"The Worst Sentiment I've Ever Seen in 50 Years" | Adrian Day

Gold-stock sentiment just hit a level Adrian Day has never seen in 50 years of managing money, one day two weeks ago, not a single investor surveyed was bullish.

Speaking with Kitco News at the Rule Symposium 2026 in Boca Raton, the Adrian Day Asset Management chairman said miner bullishness has collapsed to around 7%, against a typical 60/40 split. He calls it "the worst sentiment I have ever seen in my 50 years managing money in any sector at any time," and argues it has left the big producers historically cheap, a Scotiabank study places them in their lowest valuation quartile in 70 years.

Day, a value investor who says he is "not in the business of predicting," expects generalist money to rotate into gold once the S&P stops climbing, and points to the rotation already underway, in the four weeks before the conference, Microsoft, Amazon, and Nvidia all fell 15 to 20% while the S&P dropped just 2%. Still, he warns gold "could easily break the last low and go down to 3,600" first.

Recorded July 08, 2026.

Special thanks to our sponsor, Aris Mining, for making this coverage possible. To learn more, visit: https://www.aris-mining.com/

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00:00 - Live From the Rule Symposium
01:01 - Risk vs Reward, Not Predictions
02:10 - The Gold Thesis and Mid-Cycle Corrections
03:42 - The AI Trade Rotation Begins
08:50 - Passive Flows and the 401(k) Effect
09:51 - Gold Sentiment Hits a 50-Year Low
11:40 - Where the Value Is in Gold Stocks
15:21 - How to Size Buys and Manage Risk
17:31 - Why Oil Is the Most Hated Trade
20:47 - Silver: Demand, Supply and Value
25:25 - Royalties and Streamers Explained
31:14 - Discipline: Staging Into Positions
36:20 - Know Yourself, Know What You Own

#Gold #GoldStocks #AdrianDay #Silver #KitcoNews
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Transcript

SPEAKER_00 0:00

Kitco news on-site coverage of the Rule Symposium Natural Resource Investing is presented by Paris Mining.

SPEAKER_03 0:12

All right, welcome back to the show. I'm Jeremy Saffron live from the Rule Symposium at the beautiful Vocal Breton Resort here in Florida. Now everyone in this building has a forecast, a price, a target, a call. But my next guest has a harder job than that. He actually runs money for a living, which means he doesn't just get to predict where gold goes. He actually decides where the money goes, and then he lives with that decision. Now he does it globally, not just in gold, and that matters this week because a trillion dollars is walking out of one of the most crowded trades on earth. And the question everyone here is really asking is where does that land? Now, a value investor who's answered through cycle after cycle.

SPEAKER_01 0:50

Well, thank you for having me, Jeremy. Good to see you.

SPEAKER_03 0:52

Uh an interesting day indeed. And let's start with that. I mean, because right now, I mean, gold's a little bit down. Oil has spiked on this Iranian news. Markets now pricing a Fed rate hike. Uh everyone here has an opinion on that, uh, as you know. A lot of my guests, but you have to act on it. So, I mean, does a day like today actually change your plan, or is a pullback kind of the the blessing you're waiting for?

SPEAKER_01 1:13

Well, first of all, as a practical matter, I'm here in Florida at a conference, so I don't even know what's happening today, which is an awful thing for a money manager to say. But except that we are long-term value investors. We look for value and we're long-term. Um, I think the, you know, what you say actually raises a really important principle that I'd like to get across. The job of a money manager, the job of an uh investor, you said everybody has a prediction. We're not in the business of predicting. You know, if I think oil's gonna do this or gold's gonna do that, it really is not so important as looking at the risk and the reward from where we're starting. So if we look at oil today after spiking up on Iran, from where we are today, what is the risk? What is the reward? Yeah. That is what I'm looking at. I'm not looking at predicting always going to $187.23 because my Fibonacci number says that. I'm not looking at a prediction. I'm looking at the risk and the reward.

SPEAKER_03 2:22

And that's a good point. And if we bring it back to the medals, I mean I have to ask you, because you obviously you've argued for a long time that the the really what's driving gold isn't, you know, jewelry, it's not industrial demand, it's it's monetary and that lack within the government uh and paper currency. So I mean, after the quarter that we just had, and this little bit of a correction, um, is that thesis more intact for you or less?

