absolutely. A synergistic merger, a great merger. Uh, that notwithstanding, the people, some of the people who own Sandstorm owned it for it to get taken over. Now that that's taken place, they'll probably sell stock. Uh, and I'll probably buy it. Uh, >> well, Roal's been lagging, right? having the the role shares have not been keeping pace with some of the other companies. So so the market >> investors investors looked at royal gold and they saw too much concentration on too few assets. Uh this addresses that they also had some concerns about the intermediate term pipeline and the sandstorm acquisition answers that too. There's a third truism uh in today's market where so much of the market volume is passive uh companies do better in the market simply by accreating size getting included as a higher waiting in index and as a consequence of that attracting more index buying. So I I think that this uh merger is good on three counts. Well, also Royal Gold before the merger, Royal Gold was growing their dividend at a what, a 8% clip. They had increased dividends substantially, but um you know, when I was looking at the company, they had a high valuation, but I didn't like their growth. They didn't have a lot of diversification, like you said, and they didn't have a lot of um growth in the pipeline. I mean, they had the nice royalty from Great Bear in Canada, but they just didn't have a lot of uh gold byproduct streams or good royalties on a lot of those tier one mines that you like to talk about. And I think the Sandstorm acquisition when you combine the company together and you look at the investors presentation and where all the growth is coming from in Latin America and Turkey and Mongolia all the different places on really good projects. I think it looks like a a lot better company overall. >> I I don't know that I would say a better company because Royal Gold has a couple of very high quality royalties. But the truth is that the merger of the two companies makes the resultant company much stronger than either of them on a standalone basis. Uh as you point out, the knock on Royal Gold had to do with its intermediate term pipeline and that was Sandstorm's strength. Uh they fit together very very nicely. Do you think then we're going to see a response then from Franco Nevada or Weeden Precious Metals to go and uh target maybe some of these other mid-tier royalty and streaming companies to add additional growth now that royal gold has made a huge move? >> Not yet. Uh because the mining industry is coming into a period of very very large cash needs. Uh people say that the growth in royalty and streaming is behind us because all the big deals have been done and that's exactly wrong. >> Oh yeah. Look at the demands for copper and electricity. Yeah. Now >> that's right where I'm going. Uh the copper industry needs in the next 10 years to invest at a minimum 150 to200 billion. And that's problematic because they don't have it. uh if you take uh a cash flow stream from a gold royalty or a gold stream and you run it through the income statement of a copper company, it's priced at five or six or seven times EBID. If you run that same income stream through a gold royalty and streaming company, uh it's priced at 13 to 15 times EBIT, which means that the royalty and streaming companies can do a transaction that's good for the copper company and good for their shareholders, too. I suspect that there's probably 20 or 30 billion dollar worth of royalty and streaming business to do in the copper space between financing sovereign nation participation and new mine construction and Wheaton and uh Franco are just ideally ideally prepared to capture that business. >> Are there a lot of like tier one copper projects left? So we've spoken about them. The one in Mongolia, Oo Togoy, which is getting to the underground money just started, I think, on the underground after spending billions of dollars from Riyotinto in capital expenditure. You have the the couple good projects in Turkey, which a hotman's one that's just starting construction right now. Are there a lot of other good tier one deposits for copper? >> There's a lot of big deposits. Uh there are very few deposits that are same simultaneously big and have high grade. Uh it's pretty obvious that there is a large capital expenditure coming up in Grassburg as a consequence of the flooding of the of the um um block cave uh and also uh potentially funding an increase in ownership by the state of Indonesia. They could easily fund that increase by selling a stream on their production. Uh there are a number of very large copper pferies uh to put into production. The one that comes most immediately to mind is res resolution in Arizona which the industry says is an $8 billion build. I believe it's a10 billion build. Um but there are uh any number uh of big projects. Another really really really big project uh would be a drastic expansion of Olympic Dam which currently has 75 years of reserves. You need to move that forward. Uh that would cost BHP somewhere between 10 20 billion. It would be easy to fund most of that uh by selling a byproduct gold and silver stream uh allowing BHP to keep the copper a and also by the way