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Casey Research Summit Special Report: Surviving the Death of Money

Tyler Durden's picture





 

Submitted by Jeff Clarke of Casey Research

Source: Karen Roche and JT Long of The Gold Report

Marin Katusa Louis  James Rick Rule When the currency system as we know it dies, some people will become very wealthy. In this special report from the Casey Research/Sprott Inc. Summit "When Money Dies," The Gold Report cornered Global Resource Investments Founder and Chairman Rick Rule, Casey Research Senior Editor Louis James and Casey Energy Opportunities Senior Editor Marin Katusa for a roundtable discussion on the best strategies for thriving during the coming economic transition.

 

Companies Mentioned: Extorre Gold Mines Ltd.

The Gold Report: Since we are at a conference called "When Money Dies," please explain who killed money and how, after all these years of governments around the world trying everything from quantitative easing to bank bailouts, we are still in the midst of the weakest global economy in this generation's history?

Rick Rule: The answer is in an old Pogo Cartoon that reads: "I have seen the enemy and he is us." Collectively in the West, we have lived beyond our means for a substantial amount of time. We rely on a government that we have paid to steal from our neighbors. Money is how we deal with transfers. Dealing with transfers dishonestly by making more of the medium that isn't backed by any value is the process by which money dies.

Louis James: The problem is that you are asking the guardian who has stolen the goods to recover them. Government has been in charge of money for hundreds of years. When it is debased, you have to ask: "Who was watching the hens in the hen house?" When you discover who the fox is, you don't want to put him back in charge.

TGR: We are looking at quantitative easing 3 (QE3) in the U.S. Europe is considering the same thing. Even China is doing its version. Will money actually die or will it all inflate together?

Marin Katusa: I am going to take the contrarian view. With all this quantitative easing, there is actually asset deflation occurring right now if you look at the valuations from an equity standpoint. Trillions will be printed, but look at the deflation in the assets. He who has cash will be king because he can afford to buy these discounted stocks. If you do your homework and be sharp, you will make a fortune in the next three years.

TGR: But money is an asset; cash is an asset. If you are holding your wealth in money wouldn't it all deflate?

MK: It's all about purchasing power. Look at Canada's largest oil company. It is just as good of a company as it was three months ago, but it has lost half its market cap, which means your dollar will buy more of a great company. It isn't inflationary all across the board. It's an asset deflationary market. That is a current example of equity asset deflation in the market right now.

TGR: So cash will deflate less rapidly than physical equities?

MK: Yes, right now.

RR: It is likely that the purchasing power of Western currencies will lose 5%–7% compounded for a long while, maybe until they go extinct. But in the interim, when you are experiencing incredible volatility, that is demonstrably better than losing 30% per anum in assets that are illiquid. Despite the fact that money is going to die, perversely you have to have lots of it to take advantage of the liquidity crisis.

LJ: You see, inflation figures are averages. Asset price destruction in a certain area doesn't negate monetary inflation, nor its impact on other prices. Tremendous money creation is going on. This has economic consequences. The guy at the supermarket can see it even if his house is worth less. It is the worst of all possible models. Necessities cost more, but once trusted assets—the store of wealth in real estate and pensions—are depreciating. This has investment and economic consequences. The government is creating all this money and blowing it out the window. You have to figure out where to stand with a net.

TGR: How do you know what way the wind is blowing so you know where to place your net?

LJ: It's all about stuff. Stuff people need is, in general, good when paper or theoretical money is bad. In certain asset classes, including real stuff, there will be price destruction. Real estate, for instance, still has a speculative side to it and has not yet bottomed. But fundamentally, real stuff that has value can't just blow away. The world will go forward. People will need food and raw materials. Gold is another vehicle with intrinsic value. These things can't be inflated out of existence. When prices on valuable stuff goes down ridiculously, that should be seen as a godsend. People will still need copper, steel and timber. Buy when that stuff is priced low and wait for it to go high, then sell.

TGR: Oil is priced in dollars. Is there a dollar price above which demand stops?

MK: Yes, that is why you have to put the price into perspective when considering an investment. Are you valuing a company at $60, $70 or $80/barrel (bbl.) oil? If a company isn't making money at $60/bbl. oil, you don't want to own that stock.

TGR: The market in the last six months has been volatile, but it seems to be like a roller coaster coming back to where it started. Is there a bigger trend moving daily prices?

RR: Dramatic volatility will lead to higher highs and lower lows. Despite the fact that it may look like a mean on a chart, people who experience it don't experience a mean. They experience extraordinary discomfort. The fact that a $10 stock becomes a $7 stock in a few days causes people to speculate less frequently. It tames the animal spirits. The volatility will act as a depressant on the market.

That is why it is important to understand the causes of these fluctuations. QE is a polite way of saying counterfeiting. If you debase the denominator, the numerator doesn't seem to matter much. You are actively debasing the currency by making it less rare. In the process, the government has declared a war on savers, reducing the utility they could get through traditional savings, forcing them to make more speculative investments.

The problem is even deeper than that, however. At the same time you have plentiful money, you have restrictive credit. People assume prices get set across the whole spectrum, but they get set on the margin and dramatically on the margin based on the psychology of the participants. It makes no sense. Look at the downdrafts in commodities. Nothing about the utility of copper caused it to fall. But interdraft lending dried up and when credit goes away, fabricators, traders and shippers can buy. Economic dislocations like this cause the market to be really volatile for substantial periods of time, which will unnerve many market participants.

I am actually fairly excited about it. I believe if it is going to happen anyway, find a way to enjoy it.

