⭐️ Extreme Silver Revaluation! Do This With Your GOLD & SILVER For Highest Growth! | Rick Rule

本站添加: 2026-05-29

[00:00:00]Volatility's noise. That's all it is. If you're a trader, it's an opportunity.

[00:00:04]I'm not a trader. I'm a position player.

[00:00:07]I believe that over 10 years the US dollar will lose 75% of its purchasing power and that gold will in some way, shape, or form mirror that and that silver will outperform gold. That's over the 10-year time frame. I believe that they both used up most of the stored energy as a consequence of their failure to perform over 5 years. And I looked at that. The perturbations in the price, which is to say $60 to $110 to $70, well, those moves are dramatic. They're noise. I learned in my life that hyperbolic charts like the silver price in the last two two weeks of December and all of January, hyperbolic moves which absolutely enthrall speculators are very dangerous. 95% of the time in my life that I've seen in a a hyperbolic chart, what the Canadians call a hockey stick chart I've noted that the backside of that chart is just as steep as the front side, but it's a lot less fun if you happen to be long. Whenever I see a hyperbolic chart in an asset class I'm long, there's a high probability that I will sell. Similarly, whenever I see an unexplained hyperbolic chart to the downside there's a high probability that I will buy. Most people, mercifully for me cuz I don't like company, think about things exactly the other way. The hyperbolic upside justifies the narrative that they've come to believe and when the price of silver goes from 20 to 60 or 70, they intend to buy more as opposed to sell. That's opposite the way I think. Thank you, Rick. Tell me about your view on the various precious metal royalty companies like Franco-Nevada or Wheaton Precious and how they differ from mining companies. I love the royalty and streaming business.

[00:01:54]And I love it because of its predictability. At heart I'm a lender and return of capital is more important to me than return on capital. In the royalty and streaming business, to some extent after G&A your gross is your net, which is to say you aren't liable for the upfront capital expense of building a mine. You aren't responsible for the sustaining capital expense or the operating expenses. That's a very good deal. Which means that one needs to concern oneself with the revenue line as opposed to the cost line.

[00:02:22]Um pretty good deal. Because it's a superior business model it attracts superior business people. When I look at the median quality of managers in the royalty and streaming business and I compare them to the median quality of managers and promoters in the mining business, what I see is that a better business attracts better people. So I got a better I got better people and I got a better business and I got more predictability and I got less risk. It's hard for me to figure out what I might not like about this. A couple of observations based on current commodity prices and based on the net present value in an arithmetically forecastable time frame the royalty and streaming companies are expensive. That neglects a couple things. First of all, they deserve to be expensive because they're better businesses. But importantly, it doesn't take into account the fact that on very long-lived assets, 30 or 40-year long-lived assets the net present value calculation repeats itself, which is to say at an 8% discount the net present value of a deposit's free cash flow is used up in eight or nine years. But eight or nine years from now the net present value of that deposit will be the same as it is today. And when people value royalty and streaming companies, they neglect to value the net present value tail. Which is a huge mistake, an enormous mistake.

[00:03:47]The second thing is that uh on the high-quality assets, the very long-lived assets the mining companies tend to put those assets into production as soon as they've drilled off enough reserve and resource to amortize the capital expense and generate a 25% annual internal rate of return. What that means is that once a deposit gets 11 or 12 years of reserves, they put it in production.

[00:04:13]Those deposits often have 30 or 35 years of reserve and resource, which doesn't show up until subsequent drilling. The mining company pays for that subsequent drilling, but the royalty and streaming companies get the benefit. So you see deposits like Franco-Nevada's Carlin Trend deposits which have now generated well over $3 billion for Franco-Nevada but their reserves and resources are higher today than when they bought the royalties.

[00:04:43]Talk about the gift that keeps on giving. The knock that Wall Street and Bay Street had on the royalty and streaming companies 3 years ago was that the transactions that they that built those companies were unavailable today.

[00:04:54]That the large transactions were a thing of the past. Yesterday's announcement by Wheaton Precious that they signed a $4.3 billion stream, the largest streaming deal in history puts lie to that. And here's why. The copper industry, by itself, according to itself needs to invest at least $250 billion.

[00:05:16]That's B billion dollars over the next 10 years to maintain copper production at its current level. Currently, there's a supply deficit and currently demand for copper is increasing at 2.5% compounded.

[00:05:32]To maintain only today's deficit, they need to invest $250 billion. Which is about $150 billion more than they'll have from free cash flow. This is an insurmountably large amount of money.

[00:05:44]That's the first part of the equation, so remember that part. The second part is that if you take the byproduct gold and silver production from these copper mines, it's substantial. If that free cash flow reports to an integrated minor major mining company, it's priced by the market at between five and seven times cash flow. It's lumped in with copper cash flows. If it's segregated in a streaming company, into a high-margin focused product, gold or silver product, that cash flow trades at 15 to 17 times cash flow. The royalty and streaming companies have a permanently lower cost of capital. That means that when you are constructing a big copper mine if rather than produce out the gold and silver and run it through your own income stream at say six times cash flow you can sell it to a streaming company who gets to value it 16 or 17 times cash flow. They can pay you more for it than you can pay for it yourself. A $4 billion transaction between Wheaton Precious and BHP is simultaneously advantageous to BHP and Wheaton Precious. Big transactions in the streaming business rather than being behind us are going to be in front of us. The streaming business will allocate more capital in the next 10 years than they've allocated in the last 40. And that's something that Wall Street and Bay Street haven't yet realized. I think they'll realize it very quickly as a consequence of yesterday's announcement.

