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Speaker 2: And welcome. You are listening to and watching the Financial
Survival Network. I'm your host, Carrie Lutz. With us today
is our good friend Rick Rule, and we're going to
get the latest on what's happening in precious metals the markets.
Is the bull market in silver and gold over Rick,
It's great to have you on again. And hope all
is well.
Speaker 3: Harriet's fair NHDB back and in answer to your question,
things are going quite well.
Speaker 2: Thank you. So, you know, like volatility, this is what
really separates pros from the amateurs because if you can't
control your emotions when you see what happened in silver
one hundred and twenty plus dollars announced down to sixty
four in the blink of an eye, and you know,
buckle your seatbelt time. But the newer people investing in
the sector, this kind of movement freaks them out. Let's
face it, they're just not used to this unless they've
been playing bitcoin for more than six months, right.
Speaker 3: You know, Carrie. When I was a very young man,
I was actually a pretty good trader. I would try
to trade these short term swings my investment goals. Well,
I was still in university, were you know, want to
trade four snow tires and dinner with a day at
a nice restaurant. I have very focused goals and very
very periods of time, and volatility was useful for me.
Then I learned very young that a chart with a
parabolic up move was going to have an equally sharp retracement,
maybe not for the whole up move, but it was
going to have a very sharp retracement, and a parabolic
down move would also have a correction. Those charts that
the Canadians call hockey stick graphs cause one to understand
that the backside of the stick is just as steep
as the front, but somewhat less fun if you're long.
Now that I'm not a trader, I sort of regard
them as noise. I like, I think you sold most
of my physical silver, and I guess partly about that
volnable move but mostly because the silver that was in
my portfolio was in my portfolio as a consequence of
the fact that silver was a hated asset, and when
it ceased to be a hated asset, the reason that
it was in my speculative account went away. And when
it went away, eighty percent of the silver had to
go away, or didn't have.
Speaker 2: To go away.
Speaker 3: But I just did, you know, I decided I'd look
somewhere else for hate.
Speaker 2: All right, well, I'm going to do a clickbait headline here.
Why is Rick Rule selling his silver?
Speaker 3: Why has Rick Rule sold?
Speaker 2: Is probably a better solve.
Speaker 3: This silver, the you know, the twenty percent I have
left is you know, likely not going to be.
Speaker 2: Sold for a while.
Speaker 3: I believe, Carrie, that the primary bullmarket in precious metals
has a long time to run. I believe that the
decade that's in front of us resembles in some way,
shape or form, the decade of the nineteen seventies. Specifically,
and I've said this in our interviews before, I believe
the US dollar over ten years loses seventy five percent
of its purchasing power. That's what happened in nineteen seventies.
So I believe that gold and silver have further to run.
I also believe the pace of the run that we
saw in twenty twenty five probably can't be repeated. I
think that late twenty twenty four, late twenty twenty five,
I think the move that you saw in gold and
silver was pent up energy. It was the fact that
gold didn't move in twenty twenty, twenty twenty one, twenty
twenty two, twenty twenty three. And I think most of
the pent up energy, which is to say, most of
the price move that's a consequence of past underperformance, is
now out of the market. So people need to look
forward for the gold trade. If they don't see the
gold trade the way I do, they should decide that
the easy money has been made, take their money off
the table and go somewhere else.
Speaker 2: You know, so about that, and you know, looking at
it where you have that major move, And then, for
some reason, we always want to think that this time
is different, that somehow the parabolic move is going to
continue indefinitely into the future, because this time really is different.
But I'm always think back to Benjamin Graham, the tree
does not grow to the sky. Correct. Correct.
Speaker 3: It's also useful I think for the generation of players
twenty or thirty years younger than you and I who
didn't experience the decade of the seventies to revisit it
in the sense that in the nineteen seventies, I would suggest,
in response to the deterioration purchasing power of the US dollar,
the gold price ran what twenty fivefold? Yeah, I'm not
suggesting by the way it rose twenty fivefold from here.
What I am suggesting is that in the decade of
the seventies we had at least four twenty five percent
price retrenchments, and we had one in nineteen seventy five
that was a fifty percent ice retrashment.
Speaker 2: I actually remember that, Yeah.
Speaker 3: As do I. I remember from alongside it was not
particularly pleasant for young men. But the lesson in all
this is that cyclicality and volatility are inherent in bull markets,
and if you weren't financially and psychologically prepared for it,
you're going to get shaken out. People who got shaken
out in nineteen seventy five. For history's sake, I should
recount the facts. In the period nineteen seventy to early
nineteen seventy five, the gold price ran from thirty five
dollars admittedly priced controlled to two hundred dollars, and that
move at sixfold move attracted a lot of adherence, And
nineteen seventy five the gold price fell from two hundred
dollars to one hundred dollars, and the newly faithful wish
they'd never learned how to spell gold. Those who got
shaken out at one hundred moved to move from one
hundred to eight hundred and fifty over the next five years.
