Market Outlook: Escalating Middle East conflict threatens oil flows, pushing rates higher, the dollar stronger, and near-term economic conditions weaker.
Oil/Energy: Anticipatory price spikes could shift to rationing by price, with restoration of damaged Gulf infrastructure and reservoir management delaying normalization.
Precious Metals: Gold’s key driver is currency debasement; near-term softness is possible with a strong USD and higher yields, but long-term prospects improve with deficits and money printing.
Gold Strategy: Uses gold as a core savings asset and liquidity hedge, noting historic resilience in post-shock recoveries versus other assets.
Uranium/Nuclear Power: Clear beneficiary of the energy security imperative, with likely Japanese restarts and rising global acceptance; plant standardization lowers costs, though plant-failure risk remains.
Uranium Vehicles: For non-specialists, he suggests Sprott Physical Uranium Trust (U.UN/SRUUF) or Cameco (CCJ), emphasizing a multi-year horizon rather than quick gains and cautioning that juniors require deep diligence.
Industrial Materials: Decades of underinvestment point to future rationing by price; base metals rise if recession is avoided, otherwise timelines extend.
Risks & Preparation: Higher rates stress private credit and junk ETFs, so boost liquidity, verify bank solvency, and favor low-leverage companies amid potential volatility.
Transcript
I think the state of the economy is weaker than people believe and I think it's going to become weaker still as a conflict as a consequence of the conflict and higher energy prices if peace does eventually uh result. We're going to have to restore facilities destroyed by war in the United Arab Emirates in Kuwait in Saudi and of course in Iran. Two weeks ago I was sort of optimistic that cooler heads would prevail. Uh today would suggest I was unduly optimistic. Rick Rule, CEO and president of Rule Investment Media and also co-founder of Battlebank. It's so great to welcome you back to the show. Great to see you again, Rick. >> Delighted to be back. Thank you for having me. >> Well, we had you on back in January. Um, we taped that episode uh January 19th and gosh, Rick, what a year it's been already. A lot's happened. In the last time we spoke, we had not had a war in the Middle East and now we do. So given the backdrop, can we get your latest big picture macro view where we are today? Where you see things headed? What's been on your radar of late? And as you know, Rick, you can take all the time you need to set the table. >> That's a big topic, but let's start with the war. Um, today, which for the record is the 4th of May, seems to be marked by an escalation in the conflict, which is unfortunate for a bunch of reasons. But let's uh stick to economic reasons and in fact let's stick with resources. The increase that we've seen in the oil price since the beginning of the Gulf conflict has really been anticipatory which is to say that the world uh hitherto has been uh existing on floating cargos of crude uh and on strategic stockpiles in various countries. those stockpiles and that inventory uh that at least the inventory south of the straits of Hormuse is rapidly running out. And if this conflict doesn't end very very quickly, you're going to start seeing a very different level of oil prices, which is to say oil prices that are a consequence of rationing by price, not in anticipation of r of rationing by price. uh cruds today loaded on tankers are often fetching $40 per barrel premiums to the quoted price that you're seeing on the market. So uh a $100 barrel of Brent as an example in the markets is priced at $140 if that oil is on the way to say Pakistan or Sri Lanka or more recently Australia. So what your audience needs to know, those audience who have lived, that part of the audience has lived further from the way oil markets really work, is that the oil price escalations and the damage done to the economy that we've seen up to now are anticipatory. which >> say that the runups run up in prices has been either strategic or speculative hoarding uh in anticipation of the oil pricing level that would uh accommodate a a real immediate shortage. Uh I'm afraid that we will see those prices in the 7 to 10 day time frame. Uh if these hostilities don't end fairly definitively, this will have a lot of impact. Um while oil prices per se are not taxes, they act the same way as a tax would on the economy. They divert capital out of all other aspects of the economy. to energy prices. Some of that acrew to governments. Some of it acrew to private parties like oil oil companies. But the fact is that uh the impact uh of increased energy prices uh impacts negatively almost every part of the economy. I I think it's important too to understand uh that the anticip anticipation of the effect on the economy uh damages confidence uh confidence which is already low. Uh I don't want to seem like a downer. Uh I have hoped for some time that ser heads would prevail and the conflict in the Gulf would deescalate. It would appear today that with the apparent attack by the Iranians on oil production and transportation facilities on the western side of the Gulf and apparently on a vessel in the Gulf uh and the widely anticipated uh consequence of that which might be a coordinated USIsraeli strike or renewed strike on the Iranian side that deescalation is not on the Accar cards and it's important to understand the immediate consequence of that in the oil price and the likely longer term consequence of that in the economy which is to say today Julia all the news that I see is bad uh that's begun to be reflected in the interest rate on the US long-term treasuries it rose through 5%. Despite the best efforts of the administration and the Fed to lower interest rates, the markets are having none of it. They're raising interest rates and all of that is having the perverse impact of a fairly strong US dollar. Uh the increased uh interest rate in the US in particular makes US Treasury securities more attractive compared to other countries. And I wouldn't be surprised to see uh that uh moderate the gold price. The gold price is of course denominated in US dollars and a strong gold price is often near-term detrimental. Uh the strong US dollar is detrimental to the gold price. I hasten to point out that in every case in my lifetime, with only two exceptions in 73 years, the government response to turmoil like this, the government response to the likely outcome uh of illiquidity in the markets has always been to artificially lower interest rates and to engage in money printing. Both of those activities would be bad for the US dollar and good for gold. But immediately right now, the increase in US interest rates and the so-called flight to quality around the world is driving the US dollar higher and likely driving gold either sideways to down. >> Interesting. Can can you elaborate a bit more on the gold dynamic because I often think like of gold as like a safe haven and when you might be like when you have these kinds of fears that maybe that's a place to be. But wait, just explain the dynamic with gold. That's actually a really interesting point. >> That's an interesting question. I believed growing up because I'd been taught that gold responded to fear. But it turns out that gold over time responds only to a very specific type of fear. Uh which is to say fear in the deterioration of the purchasing power of the currency that you operate on. Uh it turns out that war and other types of fear allow people in the short term the psychological excuse to do what they wanted to do anyway which is to say buy gold. But the primary motivation for gold at least in my in my lifetime has been due to the fear of the deterioration of the purchasing power of fiat currency denominated instruments. I have found in my life that news related things like wars like co uh have been very very very short term with regards to gold and the gold mostly reacted uh in my context in relation to people's fear about the US dollar and the maintenance of purchasing power in US treasuries and I suspect this time will be the same remember too that gold is denominated in US dollar terms >> and and the US dollar goes up uh that necessarily impacts the price of uh items denominated in US dollars. And so one could anticipate despite the fact that people are nervous that in the very near term the gold price goes sideways to down as a consequence of strength in the US dollars and the increased relative attractiveness of US currencies yielding above five relative to gold. >> Hey everyone, I hope you are enjoying this interview. If you can take a quick moment and hit that subscribe button, we are on a mission to hit our next goal of 100,000 subscribers and your support could really help us get there. Thank you so much and enjoy the rest of the interview. The dynamic also with the long bonds and we've seen rates back up. What are the implications there? Like what are you watching for? >> Well, that's a that's another interesting circumstance. I Let's get the politics out of the way. I would prefer that the government stayed out of the way of interest rates. I would prefer that the government let the interests of savers uh and uh spenders meet at the market and set the interest rate by itself. Uh it seems that nobody in Congress has me in my speed on their speed dial so that my preferences aren't being very well represented. Uh but uh a higher interest rate uh does a few things. Uh of course uh it's wonderful for savers. Um I suspect that at 5% the US interest rate is still below rate of deterioration of the US dollar's purchasing power which by the way is not itself represented by the CPI. But higher interest rates do a couple things that are harmful uh to debt and equity markets. The higher yield available on new bonds makes older bonds with lower yields less valuable. So it's harder than the bond market. Uh it makes uh access to capital a a more expensive but also more difficult. particularly concerning to me uh is that the increased interest rates will be even harder on private credit markets which have experienced some distress. Uh borrowers that had a difficult time making payments at 4% interest are going to have a more difficult time making payments at 5% interest. Uh it raises the interest component on the national debt. Remember that the US government owns on balance sheet almost $40 trillion which it has to pay interest on. Uh and most concerning of all it probably raises the cost and limits the ability of