FRIEDLAND’S Global Power Play: Saudi & Trump Join The Game | Rick Rule

Trump, like all recent US presidents, is a transactional leader who uses tariffs as a tool to reward allies and punish enemies, not to achieve principled policy objectives.

“Mr. Trump, like all of his predecessors, is a transactional leader. Tariffs are a wonderful way to reward his friends and punish his enemies. [...] Mr. Trump is no different than Mr. Biden. He's no different than Mr. Clinton. He's no different than Mr. Bush. [...] He is transactional. And tariffs are a wonderful, wonderful tool for selective enforcement, for punishing one's enemies, and for rewarding one's friends.”

Chinese enterprises came late to international resource competition and therefore required state power (soft power through infrastructure investment and hard power through security forces) to compete effectively, unconstrained by anti-corruption laws that limit US and European companies.

“The Chinese believe perhaps rightly that without the power of the state because the Chinese enterprises were so late to the game, the game being international uh extraction uh investments that they required the power of the state both the soft and the hard power of the state to compete particularly in Africa. The Chinese have not been constrained with the foreign anti-corrupt practices act in the United States and similar legislation in Europe.”

All US presidents (Trump, Biden, Clinton, Bush) are fundamentally transactional leaders who use tariffs and subsidies not to optimize economic efficiency but to reward political allies and punish enemies, making tariff policy primarily a tool for selective enforcement and wealth transfer rather than economic policy.

“Mr. Trump, like all of his predecessors, is a transactional leader. Tariffs are a wonderful way to reward his friends and punish his enemies...Mr. Trump is no different than Mr. Biden. He's no different than Mr. Clinton. He's no different than Mr. Bush. He's no different than the Donald Trump that inhabited the office in the first term. He is transactional. And tariffs are a wonderful, wonderful tool for selective enforcement, for punishing one's enemies, and for rewarding one's friends.”

In 2023, the gold price rose while gold mining stocks stagnated because foreign central banks (not mining stock investors) were buying gold bullion, and central banks don't buy gold stocks, creating a disconnect between the two asset classes.

“The first was that the gold price was moving because foreign central banks were buying and foreign central banks don't buy gold stocks. So one asset class that had buyers moved, another asset class that didn't didn't move.”

The US government has $36 trillion in on-balance sheet liabilities and unfunded entitlement liabilities exceeding $100 trillion in net present value, creating valid concerns about purchasing power maintenance in US dollar instruments.

“in the US we have $ 36 trillion in onbalance sheet liabilities and that the net present value of unfunded entitlement liabilities exceeds a hundred trillion dollars tells you that nervousness about fiat denominated instruments in the US dollars are very very very valid concerns”

Biden administration reversed its anti-uranium stance (Rule was 'vilified' as a profiteer from Hiroshima and Nagasaki) toward uranium subsidies in response to shifting political alignments around mining, exemplifying how policy follows political rather than technical logic.

“I note that even under Biden uh because there was a change in the politics around mining that there was a change in policy early on in the Biden administration. Myself as a uranium investor was vilified. I was the worst thing on the planet earth. I was a profiter from Hiroshima and Nagasaki and Three-Mile Island. Towards the end of the Biden administration, they were looking to subsidize the domestic uranium industry. I went from being vilified to being subsidized.”

Canada is a tier-one jurisdiction in reputation, yet recently appointed a prime minister who won election on a platform of change and then decided Canada wouldn't have a budget, creating substantial political risk for fiscal policy, taxation, royalties, and infrastructure investment.

“The Canadians will tell you that Canada is a tier one jurisdiction. Uh and yet they just appointed a prime minister who subsequently of course won an election running ironically on a platform of change and he decided yesterday that Canada wouldn't have a budget. Wouldn't have a budget. Now how does that feel in terms of political risk? [...] consider the political risk associated with a jurisdiction that doesn't have a budget.”

AI is becoming valuable for financial screening by automating quantitative analysis: what took 6 weeks per company by hand, then 1-2 hours per company on Bloomberg, will soon take 15 minutes with AI, compressing 50 years of manual work into automated monitoring.

