Transcription
The point of this is that the price escalation that you've seen in oil in calendar 2026 is really a preview of things to come. Welcome to Thoughtful Money. I'm Thoughtful Money founder and your host, Adam Tagert. And I'm very pleased to be able to sit down uh with the great Rick Rule um fresh off of his very successful annual symposium there in Boca Raton, Florida. Rick, thanks so much for taking the time to join us.
>> Thank you, Adam, and thanks for your participation in support of the Natural Resource Investment Symposium. I appreciate that.
>> Well, I appreciate that, but I'm going to thank you right back. I had an absolutely wonderful time. Um, you put on a fantastic event and you are a great host, as is the staff that you've assembled there. So, um, really had a just a phenomenal time there, as I know everybody else who I got to talk to there did as well. Um, Rick, you know, we we we had you on a couple months ago leading up to the event. You talk about how what makes this special is you're a guy who's a been in this business for decades and b goes to a lot of these things and this is kind of your opportunity to assemble what you deem to be the cream of the crop in terms of the greatest analytical minds to come speak but also the greatest uh you know commercial uh vendors that are out there actually doing the mining and uh pursuing these uh natural resources that everybody wants to invest in. So, um I I from my perspective, mission totally accomplished. Uh great time, learned a lot from a lot of great people, met a lot of great um mining executives that are there. In fact, I got to have lunch with Rob Mchuan. And uh man, Rick, I'm I'm not sure there's a nicer man on the planet than Rob.
>> That's accurate. I've known Rob long enough that I did business with his father, which will >> wow >> tell you how long I've done business. He is, as you say, a wonderful guy, an accomplished mining executive, also honored with the uh Order of Canada, which is the highest uh civilian uh award issued by the government of Canada for his contributions to Canadian philanthropy. Uh
>> so folks, that's the kind of caliber of of person that Rick is assembling at this event. How I got squeaked in the side door, I have no idea, but I'm so grateful of that, Rick. Um, so I'll talk in a little bit about some of the key things that I noted there, but I'm I'm much more interested in asking you as the men who put this all together and um, you know, got to watch it all unfold over the five days of the event while you were there. What were some of your key takeaways there? What were some of the things that the great Rick Rule actually learned while he was there?
>> Well, the first day takeaway is that what you hear in the popular media uh, is in many senses different than what's occurring. Uh I think that's important. We tried to recruit our macro speakers not really from journalism but rather from people who had participated uh, you know, um Nomi Prince can talk about the correct you know, the corrupt nature of Wall Street because she was a partner in Goldman Sachs. uh, you know, it goes like that and I I think it's important that you juxtapose the arithmetic of the way the world works today with the way that uh CNBC and Fox tell you it works.
>> Uh, I'm not trying to say that the world is better or that the world is worse than is portrayed in popular media. What I'm trying to tell you is that the world is different. And I think it's really important that you understand the way the world is before you construct a portfolio designed to protect yourself and/or prosper from the world ahead. I think that that same disconnect uh continues down into resource markets. If you pay attention to the way the big brokerage firms or some of the more popular opinion leaders in natural resources talk about the markets and you compare and contrast um their perceptions with say Adrien Day, somebody who's money in these markets >> through good markets and bad for 40 years. you notice a huge disconnect between the story that you're sold on the internet and other places and the market as it exists today. Uh a shout out to the conference I guess uh I've been going to conferences for a very long time and I'm a highly competitive person. The idea that you segregate among exhibitors, that you uh only allow exhibitors whose stock you own, I think contributes to a better conference too. There is an enormous qualitative difference between a conference that uh segregates among uh exhibitors and somebody who lets in anybody with a check that cashes.
>> Right?
>> We admitted 68 public company exhibitors this year. we turned down at last count 135. [laughter] Uh I think that's important. And the final thing that I have to say about the conference is uh I've been putting it on for 31 years. By the way, this was the first year that the conference really truly met my object my objectives. Uh it did that uh because of the interplay between the conference and the Rule classroom. The attendees who came this year were armed with 300 hours. Not that they all took advantage of all 300 hours, but they were armed with 300 hours of educational material. A and it's important, I think, for the conference that we interviewed every single exhibitor and every single speaker before the conference so that the attendees had the ability to attend the conference well prepared. uh and those two things uh the importance of quality in your investment decisions uh and the importance of your own preparation that is not that you got a hunch bet a bunch but that you've actually done the work necessary to get out of the conference uh what you put into the conference I think is what made the difference we had Adam I don't know if you noticed this uh I noticed it to my great delight we had attendees that have been for long enough that they self-organized into posies. Four or five attendees would form a team to interrogate uh exhibitors. Uh one team asked the same question of the same exhibitor three different times by three different people to make sure that the questions the answers would track. Uh I mean this was a full contact event this year and I
>> Yeah, I love that. I'm pretty sure I got hit up by a couple of those posies myself. Um, I've already mentioned on the channel, Rick, it it great experience there. One of my biggest challenges of the event was literally just walking across the event room floor. Um, I'd want to get somewhere and it would take me like an hour to get there because I'd talk to somebody and then as soon as I was done, I'd take a step and somebody else would come up. uh incredibly engaged audience and I and I really do uh respect what you guys have built there with the the preparatory content as you said and it just makes total sense if you want the conference to be a a home run for you it's a lot easier if you you arrive at the conference already on second base right
>> I think Adam that's part of the function that you yourself fulfill uh in the popular media uh it isn't enough to be exposed to opportunity it's important that your paradigms be shaped in a way that you can study the opportunity uh in a way that leads to the probability of your success. It's the process that becomes important and many people forget that.