TGR: Marin, you are skilled at mathematics. Your models help assess equities. In a market driven by psychology and government policies, how relevant are your models and have you changed the factors you use to value companies?

MK: Since so many people are investing on emotion in the resource sector, you have to take your profits in a bull market and have lots of cash on hand to take advantage of deals in a bear market. In the program I created, there are literally thousands of variables you can analyze and interpret, but one of my favorite metrics for the junior exploration sector is the Casey Cash Box Indicator. One year ago, three companies were trading for less than cash on hand. Now I know of a little over 30. But, we are no where near the low of March 2009 when over one-third of all the companies on the TSX and TSX-V were trading less than cash. The Cash Box Indicator is what I use to give me a "feel" of the psychological sentiment in the market. When there are lots of companies trading under cash, people are fearful, and that is good if you're looking for value.

For the junior exploration companies that do not have any tangible assets, the models I use for producing projects with cash flow are not as relevant.

TGR: Louis, you are out there visiting companies all over the world. In this market, how important is management?

LJ: It is and it isn't. Having competent people to run the show is imperative. The alternative is non-competent people. Who wants that? Incompetence shows up quickly in performance. But just because a company has good people and a good project doesn't mean it will do well; nature may not cooperate with exploration, or it could run out of money. When fear is in the driver's seat, people are less willing to take chances, even on good people.

In the end, volatility is your best friend because you know that a market that's down will go up again. When your favorite wine or something you value goes on sale, you don't complain. You celebrate and buy two. We have that opportunity now. Wall Street hates volatility, Howe Street loves volatility—or it should, even on the downside, because that is a sign that it's shopping season.

TGR: In the 1970s, we saw a bullish precious metals market, followed by a big upside. This time we had a big upside and now extreme volatility. Have we already experienced the extent of the bull side?

RR: You have to acknowledge the fact that despite volatility's unpleasantness, it can be an opportunity. Gold and silver still have a long way to go although it may not be straight up. Even if it were to go to $2,500/ounce (oz.) eventually, it could test $1,000/oz. first. You have to have an understanding of history in order to understand what you might face. Keep cash on hand to take advantage of the volatility. Prepare yourself to have the courage to take advantage of the dips. A lot of people have been responsible investors and studied everything about the market except themselves. They haven't prepared themselves. You need the cash and courage to use volatility.

Be careful, however. Don't get your information from the market. The market is a mob. It is a facility to buy fractional ownership of businesses. But you have to get a sense of the value of the business to make good decisions. Take advantage of the idiocy of the other players. Other players only drive value of the stock in the short term. In the long term, the company fundamentals will determine the value of the business. What the three people in this room have become good at is buying companies that will be taken over by the industry at higher prices later. Playing foolishness is fun, but that is less important than the fundamentals associated with the valuations of the companies. The safest and most consistent money is made when you find discrepancies in the valuation of a company and the market valuation and play the arbitrage.

TGR: How can you value gold in a volatile market like this where the price of gold can vary between $1,000/oz. and $1,900/oz. Do those lows wipe out some companies?

LJ: The average cost of production for most companies is $600/oz. Even at $1,000/oz. gold, a 40% margin in any industry is considered pretty good. A lot of mining companies are making lots of money right now, which means they are fundamentally strong. In the face of that, when the market fluctuates, it's a good thing; it brings opportunity. I have stocks in my portfolio that we have been able to take profits on when they were high and buy again when they were stupid cheap. We have been able to make doubles this way multiple times—on the same stock.

But not all gold stocks are production stories. How do you value an exploration play where there is no particular asset? That is difficult. You can use peers, or speculate about what the company might have in the ground if it is successful and try to estimate a value. Whatever path you choose, you should have some kind of metric, a sense of what is reasonable.

A great example of how volatility can create opportunity and profits is Extorre Gold Mines Ltd. (XG:TSX; XG:NYSE.A; E1R:Fkft), the spin out from Exeter Resource Corp. (XRC:TSX; XRA:NYSE.A; EXB:Fkft), operating mostly in Santa Cruz, Argentina. I have been there and looked at the main asset. I have no doubt the flagship Cerro Moro project is going to be a highly profitable mine, unless the government goes completely insane. Extorre had good exploration success there and has started getting very positive results from a second project. Based on this work, Extorre went from CAD$2 to CAD$14, so naturally we took profits along the way. I love Extorre, but at CAD$12, its market cap was greater than some profitable producers with cash flow and it was still just exploring. Now, with no bad news from the company, the market correction has the stock down to CAD$7. We know more about its assets now than we did when the shares were higher, but it's selling cheaper, so it's a better value now. We don't know when things will go up and down, we just know they will. We know when they are cheap it is a good time to buy; when they are expensive, it's a good time to take profits.

TGR: It seems like investors have to be more active now, going in and out of stocks. They can't just buy and sit on them.

MK: You have to be careful in this volatile market. An investor needs to understand what type of investor he/she is. If you are a day trader, this is your type of market, because the volatility and big swings are present. I don't believe relative valuation. I think it is important to distinguish between intrinsic valuation and relative valuation. But the answer to your question really depends on what type of investor you are and why you bought the specific stock. In my experience, my biggest gains have been buying big positions in companies where I believed in management and the projects, and bought more when the stock was down, and held the stock for more than a few years.

LJ: There is a distinction between resource investing and mainstream investing. Tried and true Graham-Dodd analysis was never applicable to our industry because the underlying commodities change too quickly, making even the biggest companies too fickle for that sort of securities analysis. However, I would posit that Wall Street is becoming more like Howe Street in a post-Lehman Brothers world. Everyone is taking more risk. There is no safe place anywhere in the world where you can buy a stock and forget about it.

