Becoming a competent investor requires the constant willingness to learn and the pushing aside of what you think you know. Over the course of my personal investing career, there have been a handful of people who have greatly influenced the way I invest my money in the market. Rick Rule, without a doubt, has had the largest impact to date.

In a few weeks, July 30th to August 3rd, the annual Sprott Natural Resource Symposium will take place in Vancouver, British Columbia, Canada. Rule will be giving a speech at 8 am on August 1st entitled, Lessons, Re-Learned, In a Bear Market.

In my opinion, this single speech is worth the price of admission, never mind the whole host of other headline speakers, such as Doug Casey, James Rickards and Grant Williams to name just a few.

Today, I have for you a conversation with Rick Rule. In our conversation, we covered a number of topics, but most importantly, Rule explains why it’s vital for an investor to be self-aware and, secondly, frames the mindset which is needed to invest in “risky” jurisdictions.

Additionally, at the end of the interview, Rule gives you, the reader, a great offer that I hope you will take him up on!

See you at the Symposium.


Brian: Access to cash is to the junior resource companies like air is to human beings; an absolute necessity.

For many, Toronto, Canada represents the Mecca of junior mining finance. However, it appears this may be rapidly changing, as the bear market in resources is not only affecting investor profits, but also the banks and institutions which have, for many years, been the suppliers of cash to junior resource sector.

I have a two-part question; First, in your opinion, do you agree that Toronto’s role as the center of the junior mining finance world is diminishing? Secondly, if so, do you foresee any repercussions for this seemingly major change?

Rick: I think to an extent, Toronto’s role may be declining, it’s really a consequence of the increase in participation in other parts of the world. I’m thinking particularly of the Pacific Basin, Hong Kong, Shanghai, and of course, Sydney. Toronto still punches, Toronto and by extension Vancouver, still punch well above their weight on a global scene, meaning that they still originate more capital for mining that is consumed inside Canada. It’s worthy to note the centers of excellence occur in both cities that make important contributions to the service sectors in those cities. My suspicion is that as the mining market turns from cyclical lows that the importance of Toronto and Vancouver, that is the importance of Canada, as a mining finance center, will continue.

Brian: Over the last month or so, the gold price has been strong, surpassing the US$1400 /oz mark, a price we haven’t seen since 2013. While a rising gold price will undoubtedly draw more eyes to the sector, which is positive, I can’t help but think that there are some drawbacks to a world with a rising gold price.

How do you view a world with rising gold prices?

Rick: Gold traditionally has functioned as insurance, which means it does well when confidence decreases. The circumstance that would see a very high gold price would almost certainly be a poor outcome for most aspects of your life and your portfolio. The truth is that gold does well in response to things like war or economic unrest.

So the circumstance that would see gold at levels that some forecasters have talked about, $5,000 US and now $6,000 US, and now $7,000 US an ounce, would not be pleasant for the rest of your portfolio. That said, I think a prudent investor always allocates for circumstances that would be problematic. And gold, for thousands of years, has operated in that part of people’s portfolio.

Brian: Are market sentiment and fundamentals like the chicken and the egg? Meaning, does it make a difference which one comes first to alter the tide from a bear to bull market?

Rick: I believe it does. I believe in mining, well, I believe in all economic activities that bull markets are the authors of bear markets and vice versa. People’s expectation of the future is set by their experience in the immediate past, and it’s my belief that markets overshoot in both directions. I believe the next bull market in mining will be a consequence of people’s anticipation of success being so low that the challenge for the industry would be to get under the bar rather than over the bar.

In other words, the industry needs to beat people’s expectations for a while. People’s expectations are now so low that beating those expectations will, in fact, be easy. The fundamentals must change relative to value before expectations change. And, mercifully, the mining industry is in the midst, the beginning, of a renaissance I believe that will cause it to do exactly that.

Brian: Over the last year or so, I have found great value in studying my losses and trying to find similarities in my mode of failure. Not surprisingly, there is a commonality in my failure mode and it is directly linked to my own bias tendencies.

Self awareness is important in all aspects of life, but hard for some to attain. I heard a wise man once say,

“you may not know who you are, but I bet you can tell me who you aren’t.”

This really resonated with me because the more I think about it, the more this backwards type of thinking makes sense.

As an investor, how important is it to be self-aware?

Rick: I think that’s probably the most important question I’ve been asked all month. And I would suggest to you that there are many paths to investment success, but they all begin with who you are. I have learned myself that most of my worst investment wounds were in fact self-inflicted. And while I look at the range of risks in the market, interest rates, governments, dishonest promoters, the biggest risk that I face is conveniently located to the right of my left ear and to the left of my right ear. That is my own biases.

We talked a bit in the prior question about the earliest bias. We all believe ourselves to be rational fact seekers, taking information from all sources, and organizing that information logically and making rational conclusions. That’s not what happens. We, in fact, select information that makes us comfortable with our existing prejudices and biases. And the truth is that we have short memories. Our experience in the recent and the immediate past shapes our expectation for the future much more than our experience going back two decades or three decades, which is, in fact, more valuable.

I think if anybody takes away anything from this interview it is being self honest, attempting to be self honest, pardon me, checking your biases, and continuing to invest in your own education is the best guarantee that you can have of investment success.

Brian: In my opinion, political risk within a jurisdiction is rooted within the culture of the society in which it inhabits. Therefore, understanding the culture of the society is integral for gauging the risk of a prospective investment.

