The veteran resource investor made the comment during a July 7, 2026, interview with David Lin of The David Lin Report, recorded from the floor of the Rule Symposium in Boca Raton, Florida. Rule is the co-founder of Battle Bank, the proprietor of Rule Investment Media, and the former CEO of Sprott US.
“If I had to think about one thing that really scares me, that’s it,” Rule told Lin.
A Liquidity Mismatch Inside Junk Bond ETFs
Rule explained that high-yield and subprime credit ETFs hold trillions of dollars in combined assets, much of it owned by retail investors who do not understand the underlying credit risk. The ETF shares trade freely, he said, but many of the bonds inside them do not.
Some of those bonds trade only once every six weeks, according to Rule. If redemptions force a fund manager to sell that debt overnight, the sale price will reflect the seller’s distress rather than the broader market, he said.
Rule tied that risk directly to interest rates. Higher rates make it harder for stressed borrowers to keep paying, and credit that is already struggling at current rates would struggle more if rates climbed further, he said.
Why the Fed Has Less Room Than It Did in 2008
Rule compared the current setup to the 2008 financial crisis, when the federal government stepped in to backstop major institutions. He said the difference now is the size of the debt behind that promise.
Federal debt stood near 40% of GDP in 2008, Rule said. He put the current figure near 120%, before accounting for unfunded entitlement obligations. That leaves the Federal Reserve with less capacity to intervene without resorting to money creation, which Rule said would carry inflationary consequences.
Rule pointed to bond market behavior as evidence that the market is already pricing that constraint. The government has been buying longer-dated Treasurys while issuing more short-term debt to fund the purchases, he said, yet long bond yields keep climbing anyway. He described that as investors demanding compensation for both time and risk.
A Soft Outlook for the Second Half of 2026
Rule expects the second half of 2026 to be weak across markets, citing reduced pressure on the Fed to cut rates and a stronger dollar as a result. He said commodities priced in dollars, including gold, would likely soften on that basis.
He also pointed to the recent Gulf conflict and the oil price spike that followed, arguing it pulled liquidity out of the broader economy in a way that could show up as economic weakness later in the year. Rule said he expects copper and oil prices to reflect that pressure.
Despite the near term caution on gold prices, Rule said gold mining equities are fairly priced relative to the metal for only the fourth time in his career, and he expects the nominal gold price to be markedly higher within a decade. He said he is allocating more heavily to oil and gas stocks over the next six months, including Canadian producers, an area he said he understands well enough to navigate the political risk tied to Prime Minister Mark Carney’s energy policy stance.
Inside the Rule Symposium
Rule said his firm vetted every exhibitor before the four-day conference, accepting 68 companies and rejecting 135. He said the goal is to let attendees allocate their time efficiently and to offer refunds if they feel the event did not deliver value.
He noted that junior resource stocks fell roughly 40% into the conference, compressing valuations across both strong and weak companies alike. Rule said that the selloff created value on the exhibit floor that would not otherwise exist.
“The time to take hors d’oeuvres is when they’re passing them out,” Rule stated.
On mergers, Rule cited BHP’s $4.2 billion transaction with Wheaton Precious Metals as evidence that royalty and streaming companies retain a lower cost of capital advantage even as interest rates rise, a dynamic he said points to more large deals ahead rather than behind the sector.
Rule said he screens companies for three things before including them in his rankings: a management team with a track record relevant to the specific project, sufficient scale, and a clear answer for how the company plans to add value.