RR: The two central tenets of Ben Graham's book The Intelligent Investor deal with evaluating the margin of safety and management. You have to speculate in companies that have the financial wherewithal to weather the most immediate risks. In today's volatile market, you are competing against manic-depressive traders who show up one day wanting to pay more than what you have is worth and the next day willing to sell for less than their assets are worth. In a devotion to net-nets, one of the best indicators of when you ought to be all-in is when it is full of people so disgusted in the market they are selling for less than they are worth. It's a great time to be an investor.

TGR: If a lot of these companies are worthless, how does the average investor know which companies can go the distance?

LJ: You have to make your own decisions based on your risk tolerance. Your mileage will vary. Read the financial statements, talk to management. At some point you have to act, but you can and should wait until you are fully confident in your investment decision, so your confidence won't be easily shaken by market volatility. It's not like baseball; you can wait for the perfect ball, so don't swing until you're sure you're buying low.

MK: Great tools are available. Watch the legends and insiders to see what they are buying and selling.

TGR: My last question is how does a new investor start in this industry?

RR: Go for a walk. Have a conversation with yourself. Do a personality audit. How hard are you willing to work and what is your risk tolerance? If you aren't willing to work and don't like volatility, try owning physical trusts, ETFs or seniors. If you have a longer-term perspective and stomach for volatility, you can take advantage of the opportunities in the junior space. But you need to have a plan.

MK: You can't succeed unless you are passionate in whatever you do. If you don't really like the sector, then you won't go as deep as you need to have success and you won't make the best decisions. Make sure you have a passion for mining. And have fun. Life is short.

You also have to be willing to make lonely trades. When everyone else says you are wrong, that is when investing becomes very interesting.

RR: Just because everyone else's money dies, that doesn't mean your money has to die. You are responsible for your future.

 


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Fri, 10/14/2011 - 17:37 | Link to Comment X.inf.capt
X.inf.capt's picture

GOT PHYSICAL PM's?

Fri, 10/14/2011 - 17:46 | Link to Comment nope-1004
nope-1004's picture

Yes, and adding as fiat becomes available.

The cronies at JPM and the lead whore Blythe Masters keep pounding commod's down.  Manipulation is their only way they can make a buck.  What a sad existence, and a sad life.

Can't print PM's, but can try like hell to keep them under wraps.  Try until the end.  The path is set.  My bet is with PM's and a failed banking system.  The idiots inside take the other side of the bet - a bunch of White-collar fools (and one half chested pink lump infested wench)!!

Fri, 10/14/2011 - 17:57 | Link to Comment X.inf.capt
X.inf.capt's picture

Good for you, i just made my final trip, that i think im going to need, to the coin store.

+1 2 u

Fri, 10/14/2011 - 19:03 | Link to Comment Hearst
Hearst's picture

OWS needs to all start holding "Crash JP Morgan Buy Silver" placards and stop the mindless chants.

Fri, 10/14/2011 - 22:45 | Link to Comment AldousHuxley
AldousHuxley's picture

OWS needs to be entreprenuers and invest in gold ATM machines and place it infront of goldman sachs / JP Morgan HQ.

 

See how many fiat pushing banksters buy gold with their bonus money.

 

print some S&P 500 in gold charts around too to let the baby boomers what their 401k is really worth.

Sat, 10/15/2011 - 08:53 | Link to Comment Dental Floss Tycoon
Dental Floss Tycoon's picture

The part I didn't understand about the death of money was, "He who has cash will be king..."

Can someone explain that to me.


Sat, 10/15/2011 - 14:24 | Link to Comment DosZap
DosZap's picture

DF Tycoon,

In the GOOD old days, of the Great Depression of the 30's, Cash was KING.

Because it was backed by/with Gold and silver was the coinage also.

Herein is the dilema we ALL have to face this time around.......................

The USD is backed by nothing, and we have run the Gvt debt so far, by adding frns to the system, Cash may be KING, as long as it's considered the safe haven by the rest of the world.

When the Chair Game ends, then the excess safe haven frns,will no  longer be the KING.

People will be cashing out like crazy, dumping them for whatever they can.

This is where PM's come in.............................they are THE only backstop.

So, bottom line, until the Dollar is viewed as leperous by other nations, it will remain  the GO TO HORSE,and continue to push PM prices down,as ong as it goes UP, in relation to the others.

Problem is , NO ONE knows when that Event happens.(and it will happen).

But as of today, the worthless Dollar is still considered the BEST of the WORST.

Sat, 10/15/2011 - 20:54 | Link to Comment Chaffinch
Chaffinch's picture

The dollar is considered "the best horse in the knacker's yard", until suddenly everyone realises it's backed by nothing, and PM's win the day...

Fri, 10/14/2011 - 17:40 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Pretty safe bet everyone here does.  After that it is the farmland, water, and like-minded neighbors that matter.

Fri, 10/14/2011 - 17:43 | Link to Comment X.inf.capt
X.inf.capt's picture

+1 to the above

Fri, 10/14/2011 - 17:54 | Link to Comment JW n FL
JW n FL's picture

 

 

what are "PM's"?

what does +1 mean?

why is everyone so negative?

everything is fine, I was just at starbucks and my plastic card worked just fine, the phones lines still work!

Fri, 10/14/2011 - 18:17 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

"everything is fine, I was just at starbucks and my plastic card worked just fine, the phones lines still work!"

How many times have we heard "it was working fine yesterday"... could be in reference to an auto, a cell phone, home plumbing, or the CRIMEX...

Anecdotal info:... The day that Hitler kicked off 'operation Barbarosa', the massive invasion of his then ally Russia, Russian trains carrying Russian natural resources into Germany were passing columns of German tanks and troops going the other way, invading Russia.

