Doug Casey argues that investors often prepare for the wrong risks. Markets rise and fall, commodities fluctuate, and economies expand and contract.
Yet The International Man contends that the greatest threats to wealth often emerge from the political and monetary systems that shape every investment decision. In his view, preserving long-term financial independence requires thinking beyond prices and portfolios to the institutions that govern them.
Is successful investing really all about choosing the right assets?
What does it means to remain financially resilient when the rules themselves can change?
Read the transcript below.
Transcript
Why your biggest risk isn’t financial, it’s political
Doug Casey
Right now, the financial and economic world is in a very, very dangerous position. The dangers that your wealth, your assets are great, but greater than those financial risks are your political risks. People don’t think about their political risks. What you really want to do is have your foot in a second or a third country in case things go bad where you are.
The Democrats are going to win the midterms, maybe by a big margin. This is hard to predict, but there’s a risk of that. We could have foreign exchange controls, and there are lots of reasons that I I can think of why they might do that. At which point you can’t effectively get your money out of the country. Now you’re stuck here like a lobster in a trap. We live in a world of fiat currencies where dollars or pounds or euros are created out of thin air, and the new ones go to the ruling elite first.
It’s like a fire hose of money spewing into society, but these guys get to drink from it first, and then the little guy just gets whatever trickles down to them. The only solution to this problem is to totally free marketize the economy, and that basically means using gold as money.
Monetary Metals
Welcome back to the Gold Exchange Podcast. My name is Ben Nadelstein of Monetary Metals. I am delighted to be joined today by Doug Casey. He’s the author most recently of The Preparation, as well as many other books that you should go out and grab. He’s a lifelong speculator and anarcho-capitalist, and he’s traveled to over 155 countries, living in over 10. He joins me today on the podcast to discuss all things gold Doug, welcome back to the podcast.
Doug Casey
It’s a pleasure.
Monetary Metals
So, Doug, I want to start on a macro view. A lot of analysts have said with the geopolitical situation in the Middle East, they would have expected not only oil prices but gold prices to be behaving quite differently than they’re behaving today. You see the oil markets and the gold markets going forward from the kind of geopolitical crisis that we’re currently having.
Doug Casey
Gold and oil are very much related, but not at all the same commodities. Talking about oil, this is all rotating around the dustup between the US, Israel, and Iran over the Straits of Hormuz. I’ve been of the opinion since this thing started that it was not going to end anytime soon, and it was likely to get much worse. Somebody did a count of how many times Trump has said, “It’s all over. Don’t worry about it. We control the Straits.”
Well, among his other faults, and he has virtues, let me point that out, but among his many faults is Trump is a pathological, chronic, and enthusiastic liar. So you really can’t believe a thing he says, whether that’s true because he’s moved into his dotage and isn’t thinking clearly, or it’s a basic character flaw. So anyway, let’s forget about what Trump says. Let’s think about what he’s done and why this thing is not going to end soon.
The US and Israel launched an unprovoked surprise attack attack on Iran. And in response, Iranians have responded, but they’ve been very measured and thoughtful in their responses. But I think at some point soon, they, perhaps now, they’re just tired of being used as a punching bag. So this thing could get totally out of control. Okay, there’s the preface. Oil at close to $80 right now. Cost of production, marginal cost of production, it depends on where you are, what kind of oil you have, all this type of thing.
I think it’s gonna go a lot higher is the next step is going to be closing the, uh, Bab-el-Mandeb Straits, which the Houthis might do in sympathy to the Iranians. And of course, this relates to the dustup between Ukraine and Russia. Russia’s oil exports— it’s a major oil exporter— are being compromised by that war as well. So, long answer to your simple question: no reason for oil to go down, lots of reasons for it to go higher.
Doug Casey’s outlook for oil, gold, and the Middle East
Doug Casey
As far as gold is concerned, listen, I started buying gold after I read Harry Browne’s book You Can Profit from the Coming Devaluation. I read that book in 1971 and started buying gold in the low $40s. I bought a lot over the years and I’ve never sold an ounce. It seemed to me that it was grossly underpriced as an asset. Technically speaking, it’s not an investment because it doesn’t create new wealth. That’s what an investment does. So it was an excellent speculation for many years, but once it crossed $2,000 an ounce, I started saying to myself and to others, you know, relative to other things in the world— houses, cars, clothes, food, whatever.
Gold is about where it should be, quote unquote. And I’m comfortable with gold at $4,000 an ounce, but I no longer treat it as a high potential speculation. I still accumulate it as an asset. So is gold going higher? Yeah, probably, but not immediately. It’s different from oil that way. Oil is going higher. Okay. Famous last words. Making predictions, very dangerous.
Monetary Metals
Especially about the future, Mr. Casey. Now I want to ask you about the oil price and how it affects gold mining companies, because we’ve had some analysts on who say, well, oil is a small part of these mining companies. They don’t really have to worry about the price of oil as much. Often they hedge the price of oil. Where is this oil play going to come into play when it comes to gold miners, especially if you think oil prices will rise? How will that affect the mining sector in general?
