Wednesday, October 18, 2006

Doug Casey on RoBTV Oct18

Mr. Casey was on Market Call with Jim O'Connell for a full hour today talking about energy, metals, and resources. Let's see what he had to say about our little world of uranium.

ON URANIUM:

still lots of misconception..nuclear power is way to fly for mass energy generation..by far the safest, by far the cheapest..440 active nuclear plants..Chinese putting up 2 plants/year..India, rest of the world..tremendous deficit of uranium..since it takes about 10 years from time to discover economically uranium deposit to time to production, permitting being as onerous as it is..there will be a uranium deficit for some time..not surprised to see uranium $100-150/lb..several years ago only 4-5 uranium companies..now more than 200..grown like poison mushrooms after rainstorm..how many competent uranium teams are there? not a lot of expertise for mining in general, uranium in particular..out of those 200 or so companies, how many have competent teams? half a dozen? a dozen? odds not good..having said that, there will be a uranium boom..


Analysis:

This is one of the reasons why I chose to be an affiliate of Casey Research (as evidenced by the promotional banner on the right sidebar). Doug is amongst the biggest uranium bulls out there, but he will not unabashedly prop up any and every single uranium stock. He, like I, preaches caution and the need to find good quality companies with feasible assets and strong management. Although he might have not been the most traditional guest on RoBTV (literally refusing to talk about individual stocks and mixing in history and philosophy into his points), Doug really knows his stuff.
 

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>> Jim: Welcome to the wings edition of "market call." I'm jim o'connell. Today a special guest. Doug casey from casey research has joined us to answer your questions on the big picture on energy, precious metals and other things. Of course resource, and welcome, doug, great to see you. >> Thank you, jim. Your expertise or your area of preference is really gold and is silver now.
>> My main news letter called the international spectator and it's called that because i look everywhere on the globe all the 230-some companies, and it's, and i speculate on things. I'm not sure investment is as easy or pos nibble today's world than it might have been in the past so yeah.
>> Jim: I just want to sort of set the table on what you've done. You're a best selling author on crisis and investing and you've made many correct calls in the market, now you're predicting "an economic cataclysm: The greater depression." You're predicting a depression. On what basis? >> First of all we you at to define the word. A lot of people use these terms and they're ill defined and say oh, depression that must be like something that happened in the 1930s. Let me give you a good, broad, general definition. It's a period of time when most people's standard of living falls significantly, and I think that that's in the cards for a am of in reasons. You can also say depression at a period of time where the business cycle climaxes and there are certain things that cause the business cycle or it's a period of time when distortions and miscal indications of capital in the marketplace. An example of that is the current real estate bubble when these things are liquidated so all these things are adequate examples of depression. Doesn't have to be a bad thing. >> Depression doesn't have to be a bad thing?
>> No, not at all. As I said, one of the definitions is it's a period of time when distortions and misallocations of capital are liquidated and if you can go into a tough economic time, properly set up you'll have the assets to buy things at the bottom it's very hard to buy things at the bottom today. Most assets, financial assets are terribly inflated today. I would want no part of them.
>> Jim: Now you've said we're headed for a catastrophe, reminiscent of the famous inflation of port world war one in germany. That doesn't sound like a good thing to me. >> You could have two types of depression, you could have a deflationary depression which typified canada and the U.S. In the 1930s or flaigsary, the type of thing germany had in the 20s or for that matter the type of thing argentina had a few years ago. You could have either. It depends on what the government does and i lay the problem for these things squarely at the feet of the government. It has far too much interaction with the economy.
>> You're talking the U.S. Government?
>> All these governments. The canadian government may even be worse than the U.S. Government. The nice thing about the canadian government is it's smaller and if it's small he, it's not as dangerous. A small elephant's not as dangerous as a big elephant. So no. The problem is the state interfering in the economy. And what is the economy? It's people producing and trading with each other. And what's the state? It's organised coercion telling them what they can and can't do based upon the arbitrary dictates of bureaucrats and economically ignorant politicians. So no. The government's the problem but everybody hooking to the government for solution solutions it's the opposite of what they should be doing.