allowing BHP not to dilute their own shareholders at a copper multiple or or an iron multiple which is substantially below the gold multiple. And it sounds like Olympic Dam, they could do some type of syndication deal where like Franco Nevada, we precious metals and maybe even the the larger royal gold company could all split like a massive uh gold stream on that deal, then gold or silver stream on that deal. So we could see if a project's that large, maybe Franco Nevada doesn't want to take on all the risk themselves and they split they split the deal uh in in half or in thirds or something. >> I think the needs are so large in the copper space over the next 10 years that syndication will be the norm rather than the exception. And I think syndication will extend all the way out to some large institutional investors like Nores Bank uh CITC uh and people like Black Rockck. There will be I think everything that Weaten and Franco uh and the rest of the industry needs plus some for others. >> So you brought up uh data centers, AI, copper demand. You've been a uranium bull for a long time throughout the the bare market. Now that things have seemed to turn, do you think that this this new growth picture with electricity demand? Do you think that this is uh maybe put in a uranium bull market, nuclear power bull market, electricity demand bull market for decades? >> I don't know about decades. Markets seem to work, but I feel pretty good about the next 10 years. Most of the stories that you've talked about data centers and stuff like that uh aren't going to do anything for demand in the next three or four or five years. You got to permit these things. You got to finance them. You got to build them. What's driving power demand, uranium demand right now is the fact that existing power stations which were supposed to be shut down uh and were supposed to stop consuming uranium are being extended by as much as 50 years. A and that demand gets added this week or next week and next month. Uh the pace of Japanese restarts too. They announced a lot of restarts but they didn't restart them. Now they're starting to do those re those restarts. So when people look at the uranium market right now they're buying the narrative. They're buying uh small modular reactor narrative or they're buying data center narrative. They're buying narrative that's going to be important six or seven years from now. What's important now is uh canceled shutdowns, uh accelerated restarts, and Chinese new builds. The uranium market in terms of demand is screaming, absolutely screaming. And as we talked about the last time you and I interviewed Jason, uh, a new financial instrument, which is the term contract in the uranium business, is going to be an absolute gamecher for the juniors who choose to participate in it. In every other commodity that I know of, uh, prices are set at spot with the exception of, you know, futures markets. But when a guy like me goes to do a net present value calculation on a gold producer, he has no idea what the gold price is going to be two years from now, 5 years from now, 10 years from now. In the uranium business, uh producer and consumer can get together and put together a contract that specifies minimum prices uh and minimum volumes going out as far as 30 years. This is good for the reactors because they need to have a lockedin source of supply that's long enough to amvertise the construction loan to build a nuclear power plant. And is good for the producer because small companies that wouldn't otherwise have access to the capital as a consequence of the pricing and revenue uncertainty can now go to the bank with a contract signed by a credit grade counterparty, a Tokyo power, a China general nuclear, a southern company, a Duke company. This happens in no other commodity and it is I would suggest to you uh the most important factor in the pricing of the 10 or 12 legitimate junior uranium companies and it's also a factor that not one in a thousand uranium speculators thinks about. >> Now let me just push back on some of the data. So a few of the data centers the massive ones. So, the Stargate AI in Abene, Texas, which has 200,000 over 200,000, Nvidia GPUs, and then they're going to stage it up to multiple stages. That one's online. It just came online in I think the last like month or so. And then uh Colossus uh AI data center from XAI that Elon Musk built that has he has a couple of them, but those aren't using nuclear power, Rick. I think those are only using natural gas right now. Now they do want to add nuclear power there, but it was just cheaper and easier, more efficient to build a natural gas pipeline. Especially if you're what in Abene, Texas that's not that far from the Perian Basin. You could just set up a what a uh natural gas turbine substation. You can move some pipelines. So looks like natural gas potentially in the next couple years while these data centers are built out is going to be a beneficiary of the data centers that are under construction first. >> The data centers will be an important part of electrical demand assuming that technology doesn't intervene. five years from now, six years from now, seven years from now. Uh when the Chinese