Being bullish on one of the world’s riskiest jurisdictions is usually correlated with some major change within the given country’s politics. However, I’m not sure if the change that is expected is ever really real, as most countries seemingly never escape the handle of ‘risky.’

Is it possible to have or expect real change in risky jurisdictions?

Rick: I think you need to define a risky jurisdiction. The truth is that mining is a location specific and capital intensive business, so it is particularly prone to political risk. It’s also a small business, which means that it never enjoys the political power necessary to defend itself. Mostly, the controllable aspect of political risk is price and probability. People who look like you and I, and I’m venturing into dangerous territory here, politically risky it can go, tend to believe that money that is stolen from us by white people in English, according to the rule of law, is less gone than money that’s stolen from us in ways that we understand less well.

So, I believe a lot of political risk is expectation and the price that one assumes for the risk. My biggest economic experience with political risk occurred 30 years ago in a wayward jurisdiction known as the People’s Republic of California where net present value in excess of about $700 million was taken by shareholders by the capricious California legislature. And people tell me that Congo is risky.

I would argue with you right now that the People’s Republic of British Columbia, which is regarded as a superb place for politics, is extraordinarily risky. The BC provincial legislature is a joint venture between the Socialists and the Greens. Not exactly mining’s best friend. The wealth grabs that the BC legislature in Vancouver City Council have made frankly protectionist racist taxes on foreign investors are, I think, a harbinger in the future. So, when people talk about cultures and political risk, people need to discriminate I think based on their understanding of the culture that they operate in and the culture that they are familiar with. Yes, Brazil has a long standing history of formal corruption. I would ask you what the difference between a campaign contribution and a bribe is.

Brian: Having attended many resource sector focused investment conferences over the years, it’s clear, to me at least, that the majority of investors in the sector are in their, so-to-speak, ‘golden years.’ The younger generations, mainly the millennials, on mass, are virtually absent with their attention seemingly more focused on cannabis and crypto. The question that comes to my mind is, why? Is it a matter of relatability?

In your opinion, why has the resource sector failed to attract the millennial generation’s investment dollars, thus far?

Rick: I think that the younger generation is extremely narrative oriented, and the resource narrative hasn’t played out for a long time. My own generation, we’re definitely past our sell by date. Certainly in the ’60s, we were attracted to much more mainstream investment activities until our paradigms were changed by the decade of the ’70s, which saw natural resources explode in price, and that price justified the narrative to us.

My suspicion is that sometime in the next 10 years we are going to have another upward move in resource prices, in particular precious metals prices, and I think the precious metals narrative. Appealing to people’s greed and fear will have an extremely profound impact on millennials. Interestingly, I have found in the last 18 months that the inbound interest that Sprott has received around the world is now about evenly divided between younger people and older people, and is interestingly now 40% female. A circumstance which I have never seen before.

So, while the situation that you describe still prevails today, I would suggest to you that it’s changing very, very rapidly. The industry is attracting interest from around the world rather than just from developed countries. It is attracting increasing interest from younger people, and for the first time in my career, attracting substantial interest from younger females.

Brian: Conferences are a great way to expand your knowledge of the sector and to speak to the people who are running the companies in which you’re speculating. Learn who these people are – you’re trusting them with your money.

For those looking for a conference to attend, I highly suggest that you attend the Sprott Natural Resource Symposium from July 30th to August 2nd in Vancouver. In my opinion, it’s by far the best conference in the business and worth every penny.

In your opinion, what’s the value proposition of the Sprott Natural Resource Symposium?

Rick: I think we have several value propositions. The first is that the sort of keynote headline speakers, the generalists, who go to the narrative that we were just discussing, our top, top, top line. Danielle Dimartino Booth, sort of a new voice on the scene, but a profoundly bright individual. She will be joined on the main podium by Nomi Prins, another person who just came to prominence in the last decade. Of course, Jim Rickards will be back, and Doug Casey will be back.

But keeping the macro theme company. Importantly at this conference there will be five or six presenters who have built multi-billion-dollar natural resource companies from standing starts. People who can talk about how you generate billions of dollars of wealth in the resource business, and how their experience building companies has shaped how they invest and how it can help the way you invest.

Importantly, at this conference, our attendees have told us that the exhibitors, the public companies who come to tout their wares, are more than advertisers. The attendees say that the exhibitors are content, too. So in our conference, which is different than other conferences, in order to be allowed to exhibit a public company it must be owned in a Sprott managed equity account. That doesn’t sadly guarantee that everything we invest in goes up in price. But the truth is that you will have a curated list of exhibitors, which are all owned in Sprott managed accounts, and by Sprott principles.

So, I think the combination of an absolutely great top line group of commentators and newsletter editors, with combined circulations over a million people, a high quality group of industry people who have made billions of dollars for their investors, and a curated group of exhibitors combine to make this, I think, the finest high net worth retail natural resource conference on the planet.

Brian: That’s great. I’m really looking forward to it. Thank you very much for your time today.

Rick: Always a pleasure, Brian. If I may, I would like to offer your readers an inducement to get to know Sprott. For any of your listeners who care, I am willing to personally rank their speculative resource portfolio.

If they would email me the names and symbols in text, not as an attachment, in an email to, I will rank their holdings and send them back by return email.

Absolutely no obligation on their part. This is something that we do to get to know people. So if that is of interest, I invite your listeners to email me personally.

Brian: That’s a great offer. Thank you very much, Rick.

Rick: Always a pleasure. Thank you. I look forward to seeing you in Vancouver.

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Until next time,

Brian Leni P.Eng

Founder – Junior Stock Review

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company and sector that is best suited for your personal investment criteria