SPEAKER_01 2:44

I would say it's still intact, and I'd call it a little more than a little correction. Yep. Um, no, it's still intact. I mean, is is anything the US government is doing making us think that they're getting their fiscal house in order? Nothing. And that goes to other countries around the world, whether it's Germany or Britain. Um you know, none of them is uh fiscally has fiscal rectitude. Um so no, but the the the thesis is very much intact. Mid-cycle corrections are not unusual. We must first of all acknowledge that. The prime example, of course, is 1975 when gold dropped 45%, um, and the stocks, of course, collapsed much more. So mid-cycle corrections, we had one in the middle of the 2000s, the noughties or whatever they call them. Um so a correction is is is is normal. And this one, of course, was set up by something we weren't necessarily expecting. Uh the oars price spike based on the Iran war, um, but not unexpected in many ways. Yeah.

SPEAKER_03 3:54

You know, that's an interesting point because it kind of brings us to this big move that I talked about in the intro. I mean, this is the week the AI trade has started to crack just a little bit. I mean, Nvidia, I think, shed something like a trillion dollars since May. Uh, Korea fell into a bear market, and a lot of that money is rotating straight into China. I mean, Alibaba jumped double digits this past week. Now, you invest globally, and that's what I want to talk to the audience about. So make the call. I mean, when money leaves the most create credit trade on earth, where does a value investor actually put it? Is it is it emerging markets?

SPEAKER_01 4:24

Is it China? Well, I I suppose the sort of people that were heavy into Nvidia probably aren't value investors to begin with. But I think there are incredible values out at the moment. The the foreign markets, that is the world, the world ex-US market, so I'm now talking from America. Foreign markets have underperformed the US market for 13 years now, up until last year. It's a long period. That's a long period of dominance of one market. And that dominance was driven primarily by big tech and AI. Because if you're a British investor, a Swiss investor, a Singaporean investor, whatever, if you want, you know, big tech, whether it's um Microsoft or or um Meta, you know, Facebook or all of these things, and particularly the big hyperscalers, you either go to China or you go to the US. And for a lot of people who didn't want to go to China, the US was the place to be. They had to come here. That's why the money was just pouring into the US. And I think as these things roll over, which they've been doing for a while now, I mean they've really started doing this since October, all of them. Uh but before I came to the show, before I came to the show, so the numbers are out of date, but it gives an illustration. Over the past four weeks, before I came to the show, uh Microsoft, Amazon, Nvidia were all down 15 to 20 percent when the SP was down 2%. So that rotation out of a big tech is already happening. Okay, so where does that money go? I think some of the money will go to tech companies in other countries, and you mentioned Alibaba. It's a perfect place. If I'm a if I'm a tech investor and I think Nvidia is very expensive relative to Alibaba, different businesses, of course, but still I will move money out of Nvidia into Alibaba. A lot of that money will rotate from big tech growth companies into both value and small cap. So you look at the value versus growth. As you know, growth has outperformed value for like 10 years now, more than 10 years, in the US. Um, this year to date, the Vanguard value fund is up over 14%, and the Vanguard Growth Fund is up 4%. So we're already seeing that rotation. Again, you look at big, big versus small. The Russell 2000 index is up more than 50% over the SP. So that rotation is already happening. Another big rotation is out of the US into global markets. The Morgan Stanley, Capital International, World X US, I'll just say foreign going forward, the foreign markets last year were up about 32% compared with 17% for the SP. So they almost did twice as much. This year they're outperforming again marginally, but they're outperforming again. So that rotation is already happening. And I think with the big cap tech uh the big tech, the big cap tech stocks um rolling over, that money, a lot of that money will go into foreign markets. Now, we were hoping, of course, that a lot of it will go into the laggards, things like, you know, the the the gold stocks, you can hardly call them laggards, but they're nowhere near where they should be. But into the into commodities and things like that. I think we will start to see money in the gold stocks from retail, from small institutions, from generalists, right, who are not in the gold market at the moment. Those people are just not in that market. We can talk about that if you want. Yeah, I want to. But I think we'll start to see that money go into gold and gold equities when the SP stops going up. And remember what I just said, even though Nvidia and Microsoft are down 15-20%, the SP is still up 2%. The guy that looks over woman, the guy that looks at his statement, his 401 statement once a month, is still seeing it go up. He doesn't look at the market breadth, which is deteriorating. He doesn't look at NVIDIA rolling over, he looks at his statement is going up every month. Once the SP stops going up for two or three months in a row, then that investor calls his advisor and says, hey, what's going on? Where should I put my money now?

