Transcription
Hello everybody and welcome into Commodity Culture where we break down commodities markets, sound money principles and geopolitics all with the goal of making you a better investor in the commodities sector. My name is Jesse Day. Today is January 19th, 2026 and I'm thrilled to welcome Rick Rule to the program. A legendary commodities investor and speculator and the CEO of Rule Investment Media. Rick has sold 80% of his physical silver. And although he believes it could go much higher, he has rotated 50% of that capital into an area he sees a greater value in, and that is the silver mining sector. He reveals which names he's invested in, along with breaking down why he thinks silver stocks are set to outperform in 2026. Rick also breaks down his views on the gold space, the metal and miners, uranium stocks, and why he's still bullish on the other yellow metal. And you're going to want to stick around to the end of the interview where Rick goes deep on the oil and gas space and why he thinks Canadian energy companies in particular are especially cheap right now. Guys, the Vancouver Resource Investment Conference is coming up this weekend, the 25th and the 26th. That'll be a Sunday and Monday in Vancouver at the Convention Center West. Tickets are free. The link is in the description below to get yours. Me and Rick will both be there and I hope to see you there. But now, without further ado, my conversation with Rick Rule. Rick Rule, it is great to have you back on Commodity Culture. I want to kick things off by discussing the silver sector because we had a few conversations in the past when silver was around the $30 range and you said that as a contrarian you loved how hated silver was at the time. Well, here we are at $94 and change. It feels like the narrative has flipped. Both my X feed and my comment section is frequently filled with people proclaiming we have entered a new era for silver. This is just the beginning. Silver's never coming back down for a number of, you know, pick your favorite narrative, monetary debasement, silver shortages, etc. Is now perhaps time to take some profits off the table? And I wonder if you ascribe to the idea that one should always keep some physical metal on hand as an insurance policy regardless of the price.
>> You asked me a bunch of questions there, so I'll try to answer them. Yeah, I'll try to remember them. With regards to the last question, uh I save in gold. I maintain liquidity in US dollars. Uh we could talk later about what would cause me to sell my gold, but this price isn't one of them. As you suggest, uh I'm a contrarian, and you and I talked a couple years ago about silver being a hate trade, and I bought it. I bought it because I thought when the hate subsided that the silver price would increase. Guess what? That happened. In my own portfolio, silver represented in my portfolio a speculative asset class, not an investment class, a speculation class. And the reason that I owned it is because it was hated. And when that reason went away, the silver price went up. So last week, I sold 80% of my physical silver. Uh this is a personalized decision. It might not apply to the rest of your listeners, but I note that the internet response to my announcement that I sold 80% of my my silver was filled with hate. So, I know I did the right thing. Uh when X is widely lined up against me, uh I know I'm correct. Now, it's instructive to note what I did with the money. Uh some of the money, a small amount, I put back into physical gold because insurance is more important than speculation. to a rich 73-year-old like me. Uh more than half the money, as it turns out, I put into silver equities because the silver price just has to stay the same rather than increase for the silver equities to do better. The silver equities are discounting about 40 or $45 silver. If we're really in a period of 75 or $80 silver, the silver stocks have to play real catch-up. And so I believe that the silver equities are a better receptacle of my speculative capital than silver is itself. Silver just needs to maintain today's price for me to be rewarded in the silver equity. Silver needs to increase for me to be rewarded in the physical silver. And I believe I have a durable competitive advantage relative to other investors and speculators in the silver space. 50 years of experience in analyzing silver equities. So as a speculative asset class, the silver equities are more appropriate for me personally than silver is itself. Other speculators will need to ask that question themselves as to whether it's appropriate for them. Sadly, many speculators don't know how to question themselves. Uh so they likely won't be able to attract an answer. Uh make no mistake, I believe that the precious metals bull market and the silver market have a lot further to run. But that doesn't matter to me. Uh what matters to me is that I'm a disciplined speculator. The reason to own my silver went away and there is another asset class that fits in that part of my portfolio better. So I shifted to it.
>> Now speaking of, you know, getting attacked and getting a lot of hate. Interestingly, I did an interview recently with Gary Savage who said he was very bullish on silver. He thought the price would keep going up, but at some point we could experience a dramatic correction and this caused the comment section to go into an absolute frenzy. I've never seen anything like it. Everybody was attacking him, talking about how much of a he was. People were ganging up together. Doesn't he understand this is a new era for silver? Doesn't he understand monetary debasement? And on and on. It was one of those moments where you look around and you ask yourself, am I in a cult? Because I'm very bullish on silver, but this kind of shocked me to see this kind of reaction. Now, perhaps you could shed some light and walk us through the dangers of getting so emotionally attached to an asset class.
