Rick Rule: The Dollar’s 75% Collapse Will Triple Gold Prices
Summary
Gold: Strong bullish case driven by anticipated US dollar purchasing power decline and persistently negative real rates, with potential for a multi-year nominal price increase.
Dollar Debasement: Expectation of a ~75% decline in USD purchasing power over a decade underpins the allocation to gold and hedging against fixed-income losses in real terms.
Oil & Gas: Thesis centers on underinvestment in sustaining capital, mispriced demand outlook (no peak demand soon), and attractive dividends, creating a compelling multi-year value opportunity.
Gold M&A: Consolidation wave is rational for scale, liquidity, G&A savings, and better capital allocation; caution on non-synergistic deals focused solely on scale.
Key Company: Agnico Eagle (AEM) highlighted for strategic advantages in the Abitibi, disciplined capital allocation, and attractive risk-adjusted value at higher gold price assumptions.
Portfolio Positioning: Trimmed junior exposure into strength; reallocated into gold beta (e.g., FNV, WPM, AEM) and oil & gas equities to balance upside with reduced downside risk.
Risks: Rising cost creep in miners, potential “payback” from past high-grading, and increased royalties/taxes (“social theft”) could pressure margins despite higher commodity prices.
Transcript
Special coverage from the New Orleans Investment Conference is brought to you by First Majestic Silver Corp. There's no substitute for silver. Hello and welcome to the New Orleans Investment Conference. Welcome back to the Sore Financial channel. My name is Kai Hoffen. I'm the Edj Money guy over on X and of course your host of this channel. And I'm joined again by Rick Rule, founder of Battle Bank. Just I don't know how do I introduce you these days? You wear so many hats. Also the brains behind Rule Investment Media, I guess. Uh Rick, it's always great to have you. >> Thank you. Pleasure to be with you. I'm looking forward, by the way, to uh my first appearance at your investment conference. I'm looking forward to doing that. I've never done it before. So, thank you for inviting me. I look forward to participating. I'm sure it's going to be an enormous success. >> Well, at $4,000 gold, we're all geniuses, right? And everything's great and everything works. But, uh, no, really looking forward to hosting you in about 2 weeks time, Rick. Looking forward to that. But in the meantime, we got to discuss what is happening in the markets, what is happening on the macro level as well. Um, maybe we'll start with the US government right now. Uh, you had to travel here. I had to travel here. I hear I heard you had a decent experience. Mine wasn't as pleasant due to the government shutdown. TSA decided not to work or at least at full capacity. Um, what do you make of the government shutdowns and how do you think it is impacting what we're doing here? >> Uh, it's theater. Uh, I I think it shows people around the world that government's function is not to serve, it's rather to rule. uh you are seeing theater in support of uh political posturing of party elites to the body politic. It's disgusting. First of all, the government isn't shut down. They're shutting down some services. Some people aren't getting paid, but prior shutdowns have shown that they will get paid. So, what this really is is political posturing. There's a little bit of deeper posturing going on right now. The Democrats allege that the Republicans are displeasing health care costs. In truth, the Democrats did that with Obamacare. The Republicans are arguing about who pays for it, we or the user. Uh, a second issue, uh, even according to some Republicans, Massie at all, is that the longer the government stays shut down, the more time it is before they have to release the Epstein tapes. uh which probably will be unpleasant to personalities from both parties. At some point in time, they will resolve this. They will evolve a settlement which is good for them and lousy for the citizenry. That's the only guarantee. >> No, there's no progress. Like I'm here in the US. This is my third or fourth day here and I don't hear anything about it or much. It's not even being discussed widely. You you see some talking heads on financial media, but it seems like there's zero progress. And how would you define progress? Progress assumes that you believe that what they do is good. >> Yeah. >> Uh if we actually had a government shutdown, that would be progress. >> If we actually had a government shutdown, that would be real progress. That will never occur. It doesn't serve the interest of any of the political class. >> Do you see it merging into a Doge 2.0 scenario? Maybe using it. And I think one of the media outlets used the term call the herd. We never had Doge. >> Yeah, >> we never did. Doge was also theater. It was well pointed out by David Stockman. >> Uh that there was never an intention to reduce the size of government. There was an intention to change who the beneficiaries were. The Department of Government Efficiency gave way to the big beautiful bill uh which prophecied the second largest deficit in recorded history. So Doge 2.0 assumes that a Doge 1.0 existed. It's important to note that this is all theater. It was never meant to occur. It was always intended to mislead and in that they were extremely successful. >> What is the underlying agenda then? Like what's maybe even the end goal? power, naked power, the ability to benefit those constituents who are close to you at the expense of others. HL Min famously said, "Elections are everywhere and always, advanced auctions of stolen property." If you think about an election in that fashion, you'll understand them. a saying that goes further back. I think it was Gorvidal that said you can understand the political process if you look at the origin of the word politic poly from the Greek for many tick from the English colloquial for small blood sucking insect. >> If you believe that the role of government is somehow to do good you will continue to be hoodwinkedked and swindled if you understand them for what they are small blood sucking insects. If you understand the elections for what they are, advanced auctions of stolen property. Sadly to say, if you become sufficiently cynical, you will understand the role of government. >> Like New York is having a really heated mayoral race debate there with a Canada apparently that's clear in the clearly in the lead, but he's from the left side. He's a socialist. Um what do you make of that? Is that a bit of a signal um to the country to to Washington? >> I think it's hugely positive. Uh I think we call a question. I think that New York voters, if they searched their memories, would remember that when the Ber Berlin Wall come came down, people weren't rushing from the west to the east. If those same people searched their memory for memories of leaky boats pushing off from Miami going to Cuba, they would figure out that there weren't any. >> Yeah. When people got killed in a demarcation line line in Korea, it wasn't people from the south fleeing to the north. The policies that people are going to vote for overwhelmingly in New York in New York City have failed every time they've been tried in recorded history. >> Yeah. True. Or what is it from Haiti to uh Cuba? Like only 90 km instead of 900 km to Florida. And you and speaking of