Rick Rule’s Silver Stocks (+ a Surprising Opinion)
Summary
Silver Market Dynamics: Rick Rule discusses the shift in sentiment towards silver, noting it has moved from being "hated" to "unhated," and emphasizes the importance of taking profits when speculative positions have significantly appreciated.
Investment Strategy: Rule highlights his disciplined approach to speculation, focusing on taking profits when the market capitalization of a company reaches the expected value before the underlying questions are answered.
Company Insights: He mentions maintaining positions in hybrid silver companies like Pan-American Silver and Wheaton Precious Metals, while being a seller of speculative silver exploration stocks.
Market Trends: Rule observes a potential leadership change from gold to silver in the market and predicts a hot month for speculation, using this as an opportunity to reduce speculative positions.
Nickel and Rare Earths: He expresses interest in nickel and rare earths, particularly in jurisdictions outside of China, due to expected cost increases in production and environmental concerns.
Platinum and Palladium: Rule sees potential in platinum and palladium due to their price inelasticity and the geopolitical risks associated with their primary production regions, Russia and South Africa.
Oil and Gas Sector: He anticipates elevating several oil and gas stocks in his rankings, citing the market's current negative sentiment towards the sector as a potential opportunity.
Banking and Education Initiatives: Rule announces the launch of Battle Bank, offering unique financial services, and promotes educational boot camps on gold investing through his Rule Classroom platform.
Transcript
Today on Resource Talks, Rick Rolls back after well really Rick after it's been too long. So, thank you so much for doing this. Thank you. And before we start, congratulations on the uh growth of your channel and on the very high quality programming that you've learned to produce. Well, thank you so much for saying that. I uh wish I could take all the credit, a lot of that credit goes to my wife, but even more so to to you and and kind of putting me on this path. So, uh thanks so much for doing this. really appreciate it. Uh just briefly for people watching and listening, if you want a summary of this conversation and all the other interviews that we do on Resource Talks, go to resource talks.com. There's a free newsletter. It goes out once a week with a bullet point summary of all the conversations from the week before. Um I know we don't have too much time, so that will be about it for pleasantries. Uh I'm going to get down to business now. you uh you you told me almost 2 years ago that silver was one of the most hated metals and and that's clearly no longer the case. It's not as hated. Uh you even said that if you were rating silver, which you you don't typically rate commodities as we talked back then, but you would rate it as a four at the time and and to be fair, I only gave you like 20 seconds to think about it, but is that still the case today now that that's silver is very much in favor? Where do you place it? No. uh silver is unhated and as you rightly point out the easiest money that's made in speculation is the move from hated to unhated which has already occurred in silver. Um I believe that silver has farther to go but I'm also a disciplined speculator. So in my speculative silver stocks portfolio uh I've sold between a third and a half of my position. I've maintained my positions in the hybrid silver companies, the Pan-Americans, the Wheat and Precious. Uh, and I've maintained my positions too in the highquality Latin American producers, the Buenovas, uh, you know, the penles, uh, that sort of thing. But what I laughingly call the silver animals, uh, that whole paniply of silver exploration stocks that, uh, have some silver in the ground, but don't have the means to produce it. I've been a fairly aggressive seller of those. Uh to be clear, I I think the complex goes higher. I don't think that the silver bull market has really started. Uh I think we've seen signs in the last four weeks that leadership is changing from gold to silver. But to be honest with you, I don't care what I think. Uh if I have a speculative position that's up 400% where I haven't seen real improvement in the underlying company with the exception of the commodity price, uh I've learned to take my money off the table. a circumstance where I can sell between a quarter and a third of my position and eliminate all of my downside in return for giving up a quarter or a third of my upside seems like a hell of a trade to me. So that's what I've done. Is that a hard and fast rule where you're like I'm up 400% you know 5x I'm going to take some off the table. How do you judge that? I don't have any hard and fast rules if it's too easy. Well well here's what I do Antonio. You'll remember in earlier conversations where I said the money and exploration and development was made answering unanswered questions. I try to figure out what the probability of a yes answer is, how much time a yes answer will take, and what a yes answer is worth. And if the market gives me the market capitalization that I had hoped for with a yes answer before the question has been called, I take money off the table. That's free money. And it doesn't matter to me if I think the stock is going up. I don't care what I think. Uh, I think October is going to be a blisteringly hot month in speculation, and I'm using it to reduce my speculative positions. Most people, particularly younger people than me, uh, would try to squeeze every farthing out of their position. Uh, I've learned to be different. Uh I I've learned to pay attention to the market in reverse order when the momentum is well I do what the market demands right now the asks are getting taken out so I'm supplying some asks two years ago the bids were getting taken out so I supplied some bids uh I accommodated the market when people wanted to exit I was a buyer but now people want to enter I'm a seller and yes I think it's going not merely higher but much higher But to reiterate, I don't care what I think. Uh this is an easy time to take money off the table that was easy to make two two and a half years ago. I think you once told me that you do what the market makes easy for you to do. If there's a lot of buyers, you're a seller. If there's a lot of sellers, you're a buyer, essentially. Exactly. Right. And the silver space has got a plethora of buyers. Uh, I was looking today at Paul Harris work for the mining journal about all the small silver financings that are taking place. When the companies are trading large amounts of their equity for cash, they're telling you that they think the cash is worth more than the equity. When they're using their money to buy in shares, they're telling you something different. Uh, and you're wise to learn. Now, I'm not trying to say that the money that they raise can't be put to good effect uh to uh lift the fortunes of all the shareholders. All I'm trying to say is that when a company with a hund00 million market cap does a $25 million financing, they're telling you that they view the money as being worth more than the stock. And you're wise to listen. Well, I I was told that the three main rules of junior mining are take the money, take the money, take the money. in a bull market, uh, in a bare market, the rules are take the stock, take the stock, take the stock if you have good people. You just, you just have to look at the market signals and do the opposite. Well, what if someone someone's listening and and they're like, Rick, I love you. You're not a silver analyst, though. You're a credit analyst. I still want to go with silver, but what are the names that I I hide out in from the perspective of where are we talking? silver producers, mid-tier producers, is it the juniors that are finally going to come in in in the flavor of the day, or where do you where do you hide out? Where do you find value? If you're willing to take some risk, probably the development stage juniors, high quality development stage juniors, um, Abra Visla, uh, if you have some courage, uh, right now, but I think I'm going to interview Ben Wallace. You may know that a short report was published yesterday. Y uh and I'm I'm I'm hoping to interview Benois Lal in the real classroom uh and allow Ben Wis to um give his side of the story. Uh I will admit too I'm predisposed to Benois. I was a large semifo shareholder. Uh and that had a very very happy ending for me. But I I think depending on the outcome of that interview, I I would likely be an IA shareholder. I love hate and I is roundly hated. If you are willing to tolerate political risk and you think that silver is going higher, I count on both those scores. Uh I think perhaps uh you look at Fresno uh albeit the current president of Mexico has personal enmity for the family that controls that company. Uh perhaps you look at Buenova, but you expose yourself to real political and social risk uh in Peru. Uh, I think Pan-American Silver or pardon me, Pan-American Minerals, uh, by the way is irrespective of its silver assets in pretty good condition. They sold some redundant assets, paid down some debt. They have worked on the assets that they acquired that required sustaining capital investments. So, I would own Pan-Amean separate and apart from its silver pedigree. Uh, I have a very large position in wheat and precious. Uh, and while I'm still selling other stuff, I'm still buying wheat and precious. Uh, you'll notice a 72 year old's skew away from the penny dreadfuls, uh, which is where I cut my teeth uh, more towards market beta than alpha. What are you buying when you when you buy wheat and precious metals? Is it is it randy? Is it is it the acid? Is it is it the head the well the tailwinds in this case? What are you buying? I think you buy three things. Uh I think yes, you absolutely buy Randy Smallwood. I've known him now for more than three decades since he was a contract geologist in Wheaten River gold mines and I've watched his progression over 35 years and I invest in people. Randy is very very very good people. People look at Randy and they think of him as a commercial animal. Uh he's a pretty damn good geologist. Uh and he's a good geologist in that he's sort of a senior statesman now. He's good at hiring geologists and engineers. He's good at mentoring them. He's good at mobilizing them. He's good at understanding their biases. So he uses them for what they're good at and ignores what they're not good at. That's an unusual talent. He is also commercially extraordinarily astute and uh very disciplined. Uh one of the things I like about Randy is the last time I interviewed him, he talked about Wheaten on a per share basis. He didn't talk about aggregate cash flows across the length and breadth of the company. Those guys are serial diluters. He talked about it on a per share basis, which is what matters to me. Uh I like that. And I like I like the fact that he said as a financial intermediary, one bad deal blows up five good deals. So you make money by what you don't do, not by what you do. That's an unusual discipline in our space. I own it, too, because I keep reading analyst reports that say that the sweet spot for the royalty and streaming space is behind us, that there's no more good big deals to do. And I believe that the sweet spot's ahead of us. Uh I believe in particular that uh the state of development that will need to take place in the copper space will