[Music] [Music] I'm Charlotte McLoud with investing news.com and here today with me is Rick Ru proprietor at Ru investment media thank you so much for joining me great to have you here Charlotte I'm delighted to be back with you thanks for having me back of course always a pleasure to speak with you and good to be connecting at V see that's where we are today and I'm going to start with the title of one of your talks and I'm going to look at the screen here so I get it right


exploration is out of favor I'm moving back into exploration so I think anyone who's watching will be feeling that sentiment so is this the bottom for juniors do you think I don't know okay but it kind of doesn't matter um Bernard Baro once said that the only person who absolutely bought at the bottom and sold at the top was a liar it didn't happen could the exploration stocks go lower yes have I made a lot of money buying at or around Market Bottoms in the past yes the constant for me uh Charlotte is that


these are capital intensive cyclical businesses and to really make money you have to be a contrarian when exploration is out of favor I Look to it you'll remember two or three years ago you and I having discussions about uranium deeply out of favor deeply hated look at what happened uh that's why I'm in the exploration space yes uranium definitely a really good example and we're going to come back to that a little further on in the conversation I wondered if you could get a little bit more specific on how


you getting back into exploration because I think people would be interested to hear if you're looking at a particular sector or type of company from my point of view in the last 10 years the exploration sector has been overvalued the prices that people put on Equity offerings and the lack of warrants didn't compensate investors for the risk that they were taking in Exploration that's changed the exploration companies played chicken with capital markets raising money just in time they're out of money they need


to come to investors and the pool of investors is smaller than it used to be here I am 10 years ago uh it seemed to me that the best value propositions of Natural Resources were among the very largest companies the very safest companies in the space so I could be in names like weat and precious uh or Exxon or Franco Nevada and given that I wasn't paid to take the risk inherent in the exploration companies I didn't do it now we're in a circumstance where some of these companies have done 10 years of


good work they're selling for a third of the price that they were selling for 10 years ago before they did the good work and there's nobody competing with me on the bid uh this is a wonderful circumstance particularly frankly Charlotte for a 70-year-old who isn't will who isn't as able to work hard as he was 20 years ago the fact that the younger abler competitors of mine are on strike is just the very best possible circumstance for me okay and you said ARA conversation was back in November and as


they saying you know you're here you're looking to allocate Capital but I remember you were having a tough time doing it then so has has that changed uh it's changed because companies that were adequately capitalized a year ago some of them have run out of money I mean run out of money I'll give you an example this is not an investment recommendation uh a former Market darling uh it's called Chana c h a Ka I think it ran up to probably I don't know 80 or 90 set some years ago reasonably


successful exploration so I believe that the market cap was probably justified by mineral inventory uh in some breta pipes two great great great big targets uh the people behind the company I know very well highquality people pre money market cap $6 million uh and they give me a full warrant so if they have an exploration success there's a real good chance of the 10 bagger or a 15 bagger with a full warrant now people that play this game need to understand that an exploration the most likely outcome in each


investment decision that you make is failure the most likely outcome is that you lose 20 or 25% before you can liquidate your Holdings on a failure but if the down side is 20 to 30% but the upside is5 1500% with a warrant it means that your real upside is 25 to1 one 25 bagger advertises a ton of 25% losers and we're back in the place where the Chana copper type of circumstances six $6 million back stop pre-money valuations are around so I'm back too okay so we started with the specific looking at the Juniors now I want to


pull way back out I think each time we talk I check in with you on the health of the US economy and last time you were still pleasantly surprised but you said cracks were emerging because of high interest rates so looking at 2024 rates seem poised to come down is that going to ease those cracks or or I think the FED is hoping that they won't need to interest that they won't need to interest ease interest rates I think that the FED is hoping that they can talk about easing interest rates uh and


have the economy loosen up but the FED we're in front of the FED starting a new bank so we talk to them a lot uh the FED recognizes that there's no fiscal discipline from Congress and so the only thing that stands behind the US economy and really idiotic inflation is the fed the FED in the absence of some control of spending by Congress uh the only tool that they have to keep the US economy sort of unkill Hilter is interest rates their preference would be not to cut uh and if the US economy continues