Haiti, you you never saw people climb cross the line from the Dominican Republic to Haiti, only the other way around >> from less free to more free. So the New York voters in their wisdom uh have decided to try a political system which is a proven failure since VHimar Germany. >> Let's see if we can make the segue to the financial markets. Maybe New York is that segue that we can use. uh the central center of capitalism obviously, but how does this all being reflected in in the markets right now when we're looking at the S&P 500 at record highs, right? How does that sort of fit into the market narrative then? >> Liquidity, uh people pay more attention to liquidity than they do solvency because people hate arithmetic. If you look at the S&P 500 in the period 2000 to 20 2025 and your denominator is gold rather than the dollar, the S&P 500 has been in a bare market for 25 years. If your denominator is fraudulent, then you see us in a bull market. I mean, this is really pretty simple arithmetic. >> It is. I have, as an example, I've maintained liquidity in US dollars, but I've saved in gold for 25 years. And when I look at the part of my ledger that's constructed in gold, I'm struck by how cheap things are. Energy is cheap, food is cheap, housing's cheap, what I use as my denominator, the US dollar, things are expensive. >> Yeah. Uh it's an interesting angle, right? And because we're having that liquidity debate right now because we had the Fed meeting last week and quantitive tightening is coming to an end. Although we can probably agree that that was a joke anyway because the tightening was $5 billion on a trillion dollar balance sheet. Uh so it didn't really make a dent. But it seems like QE is back on the horizon or it's at least not being called that. >> Well, you will see that they added 26 billion to the system last week. So when somebody says when is quantitative easing going to happen? I I say last week. >> Yeah, it's already we're in the middle of it. >> Yeah, we're in it. >> Because wasn't it like we're moving quantitive tightening? We're letting some of those mature like mortgage bonds like mature, but we use that money to reinvest and buy short-term bills. >> And that's very interesting. I mean, that to me is the crux of maybe what we talk about for a little while. The Fed is actively participating in the short end of the curve. Since 1992, when they've participated in the short end of the curve, they've been able to bring the long end down. People have played the the time spreads. Mhm. >> What's happening now is that despite their efforts, the long end is going up. That would suggest, doesn't prove, but it would suggest that for the first time since the Clinton administration, the market is beginning to re reassert control over the long end of the curve. And that must scare the hell out of the Fed. >> The bond vigilantes. >> Yes, correct. You You have a memory that belies your age. Well, I've done a few interviews where we talked about this as well. So, I'm not claiming all assuming knowledge here, but it is an interesting one because the bond the 10-year even is up over 4.1 again like it's climbing up. It's higher. The Dixie is up as well. Um, when we talk about liquidity, uh, what do you make of the Dixie the dollar meaning? Why why is that why is it rising? >> I'm not sure. Um, I really not I think that the next 10 years sees a period of currency multicurrency volatility. I don't think that the US dollar does poorly relative to other currencies. I think the purchasing power of the US dollar in an absolute sense is going to be disastrous. I mean I think that we reenter what we saw in the 70s where according to the US government the dollar loses 75% of its purchasing power. I don't think the dollar does badly against the euro >> or the Canadian dollar or the Australian dollar or the British pound. I think it is absolutely as opposed to relatively bad. But I think that we're coming into a period very similar to the period 2000 to 2006 where there's multicurrency turbulence, multicurrency variability. Right now we're seeing a period where although the US dollar is absolutely weak, it's relatively strong. >> I'm not sure why. >> I suspect it isn't because of the strength of US so much as the weakness of our counterparties. Like I I read somewhere maybe to interject here is that the US keeping the yields high. So money is floating into the US because the yields are just higher than in Europe for example. >> And that makes that makes perfect sense. >> Just very >> when I think about our challenges when I think about them in an absolute sense um I'm afraid when I think about our challenges relative to European challenges I'm more afraid for the Europeans than for us. >> Like and I live in Europe. Yeah. >> Right. >> Like I'm a bit jealous of what is happening in the US. the way you're spending money on what you're spending money. And maybe it's the follow-up question I meant to ask about the dollar. The US has always been known for like military supremacy, but now we're talking AI and tech supremacy uh as well. Maybe because I'm coming from the from the angle that maybe the US is trying to secure the the future of the dollar by inserting its AI and tech dominance uh on the global on a global scale talking blackwell chips and others um to to to remain relevant. Do do you see that as a potential opportunity? >> I think you're giving us too much credit for intelligence. Uh I think that the United States uh already has the remnant uh of tech supremacy. If you look at the 10 largest tech companies by market cap in the world, they're American. Uh which means that the government maybe has decided or maybe accidentally that we're playing to our own existing strength. All the United States would have to do, all that we would have to do to reassert financial hegemony on a global basis would be to control the budget deficit. We don't need to reduce spending. Reagan never did. He controlled spending. He allowed the economy to outgrow the deficit. And we need to reform our tax code. If you and I built a factory in the United States, tiltup concrete construction, >> we would amortize the construction cost of that factory over 33 years. In other words, we would deduct 3% a year from our tax base. In Sweden, socialist Sweden, we would expense that factory. In Japan, we would expense that factory. In China, we would expense that factory. The United States has adopted a populist consumer centric tax code because that's what the voters wanted in favor of the investment centric tax code that the Asian tigers plus Sweden plus Latvia, Lithuania, Estonia uh have instituted. That system works, ours doesn't. >> I think we're seeing that right now as well because we have to spend on from the government side, what is it? $8 for every dollar that goes into the GDP. Uh, so there's a bit of a disconnect. >> The GDC deflator. Yeah. >> Yeah. Exactly. Right. Um, >> what is gold telling us in in regard to that? Like I had Larry Leart sitting in your chair earlier today and he was saying, "Well, maybe gold has been sniffing out exactly what we've been talking about that there will be more liquidity uh coming down the pipeline. It's maybe a future indicator of what's to come." >> People who pay attention to the last interview that you and I did, and I realize that's not most of the people who listen to this