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Silver has surged from $20 to $75 and Rick Rule explains why the recent pullback may simply be a correction inside a much larger precious metals bull market. This is essential listening for anyone looking to buy gold, buy silver, or understand where the silver price and gold price are headed next.
GOLD INVESTING STRATEGY AND WHY INVESTORS BUY GOLD AS A LONG-TERM SAVINGS ASSET
The conversation between Craig Hemke and legendary natural-resource investor Rick Rule highlights the evolving role of gold, silver, and mining investments during periods of economic volatility. As markets fluctuate and investors search for stability, Rule emphasizes the importance of understanding precious metals not simply as speculative assets but as strategic financial tools. In the interview, Craig Hemke introduces the discussion by noting the volatile environment shaping 2026 markets. Rule’s perspective reflects decades of experience navigating commodity cycles, banking ventures, and resource investing. Early in the conversation, he discusses the launch of Battle Bank and the broader concept of using precious metals within modern financial systems. One of the most interesting insights relates to using gold as collateral rather than selling it. Rule explains the benefit clearly: “if you have a lot of your net worth tied up in gold and you need to access that capital on occasion, we… believe it to be good collateral.” This perspective reinforces a core philosophy among long-term precious metals investors: hold gold as savings rather than a trading instrument.
This strategy aligns with a broader investment thesis around purchasing power protection. Rule explains that many investors hold precious metals specifically to preserve wealth over time. He notes that selling gold can trigger taxes and eliminate the long-term benefit of holding the asset. Instead, borrowing against it allows investors to maintain exposure while accessing liquidity when necessary. As he describes the advantage, he states: “Don’t sell it, don’t pay the capital gains tax, use that as a down payment… refinance the cottage five years out or six years out.” This approach illustrates how gold can function as a financial foundation rather than simply a commodity trade. Investors who closely monitor the gold spot price often seek opportunities to accumulate during volatility while maintaining a long-term perspective. For those studying precious metals markets, understanding price movements and macroeconomic trends is essential. Tools such as the gold spot price chart can help investors analyze market cycles and long-term trends.
Ultimately, Rule frames gold ownership as a defensive asset allocation strategy. He summarizes this view when discussing portfolio construction: “I own gold in my investment portfolio. I consider gold to be a savings asset.” That philosophy reflects the broader strategy many experienced investors follow when they buy gold — not necessarily for short-term speculation, but for long-term wealth preservation and financial flexibility during uncertain economic cycles.
SILVER SPECULATION AND WHY INVESTORS BUY SILVER DURING MARKET CYCLES
While gold functions as a savings vehicle, Rick Rule draws a clear distinction between gold and silver in investment portfolios. In the interview, he explains that silver often behaves differently in commodity cycles and tends to move more dramatically once investor sentiment shifts. Rule notes that silver’s volatility can create powerful opportunities for speculative gains, but timing and sentiment play a critical role. He explains the rationale behind his own strategy: “I save in gold. I speculate in silver.” This distinction is essential for investors who buy silver with the expectation of larger price swings compared to gold.
Rule reflects on the recent rally in silver prices and why he chose to take profits during the run-up. His reasoning highlights an important principle of speculative investing: when an asset reaches the price target originally expected, the risk-reward profile changes. As he states in the conversation, “I bought the silver because I thought the price could go to 50. I was wrong. I went to 75.” Even though the market continued moving higher, he decided to exit the position because the original investment thesis had played out. That disciplined approach contrasts with emotional trading that often occurs when markets surge. He also stresses that market corrections are normal during bull markets. Referring to historical precious-metal cycles, Rule reminds investors that major pullbacks occurred even during strong long-term trends.
Silver investors frequently track movements in the silver spot price to understand these cycles and identify opportunities during pullbacks. Long-term charts of the silver spot price reveal periods of explosive growth followed by consolidation phases, which can provide entry points for patient investors.
Rule emphasizes that speculation works best when an asset is unpopular or “hated.” When investor sentiment shifts and demand returns, the upside can be dramatic. This is why many commodity investors carefully monitor sentiment indicators before they buy silver. In resource markets, prices can move quickly once generalist investors enter the sector. As Rule explains, “when the momentum in the precious metals trade was established by gold… the market leadership would change from gold to silver.” That transition often signals the speculative phase of the precious-metals cycle.
GOLD MINING STOCKS, RESOURCE INVESTING, AND THE IMPACT OF GOLD SPOT PRICE TRENDS
Beyond physical metals, the discussion also explores the role of mining companies in a diversified precious-metals portfolio. According to Rule, the market frequently misprices mining stocks because investors focus too heavily on short-term price movements rather than underlying asset value. During the interview, Craig Hemke mentions that major mining equities declined sharply even while metal prices remained strong. Rule attributes this behavior to investor narratives rather than fundamental valuation analysis. As he bluntly states, “I think people are being stupid. I think most people don’t do any work though.”
