Latest / Financial Survival Network / Warning to Silver Shorts: Your Days Are Numbered - Rick Rule - #6302

Transcript

Warning to Silver Shorts: Your Days Are Numbered - Rick Rule - #6302 · Financial Survival Network

• 0:00
  Speaker 1: The people who are involved in complex hedges in the
• 0:04
  Speaker 1: silver market, I think you're going to get massacred. I mean,
• 0:07
  Speaker 1: I think they're in for some truly religious experiences. To
• 0:11
  Speaker 1: the extent that a short position on silver that has
• 0:15
  Speaker 1: been put in place by algorithms that are looking at
• 0:17
  Speaker 1: silver markets over the last forty years, those leverage guys
• 0:21
  Speaker 1: are really truly in for a world of hurt.
• 0:24
  Speaker 2: You are listening to Carrie Lutz's Financial Survival Network, where
• 0:28
  Speaker 2: you get valuable information you just can't find anywhere else
• 0:32
  Speaker 2: to thrive in today's trying times. You need the Financial
• 0:36
  Speaker 2: Survival Network now more than ever. Go to Financial Survivalnetwork
• 0:41
  Speaker 2: dot com and get your free newsletter and gift. Financial
• 0:45
  Speaker 2: Survival Network now more than.
• 0:48
  Speaker 3: Ever, And welcome. You are listening to and watching the
• 0:54
  Speaker 3: Financial Survival Network. I'm your host, Carrie Leutz, and with
• 0:59
  Speaker 3: us is one of the savvyest and most successful resource
• 1:05
  Speaker 3: investors on the planet. Rick Rule officially in retirement, but
• 1:12
  Speaker 3: I was with him last week at his investment symposium
• 1:17
  Speaker 3: Resource Investment Symposium. And Rick, if you've retired, you're keeping
• 1:22
  Speaker 3: it a big secret, aren't you.
• 1:24
  Speaker 1: I failed retirement pretty cool, pretty completely. And I'm delighted
• 1:28
  Speaker 1: about that. I joke with my wife that my mind
• 1:32
  Speaker 1: doesn't do well in neutral. It needs to be stimulated
• 1:35
  Speaker 1: or sedated, and working for me is healthier than drinking.
• 1:39
  Speaker 4: But I enjoy both.
• 1:42
  Speaker 3: I feel exactly the same way you got a few
• 1:45
  Speaker 3: years on me. But the thought of retirement is not
• 1:49
  Speaker 3: something I've come to terms with yet. And this is
• 1:53
  Speaker 3: the probably the greatest time to be in this sector
• 1:56
  Speaker 3: of our lifetimes here right.
• 1:59
  Speaker 1: I don't know if this will be more successful than
• 2:02
  Speaker 1: the decade of the seventies was, But coming into the
• 2:05
  Speaker 1: decade of the seventies, I didn't have much experience and
• 2:08
  Speaker 1: I had no money. What's different is that I have
• 2:11
  Speaker 1: both now, so I suspect that I will come out
• 2:15
  Speaker 1: of the next ten years much better than I came
• 2:16
  Speaker 1: out of the decade of the seventies. And I came
• 2:18
  Speaker 1: out of the decade of the seventies pretty well well.
• 2:21
  Speaker 4: Rick.
• 2:21
  Speaker 3: I was going to ask you this question last, but
• 2:25
  Speaker 3: since you raised being broke and having no money, what
• 2:29
  Speaker 3: would you buy right now if you were thirty years old,
• 2:32
  Speaker 3: broke but had knowledge and nerve.
• 2:37
  Speaker 1: Frankly, I'd buy more knowledge. I know that's not the
• 2:40
  Speaker 1: right answer.
• 2:41
  Speaker 4: But.
• 2:43
  Speaker 1: Your best asset at age thirty is compounding your knowledge
• 2:48
  Speaker 1: and working on your reputation. I suspect that what an
• 2:57
  Speaker 1: investor might do, assuming they have no assets looking at
• 3:02
  Speaker 1: the next ten years, is to begin to save systematically
• 3:06
  Speaker 1: and save probably half of what you say in gold.
• 3:12
  Speaker 1: I say that not because gold will necessarily outperform other assets,
• 3:16
  Speaker 1: but I think that over the next ten years, the
• 3:19
  Speaker 1: purchasing power of the US dollar will decline by seventy
• 3:22
  Speaker 1: five percent, and that gold will maintain at least its
• 3:26
  Speaker 1: nominal purchasing power, which means that it is a high
• 3:31
  Speaker 1: probability savings instrument. That's a boring answer. I'm tempted to
• 3:38
  Speaker 1: say that a thirty year old who believes that he
• 3:41
  Speaker 1: or she will be able to increase their disposable income
• 3:46
  Speaker 1: over ten years, if they're looking at investments simply as investments,
• 3:50
  Speaker 1: should consider buying exon mobile.
• 3:53
  Speaker 4: Yeah.