interview, but that notwithstanding, my belief is this. My belief is that because of the size of the onbalance sheet and offbalance sheet liabilities of the US government relative to the size of the US economy that the purchasing power of the US dollar will decline by 75% over 10 years. If that's true, and I believe it is, I'd love to see somebody challenge my arithmetic. It is likely as far as I'm concerned that the nominal price of gold reflects the deterioration the purchasing power of the US dollar. That would suggest over 10 years a three-fold increase of the price of gold. Is it going to happen? I don't know. But it's arithmetically logical that it would occur. The second thing is that gold traditionally has done well reflecting that fear uh in real interest rates. Uh if you believe in the CPI, you believe that the deterioration the US dollar is proceeding along at 2.9% a year. The problem is that the CPI is a flawed index. When I look at the basket of goods and services that I consume, the deterioration of the US dollar relative to what I buy, what my household buys, is declining in purchasing power at about 8%. So if you buy the US 10ear paying 4.1 in a currency that's declining by eight, what that means is that you're losing 3.9% a year compounded. There is nothing that could make you more concerned about the maintenance of the purchasing power of the dollar than a guarantee that your savings cost you 4%. Hence, gold does well. >> Hence, nobody's saving it seems like as well, at least in the US. >> I am >> You got a few of us. >> Yeah. No, there are very few. >> Yeah. >> So, we've seen a bit of a like pullback in gold in general, which is quite healthy. I'm personally quite happy seeing that. Uh would you agree with that? Nothing goes up in a straight line. Um how you've been like sort of also from a personal portfolio standpoint managing. I'm not a trader, but it's a matter of public record that about five weeks ago, I sold off 25% of my shareholdings in juniors. I didn't do it because I anticipated a pullback. I did it because the market was extremely hot. And I have learned that whatever is easy to do in the market, you should do. When there's all biders and no offers, you should throw up some offers. When there's all off no all offers and no biders, you should throw up a bid. Arithmetically, I was able to sell off 25% of my position and pay for a 100% of my position, including the capital gains tax. So, I sold off 25% of my upside and I eliminated my downside. That's a good trade. I think that gold mining beta does well. I think gold mining alpha does better, but I don't care what I think. This gave me the ability to by selling off 25% of my upside eliminate my downside. What's instructive I think is what I did with the money. I took half that money and I invested it in a package that included gold itself, >> Franco Nevada, wheat and precious and eggno eagle. In other words, I traded in alpha and I bought beta. I think the market's going the other way, but that's not what I care about. Uh I care about how it affects my own portfolio. I took the other half of the money I put in the oil and gas business. >> I love, as you know, Kai, I love hate. >> Yeah. Uh, I love hate surrounded by good fundamentals and the market hates oil so I love it. >> Well, we're seeing takeovers happening in the oil and gas space. So buying MEG Energy Y >> for 12 billion. I'm not too familiar with the deal, but that's been widely discussed whether there's an interloper coming in as well, I hear. Um, what do you make of it? Maybe draw a picture for us. I know you've been chatting uh about oil and gas on other channels as well, but draw for our audience a bit of a >> Well, first of all, the big thinkers in the world, you know, that noted energy fet physicist Greta Thornberg, your your ex Minister Miracle >> uh would suggest that the peak oil demand occurs in 2030. >> Peak oil demand doesn't occur in my life. >> For the record, I'm a heavy healthy 72-y old. I don't think it occurs in your life. Which means that when people do net present value calculations on oil companies, they throw out the back half of the demand curve. I think that the oil industry is selling at a 50 or 60% discount to net present value today. But the second part of the equation is that the oil industry is underinvesting in sustaining capital by about $2 billion a day. When you do that, it doesn't affect your output in 26, maybe even 27, but 28, 29, it affects it dramatically. Uh, so I think that the industry is selling at a 50% discount to what it's worth. And I think what it's worth doubles. So I'm talking about buying a three or four year double at a 50% discount and getting paid, depending on the stock, between a four and a 6% dividend while I wait. In other words, my time value of money, which is traditionally my bogey because I'm always early, doesn't exist because of the dividend yield. >> It's covering your >> These are stupidly high quality companies. I I mean, I'm not talking penny dreadfuls here. >> Yeah, they're all billion dollar companies. Easily >> multi-billion. I mean, the stock I'm added to you the most aggressively is Exxon. >> You know, this is not a penny stock of them. Yeah. Not a penny stock. >> Yeah. Absolutely. No, it's astonishing the oil and gas space. I was just in Texas before coming down here. It's 235 a gallon. >> Absolutely phenomenal. Uh it's it's interesting because it has a massive of course economic uh impact on the consumer as well. But uh that just reflects on what kind of price environment we're in. I call it QE for the people. Low low oil and gas prices in that regard. >> Of course, the governments will arbitrage that away. Uh if you look at the gas price in California, it's more than twice the price of uh gas in Texas. And it isn't because California is under endowed. It's because uh Governor Nuomo steals the premium. >> Yeah. I wouldn't be running a trucking business in California. I tell you that that can't be fun. But it's just an interesting indicator how also it fluctuates and how how much of an impact it has. Um jumping around a little bit, Rick, because I want to talk takeovers in the mining space. Uh we've seen last just last two trading days, two massive deals announced. Uh Probe being bought by IM Gold, uh sorry, by Fresno >> by Fresno. That's >> Fresno. IM Gold bought something else the other day. Um, I'll get back to that one, but I was going to talk core and of course new gold that was announced this morning, $7 billion deal turning into a $20 billion company. What What do you make of it? What's sort of the signal you're receiving here? >> Well, first of all, it has to happen. Uh, we have a market now where a bunch of the volume is passive and the bigger you are and the more trading liquidity, the more of the passive dollars you get. Uh, more trading volume equals higher share price equals lower cost of capital. lower cost of capital's defining competitive advantage. The second benefit is obvious to those who look but most don't look which is to say that bigger entities can reduce their GNA relative to assets under management or free cash flow. You eliminate in a good takeover one management team or parts of both. Uh lower GNA is good for everybody. The third thing is that a management team with more opportunity sets is able to allocate capital more efficiently. If a management