Rick Rule: When Silver Moves, It Moves Hard — Don’t Be Late
Summary
Silver Market Dynamics: The podcast emphasizes that when silver moves, it outpaces gold significantly, with its rate of escalation being at least double that of gold, highlighting the importance of timing in silver investments.
Precious Metals Bull Market: Rick Rule expresses confidence in the long-term bull market for precious metals, driven by factors such as anti-dollar sentiment, deteriorating US finances, and eroding Fed credibility.
Investment Demand: The discussion points out that investment demand, rather than industrial demand, is the primary driver of silver bull markets, with the imbalance between buyers and sellers being crucial.
Monetary Characteristics of Silver: Silver is considered a monetary metal, particularly in regions like South Asia, where it serves as a store of value and an informal unit of exchange due to its affordability compared to gold.
Market Volatility: The podcast warns of the inherent volatility in silver markets, advising investors to be prepared for significant price fluctuations and to approach investments with caution.
Silver Equities: The limited market cap of quality silver equities means they can experience dramatic price movements when generalist investors enter the space, with historical examples of significant gains in silver stocks.
Investment Strategies: Rick Rule discusses different strategies for investing in silver, including owning physical silver in segregated storage and investing in reputable silver equities, while emphasizing the need for due diligence.
Key Companies: The podcast highlights several silver companies, such as Wheaton Precious Metals, Pan American Silver, and First Majestic Silver, as potential investment opportunities, noting their varying levels of risk and potential returns.
Transcript
Silver pays so much rent when it moves that you can easily afford to be early and you cannot afford to be late. When the narrative is justified by the price momentum in gold and the generalist investor begins to come into the p into the space, silver begins to outpace gold substantially. From the point in time when silver begins to outpace gold, its rate of escalation is at least double that of gold. There simply isn't enough market cap in the reasonable quality silver equities to handle the money and they do truly insane things. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Greetings and welcome to our wealthy on show. My name is Trey Reich and we're here today with Rick Rule who I really think needs uh no introduction. Rick, thanks for being with us. How are you today? >> Uh always a pleasure to be with you Trey and I'm uh I feel wonderfully well today. the better for having the rare opportunity to visit with you. >> Oh, you're very kind. You're very kind. Well, the topic of today's discussion and in fact the month at Wealthon is silver. Uh, and along those lines, I want to start by letting viewers know that later this week on the 23rd, uh, Wealthon and our partners at SCP Resource Finance in Toronto, we'll be hosting a full day silver conference at the Shangrila Hotel. Uh, for those who can get there in person, bless your heart. And for those who are interested in a virtual hookup, uh please uh click on the link in the description below uh so we can get you registered for the uh the conference. I've uh also finished uh a fairly large silver masterpiece of which I'm proud which is available for folks who uh sign up as accredited investors again in the description in the link below. Um, I know that silver is one of your passions, uh, very dear to your heart. Uh, and I wanted to start this way. Uh, given silver, I think we're up 11 and a half% in the last week. On a scale of 1 to 10, you've been through a lot of these cycles, how would you rate the current bull market in silver? >> I'm not ducking the question, but I don't know. Um, I feel very good about the whole precious metals complex for the next five or 10 years. I'm leerary uh about hockey stick charts. Uh, the backside of a hockey stick is just as steep as the front, but somewhat less fun if you're long. You're uh, Trey, I think a better observer of markets than I. My experience has been going back to three prior bull markets that precious metals bull markets are always led by gold. They're led by the fear buyer. My belief is that when the narrative is justified by the price momentum in gold and the generalist investor begins to come into the p into the space that silver begins to outpace gold substantially. I'm guessing that what we've seen in the last four weeks is the beginning of that phenomenon, but I would actually defer to you uh in in terms of that. Um I note and wealthy on may know this better than I. I note that many retail physical silver dealers have run out of retail product in silver. Uh I know that I have and Sprat has and likely you have been able to buy silver in larger denominations uh at least uh in the US and Canada albeit not in London. So I guess what I'm saying is don't count on the sort of performance that we've seen in the last month uh continue on with the same velocity. Uh but I absolutely positively believe that the precious metals bull market is very much intact. Uh albeit uh it's going to be volatile. Uh, as you know, Trey, it has been for our whole lives and will continue for as long as we have left to be a volatile market. >> So, after rising 27% last year, gold's up uh I think 57% this year. Uh, silver last year was up about 21. This year, believe it or not, it's up 78, which these are starting to we these are, you know, pretty incredible numbers that we're tossing around here. Here's another way to to sort of give you a question from a different angle. Are you surprised? >> I'm not, Trey. If you'll recall conversations that you and I had five or six years ago, uh we were saying when is this going to happen? Uh and I suspect that what we're seeing is the metals playing catch-up. >> Mhm. >> I suspect that pressures were building uh against uh fiat denominated savings products, US treasuries and things like that for years. uh they were building but because they were performing uh the products held up well. When those products being fiat denominated savings products uh 10ear treasuries as an example faltered they faltered in spades uh and they gave up uh what I might consider long of tooth gains. So, I think that Trey, we're experiencing in 2024 and 2025 uh pentup fundamentals that go back at least seven or eight years, but particularly go back to 1999. Uh I I would also uh ask your listeners to consider the longer term performance of gold going back to say the year 2000. Uh I remember answering many interviews a few years ago when people say, "Well, when is gold going to move?" I would say, 'Well, I think it's going to move in the year 2000. >> Uh at that point, it was up 7% compounded for 20 years. Now it's up 9% compounded for 20 years. What it's done in the last year gets the headlines, but what it's done for 25 years should get people's attention. >> Absolutely. So, I think the way I'd restate what you just said is for the past, I don't know, 20 years, you and I have been talking about what I think are the big three fundamentals. Anti-doll sentiment, deteriorating US finances, and eroding Fed credibility. Those are really the big three. And as you just pointed out, we've been talking about them for about 20 years. And to be honest, the system has held together longer than I would have expected, even the dollar standard system, etc. So my question is, it certainly feels different this time, do you agree? >> I do. I do. you know, uh, if you take this back, uh, a fairly long time, uh, the US on balance sheet liabilities relative to GDP 40 years ago were 30%. Now they're at 120%. Uh, the 2008 circumstance was correctable uh, with quantitative easing, which you and I would call counterfeiting. Uh but increasingly my suspicion is that the powers that be will be pushing on a string. The other thing well I think there's two more things that make this difference different pardon me. The first is the incredible sum of the net present value of unfunded entitlement liabilities. The offbalance sheet liabilities of the US government. The promises that they've made to old geysers like me. Uh that number according to the Congressional Budget Office exceeds $120 trillion. To put that in perspective, the gross federal income is $5 trillion. Uh that's a fairly ugly mismatch. The second thing that's different now, Trey, I think is the dawning realization that United States savers are experiencing negative real interest rates. If you follow the theory that gold does well when people are concerned about the maintenance of purchasing power in the US dollar, if you believe in the CPI, which neither you nor I believe in, uh the government would suggest that your dollar is declining in purchasing power by 2.9% compounded. But they buy their groceries uh their goods and services in hedonistically adjusted grocery stores which are not available to us. I would suggest that the purchasing power of your savings and mine is declining at about 8% compounded. And the arithmetic problem there is if you're saving at fiat denominated instruments, let's say the US 10-year Treasury, the world's benchmark security, you're getting 4.6 paid 4.6, pardon me, in a currency that's declining at eight. That means you aren't making 4.6, you're losing 3.4 for every year for 10 years. There can't be a circumstance in the long term that is better for gold than that. >> As a footnote to what you said, I want to point out to uh viewers when Rick said hedonistically adjusted. Uh one of my favorite uh throwaway phrases when talking about how CPI is constructed is hadonically adjusted hot dogs in Houston. Notice the alliteration there. So, uh what Rick is referring to is the CPI uh bean counters. If the price of something goes up, uh they'll adjust it for quality. So, if a Dell computer uh you know goes from $1,000 to $1,500, the BLS will say, "Well, it's 50% more powerful, so the price didn't change." So, that's one example. And another, believe it or not, is if the price of steak goes up locally, the BLS will actually assume a certain amount of people switch uh to pork or hot dogs or something else, which is why I use the hot dog. But the um hydonic adjustments is actually it's not a joke. It's a big part of what the BLS does to keep CPI as low as it is. So, just wanted to give that footnote. So let's let's uh narrow in on silver a bit because it's silver month. Um I think we have all read uh a lot uh