Doug Casey
Well, for almost all gold miners, oil is their main cost input. Not oil itself, it’s diesel is what they use. And diesel is the most problematical part of the oil supply chain at this point, much more than gasoline is. But still, in the face of $4,000 gold, it’s increasing the cost, but not enough to be worried about it. So, uh, I don’t see oil as being a problem per se for the gold mining industry, as long as the diesel’s available. And, uh, that could be a problem of the availability of diesel.
Monetary Metals
And how do you see different miners in different jurisdictions going forward? Because obviously there’s been some level of fracturing of the global order where supply chains overall have become more fractured over time. Do you think that where the jurisdiction of the mine is, is going to matter even more in the future than it does today?
Doug Casey
I’d say definitely. I started out buying gold stocks when South Africa was the place you went to go for gold stocks. And I could tell you interesting stories. About buying South African gold stocks back in the ’70s when it was possible to get a, uh, current dividend yield of as much as 70%. And the dividends went way up from there on some of these mines anyway. But that’s something else. I frankly am completely uninterested in buying anything in South Africa right now. The country’s been on the slippery slope for decades and the slope is getting steeper. Not very interested unless I can get the kind of bargains that were once available in the ’70s.
So gold mining is a crappy business. Let’s start out by saying that when we talk about gold mines, before you even to start out with, you’re on an Easter egg hunt in the middle of nowhere looking for a deposit that costs millions and millions of dollars.
And that, and your trouble really starts when you get a sniff, and then it’s going to cost you many millions of dollars more to explore it and prove it up. And then it gets worse if you have find, actually find a deposit, now developing it is gonna cost you tens of millions. And God forbid, now you’re gonna build the mine. It’s gonna probably, probably cost you hundreds of millions of dollars or more.
Then once you build the mine, you’re going to be assaulted by NGOs, by indigenous people, by everybody, not least of which is the government of wherever it is, who recognizing that you, you’ve got all this sunk capital, you can’t move the mine, use you as a piggy bank with royalties, looking for partial ownership. So I really feel like an idiot having been involved in the mining business for the last 50 years. It’s not like it was in the 19th century when that phrase, hey, we’ve got a gold mine here. Yeah, it was great back then.
Now it’s nothing but trouble. And until very recently, it’s been a very, very marginally profitable business. So I’m not answering your question, which country would I go to? I’d like to go to none of them. They’re all a problem. Some are better than others, of course. I mean, you go to Africa, I mean, anything can happen on that continent.
What’s the best mining sites in the world? Well, they say Canada and the US are the best places to have a mine. I suppose there’s still a rule of law. You can more or less trust the agreements that you have with the state.
But look, I just try to stay away from the really crazy places unless I can get something cheap enough, because it’s a question of what you pay for an asset. It’s like Elon Musk’s SpaceX offering. Big fan of Elon, big fan of rocketry and the satellites and all this type of thing, but at its current price, not interested. Same thing with gold bonds.
Why physical gold beats paper wealth
Monetary Metals
And how does that factor in terms of the geopolitical question of different currencies? Because that same relative game happens against countries and their currencies. So you might feel uncomfortable investing in the currency in Ghana, or the currency in Turkey or the currency in China. But you might say of all the dirty shirts, the cleanest one is either maybe the US or Switzerland. Do you think that that same relative game happens not only for mining jurisdictions but for countries’ currencies as well?
Doug Casey
Yeah, well, every currency in the world bar none is a fiat unit backed by nothing but the faith of the issuing central bank or government. All of them will eventually reach their intrinsic value, which is basically zero. Some are descending to that level faster than others. As a long-term investor, and I hesitate to say long-term when we’re talking about a business as cyclical as the mining business or any resource business for that matter, you want a country that’s not only got a, a stable government, but a stable currency.
Because if you’re in a country where inflation is— where they’re rapidly inflating the currency and destroying it, things might look good. For the short term because you’re paying your workers and incurring all your local costs in that currency. So it’s getting cheaper and your costs are going down as it gets cheaper. That’s in the short run. But in the long run, you know, you could be looking at something like Zimbabwe and some of these countries.
And when a government’s in process of destroying its currency, which is what inflation is all about, they’re gonna have to extract revenue from someplace. That’s especially bad for the resource industry ’cause your asset’s fixed there. There’s no place you can hide. So short term, yeah, a highly inflated currency is good because it goes down relative to others. Long term, it’s disastrous, just like for every other business.
Monetary Metals
Is that why you would say that owning physical gold bullion compared to either gold miners or currency-related investments is kind of why you feel more comfortable in the physical gold bullion space as compared to more maybe speculative mining companies or owning assets that are generally either tied to or denominated in some form of government currency?
Doug Casey
As I said, I’ve been buying gold since 1971 and I’ve never sold an ounce. So I’ve got as much as I need. Quite frankly, most of what I do is speculate. I don’t say invest. I think it’s important to use your words properly and accurately. And in the mining business, we’re really talking about speculating, not, not so much investing. I can define those words later if it’s of interest to you.
Yeah, I’m very involved in these companies from explorers, which are extremely risky for all kinds of reasons, to developers, which I think is generally speaking where the, uh, real upside is, and producers. And I tend to stick with the new and small producers, not the biggies like Newmont and such, for a number of reasons.
