Transcription
[music] Minds and Money 2025. Commodity TV here in the lovely city of London. And I have now the pleasure and honor to speak with Rick Rule, uh, from Rule Investment Media, one of the, if not the, mining investment legend, I would call you.
>> Well, it's kind of you to say that.
>> No problem. Uh, welcome to England. How's the show so far? You had here a little panel, uh, discussion stuff. How was that?
>> I have high expectations for Resourcing Tomorrow. I've spoken at this conference and its predecessors for almost three decades. So, I'm, uh, comfortable with and appreciative of the conference organizers, the attendees, uh, the exhibitors. I've done business in the city of London, I'm embarrassed to say, for 50 years. So, uh, this is almost old home week for me.
>> Great. Okay. So, a phenomenal, yeah, year for natural resources comes to an end, I would say. Um, what were your highlights of 2025?
>> Well, I had you interviewed me two years ago, I would have described the equities markets and resources as a coiled spring. Uh, I love hate. Uh, and so frankly, two years ago was better for me than now. Which is to say, when the sector is out of favor, there's more opportunities. I've been on record of saying that I have sold 25% of my junior portfolio, which I did. By selling 25% of my portfolio, I recouped all of my capital. So, I sold off 25% of my upside and I eliminated my downside. That doesn't mean that there aren't spectacular opportunities ahead, but I've learned after 50 years in this business that you haven't made the money until you've taken it, which is what I did.
>> That's for sure. Okay. So, um, what can we await for next year? What would you say? What would be the main topics for next year?
>> I think it depends on who you are. Uh, I'm doing two different things. My portfolio looks like a barbell. [snorts] Uh, on the one hand, the largest and finest companies in the natural resources business, on a historical basis and relative to their free cash flows, are cheap.
>> Cheap.
>> Yeah.
>> On the other hand, uh, the very raggedy edge of exploration hasn't found love yet. So on one part of my portfolio, I'm taking very big risks because the market is looking for the developers rather than the explorers. So I'm getting in front of where I think the money will be two years from now. And in the other part of my portfolio, I'm owning the Franco-Nevadas, the Exxons, the Wheat and Precious, and the Agnico Eagles without, uh, I shouldn't say without too much in the money, uh, in the middle. I, I have a pretty good diversified resource portfolio that was purchased over the last six or seven years. But in terms of what I'm doing with new money, it's either going into the best of the best or it's going into front-end exploration.
>> Are we in the middle of a new resource cycle or just at the beginning?
>> Uh, in American parlance, in baseball parlance, I would say that we're in inning three of a nine-inning game. I, I believe, well, I don't have to believe. I can cite arithmetic. Uh, I can tell you that in my opinion, the US dollar, as an example, over 10 years likely loses 75% of its purchasing power. Uh, I think that gold will hold its purchasing power. Okay. Uh, if that's true, over 10 years, the gold price goes up in nominal terms, US dollar terms, threefold or four-fold. Um, not a bad move. I also believe that from experience, that as a society, we've underinvested in productive capacity around the stuff of humankind, copper, oil for 30 years, and we aren't going to catch up in 5 years. Uh, I don't believe that you're going to see the price escalation, as an example, in copper that people think we are in the near term because I think the economy is too weak for that. But if you look out five years, I think the nominal price of oil, the nominal price of copper, the nominal price of nickel will make today's prices look fictional.
>> Okay. So I know that you are a big fan of uranium. Let's speak a little bit about uranium. What are your feelings about that sector?
>> I, I, uranium has a long way to go. That being said, I think the uranium juniors are fully priced. They've had a tremendous move. The easiest way to make money is in the juniors is to find a sector that's hated. And uranium is no longer hated. The, the junior sector is up four-fold across the sector. Uh, and junior companies, frankly, that have no uranium, uh, are trading at premiums, which is odd. Uh, that being said, the fact that in the uranium market you have the ability to sign long-term contracts where you can lock in price and volume for 20 years is an advantage that you don't see in any other commodity on the planet other than basic electricity. And this has not been factored into the uranium equities. The certainty involved in free cash flow in uranium isn't duplicated in any other sector in commodities. Um, I think the future of the uranium sector are the SMRs.
>> When do we see the breakthrough of the SMR sector?
>> Uh, 10 years, I would say.
>> 10 years from now?
>> Yeah. Uh, I, I mean, and I, I think the near-term future of the uranium sector isn't SMRs. Uh, I would say it's the fact that plants that were slated for shutdown aren't being shut down. So the demand forecasts from people like me are wrong. Uh, we have a lot of phase-outs and shutdowns that aren't taking place. Meanwhile, there's an increase in Japanese restart and there's a huge boom in conventional reactor construction. I don't think, as an example, that you will see an SMR rollout in the Western world for at least five or six years. And I think it gets, it gets going in earnest in the middle of the next decade.
>> What are your feelings about the German way?
>> You're German, so I'll, I'll hold my tongue, only to say, uh, the idea that a country where the sun doesn't shine would cast its future to solar seems odd to me. Uh, perhaps Ms. Merkel knows more about physics than I, but I doubt it.
>> Yeah, hopefully she knows. Um, okay, let's come back to the whole sector. Um, what will be your top three picks for 2026?
>> In what regard?
>> Of mining, so mining, uh, companies.
>> Uh, the big gold companies still have a long way to go. Uh, I was looking at earnings consensus forecasts for the major miners, uh, and all of the Wall Street analysts seem to be using $3,200 gold, which is interesting in a $4,200 environment. Uh, price escalation is set by earnings surprises. And if your forecast is based on 32 and you're selling the stuff for 42, it seems like the stage is set for a wonderful, wonderful surprise.
>> Uh, if you're asking where I'm putting my own money, the hated commodity in the world is oil and gas. And well over half of my portfolio, uh, is in oil and gas, and about 80% of my new allocations are in the oil and gas space. I love hate. Hate has served me extremely well in resource investing, and I can buy the single finest oil company in the world, Exxon, at a substantial discount to net present value in a world where I think what it's worth will double or triple, uh, in five years. The idea that I can buy a triple at 60% of current net present value and get paid a 3.75% dividend while I wait. Um,
>> that kind of good fortune seldom happens to an old man like me.
>> Okay. Okay, Rick, thank you very much for this insight in your feelings about the commodity sector and in your, yeah, topics and, yeah, the most hated commodities.
>> Well, I, I, I hope I make your viewers money. I hope so. See you, uh, maybe in Toronto 2026.
>> Look forward to it.
>> I hope so. Thank you very much. So, that was, uh, Rick Rule, the CEO of Rule Investment Media. You heard it. Booming commodities are great, but the hated ones are better because they, uh, offer better chances to make money. So, I would say thank you very much and bye-bye from London.