in the last 6 to 12 months actually the last two to three years about photoic uses and the industrial demands for silver are clearly on very solid footing. Uh I think industrial demand in the last four or five years up about a third. Um, so it's obviously a very stable base and an important part of how I think people relate to silver. But would you agree with me that when it comes to silver bull markets, while industrial demand is a great base really doesn't have that much due to to do with bull markets, it's investment demand that that causes the types of move of silver that we've seen lately. You and I are going to get a a lot of hate for this, Trey, but you're absolutely right. What matters in a silver bull market, in my experience, the three that I've lived through in my lifetime, is investment demand, the delta between buyers and sellers in the investment market. >> That's the end of it. It's that simple. >> Yeah. I I mean, I've listen, I've been aware uh of the arguments around the physical utility of silver for a very long time. I remember when photographic demand went away and I remember in the middle of photographic demand going away, one of the damnedest spikes I've ever seen in the silver market. >> U it was really difficult for me to explain that away in any other way than observing the fact that in the investment market there was a lot more buyers than sellers. >> U and I'm uh I understand the implications of increasing photovoltaic demand. And I understand the incredible implications of silver's efficacy as a water treatment uh item or a um you know anti-germicide. You know, I get all that. Uh and I think it's important uh but it would appear to me that what generates real price moves is simply the imbalance between buyers and sellers. I think maybe the second thing that makes uh judging silver pricing as a function of industrial demand difficult is the fact that on the supply side uh most silver doesn't come out of silver mines. It comes from recycling or comes from a byproduct of other metals. So you have this weird thing with silver that when the silver price goes up, it doesn't necessarily stimulate supply. uh an increasing copper price or zinc price or lead price might stimulate supply, but an increasing silver price doesn't seem to do that. It might uh it might encourage more recycling, but it's a very very odd metal. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Would you say that silver is a monetary metal or Yes. >> would you say it's lost its monetary characteristics? >> No, I I think it is. It might be a monetary metal in drag. But I note that one of the functions of a monetary metal is that savers believe that they can if they need to transact in it, but it is also a store of value. uh and that's an important aspect of silver particularly in South Asia, Pakistan, India, uh Bangladesh and Sri Lanka uh where people have a thousand years of experience with the debasement of government currency. Uh people when they can uh often choose to store their wealth in precious metals and for a couple hundred million people in South Asia the unit cost of gold is too high. They store their wealth in silver and in that sense it is a monetary metal and I happen to know from having been there but also watching the behavior of South Asians in Dubai that not only is it a is a sore of value but it is in fact a unit an informal unit of exchange >> which is the definition of a monetary metal. One of the things that make gold uh such a good monetary metal and reserve asset is the very large fixed above ground stock compared to its flow. So basically all the gold never mind is around in some form or another. It's 216,000 tons. I'd say half is in jewelry and in museums and in teeth. So if we take what's left, it's about 15 trillion uh of sort of above ground investable gold in some price or another. Uh on the silver side, uh I think it's one of the great mysteries of the world. How much silver is really above ground? And why that's important as a monetary metal is if you have this above ground stock that people covet and hold uh you know even if it's in the form of jewelry or silverware to some degree if there's this stable above ground stock of silver versus its flow uh that adds to its monetary uh value. So my question to you and this is this is just sort of a fun question. How do you estimate the above ground stock of silver? What do you think we got? >> I've been trying for 20 years, Trey, and my track record is unblenmished by success. I um I remember back to the point in time when uh Buffett was believed to have between 15 and 20% of the world's above ground supply of silver. And of course, normal tightment plus Buffett's cache caused the silver price to escalate fairly dramatically. >> And then it got crushed. And I remember the silver bull saying it was another example of manipulation. What it was was in fact that the silver price doubled in US dollar terms. The US dollar doubled against the rupia and they either had a flood or a bad harvest or something in India. And the Indian peasantry had a choice between selling selling their silver or watching their kids starve. They made the correct decision. uh and a bunch of silver supply that nobody exist nobody knew existed came on the market and that event um caused me to decide that I was never going to be able to decide what the above ground supplies were and frankly that I was never going to be able to time a silver bull market particularly correctly. M >> I had to satisfy myself with the fact that uh silver moved after gold had established the narrative and that if I was 2 years early that the price movement in silver made being early not a problem. Uh, silver pays so much rent when it moves that you can easily afford to be early and you cannot afford to be late. >> Very interesting. So, the media, the financial media tends to follow what's easiest to follow. So, I've read many more articles than I care to admit about the dwindling stocks at the LBMA and COMX. And for a second, throwing aside the Trump tariff influence, which in my opinion has brought a lot of metal from LBMA to COMX, um I think that you would agree with me. I'm not putting words in your mouth, but I think looking at those stocks is very shortsighted because uh would you agree that there's a lot of silver in repositories uh and you know uh global wealth has a tendency to want to be unnoticed. So, uh there's a lot of silver out there that doesn't want to be discovered. Um so would you agree? I mean I'm I'm in the sort of six billion ounce camp. Is that roughly where you're at? >> I don't try. Um I I'm laughing, Trey, because you and I were at Sprat together as colleagues. >> Mhm. >> In the last silver squeeze, and at that point in time, North America was short of silver. And you may recall at Sprat that the Sprat Physical Silver Trust was growing >> ridiculously. And they cleaned out the silver in Toronto, then they cleaned out the silver in Ottawa. Then they cleaned out the silver in Chicago. Then they cleaned out the silver in New York. and they had to bring silver from London. Now we have a situation where London's out of silver and so they they got to clean out New York. But the other point you make is that there's a whole bunch of silver that isn't good delivery comics or good delivery LBMA silver, but it'll find its way in the system over time, >> right? >> And by the way, if the silver price was to fall back from whatever it is today, 50 and change to 40, it wouldn't derail a precious metals bull market. uh it would change a whole bunch of people that got the religion of silver in the last four weeks >> and make them doubters but that doesn't matter >> right >> I mean it'll matter to them if they get whips uh but it doesn't matter the fact that silver went from 40 to 50 uh is only validation of the thesis for those people who needed validation and we're silver to decline from 50 to 40 that wouldn't matter much either >> except for the people who were trading that move on margin. >> Before we leave the topic of above ground physical stocks, I can't resist putting you on uh on on the defensive I guess again about uh throwing figures at you, but the one month lease rate for 20 years I've heard people talk about running the ComX. We're going to have 10 big hedge funds take delivery. There's no physical there. We're going to run the Comx and we're going to cause a squeeze. And literally for 20 years, whenever I hear those things, I sort of deduct a point or two from, you know, my view of that person's intelligence because it's just never going to happen and it never has happened. However, after 20 years, one month lease rates on silver today are 33%. The 3-month rate is 22% and the 12-month rate is 9%. So, it's now costing 35% a year just to have a silver short. Uh, and it I think it comes out to 64 basis points a week. And that's on top of the losses of the silver price appre appreciation we just talked about 11 12% in the past seven trading days. Do you think we're potentially getting to a squeeze situation? Is it doesn't it aren't the signs that we're there? >> Well, we certainly have a near-term squeeze. uh you can uh given the spreads that the industry has historically enjoyed uh you can afford a 3 and a half you can afford a 3 and 1 half or 4% lease rate not a problem. >> Mhm. >> A 35% lease rate. >> Mhm. >> Uh that's catastrophic. Uh as you know uh many of the traders uh are running 10 or 15% equity assets that that does more than eliminates the margin. I I think the lease rates that you quote 35% for the near month uh and 9 10 11% uh further out uh talk a lot about the market's belief that as you had suggested earlier there is silver out of system that can over time come into the system. Mhm. >> Um I I remember conversations that you and I had two decades ago. Um where we both sort of chuckled and said, you know, over time markets work. The cure for high prices is high prices. The cure for low prices is low prices. Uh and that really ultimately uh price in the very long term is a function of utility. uh in the very near term uh these high prices might be problematic for traders. That's what the lease rate suggests. In the long term, you have to look at the utility of precious metals for savers relative to the utility of the US 10-year Treasury. That that one makes me long-term bullish. >> Very good point. Um, before we turn our attention to investing in in silver as individual investors, I had the opportunity to visit with Pierre Lassan a couple of weeks ago and he picked a very interesting gold target. Not quite sure where his