Jason Hartman talks about past recession home prices. He hosts author of Crisis Investing, Doug Casey. Casey gives his opinion on The Great Recession and gives investment advice.
Jason Hartman 0:54
Welcome to Episode 1451. Today, our guests will be Doug Casey with a jam packed interview and some good insights into what is going on. He’s a returning guest. He’s been on the show several times before. And you probably know dug through Casey Research or any of his many, many very popular books. So we will get into that in just a moment. But what am I thinking about today? Well, obviously, so much going on in the world. I’ve been on two mastermind meetings today online, of course, not in person. And those are becoming so convenient. Oh, what’s your minds me? I got an announcement for you. And you may already know because many of you who have registered just from our email that we sent you, but we have a webinar tomorrow and then it’s also going to rerun on Sunday. And that is about Sweet Home Alabama. Actually, we’ve got some we’re calling this one sweet New Home Alabama because it’s new construction. These are gorgeous properties, gorgeous properties in three different Alabama markets, Huntsville, Tuscaloosa and Birmingham. And I think you’ll really like this we’ve got a good relationship there with a good home builder provider, and you’re definitely not gonna want to miss this one. You can register it bit.li slash Sweet Home webinar. That’s bi T dot L y slash Sweet Home webinar. Okay, so if.li slash Sweet Home webinar, that link will be in the show notes for you at Jason Hartman calm and join us for that tomorrow. Many, many people have already registered and we’d love to have you join us as well. As we interview the Home Builders and the property management team and really show you some good stuff you’ll really you’ll just be so impressed with these properties. They’re they’re so nice. They do not look like rental properties at all. In fact, I remarked as we were looking at the slides for the webinar, in the videos for it, I remarked that, you know, I would easily live there right myself and you know, I’m a little more picky than your average rental property occupant. I’ve got some cash, right? So I want a nicer place. And well, I’ll tell you, some of these houses are just so nice, gorgeous countertops, gorgeous fixtures, really nice woodwork. These are upper scale rental properties, okay. And these are the properties that are like a Class A plus class properties in in good growing markets with just a lot of good fundamentals. So So join us for that tomorrow. Again, bi t.ly slash sweet home like Alabama, Sweet Home webinar, Sweet Home webinar. Okay, so before we get to our guests, Doug Casey, I’ve been looking at a lot of research today as I do most every day. We just dropped some money on joining an expensive corporate level subscription service for data just so we have more good insights to share with you, this is a very important time to really be looking at beta and taking deep dives into what has happened historically, what might happen this time around how we invest for a pandemic. And just make sure that our portfolio our investments are safe from what is going on, and then also positioned for growth from all the happenings in the world. So some great opportunities here on both sides on the safety side and on the growth side. But one of the charts I was looking at today, which I just thought I’d share with you before we get to our guest is about the price changes for homes for the home market the housing market during several of the past recessions Right, what kind of changes did we see in home prices? Now, I have to just make the the big, big disclaimer here. That of course, this is a national chart. And with that you’re going to have a lot of subtleties that are missed, completely missed. Because there’s no such thing as a US housing market. There’s no such thing as a national housing market. There are really about 400 local markets. And like I always say, the old thing is all real estate is local. All real estate is local. So when we look at something like this, it’s just a very macro view. But nonetheless, it’s still interesting, and it does tell us something, but it certainly doesn’t tell us everything, because there are many nuances here. And when you consider the last great recession Otherwise known as the global financial crisis, the GFC. You see there that that one is proximate in our memories. And that really, really took place for the most part in the very cyclical markets. They were obviously hit the hardest. So when you look at the weighted average of the appreciation or depreciation, mostly depreciation is what I’m going to talk about now. But there’s one exception, you’ll see that that’s heavily heavily weighted, always on the cyclical markets, especially the last time around, because the last time around those cyclical markets during the good times got way further out of whack than they had in the past. Okay, so let’s talk about the chart. Let’s look at some data here. Okay. And when I say look at it, I’m going to translate it into audio format for you. So it will be understandable and you are going to see through my Eyes. Okay, let’s start back in January of 1980, we had a recession. Okay, remember we were coming right off the Jimmy Carter economic disaster again by opinion of Carter, good man, bad president. Not a good leader at all, but certainly a smart person and just not a good leader. Okay. But he had intellectual knowledge, but intellectual knowledge. isn’t everything. Okay? He definitely isn’t. It’s something but it’s certainly not everything. Okay. So, in that recession, housing prices nationally went down by 