• 3:54
  Speaker 3: Yeah, you mentioned that during the conference and the you
• 3:58
  Speaker 3: know talk about boring. You can't get any more boring
• 4:04
  Speaker 3: than the Big X, So, you know, interesting, This idea
• 4:09
  Speaker 3: of investing in human capital, mainly your own human capital,
• 4:16
  Speaker 3: I found in my life to be the one surefire
• 4:19
  Speaker 3: investment that has never failed me. In over you know,
• 4:25
  Speaker 3: nearly seven decades, every time I invested in myself it
• 4:30
  Speaker 3: paid back many times over time than anything else I
• 4:35
  Speaker 3: ever invested in.
• 4:37
  Speaker 1: I would agree with that completely. Knowledge is an asset. Well,
• 4:41
  Speaker 1: you can lose it, but it can't be stolen. It
• 4:44
  Speaker 1: can't be taxed. The fruits can be taxed, and your
• 4:48
  Speaker 1: reputation the same. What thirty year olds need to focus
• 4:54
  Speaker 1: on is the group of people they choose to be
• 4:56
  Speaker 1: their community, because you become the sum of your friends,
• 5:01
  Speaker 1: your reputation because if you lose it's very difficult to
• 5:05
  Speaker 1: rebuild it. And your knowledge, all the risks that you face, Carrie,
• 5:10
  Speaker 1: probably are manageable. If you manage the risk. This to
• 5:14
  Speaker 1: the left of your right ear and to the right
• 5:15
  Speaker 1: of your left ear.
• 5:18
  Speaker 4: I couldn't agree with you more.
• 5:20
  Speaker 3: And like you said, the knowledge you attain, you know,
• 5:24
  Speaker 3: no one can ever take it away from you. You
• 5:26
  Speaker 3: can't lose it. Health, all those types of things. But
• 5:29
  Speaker 3: assuming your health is good, invest in your health, invest
• 5:33
  Speaker 3: in your human capital. So I wasn't going to go
• 5:36
  Speaker 3: in this direction, but I have to go there with
• 5:39
  Speaker 3: you now because you made me think of something at
• 5:41
  Speaker 3: a connection. Ironies, the ironies of life. So we're in
• 5:47
  Speaker 3: the midst of this green revolution, all right, And the
• 5:51
  Speaker 3: very people who've been espousing the green revolution have been
• 5:55
  Speaker 3: the people who've been holding it back because you can't
• 5:58
  Speaker 3: get a mining permit. They've made the process so impossible
• 6:04
  Speaker 3: to obtain a permit that we've seen companies just throw
• 6:08
  Speaker 3: up their hands and say adios, I'm done.
• 6:12
  Speaker 4: And then our current.
• 6:14
  Speaker 3: President, who is the most anti anti electrification. I wouldn't
• 6:20
  Speaker 3: say he's anti technology, he's just maybe common sense about it.
• 6:26
  Speaker 3: His policies speeding up mind permits, things like putting the
• 6:31
  Speaker 3: road through at the Ambler District in Alaska for Trilogy
• 6:37
  Speaker 3: who I worked with in the past, full disclosure. But
• 6:41
  Speaker 3: his policies are making the Green New Deal more accessible
• 6:46
  Speaker 3: than any of his adversaries. Do you find that as
• 6:50
  Speaker 3: ironic as I do?
• 6:51
  Speaker 1: Rick, Well, it's important to understand that the Green New
• 6:54
  Speaker 1: Deal wasn't really about environment.
• 6:57
  Speaker 4: Let's get that out of the way.
• 6:58
  Speaker 1: And I also need to say I'm no particular fan
• 7:01
  Speaker 1: of Trump, but I do note that he has been
• 7:06
  Speaker 1: effective at rescinding executive decrees by prior administrations. And I
• 7:15
  Speaker 1: have noticed myself a real change in the politics of
• 7:19
  Speaker 1: the regulatory agencies, which means frequently in the regulatory agencies.
• 7:25
  Speaker 4: There was.
• 7:27
  Speaker 1: A belief at the staff level the resource projects should
• 7:31
  Speaker 1: go ahead, but the politics of the agency were such
• 7:35
  Speaker 1: were such that at the very least stasis was what
• 7:39
  Speaker 1: you expected. Now at the BLM, which by the way,
• 7:44
  Speaker 1: has really competent technical people working there, They've been hidden
• 7:48
  Speaker 1: well for twenty years, but they're there now. There is
• 7:53
  Speaker 1: an incentive within the organization to get stuff done. They
• 7:59
  Speaker 1: can use the knowledge that they have in the agency
• 8:02
  Speaker 1: to complete the regulatory process in a responsible matter. It's
• 8:11
  Speaker 1: further to what you say, Carrie, mining, look at empirically,
• 8:18
  Speaker 1: is an efficient use of land. You generate an awful
• 8:24
  Speaker 1: lot of economic activity and an awful lot of consumer
• 8:28
  Speaker 1: utility by despoiling a very small piece of earth. The
• 8:33
  Speaker 1: Resolution copper mine in Arizona, when it's built after twenty
• 8:38
  Speaker 1: seven years of permitting, will have substantially less environmental disturbance
• 8:43
  Speaker 1: than one golf course. Golf courses are green and people
• 8:47
  Speaker 1: like to play on them, so they're regarded as not
• 8:50
  Speaker 1: being environmentally deleterious. But if you have a monoculture, which
• 8:54
  Speaker 1: is to say, grass in a Riparian area, the truth
• 8:57
  Speaker 1: is that they're environmentally extremely injuries. So it's important to
• 9:05
  Speaker 1: look at the concept of environmental degradation from an empirical
• 9:11
  Speaker 1: technical lens as opposed to an emotional narrative lens. And
• 9:15
  Speaker 1: I think what mister Trump has been able to do
• 9:18
  Speaker 1: with the regulatory agencies is allow them to return to
• 9:23
  Speaker 1: empirical rather than political or narrative analysis.
