Right on the Money: Doug Casey on Economics, Investing, and the Ways of the Real World with Louis James

Chapter 7

Doug Casey on the Education of a Speculator (Part Two)

June 2, 2010

Louis: So what did you do after cashing in, in the 1980s?

Doug: That’s when I started getting into the mining stocks you now cover. I liked their incredible volatility. But it took me quite a while to really understand the way the game was played. Even though the third thing I wanted to be when I was a kid was a geologist, it took me years to get geologically active, so to speak. But no regrets. It was a great time to get into the field, because there were some fantastic gold stock runs in the 1980s, right up to the Bre-X scandal in 1996.

I went out into the field, as you do now, building first-hand understanding for the fundamentals of the business. That’s as opposed to treating these things strictly like trading sardines—which, of course, most of them are. But even so, you can trade them much more effectively if you have a solid grasp of the technical areas of the business. And there’s no book for learning this; there’s really no way to learn how to sort the wheat from the chaff, other than to get out there and apply boot leather, spend a lot of time talking to geos, learn the psychology of the players, and watch the economics of mining companies as they develop.

The 1980s were really a period of learning for me, playing around with wins and losses, all of which prepared me to profit from the bull market of the 1990s. It’s been a wild ride, with resource stocks cyclically going up 1,000 percent, and ...