| All the
Trouble in the World |
| BIG
GOLD |
| By Doug
Casey |
| For international investment expert
Doug
Casey, there’s more than a recession on the horizon… he recommends
battening down now for the rough seas ahead... with some special information
about making sure your investments can weather the coming storms. |
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| If you credit Austrian School economic theory,
which I certainly do, you’re forced to believe that the Business Cycle
exists. The Business Cycle is driven largely by government intervention
in the economy, in the form of taxes, regulation and, most importantly,
currency inflation. These things give false signals to businesses and investors,
which cause distortions in the market, and misallocations of capital. |
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| When, inevitably, the errors start to be corrected,
the result is an economic downturn. It will be called a “recession” if
the government succeeds in preventing widespread bankruptcies and unemployment
through one more dose of inflation. |
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| Or it will be called a “depression” if today’s
economic tempest slips out of the government’s control. |
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The point is that the more
highly taxed, regulated, and inflated an economy is, the more likely that
it’s eventually going to experience a real depression.
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| From a financial point of view, a depression is
a period when the distortions of an inflationary boom are liquidated –
a mass die-off of the economically misbegotten. From an economic point
of view, it’s a period when the general standard of living decreases significantly.
(This is an entirely too brief discussion of a really important subject;
I urge you to check the appropriate chapters of any of my three investment
books.) |
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| The point is that the more highly taxed, regulated,
and inflated an economy is, the more likely that it’s eventually going
to experience a real depression. |
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| Perversely, the more control a government
has, the longer it can put off the day of reckoning. But the longer the
artificial structure is propped up, the bigger the mess will be when it
eventually collapses. From my point of view, what will happen next is almost
written in stone. The only real question is: when? |
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I think there are lots
of reasons to be afraid. Very afraid.
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| In 1980-82 things almost did go over the edge.
But the recession was serious enough, and some subsequent extraneous positive
events (the collapse of the USSR, the coming of age of China, and now India)
were significant enough to pull things out. |
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| But now, more than a generation after the last
serious crisis – and four full generations after the Great Depression –
I think there are lots of reasons to be afraid. Very afraid. |
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| Am I predicting the Greater Depression may be
upon us? Let me preface my response with a disclaimer. I’m not a fortune
teller. But my gut feel is: yes. I’m not going to mount all manner of statistics
to buttress the assertion. My point here is to draw your attention to the
fact that there’s a lot that’s likely to go wrong besides the central problem
of the Business Cycle, a problem that is now evidenced in the collapsing
housing sector and all the pain associated with that collapse. |
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| The “other” problems now include the Forever War
against Islam, peak oil, increasing political control over virtually all
aspects of life, the potential for social unrest (within the U.S. Mexican
community, for instance), the historically high level of foreign holdings
of U.S. dollars, a rise in nationalism and protectionism, etc. While not
always obvious, all of these things are related, so it’s likely that
when one of them starts running out of control, so will the others. |
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"History shows that governments
tend to react to economic crises by increasing government control over
the free market" - - Ron Paul
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"The point is that the more
highly taxed, regulated, and inflated an economy is, the more likely that
it’s eventually going to experience a real depression." - - Doug
Casey
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| What will, in fact, happen? Nobody knows,
including myself. But I’m quite afraid we’re in for truly stormy weather
in the next few years. Most people aren’t adequately, or even at all, aware
of this prospect. |
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| I suggest you stay with the approach we advise
in our monthly BIG
GOLD advisory. And that approach has a foundation in gold and carefully
selected gold stocks. |
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| As I am in for the long haul at this point, selling
only reluctantly and when absolutely necessary to keep Caesar mollified
or for portfolio rebalancing, I still view any weakness positively. |
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| Making mid-stream adjustments to your portfolio
based on these buying opportunities is important. Being bold when others
are timid can make a big difference. |
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| In my opinion, gold isn’t just going through the
roof in the next few years. It’s going to the moon. And gold stocks are
a leveraged way to capitalize on it. |
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| Doug Casey is chairman of Casey
Research, and author of the best-selling Crisis Investing.
Each week, Casey Research provides unbiased research and recommendations
to an audience of over 50,000 self-directed investors. To
learn more about Casey’s BIG GOLD, which follows a cautious portfolio of
producing and near-producing gold stocks, mutual funds and gold ETFs, click
here. |
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