“uh 25 or 30 years ago, I would get five years of quarterly uh reports from mining companies and I'd pull the statements out and I'd lay them down uh on a very long conference table and I would spend six weeks uh looking at the performance. [...] Then uh a very very very smart woman came and showed me how to do all of that on Bloomberg. [...] I think in 2025 I will be able to do that with AI and I will be able to cause it to occur in 15 minutes.”

The US will overtly subsidize companies securing non-Chinese sourced critical materials as a government action responding to geopolitical supply constraints, whether people believe in this policy or not.

“To the extent that there are geopolitical constraints around access to materials, you are going to see uh government action that allows their industry to access supplies that would be politically threatened. What that means in the United States as an example is that you're going to begin to see the overt subsidization of US companies trying to secure non-Chinese source supplies of critical materials. You're absolutely going to do this going to see this whether or not you believe in it or not.”

Only 10-15% of public mining company listings worldwide are viable; if you merged all 3,000+ junior exploration companies into one 'Junior Explore Co.,' it would lose $2-12 billion annually, so the cohort has negative value.

“If you merged every public junior in the world into one company, Junior Explore Co., there's 3,000 of them or something like that in all jurisdictions. Uh that company would lose between two and 12 and 10 billion dollars a year. So what should it be worth? If you uh I I believe that no more than 10 or 15% of the listings worldwide are viable.”

Political access to state-backed credit (from Industrial and Commercial Bank of China, US government subsidies, European subsidies) becomes a new form of fundamental analysis for mining company valuation, replacing traditional financial metrics.

“a new form of fundamental is going to have to be political analysis. Does the issuer that you're looking at have access to credit from the Industrial and Commercial Bank of China? Do they have access to credit, subsidized credit, in other words, a lower cost of capital from the United States? Do they have access to subsidized capital? In other words, are they looting the European taxpayers? This is going to be a new form of security analysis. What facility do these companies have for exacting fraud on taxpayers?”

People with European ancestry believe money stolen by white people through legislated rule of law is somehow less gone than money taken overtly by people with different skin tones in Africa, but California's 13-year permit delays and $16 million informal bribes represent 'rule of law' political risk equivalent to African countries.

“people that look like you and I tend to believe that money stolen from us by white people in English through the legislature, according to the rule of law, is somehow less gone than money taken from us in more overt fashion by people with different skin tones in places like Africa. uh we hearken to the rule of law, but in a circumstance like I experienced in California where for almost no reason whatsoever, permits were delayed for 13 years and required $16 million in informal bribes”

Since mid-December, gold moved nearly $1,000 from $2,550 to $3,500—an exceptionally rapid appreciation requiring explanation beyond routine market movement.

“Since mid December, gold pretty much moved almost $1,000 from $2550 to $3,500. An insane move in a very very short time”

If the mining industry bundles campaign contributions in favor of Trump allies, tariff legislation and subsidies for mining will be generous, following the principle that 'elections are advanced auctions of stolen property'.

“to the extent that the mining business is cynical enough uh following the old maxim um that elections are advanced auctions of stolen property, I suspect that if the mining industry bundles campaign contributions uh in favor of allies of Trump that the tariff legislation around mining uh and by the way the subsidies around mining will be uh very generous to the mining industry”

Mining has not been a business that mattered in the US economy for a long time, and the mining industry has done a reasonable job protecting interests in Washington relative to its economic importance, but faced an uphill battle against environmental movement concerns about historical degradation.

“Mining hasn't been a business that's mattered in the United States for a very long time. Uh and I would say that the mining industry relative to its importance in the US economy has done a reasonable job protecting their interest in Washington. But the tide was against them.”

US federal permitting is seeing reduced red tape under Trump's Federal Energy Regulatory Commission leadership, but investors still need to focus on states with political support for extractive industries: Texas, Wyoming, Nevada, Alaska, Idaho, South Dakota, New Mexico, and Oklahoma.

“I have seen that with my own eyes. Uh but you need to understand that when some of the objection goes away federally, you still have to deal with state and local. What that means is that if you're an investor in extractive industries in the United States that you to the extent that you're able focus on the state of Texas, the state of Wyoming, the state of Nevada, and the state of Alaska, uh constituencies which have a social and political mobilization in favor of extractive industries.”

Much AI application in mining sector is promotional, used to attract naive speculators rather than deployed as actual investment analysis tool, requiring caution about AI adoption claims.