require 150 $200 billion and I think a substantial amount of that will come from selling byproduct streams on precious metals uh to lower the upfront per share uh capital expenditure for copper. Uh I also think there's the potential to do very large transactions involved in sovereign countries wanting bigger equity stakes in mining operations in their territory. And one of the ways I think that you do that that you finance that is by streams. So while the analysts see a posity of billion-dollar transactions over the next 10 years, uh I see a plethora of billion-dollar transactions over the next 10 years and I see Franco and Weaten as being the primary beneficiaries of that. Why I I ask you that was I wanted to set the stage is to talk about how did you come up with you know saying that the names that you said the silver names are high quality. Was it an EV to EBIT ratio? Do you look at ASIC jurisdiction? Is it a combination of everything? Is there is there something that you specifically look at? I start with the premise that all jurisdictions are lousy. Uh all of them. The most dangerous government is the one closest to you. Uh in terms of the manifestation of political risk by dollars lost, the worst jurisdiction of my career was California, the state I lived in. The best jurisdiction of my career was Congo. So I start with the premise that all jurisdictions are lousy. Uh that you need to understand the risks not as presented by the nightly news but rather the risks that are likely to impact you over time as a shareholder. uh risks in Mexico around Polis and Fresno uh acrue to the fact that uh the president of Mexico is anti-mining but she knows that the only economic engine in rural Mexico other than narcotics is mining so she has to tolerate it but she has a personal entity towards the families that control paneles and fes that's a real risk the president doesn't like you um but if you're going to be in a silver business and you're not in Peru and you're not in Mexico you're not in a silver business. Uh you need to work through that. There's some loweffort names in the US uh COR as an example or heckla brand names for silver but their 20-year return on capital employed and their investment allocation decisions have been subpar. Yeah. So you need to jutapo those two things. Uh do you want psychological security? Uh do you want momentum? Do you want a brand name? In other words, do you want something that might do well over two or three months? Or are you willing to take um subjective political risk and get higher quality deposits in a higher quality um geological jurisdiction? I take door. Well, ideally, I I want no risk at all in 10x potential. And a lot of people on YouTube are promising me that. So, I don't know what's up with Yeah. Yeah. I know. I know. I know. and you want to you want a nasty weekend with three Victoria Secrets models, but that's not on offer. Maybe at your age, but certainly not on mine. Um, this is a question about the producers more or less. So, do you do EV to MPV or something like that? But we can keep going down and talk about the developers. When you look at a company like Abra with um, you know, economics on the table, what are you looking at there? Is it an after tax IRRa that's double digits payback? Is it uh you know whatever metallergy whatever else you might be looking at there? I'm looking at the fact that the drilling's become predictive. The exploration team I think really has figured out the genesis of that district and they propose an exploration thesis. They test it with the drill bit and lo and behold they confirm it. Uh I I've seen this a few times in my career. And what happens when drilling becomes predictive when the technical team understands the geology of a district is that you add ounces and high quality ounces very very efficiently. That's where they are. Your risk here really is that melee fails. Uh the top of Salta is really truly back beyond where they are. But there's increasing economic development up there both from hard rock lithium plays but Fortuna is up there. Um you know there's there's increasing amounts of mind development. So the infrastructure challenges that faced Abra by the way that deposit Dablios uh I helped buy for silver standard 20 years ago and there it was just an optionality play because it was truly in the middle of nowhere. Uh you had to get you had to travel a long time to get to a place that was 8 hours away from there. Uh that's over now. Uh so what really attracts me to ABRA is the fact that I think despite the fact that the deposit's economic now it doubles. Yeah. Didn't you guys do that deal for like 2 million bucks or something like that? Yeah. 2.5 I think. Okay. Uh now we didn't regard it as a a tier one exploration project because we weren't involved in exploring for things. We were involved at silver standard with trying to buy 40 million ounce resources that could go to 100 or 150. But we were trying to buy them for a nickel an ounce. We were looking for optionality in silver. In the early part of the 1990s, nobody was paying for optionality because nobody thought the silver price would ever go up. When it did go up, the Silver Standard share price went from 72 cents to $40. So in a sense, that deposit served its usefulness for to us. When the shareholders of Silver Standard, the institutional shareholders decided to change leadership there, uh the strategy that I advocated, the strategy that was brought forward by Bob Quartermain changed. uh and they sold the deposits that we had acquired very cheaply for pretty good profits uh and they used that to build a s pardon me a a metals producing company. Uh that strategy served both sets of shareholders. Likely uh had management at Silver Standard not changed uh the exploration success that they're enjoying today would have occurred within silver standard. But I think all shareholders were served by the transaction. And to be fair, two and a half million back then, just looking at how M2 has developed since, uh, is probably like 30 50 million bucks. Yeah. Yeah. Um, you you mentioned that you didn't think it was a tier or you guys didn't treat it as a tier one exploration opportunity. What's a tier one exploration opportunity in silver? How do you notice that before everyone else does? Well, you know, I say that and we didn't put a hole in it. Uh, I just looked at the fact that we didn't buy it as an exploration project. We knew that there was a lot of upside, but we were able to buy 40 or 50 million ounces of silver with exploration upside for 2.5 million bucks. We at that point in time wanted to say to our shareholders, uh, this deposit is worth nothing at $5 silver and could be worth a lot at $15 silver. If silver does go to 15, this is a 10 bagger, at least for us. Rinse, wash, and repeat. uh we didn't want to focus on Diablo. We wanted to focus on the strategy of buying deposits that had spent that had had 25 or $30 million spent on them, buying $30 million worth of data for $2.5 million and hanging on for dear life. uh in the early part of the 90s when nobody was paying for optionality and they were giving away optionality for free, I decided to take as much of it as I could possibly get because it was free. Uh and the strategy was to buy 10 or 12 or 15 if we could out of the money silver deposits that had had large exploration expenditures very very very cheaply which is something that we did. It worked out extraordinarily well. Had those assets stated silver standard, had the management of silver standard not changed, it's likely that the beneficiation of those assets would be being done today by Bob Quarterbane, that didn't happen uh to the benefit probably of everybody. You know, Bob went on and did Predium and now he's doing Dakota and uh the SSR guys have built a fine mining company merging with Alisair. uh but uh as times train change uh shareholder strategies change. How has that changed for now? Like if if you thought let's just assume that you thought silver would double or triple from here on out, would you go looking for tier one exploration opportunities specifically? Um yeah, theoretically, but you know, you're late. Everybody's looking for them now. The the time you had to look for them was 5 years ago when they were cheap. Look what Tony Makuch did with Discovery. Uh, you know, he went out when nobody cared about silver. Uh, and he bought one of the better, uh, highquality silver exploration assets in Mexico. Spent a bunch of money on it. Did this sort of Toronto technique, just drilled a living s out of it. Uh, it would be tough to duplicate now. Uh, there's a lot of good competition out there. Uh so for me personally uh this is the time to be looking for sulfide nickels. Uh this is the time to be looking perhaps for rare earths. Uh this is the time to be looking for stuff that people don't like. Uh not the things that people do like. If I'm going out looking for things that people do like, uh, I'm assuming that I'm smarter than everybody else in the process, that I'm smarter than Frank Gustra, that I'm smarter than Pierre Lassan, that I'm smarter than Ross Bey. That's a dubious proposition, smarter than Lundines. Uh, I need to compete with them when they're not in the race. You're you're looking for what others don't like, which actually makes sense to me why you've been talking to me for all these years. Um, oh, people like you now, but I'm talking I'm talking to you for old times sake. Yeah, maybe you should stop. Maybe you should short me if there's an option. I'll let you know. Um, what about the um what about the rankings that you have right now? Is there anything within your silver rankings that ranks as a four or a five today? No. Interesting. A five. Yes. I'm sorry. Yeah. Uh, five. Absolutely. uh Polis, Fresno, uh Buventura, Abra, uh Visla, and then of the quasi silvers, uh Pan-American, which I have as a four actually, uh and Wheat and Precious, which I have as a four. Does anything I I know you generally don't like giving anything um more than a four. When I say more, just for people listening, the lower the number, the better the better the company is according to you. anything that you're giving uh less than a four outside of silver or anywhere else? I'm likely I'm doing the work right now as you know I'm just back from Africa so I've been three weeks out of pocket and uh my oh this side my bank just got chartered uh so I'm about to graduate from being a banker an application to being a banker so I'm quite busy but I suspect that the work I do in the next 10 uh 10 weeks will elevate a whole bunch of the oil and gas sector from four to Interesting. The market hates the oil business. Um, I have one three in the entire portfolio right now, which is Exxon. Hardly a gaming name. I think Exxon is selling for half what it's worth. Uh, and I think what it's worth on a discounted net present value basis doubles in two or three years. So, I think on a valuation as opposed to a price bagger, you know, a price basis, this is a two or threeyear forbeagger. The idea that I can get a two or threeear forbagger uh on a company of the quality of Exxon is unique in my career. It has everything to do with the fact that the market is chasing momentum and the market hates carbon and the market doesn't care about cash. Uh I'm an old man. I'm a banker. Uh I think cash cash and the ability to generate cash is a wonderful thing. Has it ever? I wonder. uh especially when it comes down to stuff like that. Were you looking for uh nickel in Africa, by the