>> Most people, particularly undisciplined people, and this will this will generate a lot of hate all by itself, uh can't invest in a narrative until the price momentum of the underlying commodity has justified the narrative. Everything that is true about the silver narrative today at $80 was true at $20. The difference is that if the silver price goes from $20 to $80, uh the value of the narrative is arithmetically only a quarter as great. The coiled spring aspect of silver is used up. People need to understand that if your reason to own it was mine, which is to say the alleviation of hate, that's occurred. Am I saying that the silver price can't go to $200? No, I'm not saying that at all. I don't care. Uh, I bought it for a specific reason. The specific reason came true. I expect over 10 years the price of metal of precious metals, including silver, to be not merely higher, but a lot higher. I have found what is for me a more attractive way to express my preference for the silver trade. I will tell you this. Uh I know how good my timing is uh and how good my underlying thesis is by how much how much hate it attracts on X. Uh 10 years ago, I remember proposing renewed investments in the uranium sector and people were apoplectic in their hate. This is a failed bull market. The stuff has gone nowhere. It's the stuff of Hiroshima, Nagasaki, Three-Mile Island. Fast forward five years and I disclose that I sold some of my uranium stocks. What a halfwit. They said the guy steps out of a bull market. Can you imagine anything in the world more stupid? Then the uranium stocks declined and they say, "Well, the guy was front running, right? He was I mean I know that if I get 30 responses in social media and 25 are violently opposed that I'm doing precisely the right thing." Uh that's the narrative I look for. um monetary debasement u we can discuss that if you want in your show we can discuss why the purchasing power of the US dollar and other fiat currencies is going to decline we can discuss why precious metals are going to be the beneficiary of that uh happy to have that discussion believe it to be true probably after 55 years in those markets I know it more fully than many of the geniuses on X um happy to do that let me introduce some other things to them though. Uh let's introduce a little history just for fun. As you can tell by looking at my image, uh I've lived it. In the decade of the 70s, the US dollar lost 75% of its purchasing power. Not coincidentally, in the decade of the 70s, the gold price rose from $35 to $850. there is uh some correlation between the deterioration of the purchasing power of the US dollar and importantly real interest rates in fiat currencies and the reaction to the gold price. Uh that's the good news because I suspect that in the next 10 years we'll see another 75% deterioration in the purchasing power of the US dollar. I say good news advisedly and that should fuel continued increases in the gold prices. But a couple things you need to know. While I believe that in very rough terms, the nominal price of gold, the dollar gold quote increases in inverse measure to the deterioration, the purchasing power of the US dollar, what I guarantee is volatility, uh we will experience in the next 10 years at least one, probably two 30 or 35% declines in the gold price. We experienced three of them in the decade of the 1970s. But the other thing that people need to look at is the chance of a real decline. Uh I remember well uh in the period 1970 to 1975, the gold price increased from $35 to $200 an ounce. A six-fold increase. And because of that increase, a whole bunch of people who didn't want to own it, gold, and didn't know about it at $35 or $50 were in love with it at $200, right? In love with it. Uh the price action justified the narrative. In 1975, Congress and the Fed raised the US interest rate and the gold price fell by half. It fell from $200 to $100 an ounce. Many of the people at $200 who were in love with it hated it at $100, pardon me, when it was half as expensive. They wished they never learned to spell gold, only a four-letter word, and got shaken out. And after they got shaken out, the gold price ran from $100 to $850. Past is in some measure prologue. The people who are most uniform uh in their love of a narrative, which is only recently proven, will be the first to be shaken out when the price action shakes their faith in the narrative. Um, mercifully, I'm an old man. Uh, I'm going to stay the trade to some degree until the reasons underlying the trade go away.
>> The sponsor of today's episode is Arc Silver, Gold, Osmium. Owner Ian Everard is praised even by his competitors as one of the most honest and level-headed bullion dealers in the United States. They have some great prices. You can see some of them displayed right now on screen. Take advantage of these specials today by reaching out to Ian at 3072649441 or by email at ian@archcsggo.com. Make sure to tell him of course that Commodity Culture sent you. And now back to the interview. Let's talk about the silver mining sector in a little more detail. Now, as you mentioned, selling a lot of your 80% of your physical stack, putting 50% of the proceeds into the miners. Now, throughout last year, at one point, the miners did provide a levered play on the silver price. But as the year closed, that gap closed. If we look at the SIL ETF as a proxy for the silver miners and as we sit here today year to date silver the metal is outperforming the mining stocks both the SE and SILJ ETF which is extremely interesting. Is that what you're watching and is that what makes you bullish on on silver miners in 2026?