build a new nuclear power plant, they're not little firecrackers like we build in the United States, you know, 250 megawatt plants. These are gigawatt plants. They don't burn uh 200,000 lb like the old American firecrackers. They build they burn a million or 1.2 million pounds. uh the impact on the supply demand imbalance in uranium for the next 5 years. And by the way, five years is most of a net present value curve uh comes as I say from restarts uh from delayed shutdowns and from Chinese new builds. Things like uh uh SMR conversion. And I was just in Keer, Wyoming, which is where uh Bill Gates intends to replace a coal fired plant with an SMR. Those will be important contributors uh to the uranium business in 5 years, 6 years, 7 years. You may recall, Jason, I was a little skeptical of that three or four years ago uh because it seemed to me that SMRs were not really proven technology. It was pointed out to me by a client of mine that the US Navy has run on SMRs for 40 years. Uh, >> you can't invest in those scale. >> Yeah, you can't invest in those as uh >> No, that's right. But I mean what I'm trying to say is that the utility the uh the technology has been well enough adapted that the ability to scale up from a submarine or an aircraft carrier uh to a regional utility SMR is well within our reach. So each interview every couple months when I have you on I ask you because I know you're contrarian and you're looking for undervalued stuff a commodity that's cheap and hated out of favor cycles do turn. We were talking I think about platinum and palladium miners over the last couple interviews and look at the rally we've gotten in platinum and platium price markets as you say all the time markets do work eventually that uh the cure for low prices is low prices. Which um commodities or industries do you see right now are cheap hated out of favor valuations riskreward or looking attractive? >> Oil and gas. Uh, in fact, Jason, in my own portfolio, despite the fact that I think gold is going much higher, I'm selling 25% of my junior gold and silver stocks. Not because I don't think that there's a lot of money left. I'm doing it because over the last 5 years, I built massive positions. Uh, and I can sell 25 to 30% of my speculative portfolio. By speculative, I mean non-producing explorers and developers. and I can recoup all of the money I've invested in the sector. Giving up 25 or 30% of my upside, I eliminate all of my downside. The money that's coming from that sales is going two different places. some of it is going back into the gold space but in the lower risk names gold itself Franco Wheaton uh Agniko because I think uh right now that there's a speculative frenzy that I'm well advised to take advantage of but the other sales proceeds the other half of the money is going into the oil and gas space uh probably doesn't work for two years but as you know Jason uh I'd rather be two years early than two weeks slate and I love uh underowned and unloved stocks and the energy business is underowned and unloved. >> Well, we're starting to see mergers and acquisitions, right? So, some of the larger companies that have that are lowc cost producers, better balance sheet, free cash flow, good profit margins, they're starting to target acquisitions now, they're looking at the valuation numbers, and they're going and buying assets now. Now, their share prices aren't being rewarded for the acquisition, but when the cycle does turn, they will be. You know, I'm an old guy now, Jason, and I think in five-year terms, the acquisition's example of Pioneer by Exxon, uh, this will have benefits for the rest of my life. It was a $60 billion acquisition. Now, the immediate postcript of that acquisition is that many Pioneer holders held it for a takeover. When the takeover took place and they got their Exxon stock, they sold it. So, Exxon sold off. Uh, that comes from people who think by the quarter uh not in three or four or five year time frames. I think in three or four or five year time frames. And I note right now in the oil and gas business, according to the International Energy Agency, that the oil and gas business as a whole, including the state-owned firms, are underinvesting in sustaining capital. Not not new project capital, but sustaining capital to the extent of about $2 billion a day or $700 billion a year. that might not impact their ability to produce in 2025 or 2026, but 2027, 2028 that begins to bite and I want to be in place when that happens. >> Well, especially if those data centers do come online. And I mean, we're going to be using a lot more energy and electricity, especially natural gas. The pipeline companies that are going to be moving the natural gas from the cheap, lowerc cost areas to either a liqufied natural gas export facility or to a what a power station substation near a data center. >> And note that that's happening right now uh in the United States because of an over supply of natural gas for 5 years. We've been investing billions of dollars per month on natural gas takeaway, on peaking plant construction, on gas liquef. The other thing that happens is that gas dependent uh US and uh pardon me European industrial concerns uh have left places