• 9:27
  Speaker 4: Yeah, I think we'd agree.
• 9:28
  Speaker 3: There are probably some places minds should not be built,
• 9:33
  Speaker 3: you know, due to geographical population, many factors. But you know,
• 9:40
  Speaker 3: invoking his emergency authority to push these projects through something
• 9:47
  Speaker 3: that we really only saw happen during wartime or run
• 9:51
  Speaker 3: ups to wartime. Is this a good thing? I mean
• 9:55
  Speaker 3: from our standpoint, yes, it's a good thing. We agree
• 9:59
  Speaker 3: a healthy mining sector, not just for the United States
• 10:03
  Speaker 3: but for the world in general, is essential to our
• 10:06
  Speaker 3: continued prosperity and well being. But invoking emergency authority to
• 10:12
  Speaker 3: push a copper mind through, what are your thoughts?
• 10:17
  Speaker 1: What I would like to see mister Trump do, and
• 10:18
  Speaker 1: he won't do it, by the way, but what I'd
• 10:20
  Speaker 1: like to see him do is require upfront bonding environmental
• 10:25
  Speaker 1: bonding for resource development the United States, including exploration, which
• 10:31
  Speaker 1: means that the company would need to propose a reclamation
• 10:35
  Speaker 1: budget which the regulator would accept, and that would need
• 10:39
  Speaker 1: to be funded upfront by way of an insurance policy.
• 10:44
  Speaker 1: What happens right now is that the risk was socialized.
• 10:47
  Speaker 1: People promise to reclaim, but you know what a promise
• 10:50
  Speaker 1: is worth, particularly for a bankrupt company, It's worth nothing.
• 10:54
  Speaker 1: The best way to ensure environmental compliance would be for
• 10:59
  Speaker 1: the company planning to do the mind to convince the
• 11:02
  Speaker 1: insurance company to take the risk and pay them the
• 11:06
  Speaker 1: price for the risk that they assumed. That lets the
• 11:09
  Speaker 1: taxpayer off the hook. Then the regulatory process comes to
• 11:14
  Speaker 1: be involved in prohibiting the discharge of deleterious materials from
• 11:19
  Speaker 1: the mind sight to the environment. Stop. That's what I'd
• 11:23
  Speaker 1: like to see mister Trump do. That's not what he
• 11:26
  Speaker 1: will do. What he will do will be to solicit
• 11:30
  Speaker 1: campaign contributions and political favors from elements in society, like
• 11:35
  Speaker 1: the oil and gas industry that he thinks are more
• 11:40
  Speaker 1: aligned with him than the other side, Which is to say,
• 11:44
  Speaker 1: carry the old saw that mankenhead about events elections being
• 11:47
  Speaker 1: advanced option of stolen property. First to book, Democrats and
• 11:51
  Speaker 1: Republicans in equal measure.
• 11:54
  Speaker 3: For property yet to be stolen, and couldn't agree with
• 11:58
  Speaker 3: you more on that. On the other hand, maybe this
• 12:02
  Speaker 3: policy aligns more with societal good than just stopping everything
• 12:08
  Speaker 3: this kind of luddite response to anything that happens. I mean,
• 12:14
  Speaker 3: I'm not justifying it, but I'm saying it's kind of
• 12:18
  Speaker 3: like I live in Florida. So there's no state more
• 12:23
  Speaker 3: corrupt than Florida than except for every other state. But
• 12:27
  Speaker 3: the difference between Florida and New York is well, like
• 12:32
  Speaker 3: in the Illinois there was a saying an honest judge
• 12:35
  Speaker 3: is one who's fixed and stays fixed. In Floriday, you
• 12:41
  Speaker 3: pay the price of admission, whatever it is, zoning variants,
• 12:46
  Speaker 3: law change, whatever, but you pay for it and you
• 12:48
  Speaker 3: get what you paid for. In New York, you pay
• 12:50
  Speaker 3: for it and you keep paying for it and paying
• 12:52
  Speaker 3: for it, and maybe one day you'll get it. And
• 12:55
  Speaker 3: that's why Florida is more prosperous than New York. Maybe
• 13:00
  Speaker 3: this corruption is just built in, and maybe we need
• 13:03
  Speaker 3: the most effective corruption we can find.
• 13:06
  Speaker 1: They used to say a Mouisiana, the good thing about
• 13:10
  Speaker 1: Leander Perez was he stayed bribed.
• 13:15
  Speaker 3: Yeah, I'm just saying So let's talk about metals markets
• 13:19
  Speaker 3: silver gold divergence. Is there a lagging silver squeeze that's
• 13:24
  Speaker 3: about to really hit and does forty dollars silver matter?