borrowers uh in the below investment grade or junk bond market to maintain their current levels of indebtedness. We've talked before, Julia, you and I, about the fact that my my real greatest fear for the equities market would be uh a credit crunch where the retail investors who own the high yield ETFs, the junk bond ETFs, became concerned about credit enough that they began to sell their ETFs, forcing the ETF managers to sell their underlying holdings in junk bonds, which are highly illquid. uh if that happened, I'm not saying it's going to happen, by the way. I'm talking about a black swan style fear, but if you had concerns, general concerns around access to credit in private credit and the junk bond market, you could have a liquidity circumstance rivaling that of 2008 where the credit quality concerns were limited really to real estate securities at the beginning of that difficulty. I'm not saying it's going to happen. I'm not even saying that there's a probability it's going to happen. But the penalty for the possibility of it happening is very high should it occur. And I I don't want people to keep that first and foremost in their minds. But I do want them to have it in their minds. >> And so having that in your mind that there's a possibility this could happen like being prepared for that. How do you prepare? Well, I think one thing is that if you're a saver, as an example, you ask your bank to forward you a piece of paper called a statement of financial condition. In other words, you try to figure out if you are if you are a saver in a solvent bank. The second thing is that you probably begin to increase your personal liquidity uh which is to say that proportion of your portfolio which is in cash and or gold some form of cash equivalent. In terms of your investments, you begin to look at uh how leveraged your companies are relative to their balance sheets, which is to say if they are likely to need to rebalance sheet to uh refinance the balance sheet in the next 12 or 18 months. Uh perhaps you slim those positions. uh if you if the companies that you uh are invested in need access to capital and may not have access to capital it could have a very very del deleterious impact on those companies I think it's time to begin to exercise caution >> also just speaking of exercising caution and having more of that liquidity on hand or things that can be liquid um cash or gold as you mentioned before like gold likely to moderate I take it Rick you still very much like and own gold and you have for what 25 years now? >> I've own it on and off for 50 years, but I've been I've been denominating my own savings in gold since the year 2000. Uh so it's been my predominant savings asset. I've had liquidity in US dollars because I spend those not gold. Uh but I feel better about gold as a savings instrument than I do the US dollars. Given that I spend US dollars, my savings fluctuate in value. But you know, Julia, if you have like me saved in gold since the year 2000, if you uh observe pricing levels in gold rather than US dollars, you're actually struck by how cheap things are. Housing gold >> is cheap. Uh healthcare and health insurance measured in gold is cheap. Groceries and energy measured in gold are cheap. If you denominate those same assets in US dollars in the period 2000 to 2026, you're struck by how expensive everything is. If you denominate those in ounces or grams of gold, you're uh you're surprised at how cheap things are. The knock against gold has always been that uh doesn't pay interest and you it costs you to store it. But gold has escalated in US dollar terms in price by over 9% compounded since the year 2000. Uh so I think it's a very good savings asset. Understand that if we have a circumstance like 2008 that we have a liquidity squeeze that every asset on the planet will sell off. The sale won't be made by the investor. It'll be made by the margin clerk and he or she is pretty ruthless. they hit anything with a bid and gold has a bid but the circumstance surrounding that sell-off means that very high quality assets like gold come back much more quickly. Uh I remember in 2008 and before that in 1987 uh in two prior liquidity panics that gold got hammered uh because people sold what they could to raise cash when they needed to. But in both circumstances, the gold price came back very rapidly, much more rapidly than the prices of other asset classes. And it turned out that gold, even in periods of illiquidity, was at at the very least uh a good counterpart to more conventional savings assets. And I still believe that to be the case. And as I pointed out earlier, we last spoke January 19th. And of course, in the time in the time since that conversation, we did see some major moves, major moves upward in gold. Um, well above 5,000 at the time. Today we're at 4500 and some change. Um, but you think it's going to moderate like elaborate a bit more on your outlook for gold, if you will. >> Well, it's very interesting, Julia. you know, as you suggest, golden, uh, in particular, silver has sold off since the end of January, and people comment on that. And I'm, uh, of mixed minds. Um, uh, gold entered 2025 at what, 36, $300 an ounce. So, one needs to decide, is gold down to 4,800 or is it up to 4,800? I guess it depends on your perspective. In my case, I've been saving in gold since the year 2000. Uh, in my case, gold is up decidedly from $253 an ounce to 4,800. Uh, savings are not where one trades. >> I'm not suggesting that it isn't right for some portfolios for people to trade gold or silver. Uh, I invest in gold or rather I save in gold and I speculate in silver. So, those are very different activities for me. My personal suspicion, and I've told you this in our interviews before, is that I expect over the next nine or 10 years the US dollar to lose 75% of its purchasing power. Uh there's prologue for that. That's precisely what happened in the decade of the 70s. The US dollar lost 75% of its purchasing power. During that period, the gold price escalated 26fold. I'm not suggesting by the way that gold escalates 26fold from here. But I am suggesting that if the US dollar loses as I believe 75% of its purchasing power that uh gold will maintain its purchasing power or otherwise uh you know put another context double or triple or quadruple in US dollar pricing from here. uh I don't have any idea what it might do in 3 months or 6 months but as I say the arithmetic tells me that it's likely that the US dollar loses 75% of its purchasing power and history tells us that gold will maintain its purchasing power which means that its price in US dollar terms should do quite well for the next 10 years. The last time we had you on, Rick, um you told me that you sold 80% of your physical silver, which was around $75. Um and you rotated the proceeds into silver equities like silver miners. Um are you still in that trade or how has that one played out? >> I am. Uh and that trade's done fairly well. The basket of silver miners I picked with one exception uh has done very well uh which is to say my bucket of silver equities uh is up 20 something% 21 or 22%. While uh physical silver has traded sideways. Uh you'll you may recall that I put uh 50% of the money in silver equities. I put 25% into savings largely physical gold which hasn't done well. uh but I'm holding it I'm hoping for 10 years and I put 25% in oil stocks not anticipating the problem in the Straits of Hormude rather the fact that oil stocks were unloved uh they are not unloved anymore uh and the oil stocks that I bought at that point in time have done much better than I ever anticipated the pricing levels that we're seeing around crude are the pricing levels that I had expected to see in 2030 uh the conflict in the Gulf let's just say it accelerated the time frame a bit. >> Wait. Okay. Elaborate a bit more on that too because I do recall the last time we did talk about the oil price. Um, and how that was also kind of hinting that the global economy was a lot weaker than people expected. Fast forward, here we are today, um, oil above 100 as we're having this conversation. What does it tell you about just maybe the state of the global economy? not much about the state of the global economy. It tells me a lot about the fact that we're not going to have any oil in 10 days. Um >> the I think the state of the economy is weaker than people believe and I think it's going to become weaker still as a conflict as a consequence of the conflict and higher energy prices. My thesis around oil was simply that uh on a global basis the oil industry was underinvesting about a billion dollars a day in sustaining capital. And this would occur or pardon me this would result in late 2028 n uh 2029 and 2030 into reduced production uh and higher oil prices. Um I didn't anticipate a war uh which accelerated everything. By the way uh the deferred sustaining capital investments in every part of the world with the exception of the US and Canada are continuing. Uh and in addition to that now uh in addition to normal sustaining capital investments we need to make uh if peace does eventually uh result we're going to have to restore facilities destroyed by war in the United Arab Emirates in Kuwait in Saudi and of course in Iran. So that billion dollars a day uh in underinvestment in uh sustaining capital investment doesn't include the amount of money that we're going to have to spend to restore uh productive facilities which have been damaged by war or the uh damage to reservoir reservoir formations that are done that have been done as a consequence of shutting down that production because you can't export that production through the straits of Hormuse. When commentators in popular media talk about the fact that 20% of the world's crude supply moves through the Gulf, what they unfortunately don't note is that over 50% of the world's export supplies of crude flow through the Gulf. So if you're an American or Canadian and you get oil and gas from the United States and Canada, you are more insulated from the circumstance that if you are an investor other places. Uh two, the consequence of shutting down the straits of Hormuse is that uh Iran, Kuwait, Saudi Arabia and to some extent the UAE and certainly Qatar uh have been forced to shut in productive capacity. And when you shut in capacity to restart the capacity, you don't just turn a gate valve you need to manage that reservoir. So it will be a while even after uh the sustation of hostilities before we are able to restore Gulf production to its pre-conlict levels. >> As