way? Yes. Well, when I was in Botswana, I was just looking to have a good time. Uh I missed uh the nickel trade across the border in Namibia, which Frank Jester got, and I'm I kicked myself for that. Um good work, Frank. Uh I'm a life's own shareholder. Uh, I've known the Cababanga Deposit for 30 years, discovered by Roman Schlanka, a mentor of mine. Um, you know, going all the way back to the Sutton days. That that company's financially challenged. I suspect I'll have the opportunity, if that's the right word, to participate in a second uh in a in a new equity transaction. My um my focus nickel play right now is Centaurus in Brazil which I think is a tier one deposit um deeply out of favor. People hate sulfide nickels particularly in Australia because they look at the competition coming from Indonesia. This company is Australian doiciled and as I keep saying to you I love hate. So nickel is hated. Australians particularly hate it. This is Australian doiciled has everything going for it as far as hate is concerned. Uh large deposit. I think it'll be a tier one deposit. I think uh I think it'll be in the lowest cash cost quartile in the world in sulfide nickels. Uh I think it'll be in the best cortile in the world in terms of return on capital employed. Uh even at today's nickel price which I don't expect will last 5 years. So I'm very attracted to that name. Uh, you should note for conflicts of interest that I own an immodest amount of it. Did you have a good time in Botswana though? I had a ball in Botswana. I highly recommend it to uh anybody who really truly wants to go back and beyond. If popular culture is what matters to you in life, don't go to Botswana. You're in fairly remote camps. Very, very, very high quality human beings, wonderful human beings. It's a wonderful place. Uh, if your interest is the really truly wild parts of Africa, that's um well, I'll hopefully be able to say the same sometime soon. Um, we we'll talk after this. Um, Nickel though, I thought after the Talon, you know, this discovery, Nickel would would start going and people would start paying attention, but they didn't. Um, and and they aren't. What do you think is going to change that? what what brings people's interest back to nickel? Uh I think that the price competition from laterite nickels fades. Uh I a year and a half ago flew over southern sulues. Uh which is where that the epicenter of the laterite nickel boom is taking place. Nobody should confuse me with Greta Thornberg. I don't think anybody will. Uh but the environmental devastation that's being done by the letteric nickel industry in Indonesia is really truly unconscionable. Uh and I don't think that the Indonesian citizenry, I'm not talking about the elites, but the citizenry or the government is going to tolerate it for too much longer. And if you have responsible mining standards around the nickel lateres or if you have an increase in the oil price or both, the cost of producing nickel later begins to sore, which puts a floor under nickel prices. Uh that's what I think makes a difference. Will that happen a year and a half from now? Maybe. Two years from now, maybe. You'll remember, Antonio, I've told you for years that I think in fiveyear terms, which is my durable competitive advantage. Uh, I compete with buyers who have trauma holding stock over a long weekend. Uh, and in my experience, investable trends don't happen over long weekends. So, I'm buying nickel today because I have no competition buying nickel. I can buy high quality deposits and I believe that an increase in the cost of producing raw nickel uh will increase and increase fairly dramatically in the 2 to threeyear time frame. I have a similar thesis. If you care about rare earths, uh the price has been established by the cost of producing rare earths in Singyang in far far western China. Uh China is not as poor as it was 25 years ago. And the environmental devastation that's occurred as a consequence of lowcost production of rare earths isn't being tolerated in China today. uh separate and apart from the geopolitical story around rare earths, the truth is that the floor prices for heavy rare earths uh established by the production costs are rising very very very dramatically. We haven't looked for rare earths outside of China because China produced them too efficiently. We had a bunch of them at Mountain Pass, which has gone broke three times in my life because it couldn't match Chinese prices. Mhm. But as the Chinese prices increase as a consequence of cost escalation, rare earth deposits in other parts of the world compete on a much more even footing. So I'm attracted to that even though the mark well not even though attracted to that because the market hates it. There's something with nickel that it's actually it goes back to our conversation about silver where 70% of of mine supply for silver is is byproduct. So silver's silver supply doesn't respond to silver's price and and there's volatility spikes and and and the fundamentals lag to that. It's very unpredictable. It's hard to deal with. I find that sort of the community in silver is is just a different breed of speculator altogether. A very interesting people to to behold if you will. And then with nickel over 50% of the global supply is tied to one jurisdiction, right? Indonesia and and export rules and power subsidies and everything else. And then you add the complexity of of battery battery tech and and battery chemistry really that can change overnight and and that makes it also unpredictable. So how do you how do you deal with that risk within your portfolio? Life is a range of probabilities. Uh, I understand that to make the amount of money that I've made over the last 50 years, you have to be willing to be wrong on occasion, and I am very willing. Uh, particularly wrong about time. Uh, I'm I know I'm right about Indonesia. Uh, the amount of environmental devastation I saw in the epicenter of the latter the latter boom, it's not an activity that's going to continue in today's world. Um the other thing is that later nickel is extremely energy intensive and I believe that the oil price two years two and a half years from now is much higher than it is today as a consequence of global underinvestment in sustaining capital in oil and gas. Those two things uh change uh the cost to produce nickel. Do you have to go down the or go up the risk trail? I suppose uh when it comes down to nickel given how early is do you have to deal with or look into life zone Talon Canada nickel FPX uh companies like I I look at the deposits by size and scale um by return on capital employed and by product by potential AISC I'm attracted to Talon when I look at the market cap of Talon relative to the market cap of Centaurus I'm more attracted to Centaurus is yeah, Canadians will tell you that it's a lower risk jurisdiction than Brazil. I'm a guy that uh had a condo in Vancouver, BC uh and watched the combination of the federal government, the provincial government, and the municipal government uh raise his property tax 16fold uh including a vacant home tax during a period of time with COVID when I couldn't visit my home. Rather than give foreign owners a break because of COVID restrictions, they doubled the vacant home tax. Um, the most dangerous government is the government that's closest to you. That's just the way it works. Uh, if you're Canadian, you feel warm and fuzzy about Canadian politics until you experience them arithmetically. Now, the truth is that Canadian deposits, because Canadians are ethnosentric like everybody else, will probably enjoy a lower cost of capital for the rest of time. Uh, people that look like you and I, Antonio, and most Canadians look like you and I, seem to believe that money stolen from us in English by the legislature, according to the rule of law, is somehow less gone than money taken from us by more traditional methods in Africa by people who aren't white. But the truth is that the money is just as gone. One of the advantages of my life is that I've will I've been willing to be fairly fairly dispassionate about analyzing how money is stolen from me. The issue that I suppose I not issue but a challenge that I have there with Canadian companies and Canadian explorer codes is that well often times we're talking about magmatic nickel sulfites as you mentioned and and and I like risk I suppose I'm trying to be you but at the beginning of your career there and so I'm I'm trying to be smarter than I really am I suppose as well but it's uh I certainly was. But the point about magmatic nickel sulfide deposits is that they're really really hard to find. So it's tough for explore co they can miss 25 times and they can miss 100 times in a row and then tag on to something like Talon has and um but but it's really tough when we're talking about like small cap explore co and you've told me before that there's nothing more than than you know 5 to10 million explore coast with with some really good ground that you really like. So how do you deal with that within nickel? Do you go for the nickel explore because there are 3 to 10 million market cap? I don't have to. Uh folks hate nickel right now. Uh and so I can buy deposits like Centaurus or perhaps Talon. Uh a year and a half ago, Magma. Uh and I can buy them for half NPV where I think NPV is going to go up. Uh, I might not get a 10bagger or a 20bagger, but I think a portfolio of carefully chosen nickel sulfide stocks with the third dimension, you know, with drill holes, uh, with deposits sure to grow. Uh, I think I can put together a portfolio of four or five that are pretty solid, four or five baggers over five years. uh the idea that I have a 40% probability of achieving a four a four bagger relative to a five or 6% probability of achieving a 10bagger with a penny dreadful arithmetically draws me to door A, not door B. Of course, psychologically I want a 15 bagger as opposed to a four bagger. But when I juxtapose the potential upside with the probability of that upside, I'm drawn towards door door A. I'm still drawn towards door B. How do I fix that? I'm I'm serious. Like I understand what you're saying, age, that'll do it. No problem. You're good at math. I mean, you're good at big math. Uh you've been around the game. You've been lied to enough. uh even at your relatively young age that you understand that those $10 million stories are mostly million-dollar stories. There's $9 million worth of water in there. The water should be free. That's a that's an important point there as well. Um last time we talked about silver again was about two about two years ago, give or take. You said at the time that you very much like platinum. I think you said you'd place platinum ahead of silver. Platinum has had a decent run now. Um but also just a challenging niche market controlled by two countries essentially almost all of it. So how do you deal with how do you deal with platinum now? Uh I look for platinum deposits outside Russia and outside South Africa. Uh Russia has one set of challenges meaning that my Russian assets are currently in limbo and South Africa has a different range of challenges. Uh I must admit I'm a very large Ivanho shareholder which is putting an 80 million ounce platinum deposit in South Africa into production. Yeah. Um my platinum name is Bravo uh which has what I believe to be a tier one platinum discovery with by the way an uh IOCG overprint uh in Brazil. Uh that meets a lot of criteria and there's a lot of risk because it's exploration stage. Um, and Brazil, I mean, Brazil's