His analysis focuses on net asset value calculations and how mining companies are valued relative to expected metal prices. Rule explains that many analysts still base their estimates on much lower gold price assumptions than the actual market price. “If your earnings are calculated on a $3,300 basis and you’re selling your material for $5,200, it’s going to be very tough not to yield a positive earnings surprise.” This discrepancy creates potential opportunities for investors who analyze companies beyond simple market sentiment. In other words, when the gold spot price rises faster than analysts adjust their models, mining companies can deliver unexpectedly strong earnings.
Rule also highlights the importance of separating price from value. Short-term volatility can present opportunities for investors who understand the underlying economics of mining operations. As he explains: “Segregate between price and value.” When quality companies temporarily decline due to market sentiment, experienced investors often increase their positions. In fact, Rule openly states that he prefers lower share prices if he plans to accumulate more stock. “Given that I’m not going to sell, I would prefer to buy… I would prefer to buy stuff that was cheaper as opposed to more expensive.”
Investors studying mining stocks often analyze the relationship between metal prices, operating costs, and production growth. Monitoring broader precious-metals trends can provide valuable context for these investments. Market participants frequently reference comprehensive precious metals price data to track trends and identify investment opportunities.
Understanding these relationships is essential for investors seeking leveraged exposure to precious-metal markets. Mining companies can amplify gains during strong metal bull markets, but they also carry operational and financial risks that physical metals do not.
LONG-TERM PRECIOUS METALS OUTLOOK: GOLD, SILVER, AND THE FUTURE OF RESOURCE INVESTING
Toward the end of the discussion, Rule expands the conversation to include broader macroeconomic trends affecting commodities and currencies. One of his most striking observations concerns the long-term purchasing power of fiat currencies. He explains that although the U.S. dollar may remain dominant relative to other currencies, its purchasing power is likely to decline significantly over time. Drawing from historical precedent, he says: “I think that the purchasing power of the US dollar… will fall by 75 percent in purchasing power.” This expectation is based on historical patterns, particularly the inflationary environment of the 1970s. Rule reminds listeners that during that decade, the purchasing power of the dollar fell dramatically while gold prices surged.
He notes that the purpose of holding precious metals is not necessarily to outperform every asset but to preserve purchasing power. “You own gold defensively,” he explains, adding that investors willing to accept more risk may choose mining stocks or speculative resource investments. The logic behind precious metals ownership becomes clear when considering currency depreciation. If currencies lose value over time, the nominal price of gold must rise simply to maintain the same purchasing power. As Rule explains, “the nominal gold price… should mirror the decline in the purchasing power of the US dollar.”
This long-term perspective is why many investors gradually accumulate physical metals during periods of uncertainty. Market volatility, geopolitical instability, and inflationary pressures can all reinforce demand for hard assets. Investors looking to build a defensive portfolio allocation often start by learning about different forms of bullion ownership before they buy gold or buy silver.
In conclusion, the insights shared by Rick Rule highlight the importance of strategic thinking when investing in precious metals. Gold can serve as a long-term savings asset, silver can provide speculative upside during commodity cycles, and mining companies offer leveraged exposure to rising metal prices. For investors seeking protection against currency debasement and economic uncertainty, precious metals remain a cornerstone of long-term portfolio diversification.
Investors looking to protect purchasing power and diversify their portfolios should consider adding physical precious metals to their holdings. Understanding market cycles, monitoring the gold spot price and silver spot price, and strategically choosing when to buy gold or buy silver can help build long-term financial resilience.
Craig Hemke: Hello again from Sprott Money at SprottMoney.com. We're now about halfway through a very volatile month of March. Very volatile year so far, but March has certainly turned the tables a little bit. It's time to do our Ask the Expert segment. I'm your host, Craig Hemke. Joining me to discuss all this is our old friend, Rick Rule, legendary investor, current, well, we'll him a retiree, but he's the guy that set up battle banking, had, you want it? I'm going to ask him a little bit about that too, because that's his latest project. You all need to hear about Rick. Thank you for taking some time to join me and discuss all this.
Rick Rule (00:45.418)
Well, thanks for having me on. It's amusing being described as a retiree. I would say that Eric Sprott and I are having a competition as to who can fail retirement in the most profound possible way.
Craig Hemke (00:56.517)
You're staying very busy. I mean, between the, you know, the symposiums you do online and in person and appearances on other channels and, this battle, you've been starting this bank now for a couple of years, but I understand it is now up and running and tell everybody a little bit about it.