>> A little concerned about the J. I'm interested in the silver miners, not the silver morons. uh there are a whole bunch of companies that have silver in the name on the share certificate but they don't have any silver and realistically if the price of something that you don't have goes up it shouldn't impact your underlying value but when I look at the silver producers uh when I look at say Pan-American Silver which paid a very very very full price for MAG a full price of $30 silver and I think about the fact that the Bay Street research reports and the Wall Street research reports when they look at earnings are assuming a $45 silver price. If you make the stuff for $0.75 and deliver it into a forecast at $45, it's impossible that you don't have an earnings surprise. The second thing is that when uh uh old securities analysts like me do net present value calculations, we still do those things. uh if the silver price increases from say let's call it any number you want $40 to $80. So the silver price doubles I if you were a producer making silver for $20 and selling it for $40 you have a $20 margin uh and the silver price doubles your margins quadruple triple or quadruple. It's important to understand that and the valuations of the silver stocks are discounting lower silver prices. If today's silver price holds, and I think they can, the net present values that we've ascribed to those producers are unrealistically low and we have earnings surprises. It's as simple as that. I feel good about the silver price over 10 years. I think that 2026 is probably a good year, but I don't think it's a year that repeats the performance that we got in 2025. So, I don't want a big a big bet on my part in a near-term increase in the silver price. What I want is a bet on the increase in margins and the increase in net present value on the more efficient producers or on the very very very high quality developers where uh mine construction looked fairly certain at $35 and you go into an $80 world. Uh if you have people trading off net present values established in preliminary economic assessments at $30 silver and you rerun that same net present value calculation at $50, $60, $70 or $80 numbers, the difference is stark and it's dramatic. Well, I would be remiss and in fact people would certainly attack me in the comments if I didn't ask you for some of those names of the silver miners that you ended up deploying capital into recently if you feel comfortable sharing them. Um, are you looking more towards those developers at this point in time or are you deploying capital to the big producers like Pan-American Silver or all the above?
>> I have all of the above. Uh I I'm in a market where I think I'm right and where I think that the underlying move is going to be fairly dramatic in terms of the big names, I tend towards beta rather than alpha. Uh I like the probability of a triple more than I like the possibility of a five bagger or a six bagger because I like the difference between probability and possibility. Uh so uh I added to some Wheaton uh not primarily a silver stock but still has a silver component and still produces an awful lot of silver and the free cash flow estimates uh around Wheaton are certainly understated for the increase in both the gold and the silver price. It's important to note that I own Pan-American uh because I think there's earnings leverage, but I think there's a different kind of leverage that the market has completely ignored. Uh and that is the leverage exhibited by two undeveloped silver deposits, one in Guatemala, one in Argentina. These are each half billion ounce high-grade deposits that aren't figured into the net present value because they don't have any. They don't have any because of political constraints uh to development. The governments have paid some attention to domestic politics uh ignoring the fiscal benefits that will come to the state. Uh the state generally tries to steal somewhere between 35 and 50% uh of the economic value of a deposit after the payback of capital. Um, that was a fairly small number in these two deposits of $20 silver. The benefits to Guatemala and Argentina from stealing, let's call it, 35% of the economic benefit after a recoupment of capital are billions. And I don't believe that either government can afford to leave these two deposits unbuilt. And you get that in Pan-American for free. Um, free is a very good price. Uh, and I'm particularly attracted to redundant assets, assets on the balance sheet that don't contribute to current cash flow estimates, but still have residual value. uh the option value of these two deposits in Pan-American, while by no means a certainty, ignores the fact that governments who could ignore the revenue because it was small relative to the domestic political price that they'd pay for development. Uh that avoided revenue uh in both Guatemala and Argentina is just too high. I believe that there's a probability that a political accord will be found and that those assets will go back onto active status in that balance sheet as opposed to passive status and I get that for free.
>> Yeah, you you brought up Wheaton Precious Metals which brings up an interesting thought that I'd like to share perhaps a mental block that I'm having as an investor. Wheaton Precious Metals is my single largest precious metals equity holding. it's gone up hundreds of percent. I have a real hard time adding to positions that have gone up that much. What I tend to do when I have capital to deploy is I go through my investments and I look for the ones that are not doing so well but that the thesis hasn't changed. Oil and gas is the thing that comes to mind the most for me too at the moment. Fertilizer stocks as well, but there's a block when it comes to things that have gained. I I seem to have I'm trying to be too much of a contrarian. How do you face that situation? Knowing when to add on strength and when to seek out more undervalued positions that have perhaps drawn down but still present an attractive value proposition.
