"We've Never Seen Anything Like This In Recorded History..." - Rick Rule

Added: 2026-05-30

[00:00:00]If you give me 5 years rather than 5 weeks, I'm really constructive.

[00:00:05]Um, you know, oil was easily my favorite commodity in January because it was hated.

[00:00:11]By the way, I didn't foresee the go for uh oil's no longer hated. So, the hate deficit is gone. What happens in the near term is anybody's guess. Uh I don't know how as if or when the Gulf conflict will be settled. If the Gulf conflict is settled, uh neither rationing by price nor rationing by anticipation will be in the market and the oil price likely will fall, probably fall fairly precipitously.

[00:00:43]Looking longer term, the structural deficit in the oil market got worse as a consequence of the war.

[00:00:50]uh in January not foreseeing the war I would have said that an oil price rise in 29 2030 was inevitable but it was inevitable because the oil industry on a global basis was underinvesting as to about a billion dollars a day sustaining capital investment and that would impact the outyear's production that circumstance got much worse well I need to admit in the near term I was very wrong uh I had anticipated that the Gulf conflict would express itself uh in something resembling a recession sooner rather than later and that copper prices would fall both because there's a lot of copper in speculative inventories uh and speculators are notoriously fickle and speculators are also uh cost of capital sensitive and I would have expected the increased lending rates to decrease speculation of copper. I'm glad you didn't interview me nine weeks ago because I would have been exactly wrong with regards to that. the copper price has done extremely well. Looking longer term, there's no way around higher copper prices.

[00:01:54]Uh we're going to have to ration by price. This just this isn't just a data center story.

[00:02:03]There's a billion people on Earth, Daniel, that have no access to primary electricity. We're going to solve that problem next 20 or 25 years. Copper will be used in generation. Copper will be used in transmission. And copper will be used in application. I was at medals week in London end of 2025 and there were a couple of salient facts not rhetoric facts uh that is this right now there's a structural deficit in copper we're using more than we're making that's okay because we have some in inventory but it's not okay 3 years out or four years out in order to maintain current levels of production the 10 largest copper mining companies in the world need to spend 250 billion constant $225 non-escalated dollars over 10 years and they don't have the money. So that's one challenge. But spending that $250 billion assuming they can get the money maintains their current level of output.

[00:03:03]That doesn't take into account that demand for copper pre- data center is growing between 1 and a half and 2%.

[00:03:12]Compounded.

[00:03:14]You cannot increase copper supply without investment without exploration.

[00:03:19]But we haven't been exploring for copper uh on a concerted basis for 30 years.

[00:03:25]There is nothing that we can do nothing that we can do that will alleviate a production shortfall 5 years from now.

[00:03:34]If we have an ugly depression or synchronized recession, we can simultaneously reduce supply and reduce demand. But if we have that, your copper stocks will be the least of your worries.

[00:03:46]Uh so for those reasons, I'm a long-term bull on copper. Uh I was a short-term bear and I was wrong. Beneath copper's short-term strength lies a more serious long-term imbalance. Global markets are already operating in a structural deficit where consumption consistently exceeds production. Stockpiles are helping bridge the gap, but that cushion is shrinking over time. Maintaining current output alone requires massive capital investment from major mining companies over the next decade.

[00:04:17]Exploration spending has lagged for years, limiting the discovery of new highquality deposits. Even with strong pricing incentives, supply expansion remains constrained by long development timelines and financing challenges. As electrification accelerates globally, copper demand growth is increasingly set to outpace the industry's ability to respond.

[00:04:40]>> Probably too short a term for me to comment on with the exception of the pace of Japanese restarts which is increasing.

[00:04:47]Uh looking out over 10 years, uh you can only be a bull.

[00:04:52]The unsung beneficiary, if there is a beneficiary of the Gulf conflict, is the Iranian business.

[00:04:58]Students of history will note that the French nuclear fleet and the Japanese nuclear fleet, the fourth and third largest nuclear fleets in the world respectively, were constructed as a consequence of the Arab oil embargo.

[00:05:12]And the realization in Japan and France that energy security for them required nuclear fuel. It was the only fuel dense enough that you could store enough to power Japan and France respectively for 5 years. Uh we forgot about that message over the last 50 years. The conflict in the Gulf restored that message and it restored it in dramatic fashion.

[00:05:36]The only substance in the world with sufficient energy density to fuel a national grid is uranium.

[00:05:43]You can store enough uranium to fuel Japan in one warehouse. You cannot store that much coal, that much natural gas, that much oil, or certainly that much rain. Uh by the way, you can't store enough battery. that sun matters either.

[00:05:56]It's only uranium.

[00:05:59]Uh again, we have a structural deficit in uranium. That's okay because we have inventories of uranium, but the inventories are opaque and they're drawing down. Now, the story gets more sophisticated.