2.6%. Then we had another recession. It wasn’t much longer before we had another recession, where prices went down from July of 1981 to November of 82. Remember, a recession academically defined as two consecutive quarters with flat or declining gross domestic product. GDP, okay in that recession 5.8% decline, but again, this is National, so it has its flaws. Okay, then go fast forward to 1990 1990, July of 1990 through March of 1991. Now remember what happened there remember good old George Bush Senior, he had a high approval rating, and then his approval rating just sank, sank, sank suddenly and you remember the Persian Gulf War and all of this stuff. And by the way, I must just mention a sideline. It was kind of kind of funny. I remember I went to your Belinda park in Orange County, California with my girlfriend at the time my on and off girlfriend for seven years was her name was Shannon. And she and I and a couple of our friends went and saw a rally with Ronald Reagan and George Bush. Wow, that was so cool to see Ronald Reagan. And he was such a funny guy. And he was campaigning for george bush, the elder george bush. And at the time, and I remember Reagan stood up at the podium, and he said, I love being back in Orange County, where you have the Santa Ana winds. And anybody who’s you know, lived in Southern California knows what the Santa Ana winds are there when these warm winds they reverse course, and instead of an onshore flow goes the other way, which is unusual. It’s just a different kind of weather condition. They call it the Santa Ana winds. And Reagan goes on to say and is very humorous, great communicator style. He goes on to say I love being back in Orange County, and I really love the Santa Ana winds. But our opponent, Bill Clinton, he doesn’t like coming here because he avoids any place where they have a draft
in the audience just cracked up. It was it was really funny, Reagan WhatsApp, he was quite the communicator. Definitely. Definitely a great communicator. Okay, so during that recession 6.7% decline 6.7% decline. Now here’s the interesting one, the next recession comes along 10 years later, March 2001 to November of 2001. And that now remember we got 911 in there. Okay. But during that time, housing prices nationally a ppreciate. It Yes, I did say appreciate it increased in value by 4.4%. Okay, 4.4% increase. And then we had a really bad one, the global financial crisis, the worst economy and just over seven decades, the Great Recession, December 2007, to June of 2009, huge collapse of the global economy, right, and we’ve discussed that ad nauseum on the show over the years. And we were discussing it back then. And you know, now we’re 1012 years later, and we’re still talking about it, right. But we’re gonna have a new one to talk about. And that’s the one we’re going through right now. We’re going to be talking about that one for many years to come to as it unfolds, and we gain new knowledge about it. But December 2007, to June of 2009. Housing prices nationally declined by 16.7% 16.7%. Ouch. That was a big one. But that was mostly in the in the cyclical markets, not the linear markets that we invest in. And, surprisingly, income on those income properties. Cash Flow held up pretty darn well. I mean, I remember there were some downward pressures for a time there when you couldn’t raise your rent. In fact, sometimes to keep a tenant you were maybe reducing your rent by 25 bucks a month. Again, no big deal when you follow my 10 commandments of success. Investing, you’re going to be pretty insulated, even from really scary downturns. Okay, and we’ll see how that works out this time because, hey, we’re in one now. Now, my strategy has certainly evolved. I call it pandemic investing. We’ve been alluding to a lot of that on recent episodes for the past two months. And we will continue, and I promise so I know you’re asking about it, we will bring you our webinar. And our entire six week course, is coming on pandemic investing. And, you know, I’ve been meaning to get that to you, frankly, it’s like herding cats, if you will, because the data just keeps changing and developing and I’m trying to take a snapshot in time and present something really good for you really usable, but it’s really hard when it’s so squirrely because we’re right, we’re in the midst of it right now. And it just keeps Changing. So I’ll get to it. Don’t worry, it’s coming, folks. It’s coming. I mean, the whole six week course is pretty much finished. But I just having to keep update the charts and the graphs in there for you. So, you know, that’s why it’s nice that there will be a launch webinar for the course. And you’re all invited to that, of course. And then over the six weeks, I can keep sort of iterating and updating the data as we go along through that through that course. So really excited about that. It’s coming. We’ll announce that soon, but definitely get on our webinar tomorrow. As we talked about sweet home, Alabama, and three markets. They’re brand new construction, so really nice. Again, bi t.li slash Sweet Home webinar. And without further ado, let’s get to our returning guest, Doug Casey. Let’s welcome back a guest who’s been on several times and that is none other than Doug Casey. He is the founder of international man also case he research which he’s not as directly involved with anymore. He’s an author of several great books and a real thought leader on various investments and situations. And we’re obviously all in a situation now. So I wanted to invite him back, Doug, it’s great to have you back on and you’re coming to us from Argentina. Is that or no? Ecuador, right? No. Across the plate
Doug Casey 14:24
River. I’m worldwide. Okay.
