No Such Thing As a Sure Thing–But Sometimes It’s Close

No Such Thing As a Sure Thing–But Sometimes It’s Close

By Louis James

In the investment world, there’s no such thing as a sure thing, and if anyone tells you they have such an investment, you should run the other way. Fast. But sometimes, the odds are so clearly stacked in one direction that it comes pretty close.

How can one be so sure? Due diligence, of course; the devil is in the details—and so is the profit.

It’s impossible to illustrate this without tooting my own horn a bit, so please bear with me on that. The point of the story is critical to investments in all sectors and should help you with your own.

My sector—my specialty—is mining. I’ve been kicking rocks around the world for more than a decade now, learning geology and engineering and metallurgy from world-class experts in their fields. But the point is to make money, not just to figure out nature’s geological puzzles, so I’ve also immersed myself in the world of legendary investors, learning all I can from their successes and failures.

The result is that I now have an encyclopedia of mineral exploration and exploitation projects in my head, as well as experience with thousands of companies in the field—and the outcomes of their efforts. This enables me to very quickly sort the wheat from the chaff.

Continue reading “No Such Thing As a Sure Thing–But Sometimes It’s Close”

A Cure for Metals Investor Malaise

A Cure for Metals Investor Malaise

By Louis James

Markets fluctuate. Sectors cycle. Investors love and hate these facts, but we all know that if it were not so, it would be impossible to buy low and sell high.

The problem, of course, is that no one can time the market consistently. That makes it hard to know when low is low enough to make buying a likely one-way street and when it’s high enough to make selling a stroke of genius.

But this is a good thing: if it were easy, anyone could do it, everyone would try, and there’d be no profit in it. It is the very fact that it’s hard—that it takes true contrarian guts to bet against the herd and buy low, and buck the trend and sell high—that makes extraordinary profits in rational speculation possible.

Still, hard is hard, and many would-be speculators end up buying high, when “everyone” says a market sector will keep rising, and selling low, when “everyone” hates the sector precisely because it has become objectively undervalued.

Continue reading “A Cure for Metals Investor Malaise”

Will Gold Win Out Against the US Dollar?

Will Gold Win Out Against the US Dollar?

By Louis James

It is an essential impossibility to solve problems created by excess debt and artificial liquidity with more of the same. That’s our credo here at Casey Research, and the reason why we believe the gold price will turn around and not only go higher, but much, much higher.

While fellow investors around the world may not agree with gold-loving contrarians like us, they are buyers: gold is up in euros and almost everything else, except the dollar.

The dollar’s rise has been strong and seems all but unstoppable. But look at it in big-picture terms, as in the chart below, and ask yourself how sustainable the situation is.

I’m skeptical of reading too much into such charts. A peak like the one in the early 1980s would certainly take the USD much higher, and for several years to come. But still, this is an aberration. It’s not the new normal, but rather the new abnormal.

Continue reading “Will Gold Win Out Against the US Dollar?”

Reality Always Wins… But Never on Schedule

Reality Always Wins… But Never on Schedule

By Louis James, Chief Metals & Mining Investment Strategist

“Expect the worst and you won’t be disappointed” is true enough, but it’s a miserable way to go through life.

For investors, expecting the worst is paralyzing, a reason to do nothing.

But when a market gets beaten up the way the natural-resource sector has been over the last few years, pessimism comes to dominate the chatter in boardrooms, blogs, and cocktail parties the way mold takes over a shower. It’s a blight.

“There are no buyers left in the market; it will take years to recover.”

“There’s no financing available, so everything will grind to a halt for years to come.”

“Don’t step on that black spot.”

Recent experience in the resource sector has been so bruising that the wounded have turned to pessimism as a psychological defense, to feel wise and experienced, or at least a little less foolish. An upbeat assessment wouldn’t just risk more money, it would risk more pain.

What Is

Opinions are plentiful, so rather than offering one more, let me summarize what I know for certain: price and value are related, but they often diverge.

Continue reading “Reality Always Wins… But Never on Schedule”

How to Get Struck by Lightning

How to Get Struck by Lightning

By Louis James, Chief Metals & Mining Investment Strategist

Two M&A deals have already delivered paydays for investors in junior mining stocks this year: Goldcorp’s half-billion-dollar purchase of Probe Mines in Canada, and Tahoe Resources’ billion-dollar acquisition of Rio Alto Mining, a Peruvian gold producer.

