Last week, Casey Research’s resource expert, Dave Forest, and his longtime colleague Chris Lowe caught up to discuss the mining renaissance coming to America… and what it means for savvy investors.
Today, they’re picking up where they left off. Dave reveals the real reason why mining moved offshore in the first place… what’s next for gold… and our guide to profit with one of Warren Buffett’s secret strategies…
Chris Lowe: Hello, Chris Lowe here.
In last week’s conversation with Dave Forest, we talked about the mining renaissance in the U.S.
Just out of interest, Dave, in terms of the kinds of metals mined around the world, why did America go into decline? It seems odd to me.
Dave Forest: A lot of it is local resistance. The rise of the environmental movement presented a lot of challenges in places like Arizona, which used to be a major copper-producing center.
There was a lot of resistance from environmental groups. People gravitated outside of the U.S. because it was easier at the time.
That’s still the case. There still is resistance. When you go to build a new mine, the permitting is very intense.
But there’s a sense now that it’s worthwhile to bring all the stakeholders to the table, to spend the time and money to make sure that it gets done right. It’s worth the certainty of operating in a known jurisdiction, in your backyard.
Also, the government has recently changed its view on different parts of the mining industry. Certain areas like national forests were largely off-limits to mining – even though that was not the intent when national forests were created.
Because of policy, they effectively became off-limits to mining.
But in the last two or three years, that’s changed. The government said, “The crisis of not having these metals is more important. Where we know about these deposits, we need to push for their development.”
I know of several companies that are working now in areas where 10 years ago – or even 5 years ago – it would have been really tough to work.
Today, they’re working there very efficiently, with all the appropriate steps. It’s happening. And that’s unlocking whole tracts of land that have not been accessible for half a century, in some cases.
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Chris: I have to talk a bit about gold, because we always get a lot of questions about gold. I know that you were talking recently in Casey International Speculator about what happens with gold in a crash. Is that something you’re gearing up for?
In terms of the broader market, do you feel like things have gone a little bit too far? How do you see that panning out?
Dave: I think everybody should be cognizant of the risk of a stock market crash, the way things are today.
We’ve got an incredibly uncertain global economy. We still don’t really know what the effects of COVID-19 are ultimately going to be.
We’ve got an unprecedented shutdown. We’ve had unprecedented amounts of stimulus. The U.S. government alone created twice the amount of money in three months this year than they did in the wake of the 2008 financial crisis.
There are a lot of big unknowns happening in the economy and the monetary system. So, you’ve got to be ready for anything to happen – including a major stock market crash.
In a crash, everything will get hit. Historically – in 2008 and other crashes – gold got hit, too.
In a panic, people sell everything they can. But the benefit of gold is that it rebounds. Historically, it has rebounded very quickly.
So, within a matter of months, we saw gold and gold stocks recover. And in most cases, after that quick recovery, they went on to have a big bull market.
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2009 to 2011 was a huge gold bull market. A lot of people made a lot of money. The wider market was recovering, but it took a long time. It was grinding upward for quite a while.
Gold’s potential for big gains is one part of the justification for including gold stocks in your portfolio.
The other part is that gold is a sector that’s largely uncorrelated to a lot of the normal, mainstream kinds of investments that people have.
Having a small amount in something like that, you could expect to do reasonably well in the event of a crash. It makes a lot of sense, just for diversification.
I personally know people whose gold stocks saved them in 2009. Everything else got crushed. But their gold portfolio did so well that they could use that money to live and keep going.
And in a lot of cases, they actually made pretty big profits. That’s something I think every investor should be considering right now.
Chris: You’ve also talked about an investment that Warren Buffett has been making. It’s gone on behind the curtain a little bit, so not a lot of people know about it.
We’re not going to get into the details here. But can you talk a bit about what you’re looking into, and why you’re excited about it?
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Dave: This is something that our research team has come across.
It’s a different way of buying stocks, basically. There’s a particular instrument that Warren Buffett has used with incredible success.
Obviously, there are a lot of stories behind Buffett and his investing genius. But this is one that a lot of people don’t know about. It’s responsible for some of his biggest and most profitable trades, and quickest gains.
In some cases, he’s made billions of dollars using this method – in the span of days.
And the interesting thing is, it’s not something that’s talked about anywhere in the mainstream investing press. But it’s something that everybody can buy.
We found that it’s incredibly easy for the average investor to purchase and to use. It’s just really hard to find information on it.
So we’ve put together what I believe is the world’s first comprehensive guide to this particular kind of investment, for any investor who wants to get started in it.
Once you get started, it’s actually quite easy. And the potential for gains is huge.
The reason Buffett likes it so much is that it amplifies your gains on a normal stock – without the complexity of options, or things like that. It’s just something you buy and hold… and sell when it goes up.
We’re really excited about it. I think we’re going to have a lot more to say about it in the coming months, as we get this service out and rolling.
Chris: I know there’s one pick in the portfolio which is tied to a mattress company stock. How big was the gain?
Dave: Well over 4,000%. You’re right, it’s a mail-order mattress company. And the stock has done well. But this particular way of investing in the stock has done exponentially better.
It had over 4,000% gains. It’s a perfect example of the kind of big upside you get from this new service.
Chris: I must check in when it’s up and running. Thanks for your time. I think that covers an awful lot of the stuff that you’re looking at. And there are some really interesting investing ideas in there. So, thanks again.
Dave: Thanks for having me.