• 13:29
  Speaker 1: Uh? Let me answer that in parts. My experience has
• 13:33
  Speaker 1: been that in precious metals bull markets, gold leads, and
• 13:38
  Speaker 1: when gold momentum attracts the generalist investor into the space,
• 13:42
  Speaker 1: leadership transfers to silver.
• 13:44
  Speaker 4: Whether were there or not, I don't know.
• 13:47
  Speaker 1: What I do know is you won't need to tell
• 13:48
  Speaker 1: me when it occurred. They're usually pretty dramatic events. I've
• 13:53
  Speaker 1: seen him happen three times before in my life, and
• 13:56
  Speaker 1: you don't need a weatherman to tell you which way
• 13:58
  Speaker 1: the wind blowing when that happens. As to a silver squeeze,
• 14:01
  Speaker 1: I am not one of those who believes that there's
• 14:04
  Speaker 1: been an ongoing conspiracy to depress the price of silver
• 14:08
  Speaker 1: over time. I worked for great, big financial institutions, and
• 14:14
  Speaker 1: the idea that they would take a negative carry a
• 14:16
  Speaker 1: short position over ten years or twelve years, which affected
• 14:21
  Speaker 1: quarterly cash bonuses. The probability of that occurring is nil.
• 14:26
  Speaker 1: Wouldn't happen markets. All markets are manipulated in the short term,
• 14:31
  Speaker 1: and they're manipulated in whatever direction is easy and is
• 14:35
  Speaker 1: easier to manipulate. For forty years, you have manipulated silver
• 14:40
  Speaker 1: markets down because that was their natural direction. I remember
• 14:45
  Speaker 1: the nineteen seventies when trading desk would manipulate the price
• 14:49
  Speaker 1: of silver up because that was the easiest direction. The
• 14:53
  Speaker 1: manipulation takes place because the futures markets, the paper markets
• 14:59
  Speaker 1: often trade two hundred times the available silver to cover
• 15:05
  Speaker 1: on a daily basis. They're much more liquid. So the
• 15:09
  Speaker 1: game works like this. A short syndicate gets involved over
• 15:15
  Speaker 1: the last forty years short in the futures market six
• 15:18
  Speaker 1: year duration, twelve month duration, twenty four months duration, that
• 15:22
  Speaker 1: kind of thing, and they get what would be for
• 15:26
  Speaker 1: you and I massively short two billion dollars short, three
• 15:30
  Speaker 1: billion dollars short in a market where the nominal value
• 15:34
  Speaker 1: of the positions is four hundred billion, and then they
• 15:37
  Speaker 1: borrow fifty or sixty million dollars worth a billion, and
• 15:43
  Speaker 1: they pound it into the market physically at whatever point
• 15:47
  Speaker 1: in time the market has the least volume, and they
• 15:52
  Speaker 1: use the impact of the physical market on the futures
• 15:56
  Speaker 1: market to cover their shorts and pay off their physical loss.
• 16:01
  Speaker 1: I mean, you see it happen time and time and
• 16:03
  Speaker 1: time again. That supports long term price manipulation. I think
• 16:11
  Speaker 1: that there's an aggregate of short term price manipulations. The
• 16:14
  Speaker 1: eurobond market has been manipulated, the Euro market's been manipulated,
• 16:19
  Speaker 1: the US treasury market's been manipulated. If you can manipulate
• 16:22
  Speaker 1: markets that are that big, the silver market's a piece
• 16:25
  Speaker 1: of cake. What will change, Carrie, is that the easiest
• 16:29
  Speaker 1: way to manipulate the market is going to go from
• 16:32
  Speaker 1: down to up.
• 16:34
  Speaker 4: I got it.
• 16:35
  Speaker 3: Yeah, that makes total total sense, and so a short
• 16:39
  Speaker 3: squeeze because some of the players aren't going to figure
• 16:42
  Speaker 3: this out until it happens.
• 16:45
  Speaker 4: Right.
• 16:46
  Speaker 1: The people who are involved in complex hedges in the
• 16:50
  Speaker 1: silver market, I think are going to get massacred. I mean,
• 16:53
  Speaker 1: I think they're in for some truly religious experiences. To
• 16:57
  Speaker 1: the extent that a short position on silver that has
• 17:01
  Speaker 1: been put in place by algorithms that are looking at
• 17:03
  Speaker 1: silver markets over the last forty years, those leverage guys
• 17:07
  Speaker 1: are really truly in for a world of hurt. Those
• 17:11
  Speaker 1: I mean, you know, long term capital management worked until
• 17:14
  Speaker 1: it didn't. It was a convergence trade, but the convergence
• 17:17
  Speaker 1: trade wasn't set up for a third standard deviation anomaly.
• 17:21
  Speaker 1: And I think the silver market's going to see a
• 17:23
  Speaker 1: third standard deviation anomaly, which means that the people who
• 17:28
  Speaker 1: are using silver as an unhedged corollary to some economic bet,
• 17:35
  Speaker 1: and they're doing it from algorithms that are based on
• 17:38
  Speaker 1: forty years of trading history, they aren't prepared for a hiccup,
• 17:41
  Speaker 1: and they're gonna get a hiccup.