Jason Hartman 14:27
farm here. Fantastic. And then you also at least used to live in Aspen half of the year and then South America the other half of the year. Is that about right?
Doug Casey 14:37
That’s right. I still have my ranch in Aspen, but it’s questionable whether I’ll even go back there in the summer. Yeah.
Jason Hartman 14:43
Well, I met you at Aspen and we did a live interview in person there and that was a lot of fun. I think maybe that was the last time you were on the show but a lot has changed in the world. What is your take on the Coronavirus pandemic situation? Is this an overreaction is the is the reaction maybe bigger than the problem or what are you thinking?
Doug Casey 15:05
It’s a gigantic overreaction. The hysteria that’s going on right now is the biggest in the way of hysteria since the witch trials of the Salem late, The Late Late 17th century. Wow. Simply overblown. The fact of the matter is that the ordinary seasonal flu kills someplace between 25 and 60,000 American 25,000 60,000 Americans a year and always has the death toll from this isn’t going to be anything near that. But these morons have totally shut down the economy. And I don’t think it’s going to recover very easily. So this is a man made disaster and I’m not talking about the virus itself. I have no idea what it is. It’s just another virus. There are hundreds of viruses, the pass through the population. Always have people only really isolated viruses as a kind of life form. Oh, it was only 70 or 80 years ago. So these things have been going on since day one. This is just one among many. And it should be and would have been just forgotten, but it’s not it’s, it’s turned into a major disaster for no good reason.
Jason Hartman 16:24
Okay. I don’t want to get into the debate because we’ll burn up a lot of time of is this different than the flu or not? There are some differences even though the death numbers are the issue you mentioned is definitely correct. But there’s the contagiousness, there’s, there’s the treatment. There’s the overwhelming the healthcare system possibility. There’s the fact that, you know, on the normal flu usually don’t need ventilators. So some differences. I mean, you agree with that, right?
Doug Casey 16:49
Well, look, I’m not a biologist, I’m not doing the allergist. I’m not a medical expert, and I don’t really trust anything that you see on the news these days. Yeah. So who really knows? Right? All I can say is that I haven’t personally, I don’t personally know anybody that’s been afflicted by the virus.
Jason Hartman 17:11
Okay, fair enough. So the economy, let’s jump on that now. The economy is in uncharted territory. I mean, I like to say, Doug, that we are witnessing the biggest money printing extravaganza in world history. And we’re just seeing the beginning of it now. The 2.2 trillion is just the beginning. At least that’s my take on it. What do you think about this, you know, the various bailouts, the various aid and it feels like we’re galloping towards socialism. Wow, it’s, it’s absolutely crazy.
Doug Casey 17:43
Well, it’s a catastrophe in the making. The analogy I like to use is that since the meltdown of 2008 look at that as being entering the leading edge of a huge financial hurricane. We went through this bleeding edge of the hurricane in 2008, and nine and 10, a very big hurricane. So we’ve been going through a very big eye of the storm. Now we’re entering the trailing edge of the storm. And it’s going to be much worse, much different and much longer lasting than the unpleasantness that we might remember from 2008 and nine and 10.