>> Uh you use the phrase undervalued. Uh and that's what I think the crux is. I I had I was impacted by the same thinking as you uh which is to say if a stock price doubled I believed it was half as half as expensive. The question is why did it double? What I do, Jesse, and I would encourage you to do the same thing is every time I make an investment, I write myself a one and a half or two-page memo about why I made the investment, what I think the liquidation value is, what the investment case is, what the risks are, what will cause me to sell it. In the case of Wheaton Precious Metals, although the stock price has done well in a year and a half at current commodity prices uh the net present value of the underlying underlying free cash flow rather than using a $2,200 gold base rather rather than that using a $4,500 gold base suggests that the in the juxtaposition of price to value which is where money is made. It's made of the delta between price and value that Wheaton is selling for less than it sold for before the share price doubled. In the case of Wheaton, the market makes an assumption too that I believe is wrong. The market uh the Bay Street and Wall Street analyst suggests that the days of big deployments and streaming are over, that the big deals have been done. And I think that's exactly wrong. I think the big deals are ahead of us. For this reason, uh gold and particularly silver streams uh that are generated by base metals mines are worth more as silver streams than there are base metals cash flows. The silver stream multiple is 15. The copper multiple is six. So if you take that revenue out of a copper producer and put it in a silver producer, it's worth three times as much. Follow me a little while longer and I'll get you there. Uh the copper industry uh in London suggested to us that the copper mining industry has to invest $250 billion in the next 10 years to maintain current levels of copper production which are in deficit. And they also tell us that demand will increase by 2.5% compounded for 10 years. The problem is that the copper industry doesn't have $250 billion and inflation is raising that upfront estimate literally every month. What I think you'll see is that very very large copper deposits uh raise part of the capital to build the copper mine by selling silver streams. uh and that these financings will take place in billion and $2 billion chunks separately. I think that we're coming into a merger and acquisition cycle. Uh and I think that a large use of capital will be in mergers and acquisitions. And I think that one of the ways that you fund that if as an example you are Rio and you're going to take over Glencore but you believe that Rio was undervalued. So you're loath to make all of the payment in shares. That one way that you finance that is to sell a silver stream on the assets that you're acquiring. The third thing is that there's a there's a clamor for host governments around the world to participate directly in their mines. Many of these mines are governed by international arbitration. So you can't steal them, you must buy them. The difficulty is that many of these governments are broke and they can't buy them. How better to finance the acquisition of an interest in a copper mine than by selling a partial stream on the byproduct silver. So for these three reasons, the upfront capital costs around copper uh the increased pace of uh merger and acquisition and the increase of nationalization. Uh I believe that there are billions of dollars of streams ready to be written in the next 10 years and not that many companies that are capable of deploying that much cash. Uh Wheaton being one of them.
>> Great assessment. I want to shift to the gold mining space and gold now and get your thoughts there. Perhaps you could speak a little bit about how much of the gold price is being driven by US dollar debasement as you alluded to earlier and let's tack on the question what would make Rick Rule sell his gold as you mentioned that as well.
>> That's the best question of all. Uh we'll deal with the first one first though. Um much of your audience is Canadian and they're not going to like what I have to say but the dollar is the world reserve currency. It's the most important currency in the world. And the most important savings instrument in the world is the US 10-year Treasury. It's the one that every other debt instrument in the world is priced off of. Uh for people who don't like US dollar hegemony, I don't either, but it doesn't matter. It's what it is whether you like it or not. And the real purchasing power of the dollar, not the relative purchasing power, the real purchasing power of the US dollar is headed lower, inexorably lower. I lived through the decade of the 1970s where the US dollar lost 75% of its absolute purchasing power. Meaning it took $4,000 in 1980 to buy what $1,000 bought in 1970. Pass is prologue. We're going there again. There's no way around it. Uh, by the way, I don't think that the US dollar will necessarily do bad in relative terms, which is to say, uh, I don't think there's a discernible long-term trend versus the euro, the Canadian dollar, the Australian dollar. I'm talking about in an absolute sense the dollar will lose 75% of its purchasing power. And we'll talk later uh about the implications of that. But the US dollar interest rate, real interest rate is also profoundly negative. uh if you believe that the rate of deterioration, the purchasing power of the US dollar is reflected by the CPI, you're not concerned. But I believe that the CPI is better called the CP lie. Uh the basket of goods and services, Jesse, that I believe that you buy and your listeners buy, uh I think is increasing at 8 to 10% a year compounded. Take yourself back to 2020. Look at the mortgage cost. It's doubled. Look at rents almost doubled. Grocery prices doubled. Gasoline prices up 60%. Taxes. I believe the deterioration of the purchasing power of the US dollar uh is proceeding to pace at between 8 and 10% a year. That's where negative real interest rates come in. If you buy the world's premier savings vehicle, the US 10-year Treasury, you're getting paid 4.2%. Feels pretty good in the outset. If you're comparing it with the CPI at 2.9%, you're making 1.1% a year real yield. Most people are less sophisticated. They just say, "I'm getting paid 4.2." That's okay. But you're getting paid 4.2 in a currency where your purchasing power is declining by 8% a year. You aren't making 4.2. You're losing 3.8. If you lose 3.8 a year, every year for 10 years compounded, it means that you give the government $100,000 and they give you back $50,000 in purchasing power. Uh what France Pix said is a certificate of guaranteed confiscation. That's why gold is doing well. Gold is doing well because it maintains its purchasing power while savings destroy them. When people ask me, Rick, uh, what do you