• 17:43
  Speaker 3: What you're describing is blood in the streets. Fortunately, nobody
• 17:47
  Speaker 3: works in Wall Street anymore, so you don't have to
• 17:50
  Speaker 3: worry about walking down the street and having a body
• 17:54
  Speaker 3: you know, crashed to the ground before you because everybody's
• 17:57
  Speaker 3: in their in their home office doing these trades here.
• 18:02
  Speaker 4: Rick.
• 18:02
  Speaker 3: But but seriously, this is like an existential event, what
• 18:09
  Speaker 3: you're saying, and it could spread to other markets as well,
• 18:12
  Speaker 3: because like you said, silver is tiny. You got thirty
• 18:16
  Speaker 3: five billion dollars worth of shorts in silver, man, like
• 18:23
  Speaker 3: this could just spread in one counterparty hits the hits
• 18:27
  Speaker 3: the bricks, and we're talking to from the fledge.
• 18:31
  Speaker 4: Meltsound about that.
• 18:32
  Speaker 1: To be honest with you, thirty five billion dollars is
• 18:35
  Speaker 1: a lot to you and me, But the notional value
• 18:38
  Speaker 1: of derivatives is more like five trillion dollars. I'm not
• 18:43
  Speaker 1: so concerned about that. I'm much more concerned about things
• 18:47
  Speaker 1: like unfunded entitlement liabilities and the imbalance between the nominal
• 19:01
  Speaker 1: and the real interest rates. I mean, if you want
• 19:03
  Speaker 1: me to scare your audience, carry I can really truly
• 19:06
  Speaker 1: do that. I'm less. I'm less concerned about the impact
• 19:10
  Speaker 1: on Wall Street and the deriven's markets by a silver short.
• 19:13
  Speaker 1: I think it'll be you know, I think there's probably
• 19:15
  Speaker 1: a couple of quantitative hedge funds.
• 19:19
  Speaker 4: It'll go broke.
• 19:22
  Speaker 1: Good riddance.
• 19:23
  Speaker 4: No one cares about them anyway.
• 19:25
  Speaker 1: Yeah, you know, the derivatives market is, it's truly vast.
• 19:30
  Speaker 1: There are other counterparty scenarios that scare me a lot more.
• 19:34
  Speaker 1: If if maws and paws in the United States that
• 19:40
  Speaker 1: own high yield ETFs junk bond ETFs get a whiff
• 19:46
  Speaker 1: of the beginnings of a credit crisis like they did
• 19:48
  Speaker 1: in two thousand and eight around real estate, and they
• 19:51
  Speaker 1: go to sell those high yield ETFs. The ETFs are
• 19:55
  Speaker 1: extremely liquid, they trade billions of dollars a day, but
• 19:59
  Speaker 1: they're comprised assets that are totally illiquid. Yes, if they
• 20:03
  Speaker 1: redeem the ETF and the manager has to sell the
• 20:05
  Speaker 1: bonds and can't. Now that's a scenario that's truly scary.
• 20:12
  Speaker 3: And I remember reading Benjamin Graham. You know, he only
• 20:15
  Speaker 3: wrote this almost one hundred years ago. They had junk
• 20:18
  Speaker 3: bonds then. Junk bonds aren't a new thing. The liquidity
• 20:22
  Speaker 3: of junk bonds are. But he said that, you know,
• 20:27
  Speaker 3: no individual investor should ever buy a junk bond because
• 20:31
  Speaker 3: you cannot understand it. And we've seen even the guys
• 20:35
  Speaker 3: who understand the market get slaughtered by it. And yet
• 20:39
  Speaker 3: there's a lot of junk out there.
• 20:42
  Speaker 1: Harry, in shows like yours where there's live Q and A.
• 20:45
  Speaker 1: I've talked to investors that held I high yield ets
• 20:48
  Speaker 1: that didn't understand that the assets were comprised of junk bonds.
• 20:52
  Speaker 1: They just looked at the cover yield, not how the
• 20:55
  Speaker 1: yield was generated. When I was a younger man, wasn't
• 20:58
  Speaker 1: the young man, but in the eighties I was pretty
• 21:02
  Speaker 1: active in the high yield credit market because I understand
• 21:05
  Speaker 1: how to read bond covenants. And I remember that when
• 21:10
  Speaker 1: Drexel Burnham started to blow apart and blew apart the
• 21:13
  Speaker 1: junk bond market. We had a we had a description
• 21:17
  Speaker 1: for these ill liquid bonds. We called them owl blonds.
• 21:20
  Speaker 1: And we called them owl blonds because when you called
• 21:23
  Speaker 1: your broker to sell, your broker would say to who too.
• 21:30
  Speaker 3: I had some friends that worked at Drexel, and you know,
• 21:33
  Speaker 3: but then Leon Black picked over the carcasses of all
• 21:38
  Speaker 3: those owls and made billions of dollars because, like you said,
• 21:43
  Speaker 3: he could read a convenant.
• 21:44
  Speaker 1: It's a great, great, great market if you understand it.