Jason Hartman 18:19
Okay, so your metaphor is that for the past eight to 10 years coming out of the Great Recession, and I’m, I’m sort of using 2012 as the kind of coming out of the Great Recession, even some would consider it 2010. But 810 years was the eye of the hurricane. And now, you know, in the eye, it’s sort of calm, right? There’s been a good economy, things have been growing people, there’s a wealth effect that’s been going on that last eight or 10 years, and now we’re going to get the other part of the storm. Right. Is that the way you’re looking at it?
Doug Casey 18:52
That’s right. And what happened was, is that the government caused the disaster of 2008 For us, by creating gigantic distortions and Miss allocations of capital, we can go back a lot further Western civilization itself, which, incidentally, is the only civilization in the history of the world that actually even counts. It peaked in 1914, and has been going downhill since then. That’s not to say that science and technology, which are the sole fruits, which are among the fruits of Western civilization, the only civilization that has a meaningful science and technology, but science and technology has been increasing at the rate of Moore’s law for the last hundred years, but the civilization itself has been going downhill. So
Jason Hartman 19:47
tell us what you mean by that because I sometimes like to say with a friend of mine, that we think civilization peaked in 1990. Now granted, there’s been technological advance since then. But I’m talking about the culture war. What do you mean by that? When you say you say 1914? Well, okay, you’re probably talking about the Federal Reserve and the IRS coming along, right is is that where you’re going?
Doug Casey 20:11
Those are tools of things I’m talking about, but the essence of Western civilization, what started with the Greeks in the fifth century BC, the look, it’s all kinds of things that have changed over the years. And that’s an entirely separate conversation. But I think that what we’re looking at here is something much more serious than just say, financial meltdown. I think it’s going to turn into an economic meltdown. We’re going to have gigantic political changes, it’s going to turn into a social meltdown, too, as well. The United States itself, incidentally, is no longer really a country. It’s a multicultural domestic Empire. At this point. It’s very hard to hold something like that together. We don’t ever have a binding culture where people that live in the geographic area called the United States, they no longer share anything that resembles a common religion. Even a common language. common culture. Yes, because there’s
Jason Hartman 21:21
so much for America being a melting pot lately, right? It’s more of a toss salad. Would that be a fair statement?
Doug Casey 21:29
Well, that’s right. It’s a toss out where its components don’t even go together
Jason Hartman 21:34
very well. Right, a mismatch toss salad, but it’s, the ingredients don’t taste good together. Okay. All right.
Doug Casey 21:43
So this whole thing, the virus is really just the pin that broke the gigantic financial bubble that was created by the government creating trillions of dollars starting in 2008. And it wasn’t only the US Government, it’s all the major governments around the world that have created trillions and trillions of their own currencies. Now, that dependence broken the bubble, they can no longer reduce interest rates any further. They’re already zero or below zero in Europe and Japan, close to zero in the US, can they create a lot more money while they’re doing that? But these trillions of dollars, basically helicopter money, maybe they’re going to pull up the markets again, the financial markets, sure that’s the first place the money goes. But this time around, we’re going to have huge price rises on our retail level, food, shelter, clothing, basics of that nature are all gonna start heading up strongly at the very time
Jason Hartman 22:47
You mean prices of those things. Exactly. Okay. Right. So inflation in food clothing shelter, you said Right,
Doug Casey 22:54
exactly. We’ve had we’ve had plenty of inflation in the financial markets with stock price.
Jason Hartman 22:59
Inflation versus consumer price inflation got it
Doug Casey 23:03
exactly. And even bond prices are at an all time high. This next time around, actually, the big problem this time around isn’t going to be so much the stock market, although it’s we just started upon this bear market, the big problem is going to be in bonds, there are triple threat to your capital, you have the inflation risk, the currency that the dollars that you get back are going to go down in value very rapidly. Over the next decade, you’ve got the interest rate risk, interest rates, not an all time low, are going to start heading back up to the levels they were in the early 80s and beyond. And by that I mean 15 and 20% and higher. And the last the default risk, there’s so much debt in the world, a lot of it’s not going to be paid. So, um bonds are about the worst place for money at this point.