>> So how does one prepare, an investor, for this catastrophe as you call it, or crisis or depression? That's pretty heavy stuff.
>>, What you've got to do is get into financial or real assets that are under priced relative to everything else. So let's see where people have their money today. Stocks you know stocks were an excellent bargain in 1982. Awrote a book at that time called strategic investing. It was a stock market book and at the time the dow was 1,000 and i said, you know, you've got to buy these things. And since then i was predicting 3,000 on the dow, which seemed insane back in 1982. And then look what's happened. >> Jim: Hit 12,000 today.
>> Right but that's a good reason not to buy it because when something goes up 12 times in 20 years, it's probably not under priced. The time to buy stocks is when you can buy them for a dividend yield. And people forget, at past market bottoms, the dow and similar indices has sold for six, seven, eight types earnings. Its yield at six and even 8% and dividend yields, look in 1974 another bottom, the value line index, okay, which is a very very broad general index was yielding 7.8%. That's the average! These values aren't around anymore today. The dow passed bottom and sold at book value. It's several times book value. No i mean hook, it's a market of stocks not a stock of market value. In general ra, I have no idea interest in the stock market right now. It's not cheap. >> Jim: But you have a lot of interest in gold and silver and uranium and we're going talk about that when we come back in just a moment. Do stay with us, doug casey, chairman of casey research is our guest today. Phone numbers will appear on your screen. It's big picture stuff today as opposed to a lot of questions on specific junior companies. The focus, energy, metals, and resources. Gold and silver especially. We'll be right back.
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>> Jim: We're back, doug casey our guest today. We've got conrad joining us. Go ahead conrad. >> Caller: Thanks very much. Great show you guys. Doug I'm not sure if you're familiar with mansell minerals. I wonder if you have any comments and if you are familiar with it, if you have a fixed month or 12-month target on the stock.
>> Doug casey: Yeah, that's very good. It's rather foolish of me but i own probably a couple hundred of these junior stocks. Mansfield happens to be one that i own quite a bit of. It's largely a play on argentina. They've got a couple properties that are spectacular down there. It's got a market capitallization, forget about the price per share. The important thing is the market capitallization. The number of shares time the price per share. What is that, $65 million? Something like that. It's got -- even though that stock from the time that we first got on it has gone up about five to one, which scares me, when any stock goes up that much it would be better to sell than to buy, i think it can go another five to one if they keep developing the way they are. It's one of a class of stocks that I like, not just because it's a junior mineral exploration company, gold and copper, but it's an original -- it's in argentina, which is one of my favourite countries in the world. From a number of points of view as a real estate speculator, which I also do a lot of, not just minute ras but international real estate but the nice thing about argentina, when you see a company exploring in argentina, you've got to remember that sompl the biggest and best mines in the world are in the andean cordiera in chile. But argentina shares the same gentlemenography as chile, has only been open to mining for the last 10, 15 years at most and it's relatively totally unexplored. So if i had a choice between a company exploring in chile, which has been explored and argentina, which hasn't, I'll go to argentina. >> Jim: Oak, we have jeff joining us from vancouver. You're just freshly back from a gold show in vancouver. Jeff's got a question for you do yeS.
>> Jim: Go ahead.
>> Caller: What's your outlook on talisman energy.
>> Doug casey: Which energy?
>> Jim: Talisman.
>> Doug casey: I don't follow big companies and the reason i don't follow big companies is because most people will invest $100 in hope-getting a $6 return. I would rather invest $6 with the hope of getting a $100 return. So I go for the smaller more volatile, more speculative.Companies. But I'm very bullish on oil and gas, have been for a long time. I will continue to be bullish on oil and gas for two main reasons. Number one, i think that m.K. Hubbard was correct about peek oil. I throw out most of the ecological hysteria about we're running out of natural resources. It's all baloney. But in the case of oil, there's something to it the idea of peek oil. Number one. And number two, oil is the most political, or second most political after gold of all commodities. And I'm afraid we're heading for something very very serious that's going to resemble world war iii and the premium for oil and energy generally is going to go uP.
>> You're talking about what's happening in the middle east?