you noted earlier, um prices today, they're anticipatory of what's to come. How critical is the next 7 to 10 days and what are you kind of bracing for? >> Unfortunately, you can't overstate it. Uh we're beginning to see an example in continental Europe the cessation of flights uh not because of the price of jet fuel but rather because of the unavailability of jet fuel. you are starting to see some national economies I'm thinking uh Pakistan and Sri Lanka as an example where the government has mandated reduction in economic activities driving working factories stuff like that as a consequence of the lack of availability of crude oil um virtually the whole world uh with the exception of the United States and Canada and maybe the western hemisphere uh is reliant to some degree on uh Persian Gulf crude and Persian Gulf refined products. Uh we are also reliant most of the world reliant on Persian Gulf supplies of liqufied natural gas sometimes as uh uh you know competitor for oil but also uh helium, nitrogen, nitrogenous fertilizer, sulfur, sulfuric acid, refined aluminum. Um this will be a circumstance in the near term that's problematic. Uh two weeks ago I was sort of optimistic that cooler heads would prevail and that we would find a way find some sort of way out of this impass. Uh today would suggest I was unduly optimistic. >> Yeah. Um you also just explained too that oil prices are kind of like a hidden tax. At what point does it really break things? Is there like a threshold to watch? >> I don't know. I I really don't know. I um I was uh cognizant, which is to say I was, you know, I don't 2021 when the Arab embargo happened. Uh and I remember the impact of what was then higher prices on the economy, which was not good. uh we didn't have a circum a circumstance however where we didn't have oil. We had you know gas lines in the United States stuff stuff like that but we didn't have a circumstance where there was an economy like Taiwan or Japan or China or Korea uh or Indonesia or even Australia that were so totally reliant on Persian Gulf crude and literally could not get it. So, I don't know what the impact is going to be. I mean, we will limp through. Make no mistake. This isn't the end of humankind or anything like that. Um, but I think we're in for a real uh character test in the next month. Uh, if we don't have a way out of this problem. >> What What do you mean by that when you say real character test? Well, the circumstance around, let's be inflammatory and say $200 a barrel of oil is not pretty. Uh I I mean, you weren't alive then, but I remember the impact on Americans in 1973, 1974, 1975 when the oil price was shooting up and when people had to stay in line for two hours for gasoline. Um I haven't experienced a period in time where the world was reliant on oil uh and didn't have any uh I don't know what the impact is if as an example you had to shut down to some degree uh transpacific airlines uh if people couldn't get from for a while Japan to the United States as a consequence of a lack of jet fuel. uh and I don't know what the impact both the direct impact on the economy or the impact on uh confidence investor and consumer confidence would be. I just don't have any idea we will get through um I just I have no idea what the near-term impact will be. I hope that we get through it fairly well. One consequence that uh small by comparison but we should talk about because we've talked about speculation on your show before. >> Yeah. The easiest beneficiary of all this to figure out is uranium and nuclear power. Uh, that one's an absolute no-brainer. Uh, the construction of the nuclear fleet in France, the fourth fourth largest in the world, and the nuclear fleet in Japan, the third largest in the world, were themselves a direct consequence of the Arab oil embargo. and the sense to both uh the French and the Japanese body politic that those countries needed energy security. The only fuel dense enough that you can store enough of it to fuel a country the size of France or Japan uh is uranium. And what this will do is refresh everyone's mind uh about the attractive of attractiveness of nuclear power both in terms of cheap base load uh also in terms of um no carbon generation but in particular uh energy security. I suspect the near-term impact of this will be uh a much more immediate restart of the Japanese nuclear fleet uh which shut down as a consequence of Fukushima and and an acceleration uh an accelerated acceptance of nuclear power around the world but particularly in the eastern rim of the Pacific basin. Uh the easiest beneficiary of this to see over the 10-year time frame is certainly uranium and nuclear power. >> Yeah, you are someone who's been calling for like a renaissance in nuclear and specifically talking about the importance of uranium. You're just mentioning some potential developments there like how that one might play out. What do you think remains the biggest misunderstanding around the space? >> Well, the the misunderstandings I need to say are being resolved. Uh as recently as six years ago, Post Fukushima polls in Japan suggested that 75% of the population was opposed to nuclear power. Now over 70% are in favor of nuclear power. we've got on the United States over the last five years from being solidly anti-uclear to the point where the Trump administration is thinking about subsidizing us. Now, I need to say, Julia, I felt cleaner when I was vilified than I do now being subsidized. I need to say that. But it does say an awful lot uh about nuclear power. What could derail it? That's easy. A plant failure. >> You know, another three Mile Island, another Fukushima, another Chernobyl. >> Uh that would throw the thesis out the window right away. But nuclear nuclear energy uh has become much better engineered uh and nuclear plant practices are much better than they were in the past and the cost of nuclear plant construction is coming down uh as we get more experience with it. the Chinese who have been building nuclear power plants like crazy uh can turn out a plant in China where the construction cost is say $5 billion where that same plant in the United States assuming you could ever permit it is closer to eight or n billion. If the United States begins to, as the president has suggested, uh, build plants in 10 or 12 plant batches, you will see the cost of building a nuclear power plant in the United States fall by as much as half, which will in turn make it much more attractive. to the extent that the that this administration or a subsequent administration uh is able to standardize and reduce the permitting timelines uh you'll see a real renaissance in nuclear energy even in the United States a country that is hi there too believe that it was too rich to need to afford it. >> So this is one of those like unsung beneficiaries then of what's happening um with the war. Quick question though from an investor perspective. Um how do you express this like do you call it a trade or speculation or investment? I know you have different lingo but um how do you express like this thesis is that junior miners like how I guess it's different for everybody but how do you do it? >> I mean for the I am both an investor and a speculator and the speculative will be in the junior miners. you expose yourself to real risk and you have to do a lot of work because it isn't just the uranium market that matters. It's the ability of the company to deliver value which is a very different circumstance for most people. They shouldn't be in the juniors because they aren't willing to do the work, take the time necessary to understand the risks for those people. You have two choices. Uh you can buy the SPAT physical uranium trust. By the way, don't try to buy uranium and store it in the basement. That's not >> you'll get flagged on a list, I'm sure. >> Yeah. >> So, by the Sprat Physical Uranium Trust, uh, symbol in the US, SR UF, I think, symbol in Canada, SP U, uh, or, uh, by the biggest and most viable of the uranium miners, which is Kamico, CCJ, if my memory serves me well, uh, on the New York Stock Exchange. Uh, don't be prepared for immediate gratification. uh the circumstance I'm talking about which is uh the renewed political favor of uranium translating into higher uranium prices is a two or three or four yearlong project. Uh if you are one of those who has trauma holding an investment over a long weekend, this isn't for you. >> Rick, um is it fair to say that you think the economic outlook still looks bleak >> in the near term? I do. Uh make no mistake uh 15 years from now the world will be demonstrabably better than it is today. We just have to get from here to there. Getting from here to there uh is going to require a reckoning. Uh we have too much debt at the individual level. We have too much debt at the corporate level but we have way way way too much debt at the government level and we need to wake our way work our way through this. Uh at the same time, we have intergenerational debt. My generation uh voted ourselves all kinds of cool benefits, but we forgot to pay for them and we're leaving the bill with you. Uh and this bill has to be etized over the next 10 years. Uh when you consider the impact of yourself over the next 10 years, understand that the world 15 years from now as a consequence of technology will be way better than it is today. But we have to get from here to there. and you have to plan accordingly. >> So maybe ble in the near term, longer term. Um maybe we'll get through it. I guess Rick, um let me ask you this. What do you make of how the stock market has behaved during this war where we've seen like new highs? I feel like we keep seeing headlines around new highs. Forget about today and the sell of today, but what do you make of it? Is that normal? Well, I'm, you know, I'm not an aspect, I'm not an expert on most aspects of the stock market, which is to say I don't know enough about technology to tell you whether Nvidia is overvalued or undervalued. I don't know. Uh, I don't watch TV, so I don't know what media stocks are really worth. Um, I I'm disconnected to most parts of the economy. I understand very well uh natural resource businesses and conventional financial services businesses. Uh and but I would suggest that the market itself is discounting better economic conditions than I do. Uh the only thing I can think of well I guess I can think of two explanations. The period 1982 to 2022 was probably the most benign economic time in human history. Uh the best time in human history to be in the