Jason Hartman 23:53
Okay, and I’d agree with that bonds are very vulnerable to inflation. So I would definitely I agree with you there. Okay. So I mean, would it be fair to say that you’re a gold bug? Well, I believe that gold is proven as being the best kind of money. It has unique characteristics that are really only true of gold that make it especially useful for money. Steel is especially useful for buildings and cars. And aluminum is good for cans and airplanes and every one of the 92 naturally occurring elements has unique characteristics, and gold as the most durable and visible of all the naturally occurring elements is especially what is money that’s why it’s always been used as money. So I think the world is going to go back to gold and the idea of national currencies that are not even paper anymore because they want to go digital with them. total disaster from a personal freedom. point of view and meaning of private because your let me just expand on that for a moment. You know, if you don’t have privacy in the way you allocate your resources if you don’t have privacy in the way you spend your money, you know, that is a very big concern for liberty. Okay, financial privacy, you know, if the government can track through a digital dollar or a crypto currency that is sponsored by the central banks and the governments, then you have no privacy, they know everything you buy, they know every every they know they know how much you have, and they know everything you buy, and they know what you spend, they know if you bought a gun. They know if you bought a face mask. They know if you bought a new phone, you went to a strip club, okay, so this is very risky that they do that and I already see them through this crisis paving the way to that China as this first started to break out, you know, there were articles about how the currency is dangerous because it can Harry’s germs and people can become infected by using the currency. And China is fairly cashless, by the way, at least when I was there, you know, people were using WeChat to pay for lots of things and just not a lot of cash being used. Of course, the Scandinavian countries are almost completely cashless. Some places in the US are cashless where they literally say, you know, please no cash, you know, use a credit card use Apple Pay or Google pay. So this this is a big concern. You know, as far as cryptocurrencies go, I think the one that’ll win the game is not going to be Bitcoin or aetherium or anything else. It’s going to be the one sponsored by the governments in the central banks.
Doug Casey 26:39
I’m certainly going to avoid using any government or central bank cryptocurrency.
Jason Hartman 26:45
Yeah, well, I’m not saying I like the idea of them winning the game. I’m just saying because they’re the most the governments and central banks are the most powerful entities the human race has ever known. They will force it upon us, they’ll just tell us, that’s what we have to us there are now legal tender laws about the dollar, saying it’s for all debts public and private. Right? It says it right on on the currency. And they’ll just make us use it. Right?
Doug Casey 27:09
Well, I suppose they will. But this is one of the advantages of living and out of the way backward countries, as I do, I mean, I’ve, I’ve traveled many times, most of these countries many times, to 155 different countries, I’ve lived in 10 different countries. And I find that I generally prefer living in these quiet, backward countries, even countries that have, especially countries that have serious economic problems, because bringing capital from outside I can have an extraordinarily high standard of living and a very low cost. But getting back to what you were saying, yes, the world is going to go in that direction. I don’t know what you can do about it. If, if the whole world starts to resemble Germany in the 1930s, or the Soviet you union from the way it was from the 1920s to the 1980s. There’s not much you can do about it. And unfortunately, most people worship their governments, they think that their governments are necessary and important and good. I’ve been a philosophical anarchist for many years. I don’t believe that the institution of government itself is either necessary or immoral. But that’s, that’s the philosophical state. And
Jason Hartman 28:28
that would take an awfully long time to discuss. So let’s skip that one for now. But yeah, okay, got it. So the next things to expect, we both agree that we’re going to see more socialism, more government intrusion in our lives, the movement toward a government sponsored cryptocurrency and we all agree on that.