[00:06:12]Um and it has two parts. uh there is a refueling cycle going on around the world which is different different than the initial stocking cycle. Uh and that refueling cycle uh itself uh has consequences which are exacerbated because a lot of the supply that's come on the market in the last 3 years particularly Japanese supply hasn't been sold into the market but rather leased. Uranium is regaining strategic importance due to its unmatched energy density and storage efficiency. Unlike fossil fuels or renewables, nuclear fuel can be stored compactly while producing extremely high and reliable energy output. This makes it uniquely valuable for long-term energy security planning. Geopolitical instability has renewed interest in nuclear power, especially in countries seeking independence from volatile fuel imports. At the same time, uranium markets are facing tightening supply conditions as inventories decline and reactor demand rises. New plant construction and reactor restarts are intensifying pressure on available material, reshaping expectations for nuclear fuel availability over the coming decades, which means that the people who bought and used that uranium have to replace it with uranium, not with money.

[00:07:35]That's important. The pace of Japanese restarts is important too because a lot of the surplus inventory in the world is in Japan.

[00:07:43]Uh without the pace of Japanese re restarts that inventory is inventory held for sale available for sale in world markets.

[00:07:53]If it's inventory held for fuel that means it comes off the market. The third part of the market that people don't understand uh and nobody knows the level of above ground inventories.

[00:08:03]Nobody knows.

[00:08:05]But it At World Nuclear Week in London, it was estimated that available for sales uh inventories worldwide were about 300 million pounds.

[00:08:16]Uh that would be adequate with the supply deficit of 40 million pounds a year. Uh although it would be problematic relative to the pace of new plant construction that's happening worldwide.

[00:08:29]What that number doesn't understand is that it includes 82 million pounds that are held by SPRAT and not available for sale. If you take that 300 million pound number, if that's the right number, I'm not saying it is. I don't know. But if you take that 300 million pound number against 40 million a year, you took you feel pretty good until you subtract 80 million pounds from it and then you feel a lot less good.

[00:08:57]The other important thing in uranium that the market doesn't take note of which amuses me, you alluded to earlier in the interview, which is the term market.

[00:09:09]In every other commodity that I know of on the planet, prices are set at spot.

[00:09:13]Uh they're set in the immediate interchange between buyers and sellers.

[00:09:17]Increasingly, in the uranium market, transactions settle in the term or contract market. And that's important.

[00:09:24]Uh the term market allows producers to know with some with some certainty how much they can sell and at what price for a long period of time. A major structural shift is occurring in uranium pricing and trade. The market is increasingly moving away from short-term spot transactions toward long-term contracting between producers and utilities. This transition provides mining companies with predictable revenues and improves financial planning stability. Utilities gain long-term fuel security, reducing exposure to price volatility and supply shocks. Financial institutions are also becoming more comfortable financing nuclear projects when fuel supply contracts are secured in advance. This strengthens project bankability and lowers capital risk. As contracting expands, uranium producers gain better access to financing, reshaping the economics of global nuclear development and investment frameworks.

[00:10:22]This helps them amvertise debt uh and it helps lazy securities analysts like Rick Rule uh do free cash flow forecasts because price is not a variable anymore.

[00:10:35]Uh it also helps the consumer. If you and I, not that we could, but if you and I were going to build a modern big nuclear power plant and we were going to spend $8 billion building that plant, we would likely borrow 5.5 or 6 billion of that $8 billion.

[00:10:53]And increasingly, the banks who lend us that 5.5 or 6 billion are requiring the borrowers to have enough contracted uranium to advertise the loan.

[00:11:06]And it is the fact that an increasing amount of the transaction in the Iranian business that occurs from here on forward will occur in the term market.

[00:11:19]That allows investors and lenders to view with more certainty the free cash flows and net present values attributable to uranium producers than they can in any other commodity on the planet.

[00:11:36]That's an enormous variable in favor of nuclear. Will it matter this year or next year? Probably not, because companies are viewing their contracts as trade secrets and they're opaque.

[00:11:50]But when it comes to the attention of these management teams that if they're clearer with regards to their contract, they lower their cost of capital.

[00:12:01]The market will take care of that. Oil prices remain highly sensitive to geopolitical developments, especially in key production and transit regions. In the short term, market direction is often dictated by conflict risk, shipping disruptions, and fears of supply interruptions. This creates sharp volatility driven by shifting expectations. However, underlying the immediate noise is a deeper structural issue, chronic underinvestment in global production capacity. Many producers face fiscal and security constraints that limit expansion, while recent disruptions have reduced spare capacity further. As a result, even temporary shocks can significantly tighten markets, reinforcing the long-term risk of sustained supply shortages in global energy systems.