stock market. Real interest rates were falling, US dollar hegemony, uh the good aspects of globalization, which is to say more trade, the inclusion of literally billions of people into the labor force, including women. Uh all that was good. Uh I suspect that we uh ran out of that epoch in 2022 with higher real interest rates and I think that we'll continue to have higher real interest rates over time because I think we're going to have uh higher levels uh of inflation. Uh if I'm right uh then equity markets are pricing in too rosy a scenario probably as a consequence of 40 years of benign economic times. The more cynical side of me says that Wall Street looks at the fiscal dilemma in front of the United States, unsustainable debts and war, and they suspect that the likely outcome will be that the Fed will have to cut interest rates. Traditionally, interest rate cuts have been good for the equities markets. Um, the truth is that I don't know which or either uh is true. My own uh economic outlook is less rosy. I can't talk about equity market valuations because I don't understand what most of these companies are are worth. I would argue, however, Julia, that most of the people who are pricing the stocks don't know what they're worth either. They just think they do. Uh and uh the cynic in me, which admittedly is a large part of me, says that many institutional investors are buying the stocks because they think in the near term, which is how they earn their bonuses, that interest rates are headed down. Well, we're going to likely have a new Fed chair here with Kevin Walsh. Anything that you are anticipating or expecting from a Worshled Fed? Have you I don't know how much you've looked into him, but >> I like what he says. Uh, on the other hand, I liked what Alan Greenspan said before he became Fed chair, too. Uh, it seems that Washington has a very perverse effect uh on people exercising their better judgment. Uh it would be difficult for me to believe that uh political forces allow him to be as hawkish uh as his statements have suggested that he would be. Remember the the last the last Fed or the last hawk we had in uh control of the economy goes way way way back to the Reagan era. Vulkar and I don't suspect that there is the political will to accommodate a Paul Vulkar. Um you Julia probably weren't old enough to remember that circumstance but uh if I recall the prime interest rate went from 5 a half to 18%. >> I wasn't born >> Yeah. I I reckon that would be the case. Um uh and that was very dramatic. Uh I don't think that we have the political will to accommodate that and I'm not sure frankly uh given the level of debt on the balance sheet and in particular the level of unfunded entitlement promises Medicare, Medicaid, and Social Security. I don't know how well the economy would handle a shock like that. Uh and as a consequence, I'm not sure that we're gonna have one. Um Rick, I feel like we've covered a lot in the commodities universe today. Um would you say are we still early innings in a commodity super cycle or where are we in that? >> We are. I mean the last time you and I talked I talked about three different markets. I talked about precious metals. Uh I talked about uh industrial materials and I talked about energy. Uh the energy market got sped up as a consequence of war. Uh um so if the war ends fairly quickly, I think you'll see a moderation in the oil price that happens fairly quickly. I do believe that shortage will return to the oil markets in 2000 or 2029, not because of war, but rather because of a deferral of sustaining capital investments. I think as the economy grows and as our ability to produce declines that we will increasingly ration by price in energy uh in terms of industrial materials which is to say copper iron things like that I think market forces will also take them higher but it wouldn't surprise me to see a softer economy take them lower first you can have uh production shortfalls which we will have if you have declines in demand that are economically related and not have an increase in price. If we don't have a global economic slowdown, if we don't have a recession, if we don't have a depression, you will see higher base metals prices, and you'll see them within two years. Uh if we do have an economic slowdown, you'll see those incre price increases happen later. But make no mistake, Julia, as you and I have described before, uh we have underinvested in productive capacity around natural resources for decades, and we can't solve that problem in the two or threeyear time frame. We will in the next 10 years ration commodities by price. With regards to the third third bull market which is precious metals, I believe the driver there is debt and deficits. I believe that the only way that western governments have out of their impass with regards to unsustainably high government spending uh is artificially low interest rates uh and inflation. Uh and those things while they're bad for everybody with the exception of you know a few people like me that have access to uh finance and an understanding of how to use it but for every for everybody else that's a very very very bad circumstance but it's very good for the gold price. >> Mhm. >> Um so I'm a precious metals bull. Uh I'm an industrial materials bull in the long term but perhaps not in the short term. Uh I was a very very lucky energy bull. Uh lucky is a perverse way to describe the outcome of a war. But the circumstance that I thought would happen over three years happened over 3 months. As I guess what I should say is I'm a lousy geopolitical analyst. >> Well, you were prepared or at least directionally you got it right. Um Rick, before I let you go, a couple things here I would love for you to do with this audience. Um give us an update on Battlebank. Uh, you have a symposium coming up in July. I don't know if you've sold out yet, but if there are any tickets available, maybe let folks know about it cuz I think this audience would be very interested. And then let's leave the audience with some parting thoughts. Um, anything that's top of mind for you that maybe we didn't cover. And of course, let folks know where they can find your find you and support your work. >> So, let's do them in reverse order. >> Okay. Um, if you're interested in positioning your portfolio or have positioned in your portfolio in the context of things that we've been talking about today, natural resource investments as an example, I can help you and I'll do it for free. Uh, pretty good price. Uh, if you go to my website, ruleinvestmentmedia.com, and you list your natural resource stocks, your portfolio, I'll rank them for free, one to 10, one being best, 10 being worst. I'll comment on individual issues if I think my comments might have value. That's ruleinvestmentmedia.com. Please, by the way, no crypto stocks. Please, no pot stocks, you know, please, no technology stocks. Leave an old guy to do what he does. Well, secondly, as you point out, uh July 6th through 10, the Natural Resources Investment Symposium takes place in Boca Raton, Florida. Uh this could be the 30th year, something like that. Long time. Uh we are sold out in terms of tickets uh live tickets at the conference. We made enough money for people last year that virtually everybody came back and some new ones have come too. But we have an unlimited number of live stream or you know internet hosted. So you can watch the conference from the comfort and convenience of your own home. Uh importantly we're going to give you more information over four days than you can absorb in four days. So we record the entire proceeding uh in in you know including uh all of the off session things uh and you have access to those for a year. In addition to that uh we uh interview every exhibitor and every presenter before the conference. If you go to the rule investment media YouTube site, uh you will be able to watch by the time of the conference 90 interviews that I've done with exhibitors and speakers even before the conference. So you arrive at the conference ready to allocate your time efficiently. At our conference, unlike any other conference I know of, whether you attend live or live stream, it comes with a 100% money back guarantee. If you think for any reason that the educational uh opportunities that we offer you don't exceed in value the price that we charge you, simply email me and I'll give you your money back. I'm extremely proud to say of over 30 years of selling investment education products, I've had to refund about onetenth of 1% of the tuition I've charged. But there is of course uh that guarantee. And finally, thank you for the mention of Battlebank. Uh, many of your long-term listeners know that we struggled within the confines of the Fed to open a bank for some years. Uh, and ultimately did what we should have done to begin with, which is to say we bought a little bank and added a whole bunch of capital to it. We are now adding uh deposits, be they cash or bullion, at the rate of about a million dollars a day. So the bank is growing very nicely. Uh we have a backlog of people wanting to do business with us that exceeds 23,000 people. We're uh opening the bank to the back to the list fairly slowly. You get one chance to make a good first impression. So we're contacting about 250 uh people 250 300 people a day. Uh they're responding extremely well. uh as is evidenced by the fact that we're adding about a million dollars a day in deposits. Uh so the bank is going very well. We're growing it at a measured pace. When I say measured, uh we want to make sure that the service that we offer is service that we'll be proud of a year from now. So as we bank as we break in the bank, we're growing it only very very slowly. uh we aren't constrain in constrained by financial capacity, but we are constrained by human resources and we want our depositors and our borrowers to have the best possible experience with us. >> Rick, that is fantastic. I love hearing all of these wonderful updates. Um especially selling out the conference. So amazing. Rick Rule, CEO of Rule Investment Media, co-founder of Battlebank, friend of this show. I want to thank you for being so generous with your time, all of your knowledge and wisdom and helping us all learn and get better. really appreciate you, Rick. >> Well, thank you for the opportunity to uh have these discussions with you and uh the ability to uh address your audience. Uh thanks for years of good conversation. >> Well, we love having you on and you're always always welcome. Thanks again.