There's all kinds of lessons there.
Speaker 2: And then the two thousand, it was back down to
just under three hundred bucks, not till nineteen ninety nine.
I bought you eight six, if I recall, yes, I
got in there to eighty eight, so n nice print,
and I wrote it up and then down. But in
some respects this time really is different, at least for silver,
because we genuinely have structural deficits and booming demand. Does
it make it different? Does it put a floor under
silver that we wouldn't otherwise normally have if this was
just a normal market to run up.
Speaker 3: I'm too old. I'm too old and smart to answer
that question. Yes or no, fashion we'll talk around it.
I've been trying to understand the silver market since the
early nineteen seventies at the University of British Coal Umbia.
Maybe I'm a dumb guy, but after fifty five years
of trying, I understand that I don't understand.
Speaker 2: Here's a few problems. That's knowledge.
Speaker 3: On the supply side, we don't really know what the
above ground supplies are. We know what the above ground
good delivery supplies are, but we know really nothing statistical
about informal ownership in India, Pakistan, by Gladesh and Sri Lanka.
Is it a billion and a half ounces? Is it
three billion ounces? We do know that saving in silver
has been part of the rural Indian culture, rural South
Asian culture, I should say, for a thousand years yea.
And they distrusted their government before we had a government.
So there's a lot of supply that can come out
in the right sort of circumstances. In terms of forwards
looking supply the deficit, we know that silver miners produce
eighteen percent of annual supply. The rest comes from byproducts
of other materials and recycling. So the silver price doesn't
necessarily stimulate supply. You have to look to the copper
press and seek price led price and the cold price.
It is really tough to get a handle on a
silver market. Folks who trade news don't trade the whole news.
People went crazy with the export restrictions announced by the Chinese,
But the Chinese said that they were going to restrict
silver exports to authorized exporters. They issued forty two export
licenses to politically connected traders, which is to say this
is more rent seeking than it is market control. It's
important in markets like these carry for the people who
are in trade news, which usually doesn't work in my experience,
to read the whole article, not just the headline, before
they try to trade on it. So that long soliloquy
all goes to say an answer to your question, I
don't know, but.
Speaker 2: It certainly appears though that industrial demand is way higher
than it was like in nineteen sixty five when they
demonetized our coinage. That part is very true.
Speaker 3: Now industrial demand becomes price sensitive at some point. The
silver's reflective properties means that the point with regards to
solar panels probably substantially higher than now, unless there's some
technological breakthrough what we see in passbow markets. I'm not
suggesting that past has to repeat itself. What we see
in passbol markets is that industrial utilization of silver has
continued except for a five year period after the use
of photography of silver and.
Speaker 2: Photography and that's raise.
Speaker 3: Yeah, that created a real slump, but it would appear
with the germicidal properties of silver, the applications in water
and wastewater treatment, and particularly with regards to solar that
industrial demand for silver for a while grows and grows
and grows. We also know from studying history, though, that
dramatic price moves in silver haven't occurred as a consequence
of industrial demand. They've occurred in precious metals bull markets
after the leadership of gold in those markets, the momentum
of gold attracted generalist investors into precious metals markets. That's
what's happened to the last three markets. At some point in
time in that market when the generalist comes into the
market leadership in terms of price momentums, which is from
gold to silver, and we saw that happen in spades
in twenty twenty five. Yeah, whether or not there's going
to be a pylon with regards to industrial demand remains
to be seen. But the condition present for a silver
price move, which has occurred in every precious metals bull
market in my life has occurred.
Speaker 2: So but yeah, I see your point and I understand it,
but it does seem like, well, let's go over three
stories that are circulating in the self market right now.
Number one is Samsung has created a battery that is
the greatest thing since sliced bread. You'll get one thousand
miles on your ev The negative is it gobbles up
silver like nothing else before it. Number two is the
Chinese whale who made three billion dollars as in trading gold,
and as best as I can tell, he's real, and
he did have a short position, but we don't know
the other side. We don't know if he was doing spreads,
cross market arbitraging. We have no idea what this guy
was doing, but he did have a short position. And
number three is somehow JP Morgan has accumulated a short
position of six point two billion ounces of silver, which
is enough to basically destabilize the global financial system. That
tells you something about what part of the cycle we're
in as well, because these stories they're just recycled and
brought up to date, right, and we could add two
to those.
