Albert welcomes longtime friends Rick Rule and Richard Maybury for a discussion on foreign markets and mentoring.

Click for Show Transcript

Albert Lu: Welcome to The Power & Market Report. I’m Albert Lu. I’m joined now by two regular guests of the show, Rick Rule, the President and CEO of Sprott US Holdings and Richard Maybury, the President of Henry Madison Research.

Gentlemen, welcome to The Power & Market Report. It’s a pleasure to have you onboard.

Richard Maybury: Thank you.

Rick Rule: Pleasure to be with you.

Albert Lu: I want to talk about a little bit of geopolitics and a little bit of investing, international investing, given both of your expertise and I want to start with Russia and direct this question to Richard Maybury. Richard, you’ve been talking a lot about China lately but I want you to tell us what you do think of the prospects of the US going to war with Russia at some point or I would add to that. Are we actually in a proxy war right now?

Richard Maybury: Yeah. I think it’s very accurate to say that we’re in a proxy war right now. The Russian government apparently wants to reestablish the hegemony over its part of the world that it had back when it was the Soviet Union and they’re moving in that direction and making some progress on it. As far as US and Russia going to war with each other, I think the probability going to war directly with each other, I think the probability of that is pretty close to zero. However, there’s always the possibility of an accidental war. Now this was a big thing that people talked about a lot back in the 60s and 70s and they pretty much lost a realization of it.

If you want to see something that’s fairly realistic, there’s an old movie in 1965. It was called The Bedford Incident and it shows how a nuclear war between the US and Russia could start accidentally and I’m sure that the military forces, the generals and the admirals on both sides realize that risk still exists.

Somebody could screw up and start a nuclear war accidentally. So they are very, very cautious about it and so there’s almost no chance that they will take a risk of going head to head against each other in a conventional war because it might escalate into a nuclear war.

But the proxy war idea, I think that’s actually going on right now. That has already started. The US and NATO have been moving forces in the direction of Russia which always scares the Russian people to death and you’ve got the conflicts in the Ukraine Crimea. It’s pretty clear that the Russian government is planning to reestablish the Russian empire and that Washington doesn’t want it to happen. But I think that again, they aren’t likely to go head to head with each other but there will be more call them “little Vietnams” popping up around that area quite a while.

Albert Lu: Thanks for that. Turning to the investing side with Rick Rule, regular listener Michael Gephart asked the question about the general evaluation of Russian oil producers and the future of Russian shale gas. What would you tell him?

Rick Rule: Two different answers. I think that the large resource companies in Russia including the oil and gas companies and the mining companies, at least with regards Norilsk in the mining side are on a global basis pretty cheap. One could argue that they deserve to be cheap given the lack of transparency in the Russian market. On the other hand, perhaps they deserve a premium as well because of the absence of political risk with regards to their operations in Russia.

I guarantee you that if the Russians proposed to build something like the Keystone Pipeline, there wouldn’t have been 15 years of debate.