>> Okay. All right. Well, thank you. And I'm sure everyone's saying, "Hey, but guys, stop the mutual appreciation society here." Um, I I I'll say some things I I noted there and I had the great pleasure of being on stage with Nomi Prince and Adrien Day as you mentioned there. Um, uh first off uh, you know, I noticed that a on a lot of people's um dance card there terms of the the speakers and a lot of the exhibitors copper was a big theme. I know you've been very bullish on copper of late. Um, they are too. there seemed to be a lot of validation for what you've been telling this audience, my audience about about why you're bullish on copper. Heard a lot of other um minerals that don't generally get a lot haven't gotten much play in past years but are now. Um, antimony was one of them. U titanium being one. Um, so uh I think one of the big themes there was in this new more fractured world right this this era of delocalization um where countries are are trying to resource supply chains becoming less um reliant on um uh other supply chains. Sorry, tungsten was another element too that was mentioned. um, you know, there there's a investors are casting around the world to say okay wait a minute where can we get these minerals from sort of safer jurisdictions than maybe where we've gotten them from from in the past that seemed to be a really interesting theme this time around that a lot of a lot of minerals that I think we just kind of took for granted or or really just kind of glossed over uh before are now becoming you know in increasing number of investors crosshairs did you detect the same
>> I did and I think it's important that your listeners who are not necessarily resourced centric understand that we've been three decades underinvesting in natural resources. If you add on to that uh increasing geopolitical challenges, the fact that the world is becoming less united as opposed to more united, what we're going to see is lots of different uh resource commodities, lots of different components in the material standard of living which we either live or aspire to live in are going to be challenged. Now I try to emphasize the big markets like oil and copper because they require less sophistication. Uh you have to be less exactly right. The further down the periodic table you get uh the greater the potential leveraged rewards but the higher the potential risks.
>> As an example in the vanadium market it would take one big discovery to change supply uh and you can crater the price. I remember that happened in the in the molybdenum market 15 years ago. We got short of Molly. Everybody went crazy for Molly. The big pop copper producers added Molly circuits to the back of their porphyry plants and all of a sudden the world was way long Molly as opposed to way short Molly. So it's important when you think about all these sub themes in the context of the whole that you understand that the smaller the market, the antimies, the vanadiums, the tungsten, the more near-term upside there is and the more risk and volatility that there are. What we try to do at the conference is give people the ability to understand that uh to ascertain where they are on the risk-to-reward spectrum. But you're absolutely right. There were discussions of minerals that are far outside the investment mainstream. And I think there was a lot of discussion uh about who for whom those minerals might be appropriate and why. There was, as you suggest, a lot of discovery that you almost never see in the popular press about the realities of political and geopolitical risk. Uh, including my own perception that every country in the world is bad. Uh, it's just that some political mis political risk is mispriced as opposed to other jurisdictions. I and I suspect you would say to our attendees that one of the riskiest jurisdictions that you or I have ever operated in was the state of California which not popularly perceived as risky. Uh and it's important that a conference such as ours addresses the totality of risk and the totality of reward.
>> Um, one of the things that that um we talked about on my panel, I actually shared a story from when I was in business school. You know, at at at Stanford, we were all eager free market capitalists and um eager to take all the classes that interested us, but there were a few core classes they forced us to take. And I can't remember the name of this, the official name of this class, but we all informally called it non-markets. And it was all the things that could kind of, you know, get in the way of free market capitalism. This is things like monetary policy, legislation, regulation, stuff like that. And I think maybe even above cost accounting, it was the class we all least wanted to take and we were just like, why are we taking this? It has no relationship to the world the way we think it should be. And whatever. Um, it turned out to be probably the most practical class we ever took because in the decades that followed, uh, the government has increasingly, you know, put its thumb on the scale in a lot of ways through these non-market interventions. Um, and [clears throat] um, two questions for you. So obviously one of one of that is is to all these things we're talking about, you know, the US has been adding increasing number of elements to its critical minerals lists. Um, it's now uh, you know, providing incentives for companies to get out there and pursue some of these minerals. It's providing grants. It's it's stripping away regulations. Um, I think a lot of that is good and very exciting for natural resource investors. Um, I've got a follow-up question to that, but let me just take a beat there. Are are you seeing similar and is this kind of making you more excited going forward just because there's more skin in the game now for the world's governments behind a lot of these things?
>> Both more and less excited. Uh, as a taxpayer, I'm horrified.
>> Mhm.
>> Uh, as somebody who's been an investor in the space for a long time, the idea that a bunch of dumb money comes behind me and there's no money as dumb as government money uh is attractive uh but I really am uh of mixed opinion. I am certain that the government's application of capital will be a misapplication. There's zero doubt about that. Uh, it won't be based on the risk-adjusted net present value and the probabilities of return on capital employed. It will be based on what will generate the most votes for the people who cause it to occur. In other words, there will be a non-economic transaction that takes place.
>> I look at my own experience seven years ago uh during the Biden administration. People like me who were advocates of US uranium were likely to find their picture on a post office wall. [laughter] Now, these same guys who vilified us want to subsidize us.
>> Right?
>> I need to say, Adam, I felt cleaner when I was on the post office wall than being subsidized, but I certainly understand that there's no money in the world the mining industry likes as much as dumb money. And the dumb money is literally cascading down into the business now. So, in terms of the return on capital employed that will be enjoyed by smart money that front ran that was front running the dumb money, these are wonderful times. Okay.
>> Mountain Pass, as an example, uh in our former domicile, California, uh received a massive government grant. Uh in my lifetime, that deposit has been bankrupt three times.
>> Um, so, as a taxpayer, I'm horrified. As a speculator, I'm delighted.
>> Okay. Um, so thank you for offering that validation, which is if you are an investor in this space and you can figure out where the dumb money is going and get in front of it, it can be a huge tailwind for you. Um, I also told a little story which I'll keep really brief here, but um I was um at a event, social event here in Nevada where I live with a um, a mining CEO. Um, he's he runs mines even though he lives here in Nevada, he runs mines up in Idaho and um they've got a lot of um I called it Antimony, but I guess it's antimony. I think I heard you pronounced correctly. Um, so they've got a lot of antimony uh and the government has approached him and said, "Look, you know, we're really trying to help increase the nation's antimony production." And they're they're like aggressively throwing grant money at him and they have these, I guess, budgetary deadlines where it's got to be spent by. So, you know, he's basically saying they're kind of making my life a living hell because I got to get all this stuff ready to be able to qualify for this grant, but they're just shoving it down my throat. Sure, I'll take it. Um, so to your point, there's a real urgency behind this. And of course, when when the government has that type of urgency, you can make sure that they're they're not really dotting all their eyes and crossing all their tees. Um,
>> and this was, of course, after spending 13 years in needless permitting activities before they decided to subsidize him. I mean, the juxtaposition now and then is striking. And I need to say that uh the United States permitting regime had to become more practical and less political. It had to be about not doing harm as opposed to satisfying the sort of woke personalities of some elites.