Speaker 3: A gold discovery in Uganda that apparently is equal to
half the gold ever produced in the history of mankind.
I spend a fair bit of time at Uganda, and
that deposit has missed me as well as every professional
geologist in Africa. And a similar discovery apparently has been
made in China, a gold discovery that numbers in the
hundreds of millions of ounces. There's a word for this
in English. It's horseshit. I can't speak to the Chinese
whale because I don't follow traders. This whale may, as
you suggest, as you suggest, exist the idea that he's
going to telegraph his short position, or that somebody is
going to know about his short position, if he's that
good at trader. The probability of that, I think is mil.
As to a six billion ounce short position by JP
Morgan Chase, that one is pretty simple. With any access
to the ced our database. The statement of financial condition
for JP Morgan Chase is available For those people who
don't want to do that, Let me tell you something
about my experience on Wall Street, which is deep. The
only thing that matters on Wall Street to employees of
Wall Street is quarterly cash bonuses. Nothing else matters. Systemic
short positions that cause an interest to be payable as
opposed to receivable reduces quarterly cash bonuses. The people who
are listening to this need to repeat after me. Nothing
that reduces quarterly cash bonuses is allowable on Wall Street.
Interest is to be received. There needs to be a
net interest spread so that cash is generated, so that
cash can be distributed. A six billion ounce short position
would require I don't know, it would acquire at least
the derivatives borrowing billions and billions and billions of dollars,
and JP Morgan Chase would have to post margin collateral
on those billions of dollars, which would cost cash, which
would reduce quarterly cash bonuses. Any story that you read
about a systemic short position on Wall Street going after
years or decades, you can automatically negate because it reduces
or eliminates quarterly cash bonuses. People work on top of
Wall Street for quarterly cash bonuses.
Speaker 2: And year ends.
Speaker 3: Yeah that's right, but you know most of them aren't
that far sighted.
Speaker 2: Yeah, yeah, that's for sure at the quarterly mindset. So
now that silver has loved, what other resources can we
look at? That are still hated.
Speaker 3: It's getting scarce. You know, a sulfid nickel is aided.
If you would talked to me four months ago, I
would have said oil and gas. I was a wild
buyer of excellent at one hundred. I'm a little less
wild at one hundred and sixty. I think the oil
trade is actually ahead of itself. I think it has
a long way to go, but I think it goes
lower before it goes higher. There are some sub sectors
that I like. Mostly I've been expressing my love for
oil and gas, or rather my love for the hate
surrounding oil and gas and the great big companies because
I thought they were cheap. What's happened to me, very
very very recently is I found my portfolio way out
of balance to beta, away from alpha. And there is
a speculative subclass, which is companies with sub two hundred
and fifty million dollar market capitalization that are involved in
offshore conventional exploration rather than onshore shale plays, yeah, which
are what the market likes in Third world emerging in
frontier markets. All of the speculative premium that surrounded that
sector for the last forty years. It was a very
good sector for me. By the way, all that speculative.
Speaker 2: Premium is gone.
Speaker 3: So very recently, I've assembled at portfolio personally, and I'm
not going to name the names because I'm still assembling
that portfolio and I don't want ten thousand of your
listeners competing with me. But the five companies share similar characteristics.
First of all, there is somebody in management or on
the board who I know and love and trust, so
that the information I get, while not inside information, is
certainly nuanced and good. The second is that their projects
have to have analogous production in the same base, in
the same trend, and they have to be well seismically supported.
And the third characteristic is that the seismic signature has
to be big enough that if by some odd chance
I'm successful with the well, that I get a fifteen
or twenty to one return. The arithmetic on that speculation
goes like this. These seismically supported big structures with analogs
have a twenty five to thirty five percent probability of success.
So if you're taking five starts, you have a statistical
probability of one success. If you lose thirty five to
forty percent of your money on the four unsuccessful tests,
and you make fifteen or twenty to one on the
one successful test. When you aggregate all that arithmetic, you
have a pretty good outcome if you have the emotional
and financial wherewithal to stand the trade, particularly stand the
trade against all odds. You strike out, you go five
or five bad.
Speaker 2: Yeah. Well, oil exploration is a whole different animal than
it was kind of twenty years ago. At the risk
of dry wells, you know, is mini school compared to then, right,
much lower.
Speaker 3: When I was involved in exploration, well for my employer's account,
not for mine, I didn't have account. Then these deep
wildcat wells on shore had a ten percent probability of success. Now,
these much more expensive offshore shore wells have a twenty
five to thirty five percent probability success provided that there's
good seizmic coverage and there's a producing analog.