>> Oh, yes, absolutely. This is -- look, this is much more serious than just another dust-up between the arabs and the israelis. If you look at this historically, the idea of a class of -- clash of civilizations actually has something to it. The west and islam have been fighting since mohammed broke out of the saudi desert, in the seventh century, and I'm afraid we're going into another serious bout of the crusades at this point. And this is much more serious than anything we've seen in the past. >> We'll be back in just a moment doug casey our guest today. We're talking mining, metal it gold, silver, housing, the whole gamut, big picture today. If you'd like to give us a call, the phone numberses are on your screen.
>> Closed captioning of this program is brought to you in part by the certified general accountants.
>> Jim: We are back, doug casey is our guest. Let's take a call from michael in toronto. Michael?
>> Caller: Good afternoon, gentlemen, mr. Case see, I just wanted to get your thoughts on the future potential of uranium and more specifically a stock that you've remmed in the past. Alberta star. >> Doug casey: Mm-hmm. Okay. First let me talk about uranium. There's a lot of misconceptions about that element. I've long been a believer that nuclear power is the way we're going fly for mass energy generation. It is by far the safest by far the cleanest, and almost certainly by far the cheapest form of mass power generation. And they're about, what 430, i think, active nuclear plants in the world right now, and the chinese are going to be putting up to a year, and the indians, and even the europeans. All over the world people recognise this and there's a tremendous deficit of uranium right now. The world is using almost twice as much uranium as is being mined right noW. And since it takes about ten years from the time you discover a viable uranium deposit, economically viable uranium deposit to the time you can put it into production, what with permitting and all this type of nonsense, being as onerous as it is, there's going to be a uranium deficit from sometime to come. I would not be surprised at all if uranium goes $100, maybe $150 a pound.
>> Jim: What's the best way to play it?
>> We mentioned one uranium company but hate talk about anyone uranium company. Why? Because five or six years ago, when nobody was talking about uranium, there were only four or five uranium companies in existence, all right?
>> That was what, 150?
>> Doug casey: Cameco, den sin son and others, yes, oh, there's more than 200 now. They've grown like poison mushrooms after a rain storm. How many competent uranium teams are there out there right now? Well, first of all nobody's thought uranium for 25 years so people taking geology courses in college haven't been starting uranium. Nobody's been taking geology courses for the last generation. Everybody's gotten into high-tech. Nobody's wanted to get into this 19th century choo choo train economy industry called mining. It's an embarrassment in financial circle, and you know, somebody that's just going to college wouldn't dream of doing such a backward, idiotic thing as getting into geology or mining so there's not a lot of expertise for mining in general and uranium in particular since it's been so politically incorrect so out of those 200 and some company, how many of them have competent teams? A half.
>> Doug casey: Zen? Maybe a dozen? So your odds of picking a good uranium company are small among these juniors. That said, i think there's going to be another uranium boom, such as we had 25, 30 years ago then back in the '50s and these stock, the public is going pile into them and they're just going to howl. >> Jim: Let's come to gold for a minute. You're quoted as saying gold is going to the moon. We'll take a question first from len in victoria. Go ahead, len.
>> Caller: Good morning gentlemen. My question is your opinion on the future price of gold by this year end in the spring, in particular yamana gold, yri.
>> Jim: Okay, your target on gold.
>> Doug casey: Yeah, well look, i was actually a founding shareholder of yamana many years ago but i lost all my yamana, i don't know, about a year ago. It's been a spectacular performer. It's gone way up and i like to reallocate dollars from high priced stocks to low priced stocks that have yet to go on the kind of growth curve that yamana went on so i don't want to talk about is that, I'm out of. As far as gold in particular is concerned it's actually the most under priced of the metals at this point. If you look at what it was relative to its bottom five years ago, it's only about doubled. And things like tungsten, mali, they've gone up 10-for-1. Copper's gone up 6-1. Silver is has quadrupled so in relative term, gold is very cheap. It's also very cheap relative its past peek and I've got point out about gold. People say, well gold was $800 back in 1980 but you can't look at things in terms of U.S. Dollars that's as idiotic as an argentine looking at things in terms of pesos. The dollar is a floating abs distraction.