Monetary Metals
Talk to me about the difference between these big miners like Newmont who have been around forever, who have maybe stronger balance sheets, stronger mining history, versus these kind of newer or smaller producers. How should investors or speculators think about the difference between saying, I want mining speculation returns, but I’m worried about that risk of new mines or explorers? How should they think about allocating between preexisting and strong balance sheet mines like a Newmont versus maybe a new up-and-comers where maybe there’s more ability to have gains?
Doug Casey
Nothing wrong with big companies like Newmont, but the problem And I own Newmont as a matter of fact. But the problem is that these big companies are not run by the founding entrepreneurs. They’re run by hired hands, basically professional managers. I much prefer to own a company that’s run by the founder, perhaps the guy that found the deposit. He’s got an entrepreneurial spirit. He doesn’t think bureaucratically. Which these big companies all do. And this is a major consideration. Most of what I do is with, with smaller companies run by entrepreneurs.
For instance, B2 Gold. Okay. I was a founding shareholder of that because Clive Johnson, until very recently, who was the president and chairman of the company, but he’s kind of retired. I was a founding shareholder of that. I still own the shares of it because I liked Clive and his spirit has treated me really well. I’m always looking for companies of that nature. When it comes to the explorers, I think, and this number changes all the time and you may stand to correct me, but I think there are about 2,000 so-called gold miners in the world and most of them don’t have any gold and never will except the word on their share certificates.
Well, they don’t have share certificates anymore, unfortunately, but they’re engaging in unsuccessful Easter egg hunts and most of the money they raise is to keep the lights on and to pay salaries and this type of thing. Getting back to what I was saying, yeah, I’ll take a flyer on explorers if I really like the people that are involved and other things. I’ve developed a set of mnemonic, 9 Ps, that you should look at when you’re buying a mining company, or for that matter, any kind of company. 9 Ps, they all begin with a P.
The problem is, is that it’s supposed to be a mnemonic, but 9 is too many to remember. That’s why primitive people say 2, read many. So I kind of outfoxed myself on that. Anyway, generally stay away from explorers. Much more interested in developers and less interested in large companies. So on the bell-shaped curve from having nothing and looking for it to having a lot, I’m kind of, I guess I’d be on the middle of the bell-shaped curve.
Monetary Metals
If you’re enjoying this conversation, you’ll probably want to check out our 2026 Gold Outlook Report. It’s our latest edition and it covers everything from fundamental prices of gold and silver, basis and co-basis data, as well as our macro outlook for the rest of the year and our price calls for gold and silver in 2026. It’s absolutely free to download.
The truth about gold mining stocks
Monetary Metals
I want to ask you now about what’s happening inside the US. There’s this push towards a critical minerals list. Silver was at one point discussed on this critical minerals list. List, and many mines are now on this critical minerals list inside the United States. For Doug Casey, do you see that as a positive economic development where the government is saying, hey, we’re realizing that minerals and metals are important to our economy, or is this more of a slide towards government ownership and government stakes in these critical minerals and critical materials?
Doug Casey
That’s a very astute question on your part. The government should have no involvement in the economy at all. In my opinion, none. Getting the government involved in any business, including the mining business, is guaranteed to throw a monkey wrench into the process. People say, oh, this’ll be wonderful. The government can provide capital and cut the red tape that it creates and so forth. Okay. I understand that.
Look, I see the government not as being my friend, certainly not my partner. I see it as a a predator, which is dangerous. It’s, it’s like George Washington said, it’s like fire. It, it can be used. I, I don’t believe that part of it, but it’s dangerous if it gets out of hand, and it usually does. So look, if the government wants to solve the critical minerals problem, all it needs to do is totally deregulate the mining business and high mineral prices and it’ll take care of itself.
We don’t need help from them. The last thing you want is somebody from the government stopping by and saying, I’m here to help you. I mean, that’s a joke, but it’s not a joke.
Monetary Metals
So Doug, you are a famous anarcho-capitalist, maybe one of the most famous living anarcho-capitalists. So when I ask you this question, it’s leaning on your expertise here. Obviously the government has taken shares or stock in some major public companies during the Trump administration. And there’s a very high likelihood that the Democrats take power in this midterm elections.
Do you think that this is going to be like Joe Biden who kept Trump’s tariffs, or do you think that the Democratic power balance now that we’re potentially going to see is going to keep this corporate and government fusion at bay, where this was basically the last of the government taking a stake in a business that we’re going to see?
Doug Casey
No, it’s not the last. It’s actually, it’s actually probably the beginning. What Trump is doing economically is technically called fascism. Now, fascism, that was a word that was coined by Benito Mussolini, incidentally. He coined that word. And the original definition of fascism has kind of withered away. People think, oh, that has to do with guys in black uniforms and jackboots and— no, not really. Fascism is state capitalism. It’s a melding. Of the state and corporations.
What Mussolini said is everything within the state, nothing outside of the state, nothing against the state. And fascism is about the melding of corporate interests and the government. Now, as an economic system, it’s far superior to communism where the state owns everything, or socialism where the state owns the means of production. At least in fascism, you have businessmen that are own these things, you have stock markets and all that, so forth.