Speaker 2: Yeah, and if you've got a good guy on the
rig there, it's even higher.
Speaker 3: Right, Well, that could be I'm you know, one can
assume that somebody who's manning a rig for x On
or Shell Hotel, what would guess they're pretty good?
Speaker 2: Yeah for sure. All right, So these foreign deep water explorers.
Speaker 3: In in countries that most people hate or can't spell
or pronounce.
Speaker 2: And can't find on the globe, right, correct, correct, I
have no idea where they're at. So what about gold
and silver miners? Now gold miners are printing money? Is
that going to continue or are we going to retrace?
Speaker 3: What's going to be well in the very near term.
What intrigues me is I keep sitting in on conference
calls and reading Bay Street and Wall Street research, and
the earnings estimates are based on thirty two, thirty three,
thirty five hundred dollars gold. If you're selling gold for
five thousand bucks and the estimate has you selling gold
for thirty five hundred bucks, it's pretty likely that you're
going to surprise folks.
Speaker 2: Yeah, I would say good shales of that.
Speaker 3: One of the things I did, Carrie, when I sold
my silver is I redeployed half the money into silver stocks,
high quality ones.
Speaker 2: Here's why.
Speaker 3: If from seventy five dollars is an example, silver traded
sideways for a year, which I don't think is unlikely
by definition of silver trade sideways, I don't make any
money on it, right, right, But if silver maintains seventy
five dollars in trade sideways. Given the fact that the
earnings estimates for the silver companies are predicated on forty
five dollars silver, if you make the stuff for seventy
five as opposed to a forty five dollars estimate, you
do pretty well, and it causes Wall Street and Bay
Street to redo their net present value calculations. So it's
not unlikely if a seventy five dollars price environment is maintained,
that the silver stocks are up by forty five or
fifty percent even while silver goes sideways. So ironically, if
the silver price falls, the net present value calculations probably
don't change much because from seventy five dollars to forty
five dollars, that forty five dollars is the basis of
the existing net present value calculations. So it's a very interesting,
very asynchronous bet.
Speaker 2: And yeah, it really is because your downside is limited
because basically you wind up with what you have now.
But if the price shows any strength, any resilience, which
I think you're probably correct, I mean, I don't want
to predict silver prices. It's easier to predict trend than
so than the actual price. For sure, but yeah, if
it just stays where it's at, these guys print money.
So and that's the lag time between the price appreciating
and then the downstream effects being understood by Wall Street.
And this is something that happens a lot, doesn't it.
It does.
Speaker 3: Now your listeners need to understand that this is a
strategy that doesn't play it over a long weekend. I'm
talking about arithmetic, and arithmetic always lags narrative, which is
to say, if the silver price fell from seventy five
dollars to forty five dollars, although the silver stocks would
be appropriately valued, they probably would fall in price for
a year or eighteen months because the narrative would be
that silver was a bad place. People wouldn't look at
the industry's free cashle at forty five dollars or the
net present value of future casuals at forty five dollars.
They would look at the fact that the silver price
and silver stocks fell, and they would react to the
narrative rather than an arithmetic fashion. Eighteen months or let's
call it thirty months from here cures that, which is
to say, over time, the narrative has to surrender to arithmetic.
But it doesn't surrender to arithmetic in a timeframe that's
aw and suitable for speculators.
Speaker 2: Yeah. Interesting thing is in the nineteen sixty silver was
ninety cents an ounce, you know, so I'd say the
price of silver is more than kept up with whatever
the real rate of inflation is, which will never know
because it's impossible to know and be because even if
they did know, they wouldn't tell us.
Speaker 3: Right right, you know, that's something we should talk about, Carrie.
The even listeners of yours, let's just say they're far
enough off main Street to listen to you, very.
Speaker 2: Far off, Like they took a turn. They took a
turn off main Street and they never found it. They
never got back again.
Speaker 3: Yeah, And whether that was rational or bourbon infused. Even
your listeners, I think many of them conflate the CPI
with the rate of deterioration of the US dollar, and
that's wrong. We have been conditioned by this factoid called
the CPI. The CPI is an example when it's inconvenient
doesn't include.
Speaker 2: Food or fuel.
Speaker 3: If somebody saw both you and I walking down the hall,
they would conclude that an index that didn't include lunch
was of no interest to you.
Speaker 2: Or I, I mean.
Speaker 3: Arithmetically, I would urge your listeners to do a back
of the envelope fact check and ask themselves in the period,
say twenty twenty to twenty twenty six, whether the basket
of goods and services that their household consumes has only
become two point six percent more expensive year on year.