What a difference a day can make, eh?

Fri, 10/14/2011 - 19:14 | Link to Comment Troll Magnet
Troll Magnet's picture

come on over to my house on monday, JW. let's watch Days of Our Lives together and wonder why people are buying this, this, whatchamacallit? Precious medals? Are they all failed Olympic athletes or something?

Fri, 10/14/2011 - 22:49 | Link to Comment AldousHuxley
AldousHuxley's picture

you never know...in 2012 london olympics, british might award 4th place medals made out of paper.

Fri, 10/14/2011 - 23:01 | Link to Comment AldousHuxley
AldousHuxley's picture

correction: "gold" medals are only six grams, or 0.19 ounce, of gold coating on silver.

 

Fri, 10/14/2011 - 18:27 | Link to Comment SheepDog-One
SheepDog-One's picture

Yes JW all is well, as Im out of all markets forever, got PM's rifles ammo and clothes and a nice farm. Let the elites cut off each others heads in the coming days it means nothing to me.

Fri, 10/14/2011 - 23:11 | Link to Comment FeralSerf
FeralSerf's picture

There's still the alphabet soup bunch to be afraid of.  It's real and they're nasty!

Sat, 10/15/2011 - 09:14 | Link to Comment Abitdodgie
Abitdodgie's picture

As long as you take at least 3 of them with you , then you served your country.

Sat, 10/15/2011 - 10:18 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

Sir:

You need to hit the Ctrl/Sarc key when you are playing with the newbies around here.

<smirk>

Fri, 10/14/2011 - 19:20 | Link to Comment Triggernometry
Triggernometry's picture

Don't forget copper, especially when it comes as plating for lead.

Fri, 10/14/2011 - 17:55 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

This article reads like an infomercial for mining stocks and mining exploration companies.

The panel recommends that we 'all do our homework' before diving into mining stocks...but, how many ZHers have the time, expertise and/or resources to actually meet with and evaluate the potential for a specific mining operation? I don't.

In light of my ignorance, time constraints and lack of funds to travel the world in search of 'great opportunities in mining stocks', I will stick to what I learned when I took a bath on miners in the past...

A mine is a hole in the ground with a liar standing next to it.

Physical PMs for me... they do not have the counter party risk of a hole in the ground with accompanying liar.

Fri, 10/14/2011 - 18:21 | Link to Comment Stevious
Stevious's picture

It's an infomercial for Casey's series of newsletters.  I find it sad that it's so blatantly advertising here at zerohedge.

Fri, 10/14/2011 - 19:18 | Link to Comment Troll Magnet
Troll Magnet's picture

600 bucks to mine an ounce of gold...considering that, for example, it costs about a dollar to make a cotton t-shirt that sells for 10, sometimes 100x more to retail customers, i think gold is a pretty good buy.

Fri, 10/14/2011 - 19:45 | Link to Comment silverserfer
silverserfer's picture

I wonder if $600/oz is daily costs after mine is up and running. Does it include hidden costs and startup costs?

Fri, 10/14/2011 - 21:09 | Link to Comment akak
akak's picture

It's much easier to understand silver:

 

 

Only $5 to dig from the ground ....

Only $5 to dig from the ground ....

Only $5 to dig from the ground ....

Only $5 to dig from the ground ....

Fri, 10/14/2011 - 23:16 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Silver @ ~$30/$5 to mine=6 price/cost

Gold @ ~$1650/$600 =2.75 p/cost

Why is Silver a better value today?

Sat, 10/15/2011 - 08:34 | Link to Comment SilverIsKing
SilverIsKing's picture

Is your first name really schmuck?

Silver $32
Gold $1,680

Which is the better value?

Sat, 10/15/2011 - 13:36 | Link to Comment Schmuck Raker
Schmuck Raker's picture

Yes, my first name is really Schmuck.

I asked which was the better value.

I did not ask which was lower priced.

Even a schmuck should know the difference.

Fri, 10/14/2011 - 23:25 | Link to Comment DosZap
DosZap's picture

akak,

bro, only $5.00 if it's the by product.If it's designated Silver mine, I am sure the costs go well above $5.00.

Sat, 10/15/2011 - 00:27 | Link to Comment akak
akak's picture

DosZap, of course I know that.  I was merely making fun of our old beloved silver-hating troll Mathman, who endlessly repeated that simplistic (and erroneous) line.

Sat, 10/15/2011 - 14:14 | Link to Comment DosZap
DosZap's picture

akak,

10/4 ,sorry bud.

 

Sat, 10/15/2011 - 21:07 | Link to Comment Chaffinch
Chaffinch's picture

If they have a mine producing a variety of metals, who decides that the gold costs $600 an ounce to produce and the silver costs only $5 an ounce to produce?
My bet is an accountant apportions the costs, based on what he wants to show the estimated reserves to be worth - I think far too much store is set by these arbitrary figures.
Could Warren Buffett write a cheque for $5 billion to buy his own silver mine and expect to mine a billion ounces? Of course not...

Sat, 10/15/2011 - 10:03 | Link to Comment bbq on whitehou...
bbq on whitehouse lawn's picture

Its closer to 6000/oz if you include all of the failed projects and costs just to get to that one good gold ore vain.

Mines are far from cheap thats why they get special rules and federal help.

In a real free market its scary to think what the cost of mining would be.

Fri, 10/14/2011 - 19:16 | Link to Comment DosZap
DosZap's picture

Snidley Whipsnae

Agreed.

I am not EXACTLY sure on these numbers(interview may still be up on King News).