Rick Rule: The Oil Crisis Is Just Getting Started
Summary
Transcript
I think the state of the economy is weaker than people believe and I think it's going to become weaker still as a conflict as a consequence of the conflict and higher energy prices if peace does eventually uh result. We're going to have to restore facilities destroyed by war in the United Arab Emirates in Kuwait in Saudi and of course in Iran. Two weeks ago I was sort of optimistic that cooler heads would prevail. Uh today would suggest I was unduly optimistic. Rick Rule, CEO and president of Rule Investment Media and also co-founder of Battlebank. It's so great to welcome you back to the show. Great to see you again, Rick. >> Delighted to be back. Thank you for having me. >> Well, we had you on back in January. Um, we taped that episode uh January 19th and gosh, Rick, what a year it's been already. A lot's happened. In the last time we spoke, we had not had a war in the Middle East and now we do. So given the backdrop, can we get your latest big picture macro view where we are today? Where you see things headed? What's been on your radar of late? And as you know, Rick, you can take all the time you need to set the table. >> That's a big topic, but let's start with the war. Um, today, which for the record is the 4th of May, seems to be marked by an escalation in the conflict, which is unfortunate for a bunch of reasons. But let's uh stick to economic reasons and in fact let's stick with resources. The increase that we've seen in the oil price since the beginning of the Gulf conflict has really been anticipatory which is to say that the world uh hitherto has been uh existing on floating cargos of crude uh and on strategic stockpiles in various countries. those stockpiles and that inventory uh that at least the inventory south of the straits of Hormuse is rapidly running out. And if this conflict doesn't end very very quickly, you're going to start seeing a very different level of oil prices, which is to say oil prices that are a consequence of rationing by price, not in anticipation of r of rationing by price. uh cruds today loaded on tankers are often fetching $40 per barrel premiums to the quoted price that you're seeing on the market. So uh a $100 barrel of Brent as an example in the markets is priced at $140 if that oil is on the way to say Pakistan or Sri Lanka or more recently Australia. So what your audience needs to know, those audience who have lived, that part of the audience has lived further from the way oil markets really work, is that the oil price escalations and the damage done to the economy that we've seen up to now are anticipatory. which >> say that the runups run up in prices has been either strategic or speculative hoarding uh in anticipation of the oil pricing level that would uh accommodate a a real immediate shortage. Uh I'm afraid that we will see those prices in the 7 to 10 day time frame. Uh if these hostilities don't end fairly definitively, this will have a lot of impact. Um while oil prices per se are not taxes, they act the same way as a tax would on the economy. They divert capital out of all other aspects of the economy. to energy prices. Some of that acrew to governments. Some of it acrew to private parties like oil oil companies. But the fact is that uh the impact uh of increased energy prices uh impacts negatively almost every part of the economy. I I think it's important too to understand uh that the anticip anticipation of the effect on the economy uh damages confidence uh confidence which is already low. Uh I don't want to seem like a downer. Uh I have hoped for some time that ser heads would prevail and the conflict in the Gulf would deescalate. It would appear today that with the apparent attack by the Iranians on oil production and transportation facilities on the western side of the Gulf and apparently on a vessel in the Gulf uh and the widely anticipated uh consequence of that which might be a coordinated USIsraeli strike or renewed strike on the Iranian side that deescalation is not on the Accar cards and it's important to understand the immediate consequence of that in the oil price and the likely longer term consequence of that in the economy which is to say today Julia all the news that I see is bad uh that's begun to be reflected in the interest rate on the US long-term treasuries it rose through 5%. Despite the best efforts of the administration and the Fed to lower interest rates, the markets are having none of it. They're raising interest rates and all of that is having the perverse impact of a fairly strong US dollar. Uh the increased uh interest rate in the US in particular makes US Treasury securities more attractive compared to other countries. And I wouldn't be surprised to see uh that uh moderate the gold price. The gold price is of course denominated in US dollars and a strong gold price is often near-term detrimental. Uh the strong US dollar is detrimental to the gold price. I hasten to point out that in every case in my lifetime, with only two exceptions in 73 years, the government response to turmoil like this, the government response to the likely outcome uh of illiquidity in the markets has always been to artificially lower interest rates and to engage in money printing. Both of those activities would be bad for the US dollar and good for gold. But immediately right now, the increase in US interest rates and the so-called flight to quality around the world is driving the US dollar higher and likely driving gold either sideways to down. >> Interesting. Can can you elaborate a bit more on the gold dynamic because I often think like of gold as like a safe haven and when you might be like when you have these kinds of fears that maybe that's a place to be. But wait, just explain the dynamic with gold. That's actually a really interesting point. >> That's an interesting question. I believed growing up because I'd been taught that gold responded to fear. But it turns out that gold over time responds only to a very specific type of fear. Uh which is to say fear in the deterioration of the purchasing power of the currency that you operate on. Uh it turns out that war and other types of fear allow people in the short term the psychological excuse to do what they wanted to do anyway which is to say buy gold. But the primary motivation for gold at least in my in my lifetime has been due to the fear of the deterioration of the purchasing power of fiat currency denominated instruments. I have found in my life that news related things like wars like co uh have been very very very short term with regards to gold and the gold mostly reacted uh in my context in relation to people's fear about the US dollar and the maintenance of purchasing power in US treasuries and I suspect this time will be the same remember too that gold is denominated in US dollar terms >> and and the US dollar goes up uh that necessarily impacts the price of uh items denominated in US dollars. And so one could anticipate despite the fact that people are nervous that in the very near term the gold price goes sideways to down as a consequence of strength in the US dollars and the increased relative attractiveness of US currencies yielding above five relative to gold. >> Hey everyone, I hope you are enjoying this interview. If you can take a quick moment and hit that subscribe button, we are on a mission to hit our next goal of 100,000 subscribers and your support could really help us get there. Thank you so much and enjoy the rest of the interview. The dynamic also with the long bonds and we've seen rates back up. What are the implications there? Like what are you watching for? >> Well, that's a that's another interesting circumstance. I Let's get the politics out of the way. I would prefer that the government stayed out of the way of interest rates. I would prefer that the government let the interests of savers uh and uh spenders meet at the market and set the interest rate by itself. Uh it seems that nobody in Congress has me in my speed on their speed dial so that my preferences aren't being very well represented. Uh but uh a higher interest rate uh does a few things. Uh of course uh it's wonderful for savers. Um I suspect that at 5% the US interest rate is still below rate of deterioration of the US dollar's purchasing power which by the way is not itself represented by the CPI. But higher interest rates do a couple things that are harmful uh to debt and equity markets. The higher yield available on new bonds makes older bonds with lower yields less valuable. So it's harder than the bond market. Uh it makes uh access to capital a a more expensive but also more difficult. particularly concerning to me uh is that the increased interest rates will be even harder on private credit markets which have experienced some distress. Uh borrowers that had a difficult time making payments at 4% interest are going to have a more difficult time making payments at 5% interest. Uh it raises the interest component on the national debt. Remember that the US government owns on balance sheet almost $40 trillion which it has to pay interest on. Uh and most concerning of all it probably raises the cost and limits the ability of borrowers uh in the below investment grade or junk bond market to maintain their current levels of indebtedness. We've talked before, Julia, you and I, about the fact that my my real greatest fear for the equities market would be uh a credit crunch where the retail investors who own the high yield ETFs, the junk bond ETFs, became concerned about credit enough that they began to sell their ETFs, forcing the ETF managers to sell their underlying holdings in junk bonds, which are highly illquid. uh if that happened, I'm not saying it's going to happen, by the way. I'm talking about a black swan style fear, but if you had concerns, general concerns around access to credit in private credit and the junk bond market, you could have a liquidity circumstance rivaling that of 2008 where the credit quality concerns were limited really to real estate securities at the beginning of that difficulty. I'm not saying it's going to happen. I'm not even saying that there's a probability it's going to happen. But the penalty