Now the arrival of a new, well-capitalized bidder for mining properties—X2 Resources—has raised prospects for more blockbuster deals like last year’s $3-billion takeover of Osisko Mining by Agnico Eagle and Yamana Gold. X2—a still-private UK company headed by Mick Davis, former CEO of mining giant Xstrata—has raised $5.6 billion to buy up “blue chip” assets in the mining sector.

Given Xstrata’s pedigree as a base metals company, I don’t expect X2 to go stalking any of our favorite gold exploration juniors—or even base metals juniors, for that matter. The company is more likely to buy deposits and operations from major mining companies that are looking to simplify and focus their businesses.

I have some guesses as to which properties will appeal the most to X2, but even if I’m right, those guesses wouldn’t be easy for investors to profit from. Suppose X2 lands a great deal for itself, taking a prize asset off the hands of a big mining company fighting reduced margins. That might be good news for X2, but it’s not a public company you can invest in, so you’re not invited to the party. For the seller, it’s an unhappy fire sale, nothing for shareholders to celebrate.

Knock-On Effects

To find M&A opportunity in junior mining stocks, look a little further down the road.

Continue reading “How to Get Struck by Lightning”

The Single Most Important Lesson from the Casey Summit

The Single Most Important Lesson from the Casey Summit

By Louis James, Chief Metals & Mining Investment Strategist

At our San Antonio summit, Rick Rule gave a talk that, as always, was well reasoned, packed with facts, and powerfully cogent. His message was simply that bear markets are for buying and bull markets are for selling—and in the future, resource investors with staying power would look back on the current market as “the good old days” when they were able to buy great stocks cheap.

It was a great talk that no one I spoke to had any objection to nor argument against. What I did hear from some people, however, were comments along the lines of: “Yes, but he’s been saying that for years.”

Given the level of understanding of and sophistication regarding natural resource investing among Casey Summit attendees, this downbeat expression might be a sign of a bottom.

Fair enough, though I have to say that while I did get some questions about talking tax losses or reducing exposure to metals and mining stocks until the tide turns, what most people wanted to know was what the best bargains on sale now are. My answers are covered in our metals newsletters and updated in between issues.

Back to Rick’s talk. When I heard the pushback about Rick having said the same thing for years, my first thought was that he hasn’t; during the first two years of the slump that began in 2011, Rick was saying the market could go lower. He did recommend selected investments earlier, but it wasn’t until the beginning of this year that Rick and the others we featured in our Downturn Millionaires and Upturn Millionaires videos really started saying that this is the year to go long—way long.

Others have been more assertive about buying on the way down, myself included, which I have admitted in print before.

But here’s the thing: Rick and Doug and others—myself again included—have indeed made money buying when the market melts down and despair is in the air, as it is at present. That is an undisputed fact.

This got me to wondering why anyone would dismiss Rick’s remarks. I very much doubt that anyone there thought Rick was making things up, lacking in perception, faulty in his logic. Nor is it plausible that he could have been trying to trick anyone—to what end? Sure, brokers make money on all trades, winners and losers, but brokers who lose their clients’ money lose their clients. It simply makes no sense to deliberately mislead investors about the market or give bad advice on purpose. That’s a recipe for going out of business, and Rick has been in the business for decades, making a lot of money for a lot of people along the way.

No, I don’t think anyone was really doubting Rick’s sincerity or his conclusions. The hesitant ones were just so beaten up by the markets they were afraid.

This brings us back to an observation I’ve made many times myself and tried my best to stress to investors before they become resource speculators: you have to be a contrarian in our sector, buying low and selling high, and that takes a lot of courage based on solid convictions.

I suspect that some people may sabotage themselves on both scores when the market is down, not wanting to seem like zealots, blind to negative results. The thought makes me uncomfortable myself.

And yet, it’s true that resource investors must be contrarians, or they will get wiped out, and it’s absolutely true that successful contrarianism requires a very great deal of courage.