math or or um method came from, but he picked $17,250 by 2030. And of course, if Lucky Pierre says that, there's a certain amount of truth in it just because he said it. But my question to you is, and I know this isn't your uh, you know, favorite hobby, but how high can silver go? >> Oh, God. Um, silver's emotional. Mhm. >> Uh and the stupidity of small groups of people is basically boundless. >> Mhm. >> Uh I don't I don't have a number on it, but my experience has been in prior bull markets that from the point in time when silver begins to outpace gold that its rate of escalation is at least double that of gold. with regards to gold and I'm sorry about the elliptical way I answer the question but with regards to gold uh I believe that if the purchasing power of the US dollar declines by 75% over 10 years which I think it will that the nominal US dollar price of gold will likely mirror the deterioration the purchasing power of the US dollar so a 10ear near three-fold increase in the gold price wouldn't surprise me at all. If past prologue, uh, the silver price escalation could double the gold price escalation. Will it? I don't know. >> So, you're talking about a four bagger with gold and an eight bagger potentially with silver. Correct. >> And I I really don't care. Um, I'm going to own some silver because I believe that gold is in a primary bull market and my history tells me that silver will outpace it. >> I regard my gold personally as savings. I regard it as something that maintains my purchasing power. I have benefited so extraordinarily as a speculator with silver in the past that I'm going to continue to hold some silver purely for greed purposes. But as a I think worthy footnote, I would go back to viewers uh to something you said earlier, which is when you get this type of a hockey, you know, it's funny. I I've I've had a couple people approach me about, you know, technical analysis of the silver price and how important is that here? And I'm one of these folks that I always have believed that I'm a fan of technical analysis as long as it supports my case. Uh, and as as we look at the silver price currently, I'm not sure how much, you know, technical analysis can add, we're in the midst of a a massive upside, you know, multi-deade all-time high breakout. So, I don't need a technician to tell me that silver's um, you know, in the midst of a breakout. But would you agree that at this point in the cycle a bit of caution uh you know is a worthy prudent uh way to approach the silver market because as you pointed out in the past in all the times you've made money in silver uh during the midst of that cycle you've had a 50% decline. I'm not saying that's going to happen here but uh would you agree that a little bit of of prudence uh is is is advised at this point? Yeah, absolutely. Particularly depending on the time frames that you operate under. Uh if your portfolio is underweight precious metals, um now if you have a 5year or six year or 10 year horizon is not a bad time to buy silver. Uh if you've been a systematic buyer of silver like I have, uh and if unlike me, you are a short-term trader, you might want to take some of this one. You know, I I think it depends on who you are and I think it depends on the composition of your portfolio. I'm getting lots of questions now saying, "How much of my portfolio would be in gold?" Well, that depends on how the rest of your portfolio is allocated. If you are somebody whose portfolio is concentrated on long-term treasuries, you better hedge. You better own a lot of gold, right? Mhm. >> Uh if by contrast uh you have asset classes that allow you access to pricing power to keep pace with inflation, then you need to own less gold. Uh there isn't a one-sizefits-all answer with gold or silver. But as you suggested, silver is going to be by its nature more volatile than gold. And gold is going to be volatile. So you absolutely positively need to prepare yourself psychologically and financially to stay the trade. It's gonna be as it has been a good trade, but it's not going to be and it's never been an easy trade. >> And uh my also little footnote from facial ticks that I've collected over the last 20 years, I think it's important for viewers to recognize that the first tick on gold and silver, if you're entering the market for the first time, uh has a tendency to be pretty emotional. So my point there is uh if you don't own any silver be very very judicious because uh when the first tick is down you know 20% that that's not a very pleasant place to be with precious metals. So um with having said that um in terms of individuals who are looking to expand their exposure to silver what's the Rick rule prey on how an individual investor can gain uh acquire and build silver exposure. >> Again I think that depends on who you are. Mhm. >> There are some speculators, Trey, who you and I know personally who believe that it isn't in your personal possession, you don't own it. Uh I have some respect for them. But I used to refer to them as midnight gardeners. Uh midnight gardening, holding silver in your own physical possession, exposes you to a whole different set of risks. >> Um people coming to visit you who you normally wouldn't have over for lunch. And so people need to concern themselves with that. >> Uh I prefer that my clients who own physical silver own it uh probably in segregated storage. Uh not common storage with a really really really reputable dealer. Uh I'm thinking back now to the decade of the 70s when a bunch of people who didn't trust the government sent their money to people who they had never met who ostensibly were going to hold their silver for them and stole it. So it's important that if you hold precious metals in either segregated or non-segregated accounts that you know a lot about the broker. >> Does Battle Bank by the way? >> Pardon me. Does Battlebank uh do silver custodially? >> We absolutely will custody silver. Uh and many people were will. I'm suggesting that people utilize uh the broker or the facility that they're most comfortable with. If they don't have anybody, >> we would welcome the business. What battle bank does that most institutions in fact no institution will do uh in retail denominations is we will allow you to access credit secured by your gold silver platinum and palladium. Mercifully, my counterparts in the US banking system consider bullion to be bad collateral. A situation that delights me. But yes, absolutely. Uh Battle Bank will transact in gold and silver. Uh but not to the exclusion of other dealers. The truth is if you know and love and trust somebody um by all means use that group. And when it comes down to uh the metal itself versus equities, once again, I know that you will say that depends on your risk tolerance and your time frame and that type of thing. But one of the things I want to stress for viewers is just how tiny the uh silver market is. So, uh, I'm going to ask you the question in two ways, but first of all, when you're trying to explain to somebody the size of the silver market versus gold, what what do you point to? >> Well, I I guess you're talking to the relative market share of the silver stocks relative to the relative to the value of silver. >> Mhm. >> Which is to say stock to float. >> Mhm. Uh my experience has been when the generalist investor comes into the silver space, there simply isn't enough market cap in the reasonable quality silver equities to handle the money and they do truly insane things. Uh Trey, I came in or both. >> Pardon me. >> The investors or the stocks do insane things or both. >> Well, both of course. >> Okay. I I I came into the business in the 70s. Uh one stock qualane I watched go from 10 cents to $65. >> Mhm. >> I was too young, too dumb, and too poor to take advantage of that. The second silver stock bull market, you and I knew each other. Uh >> I was deeply involved in both Silver Standard and Pan-American. They went from 72 cents and 50 cents respectively to $45 in six or seven years. >> Mhm. >> Now they were high quality stories run by great people. There are probably 150 junior silver equities in the world, most of which are now and will always be valueless. But the companies with reputable people and real deposits uh with a reasonable pathway to production will absolutely positively shock people this cycle the way they have done the last three cycles. The caveat to that is if you're not prepared to do the work to segregate uh in movie parliament between the good, the bad, and the ugly, the silver price can double and you can still lose money. So to set this up, which uh is going to be going through some of the silver stories that you enjoy or that you think make sense, I want to point out that uh we just wrote a long silver uh report and one of the things that I do each year is check in on how many stocks uh are really available for investing quote unquote pure play silver. So, in the selective silver miners ETF, um there are 38 names, but if you screen them for 20% silver production, believe it or not, it is very low. It's some of the companies in the silver index, but if you screen it for 20% silver revenues and 500 million market cap, how many do you think there are? And the answer is 15. So, and the market caps of those 15, you know, the Pan-Americans, the First Majestics, Gordelene, Heckla, moving down the list is 98 billion. So, there's a hundred billion dollars of quote unquote pure silver plays. And I will point out that if you look at all 15, the silver percentage of revenue is still less than 50%. It's 48. Uh, but assuming half silver is good, those are the big guys. And I assume that you would agree that for folks looking for silver exposure, once you have your metal and then you have, you know, your equity portion, some portion of it should be in these 15 uh sort of premium silver names. Would you agree? >> Yes, absolutely. Uh for two reasons. The first thing is they have silver. You know, there's a lot of companies, as you know, Trey, that only have silver as a component of the name on the share certificate. >> Mhm. they don't have any silver and if the price of something you don't have any of goes up it shouldn't have any impact on your underlying value. So by all means and certainly uh guys that are producing have the ability to take advantage of spikes like this. So I absolutely positively uh agree with you. I think that there is room in a portfolio where somebody works hard to come down to non-producing companies to the developers and the advanced explorers where let me rephrase that if you have the experience