[00:12:48]>> We had the largest and highest quality undeveloped uranium deposit in the world. And mercifully, we had it in Canada, uh, a place that, while it may not be great, has the rule of law. and assume that we have like the nextgen management has done a good job uh in permitting and in matey and first nations relationships you know all those kind of things. The challenge we had 10 years ago is that the upfront capital cost of building that mine was more than we could raise. We couldn't do it. We couldn't acquire with your balance sheet and my balance sheet or even NextGen's balance sheet the uh construction loan necessary to build that mine. So we had to sell it.

[00:13:32]Today is very different.

[00:13:35]You and I can go to Ontario Power, Southern Company, Tokyo Electric Power, China General Nuclear, Duke Power, and we can enter into long-term supply contracts. And then we can go to Westinghouse and Westinghouse will build us our mine and our processing facility on a fixedpric turnkey basis.

[00:13:54]So we know what it'll cost us to build the mine and we know what the free cash flow from the mine will look like and we are able to take those offtake contracts and literally use them as security to raise the construction financing to build that mine. Now, you and I might decide that we don't actually want to build a mine, a rational decision. But when we go to talk to people about buying that mine and they say, "You have to sell to us because we get but because you can't build it." We can say, "Oh, sir, now there you're very very wrong.

[00:14:28]>> We can build it. uh we are willing to sell this as a fair price at a fair price but we are not willing to accept an exorbitant discount to the net present value that we could create for yourself for ourselves.

[00:14:42]The second thing that happens now is that for a very high quality mine like NextGen, it was widely supposed uh that in the market conditions that existed 10 years ago that they could sell it to Kamako Kamako Kamako or Kamako. For political reasons, the Chinese were going to be excluded from the Canadian market.

[00:15:04]But that's changed too. Uh Riotinto has a large mine in Saskatchewan, the Jansen Podash mine.

[00:15:12]Uh so you have to add Rio back in the equation.

[00:15:16]Uh there is a Canadian company now Anglo when that merger takes place that is a large enough company uh to buy and build that mine and and then of course there's Kamo.

[00:15:30]It's very difficult to have an auction with one bidder, but having an auction with three biders with the fallback that you could build the mine yourself changes uh the relationship between net present value and transaction prices for the benefit of shareholders.

[00:15:48]>> Across copper, uranium, and oil, a common global pattern is emerging.

[00:15:54]Rising demand from electrification, infrastructure expansion, and energy security priorities is colliding with years of underinvestment in supply capacity. Each commodity reflects a different stage of this adjustment, yet all point toward tighter long-term markets. Short-term price movements will continue to be influenced by economic cycles and geopolitical events, but structural deficits remain the dominant underlying force. Investors are increasingly reassessing long horizon risks and capital allocation strategies.

[00:16:25]The coming decade is likely to be defined by resource scarcity, strategic competition, and rapidly growing global energy consumption pressures worldwide.

[00:16:36]>> If you give me 5 years rather than 5 weeks, I'm really constructive.

[00:16:41]Um, you know, oil was easily my favorite commodity in January because it was hated.

[00:16:47]By the way, I didn't foresee the go for uh oil's no longer hated. So, the hate deficit is gone. What happens in the near term is anybody's guess. Uh I don't know how, as if, or when the Gulf conflict will be settled. If the Gulf conflict is settled, uh neither rationing by price nor rationing by anticipation will be in the market and the oil price likely will fall, probably fall fairly precipitously.

[00:17:18]Looking longer term, the structural deficit in the oil market got worse as a consequence of the war.

[00:17:26]uh in January not foreseeing the war I would have said that an oil price rise in 29 2030 was inevitable that it was inevitable because the oil industry on a global basis was underinvesting as to about a billion dollars a day sustaining capital investment and that would impact the outyear's production that circumstance got much worse uh obviously the Iranians are not making sustaining capital investments they have another use for funds uh the Saudis, the Kuwaitis, and the UAE aren't making sustaining capital investments because they're afraid as they get making they'll get b they'll get they'll get blown up. But in addition to sustaining capital investments, we have to replace billions of dollars worth of production inventory that got destroyed by during the war.

[00:18:14]So the supply challenges that we face in 2029, 2030 get worse.

[00:18:22]The certainty that supply uh deficits occur is inevitable absent a recession or a depression. But in the very near term uh oil prices are solely a function of the resolution of the Gulf conflict.

[00:18:46]And I can't tell you I I just don't know how that's going to go. I can tell you this, if a resolution isn't found very quickly, you go from prices being set in anticipation of a shortage, because we've existed on floating inventories and strategic reserves to a circumstance where the prices are set where you ration by price, where countries bid against each other for cargo so that they can fly planes and drive cars.

[00:19:13]And that will be a different pricing scenario if it occurs.

[00:19:17]Heat up here.