A Second Chance at One of Doug Casey’s Most Lucrative Hits

A Second Chance at One of Doug Casey’s Most Lucrative Hits

They call it “death by necklacing.”

It has nothing to do with jewelry. Necklacing is a torture technique that was common in South Africa during the violent 1980s.

A mob would place a rubber tire, the “necklace,” around the victim’s neck, douse the tire in gasoline and light it on fire.

The victim would slowly burn alive.

Nelson Mandela’s wife at the time, Winnie Mandela, widely publicized the practice when she said…

“Together, hand in hand, with our boxes of matches and our necklaces, we shall liberate this country.”

Winnie Mandela’s famous quote illustrates a nuance to the conflict most people overlook.

At the time, South Africa was still under apartheid (legalized racial segregation). Black rebels fighting against the government would frequently necklace other blacks, “traitors” they suspected of collaborating with South Africa’s white government. It was a nasty but powerful deterrent.

I’m not bringing this up to churn your stomach, but to highlight that, from time to time, South Africa goes through horrible crises. The country’s bloody history of racial division pretty much guarantees recurring turmoil.

In 1976, South Africa was in one of those crises. Massive riots erupted in Johannesburg’s suburb of Soweto. There was literally blood in the streets as police killed hundreds of protestors. Everyone thought South Africa, and its gold-mining industry, would collapse.

As you may know, South Africa has been one of the world’s largest gold producers for over a century. In the mid-1970s, the price of gold was plunging. Gold hit a low of $103 in August 1976… nearly 50% off its $200 high two years earlier. Nearly everyone holding South African gold stocks sold them.

It was a classic crisis-investing situation…

The conventional wisdom turned out to be dead wrong. South Africa didn’t collapse. And gold rocketed to $800—a 700% gain.

Higher gold prices meant higher profits for South African gold miners. Higher profits meant higher dividend payments for investors.

Over the next few years, South African gold stocks rose an average of 600%. Most paid out more in dividends than it would have cost to buy the stock. This led to one of Doug Casey’s biggest investment hits ever.

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