Casey’s “The Biggest Threat to America That No One Is Talking About” Play on Superpower China

What's being hinted at as a pick of Casey's Crisis Investing?

By Travis Johnson, Stock Gumshoe, September 12, 2016

Nick Giambruno is helming the Crisis Investing letter for Casey Research now, which must come with a fairly high degree of attention because Doug Casey really made his name with his bestselling book of the same name in the late 1970s (later revised a couple times).

And after all this time you know what you’re going to get with Doug Casey, who has been a pretty consistent and strong-voiced libertarian: He thinks government has far outlived its usefulness, that we’re on the brink of a catastrophic collapse (and have been, at least much of the time, since 1979), and that you need to embrace “alternative” investments to protect yourself. Presumably those “alternatives” have morphed somewhat over the years, but gold has almost always been a factor, as has foreign real estate and investment in foreign countries — he’s very well-traveled, and many of the anecdotes that crop up in ads for Doug Casey’s work revolve around buying deeply discounted companies or real estate in countries that are hated or avoided by most investors.

Doug Casey has spent the past few months opining in interviews that we’re leaving the eye of the financial hurricane — that the first waves hit with the financial crisis of 2008, we’ve been enjoying the becalmed eye, and now the back end of the hurricane is going to hit us harder still. Here’s how today’s ad quotes Casey, from March:

“Right now, we are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.”

That’s a lovely metaphor, and it makes sense that there would be a negative backlash, eventually, to the huge monetary stimulus programs of the past eight years — particularly from inflation, though that hasn’t yet reared is head, but probably also from the great imbalances and strange incentives that have been created by holding interest rates at zero (or, most absurdly, by negative rates).

But the timing of big turns in the economy is, obviously, easy to opine about and almost impossible to accurately forecast. Doug Casey was saying much the same thing, about a likely “exit from the eye of the hurricane” within months back in the Spring of 2014. And he wasn’t alone, people have been predicting disaster pretty much every year since the US Government and the Federal Reserve stepped in in 2008 and 2009 with their various “rescue” programs and set us on the “easing” and stimulus path. The Fed has done unprecedented things in pushing liquidity, and is obviously the major global driver of investor sentiment these days — as we can see every time (including last week) that a hint of possible rate hikes hits the ears of Wall Street traders.

So even when we think that a pundit is making a rational argument, it’s important not to nod your head so vigorously that you forget to be skeptical about their ability to accurately predict the future.

And, like I said, we know the prevailing sentiment — they put it in the first couple paragraphs of the ad letter:

“As Dispatch readers know, America has been in decline for decades. The 2008-2009 financial crisis only accelerated the country’s downfall, thanks to the Federal Reserve.”

There is quite clearly another way of looking at America’s progress over the past few decades, but debating the point is not why I’m writing to you. Instead, I thought we’d try to identify for you what Casey’s analyst Nick Giambruno is pitching as his play on this “Biggest threat no one is talking about.”

And Giambruno notes that his readers are already “prepared for this coming crisis” because they’ve stockpiled cash and sold most of their US stocks, and because they own gold.

But this particular hinted-at recommendation is a buy based on the “major