team has one asset, they focus on that asset because that's where their salary comes from. If you merge core uh and new gold, you look across the whole range of assets and you optimize those assets that have the highest net return on capital employed. These are all good things. There is a difference however between really synergistic mergers and mergers for scale. In the in the period 2000 to 2011 there was lots of M&A but most of it was stupid. M&A around scale uh I am afraid that the Fresno takeover of probe is just such a merger. Um, what on earth are Fresno's competitive advantages in Ontario? How is that synergistic with their existing operations? My suspicion is that it reflects uh their need to diversify or their wish to diversify their political risk out of Mexico, >> but they should have enough leeway or enough pull in Mexico anyway to to sort of sustain that. Wouldn't you? >> I don't know. >> I have no comment on that. The I am gold merger, I understand. Uh they have infrastructure in the region. I was a skeptic about uh tier 2 assets and tier three assets in the abativia in Canada because I've watched them be strained be uh uh orphaned in three prior cycles. Uh yes they had gold but they didn't have enough gold to justify building a plant. I visited with Amar Aljundi at my conference in Boca Raton. He's CEO of Agniko >> and he said Rick you need to rethink that. There is so much infrastructure in the abbatibi now that we don't need to build too much of it. A deposit which doesn't justify the construction of a mill that's within 20k of an existing mill. We need to build the mine but we no longer need to build the infrastructure. So you need to in your own mind revalue these 1 million ounce or million and a half ounce deposits to take into account the existence of the infrastructure. And you got or sorting now as well, which is working really well. >> I'm afraid of that. You're scared. Okay, let's leave that topic. Let's leave that out. Yeah, I mean I the fact that I don't have to build a $400 million mill uh that I have to pay 10,000 $10 million a year in trucking costs. I get that one. >> Yeah, it's easy math. >> And I think that's what you saw with I am Gold. Uh and I suspect that El Dorado and I mean there's a there's a group of companies which are wellestablished, understand the abotibby uh that will benefit from this. I was going to say, did that transaction lit the fuse? >> Uh, no. The discussion that I had with Amaral Jundi lit the fuse, the guy who said to me, you're making a mistake thinking this way. I think if you put a scale and you had Amaral Jundi's knowledge of the Abativian mine that I would be on the light end of the scale. >> Um, Agnika plays an important role in it obviously because they they control most of it, but they also control quite a few juniors because they have like minority shareholdings. 03 was one of them that they bought. Y >> there's a couple others. We don't have to go through the names individually. Um do you think has a bit of a strangle hold on the Abby in general and with Fresno and others coming in? >> I don't uh because there's a reasonable number of wellunded people in the Abatibi that have infrastructure that's closer to the orphan deposits. The person that has an economic advantage is going to win. Uh the corporate culture of Abot of uh Agniko is focused on return on capital employed per share. They don't think about the enterprise so much as they think about on a per share basis. And if they have a 21% IRRa on deposit A and a 17% IRRa on deposit B, they will let deposit B go. Most companies won't do that. So the companies that will prevail locally in the Abbot Tibby are those companies that can best leverage their existing assets in the Abatibi. >> Would you be buying anything in the Abatibi right now? >> Uh I just bought more Agniko. >> Okay. Yeah. Okay. >> Um when I Agniko having doubled >> Yeah. >> on a net present value basis at four at $4,000 gold is cheaper than it was before it doubled at $2,200 gold. So at my age, the idea that I increase my risk for marginal Yeah. >> reward is stupid. >> Rick, I I could chat with you for hours and lots of questions popping into Matt because you mentioned net present value calculations that takes in consideration gold price, right? >> But I I've just actually before you sat down, I was chatting with somebody and we're talking about the Raymond James price forecast and they're still using $2,900 gold long term. >> Yeah. Maybe that as the last question here like how how does that make sense? >> There's a lot of room for surprise. >> The uh the mining companies have also been trained to use fairly conservative price forecasts. When people's earnings forecasts are based on $2,70050 gold and $3,000 gold and they're selling the stuff for $4,000, there's pretty good earning surprises. and earning surprises drive share price escalation. Uh I think there are good as opposed to bad surprises baked in the cake for at least two more quarters. >> Absolutely. Well, the average gold price, what is it now? $3,800 this quarter or something like that. There's another $200 $300 higher y >> than in Q3. Yep. >> Absolutely. We're on the right track. >> Now what we are seeing is we're beginning to see pretty ugly cost creep. And I suspect what we're beginning to see is payback for prior years high-grading. >> Uh what happens when you hygrade is that you artificially goose earnings in that quarter depending on how you report, but you also sterilize the aura around what you hygraded. So I think part of the the uh cost escalation that we're seeing now is payback for hidden sin, but we'll work through this. You >> you mentioned ACO and I looked at their numbers. Uh they're actually having to pay higher royalties because the gold price is higher as well. And that's sort of catching up with them as well. >> And the other thing that you're going to see for sure, Kai, is increasing theft. Uh not employee theft, but rather social theft. >> You're going to see uh higher off-site capital expenses. You're going to see higher provincial and federal royalties. You're going to see a new range of tax. For sure, the so-called Commonwealth is going to steal the private wealth. >> Fantastic, Rick. Really looking forward to hosting you in Frankfurt. We'll continue this conversation. Pleasure. >> Really looking forward to it. Thanks so much for joining us here. Everybody else, thank you so much for joining us here on the floor of New Orleans or the New Orleans Investment Conference. Rick, I forgot to ask if our audience doesn't know where to find you, where can we send them? >> Thank you for asking that. If you care about the way I think about natural resources, find out for free what I think about your portfolio. Go to ruralinvestmentmedia.com, list your natural resource stocks, and for no obligation and for free, I'll rank them. Uh, bear in mind, I'm on the road for five weeks, so be a little patient. I'll be ranking them when I'm on the road, but be a little patient. By the way, please no crypto. Please no pot stocks. Please no tech stocks. Natural resources only. ruleinvestmentmedia.com. List your natural resource stocks. I personally will rank them. >> Fantastic. Awesome, Rick. Great service. Thank you so much. Everybody else, thanks so much for tuning in. Hit that like and subscribe button and uh take care out there.