>> And that has begun to happen. I have a friend in the BLM who I've known a very long-standing and he said, "Rick, if you want to get something done, you got two years."
>> Oh, okay. just in case there's an administration shift. Um, okay. So, here here's where we're getting to my second question. Um, but to segue into it, I'll go back to your nuclear points, Rick. Um, you know, I have been very heartened and and I don't follow this nearly as much as you have. Um, but I've been very heartened about uh the alacrity by which the current administration you know appears to be um pivoting the government from complete opposition against any innovation in nuclear or anything in nuclear to oh my gosh we've got to you know, basically engineer a domestic nuclear renaissance as fast as we can right, you're nodding as I'm saying this um and so you know, the the government when it puts its mind to it can be a real enabler and provide a real tailwind uh to industry and commerce and uh I think what's going on in the nuclear industry right now is a great example of that where they've just they're they're slashing regulation as fast as they can hopefully still you know preserving essential safety elements. Um, but they're really driving a ton of innovation that's going on there and I've I've interviewed some really interesting companies on this channel of late like in the micro nuclear reactor space. Super fascinating. Um, so when I told this story on the stage about the the non-markets class at Yahoo and the fact that investors really need to be aware that the government is stepping in and I'll say, you know, creating winners and losers, but but I think the intent is to try to create more winners in some key um key sectors for the the economy. Um, Adrien Day then sort of you know, went on I I a tirade that I very much agreed with mostly which was you know, he was he was all for the government kind of getting friction out of the way of commerce but but at the same time completely opposed to the state taking an equity stake um in major companies. you know, he said, "Look, that's that's just the the basis for, you know, socialism and eventually communism. I mean, that that's state control." Uh, he got a pretty much a standing ovation from the audience, which I participated in. Um, but I asked him afterwards, I I said, you know, Adrian, like, where is the line? Like in other words, if it wasn't an equity stake in in a company, but it was a a favorable loan um, you know, or a grant um, that that's trying to accelerate a national objective, you know, for example, we want to create X amount of incremental, you know, nuclear electrical production by a certain date. Does the government have a role to play to try to provide incentives or or help companies get there? Um, where is that line between being an enabler and stepping into state control?
>> I don't think that it's the government's business to pick winners and losers.
>> Mhm.
>> If the government removed the obstacles, here's an example. Uh, the last US reactor that was built, a big reactor, a gigawatt reactor, uh, cost with delays and customization about 29 billion dollars. Can you get the time on that? When was that? Was that like in the 70s?
>> Oh, no. No. Just completed year and a half ago. Years ago.
>> Uh, the Chinese are building gigawatt reactors for $6 billion each.
>> Mhm.
>> Because they build them at a clip of the same kind.
>> Right.
>> They aren't required to be re-engineered for local political preference.
>> Yeah. to the extent that the Nuclear Regulatory Commission uh enabled uh the development of a single American prototype which could be permitted on a cookie-cutter basis and could be assembled, we could cut the cost uh the front-end cost, the capital cost of nuclear power generation in the United States from $28 billion to $6 billion.
>> Our technology is as good as the Chinese, but the Chinese get to employ it a lot. So, they tweak it better and better and better.
>> Right?
>> Getting out of the way is the first thing the United States could do. The second thing the United States could do that wouldn't cost the United States any direct money would be to change the tax code. Make it as investor friendly as the Chinese tax code or for that matter the Swedish or the Danish tax code.
>> Mhm.
>> If you and I were to build a nuclear power plant in Denmark or in China, uh, the concrete shell of the building, uh, we could depreciate uh for tax purposes in 5 years, including against other income. In the United States, we would depreciate that via straight line for 30 years.
>> Okay. [clears throat] uh, to the extent that the US tax code became more investor friendly and less consumer centric, most of the competitive disadvantage that we face versus other countries would be eliminated. It's important to note that the u [clears throat] some of the countries that the political class uh likes so much, the Nordic countries have much more investment centric tax codes than the United States. So to the extent that we eliminated regulatory roadblocks and we were affirmative uh in terms of what we expected with regards to resource development, eliminating the export of deleterious materials and standardizing safety designs across reactors uh across refineries a and I would further advocate something that the industry would hate uh front-end environmental bonding for all resource and extractive activities in the United States.
>> so that the the downside, the disutility of mistakes wasn't socialized, but rather was kept private and then changed the tax code to make it competitive with Japan, Korea, China, Sweden, Denmark. Uh, we wouldn't even be having these discussions.
>> Okay. Well, that's a that's a great list. Um, and uh, I mean, hopefully I don't know, hopefully maybe we're starting to get there, but but basically what I what I take from you Rick is I mean the government is going to favor different industries just based upon what it deems as in the national interest, but your point is, okay, so remove the friction within that industry first, second, enable the inflow of capital to that industry, but largely from a private uh source and it's not directed to a particular um, you know, set of companies on a favorable basis. It's just let the free market decide where that cap that private capital should go.
>> Certainly with regards to resource investments, Rick Rule would prefer Rick Rule allocated Rick Rule's capital.
>> Mhm.
>> To having Donald Trump or some senator who arguably knows an awful lot less about resources than I do, allocate my capital for me.
>> Okay. Um, well, hopefully um some of the influential minds there in politics listen more closely to the Rick Rules, but the reality right now is that there's just a lot of money flowing out of that, you know, DC and into these industries and as a natural resources investor. You know, I'm going to speak for Rick Rule for a second. Um, there's all sorts of reasons to be excited about investing in these natural resources for reasons of underinvestment and future demand and all that type of stuff. But then there's the additional reason of hey, there's a there's a gravy train of liquidity flowing into this. Put yourself ahead of it.