That’s when it hit me: it’s no accident that Doug and Rick make millions while others make peanuts. Anyone of reasonable intelligence could do what Rick and Doug do, but they don’t choose to. Fear can be fought, conviction can be nurtured, contrarianism can be cultivated. The ingredients and recipe for success are right in our hands… but so few people grasp them!

Extraordinary success can’t be easy, or it would cease to be extraordinary. Obvious. Almost tautological. But still important; it means that while few people do make the necessary choices, almost anyone can make them.

That includes you, my dear reader—if you have the conviction.

So… What’s the difference between a fanatic and a visionary?

Honest answer: Nothing.

A visionary is a fanatic who happens to be right.

I’m convinced Rick is right, of course, agreeing as he does with the Casey consensus on our market sector. I’ve been putting my money where my mouth (or keyboard, as the case may be) is.

Only time will tell if we are right—but if you wait until it’s obvious that we’re right, you’ll miss the opportunity for maximum profit.

Tough call.

But the choice is yours, and only you can make it.

And now you have the opportunity to be seated front and center to hear Rick’s entire talk, along with over 30 other world renowned experts, in our Casey Research 2014 Summit Audio Collection.

With your Casey Research 2014 Summit Audio Collection, you’ll hear three days of in-depth presentations covering the most important issues facing our economy today and learn how to survive and prosper over the coming year.

You’ll hear from world-renowned experts in economics, geopolitics, investments, real estate, investigative journalism and international law about the current political environment, the latest developments on the economy, what’s going on in the investment markets, what are the most promising investment ideas, and much more..

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Discovery of the Decade, On Sale

Discovery of the Decade, On Sale

By Louis James, Chief Metals & Mining Investment Strategist

Sell in May and go away?

Precious metals tend to exhibit a seasonal pattern to their price trends, with summer weakness that leads to strength in the fall. Add to this the fact that mineral exploration in the Northern Hemisphere, especially in Canada, enters a sort of hibernation during winter months and then reawakens in the spring. With winter drill programs already announced, we typically see less news flow starting about now until well into the summer.

These variables combine to exacerbate the “sell in May and go away” conventional wisdom regarding the broader stock markets, as many brokers and promoters in our sector take their holidays during these relatively quiet months. Sometimes, even with stable or rising metals prices, shares in great companies can drop over the weeks and months just ahead, simply due to the lack of Push. Here at Casey Research, we call this Shopping Season, and it seems to have arrived early this year.

It is never safe, however, for metals speculators to head for the Bahamas and ignore the market for months; there’s always the possibility of a sudden black-swan event that kicks precious metals into a higher gear earlier than expected.

Further, individual companies can and do buck the trends all the time. That’s especially so if they’re working on a discovery that could deliver game-changing results at any time, working in a country where water doesn’t freeze in January, or working underground, where seasons are irrelevant.

And I’d like to introduce you to one of those companies today.

But What If Prices Go Lower?

http://www.caseyresearch.com/images/Ferrari458.pngImagine that you were offered a brand-new Ferrari 458 Italia at a 75% discount during an economic downturn.

Even those not into high-maintenance cars would have to think about it—it could potentially be a very profitable trade.

Now suppose you bought the car, garaged it, cared for it, waited for the car market to turn around—and then the market got even worse for a while, and you saw the same car offered for 50% less than you paid for it.

While you might regret that you didn’t time the bottom right, would you conclude that the Ferrari was worthless?

I think you can see where I’m going here. Unless desperately short on cash for some extremely urgent need, nobody would sell our hypothetical Ferrari at a great loss; they’d simply wait out the downturn, no matter how long or painful. Whatever else might change, the Ferrari remains a Ferrari.

Just as, whatever else happens in the economy, an ounce of gold remains an ounce of gold. And yet, when it comes to the best-of-the-best gold stocks in the junior mining sector, investors seem increasingly willing to make the mistake of dumping valuable companies, simply because they are on sale. The error here is confusing price and value—and recognizing such errors before the market does is the essence of successful speculation.

Sales are for buying. A solid company with a deeply undervalued asset and all the cash needed to correct that mis-valuation is exactly the sort of bargain we like to buy during Shopping Season. That’s the kind of opportunity I have for your consideration today.

Regardless, and whether or not you buy the stock I recommend below, I hope you’ll read the case and watch the story as it evolves, to see if I’m right about the company.