Rick Rule: The Dollar’s 75% Collapse Will Triple Gold Prices
Summary
Transcript
Special coverage from the New Orleans Investment Conference is brought to you by First Majestic Silver Corp. There's no substitute for silver. Hello and welcome to the New Orleans Investment Conference. Welcome back to the Sore Financial channel. My name is Kai Hoffen. I'm the Edj Money guy over on X and of course your host of this channel. And I'm joined again by Rick Rule, founder of Battle Bank. Just I don't know how do I introduce you these days? You wear so many hats. Also the brains behind Rule Investment Media, I guess. Uh Rick, it's always great to have you. >> Thank you. Pleasure to be with you. I'm looking forward, by the way, to uh my first appearance at your investment conference. I'm looking forward to doing that. I've never done it before. So, thank you for inviting me. I look forward to participating. I'm sure it's going to be an enormous success. >> Well, at $4,000 gold, we're all geniuses, right? And everything's great and everything works. But, uh, no, really looking forward to hosting you in about 2 weeks time, Rick. Looking forward to that. But in the meantime, we got to discuss what is happening in the markets, what is happening on the macro level as well. Um, maybe we'll start with the US government right now. Uh, you had to travel here. I had to travel here. I hear I heard you had a decent experience. Mine wasn't as pleasant due to the government shutdown. TSA decided not to work or at least at full capacity. Um, what do you make of the government shutdowns and how do you think it is impacting what we're doing here? >> Uh, it's theater. Uh, I I think it shows people around the world that government's function is not to serve, it's rather to rule. uh you are seeing theater in support of uh political posturing of party elites to the body politic. It's disgusting. First of all, the government isn't shut down. They're shutting down some services. Some people aren't getting paid, but prior shutdowns have shown that they will get paid. So, what this really is is political posturing. There's a little bit of deeper posturing going on right now. The Democrats allege that the Republicans are displeasing health care costs. In truth, the Democrats did that with Obamacare. The Republicans are arguing about who pays for it, we or the user. Uh, a second issue, uh, even according to some Republicans, Massie at all, is that the longer the government stays shut down, the more time it is before they have to release the Epstein tapes. uh which probably will be unpleasant to personalities from both parties. At some point in time, they will resolve this. They will evolve a settlement which is good for them and lousy for the citizenry. That's the only guarantee. >> No, there's no progress. Like I'm here in the US. This is my third or fourth day here and I don't hear anything about it or much. It's not even being discussed widely. You you see some talking heads on financial media, but it seems like there's zero progress. And how would you define progress? Progress assumes that you believe that what they do is good. >> Yeah. >> Uh if we actually had a government shutdown, that would be progress. >> If we actually had a government shutdown, that would be real progress. That will never occur. It doesn't serve the interest of any of the political class. >> Do you see it merging into a Doge 2.0 scenario? Maybe using it. And I think one of the media outlets used the term call the herd. We never had Doge. >> Yeah, >> we never did. Doge was also theater. It was well pointed out by David Stockman. >> Uh that there was never an intention to reduce the size of government. There was an intention to change who the beneficiaries were. The Department of Government Efficiency gave way to the big beautiful bill uh which prophecied the second largest deficit in recorded history. So Doge 2.0 assumes that a Doge 1.0 existed. It's important to note that this is all theater. It was never meant to occur. It was always intended to mislead and in that they were extremely successful. >> What is the underlying agenda then? Like what's maybe even the end goal? power, naked power, the ability to benefit those constituents who are close to you at the expense of others. HL Min famously said, "Elections are everywhere and always, advanced auctions of stolen property." If you think about an election in that fashion, you'll understand them. a saying that goes further back. I think it was Gorvidal that said you can understand the political process if you look at the origin of the word politic poly from the Greek for many tick from the English colloquial for small blood sucking insect. >> If you believe that the role of government is somehow to do good you will continue to be hoodwinkedked and swindled if you understand them for what they are small blood sucking insects. If you understand the elections for what they are, advanced auctions of stolen property. Sadly to say, if you become sufficiently cynical, you will understand the role of government. >> Like New York is having a really heated mayoral race debate there with a Canada apparently that's clear in the clearly in the lead, but he's from the left side. He's a socialist. Um what do you make of that? Is that a bit of a signal um to the country to to Washington? >> I think it's hugely positive. Uh I think we call a question. I think that New York voters, if they searched their memories, would remember that when the Ber Berlin Wall come came down, people weren't rushing from the west to the east. If those same people searched their memory for memories of leaky boats pushing off from Miami going to Cuba, they would figure out that there weren't any. >> Yeah. When people got killed in a demarcation line line in Korea, it wasn't people from the south fleeing to the north. The policies that people are going to vote for overwhelmingly in New York in New York City have failed every time they've been tried in recorded history. >> Yeah. True. Or what is it from Haiti to uh Cuba? Like only 90 km instead of 900 km to Florida. And you and speaking of Haiti, you you never saw people climb cross the line from the Dominican Republic to Haiti, only the other way around >> from less free to more free. So the New York voters in their wisdom uh have decided to try a political system which is a proven failure since VHimar Germany. >> Let's see if we can make the segue to the financial markets. Maybe New York is that segue that we can use. uh the central center of capitalism obviously, but how does this all being reflected in in the markets right now when we're looking at the S&P 500 at record highs, right? How does that sort of fit into the market narrative then? >> Liquidity, uh people pay more attention to liquidity than they do solvency because people hate arithmetic. If you look at the S&P 500 in the period 2000 to 20 2025 and your denominator is gold rather than the dollar, the S&P 500 has been in a bare market for 25 years. If your denominator is fraudulent, then you see us in a bull