• 21:49
  Speaker 1: The oil and gas industry junk bonds in the eighties
• 21:53
  Speaker 1: and the nineties made me, relative to my net worth,
• 21:57
  Speaker 1: a large amount of money forever, great full. But I
• 22:01
  Speaker 1: understood about oil and gas and understood about covenants. You know,
• 22:04
  Speaker 1: I remember buying bonds with a cover yield of twelve
• 22:08
  Speaker 1: percent that we're selling at sixty. So you know, I
• 22:14
  Speaker 1: got a running yield of twenty percent and a yield
• 22:18
  Speaker 1: maturity of thirty five percent in a dead instrument. Life
• 22:22
  Speaker 1: doesn't get better than that. But that's not what's on
• 22:24
  Speaker 1: offer today.
• 22:26
  Speaker 3: I remember making twenty percent on Ford bonds myself. But yeah,
• 22:32
  Speaker 3: so talking about the junior resource sector, which is revivified,
• 22:38
  Speaker 3: that's the right word as witnessed by your recent conference.
• 22:42
  Speaker 3: You know you always said the junior resource sector is
• 22:47
  Speaker 3: a broken model if you will, composed of lifestyle companies
• 22:53
  Speaker 3: that aren't real businesses, and you know, look, we.
• 22:58
  Speaker 4: Got a lot of AI going on.
• 23:01
  Speaker 3: Do you think the AI can pick out the lifestyle
• 23:04
  Speaker 3: companies from the real companies five years from now?
• 23:09
  Speaker 1: But you have to know how to ask AI the questions.
• 23:12
  Speaker 1: What AI does is aggregate misinformation often, So if you
• 23:18
  Speaker 1: ask AI to search the Edgard database or the Cedar
• 23:24
  Speaker 1: database for companies where general and an administrative expenses less
• 23:28
  Speaker 1: than twenty five percent of total expenditures, that's a great
• 23:31
  Speaker 1: use of AI. But if you ask AI to look
• 23:34
  Speaker 1: for lifestyle companies without defining what a lifestyle company is,
• 23:38
  Speaker 1: they'll go to CNBC or Kitko or places and they'll
• 23:42
  Speaker 1: aggregate a whole bunch of narrative and misinformation. AI is
• 23:47
  Speaker 1: really good for what the Bloomberg gobots have been good for.
• 23:52
  Speaker 1: It can search databases if you give it very very
• 23:57
  Speaker 1: very specific correlations, and you can do it instantaneously. AI
• 24:03
  Speaker 1: can do in terms of comparative balance your analysis. If
• 24:06
  Speaker 1: you know how to ask the question tasks in two
• 24:10
  Speaker 1: minutes that would take me two months and I'm good
• 24:14
  Speaker 1: at it. The important part, though, is that you have
• 24:18
  Speaker 1: to understand how to ask it the right question.
• 24:22
  Speaker 4: That is so true.
• 24:23
  Speaker 3: I've been using it for three and a half years now,
• 24:26
  Speaker 3: and you know, like could they talk about prompt engineers
• 24:31
  Speaker 3: and all that, Well, that's nice, but I'll tell you what,
• 24:36
  Speaker 3: Like for law, I had a friend and the legal
• 24:40
  Speaker 3: profession doesn't even see what's coming here. Adam Ray, friend
• 24:44
  Speaker 3: of mine. She wanted to read. She wanted to amend
• 24:47
  Speaker 3: her trust a mendor will and quit claim her condo
• 24:51
  Speaker 3: over to her trust. And she goes to one lawyer
• 24:55
  Speaker 3: forty five hundred dollars. She goes to another lawyer thirty
• 24:59
  Speaker 3: five hundred. Now I'm a recovering attorney, in fact, in
• 25:02
  Speaker 3: America's top recovering attorney.
• 25:04
  Speaker 4: She comes to me. I said, fuck it, Like.
• 25:07
  Speaker 3: I'm not writing papers, Let's throw it into the AI
• 25:11
  Speaker 3: and see how it works. I think it'll do, okay, Rick.
• 25:15
  Speaker 3: Twenty minutes later, I had all her documents done, multiple
• 25:20
  Speaker 3: copies stapled, and they were ready to be witnessed and notarized.
• 25:27
  Speaker 4: And they worked.
• 25:28
  Speaker 3: They were perfect. In fact, they were better than the
• 25:31
  Speaker 3: documents I would have created. Myself because I'm a master
• 25:34
  Speaker 3: of typos, and there wasn't one typo. And that's just
• 25:39
  Speaker 3: one area. So I had the legal expertise. I could
• 25:42
  Speaker 3: look at the docs and know that they were.