>> Jim: Not worth the paper it's on?
>> Doug casey: Well it won't be in the future. What it is -- the dollar is the unsecured liability of the U.S. Government. There's absolutely no reason to trust the U.S. Government. It's a bankrupt entity digging itself deeper and deeper into a hole and you know, as I said these dollars are floating abstractions, they're guaranteed to be wortless every year. >> Jim: We'll come back some of those thoughts on the U.S. Government, but what is your target on gold?
>> Doug casey: It's very hard to pick a target for gold what's the correct price for gold? Well I'll tell you what should happen and i believe will happen in the future. In the past up until 1933 each U.S. Dollar represented a specific amount of gold, $20.50 worth of gold on deposit with the U.S. Government. That's a proper monetary system. The dollar was just a receipt. If that were to happen again, i don't know what the price of gold would be. There are five trillion U.S. Dollars, probably, nobody knows exactly, out side of the U.S., Owned by foreigners, who don't have to use them, in day to day currency like americans do. The U.S. Government has about 270 million ounces of gold on deposit. Divide them up, do the math. That's not counting the U.S., The dollars in the U.S. >> But if I press you for figure, is gold going to $1,000, $2,000?
>> Doug casey: Gold's going not only to $1,000, I think that in terms of today's dollars, and I don't know what the dollar's going to be worth tomorrow if ben bernanke tarts throwing $100 bills out of a helicopter. I do like him he's got a wri sense of humour which is unusual in bureaucrats. But no. Inning this bull market in terms of today's dollars, gold's going well above $2,000 an ounce, probably more. I think it's going get out of control. >> $2,000 plus?
>> Doug casey: Yes, but look at it this way, if we readjust today's dollarstor what they were worth in 1980 when gold went $800, those dollars would be the same as $2300 gold today and the financial situation today is much more serious, although not developed yet. We're not at the peak of a crisis as we were in 1980, but things are much more serious now than they were then, so gold could go far above its past high.
>> We'll dig more into that when we come back in just a moment. Doug casey is our guest today. Big picture stuff if you'd like to give us a call. We're pack in two minutes. >> Jim: Welcome back. Doug casey, our guest. Let's go to ron in vancouver. Hello, ron.
>> Caller: Hello, mr. Case see, I'd like your comments on junior nickel explorers in canada. Specifically the raglin district and knight resources if you could, please? Thank you.
>> Doug casey: Okay. I hate to comment on individual stocks. And the reason is, it's a bad habit for you to get into to take -- look. Anybody's opinion plus $10 is worth a cup of coffee in tokyo and anything i can say about a stock in 15 seconds that we have for it, is absolutely not enough for you to either buy or sell on it. If we follow the stock, we do long reports and dig into all this type of thing and you should read it and digest it. This is a little bugaboo of mine. Most people spend more time reading consumer reports to decide what refrigerator they should buy for $500 than they'll put their net wort into an individual stock. I hate to out to, for just that reason but there are other reasons besides.
>> Let's go jason in yorkdale. A general question. Jason?
>> Doug casey: We can talk about nickel, though, that's a different story. There's 92 naturally occurring elements we could talk about, probably I could talk about a third of them anyway.
>> Jim: We'll certainly get into them. Are you with us, jays on?
>> Caller: Yes, i am.
>> Jim: Go ahead.
>> Caller: Good morning as it is in saskatchewan. Our cows have the inability to milk an hour earlier during the summer months as they appear to across the country. But that's another issue. >> Jim: Okay.
>> Caller: Doug, my question is on natural gas, and I'm confused because as an amateur investor, it would seem to be that the price of natural gas is directly reflective of a supply and demand curve. Yet various analyst opinions seem to be all over the place, whether we have oversupply of natural gas, under supply of natural gas, we've got huge amounts in store.
>> Jim: Okay.
>> Caller: I heard that for the first time in 30 years this summer, the natural gas reserves have been drawn down.