“Too much of AI in the mining sector right now is promotional. People use AI to attract the attention of naive speculators as opposed to using AI as an investment tool.”

Gold mining stocks that have done spectacularly well in the last 18 months are high-quality producers (Agneo Eagle, Alamos, Lumine, G Mining) that achieved cost containment while gold price exceeded input cost inflation, expanding free cash flow per share.

“in the last 18 months, the high quality gold stocks, the wheat and precious metals, the Agneo Eagles, the Alamos, the uh Lundines, even smaller companies, G mining as an example that uh delivered cost containment have done extraordinarily well.”

The CPI is a manufactured statistic; Rule believes true purchasing power erosion of the US dollar is 7.5-8% annually, not the 2.5% CPI indicates.

“If you believe like I do, however, that the purchasing power of the US dollar is actually declining at seven and a half or eight% a year because the CPI is a manufactured statistic.”

Chinese infrastructure investment and commercial investment in Congo has been a major employment driver in southern Congo (formerly Katanga), providing real development benefits alongside resource extraction.

“Chinese infrastructure investment uh Chinese commercial investment and Chinese mining investment has been a really important driver in individual employment throughout the southern part of Congo, formerly known as Katanga.”

People with shared demographic characteristics with Rule (white, English-speaking, Western) perceive capital loss through legitimate-seeming legal processes (regulatory delays, campaign contributions) as less onerous than overt expropriation in Africa, but this is cognitive bias because the actual cost (money lost, time lost) is identical regardless of method.

“people that look like you and I tend to believe that money stolen from us by white people in English through the legislature, according to the rule of law, is somehow less gone than money taken from us in more overt fashion by people with different skin tones in places like Africa.”

In a precious metals bull market (this is Rule's fourth), price action follows a predictable five-phase pattern: (1) bullion moves first driven by fear buyers, (2) biggest and best producers move when margins increase and momentum attracts investors, (3) best of the rest move, (4) developers move, (5) exploration companies move.

“A precious metals bull market in my experience and this is my fourth bull market follows a very predictable pattern. The bullion moves first. Absolutely moves first. It's driven by the bullion. It's driven in fact by the fear buyer. When the bullion price moves fast enough that margins increase, uh the fact that free cash flow is increasing and the fact that the underlying momentum of gold attracts investors into the space, the biggest and the best producers move next...Phase three is when the best of the rest move. Phase four uh is when the developers move. Phase five is when the exploration companies move.”

A gold bull market follows a predictable five-phase pattern: (1) Bullion moves first, driven by fear buyers; (2) Major/best producers move as margins expand and free cash flow increases; (3) Best of the rest move; (4) Developers move; (5) Exploration companies move.

“A a precious metals bull market in my experience and this is my fourth bull market follows a very predictable pattern. The bullion moves first. [...] When the bullion price moves fast enough that margins increase, uh the fact that free cash flow is increasing and the fact that the underlying momentum of gold attracts investors into the space, the biggest and the best producers move next. [...] Phase three is when the best of the rest move. Phase four uh is when the developers move. Phase five is when the exploration companies move.”

Rule believes near-term phenomena (Trump, tariffs, DOGE, political uncertainty) are rhetorical excuses for investor action, not drivers; the underlying move in gold is all about arithmetic (negative real yields) and math bores people.

“I think that people use narrative tariffs, Trump, uh, whatever it might be as an excuse to take actions that they want to take. I believe that the underlying move in the gold price is all due to arithmetic. all due to math. But math bores people. They feel it in their bones and they express themselves because Trump might be the manifestation of their fears or because they don't like the concept of the Department of Government efficiency or they don't like deportation without due process or they don't like tariffs. I think that those are all rhetorical excuses uh to express the same form of selective selection bias whether it's right or wrong that we described earlier. Uh I am not one of those who believes that the near-term phenomenons are the drivers. Uh I believe they're the excuses.”

Ray Dalio's $320 million gold position represents purchasing power insurance against dollar depreciation rather than speculation, consistent with 1970s precedent where the dollar lost 75% purchasing power and gold appreciated 30-fold.

