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January 25, 2019 | Beware Venezuela Opportunity Hype

Lobo Tiggre, aka Louis James, is the founder and CEO of Louis James LLC, and the principal analyst and editor of the Independent Speculator. He researched and recommended speculative opportunities in Casey Research publications from 2004 to 2018, writing under the name “Louis James.” While with Casey Research, he learned the ins and outs of resource speculation from the legendary speculator Doug Casey. Although frequently mistaken for one, Mr. Tiggre is not a professional geologist. However, his long tutelage under world-class geologists, writers, and investors resulted in an exceptional track record. The average of the yearly gains published for the flagship Casey publication, the International Speculator, was 18.5% per year during Tiggre’s time with the publication. A fully transparent, documented, and verifiable track record is a central feature of services going forward. Another key feature is that Mr. Tiggre will put his own money into the speculations he writes about, so his readers will always know he has “skin in the game” with them

The long-awaited collapse of the Maduro dictatorship in Venezuela seems to be at hand.

Dogmatic adherence to catastrophic socialist policies bankrupted the country years ago. Large portions of those people able to leave the place have done so. Now many of those left are back in the streets fighting an illegitimate government.

The country’s legislature has, as required by its constitution, named a new president after internal and external observers declared Maduro’s victory in last year’s election to be fraudulent. The problem is that the armed forces still back Maduro. That may change soon, as the death toll of the protests rises.

Why does this matter to anyone outside Venezuela?

Because the country is an oil-rich member of OPEC, as well as a place well endowed with other valuable resources, notably including gold.

It won’t be long after Maduro is out—and maybe even before—that we’ll see articles written about what a great contrarian opportunity Venezuela is. These pitches will have some basis in reality, as the country is wealthy in natural resources. Assets in the country will be selling dirt cheap. But… those assets will deserve their fire-sale valuations.

Ousting Maduro won’t make Venezuela a safe or good place to work.

Installing a new government won’t make the people realize that it was the socialist policies that destroyed their economy—not the corruption, not the United States, not Maduro’s personal flaws, nor anything else that will be blamed.

And even in the unlikely event there’s new, pro-business leadership, it will be tough to persuade the people to embrace a freer economy. And even if that happens, it will take years to make the transition.

When there’s stable, pro-business rule of law and popular support for foreign investment among the people of Venezuela and their representatives, that’s when it will be time to look for opportunities in Venezuela.

Before then, the country will just be a hyped-up money trap.

You may remember when the Taliban collapsed in Afghanistan and the media hyped the trillions of dollars of natural resources Western companies could now move in on. But can you remember hearing of anyone making any money on that supposedly gold contrarian opportunity?

The same hype hit the airwaves when Castro stepped down in Cuba. I don’t see miners making money on that yet either.

Don’t get me wrong. I’ve been to Venezuela’s gold fields. Unlike the hypothetical resources of Afghanistan and Cuba, there really are a lot of known deposits there. Same with the oil. Another plus for business is that the people will be desperate for foreign investment and the jobs that will create.

But that doesn’t mean the legal, regulatory, and social environment will be conducive to Gringos, Chinos, or even Rusos to come in and do business unmolested.

I look forward to the day when Venezuela becomes a great place to do business again.

That day will not be the day Maduro loses power—nor will it be anytime soon after.

Caveat emptor,

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January 25th, 2019

Posted In: Louis James

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