>> Jim: We got less than a minute. So we'll have to dive into an answer. >> Doug casey: Right. All right, natural gas. Look, you've got to be bullish on energy of all types, that's why I'm especially bullish on uranium. Natural gas is something else again. It's a local market because it's hard to move, okay? You've got gigantic natural gas deposit, various places in the world but the problem is moving them with liquid natural gas tankers and then you've got to off load the liquid natural gas tankers and so forth. And it's got to be shipped in pipelines and so forth. So it's a local market, more than oil, which is an international market. So it's very hard to comment on it for that reason. It depends on where you are in addition to what it is. Natural gas. But yes, in general, I'm bullish on these natural gas stocks. I think they're cheaper as a group than they you at to be and i like the natural gas exploration companies more than i do the ones that are biG. >> Jim: All right, doug doug. Welcome back in just a moment doug casey our guest. We have him for another half hour or sO. We'll talk about the housing bubble that's what it is, bond, and more discussions on gold and silver and
>> You are watching report on business television.
>> Jim: We're back. Special edition, wednesday edition of "market call"ment I'm jim o'connell. Doug casey is our guest. Chairman of casey research. You're based out of -- your office is in swrerm month but you're all over the world basically. >> I'm a holeless person, jim.
>> Jim: You're a homeless person. And this economic crisis, monetary crisis you're predicting, what's the catalyst that will sets it off? Is it housing? It's unpredictable what it might be but housing is certainly a predictor to set off this thing and the reason is that the real estate market is much bigger in thames of value and the stock market, which makes it more important and it's much more leveraged than the stock market has ever been. People have never bought stocks for 80, 90,100% or even 150% hardge margin. A year ago, I don't know if they have those today, where they were companies offering to lend you $150% of the market value of your house and this is completely insane people have been using their houses as atm machines for years counting on it going up. They thought about houses as being the new internet stocks and that's actually not a bad analogy. >> So that brings us to the feed. Many depend on the fed to guide people in like a storm but you say the fed serves no useful purpose?
>> No, it doesn't. In fact this is one instrumentality of government that should abolished, the fed reserve and the U.S., These are just instruments of inflation that since they were created have destroyed the currencies they were supposed to protect. They're really nothing but method, providing a taxing for the government. How does the government get its money? It can extract it from you directly with taxes. It can borrow it which they certainly do but that just means taxes are going to have to be paid in the future with interest, and the third thing they can do is inflate the currency which they do with abandon, under the disguise of stimulating the economy and so forth. This is nonsense. No the fed and other central banks should be abolished and we should use a free market money historically gold has been the best one. >> But there's no chance of that happening, is there?
>> Doug casey: No no chance at all but i don't know what's going happen when we go into this next monetary crisis which is likely to be characterized by a catastrophic deline in the value of not only the u.S. Dollar but canadian dollar, too. And I don't know what they're going to do at that point. How they're going to reorganise things.
>> What do you base that on? What makes you qualified to predict such a catastrophe? What do you see that we don't see? >> Well, look, I'm a history buff. And I see history may not repeat itself but as mark twain says, it rhymes. And there's a certain cyclicality naturally to economic events for boom and bust but government creates huge st. Extortions in the way people interact with each other that are unsustainable. I've writ fen several books on this. They're not currently in print. I recommend people look into this.
>> Jim: We'll take --
>> Doug casey: I mean, look. The longest trend in history is the ascent of man. Things will continue getting better at an accelerating rate well into the future but i think we're into for a financial melt down here for the future. >> Jim: On that note, let's go to and draw in calgary. Hello andrew.
>> Caller: Hello, jim and doug. My question is about short selling last night on marketcall tonight it was suggested one could take vank the seasonality and shorting the s & p in late april and september. You're suggesting a shorter mode for shorting than seasonality. How might one time the initiation of the short sales to best take advantage of an oncoming recession? Thank you very much. 'Bye. >> Right. Okay, what you were just saying is there's an old adage, it's kaud sell in may and go away and historically that's been a good time to short. Okay, there's actually good reasons why that's a wise adage, but if you want to profit from a monetary crisis, which we're going into, I'm not sure, short selling stocks, overpriced as the market in general, is I'm not sure that's the best way of doing. Why? If we have a monetary crisis characterized by the collapse of the dollar, these stock, these companies represent real assets and you might have a lot of buying of theM. The best thing to do, i think, is to -- look, bonds or something that's absolutely going to be hurt. >> We'll be back. Doug casey, chairman of casey research, more of your calls right after this break.
