What NIRP, Rising China Tensions, and “AK-47 Nations” Are Signalling Right Now
What NIRP, Rising China Tensions, and “AK-47 Nations” Are Signalling Right Now by International Man
Legendary speculator Doug Casey has been in the commodities markets for over 40 years. It’s been the key to some of his most significant investment wins.
Gold and silver have broken out of a six-year trading range and seem to be going higher. We think this signals the start of a new bull market and the chance at life-changing profits, just as it has during numerous cycles in the past.
That’s why we’re bringing you a discussion we recently had with resource expert Marin Katusa.
Doug and Marin have known each other for more than 15 years. Doug says Marin stands out as perhaps the most competent and successful person he has met in his years in the resource markets.
Doug trusts Marin with most of his mining stock money, because he’s not only technically smart but street smart. Marin has built and run a major mining company himself.
With the markets moving fast, this conversation is genuinely urgent. You’ll find it below.
International Man: Pretty much everything is in a bubble right now. Stocks, bonds, real estate, and most other asset classes are near historical highs. About the only exception is commodities. How do you see the big picture?
Marin Katusa: In a Negative Interest Rate Policy (NIRP) world, the traditional rules have changed. Also, most governments will increase their “take” of the proceeds of existing and future producing assets.
So, out of the gate, you want to focus on big projects that make money at a 40% discount to current spot prices.
Gold is a great place to be in the current global macro environment, as I don’t see NIRP ending any time soon.
For gold projects, if the company you are looking at isn’t economical at $1,100 gold, forget about it. Also, I’m interested only in projects that produce or will produce over 100,000 ounces per year for 10 years. That’s my minimum threshold and what the gold majors are looking at investing in and buying out too.
I’ve traveled the world. I’m interested only in non–AK-47 nations—that is, countries where the rule of law is respected and that aren’t completely corrupt—i.e., countries where you don’t see AK-47s in the streets.
Two decades of being a major financier in the sector have taught me to never underestimate political risk. It’s everywhere, but assessing the proper risk is critical to respecting your capital.
Mining is a tough business, and it will only get tougher. The smartest and toughest will get going and make things work out—hence my focus on world-class projects run by the best management teams in the business, that have skin in the game at the same cost base as you are able to buy stock in the company.
Be especially careful with base metals.
I was one of the original founding directors of Canada’s third-largest copper producer, and I don’t see many new projects coming online that are economical below $3.00 per pound of copper. There is no doubt of a coming shortage of copper, especially with the green electrification occurring globally, but I think copper will remain weak for the next 12 months. So, you have time to pick up the best copper assets during market weakness.
Zinc will also be a tough place to be.
Uranium is another commodity that will be cheap for another 24 months. Royalties are the best way to play uranium in the current environment. It will be a big payday for those aligning themselves correctly in this uranium cycle.
International Man: How do commodity cycles work, and how are they essential for big profits? Where do you think we are in the current cycle?