Reprinted from LewRockwell.com
When asked about gold stocks Doug Casey, who has made millions speculating in junior mining shares, makes the point, “I’m not sure how many thousands of gold mining stocks there are in the world today – I’ll guess about 3,000 – but most of them are junk. If they have any gold, it’s mainly in the words written on the stock certificates.”
Speculating in the shares of junior natural resource company shares exposes many human frailties, greed, and fear most prominently. I myself love a good story, especially one that might make me wealthy. However, my punting on penny mining shares has built little capital, but plenty of character.
Since learning from Murray Rothbard that gold is money I haven’t been able to help myself. Coins just sit there, collecting dust, while the central banks print us toward oblivion. Surely, mining shares will get me ahead of Ms. Yellen and Mr. Draghi who prey on my savings with their daily monetary machinations.
Yes, what gold miners extract most efficiently is money, from investors’ (who are really just wild-eyed gamblers) pockets. “About 1 in 3,000 mineralized anomalies became a mine,” Rick Rule explains. “So the typical Howe Street or Bay Street investment proposition is that you take a 1 in 3,000 chance for a 10 to 1 return.”
As a long as those odds are, to make matters worse, occasionally there is a fraud like Bre-X. A company believed to have an enormous gold deposit in Busang, Indonesia. Its shares went from pennies to C$286.50, before the scam was exposed. Turns out the core samples were “salted” and when Filipino Bre-X geologist Michael de Guzman committed suicide with a leap from a helicopter on March 19, 1997, the company’s scheme unraveled.
The aforementioned Mr. Casey bought Bre-X shares but cashed out early, reportedly making 800% on his investment. Besides making good money, maybe, just maybe, those salted samples planted the seed for the plot of his novel “Speculator (High Ground Series Book 1)” written with John Hunt.
Casey’s story is set in the fictional African country of Gondwana, not Indonesia, however, the shares of fictional B-F Explorations hit a high of C$290 a share, similar to the peak price of Bre-X, and the CEO of B-F is named Smolderhof while Bre-X purchased the Busang property on the advice of its geologist John Felderhof. The fictional B-F fraud totaled C$6 billion the same as that of Bre-X.
Those familiar with Mr. Casey know he’s as much a philosopher as he is a speculator. There is no ambiguity in Casey’s characters, they are either evil, and work for, or conspire with, say, the IRS or they are good, caring, and honest. The author makes sure we like the good guys and hate the bad guys. If only real life could be that simple.
Casey told Colen Kattell of Palisade Radio that the book is autobiographical “to a reasonable degree.” The book’s hero is Charles Knight a 23-year old speculator, which is the first of his six politically-incorrect occupations: Five more novels are promised, with the next one “Drug Dealer” scheduled for release at 2017 Freedomfest. Appropriately, Walter Block’s “Defending the Undefendable” gets a mention in the book. Knight, like Casey himself, questions society’s conventional wisdom, and chooses to pursue life via a road less traveled, in Casey’s case to over 150 countries.
Knight didn’t go to college and instead gets his education from real life experiences and self-directed reading. He attracts a number of wise mentors in his short life and meets another, Xander Winn, at the B-F Explorations’ site. The two then embark on the adventure of a lifetime; a tangling together of the jungle, love, lust, boy soldiers and grizzled mercenaries, violent revolution and psychopaths, the IRS and a giant gold fraud.
Many of Casey’s investing axioms are worked into the fast-paced narrative, such as the Nine P’s of resource stock evaluation: people, property, financing, paper, promotion, politics, price, push, and pitfalls. Later on, Six P’s are mentioned, “Proper Planning Prevents Piss Poor Performance.” The author even provides what he calls “sugar coated, spoon fed” instruction on geology.
While Casey is a fan of Ayn Rand, he doesn’t force the reader to trudge through 100-page stemwinding speeches on the morality of markets and such. Instead, the author sprinkles his libertarian philosophy lightly over the plot making the book a quick and effortless read. For instance, Ms. Rand would be pleased our hero doesn’t succumb to the attraction of superficial stunning looks for a possible companion but instead chooses a mate reflecting his values.
It is true, “A junior mining company takes your money and their dream, and turns it into your dream and their money,” which appears in Speculator’s pre-matter. Those dreams can materialize, but the experienced know and Charles Knight finds out, the dreams can vanish in a heartbeat.