Ben Davies was talking Miners/Stocks.He manages a Multi Billlion dollar fund.

He said, sure we are in some very good Miners, but they are very,very dfficult to find(the good ones).

He said that there were roughly 4000?,on the exchanges, and out of that number maybe 200 were people they would invest IN.(tells me what I need to know,if you do not understand something, either learn it inside out, or steer clear).

So, what ARE the odds of Joe Schmoe finding them, do the math.

At this point way I see it is we have two choices.

PM's in hand, or Fiat....................combo

Depending on which way this cookie crumbles,PM's off the chart  Up?,Dn? or option two, fiat goes WAY up.

And we sit with lots of  devalued PM's for maybe a while.......2-3yrs.(because nothing short of a miracle is going to float this boat much past that.(IMHO)

Hedge your bets, cut back on PM's held, and hold cash.

Or, roll the dice, and take yer chances.

Fri, 10/14/2011 - 22:37 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

Dos Zap...

"Hedge your bets, cut back on PM's held, and hold cash.

Or, roll the dice, and take yer chances."

I am holding some FRNs... I have to for it's the law of the land that taxes, etc, must be paid in fiat or be subject to fines/jail. But I rolled the dice 43 years ago and they came up gold. I knew the history of fiat currencies back in the early 1960s and the history has not changed, nor will it. Keynes didn't invent fiat currency or soverign bond printing out the ying yang... A multitude of failed fiat currencies and soverign governments litters the landscape of financial history like a view of the aftermath of a horrendous battlefield.

Some people say that a classical education, ie; the study of lit, history, the humanities, etc, is no longer necessary. The people that say that the study of history is no longer necessary are the same people that would have you believe that the current US Government is on sound financial footing. One cannot understand history without an understanding of financial history... History is literally driven by soverign economies and access to commodities. 

The statement below is a fact that no one can deny... and, is really all one needs to know about PMs vs fiat as stores of wealth.

'Fiat always declines to a purchasing power of zero. The purchasing power of physical PMs never declines to zero.'

In order to take advantage of PMs over fiat one needs to think in terms of generations... not years or consumer purchases. I don't envy people with big yachts or fancy cars... hey, it's their money and they can spend it as they wish...and, if everyone thought and acted as I do they would not have enjoyed a 30 year debt fueled party!

Accumulation and safe disbersment of PMs is a method to insure your children and grand children avoid the clutches of azz hats like the current crop on Wall St and in DC. PMs are great but PMs don't think! You gotta do the thinking for them.

 

 

Fri, 10/14/2011 - 23:16 | Link to Comment DosZap
DosZap's picture

Snidley,

Thanks for the time and effort in answering.
I appreciate it.

Yes I know the history,and understand.

My issue is if we re not going to be able to profit off PM's in THIS lifetime,after being ahead of the curve and doing so that we will not lose money coming out the other side when a new currency is issued.(Assuming we are still  here,LOL).

I buy to hold value for use then, as well as generational.

Fri, 10/14/2011 - 21:52 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

In your sweaty little hands Bitchez!!! ;-)

Fri, 10/14/2011 - 17:38 | Link to Comment Western
Western's picture

PMs are great.

 

But it takes second place to having a nice secluded, well stsocked and prepared property all to yourself.

 

edit* when i say well stocked i mean bullets, bitchez

Fri, 10/14/2011 - 17:39 | Link to Comment X.inf.capt
X.inf.capt's picture

uh, o.k.

GOT HIDEY HOLE IN I-D-HO?

Fri, 10/14/2011 - 20:07 | Link to Comment Dugald
Dugald's picture

Best hidey hole is a well stocked ocean going yacht. A nice chunk of dirt is good, but its very very stationary...could end up being your own personal Alamo

 

Sat, 10/15/2011 - 08:14 | Link to Comment Are you kidding
Are you kidding's picture

And you could end up anchored or adrift with nothing but the fish you could catch.  Do you believe that fuel will be easily had? 

How do you think everyone else will fare if the US utterly collapses as you suggest in your response?  Dollars DO drive the world economy.  The world economy WILL stop...at least for a while when the current system collapses.  It just may be the "great culling"...who get's culled and who does the culling...that's the question. 

I say whitey comes out on top again...history usually DOES predict future performance when it comes to people.  Leave the cities for sure...but in rural America?  I don't think it will get THAT bad.  I'm rural, cattle, chickens, goats, hogs, corn, soy, peanuts, all grown/raised locally they we'll just keep it all for ourselves.  Lots of farmland could be instantly converted to vegetables.  I've got 7 acres of pasture myself.  Not a time to be poor and worthless.  Not a good time to be wandering looking for friends I'd imagine either.

Good luck with your choice...

Sat, 10/15/2011 - 14:46 | Link to Comment DosZap
DosZap's picture

Are you Kidding,

How apropos,your handle matches your statement.

 I'm rural, cattle, chickens, goats, hogs, corn, soy, peanuts, all grown/raised locally they we'll just keep it all for ourselves.  Lots of farmland could be instantly converted to vegetables. 

While I agree it will take time for the Dwellers to hit you, the PTB will be the worst of your worries.

There are so many seizure, and forfeiture laws on the books, and anti hoarding sections, it resembles the IRS code.

You will LOSE it all.

Celente has the best answer I have seen..................for those that are mobile, semi good health.

GOD,GUNS,GOLD,GO............................

IOW, as General Patton proclaimed,

"The fixed battle emplacement is a monument to the stupidity of man."

Same will go for the Agri/ Rural,out of towners.

