Nick Hodge,
Publisher
June 23, 2026
Yesterday, I interviewed Rick Rule.
And I asked him a portfolio management question because I wanted to get past the usual market commentary.
Gold, oil, uranium, silver, deficits, taxes. Rick can talk about all of it, and he does it well. But I wanted to know something more useful for investors in our corner of the market.
How does he actually organize risk?
So I asked him about portfolio buckets:
“I’ve heard you say that you think about your portfolio in three buckets… core, active and passive.”
Rick corrected me.
There aren’t three buckets.
There are four.
The first is savings and liquidity. For Rick, that means gold and short-term liquidity, mostly in U.S. dollars.
“Gold, because I save in gold, and then liquidity, short-term liquidity, mostly U.S. dollar-denominated liquidity.”
He knows the dollar liquidity loses purchasing power. He doesn’t pretend otherwise. But he keeps it anyway because he has lived through enough liquidity panics to know that cash allows him to buy when everyone else is selling.
His second bucket is core holdings.
These are the companies he is willing to hold “through hell or high water.” They go down. Sometimes 20% or 30%. But if the business is good enough, and the long-term thesis is intact, those drawdowns are opportunities rather than threats.
The third bucket is what he called a growth or investment portfolio.
These are operating businesses with risk, but also real fundamentals and multi-year plans. He might be wrong and sell. He might be right in a bigger way than expected and buy more.
Then there is the fourth bucket.
The speculative bucket.
And this is where it gets interesting for junior resource investors.
Rick divides speculations into two categories: active and passive.
“The speculative bucket comes in two pieces, active and passive.”
Active speculations are positions where he still has capital at risk. He still has money on the table. He is still underwriting the next question, the next drill hole, the next financing, the next technical step.
Passive speculations are different.
These are positions where he has already sold enough stock to recover his original capital and pay the tax. He still likes the management team. He still likes the project. He still wants exposure to the next unanswered question.
But his original capital is no longer at risk.
Rick has a great phrase for that.
He calls it a “library card.”
“Let’s say I bought $100,000 worth of XYZ, and XYZ performed well… and the stock tripled. And I was able to sell enough stock to recoup my capital and pay the capital gains tax, but I still like the management team and I still like the prospect of the next unanswered question. I call that a library card. I keep it around, paid for.”
That is a wonderful way to think about junior mining speculation.
A library card is free access.
It is not a burden. It is not a daily obsession. It is not something that owns you emotionally.
It’s the chance to participate in risk-free upside.
You still follow it. You still care about it. But you are no longer watching every tick as if your household balance sheet depends on it.
That is a much healthier way to own high-risk exploration upside.
It also explains why selling is as important as buying.
Rick said he will take money off the table if the market gives him his target price before the underlying question has actually been answered.
If he buys a stock at $1 because he thinks the next drill program can validate a geological model, and he thinks success gets the stock to $3, he may sell if the stock reaches $3 merely in anticipation of the result.
“If I get an answer that is in line with the answer I predicted, and I get a move in the market that’s in line with what I thought would occur… it’s very likely that I will sell enough stock that I can get to or at least approach that point of no concern.”
That phrase matters too: “the point of no concern.”
That is where a speculation becomes something else.
It becomes optionality.
It becomes upside you can hold without being forced into bad emotional decisions during inevitable volatility.
This has direct bearing on private placements.
Most investors look at a private placement and ask one question: How cheap is the stock?
Rick is looking at more than that.
He wants to know the size of the prize, the cost of the test, and whether the management team understands the unanswered question they are raising money to answer.
He also cares about structure.
In today’s market, a lot of companies are raising money without warrants. Rick said he often passes on those.
“There are a lot of deals that are getting done without warrants. Mostly in those circumstances, I’ll pass. Mostly in those circumstances, the idea that I would get restricted stock, stock I can’t sell and not get a warrant, you know, I probably prefer to buy it in the market.”
That is the right way to think about it.
If you are taking restricted stock, you are giving up liquidity. You are accepting the risk that the market moves against you while your capital is locked. A warrant can compensate you for that risk.
But Rick does not view warrants as a free lunch or a one-way investor gimmick.
He sees them as a financing tool.
“I regard warrants both as an inducement for myself, but also as a tool for management teams. It really is a second equity financing that has no fees associated with it if they’re successful.”
That is the key.
A good private placement should work for both sides.
The investor gets leverage and compensation for risk. The company gets capital now and potentially more capital later if it performs. The warrant is part of the financing architecture.
That is why capital recovery matters so much.
In a junior market, the first job is survival. The second job is upside. The third job is staying rational long enough to benefit from both.
And this is also why I’m looking forward to the Rule Symposium next month.
The in-person event is sold out. But you can still attend virtually by signing up at this link.
Rick interviews the presenting companies before the conference. The sessions are recorded. The virtual format gives you a way to study the companies, listen to the questions, revisit the answers, and think about each opportunity in exactly this framework:
- What is the unanswered question?
- What is the cost of the test?
- What happens if the answer is yes?
- What happens if the answer is no?
If you register by July 3rd, you can use code VA50 at checkout for $50 off virtual attendance.
That is worthwhile because this is the type of market where preparation matters. You do not want to walk into a room, hear three stock names, write them down, and call that due diligence.
Rick made that point clearly in our conversation. Serious speculators need to know why they own something, what would make them buy more, and what would make them sell.
Before he buys, he wants management to articulate what question they are trying to answer. What action will answer it? What will a yes mean? What will a no mean? What question comes next?
That is not theory. That is the work.
A drill program should answer a question. A financing should fund a test. A warrant should compensate for risk. A sale should recover capital when the market gives you the chance.
That is how a junior stock moves from active speculation to passive “library card.”
And that is the lesson.
Speculation is not gambling when you define the question, the cost of the test, and the sell discipline before the result comes in.
It is still risky. It is still volatile. You will still be wrong plenty.
But you are no longer just buying stories.
You are buying unanswered questions with a plan for what to do when the market answers them.
Call it like you see it,
Nick Hodge
Publisher, Bizarro World