to understand uh a little bit of geology and a little bit of finance. um if you don't avoid them there there is going to be enough rent paid in the 15 stocks that you mention that capturing the beta in the sector is enough for most people you don't need the alpha uh you know Trey when the silver stocks move beta can give you three or 400% returns uh and it's only an extraordinarily greedy person like myself uh that would prefer to do the work to out perform a three or 400% gain. >> And uh as a great leadin to our wrap-up um I know that you know these companies better than anybody on the planet. So and I know silver sort of you know a dear to your heart emotion. So give us three or or four names that I know the way that you look at a company is what's the proposition? What are they trying to accomplish? you know, what's the proposition, the investment proposition of this company? Can you give us three or four names in this area that that you think make sense? Not that you're recommending, but that make sense if you're going to figure out how to look for a good silver company >> and the stories because I think the education is important as the name. >> Mhm. >> Uh start with the best. Uh wheat and Precious is no longer a silver company. uh but it still has a constituency around silver and it still has substantial silver revenues. I would suggest to you that despite the share price performance of Wheaten on a net present value basis, it's probably cheaper than it was before the stock price doubled. Because the price of the underlying commodities is up so much. >> So you start there. You start with the best of the best. You come down quite a bit with Pan-Amean, which is again no longer a silver company, although they've increased the silver proportion by buying mag silver, but it's a company that was penalized uh after the ac after a couple of fairly large acquisitions by virtue of the fact that they bought acquisitions that had been cash starved. uh Pan-American has addressed that now and they are generating boatloads boatloads of cash which is a really good thing you know just boatloads of cash. >> Mhm. >> Uh I am willing to take political risk which many of your listeners and viewers might not be. So I'm willing to buy the Fresnos and the Buenovas the Latin American silver producers >> before we move. any people or not. >> Before we move on, Rick, what's your view on Na'viad and Escobal as options in Paname? >> Uh, I was informed that uh Escobal was going to be approved. Uh, and I was informed that by a fairly high ranking person in the Guatemalan government who was wrong. uh the the community opposition or the distal community opposition uh and the NGO participation has been really problematic there and I'm no longer including uh Escobal in any calculation around Pan-American except for optionality. uh Na'viad uh appears to have more progress uh more prospect as a consequence of the fact that Argentina really truly needs foreign direct investment. Uh but my thesis doesn't involve either Kascoal or Na'viad except as optionality. The optionality is there. It's a billion ounces of high-grade ludicrous margin silver. >> But ludicrous margins that you can't access for five years on a net present value basis don't amount to much. Right. I do think it's very sad that Escobal has been moth baldled and I used to use it as a poster example of a beautiful mine next to a community, you know, operated very safely environmentally, 20 million ounces a year. It's a it's it's it's a travesty that that thing sits mothballled. And I certainly hope they work it out. And I think Michael Steinman is exactly the type of person who may be able to over time pull it off. Do you agree? >> And behind Michael Steinman, uh, Ross Speedy, Ross Speedy has a real sense that you need to operate responsibly both with regards to the environment. He's given in excess of hund00 million to environmental causes. >> Mhm. And socially, uh, I think the success of the Londines in Ecuador speaks to what the mining industry can do if they put in the years in the yards. Um, on a net present value basis, maybe that doesn't matter. If it, you know, at an 8% discount, if it takes them five years, you know, there's financial considerations, but you could have a surprise. You know, I mean, this sounds very elitist, but Guatemala could come to their senses. Stranger things have happened. >> Mhm. Mhm. >> Um >> I interrupted you. You were talking about Neo and >> Yeah, I I own Fresno and Buenura >> because I'm a comfortable rodeo writer. You know, I'm okay with political risk uh in return for project development pipelines. Both companies have those. But for investors and speculators who don't, you probably need to avoid those. I I think maybe uh the most volatile near-term uh upside could be in what we laughingly call the silver triumvirate. Uh those names that have uh traditional association with the silver community uh and have real upside volatility in terms of free cash flow to the silver price. That would be first majestic silver where uh you know Keith has spent a hundred million dollars in investor relations for 20 years and built a cult. uh Heckla and Cordelane. Uh these are ironically not the most efficient silver producers, but they are silver producers where many of the objections to ownership, which is to say political security and familiarity, aren't there, and they have really truly legitimate upside leverage to the silver price. Uh so some speculators might want to consider those. uh coming down into diceier names which is of course as you know where I made my reputation. Uh I like Abra a lot. Uh I I think the exploration there is becoming predictive that they understand the orbody. Uh I think it's still reasonably attractively priced because of the remote nature of the deposit. Uh investors are rightly concerned about that. Uh I uh own a lot of Vista silver. Uh the only reason why somebody wouldn't is a fairly rational fear of narot trafficantes in the neighborhood. For those of you who don't speak Spanish, that means narcotics traffickers. Uh and I uh I own a controversial name uh Silver where a recent short report was authored. This is Mr. Lal Benis. >> Go there. Ben, pardon me. >> Benis, I was just gonna say Mr. Lal. >> I've invested with Benois Lal for almost three decades. His prior effort, Seafo, was a textbook case of how to build a mining company in frontier frontier jurisdictions. Uh, so I'm I'm a holder of those three juniors. And anybody who pays attention to what I just said about them needs to understand that I'm long. This is a biased lawn. >> And the short report basically uh was done by non uh you know geologist type folks who pointed out that the pit outline didn't really increase but the ounces did and they sort of reached some conclusions. You know, you're better at this stuff than I. Did you find much in that report or did you find it fairly superficial? >> Uh I I found it was interesting. Uh you know these guys are talking their books. Guys do that from the long side, guys do it from the short side. So what I did is I called up Benois Lel and said, "Beno, uh I have 15,000 students at the rule classroom." >> Mhm. >> Uh if you'd like to refute these charges, why don't you do it live with me questioning you? And he said, "Uh, I would pay to do that." I said, "No, no, this is free, >> but this won't be advertising. This won't be a puff piece. You know, this will be me asking you the questions raised by the short report." He said, "In a New York second, uh, people who are curious about that dispute are invited to go to the rule classroom uh, and pull up Rick Rule uh, v um, Benois. He's a truly exceptional human being." Mhm. And how did he discharge himself on a >> I think he did it extremely well. Uh you know Benois is a specialist at the simple declarative statement. >> Uh he basically said no these guys are wrong. >> I categorically refute the charges. >> The uh reserve and resource report that they looked at was audited by Hatch. M uh I would uh be interested in the people who authored the short report comparing their credentials to Hatch. The report was also audited by the European Bank for Reconstruction and Development. I mean it was it was a pretty good defense I have to say. Uh and for uh viewers who are interested in IA, I I can't resist pointing out that they will be speaking at 10:30 uh on Thursday at uh uh at the Shangrila Hotel as well as Michael Steinman and First Majestic. Um and we're very excited about the silver conference. So I want to point it out one more time there live >> to my knowledge. Yeah, it's the only silver conference. I'm not aware of any other silver conference that's dedicated totally to silver. There may be, but I'm not aware of it. And once again, that'll be this Thursday, the 23rd. And for those who can't make it in person, I encourage you uh to sign up for the virtual replay, which will be on Saturday, October 25th, to give uh everybody an opportunity to view from the comfort of their own home. So, uh should be a lot of fun. And I should point out Eric Sprat is our keynote speaker at 8 and I think I've seen him speak five or six times and I've never been disappointed. He is he is one of the truly entertaining speakers uh and one of the spendies in the silver trade. So he's going to be a great way to start our day on Thursday. >> That's a wonderful catch. As you know, I couldn't get him to speak at at our conference when it has it had his name on the door. I can limit his engagements, but Peter Groskoff was able to to twist his arm to uh to kick us off. Well, >> promised him a fishing trip or something. >> Yeah, he he's on a fishing trip today. I actually spoke with Peter earlier. Um >> Eric, as you say, is uh he is a absolutely legendary speculator. >> Uh he's a great speaker and he's a wonderful human being. uh people that had the opportunity to hear Eric and passed on it uh they need their head examined, you know, just simply they need their head examined. >> Yes, I've always found it easy to get jealous of billionaires who are actually gentlemen as well. It's a good combo. Um but Rick, thank you very much for your time. Uh these are great names uh for us to think about and look at and as usual, we'll check back in a few months and see how you're doing. >> I look forward to it, Trey. It's uh it's been nice having these conversations over the decades. Uh it's nice too to have the conversations when we are uh indisputably correct. >> Let's hope it holds up. We'll talk to you soon. >> Bye-bye. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time.