market. I mean, this is really pretty simple arithmetic. >> It is. I have, as an example, I've maintained liquidity in US dollars, but I've saved in gold for 25 years. And when I look at the part of my ledger that's constructed in gold, I'm struck by how cheap things are. Energy is cheap, food is cheap, housing's cheap, what I use as my denominator, the US dollar, things are expensive. >> Yeah. Uh it's an interesting angle, right? And because we're having that liquidity debate right now because we had the Fed meeting last week and quantitive tightening is coming to an end. Although we can probably agree that that was a joke anyway because the tightening was $5 billion on a trillion dollar balance sheet. Uh so it didn't really make a dent. But it seems like QE is back on the horizon or it's at least not being called that. >> Well, you will see that they added 26 billion to the system last week. So when somebody says when is quantitative easing going to happen? I I say last week. >> Yeah, it's already we're in the middle of it. >> Yeah, we're in it. >> Because wasn't it like we're moving quantitive tightening? We're letting some of those mature like mortgage bonds like mature, but we use that money to reinvest and buy short-term bills. >> And that's very interesting. I mean, that to me is the crux of maybe what we talk about for a little while. The Fed is actively participating in the short end of the curve. Since 1992, when they've participated in the short end of the curve, they've been able to bring the long end down. People have played the the time spreads. Mhm. >> What's happening now is that despite their efforts, the long end is going up. That would suggest, doesn't prove, but it would suggest that for the first time since the Clinton administration, the market is beginning to re reassert control over the long end of the curve. And that must scare the hell out of the Fed. >> The bond vigilantes. >> Yes, correct. You You have a memory that belies your age. Well, I've done a few interviews where we talked about this as well. So, I'm not claiming all assuming knowledge here, but it is an interesting one because the bond the 10-year even is up over 4.1 again like it's climbing up. It's higher. The Dixie is up as well. Um, when we talk about liquidity, uh, what do you make of the Dixie the dollar meaning? Why why is that why is it rising? >> I'm not sure. Um, I really not I think that the next 10 years sees a period of currency multicurrency volatility. I don't think that the US dollar does poorly relative to other currencies. I think the purchasing power of the US dollar in an absolute sense is going to be disastrous. I mean I think that we reenter what we saw in the 70s where according to the US government the dollar loses 75% of its purchasing power. I don't think the dollar does badly against the euro >> or the Canadian dollar or the Australian dollar or the British pound. I think it is absolutely as opposed to relatively bad. But I think that we're coming into a period very similar to the period 2000 to 2006 where there's multicurrency turbulence, multicurrency variability. Right now we're seeing a period where although the US dollar is absolutely weak, it's relatively strong. >> I'm not sure why. >> I suspect it isn't because of the strength of US so much as the weakness of our counterparties. Like I I read somewhere maybe to interject here is that the US keeping the yields high. So money is floating into the US because the yields are just higher than in Europe for example. >> And that makes that makes perfect sense. >> Just very >> when I think about our challenges when I think about them in an absolute sense um I'm afraid when I think about our challenges relative to European challenges I'm more afraid for the Europeans than for us. >> Like and I live in Europe. Yeah. >> Right. >> Like I'm a bit jealous of what is happening in the US. the way you're spending money on what you're spending money. And maybe it's the follow-up question I meant to ask about the dollar. The US has always been known for like military supremacy, but now we're talking AI and tech supremacy uh as well. Maybe because I'm coming from the from the angle that maybe the US is trying to secure the the future of the dollar by inserting its AI and tech dominance uh on the global on a global scale talking blackwell chips and others um to to to remain relevant. Do do you see that as a potential opportunity? >> I think you're giving us too much credit for intelligence. Uh I think that the United States uh already has the remnant uh of tech supremacy. If you look at the 10 largest tech companies by market cap in the world, they're American. Uh which means that the government maybe has decided or maybe accidentally that we're playing to our own existing strength. All the United States would have to do, all that we would have to do to reassert financial hegemony on a global basis would be to control the budget deficit. We don't need to reduce spending. Reagan never did. He controlled spending. He allowed the economy to outgrow the deficit. And we need to reform our tax code. If you and I built a factory in the United States, tiltup concrete construction, >> we would amortize the construction cost of that factory over 33 years. In other words, we would deduct 3% a year from our tax base. In Sweden, socialist Sweden, we would expense that factory. In Japan, we would expense that factory. In China, we would expense that factory. The United States has adopted a populist consumer centric tax code because that's what the voters wanted in favor of the investment centric tax code that the Asian tigers plus Sweden plus Latvia, Lithuania, Estonia uh have instituted. That system works, ours doesn't. >> I think we're seeing that right now as well because we have to spend on from the government side, what is it? $8 for every dollar that goes into the GDP. Uh, so there's a bit of a disconnect. >> The GDC deflator. Yeah. >> Yeah. Exactly. Right. Um, >> what is gold telling us in in regard to that? Like I had Larry Leart sitting in your chair earlier today and he was saying, "Well, maybe gold has been sniffing out exactly what we've been talking about that there will be more liquidity uh coming down the pipeline. It's maybe a future indicator of what's to come." >> People who pay attention to the last interview that you and I did, and I realize that's not most of the people who listen to this interview, but that notwithstanding, my belief is this. My belief is that because of the size of the onbalance sheet and offbalance sheet liabilities of the US government relative to the size of the US economy that the purchasing power of the US dollar will decline by 75% over 10 years. If that's true, and I believe it is, I'd love to see somebody challenge my arithmetic. It is likely as far as I'm concerned that the nominal price of gold reflects the deterioration the purchasing power of the US dollar. That would suggest over 10 years a three-fold increase of the price of gold. Is it going to happen? I don't know. But it's