like Germany where the gas is expensive and in perilous supply and they've begun near shoring. They've begun to build, as an example, chemical or fertilizer uh capacity in the US to utilize US gas. Thus far, the supply of US gas is a byproduct of oil drilling has been adequate. But at some point in time, at least with current technology, the current US oil price isn't high enough to contain to continue the pace of uh o oil drilling that you've seen in those shale basins. and the byproduct gas production will inevitably uh decline, but the infrastructure a and the consumption of it will continue. Again, not a story for somebody who cares about a quarter. A wonderful story for somebody who's determined to become richer over the next 3 to 5 years. >> Yeah. To use an oil and gas example, normally EoGG Resources, which is a large independent one, normally they're very stingy. the management team with a lot of spending with acquisitions. They've been doing acquisitions the last like 6 to9 months. So they might not like on the exact timing it might not pay off but a couple years from now when the cycle turns they're going to look very very smart. So it it's the top management teams the lowcost producers are targeting the assets now. I think there's a lot of mergers and acquisitions of the Canadian oil and natural gas producers right there's huge consolidation up there in Canada. There is EOG by the way and Exxon uh aren't merely acquirers. Uh what they have been acquiring is assets that complement and interfinger with their own assets. Uh it is common now in these shale basins Jason that the uh lateral reach of an oil well uh goes as far as three or four miles. So if you are able to consolidate uh leases so that you can run your lateral three or four miles as opposed to a mile and a half uh your drilling and recovery becomes much more efficient. When you look what EOG is doing and you look what Exxon is doing, they aren't merely acquiring BTUs. They aren't merely acquiring resources and reserves. What they're doing is making strategic acquisitions to fill in their existing land holdings. This will pay real dividends. These are truly accretive synergistic acquisitions. >> So, so it's similar to what Agnico Eagle when they're buying what land packages of juniors surrounding what can malarctic or some of their other lowcost producing mines. >> Yeah, it's funny. It's funny that you say that. I uh I I interviewed Amomar Aljundi at my Boca Ratan conference in July and we were talking about the smaller assets in the Canadian Shield and I said, you know, there's a lot of assets up there, you know, million- assets that don't make any sense because you can't build processing facilities. And what he said to me is, uh, what you're going to see this time is that people who have fairly close processing facilities are going to buy those. million ounce might not work as a standalone, but if there's a if there's an ore hungry mill five miles or 10 miles or 15 miles away, uh in this cycle, uh mines that can get built uh and get can get built without having to add mills, but rather utilize existing infrastructure are going to get bought. Uh and that was a very interesting observation. >> So, last question here as we wrap up. I get asked all the time about silver companies, silver miners at a $48 an ounce silver price and we've just had absolutely enormous rally in silver and there's rumors of a silver shortage. Can uh a lot of these gold miners or copper miners, can they bring on a silver specific deposit or is there just not a lot of them out there? >> There's very few of them out there and most of the good ones are in the hands of Mexican or Peruvian companies that North American and European investors don't want to touch. Uh if you're truly a silver speculator, you have to look at names like Polises and Fresno and Bueno Ventura. You have to expose yourself to Mexican uh and Peruvian political risk. And many North American investors aren't willing to do that. In terms of pure silver deposits that are controlled outside of Peru or Mexico, we've identified only five that we think are truly truly highquality deposits. uh as we've seen very recently with the takeover of MAG by Pan-American, the takeover of Silver Crest and the takeover of Gatos, uh highquality silver deposits, ones that are solidly economic in the 40s, they're rare as hens teeth, uh and they get taken at huge premiums. It's very worthwhile to note that even after uh attractively priced premiums uh for Silver Crust and Gatos that the acquirers COR uh and First Majestic in the aftermath of the takeovers did well. uh these takeovers while they may not have been accretive on a net present value basis because of the short reserve life that you see at Silver Crest and at Gatos were accretive on a cash flow basis and the market absolutely loved these takeovers. The holders of Gats and Silverest got paid an attractive market premium and the shares that they receive by the acquirers have gapped up. Wonderful set of circumstances. How long can uh how many years would it take then uh at the current silver prices for a uh first majestic silver some of these other producers to bring online say a new deposit? >> Well, they