treated me very well, but I've had some tough experiences in Brazil, too. There are social and political challenges around Bravo. Um, but I'm I'm attracted to the platinum business. The market sold off platinum and palladium as a consequence of this strange belief that the internal combustion engine is going to go the way of the dodo, which I don't believe. Uh I believe it'll be the primary source of motor transportation, not just through my life, but through yours. Uh I don't see a lot of young people uh in Belgium with, you know, long hair and protest signs saying more smog, please, more smog. which means in order to enable the sale of an internal combustion engine, you're going to need to sell a catalytic converter, which requires platinum and palladium. I also see the possibility of supply disruption. As you point out, platinum and palladium are produced in South Africa or Russia, two not particularly stable jurisdictions. And if you experienced ongoing political or social risk in either jurisdiction, you would deprive the world of a lot of platinum. And here's the sexy part of the story. Right now, it takes about 150 bucks worth of platinum in a catalytic converter to sell a 50 or $60,000 car. If the platinum price doubled, it wouldn't change the finished price of the car. There is astonishing price inelasticity in platinum. uh if you combine that astonishing price elasticity uh with the high possibility of supply disruption uh from a speculator's point of view this doesn't have to happen but if it does happen the payoff is so extraordinary that I think a speculator like myself who can afford a 50% loss as an example on a position if he or she calls himself a speculator they have to look at that value proposition they just have to look. Uh otherwise, you know, they should put their dough in short-term treasuries. Most things seem to be in favor now though. I mean, I suppose outside of nickel and lithium and and a couple of other odds there, but like the big ones. So, you gold and silver, platinum, even uh copper now with Grassburgg's pushing for a very nice handle there as well. When does this run out of steam? What's going to be the, you know, the stick in in the wheel here? I don't think industrial materials I mean people are buying the industrial materials narrative because of geopolitics. Um we're in a precious metals bull market right now. I don't think we get into an industrial materials bull market for two or three years. Uh there are a lot of headwinds in the economy. I think the very soft oil price uh and uh prior to two weeks ago the soft copper price is a function of the fact that there is a much slower global economy than people are giving credit for. I think we will experience real shortages of things like oil, gas, copper, nickel 5 years from now, 6 years from now. uh but you can have supply shortages if you have economically related demand shortages and you don't move price. So I think we have to I I think we have to um absorb a soft economy for two or three years before we come into a real industrial materials bull market. M I think the other thing that a lot of speculators don't recognize because it's not in their time frame. Uh is first of all inflation is much higher than we believe it is. Uh when Americans look at inflation they think of the CPI which I characterize as the CP lie. Uh they believe that the deterioration the purchasing power of their dollar is proceeding along at 2.5 or 2.6%. I think it's more like 8% or 9%. Uh what that has to do with industrial materials is what is believed today to be an $8 billion capex to build a copper pfery uh is actually an 11 billion capex and that capex number is escalating at 8 or 9% compounded. That means that the incentive price uh needed to advertise 11 or 12 billion uh is going up by 10% compounded. And that means that existing assets that don't need to be built that are carried at book uh after a lot of depreciation with 25 or 30 year mine lives are twice as valuable as the market thinks they are. I know you know Lynn Alden and she has this meme or a joke that's not really a joke but she always talks about nothing stops this train as in nothing stops the money printers essentially and the the increase in M2 that we've talked about which is making it really hard for me to get bearish on gold. I just remain I don't find a reason to be bearish on on on gold at all or or the precious metals. But you've always taught me to be a contrarian. So, how do I reconcile being bullish on something that's popular? Should should I still be bullish on gold? Uh, it is possible to be bullish and take near-term profits. Uh, I am right now, as we speak, uh, selling between a quarter and a third of my positions in the gold explorers and developers because they've given me too much too fast. I believe October is going to be a blistering hot month for the gold stocks, which is from my point of view a wonderful time to sell some. because there's bids. Uh I believe the gold price goes much higher over 10 years. But that doesn't matter. I have the ability to derisk my portfolio right now. Take all the risk out of the portfolio. When I'm at what I call the point of no concern, where I have a position where I've sold enough stock to recoup all of my capital and pay the tax, I become extraordinarily patient. And I'm putting myself in that position uh during the month of September and October. I believe that the US dollar in an absolute sense loses 75% of its purchasing power over 10 years. Paradoxically, I think it does relatively well compared to other fiat currencies. In other words, I think it'll do okay against the euro, okay against the Canadian dollar, okay against the Australian dollar, but in an absolute sense, I think it loses 75% of its purchasing power. I believe that it's likely that gold's rise in nominal terms, US dollar terms, mirrors the decline in US dollar purchasing power over 10 years. Which means that I think that the gold price in nominal terms could easily go three-fold from here. Uh I believe too that over time that'll be reflected in the equities prices. I think that you look at the decade of the 1970s for the analog. That's what I think. Uh, thinking's free. I have the ability right now to monetize the fact that the junior gold stocks have gone from unloved to loved. Uh, and I have the ability right now without disrupting any of the names to sell enough of my position that I have the rest of my position, which is substantial for free. I have the ability to eliminate the downside in my speculative position by giving up a quarter of the upside. And that's a hell of a trade. And that's only the speculative positions. What would you keep in that case? Just a established producers. I'm adding to my Franklin Nevada. I'm adding to my wheat and precious. I'm probably done adding to my barrack, but I was a pretty aggressive adder of bareric. Um I am uh adding also to my transactions as a secured lender uh in senior secured construction facilities for the mining business which is a 12 to 15% internal rate of return business. Good business for me. Um, and I'm keeping a bunch of my I mean, don't get me wrong, I'm keeping a bunch of my upside uh in the developers and the explorers. I'm just eliminating all of my downside. You know, I I I run into problems even with veteran speculators talking about that. They said, "How can you sell? You're in a bull market. Don't think so much. Just look at the chart." But I don't like it when people tell me not to think, you know, um it just doesn't make a lot of sense to me. Uh the idea where I can maintain 65 75% of my upside and eliminate my downside just makes a whale of a lot of sense to me. You know, you and I talked uh at least twice, Antonio, over the years. Once around uraniums when the junior uraniums were roundly hated, and it was just a no-brainer. It was an absolute no-brainer. All these internet morons who had uranium as part of their internet handle were bemmoning the fact that they ever learned to spell uranium. nothing had changed except the price performance. This guy's got worn out. Um, those are no-brainer buy periods. But if you buy something because it's hated. When it ceases to be hated, that means that part of the reason, at least part of the reason that you own it, is gone. And when the reason to own a stock goes away, irrespective of performance, the stock needs to go away. I'm not, we've already ran out of time. I know I've not been too respectful of your time. So, what do you have coming up with the World Classroom and uh Battle Bank? Well, Battle Bank is finally going to be open for business. Uh after 54 months, the regulators have decided that I can be a banker again, which is lovely. Uh so, we look forward to, among other things, allowing Americans and Canadians to save in 20 currencies, not just the US dollar. We look forward to paying interest on checking accounts. If you're interested in interest, and you should be, think about BattleBank. Uh we look forward to being able to offer people credit facilities secured by their physical gold, silver, platinum and platium holdings. Uh our competition in the United States, the banks don't believe that gold is good security despite the fact that we get to hold the security and I can sell it 24/7. I think it's great security. So somebody who has a big gold portfolio, a lot of capital tied up in their gold, don't want to sell the gold, don't want to pay the capital gains tax, but needs access to credit, maybe to buy distressed real estate, whatever purpose, come to Battle Bank. Anyway, I look forward to doing business as a banker finally as opposed to an applicant banker. Uh the real classroom, we've done a three-part boot camp on gold. The first was physical gold. Why own it? How to own it? How to store it. The second was the best of the best. The Franco, the Wheatens, the Agneos. This is the rest. Uh this is the junior gold segments coming up in two weeks. We have a great faculty. Uh John Hathaway been a gold stock buyer for 40 years. Hardly a Johnny come lately. Adrien Day 40 years. The junior analyst is logo. He's only been at it 25 years. Uh and of course me. Uh don't come to the boot camp if you're the kind of person who buys the Sunday paper for the crossword puzzles and the funnies. We're going to work your behind off for eight hours and then we're going to give you a tape so that you could repeat the process. So if you are prepared to spend between 8 and 20 hours uh doing this, don't come. Do come uh if you want to learn the how and why of gold stock investing. If you're prepared to work like all educational products uh offered up by the rule classroom and rule investment media, this has an ironclad money back guarantee. If you buy the course, take the course, and don't think you got your money's worth, email me. I'll give you your money back. a financially riskless transaction few and far between today. Thank you so much for doing this. I really appreciate your time. One more thing, anybody who cares what I think about natural resources can go to my website, Rule Investment Media, list your natural resource stocks, and I'll personally rank them. No charge. So, of course, a money back guarantee there, too. Uh I'll rank them 1 to 10, one being best, 10 being worse. I'll comment on individual issues if I think my comments have might have value. That's ruleinvestmentmedia.com. List your natural resource stocks. Please, please, please. No crypto, no pot stocks, no tech stocks. Just natural resources. Leave an old guy to do what he does well.