think about this gold bull market? I say, which one? They say, well, in the last three years, three years doesn't matter to me. In the period 2000 to 2025, the gold price increased at 9% compounded every year for 25 years. In fact, if you save in gold, as I do, maintaining liquidity in dollars, and you construct a ledger around your cost of living, you're astonished by how cheap things are. Real estate measured in gold terms is cheap. Oil, gasoline, medical insurance, cars, all of those things are cheap in gold. They're expensive in dollars and therein lies the lesson. Now, let's get to the more interesting question, Jesse. What would cause me to sell my gold? If the reasons to own it went away, which is to say, if first of all, the US government balanced their budget. Every year uh our debt which is now almost $39 trillion goes up on balance sheet by $2 trillion a year. So I would need to see a balanced budget and I would like to see uh the path clear to a reduction in debt. In 1980 US government debt stood at about 25% of GDP. Now it stands at 120% of GDP and I would like to see those two numbers normalized. Much more important to me though is off-balance sheet liabilities. The net present value of unfunded promises Medicare, Medicaid, Social Security, military pensions, all that stuff is $120 trillion. Trillion. And that number grows by about $2.5 trillion dollars a year. So in order for me to sell my gold, I would like to see a political accommodation that um explains arithmetically how we fund $120 trillion in off-balance sheet obligations. We either need the pensioners, the guys like me to say, "Yeah, well I understand I paid in for 60 years, but I understand you guys can't pay me, so that's okay. No hard feelings." Or we need some other form of accommodation. By the way, that accommodation is going to be hard to get. If you add the on-balance sheet and off-balance sheet liabilities of the US government, the number comes to $159 trillion. The IRS, whose business it is to know, suggests that the aggregate private net worth of American citizens is $167 trillion. So there's an $8 trillion plurality over what we have versus what we owe. And that number gets worse by $4.5 trillion a year. So I would need to see that problem resolved. But the most important problem uh in order for me to sell my gold uh and go into savings instruments would be that I need a positive real yield. If the underlying inflation rate is 8% as an example, traditionally through history, savers have demanded 150 basis points, one and a half percent real yield over inflation. That means that the US 10-year Treasury would have to be yielding what, 9.5%? Imagine how the US government who is having trouble servicing their debt at three would do at 9.5. 9.5 presupposes a first mortgage rate, 30-year fixed mortgage rate of 10.5 or 11 as opposed to 6.7. Uh what would an 11% 30-year fix do to US housing prices? Wouldn't be pretty. Wouldn't be pretty. You get the point. So, in order for me to solve my to sell my gold, we would need to solve the problem of real yield and we would need to solve the problem of debt and deficit. And I believe we will. Uh I just don't believe we will for 10 or 15 years. We will solve the problem the way we did in the 1970s. How did we do that? We inflated away the net present value of obligations. In other words, we honored the nominal obligations we uh uh uh obligations we had to our bondholders and our entitlement beneficiaries while we inflated away the net present value because taxes weren't indexed to inflation. The second thing that we did was that we decided as a people, I'm talking about Americans now, that we would reduce the size of government and we elected this guy named Reagan. Now, he didn't actually do it. He just promised to do it. But what he did do is he slowed the rate of growth of government and as a consequence of that over 15 years the government was able to grow its way out of the debt. The most important thing that we did is we punished ourselves. Uh we brought in this guy named Volcker and he tripled the interest rate. Now when inflation was at 10 or 12% and the savings yield was at 5.5% Americans were losing 5% a year of their purchasing power. When Volcker took the interest rate to 18%. If the inflation rate is 12 and interest rates at 18, there's a real yield to savings and savings not surprisingly skyrocketed and borrowing not surprisingly plummeted. At the same time that we did all that, there was the bright spot which is technology. uh through technology people were able to generate greater utility, greater economic output with lower capital inputs and I think I think technology continues apace which is to say 15 years from now I think the world is measurably better than it is today but we have to get from here to there. uh and for most of the time from here to there I'm going to be a gold holder.
>> When it comes to the gold mining sector right now, do the big producers still look attractive to you? And what other areas of the gold mining space do you think are presenting opportunity right now?
>> Depends on how hard you want to work. Uh most people don't want to work. Most people buy the Sunday paper for the crossword puzzles and the funnies and those guys need to confine themselves to the big producers because if you don't do the work, there's too much company risk. If I'm right about the gold price, there's a boatload of money to be made over 10 years in beta. Beta being defined as the outperformance of the gold sector relative to the rest of the market. If you want to work harder and take more risk, there's probably twice the upside in the in the alpha, but you run significant single company risk. So, you have to be willing to do the work. Specifically, Jesse, as you know, I've graded almost 100,000 portfolios in 35 years. And I've learned a lot about how people invest. And I ask people, if they ask my advice, I ask it anyway, uh, to limit the number of speculative stocks you own to the number of hours per month you plan to spend working on those speculative stocks. Not listening to podcasts like this, although I think you should do that too, but reading annual reports, proxies, quarterly reports, resource statements. Uh, many people who own 50 stocks work one hour a month and there's no correlation there. And those people lose money and they they deserve to. So to the extent that to the extent that you want to do the work understanding the risk, prepare yourself psychologically and understand the companies that you're invested in, then by all means uh allocate some of your portfolio to alpha as opposed to beta. But for most people who have lives, confining themselves to beta beta is a better idea. I'm willing to do the work and I'm over 50% paid because for more than 50% of my precious metals portfolio, I want the probability of getting paid, not the possibility of getting paid.