Rick Rule (01:17.874)
I was telling you off the air, Craig, we had a board meeting the other day and I was wondering why the board meeting was so interesting. And it occurred to me for four years, the board meetings were, how do we get licensed? How do we deal with this regulator? What sort of FinTech investments do we have to make? When do we make it in anticipation of getting licensed? All stuff that had to be done, but no stuff that was fun. This board meeting was talking about how do we service our customers better? Credit quality deposit products. It was actually about banking and that was not I signed up for. So it's really absolutely a delight to be back in the banking business. Our group headed of course by my partner Frank Trotter sold our last bank in 2014. And I'm not trying to say that every bit of the journey between the time that we opened that bank and the time that we sold it was a joy.
Craig Hemke (01:54.383)
Right.
Rick Rule (02:16.418)
But I will say that backing that team and building that franchise from zero customers to 275,000 customers and building that franchise from zero deposit base to $28 billion was a lot of fun. And I'm absolutely backing a very smart, very strong young team. We have some great existing customers. I also need to say, I guess a bit of a bribe, not bribe, but a bit of a boast. When we opened Everbank, our customer backlog was exactly zero. In the 54 months that we were waiting to get permitted to open Battle Bank, we were fairly noisy about the value proposition that we were going to offer. And I'm delighted to say that we opened this one with a customer backlog of 22,000 people, people who had visited our website and told us specifically
Craig Hemke (03:10.373)
Holy smokes.
Rick Rule (03:14.424)
from the menu of goods and services that we propose to offer, which services were most of interest to them. The consequence of that is that I think our first couple of years growth is probably gonna be pretty outstanding.
Craig Hemke (03:28.323)
Yeah, yeah. For folks that are recognizing now that you're all up and running, website, best place to go to find out more information.
Rick Rule (03:32.174)
battlebank.com. for any reason, Craig, any of the Sprott Money listeners are dissatisfied with their current bank, I suspect that's all of them, they should visit battlebank.com. And let me tell you a little bit, if you don't mind, about what makes us different. The first is that unlike many of the neo banks, we're run by bankers, not
Craig Hemke (03:39.205)
That's easy enough.
Craig Hemke (03:53.465)
Please.
Rick Rule (04:01.582)
by sort of Silicon Valley whiz kids. We're fairly prudent. The Fed would tell you that a well-capitalized bank has 7 % of equity by way of assets. We think 10 is a better number than seven. We're under-leveraged. We're not gonna try to do all things well. We don't think that we can compete with Bank of America. But if we do a few things very well, we don't think Bank of America compete with us either. So what are those?
Well, the first is that we're not going to have 15 deposit products to fool you. We're going to have one and we're going to pay interest on it. There's $7 trillion in deposits in the U.S. that aren't drawing interest, mostly checking accounts. Our customers are interested in interest. We will also allow you to bank in 20 currencies, not just the U.S. dollars. Say you're a Canadian living in the U.S. and you operate on both sides of the border. You need to bank on both sides of the border, but mostly
Craig Hemke (04:42.297)
Yeah.
Craig Hemke (04:57.637)
Mm-hmm.
Rick Rule (04:59.298)
that's not available to you. At Battle Bank, it will be available to you. Our last bank, EverBank, we ended up providing banking services in 28 currencies. We're starting this one with 20, others to follow. Of particular interest to, I think many of your listeners, particularly those who do business with Sprott Money, which by the way I recommend, is that at Battle Bank, we are of the gold crowd.
We understand how to talk to gold bugs because we are them and we've been doing it for many years. Specifically, if you have a lot of your net worth tied up in gold and you need to access that capital on occasion, we, unlike your existing bank, believe it to be good collateral. If you post it with Battle Bank, we will allow you to establish a line of credit. You don't have to borrow against it until you want or need the money. Let's say
that a summer cottage that you've been looking at for 10 years suddenly comes for sale at a distressed price and your choice is to sell some of your gold or silver, pay capital gains tax and put down a down payment or access your credit line secured by your and silver. Don't sell it, don't pay the capital gains tax, use that as a down payment, refinance the cottage five years out or six years out, repay the loan effectively to yourself.
a wonderful, wonderful, wonderful use of capital. One that isn't available at any bank that I know of other than Everett Bank, pardon me, Battle Bank. And by the way, we have a dealer agreement in place with Sprott so that Sprott clients, Sprott money clients will have very easy access to our credit facilities without having to leave their Sprott relationship, which we urge them not to do.
Craig Hemke (06:48.783)
So if you're storing gold and silver with Sprott money already.
Rick Rule (06:52.888)
Yeah, that's correct.
Craig Hemke (06:54.661)
Perfect. And again, it couldn't be more timely, Rick, where you have this discussion on my TF Metals Report site all the time. Where do you sell? When do you sell? Well, if you can have, use your metal in a different way, you don't have to sell it in that situation.