>> Right? And and you know, the impact of that uh, a cynic could say is be has been seen in China. Uh, the Chinese government have used the Chinese banks as conduits of below market capital for Chinese companies. The consequence of that is that they've grown world-scale businesses in 30 years. I'm not in favor of that. But uh, if a [snorts] non-investment grade company goes to build a gold mine, the loan uh on the construction loan, the construction loan is likely to cost them between 13 and 15% per annum. To the extent that an investment grade company does that, that can borrow on balance sheet, that cost of capital is more like 6.75%. to the extent that a Chinese firm does it and borrows through Industrial Commercial Bank of China, that same loan costs three and a half%. So for one of the independent miners that you would have seen at my conference, the sort of gold uh of the world, the Aerys Minings of the world,
>> their cost of capital for construction [clears throat] is somewhere between 13 and 15%.
>> Zjin's cost of capital is 3 and a.5%.
>> Wow. Wow. Okay. Um, by the way, I just want to mention, Rick, I meant to say this while we were talking about your conference. Um, folks, if you missed Rick's conference, um, all of the content, uh, you know, all five days worth as well, Rick, is is the the previewing you had, is it all assembled together?
>> No, the previewing anybody can re anybody can look. All you have to do is go to the Rule Investment Media YouTube channel or the Rule classroom. either venue has every pre-conference interview uh loaded uh and and they'll be loaded for a year. Uh anybody can do that and thousands and thousands of people who didn't attend the conference have.
>> Okay. Well, if you're watching and you haven't done it, folks, that's where all that content is. But if you want the actual good stuff that was behind the velvet rope at the conference and it's 5 days worth of great stuff, uh just go to thoughtfulmoney.com/rulesymposium and it'll redirect you um on how to get uh replays of all those videos. Um, if
>> I might add something there, Adam.
>> Yeah.
>> Uh, every investor education product I've sold in 31 years of selling them has come with an unconditional money back guarantee. Uh, if you order the recordings and listen to them and don't think that they're worth what I charged you, email me. I'll give you your money back. The truth is, in 31 years, we've had to refund about onetenth of 1% of the tuitions that we've charged. But that's your guarantee. This is one of the few riskless transactions, financial transactions that's on offer in the world.
>> You're such a good guy to offer that, Rick. Um, fantastic guarantee. And yes, I'm I'm having been to the conference, I'm quite sure nobody's going to take you up on that. Um, it's just an overwhelming delivery of value. Uh, all right. Uh, so I've got some questions for you about uh the Iran war and its repercussions. But before we do that, Rick, a quick note from Plaude. Um, so folks, one thing I've learned from interviewing investors, economists, and business leaders is that information only has value if you can actually act on it. We spend hours every day in meetings, conversations, interviews, and discussions, gathering insight. The challenge isn't finding information anymore. It's retaining it, organizing it, and turning it into better discussions. That's what caught my attention about Plaude. Instead of dividing your attention between the conversation and your notes, Plaude helps capture what's being discussed, so you can stay focused on listening, asking better questions, and engaging in the discussion, which is essential for me as a podcaster, folks. And afterwards, it organizes everything into searchable notes, summaries, and action items that are easy to revisit when you need them. For professionals who spend their day in client meetings, investment discussions, strategy sessions, and decision-making conversations, the Plaude Note Pro helps capture key details, follow-ups, and action items without spending hours rebuilding your notes later. And by the way, folks, this is the Plaude Note Pro right here. Man, you can see it is really thin. It's super lightweight. Um, barely has any weight to it at all. Um, and you know, you can put it uh in your pocket or whatnot, but you can also attach it right to your phone. It can spend the whole day with you. And for people who spend their day moving between conversations, events, client meetings, and research, the Plaude Notepin S provides a hands-free way to capture important information the moment it happens. You've seen me wear this on previous interviews, folks. I just wanted to show you how simple and easy it is to put on. It's just got this little magnetic backing. Um, you can clip it to your your lapel or your pocket there. Or you can just use the magnet like this and uh, voila. That's all you got to do. And then it just records. There's no need to pull out your phone. There's no need to interrupt the conversation. In fact, um, I've got the Notepin S on my lapel now. As you can see, it's great in helping with key tasks like interview prep, researching market um, reviewing market research, and discussing ideas with guests or preparing for upcoming conversations. The goal isn't simply to remember more. It's to retain the information that matters, revisit it when needed, and make better decisions because of it. That's where tools like Plaude can make a real difference. So check out Plaude at plaude.ai/adam and use code adam for up to 20% off. All right. Now Rick um one thing that has changed since your conference uh has been the resumption of kinetics between the US and Iran and uh, you know, things were looking at your conference uh that perhaps maybe [clears throat] cooler minds uh cooler heads uh diplomacy was going to win out and that the ceasefire would hold uh and that, you know, we'd get back and make progress on the negotiations and that the Strait of Hormuz would open up and oil would be freely flowing. uh that's definitely uh been thrown a monkey wrench uh since then and very unclear as to if and when the Strait's going to reopen. So um a lot of uncertainty now. Oil prices have risen dramatically since their selloff. Um, uh Brent is already over 90. I think futures are getting close to 94, 95 right now. Um, WTI is still under 90 but it's getting close. Um, so uh how much has this resumption of kinetics I guess uh affected your outlook and what material ramifications if any do you expect here for oil and any other critical commodities?
>> If [clears throat] we can uh if we can deescalate, that is to say if heads if clear heads ultimately do prevail and if they can prevail within sort of of the 10-day time frame um, we'll duck the consequences. There are still reasonable reserves, strategic reserves in places like China, Japan, the United States. Places that couldn't afford reserves like like Sri Lanka and Pakistan, they're already behind the eightball. [clears throat]
>> You know, they were already behind the eightball. But it's important to know that the increase in oil prices that we've seen is as a consequence of the threat of a shortage as opposed to an actual shortage. If we come into an actual shortage and you ration oil by price, I don't know what that price will be, but it'll be much higher. In North America, we will be less existentially impacted because we produce lots of oil. Adam Tagert will go to the pump, look at the price, use some improper English, uh, fill his car and drive away. A taxi cab driver in Colombo in Sri Lanka looks at that higher price and he parks his cab.