>> Jim: We're back, got a lot of call, let's go to john in mississauga. Hi john.
>> Hi there. I'd love to hear doug's comments thchlt is further to his comments about the futility of central banks. I'd love to hear doug's comments about the theory of the central bank's manipulation of gold price and basically the transfer of national wealth from west to east, considering who's buying.
>> Okay. >> Yes, well, i'm not a -- I'm sure you're not either, but I'm not a conspiracy theorist and the reason I'm not is anybody that's tried to agree with three or four friends what movie to see and where to go for dinner knows how impossible it is to get agreement, even on something as trivial as that and trying to get these people that run central banks to try to agree on something. It's got to be impossible. Nonetheless, that being said, they do have certain interests, and if you want to talk about one thing that I'm sure governments around the world and central banks would like it see happen is for gold prices to stay low. And the reason for that is that gold is like a thermometer, a barometer of financial well being and when the gold price starts going up, up, up, they get worried. Why is the gold price going up. So they're trying to keep it down so it doesn't create a panic. How can they keep it down? Well, there are a number of things they can do in addition to selling their gold, which they've been doing most of the person central banks, europe and canada, one of them have sold all their gold. This is good thing in my point of view. It means there's less power in these people's hand, good thing, and once they've sold their gold, it's sole. Now they can't do anything more to sell goal. All they can do is buy it, which is what the up-and-coming oriental central banks and governments are doing. They're much smarter than we are.
>> He have eric in vancouver. Eric, welcome to the show.
>> Good morning, gents tellmen, thanks for having me on your show. Jim, I've got a question regarding the copper prices and i think it's more of a pack crow and I'd like to apply to stock. A little background on the stock. I bought it back a year ago, it's a small cap stock. It traded around $2 and phelps dodge came out and said copper's going hit $3. This when copper was around $1.80. My stock went up to $4 and before copper even hit $3 the stock peaked and it's back off 45%. I'm just wondering what moves or gives the stock its value. Copper's holding in at $3.50 a pound.
>> Jim: Let's give that a try. Thanks very much, arT.
>> Right, okay look, back in the '60s, due to new exploration technologies, there were some immense company per discoveries all over the world in the 1960s and then for the last 25 years there haven't been any and there hasn't been any exploration for copper, so what's driving copper right now is two things. The development of china and india, and that is going to continue. Hiccups along the way, who knows, maybe a revolution in china but the cat's out of the bag and mrs. Wong wants a new refrigerator and air conditioner and so do all the people in india, so demand for copper is going to stay up there and supply is very constrained for copper. There's been little exploration for cop he or minerals for the last generation. As far as these copper.S are concerned most people are thinking wait a minute, it was only five years ago, copper was $60 cents a pound and there was a glut of it so most of them are thinking, well, copper's run up and maybe it will go down but I think copper companies that have viable deposits right now are real tuvely cheap so I don't know which once you have and there are a number of theme them that are quite good but copper deposits today, you're looking at a billion tons of material most often at a half percent copper with gold and so forth. This is the type of thing in the right country that is probably good to hold. Most of these stocks are cheap.
>> Let's go to ron in toronto. >> I'd like to ask mr. Casey what he feels the price of led will be about a year from now.
>> Well, led, zinc, these base metals generally, you've got make the same comments, I could make the same comments as about copper. These things were in the doug house for a full general generation. Nobody was looking for them, putting lead or zinc mines for that matter into production because they were all sub economic. The industry was in liquidation. The companies that were mining lead and zinc were actually losing money trying to make it up on volume. Why were they doing? Well I guess it's because they were lead and zinc myron, and that's what they do, whether they make money or not. No particular comments on lead other than putting it into a class with the other metals, except I don't think it's going to be, I'd save the base metals lead has got to be the weakest and least desirable speculation. >> Okay, one more before the break. Adele, blind river, ontario. Go ahead.