You can maybe stave off the Dwellers, but the PTB(having already passed anti farming laws),and put EVERY agency in the Fed Gvt in charge of overseeing the laws.............you had best have a FLIGHT=haul ass  plan/ packed and ready items to go WELL ahead of time.

Given the choice, I would prefer to be rural, but not saddled to property I owned.............................you WILL be stripped clean.

There are EO's,and PDD's on the book(avail online) telling US the Gvt has the right to seize any and all our property, and even our families, separate them, and use you as slave labor.

Personally I WOULD REFUSE I would rather go down in a hail of lead.

Mon, 10/17/2011 - 12:13 | Link to Comment Are you kidding
Are you kidding's picture

Ain't gonna happen...not in the south...not again.  We're far enough from any even large city for any roving bands to bother us.  Who is going to go around TAKING away people property?  Not where I live.  They wouldn't get out of the FIRST house!  I think the rural "redneck" states will do just fine...better than most for sure.  Thanks for worrying about me!

Fri, 10/14/2011 - 18:21 | Link to Comment Stevious
Stevious's picture

I can understand stocking bullets, but stocking bitchez, are you advocating polygamy?

Fri, 10/14/2011 - 21:55 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

Copper & Lead Bitchez!  After toilet paper....blah, blah, blah...Bitchez ;-)

Sat, 10/15/2011 - 01:26 | Link to Comment CapitalistRock
CapitalistRock's picture

Not really. Land has a long history of confiscation, even in America. Land doesnt move easily when civil war requires it. Those with the gold will live well so long as they can keep it safe.

Fri, 10/14/2011 - 17:37 | Link to Comment pauhana
pauhana's picture

OK, I didn't learn a whole lot from this.  I got my canned goods, my guns & ammo, my vegetable garden, and things I can trade for things I don't have.  What else?

Fri, 10/14/2011 - 17:41 | Link to Comment X.inf.capt
X.inf.capt's picture

popcorn!

and enjoy the show....!

Fri, 10/14/2011 - 18:47 | Link to Comment Seer
Seer's picture

That's what I need more of, shit that breaks! </sarc>

I do use it, but only for powering a fence energizer.

I've got passive solar- southern exposure in the northern hemisphere (upper latitudes).  Can see the orb (when it's out :-( ) even on Dec 21st/22nd.

BTW - Micro-hydro kicks solar power's butt: but then again, hydro is the result of solar activity (the water cycle).  Had tried, unsuccessfully, to land a place that would have allowed me to have such a system (w/o losing passive solar [in the end I find heat more important than electricity]).  But... still more techno-crap to have to chase around: I've got my hands full just dealing with natural stuff (on the property) :-()

Fri, 10/14/2011 - 20:11 | Link to Comment Dugald
Dugald's picture

A Horseshoe???

Fri, 10/14/2011 - 21:56 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

Knowledge on how to use them. ;-)

Peace!!!

Fri, 10/14/2011 - 17:38 | Link to Comment HedgeAccordingly
HedgeAccordingly's picture

gotta let our past dictate the future.. takes patience but those who doe the due dilligence are the ones who prevail. fast money has never created sustainable wealth - todays 1 min chart is comical when you look at volume http://hedge.ly/oj3l9m

Fri, 10/14/2011 - 17:38 | Link to Comment Spanish Lizard
Spanish Lizard's picture

Im just gonna drink...

Fri, 10/14/2011 - 21:22 | Link to Comment Henry Chinaski
Henry Chinaski's picture

Good post

for for Friday night.

Fri, 10/14/2011 - 17:40 | Link to Comment jdelano
jdelano's picture

Pisani skeptical that the g20 will avail us of a solution to europe's debt crisis. Shit. Guess that means they really will manage to get something done.

Fri, 10/14/2011 - 17:41 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Fuck it, I am staying short (overall).

Fri, 10/14/2011 - 18:05 | Link to Comment jdelano
jdelano's picture

Me too--just a joke.

Fri, 10/14/2011 - 18:28 | Link to Comment SheepDog-One
SheepDog-One's picture

jdelano its pretty apparent the last 10% rally was just to pad the coming big blows we're about to see.

Fri, 10/14/2011 - 17:43 | Link to Comment medicalstudent
medicalstudent's picture

molyneux is a bit effeminate and relatively beta male, but a genius nonetheless.

 

casey is a badass. he dont give a fuck.

Fri, 10/14/2011 - 17:52 | Link to Comment Caviar Emptor
Caviar Emptor's picture

I take another bow for having enunciated the theory of biflation here for a couple of years, which is being explored in this article: 

You see, inflation figures are averages. Asset price destruction in a certain area doesn't negate monetary inflation, nor its impact on other prices. Tremendous money creation is going on. This has economic consequences. The guy at the supermarket can see it even if his house is worth less. It is the worst of all possible models. Necessities cost more, but once trusted assets—the store of wealth in real estate and pensions—are depreciating. This has investment and economic consequences. 

Fri, 10/14/2011 - 18:09 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

I'm with you CE... I see biflation currently and for the past several years. The efforts of central banks to prop up banks by keeping real estate and stocks propped up, and interest rates on soverign debt low, is causing prices of food/energy to rise. Meanwhile prices of commercial/residential real estate continue to fall in most areas.

ZH ran a most interesting article yesterday... concerning the past six weeks sell off of US Ts. Although it's a very small number so far this could be the start of something very big. Trends are set at the margin... someone has to be the first through the exit.

Fri, 10/14/2011 - 17:52 | Link to Comment Dogfather
Dogfather's picture

Worthless drivel...


Fri, 10/14/2011 - 19:35 | Link to Comment itstippy
itstippy's picture

I learned a lot. 