arithmetically logical that it would occur. The second thing is that gold traditionally has done well reflecting that fear uh in real interest rates. Uh if you believe in the CPI, you believe that the deterioration the US dollar is proceeding along at 2.9% a year. The problem is that the CPI is a flawed index. When I look at the basket of goods and services that I consume, the deterioration of the US dollar relative to what I buy, what my household buys, is declining in purchasing power at about 8%. So if you buy the US 10ear paying 4.1 in a currency that's declining by eight, what that means is that you're losing 3.9% a year compounded. There is nothing that could make you more concerned about the maintenance of the purchasing power of the dollar than a guarantee that your savings cost you 4%. Hence, gold does well. >> Hence, nobody's saving it seems like as well, at least in the US. >> I am >> You got a few of us. >> Yeah. No, there are very few. >> Yeah. >> So, we've seen a bit of a like pullback in gold in general, which is quite healthy. I'm personally quite happy seeing that. Uh would you agree with that? Nothing goes up in a straight line. Um how you've been like sort of also from a personal portfolio standpoint managing. I'm not a trader, but it's a matter of public record that about five weeks ago, I sold off 25% of my shareholdings in juniors. I didn't do it because I anticipated a pullback. I did it because the market was extremely hot. And I have learned that whatever is easy to do in the market, you should do. When there's all biders and no offers, you should throw up some offers. When there's all off no all offers and no biders, you should throw up a bid. Arithmetically, I was able to sell off 25% of my position and pay for a 100% of my position, including the capital gains tax. So, I sold off 25% of my upside and I eliminated my downside. That's a good trade. I think that gold mining beta does well. I think gold mining alpha does better, but I don't care what I think. This gave me the ability to by selling off 25% of my upside eliminate my downside. What's instructive I think is what I did with the money. I took half that money and I invested it in a package that included gold itself, >> Franco Nevada, wheat and precious and eggno eagle. In other words, I traded in alpha and I bought beta. I think the market's going the other way, but that's not what I care about. Uh I care about how it affects my own portfolio. I took the other half of the money I put in the oil and gas business. >> I love, as you know, Kai, I love hate. >> Yeah. Uh, I love hate surrounded by good fundamentals and the market hates oil so I love it. >> Well, we're seeing takeovers happening in the oil and gas space. So buying MEG Energy Y >> for 12 billion. I'm not too familiar with the deal, but that's been widely discussed whether there's an interloper coming in as well, I hear. Um, what do you make of it? Maybe draw a picture for us. I know you've been chatting uh about oil and gas on other channels as well, but draw for our audience a bit of a >> Well, first of all, the big thinkers in the world, you know, that noted energy fet physicist Greta Thornberg, your your ex Minister Miracle >> uh would suggest that the peak oil demand occurs in 2030. >> Peak oil demand doesn't occur in my life. >> For the record, I'm a heavy healthy 72-y old. I don't think it occurs in your life. Which means that when people do net present value calculations on oil companies, they throw out the back half of the demand curve. I think that the oil industry is selling at a 50 or 60% discount to net present value today. But the second part of the equation is that the oil industry is underinvesting in sustaining capital by about $2 billion a day. When you do that, it doesn't affect your output in 26, maybe even 27, but 28, 29, it affects it dramatically. Uh, so I think that the industry is selling at a 50% discount to what it's worth. And I think what it's worth doubles. So I'm talking about buying a three or four year double at a 50% discount and getting paid, depending on the stock, between a four and a 6% dividend while I wait. In other words, my time value of money, which is traditionally my bogey because I'm always early, doesn't exist because of the dividend yield. >> It's covering your >> These are stupidly high quality companies. I I mean, I'm not talking penny dreadfuls here. >> Yeah, they're all billion dollar companies. Easily >> multi-billion. I mean, the stock I'm added to you the most aggressively is Exxon. >> You know, this is not a penny stock of them. Yeah. Not a penny stock. >> Yeah. Absolutely. No, it's astonishing the oil and gas space. I was just in Texas before coming down here. It's 235 a gallon. >> Absolutely phenomenal. Uh it's it's interesting because it has a massive of course economic uh impact on the consumer as well. But uh that just reflects on what kind of price environment we're in. I call it QE for the people. Low low oil and gas prices in that regard. >> Of course, the governments will arbitrage that away. Uh if you look at the gas price in California, it's more than twice the price of uh gas in Texas. And it isn't because California is under endowed. It's because uh Governor Nuomo steals the premium. >> Yeah. I wouldn't be running a trucking business in California. I tell you that that can't be fun. But it's just an interesting indicator how also it fluctuates and how how much of an impact it has. Um jumping around a little bit, Rick, because I want to talk takeovers in the mining space. Uh we've seen last just last two trading days, two massive deals announced. Uh Probe being bought by IM Gold, uh sorry, by Fresno >> by Fresno. That's >> Fresno. IM Gold bought something else the other day. Um, I'll get back to that one, but I was going to talk core and of course new gold that was announced this morning, $7 billion deal turning into a $20 billion company. What What do you make of it? What's sort of the signal you're receiving here? >> Well, first of all, it has to happen. Uh, we have a market now where a bunch of the volume is passive and the bigger you are and the more trading liquidity, the more of the passive dollars you get. Uh, more trading volume equals higher share price equals lower cost of capital. lower cost of capital's defining competitive advantage. The second benefit is obvious to those who look but most don't look which is to say that bigger entities can reduce their GNA relative to assets under management or free cash flow. You eliminate in a good takeover one management team or parts of both. Uh lower GNA is good for everybody. The third thing is that a management team with more opportunity sets is able to allocate capital more efficiently. If a management team has one asset, they focus on that asset because that's where their salary comes from. If you merge core uh and new gold, you look across the whole range of assets and you optimize those assets that have the highest net return on capital employed. These are all good things. There is a difference however