>> Right?
>> He stops. So, it really depends on who you are looking.
>> In theory too. If if our if our national reserves got low enough, we could theoretically stop exporting, right?
>> Oh, yeah. Absolutely. Yeah. And and I think we would uh the political impact of [clears throat] providing crude to the world when Americans couldn't drive, I think would be very, very high and I think the president and congress would >> would agree on that. That hides though uh I think an important part of the conference which is to say that the shortage of oil that we're experiencing today is artificial and temporary. It has to do with war. The shortage that we're facing late '29, early 2030 is structural.
>> Because we didn't explore and drill for it back in 2019 or 2009. Right?
>> It's a consequence of 30 years of underinvestment but in particular three years of the industry deferring sustaining capital investments to the to the extent of about a billion dollars a year. This doesn't necessarily impact you in year one or year two or year three, but [clears throat] it impacts you in the out years. And that structural imbalance, the structural shortage isn't something that can be cured with an armistice. It's something that has to be cured with massive capital investments over a fairly long period of time. The point of this is that the price escalation that you've seen in oil in calendar 2026 is really a preview of things to come. The difficulty is that the [clears throat] the ability to correct that imbalance [snorts] uh the probability of correcting that imbalance in a reasonable time frame is much lower when the shortage is due to structural rather than artificial reasons.
>> Um, so let's let's talk for a second about potential opportunities that that that that's making available to today's investors. So obviously in the near term, the higher the oil prices go up, the better it is for oil producers stocks, right? Their stocks generally tend to to follow the the oil price. Um, and we had a really interesting, you know, so I know you were very bullish on um the oil and gas sector uh coming into this year and you and I talked at length about that on this channel. Um, neither of us had any clue that, you know, we were going to go to war with Iran. Um, and stocks started rising before the war. I mean, they they actually started rising, I think, as the, you know, Wall Street was starting to wake up to, I think, what you were talking about. Then the war happened and that was everybody's focus. Then the deal got signed and oil prices, you know, as Trump said they would, dropped like a rock. Um, but then we've gone back to kinetics and oil prices are are rising back up again. So I guess my question for you is is um even if even if this gets resolved at some point favorably this year um, will [clears throat] do you still see a reason to continue to accumulate energy stocks here even though they they kind of had their run-up earlier this year? Um, and if so, are there any particular names right now that you're particularly interested in?
>> I think that depends on your time frame. Uh, oddly, as I get older and have less time frame t time left on earth, I become more patient.
>> Mhm.
>> Not because my time preferences have changed, but rather because I now understand how long it takes for an investment to mature.
>> Yep.
>> So, I'm thinking right now about 2029 and 2030.
>> Okay.
>> Uh, let's let's go with that time frame.
>> If you look at that time frame, oil stocks are cheap. Uh, I mean really truly cheap. uh, what happens in the course of this year I have no idea about, but the real shortage is a structural shortage, not an artificial shortage with the caveat that I can't determine which way the war goes.
>> Mhm.
>> Um, it wouldn't surprise me uh maybe it would surprise me. I hope that people get tired of killing each other and the consequence of that is that in some way shape or form peace returns to the Middle East. And I think if that happens, the oil price goes much lower. One of the consequences of the high oil prices that we see is that we kill demand in low-income countries.
>> And that demand [clears throat] comes back. When the supply increases and the demand doesn't increase, we see a crater in price much like was much like we saw as a crater in price during the COVID periods of time.
>> Right. And we've also totally incentivized everybody else in the world who's an exporter to produce more.
>> Correct. Correct. Uh, looking a bit longer though, uh, the deferral of a billion dollars a day in sustaining capital investments has been exacerbated a lot by the war uh because countries like Iran had other uses for the cash. You know, they weren't they weren't making sustaining capital investments and a lot of the existing capital they had got blown up. It needs to be repaired. not just in Iran, uh, in, you know, in the UAE, in Kuwait, in Saudi. So, not only has the deferral of sustaining capital increased, but the truth is that the requirement for sustaining capital to repair stuff that we blew up uh has increased. This exacerbates the circumstance in 2029. It doesn't ameliorate it. And we don't really even know at this point in time too how much damage might have been done to at least Iran's wells right as they were getting um, what's the term, put in stopped in or whatever when we really had the the hardcore blockade?
>> shut in. Yeah. Um, I mean, do do we have any intelligence on that or are we just sort of assuming that?
>> What we do know is that the Iranians have been chronic offenders with regards to deferred sustaining capital investments and the Iranians haven't been able to avail themselves of either US or or Canadian drilling and completion technologies. The Iranians are using technologies that are 20 years old. It might be to their benefit if some of their producing inventory was destroyed. uh, so that they can re-engineer those wells. If you look at the production performance on the Iranian side of the South Pars field and juxtapose that with the production uh profiles that the Qataris enjoy, the same field on the other side of an international line uh, the Qataris are much, much, much more efficient both because they've maintained sustaining capital investments but also because they've had access to US drilling uh and completion and production technologies. The Iranians like the Mexicans and the Venezuelans need a major reset of their infrastructure spending.
>> Okay. Um, so I'm curious, you know, on a relative basis, does and and we'll get to, you know, companies you like. Um, does this benefit kind of the the US-based producers because on a relative basis, they're going to come out of this with with a maybe more incremental demand because the world is going to say, "Look, we were sourcing 20% of our oil through the Gulf. We don't trust it as much anymore as a source. We'll still source some from there, maybe 10%, maybe 12, but the rest we're going to get elsewhere and we'll be part of elsewhere." Um, and that to your point, we have you know, superior technology innovation and right now an administration that is trying to remove the red tape uh and the friction from the process.
