| Where Should Your Money Be?
Laguna Beach, California
Wednesday, August 15, 2007
Stocks? No. Bonds? No. Real estate? Not with a
ten-foot pole,
Preparing for the "mania stage" in commodities,
A windfall of incendiary remarks and much more...
-------------------------
Eric Fry, reporting from Laguna Beach,
California...
Doug Casey, founder of Casey Research, attracts both
adulation and scorn – just like any individual who dares to offer an
unpopular message. But since Doug seems to delight in delivering a wide
variety of unpopular messages all at one time, he manages to attract
EXTREMELY impassioned reactions from fans and critics alike.
In short, Doug's perspectives never elicit a yawn.
At last month's Agora Wealth Symposium in Vancouver,
Canada, Doug deliver a fascinating 45-minute presentation that covered a
range of topics – from economics to politics. The presentation amused
and delighted most of the attendees, while not failing to annoy many
others. We were not surprised, therefore, when a survey of Symposium
attendees rated Doug Casey as the "Most Favorite Speaker." But Doug also
ranked fourth on the list of "Least Favorite Speakers."
Like we said, Doug never elicits a yawn...as you will
see for yourself in the snippet from his presentation that appears
below...
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---
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--------------------------------------------------------
Where Should Your Money Be?
By Doug Casey
You all came here for investment advice. Everybody's
got an opinion on where the market is going to go. So I'll give you my
opinion briefly...
Stocks: Do you want to be in the stock market now?
Well, I'd say no. The stock market was a bargain back in 1982 when the
Dow Jones Industrial Average was less than 1,000. Today the Dow's around
14,000! Typically, at serious market bottoms, the Dow yields about 6%. –
In 1932, for example. And I think what's coming up is going to be worse
than what happened in the 1930s. The market yielded 13% for a while. Do
you want to be in the stock market? No, I don't. I own very few common
industrial stocks. And the ones that I do own are mostly private
companies that I'm looking to take public. So that's a different
question. You don't want stocks, so forget about stocks.
Do you want bonds? No! Bonds are a triple threat to
your capital. A triple threat! The last bottom in the bond market, the
real bottom was in the early '80s. Treasury bonds were yielding 15%.
Bonds are a triple threat to your capital at this particular time. They
have been for some years, because we're really at the edge of the
waterfall.
Here's the triple threat: First, interest rates are
extremely low and I think interest rates are going to be extremely high
in the future. And, obviously, bond prices fluctuate inversely with
interest rates.
Number two: Credit risk. The world is very very
indebted today, and I don't want to be a lender when we could have a
financial credit collapse. So the second thing is credit risk. The third
thing is currency risk. The bonds that you're likely to buy are
denominated in US dollars, and the dollar is going to reach its
intrinsic value. In other words: zero.
Okay, so forget about stocks, forget about bonds. What
about cash? How about T-Bills? No, because T bills are denominated in
dollars, and the dollar is an "IOU nothing" issued by a corrupt and
bankrupt government. It's a floating abstraction. If you hold dollars
today, you're going to be as dumb as an Argentinean who held pesos ten
years ago. And you're going to have the same fate. So forget about that.
Okay, real estate. How can you go wrong with real
estate? Look, I've speculated in property all over the world, and it's
been very, very good to me. But we're suffering a world wide real estate
boom, which is just now coming to an end. So, no, I would not touch
property – certainly not in the US, absolutely not in the US – with a
ten foot pole. So forget about that.
I'm sorry I'm running over this without giving you
adequate reasons for these opinions. But I jut wanted to cover this
ground.
The other thing about property is taxes. You think you
own your property? You don't own your property. Try not paying your real
estate taxes for a year or two, you'll find out who really owns your
property. So, no, forget about real estate, certainly in the US, and not
even in Canada. I've got to say the market here is just too hot.
So where should your money be? Look, it's very simple:
Gold. That's it. I just don't know a cheaper or better
\place to put your money. Honestly, of all the things in the world, and
I look at everything – I'm very eclectic, looking at anything and
everything. I'll buy anything if the price is right – gold is the best
bargain in the world right now. It's not just going through the roof;
it's going to the moon. There's going to be a gold buying panic that's
going to knock your socks off in the next few years. The gold bull
market has not even gotten started...
I buy gold for safety, prudence, for insurance. I
don't view it as a speculation. I view it as money – so where am I
personally, what do I do with all my money? Well, not all of it, but a
lot of it: I speculate in mining stocks. It's always been a specialty of
mine. It's the most volatile market in the world, these little mining
stocks. More volatile than the internet stocks you saw ten years ago.
And in these stocks, we're in a three stage bull
market.
The "sale stage." That stage is long gone. That was
from about from the late 1990s to maybe 2003, where a lot of these
stocks were selling for less than the cash in the bank. They were really
cheap. And here in Vancouver, every week, back in 1999, a mining company
– a public vehicle that had "mining" in its name – turned itself into a
high-tech or internet company. That's how bad things were back then. So
from 2000 to 2003, we had a stealth bull market – when these stocks as a
whole went up five- or ten- to one. That's a lot. And people didn't even
know they existed, because for a whole generation, gold – and
commodities in general – had done nothing but go down. So you were
looked on as being an idiot, a dinosaur, if you were invested in these
things.
But then, by 2003 after they had already soared, a lot
of investors were discovering these stocks for the first time. Now we
reach the "wall of worry" stage – the second stage of a bull market.
We've been in that stage since 2003. Here is where the bulls and the
bears fight, and where commodity prices sometimes fall sharply for a
while, mostly because they had already gone up a lot during the
preceding years.
Copper has gone from $.60 to $4 dollars; nickel from
$2 to $20. So a lot of investors start predicting that prices are going
down. Others say, "No, no, they're going higher because of China and
India." All these arguments go back and forth, while commodities and
commodity prices bounce up and down. But this "wall of worry" stage is
drawing to a close.
We're going to go into the "mania stage." I think this
is going to happen. As the US dollar starts really turning into toilet
paper over the next few years, there's going to be a speculative bubble
in these kinds of resource stocks, and people are going to pile into
them. And stuff that six, seven years ago sold for 10 cents a share
could go for 50 or 100 dollars a share. It's going to be that insane. So
that's when I'm going to be hitting the bid, when everybody is asking me
for stock touts. So, I'm telling you, right now, you're still at the end
of the "wall of worry" stage. The easy money is long gone in these
stocks. The safe money is long gone. The big money is still ahead, but
it's going to be risky, volatile money.
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----------------------------------------------
Rude Endnote: Unfortunately, in the interest of time,
we had to leave about 80% of the transcript from Doug's presentation "on
the cutting-room floor." Missing from the transcript above, therefore,
were comments like:
"Politics is the process of organized theft. That's
all these people do in Washington, or Ottawa, is make laws to reallocate
people's money from Peter to Paul, and so it's theft, that's all it is."
And:
"It's the wrong thing to vote...It just encourages
them."
And, lastly:
"It's too late for peaceful change, but it's still too
early to line the bastards up against a wall and shoot them. But we're
getting there."
If you wish to catch Doug's unique and incendiary
remarks in their entirety, you may order the CD version of his
presentation here:
Vancouver Investment Symposium CD
Cheers,
Joel Bowman
Rude Awakening
aussiejoel@the-rude-awakening.com |