SPEAKER_03 9:01

It's interesting. I mean, passive investing, think about going back years ago. How much has that changed the game? I mean, there's always a bid, there's always an ETF, there's always something. And then, you know, uh, has it changed fundamentally the way you look at the investment community?

SPEAKER_01 9:14

Well, absolutely. I mean, and and it's particularly 401k that it's linked with the 401k. So most of the money from the US, most US money going into the market is 401k money. And 401k money, as you know, um, you know, every year the the work, the employee gets a choice where do you want to put your money for the next year? Do you want to put it in bonds or in the US uh or in the US or or maybe a global fund? But they don't offer you a gold fund, they don't offer you an emerging market fund. And so people have just been saying, well, put it in the US, in the SP. So it's just a self-reinforcing mechanism. So long as people are employed, the employee matches, and that money just pours into SP funds. Yeah.

SPEAKER_03 10:02

And Adrian, I mean, you and I talked about this on the show before. I mean, for the entire bull market, it seems that the generalist investor, um, even the ordinary fund manager, I mean, they've they've sat this out basically. Uh you've talked a little bit about it there, of all this money coming out of crowded tech. Does gold, the wider resource space, you know, does it actually catch a piece of it, or is that just what we're hoping in the room?

SPEAKER_01 10:24

Well, I I think it will catch a piece of it. It's unfortunate it's coming at this time when the sentiment on gold is just so overwhelmingly extreme. The negative sentiment on gold equities among the broader investment public right now is, and I say this literally, the worst sentiment I have ever seen in my 50 years managing money in any sector at any time. So to illustrate that, you know they have these bull bear sentiment indexes on the gold on the stock market, on the dollar, on the dollar's pretty crowded right now as well. So the dollar's about 80% bullish. The gold miner bull bull sentiment is about 7% right now, which which is, I mean, it rarely gets that low. A normal bull bear sentiment index is 60-40, right? I mean, by its nature, any any market at any time has people who like it and people who don't like it. There's people buying, there's people selling. And so you don't normally get that extreme. But one day, two weeks ago, one day, two weeks ago, we actually had zero bullish. Now, I joke, well, I wasn't in the sample, they didn't ask me. It's a sample, obviously, but that they ask. But I have never, never seen bull zero bullish or zero bearish.

SPEAKER_03 11:48

Even with the run-up, never.

SPEAKER_01 11:50

Never.

SPEAKER_03 11:50

Wild. Never. So, I mean, let's get practical about where a value investor actually looks then, because I mean there it seems like there's four choices here when we talk about uh how to play this. You know, the medal itself, we got royalty companies, we got the the producers, the junior explorers. After this court cat after this quarter, I mean, in in plain kind of categories, you don't have to mention specific names. I mean, where do you see the clearest value right now?

SPEAKER_01 12:14

I I think there's value across the entire spectrum, to be honest with you. But to me, I would stick with the big cap, the big cap miners, for good big cap miners, and the big cap royalty companies, because that is where generalist money will first flow. So when money first flows back into the sector, because we're seeing these massive withdrawals, right? From GLD and from GDX, we're seeing these massive ongoing redemptions. But when money first comes back into the sector, unless you're in this room, you don't go and buy AJS Expiration as your first gold stock. You know, you buy Franco or Wheaton or Agnego or Sparrick or something or Newman. Um, so I think the money will flow into the big cap miners and the big cap royalty companies first, for valuations on those stocks. You said, did you say don't mention Well, you absolutely can mention it.

SPEAKER_03 13:07

Audience would love it.

SPEAKER_01 13:08

Well, I mean, just as an example, Agnego Eagle, which is a great company, Agnego Eagle had a little bit of a problem last week, and I literally mean a little bit of a problem. Market overreacted. You know, 40,000 to 80,000 ounces a year for three years lost lost production for Agnego is not a big deal.

SPEAKER_03 13:28

Um a lot of people to the exit fast.