This is insane, I mean, this is truly insane. I
did the calculation myself informally. You know, I didn't audit
every purchase I made, but I looked at things like
health insurance, car as you're on mortgage interests, you know,
things like that. It would appear. And by the way,
I'm a little cheap skate, I don't buy much, but
it would appear to me that the deterioration in the
purchasing power of my savings relative to the basket of
goods and services I buy, it would appear that the
deterioration value is between eight and ten percent, not two
point six. That becomes problematic for people, because people who
are planning their life for the next ten years against
a two point six percent deterioration they're purchasing power, are
going to make an enormous enormous mistake. I mean, I
really think it's important that when people think about how
they're going to sustain themselves for the next twenty years,
that they ignore the CPI and think about a number
that's closer to their own experience in the decade of
the seventies, which you and I remember, Carrie, but many
of our contemporaries don't remember. The basket of goods and
services that one could acquire in nineteen seventy for one
thousand dollars cost four thousand dollars by nineteen eighty. If
you were living on a fixed income, or if you
had your savings deposited in a bank account, earning four
point two or four point three against twelve percent inflation,
you've had a very ugly experience in the decade of
the nineteen seventies, and I would ask for your listeners
to think about their own financial plan in that context.
Speaker 2: That's so true. You know, the numbers do not reflect
reality by any stretch. But interestingly enough, in you know,
in nineteen seventy, I think it was two silver dimes
bought a gallon of as, and now two silver dimes
by like, I don't know, I did the math I
think it's six or eight gallons of gas, which in
itself tells you a lot. Now, obviously there were times
when the purchasing power of physical metal actually declined, like
I think in nineteen eighty or ninety, I don't remember,
but it actually declined. But those were anomalies, yep, in
the course of time. So that tells you a lot
right there.
Speaker 3: Well, certainly twenty eleven to twenty thirteen there was a
real dump in metals prices and in the real purchasing
power of metals, perhaps by fortuitous luck, but I hope
my experience. I began to save let me rephrase that,
I began to incorporate a substantial amount of gold in
my savings, maintaining liquidity in US dollars and maintaining liquidity
and gold too. But really my permanent savings became more
and more gold dependent. Interestingly, about six months ago, I
have some of my money managed by a multi family office,
and I've told him they can do anything they want
except for precious metals and natural resources. In other words,
I want that part of my portfolio out of my
own out of my own harm's way. And I sat
down with the portfolio manager there who has always been
interested in my portfolio. He does what I do, and
I asked him not to do what I do in
my own portfolio. And he showed me how much more
affordable things are for me as an example of being
on the Golden constant. He showed me an index of
the S and P five hundred. He showed me an
index of home prices. Yeah, you know, he said, interestingly, Rick,
for you, really things are much cheaper than they were
in the year two thousand and I thought of it
in that context, but it's wild.
Speaker 2: I'm actually doing a report, not to plug it here,
but tracing the purchasing power of silver, gold and the
US dollar on things like cars, houses, Thanksgiving meal Like
a Thanksgiving meal used to be like an ounce of
silver back in the sixties. Bought a Thanksgiving meal Right now,
an ounce of silver buys a multiple meals, you know, good,
half a week's worth of meals. It's a fascinating study
that I don't think is done enough. I'm calling it
living the silver backed lifestyle? Are you? And yeah, it'll be.
It's just a fun exercise for all you subscribers out there. Hey,
this discussion would not be complete without a discussion of AI,
because we're both very aligned on it. You know, it's
worse than garbage in garbage out. It's like garbage in
and you don't know what is going to come. You
said it, and I had said it myself that if
you don't ask it the right questions, you're never going
to get the right answer. And the ability to ask
it the right questions isn't something you can just pick up.
It's something you have to suffer through a lifetime of
investment mistakes and catastrophes to really know what to ask
it right.
Speaker 3: I would say in my hands, until a year ago,
AI stood for artificial idiocy. What AI did when I
asked it a general question before I knew how to
constrain it, was it would search for consensus opinion on X.
In other words, it was a compendium of the beliefs
of every more on the planet, which was not of
particular use to make. The more recent versions of AI,
if you understand how to constrain them, are miraculous. My
partner in the real classroom, Albert lou.
Speaker 2: Who is you know?
Speaker 3: He was a semiconductor engineer, became before he came over
to the dark side, he's really pretty good at technology,
he said, Rick, you know we're educating AI with your
YouTube talks, Yes, and with a lesson from the classroom,
and pretty soon I'll be able to duplicate and fire you.