for the possibility of it happening is very high should it occur. And I I don't want people to keep that first and foremost in their minds. But I do want them to have it in their minds. >> And so having that in your mind that there's a possibility this could happen like being prepared for that. How do you prepare? Well, I think one thing is that if you're a saver, as an example, you ask your bank to forward you a piece of paper called a statement of financial condition. In other words, you try to figure out if you are if you are a saver in a solvent bank. The second thing is that you probably begin to increase your personal liquidity uh which is to say that proportion of your portfolio which is in cash and or gold some form of cash equivalent. In terms of your investments, you begin to look at uh how leveraged your companies are relative to their balance sheets, which is to say if they are likely to need to rebalance sheet to uh refinance the balance sheet in the next 12 or 18 months. Uh perhaps you slim those positions. uh if you if the companies that you uh are invested in need access to capital and may not have access to capital it could have a very very del deleterious impact on those companies I think it's time to begin to exercise caution >> also just speaking of exercising caution and having more of that liquidity on hand or things that can be liquid um cash or gold as you mentioned before like gold likely to moderate I take it Rick you still very much like and own gold and you have for what 25 years now? >> I've own it on and off for 50 years, but I've been I've been denominating my own savings in gold since the year 2000. Uh so it's been my predominant savings asset. I've had liquidity in US dollars because I spend those not gold. Uh but I feel better about gold as a savings instrument than I do the US dollars. Given that I spend US dollars, my savings fluctuate in value. But you know, Julia, if you have like me saved in gold since the year 2000, if you uh observe pricing levels in gold rather than US dollars, you're actually struck by how cheap things are. Housing gold >> is cheap. Uh healthcare and health insurance measured in gold is cheap. Groceries and energy measured in gold are cheap. If you denominate those same assets in US dollars in the period 2000 to 2026, you're struck by how expensive everything is. If you denominate those in ounces or grams of gold, you're uh you're surprised at how cheap things are. The knock against gold has always been that uh doesn't pay interest and you it costs you to store it. But gold has escalated in US dollar terms in price by over 9% compounded since the year 2000. Uh so I think it's a very good savings asset. Understand that if we have a circumstance like 2008 that we have a liquidity squeeze that every asset on the planet will sell off. The sale won't be made by the investor. It'll be made by the margin clerk and he or she is pretty ruthless. they hit anything with a bid and gold has a bid but the circumstance surrounding that sell-off means that very high quality assets like gold come back much more quickly. Uh I remember in 2008 and before that in 1987 uh in two prior liquidity panics that gold got hammered uh because people sold what they could to raise cash when they needed to. But in both circumstances, the gold price came back very rapidly, much more rapidly than the prices of other asset classes. And it turned out that gold, even in periods of illiquidity, was at at the very least uh a good counterpart to more conventional savings assets. And I still believe that to be the case. And as I pointed out earlier, we last spoke January 19th. And of course, in the time in the time since that conversation, we did see some major moves, major moves upward in gold. Um, well above 5,000 at the time. Today we're at 4500 and some change. Um, but you think it's going to moderate like elaborate a bit more on your outlook for gold, if you will. >> Well, it's very interesting, Julia. you know, as you suggest, golden, uh, in particular, silver has sold off since the end of January, and people comment on that. And I'm, uh, of mixed minds. Um, uh, gold entered 2025 at what, 36, $300 an ounce. So, one needs to decide, is gold down to 4,800 or is it up to 4,800? I guess it depends on your perspective. In my case, I've been saving in gold since the year 2000. Uh, in my case, gold is up decidedly from $253 an ounce to 4,800. Uh, savings are not where one trades. >> I'm not suggesting that it isn't right for some portfolios for people to trade gold or silver. Uh, I invest in gold or rather I save in gold and I speculate in silver. So, those are very different activities for me. My personal suspicion, and I've told you this in our interviews before, is that I expect over the next nine or 10 years the US dollar to lose 75% of its purchasing power. Uh there's prologue for that. That's precisely what happened in the decade of the 70s. The US dollar lost 75% of its purchasing power. During that period, the gold price escalated 26fold. I'm not suggesting by the way that gold escalates 26fold from here. But I am suggesting that if the US dollar loses as I believe 75% of its purchasing power that uh gold will maintain its purchasing power or otherwise uh you know put another context double or triple or quadruple in US dollar pricing from here. uh I don't have any idea what it might do in 3 months or 6 months but as I say the arithmetic tells me that it's likely that the US dollar loses 75% of its purchasing power and history tells us that gold will maintain its purchasing power which means that its price in US dollar terms should do quite well for the next 10 years. The last time we had you on, Rick, um you told me that you sold 80% of your physical silver, which was around $75. Um and you rotated the proceeds into silver equities like silver miners. Um are you still in that trade or how has that one played out? >> I am. Uh and that trade's done fairly well. The basket of silver miners I picked with one exception uh has done very well uh which is to say my bucket of silver equities uh is up 20 something% 21 or 22%. While uh physical silver has traded sideways. Uh you'll you may recall that I put uh 50% of the money in silver equities. I put 25% into savings largely physical gold which hasn't done well. uh but I'm holding it I'm hoping for 10 years and I put 25% in oil stocks not anticipating the problem in the Straits of Hormude rather the fact that oil stocks were unloved uh they are not unloved anymore uh and the oil stocks that I bought at that point in time have done much better than I ever anticipated the pricing levels that we're seeing around crude are the pricing levels that I had expected to see in 2030 uh the conflict in the Gulf let's just say it accelerated the time frame a bit. >> Wait. Okay. Elaborate a bit more on that too because I do recall the last time we did talk about the oil price. Um, and how that was also kind of hinting that the global economy was a lot weaker than people expected. Fast forward, here we are today, um, oil above 100 as we're having this conversation. What does it tell you about just maybe the state of the global economy? not much about the state of the global economy. It tells me a lot about the fact that we're not going to have any oil in 10 days. Um >> the I think the state of the economy is weaker than people believe and I think it's going to become weaker still as a conflict as a consequence of the conflict and higher energy prices. My thesis around oil was simply that uh on a global basis the oil industry was underinvesting about a billion dollars a day in sustaining capital. And this would occur or pardon me this would result in late 2028 n uh 2029 and 2030 into reduced production uh and higher oil prices. Um I didn't anticipate a war uh which accelerated everything. By the way uh the deferred sustaining capital investments in every part of the world with the exception of the US and Canada are continuing. Uh and in addition to that now uh in addition to normal sustaining capital investments we need to make uh if peace does eventually uh result we're going to have to restore facilities destroyed by war in the United Arab Emirates in Kuwait in Saudi and of course in Iran. So that billion dollars a day uh in underinvestment in uh sustaining capital investment doesn't include the amount of money that we're going to have to spend to restore uh productive facilities which have been damaged by war or the uh damage to reservoir reservoir formations that are done that have been done as a consequence of shutting down that production because you can't export that production through the straits of Hormuse. When commentators in popular media talk about the fact that 20% of the world's crude supply moves through the Gulf, what they unfortunately don't note is that over 50% of the world's export supplies of crude flow through the Gulf. So if you're an American or Canadian and you get oil and gas from the United States and Canada, you are more insulated from the circumstance that if you are an investor other places. Uh two, the consequence of shutting down the straits of Hormuse is that uh Iran, Kuwait, Saudi Arabia and to some extent the UAE and certainly Qatar uh have been forced to shut in productive capacity. And when you shut in capacity to restart the capacity, you don't just turn a gate valve you need to manage that reservoir. So it will be a while even after uh the sustation of hostilities before we are able to restore Gulf production to its pre-conlict levels. >> As you noted earlier, um prices today, they're anticipatory of what's to come. How critical is the next 7 to 10 days and what are you kind of bracing for? >> Unfortunately, you can't overstate it. Uh we're beginning to see an example in continental Europe the cessation of flights uh not because of the price of jet fuel but rather because of the unavailability of jet fuel. you are starting to see some national economies I'm thinking uh Pakistan and Sri Lanka as an example where the government has mandated reduction in economic activities driving working factories stuff like that as a consequence of the lack of availability of crude oil um virtually the whole world uh