SPEAKER_01 13:30

And they've uh they well run, remember, we should remember there is no environmental damage, there were no uh injuries, and most important most important, sorry, the injuries is important, but also importantly, it did not in any way affect the underground development, which is a odyssey, which is very important. And so to lose 40 to 80,000, 60 to 80 this year, 40 to 60 next, and 2028, it's it's it's it's it's meaningless. And Agnego actually um uh re-re um restated their guidance. They um makes sense. Yeah, I mean so but anyway to get to the valuation, Agnigo Eagle today is selling within a hair, within a hair of its all-time low price to free cash flow valuation. And you can look at other stocks the same. Scotiabank did a study which a lot of people have seen, and they looked at the top like, I think it was 20 producers over the last 70 years, and they looked at the valuations, a lot of valuations, price to NAV, price to Ibadah, price to you know, free cash flow, etc. etc. etc. And on every single one, we are now in the lowest quartile. The lowest quartile of history does not make sense when you've got such incredible cash flows. You know, we all get upset about oh, the price of oil's come, I mean the price of gold's come down, oh the price of oil's gone up. When your Agnego and you're all in sustaining costs last year are less than $1,340, so they go up 10%. It's a negative, but it's hardly the end of the world. Yeah, yeah. I mean, the the margins, as you know, are just phenomenal. And they won't last. I mean, this is a unique opportunity.

SPEAKER_03 15:21

Some value there. And what are your thoughts on the streamers? I mean, they got a little frothy there, I think of uh Wheaton and what have you. I mean, we've seen all these stocks come down on the equity side. Is it is it do you wait for a little bit more here?

SPEAKER_01 15:32

I think it all depends, and and this is why I say I'm not in the business of predicting. If I was in the business of predicting, I'd say, oh, gold's gonna do this and you buy today, you buy tomorrow. No, so you've got to look at the individual and their risk reward, their risk, their risk reward and their tolerance that I mean, sorry, start again. You've got to look at individual investor, what is what is um financial situation and financial uh obligations in the future are you've got to look at his risk tolerance, you know, how tolerant is he of risk and volatility, two different concepts, of course. But the other thing you've got to look at, which is obvious, is how is he already invested? So if I've got a conservative client, and I I don't think this violates any SEC rules, if I've got a conservative global account who opened three years ago and I gave that client a 20% gold stock allocation and I bought 20% in gold, well today, after even after the decline, even after me trimming the stocks, that client's now got 35% in gold. Do I buy more today? Of course not. Someone who came in on January and I put some money into the market, but I really didn't want to put it all to work, well, yeah, this is a good time to buy some more. So the bottom line is I think this is a good time to buy some more, but I think there's a I think there's a a high possibility, so 20, 30, 40%, I don't know, for gold could easily break the last low, and I don't know what it is right now as we're speaking, but easily break the last low and go down to 3600, easily. And if that happens, then of course the gold stocks go down dramatically. So I would invest some today in the biggest and the best, and I would keep some cash on the sidelines, you know, for future better prices.

SPEAKER_03 17:28

Still sitting here flirting around 40, 50, something like that. Um, you know, I gotta get to silver too.

SPEAKER_01 17:34

But I'm saying if it breaks a lot less low, it'll retest the lots low. If it breaks it, I think it'll go down a few hundred.

SPEAKER_03 17:41

Yeah, interesting. Sorry. Now, you've built your career buying good things when people hated else hated them, obviously. We know this. So put yourself kind of on the spot. I mean, what's the most hated, uh most left for kind of dead corner of the sector that you're actually buying right now?