But the trend in this direction is negative and it’s ongoing. It started early in the 20th century. Most people are unaware of the fact that in 1900, let’s say even 1910, there was no income tax any place in the world. In fact, there were almost no taxes in the world. And the US government and most other governments in the world took it most 5% of the economy, mostly through excise taxes and, uh, some import duties. Okay.
But now governments take 30, 40, 50, 60%. So it’s gotten completely outta control and the trend is still in motion. I mean, as evidenced by the election of, uh, Mamdami in New York and the fact that for the last 3 generations, 4 genera— longer than that, kids have been actively indoctrinated in high school, college, even grade school with, um, all kinds of collectivist, status, socialist ideas. And it’s moving through the pipeline now where these people are getting into government and they really believe this is the way things ought to be run. So I’m rather pessimistic about the way things are going.
Is government involvement helping or hurting mining?
Monetary Metals
Well, that is a perfect segue into your latest book called The Preparation. So give us a little bit of hope here for some people who maybe have kids who are interested in going to college and maybe thinking, well, maybe now I’m not so sure after this great podcast with Doug and Ben. So tell us about the preparation and maybe what kids today could potentially be doing if they’re not so interested in going to college.
Doug Casey
Yeah, it’s good that you mentioned that because I’m not trying to engage in doom porn or scare people, but, um, the last book I wrote was this one. Of course, like any author, I have a copy near at hand. The Preparation. Well, this book counsels young men in particular, but also young women, I think, not to misallocate 4 years of their time and a lot of money going to college. And this book spells out exactly why college has become a scam, a fraud, not just a negative experience, a deleterious experience.
Look, years ago, college was of value before all of the professors were Marxists and almost all of the professors in almost all of the colleges today are Marxists. And when you’re 18 years old, you really don’t know too much. You go to college and you listen to your professors and you assume that what they’re telling you is the truth and their worldviews are correct and so forth. So it’s, um, a corrupting influence that it’s hard to unlearn these things with. So anyway, we’re telling people, don’t go to college.
Not only that, but it’s gonna burden you with perhaps hundreds of thousands of dollars of student debt, which will be an albatross around your neck for the rest of your life. And most of what you’ll learn in college is not only wrong, but deleterious. I’m not talking incidentally about taking STEM courses, science, technology, engineering, math. For those things, the formal discipline involved in those things, the lab work, okay, that’s a different story, but most people don’t take those things. Okay. So what are you supposed to do with those 4 years instead of going to college?
Well, We lay out a program here that basically endeavors to turn you into a Renaissance man. In other words, the program that we lay out, all of the academic things that you would learn in college, history, science, literature, those three things can much more be effectively learned through, let’s say, courses offered by the Teaching Company. So they’ve rounded up the best professors in the world and paid them to give a command performance, which you can listen to as many times as you want.
Unlike going to class where you Even if you have a great teacher, you may cut the class because you were drinking the night before. Often the case, I’m afraid. You’re noticeably bad. You may fall asleep in class. It’s a much better way to learn the material. But the essence of the preparation is we divide the 4 years of college into 16 quarters. In each quarter, you learn something practical, real world. One quarter, you go to Thailand and learn martial arts because Every man should know how to defend himself physically. One quarter, you’ll learn how to be an open ocean sailor.
One quarter, you’ll go to—and, and for that, my co-author’s son Maxim went to the Falkland Islands and sailed around Cape Horn. That’s a story you can tell for the next 50 years if you want. One quarter, you’ll go to Canada and learn how to be a welder. One quarter, you’ll go to Florida and learn how to drive heavy machinery. And these are valuable things. One quarter, you’ll go to Italy and learn to be a chef, not because you wanna be another Gordon Ramsay or Wolfgang Puck, but this is a valuable skill that can last you throughout your entire life.
In the course of this, you’ll basically be taking an MBA course as well, learning how to run a business because we want people to think in terms of being entrepreneurs, not employees living in cubicles. So this book is a handbook for a young man who hasn’t thought about this stuff and needs counsel what he should do with those 4 valuable years of his life. And by the time he finished the 4 years, instead of having a huge debt burden and bad ideas, you should actually have a lot of cash in the bank and, um, the ability to, uh, start businesses.
That’s what this last book is about. And I’d urge people if they have kids or grandkids to buy it, give it to ’em, support them. And if you’re a kid, you should buy it. Listen, when I was in 8th grade, if I’d had a book like this, It would’ve accelerated my life, but I didn’t have a book like this. So that’s why we decided to write it.
Why college has become a bad investment
Monetary Metals
Doug, you’ve always been known for helping people become more independent, either in their thinking or in their financial abilities. What are some of the things that you think adults are missing today to become either more financially independent or just independent in general in their lives?
Doug Casey
As I just mentioned in reference to kids, I think your object should be to be self-employed. As opposed to an employee, because it’s only when you are self-employed that you can truly control your own destiny. If you’re an employee, your job exists based upon your employer. Okay, look, there’s a time for that. It’s good to learn how to be an employee.