They suggest one should buy low and sell high. In times of volatility like this, there are many opportunities to buy low and sell high.  But one must be careful what one buys, and what one pays, to make sure that it's low.  Otherwise one won't make money when one sells at a higher price.  So whatever investment style you prefer, day trader or whatever, be sure to buy low and sell high during these volatile times of opportunity.

Mining stocks present a golden opportunity to buy low and sell high right now, thanks to all the volatility.  But be sure that it's a solid stock, and is priced low, before you buy . . .

Fri, 10/14/2011 - 21:11 | Link to Comment akak
akak's picture

You forgot to mention that one must wait for the official market bell to be rung before knowing when a low is a low, and a high is a high.

Fri, 10/14/2011 - 18:06 | Link to Comment CompassionateFascist
CompassionateFascist's picture

"Life is short". These people have no idea how "short" it is about to get. Beginning with all those urban cosmic white OWSers. Once the EBT cards stop working, the group-entitlement boyz are going to have them for dinner.

Fri, 10/14/2011 - 18:29 | Link to Comment SheepDog-One
SheepDog-One's picture

No doubt! And these 'I got PM's so Im completely insulated' types are going to find out in wont be worth much of anything for a long, long time.

Fri, 10/14/2011 - 19:05 | Link to Comment Clint Liquor
Clint Liquor's picture

Let me guess, we should all have 'physical US Dollars', right?

Fri, 10/14/2011 - 23:25 | Link to Comment FeralSerf
FeralSerf's picture

Yep, this is why this is so stupid.  When prices were higher we were told we must get rid of all that worthless fiat and buy, buy, buy.  If we did as we were told, we no longer have any fiat.  The only way I can see to get that fiat is to sell lower and take my lumps.  This is the way to get rich??   There must be something I don't understand yet.

I bought the fuckin' dip.  Now it's lower and I don't have any cash left.  What now?

Fri, 10/14/2011 - 23:38 | Link to Comment DosZap
DosZap's picture

FERAL,

IMHO,

Remember the saying, Don't fight the Fed........they will win in the end(unlimited fiat checkbooks).

You need Cash, sell some as close to cost, as you can and not lose money if you have to.

But don't dump the lower priced part of your cache, or you will likely be sorry.

Politics, and global chaos is causing this seesaw BS, gotta have strong stomach and extra cash to invest for the LONG term.

When I think of long term, I figure 3-5 yrs out max.

If I am gonna lose on  this deal in 5yrs, WTF am I holding so much now for?.

No ROI. So, may be prudent to only hold 20-30% in PM's,frns in balance.Have to do what is best for you.

Unless the system collapses,and the we do not KNOWS are the killer.

No doubt sooner or later they will pay off huge..............just wehn.

Only God knows.

Sat, 10/15/2011 - 20:55 | Link to Comment J U D G E M E N T
J U D G E M E N T's picture

This game has just started.  Keep all your PM's.  The two major bounces down were

the options expiry and margin hikes. (To provide for the insider traders at the CME

and company.)  Both legs down were positioned immediatley preceeding the expiry.

As the margins increase, the amount of PM contracts will slow down due to the larger

margin requirements.  After this the long slow march of PM's to infinity is inevitable.

This is a long term game, it's playing chicken in slow motion.  Do not think that the

price is of any concern here.  The Silve Price/Federal Reserve Note ratio is always the same.

The PM holds it value against the dollar. It is Value that cannot be diluted.  My strategy consists

of buying all the dips, (The major ones like the options expiry), and averaging down.  I wish i had 

short power.  I would short the CME contracts to oblivion 3 days before the expiry dates!

Then buy them all up again when it goes down 30%

 

Fri, 10/14/2011 - 23:17 | Link to Comment DosZap
DosZap's picture

SheepDog-One

Good for you, I am happy for you.

Honest question SD One?

So if you were not set,what would you be in right now, Pm's or Fiat?.

Or a 50-50 mix?.

(after the Guns,ammo, and land.)

Sat, 10/15/2011 - 10:30 | Link to Comment MrBinkeyWhat
MrBinkeyWhat's picture

 

 

 

 

  • durable stored food/water
  • barterable durable goods
  • tools you know how to use
  • alternative energy (solar, magnetic, methane)
  • secure location
  • farmable land (With water)
  • the ability to farm it
  • chickens, goats...etc
  • good friends
  • security measures
  • US nickles
  • junk silver
  • small gold
  • OZ gold

In that order.

 

Fri, 10/14/2011 - 19:26 | Link to Comment Seer
Seer's picture

The "OWSers" are fighting the enemy (worshipers of fiat) and this is how you view them?  Kind of like being a general and watching your troops get slaughtered.

Fri, 10/14/2011 - 18:17 | Link to Comment Stevious
Stevious's picture

Quite obviously an advertisement in disguise.

Casey's publications are good, I've subscribed as far back as 1980 when it was simply called Crisis Investing, now there are many newsletters.  Just realize that "under" the publications is a very expensive "alert" system subscription.

The high paying "alert" subscribers are told about a perceived opportunity before the lower priced subscribers are.  This most likely "creates" a run-up as the larger volume of lower paying subscribers buy in, later, after they are informed, thus lifting the price of the reccomendation.

In fairness this set-up is not hidden, but frankly I don't like that sort of set-up.

Fri, 10/14/2011 - 18:25 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

We don't need no stinkin alert system!

See real PMs... Buy real PMs.

I read their infomercial on mining stocks/exploration companies and wonder how much they are underwater on those small cap miners?

Louise Yamada is the only one in the last year, or longer, that has told the truth... paraphrasing her... 'we are avoiding the mining sector'...