Rick Rule (07:09.477)
I'll tell you what's been happening to us. know, even before we went national, when we bought this little bank up in Minnesota to get the charter, we had been talking to some people that were gold holders. And we actually began to make some loans before we went national. And what was common about this was the borrowers were business people that had occasional working capital needs.
that had a lot of gold, specifically three of them were real estate developers. And from time to time, when they're initiating a project, they need cash. They didn't want to have to sell their gold or silver. In one case, the gold holdings went back to 2004. So that would have necessitated the payment of a very large capital gains tax bill. But these people were able to access the capital they had tied up in the precious metals to provide working capital for their operating business.
Craig Hemke (07:53.721)
Yeah.
Rick Rule (08:03.032)
Perfect, perfect, perfect use of these lines.
Craig Hemke (08:04.025)
Yes.
Craig Hemke (08:07.397)
That's terrific. I'm sure people listening to this are like, Oh boy, uh, this is great. Battle bank.com. Correct. Well, my friend, let's, uh, let's turn to those metals. Uh, we came out of the, you know, we ended up the bat last quarter of 2025 was tremendous. And the first couple of months of 2026 off to a hot start as well. And then we got a curve ball, uh, thrown at us, uh, about two weeks ago. And it has been.
Rick Rule (08:11.214)
Correct.
Craig Hemke (08:35.941)
Interesting to watch the markets react, Rick. I'm in the thought that I don't want to call it a market inefficiency, because that's not the right word. But I feel like they're getting it incorrect in the short term, where crude is going up and the dollar's being bought in a safe haven. it's like this, the machines are just programmed to sell everything when that happens.
Is that the right trade, Rick? Is that the long-term trade, the longer this goes on, or is it, like I said, an inefficiency?
Rick Rule (09:06.926)
Is it an inefficiency? In the near term, they're uncorrelated. I think what happened in precious metals was simply that the market gave us too much too quick. When people say to me, well, God, the silver price is down to 80. I say, really? I thought it was up from 20. You know, so you have to take time frame into account. Anytime you see a hyperbolic chart.
Craig Hemke (09:09.454)
mental inefficiency. Yeah, okay.
Craig Hemke (09:19.801)
Yeah.
Craig Hemke (09:27.877)
Right?
Rick Rule (09:36.15)
What what the Canadians call a hockey stick graph? You need to know the correct itself 99 times out of 100 and the backside of a hockey stick is just as steep as the frontside was but it's a lot and if you're long It doesn't usually retrench as far as it went up because it usually went up goes up but it retentious You at the beginning of this call Craig? Mentioned the decade of the 1970s Unlike some of the listeners on this call. I was there, know cognizant and I recall that greatest of all
Craig Hemke (10:02.521)
Yeah.
Rick Rule (10:06.146)
gold bull markets where the gold price went from 35 bucks to 850. Four times during that decade, the gold price fell by 25 % or more. One time in 1975, and I remember it like it was yesterday because I was long, the gold price fell by half. So you need to understand that cyclical or volatile declines can occur within a secular bull market and it doesn't change a damn thing.
You have the psychological and financial preparedness to stay the trade. This isn't even noise to you. It's a distraction. If you don't have both the psychological and the financial strength to stay the trade, this could be fatal to you. Now I'm fairly public about the fact that in the real runoff, I sold about 80 % of my silver.
Craig Hemke (10:53.871)
Yeah.
Rick Rule (11:04.62)
I'm not suggesting that other people do it. And I think the reason that I did it is instructional because it's personal. I bought silver when it was hated. I bought it when it was hated because I thought when it just ceased to be hated, even before it became popular, there was a lot of rebound in price. I bought it too, and we've talked about this before, Craig, you may not remember, but we talked about the fact on your show,
that when the momentum in the precious metals trade was established by gold, as the generalist investors tiptoed into the precious metal space, the market leadership would change from gold to silver. When that happened, that was the key to me that silver was unhated. I own gold in my investment portfolio. I consider gold to be a savings asset. I own silver in a speculative portfolio, a very different part of my portfolio.
And in my speculative portfolio, when an investment performs as expected, I don't care how high I think it could go. I just care whether on a risk adjusted basis, it's the best speculative avenue for my money. I bought the silver because I thought the price could go to 50. I was wrong. I went to 75. Well, it went higher, but I sold it at 75. And I did it because in a sober moment,
I recognize that if the silver price didn't have to go up anymore, it could, but it didn't have to. The tension on the spring had been released in the move 20 to 75. And if as a thought experiment, silver traded sideways for a year, by definition, I'd make no more money on my silver because it traded sideways. But the silver stocks were being valued by Bay Street on a $45 price assumption.
Craig Hemke (12:36.783)
Mm-hmm.