Rick Rule’s Silver Stocks (+ a Surprising Opinion)
Summary
Transcript
Today on Resource Talks, Rick Rolls back after well really Rick after it's been too long. So, thank you so much for doing this. Thank you. And before we start, congratulations on the uh growth of your channel and on the very high quality programming that you've learned to produce. Well, thank you so much for saying that. I uh wish I could take all the credit, a lot of that credit goes to my wife, but even more so to to you and and kind of putting me on this path. So, uh thanks so much for doing this. really appreciate it. Uh just briefly for people watching and listening, if you want a summary of this conversation and all the other interviews that we do on Resource Talks, go to resource talks.com. There's a free newsletter. It goes out once a week with a bullet point summary of all the conversations from the week before. Um I know we don't have too much time, so that will be about it for pleasantries. Uh I'm going to get down to business now. you uh you you told me almost 2 years ago that silver was one of the most hated metals and and that's clearly no longer the case. It's not as hated. Uh you even said that if you were rating silver, which you you don't typically rate commodities as we talked back then, but you would rate it as a four at the time and and to be fair, I only gave you like 20 seconds to think about it, but is that still the case today now that that's silver is very much in favor? Where do you place it? No. uh silver is unhated and as you rightly point out the easiest money that's made in speculation is the move from hated to unhated which has already occurred in silver. Um I believe that silver has farther to go but I'm also a disciplined speculator. So in my speculative silver stocks portfolio uh I've sold between a third and a half of my position. I've maintained my positions in the hybrid silver companies, the Pan-Americans, the Wheat and Precious. Uh, and I've maintained my positions too in the highquality Latin American producers, the Buenovas, uh, you know, the penles, uh, that sort of thing. But what I laughingly call the silver animals, uh, that whole paniply of silver exploration stocks that, uh, have some silver in the ground, but don't have the means to produce it. I've been a fairly aggressive seller of those. Uh to be clear, I I think the complex goes higher. I don't think that the silver bull market has really started. Uh I think we've seen signs in the last four weeks that leadership is changing from gold to silver. But to be honest with you, I don't care what I think. Uh if I have a speculative position that's up 400% where I haven't seen real improvement in the underlying company with the exception of the commodity price, uh I've learned to take my money off the table. a circumstance where I can sell between a quarter and a third of my position and eliminate all of my downside in return for giving up a quarter or a third of my upside seems like a hell of a trade to me. So that's what I've done. Is that a hard and fast rule where you're like I'm up 400% you know 5x I'm going to take some off the table. How do you judge that? I don't have any hard and fast rules if it's too easy. Well well here's what I do Antonio. You'll remember in earlier conversations where I said the money and exploration and development was made answering unanswered questions. I try to figure out what the probability of a yes answer is, how much time a yes answer will take, and what a yes answer is worth. And if the market gives me the market capitalization that I had hoped for with a yes answer before the question has been called, I take money off the table. That's free money. And it doesn't matter to me if I think the stock is going up. I don't care what I think. Uh, I think October is going to be a blisteringly hot month in speculation, and I'm using it to reduce my speculative positions. Most people, particularly younger people than me, uh, would try to squeeze every farthing out of their position. Uh, I've learned to be different. Uh I I've learned to pay attention to the market in reverse order when the momentum is well I do what the market demands right now the asks are getting taken out so I'm supplying some asks two years ago the bids were getting taken out so I supplied some bids uh I accommodated the market when people wanted to exit I was a buyer but now people want to enter I'm a seller and yes I think it's going not merely higher but much higher But to reiterate, I don't care what I think. Uh this is an easy time to take money off the table that was easy to make two two and a half years ago. I think you once told me that you do what the market makes easy for you to do. If there's a lot of buyers, you're a seller. If there's a lot of sellers, you're a buyer, essentially. Exactly. Right. And the silver space has got a plethora of buyers. Uh, I was looking today at Paul Harris work for the mining journal about all the small silver financings that are taking place. When the companies are trading large amounts of their equity for cash, they're telling you that they think the cash is worth more than the equity. When they're using their money to buy in shares, they're telling you something different. Uh, and you're wise to learn. Now, I'm not trying to say that the money that they raise can't be put to good effect uh to uh lift the fortunes of all the shareholders. All I'm trying to say is that when a company with a hund00 million market cap does a $25 million financing, they're telling you that they view the money as being worth more than the stock. And you're wise to listen. Well, I I was told that the three main rules of junior mining are take the money, take the money, take the money. in a bull market, uh, in a bare market, the rules are take the stock, take the stock, take the stock if you have good people. You just, you just have to look at the market signals and do the opposite. Well, what if someone someone's listening and and they're like, Rick, I love you. You're not a silver analyst, though. You're a credit analyst. I still want to go with silver, but what are the names that I I hide out in from the perspective of where are we talking? silver producers, mid-tier producers, is it the juniors that are finally going to come in in in the flavor of the day, or where do you where do you hide out? Where do you find value? If you're willing to take some risk, probably the development stage juniors, high quality development stage juniors, um, Abra Visla, uh, if you have some courage, uh, right now, but I think I'm going to interview Ben Wallace. You may know that a short report was published yesterday. Y uh and I'm I'm I'm hoping to interview Benois Lal in the real classroom uh and allow Ben Wis to um give his side of the story. Uh I will admit too I'm predisposed to Benois. I was a large semifo shareholder. Uh and that had a very very happy ending for me. But I I think depending on the outcome of that interview, I I would likely be an IA shareholder. I love hate and I is roundly hated. If you are willing to tolerate political risk and you think that silver is going higher, I count on both those scores. Uh I think perhaps uh you look at Fresno uh albeit the current president of Mexico has personal enmity for the family that controls that company. Uh perhaps you look at Buenova, but you expose yourself to real political and social risk uh in Peru. Uh, I think Pan-American Silver or pardon me, Pan-American Minerals, uh, by the way is irrespective of its silver assets in pretty good condition. They sold some redundant assets, paid down some debt. They have worked on the assets that they acquired that required sustaining capital investments. So, I would own Pan-Amean separate and apart from its silver pedigree. Uh, I have a very large position in wheat and precious. Uh, and while I'm still selling other stuff, I'm still buying wheat and precious. Uh, you'll notice a 72 year old's skew away from the penny dreadfuls, uh, which is where I cut my teeth uh, more towards market beta than alpha. What are you buying when you when you buy wheat and precious metals? Is it is it randy? Is it is it the acid? Is it is it the head the well the tailwinds in this case? What are you buying? I think you buy three things. Uh I think yes, you absolutely buy Randy Smallwood. I've known him now for more than three decades since he was a contract geologist in Wheaten River gold mines and I've watched his progression over 35 years and I invest in people. Randy is very very very good people. People look at Randy and they think of him as a commercial animal. Uh he's a pretty damn good geologist. Uh and he's a good geologist in that he's sort of a senior statesman now. He's good at hiring geologists and engineers. He's good at mentoring them. He's good at mobilizing them. He's good at understanding their biases. So he uses them for what they're good at and ignores what they're not good at. That's an unusual talent. He is also commercially extraordinarily astute and uh very disciplined. Uh one of the things I like about Randy is the last time I interviewed him, he talked about Wheaten on a per share basis. He didn't talk about aggregate cash flows across the length and breadth of the company. Those guys are serial diluters. He talked about it on a per share basis, which is what matters to me. Uh I like that. And I like I like the fact that he said as a financial intermediary, one bad deal blows up five good deals. So you make money by what you don't do, not by what you do. That's an unusual discipline in our space. I own it, too, because I keep reading analyst reports that say that the sweet spot for the royalty and streaming space is behind us, that there's no more good big deals to do. And I believe that the sweet spot's ahead of us. Uh I believe in particular that uh the state of development that will need to take place in the copper space will require 150 $200 billion and I think a substantial amount of that will come from selling byproduct streams on precious metals uh to lower the upfront per share uh capital expenditure for copper. Uh I also think there's the potential to do very large transactions involved in sovereign countries wanting bigger equity stakes in mining operations in their territory. And one of the ways I think that you do that that you finance that is by streams. So while the analysts see a posity of billion-dollar transactions over the next 10 years, uh I see a plethora of billion-dollar transactions over the next 10 years and I see Franco and Weaten as being the primary beneficiaries of that. Why I I ask you that was I wanted to set the stage is to talk about how did you come up with you know saying that the names that you said the silver names are high quality. Was it an EV to EBIT ratio? Do you look at ASIC jurisdiction? Is it a combination of everything? Is there is there something that you specifically look at? I start with the premise that all jurisdictions are lousy. Uh all of them. The most dangerous government is the one closest to you. Uh in terms of the manifestation of political risk by dollars lost, the worst jurisdiction