>> Let's talk about uranium equities for a moment. It's been on a tremendous run, the uranium sector in general, since around 2019, 2020. It's interesting because you still have people on social media saying that, you know, when is the uranium bull market going to start when actually it's already been in full swing. I believe last time we spoke about it, you said the the big money is behind us, but the sure money is ahead of us. Something like that. Do you still feel that way right now? Um about the uranium space?
>> Uh you need to be selective. uh there's a lot of junk in the uranium sector and there's probably 12 or 13 that have definable value and so the gain is going to be in those. Uh and people are going to have to do the work. I'm not going to give them their names. Um so you got to be sure that your uranium company has some uranium. But what's changed and we've talked about this before Jesse. uh the structure of the uranium market is going from the spot market to the term market and doing that takes the guesswork out of price and volume. There's no other commodity in the world like that. We're seeing now where the term market which is really hard to ascertain appears to be selling at a five or 6% premium, five pardon me, five or six dollar premium. So eight or nine% premium to the spot market. The spot market is how the industry is judged. But the spot market's becoming a floating abstraction uh because it's so illiquid. On almost every day you look, the dollar trading volume of the Spot Physical Uranium Trust, which is keyed to the spot market, exceeds the dollar volume of the spot market, which is to say the spot market is becoming the spot market. Uh that means that the spot market itself is a factoid. Uh the second thing it ignores is the impact of uh the spot market and the sanctity of supply. When people look at supply in the uranium market, they forget that by counting the inventory in the Spot Physical Uranium Trust as supply, they're misstating it. That supply has gone to supply heaven. It's not for sale. The only way that material could get sold is if a utility or somebody bid a substantial premium to market for that stuff. So when people look at the above ground inventory of uranium, they're adding 80 million pounds to supply which isn't supply and can't be contracted for.
>> I also want to touch on the oil and gas sector for a moment because while gold, silver, and uranium equities are all performing very well, both the WTI crude price and related equities have been performing rather poorly. And this is a hated sector in many ways. We saw a lot of divestment through ESG initiatives over the last, let's say, 5 years or so. Now that is starting to turn around a bit, but it is still a sector that is not looked upon very favorably by a lot of institutions at this point. What do you see right now as the value proposition in oil? Because obviously the narrative of oil is going away and we're going to live on wind and solar is starting to fade at this point. I think people are waking up to reality. Even the IEA, which has kind of been pushing a clean green energy narrative for quite a while now, is starting to turn around and say, "Hey guys, maybe actually we need more oil than we thought, for longer than we thought." Uh, what are your overall thoughts on the oil sector as we sit here today?
>> Let's deal with the IEA first. Uh, the IEA in 2020 2024 said that peak oil demand would occur in 2030. Uh IEA 3 months ago said that peak oil demand would occur in 2060. Now that's an important important difference because demand uh impacts price and price impacts net present value. If net present values decline after 30 years or pardon me after 2030, what it means is that that the net asset value tail and cash flows that occur after 2030 go away. But if peak oil demand occurs in 2060, the net present value tail gets added back on. And that makes a huge difference. Um, people say to me all the time on social media, which is one of the reasons I know I'm right, uh, you're ignoring alternative energy. Uh, and here's the way I respond to that. Depending on who you listen to. Uh, humankind has spent uh between uh six and 11 trillion dollars on alternative energy in the last 40 years. And that expenditure has led has reduced the market share of fossil fuels from a high of 83% 45 years ago to a low of 81% today. Uh conservatively $6 trillion investment has reduced the market share of fossil fuels by two%. In a world where projected energy demand will double in 30 years, not just AI data centers, not just Teslas, a billion people on Earth having no access to primary electricity. We're going to need more of all kinds of power, including of course fossil fuels. And then the third part of the equation, the oil industry itself has been underinvesting in sustaining capital requirements to again depending on who you listen to between a billion and $2 billion a day. A day that may not impact output in 2025 or 2026, but it sure does in 2028 and 2029. That makes a big big big difference. uh the decline of new project investment and the decline of sustaining capital investment as well as the disintermediation of capital for politically expedient reasons away from oil and gas debt to other sectors uh means that production will be much weaker than people think in the out years even while demand is high. Now I would encourage people to listen to this who listen to this uh to for two or three months forestall their enthusiasm for the oil business because the oil quote is up from 50 to 60 based on events in Venezuela and events in Iran. People are trading the news and I suspect that the oil quote and the oil and gas averages the index have perhaps 15% to fall in the next 3 months after which I think it's really stair steps to heaven. Uh in the case of Iran uh or Russia the thug that owns the oil matters much less than the fact that the oil reaches the market. You may recall that we sanctioned Iranian oil uh and nobody paid attention. Iran still sells the oil and we sanctioned Russia in which case they still sell the oil. The other wild card is of course Venezuela and people act as though regime changes occurred. It hasn't. We abducted the head thug and we left all the other thugs in place. So it's important that rather than pay attention to the news which is easy to digest Russia, Iran, Venezuela that we pay attention to sustaining capital investments uh and peak oil demand and net present value. Ironically, the the oil stocks that have done well are the companies that have neglected sustaining capital and return capital to shareholders. that is to say companies which have completed buybacks or increased their dividend yields. You do that by cannibalizing yourself. Uh some of those companies have enough free cash flow that they will be able to upgrade sustaining capital investments when the supply pardon me when the price incentives won't be so lucky. So it's important that you don't look at oil and gas as a one-size-fits-all narrative. rather that you do the proper securities analysis. You look at proved undeveloped locations. You look at drilled uncompleted. You look at their recycle ratio. There's a whole bunch of stuff that goes into the oil and gas narrative that isn't covered just by saying oil and gas. The devil's in the details, but the sector is underloved. uh the sector generates uh a lot of free cash even at today's uh prices. It's important to note you don't have to cover full cycle costs in order to generate cash because you're cannibalizing investments you made five or six years ago. It's important for people to understand that. But it's important in terms of investing for the future that you do understand full cycle costs. And if you understand full cycle costs and the impact of declining uh sustaining capital investments, you understand that an increase uh in the oil quote and the net present value of the producers is inevitable.