You gotta start someplace. Okay. I understand that, but that’s not where you want to end up. So that’s number one, change your attitude towards what you’re going to do for work. You need knowledge and that means reading. Books, but reading the right books about the way the world works. And that’s what economics should be defined as. It’s a study of the way the world works in the process of producing and consuming things. Most people think economics is all about, uh, mathematical models and how the government should manipulate society and pull strings as if society was a, uh, a factory, which it’s not. Keynes acknowledges Very important.
Monetary Metals
Yeah. What about foreign passports, having foreign bank accounts, kind of diversifying? We hear a lot now of maybe having a second home, a second passport, and maybe a different jurisdiction than the one you currently live in. How important do you think that is in today’s environment?
Doug Casey
I think it’s critically important because right now the financial and economic world is in a very, very dangerous position. So the dangers that your wealth, your assets, your livelihood confront right now are great, but greater than those financial risks are your political risks. People don’t think about their political risks. What you really wanna do is have your foot in a second or a third country in case things go bad where you are. And people don’t seem to learn this lesson.
I mean, Russians in 1917 wished that they had a foot someplace else. Germans in 1933, Wish they did. Vietnamese in 1975, we’re sorry if they didn’t. Chinese in 1948, same thing happened. Lots and lots of countries that I can list like that. Now, are things gonna go bad here in the US? That bad? Well, they’re actually going bad now under Trump. And as you mentioned earlier, I think you’re right. The Democrats are gonna win the midterms, maybe by a big margin.
So I mean, this is hard to predict, but there’s a risk of that. And, uh, the memes controlling the Democratic Party right now are coming forth from people like Bernie Sanders and Mamdami and AOC, those kind of people. They’re absolutely rabid collectivists that don’t have a clue about economics, but are really interested in controlling everybody’s lives and being professional busybodies. So, No telling what they’re gonna do.
Well, or what Trump is gonna do. We could have foreign exchange controls, and there are lots of reasons that I can think of why they might do that. At which point you can’t effectively get your money outta the country. Now you’re stuck here like a lobster in a trap. And let’s admit it, the US is at this time one of the best countries in the world to be trapped in if that happens. Okay.
I readily acknowledge that this is still one of the freest countries in the world, even though it’s on the slippery slope. But you want to have alternatives to your— so So yeah, that’s very important. Now I understand that most people aren’t in a position to have a second home abroad and to spend the time and the money to get a second passport. Okay. I understand that, but that just means that you have to put yourself in a position where you can acquire these things.
Monetary Metals
Now, Doug, I want to get to a rapid-fire section. I want to ask you questions from all over the map because I’ve got a Renaissance man in front of me. So I want to hear your thoughts thoughts and your opinions on questions from all over the spectrum, starting with the AI boom that we’re seeing.
A lot of people think this is a complete boom, we’re going to change not only the companies and the way we work today, but that so much of the modern economy is now going to be based on the AI, while others think that this is really all hype, it’s a complete bubble, and that this AI bubble is at some point going to burst. On that spectrum, where does Doug Casey sit?
Doug Casey
Are you familiar with Ray Kurzweil?
Monetary Metals
No.
Doug Casey
Okay. Well, I’m a fan of his. I think he’s correct about the singularity being near. And what does that mean? It means that a number of factors, AI is part of it, the biotech revolution, the computer revolution, robotics, space exploration, life extension. Look, things are changing now faster than ever before in history. And I think that’s a good thing for a number of reasons. But we’re talking about AI, which is an important part of all this. And I’m a big fan of AI for all the reasons that everybody’s heard of. No problem with that at all.
Problem with—I have—there’s a, a super bubble right now in AI where gigantic, unprecedented amounts of capital, trillions and trillions of dollars are being allocated. Most of it, I guess, is going to data centers and whenever You throw that much money into one area that quickly, you’re going to make mistakes. There are going to be huge misallocations of capital. That’s in addition to the fact that I’ve asked myself, what are all these data centers actually going to do?
Now, AI can make tremendous advances in the sciences, biology, cracking the code of molecules, all this type of thing. It’s absolutely wonderful. But are all these data centers being used for that? No, no, they’re not. They’re basically accumulating data on people. Well, hey, you need that data in order to effectively sell things to them. I think there’s a chance, especially with technology continuing to evolve, that most of the nodes, computers, whatever, inside these gigantic buildings that run hundreds of thousands of square feet are all going to be obsolescent and useless in 5 or 10 years.
And all that capital is going to have dried up and blown away. So answer to the question, stay far away from it right now. It’s a good thing, but it’s gotten totally outta control. On top of that, one other thing I’ll mention in the mode of fascism, the government is getting use of that information first and foremost, and the corporations it works with, and that may be good for them, but it’s not good for the average guy.
The case for a second passport and foreign assets
Monetary Metals
What are your thoughts on inflation versus deflation? Because one argument is that, well, because of the way that there’s, you know, money being debased because of all of these tariffs, because of the global supply chain being broken, we’re more likely to see inflation. But an argument on the other side is, of course, because of this AI technology, because of all the powers of this new technology on health sciences, on longevity, we’re actually going to see deflation. So between those competing forces, what do you think is going to be the macro theme in the future? Inflation or deflation?