“If you follow that line of thinking over 10 years, what Mr. Dallio is doing is simply buying purchasing power insurance. He's not speculating on gold. He's not even investing in gold. He is using gold as a hedge against the declining purchasing power of the US dollar and the inherent uh negative real yield on US dollar denominated debt securities”

Robert Freedelland is strategically five years ahead of the world and the best salesman Rule has ever met; his pursuit of Saudi Arabia relationship combined with his Trump access positions him to shape US critical minerals strategy and beneficiary companies.

“Robert is strategically uh as good a guy as I've ever met. He's five years ahead of the world. Uh he is also I think uh the best salesman I've ever met. Uh all I can say is um now that he has access and and he has very high level access uh in Saudi Arabia uh and Saudi Arabia has expressed an interest in expanding their role in global minerals. Uh he's the best salesman I ever met. Uh, and he will, repeat, he will be able to sell President Trump.”

Chinese state policy officially instructs mainland Chinese businesspeople to maintain cordial commercial relationships with Americans despite state-to-state geopolitical competition, suggesting that US-China mining competition will involve both competition and cooperation depending on individual project and leader interests.

“about five months ago uh Chinese people that I have done business with for a very long time uh mainland Chinese I mean uh reached out to me and said by the way we have been instructed by the party to reach out to and maintain cordure relationships with individual Americans the state-to-state difficulty is not intended by the Chinese state to interfere with commercial interaction between Chinese and Americans.”

Mining companies with government backing can engage in what amounts to structured fraud on taxpayers through subsidized capital programs, making ability to extract value from government programs a new form of fundamental analysis alongside traditional competitive metrics.

“Do they have access to subsidized capital? In other words, are they looting the European taxpayers? This is going to be a new form of security analysis. What facility do these companies have for exacting fraud on taxpayers?”

Robert Freedelland has positioned himself as the strategic leader for the next phase of geopolitical resource competition by securing high-level relationships with Saudi Arabia, the US government, and maintaining historical relationships with Chinese and Japanese state institutions, allowing him to access subsidized capital from multiple state sponsors for mining projects.

“He has 30 years of experience with Zjin Mining and Chitik Sitic, China International Trade and Investment Corporation. He has watched the Chinese use the power of the state to support their mining industries international aspirations. He has taken a lesson from the Chinese. uh he himself utilizes the power of the Chinese state in Congo. He utilizes the power of the Japanese state uh in South Africa. He now is looking forward to utilizing the power of the Saudi crown and the United States state.”

Mining industry lobbying has been relatively effective given industry importance, but was disadvantaged by a decades-long tide of environmental activism that, while often misguided, correctly identified historical mining environmental damage that the industry could not overcome through messaging.

“Mining hasn't been a business that's mattered in the United States for a very long time. Uh and I would say that the mining industry relative to its importance in the US economy has done a reasonable job protecting their interest in Washington. But the tide was against them. Uh there was a ground swell of support, sometimes misguided, uh for an environmental movement that rightly noted that historically the mining industry was less good than it should have been around environmental degradation and there wasn't very much that the mining industry could do to change the opinion of past sins.”

Chinese government instructed mainland Chinese business contacts to maintain cordial relationships with individual Americans despite state-to-state difficulty, indicating that US-China competition will involve cooperation where mutually beneficial to Trump and Xi.

“uh you know about five months ago uh Chinese people that I have done business with for a very long time uh mainland Chinese I mean uh reached out to me and said by the way we have been instructed by the party to reach out to and maintain cordure relationships with individual Americans the state-to-state difficulty is not intended by the Chinese state to interfere with commercial interaction between Chinese and Americans. And I think that this is official Chinese policy”

Canadian investment bankers have rapidly mobilized to develop relationships in Washington DC to access the US government's bipartisan goal of securing raw material supplies, with senior bankers spending multiple days per week in DC to develop this infrastructure.

“My friends in the Canadian mining industry have not been slow on the uptick. If they are promised access to lower-priced capital, they are on it like white on rice. I know myself, I have fairly close connections to a senior Canadian investment banker who is spending one or two days every two weeks in Washington DC. H uh this is a guy who makes an awful lot of money structuring transactions uh in Canada sitting at the apex of the pyramid of mind finance and he has decided he's a fairly young guy that in terms of his investment banking practice in the next five years the most beneficial use of his time is developing deep connections and a deep understanding in Washington DC uh associated with the US government's bipartisan goal of securing access to raw materials”

Rule's focus on projects rather than politics has worked well over 50 years; Congo has been his single best-performing jurisdiction by 'money in, money out' measure despite substantial political risk, while California was his worst-performing due to permits delayed 13 years requiring $16 million in informal 'bribes' (campaign contributions, studies, deeds).