Doug Casey 28:48
Yeah, that’s what’s going to happen. That’s actually in the cards, we’re going to see much higher levels of inflation, which is well on the part of the central banks which create the currency that can be Printing tons of new currency, whether it’s the old currency that we use now, or the new one will be much easier for them to do that will create more distortions in the market we’ve entered upon is what I call the greater depression. As I said before, it’s going to be much worse and more serious and different than the unpleasantness, not just of 2008 and on, but of 1929 to 1946. This has the potential to be the biggest upset since the Industrial Revolution. It’s gonna be fascinating to watch
Jason Hartman 29:34
it, it definitely is, and hopefully we will help our listeners at least be comfortable through it or potentially thrive and prosper through it. Because economics is a relative game. All you have to do is be ahead of the average and you are winning, okay, even if the average declines, just be ahead of it. So if everybody’s losing their shirt and you’re treading water and staying the same You’re doing great, okay. And one of the things I would encourage people to do, because one of my other predictions is we’re going I mean, there are many but you know, we’re going to see people flee high density living environments to low density living environments, they already know now they can usually work at home, we’re going to see a move toward a simpler life, I believe out of this, we are going to see a move toward a nationwide Housing Assistance Program. Maybe it’s the section eight program we already have expanded, or a whole new program, we’re going to see more pushes toward universal basic income, and Spain has already is already in the process of enacting a universal basic income. And this is going to spread around the world if you asked me, but you know, when I was a kid, Doug, and I did encourage people to you know, go to YouTube or whatever and watch some of the episodes. I used to watch the show The Waltons, I’m sure you know that show. And, and you just see how simple life was back then. Right? I think We see that, you know, we’ve used that when we watch any old era TV or movie. But you look at that, and you also look at the Great Depression, and how people in the urban areas in the high density areas were hurt the most. And the people that suffered the least, or the people living in the more rural, and they really didn’t have suburbia, back then yet, because that came after world war two in America, which is a uniquely American idea, suburbia, they didn’t really, you know, their life didn’t change that much at all. They grew their own food, they were self sufficient. And, you know, they kind of went on with life. But if you were in an urban area, or you were in line for soup, or whatever you could get, and you couldn’t be self sufficient. And so, you know, there’s been this push to push people, maybe it’s un agenda 21 or whatever, or just you know, the way societies evolve toward these high density urban living environments where they cannot be self sufficient. You probably have some thoughts on that as well. Since you live on ranches anywhere you go, right.
Doug Casey 32:03
Yes, I agree. You’re you’re absolutely correct. There will be a move away from the city is now here in Oregon. Why? I’m on 1000 acres I’ve got just Well, that’s a very small plot for this part of the world if you’re a landowner, yeah. I mean, across the river in Argentina, I have about 150,000 acres in conjunction with some partners, but this is a much more livable thing to be on. But here I’ve got, I’ve got a gym. I’ve got a pool. I’ve got a mile Riverfront. I’ve got dairy cows, beef, cows, chickens. So I’m pretty self contained. I’ve got a great library and we’re on the internet right now. So what else I need? Actually, nothing that I can think of. Yeah, you’re quite correct. On all that you said I’m I’m intensely optimistic about this. Long term future I’m a believer in Ray Kurzweil, his concept of the singularity, right coming up perhaps at the end, this generation,
Jason Hartman 33:10
he predicts 2030 will achieve singularity when the $1,000 computer can do what is the human brain can do. Right is that that’s part of the singularity concept that Ray Kurzweil talks about.
Doug Casey 33:25
That’s just part of that. Yeah,
Jason Hartman 33:27
go ahead and expand on it.
Doug Casey 33:29
locations in many, many different areas of life that will could transform life totally, especially when we get into nanotechnology. So if you can hang on for another 20 years, we may live in a absolutely different world, hopefully a much, much better world totally different. But we have to do here is figure out what’s going to happen over the next few years. And I believe that the general standard of living is going to go down a lot. The Chaos levels Want to go up a lot. And the only thing that you can really do other than speculate in the markets to try to stay ahead, although I’ve got to say that’s gonna be very hard, because the depression is a time when everybody’s standard of living goes down And the winner is just the person that loses the least.
Jason Hartman 34:17
Right, exactly that, by the way, listeners, that’s a really good point. Doug, can you repeat that? Yeah,
Doug Casey 34:25
in a depression, the winner is the person that loses the least because the general standard of living drops into depression, and that’s what we’re looking at.
Jason Hartman 34:34
Okay. So tell us how we lose the least I like it. That’s good.
