Transcription
Gold is denominated in dollars and as a consequence you have to look at both the numerator and the denominator. Increase in the attractiveness of the US dollar was hard on the gold price. My suspicion is that Walls, despite his academic background, he will become politically motivated and the political class wants, in fact needs, lower interest rates. Understand low interest rates are really a function of subsidizing spenders at the expense of savers. In a democracy one measure of gold ultimately is whether interest rates are positive or negative. And my suspicion is that the real rate of inflation, the real rate of the deterioration of the US dollar is somewhere between 8% and 10%. The fact that the index of gold and silver producers has fallen substantially and has fallen indiscriminately, which is to say relatively high quality companies and the junk companies have both fallen has meant that many companies that I wanted to buy that were outside of my price range are in my price range or coming into my price range. That's a wonderful circumstance for me. Better values at lower prices.
>> Um we saw precious metals surprisingly actually not increase in price during this period. Normally this is seen as a sort of risk-off asset that actually performs well during these periods of uh you know, geopolitical risk and concern. Um yeah, how how why do you think they maybe didn't experience that increase in you know, in price or that that we'd expect them to experience during that such a period?
>> Uh Tony, I'm not an expert in investor psychology but I suspect that the fear that really moves gold prices is the fear of maintenance of the purchasing power uh in fiat instruments. My experience has been that geopolitical concerns give people an excuse to do what they were otherwise going to do. But it doesn't have a very long-term impact on markets. It's fear of the maintenance of purchasing power. I think specifically with regards to the gold market in the first half of 2026 that rising US interest rates led to a rising US dollar. Gold is denominated in dollars and as a consequence you have to look at both the numerator and the denominator. As the real US dollar quote rose, the price of many things that's denominated in dollars as a consequence fell. Secondly, the higher US interest rates and relatedly by the way, the higher US interest rates made yield oriented instruments less unattractive relative to gold than they had been. So it makes absolute sense to me that the increase in interest rates and the increase in the attractiveness less of the US dollar was hard on the gold price. It's my own belief that at some point in time in the not too distant future that you're going to see the US government lose its nerve with regards to the interest rate. And I believe that there will be concerted political pressure 6 months from now, 12 months from now, 18 months from now to lower the nominal interest rate.
>> Gold failed to rally during geopolitical stress and that should concern investors more than a falling price ever could. According to Rick Rule, the bigger force wasn't fear. It was purchasing power and the temporary strength of higher US rates. But here's the contradiction. If rates stay elevated while debt servicing explodes, policy eventually collides with reality. Savers chasing yield may discover too late that nominal returns masked real losses. Next, Rick Rule exposes why future rate cuts could become politically unavoidable long before inflation disappears.
>> And if I'm right, if that happens, you'll see a very different gold chart.
>> Yeah, and just uh you know, we're talking at the time literally where uh sort of the new Fed chair Warsh is uh having his first meeting and I'm just reading here now what it's saying is apparently uh they're looking to abandon the bias towards lower rates. Uh So, apparently they used to be sort of uh writing in the in the text they released which said that they would on average look to lower rates, but that's something that they're not going to do. So, a lot a lot more of a hawkish take from Kevin Warsh. How how do you see that impacting I guess yeah, as you said the monetary value?
>> I'm old enough to remember Alan Greenspan. A a legitimate gold gold bug until he became Treasury Secretary. Uh people who become immersed in politics do what is politically expedient. So, my suspicion is that Warsh, despite his academic background and despite his preference for interest rates that more properly uh reflect the supply and demand of the dollar that over time, like Greenspan, he will become politically motivated and the political class uh wants, in fact needs, lower interest rates. Understand that low interest rates are really a function of uh subsidizing spenders at the expense of savers. In a democracy, spenders are always more numerous than savers. And if they vote their own self-interest, guess what they do?
>> Are there any set of regions that you think would benefit a lot? I know you've mentioned Venezuela, you know, um obviously the US. Are there potential countries, any other regions do you think?
>> For me, because I understand it well, uh I'm over-invested in Canada. I think there's a headline political risk. Their Prime Minister is anti-oil. Uh I'm hoping, as an ex-banker, that he understands that his idiotic spending programs will require him to fund at least 60% of it.
The fastest way to understand future rates is to ignore speeches and watch who benefits from lower borrowing cost. Rick Rule notes that central bankers often enter office with principles and leave with political incentives. The market hears higher for longer, but governments carrying large deficits hear something entirely different. If policy bends toward debt management instead of currency defense, conservative savers absorb the cost through purchasing power erosion. Next, Rick Rule reveals the quiet trade institutions prepare for before public policy officially changes.