to show reasonable signs of strength I think they'll talk about cutting as opposed to cut if you begin to see more Carnage in the economy then of course they'll be forced politically to cut interest rates okay very interesting though so but that might not happen if they if they can get away with it I think their preference in the absence of restrain from Congress which doesn't seem to be in Congress vocabulary uh would be to keep interest rates higher for longer all right okay very interesting so I want to I want to


keep moving we pretty much skipped over gold when we talked in November so we've got to talk about gold especially after the price activity at the end of last year so I would have thought with the gold price staying above 2,000 pretty steadily we would have seen more mainstream interest I wonder if that is still to come though is it and what would be the Catalyst I think it is still to come uh I think from the point of view of generalist investor non-industry investors that the performance of the so-called magnificent


7 the big tech stocks as such that they the generalist investor believes that those companies have enough pricing power that they themselves are inflation Hedges I mean a few where is this thing if you look at the fact that Apple could sell me this little thing for $1,200 uh and deliver enough utility to me that if they charge me400 I would still pay suggest suggests I think to the big investors that there's plenty of P that there's plenty of pricing power in Corporate America and that they don't


need to come down to the gold space I think that's a mistake um I think it's a big mistake I think with specific regards to Apple although I'm not a a tech investor that their avenues for growth uh are probably less tramatic than they were in the past their margins are insane but I I I think it's a wonderful company but I think it's priced for Perfection I don't think Perfection occurs but let's leave that aside in the gold space uh it is arguable that a US investor not a global


investor but a US investor didn't need to own gold in the period 1982 to 2022 declining real interest rates globalization the ability to export the US fiscal problems by printing currency because we had the world's Reserve currency meant that Americans didn't have to go on gold everybody else did gold did well in other currencies but not well in the US dollar I think that changed in 2022 I think too Charlotte and most Americans understand this only one half of 1% of total US savings and investment


assets are invested in Precious Metals related assets the four decade mean is 2% I believe that we're going to have reversion to mean I'm not one of these guys who says that the US Treasury Market's going to collapse and Gold's going to win the war against the US dollar ridiculous reversion to mean if you have reversion to mean you quadruple demand for precious metals and precious metals related Securities in a market that is by itself 22% of the world's savings and investment Capital Market


that's what's going to happen okay and you know when it comes to interest in Gold especially in the west I did want to mention because I've seen so many headlines about it the the Costco and Walmart gold sales does that tell us something about sentiment changing it it tells you that there is enough interest in Costco and Walmart that there's room for it on their shelf what is a bit of interest to me Charlotte and you've been helpful in this I have in the last seven years graded now 80,000 natural resource


portfolios at rural investment media and what has occurred to me is that the interest in gold is much broader it used to be when I was talking to a gold audience I was looking at myself in the mirror there were old fat bald white guys right that was the audience in the last three years my audience has become 35% non-caucasian uh and 30% female now when I'm talking to an interest of my own constituencies and I look at it at the audience everybody's there South Asian people are there African people are


there Latin American people are there young women are there which is important separate apart from the fact that they're pretty um the democratization of the gold mark is something that even the companies don't understand they aren't gearing their investment pitches to the real gold market they're gearing their pitches to the people that they used to sell to and that's not where the market is anymore very interesting and okay just to go back to that 880,000 portfolios that you've looked at so that


gives us an idea of the demographics you're seeing in the shifts there are there any other Trends in in behavior that you would pick out that's a wonderful question uh the first and most obvious is that when I ask people individually to describe themselves as investors uh they almost uniformly decide describe themselves as conservative investors which is ridiculous they're wild speculators it's fine to be a wild Speculator if you behave accordingly if you understand and govern yourself uh


accordingly it is also true sadly that people VI investment classes after they've proved themselves and the way that they prove themselves is with an increase in price so people tend to buy Investments after they've already performed after they've performed they don't need to perform anymore so as an example when I would come on your show when uranium was a ton dollars and say the uranium price has to go up or the or the lights are going to go out nobody cared now that the price is already up


to $100 above the incentive price everybody wants to be in the uranium space there is a sad tendency to worry about the H the horse after the horse is out of the barn and people need to adjust their thinking in that regard okay well hopefully people who are listening might might keep that in mind so let's let's check in on uranium we've got to go quickly through these topics so really good performance in 2023 from uranium you already told us the easy money has been made but we've