with the exception of the United States and Canada and maybe the western hemisphere uh is reliant to some degree on uh Persian Gulf crude and Persian Gulf refined products. Uh we are also reliant most of the world reliant on Persian Gulf supplies of liqufied natural gas sometimes as uh uh you know competitor for oil but also uh helium, nitrogen, nitrogenous fertilizer, sulfur, sulfuric acid, refined aluminum. Um this will be a circumstance in the near term that's problematic. Uh two weeks ago I was sort of optimistic that cooler heads would prevail and that we would find a way find some sort of way out of this impass. Uh today would suggest I was unduly optimistic. >> Yeah. Um you also just explained too that oil prices are kind of like a hidden tax. At what point does it really break things? Is there like a threshold to watch? >> I don't know. I I really don't know. I um I was uh cognizant, which is to say I was, you know, I don't 2021 when the Arab embargo happened. Uh and I remember the impact of what was then higher prices on the economy, which was not good. uh we didn't have a circum a circumstance however where we didn't have oil. We had you know gas lines in the United States stuff stuff like that but we didn't have a circumstance where there was an economy like Taiwan or Japan or China or Korea uh or Indonesia or even Australia that were so totally reliant on Persian Gulf crude and literally could not get it. So, I don't know what the impact is going to be. I mean, we will limp through. Make no mistake. This isn't the end of humankind or anything like that. Um, but I think we're in for a real uh character test in the next month. Uh, if we don't have a way out of this problem. >> What What do you mean by that when you say real character test? Well, the circumstance around, let's be inflammatory and say $200 a barrel of oil is not pretty. Uh I I mean, you weren't alive then, but I remember the impact on Americans in 1973, 1974, 1975 when the oil price was shooting up and when people had to stay in line for two hours for gasoline. Um I haven't experienced a period in time where the world was reliant on oil uh and didn't have any uh I don't know what the impact is if as an example you had to shut down to some degree uh transpacific airlines uh if people couldn't get from for a while Japan to the United States as a consequence of a lack of jet fuel. uh and I don't know what the impact both the direct impact on the economy or the impact on uh confidence investor and consumer confidence would be. I just don't have any idea we will get through um I just I have no idea what the near-term impact will be. I hope that we get through it fairly well. One consequence that uh small by comparison but we should talk about because we've talked about speculation on your show before. >> Yeah. The easiest beneficiary of all this to figure out is uranium and nuclear power. Uh, that one's an absolute no-brainer. Uh, the construction of the nuclear fleet in France, the fourth fourth largest in the world, and the nuclear fleet in Japan, the third largest in the world, were themselves a direct consequence of the Arab oil embargo. and the sense to both uh the French and the Japanese body politic that those countries needed energy security. The only fuel dense enough that you can store enough of it to fuel a country the size of France or Japan uh is uranium. And what this will do is refresh everyone's mind uh about the attractive of attractiveness of nuclear power both in terms of cheap base load uh also in terms of um no carbon generation but in particular uh energy security. I suspect the near-term impact of this will be uh a much more immediate restart of the Japanese nuclear fleet uh which shut down as a consequence of Fukushima and and an acceleration uh an accelerated acceptance of nuclear power around the world but particularly in the eastern rim of the Pacific basin. Uh the easiest beneficiary of this to see over the 10-year time frame is certainly uranium and nuclear power. >> Yeah, you are someone who's been calling for like a renaissance in nuclear and specifically talking about the importance of uranium. You're just mentioning some potential developments there like how that one might play out. What do you think remains the biggest misunderstanding around the space? >> Well, the the misunderstandings I need to say are being resolved. Uh as recently as six years ago, Post Fukushima polls in Japan suggested that 75% of the population was opposed to nuclear power. Now over 70% are in favor of nuclear power. we've got on the United States over the last five years from being solidly anti-uclear to the point where the Trump administration is thinking about subsidizing us. Now, I need to say, Julia, I felt cleaner when I was vilified than I do now being subsidized. I need to say that. But it does say an awful lot uh about nuclear power. What could derail it? That's easy. A plant failure. >> You know, another three Mile Island, another Fukushima, another Chernobyl. >> Uh that would throw the thesis out the window right away. But nuclear nuclear energy uh has become much better engineered uh and nuclear plant practices are much better than they were in the past and the cost of nuclear plant construction is coming down uh as we get more experience with it. the Chinese who have been building nuclear power plants like crazy uh can turn out a plant in China where the construction cost is say $5 billion where that same plant in the United States assuming you could ever permit it is closer to eight or n billion. If the United States begins to, as the president has suggested, uh, build plants in 10 or 12 plant batches, you will see the cost of building a nuclear power plant in the United States fall by as much as half, which will in turn make it much more attractive. to the extent that the that this administration or a subsequent administration uh is able to standardize and reduce the permitting timelines uh you'll see a real renaissance in nuclear energy even in the United States a country that is hi there too believe that it was too rich to need to afford it. >> So this is one of those like unsung beneficiaries then of what's happening um with the war. Quick question though from an investor perspective. Um how do you express this like do you call it a trade or speculation or investment? I know you have different lingo but um how do you express like this thesis is that junior miners like how I guess it's different for everybody but how do you do it? >> I mean for the I am both an investor and a speculator and the speculative will be in the junior miners. you expose yourself to real risk and you have to do a lot of work because it isn't just the uranium market that matters. It's the ability of the company to deliver value which is a very different circumstance for most people. They shouldn't be in the juniors because they aren't willing to do the work, take the time necessary to understand the risks for those people. You have two choices. Uh you can buy the SPAT physical uranium trust. By the way, don't try to buy uranium and store it in the basement. That's not >> you'll get flagged on a list, I'm sure. >> Yeah. >> So, by the Sprat Physical Uranium Trust, uh, symbol in the US, SR UF, I think, symbol in Canada, SP U, uh, or, uh, by the biggest and most viable of the uranium miners, which is Kamico, CCJ, if my memory serves me well, uh, on the New York Stock Exchange. Uh, don't be prepared for immediate gratification. uh the circumstance I'm talking about which is uh the renewed political favor of uranium translating into higher uranium prices is a two or three or four yearlong project. Uh if you are one of those who has trauma holding an investment over a long weekend, this isn't for you. >> Rick, um is it fair to say that you think the economic outlook still looks bleak >> in the near term? I do. Uh make no mistake uh 15 years from now the world will be demonstrabably better than it is today. We just have to get from here to there. Getting from here to there uh is going to require a reckoning. Uh we have too much debt at the individual level. We have too much debt at the corporate level but we have way way way too much debt at the government level and we need to wake our way work our way through this. Uh at the same time, we have intergenerational debt. My generation uh voted ourselves all kinds of cool benefits, but we forgot to pay for them and we're leaving the bill with you. Uh and this bill has to be etized over the next 10 years. Uh when you consider the impact of yourself over the next 10 years, understand that the world 15 years from now as a consequence of technology will be way better than it is today. But we have to get from here to there. and you have to plan accordingly. >> So maybe ble in the near term, longer term. Um maybe we'll get through it. I guess Rick, um let me ask you this. What do you make of how the stock market has behaved during this war where we've seen like new highs? I feel like we keep seeing headlines around new highs. Forget about today and the sell of today, but what do you make of it? Is that normal? Well, I'm, you know, I'm not an aspect, I'm not an expert on most aspects of the stock market, which is to say I don't know enough about technology to tell you whether Nvidia is overvalued or undervalued. I don't know. Uh, I don't watch TV, so I don't know what media stocks are really worth. Um, I I'm disconnected to most parts of the economy. I understand very well uh natural resource businesses and conventional financial services businesses. Uh and but I would suggest that the market itself is discounting better economic conditions than I do. Uh the only thing I can think of well I guess I can think of two explanations. The period 1982 to 2022 was probably the most benign economic time in human history. Uh the best time in human history to be in the stock market. Real interest rates were falling, US dollar hegemony, uh the good aspects of globalization, which is to say more trade, the inclusion of literally billions of people into the labor force, including women. Uh all that was good. Uh I suspect that we uh ran out of that epoch in 2022 with higher real interest rates and I think