Doug Casey very gloomy and right three years ago
Posted on 22 July 2010 with 3 comments from readers
Alternative investment guru Doug Casey stayed true to his gloomy view of a second phase of the Greater Depression that we are living through in his presentation in Vancouver this morning.
He thinks markets are presently in something of a ’sweet spot’ or the ‘eye of the hurricane’ and that very shortly the volatility will return. It would be easy to dismiss him as a crank if his warnings three years ago were not so accurate, see this video:
Mr Casey is only investing in farm land, gold and silver, so bleak has he become about the prospects as he holds all assets have become overvalued by decades of leveraging. So things feel better than 18 months ago but are about to get much worse.
His thesis is simple and hard to refute: nothing has really been done to solve the financial crisis, only the cracks have been papered over with more borrowing. Thus the deleveraging has a long way to go, and that means lower valuations for stocks, bonds and real estate.
‘It will be much more widespread and much stormier and last longer,’ he said, believing that currency printing will create more asset bubbles which investors will be able to profit from such as gold and junior resource stocks.
He also believes in political risk diversification, that is shifting assets overseas to multiple locations. His own choice is Argentina which has a ‘kind of feudal society in the provinces’.
Doom and gloom
But Mr Casey is resolute that by the end of the year the bad times will be back for financial markets and that there will be world changing upsets in 2011 and 2012. This will be accompanied by social upheavals, military disasters and political chaos.
You certainly got the feeling that perhaps he had a bad flight up to Vancouver or had gotten ought of the wrong side of the bed that morning. The annoying part is that so much of what he said three years ago was also dismissed as nonsense then and has come right.
3 Comments posted by readers:
If people would only listen with an open mind, they would be able to see that the man is talking sense! OK perhaps his predictions are a bit dire, but there is logic in what he is saying.
The world has become so obsessed (and now addicted) with chasing quantitative growth that the powers that be will do anything to achieve it.
What people do not realize is that chasing these unnatural growth rates is like body building with steroids!!! The backlash by way of de-leveraging is severe and takes many years to complete. We are in the de-leveraging stage and instead of managing it and making it as painless as possible for the majority, we are still in denial and fighting it. Governments are pumping trillions into their economies like body builders pump steroids……and we all know what happens thereafter!
@ prachish: Well said.
I’ve been a subscriber to several of CaseyResearch’s newsletters for over 3 years now, and it has been consistently good investment advice.
In a nutshell, I can’t get this kind of advice anywhere for even 5 times the price.
Investment advice from folks like Casey, Bill Bonner, Marc Faber, Barry Ritholz, John Mauldin, etc. should be taken very seriously.
What is one to do if you need a house over your head though.
I live in Australia and we are currently going through the mightiest of Asset bubbles in the form of property. I am convinced that this will lead to the ruin of the Australian economy as it will not be able to handle any external shocks no matter what the politicians tell us. This more of a danger to Australians than any terrorist threat yet they blindly insist on ever higher house prices and middle class welfare. However, it maybe 10-15 years away before the realities come home to roost as the Government can keep on pumping the economy every time it looks like returning to a ‘normal’ state.
I despair of the neo liberal establishment and their mantra of debt/housing = road to wealth. It is going to cause major social dislocation in Australian cities, already the number of homeless are growing. Similarly the debt used to increase house prices denies investment in badly needed infrastructure, Melbourne traffic is as bad as many cities in Europe and getting worse very quickly.
I hope Casey is right, I don’t want anyone to suffer but the sooner we address the issues, as we will have to, the sooner sense can return.