“The single jur best jurisdiction on the planet for me, money in and money out, has been Congo. [...] The worst jurisdiction for me personally in terms of political risk that I experienced that resulted in loss was the People's Republic of California. [...] permits were delayed for 13 years and required $16 million in informal bribes, campaign contributions, deeds in l needless studies.”

In a gold bull market, investors lacking analytical capability or stomach for volatility can achieve 250-300% returns over 5 years by simply owning the best-of-the-best producers without needing to generate alpha or manage risk actively.

“if you aren't prepared to do the analytical work, that you don't need to generate alpha in a bull market, you don't need to outperform the market itself because the beta in the market during a gold bull market, and I define beta as the amount by which the gold industry outperforms regular uh equities indexes, is So extraordinary 250% 300% that many people who aren't prepared to do the work or can't stomach the volatility or can't take the risk should comprise should uh pardon me compose a a portfolio of the best of the best just the best don't mess with the rest”

Robert Freeland's core objective is not individual project development but building mining empires through exploitation of state power and capital—he operates in a different league than typical mining entrepreneurs who focus on pumping a 25-cent stock to 75 cents.

“He is working on the fact that he sees the next 10 years as being the best 10 years in his life in the mining business and he understands that strategically at the level he plays. You know, Kai, he's not about jitying a 25 cent stock to 75 cents. He's about building empires. He understands that the highest and best use of his time is at once learning how to exploit the power of the state in support of his enterprises and also lowering his cost of capital.”

If underground reserves in Congo (Kibali/Kabanga, Tank Fun Gurumi, Camoa Kauka) are extraordinarily high quality and entrepreneurs can navigate political/social risk, money-in-money-out returns exceed those in stable jurisdictions, making Congo superior despite political risk.

“I have been blessed in my life in Congo uh to have invested very early on in Kilamoto, which became Kabanga, one of the biggest gold mines in the world. I was lucky enough to be with the Lundines in Tank Fun Gurumi, one of the biggest copper mines in the world. I was lucky enough to be with Robert Freedelland and Camoa Cula, uh, one of the largest copper mines in the world. And the ability that those entrepreneurs had to navigate the political and social risk of Congo and the extraordinary nature of those deposits meant that although I was exposed to substantial political risk in Congo, if you measure the jurisdiction by money in, money out and time value of money, I've made much more money in Congo than I have anywhere else in the world.”

During the 1970s gold bull market, sustained interest rate rises caused a 50% pullback in the gold price, but this was a temporary hiatus, not the end of the bull market, and investors should expect similar pullbacks in current gold bull market rather than being shaken out by volatility.

“The last period that we had with a really explosive growth in the gold price relative to the US dollar was in the decade of the 70s. And by way of illustration, in 1975 when there was a sustained rate rise in interest rates, the gold price fell by 50%. The bull market wasn't over. It was just a very ugly hiatus in that. So, be prepared if you're in the gold business for some some pullbacks. They're normal. They're natural. They're to be expected. Don't get shaken out.”

Ray Dalio opening a $320 million gold position is not speculative top-ticking but rather rational purchasing power insurance, as Dalio (like Rule) understands that gold moves commensurately with dollar devaluation, making it a hedge against negative real yields on dollar debt.

“he's using gold as a hedge against the declining purchasing power of the US dollar and the inherent uh negative real yield on US dollar denominated debt securities.”

During precious metals bull markets, the beta (outperformance vs general equity indices) can reach 250-300% over five years, so investors under 45 who cannot stomach volatility or do analytical work should simply hold a portfolio of 'the best of the best' and expect 250-300% returns over five years without needing to do stock-picking.