still got the real money and the big money last time we spoke you said we're in that real money stage we need to focus on companies doing real things is that still where we are absolutely and at some point time if you'd like you and I can have a real uranium discussion there have been fundamental changes in the uranium Market that are probably understood by a 100 people people are not paying attention and it's important to pay attention to but it's a 20-minute discussion uh for myself full disclosure


uh I was way early uranium way way way long uh I've now sold enough stock that I've recouped all my Capital I've sold enough to pay tax on the capital I recouped and I sold a little more just to reward myself for being smart and early uh so when I say that the big money's ahead um that's not what I did I D risk to trade okay and I want to touch on another comment from that conversation about uranium so you made a comment about m&a and you said companies like NextGen and fishion are likely to be


taken over so I want to hear a little bit more hopefully on how m&a activity could pan out F Well mercifully we're starting to see it mercifully we're starting to see at least lateral mergers uh in among the uranium developers which is important companies that have greater asset bases generally have lower General administrative charges relative to the assets under management they're larger companies with more trading liquidity uh which means they have a lower cost of capital what


I suspect might happen is as the generalist money comes in the uranium space the bigger companies will have larger market caps more liquidity and either the prices of the smaller ones go up or the big ones by the small ones that's what'll happen in the case of next chin you have a special circumstance you have what is the best known undeveloped uranium deposit in the world uh but you have a Canadians will hate me for saying this but you have a 400 kilometers west of nowhere uh there's no infrastructure there and you


have fision in the same place so logically those two deposits will be built as one and the capital costs associated with building it uh are likely to be such that the market won't trust the current nextg management to build it these guys were great explorers like off the charts good explorers they've done a wonderful job in community relations they've done everything right but they're untested in terms of building 7 billion doll mines so it is more likely than not not certain but more likely than not that


somebody has to take them over logically that would be camoo but C Co just bought westing house uh they may be full when you look at the whole range of acquirers it is likely that because that's uranium and because it's in Canada that the Canadian government will view it as a strategic asset it's unlikely that China General nuclear would be allowed to buy it as an example uh could Tech buy it perhaps would the Canadian government allow BHP to buy it now that BHP is spending $7 billion in Saskatchewan on a podes


deposit maybe but that's the kind of m& you have to look at you have to look at strategic m&a and I think we're going to see it in the space and I think investors are going to make a lot money out of okay very tricky very much something to keep an eye on but okay still continuing on with uranium so I keep hearing it's sellers Market the producers are really in the driver's seat and like many parts of the market the deals that these companies do with utilities are pretty opaque but I


wondered if we could talk a little bit about them and just in general what should inv investors look for and what should they understand when they see companies doing this this is part of that longer conversation uh what's important is that the physical Market in uranium has gone from the spot Market to the term Market this is important because it gives investors visibility as to uh the Top Line uh the sales price for a long time and it gives you certainty if you're signing an off-take agreement with a credit quality


taker Ontario power Duke power Southern companies uh you have more certainty now in terms of Revenue and price in the uranium business than in any other commodity on the planet and that means that once you get the ability to understand with the existing disclosure if you take the time to look at the structure of the company's contract book you will be able over the next 10 years with uranium more than any other commodity on the planet except perhaps iron ore to have price certainty which is really really really different


I've never seen anything like this in my years in the resource business okay one more uranium question and I I'll hold you to that we'll come back all longer uranium question so price you mentioned we've we've reached triple digits we've gone beyond the incentive price so looking longterm what's what's a realistic long-term level I don't know the answer to that partially it's a function of interest rates uh the incentive price has to do with the cost of capital put stuff in production and


it has to do with the levels of social rats in other words will in very blunt terms your prime minister decide to steal as much money from the Uranian business as he does from the oil and gas business uh because that would change the incentive price um right now I suspect that $75 at today's interest rate is plenty what's important to know in the near- term Charlotte and and what your what your audience needs to understand is that in the very near term because of the long lead times required to increase


production uh that the $100 incentive price won't in the near-term increase production except for the projects that cako and kadam prom have that were put on Hiatus about 15 million annual pounds the deficit is about 50 million pounds and we won't be able to address address that deficit on a global basis for five to seven years despite the increase in the spot place okay and just because you mentioned Kaz Adam prom I know a lot of people are looking at their recent release where they said okay we're