got to find it first. Uh, First Majestic is lucky in that it would appear that their current flagship, which is Sand Demus, which by the way has been producing since the 1600s, uh, it would appear that there's some very valid depth extensions there, which is wonderful because you don't have to permit it, you just have to go get it. Uh, and they are also enjoying uh, pretty spectacular brownfield success at Armatano. So, First Majestic is in the lovely position of not having to bring new projects in production because two of their existing mines uh appear to have pretty substantial brownfields uh expansion. The difficulty is that as I say, we've only identified five at most six deposits worldwide that uh we think are at once attractive and gerine. By gerine I mean uh over a 100red million ounces uh of uh insichu recoverable uh economic reserves and resources. In other words, there aren't many deposits around. Uh if you have the misfortune of having one of those deposits, let's just say that you and I Jason discovered a new 100 million ounce silver deposit uh and let's say it was in Arizona, nice silver state. Uh if the resolution copper mine is any reference point, uh resolution has been in the permitting process for 27 years. That's before you build it. >> But it would still take many years to bring online new silver supply, right? Unless, like you said, it's at an existing producing silver mine. And so like Pan-American Silver, First Majestic, they can increase production at a Brownfields project, but a new silver deposit could take uh at least 3 to 5 years, you would think, or probably longer. >> Yeah. Well, 3 to 5 years would be aggressive. Uh very aggressive. The only the only tier one silver deposit we see in the world that's green fields that we think will be built in the next two two and a half years, uh is in Morocco controlled by uh silver. uh the other deposits that we see uh the Mexican deposits, very very very high quality deposits, but they're going to be a while uh you know in permitting and construction and stuff like that. >> Well, Pan-American Silver has some of the top projects, right? They have the the La Navididad in Argentina in that province and then they also have what the one in Guatemala, but there's issues trying to restart those. >> There's huge issues in both of those. Um, I was informed uh unreliably as it turned out that the political and social issues in Guatemala had been addressed. Uh, but that turned out as a result of the uh intercession by people like uh Oxfam to be not true. Uh there are substantial unresolved political issues in Guatemala. uh Na'viad, the problem isn't so much with the Argentine state, that is to say, the government of Argentina, but rather the government of the state that the deposit itself is in. Um returning uh the Guatemalan asset to production wouldn't be a hard thing to do because the mines's built, the mills built, the power's in place, and it's on what's called hot stop, which means that the mines's been the mine and the mill have been very well maintained. And you could probably bring that mine into produ back into production in six months. Uh at Navididad, uh I've been there. That that deposit's in the middle of nowhere. Uh and there would be a long lead time assuming that you could reach a political accord in that state uh between the time that you were able to permit the mine, finance the mine, and build the mine. That's a that's a long-term project. And the other projects that we see that we like uh Abra silver uh Abra is at very high altitude in Salta in Argentina. I think it's a profound discovery. Uh I think it'll produce for decades. But they aren't even out of the exploration phase yet. You know, they haven't gone into the feasibility stage, much less the permitting phase and the building phase. Uh and it's very high altitude, 12, 13,000 ft. uh in a place that's 40 kilometers from any existing infrastructure uh in Salta Argentina. Uh one that would likely be easier to build would be the Visa silver deposit. Uh it's its challenge is that in the uh western part of the Sierra Oxidental in Mexico uh the local sociology is a euphemism for narot trafficantes which you have to deal with. There's good infrastructure in place there in terms of power, water, roads, labor, but there are sociological challenges. >> It's just sad because if you run the what the net present value of the discounted cash flows for the mines, what the silver mine in Guatemala, Lavid, in Argentina, I mean those mines are worth, Rick, in net present value at at a discounted silver price, even $ 35 now silver, they're worth many billions of dollars. You would think the governments would want to fasttrack this and accelerate it. It would bring jobs and investment to the local economy. It would start to make the tax revenues flush. And yet here we are. There's going to be a lack of supply in these mines. >> That's why you and I aren't in government, Jason. We can add and subtract. >> Well, I mean like the government sees uh the gold and silver price at these levels and their first reaction what look at Molly what they want to confiscate the mine instead of wanting the mine to run and maybe trying to renegotiate