SPEAKER_01 17:57

Absolutely, and and the thing about being a long-term value investor, there's many paths up the mountain. If you're a momentum investor, you have different criteria. But the thing about being a long-term value investor is you do buy things when they're out of favor, and the more out of favor, the better, right? You should never feel 100% comfortable by making a contrarian play. You should always feel a little bit nervous. So the most, the most um the most hated, the most out of favor things today would be gold, uh would be, and I'm not talking about today, today as opposed to yesterday, would be the oil stocks. Now, of course, you know, they never really did come down low enough uh for me to be an aggressive buyer, but on a longer term basis, oil is the most hated commodity. People have this uh perverse notion that you can run a modern industrial society without fossil fuels. Uh my answer to that is just look at Germany. Uh they're trying it and it's not working out very well. So we're going to need fossil fuels, but because of a narrative, because of a narrative, we're not gonna need your product in 15 years, we're not gonna need it, we don't want it, and we don't want it, and we're not willing to invest in your company, and we're a bank, and we're not gonna willing to lend you money, and I'm a fund manager, and I'm not willing to invest in your fund because you own an oil stock. That is about as hated as you can get. And what is the response of the industry to that? The logical response of the industry is not to invest in oil exploration. So we've had a period of 10-11 years now of extreme underinvestment. And the result of underinvestment is that in the future you don't have enough supply, right? If you're not investing now, you're not gonna have supply in five years' time. I wonder when this comes to, you know. Well, we're beginning to see a little more we're beginning to see a bit of a change because people just have to look at, you know, Britain, uh, which is following Germany's lead uh in a net zero. And then slightly reversed. I mean, in Britain, for example, but the uh I've forgotten what they call him, the environmental minister or something, he's just ordered that you're not allowed. They're gonna ban heated tow racks. I mean, give me a never mind. Don't stop me with that. But anyway, but the point is it is that's an example of just how hated it is.

SPEAKER_02 20:28

Yeah, yeah.

SPEAKER_01 20:29

Um, but um, yeah, when's I mean it's a little bit difficult on oil stocks right now because of the war. You know, we had the oil spike, the oil stocks ran up, we had the oil price come down.

SPEAKER_03 20:41

Dividends didn't change, no.

SPEAKER_01 20:43

Right. So I I I want this situation to settle down a bit before buying, but I would definitely be aggressive on the oil stocks. And some of the other markets. I mean, I just mentioned Britain. Yeah. Uh well, we haven't talked about foreign markets. I don't know if you haven't.

SPEAKER_03 20:57

Well, I do want to talk about foreign markets. I'd have to ask you about silver, because I mean, you know, I'm I'm looking at it today. I mean, it's sold off even harder than gold. But on pure value, uh, forget the hype. I mean, uh, where's the better dollar right now? Is it is it silver, the metal itself, silver miners?

SPEAKER_01 21:11

Well, I okay, so first of all, I think gold has better risk reward. There are scenarios, plausible scenarios I can imagine, where silver would be hurt more and on a longer-term basis than gold. So on a risk reward, I think gold is better. But if you're looking purely at potential, then I think silver is a better buy right now. But the thing people forget about, and I'll I'll answer the question, but you know, the silver miners are dependent upon the price of silver. So we'll start with silver. Thing people, there's two really important things about silver, and I'm not gonna go into all the um uh, you know, everything, but there's two things about silver we should re as an investor we should really focus on. One is we all know it's a more of an industrial metal than it's gold. But people seem to think that that industrial Is just forever. No, when the price of something goes up from $10 to $100, what does the end user do? They look for substitutes.

SPEAKER_03 22:10

They get creative.

SPEAKER_01 22:11

And they get creative and try to use less. And so uh Chinese solar manufacturers, silver represented 10%. When silver was at $10 or $12, silver represented 10% of the cost input. Right. You didn't really care about it. Was it $10? Was it $12? Was it 15? Who cares? You just use, buy it and use it. When it ran up to 60, 70, 80, 100, then it becomes very, very meaningful. And so what you find today, you can't substitute anything right now, as far as I know. You can't substitute something else for the silver in the solar panel, but you can become more efficient. And so the Chinese manufacturers now, their usage of silver, solar manufacturers, their usage of silver is down about 25%. Meaningful. And you're going to see that in anything and everything. Rick Rule likes to say it's a, I think it's a common phrase in the industry, but those the solution to high prices is high prices. And so high prices lead to substitution and to efficiencies in use. And people seem to forget that. They think, well, look at all this industrial demand, that's going to carry on. The other thing about silver, of course, is different from gold, is uh the retail um uh uh component of demand. And um in January, even in January, the gold ETFs were seeing outflows, the silver ETFs were seeing inflows. But when the silver, when the retail changed, that has an oversized impact, an oversized impact on the price of silver. And so it doesn't surprise me that today the silver silver's gone down more than gold. I think when we get down, I don't know what it is right now, but when we get under 60, 55 to 60, I would think that would be pretty much a low, and I would be looking to be pretty aggressive. But I would always favor in this market, I'm gonna favor the equities. Yeah. Um the thing about the other thing about silver, of course, as we all know, is that there are very few pure silver mines in the world. Some like 25% of silver production comes from silver mines. The rest is byproduct, some's byproduct of gold, but some's byproduct of lead or zinc. You know, and and the lead miner in Bolivia doesn't stop mining lead because the price of silver collapsed. It's only 8% of his byproduct credit anyway. So the supply does not respond to changes in the price, right? Because most of it's by product. But that flows over to the companies. There are not that many pure silver companies, whether they're silver producers or silver explorers. You look at Pan American, I think the second largest or third largest silver producer in the world, last year 20% or less than 20% of his revenue was in silver. But it's Pan American silver. Uh this year with the Mag acquisition, it'll be about, you know, depending on price, of course, it'll be about 23%. So still a minority of their revenue comes from silver. But when sil and I love Pan American, by the way, I don't want anyone to think that that means I don't like it. But when the silver price moves and people are looking for silver stocks, they will buy Pan American silver. Right. Yeah.