“beta in the market during a gold bull market, and I define beta as the amount by which the gold industry outperforms regular uh equities indexes, is So extraordinary 250% 300% that many people who aren't prepared to do the work or can't stomach the volatility or can't take the risk should comprise should uh pardon me compose a a portfolio of the best of the best just the best don't mess with the rest and go about their lives read books do their work garden whatever appeals to them uh I think making 250 or 300% over 5 years in what is effectively At least operationally, a riskless transaction is not a bad outcome”

Only 10-15% of junior mining listings worldwide are actually viable; if merged into a single company, Junior Explore Co., it would lose $2-12 billion per year, so qualitative filtering of mining stock portfolios to remove bad-operator companies has been successful for the last two years.

“If you merged every public junior in the world into one company, Junior Explore Co., there's 3,000 of them or something like that in all jurisdictions. Uh that company would lose between two and 12 and 10 billion dollars a year. So what should it be worth? If you uh I I believe that no more than 10 or 15% of the listings worldwide are viable.”

Rule was early investor in Kilamato (became Kabanga, one of the world's biggest gold mines) with Lundin, in Tanke Fun Gurumi (one of biggest copper mines) with Lundin, and in Camoa Cula (one of largest copper mines) with Robert Freeeland, and made substantial returns despite Congo political risk because of entrepreneurs' ability to navigate risk and deposit quality.

“I have been blessed in my life in Congo uh to have invested very early on in Kilamoto, which became Kabanga, one of the biggest gold mines in the world. I was lucky enough to be with the Lundines in Tank Fun Gurumi, one of the biggest copper mines in the world. I was lucky enough to be with Robert Freedelland and Camoa Cula, uh, one of the largest copper mines in the world. And the ability that those entrepreneurs had to navigate the political and social risk of Congo and the extraordinary nature of those deposits meant that although I was exposed to substantial political risk in Congo, if you measure the jurisdiction by money in, money out and time value of money, I've made much more money in Congo than I have anywhere else in the world.”

AI in the mining sector is currently mostly promotional, used to attract naive speculators rather than deployed as a genuine analytical tool, and Rule will not speak on AI at his symposium until he has sufficient confidence in a team's actual competence with AI to teach rather than learn.

“Too much of AI in the mining sector right now is promotional. People use AI to attract the attention of naive speculators as opposed to using AI as an investment tool. No, you're right. And um it's a good segway actually to talk about your upcoming rule symposium...Not this year. I need to get better at it myself. Uh I want to be able to offer up any segment of my conference with a straight face.”

The mining industry's policy wins depend on bundling campaign contributions to Trump and his allies; if the mining industry invests in lobbying and campaign contributions to Republicans, tariff and subsidy legislation around mining will be generous because Trump's transactional nature means he rewards financial supporters.

“to the extent that the mining business is cynical enough uh following the old maxim um that elections are advanced auctions of stolen property, I suspect that if the mining industry bundles campaign contributions uh in favor of allies of Trump that the tariff legislation around mining uh and by the way the subsidies around mining will be uh very generous to the mining industry.”

Political risk in mining is not correlated with jurisdiction tier-one reputation; it is found where actual capital and sovereignty issues arise; Congo has been Rick Rule's best jurisdiction by absolute return (money in, money out, time value) despite extreme political risk, while California's regulatory delays and informal bribing cost him $16 million and 13 years of permitting delays.

“The single jur best jurisdiction on the planet for me, money in and money out, has been Congo. I've exposed myself to a lot of risk. I've exposed myself to a lot of fear. And I have made what is for me an absolute boatload of money. The worst jurisdiction for me personally in terms of political risk that I experienced that resulted in loss was the People's Republic of California...permits were delayed for 13 years and required $16 million in informal bribes, campaign contributions, deeds in l needless studies. Uh political risk is in fact where you find it.”

Canadian tier-one jurisdiction reputation is undermined by political risk at the highest level: the newly elected prime minister refused to prepare a budget, following his predecessor's failed philosophy that 'the budget will balance itself,' creating structural fiscal uncertainty that impacts mining company taxation, royalties, and infrastructure investment.

“The Canadians will tell you that Canada is a tier one jurisdiction. Uh and yet they just appointed a prime minister who subsequently of course won an election running ironically on a platform of change and he decided yesterday that Canada wouldn't have a budget. Wouldn't have a budget. Now how does that feel in terms of political risk? You'll recall that his predecessor said that the budget would balance itself and the outcome of that is economic performance in Canada for a decade that was substantially less than the economic performance in the United States”

Canadian investment bankers and mining executives are rapidly mobilizing in Washington, with at least one senior Canadian banker spending 1-2 days per week in DC building relationships around US government goal of securing raw material access.