Doug Casey 34:39
The most important thing is that you have assets where there’s no counterparty risk, where you don’t have to trust a bank, or an insurance company or for that matter, your pension fund, which is stuffed with bonds and or priced stocks. So I think that your basic savings Shouldn’t be in the form of gold and silver coins, mostly in your own possession. If you have significant assets, you should have been more than one political jurisdiction because your greatest danger today isn’t the markets which are dangerous enough, but it’s the political system. It’s your government. So you should have lots of gold and silver coins. And if you want to speculate, the best place to be, in my opinion, are mining stocks. They’re very cheap right now, gold mines especially, are all making a lot of money. 1600 dollars an ounce, but they’re very cheap, because the average financial manager doesn’t believe in them. He doesn’t understand them. He doesn’t own them. That’s gonna change no pylon to him. It’s gonna be like the contents of Hoover Dam trying to get through a garden hose next few years. So that’s where I’m concentrated right now. mining stocks in general. Okay, hands on.
Jason Hartman 36:00
About mining stocks vcv cheap oil. That’s good news for the miners, right? Where energy gets really cheap because it’s it costs less to bring bring the metals out of the ground is that is that how you would look at that?
Doug Casey 36:12
depends on the type of mine, whether it’s underground mine or an open pit mine, whether the mine is close to civilization are far away. But we can generalize and say that perhaps 20% of the cost of mining is oil related. And, of course, oil has fallen in the last couple of months from about $55 down to about 25. At the moment, I don’t know how much lower it can go because none of the frackers in the US are making money. In fact, they’re all hemorrhaging money at this
Jason Hartman 36:44
point, right? They are probably going to lose them completely. They’re just not gonna stay in business.
Doug Casey 36:50
Probably not unless oil prices go up. But I speculate in commodities, not just oil and gas and copper and you Gold, but soybeans and hogs and cocoa and coffee, all the rest of them. And what I can tell you right now is that none of the producers of commodities except for gold, are making money. It doesn’t matter. The gold miners are making money from Gold’s point of view, because all the gold that’s ever been mined, basically, still in existence. That’s not true. Any other commodity, even silver.
Jason Hartman 37:29
You know, I just gotta ask you about that for a second. This still seems pretty far fetched to me, but it’s worth a discussion point. What about mining the asteroids? What about creating these metals and alette in labs? You know, I’ve read articles about both of those things. And, you know, maybe the supply isn’t as limited as we want to believe this may be far off, but I don’t know how far you know, maybe it’s not that far.
Doug Casey 37:52
In my one of my books, crisis investing for the rest of the 90s. I talked about exactly this. There are about 6 billion ounces of gold in existence right now above ground. Okay? That’s the best guess nobody knows for sure. About 80 million ounces per year are produced. So the amount of gold in the world grows by about one in a third one and a half percent per year. Now, your question was, can I supply go up a lot, not really here on planet Earth, because all of the high grade deposits have basically been found people have been looking for gold for thousands of years. So all the low hanging fruit spin fun. Now, when you find a new gold deposit, you’re looking at moving hundreds of millions of tons of ore, and it might grade a hundredth of an ounce per ton. This is next to nothing. The gold mines now or something like the basin, treasure of Sierra Madre, you’re talking about gigantic earthmoving operations. Extremely capital intensive and high cost. Now we can change that will remind the asteroids Yes, of course they will. There’s no question that the as many of the asteroids have heavy metals in them like Iridium and rhodium and gold, platinum on these things, but that’s going to be very, very high cost. And that’s pretty far in the future still 20 or 30 or 40 years. The sea is full of gold. It’s full of everything, everything dissolves into the sea. So can gold be recovered from the sea? People talked about that for many generations? Well, perhaps bioengineering could breed types of seaweed that can concentrate gold and much the way that spinach concentrates iron, this type of thing could be done soon. No, not very soon at all. could go be created, transmuted from other elements. Yes, of course. alchemy. Yeah, right. It can be done. It’s just a question of the number of protons in the nucleus of an atom. But
Jason Hartman 40:06
I just wanted to bring that up because you know, the value of precious metals, diamonds, or most anything else is based on scarcity versus demand. Yet, you know, it needs to be scarce and it needs to have high demand. That’s how you how the value is upheld, right? If it’s abundant, it has low demand, or if it’s abundant, then the demand can be met. If it’s scarce, and there’s demand for it, then the demand can’t be met and the price goes up. That’s right. Yeah, basic economics.