between really synergistic mergers and mergers for scale. In the in the period 2000 to 2011 there was lots of M&A but most of it was stupid. M&A around scale uh I am afraid that the Fresno takeover of probe is just such a merger. Um, what on earth are Fresno's competitive advantages in Ontario? How is that synergistic with their existing operations? My suspicion is that it reflects uh their need to diversify or their wish to diversify their political risk out of Mexico, >> but they should have enough leeway or enough pull in Mexico anyway to to sort of sustain that. Wouldn't you? >> I don't know. >> I have no comment on that. The I am gold merger, I understand. Uh they have infrastructure in the region. I was a skeptic about uh tier 2 assets and tier three assets in the abativia in Canada because I've watched them be strained be uh uh orphaned in three prior cycles. Uh yes they had gold but they didn't have enough gold to justify building a plant. I visited with Amar Aljundi at my conference in Boca Raton. He's CEO of Agniko >> and he said Rick you need to rethink that. There is so much infrastructure in the abbatibi now that we don't need to build too much of it. A deposit which doesn't justify the construction of a mill that's within 20k of an existing mill. We need to build the mine but we no longer need to build the infrastructure. So you need to in your own mind revalue these 1 million ounce or million and a half ounce deposits to take into account the existence of the infrastructure. And you got or sorting now as well, which is working really well. >> I'm afraid of that. You're scared. Okay, let's leave that topic. Let's leave that out. Yeah, I mean I the fact that I don't have to build a $400 million mill uh that I have to pay 10,000 $10 million a year in trucking costs. I get that one. >> Yeah, it's easy math. >> And I think that's what you saw with I am Gold. Uh and I suspect that El Dorado and I mean there's a there's a group of companies which are wellestablished, understand the abotibby uh that will benefit from this. I was going to say, did that transaction lit the fuse? >> Uh, no. The discussion that I had with Amaral Jundi lit the fuse, the guy who said to me, you're making a mistake thinking this way. I think if you put a scale and you had Amaral Jundi's knowledge of the Abativian mine that I would be on the light end of the scale. >> Um, Agnika plays an important role in it obviously because they they control most of it, but they also control quite a few juniors because they have like minority shareholdings. 03 was one of them that they bought. Y >> there's a couple others. We don't have to go through the names individually. Um do you think has a bit of a strangle hold on the Abby in general and with Fresno and others coming in? >> I don't uh because there's a reasonable number of wellunded people in the Abatibi that have infrastructure that's closer to the orphan deposits. The person that has an economic advantage is going to win. Uh the corporate culture of Abot of uh Agniko is focused on return on capital employed per share. They don't think about the enterprise so much as they think about on a per share basis. And if they have a 21% IRRa on deposit A and a 17% IRRa on deposit B, they will let deposit B go. Most companies won't do that. So the companies that will prevail locally in the Abbot Tibby are those companies that can best leverage their existing assets in the Abatibi. >> Would you be buying anything in the Abatibi right now? >> Uh I just bought more Agniko. >> Okay. Yeah. Okay. >> Um when I Agniko having doubled >> Yeah. >> on a net present value basis at four at $4,000 gold is cheaper than it was before it doubled at $2,200 gold. So at my age, the idea that I increase my risk for marginal Yeah. >> reward is stupid. >> Rick, I I could chat with you for hours and lots of questions popping into Matt because you mentioned net present value calculations that takes in consideration gold price, right? >> But I I've just actually before you sat down, I was chatting with somebody and we're talking about the Raymond James price forecast and they're still using $2,900 gold long term. >> Yeah. Maybe that as the last question here like how how does that make sense? >> There's a lot of room for surprise. >> The uh the mining companies have also been trained to use fairly conservative price forecasts. When people's earnings forecasts are based on $2,70050 gold and $3,000 gold and they're selling the stuff for $4,000, there's pretty good earning surprises. and earning surprises drive share price escalation. Uh I think there are good as opposed to bad surprises baked in the cake for at least two more quarters. >> Absolutely. Well, the average gold price, what is it now? $3,800 this quarter or something like that. There's another $200 $300 higher y >> than in Q3. Yep. >> Absolutely. We're on the right track. >> Now what we are seeing is we're beginning to see pretty ugly cost creep. And I suspect what we're beginning to see is payback for prior years high-grading. >> Uh what happens when you hygrade is that you artificially goose earnings in that quarter depending on how you report, but you also sterilize the aura around what you hygraded. So I think part of the the uh cost escalation that we're seeing now is payback for hidden sin, but we'll work through this. You >> you mentioned ACO and I looked at their numbers. Uh they're actually having to pay higher royalties because the gold price is higher as well. And that's sort of catching up with them as well. >> And the other thing that you're going to see for sure, Kai, is increasing theft. Uh not employee theft, but rather social theft. >> You're going to see uh higher off-site capital expenses. You're going to see higher provincial and federal royalties. You're going to see a new range of tax. For sure, the so-called Commonwealth is going to steal the private wealth. >> Fantastic, Rick. Really looking forward to hosting you in Frankfurt. We'll continue this conversation. Pleasure. >> Really looking forward to it. Thanks so much for joining us here. Everybody else, thank you so much for joining us here on the floor of New Orleans or the New Orleans Investment Conference. Rick, I forgot to ask if our audience doesn't know where to find you, where can we send them? >> Thank you for asking that. If you care about the way I think about natural resources, find out for free what I think about your portfolio. Go to ruralinvestmentmedia.com, list your natural resource stocks, and for no obligation and for free, I'll rank them. Uh, bear in mind, I'm on the road for five weeks, so be a little patient. I'll be ranking them when I'm on the road, but be a little patient. By the way, please no crypto. Please no pot stocks. Please no tech stocks. Natural resources only. ruleinvestmentmedia.com. List your natural resource stocks. I personally will rank them. >> Fantastic. Awesome, Rick. Great service. Thank you so much. Everybody else, thanks so much for tuning in. Hit that like and subscribe button and uh take care out there.