Louis James: Stuff is not really cheaper. There is deflation in some asset classes and some equities, but life for the average Joe is not cheaper and commodities in general are not cheaper. Oil is still above $100/bbl. When commodities have not lost ground but the equities have, that’s an alligator jaw pattern. I’m not speaking as a technical analyst—that’s just a metaphor. But it’s actually fantastic if you have high, driving prices in the commodities, and you find good, cheap companies with good management, money in the bank and the wherewithal to weather the storms.
I also think we’ll see more volatility, and the chances of seeing much lower prices are pretty good. When a bear sentiment grabs the market, it takes everybody down, both the best and the worst players. If you have the courage to face it, that’s very good news.
If you’re new to the game, you can get fantastic buys on things that others have identified as great plays, already worked on and de-risked. If you’re already long, it’s a matter of self-discipline, which few investors have. Most of them get burned again and again. They buy high when everybody else is buying. They feel confident. They jump in. Things turn against them. The tide goes the other way. They get scared. Everybody else gets scared at the same time and they get creamed. Investors need self-discipline, belief in what they’re doing and they need to know why they’re buying something to be able to happily take those shares off weaker hands.
I think there’s a good chance we’ll see much more of that over this summer and I’m looking forward to it. After the sector bounced back from 2008, I wrote that we should be so lucky as to have another one.
TER: Speaking of lower equity prices, Marin, last fall you told us that quantitative easing was deflating equity valuations. “He who has cash will be king,” you said, “because he can afford to buy discounted stocks. If you do your homework and be sharp you’ll make a fortune in the next three years.” Is that still the case? Or are we too late?
MK: I still believe we’re in deflating equity prices. By mitigating risk, being strategic, always taking Casey free rides, the portfolios for 2011 for both the Casey Energy Report (CER) and Casey Energy Confidential (CEC) gained over 20%. And Q1/12 was over 20% for both newsletters, too.
Throughout the year, a few of our buys had massive gains—like Poseidon Concepts Corp. (PSN: TSX), TAG Oil Ltd. (TAO:TSX; TAOIF:OTCQX;) and Africa Oil Inc. (AOI: TSX.V). Did we sell too early? Yes. But so what? We reduced our risk. We made money. We lived to see another day. And with one of them, we now have a dividend for free and the company’s growing.
So if you do your homework and buy good companies, you can do well. I don’t think you’re too late at all.
The 300+ investors who attended the 3-day Casey Research Recovery Reality Check Summit discovered a multitude of natural resource investing strategies during daily Gold and Resource Stock Roundup sessions. These sessions featured Rick, Marin, Louis and Jeff Clark, senior precious metals analyst at Casey Research, who together revealed their favorite natural resource stocks to invest in now. You can hear all of their recommendations, as well as every recorded summit presentation—over 20 hours in all—with the  Casey Research Recovery Reality Check Summit Audio Collection.
Founder and CEO of Global Resource Investments and President of Sprott Asset Management U.S.A, Rick Rule began his career in the securities business in 1974 and has been principally involved in natural resource security investments ever since. He is a leading American retail broker and asset manager specializing in mining, energy, water utilities, forest products and agriculture. Rule’s company has built a sterling reputation for its specialist expertise in taking advantage of global opportunities in the resources industries. In 2011, Rule closed a landmark deal with Eric Sprott, Founder of Sprott Inc., another famous powerhouse in the arena. Sprott Inc. offers resource-oriented investors opportunities in segregated managed accounts, mutual funds, hedge funds and private partnerships. The collective organization offers unparalleled expertise and access to investment opportunities in all resource sectors. Sprott Inc. manages a portfolio of small-cap resource investments worth more than $8 billion and boasts a workforce of more than 130 professionals in Canada and the U.S.
Louis James is chief metals and mining investment strategist at Casey Research, where he is also the senior editor of Casey Investment Alert and Conversations with Casey. When not in meetings with mining company executives in Vancouver, B.C., James regularly travels the world evaluating highly prospective geological targets and visiting explorers and producers getting to know their management teams. For more than 25 years, Casey Research, headed by investor and best-selling author Doug Casey, has been helping self-directed investors to earn returns through innovative investment research designed to take advantage of market dislocations.
Investment Analyst Marin Katusa is the senior editor of Casey’s Energy Opportunities and Casey’s Energy Confidential. He left a successful teaching career to pursue what has proven an equally successful—and far more lucrative—career analyzing and investing in junior resource companies. With a stock pick record of 19 winners in a row—a 100% success rate last year—Katusa’s insightful research has made his subscribers a great deal of money. Using his advanced mathematical skills, he created a diagnostic resource market tool that analyzes and compares hundreds of investment variables. Through his own investments and his work with the Casey team, Katusa has established a network of relationships with many of the key players in the junior resource sector in Vancouver. In addition, he is a member of the Vancouver Angel Forum, where he and his colleagues evaluate early seed investment opportunities. Katusa also manages a portfolio of international real estate projects.
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Disclosure:
1) Karen Roche and JT Long of The Energy Report facilitated this panel discussion. They personally and/or their families own shares of the following companies mentioned in this interview: None
2) The following companies mentioned in the interview are sponsors of The Gold Report: None.
3) Rick Rule: I personally and/or my family own shares of the following companies I mentioned in this interview: None. I personally and/or my family am paid by the following companies I mentioned in this interview: None.
4) Louis James: I personally and/or my family own shares of the following companies I mentioned in this interview: None. I personally and/or my family am paid by the following companies I mentioned in this interview: None.
5) Marin Katusa: I personally and/or my family own shares of the following companies I mentioned in this interview: None. I personally and/or my family am paid by the following companies I mentioned in this interview: None.