• 25:44
  Speaker 1: You edit it, you can shape the product, and then
• 25:48
  Speaker 1: you can consume the product. That's important. I asked AI
• 25:52
  Speaker 1: to try to do some work for me in anticipation
• 25:54
  Speaker 1: of an interview about six weeks ago talking about debt
• 25:59
  Speaker 1: deficit on baalllot sheet liability stuff like that. I didn't
• 26:02
  Speaker 1: specify source, and so they went through Twitter and CNBC
• 26:10
  Speaker 1: and ABC and CBS, and what I got was an
• 26:15
  Speaker 1: aggregation of misinformation. They didn't, as an example, talk about
• 26:20
  Speaker 1: They talked about one balance sheet liabilities, you know, thirty
• 26:23
  Speaker 1: seven trillion. They talked about net on balance sheet liabilities
• 26:28
  Speaker 1: thirty trillion net of the seven. But they don't talk
• 26:31
  Speaker 1: about unfunded entitlements. They missed completely the one hundred trillion
• 26:38
  Speaker 1: dollar elephant in the room. So it's important that somebody
• 26:42
  Speaker 1: be like Harry Lutts, somebody use AI in a subject
• 26:49
  Speaker 1: that they know well enough that they can frame the
• 26:51
  Speaker 1: question and they can judge the product.
• 26:55
  Speaker 4: So true.
• 26:56
  Speaker 3: We used to say garbage in garbage out Now, it's
• 27:00
  Speaker 3: garbage in landfill out. I mean it's so true because
• 27:06
  Speaker 3: you can ask it questions and they're theoretically correct, but
• 27:11
  Speaker 3: they're absolutely on a factual level they're wrong. And I
• 27:16
  Speaker 3: see it all the time. But if you can't recognize it,
• 27:20
  Speaker 3: then you're going to spout out garbage that you don't
• 27:23
  Speaker 3: really understand. That's the whole problem with AI. It's a
• 27:25
  Speaker 3: black box and nobody really understands how it's producing its
• 27:32
  Speaker 3: results at this point.
• 27:33
  Speaker 4: Right.
• 27:34
  Speaker 1: We're seeing now in the exploration business. In exploration, we
• 27:38
  Speaker 1: have a thing called coincident anomalies where you might look
• 27:42
  Speaker 1: at ten different factors and you might look you look
• 27:46
  Speaker 1: for areas where favorable data overlays itself geographically right. And
• 27:52
  Speaker 1: AI has the potential to do that spectacularly well. It
• 27:55
  Speaker 1: has the potential to look, as an example, at two
• 27:59
  Speaker 1: thousandsquare miles of Earth from a landsat photo, look at
• 28:03
  Speaker 1: spectral differentiation so that you can understand how different landforms
• 28:08
  Speaker 1: respond to light differently from space. Merge that with visible
• 28:14
  Speaker 1: structures you know callederas or faults. Merge that with historical
• 28:20
  Speaker 1: ground data, historical geophysical data. Each of those inputs might
• 28:27
  Speaker 1: take a researcher two or three weeks to do. In
• 28:32
  Speaker 1: the old days, we used to actually make vellums overload them.
• 28:37
  Speaker 1: AI can do that. AI can take two thousand square
• 28:40
  Speaker 1: miles of earth and define a thousand acre target so
• 28:48
  Speaker 1: that geologists don't have to look at two thousand square miles,
• 28:51
  Speaker 1: they can look at one square mile. That's a great
• 28:54
  Speaker 1: use of AI. It's a great use of AI. And
• 28:57
  Speaker 1: over the next five years we're going to learn how
• 28:59
  Speaker 1: to do this, and we're to develop data sets that
• 29:02
  Speaker 1: are AI usable. You know, it's going to actually change
• 29:05
  Speaker 1: the way we develop in store data to make it
• 29:08
  Speaker 1: assimilable on AI. That's that's going to be fantastic.
• 29:12
  Speaker 3: And then if the Elon Musk starts taking as tunneling
• 29:16
  Speaker 3: machines and devotes them to mining, we might really have
• 29:20
  Speaker 3: a revolution in the mining space.
• 29:23
  Speaker 1: That's coming the you know, the oil and gas business
• 29:27
  Speaker 1: has undergone as spectacular transformation the last thirty years through technology.
• 29:31
  Speaker 1: My mining friends will hate this, but the oil and
• 29:33
  Speaker 1: gas guys are smarter. That's coming to mining. You know,
• 29:37
  Speaker 1: it really truly is coming to mining. The technology that's
• 29:40
  Speaker 1: worked in oil and gas around geophysics will come to mining.
• 29:44
  Speaker 1: I don't know what it'll be, you know, maybe it'd
• 29:46
  Speaker 1: be Robert Friedan's typhoon typhoon. Who knows what it'll be.
• 29:51
  Speaker 1: But eventually we will have some form of tool the
• 29:55
  Speaker 1: human I sees an ankstrum into the earth. We'll have
• 29:58
  Speaker 1: some form of tool that will allow us to do
• 30:02
  Speaker 1: for mineral deposits what we can do for oil and
• 30:04
  Speaker 1: gas deposits today. That may or may not be an
• 30:07
  Speaker 1: AI enabled tool, but technology will truly transform mining. It's
• 30:12
  Speaker 1: interesting that a rocket scientist, Elon Musk is the guy
• 30:18
  Speaker 1: who came to us with a more efficient, boring technology,
• 30:24
  Speaker 1: given that our industry had been boring for three hundred years.
• 30:27
  Speaker 1: It's interesting that the technological innovation came from outside of
• 30:31
  Speaker 1: the experienced class.