Rick Rule (13:02.51)
So without the silver price going up, the silver stocks could escalate on a valuation basis by up to 50%. If the silver price went up reasonably, the silver stocks would go up too. Paradoxically, if the silver price were to decline from $75 an ounce to $50 an ounce, given that the valuations were predicated on a $45 assumption, I had more shelter to the downside in the stocks I did in the silver itself. So for me, it was a good decision.
Craig Hemke (13:29.163)
That's true.
Rick Rule (13:32.846)
I should also say I scraped some money off the table, all the way out of the table. I got out of the way of speculation, which is to say I bought physical gold with it, which is the way I save. So I bought silver stocks, physical gold, and oil and gas stocks with the proceeds. I got lucky in the last part of the trade.
Craig Hemke (13:43.161)
right right right
Craig Hemke (13:54.917)
What would you be looking for to get back into physical silver then, Rick?
Rick Rule (14:00.526)
A big price decline. It's a speculation for me. I segregate among the precious metals by investment and speculation. I save in gold. I speculate in silver. So silver would have to be the best speculation available to me. And mercifully, I cover the whole gamut of natural resources. To me, successful speculation
Craig Hemke (14:04.143)
Big dollars or just time going by and gold going up or a big.
Craig Hemke (14:18.82)
Yeah.
Rick Rule (14:29.226)
Involves the asset class that I'm speculating on being hated And sadly for me, there's not very many sectors and resources that are hated now When you and I first started talking four or five years ago hate was abundant The opportunity was abundant But my life has changed there are there are times in your life when you're writing check checks And other times in your life when you're cashing checks and I happen to be in a check cashing era right now
Craig Hemke (14:37.603)
Yeah. Yeah.
Craig Hemke (14:41.967)
Right there.
Craig Hemke (14:55.971)
Right, right. Let me go back one more question on this point. It seems as if in the short term here, this first two weeks, that the market looks at this trade and says, oil prices are going higher. It's going to be inflationary. So sell bonds, higher interest rates. The Fed's now going to tighten because of that. Where I sense that it's not accurate is that actually the Fed will
Rick Rule (15:06.894)
So, yeah, it's a lot.
Rick Rule (15:14.222)
Good night.
Craig Hemke (15:24.719)
probably be more concerned about economic growth and move to cut regardless of what the inflationary impact. How do you feel about that? Do you think that has legs?
Rick Rule (15:30.638)
I think you're right. I think the oil price moved up because people were unnerved about the supply side in oil. And I think they should. You and I have talked before, before the wars, plural, that we were under investing in sustaining capital in the oil business to the 10 of about a billion dollars a day. Now I had anticipated the supply shortages would take place in 2029.
Craig Hemke (15:39.567)
Yeah.
Rick Rule (16:00.226)
Fast forward to a war. And that changed, obviously, everything. It didn't change the underlying economics around the oil business. Oil supplies will get tighter and the market will respond by price. Will these prices hold? That's a function of peace. When or if we have peace. The second question revolves around the US dollar. And there the answer is trickier and it will be very unpopular with a Canadian audience.
Craig Hemke (16:01.849)
Yeah. Yeah.
Craig Hemke (16:17.209)
Yeah.
Rick Rule (16:30.154)
My friend Doug Casey described the US dollar as the worst currency in the world, with the sole exception of all of the others. The US dollar for all its fault is the most liquid currency in the world, and it's also the most transparent, the least opaque currency in the world. It is a currency where most of the international debt in the world is denominated, which means the demand for dollars to pay back debt.
Craig Hemke (16:38.148)
You
Craig Hemke (16:56.292)
Yep.
Rick Rule (16:59.338)
Irrespective of mr. Trump's popularity or lack thereof is very high. No other currency has that The last time I looked about two and a half percent of the world's international obligations were denominated in remnimbi So, what do you think the relative demand for debt service between remnimbi and us dollars are? This one's fairly simple as Absolutely ugly
as the numbers around the US dollar are, as ugly as they are, paradoxically, they're uglier in other places. And when people get very concerned about their liquidity, about the sanctity of their liquidity, the global demand for US dollars in the past four weeks has gone absolutely crazy, including by countries that already have too many of them.
Craig Hemke (17:40.601)
Yeah.
Rick Rule (17:59.116)
Now, I think this is a fairly short-term phenomena. Let me rephrase that. I think the US dollar over 10 years will do relatively well against other currencies. I think the US dollar over 10 years absolutely, that is not compared to the Canadian dollar or the euro, will do extremely well. Pardon me, extremely poorly. I think that the purchasing power of the US dollar in isolation
Will fall by 75 percent in purchasing power Which means that a basket of goods and services that cost you a thousand us dollars today Will cost you four thousand us dollars 10 years from now Yeah, I lived through that in the decade of the 70s the purchasing power of the us dollar in that decade Fell by 75 percent not coincidentally craig the gold price ran 26-fold That isn't to suggest it's going to run 26-fold from here
Craig Hemke (18:39.556)
Yeah.