SPEAKER_03 25:33

Uh brilliant story, Pan American is as well. You know, you talked a little bit about what you were favoring there. You've also favored the royalty and streamers. I mean, you you know, for someone who's never uh heard that term, I mean, uh, we got a big audience. Explain it in English what the what the model does and what it actually protects you from that owning a miner doesn't.

SPEAKER_01 25:51

Okay, I'll try to be brief. So a royalty company is almost like an investment bank. You're an explorer, you're a developer, you're a miner, you need capital. So you come to the royalty company who will give you $100 million, and in exchange for that hundred million dollars, they get 1.5% of the gold you produce for the rest of a mine life. Or maybe they only get the byproduct, maybe you're a copper miner and they get the gold byproduct, which is a win-win because you don't really you and your investors don't really care about the barbaric metal, you only care about the copper. So the royalty or streaming company will give you the money and in return they get a piece of the action. And and and I think for the purposes of this, we can just talk about royalty companies to include streamers. Streamers are a little bit different, as you know. A streaming company will give you instead of a hundred million today, they'll give you sixty million, but then when they get the ounce of gold, they have to pay you a hundred dollars or fifty dollars per ounce, so they give you an ongoing payment. And really, there's a difference in the two. Um street uh streaming has better uh has tax advantages, royalties are on the title of the ground, so they pass from owner to owner, whereas a stream is a contract with the company. So if the company goes out of business, um the stream does not continue. Whereas a royalty, the stream continues. So those are the main differences. But whether a company, a developer or producer takes a stream or a royalty depends really just on the terms that they can get and what their objective is. If you're a developer and you know you're going to need X amount of money every year for CapEx, developing CapEx for the next 10 years, well, you'll take a stream so you get that ongoing cash flow.

SPEAKER_03 27:43

And do you think, I mean, I remember talking to Rick just a couple of weeks ago, and he, you know, he was talking a little bit about how right now uh there's not a huge ton of access to capital and for some of these guys. I mean, you've got to go to a streamer.

SPEAKER_01 27:55

Well, streams and royalties, uh streams and royalty companies, uh streaming royalty is now a tr it's just now a standard part of a financing package. When you're looking to develop a mine, you you have choices. You have to dilute yourself. And a lot of people say, I don't like giving away 1% off the top. Well, you have to dilute yourself. You either bring in a partner who owns part of the project or part of your company, or you raise equity and dilute everybody, or you raise debt, and the debt is your the repayment of your debt is your first obligation. I mean, what's the difference? Yeah. Or you do a royalty or stream. A royalty and stream is now a standard part of a financing package, and how much of each you use just depends on market circumstances. Right now, with the equity market the way it is, most companies and stocks where they are, most companies are not going to want to raise most of their capital in equity. Yeah, totally. Yeah.

SPEAKER_03 28:51

And I mean they're there, you know, the nothing's free, though, obviously. So I mean, where's the risk in the royalty model that you think investors kind of underestimate, especially at these prices?