“My friends in the Canadian mining industry have not been slow on the uptick. If they are promised access to lowerpriced capital, they are on it like white on rice. I know myself, I have fairly close connections to a senior Canadian investment banker who is spending one or two days every two weeks in Washington DC. H uh this is a guy who makes an awful lot of money structuring transactions uh in Canada sitting at the apex of the pyramid of mind finance and he has decided he's a fairly young guy that in terms of his investment banking practice in the next five years the most beneficial use of his time is developing deep connections and a deep understanding in Washington DC uh associated with the US government's bipartisan goal of securing access to raw materials to support uh America's material standard of living.”

Markets exhibit phase-based behavior: valuation discrepancies emerge as top producers outperform, creating opportunities for arbitrage into cheaper single-asset producers or consolidation by larger companies with lower capital costs.

“When that happens, valuation discrepancies emerge in the market. Uh companies that are single asset producers, companies that are less efficient lag in terms of their price per share. They have a higher cost of capital. One of two things happens. There's either valuation arbitrage where investors like yourself and myself begin to come down into lower quality companies because the valuations by any realizable metric are cheaper there or the bigger companies with a lower cost of capital take over the smaller companies.”

Political sentiment toward uranium mining reversed during Biden administration: Rule went from being vilified as profiteering from Hiroshima and Nagasaki to being subsidized by the government based on changing political priorities around uranium supply.

“Myself as a uranium investor was vilified. I was the worst thing on the planet earth. I was a profiter from Hiroshima and Nagasaki and Three-Mile Island. Towards the end of the Biden administration, they were looking to subsidize the domestic uranium industry. I went from being vilified to being subsidized.”

Trump administration support for cutting red tape and federal permitting is visible (e.g., FERC streamlining), but this advantage is limited because mining/resource extraction in the US is regulated at federal, state, and local levels, so investors should focus on states with social/political mobilization in favor of extraction: Texas, Wyoming, Nevada, Alaska, and emerging support from Idaho, South Dakota, New Mexico, and Oklahoma.

“regulation in the United States is tripartite federal, state and local. And I take Trump at his word because I've begun to see in terms of the fen uh federal energy regulatory commission uh the lessening of the red tape associated with project permitting. I have seen that with my own eyes. Uh but you need to understand that when some of the objection goes away federally, you still have to deal with state and local. What that means is that if you're an investor in extractive industries in the United States that you to the extent that you're able focus on the state of Texas, the state of Wyoming, the state of Nevada, and the state of Alaska, uh constituencies which have a social and political mobilization in favor of extractive industries.”

The reason gold stocks lagged gold price in 2023 was threefold: (1) foreign central banks were the primary gold buyers and do not buy gold stocks, (2) the mining sector had terrible returns during 2000-2010 when gold prices rose 7x but mining company free cash flow per share declined, creating investor distrust, and (3) during 2023 input costs rose faster than gold price, preventing margin expansion.

“The first was that the gold price was moving because foreign central banks were buying and foreign central banks don't buy gold stocks. So one asset class that had buyers moved, another asset class that didn't didn't move. The second reason might be because of the piss poor performance of the mining sector uh in the decade 2000 to 2010 where the selling price of their product increased sevenfold and the free cash flow per share exhibited by the Philadelphia gold and silver stock index declined. A third might be that in 2023 while the gold price was moving up the cost of inputs particularly energy, skilled labor and tax was moving up faster. So margins didn't expand but margins began to expand in 2024”

High-quality gold producers have blown away earnings estimates in the last 18 months by delivering cost containment while gold prices rose, and the winners include Wheaton, Agneo Eagle, Alamos, Lundin, and smaller companies like G Mining that achieved free cash flow expansion as margins finally expanded.

“in the last 18 months, the high quality gold stocks, the wheat and precious metals, the Agneo Eagles, the Alamos, the uh Lundines, even smaller companies, G mining as an example that uh delivered cost containment have done extraordinarily well...the biggest and the best producers move next. That's the f that's the that's the part of the market that we're in right now.”