>> We also have the best companies uh it it's important to understand the degree to which American companies lead the world in I I would say American and Canadian to be fair. Sure. uh lead the world. Um, and I think the world, whether they like it or not, is starting to notice uh American companies are beginning again to be preferred partners uh because it's perceived that there's a political administration in the United States isn't hostile to the oil industry anymore, but also because the economics and technological dominance of North American producers has been proven. Now when one when one looks at competitors say Total uh, Total is probably the best country uh, pardon me, company in the world in offshore exploration in West Africa. Uh, and traditionally Total has enjoyed the favor of the French equivalent of the State Department. But if you compare Total as an investment [clears throat] to somebody like Exxon, you need to understand that Total is [laughter] basically an outsourced apparatus of the French state. not not necessarily run for the benefit of shareholders.
>> So when you observe uh everything about the oil market for the next 10 years, I think your portfolio has to be overweight the United States and Canada.
>> Okay. And again with your 2030 lens on um, are you just most excited about just the big guys? You think they're going to, you know, be the dominant guys or are there some other players there that you think are worth looking at too? For most investors, Adam, who can't stomach volatility and don't want to do the work,
>> buy Exxon.
>> Buy the best of the best. 20-year track record, 30-year track record in intelligent application of capital. Uh, unlike many of their competitors, they maintain sustaining capital investments. They didn't scrimp. They made a discovery in Ghana that amazingly at 19 million billion barrels, pardon me, is big enough even to move the dial on Exxon. Um, for most people, uh, you know, people who want to read books and tend their garden and look after their children, their grandchildren,
>> buy Exxon, enjoy the market beta,
>> just sit back, uh, and let wonderful things happen to your account over time,
>> okay? And just reinvest those juicy dividends if you can,
>> whatever you choose. uh the beta which I would describe as the extent to which the oil market outperforms the broad market, I think will be extremely pleasant uh and the de-risk way to play that is Exxon, the finest company in the space. If you want to take a little more risk, great, buy Chevron. If [clears throat] you're willing to take some balance sheet risk, buy Occidental Petroleum. You know, Buffett had the courage to buy it, maybe you do too.
>> Are we still at a point where you can buy into Occidental Petroleum at a buy-in price lower than Buffett's average price?
>> Yep. And the price that Buffett paid matters less than the fact that five years from now, the chickens come home to roost in the underinvestment and sustaining capital. Occidental's challenges are balance sheet challenges. You know, they took over Anadarko and that was a big, big, big, big bill and, you know, those synergies are in the process of being realized as opposed to having been realized. Now, a lot of the balance sheet risk was ameliorated by selling a bunch of their infrastructure assets to Buffett. He put another $7 billion in the company by buying, you know, some of their gathering and transmission assets that uh reduces some of the upside associated with those assets, but it takes away a bunch of the financial risk. If you want alpha uh depending on how you define alpha uh, I suspect that in the US, the US gas glut goes away in two, two and a half years. uh gas players include Devon, which recently completed a merger with Coterra, becoming the largest independent gas producer in the United States, and EQT, uh, which is the key player in the US Northeast in the Marcellus uh, the best place to meet supply and demand because there's plenty of both up there.
>> [clears throat]
>> If you want more alpha, I think you need to go north of the border. You need to go to Canada. In going to Canada, you need to understand too that there is real political risk there. The new leader of that country, uh, Carney, >> unlike his predecessor, can add and subtract. Uh, he understands that revenue from oil and gas is important for his spending plans, but he is still anti-hydrocarbon. The headline political risk is that the guy who runs the place doesn't like you. And that's a real risk that you need to consider. If you think that he will be brought to tow by reality, which is what I'm hoping, that opens up a lot of opportunity. Uh, we talked in prior interviews uh about my so-called Magnificent 7 of Canadian oil and gas stocks. that uh that number fell seven weeks ago when Shell decided to take over ARC, which was also my favorite.
>> I know you loved ARC. Yep.
>> Yep. But the list of companies up there uh probably includes Cenovus now. Not a particularly good company, but selling at such an insane discount on any financial metric. Canadian Natural Resources, which is basically almost a mutual fund of Canadian oil and gas production. It's one company, but they inhabit almost every play uh up there. Freehold Royalty, which is probably my remaining favorite in Canada. Tourmaline uh, which I think is the best performer of the Canadian producers. Birchcliff and PO, which are the two gas-centric uh players in Canada. and an odd special situation called International Petroleum, a heavy oil producer controlled by the Lundins, uh, whose major capital investments are behind.
them, just starting to absolutely gush cash. If Mr. Carney and Mr. Trump can agree on debottlenecking the Keystone pipeline, enabling the sales of more Canadian heavy oil to heavy oil starved US Gulf Coast refiners. Uh, I think you'll get an added boost in boost, pardon me, in little international petroleum. I say little, they're a 50,000 barrel a day producer, but compared to Exxon, right?
Um, all right, Rick, this has been fantastic. Thank you for being so specific. I'm curious, um, two regions of the world. Um, one, Venezuela. Right? I mean, it's not in the news so much, but apparently things are, no news is good news, things are going well down there, um, post-Maduro removal. And, um, as I understand, production is increasing there. I think it's going to take an awfully long time, largely for reasons you mentioned, which is they're using antiquated technology and a lot of these wells have just been completely and totally mismanaged. Um, how, how much of an opportunity is that spell for some of these US producers you talked about who are basically in charge of revitalizing those wells?
Huge opportunity, particularly for Chevron, who [clears throat] stuck it out and didn't leave. Uh, that took either real courage or no common sense. I'm not sure which. [laughter] The current production surge that you're seeing in Venezuela, by the way, isn't a function of reinvestment. It's a function of overpulling existing producing assets, which is very dangerous. Subsequent to, uh, Maduro's vacation in the US, uh, some people will note that Venezuela suffered a major earthquake. Uh, right, the Venezuelan government doesn't have the capability of knowing how many people died, but it was almost certainly in excess of 100,000. So, the Venezuelans are even more in need of cash than they otherwise would have been. Uh, which means that they're becoming fairly permissive. Venezuela is an odd place for me. I've invested in Venezuelan exploration four times and I've enjoyed four exploration successes, which is to say, based on geology, Venezuela is the most permissive terrain in my life. Uh, in those four exploration successes I've enjoyed, I've suffered four nationalizations, [laughter] which is to say that every single exploration success was stolen from me. Not mercifully before I made some money on them. Uh, but I can't resist myself. I'm going back in.