SPEAKER_01 29:02

You know, I think you have to distinguish, differentiate between the large royalty companies and the smaller royalty companies. The big risk for the smaller royalty companies, which only have maybe one or two revenue sources, is that something goes wrong at one of the mines. And so they lose, you know, excuse me, 50% of a revenue source. That's not really an issue with a company like Franco. Even when Cobra Panama was shut down and it was their largest single revenue earner. It was a negative, of course, but it didn't devastate the company, and within a year they had uh their revenue was back above where it was before Cobra Panama was shut down. So you don't have that risk with the big ones. Franco Nevada, as an example, has revenue sources from over a hundred different projects. A hundred. So you don't have that kind of risk. I think the risk is is probably just valuation. Some people would say to me they think there's a risk, but these companies, waiting until a few weeks ago, until that last deal they did, sitting on two billion dollar cash, Franco with one billion, oh 1.5, sorry, 1.4, I think, $1.4 billion cash. Oh, these companies, they've grown so big they don't know where to put their money. BS. Can I say that? Yeah, of course you can. Of course they're putting money. Just uh just look at the last deal that Wheaton did, right? $1.5 billion on, I think, on that Antamina, second Antamina uh stream. These companies will find places to put their money. There's always there's always a need in the company, and that need, the royalty companies, and I include streamers, have been very good at adapting to the market as to what the market needs and wants at any particular time. You know, 15 years ago, you had the big global diversified companies like BHP and Rio Tinto with really bad and valley with really bad balance sheets. And so the streaming companies came in and said, listen, we'll help pay off your debt, you know, in return, we get a share of the future revenue. Um, I mean, they're very creative. They and that is not a need that you see today. You don't need to repair Rio's balance sheet, but there'll be a need.

SPEAKER_03 31:25

It's pretty interesting looking at those models. And I kind of want to finish on the part that actually separates the pros, and that's the discipline. You know, we've talked about this before. I mean, you've watched a lot of cycles. Uh, what's the most common kind of mistake that you see a resource investor making it exactly this point after a big run and a sharp correction?

SPEAKER_01 31:43

I I I I think it's being reactive rather than proactive. Um, we can talk about what you should have done, but that's sort of irrelevant at this point. But the the most important thing I would say is not to oversize your investments, right? So that if you really think it for your age and circumstances and risk tolerance and everything else, 20% in gold equities is appropriate. Well, don't buy 80% when the market's hot, right? Yeah, true. Because then, you know, you have a real problem when the market cools. But if you've rise size in investment, you tend not to react um to negative things. And the biggest thing people do down here is because they're overweight, because they never took any profits on the way up, they now panic. Yeah, of course.

SPEAKER_03 32:36

Yeah, we've seen it. I mean, you know, say somebody is watching kind of uh maybe underinvested and feels like they've missed it. I mean, you know. Right. What do you think? How do you actually stage money into the sector so that you're not betting it all on one day's price?

SPEAKER_01 32:50

It depends on your time horizon. I mean, if you've got a five to ten year time horizon, you've studied the gold market and you think everything I think and know means that gold will be higher and the commodities generally will be higher in five years, then you have to say to yourself, I don't really care too much about the next two weeks. Obviously, it's better to get a better entry point, but if you're long, if you've got a five-year time horizon, I would definitely put a if let's say you're just brand new, brand new, you just inherited a million dollars and you have nothing in gold. You're brand new. I frankly would be looking at putting at least 50% to work this week. At least 50%. Interesting. Okay. And I would put it in mostly the bigger cap, the good quality bigger caps, but I would also look at some of the lower risk, lower risk juniors are out there. Lower risk to me means primarily that they either have a good balance sheet or they have sources of income, or very importantly, um very importantly, they have really strong strategic shareholders. Remember, in this space, most of the companies, with very few exceptions, like say Origin, it has a royalty which is cash flowing, most of these companies have no revenue. If you have no revenue, you're going to have to raise money at some point. And the dilution, equity dilution, is for killer, is the killer for investments in this space. And so if a company doesn't have a strong balance sheet and doesn't have uh and doesn't have um a source of revenue, well, another source of revenue might be warrants. Do they have some in-the-money warrants that are going to expire? That'll give them an infusion of cash. But if they don't have all of that, look to see who owns the shares. If Ross Beattie owns the shares, Rick Rule owns the shares, let me say Adrian Dez in management owns the shares. We will be there, we're not charities, yeah, yeah, yeah. But we will be there when you need the capital. I mean, think of it this way: if if if we own 15% of a stock, I don't want that stock to dilute itself all to hell just so I can get a nice juicy warrant. No offense, Rick. I mean, I want to help. Yeah. We're not a charity, but I want the company to survive and to continue to grow. So look at who owns the company.