>> When it comes specifically to the oil and gas business in Canada, I would love to quickly get your thoughts there. We saw a trade deal between uh China and Canada recently. Part of that involved a memorandum of understanding being signed around energy cooperation. So potentially China could end up buying more oil and gas from Canada. However, on the other side of the border, of course, in the United States, Trump has repeatedly stated that Canada is going to be the 51st state at some point. Alberta is talking about separation. And although Trump initially seemed to not care about the trade deal between Carney and Xi, he basically said, "Great. If he can get a deal, good for him." We do know that Trump tends to change his mind a lot and there is a chance he could perceive this as a threat and somehow enact some sort of punitive action against Canadian oil in terms of not buying as much or enhanced tariffs or things like this. So, and then there's also Mark Carney's ideology surrounding green energy and decarbonization. With that whole board being set the way it is right now, how do you feel about investing in oil and gas companies in Canada?
>> First of all, you have to ignore most of it. Uh, great pronouncements from politicians are like the rest of their utterances, lies. They only come true accidentally. We've signed, pardon me, you've signed a memorandum of understanding. What's that? Is it a pipeline? Is it a port? Is it an oil well? No, it's a lie. It's an intention. It might come true, but the fact that Xi and Carney signed it is a very, very, very small part of the probability, the equation as to which it comes true. Let's get that out of the way. Trump ultimately is a floating abstraction, too. Uh if he did something, if he debottlenecked the Keystone pipeline, uh if he made uh Canadian heavy sour crude available to a market, the US Gulf Coast, which happens to be short, heavy sour crude, now that would be very different. Uh his postulations with regards to you know calling Trudeau a governor uh or taking over Greenland uh you know he's as relevant as frankly Xi is. The catbird is Carney. Um one hopes that unlike his predecessor it's interesting he ran a platform for change since he he and his cohorts were responsible for the 10 years of governance which he decided needed changing. One would hope that Mr. Carney is at least numerate, which is to say that he knows how to add and subtract. One would hope that if Mr. Carney looks at the budget that he tabled that he understands that somehow he has to pay for some of it. He can't borrow at all. Uh one almost knows as a consequence of his brief history in the private sector that he understands that Canada's most efficient industry is oil and gas, which is to say the best chance that he has to steal from an industry comes from the best industry in Canada. So for fiscal reasons he needs to be pro oil and gas and he has said that he will be quote pragmatic. If you juxtapose that with the fact that he says all of his financial decisions will be predicated on carbon one wonders whether narrative will take precedence over numeracy. I own the Canadian sector because it is arithmetically substantially cheaper than the US sector which is itself undervalued. The Western Canadian sedimentary basin is in a geological sense the equal of any basin in the United States including the Permian but it's much less drilled. At $60 oil. Uh the industry estimates that 85% of the tier one locations in the Permian at $60 oil with the current technologies in place have been drilled. We have 15% of our remaining tier one locations undrilled. The same number in Canada is about 75%. It's just the the runway to growth at current prices with current technologies is much greater in Canada. Canada has everything. They have the geology. They have the human resources. People don't know this, but the Canadian oil industry, despite being substantially smaller than the US oil and gas industry, suffers no diminution of quality of human resources. They have the in-place infrastructure. They have mostly the rule of law. What stands between uh the Canadian oil and gas industry and prosperity is idiocy. And one can hope only.
hope that the idiocy subsides. I think there's a probability that the outlook for the Canadian oil and gas increases, not a certainty. And I think ultimately that uh Canadian crude and Canadian gas will flow to the Pacific. Uh not because Xi says so and Carney says so, but because the Pacific needs the hydrocarbons and Canada has them.