>> Hello, I'm interested in goldmining in vietnam and I was wondering if your guests could have any comments on what kind of risks they minor league be facing, political or otherwise.
>> Well, that's the big problem with vietnam. I've been there a number of times over the years and it's advancing very very rapidly. Tremendous growth, smart people and a lot of them. There's what, 80 million people in vietnam right now? Problem in vietnam is corruption. Don't forget, this place was a people's republic. Well, still is, technically, forever, and the more centralized government like a communist socialist countries, they're always, always, without exception corrupt. You've gotta pay people off, you've got to grease people and so forth. That's the big problem with vietnam. It's not the existence of mineral deposit, it's whether they'll let you put it into production on an economic basiS.
>> So you'd stay away?
>> Doug casey: Well, you know, there are better places in the world to go and if you're going go looking for copper or gold and you want an under explored country, argentina is a favourite of mine, despite the fact there's a resurgence of nationalism throughout south america right now. I put it high on my list. That's I didn't spent a lot of time there personally.
>> All right, we'll be back in just a moment doug casey our guest of the we've got one more segment of calls and three top picks. In just a moment. Hope you'll stay with us. >> Closed captioning of this program is brought to you in part by empire life. Solutions for your investment, insurance and group benefit needs.
>> Jim: Welcome back, doug case see, our guest. We have tim for just a couple more call, doG. Let's go to brian in alberta.
>> Caller: Yes, I'm interested in the canadian diamond market. It doesn't seem to be doing a whole lot, if you compare it with gold and in particular tahera and shore goal. They've dropped more than 50%.
>> Jim: Okay, diamonds.
>> Doug casey: Right. You know, I've got to say even though there's supposed to be a deficit of diamonds with the argyle mine closing down in australia and so forth, and diamond mining can be a fantastic business and diamond mines in size gor of the biggest goldmines, I'm not a fan of diamond mining and that's because there are at least two technologies out there today that allow the creation of real and totally flawless, large diamonds for just a few dollars a carat. They're indistinguishable from the real diamonds except for the fact they're absolutely perfect and I'm a believer in the saying a difference that makes no difference is no difference. And with the development of nanotechnology in the future, diamonds are going to be as common as glass. You know, i can't wrap my head around diamond, so yes, i speculate in them and i own a diamond stock, peregrine, which is eric freed land, the brother of robert freed land. Yes, of course. But no, diamonds, different story, not really --.
>> Jim: Let's go to arnie in calgary. Silver, arnie. >> Caller: Yes, I'd like your view of silver in general and silver wheaton in particular.
>> Doug casey: Silver wheaton is a wonderful peace of financial engineering, making it possible to invest in a stock to get all the leverage in silver, and it's a pure silver company, because as you know, what they do is they buy the silver production of base metals mines for a fixed cost. It is the perfect way to speculate on higher silver prices in a very pure and actually relatively low risk way.
>> Jim: Do you own it. >> Yes, I do. I own a lots of silver wheaton and it's a corps holding, it's got a big market cap for these things. A couple billion dollars but the idea is a work of genius because it's going higher. Silver is going a lot high her. Silver is gold on steroids.
>> How much higher?
>> Hard to say. Because from a fundamental strictly technological point ever view silver has many more uses and men more uses every year. It's a basic supply deficit, but governments, including the U.S. Governments a have sold all their silver. You can build an excellent bull case for silver on the one hand, and on these stocks, it's funny, the people that like silver, it's like a religious icon for them of some type so they become maniacal about these stocks. So no they're extremely volatile, I think silver is going very much higher. >> Sarah joins us from calgary. Hello, sarah?
>> Hello, mr. Casey, could you please comment on where you see oil going in the case of a severe economic. Thank you.
>> Doug casey: Well if bush starts a war with iran, and bush and cheney are out there hooting and panting lake a couple of chimpanzee, trying to start another conflict. It's insane. And they may well succeed in doing. If they do, i mean, oil will go to a couple hundred dollars a barrel, and that's going to be the least of your problems. That's from a political points view but more important than that, as I mentioned earlier, I'm a believer in king hubbard's theory of peek oil so yes, I'm a bull on oil. >> Jim: One more caller ken in ottawa. Ken?