Doug Casey
To start, there’s nothing wrong with deflation. What that means is that each unit of currency becomes worth more every year. And if you’re a saver, which everybody should be, that makes deflation actually a good thing. Problem with deflation is that, uh, in a debt-ridden society such as we are right now, debts become harder to pay. There are corporate bankruptcies, massive unemployment, and so forth. What we really want is a stable currency.
Actually, we don’t want inflation or deflation, but because of increases in technology, which you alluded to, if we had a, a free market stable currency, Prices would be going down, down, down, down every year as production became more efficient and there was more of it. But that’s not the world we live in. We live in a world of fiat currencies where dollars or pounds or euros are created out of thin air, and the new ones go to the ruling elite first. It’s like a fire hose of money spewing into society, but these guys get to drink from it first, and then the little guy just gets whatever trickles down to them.
So I, I don’t know. I hope I’m being clear the only solution to this problem is to totally free marketize the economy. And that basically means using gold as money. I mean, you could use other things as money, but there are reasons which were first enumerated by Aristotle in the 4th century BC why gold is peculiarly good for use as money. And money should not be a political football controlled by the government. That’s, it’s a ridiculous concept.
So if that was true and if we had a sound banking system, in which fractional reserve would— didn’t exist, we shouldn’t have any of these problems. And in a free market system, we wouldn’t have the— we’ll always have problems, but not these problems. As it stands, which are we going to have? The government is running $2 trillion or more in deficits every year.
It can only finance that by basically printing money via the Federal Reserve. And that means there’s more money, there’s going to be inflation, probably a lot more inflation. Always with the risk of catastrophic deflation where there’s too much debt, everything’s too overleveraged. One guy can’t pay the next guy, can’t pay the next guy, and they all go bankrupt. That’s where we are. But I’m betting on inflation.
Monetary Metals
Would you say that what we’ve seen from foreign central banks—China, Russia, Poland, these other countries as well— who have been stockpiling or purchasing gold, do you think part of that is hedging their own currency’s instability?
The fact that they have to face face inflation in their own currency, as well as the risk of the dollar potentially appreciating against their currency? Or do you think that it’s a push back towards, hey, we think gold is a money that is neutral from any other political sovereign, and we want some more of that compared to these fiat currencies that at the end of the day are controlled by some other political economy, whether it’s the US or China even?
So do you think that’s where these countries are accumulating gold? Do you see it as hedge against their own currencies in the dollar, or do you see it as a, hey, we want something that’s politically neutral on our balance sheet?
Doug Casey
All of the above. Because since the end of World War II, the dollar, especially before 1971 when it was exchangeable at a fixed rate, $35 an ounce for all those years, they don’t trust the dollar anymore. They realize that they’re holding a hot potato that can be inflated out of existence. They don’t trust the United States anymore. They saw what happened to Russia. Its assets, or for that matter, Iran and its assets, or, and it can happen to any country that is no longer politically favored, any of them.
So what are they gonna hold? Some other country’s fiat currency? What kind of asset? Well, that’s why they’re buying gold. All of them have been buying gold. And there have been, it’s been said that the BRICS countries will come up with a currency and backed by gold. But that doesn’t make any sense to me because why should these governments, why should the Chinese The Indians and the Russians or Brazil, why should they trust each other?
Who’s gonna hold the gold? It doesn’t make any sense. You really should cut out the middleman and there shouldn’t be names for national currencies. The true international currency is grams of gold, or if you wish, ounces of gold. And that’s it. I mean, this is not something the state should be involved in. But having said that, the state is more involved with it every day, especially as all the governments of the world are actually bankrupt. Primarily among them is the US government, which is bankrupt.
Doug Casey on the AI bubble
Monetary Metals
Where do you see silver as a monetary metal going forward? We have some guests who say no, silver isn’t even a monetary metal at all. It’s really becoming an industrial metal like copper or palladium. Or on the other hand, you say, well, gold and silver are highly correlated. It’s still a monetary metal. It still has those monetary qualities. Where do you sit on that spectrum between silver as a monetary metal or as really just a commodity like anything else?
Doug Casey
Silver has exactly the same qualities as gold does. Just in varying degrees. So that’s why it’s historically always been used as a monetary metal. The problem is when you have a bimetallic system, you don’t want the government to fix the price, price control between the two of them. But there’s no reason why things, when you go to the store, couldn’t be priced in both gold and silver and prices, the ratio between them could fluctuate daily.
And this is in the computer world that we live in today. It’s just as easy as it could be priced in Bitcoin, which is actually, it’s early in the game for Bitcoin from a historical point of view, but I think Bitcoin’s going to work out. Frankly, you could have gold, silver, and Bitcoin prices all changing instantaneously by computer. All three of them are viable monies.
Monetary Metals
And then last one for you, there’s this idea of tokenized gold. Now you can have gold in a vault in Switzerland or in London or spread out across the world. That gold can then be tokenized, and then you can either trade that tokenized gold, you can spend the tokenized gold, you can share the tokenized gold. Do you think that that’s the future of gold? And if so, do you really see a need for silver because of the ability to spend gold in fractional amounts?
