Doug Casey, chairman of Casey Research, speaks with Maurice Jackson of Proven and Probable about his investment philosophy, the state of the markets and where he is investing today.
Maurice Jackson: Today, we have a very special guest joining us to discuss the natural resource space and your portfolio, the legendary investor, philosopher, bestselling author and serially successful Doug Casey.
A number of speculators are confused and frustrated with the current state of the natural resource space. I hear comments that it just seems to be dragging along. In my experience, strong hands love the current value propositions and the weak hands fold.
Our listeners are seeking your wisdom on how to cultivate the mental fortitude that you’ve had to make you so successful over the years. Take us through for a moment your thought process when sentiment is low. What does Doug Casey, one of the most serially successful speculators, do?
Doug Casey: The first thing I try to do is watch my own psychology. None of us are immune from emotion. When I find that I’m getting enthusiastic and bullish about anything, I try to stop myself, and look at the other side of the coin.
We were speaking momentarily before we started this interview. You mentioned that at the upcoming Sprott Conference, there were 700 or 750 people registered last year. This year, it sounded like there’s only about two-thirds of that number. I find this very indicative.
Prices of these resource stocks are currently quite low. People are not talking about the commodities in general, or metals in particular. The way I see it is that the world situation is more explosive than ever. I’ve got to say that I’m a bull.
Maurice Jackson: Please provide us with a macro view of the current state of the natural resource space.
Doug Casey: The last time commodities peaked was way back in 2011. That’s seven years. It’s been, in effect, a seven-year bear market. There’ve been some bounces and some false starts along the way, but all this while, the general price level has been getting higher. Inflation is there, but the prices of all commodities have been going down in dollar terms, and the dollars themselves are worth less.
The longer this goes, the more bullish I have to become. I don’t know if the markets are going to turn around next week, next month, but I can’t believe that it’s going to go on yet another year. This is a time to prudently, and of course using the word “prudent” in the same sentence as speculation on natural resources is almost contradictory, but still I’ll say it, this is a time to try to accumulate really sound companies with good management, good properties, good financing, and so forth.
I expect, whether it’s next year, or two years, or three years from now, we’ll be in the middle of a raging bull market for these things, at which point I hope I can overcome my personal emotions and instead of buying more, sell what I have. But in order to do that, you need to buy at low points, and that was a low point.
Maurice Jackson: Is there a catalyst that you have your eye on that will spark the natural resource space?
Doug Casey: This is a dangerous time in the markets, as far as I’m concerned. You’ve got to remember the analogy that I like to use for the current economic climate. We entered a gigantic financial hurricane in 2007 and we went through the leading edge of that hurricane in 2008, and 2009, and part of 2010. Now, since then, it’s a very big hurricane, it’s got a very big eye in the storm, but I expect we’re approaching the trailing edge of the hurricane now, and it’s going to be much worse, and much different, and much longer lasting than what happened in 2008 and 2009.
Why do I say that? Because the governments of the world, not just the U.S. government, but all of the world’s governments working in concert, in fact, papered over the problems that came to the fore in 2008. They poured oil on the water, in effect, by creating trillions and trillions of currency units. That has put the general stock market in a bubble. It’s put the bond markets in a hyper-bubble with zero or even negative interest rates some places in the world. It’s bulled up the real estate market, especially in major cities.
Now, when we go back into the trailing edge of the storm, what’s it going to be like? They’ve already reduced interest rates as far as they can go, so they’ve shot that arrow from their quiver. They’ve created trillions and trillions of currency units all over the world. Are they going to do more of that? I guess so. All of these governments are looking for inflation, as if inflation was a good thing.
I think we’re headed for something of catastrophic proportions. The longer that we go on here in the eye of the storm, the more I liked it, because I like good times more than bad times, but I’m convinced bad times are coming.
Maurice Jackson: I’d like to hear what you’re doing to prepare for the bad times, but I have a two-fold question here first. How much of an effect is the trade war having on the space and how is the natural resource space impacted in the long term when First World nations participate in a trade war?
Doug Casey: First of all, the trade war, of course, is something that has been set off by Mr. Trump. I think I ought to make a brief comment on Trump. In general, I support him. Why? Because he’s not a card-carrying member of the Deep State, number one. Number two, he’s never …read more
From:: The Gold Report