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

Chapter 16

Doug Casey on Cattle

September 9, 2009

Louis: Doug, we talk a lot about metals and energy, but you’ve also made money in agriculture, as have our subscribers who got in early on corn and potash. In the February 2008 issue of the International Speculator, you made the case for speculating on rising cattle prices. Would you explain your rationale for that and give us an update?

Doug: Sure. There is such a thing as a cattle cycle, and right now, all over the world, cattle are in liquidation. Farmers and ranchers just can’t make any money on cattle. Nobody has made any money on cattle in North America or Europe for years, and it’s especially serious now. So worldwide, cattle herds are being slaughtered, and that’s depressing the prices.

The interesting thing is that even as prices are being depressed by all the selling, counterintuitively, cattle herds are collapsing. That means the number of cattle and the price of cattle are going down at the same time. That obviously can’t go on forever; at some point, the relative number of cattle is going to be quite small, and prices are going to explode upward. Why? Because people in China, the rest of the Orient, and across the developing world are going to want more beef—in addition to the traditional consumers. And the numbers of cattle are going to be very low.

I think that cows are an excellent place to be.

L: If it’s not a traditional part of their diet, why would such people want more beef ?

D: As you become wealthier, you ...