Doug Casey
It should be for the market to decide, and they’re fungible between each other, and they can both be stored in facilities around the world. And this can all be done instantly in the comfort of your own home by your computer, switching the ownership of one bit. This is what a bank does for, or, or used to do for a living. Look, silver’s main purpose. Today is an industrial metal because as, as we know, it’s the most reflective of light and the most conductive of heat and electricity, both of, uh, any naturally occurring elements. So it’s got a great future from that point of view.
It has real use value, something which paper, once it’s been made into money, does not. As a speculation at this point, I’m more favorably inclined towards silver, but Let’s put it in context. Back in 2001, I think it was, it got down to as low as $4.50. So it’s run up a lot. So once again, as a speculation, eh, it’s a different story than it was some years ago. Same with gold, as I said. Actually, a lot of the metals have run up, uh, quite a bit, like tungsten and, and timothy, well, copper for that matter, platinum and palladium too, both of them.
So this is why I’m interested in the mining stocks right now, because relative to the metals they’re mining, they’re grossly underpriced. We mentioned Newmont before. It’s selling at about 9 times earnings, which I think is the lowest PE ratio that one’s ever sold at. And some of these companies that are going into production are selling at— some of them, it seems like 1 times cash flow. I mean, this is really, really cheap. So the gold and silver mining companies have run up a lot, but they’re still at historic low levels, certainly relative to other stocks.
So when it comes to the stock market, I’ve gotta say I’m grossly overcommitted to the metals, a lot of metals, not just gold and silver and uranium and copper, basically all of them. Agricultural commodities, same story. They’re very, very cheap now relative to costs of production. And there’s a really good argument that we can lay down about agricultural commodities as well with their own dynamics.
So, um, but getting back to the question, the shares of the companies that mine the metals are really, really cheap right now, and nobody wants to touch them because everybody says, Oh, mining is such a 19th century choo-choo train business. Who wants to play around with big yellow trucks in the dirt and all the problems that I mentioned about earlier that the mining business is?
Okay, that’s fine, but it’s a question of the cost. That’s what determines risk and reward. So yeah, I’m really bullish on these things. Can I be wrong? Yeah, of course. But listen, being a speculator is all about being wrong a lot, so it’s nothing new for me. But yeah, that’s where I am. I expect to stay there for at least a couple of years. More.
Inflation vs. deflation: what comes next?
Monetary Metals
For those who haven’t read all of Doug Casey’s books, you have to read those first. But then in our next book club, we’re going to be reading Zero to One by Peter Thiel, which I know you just finished, Mr. Casey. So what are some lessons we can learn from the investor Peter Thiel, who obviously has done quite well from SpaceX and some of his other ventures? What are some lessons that we can learn from the book Zero to One?
Doug Casey
Yeah, it’s funny. Thiel and I must think a lot alike because he’s bought into New Zealand and I lived there for years and had a lot of real estate there. And I went to Argentina where I did the same thing. Still live here today, and he’s doing the same. We haven’t met, but we have lots of common friends. Regarding the book, I said, okay, I’ll read it, suspicious of, you know, where he was coming from. It’s a smart book.
It’s a thoughtful book. So I recommend the book. It’s actually pretty good. Yeah, I don’t know if Thiel has a website or a blog, but there’s a friend of his named Peter Diamandis. You’re probably familiar with him. And I subscribe to his blog, and is so batshit crazy optimistic. It’s wonderful. I mean, I enjoy reading it because I basically agree with everything he’s saying, but he only considers technology, which is wonderful, and that’s why he’s so optimistic.
But I think there are other things to consider that he doesn’t seem to be considering. But I like to read it because it moderates, you know, my generally bearish cast at this time. So I’m all for Thiel. I’m all for Diamandis. I think Thiel was afraid that we could have a collapse of civilization, which I am. I think we can have a civil war, frankly, here in the US. I don’t think that crosses Diamondis’s mind, but read Thiel’s book, read Diamondis’s blog. They’re both excellent.
Monetary Metals
Last in the rapid-fire section for you, Mr. Casey, looking back at your storied career, in your opinion, which prediction did you get right, which you’re the most proud of, and which prediction did you feel like, wow, that I got it wrong, but it did teach me Which one did I really get right?
Doug Casey
So I started out with no money at all. And the first investment hit that I made in the market was, I mentioned it earlier, was those South African gold stocks, especially the high-cost ones, short life, high cost, very risky, but had those unbelievably high dividend yields. And I remember, I can tell you an anecdote. How did I buy at the bottom? Dead flat at the bottom.
I’ll tell you how it happened. I was a stockbroker at that time in Washington, DC, and I was running ads in the Wall Street Journal and other papers, you know, call me to talk about hold stocks. Got a call from this one guy out in the suburbs of Maryland and he said, Mr. Casey, it sounds good to me. I’d like to drive in there and give you a little bit of money. Said, that sounds good. I figured this is one of these rich good old boys. Well, his idea of a little bit of money was $2,500.
Well, it was more then than it is now. This is 1976 actually is when this happened. So I bought him shares of a number of these companies because they were so cheap. They’re all penny stocks. And the very next day we had riots in Soweto. It looked like South Africa was finally going to collapse in 1976. It was June of 1976. And gold, which had been going down from $200 an ounce, ran up to $200, went down to $103.50. I remember that well.