You will become redundant because AI will be better at
your mannerisms and your equips that you are. The great
quips that you had twenty f says, the great quips
that you had twenty five years ago. Rick, you've forgotten,
but AI hasn't, and they'll be able to. They'll be
able to recycle those quips into today's circumstance, and AI
will be a much better Rick rule and Rick rule.
Speaker 2: Well, I mean, you're still coming up with quips. Creativity
aspect is interesting, but the ability, I mean, I watch
good amount of youtubees and I have to be totally
on guard to see if it's an AI. There's certain
ones that are so so good that I just have
to know. And then they're going back to historical stuff,
different works that people did, and they're creating new works
and quoting them and if you didn't read the original,
you wouldn't know that this was all fake. And in fact,
I had to use AI to prove that something was fake,
because I knew it wasn't. Right now, I uncovered a scam,
a nationwide scam. I'm dropping a book next week. And
this is the cover of the book, and it's America's
rate parking scam. You've been robbed. And basically it's like
I didn't even know this until I use the AI.
But there's a standard for signs on the highways that's
federally mandated, that's been adopted by every single state. It
includes parking signs. They're called traffic control devices. That's signs
that stop signs, traffic lights, flashing lights, lines on the ground,
all of this, it's all standardized, and everything is paid
attention to except parking. Nobody cares about parking signs. So
I'm dropping this book. I'm starting a lawsuit on it
because I just I'm tired of the parking grift and
the nickel and diming of the government. But without AI,
I would have never discovered this, or it would have
taken me years to figure it out. All of this
is encompassed in this book, complements of the US Department
of Transportation, the Federal Highway Administration. It's only about twelve
hundred pages thick. If I had to read that frickin
thing to find all this would have never happened. So
when you talk about Albert and you yourself and the
way if you use it properly, it is a force multiplier.
And I tend to think that it's consumption of silver
by AI is not all they're saying it is. I
think it's exaggerated, but it sounds good in the media, right.
Speaker 3: Yep.
Speaker 2: You know.
Speaker 3: One very interesting thing that I've seen. When I first
came into financial services, I was an intern, which is
finance speak for slave to a wonderful, wonderful, legendary value
investor named Peter Kundall, and working for Peter Kundall five
years of quarterly reports physically remove the staples and lay
them out along the a long conference table.
Speaker 2: Oh you know, and dating yourself. Yeah.
Speaker 3: Peter Kundle was a great fan of the ben Gram
net net sort of thing. So you'd look for companies
that were selling the discounts to the value of their
working capital, and you would take weeks doing this. In
one industry, doing comparative net present value calculations could take
six weeks. We not me, but a young person who's
a member of the rural classroom, helped me do this
very recently. With AI, she said, search exchange databases worldwide
and give me a list of every company in the
world that has negative enterprise value in other words, a
company where the market capitalization and their debt was less
and the value of their current assets either inventory or cash.
Right where those companies are cash flow positive in other words,
where they're not falling knives. Yeah, And AI churned around
for about three minutes. Three minutes it took that long, huh,
and produced a list of seventy companies.
Speaker 2: Seventy. I can't believe there's seventy net nets floating around
in the world. Well there.
Speaker 3: I mean, what AI isn't very good at right now
is searching for extraneous problems like lawsuits hanging over them,
stuff like that. But the fact that it could find
seventy companies worldwide that were nominally at least cash flow
positive with negative enterprise value, yeah, astonished me. There's wartz
by the way, you know, there's probably ten in Japan
that are eighty percent controlled by one family, so you know,
you can't get much benefit out of that.
Speaker 2: But lawsuit risk is good As a lawyer. I can judge,
I can value lawsuit risk, especially using AI. Some of
the best hits I've ever had were lawsuits where the
stock was artificially depressed, like TVO dating myself here there
was trading for nothing, and they won their lawsuit, which
I knew they would, and then they won their appeal
and it went up tenfold. So yeah, it's spectacularly what
you could do. And I don't really think AI needs
as much silver as they're claiming it needs.
Speaker 3: You know, my hope, Carrie. I think you know that
I spend a lot of money maintaining the database of
public companies in the natural resource business, and we use
those well, we use them for my own account, but
we also use them to rank portfolios as a free
service for people and young people in the real classroom
and at the Colorado School of Minds believe that they
can automate about ninety five for sure that database. For me,
I'm spending right now about three hundred and fifty thousand
dollars a year on that database on consultants.
Speaker 2: Oh, there's no question I could do it. There's no question,
because you've got a starting point. If you didn't have
anything and you wanted to assemble it, it would be
a bigger challenge. But it's running now, so it's just
creating agents to do all.
