Speculator Series Episode 1: Doug Casey
Published in on October 1, 2011
Cambridge House is pleased share this interview with legendary investment newsletter writer and author Doug Casey, founder and chairman of Casey Research. Doug is about the nicest guy you could meet for a man in the doom and gloom business, and we think business is good. So without further adieu, here he is, the one and only Doug Casey. Watch:
For those of you who can't sit down for all 30 minutes, we've included a few of my favourite sound bytes from the interview.
"There are several thousand so called mining stocks traded here in Vancouver. Most of them have nothing but a hope and a dream. Most of them don't have a prayer of finding anything. So it's fraught with danger for the average investor. All I can advise is to educate yourself. You've got to start reading books about geology and studying the markets, and then interviewing the guys that run these companies until you get a sense of who is real and who is a flake. That's what you've got to do. Most people don't do it, they just buy a stock because it's touted to them by anybody from a friend who knows less than they do to a taxi driver, so of course they lose money."
"It's good to remember that the junior mining sector is the most volatile sector on the planet, by far, more volatile than the internet stocks ever where during in the nineties. Volatility is your friend, actually, it gives you the opportunity to sell and buy at radical extremes. Through the 70's and 80's the junior resource market moved upwards of 1000 percent as a whole then lost 95% of its' value and then did the same several times in several cycles, so this is a wonderful opportunity it presents, and I wouldn't say that it's necessarily cheap right now, but I would say that the odds of a bubble being created are great, so I think this is a good time to start looking at quality issues."
"At some point a bubble will be ignited in the precious metals, and it is entirely likely as people panic out of dollars, they are going to go into securities because at least theoretically, stocks represent a claim on real wealth, so you put those two things together, a boom in gold, and possibly, a boom in the stock market - not based on fundamentals, but just based on people wanting to get out of dollars, and you could have a super boom. I wouldn't doubt that there are going to be some issues between now and if we talked again in 3 years that are going to have gone not just 10 to 1 but 50 to 1 even 100 to 1; it has happened in the past, it will happen again in the future. At the same time a lot of these stocks will blow up and dry away because the only gold they have is printed on the face of their certificate, they don't have any in the ground."
"If you want to speculate in something, and people are going to be forced to speculate in the years to come, just to hide from the consequences of the governments' inflation of the currency, I think that junior mining stocks, for people that know what they're doing, are one of the best places to be. I think there's also likely to be a bubble that develops in biotech stocks, for a number of reasons, and I speak as a longtime amateur science buff, I'm friendly to those as well. And I'll give you a third speculation that I think is worth while, and that's being short bonds. And that's a triple play if you're short bonds at this point which are at all time highs. Interest rates have to go up, way up, which is inverse to the fluctuation of bonds, so thats number one. Number two, the dollar is going to collapse, so that's also going to destroy bonds. Number 3, you have the default risk, and that premium is going to go up. So if you're looking for one sure speculation over the next ten years get short long term government bonds. So those three, theres lots of good speculations, theres always a new train leaving the station."
Don’t forget to sign up for Doug’s free Conversations with Casey.
For those of you who can't sit down for all 30 minutes, we've included a few of my favourite sound bytes from the interview.
"There are several thousand so called mining stocks traded here in Vancouver. Most of them have nothing but a hope and a dream. Most of them don't have a prayer of finding anything. So it's fraught with danger for the average investor. All I can advise is to educate yourself. You've got to start reading books about geology and studying the markets, and then interviewing the guys that run these companies until you get a sense of who is real and who is a flake. That's what you've got to do. Most people don't do it, they just buy a stock because it's touted to them by anybody from a friend who knows less than they do to a taxi driver, so of course they lose money."
"It's good to remember that the junior mining sector is the most volatile sector on the planet, by far, more volatile than the internet stocks ever where during in the nineties. Volatility is your friend, actually, it gives you the opportunity to sell and buy at radical extremes. Through the 70's and 80's the junior resource market moved upwards of 1000 percent as a whole then lost 95% of its' value and then did the same several times in several cycles, so this is a wonderful opportunity it presents, and I wouldn't say that it's necessarily cheap right now, but I would say that the odds of a bubble being created are great, so I think this is a good time to start looking at quality issues."
"At some point a bubble will be ignited in the precious metals, and it is entirely likely as people panic out of dollars, they are going to go into securities because at least theoretically, stocks represent a claim on real wealth, so you put those two things together, a boom in gold, and possibly, a boom in the stock market - not based on fundamentals, but just based on people wanting to get out of dollars, and you could have a super boom. I wouldn't doubt that there are going to be some issues between now and if we talked again in 3 years that are going to have gone not just 10 to 1 but 50 to 1 even 100 to 1; it has happened in the past, it will happen again in the future. At the same time a lot of these stocks will blow up and dry away because the only gold they have is printed on the face of their certificate, they don't have any in the ground."
"If you want to speculate in something, and people are going to be forced to speculate in the years to come, just to hide from the consequences of the governments' inflation of the currency, I think that junior mining stocks, for people that know what they're doing, are one of the best places to be. I think there's also likely to be a bubble that develops in biotech stocks, for a number of reasons, and I speak as a longtime amateur science buff, I'm friendly to those as well. And I'll give you a third speculation that I think is worth while, and that's being short bonds. And that's a triple play if you're short bonds at this point which are at all time highs. Interest rates have to go up, way up, which is inverse to the fluctuation of bonds, so thats number one. Number two, the dollar is going to collapse, so that's also going to destroy bonds. Number 3, you have the default risk, and that premium is going to go up. So if you're looking for one sure speculation over the next ten years get short long term government bonds. So those three, theres lots of good speculations, theres always a new train leaving the station."
Don’t forget to sign up for Doug’s free Conversations with Casey.
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