>> And he the best chance that he has to do that is to allow the oil and gas industry to expand and the social take to expand. If I'm wrong, I'm going to get creamed. Uh, those companies, meaning the Canadian companies, sell at a discount to their American peers, despite the fact that they have more uh, undeveloped locations relative to the size of their reserves, which is to say, uh, the companies are more undervalued. The difficulty is the headline risk. The other place I'm personally, uh, allocating capital, and your listeners may not want to do this, is that the last sector of the oil business that's really hated is the small cap or micro cap conventional explorer, which is to say, non-shale basin, uh, explorer, particularly offshore and particularly in emerging and frontier markets. This is highly risky, but the change in technology, particularly amplitude versus offset seismic technology, has meant that the success ratios, uh, in offshore basins is dramatically higher than it was 15 years ago, and that hasn't been reflected in the market. So, one thing I am doing is I have reviewed 31 small companies involved in conventional exploration offshore in emerging and frontier markets, and I have been investing I shouldn't say investing, pardon me. I have been speculating actively in that group of companies.
>> Okay, super interesting and yeah, I guess a lot of a lot of these companies are looking for new deep water, you know, discoveries basically and that's where these companies come into play and potentially could have this, you know, find something and then, um, sell off a portion of it or could potentially be acquired by these big players.
>> That's precisely what they do. The the high-quality companies use their own, um, technical acumen, but particularly their persistence and tenacity to get involved with host governments in relatively immature basins. Uh, and they do the preliminary de-risking work, which is to say they shoot the seismic, they negotiate the fiscal terms with the governments, and then the smart ones at least, uh, attempt to bring a major or a large independent in to do the really truly heavy lifting. Uh, it's precisely that type of govern- that type of company, pardon me, as you suggest, that I prefer to speculate with.
Markets reward comfort until the cycle turns and suddenly everyone pays for certainty at the top. What Rick Rule is highlighting is the discounted sectors often stay discounted until technology quietly changes the economics underneath them. Offshore explorers remain politically unpopular, but success rates have improved while valuations still reflect old assumptions. For investors protecting wealth, the danger is ignoring unloved assets because headlines feel safer than numbers. Next, Rick Rule exposes why capital often earns its biggest returns in places institutions publicly avoid.
>> And um you know, we mentioned gold, we mentioned silver. You you'd say that, you know, it's obviously a de- devaluation of of the dollar um in the near term, debasement of the of the dollar. Um do you think that the recent low that we saw could potentially uh be a low or you're as you said, you're just looking more in the longer term?
>> I have no idea. I mean, I really have no idea. I don't know what will happen in the intermediate term with interest rates. I [clears throat] will say myself that
>> [snorts]
>> what I would define as inflation, which is to say the deterioration of the US dollar uh is a much higher number than is evidenced by the CPI. Uh and I believe that one measure of gold ultimately is whether interest rates are positive or negative. And my suspicion is that the real rate of inflation, the real rate of the deterioration of the US dollar is somewhere between 8% and 10%. While the interest rate, at least the interest rate reflected by the US 10-year Treasury, which is the bell market interest rate, is 4.4. So, I continue to believe that the real interest rate is sharply sharply negative. Most people don't share my opinion, but I suspect over time they will. Uh I remember in the decade of the '70s, the specter of inflation was front of was in front of us from the whole period 1968 to 1972.
The most dangerous inflation signal is usually the one investors decide to redefine away. Rick Rule's argument suggests that if real inflation runs near 8 to 10%, while benchmark yields sit around 4%, then the celebrated return on cash may already be negative in real terms. That doesn't immediately move markets, but it quietly erodes purchasing power quarter after quarter. Portfolio safety becomes an illusion when nominal gains lag currency deterioration. Next, Rick Rule reveals the historical delay that makes inflation look manageable right before sentiment snaps.
>> It wasn't until 5 years of experienced inflation that inflation came to dominate the minds of investors and savers. And I suspect that we'll have the same sort of delayed reaction this time, although I can't say when it'll kick in.
>> Yeah, of course, that's always a challenge. And um miners, how how have you sort of been tracking the the gold and silver miners?