Doug Casey 40:39
Don’t Don’t worry. Don’t worry about a glut of gold and a time in the near future. Okay. All right. It’s just not an element.
Jason Hartman 40:47
Okay. What else do you want to say, you know, we brought up the part about the move toward socialism and more bailouts and increased government intervention and, you know, inflation and inflationary The future any any more thoughts about that,
Doug Casey 41:02
I’ll just say that we’ve entered upon the greater depression, which is what I call it. And there’s not much you can do about it in much the same way that if a society jumps off the top of 100 storey building, they’re fine until they hit the ground. We’re about to hit the ground, hold on to your hat, it’s gonna be very interesting with all kinds of consequences. One of the most serious of them down the road is going to be military. I mean, we’ve had World War Two, and there will be world war three, it’ll be very, very different from World War Two. And I suspect it’s gonna have a substantial biological component. So all the F 20 twos and B twos and the rest of this
Jason Hartman 41:43
are not gonna matter that much.
Doug Casey 41:45
Well, it’s not gonna matter. I mean, it’s all that’s done as is helped to bankrupt the US. So it’s gonna be interesting to watch on your widescreen.
Jason Hartman 41:54
Who’s the war gonna be with? Is it going to be China?
Doug Casey 41:57
Well, look, it’s a biological war. Could be with a really smart kid that lives in a basement. In Serbia, for all I know, there are many advantages to biological war and the US government has been working on this type of thing, mainly at Fort Detrick in the US for decades. And they spent billions of dollars developing all kinds of nasty things. But with the development of CRISPR and gene editing technology,
Doug Casey 42:26
yeah, exactly. In other words, over the next generation, just as in the last generation, computer science was the big deal with the next generation, I think it’s going to be biological science. So but we’ll also have a computer element to the world war three because the whole world runs on computers, everything from the electricity grid, to the financial system, everything it’s all computer driven. Now didn’t used to be,
Jason Hartman 42:53
so you’re going to have
Doug Casey 42:54
world war three is going to be a computer war, biological war and of course, They’ll still be people running around with ak 47 shooting, but it’s gonna be nasty.
Jason Hartman 43:04
Any idea when that’s coming, Doug, you know, you’ve cheered us up so much today.
Doug Casey 43:10
I’m just, I’m just kidding. I’m just calling him away. I
Doug Casey 43:13
said, I prefer good times, much more than I prefer bad times. But I didn’t make the game. Yeah, of course, what I would recommend, however, to your listeners, Jason is they read the novels that I’ve written. You can say many things in the foreign fiction that you cannot say, or you perhaps shouldn’t say, I know nonfiction. So they can go on Amazon and pick up a copy of speculator which is about mining business in a bush war in Africa. And drug lord is our hero goes into that trade. And now assassin, which will be out in July, where our hero Charles Knight, investigates the world of assassinations, political assassins in particular, and they’re going to be novels are even more radical to follow. So you don’t want to fall behind. So I would
Jason Hartman 44:05
very early, and those are available at all the usual sources. Do you want to give out a website as well?
Doug Casey 44:12
Well go to international man calm. I do an interview or two with them. Every weekend. We have a lot of great articles. It’s free. But they’re fantastic articles on all kinds of things. So international man, calm is the place to go.
Jason Hartman 44:27
Excellent. And Doug, thanks for sharing some of these thoughts with us today. And let’s just close with that idea that in bad times, in general, the person who wins is the person who loses the least. And that’s what we’re here for. It’s a relative thing. I always say economics is a relative thing. So like that old cliche, that story of the bear in the woods, and the two hikers and the one that’s, you know, tightening his shoelaces and his buddy says, Man, you can’t outrun a bear and he says, I don’t have to outrun the bear. I just Have outrun you. And and that’s, you know, really what it is about is becoming the least because everything is relative. Doug Casey, thanks for joining us again.
Doug Casey 45:10
Okay, my pleasure, Jason.
Jason Hartman 45:16
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