[00:07:16]But it's a theme that we've been active on for the last 2 years. I did not know that about Wheaton's new deal. As an investor and fan of of Wheaton myself, that that is very interesting news. So the for our audience who's not familiar, that the big point is that these streaming and royalty companies don't have to put up the capital to do new mining and that the the issues that some mining that you know all mining companies have of the fact that everything that they drill out of the ground that's a depletion on their asset and they have to spend money to find new resources not an issue really for the the big assets that kind of made this industry, I think you're referring to the large copper deals like Antamina, SolGold. Basically these copper miners and other other producers, they sell the gold and silver streams to these companies and these are big big mines.

[00:08:07]When you said the Carlin Trend I'm sure that the rate of return on Franco-Nevada's Carlin Trend is ridiculously high because, you know, they got these assets for a song like pennies pennies pennies, I'm sure. Um but I don't think that it's huge in terms of like Franco's Franco's type type thing. Are you seeing that the big checks that are going to be written are going to be on these, you know, these these massive mines and is that what's going to shape the sector? And then I I also can ask you, you know, what what's your outlook on the smaller players, Triple Flag, OR Royalties which are growing and as well as the the the junior streamers that are much much tinier? The need for capital over the next 10 years in the mining business is going to be so so large that I would estimate the demand for streams to be somewhere between 40 and 50 billion dollars. That means that there's plenty of room for Wheaton, plenty of room for Franco, plenty of room for Osisko, plenty of room for Triple Flag.

[00:09:00]These facilities are going to have to be syndicated. Wheaton yesterday used up 80% of its firepower. The next $4 billion deal that comes along, Wheaton will be able to take a billion of it and there's going to be 3 billion left over to share. There's going to be something for everybody, everybody. It's important to note, too, that as you go down the market cap and quality trail the net asset value multiple shrink. At the commodity prices that existed a year and a half ago which are still how mining companies are valued uh Wheaton and Franco, assuming the tail discount which is to say the market doesn't take into account the tail discount were priced at 1.8 or two times net asset value. The intermediate term companies, the ORs, the Triple Flags, were priced more like 1.4 times net asset value. And the juniors the Elementals, the Voxsens, were priced at about NAV. What that means is that either the valuation arbitrage gets bought away by people like me, sophisticated speculators, or the big companies take over the small companies.

[00:10:05]There's no other choices.

[00:10:07]So, it's a it's a very very very benign circumstance. The amount of capital that needs to be allocated in the next 10 years will exceed the conventional resources of even the big players, and they will be forced in syndication to share those deals with the smaller players at the same time that the valuation discrepancies will begin >> [clears throat] >> to become eliminated. I think, too, the emergence of Tether on the scene as an important shareholder as an example in gold royalty and Elemental is important two different ways. The first thing is that the smaller royalty companies, Elemental in particular, are going to be able to offer their dividends to shareholders in gold through Tether. Tether. A lot of people who own gold stocks are people who believe in gold, and they would probably prefer to get their dividend in specie as opposed to in cash. I think this will attract the market's attention. The second thing is that Tether has expressed interest in the fact that the small royalty companies trade at a substantial discount to larger companies largely because of their size. What that means is that if you merge four three or four or five small companies into a mid-size company, by that simple act you eliminate a lot of the valuation discrepancy.

[00:11:29]So, I think that you're going to see if the value arbitrageurs don't flatten out the valuation discrepancies, you will see takeovers of smaller companies by larger companies, and you'll see horizontal amalgamations among smaller companies, all of which benefit the shareholder.

[00:11:47]The third thing, Jack, that you're going to see is you're going to see extraordinarily attractive bond issuances by the royalty and streaming companies.

[00:11:56]You will see the traditional long bond holders, the 20 or 30-year bond holders, the people who need stable yield over 30 years, the pension funds, the university endowments, begin to disintermediate out of US dollar bonds and begin to acquire bonds that may pay dollars, but are denominated subway shape or form in gold. It wouldn't surprise me to see Wheaton Precious or Franco issue a 30-year bond with a sort of a three or three and a half handle. If you are employing capital that costs you three and a half or four, and you are deploying that capital at nine or 10 or 12, the returns on capital when you're enjoying a 600 basis point spread between your cost of funds and your return on capital employed does wonderful things to goose your equity.

[00:12:48]Wow. So, you think And would those companies be issue be issuing bonds that are payable in gold or payable in dollars that you know pegged to a certain gold price? In other words, a modern-day gold standard. I think there's enough flexibility in the futures market that they could issue a bond which is denominated in dollars, but has some form of synthetic gold call. And I think their ability to engineer that product, we engineer those products at Battle Bank all the time.

[00:13:18]The ability to engineer that product, assuming that their nominal cost of capital was 3 and 1/2%, their total cost of capital after the hedge would probably be 4.1, 4.2%, and importantly, that's a hedge that is probably not duplicable by the institutional investor who would buy the bond. In other words, the only way to get that the only easy way to get that would be to buy the bond.

[00:13:45]I think a second thing that will occur is that credit products will be developed that will allow gold and silver companies, now that there's demand for their dividends to be paid in gold or silver, for them to keep increasing amounts of their working capital in gold and silver rather than in dollars. My own bank, Battle Bank, is working on products right now that would allow gold companies to keep most of their working capital, most of their liquidity in gold, and establish credit lines against that gold that would allow them to use the gold and silver without selling it to meet their working capital needs. I think the shareholders of gold and silver companies will love this. Many of them will, at least. A lot of the people who own gold and silver mining companies own them because they think the gold and silver price will do well, and they don't want to see their companies hold their liquidity or pay their dividends in dollars, preferring, rather, that the financial operations of the companies be denominated in gold and silver as opposed to in dollar. And all of this is coming quickly.