Rick Rule: When Silver Moves, It Moves Hard — Don’t Be Late
Summary
Transcript
Silver pays so much rent when it moves that you can easily afford to be early and you cannot afford to be late. When the narrative is justified by the price momentum in gold and the generalist investor begins to come into the p into the space, silver begins to outpace gold substantially. From the point in time when silver begins to outpace gold, its rate of escalation is at least double that of gold. There simply isn't enough market cap in the reasonable quality silver equities to handle the money and they do truly insane things. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.com/free. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Greetings and welcome to our wealthy on show. My name is Trey Reich and we're here today with Rick Rule who I really think needs uh no introduction. Rick, thanks for being with us. How are you today? >> Uh always a pleasure to be with you Trey and I'm uh I feel wonderfully well today. the better for having the rare opportunity to visit with you. >> Oh, you're very kind. You're very kind. Well, the topic of today's discussion and in fact the month at Wealthon is silver. Uh, and along those lines, I want to start by letting viewers know that later this week on the 23rd, uh, Wealthon and our partners at SCP Resource Finance in Toronto, we'll be hosting a full day silver conference at the Shangrila Hotel. Uh, for those who can get there in person, bless your heart. And for those who are interested in a virtual hookup, uh please uh click on the link in the description below uh so we can get you registered for the uh the conference. I've uh also finished uh a fairly large silver masterpiece of which I'm proud which is available for folks who uh sign up as accredited investors again in the description in the link below. Um, I know that silver is one of your passions, uh, very dear to your heart. Uh, and I wanted to start this way. Uh, given silver, I think we're up 11 and a half% in the last week. On a scale of 1 to 10, you've been through a lot of these cycles, how would you rate the current bull market in silver? >> I'm not ducking the question, but I don't know. Um, I feel very good about the whole precious metals complex for the next five or 10 years. I'm leerary uh about hockey stick charts. Uh, the backside of a hockey stick is just as steep as the front, but somewhat less fun if you're long. You're uh, Trey, I think a better observer of markets than I. My experience has been going back to three prior bull markets that precious metals bull markets are always led by gold. They're led by the fear buyer. My belief is that when the narrative is justified by the price momentum in gold and the generalist investor begins to come into the p into the space that silver begins to outpace gold substantially. I'm guessing that what we've seen in the last four weeks is the beginning of that phenomenon, but I would actually defer to you uh in in terms of that. Um I note and wealthy on may know this better than I. I note that many retail physical silver dealers have run out of retail product in silver. Uh I know that I have and Sprat has and likely you have been able to buy silver in larger denominations uh at least uh in the US and Canada albeit not in London. So I guess what I'm saying is don't count on the sort of performance that we've seen in the last month uh continue on with the same velocity. Uh but I absolutely positively believe that the precious metals bull market is very much intact. Uh albeit uh it's going to be volatile. Uh, as you know, Trey, it has been for our whole lives and will continue for as long as we have left to be a volatile market. >> So, after rising 27% last year, gold's up uh I think 57% this year. Uh, silver last year was up about 21. This year, believe it or not, it's up 78, which these are starting to we these are, you know, pretty incredible numbers that we're tossing around here. Here's another way to to sort of give you a question from a different angle. Are you surprised? >> I'm not, Trey. If you'll recall conversations that you and I had five or six years ago, uh we were saying when is this going to happen? Uh and I suspect that what we're seeing is the metals playing catch-up. >> Mhm. >> I suspect that pressures were building uh against uh fiat denominated savings products, US treasuries and things like that for years. uh they were building but because they were performing uh the products held up well. When those products being fiat denominated savings products uh 10ear treasuries as an example faltered they faltered in spades uh and they gave up uh what I might consider long of tooth gains. So, I think that Trey, we're experiencing in 2024 and 2025 uh pentup fundamentals that go back at least seven or eight years, but particularly go back to 1999. Uh I I would also uh ask your listeners to consider the longer term performance of gold going back to say the year 2000. Uh I remember answering many interviews a few years ago when people say, "Well, when is gold going to move?" I would say, 'Well, I think it's going to move in the year 2000. >> Uh at that point, it was up 7% compounded for 20 years. Now it's up 9% compounded for 20 years. What it's done in the last year gets the headlines, but what it's done for 25 years should get people's attention. >> Absolutely. So, I think the way I'd restate what you just said is for the past, I don't know, 20 years, you and I have been talking about what I think are the big three fundamentals. Anti-doll sentiment, deteriorating US finances, and eroding Fed credibility. Those are really the big three. And as you just pointed out, we've been talking about them for about 20 years. And to be honest, the system has held together longer than I would have expected, even the dollar standard system, etc. So my question is, it certainly feels different this time, do you agree? >> I do. I do. you know, uh, if you take this back, uh, a fairly long time, uh, the US on balance sheet liabilities relative to GDP 40 years ago were 30%. Now they're at 120%. Uh, the 2008 circumstance was correctable uh, with quantitative easing, which you and I would call counterfeiting. Uh but increasingly my suspicion is that the powers that be will be pushing on a string. The other thing well I think there's two more things that make this difference different pardon me. The first is the incredible sum of the net present value of unfunded entitlement liabilities. The offbalance sheet liabilities of the US government. The promises that they've made to old geysers like me. Uh that number according to the Congressional Budget Office exceeds $120 trillion. To put that in perspective, the gross federal income is $5 trillion. Uh that's a fairly ugly mismatch. The second thing that's different now, Trey, I think is the dawning realization that United States savers are experiencing negative real interest rates. If you follow the theory that gold does well when people are concerned about the maintenance of purchasing power in the US dollar, if you believe in the CPI, which neither you nor I believe in, uh the government would suggest that your dollar is declining in purchasing power by 2.9% compounded. But they buy their groceries uh their goods and services in hedonistically adjusted grocery stores which are not available to us. I would suggest that the purchasing power of your savings and mine is declining at about 8% compounded. And the arithmetic problem there is if you're saving at fiat denominated instruments, let's say the US 10-year Treasury, the world's benchmark security, you're getting 4.6 paid 4.6, pardon me, in a currency that's declining at eight. That means you aren't making 4.6, you're losing 3.4 for every year for 10 years. There can't be a circumstance in the long term that is better for gold than that. >> As a footnote to what you said, I want to point out to uh viewers when Rick said hedonistically adjusted. Uh one of my favorite uh throwaway phrases when talking about how CPI is constructed is hadonically adjusted hot dogs in Houston. Notice the alliteration there. So, uh what Rick is referring to is the CPI uh bean counters. If the price of something goes up, uh they'll adjust it for quality. So, if a Dell computer uh you know goes from $1,000 to $1,500, the BLS will say, "Well, it's 50% more powerful, so the price didn't change." So, that's one example. And another, believe it or not, is if the price of steak goes up locally, the BLS will actually assume a certain amount of people switch uh to pork or hot dogs or something else, which is why I use the hot dog. But the um hydonic adjustments is actually it's not a joke. It's a big part of what the BLS does to keep CPI as low as it is. So, just wanted to give that footnote. So let's let's uh narrow in on silver a bit because it's silver month. Um I think we have all read uh a lot uh in the last 6 to 12 months actually the last two to three years about photoic uses and the industrial demands for silver are clearly on very solid footing. Uh I think industrial demand in the last four or five years up about a third. Um, so it's obviously a very stable base and an important part of how I think people relate to silver. But would you agree with me that when it comes to silver bull markets, while industrial demand is a great base really doesn't have that much due to to do with bull markets, it's investment demand that that causes the types of move of silver that we've seen lately. You and I are going to get a a lot of hate for this, Trey, but you're absolutely right. What matters in a silver bull market, in my experience, the three that I've lived through in my lifetime, is investment demand, the delta between buyers and sellers in the investment market. >> That's the end of it. It's that simple. >> Yeah. I I mean, I've listen, I've been aware uh of the arguments around the physical utility of silver for a very long time. I remember when photographic demand went away and I remember in the middle of photographic demand going away, one of the damnedest spikes I've ever seen in the silver market. >> U it was really difficult for me to explain that away in