Okay. And are you going back in through these US producers or through actual ventures that are set up?
No, I'm not going back in privately anymore. My days of flying down to Caracas are over.
Okay.
I'm an old man now. But there are a few groups, one of them US connected, uh, actually with good connections to the Trump family, uh, that are on the smaller side that are going into Venezuela. A different way to play Venezuela would be simply to buy Schlumberger, Halliburton, and RIG.
The big three oil service companies. And this isn't just a Venezuela play, right?
The whole world, uh, is going to have to resume new project investing and deferred sustaining capital investing.
And the largest, the largest of the US oil field services companies, while they might not be the best stock performers, offer the best juxtaposition between risk and reward in the space. And Venezuela is, I mean, Venezuela is going to have to spend minimally, I would say, a hundred billion dollars before they go to work on the Orinoco oil sands, if they ever do. If they go to work on the Orinoco oil sands, which is the biggest undeveloped crude oil deposit on the planet, that number is going to be dwarfed, and the contractors, uh, are almost certainly going to be American and Canadian.
Okay. Is there a reason that we wouldn't go, uh, after that, provided that there's no, you know, resurgence of political complications between Venezuela and the US?
The upfront capital cost to do it will be staggering. The opportunity is staggering. I mean, the right way to exploit those resources would be a way that Canada never did with its oil sands, which is to say, nuclear power plants. The nuclear power plants generate a waste product called steam heat, which is extremely valuable in heavy oil extraction. In heavy oil extraction, you introduce steam into the horizon to make the oil more viscous. Uh, it is anticipated that one, a one gigawatt reactor generates, uh, $250 million worth of waste steam a year, uh, a byproduct which is otherwise vented into the atmosphere. So, to the extent that you wanted to develop the Orinoco oil sands intelligently, you would site, say, five gigawatts of nuclear power plants on top. They need something called water, which is admirably supplied by the Orinoco, one of the largest suppliers of water in the world. And the waste product would generate $1.25 billion a year in cash flow from a waste product. Uh, of course.
So, it's almost like the electricity that the nuclear reactor would generate is the byproduct.
Yeah. And the energy, the electricity would help too. Uh, what I'm trying to say is, before you [clears throat] invest billions of dollars in the oil infrastructure, you probably need to invest 30 or 35 billion in nuclear power plants to sit on top of it. So, it's a major, major, major capital expense. And it's unlikely that that capital could be raised until you see more political and social stability.
Sure.
In Venezuela. I'm willing to be part of a part of a group, a small part of a group, that takes a 20, $25 million, uh, you know, seismic and drilling risk.
Mhm.
Uh, [clears throat] unfortunately, I'm not capable of taking, uh, you know, $150 billion development risk. So.
Yeah, not yet. Not yet. Someday. Um, all right. So, the other part of the world I just want to get your, your quick thoughts on. Um, and I have no idea if this is anything but just words. Uh, but apparently the UK has a new prime minister, and apparently, uh, President Trump has said he had a good kickoff call with with, um, I, I got to look it up. I'm embarrassed. I can't remember the name of the new prime minister. Um, but, uh, but apparently they're maybe seriously thinking about tapping the North Sea oil, um, in a way that the UK has not for a crazily long time. Um, is there any real potential there, do you think?
Oh, technical potential, there's lots.
Well, yes. I'm sorry. Is there any, any potential for the political policy to shift? I think given the current fiscal status of Great Britain, that there's a chance that they might accidentally do the right thing. Uh, I, I wonder if the average British citizen isn't looking across the North Sea at Norway and wondering why the Norwegians have a $3 trillion sovereign wealth fund and the Brits can't balance the budget.
Um.
Right.
The geological potential in a North Sea, uh, I think is very high, particularly high because the infrastructure, the producing infrastructure is all in place.
Yeah.
And I think, I think the UK even buys some oil from Norway, which is like you're buying oil from a country that has access to the same deposits that you do. You're just choosing not to go after them.
Norway for the last 20 years has been actively exploring. Our, our friends, the Lundin family, were responsible for the discovery of a two billion barrel field in Norway in an area that was thought to be mature. Uh, the British North Sea hasn't seen concerted exploration effort using modern technology for two decades. Uh, it reminds me of California in that regard. There's a lot of resource left if the government gets out of the way.
Okay. Uh, by the way, uh, Andy Burnham is the name of the new prime minister. I'm embarrassed I couldn't pull that in the moment.
You know, they've had so many in the last three years. You can be forgiven for not.
I know. God, it's, it's almost kind of like, you know, what Italy used to be where it's like, you know, if it's Tuesday, it's a new prime minister.
Um, okay. So, uh, Rick, I'm looking at the time. We only have a couple minutes left. I promised I'd get you out within the hour. So, we've made this mostly about oil. Um, so many other things I'd love to to tap you on. Um, I guess just real quick, I'd mentioned, um, the apparent renaissance that appears to be starting here in the US and nuclear. Um, how excited are you about that and what are the ways you are looking to play it?
Well, Adam, I think the easy money in uranium has been made. When you and I first began our conversations six or seven years ago,
Right?
Uranium was hated and it was.
And you were beating that drum loudly and alone. [laughter]
Selling for less than the cost of production. The price of uranium had to go up. The price of uranium did go up. But although the sure money has been made, or pardon me, the big money has been made, the easy money has been made, the certain money is ahead of us. Uh, companies that made no money whatsoever at $40 a pound uranium and lost a lot of money at $20 a pound are making real good money at $85 and $90 a pound.
But $85 or $90 a pound doesn't seem to be enough to incent very much new production.
Meanwhile, demand for the stuff is growing like crazy.
Right?
Truly like crazy. And if there's one certainty from the Gulf conflict, it is this. Energy security is paramount. Again, it was the 1973 Arab oil embargo that caused the production of the French nuclear fleet, the fourth largest in the world, and caused the construction of the Japanese nuclear fleet, the third largest in the world. The Japanese themselves have noted that, uh, uranium is a dense enough fuel that one warehouse can contain enough material to power Japan for five years.