>> Caller: Yes, thanks, doug. I've heard for six months that zinc and copper are going to be dropping in price. I'm invested in hudbay minerals which is 50% each, i just winded what you thought of the market and also since you're into argentina, I just wondered what you thought of the oil. Petro live ra is down there and argentina.
>> Jim: We can take one of those questions.
>> Doug casey: Okay, well the base metals. I'll just repeat what i said before. For a full generation, you didn't have a base exploration for these metal, nobody was looking for them the people that were producing them were losing money. For a full generation, there were no geologists, significant numbers turned out of thers in city, kids weren't going into that so we got a tremendous supply deficit of them at the very same time as india, china and other places in the third world are going to keep developing at breakneck speed which is from the deman side. So this is not just a temporary blip in commodity prices. I'm not making a prediction for two weeks or two months or a year from now. I don't know what copper is going to do in that period of time or zinc or nickel. Or lead or -- but they've all established new level at higher levels and they -- this is a new world. This commodity bull market has legs. It is not over by any means.
>> On that note, we'll be back in just a moat minute your top three picks. Doug casey, stay with us.
>> Jim: We're back, our final segment, doug, you've got three picks today starting with northern peru copper. Noc. You own this? >> Doug casey: Yes, i do, quite a bit of it, I've owned it since it was lumina copper. Northern peru copper has about 150 million dollar market cap, and it has been -- it's a land bank run by boss beatty. We have something called the explorer's league which only mineral guys who have found or put into production two mines or more. I'm a believer betting on people first and foremost and this is ross beatty's company and I don't see how this thing can avoid doubling from here and i don't see meanful down side risk. So that's a stock I can mention and feel pretty good about. >> Jim: Your second choice is tenke mining, tnk on the tsX. You don't own this, do you?
>> Doug casey: No, i don't own tenke unfortunate. It's got a 600 million dollar market cap. Interesting thing about tenke, a, it's run by lucas lundin, also a member of the explorer's league. Most important thing -- I was going to say one thing. Very important. Choosing these stocks, there are seven things we look at. We call them the seven ps. And if anybody would like a paper we've written on the seven ps critical for hooking at all these mining stock, sen us an e-mail. >> We've got your website up right now.
>> Info at casey research and we'll send it to you. With tenke, lucas lund dean, a self made millionaire, as ross probably is, too, number one thing. It's the people. Trying to second-guess the properties and the politics and the price of the mineral, tough. Most important thing is to get good people. Okay, so luke katz cass lund dean runs ten kemd it's in the congo and petanga. I believe in going where the big run ral deposits, the politics can change on top of the mineral deposits but mineral deposits got to be there it's also in argentina, fantastic company, it's going higher. >> Number through, silver standard, ssO. Do you own it?
>> Doug casey: Ah, well no, I used to and I've got to buy it back at this point. I owned that company since it was a quarter. And i sold it at 20. I'm going to have to buy it back now at $25. Why? Because the results are getting under big property in mexico. They're getting bonanza grade. And by that, i mean ore that's 400, $500, $600 a ton in value over 10 and 20-metre whiffs. This is phenomenal! Copper, lead, zinc, silver. It's got a billion and a half market cap but it's got $400 billion in cash and run by another explorer's league inducts tee, bob quarter main. So you're not going to get hurt in this bull market with these things because before this bull market is over, and if a bull market has three stage, the stealth stage, which is gone, we're in the wall of worry stage now, people know the bull markets here but they're worried. We're going enter the mania stage where these things are going to be like the internet stocks. Maybe on steroids. Because these -- the mining sector has been so out of respect and out of view if for so long, it's going fly. It's going to be like the new internet stocks.
>> Well that hour certainly flew by. I thank you so much for joining us today. We appreciate you coming into town.
>> Thanks jim, my pleasure.
>> Hope you can come back.
>> Doug casey chairman casey research, that is our show for today, tomorrow on the show we'll be joined by morgan smedley from morgan meighen and associates, here to take your question on

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