any other way than observing the fact that in the investment market there was a lot more buyers than sellers. >> U and I'm uh I understand the implications of increasing photovoltaic demand. And I understand the incredible implications of silver's efficacy as a water treatment uh item or a um you know anti-germicide. You know, I get all that. Uh and I think it's important uh but it would appear to me that what generates real price moves is simply the imbalance between buyers and sellers. I think maybe the second thing that makes uh judging silver pricing as a function of industrial demand difficult is the fact that on the supply side uh most silver doesn't come out of silver mines. It comes from recycling or comes from a byproduct of other metals. So you have this weird thing with silver that when the silver price goes up, it doesn't necessarily stimulate supply. uh an increasing copper price or zinc price or lead price might stimulate supply, but an increasing silver price doesn't seem to do that. It might uh it might encourage more recycling, but it's a very very odd metal. >> If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. Would you say that silver is a monetary metal or Yes. >> would you say it's lost its monetary characteristics? >> No, I I think it is. It might be a monetary metal in drag. But I note that one of the functions of a monetary metal is that savers believe that they can if they need to transact in it, but it is also a store of value. uh and that's an important aspect of silver particularly in South Asia, Pakistan, India, uh Bangladesh and Sri Lanka uh where people have a thousand years of experience with the debasement of government currency. Uh people when they can uh often choose to store their wealth in precious metals and for a couple hundred million people in South Asia the unit cost of gold is too high. They store their wealth in silver and in that sense it is a monetary metal and I happen to know from having been there but also watching the behavior of South Asians in Dubai that not only is it a is a sore of value but it is in fact a unit an informal unit of exchange >> which is the definition of a monetary metal. One of the things that make gold uh such a good monetary metal and reserve asset is the very large fixed above ground stock compared to its flow. So basically all the gold never mind is around in some form or another. It's 216,000 tons. I'd say half is in jewelry and in museums and in teeth. So if we take what's left, it's about 15 trillion uh of sort of above ground investable gold in some price or another. Uh on the silver side, uh I think it's one of the great mysteries of the world. How much silver is really above ground? And why that's important as a monetary metal is if you have this above ground stock that people covet and hold uh you know even if it's in the form of jewelry or silverware to some degree if there's this stable above ground stock of silver versus its flow uh that adds to its monetary uh value. So my question to you and this is this is just sort of a fun question. How do you estimate the above ground stock of silver? What do you think we got? >> I've been trying for 20 years, Trey, and my track record is unblenmished by success. I um I remember back to the point in time when uh Buffett was believed to have between 15 and 20% of the world's above ground supply of silver. And of course, normal tightment plus Buffett's cache caused the silver price to escalate fairly dramatically. >> And then it got crushed. And I remember the silver bull saying it was another example of manipulation. What it was was in fact that the silver price doubled in US dollar terms. The US dollar doubled against the rupia and they either had a flood or a bad harvest or something in India. And the Indian peasantry had a choice between selling selling their silver or watching their kids starve. They made the correct decision. uh and a bunch of silver supply that nobody exist nobody knew existed came on the market and that event um caused me to decide that I was never going to be able to decide what the above ground supplies were and frankly that I was never going to be able to time a silver bull market particularly correctly. M >> I had to satisfy myself with the fact that uh silver moved after gold had established the narrative and that if I was 2 years early that the price movement in silver made being early not a problem. Uh, silver pays so much rent when it moves that you can easily afford to be early and you cannot afford to be late. >> Very interesting. So, the media, the financial media tends to follow what's easiest to follow. So, I've read many more articles than I care to admit about the dwindling stocks at the LBMA and COMX. And for a second, throwing aside the Trump tariff influence, which in my opinion has brought a lot of metal from LBMA to COMX, um I think that you would agree with me. I'm not putting words in your mouth, but I think looking at those stocks is very shortsighted because uh would you agree that there's a lot of silver in repositories uh and you know uh global wealth has a tendency to want to be unnoticed. So, uh there's a lot of silver out there that doesn't want to be discovered. Um so would you agree? I mean I'm I'm in the sort of six billion ounce camp. Is that roughly where you're at? >> I don't try. Um I I'm laughing, Trey, because you and I were at Sprat together as colleagues. >> Mhm. >> In the last silver squeeze, and at that point in time, North America was short of silver. And you may recall at Sprat that the Sprat Physical Silver Trust was growing >> ridiculously. And they cleaned out the silver in Toronto, then they cleaned out the silver in Ottawa. Then they cleaned out the silver in Chicago. Then they cleaned out the silver in New York. and they had to bring silver from London. Now we have a situation where London's out of silver and so they they got to clean out New York. But the other point you make is that there's a whole bunch of silver that isn't good delivery comics or good delivery LBMA silver, but it'll find its way in the system over time, >> right? >> And by the way, if the silver price was to fall back from whatever it is today, 50 and change to 40, it wouldn't derail a precious metals bull market. uh it would change a whole bunch of people that got the religion of silver in the last four weeks >> and make them doubters but that doesn't matter >> right >> I mean it'll matter to them if they get whips uh but it doesn't matter the fact that silver went from 40 to 50 uh is only validation of the thesis for those people who needed validation and we're silver to decline from 50 to 40 that wouldn't matter much either >> except for the people who were trading that move on margin. >> Before we leave the topic of above ground physical stocks, I can't resist putting you on uh on on the defensive I guess again about uh throwing figures at you, but the one month lease rate for 20 years I've heard people talk about running the ComX. We're going to have 10 big hedge funds take delivery. There's no physical there. We're going to run the Comx and we're going to cause a squeeze. And literally for 20 years, whenever I hear those things, I sort of deduct a point or two from, you know, my view of that person's intelligence because it's just never going to happen and it never has happened. However, after 20 years, one month lease rates on silver today are 33%. The 3-month rate is 22% and the 12-month rate is 9%. So, it's now costing 35% a year just to have a silver short. Uh, and it I think it comes out to 64 basis points a week. And that's on top of the losses of the silver price appre appreciation we just talked about 11 12% in the past seven trading days. Do you think we're potentially getting to a squeeze situation? Is it doesn't it aren't the signs that we're there? >> Well, we certainly have a near-term squeeze. uh you can uh given the spreads that the industry has historically enjoyed uh you can afford a 3 and a half you can afford a 3 and 1 half or 4% lease rate not a problem. >> Mhm. >> A 35% lease rate. >> Mhm. >> Uh that's catastrophic. Uh as you know uh many of the traders uh are running 10 or 15% equity assets that that does more than eliminates the margin. I I think the lease rates that you quote 35% for the near month uh and 9 10 11% uh further out uh talk a lot about the market's belief that as you had suggested earlier there is silver out of system that can over time come into the system. Mhm. >> Um I I remember conversations that you and I had two decades ago. Um where we both sort of chuckled and said, you know, over time markets work. The cure for high prices is high prices. The cure for low prices is low prices. Uh and that really ultimately uh price in the very long term is a function of utility. uh in the very near term uh these high prices might be problematic for traders. That's what the lease rate suggests. In the long term, you have to look at the utility of precious metals for savers relative to the utility of the US 10-year Treasury. That that one makes me long-term bullish. >> Very good point. Um, before we turn our attention to investing in in silver as individual investors, I had the opportunity to visit with Pierre Lassan a couple of weeks ago and he picked a very interesting gold target. Not quite sure where his math or or um method came from, but he picked $17,250 by 2030. And of course, if Lucky Pierre says that, there's a certain amount of truth in it just because he said it. But my question to you is, and I know this isn't your uh, you know, favorite hobby, but how high can silver go? >> Oh, God. Um, silver's emotional. Mhm. >> Uh and the stupidity of small groups of people is basically boundless. >> Mhm. >> Uh I don't I don't have a number on it, but my experience has been in prior bull markets that from the point in time when silver begins to outpace gold that its rate of escalation is at least double that of gold. with regards to gold and I'm sorry about the elliptical way I answer the question but with regards to gold uh I believe that if the purchasing power of the US dollar declines by 75% over 10 years which I think it will that the