the royalty tax. So the their first reaction now what the go after the mind uh some of the governments at least what >> well you know we're getting far a field of what we talk about but I think governments see their job is to steal uh you take money out of the broad economy and you deliver it to your constituency. Uh there are a couple of mining companies in Mali uh B2 Gold being one, Resolute being another that managed to reach accommodation uh with the government of Mali. they uh if you will bent over. Uh Bareric uh elected not to bend over and the Malian government decided to negotiate by seizing the mine, throwing four executives in prison and impounding three tons of gold. Fairly strong negotiating position. >> Oh boy. Yeah. I mean the barracks barric gold stock was lagging for a long time on that news and then it's what it's started a rally lately because that's a large it's a large gold mining stock and what some of these institutional investors just said okay barrack has a large market cap we're going to add beric stock but it was lagging for a very long time on what you were describing there with the mine confiscation in Molly so that's the risk if you invest in the take geopolitical risk in the wrong country in Africa or Latin America these days >> you know the market often overstates risk they don't understand Uh, in the case of Bareric, I would argue that the share price decline was far in excess of the billion dollars that they wrote that they wrote off in Mali. I'm reminded two and a half years ago when the government of Panama uh decided illegally to shut illegally to uh shut down Cobra Panama. Uh, and first of all, it was pretty clear to me that it likely wasn't going to stay shut down because it would expose the Republic of Panama to $10 billion in arbitration settlement. Uh but probably more gerine to our discussion today uh a deposit that was 13 or 14% of Franco Nevada's net present value got shut down and Franco Nevada stock by 42%. >> Oh yeah, I remember I remember having a discussion with you. I thought it was a bargain at 110. I was getting so many so much hate mail um from patrons, from people under social media videos saying anything nice about Franco Nevada back around $110 a share. I thought all the bad news was priced in. They still had a good business minus the Cobra Panama asset. >> Well, Jason, you're still a young man. You'll learn to love hate. Uh if the whole world's lined up against you, it probably means you're doing something right. >> Uh I mean, not when you're trying to sell a newsletter. Well, I don't have to do that, you know. I I I uh >> I'm in a lovely position now after 45 years of managing other people's money where I'm down to one client. Uh his name is Rick Rule. He's a thorny guy, but he understands me. >> Well, that's the whole thing with investing in the natural resource space, Rick, is that when you're a contrarian and you're looking for undervalued growth stocks, good riskreward, good assets that are mispriced, there's going to be a lot of people that don't want to hear that. They're going to talk about the stock charts. They're going to say the oil prices are never going to go up again. It's what wind and solar and ESG that uh people aren't going to use natural gas or or oil ever again. Um I mean when platinum and palladium were in a bare market, there were people telling me that there was no need for platinum and palladium anymore. >> Well, those people are my best friends. They unilaterally disarm in a battle of wits. >> Well, I I really enjoyed our discussion today, Rick. I look forward to speaking to you again in a couple months. I I suspect that um unfortunately the US government is going to continue on this the same pace here and the the debt um we're at what 80 days for every trillion dollars. We might be at 70 days for every trillion dollars the next uh added to the debt the next time we speak. >> We can't reform them. So we just need to take steps ourselves. Before I step off, Jason, I'd like to renew my offer to your listeners, which is to say what I if you like what I have to say about natural resources, uh, I can personalize the discussion. If you go to my website, ruleinvestmentmedia.com, and list your natural resource stocks, I personally, for no charge or obligation, will rank those natural resource stocks, and I'll comment on individual issues if I think my comments might have value. Once again, rural Investment Media, list your natural resource stocks, please. No crypto, no pot stocks, no tech stocks, resource stocks only. >> Well, for crypto, Rick, I mean, Tether, the stable coin, they're even buying gold stocks now. >> They're the biggest buyer of gold in the world. >> Uh, a gold they're what? They're buying gold tonnage now, too. They're not just buying gold stocks. >> They're buying gold uh and using it for their stable coin. >> Wow. >> They're the they're the biggest buyer of US treasuries in the world. Uh that's a discussion for another day about uh what what the plan is the and I'm using air quotes here. The plan is for stable coins and bitcoin and crypto here with uh DC. >> I'm the wrong guy to talk to. I'm uh I'm an old-fashioned credit analyst, pawn broker, resource