probably going to or maybe not probably they may fall short on their production 2024 2025 do you do you see that as significant or do we just not know yet I do uh I do think it's significant it tells you a couple things it says with regards to the the material they haven't returned to production at places like gang Kai that they're keeping their word they told the investors that they wouldn't return that hot stop production to production until they had sufficient long-term contracts that they were


assured that their shareholders have reasonable Returns on Capital employed which is to say that they're not paying attention to the $100 spot Market they're paying attention to how much production they can contract to China General nuclear and other people it also tells you that the faith that investors had investors like me had that they could restart their ISR projects easily was wrong uh it turns out that when you restart an ISR project although it's easier than an underground project uh


it's very much like restarting a stopped uh oil and gas water flood there are Reservoir characteristics that require customization they will be successful they are good at what they do uh it will not be a no-brainer okay all right we'll leave uranium there for now but I do hope that we'll come back to at a later date I have a fun question to finish things off or at least I think it's fun so uranium we've been watching its move for a really long time and I think now a lot of people are like okay it's here what's


what's the next uranium so something that was there's nothing as obvious right now but there are things that investors dislike because they've disappointed them and that's where I'm looking uh investors had high opes for platinum and Palladium they were disappointed they were dis appointed partially because the Russians have had to sell everything they possibly could to raise money I saw this in 1991 and 1990 the last time the Russians were broke they sold everything they had what did they have poach nickel


platinum and Palladium so there's an artificial downturn in the platinum and Palladium prices the investors don't know why there's a downturn they just know there is so they hate platinum and Palladium I love hate so the fact that people are selling off platinum and padium deposits outside of Russia and outside of South Africa means I'm a buyer letterate nickel production has increased a lot and the Russians are selling nickel so the nickel price has collapsed so everybody who was just


hyper excited about nickel as a battery metal three years ago wishes they'd never learned to spell the word um nothing's changed the Outlook in two years is radically different than the Outlook today so a high quality nickel deposit somewhere in the world is something I would look at my favorite although not for right now is silver speculation you remember the great silver squeeze uh that whole generation of silver speculators got burned because they believed that they would Prevail in three months and they


were wrong they thought their time preference mattered to the market it doesn't uh silver is from my viewpoint the most volatile commodity among the precious bals when silver moves it moves further and faster and I can get entry into high quality Junior silver stocks today uh at prices that suggest that the silver price will never go up uh a bet I'd love to take as good as uranium was three years ago no but nothing is okay thank you for going through those one all all ideas that I think people should consider any find on


thoughts that you would leave investors with for investors not speculators for investors there's one final no-brainer Market that's the oil and gas business uh the big thinkers in the world you know those morons that run your country and run mine uh would have you believe that peak oil demand will occur in 2030 and this is insane as a group of people we've now invested five trillion do trillion on alternative energies and we've reduced the market share of fossil fuels from 82 2% all the way down to


81% peak oil demand occurs in 2065 or 2070 meanwhile the oil and gas industry is under investing a billion dollars a day in sustaining Capital Investments for the next five years the best sector in resources for investors not speculators is high quality oil and gas if you have the courage for political risk the midcap Canadian oil and gas companies you Mr trudo can't stay forever uh and at some point in time the Canadian political leadership will understand that if you have a whole world looking to buy Canadian natural


gas there is a business case for it and while you wait for that blessed day to come the Canadian natural gas producers are making a lot of money at today's prices and they're paying astonishingly High dividends not for speculators but for investors this is the warmest and most comfortable place that you could possibly be okay I think that's a great place to wrap it up thank you so much for coming on to share all your thoughts today always great to hear from you uh finally if I may any of


your listeners who care what I have to say about resources can personalize it go to rule investment media.com list your natural resource stocks I'll personally rank them I've done 880,000 times now in seven years uh no cost no obligation if I have comments on individual issues think are of value I'll comment once again rule investment media.com uh I will uh rank submitted Reser stocks okay sorry to cut you off we'll add the information in the video description as we usually do and yeah we


can become one of the 8,000 very good okay once again I'm Charlotte McLoud with investing news.com and this is for GR thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear hear your thoughts so leave us a comment below we'll see you next [Music] time