nominal US dollar price of gold will likely mirror the deterioration the purchasing power of the US dollar so a 10ear near three-fold increase in the gold price wouldn't surprise me at all. If past prologue, uh, the silver price escalation could double the gold price escalation. Will it? I don't know. >> So, you're talking about a four bagger with gold and an eight bagger potentially with silver. Correct. >> And I I really don't care. Um, I'm going to own some silver because I believe that gold is in a primary bull market and my history tells me that silver will outpace it. >> I regard my gold personally as savings. I regard it as something that maintains my purchasing power. I have benefited so extraordinarily as a speculator with silver in the past that I'm going to continue to hold some silver purely for greed purposes. But as a I think worthy footnote, I would go back to viewers uh to something you said earlier, which is when you get this type of a hockey, you know, it's funny. I I've I've had a couple people approach me about, you know, technical analysis of the silver price and how important is that here? And I'm one of these folks that I always have believed that I'm a fan of technical analysis as long as it supports my case. Uh, and as as we look at the silver price currently, I'm not sure how much, you know, technical analysis can add, we're in the midst of a a massive upside, you know, multi-deade all-time high breakout. So, I don't need a technician to tell me that silver's um, you know, in the midst of a breakout. But would you agree that at this point in the cycle a bit of caution uh you know is a worthy prudent uh way to approach the silver market because as you pointed out in the past in all the times you've made money in silver uh during the midst of that cycle you've had a 50% decline. I'm not saying that's going to happen here but uh would you agree that a little bit of of prudence uh is is is advised at this point? Yeah, absolutely. Particularly depending on the time frames that you operate under. Uh if your portfolio is underweight precious metals, um now if you have a 5year or six year or 10 year horizon is not a bad time to buy silver. Uh if you've been a systematic buyer of silver like I have, uh and if unlike me, you are a short-term trader, you might want to take some of this one. You know, I I think it depends on who you are and I think it depends on the composition of your portfolio. I'm getting lots of questions now saying, "How much of my portfolio would be in gold?" Well, that depends on how the rest of your portfolio is allocated. If you are somebody whose portfolio is concentrated on long-term treasuries, you better hedge. You better own a lot of gold, right? Mhm. >> Uh if by contrast uh you have asset classes that allow you access to pricing power to keep pace with inflation, then you need to own less gold. Uh there isn't a one-sizefits-all answer with gold or silver. But as you suggested, silver is going to be by its nature more volatile than gold. And gold is going to be volatile. So you absolutely positively need to prepare yourself psychologically and financially to stay the trade. It's gonna be as it has been a good trade, but it's not going to be and it's never been an easy trade. >> And uh my also little footnote from facial ticks that I've collected over the last 20 years, I think it's important for viewers to recognize that the first tick on gold and silver, if you're entering the market for the first time, uh has a tendency to be pretty emotional. So my point there is uh if you don't own any silver be very very judicious because uh when the first tick is down you know 20% that that's not a very pleasant place to be with precious metals. So um with having said that um in terms of individuals who are looking to expand their exposure to silver what's the Rick rule prey on how an individual investor can gain uh acquire and build silver exposure. >> Again I think that depends on who you are. Mhm. >> There are some speculators, Trey, who you and I know personally who believe that it isn't in your personal possession, you don't own it. Uh I have some respect for them. But I used to refer to them as midnight gardeners. Uh midnight gardening, holding silver in your own physical possession, exposes you to a whole different set of risks. >> Um people coming to visit you who you normally wouldn't have over for lunch. And so people need to concern themselves with that. >> Uh I prefer that my clients who own physical silver own it uh probably in segregated storage. Uh not common storage with a really really really reputable dealer. Uh I'm thinking back now to the decade of the 70s when a bunch of people who didn't trust the government sent their money to people who they had never met who ostensibly were going to hold their silver for them and stole it. So it's important that if you hold precious metals in either segregated or non-segregated accounts that you know a lot about the broker. >> Does Battle Bank by the way? >> Pardon me. Does Battlebank uh do silver custodially? >> We absolutely will custody silver. Uh and many people were will. I'm suggesting that people utilize uh the broker or the facility that they're most comfortable with. If they don't have anybody, >> we would welcome the business. What battle bank does that most institutions in fact no institution will do uh in retail denominations is we will allow you to access credit secured by your gold silver platinum and palladium. Mercifully, my counterparts in the US banking system consider bullion to be bad collateral. A situation that delights me. But yes, absolutely. Uh Battle Bank will transact in gold and silver. Uh but not to the exclusion of other dealers. The truth is if you know and love and trust somebody um by all means use that group. And when it comes down to uh the metal itself versus equities, once again, I know that you will say that depends on your risk tolerance and your time frame and that type of thing. But one of the things I want to stress for viewers is just how tiny the uh silver market is. So, uh, I'm going to ask you the question in two ways, but first of all, when you're trying to explain to somebody the size of the silver market versus gold, what what do you point to? >> Well, I I guess you're talking to the relative market share of the silver stocks relative to the relative to the value of silver. >> Mhm. >> Which is to say stock to float. >> Mhm. Uh my experience has been when the generalist investor comes into the silver space, there simply isn't enough market cap in the reasonable quality silver equities to handle the money and they do truly insane things. Uh Trey, I came in or both. >> Pardon me. >> The investors or the stocks do insane things or both. >> Well, both of course. >> Okay. I I I came into the business in the 70s. Uh one stock qualane I watched go from 10 cents to $65. >> Mhm. >> I was too young, too dumb, and too poor to take advantage of that. The second silver stock bull market, you and I knew each other. Uh >> I was deeply involved in both Silver Standard and Pan-American. They went from 72 cents and 50 cents respectively to $45 in six or seven years. >> Mhm. >> Now they were high quality stories run by great people. There are probably 150 junior silver equities in the world, most of which are now and will always be valueless. But the companies with reputable people and real deposits uh with a reasonable pathway to production will absolutely positively shock people this cycle the way they have done the last three cycles. The caveat to that is if you're not prepared to do the work to segregate uh in movie parliament between the good, the bad, and the ugly, the silver price can double and you can still lose money. So to set this up, which uh is going to be going through some of the silver stories that you enjoy or that you think make sense, I want to point out that uh we just wrote a long silver uh report and one of the things that I do each year is check in on how many stocks uh are really available for investing quote unquote pure play silver. So, in the selective silver miners ETF, um there are 38 names, but if you screen them for 20% silver production, believe it or not, it is very low. It's some of the companies in the silver index, but if you screen it for 20% silver revenues and 500 million market cap, how many do you think there are? And the answer is 15. So, and the market caps of those 15, you know, the Pan-Americans, the First Majestics, Gordelene, Heckla, moving down the list is 98 billion. So, there's a hundred billion dollars of quote unquote pure silver plays. And I will point out that if you look at all 15, the silver percentage of revenue is still less than 50%. It's 48. Uh, but assuming half silver is good, those are the big guys. And I assume that you would agree that for folks looking for silver exposure, once you have your metal and then you have, you know, your equity portion, some portion of it should be in these 15 uh sort of premium silver names. Would you agree? >> Yes, absolutely. Uh for two reasons. The first thing is they have silver. You know, there's a lot of companies, as you know, Trey, that only have silver as a component of the name on the share certificate. >> Mhm. they don't have any silver and if the price of something you don't have any of goes up it shouldn't have any impact on your underlying value. So by all means and certainly uh guys that are producing have the ability to take advantage of spikes like this. So I absolutely positively uh agree with you. I think that there is room in a portfolio where somebody works hard to come down to non-producing companies to the developers and the advanced explorers where let me rephrase that if you have the experience to understand uh a little bit of geology and a little bit of finance. um if you don't avoid them there there is going to be enough rent paid in the 15 stocks that you mention that capturing the beta in the sector is enough for most people you don't need the alpha uh you know Trey when the silver stocks move beta can give you three or 400% returns uh and it's only an extraordinarily greedy person like myself uh that would