of my career was California, the state I lived in. The best jurisdiction of my career was Congo. So I start with the premise that all jurisdictions are lousy. Uh that you need to understand the risks not as presented by the nightly news but rather the risks that are likely to impact you over time as a shareholder. uh risks in Mexico around Polis and Fresno uh acrue to the fact that uh the president of Mexico is anti-mining but she knows that the only economic engine in rural Mexico other than narcotics is mining so she has to tolerate it but she has a personal entity towards the families that control paneles and fes that's a real risk the president doesn't like you um but if you're going to be in a silver business and you're not in Peru and you're not in Mexico you're not in a silver business. Uh you need to work through that. There's some loweffort names in the US uh COR as an example or heckla brand names for silver but their 20-year return on capital employed and their investment allocation decisions have been subpar. Yeah. So you need to jutapo those two things. Uh do you want psychological security? Uh do you want momentum? Do you want a brand name? In other words, do you want something that might do well over two or three months? Or are you willing to take um subjective political risk and get higher quality deposits in a higher quality um geological jurisdiction? I take door. Well, ideally, I I want no risk at all in 10x potential. And a lot of people on YouTube are promising me that. So, I don't know what's up with Yeah. Yeah. I know. I know. I know. and you want to you want a nasty weekend with three Victoria Secrets models, but that's not on offer. Maybe at your age, but certainly not on mine. Um, this is a question about the producers more or less. So, do you do EV to MPV or something like that? But we can keep going down and talk about the developers. When you look at a company like Abra with um, you know, economics on the table, what are you looking at there? Is it an after tax IRRa that's double digits payback? Is it uh you know whatever metallergy whatever else you might be looking at there? I'm looking at the fact that the drilling's become predictive. The exploration team I think really has figured out the genesis of that district and they propose an exploration thesis. They test it with the drill bit and lo and behold they confirm it. Uh I I've seen this a few times in my career. And what happens when drilling becomes predictive when the technical team understands the geology of a district is that you add ounces and high quality ounces very very efficiently. That's where they are. Your risk here really is that melee fails. Uh the top of Salta is really truly back beyond where they are. But there's increasing economic development up there both from hard rock lithium plays but Fortuna is up there. Um you know there's there's increasing amounts of mind development. So the infrastructure challenges that faced Abra by the way that deposit Dablios uh I helped buy for silver standard 20 years ago and there it was just an optionality play because it was truly in the middle of nowhere. Uh you had to get you had to travel a long time to get to a place that was 8 hours away from there. Uh that's over now. Uh so what really attracts me to ABRA is the fact that I think despite the fact that the deposit's economic now it doubles. Yeah. Didn't you guys do that deal for like 2 million bucks or something like that? Yeah. 2.5 I think. Okay. Uh now we didn't regard it as a a tier one exploration project because we weren't involved in exploring for things. We were involved at silver standard with trying to buy 40 million ounce resources that could go to 100 or 150. But we were trying to buy them for a nickel an ounce. We were looking for optionality in silver. In the early part of the 1990s, nobody was paying for optionality because nobody thought the silver price would ever go up. When it did go up, the Silver Standard share price went from 72 cents to $40. So in a sense, that deposit served its usefulness for to us. When the shareholders of Silver Standard, the institutional shareholders decided to change leadership there, uh the strategy that I advocated, the strategy that was brought forward by Bob Quartermain changed. uh and they sold the deposits that we had acquired very cheaply for pretty good profits uh and they used that to build a s pardon me a a metals producing company. Uh that strategy served both sets of shareholders. Likely uh had management at Silver Standard not changed uh the exploration success that they're enjoying today would have occurred within silver standard. But I think all shareholders were served by the transaction. And to be fair, two and a half million back then, just looking at how M2 has developed since, uh, is probably like 30 50 million bucks. Yeah. Yeah. Um, you you mentioned that you didn't think it was a tier or you guys didn't treat it as a tier one exploration opportunity. What's a tier one exploration opportunity in silver? How do you notice that before everyone else does? Well, you know, I say that and we didn't put a hole in it. Uh, I just looked at the fact that we didn't buy it as an exploration project. We knew that there was a lot of upside, but we were able to buy 40 or 50 million ounces of silver with exploration upside for 2.5 million bucks. We at that point in time wanted to say to our shareholders, uh, this deposit is worth nothing at $5 silver and could be worth a lot at $15 silver. If silver does go to 15, this is a 10 bagger, at least for us. Rinse, wash, and repeat. uh we didn't want to focus on Diablo. We wanted to focus on the strategy of buying deposits that had spent that had had 25 or $30 million spent on them, buying $30 million worth of data for $2.5 million and hanging on for dear life. uh in the early part of the 90s when nobody was paying for optionality and they were giving away optionality for free, I decided to take as much of it as I could possibly get because it was free. Uh and the strategy was to buy 10 or 12 or 15 if we could out of the money silver deposits that had had large exploration expenditures very very very cheaply which is something that we did. It worked out extraordinarily well. Had those assets stated silver standard, had the management of silver standard not changed, it's likely that the beneficiation of those assets would be being done today by Bob Quarterbane, that didn't happen uh to the benefit probably of everybody. You know, Bob went on and did Predium and now he's doing Dakota and uh the SSR guys have built a fine mining company merging with Alisair. uh but uh as times train change uh shareholder strategies change. How has that changed for now? Like if if you thought let's just assume that you thought silver would double or triple from here on out, would you go looking for tier one exploration opportunities specifically? Um yeah, theoretically, but you know, you're late. Everybody's looking for them now. The the time you had to look for them was 5 years ago when they were cheap. Look what Tony Makuch did with Discovery. Uh, you know, he went out when nobody cared about silver. Uh, and he bought one of the better, uh, highquality silver exploration assets in Mexico. Spent a bunch of money on it. Did this sort of Toronto technique, just drilled a living s out of it. Uh, it would be tough to duplicate now. Uh, there's a lot of good competition out there. Uh so for me personally uh this is the time to be looking for sulfide nickels. Uh this is the time to be looking perhaps for rare earths. Uh this is the time to be looking for stuff that people don't like. Uh not the things that people do like. If I'm going out looking for things that people do like, uh, I'm assuming that I'm smarter than everybody else in the process, that I'm smarter than Frank Gustra, that I'm smarter than Pierre Lassan, that I'm smarter than Ross Bey. That's a dubious proposition, smarter than Lundines. Uh, I need to compete with them when they're not in the race. You're you're looking for what others don't like, which actually makes sense to me why you've been talking to me for all these years. Um, oh, people like you now, but I'm talking I'm talking to you for old times sake. Yeah, maybe you should stop. Maybe you should short me if there's an option. I'll let you know. Um, what about the um what about the rankings that you have right now? Is there anything within your silver rankings that ranks as a four or a five today? No. Interesting. A five. Yes. I'm sorry. Yeah. Uh, five. Absolutely. uh Polis, Fresno, uh Buventura, Abra, uh Visla, and then of the quasi silvers, uh Pan-American, which I have as a four actually, uh and Wheat and Precious, which I have as a four. Does anything I I know you generally don't like giving anything um more than a four. When I say more, just for people listening, the lower the number, the better the better the company is according to you. anything that you're giving uh less than a four outside of silver or anywhere else? I'm likely I'm doing the work right now as you know I'm just back from Africa so I've been three weeks out of pocket and uh my oh this side my bank just got chartered uh so I'm about to graduate from being a banker an application to being a banker so I'm quite busy but I suspect that the work I do in the next 10 uh 10 weeks will elevate a whole bunch of the oil and gas sector from four to Interesting. The market hates the oil business. Um, I have one three in the entire portfolio right now, which is Exxon. Hardly a gaming name. I think Exxon is selling for half what it's worth. Uh, and I think what it's worth on a discounted net present value basis doubles in two or three years. So, I think on a valuation as opposed to a price bagger, you know, a price basis, this is a two or threeyear forbeagger. The idea that I can get a two or threeear forbagger uh on a company of the quality of Exxon is unique in my career. It has everything to do with the fact that the market is chasing momentum and the market hates carbon and the market doesn't care about cash. Uh I'm an old man. I'm a banker. Uh I think cash cash and the ability to generate cash is a wonderful thing. Has it ever? I wonder. uh especially when it comes down to stuff like that. Were you looking for uh nickel in Africa, by the way? Yes. Well, when I was in Botswana, I was just looking to have a good time. Uh I missed uh the nickel trade across the border in Namibia, which Frank Jester got, and I'm I kicked myself for that. Um good work, Frank. Uh I'm a life's own shareholder. Uh, I've known the Cababanga Deposit for 30 years, discovered by Roman Schlanka, a mentor of mine. Um, you know, going all the way back to the Sutton days. That that company's financially challenged. I suspect I'll have the opportunity, if that's the right word, to participate in a second uh in a in a new equity transaction. My um my focus nickel play right now is Centaurus in Brazil which I think is a tier one deposit um deeply out of favor. People hate sulfide nickels particularly in Australia because they look at the competition coming from Indonesia. This company is