Uh I also think ultimately that uh Canada's ability to supply the south and the west of the US with oil improves that Canada will lose the US northeast. They'll lose it to the Marcellis. They'll lose it to the fact that the largest energy importer of the United States has had a lot of inplace oil and gas for 55 years. and technology has unleashed. In fact, what likely will happen as a consequence of Canada's very strange politics uh is that natural gas demand in Eastern Canada will be serviced by the US rather than by Alberta. It's one of the laughable parts of politics. Uh, but the truth is I can't help but owning the Canadian oil and gas sector because it's just too cheap.
>> Well, Rick, both of us are going to be at the Vancouver Resource Investment Conference coming up this weekend, uh, January 25th and 26th at the Vancouver Convention Center West. I'm going to be hosting a panel with yourself and Lobo Tra on the uranium sector on the 26th. So, I hope everybody shows up for that. um would would love to hear from you what your plans are at at the VRIC and why you think people should attend this year.
>> Well, you know, I put on my own conference, Jesse. This isn't meant to be my conference for me, but I consider uh VR for me personally be sort of a farm team for my conference. I have to own companies for them to appear on my conference floor. If I don't own them, they can't exhibit the VR. There will be over 200 companies exhibiting uh and I hope with my team to visit them. Uh, and I hope as a consequence of visiting 200 companies that I'm able to find 10 or 15 that I didn't know about that I'm able to buy. I don't know if I'm able to do that or not, but I look forward to trying. Uh, the VRA has established a real platform as a place where naent Western Canadian-based public companies can put their wares uh in front of global investors. It's very very useful for that.
Uh I also think that Jay has become you know I've known him long enough I did business with his dad. Uh he's become absolutely a top class uh investment organizer. uh I think separate and apart from the fact that giving me access to opportunity on the exhibit floor that he's put together a user-friendly conf conference and at age 73 with maybe a little less energy than I enjoyed when I was in my 50s the fact that he's made the conference more efficient for attendees like myself is something that I enjoy of course I enjoy uh appearing with friends like Adrien Day and Lobo Tigra and Jay himself myself. I understand I'm doing a a panel with uh he and Ross Bey and a few others. I This is going to be a lot of fun. Uh, you know, it gives a lot of us a chance to um debate, if that's the right phrase, uh in front of a fairly sophisticated audience. That'll be fun, too.
>> Great. Well, I'm going to put links in the description to tickets for the VR. They're free. It's they're free. It's free to attend, but you do need to click the link below to get them. Rick, tell us about Rule Investment Media. Tell us about Battle Bank
>> Rule Investment Media. We'll start there. Uh I I'll make it worth your while. Anybody who is a resource investor can go to rule investment media and list their natural resource stocks and I will personally for free, no obligation, rank them one to 10, one being best, 10 being worst. And I'll comment on individual issues if I think my comments have value. Uh, that's very useful. is meant to be enjoyed in conjunction with the rule classroom, also free, where we offer now over 300 hours of instructional programming. Uh, weekly questions and answers, discussion groups, all free rule classroom. Uh, you use the tools you learned there to get the most that you possibly can out of Jay's conference, out of the VRIC. There's no particular point in talking to a bunch of companies if you don't know what questions to ask them. and in introduction to natural resources. We have a section called 11 nosy questions to ask a public company that tells you precisely much to the chagrin of the exhibitors by the way uh how you should go about doing that.
Battle Bank, well that's simple. Uh we started a new bank. We built a bank before Ever from 0 to 28 billion. We sold it. Nice. And the people we sold it to abandoned our customers. Not so nice. So we're going to take them back. What will be different with our bank? Well, first of all, we'll pay you interest, even on your checking account. $3 trillion in North America is deposited without earning interest. That's really stupid. You don't need to be stupid. You could bank at Battle Bank. Uh we'll allow you to bank in 20 currencies, not just the US dollar or the Canadian dollar. If you're Canadian and if there's a replay of the trucker strike and if you have the temerity to donate money to somebody the government doesn't like and they come to freeze your money in a US institution I will tell them that their only recourse is the US Supreme Court. Understand that if you are a gold and silver holder at Battle Bank we believe that your gold and silver is good collateral. You can access the capital you have tied up in your gold and silver without selling it by establishing a metals equity line like a home equity line at battlebank. If for any reason you're unhappy uh with the way you're treated by your incumbent bank cost you nothing to check out battlebank battlebank.com.
>> Great. All those links will be below rule investment media battle bank as well as the rule classroom so people can check all of that out. Thank you once again Rick for coming on the show. It's been a blast.
>> Jesse, thanks for you have for having me back. I look forward to spending time with you next week.
>> Thank you for joining us today. This episode is brought to you by Arc Silver, Gold, Osmium. They have some great specials on silver bullion products. You are seeing them on your screen right now. These are subject to change and while supplies last. So reach out to owner Ian Everard today at 307264-9441 or by email at ianarchsg.com and make sure to tell him that commodity culture sent you. And be sure to get your free tickets to the VRIC January 25th and 26th in Vancouver. The link is in the description below. And I'll see you guys in the next episode. Commodity Culture is a series on commodities and natural resources. If you would like to see more, be sure to subscribe and hit the bell notification so you're always up tod date with the latest episodes.