Pretium Resources (PVG, US$7.24, PVG.TO, C$7.92, US$785.4 million market cap)

The Pretium story is simple: a group of serially successful geologists have made an extraordinarily large and spectacularly high-grade discovery in an area called Valley of the Kings, which is part of the company’s flagship Brucejack gold project in mining-friendly Canada.

We’re not talking about grams of gold per tonne (g/t) here, or even ounces, but kilos of gold per tonne in many drill intersections. And we’re not talking about a small, rich “sweet spot,” but a monster gold system with more than 6.6 million ounces of gold in Proven & Probable mining reserves, averaging 13.6 g/t gold, within 13.6 million ounces of gold in all resource categories, averaging 20.5 g/t gold.

There are 1.7 million more ounces at the project’s West Zone. Both zones are wide open for expansion—and are adjacent to 35 million ounces of bulk-grade gold in Pretium’s Snowfield gold project (which itself is adjacent to Seabridge Gold’s 63.9-million-ounce bulk-grade KSM deposit).

To give you an idea how rare a bird this is, a recent report shows 26 gold deposits larger than one million ounces—just 26 in the entire world—that have more than 10 grams of gold per tonne of ore.

There are only 11 such deposits above 15 g/t, which the Valley of the Kings zone beats, if you consider its 8.7 million ounces of Measured & Indicated gold averaging 17.6 g/t. To count publicly reported gold deposits that are both larger and higher grade than Pretium’s Valley of the Kings, you only need one finger.

That’s right: just one.

Pretium’s Valley of the Kings is the richest gold discovery in the last 10 years, and one of the richest in recorded history.

But that’s just the beginning. A deposit this rich will pay for many faults and still make for a highly profitable mine, but there are many questions to answer before one can say so. Is there a lot of mercury, arsenic, or other toxic elements in the mix? Is there a national park or endangered species living on top of the deposit? Is the local government likely to steal the mine if one builds it?

I don’t have space in this column to deliver an entire “Casey 8 Ps” analysis of the company, but the questions above have been thoroughly addressed in the company’s June 2013 feasibility study. That study is being updated in view of the company’s late 2013 bulk sample, which produced almost 50% more gold than the company’s estimates predicted.

Pretium also discovered more gold veins when it went underground for the bulk sample, and is incorporating those and other new discoveries into its mine plan.

Nevertheless, and despite what is a somewhat aggressive—at the moment—gold price assumption of $1,350 per ounce, the study yields some terrific results, including:

  • After tax net present value (NPV-5% discount) of $1.8 billion
  • After tax internal rate (IRR) of return of 35.7%
  • Project finance payback in 2.2 years
  • Mine life of 22 years, at an annual rate of 425,700 oz. per year
  • All-in sustaining cost of $508 per oz.

Critical point: even at an unrealistically low $800 gold price, the project still makes money (IRR of 13.7%).

In short, this project has all the signs of a world-class, high-margin gold mine in the making, at a rate of production large enough to make Pretium of interest as an acquisition target for any of the world’s major gold producers.

That’s particularly important today, because one of those major producers, Goldcorp (GG, G.TO), just lost out in a bidding war over Canada’s Osisko Mining (OSK.TO). Goldcorp has shown its appetite for acquiring large, world-class assets while prices are down, and it has a good $3 billion in working capital to pursue them.

It’s hard to imagine a more attractive takeover target than Pretium—and if that happens, these shares could easily jump 20% to 30% in a day.

That’s no exaggeration; just look at Osisko’s stock chart, and you’ll see that it jumped more than 20% when Goldcorp made its offer last January and is close to doubling since then.

But the beauty of the situation is that Pretium doesn’t need to get bought out in order to hand us a major win; the company is fully funded for this year’s work advancing the project, and even has a little cash flow coming from a small amount of (very high-grade) mining allowed under its exploration permit. Given the exceptionally high rate of return on investment the Brucejack project boasts, we think the company will be able to obtain bank and other financing to build the mine and become a highly profitable mid-tier gold mining company.

Investors who buy now win either way, which is why this company is one of those listed in our special report, 7 Must-Own Mining Stocks for 2014, which you get free if you try a risk-free subscription to the International Speculator today.

