Deficit math shows gold’s not done, Rule says 

By Henry Lazenby in Boca Raton, Florida 

Rick Rule has an axiom for mining investors facing turbulent markets: “You are either a contrarian or you’re going to be a victim.” 

This dictum set the tone early last month at the Rule Investment Symposium in Boca Raton, Fla., where mining investment veterans debated the arithmetic driving today’s resource sector bets amid rising inflation, ballooning government debt and tightening capital conditions. 

Now is precisely when investors should look at mining, argues Rule, the renowned mining financier who has managed hundreds of millions in investments and shaped the sector for over four decades. He says that even with economic uncertainty and the growing U.S. federal debt, which now exceeds $36.6 trillion (C$50.3 trillion) and increases by at least $2 trillion each year, there are good opportunities for contrarian investors. 

“When your outgo exceeds your income, your upkeep becomes your downfall,” he said, citing a short poem learned early in his career to underline his point about unsustainable spending. 

For Rule, mining – particularly in gold and critical minerals – represents an ideal hedge as inflation erodes the purchasing power of the U.S. dollar. He likens the current era to the inflationary 1970s, when gold prices soared 30-fold. “The spenders owe it to the savers,” Rule said. “There are more spenders than savers. You do the math.” 

‘Day of reckoning’

Other industry heavyweights at the conference tempered Rule’s bullish contrarianism with a strong dose of realism. 

Frank Giustra, another accomplished resource investor who is CEO of Fiore Group, agreed gold is critical in this environment but warned the risks are escalating for the very reason that Rule cites as an opportunity: America’s growing debt problem.  

“There will be a day of reckoning and it’s coming faster than anyone can possibly imagine,” Giustra told The Northern Miner in an interview.  

He sees this showdown materializing through a potential crisis in U.S. Treasury markets, where investors could revolt, pushing yields dramatically higher and stoking financial instability. 

“Politicians have a Sophie’s Choice,” Giustra added, saying they must either drastically reduce non-discretionary and military spending – “which means not getting re-elected” – or maintain the status quo and continue down a path of “fiscal irresponsibility.” 

Access risks 

SCP Resource Finance Chair Peter Grosskopf further toned down Rule’s enthusiasm, highlighting significant risks, especially regarding capital access.  

The Rule Symposium attracted a record number of attendees. Credit: Henry Lazenby

“Junior miners are having trouble raising funds, especially those below a $500-million market cap,” he said. “Banks have backed away significantly from smaller miners and exploration-stage companies.” 

Grosskopf also underlined that inflationary pressures are sharply increasing operational and capital costs, squeezing margins and making project economics riskier.  

“Speculative money isn’t flowing as easily as before,” he told The Northern Miner. 

Monetary anchor

A macroeconomic panel added global context for conference goers. It included Giustra, financial analysts Jim Rickards from Paradigm Press, Grant Williams, who publishes “Things that make you go Hmmm…”, and Nomi Prins of Prinsights Global. They discussed how the U.S. woes compare to changes in global trade and monetary systems. 

Since the U.S. imposed sanctions against Russia’s central bank in 2022, emerging markets have been increasingly motivated to reduce their dollar dependence, Williams said. 

“All these countries who’ve been good actors within the dollar sphere for many years now see the dollar becoming less convenient,” he said. 

Prins underlined the aggressive gold buying of central banks as evidence of waning dollar confidence. Central banks have added record amounts of gold to reserves in recent years, with China and some Middle Eastern countries standing out. 

“Gold is now a new monetary anchor,” Prins said, “to backstop reserves as fiat currencies erode.” 

Structurally challenged 

Central banks are expected to continue their gold accumulation, which Giustra called “covert buying.” He suggested China likely held 10 times the gold it officially reports. 

Rickards challenged widely held views on central banks selling U.S. Treasuries. Rather than indicating a rejection of U.S. bonds, the sales are happening because they can bring in cash immediately amid global dollar shortages, he said. 

Jim Rickards from Paradigm Press and Grant Williams, who publishes the “Things that make you go Hmmm…” financial newsletter. Credit: Henry Lazenby

But the panelists all agreed the U.S. faces deep structural challenges. 

America could lower its debt-to-GDP ratio, Rickards argued, as it did after World War II when fiscal discipline, infrastructure investments and expanding energy production all contributed to drive growth. Giustra is skeptical that the feat can be repeated in 2025. 

“Where are you going to put all these treasuries?” he asked. He suggested that requiring investors to purchase government debt might become necessary. 

Gold’s moment 

As a hedge against turmoil, the panelists unanimously favour the yellow metal.  

“Gold is your hedge against all human stupidity,” Giustra quipped. 

Danielle DiMartino Booth, CEO of QI Research and a former adviser to Federal Reserve Bank of Dallas President Richard Fisher, echoed these sentiments. Gold is a protection against broader social and economic unrest as national unity is stressed when states such as Florida and Texas openly consider economic sovereignty, she said. 

As inflation cuts into buying power, fiscal gaps will widen and alliances will change, DiMartino Booth said. Because of this, tangible assets like gold and key minerals will be safer for investors. 

Default risk

Despite gold’s allure, mining-related investments are anything but risk-free. 

A “looming maturity wall” of debt among resource companies could trigger defaults, Grosskopf warned. This risk, combined with rising interest rates from America’s fiscal problems, means investors need clearer paths to cash flow, robust project economics and manageable debt levels. 

Despite these cautions, some opportunities remain highly attractive. Successful contrarian mining investors must carefully pick well-managed companies with proven assets, disciplined management and strategic minerals central to the energy transition, Rule said. 

Giustra echoed this focus on strategic commodities, noting gold’s re-monetization and growing importance to central banks. Gold’s reclassification on July 1 as a Basel III Tier One asset positions it as essential for global financial stability. 

Now more than ever, quality matters, Grosskopf stressed.  

“The market is differentiating between quality and speculative projects,” he said. 

Rule’s symposium highlighted a critical reality for mining investors: the rewards are significant, but risks have never been higher. As debt burdens climb and inflationary pressures persist, successful mining investments will require discipline, rigorous analysis and a willingness to act when others hesitate.  

Rule put it this way: “When other people panic, you’ve got to pounce.”.