Speaker 3: That stuff like that has it has now a thirty
five year history of upgrades and downgrades, so they can
artificial artificially reassemble three decades of thought process.
Speaker 2: Yes, yeah, it's it's spectacular. So it is the future.
Do you think it's going to have these humongous job
displacements that they're predicting.
Speaker 3: I think so yeah, I do, which is, you know,
probably not all bad. You free up people to do
something that generates more value for society. I mean, certainly
the young analyst Rick Rule, the young slave working for
Peter Kundle, would have been replaced, but Rick Rule's ability
to understand how to ask it questions.
Speaker 2: Can't be replaced. Yeah, we can.
Speaker 3: Just unbelievable. So, I mean, I think for people who
Robert Reich would have described as symbolic workers, knowledge workers,
AI will be truly a thing of beauty. For people
who don't think a lot about their work, They just
try to show up and make some money. That is
not going to have a happy outcome for them.
Speaker 2: And I'll tell you you know, I've had Tesla for
years and the full self driving. According to the stats
on the car, and I think they're conservative. It says
the FSD is driving ninety five percent of the time.
I think it's closer to ninety eight or ninety nine
because I hardly ever drive. And I will confess to
actually having fallen asleep in the car when it's driving.
Not a smart thing to do. But honestly, what kept
me up all these years was having to concentrate on
the highway, you know, to evaluate all the threats constantly emerging,
you know, past, present and future threats. And now like
especially on the highway, it drives better than me. There's
no question. Doesn't have quirks. Yeah, but I got quirks too. Yeah.
I was gonna say, does it get drunk? No, No,
it doesn't get tired. It's fatigued. It is. And that
to me says everything.
Speaker 3: Because you think about this, think of Elon musk Ever
went into the auto insurance business. He has automatic data
on every driver that drives a Tesla. He can price
the insurance to the risk of the driver if the
regulators will let him.
Speaker 2: He's he's in it. He's got it. And I think
twelve or thirteen states. He just that is. Yeah. Well,
they asked Warren Buffett about it, and he said, yeah,
you know, the car insurance the insurance business sounds real
great is people send you money and you send them
pieces of paper. But it's a little more difficult. But
he'd never had real time data on millions of vehicles.
And you know, according to Musk and I don't know
if it's true. Like I said, it's one of those
AI things that I want to see the numbers on.
It's three to four times safer already than human driver.
But you know, La, when it comes to parking in
the parking lot, it's not so good. I don't trust
it right where there's all sorts of stuff going. But
but it's just a.
Speaker 3: But you know, Carrie, that isn't where the risk of
auto insurance. In auto insurance is a federal Yes, yes
they have a claim, but that's nothing like a million
dollars in my ability for hitting somebody.
Speaker 2: Yeah, or you know, or you know on the highway
that's well, highways are actually safer. It's actually the local
streets for the worst accidents take place. Counterintuitive, but yeah, well, Rick,
I always appreciate you coming on the show. One of
the great things about you global thinker. You don't think
in terms of data points. You think in terms of
systems and in terms of patterns. Pattern recognition and pattern recognition.
That's something that AI really excels at. But it's something
that they don't teach consciously in our schools, our universities.
There's no course in pattern recognition. Course in logic, yes, history, whatever,
but there's nothing in pattern recognition. You were going to
teach a pattern recognition course, how would you teach it?
Speaker 3: Interesting question. I haven't thought about it. I guess in
order to make people assimilated, I would have to show
synchronous and asynchronous patterns on some subject that I could
make autobiographical because people relate to people.
Speaker 2: Sure, yeah, yeahs.
Speaker 3: It so, I guess I could do it. In the
context of the oil market and the oil stock market
going back forty five years, the thesis would be, in
terms of pattern recognition, the cure for high prices is
high prices, the cure for low prices is low prices,
and the variable is taxation interest rates. I could probably
do that, now that you mentioned it, I hadn't thought
of that. Question until you asked me. But I think
the easiest way for me to teach the course would
be to take the oil industry from nineteen sixty five
to twenty twenty six and teach cyclicality and variability. There
have to be three variability scales. One would it be technology,
the second would be theft aka taxation at rightltion right,
and the third would have to be real inflation adjusted
interest rates. And I think you could teach a pretty
good pattern recognition course doing that.
Speaker 2: Yeah, because that's what AI is really all about. In
the end, pattern recognition, and how you refine that pattern
is how useful it becomes. And you know it's something
you've been doing unconsciously your whole life. While you can
look at a stock market chart and predict with reasonable
degree of certainty where it's heading next, or where the
trend is, or where you want to be in three years,
but the market's not there yet, and I think there's
some value to it, and.
