Rick Rule Is Buying Gold Stocks as Valuations Collapse

Summary

Rick Rule told Kitco Mining that falling metal and mining-share prices have unsettled investors, but he sees opportunities—particularly in gold equities. He described Australia’s mining-investor community as knowledgeable and engaged.

U.S. Politics and Mining Permits

Discussing the midterm results as presented in the interview, Rule said he hoped divided government would limit both parties’ ability to expand spending and regulation. He expects the mining industry’s recent improvement in U.S. permitting and government support for resource projects to face pressure under the new Congress. He also characterized the election largely as a protest against President Trump rather than a strong endorsement of the Democrats.

Technology Stocks and Copper Demand

Rule said he could not explain the tech-sector selloff or judge whether AI shares were in a bubble. But he argued that opposition to U.S. data centers would not eliminate their demand for copper: projects could be built elsewhere. He attributed recent copper-price weakness more to concerns about economic growth, higher oil prices, and higher interest rates than to uncertainty over data centers.

U.S. Copper Projects

Rule viewed Freeport-McMoRan’s planned Bagdad expansion and BHP and Rio Tinto’s additional funding for Resolution Copper as products of the relatively favorable permitting environment of the previous 18 months, rather than simply a reaction to the election.

He said expanding an existing operation such as Bagdad may be easier than permitting a large new project such as Resolution. He noted the high capital cost of Bagdad’s expansion but said companies may favor existing sites as a faster way to add production amid long lead times for new mines and anticipated copper demand.

Codelco and State-Owned Companies

Rule cited Codelco’s declining production despite substantial capital spending as an example of the poor record of state-owned firms in capital-intensive industries. He argued that political priorities can divert funds from maintaining and expanding resource assets.

Gold Stocks and Investment Strategy

Rule said he is buying both physical gold and gold-mining shares, while acknowledging that higher nominal interest rates could push gold and miners lower still. By his valuation measure—comparing the value of current cash flows and projects with enterprise value—he considers gold miners as cheap as at any point in his 50-year career.

He is buying across royalty companies, producers, developers, and, selectively, exploration companies.

Junior Miners and Tax-Loss Selling

Rule said the financing window for junior companies has abruptly closed, bringing fewer competing bidders for deals. For investors prepared to accept risk and volatility, he sees the weak market and seasonal tax-loss selling as potential opportunities. He noted that tax-related selling has often been followed by a recovery early in the new year.

Presenters and Contributors

• Paul Harris: Host
• Rick Rule: Guest