Australian doiciled and as I keep saying to you I love hate. So nickel is hated. Australians particularly hate it. This is Australian doiciled has everything going for it as far as hate is concerned. Uh large deposit. I think it'll be a tier one deposit. I think uh I think it'll be in the lowest cash cost quartile in the world in sulfide nickels. Uh I think it'll be in the best cortile in the world in terms of return on capital employed. Uh even at today's nickel price which I don't expect will last 5 years. So I'm very attracted to that name. Uh, you should note for conflicts of interest that I own an immodest amount of it. Did you have a good time in Botswana though? I had a ball in Botswana. I highly recommend it to uh anybody who really truly wants to go back and beyond. If popular culture is what matters to you in life, don't go to Botswana. You're in fairly remote camps. Very, very, very high quality human beings, wonderful human beings. It's a wonderful place. Uh, if your interest is the really truly wild parts of Africa, that's um well, I'll hopefully be able to say the same sometime soon. Um, we we'll talk after this. Um, Nickel though, I thought after the Talon, you know, this discovery, Nickel would would start going and people would start paying attention, but they didn't. Um, and and they aren't. What do you think is going to change that? what what brings people's interest back to nickel? Uh I think that the price competition from laterite nickels fades. Uh I a year and a half ago flew over southern sulues. Uh which is where that the epicenter of the laterite nickel boom is taking place. Nobody should confuse me with Greta Thornberg. I don't think anybody will. Uh but the environmental devastation that's being done by the letteric nickel industry in Indonesia is really truly unconscionable. Uh and I don't think that the Indonesian citizenry, I'm not talking about the elites, but the citizenry or the government is going to tolerate it for too much longer. And if you have responsible mining standards around the nickel lateres or if you have an increase in the oil price or both, the cost of producing nickel later begins to sore, which puts a floor under nickel prices. Uh that's what I think makes a difference. Will that happen a year and a half from now? Maybe. Two years from now, maybe. You'll remember, Antonio, I've told you for years that I think in fiveyear terms, which is my durable competitive advantage. Uh, I compete with buyers who have trauma holding stock over a long weekend. Uh, and in my experience, investable trends don't happen over long weekends. So, I'm buying nickel today because I have no competition buying nickel. I can buy high quality deposits and I believe that an increase in the cost of producing raw nickel uh will increase and increase fairly dramatically in the 2 to threeyear time frame. I have a similar thesis. If you care about rare earths, uh the price has been established by the cost of producing rare earths in Singyang in far far western China. Uh China is not as poor as it was 25 years ago. And the environmental devastation that's occurred as a consequence of lowcost production of rare earths isn't being tolerated in China today. uh separate and apart from the geopolitical story around rare earths, the truth is that the floor prices for heavy rare earths uh established by the production costs are rising very very very dramatically. We haven't looked for rare earths outside of China because China produced them too efficiently. We had a bunch of them at Mountain Pass, which has gone broke three times in my life because it couldn't match Chinese prices. Mhm. But as the Chinese prices increase as a consequence of cost escalation, rare earth deposits in other parts of the world compete on a much more even footing. So I'm attracted to that even though the mark well not even though attracted to that because the market hates it. There's something with nickel that it's actually it goes back to our conversation about silver where 70% of of mine supply for silver is is byproduct. So silver's silver supply doesn't respond to silver's price and and there's volatility spikes and and and the fundamentals lag to that. It's very unpredictable. It's hard to deal with. I find that sort of the community in silver is is just a different breed of speculator altogether. A very interesting people to to behold if you will. And then with nickel over 50% of the global supply is tied to one jurisdiction, right? Indonesia and and export rules and power subsidies and everything else. And then you add the complexity of of battery battery tech and and battery chemistry really that can change overnight and and that makes it also unpredictable. So how do you how do you deal with that risk within your portfolio? Life is a range of probabilities. Uh, I understand that to make the amount of money that I've made over the last 50 years, you have to be willing to be wrong on occasion, and I am very willing. Uh, particularly wrong about time. Uh, I'm I know I'm right about Indonesia. Uh, the amount of environmental devastation I saw in the epicenter of the latter the latter boom, it's not an activity that's going to continue in today's world. Um the other thing is that later nickel is extremely energy intensive and I believe that the oil price two years two and a half years from now is much higher than it is today as a consequence of global underinvestment in sustaining capital in oil and gas. Those two things uh change uh the cost to produce nickel. Do you have to go down the or go up the risk trail? I suppose uh when it comes down to nickel given how early is do you have to deal with or look into life zone Talon Canada nickel FPX uh companies like I I look at the deposits by size and scale um by return on capital employed and by product by potential AISC I'm attracted to Talon when I look at the market cap of Talon relative to the market cap of Centaurus I'm more attracted to Centaurus is yeah, Canadians will tell you that it's a lower risk jurisdiction than Brazil. I'm a guy that uh had a condo in Vancouver, BC uh and watched the combination of the federal government, the provincial government, and the municipal government uh raise his property tax 16fold uh including a vacant home tax during a period of time with COVID when I couldn't visit my home. Rather than give foreign owners a break because of COVID restrictions, they doubled the vacant home tax. Um, the most dangerous government is the government that's closest to you. That's just the way it works. Uh, if you're Canadian, you feel warm and fuzzy about Canadian politics until you experience them arithmetically. Now, the truth is that Canadian deposits, because Canadians are ethnosentric like everybody else, will probably enjoy a lower cost of capital for the rest of time. Uh, people that look like you and I, Antonio, and most Canadians look like you and I, seem to believe that money stolen from us in English by the legislature, according to the rule of law, is somehow less gone than money taken from us by more traditional methods in Africa by people who aren't white. But the truth is that the money is just as gone. One of the advantages of my life is that I've will I've been willing to be fairly fairly dispassionate about analyzing how money is stolen from me. The issue that I suppose I not issue but a challenge that I have there with Canadian companies and Canadian explorer codes is that well often times we're talking about magmatic nickel sulfites as you mentioned and and and I like risk I suppose I'm trying to be you but at the beginning of your career there and so I'm I'm trying to be smarter than I really am I suppose as well but it's uh I certainly was. But the point about magmatic nickel sulfide deposits is that they're really really hard to find. So it's tough for explore co they can miss 25 times and they can miss 100 times in a row and then tag on to something like Talon has and um but but it's really tough when we're talking about like small cap explore co and you've told me before that there's nothing more than than you know 5 to10 million explore coast with with some really good ground that you really like. So how do you deal with that within nickel? Do you go for the nickel explore because there are 3 to 10 million market cap? I don't have to. Uh folks hate nickel right now. Uh and so I can buy deposits like Centaurus or perhaps Talon. Uh a year and a half ago, Magma. Uh and I can buy them for half NPV where I think NPV is going to go up. Uh, I might not get a 10bagger or a 20bagger, but I think a portfolio of carefully chosen nickel sulfide stocks with the third dimension, you know, with drill holes, uh, with deposits sure to grow. Uh, I think I can put together a portfolio of four or five that are pretty solid, four or five baggers over five years. uh the idea that I have a 40% probability of achieving a four a four bagger relative to a five or 6% probability of achieving a 10bagger with a penny dreadful arithmetically draws me to door A, not door B. Of course, psychologically I want a 15 bagger as opposed to a four bagger. But when I juxtapose the potential upside with the probability of that upside, I'm drawn towards door door A. I'm still drawn towards door B. How do I fix that? I'm I'm serious. Like I understand what you're saying, age, that'll do it. No problem. You're good at math. I mean, you're good at big math. Uh you've been around the game. You've been lied to enough. uh even at your relatively young age that you understand that those $10 million stories are mostly million-dollar stories. There's $9 million worth of water in there. The water should be free. That's a that's an important point there as well. Um last time we talked about silver again was about two about two years ago, give or take. You said at the time that you very much like platinum. I think you said you'd place platinum ahead of silver. Platinum has had a decent run now. Um but also just a challenging niche market controlled by two countries essentially almost all of it. So how do you deal with how do you deal with platinum now? Uh I look for platinum deposits outside Russia and outside South Africa. Uh Russia has one set of challenges meaning that my Russian assets are currently in limbo and South Africa has a different range of challenges. Uh I must admit I'm a very large Ivanho shareholder which is putting an 80 million ounce platinum deposit in South Africa into production. Yeah. Um my platinum name is Bravo uh which has what I believe to be a tier one platinum discovery with by the way an uh IOCG overprint uh in Brazil. Uh that meets a lot of criteria and there's a lot of risk because it's exploration stage. Um, and Brazil, I mean, Brazil's treated me very well, but I've had some tough experiences in Brazil, too. There are social and political challenges around Bravo. Um, but I'm I'm attracted to the platinum business. The market sold off platinum and palladium as a consequence of this strange belief that the internal combustion engine is going to go the way of the dodo, which I don't believe. Uh I believe it'll be the primary source of motor