Craig Hemke (18:50.445)
Not coincidentally. That's right.
Rick Rule (18:54.914)
But I would ask your listeners to consider the probability, I think, that gold maintains its purchasing power. Which means that the nominal gold price, gold price in US dollars should mirror the decline in the purchasing power of the US dollar, arithmetic. Maybe it isn't four to one, maybe it's three. Maybe the gold price only doubles in 10 years. You get the point. You own gold defensively. If you have the courage, you invest in gold stocks, taking the company risk.
Craig Hemke (19:02.883)
Yeah. Yeah.
Rick Rule (19:25.102)
around the price trend in gold. If you really have guts, you speculate on the gold side. You do it predicated on the probability of stronger nominal gold and silver prices.
Craig Hemke (19:40.493)
Well, let me go off into the miners, because that was the other thing I wanted to ask you about. Since all of this began two weeks ago, the GDX is down something like 16%, 17%, the big ETF. And a lot of the big mining shares have come off a little more or less than that. So you look at that, think, as an investor in the mining shares, think, well, okay, well, look, we're almost entirely through the first quarter.
And the earnings in the fourth quarter are fantastic and the metals price in the first quarter are going to be even better. But these shares are getting dumped significantly. Is it a function? people reading? I mean, I know energy is the biggest input cost in mining, right? So are people reading too much into this higher energy cost thing affecting margins? Or is it just, again, another inefficient overreaction?
Rick Rule (20:32.046)
Absolutely narrative. I think people are being stupid. I think most people don't do any work though. People pay slavish attention to price levels and people play slavish attentions to stupidly short periods of time. When people say that the GDX is down by 16%, no it's not, it's up by a hundred. It just depends on your time frame.
Craig Hemke (20:38.372)
Well, that wouldn't be the first time.
Yeah.
Craig Hemke (20:50.127)
Yeah.
Craig Hemke (20:56.291)
Well, that's true. Yeah. Yeah. Yeah. Where you start.
Rick Rule (21:01.708)
Segregate between price and value. When I look at the major mining companies and I do net asset value calculations, including their development pipelines and their cost of capital at $5,200 gold, I get a markedly higher number than the enterprise value of these companies today. People say that these companies are trading at 1.2, 1.3 times NAV, but they do that based on consensus metal pricing at 32 or $3,300 gold.
Craig Hemke (21:30.723)
Right, right.
Rick Rule (21:31.918)
If your earnings are calculated on a $3,300 basis and you're selling your material for $5,200, it's going to be very tough not to yield a positive earnings surprise. Now, for me, I have a very full portfolio of the big guys, a very full portfolio, and I hope they go down in price so I can buy more.
I am unlikely to sell my gold stocks, my big gold stocks, my really good gold stocks, even my best juniors anytime soon. The consequence of that is given that I'm not going to sell, I would prefer to buy. And obviously I would prefer to buy stuff that was cheaper as opposed to more expensive. I realize that many of your listeners don't have
the courage born of knowledge that I have, and many of them probably have different financial circumstances. But if you have a good enough sense of a company that what you would like to see is lower in price, then you probably know enough to invest.
Craig Hemke (22:47.941)
Are there other commodities you're kind of interested in here as we get into 2026? We've been, you and I've been talking about uranium for years. Are there others on your mind?
Rick Rule (22:57.985)
Yeah, mean, uranium, I'm very full. I need to say that. Uranium is another one where I would love to see the stocks cheaper, opposed to more expensive, but that's not going to happen. This is going to be a good year for uranium stocks. For a couple of reasons, I wasn't able to go to the World Nuclear Association meetings in London. Too busy in retirement. But I was able to listen to about 60 % of the recordings and I was struck by a couple of things there.
Craig Hemke (23:07.193)
Another pullback. Yeah.
Craig Hemke (23:20.099)
Hahaha
Rick Rule (23:27.11)
The first thing I was struck with was there was odd consensus on the dais that the global above ground finished inventories were 200 or so million pounds. I don't know how to get those numbers. So I don't know if they're true or not. But the point was made that with a supply deficit of 30 million pounds and above ground finished inventories at 200 million pounds, that we had six years to get through inventories before we had to catch up.
Craig Hemke (23:55.866)
Yeah.
Rick Rule (23:56.076)
That completely neglected the fact that if that 200 million pound number is right, Sprott owns 82 million of them. And that stuff's not available for sale. That cuts the available for sale estimate by 45%. That becomes salient. The second thing that I noticed, and I'd seen this myself, was that for 15 years, the utilities
Craig Hemke (24:03.301)
Right, of that, of that. Right.
Craig Hemke (24:14.981)
30%. Yeah.