Speaker 3: AI probably maybe you know the answer to this. I
suspect AI probably would be able to looking at a
fifty or sixty year chart like that, point out what
the most relevant variables were. In other words, use we'll
probably be able to figure out taxation, technology and real
interest rates without being prompted.
Speaker 2: Yeah, oh for sure, for sure, because you know that's
where the mastery and crunching all those numberes decades of
numbers that you know humans can't even do it. You know,
that's why we use charts, because we can't comprehend the numbers. Yeah. Well,
just something to think about in any event, appreciate you
coming on. Hey Rural Classroom, how do you sign up
for the Rick Rural Classroom.
Speaker 3: Three things I want to tell your listeners about if
you'll permit me. The first is given that I spend
three hundred and fifty thousand dollars a year maintaining a
public company database and natural resources. I'll give you that
database for free. Send me your natural resource stocks. List
your natural resource at Rule Investmentmedia dot com, and for
free I'll rank them one to ten, one being best,
ten being worst. I'll comment on individual issues if I
think my comments have value. Please no crypto, no tex stoks,
no pot sucks. Yeah, no clip though I don't do those.
Speaker 2: Okay.
Speaker 3: That other thing is at the real classroom. We now
have seventeen thousand students who are for free accessing well
over three hundred hours of instructional material at the real
classroom five and a half hours on introduction to natural
resource investing. There's also the Rick Rule channel and the
Rule Investment Media Channel on YouTube. But we also have
one other event coming up, the thirtieth Rule Nature Resources
Investment Symposium in Boca Raton, Florida, July six through ten,
the finest natural resource conference I think on the planet.
We will sell out of the live conferences here. We'll
sell it out within thirty days. For the first time
in twenty years, we have pardon me unlimited access online.
So Rule Investment Symposium July six through ten, Booker Raton, Florida.
If you think, for any reason you didn't get your
money's worth, We'll give you your money back.
Speaker 2: I'll give you your money back because let me tell you,
I've been to I don't even know how many of them,
Rick back in Vancouver, and you know, obviously I'm not
looking for but everything I learned there, I monetized it.
Everything and the people you meet, you know. The other
thing is why I love resource business better than any
other industry. Everyone's a character. Number one. I You're not
going to see straight lace to ivy league like lawyer types,
white shoe firm types, forget that. But they're all smart
and they're all problems. And when you get that many
problem solvers under one roof, something magical happens. You know,
the impossible becomes possible and the it rubs off on you.
I don't think I'm that bright, believe me, I don't.
But when I'm around smarter people, it makes me smarter.
So fine.
Speaker 3: They're pretty nice. Yeah, you know, we've got we've got
a couple speakers. Nomi Prince comes to mind. Oh yeah,
very very, very famous person. She comes to the conference,
She hangs out at the coffee pot, she hangs out
the r she goes on the boat preuse, you know,
eminently approachable.
Speaker 2: Yeah yeah, and you're eminently approachable. I mean I started
this fifteen years ago, Rick, and you like you're the
most generous going on people's shows of anybody out there.
But yeah, good people, problem solvers. They're actually trying to
make a difference, you know, like, Okay, we're all driven
by the profit motive, but these people are special. And
it's really you know, because hey, to it survived in
the resource sector this long. You got to have something extra.
You can't just be a you know, a schlepper or
a I'm trying to remember what somebody once told a slacker.
Somebody once told me I was in San Diego and
he said, yeah, it's a great place, but it's the
land of the slackers, which why New Yorkers can do
so well. So you can't be a slacker and make
it to the Rick Rule Investment Conference. You just can't.
Speaker 3: Well, we look forward to your non slacker audience visiting us.
By the way, if you come either live or live stream,
you'll have access to the recordings of the conference for
a year, and you'll need them. We're going to give
you more information over four days and forty six hours
then you can absorb. So when I tell you it's
going to be four days for everybody to get their moneys,
who can be eight days attending the conference and then
playing back the recordings.
Speaker 2: And great people. It's so worth it, and really appreciate
you coming on. Rick. I'll have a link to Rick's
various enterprises in the show notes. Highly recommend the classroom.
I'm signing up for it, like right away, I noone
realized you were doing it and Hey, look forward to
seeing and Boca in the summer and you'd be well.
Speaker 3: Thank you and you as well. Thank you for the
opportunity to have this discussion.
Speaker 1: Thanks for listening to carry Letz's Financial Survival Network, your
solution to today's trying times. For the latest, go to
Financial Survivalnetwork dot com. Financial Survival Network now more than ever,