that we'll continue to have higher real interest rates over time because I think we're going to have uh higher levels uh of inflation. Uh if I'm right uh then equity markets are pricing in too rosy a scenario probably as a consequence of 40 years of benign economic times. The more cynical side of me says that Wall Street looks at the fiscal dilemma in front of the United States, unsustainable debts and war, and they suspect that the likely outcome will be that the Fed will have to cut interest rates. Traditionally, interest rate cuts have been good for the equities markets. Um, the truth is that I don't know which or either uh is true. My own uh economic outlook is less rosy. I can't talk about equity market valuations because I don't understand what most of these companies are are worth. I would argue, however, Julia, that most of the people who are pricing the stocks don't know what they're worth either. They just think they do. Uh and uh the cynic in me, which admittedly is a large part of me, says that many institutional investors are buying the stocks because they think in the near term, which is how they earn their bonuses, that interest rates are headed down. Well, we're going to likely have a new Fed chair here with Kevin Walsh. Anything that you are anticipating or expecting from a Worshled Fed? Have you I don't know how much you've looked into him, but >> I like what he says. Uh, on the other hand, I liked what Alan Greenspan said before he became Fed chair, too. Uh, it seems that Washington has a very perverse effect uh on people exercising their better judgment. Uh it would be difficult for me to believe that uh political forces allow him to be as hawkish uh as his statements have suggested that he would be. Remember the the last the last Fed or the last hawk we had in uh control of the economy goes way way way back to the Reagan era. Vulkar and I don't suspect that there is the political will to accommodate a Paul Vulkar. Um you Julia probably weren't old enough to remember that circumstance but uh if I recall the prime interest rate went from 5 a half to 18%. >> I wasn't born >> Yeah. I I reckon that would be the case. Um uh and that was very dramatic. Uh I don't think that we have the political will to accommodate that and I'm not sure frankly uh given the level of debt on the balance sheet and in particular the level of unfunded entitlement promises Medicare, Medicaid, and Social Security. I don't know how well the economy would handle a shock like that. Uh and as a consequence, I'm not sure that we're gonna have one. Um Rick, I feel like we've covered a lot in the commodities universe today. Um would you say are we still early innings in a commodity super cycle or where are we in that? >> We are. I mean the last time you and I talked I talked about three different markets. I talked about precious metals. Uh I talked about uh industrial materials and I talked about energy. Uh the energy market got sped up as a consequence of war. Uh um so if the war ends fairly quickly, I think you'll see a moderation in the oil price that happens fairly quickly. I do believe that shortage will return to the oil markets in 2000 or 2029, not because of war, but rather because of a deferral of sustaining capital investments. I think as the economy grows and as our ability to produce declines that we will increasingly ration by price in energy uh in terms of industrial materials which is to say copper iron things like that I think market forces will also take them higher but it wouldn't surprise me to see a softer economy take them lower first you can have uh production shortfalls which we will have if you have declines in demand that are economically related and not have an increase in price. If we don't have a global economic slowdown, if we don't have a recession, if we don't have a depression, you will see higher base metals prices, and you'll see them within two years. Uh if we do have an economic slowdown, you'll see those incre price increases happen later. But make no mistake, Julia, as you and I have described before, uh we have underinvested in productive capacity around natural resources for decades, and we can't solve that problem in the two or threeyear time frame. We will in the next 10 years ration commodities by price. With regards to the third third bull market which is precious metals, I believe the driver there is debt and deficits. I believe that the only way that western governments have out of their impass with regards to unsustainably high government spending uh is artificially low interest rates uh and inflation. Uh and those things while they're bad for everybody with the exception of you know a few people like me that have access to uh finance and an understanding of how to use it but for every for everybody else that's a very very very bad circumstance but it's very good for the gold price. >> Mhm. >> Um so I'm a precious metals bull. Uh I'm an industrial materials bull in the long term but perhaps not in the short term. Uh I was a very very lucky energy bull. Uh lucky is a perverse way to describe the outcome of a war. But the circumstance that I thought would happen over three years happened over 3 months. As I guess what I should say is I'm a lousy geopolitical analyst. >> Well, you were prepared or at least directionally you got it right. Um Rick, before I let you go, a couple things here I would love for you to do with this audience. Um give us an update on Battlebank. Uh, you have a symposium coming up in July. I don't know if you've sold out yet, but if there are any tickets available, maybe let folks know about it cuz I think this audience would be very interested. And then let's leave the audience with some parting thoughts. Um, anything that's top of mind for you that maybe we didn't cover. And of course, let folks know where they can find your find you and support your work. >> So, let's do them in reverse order. >> Okay. Um, if you're interested in positioning your portfolio or have positioned in your portfolio in the context of things that we've been talking about today, natural resource investments as an example, I can help you and I'll do it for free. Uh, pretty good price. Uh, if you go to my website, ruleinvestmentmedia.com, and you list your natural resource stocks, your portfolio, I'll rank them for free, one to 10, one being best, 10 being worst. I'll comment on individual issues if I think my comments might have value. That's ruleinvestmentmedia.com. Please, by the way, no crypto stocks. Please, no pot stocks, you know, please, no technology stocks. Leave an old guy to do what he does. Well, secondly, as you point out, uh July 6th through 10, the Natural Resources Investment Symposium takes place in Boca Raton, Florida. Uh this could be the 30th year, something like that. Long time. Uh we are sold out in terms of tickets uh live tickets at the conference. We made enough money for people last year that virtually everybody came back and some new ones have come too. But we have an unlimited number of live stream or you know internet hosted. So you can watch the conference from the comfort and convenience of your own home. Uh importantly we're going to give you more information over four days than you can absorb in four days. So we record the entire proceeding uh in in you know including uh all of the off session things uh and you have access to those for a year. In addition to that uh we uh interview every exhibitor and every presenter before the conference. If you go to the rule investment media YouTube site, uh you will be able to watch by the time of the conference 90 interviews that I've done with exhibitors and speakers even before the conference. So you arrive at the conference ready to allocate your time efficiently. At our conference, unlike any other conference I know of, whether you attend live or live stream, it comes with a 100% money back guarantee. If you think for any reason that the educational uh opportunities that we offer you don't exceed in value the price that we charge you, simply email me and I'll give you your money back. I'm extremely proud to say of over 30 years of selling investment education products, I've had to refund about onetenth of 1% of the tuition I've charged. But there is of course uh that guarantee. And finally, thank you for the mention of Battlebank. Uh, many of your long-term listeners know that we struggled within the confines of the Fed to open a bank for some years. Uh, and ultimately did what we should have done to begin with, which is to say we bought a little bank and added a whole bunch of capital to it. We are now adding uh deposits, be they cash or bullion, at the rate of about a million dollars a day. So the bank is growing very nicely. Uh we have a backlog of people wanting to do business with us that exceeds 23,000 people. We're uh opening the bank to the back to the list fairly slowly. You get one chance to make a good first impression. So we're contacting about 250 uh people 250 300 people a day. Uh they're responding extremely well. uh as is evidenced by the fact that we're adding about a million dollars a day in deposits. Uh so the bank is going very well. We're growing it at a measured pace. When I say measured, uh we want to make sure that the service that we offer is service that we'll be proud of a year from now. So as we bank as we break in the bank, we're growing it only very very slowly. uh we aren't constrain in constrained by financial capacity, but we are constrained by human resources and we want our depositors and our borrowers to have the best possible experience with us. >> Rick, that is fantastic. I love hearing all of these wonderful updates. Um especially selling out the conference. So amazing. Rick Rule, CEO of Rule Investment Media, co-founder of Battlebank, friend of this show. I want to thank you for being so generous with your time, all of your knowledge and wisdom and helping us all learn and get better. really appreciate you, Rick. >> Well, thank you for the opportunity to uh have these discussions with you and uh the ability to uh address your audience. Uh thanks for years of good conversation. >> Well, we love having you on and you're always always welcome. Thanks again.