>> I'm delighted by the price action. They've fallen substantially. Um I believe that the mining industry, the gold mining industry is an example of the legitimate parts of it will do very well over the 5-year or 10-year term. Uh that means that I'm a structural buyer. Uh I wasn't a structural buyer, well, I was a structural buyer in the early part of this year, but I was priced out, which is to say I couldn't express my preference because the market liked them too much. The fact that the index of gold and silver producers has fallen substantially and has fallen indiscriminately, which is to say the relatively high-quality companies and the junk companies uh have both fallen has meant that many companies that I wanted to buy uh that were outside of my price range are in my price range or coming into my price range. And I would expect the second half of 2026 in my own portfolio will see substantial net purchases. In October of 2025 you may recall that I sold 25% of my mining juniors. I did that because the indexes around the junior gold producers were screaming higher. Uh and I always sell uh hyperbolic charts, Uh at least hyperbolic up charts. Um we don't have that kind of chart now. Uh we see a sideways to down chart where despite the fact that the companies by most conventional valuation metrics are doing better and better and better, their share prices are getting worse and worse and worse.
If assets are improving while prices fall, investors should ask who is selling and why. This is where Rick Rule's thesis shifts from macro fear to valuation discipline. He points to a familiar pattern. Quality miners becoming cheaper even as operating conditions strengthen. Retail investors often chase momentum, but long-term capital usually enters during boredom and exits during euphoria. Next, Rick Rule exposes why declining mining shares may be signaling opportunity instead of weakness.
>> That's a wonderful circumstance for me. Better values at lower prices.
>> Yeah, that's definitely definitely where you want to be and that's uh getting in and and you sort of focus on Canada as well or are you a bit more of geo- geographically mixed on on the miners?
>> Uh where I think I'm going to end up being more exposed is West Africa. The political news out of West Africa is horrible. Uh and I suspect that the political news out of North America is going to get worse.
>> [laughter]
>> Uh for me, it's a question of the size and the quality of the prize relative to my own interpretation of the risk. When people hear news out of a place like Ghana, uh they don't understand that the risk there is merely different than the risk in the United States and Canada. The direction there is worse, uh but often the same amount of net present value can be obtained in West Africa at 50% of the market cap of the same net present value in jurisdictions that white people are more comfortable in.
>> Yeah, and in West Africa it seems like we're seeing quite a lot of investment in oil and gas and then you'd imagine the next step would be, you know, the miners and so I got some of that's probably more risky cuz it's unsure on how it's actually going to get out of the country, but
>> Well, there's some some nice exploration results taking place in West Africa. Uh you know, the industry has been exploring in a fairly concerted basis in West Africa now since the decade of the 1990s. Uh and it takes usually 10 or 15 years for greenfields exploration to start to work. And uh exploration there truly now is in high gear and the results that we're getting uh in West Africa uh are pretty spectacular uh across a wide variety. There's also been uh in terms of stability I don't mean political stability. I mean
>> [laughter]
>> uh the end of regime wars.
The market usually prices political fear immediately, but resource scarcity much later. According to Rick Rule, valuation gaps between regions may reflect perception more than actual economics. Capital crowds into familiar jurisdictions until returns disappear while overlooked regions accumulate hidden optionality. For wealth preservation investors, the lesson is uncomfortable. Geographic comfort can become an expensive portfolio bias. Next, Rick Rule unravels why exploration cycles often reward patients long after headlines scare investors away.
>> Uh uh a lot better uh opportunities now in places like Sierra Leone and Liberia, places that even if you wanted to explore before you couldn't explore as a consequence of civil war. Uh So, I I I would say in many regards my favorite exploration theater in the world is probably West Africa, largely because of the people hate it.
>> So, is where you find the cheap options potentially? That's That's the way. So, you know, you you talked about uranium previously as well that you're sort of quite a you know you've been a large backer in the past. Are there any other commodities including that that you're sort of quite interested in at the moment or you think they could potentially be sort of less loved and undervalued?
>> Yeah, you know, sadly Anthony, nothing in our sector is hated anymore. Uh there was a lot of easy money to be made in the sector 5 years ago. Silver was hated. Uranium was hated. Oil was hated. Natural gas was despised. Uh there's not enough hate left. Even coal uh is regarded fondly now in investment circles. So, I would suggest that across the spectrum of natural resources, uh easy money, the really truly easy money has been made. I define easy money as when a sector is so broadly hated uh that all of the sellers having expressed their opinion have already sold. When you exhaust the sellers, markets have only one way to go, which is to say higher. That period's over. Uh in terms of several commodities, uranium included, the sure money, the certain money is ahead of us, but the easy money's been made.
When everyone finally agrees an asset class is attractive, most of the effortless gains are already gone. Rick Rule notes that the easy money phase in resources often ends long before public enthusiasm peaks. Markets reprice hated sectors quietly, then sell certainty back to late entrance at premium valuations. Investors protecting purchasing power should distinguish between strong long-term themes and crowded positioning.