You can read all the details about Pretium in that report, but there’s one more thing I should tell you, in case you decide not to subscribe; there’s a reason besides gold’s correction that these shares are selling for less than half of what they were a couple years ago.

It’s quite the drama, actually; last October, one of Pretium’s consulting engineering firms (a highly respected firm in its field) quit the job abruptly. On the way out, they basically said that the Brucejack resource estimate was bogus—that the deposit wasn’t really there!

That’s pretty extreme, but even more extreme was the consultants saying that, based on their statistical analysis, the Valley of the Kings bulk sample then under way should be stopped, being a waste of time and money. Management and a second consulting firm that made the resource estimate calculations (also highly respected) said they wanted to see the proof in the pudding of the bulk sample.

And a good thing, too, because their view was fully validated by the bulk sample; instead of the 4,000 ounces the bulk sample was originally estimated to produce, the sample actually yielded 5,865 ounces of gold—and that in a toll mill in Montana, not optimized for Brucejack ore.

Of course, that took time to show, and before the company could prove its point, a ridiculous number of ambulance-chasers announced class-action lawsuits on behalf of shareholders, and the whole circus took this formerly $17.92 stock all the way down to $3.10.

Now, I have known management at Pretium for many years, and was dead certain they were not faking their deposit, so I doubled down. (Yes, I personally own shares in the company; I bought them after recommending the stock to subscribers, and I am not allowed to sell them before giving subscribers a chance to do so first.) Many International Speculator subscribers were able to buy shares close to the $3 mark and have more than doubled their money on those investments since then. Because I was right: the bulk sample results vindicated management—and added a significant amount of cash to the till. The company is back in the race today.

But it’s not too late to build a position in this great company with the discovery of the decade in hand. Due to gold’s continuing fluctuations, the shares are still selling for not much more than they were at IPO—before the company made its record-smashing Valley of the Kings discovery.

Remember; a Ferrari is a Ferrari, value is value, and when you can buy a high-margin $1.8 billion asset for $785 million (or US$7.24 or C$7.92 per share), that’s a bargain.

To find out more about Pretium and our six other 7 Must-Own Mining Stocks for 2014, I encourage you to subscribe to the International Speculator today. Remember that you have three full months to check out our newsletter, and if you’re not happy with it, cancel any time within those three months for a full refund.

Or, if you decide to just buy or watch the stock to test us out, that’s fine too; I sincerely hope you’ll make a bunch of money, and come back for more.

The article Discovery of the Decade, On Sale was originally published at caseyresearch.com.

How I Intend to Survive the Meltdown of America

How I Intend to Survive the Meltdown of America

By Louis James, Chief Metals & Mining Investment Strategist

It is with a troubled heart that I look at the continued fighting in eastern Ukraine. I worry about my friends and students in the country who may well be in physical danger soon, if the conflict escalates. As an investment analyst, it’s the financial war the Russians seem quite willing to wage that has my attention.

It should have yours as well.

In our just-released documentary, Meltdown America, one of the experts noted that the Kremlin had already made moves to dethrone the US dollar as the world’s reserve currency before the renewed East-West tensions of this year. Putin has openly threatened what amounts to economic warfare as a response to sanctions placed on Russia after its Crimea grab.

Now bullets are flying—can Putin’s financial ICBM be far behind?

Mind you, the US and global economies are on such shaky ground, they could come crashing down without any help from Gospodin Putin.

One of the things that really struck me while watching Meltdown America was the way the writing was clearly visible on the wall in past cases of financial collapse and hyperinflation—but no one wanted to believe it.

That’s the way I see the US today. Life seems so normal and there’s so much wealth even in poorer regions, it’s hard to believe the cracks in the foundation could really bring down everything built on it. And that’s exactly why the cracks never get fixed; people don’t want to see them, and politicians do everything possible to deny they exist. So they widen and deepen until the collapse becomes inevitable—and I believe we have already passed the point of no return.

It’s just a matter of time now.

Gloomy thoughts indeed, but I’m not here to depress anyone. Hopefully, I can help deliver a wake-up call. Perhaps even more useful, I can tell you what I’m doing about it.

Of course, precious metals and the associated stocks are a key part of my strategy. As Doug Casey likes to say, I buy gold for prudence and gold stocks for profit. If I’m right about the economic trouble ahead, gold will protect me, and my gold stock picks will make me a fortune.

