By Doug Casey
Interviewed by Louis James, Editor, International Speculator
L: Well, Doug, we’ve seen another quarter of high volatility and significant world events. What strikes you as most important at present?
Doug: Everything is still held together with chewing gum and baling wire, for which I’m grateful, considering what’s coming. It’s very clear to me that the global economy is in very much the same space as it was in 2007—in other words, on the edge of a precipice.
L: On the global economy, my question is this: If Obama and Yellen have saved the US and Merkel and Draghi are saving the EU, why are commodities selling off so dramatically? Iron, copper, oil—just about everything is selling off. How can an economy be recovering if it’s not using raw materials?
Doug: That’s another reason why I believe that the Greater Depression started in late 2007. During a depression, people are forced to consume less, and you see that reflected in the price of commodities—at least in real terms. This can be obscured in current price terms, depending on the debasement of the currency in question.
But it’s important to remember that commodities are only a good bet when they’re cycling upward, and that only lasts for a time. The longest trend of all is the downward trend of real commodities prices, as the march of technology makes them and the cost of life itself cheaper over time. Real commodity prices have been going down for at least 2,000 years, but probably 4,000 or 5,000 years—at least since the invention of agriculture. And I think they will continue falling, despite the fact that most large, high-grade, close-to-surface mineral deposits have been discovered.
L: Hubbert was right about “peak oil” in terms of West Texas Intermediate, but oil is still getting cheaper because of the fracking revolution.
Doug: Exactly. Because we’ve made so much money on commodities and because we believe in gold and silver as money, people think of us as commodity bulls. But actually, in the big picture, I’m a commodity bear, and always have been. Nanotech will transform city dumps into high-grade ore bodies. The asteroids will be mined at low cost. Ocean water will be processed economically. It’s simply a matter of technology and energy. The future could be—should be—better than we can even imagine.
L: I understand that—but I have to step in here and remind readers that gold is not a commodity—or at least not a regular commodity, since it’s also the most successful and enduring form of money ever devised.
Doug: Yes. No matter how many times we tell readers that no one can time the market, they still want to know what I think of the timing of the gold market.
So let me tell you that even I have been feeling a bit abused and unloved by the market over the last couple years. If I’m feeling that way, I’m sure the average person in the sector is feeling it in spades—and that’s actually a strong sign of a bottom.
It’s not as if we’re buying at $35 in 1971 or $250 in 2001—both times when gold was clearly a one-way street. But at $1,200, it’s very reasonable considering how explosive the world situation is.
Continue reading “Doug Casey: Signs of a Resource Sector Bottom”