• 30:34
  Speaker 3: And all from well, I don't know if the origin
• 30:36
  Speaker 3: story is true or not that he got fed up
• 30:38
  Speaker 3: with traffic in La one day and said I'm just
• 30:41
  Speaker 3: going to dig a tunnel.
• 30:43
  Speaker 4: That's a little too.
• 30:44
  Speaker 3: Pat Well, if it's true, having been to Vegas and
• 30:49
  Speaker 3: ridden on that thing, and the people they can't see
• 30:54
  Speaker 3: the potential for this rick Like I live in Florida,
• 30:58
  Speaker 3: we have nothing but traffic. The idea of being able
• 31:01
  Speaker 3: to go under it all and not have traffic lights
• 31:04
  Speaker 3: and Florida drivers. I mean, I don't see how that's
• 31:09
  Speaker 3: just for tunneling for transportation, but for mining to be
• 31:13
  Speaker 3: able to bore through an entire mountain you know exactly
• 31:17
  Speaker 3: where you need to go and not have to worry
• 31:19
  Speaker 3: about collapses and all that.
• 31:21
  Speaker 4: I mean, who cannot see the potential of this.
• 31:23
  Speaker 1: At a quarter of the cost?
• 31:25
  Speaker 4: Yep?
• 31:25
  Speaker 1: Yeah, I mean you know, we we do more we
• 31:28
  Speaker 1: do boring in mining. And by boring I mean tunnels.
• 31:32
  Speaker 1: I don't mean the fact that our business is boring,
• 31:34
  Speaker 1: which is also true. But the idea that you can
• 31:38
  Speaker 1: increase the efficiency and cut the cost substantially changes things.
• 31:43
  Speaker 3: And the environmental aspects of it too, and the safety
• 31:47
  Speaker 3: mining when you get down to it, you start going
• 31:50
  Speaker 3: into those tunnels, it's dangerous down there and anything can happen.
• 31:56
  Speaker 3: So well, I always appreciate your coming on the show.
• 32:00
  Speaker 3: So Rick, where's the best place to find your work
• 32:03
  Speaker 3: and your latest missive?
• 32:05
  Speaker 1: The best place to reach me and the one with
• 32:08
  Speaker 1: the most current incentive is it Rule Investment Media. If
• 32:11
  Speaker 1: you go there and list your natural resource stocks, I will,
• 32:14
  Speaker 1: for no obligation review them. Please no textoks, please no
• 32:18
  Speaker 1: pot stocks please, no crypto resource stocks only Rule Investment Media.
• 32:23
  Speaker 4: Give me a little while.
• 32:24
  Speaker 1: I'm about two hundred and fifty responses behind because of
• 32:27
  Speaker 1: the conference last year. The other thing is if for
• 32:30
  Speaker 1: some reason you missed that conference, maybe you have a
• 32:31
  Speaker 1: life or something like that. The conference tapes are valuable.
• 32:36
  Speaker 1: We sell the conference tapes after the fact with a
• 32:39
  Speaker 1: full money back guarantee. If you play the tape and
• 32:42
  Speaker 1: think I didn't give you your money, I'll give you your money back.
• 32:45
  Speaker 1: Rule Symposiums look forward to seeing your listeners either place.
• 32:51
  Speaker 1: I'm glad you enjoyed the conference. Carry I hope we
• 32:53
  Speaker 1: see you there next year. We're going to bring it
• 32:56
  Speaker 1: back to a neighborhood in Florida, close to you, all.
• 32:58
  Speaker 3: Right to thirty five miles down the road. Maybe you
• 33:03
  Speaker 3: should think about using some AI to to update those
• 33:09
  Speaker 3: emails that are stacking up there.
• 33:11
  Speaker 1: Rick, Well, we have a person who is looking at
• 33:17
  Speaker 1: bringing the entire Rule Investment Media business into the century
• 33:23
  Speaker 1: kicking and starting as a person is less than half
• 33:27
  Speaker 1: my age, and I suspect we'll be able to cause
• 33:30
  Speaker 1: some minor miracles to occur.
• 33:33
  Speaker 3: No surprise there. I would expect somebody half our age
• 33:36
  Speaker 3: to be in the thick of it. Hey, if you've
• 33:38
  Speaker 3: got a question for Rick myself, shoot me an email
• 33:41
  Speaker 3: kl at Kerrie lets dot com.
• 33:43
  Speaker 4: We'll get you an answered.
• 33:44
  Speaker 3: Quick and you'll find a link to rickcite in the
• 33:49
  Speaker 3: show notes of this interview on Financial Survival Network dot com.
• 33:53
  Speaker 3: And if you go there, just sign up for your
• 33:55
  Speaker 3: free newsletter. Rick, always a pleasure. Talk to you again real.
• 33:58
  Speaker 1: Soon, my pleasure carry Thank you. I welcome the opportunity
• 34:01
  Speaker 1: to come back.
• 34:02
  Speaker 2: Thanks for listening to Carrie Letz's Financial Survival Network, your
• 34:06
  Speaker 2: solution to today's trying times. For the latest, go to
• 34:10
  Speaker 2: Financial Survivalnetwork dot com. Financial Survival Network now more than ever,