transportation, not just through my life, but through yours. Uh I don't see a lot of young people uh in Belgium with, you know, long hair and protest signs saying more smog, please, more smog. which means in order to enable the sale of an internal combustion engine, you're going to need to sell a catalytic converter, which requires platinum and palladium. I also see the possibility of supply disruption. As you point out, platinum and palladium are produced in South Africa or Russia, two not particularly stable jurisdictions. And if you experienced ongoing political or social risk in either jurisdiction, you would deprive the world of a lot of platinum. And here's the sexy part of the story. Right now, it takes about 150 bucks worth of platinum in a catalytic converter to sell a 50 or $60,000 car. If the platinum price doubled, it wouldn't change the finished price of the car. There is astonishing price inelasticity in platinum. uh if you combine that astonishing price elasticity uh with the high possibility of supply disruption uh from a speculator's point of view this doesn't have to happen but if it does happen the payoff is so extraordinary that I think a speculator like myself who can afford a 50% loss as an example on a position if he or she calls himself a speculator they have to look at that value proposition they just have to look. Uh otherwise, you know, they should put their dough in short-term treasuries. Most things seem to be in favor now though. I mean, I suppose outside of nickel and lithium and and a couple of other odds there, but like the big ones. So, you gold and silver, platinum, even uh copper now with Grassburgg's pushing for a very nice handle there as well. When does this run out of steam? What's going to be the, you know, the stick in in the wheel here? I don't think industrial materials I mean people are buying the industrial materials narrative because of geopolitics. Um we're in a precious metals bull market right now. I don't think we get into an industrial materials bull market for two or three years. Uh there are a lot of headwinds in the economy. I think the very soft oil price uh and uh prior to two weeks ago the soft copper price is a function of the fact that there is a much slower global economy than people are giving credit for. I think we will experience real shortages of things like oil, gas, copper, nickel 5 years from now, 6 years from now. uh but you can have supply shortages if you have economically related demand shortages and you don't move price. So I think we have to I I think we have to um absorb a soft economy for two or three years before we come into a real industrial materials bull market. M I think the other thing that a lot of speculators don't recognize because it's not in their time frame. Uh is first of all inflation is much higher than we believe it is. Uh when Americans look at inflation they think of the CPI which I characterize as the CP lie. Uh they believe that the deterioration the purchasing power of their dollar is proceeding along at 2.5 or 2.6%. I think it's more like 8% or 9%. Uh what that has to do with industrial materials is what is believed today to be an $8 billion capex to build a copper pfery uh is actually an 11 billion capex and that capex number is escalating at 8 or 9% compounded. That means that the incentive price uh needed to advertise 11 or 12 billion uh is going up by 10% compounded. And that means that existing assets that don't need to be built that are carried at book uh after a lot of depreciation with 25 or 30 year mine lives are twice as valuable as the market thinks they are. I know you know Lynn Alden and she has this meme or a joke that's not really a joke but she always talks about nothing stops this train as in nothing stops the money printers essentially and the the increase in M2 that we've talked about which is making it really hard for me to get bearish on gold. I just remain I don't find a reason to be bearish on on on gold at all or or the precious metals. But you've always taught me to be a contrarian. So, how do I reconcile being bullish on something that's popular? Should should I still be bullish on gold? Uh, it is possible to be bullish and take near-term profits. Uh, I am right now, as we speak, uh, selling between a quarter and a third of my positions in the gold explorers and developers because they've given me too much too fast. I believe October is going to be a blistering hot month for the gold stocks, which is from my point of view a wonderful time to sell some. because there's bids. Uh I believe the gold price goes much higher over 10 years. But that doesn't matter. I have the ability to derisk my portfolio right now. Take all the risk out of the portfolio. When I'm at what I call the point of no concern, where I have a position where I've sold enough stock to recoup all of my capital and pay the tax, I become extraordinarily patient. And I'm putting myself in that position uh during the month of September and October. I believe that the US dollar in an absolute sense loses 75% of its purchasing power over 10 years. Paradoxically, I think it does relatively well compared to other fiat currencies. In other words, I think it'll do okay against the euro, okay against the Canadian dollar, okay against the Australian dollar, but in an absolute sense, I think it loses 75% of its purchasing power. I believe that it's likely that gold's rise in nominal terms, US dollar terms, mirrors the decline in US dollar purchasing power over 10 years. Which means that I think that the gold price in nominal terms could easily go three-fold from here. Uh I believe too that over time that'll be reflected in the equities prices. I think that you look at the decade of the 1970s for the analog. That's what I think. Uh, thinking's free. I have the ability right now to monetize the fact that the junior gold stocks have gone from unloved to loved. Uh, and I have the ability right now without disrupting any of the names to sell enough of my position that I have the rest of my position, which is substantial for free. I have the ability to eliminate the downside in my speculative position by giving up a quarter of the upside. And that's a hell of a trade. And that's only the speculative positions. What would you keep in that case? Just a established producers. I'm adding to my Franklin Nevada. I'm adding to my wheat and precious. I'm probably done adding to my barrack, but I was a pretty aggressive adder of bareric. Um I am uh adding also to my transactions as a secured lender uh in senior secured construction facilities for the mining business which is a 12 to 15% internal rate of return business. Good business for me. Um, and I'm keeping a bunch of my I mean, don't get me wrong, I'm keeping a bunch of my upside uh in the developers and the explorers. I'm just eliminating all of my downside. You know, I I I run into problems even with veteran speculators talking about that. They said, "How can you sell? You're in a bull market. Don't think so much. Just look at the chart." But I don't like it when people tell me not to think, you know, um it just doesn't make a lot of sense to me. Uh the idea where I can maintain 65 75% of my upside and eliminate my downside just makes a whale of a lot of sense to me. You know, you and I talked uh at least twice, Antonio, over the years. Once around uraniums when the junior uraniums were roundly hated, and it was just a no-brainer. It was an absolute no-brainer. All these internet morons who had uranium as part of their internet handle were bemmoning the fact that they ever learned to spell uranium. nothing had changed except the price performance. This guy's got worn out. Um, those are no-brainer buy periods. But if you buy something because it's hated. When it ceases to be hated, that means that part of the reason, at least part of the reason that you own it, is gone. And when the reason to own a stock goes away, irrespective of performance, the stock needs to go away. I'm not, we've already ran out of time. I know I've not been too respectful of your time. So, what do you have coming up with the World Classroom and uh Battle Bank? Well, Battle Bank is finally going to be open for business. Uh after 54 months, the regulators have decided that I can be a banker again, which is lovely. Uh so, we look forward to, among other things, allowing Americans and Canadians to save in 20 currencies, not just the US dollar. We look forward to paying interest on checking accounts. If you're interested in interest, and you should be, think about BattleBank. Uh we look forward to being able to offer people credit facilities secured by their physical gold, silver, platinum and platium holdings. Uh our competition in the United States, the banks don't believe that gold is good security despite the fact that we get to hold the security and I can sell it 24/7. I think it's great security. So somebody who has a big gold portfolio, a lot of capital tied up in their gold, don't want to sell the gold, don't want to pay the capital gains tax, but needs access to credit, maybe to buy distressed real estate, whatever purpose, come to Battle Bank. Anyway, I look forward to doing business as a banker finally as opposed to an applicant banker. Uh the real classroom, we've done a three-part boot camp on gold. The first was physical gold. Why own it? How to own it? How to store it. The second was the best of the best. The Franco, the Wheatens, the Agneos. This is the rest. Uh this is the junior gold segments coming up in two weeks. We have a great faculty. Uh John Hathaway been a gold stock buyer for 40 years. Hardly a Johnny come lately. Adrien Day 40 years. The junior analyst is logo. He's only been at it 25 years. Uh and of course me. Uh don't come to the boot camp if you're the kind of person who buys the Sunday paper for the crossword puzzles and the funnies. We're going to work your behind off for eight hours and then we're going to give you a tape so that you could repeat the process. So if you are prepared to spend between 8 and 20 hours uh doing this, don't come. Do come uh if you want to learn the how and why of gold stock investing. If you're prepared to work like all educational products uh offered up by the rule classroom and rule investment media, this has an ironclad money back guarantee. If you buy the course, take the course, and don't think you got your money's worth, email me. I'll give you your money back. a financially riskless transaction few and far between today. Thank you so much for doing this. I really appreciate your time. One more thing, anybody who cares what I think about natural resources can go to my website, Rule Investment Media, list your natural resource stocks, and I'll personally rank them. No charge. So, of course, a money back guarantee there, too. Uh I'll rank them 1 to 10, one being best, 10 being worse. I'll comment on individual issues if I think my comments have might have value. That's ruleinvestmentmedia.com. List your natural resource stocks. Please, please, please. No crypto, no pot stocks, no tech stocks. Just natural resources. Leave an old guy to do what he does well.