Back to Basics with Doug Casey and Rick Rule

Rick RuleDoug Casey and Rick Rule get us Back to Basics with Gold…


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From Rick Rule, Sprott’s Thoughts:

In the lead up to the 2016 Sprott Natural Resource Symposium on July 26th – 29th, Rick conducted a series of interviews with various industry experts and keynote speakers, and Sprott’s Thoughts readers get the first review.

In his first interview, he picks investing veteran Doug Casey, and no subject is sacred. In 40 minutes, Doug offers his poignant views on gold, gold stocks, real estate, and even politics, both international and right here at home. As an American ex-pat living in South America, Doug has a different point of view on the U.S. economy. He is on the outside looking in, and what he sees is enough to make us pause.

First, he gets us back to basics with gold. When it comes to looking at gold as currency, there’s five words to know: durable, divisible, convenient, consistent, and value. Surprisingly, few other commodities or elements display these five characteristics. Fiat currency, by contrast, has all but one: value. There is no intrinsic value to paper currency, Doug reminds us, just paper promises.

Gold is also unique among other commodities, and thanks in part to its position as an alternative currency, it has enjoyed a rebound in 2016 when other raw materials have not. In part, a strong US dollar is to blame, but Rick wanted to know if a weakening dollar would be enough to encourage a synchronized recovery for all commodities, not just gold. Doug believes gold plays by a different set of rules than copper, uranium, aluminum and so on.

So how, Rick asks, should we think about junior gold stocks?

“They’re not for everybody.” The industry has changed over the past decades. The easy to find deposits are gone. Deposits today have to be massive and incredibly high grade. They are capital intensive, time intensive, management intensive, equipment intensive.  And, Doug reminds us, the intrinsic value of most of these junior gold companies are, well, nil. But,  the chance of running into massively outsized returns, the ones that can increase the original investment 10-, 20-, 50-fold, is why we play in the junior gold stocks’ sandbox. Junior gold stocks are a leverage play on the price of gold, and they are not suitable for everyone.

And just for good measure, Doug weighs in on the current cohort of Presidential hopefuls. “They’re all disasters. And therefore, they’re all good for gold.”

As far as the broader U.S. economy is concerned, Doug thinks we are in the eye of the hurricane, and the calm we’ve enjoyed after the global financial crisis in 2008 and 2009 is soon to be over.

It’s a thought provoking interview, and one from which all investors, whether in gold, stocks, or real estate, can learn a thing or two.

Listen to the full interview HERE.

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