SPEAKER_03 35:22

You know, this actually is interesting because I mean you've been fairly uh constructive today, obviously, but flip that around. Uh what would you have to see that would actually kind of turn you cautious and move to the sidelines? On gold? Yeah.

SPEAKER_01 35:35

Um, the biggest thing would be a decline in central bank buying on a monthly or quarterly basis. Yeah, buyers are. Now, in in the first quarter of course, we saw a huge amount of very high profile sellers, primarily Turkey, the Gulf states, as well as Poland, Russia. So we saw some very high profile sellers, but we also saw some buying, and for the first quarter, we had very significant net buying. The net buying in the first quarter, despite those high profile sales, was still higher than the quarter before. April was up on uh April was up on March. So what would turn me really cautious, I mean very cautious, will be to see one, two, three quarters of net, not a high profile sale like Turkey, but net sales.

SPEAKER_03 36:28

Right? I mean it's a liquid asset. Yes. Yeah. That would make me very nervous. Um, after all these years of kind of running real money through booms and busts, I mean, what is that one rule or discipline that kind of kept you from getting wrecked in the moments when a lot of other people did?

SPEAKER_01 36:45

Well, you say one, there's probably ten of them. I was gonna say, I'm I'm being kind. Well, I think one would be, and and this sounds one is know yourself, yeah, and one is know what you're investing in. Know yourself. I can't tell you how many people when I talk to them to when they're opening an account and I talk to them, oh yeah, I'm I'm fine, I'm a long-term investor, I'm a long-term investor. Oh yeah, I'm fine with volatility, I can stand volatility, don't worry. Nobody, nobody, nobody has ever come to me and said, I'm a nervous Nelly. Nobody. So that's the first thing. Look in the mirror and really know yourself. If you cannot tolerate volatility, you need very low exposure to gold stocks because by their nature they are volatile, very volatile. Don't think you can get around it by using stop losses because you get taken out before the bull market is even begun. The second thing is know what you're investing in. Now that sounds obvious. Who's gonna buy something they don't know? Well, everybody, including me. My biggest mistakes, my biggest mistakes, where I've lost the most amount of money in my career, and thank goodness most of it was before I was managing other people's money, was investing in something which I didn't really know. You know, we're having this interview, and at the end you say, Hey Adrian, have you looked at this new sort of hydrogen machine that they're building in Montana or something? It's really good, it's only 10 cents, stocks come down. Um, if you're interested, I'll have the guy call you and he calls me. Oh, well, we're really closed, but if you really want in, I'll get you in. And there's a nice juicy warrant. Oh, yeah, let me do that.

SPEAKER_03 38:26

Of course, a little excitement.

SPEAKER_01 38:27

Um now that's an extreme case, but it's amazing how many people don't know what they invest in. And the important thing about knowing what you're investing in is you know how to react when there's a problem. I know Franco Nevada and Agnigo, for example, I know them intimately. When Cobra Panama happened and the stock fell 25%, I knew that was an overreaction and I knew it was a good time to buy. When Agnego had the rock thing last week and it well went down 5%. Now, of course, today, you know, maybe it doesn't look so good. I should have waited. But, you know, you can put that problem into perspective um because you know the company. Now let's just imagine you didn't know the company at all. But Adrian Day just said Agnego's a great company, so I bought it. Well, oh my gosh, they got a rock problem. Is that their biggest mine? Is that Melatic? Oh my gosh, what do you do? You panic.

SPEAKER_03 39:27

Yeah, exactly.

SPEAKER_01 39:28

And so knowing what you invest in is the most important thing.

SPEAKER_03 39:31

All right, Adrian Jay joining us here at the show. I appreciate it as always, my friend. Thank you very much. We're gonna have some great guests coming up all week over here at the Rule Symposium in Boca Reton. Stay with us.

SPEAKER_00 39:41

Kitco News, on site coverage of the Rule Symposium Natural Resource Investing, is presented by Paris Mining.