I haven't seen her back on (you guess the site) since that interview.

Fri, 10/14/2011 - 19:22 | Link to Comment Seer
Seer's picture

"Buy when that stuff is priced low and wait for it to go high, then sell."

"In the end, volatility is your best friend because you know that a market that's down will go up again"

Once again a failure to understand that this isn't some cycle within The cycle.  No mention of risk associated with a COMPLETE collapse of The cycle.  But, I should know better than to expect real-world thinking from people who make money off of NOT doing anything other than telling others what to do.  Stuff works until it doesn't...

Fri, 10/14/2011 - 20:32 | Link to Comment Segestan
Segestan's picture

In a real crash , revolution and the over throw of governments, wars and ugly poverty set in ,  the mines will be like bank vaults in the ground. Mine owners had better include the huge cost of tough security that will be needed in the West, and just forget the third world period.

Fri, 10/14/2011 - 21:20 | Link to Comment Henry Chinaski
Henry Chinaski's picture

There is a lot of focus on PMs on ZH, but this article makes a good case for oil as a store of wealth.  This is also historically true.   

Fri, 10/14/2011 - 21:26 | Link to Comment akak
akak's picture

Yes, as long as you can trust the other party who holds it in custody, as taking personal posession of physical petroleum is, well, rather difficult and messy.

Fri, 10/14/2011 - 22:09 | Link to Comment zorba THE GREEK
zorba THE GREEK's picture

One should have a stash of oil. Zorba prefers good olive oil though. 

Fri, 10/14/2011 - 22:33 | Link to Comment akak
akak's picture

I always keep at least two years' worth of good extra-virgin olive oil in the freezer, just in case of eventual post-euro and/or post-dollar supply and/or trade disruptions.

By the way, just what exactly is extra virgin, anyway?  Does that mean that the olive oil has never even thought about sex?

Fri, 10/14/2011 - 23:30 | Link to Comment FeralSerf
FeralSerf's picture

The best way to assure yourself of a good supply is to buy some olive trees on a Greek island.

Fri, 10/14/2011 - 23:22 | Link to Comment DosZap
DosZap's picture

I get a RED down, for asking Sheep Dog-One an honest question, and telling him I am happpy for him?.

What's with that?.

Must be a REAL Asshat for downing an honest question,and congatulating a member.

The same dikwad will likely down this for the hell of it also.

Sat, 10/15/2011 - 00:26 | Link to Comment X.inf.capt
X.inf.capt's picture

its a crazy night in the fight club...

dont take it personally, its just the natives are getting resless...

good night, ds...

p.s. i dont junk anyone on the hedge, i feel i can learn from anyone, including trolls

Sun, 10/16/2011 - 17:21 | Link to Comment BigJim
BigJim's picture

I make a point of junking any post complaining about being junked, even if I agree 100% with the rest of the post.

I mean, c'mon, this is FIGHT CLUB! You're worried about a little red arrow?

Sat, 10/15/2011 - 02:21 | Link to Comment What_Me_Worry
What_Me_Worry's picture

The FRN will continue to be a great place to stash excess production right up to the exact moment it becomes one of the worst.

I do not know the exact second that it will snow this winter.  However, I have almost 100% certainty it will snow at some point.  This razor is getting quite the fine edge.

At some point, I need to go long physical booze.  Although, you can't eat booze, either.  It will be an interesting day when someone will just give you a weird look when you try to make a purchase with a $100 FRN.

Sat, 10/15/2011 - 15:54 | Link to Comment mkkby
mkkby's picture

I actually think that's the better way to protect your savings.  Sit in FRNs until it looks like things might go haywire.  Then use forex trades to shift into a safer currency.  There will always be one.  Europe will go through hell and come out stable before the rolling shit storm hits the US.

The advantage is flexibility.  Unlike taking delivery and storing a PM, you can make timing errors and not get caught with a market going wildly against you.  Also, the spread is smaller so you can make a wrong move or two and not lose much.

I have just a small amount of silver to survive a worst case.  Bought it when I was a kid and collected coins as a hobby.

Sat, 10/15/2011 - 09:07 | Link to Comment Grand Supercycle
Grand Supercycle's picture

SP500 / DOW daily charts remain choppy but bullish.

A reminder that SP500 / DOW weekly indicators now give bullish warning. If confirmed, it suggests significant equity rally this year.

Importantly, monthly charts remain bearish.

http://stockmarket618.wordpress.com

Sat, 10/15/2011 - 15:19 | Link to Comment Lester
Lester's picture

Anyone who still touts the terms "investor" or "investing" has NOT Come To Grips with what the collapse will entail. 

Casey is clueless; as his promotion of an ex-pat enclave in Chile (or wherever) establishes beyond doubt.

Anyone entrusting money/capital or wealth to another who is not family/blood will learn error of their ways.  Investing in some local business, as in partnering or fostering opportunity for family member will have some merit.  Share-cropping will have a resurgence.  Maybe you got 5 good acres and a couple tillers and can do plots for French Intensive Gardening with families, or maybe you got a basic tractor setup and farm and partner with families.

Anything "invested" beyond your control and oversight will be lost/filched/stolen; if not by those you trust with your treasure, then by government or other groups who will plunder them.

The trick of the New Times is not to be plundered.  Anyone who figures they're gonna profit by savvy investing, unless they're some loan-shark or bootlegger is inept enough to lose all they invest real quck-like.

 

Sat, 10/15/2011 - 15:47 | Link to Comment Lord Koos
Lord Koos's picture

I'm keeping gold and silver, but I agree with this report that in the next few years it will be good to have some cash. There will be a lot of bargains out there, and not just in stocks.

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