But Doug also says that our biggest risk today is not market risk; it’s political risk. He has moved to rural Argentina to get out of harm’s way. I’ve moved to Puerto Rico, a US territory that is rapidly becoming the only tax haven that matters for US taxpayers.

Million-Dollar Condos for Half Price

As I type here in my new home office, I glance up and see waves of Caribbean blue crashing on the palm-lined beach. Surfers are out in force. Scattered clouds add to the already amazing variety of colors in the ocean. I wonder if I will have time to go for a swim before dinner—and I’m amazed yet again to think that it was a shot at lower taxes that brought me here to Puerto Rico.

It seems almost unnatural for me to be able to enjoy so much beauty while saving money, but that’s exactly what I’m doing.

The view from my new home office.

You see, the economy here never really recovered from the crash of 2008. This is very bad news for long-suffering Puerto Ricans trying to make ends meet. When I first came here with my wife to check the place out, locals kept asking us why we were thinking of moving here; jobs are scarce, and something of an exodus is taking place in the opposite direction (Puerto Ricans are US citizens and can travel and work freely anywhere in the US).

But I wasn’t coming to Puerto Rico to sell hot dogs. My income doesn’t depend on the local economy, so its woes are an obvious opportunity for a contrarian speculator like me.

Take the most simple and basic asset class one can invest in as a Puerto Rico play: real estate. The market has been so devastated that million-dollar condos are selling for half price. When we closed on our new place, the seller came up short, and we had other options, so we weren’t willing to pay more. The real estate agents involved were so eager to keep the deal from falling through, they kicked in with their own money to help the seller out.

Personally, I’m not a big fan of gated communities, but for people who are concerned about possible social unrest in the future, it’s good to know that you can buy properties in some of the most posh and secure communities on the island with no money down.

Now, as much as I like a contrarian bargain, and as much as my wife loves the tropical weather, what really brought us here were the new tax incentives the government of Puerto Rico enacted to make the island more attractive to investors and employers.

The critical point here is that Puerto Ricans are exempt from US federal income taxes, even though they are US citizens. They pay Puerto Rican taxes, of course, and those have generally been similar to US taxes, so the island has never been seen as a tax haven before. That all changed in 2012, when Puerto Rico passed Acts 20 and 22.

Act 22

Act 22 is basically a 100% capital-gains tax holiday designed to attract investors to come live in Puerto Rico. Exactly what is included or excluded is beyond the scope of this article, but for me, the important thing is that it covers the stocks I already owned when I moved here on January 1, 2014. Given that the market bottomed at almost the same time, I have no gains to be taxed on for 2013, and will not be taxed for the gains I make going forward—all the way to 2036.

This alone was worth the move to Puerto Rico, in my opinion.

Happily, the application process was simple. My wife downloaded the form and filled it out. I signed it, and a couple weeks later, we got an official tax holiday decree in the mail—no questions asked. I had to accept the conditions of the decree in front of a notary and send in an acceptance form with a $50 filing fee, and that was it. Didn’t even have to hire a lawyer.

This tax break is not available to current residents of Puerto Rico—it’s designed to attract wealthy people to come live on the island, after all—but it’s available to all others who move here, including but not limited to US taxpayers.

Act 20

Act 20 is a tax break on corporate earnings designed to incent job creation in Puerto Rico. The idea is to persuade US employers who might set up call centers in India, or create other similar jobs abroad, to do so closer to home, by offering them a 4% corporate earnings tax rate.

My fellow Casey Research editor Alex Daley has moved to Puerto Rico as well, and we’ve formed a company here that exports writing and analytical services to Casey Research in Vermont. This is the basis of our application for Act 20 tax benefits, which has not been approved yet, but which we understand is close.

If we get our Act 20 decree approved, we’ll still have to pay regular income taxes on our base salaries, but the lower tax rate applied to our corporate income will result in a drastically lower total income tax rate for us as individuals.

I’ll be sure to let readers know when we get our Act 20 decree approved.

All 100% Legal

The beauty of this is that Puerto Rico’s tax breaks are not shady tax dodges set up by entities of questionable legality or trustworthiness, but perfectly legal tax incentives within the US.