prefer to do the work to out perform a three or 400% gain. >> And uh as a great leadin to our wrap-up um I know that you know these companies better than anybody on the planet. So and I know silver sort of you know a dear to your heart emotion. So give us three or or four names that I know the way that you look at a company is what's the proposition? What are they trying to accomplish? you know, what's the proposition, the investment proposition of this company? Can you give us three or four names in this area that that you think make sense? Not that you're recommending, but that make sense if you're going to figure out how to look for a good silver company >> and the stories because I think the education is important as the name. >> Mhm. >> Uh start with the best. Uh wheat and Precious is no longer a silver company. uh but it still has a constituency around silver and it still has substantial silver revenues. I would suggest to you that despite the share price performance of Wheaten on a net present value basis, it's probably cheaper than it was before the stock price doubled. Because the price of the underlying commodities is up so much. >> So you start there. You start with the best of the best. You come down quite a bit with Pan-Amean, which is again no longer a silver company, although they've increased the silver proportion by buying mag silver, but it's a company that was penalized uh after the ac after a couple of fairly large acquisitions by virtue of the fact that they bought acquisitions that had been cash starved. uh Pan-American has addressed that now and they are generating boatloads boatloads of cash which is a really good thing you know just boatloads of cash. >> Mhm. >> Uh I am willing to take political risk which many of your listeners and viewers might not be. So I'm willing to buy the Fresnos and the Buenovas the Latin American silver producers >> before we move. any people or not. >> Before we move on, Rick, what's your view on Na'viad and Escobal as options in Paname? >> Uh, I was informed that uh Escobal was going to be approved. Uh, and I was informed that by a fairly high ranking person in the Guatemalan government who was wrong. uh the the community opposition or the distal community opposition uh and the NGO participation has been really problematic there and I'm no longer including uh Escobal in any calculation around Pan-American except for optionality. uh Na'viad uh appears to have more progress uh more prospect as a consequence of the fact that Argentina really truly needs foreign direct investment. Uh but my thesis doesn't involve either Kascoal or Na'viad except as optionality. The optionality is there. It's a billion ounces of high-grade ludicrous margin silver. >> But ludicrous margins that you can't access for five years on a net present value basis don't amount to much. Right. I do think it's very sad that Escobal has been moth baldled and I used to use it as a poster example of a beautiful mine next to a community, you know, operated very safely environmentally, 20 million ounces a year. It's a it's it's it's a travesty that that thing sits mothballled. And I certainly hope they work it out. And I think Michael Steinman is exactly the type of person who may be able to over time pull it off. Do you agree? >> And behind Michael Steinman, uh, Ross Speedy, Ross Speedy has a real sense that you need to operate responsibly both with regards to the environment. He's given in excess of hund00 million to environmental causes. >> Mhm. And socially, uh, I think the success of the Londines in Ecuador speaks to what the mining industry can do if they put in the years in the yards. Um, on a net present value basis, maybe that doesn't matter. If it, you know, at an 8% discount, if it takes them five years, you know, there's financial considerations, but you could have a surprise. You know, I mean, this sounds very elitist, but Guatemala could come to their senses. Stranger things have happened. >> Mhm. Mhm. >> Um >> I interrupted you. You were talking about Neo and >> Yeah, I I own Fresno and Buenura >> because I'm a comfortable rodeo writer. You know, I'm okay with political risk uh in return for project development pipelines. Both companies have those. But for investors and speculators who don't, you probably need to avoid those. I I think maybe uh the most volatile near-term uh upside could be in what we laughingly call the silver triumvirate. Uh those names that have uh traditional association with the silver community uh and have real upside volatility in terms of free cash flow to the silver price. That would be first majestic silver where uh you know Keith has spent a hundred million dollars in investor relations for 20 years and built a cult. uh Heckla and Cordelane. Uh these are ironically not the most efficient silver producers, but they are silver producers where many of the objections to ownership, which is to say political security and familiarity, aren't there, and they have really truly legitimate upside leverage to the silver price. Uh so some speculators might want to consider those. uh coming down into diceier names which is of course as you know where I made my reputation. Uh I like Abra a lot. Uh I I think the exploration there is becoming predictive that they understand the orbody. Uh I think it's still reasonably attractively priced because of the remote nature of the deposit. Uh investors are rightly concerned about that. Uh I uh own a lot of Vista silver. Uh the only reason why somebody wouldn't is a fairly rational fear of narot trafficantes in the neighborhood. For those of you who don't speak Spanish, that means narcotics traffickers. Uh and I uh I own a controversial name uh Silver where a recent short report was authored. This is Mr. Lal Benis. >> Go there. Ben, pardon me. >> Benis, I was just gonna say Mr. Lal. >> I've invested with Benois Lal for almost three decades. His prior effort, Seafo, was a textbook case of how to build a mining company in frontier frontier jurisdictions. Uh, so I'm I'm a holder of those three juniors. And anybody who pays attention to what I just said about them needs to understand that I'm long. This is a biased lawn. >> And the short report basically uh was done by non uh you know geologist type folks who pointed out that the pit outline didn't really increase but the ounces did and they sort of reached some conclusions. You know, you're better at this stuff than I. Did you find much in that report or did you find it fairly superficial? >> Uh I I found it was interesting. Uh you know these guys are talking their books. Guys do that from the long side, guys do it from the short side. So what I did is I called up Benois Lel and said, "Beno, uh I have 15,000 students at the rule classroom." >> Mhm. >> Uh if you'd like to refute these charges, why don't you do it live with me questioning you? And he said, "Uh, I would pay to do that." I said, "No, no, this is free, >> but this won't be advertising. This won't be a puff piece. You know, this will be me asking you the questions raised by the short report." He said, "In a New York second, uh, people who are curious about that dispute are invited to go to the rule classroom uh, and pull up Rick Rule uh, v um, Benois. He's a truly exceptional human being." Mhm. And how did he discharge himself on a >> I think he did it extremely well. Uh you know Benois is a specialist at the simple declarative statement. >> Uh he basically said no these guys are wrong. >> I categorically refute the charges. >> The uh reserve and resource report that they looked at was audited by Hatch. M uh I would uh be interested in the people who authored the short report comparing their credentials to Hatch. The report was also audited by the European Bank for Reconstruction and Development. I mean it was it was a pretty good defense I have to say. Uh and for uh viewers who are interested in IA, I I can't resist pointing out that they will be speaking at 10:30 uh on Thursday at uh uh at the Shangrila Hotel as well as Michael Steinman and First Majestic. Um and we're very excited about the silver conference. So I want to point it out one more time there live >> to my knowledge. Yeah, it's the only silver conference. I'm not aware of any other silver conference that's dedicated totally to silver. There may be, but I'm not aware of it. And once again, that'll be this Thursday, the 23rd. And for those who can't make it in person, I encourage you uh to sign up for the virtual replay, which will be on Saturday, October 25th, to give uh everybody an opportunity to view from the comfort of their own home. So, uh should be a lot of fun. And I should point out Eric Sprat is our keynote speaker at 8 and I think I've seen him speak five or six times and I've never been disappointed. He is he is one of the truly entertaining speakers uh and one of the spendies in the silver trade. So he's going to be a great way to start our day on Thursday. >> That's a wonderful catch. As you know, I couldn't get him to speak at at our conference when it has it had his name on the door. I can limit his engagements, but Peter Groskoff was able to to twist his arm to uh to kick us off. Well, >> promised him a fishing trip or something. >> Yeah, he he's on a fishing trip today. I actually spoke with Peter earlier. Um >> Eric, as you say, is uh he is a absolutely legendary speculator. >> Uh he's a great speaker and he's a wonderful human being. uh people that had the opportunity to hear Eric and passed on it uh they need their head examined, you know, just simply they need their head examined. >> Yes, I've always found it easy to get jealous of billionaires who are actually gentlemen as well. It's a good combo. Um but Rick, thank you very much for your time. Uh these are great names uh for us to think about and look at and as usual, we'll check back in a few months and see how you're doing. >> I look forward to it, Trey. It's uh it's been nice having these conversations over the decades. Uh it's nice too to have the conversations when we are uh indisputably correct. >> Let's hope it holds up. We'll talk to you soon. >> Bye-bye. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time.