Rick Rule (24:25.41)
had availed themselves of the spot market for material, because it was cheap and it was liquid. But the spot market isn't liquid anymore. Most days that I look, the Sprott Physical Silver Trust, pardon me, Physical Uranium Trust trades between two and four times the dollar volume of the spot market, which is to say the spot market has become the spot market. The companies that have relied on the spot market for product,
can't rely on it anymore. And that's come to be reflected in the term market. In the term market, near-term delivery, the 2026 delivery, is as much as $8 a pound higher than the spot market. What that means is that the utilities have become concerned enough about supply that they are willing to pay more in the near term to lock in their supplies in the long term. And this is extremely bullish.
Craig Hemke (25:14.981)
Yeah.
Yeah.
Rick Rule (25:18.67)
extremely bullish. The third thing that's bullish, you and I have talked about in the past, but for the benefit of those few listeners on today's calls that haven't slavishly listened to our prior conversation, the structure of the uranium market is changing from the spot to the term market, unlike any other commodity in the world. The significance of that is that uranium producers know with some certainty
Craig Hemke (25:28.997)
Yeah!
Rick Rule (25:46.306)
provided that they have a credit grade counterparty, a utility, not a trader, what they're going to receive for their product and how much they can sell. And that means that doing cashflow forecasting, whether you're a provider of equity or a provider of debt is much more certain. And this will lower the cost of capital to the uranium sector and it will increase the availability of the sector. Let's look at Lee Currier at NextGen. There's no way in the world that Lee, with his balance sheet, albeit a good but small balance sheet,
could independently on balance sheet finance the construction of their Saskatchewan project, arguably the best undeveloped uranium project in the world. It's just too big and they're too small. But if Lee can go to Ontario Power, Duke Power, Southern Companies, Tokyo Electric Power, China General Nuclear, a bunch of investment grade counterparties with contracts
and then take those contracts to the bank, particularly if he can do a turnkey build on that project, fixed price turnkey build with Westinghouse Cameco. A project that he couldn't finance before on his balance sheet becomes financeable. It doesn't mean that he will do it. It just means that if Cameco comes into him or Anglo Tech comes into him,
Craig Hemke (26:49.924)
Mm-hmm.
Rick Rule (27:15.618)
where BHP comes into him and says, you should sell us this because you can't build it. He can say, well, you might be able to buy it, but I can build it. So your price better reflect the fact that I can build it. And that's a huge, huge, huge, change. The next gens of the world, the Paladins of the world, the Yellow Cakes of the world will be able to build their projects if they choose to, because the migration of the market from
volatile spot to fixed price long-term contracts suddenly makes these things much more financially viable. That might be aggressive, but there's zero doubt we're seeing in the market now, and this is actually a related topic. I've probably told you, Rod, just more than they want to know about uranium. But if somebody goes out to build a nuclear power plant today, a big one, I'm not talking about one these little firecracker.
Craig Hemke (27:55.245)
You've got me thinking price maker versus price taker in that situation.
Craig Hemke (28:15.204)
Right.
Rick Rule (28:15.818)
Wrong phrase, SMRs. The banks which are putting up 60 or 70 % of the construction costs are increasingly requiring the builder to obtain enough uranium over time to amortize the loan, which is to say they are requiring China General Nuclear, as an example, to obtain 20 years of supply to amortize the loan.
the availability of that in the contract market is what is really driving the availability of the producers to secure.
You know, these types, these types of agreements, the, isn't just the producers that need these contracts. The consumers need the contracts too. Craig, as you know, I've been a lender for a very long time. and it's really refreshing if you can see how you're going to get paid back.
Craig Hemke (29:00.345)
Yeah. Yeah.
Yeah.
I hadn't thought about that, Rick. If you were going to finance that, I'd want to make sure if I was loaning the money, I'd want to make sure this...
Craig Hemke (29:23.397)
Yeah. Yeah. You know, if your primary product is going to be power, you better show me a way that you know you can generate it. Fascinating. Again, you and I have been, you first started telling me about uranium at least four or five years ago, six or seven maybe. And in my diverse portfolio, I've probably about 10 % uranium and it has served me very well.
Rick Rule (29:38.2)
Right.
Rick Rule (29:48.43)
I think you're gonna have a good year. I don't think that these stocks are cheap based on the uranium price. I think these stocks are very cheap relative to what I see the term market doing over five years and relative to the fact that their cost of capital is gonna come down.
Craig Hemke (29:49.825)
I think so, Tom. Are you having a good? Yeah, I think so.
Right, right.
Craig Hemke (30:01.187)
Yeah, where you think it's going.
Yeah. And that point you made Rick, who knows where they came up with the 200 million ounces, 40 % of it is tied up in that Sprott Fund. You would think that's included in the 200 million.