Mhm.
The outcome of the Gulf conflict, no matter what other ramifications it has, will reinforce to nations around the world their need for energy security. And that need can only be provided by uranium. It can't be provided by any other source. The Japanese can't store enough coal. They can't store enough natural gas. They can't store enough rain. They can't build a battery pack large enough to replace the energy security that comes from nuclear power. And that will be manifest in the market over the next 10 years.
So for the average investor watching right now, is sort of the, the safe but sure way to play it is just to, just to buy a uranium ETF and just hold.
You could buy, uh, the proxy for physical uranium. I don't want to see your readers buy drums of yellowcake, put it in the basement.
Uh, you can buy the Sprott physical uranium trust. Conflict of interest, I'm the larger shareholder of Sprott. I benefit indirectly if you do that. Uh, you could buy the uranium ETF, although that causes you to buy several companies that I wouldn't otherwise buy. You could buy Cameco, uh, the second biggest, but the largest producer of uranium. If you feel a bit more gamey, you could buy their Kazakhstani competitor, Kazatom. Uh, or you could buy a basket of juniors. That basket would probably include NextGen. Uh, would definitely include Paladin. Uh, and could conceivably also include Denison. If you buy those last three, uh, understand that you're taking some actual risk. You will expose yourself to volatility for sure.
And you'll have to do some work, uh, keeping up on the news flow out of the companies.
All right. Again, thank you so much for the specifics here. Um, I'm, I'm going to wrap it up. Uh, and we'll just have you back on again, Rick, to talk about some of these other sectors we didn't get to. Let me just try to squeak in one last question. And I'll take your 20-second answer to it and let you expound fully as much as you like later on. Uh, the precious metals, do they look like they've bottomed to you here, or too early to tell?
I have no idea. I have no idea. It really depends on the direction of US interest rates. And you, [clears throat] you know, I get no leadership from that. I believe all the politicians are lying when their lips are moving.
Mhm.
Uh, I believe ultimately that, uh, if we have any kind of economic slowdown, which I suspect we might, that the political response will be to increase artificial liquidity in the US economy and lower the interest rates. If that happens, uh, I think the lesson will be clear to investors that domestic politics matters more than the sanctity of the US currency. Uh, if that happens, I think you'll see gold go on a tear, uh, in the order of magnitude as late 1975.
Okay. Um, well, not that I want to root for the devaluation of the dollar, but, uh, lot of gold, lot of gold folks would say, Rick, from your lips to God's ears. All right, my friend. Um, this has been wonderful. So, as a reminder, folks, if you would like to get the replay videos, uh, from Rick's recent symposium, and remember, you've got that fantastic money back guarantee from Rick if you don't like him, which I imagine no one is going to claim Rick. Um, then just go to thoughtfulmoney.com/ruposium and, uh, you'll get all the information there on how to get them. Um, Rick, um, just always wonderful as always. Um, uh, you're wearing your BattleBank shirt. Do you want to give a quick 30-second update on how things are going with BattleBank?
Uh, in answer to the question, now that we're finally open swimmingly, we're raising about a million dollars a day in new deposits. Uh, the bank's been open, what, 10 weeks, 11 weeks. We're at about $130 million in deposits. We're also enjoying an inflow of about a quarter, a quarter million a day in gold, gold deposits. Uh, so the bank is going very, very, very well. We've also, uh, gone through the waiting list, which is to say we've sent invitations to open accounts for the 23,000 people that were on the waiting list. So, we're now open for business for everybody. Uh, we, you get one chance to make a good first impression, Adam. And so, we only invited 250 people a day for the first few weeks so that we made sure that when people called in, they had a good experience with us. Uh, our team, I'm delighted to say, has their feet under them now. Uh, everything works. When you write a check, it cashes. When you ask us to send a wire, it wires.
You know, all of the operating systems in the bank are working. So, we're looking forward to growing the bank, uh, and serving all of our customers.
All right. Well, fantastic. And congratulations. Uh, it's got to be so much fun to be on this side of the story, Rick, um, of just, you know, not only being open for business but having all the testing done and, um, just all the other things that were, well, I mean, certainly all the regulatory approvals and stuff. It's been a long time coming, but it sounds like you're fully open for business now.
We are. You know, board meetings for four years were all about how do we get open? How do we navigate the OCC? How do we navigate the FDIC? Now we get to talk about things like servicing customers, uh, like accepting deposits, like creating deposit products in foreign currencies, like lending people money secured by their precious metals, right?
Helping people store their precious metals.
Uh, this is the fun part. This is what we've wanted to do for five years. This is back to banking. Uh, some of your listeners will remember we built a bank, uh, EverBank, one of the first internet banks in the US. We built it from zero to $28 billion, albeit in 14 years. Uh, we're in the process of doing that part again, which is what we like to do.
All right. So, if you're watching this and you haven't seen one of the many previous appearances of Rick on here, we've done a real deep dive into BattleBank. Um, you can just go to thoughtfulmoney.com/bank and be sent directly to the BattleBank website and talk to all the folks there. Um, uh, but, but in a nutshell, um, you know, Rick has been, uh, in front of audiences very similar to the one that watches my channel. Rick and basically heard all of their frustrations with their existing banks and said, "Okay, how can we try to fix as many of those as possible and create a bank for people that are big fans of sound money or precious metals, um, of getting a fair, uh, and good, but prudent with good risk control return on on their, um, savings." And so if that sounds like you folks and you haven't already checked out BattleBank, again, go to thoughtfulmoney.com/bank.
Agreed.
All right. Well, Rick, I can't thank you enough, my friend. Um, we've gone two minutes over the hour. I apologize for going late, but it's always wonderful to have you on and hope to see you on again very soon.
A pleasure. And thank you for your contributions to our conference. I really enjoyed having you there.
Oh gosh, it's always such an honor to be invited, Rick. Thanks so much. Look forward to seeing you next year.
All right, and everybody else, thanks so much for watching.