Act 20 and Act 22 benefits are available to non-US persons, but they are especially important to US taxpayers because, unlike almost every other country in the world, the US taxes its serfs citizens whether they live in the US or abroad.

In other words, while a Canadian can get out of paying Canadian income taxes by moving out of Canada, a US person cannot escape US taxes by moving to Argentina, or anywhere else—anywhere besides Puerto Rico.

It’s like expatriation without having to leave the US, truly a unique situation.

And it’s a win-win situation; people like us bring much-needed money, ideas, and energy to the island, while getting to keep more of what our crisis-investing strategy nets us. We create jobs, rather than take them. We are part of the solution here, and we’ve been made very welcome.

Is It Safe?

So that’s why I’m here. Whether or not my Act 20 status gets approved, I’m so happy about my Act 22 decree that I’m convinced we did the right thing moving here.

When I tell people what I’ve done and why, most get immediately excited by the idea—and then they balk. The first question they ask is usually: What about crime?

Puerto Rico isn’t a large island, and a good chunk of its three million inhabitants are clustered in and around the capital city of San Juan. Of course there is crime here, as there is in any large city. There are places I would not walk alone at night—just as there are in New York City.

Mexico City, Buenos Aires, La Paz… the capital of any other Latin American country or Caribbean country I’ve been to is much larger, more polluted, and more dangerous than San Juan. In my subjective view, San Juan, with its old Spanish fortifications and amazing beaches, is more beautiful. And you can drink the water here.

Sure, it might be cleaner and safer in Palm Beach, Florida—but it’s a lot more expensive there, it has less charm, and there’s no Act 20 nor 22. It’s a matter of priorities.

When I say this, most people remain skeptical; they read about the economic problems Puerto Rico has and the financial trouble the government is in, and they wonder if things could get worse.

Of course they can—but if Doug is right about The Greater Depression about to envelop the whole world, things are going to get worse everywhere.

Here at least, people are already used to massive unemployment. It won’t come as a shock; it’s never left since 2008.

Another way of looking at it is that since tropical storms hit the island from time to time (southern Florida is much more prone to major hurricanes than Puerto Rico, but they do happen), people here are more prepared for disasters than in many other parts of the US. The better apartment buildings and hotels have their own electricity generators. Nobody can freeze to death here, anyway, and fruit trees grow all over the island.

There’s a lot more I could say, but the bottom line is that I think Puerto Rico is a much better place to ride out a global financial storm than Miami, or Anchorage, or almost any city in between. A self-sustaining farm in rural Alabama might be better, but that’s not the sort of place I want to live.

I Like It Here

That last is an important point: if I have to hunker down to ride out an economic storm, it should be in a place where I like being.

Puerto Rico is beautiful and bountiful year-round. I speak Spanish, but most people in San Juan are bilingual, so that’s not really an issue. Our new flat is blocks from the best schools, shops, and restaurants in town—and even the hospital.

I open the window and the fresh air coming off the ocean carries the sound of waves, sometimes laughing children. There’s more noise pollution during the day, but at night, the city calms down, and we can hear the famous Puerto Rican coquí frogs, which my daughter calls “happy frogs.” Ten floors up, the ocean breeze is cool enough that we have yet to turn on the air conditioning.

The beaches are fantastic, and the clear water makes for great diving. I’ve never been a surfer, but the waves here are famous too, so I’m thinking of trying it out. There’s no end of other things to try out, and the neighboring islands have their own charms to offer as well.

Granted, my wife and I try to be smart about what we do and where we go, but we’ve never felt unsafe here—well, apart from the crazy drivers.

We like it here. We’re happy. For tax reasons, for quality of life, and with the potential meltdown of America in mind, we’re glad we made the move.

Find Out More

Doug Casey’s International Man Editor Nick Giambruno, Alex Daley, and I have coauthored a special report on Puerto Rico’s stunning new tax advantages. The report gets into all the details I didn’t have time or space for here. We cover all the specifics of what, why, and how. The report includes links to the forms you need, as well as recommended resources, from lawyers to realtors.

Whether you’re thinking about expatriating or you’re just tired of paying high taxes, I think Puerto Rico is a place you should consider. I know of no better resource to help you get started than our special report.

For your own health, wealth, and enjoyment, I encourage you to get your copy today.