Rick Rule (30:18.796)
You know, I've been trying myself, admittedly, you know, the...
president of Kazakhstan doesn't have me on his speed dial, but I've been trying to ascertain for my own purposes what a Bevgrandt inventories have been for 30 years and I've been consistently unsuccessful. You know, I've gone to industry conferences, I've, you know, bought bottles of wine for Ito Chu and the other traders. I don't know.
Craig Hemke (30:29.772)
You
Craig Hemke (30:38.777)
Yeah. Yeah.
Craig Hemke (30:49.379)
Well, Enric, you've considered, I mean, your old mantra is, know, higher prices are the high prices that cure for high prices, right? But this is not necessarily that direct of a process with your age. Yeah. Yeah.
Rick Rule (30:56.974)
This is not necessarily a working process. Well, it takes time for that to work out. You know, it does. I've said in capital intensive industries, the cure for high prices is high prices and time. I would argue on an inflation adjusted basis that the prices that we're seeing for uranium aren't particularly high. I would also suggest for uranium and a few other substances too, platinum among them.
Craig Hemke (31:06.031)
Yeah.
Yeah, right. If it sounds like the higher price.
Rick Rule (31:25.26)
that the utility to users is so high that demand becomes for a time price inelastic. It turns out that at $80 a pound, fuel comprises about 5 % of the operating budget of a nuclear power plant, somewhere right around legal and compliance. Cost of capital and taxes, social rents are the big changers. What that means is if
Craig Hemke (31:28.165)
Mm-hmm.
Craig Hemke (31:33.475)
Yeah. Yeah.
Rick Rule (31:55.106)
Craig and Rick have built Craig and Rick's great reactor. We've somehow raised $8 billion and we built a reactor and we need a million pounds of uranium a year for this reactor. Remember, we have $8 billion into the reactor. If the price of uranium goes from 80 bucks a pound to 150 bucks a pound, we don't conserve it. Actually, a doubling of the price of uranium almost doesn't change the cost of producing the fuel.
Craig Hemke (32:16.62)
Right.
Rick Rule (32:24.276)
If the price, if the fuel is less than 5 % and the price doubles, that's a 2.5 % change in the inputs. It's irrelevant.
Craig Hemke (32:31.353)
Yeah. And again, it's not like you can go without, that's the other part of it. I've kept you longer than I promised. So thank you for being so generous with your time. but it's always so fascinating to speak with you. And I, and every time we do this, I always end up driving you off into some other corner, because I start thinking about stuff. like, Hey, I got Rick rule here. I could ask him anything I want right now. so thank you for humoring me with that.
Rick Rule (32:58.242)
Well, I would close with two things. Any of your listeners who care what I have to say about natural resources, almost any kind, can personalize it by going to my website, ruleinvestmentmedia.com. If you list your natural resource stocks there, I will for free grade them, ranking one to 10, one being best, 10 being worst. And I'll comment on individual issues if I think my comments have value. I think too, if any of you are unhappy with your current bank, American or Canadian, check out Battle Bank.
I suspect that accounts for each and every one of you. Finally, Craig, please give my personal regards to your sponsors, the Sprott family. Hi to Larissa. Hi to Eric. I look forward to seeing them somewhere sometime.
Craig Hemke (33:40.677)
We got to, are you doing another one of those deals down in Boca or Naples? Where, where do you do those things in, okay.
Rick Rule (33:45.326)
My conference is at Boca and Leroy has threatened to come down. Eric tells me he's done his last conference. I used to have trouble getting Eric to that conference when the Sprott name was on the door. I suspect.
Craig Hemke (34:00.899)
That could be a little harder now. All right, well, I'll see what I can do. I'll ring him up and twist it, tell him I'll buy him a bottle of Cabernet to drink while he's down. Maybe that'll be.
Rick Rule (34:11.46)
If that would help, if that would help, my Cabernet bill would be unlimited. him. Yep. Yep. Unlimited. Yes, sir. Yep. Yes, sir. In July, July 6th.
Craig Hemke (34:16.569)
There you go. Okay. I'll tell him, cause he'll take you up on that. think, all right. Well, let's do this again before that'll be what in July, usually in July. Hmm. Okay. Well, I'll ring you up before then and we'll, we'll tee that up the next time we speak. But for now, Rick, thank you so much. It's just always so great to visit with you. And I know everybody's benefited from listening from all of us, Sprott money, Sprott money.com. Hey, it's mid March.
Rick Rule (34:35.938)
Thank you,
Rick Rule (34:40.398)
Thank you.
Craig Hemke (34:45.573)
We've got a lot of month to go, so keep an eye on this channel for more great market information as we move toward the end of the first quarter of 2026 and beyond. For now though, thanks for watching. We'll see you again soon.
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