So both of those things happened in one day. So Elmer calls me back and he says, I’d like to cancel that order. And I said, Elmer, “Sir, this isn’t Kresge’s. You can’t cancel the order.” He hangs up the phone on me. So at that point I had a decision to make. All right, do I want to buy these stocks, journal them into my own account and buy them, or, you know, sell them back into the market and I have to eat the whatever, the bid-ask and all those type of things.
Wait a minute, I believe this stuff. And Elmer canceling the order, that’s the bell ringing at the bottom of the market, the unsophisticated investor one. And it was the bottom of the market. I think that was my best trade. And those stocks doubled and doubled and redoubled again by the time the peak came in 1980 when gold went to $800 and whatever dollars an ounce. That was the most memorable shot that I took. And others I’ve got lucky on, like, uh, remember the great mining fraud, Bre-X?
I don’t know if you encountered that or not, but it was a gigantic mining fraud in Indonesia in, in orangutan pasture. And, uh, the story was very compelling. It was a well-told fraud and I had a bunch of shares in it because, hey, I wasn’t expecting a fraud. Started buying it at $1 sold at around $200. That was one thing. Diamond Fields, which started out as offshore diamonds in Namibia.
Okay, that’s pretty exotic. And there was very good geological reasons, all kinds, why this should be a fantastic stock. Well, that totally crapped out. But what happened was a couple of geologists, they also had properties in Labrador and they’re flying— this is the truth— the last helicopter back from the exploration camp camp and they looked at this one hill and said, gee, that’s an interesting color. And they landed, explored it, turned out to be the Voisey’s Bay nickel discovery. And that I got into in a private placement at a quarter with a full warrant.
Later went to, I think it went to $250 a share, which is to say it was 100 to 1, but the warrant gave me double on my money. So things like that happen in the mining business. Okay. Those are big wins. Big losses. There certainly have been some disastrous losses. Either of those two could have been wipe out losses, but it turned out just the opposite.
One thing I regret is I could have made my life so much easier if having heard the story about Warren Buffett and Berkshire Hathaway when he reconstituted it, I don’t know, in the late ’70s, something like that. If I could have sized up who Buffett was, every dollar I owned, I just would’ve put it into Berkshire Hathaway and made my life so much simpler. I mean, I would’ve gotten 1,000 to 1 for doing nothing. So I didn’t do that.
And I’ve always been a technophile, but I’ve never gotten involved in high-tech companies. I guess I always believed high-tech, big wreck, ’cause it’s so hard to pick the winners. Well, it’s hard to pick the winners everywhere. So I haven’t been involved in, I feel like I missed the boat on that too. Okay, well, you can’t kiss all the girls, so I don’t feel too bad about that. Yeah.
Monetary Metals
All right, Doug, last interview question for you. It’s been an honor getting to speak with you. What’s a question I should be asking all future guests of the Gold Exchange Podcast?
Doug Casey
I would try to probe their philosophical views. How do they think the world works? I mean, look at George Soros, evil human being. I’m sure he thinks the world works is very different from the way I think the world works, but he’s been immensely successful?
So I think that’s a question that you should ask. You should ask everybody just because it helps to get the measure of who you’re dealing with. And you know, one of my best friends incidentally is a guy named Jim Rogers. I’m sure you’re familiar with him. We’ve been friends for 40 years. Okay. And Jim, as you may recall, was George Soros’s partner back in the days of Quantum Fund. And Jim is a totally different person from Soros. So, I would tend to, just ’cause it’s interesting and most people are afraid to do this and don’t do it, it’s to probe into the philosophical way that people’s minds work. That’s what I find.
Monetary Metals
Doug, thank you so much for joining me on the Gold Exchange Podcast. If people want to hear more Doug Casey, read your books, where can they find more Doug Casey?
Doug Casey
I do a daily blog on internationalman.com. It’s free. I only write once a week, but we have really great writers all the days of the week. So internationalman.com, that’s one. I have a podcast with my co-author on this book, The Preparation. It’s called Doug Casey’s Take on YouTube.
I’ve written 3 novels with my friend John Hunt, Speculator, Drug Lord, and Assassin. And hopefully Terrorist is on the way, which is a subject I find interesting. And we have a paid newsletter that recommends stocks, mining stocks mostly, at this moment called crisisinvesting.com.
Oh, I know one other thing that should be relevant to your listeners now is we have another YouTube thing that’s free called The Experts Roundtable. And what we do there is there’s a dozen or more guys that are really expert. They’re geologists, they’re analysts, newsletter writers, and all kinds of, but they know the mining business. And so a dozen of us, get together and talk to a mining company and tear it apart. And it’s very educational seeing how the guy that runs the company responds to very tough questions from these guys. So expertsroundtable.com is something that’s worthwhile going to also. I think that’s it. That keeps me busy.
Monetary Metals
He’s a busy man. He’s a Renaissance man. Doug Casey, thank you so much for joining the podcast.
Doug Casey
Thanks, Ben. I appreciate that.
Follow Monetary Metals on LinkedIn: /company/monetary-metals-&-co./
Follow Darius Dale on LinkedIn: /in/doug-casey/
