Hillary’s Scary New Cash Tax

By Justin Spittler

Have you heard of “negative interest rates?” It’s become a phenomenon with economists and the media. There’s a good chance you’ve read an article about it. We’ve covered it many times in the Dispatch. I’m writing to tell you something about negative interest rates you haven’t heard. You certainly won’t hear about it in the mainstream press.

What’s coming at you is a historic event. It’s something our grandchildren will hear stories about...much like the Great Depression or the Cold War. What’s coming could send the price of gold much higher in the coming years...and hand gold stock owners 500%+ gains. If you know what’s coming, it could mean the difference between having lots of free cash in retirement or barely getting by.

To understand the gravity of this moment, let’s cover one of the most bizarre ideas in the world...Negative Interest Rates. In a normal world, your bank pays you interest on your savings. It takes your money, pools it with other people’s money, and loans it out. The bank makes money by paying out less in interest on your deposit than it earns in interest from borrowers.

For example, it might pay out 3% to depositors while earning 6% from borrowers. This is how it has worked for decades. Negative interest rates turn your “normal” bank account upside down. Negative interest rates could only exist in a crazy world where idiot politicians are in control. Unfortunately, that’s just what we’re dealing with right now. Politicians all over the world are ordering banks to charge depositors (you) a fee for storing cash.

It’s a perversion of saving. It’s a perversion of capitalism. It’s a perversion of planning for the future.
And it’s going to result in disaster. Politicians think that by making it unattractive for you to keep money in the bank, you’ll save less money. Instead, you’ll spend more money on things like smartphones and cars. You’ll invest in things like stocks and real estate. This would “stimulate” the economy.

This thinking is very, very wrong. No matter what the government does, it can’t force you to spend money. It can’t force you to make investments if you don’t see good opportunities. Forcing people to pay banks to hold their money is a tax. It is wealth confiscation for the digital age.

The government and the mainstream press won’t dare call it a tax. But that’s exactly what it is. A negative interest rate policy is a tax. Any time you hear a politician, central banker, or news anchor say “negative interest rates,” just think “TAX.” Think “TAX ON MY CASH”. I’ll say it again: Negative interest rates are going to result in financial disaster.

The coming disaster will wipe out many people. But you don’t have to be one them. I’ll explain how you can sidestep this disaster—and even make a lot of money as a result of it—in a moment. But let’s quickly cover one more thing about negative interest rates.

The Ugly Twin Sister of Negative Interest Rates

If the government makes it unattractive for you to keep cash in the bank, you can pull cash out of the bank. You can simply store it in a safe or under the mattress. Politicians know this. That’s why they’ve created another dangerous policy that works hand-in-glove with negative interest rates. That policy is banning cash.
You see, if you pull your money out of the banking system and stuff it under the mattress, you aren’t doing what the government wants you to do.

You’re not spending money or investing in stocks. This is a major reason why governments are banning large cash transactions and large denomination bills.

They are fighting a War on "Cash". In just the past few years…

• Spain banned cash transactions over 2,500 euros
• Italy banned cash transactions over 1,000 euros
• France banned cash transactions over 1,000 euros, down from the previous limit of 3,000 euros

And just a few weeks ago, former U.S. Treasury Secretary Larry Summers called for a ban on the $100 bill!
Historians aren’t surprised by Summers’ idea. Franklin Delano Roosevelt banned $500 and $1,000 bills in the 1930s. You can bet that Big Government types like Hillary Clinton and Donald Trump will do the same thing in a financial emergency.

By making it so difficult (or illegal) to buy and sell things with cash, the government wants to force people into the banking system. That way it can monitor us and coerce us into whatever it wants...like pay outrageous new taxes.

It’s all a dream come true for government central planners.

The governments say these new currency laws are for fighting terrorism, money laundering, and drugs.
But the ultimate goal is control of society…and to confiscate the wealth of private citizens. As congressman Ron Paul said, “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

Whether you agree with these regulations or not, the conclusion is obvious. By driving us more and more towards trackable digital payments, the government has made it much, much easier to confiscate our wealth. We’re like sheep that have been “herded” into a corral, ready for shearing. And Hillary Clinton (and her Big Government cronies) is holding the clippers. However, you don’t have to be sheared. You can avoid the shearing by learning how to navigate what will become the largest underground currency market in history.

Hillary Doesn’t Want Your Gold. She Wants Your Cash

On April 5th, 1933, president Franklin Delano Roosevelt issued one of the most controversial orders in U.S. history. It went by the name “Executive Order 6102” Not one American in 1,000 knows about this order. But to this day, many experts consider it to be one of the most destructive acts in U.S. history. It violated sacred principles held by our founding fathers. It impoverished millions and confiscated the savings of honest, hardworking Americans.

Executive Order 6102 made it illegal for private citizens to own gold. Citizens were ordered to turn in their gold to the government. Why would the government confiscate the wealth of private citizens? You can fill a book on the history surrounding Executive Order 6102. But in a nutshell, it was the act of a desperate government in the midst of a financial crisis. The government wanted the gold in order to increase the nation’s money supply. It believed an increase in the money supply would revive the struggling economy.

Please review those last two paragraphs.....

An increase in the money supply...a struggling economy...a desperate government. Sound similar to what is happening right now? Since the answer to that question is “YES,” we have to ask another question. Could such a confiscation happen again?

As the crisis develops, our deeply indebted government will act like a giant wounded beast, lashing out in all directions. It will grow more desperate for control. It will grow desperate for money. And just like FDR did in the 1930s, it will confiscate the wealth of private citizens. But Hillary Clinton (or Donald Trump, or whoever wins the election) won’t go after your gold. Nowadays, the gold market is very small compared to the overall economy.

Going after gold would be too much work for the government. The government is going to go after YOUR CASH. It will regulate your cash. It will tax your cash. It will take your cash. This has all kinds of implications for banking and the economy.

But here’s the most important thing you need to know as an investor. Negative interest rates and their partner, the War on Cash, will create a renewed interest in gold. This could cause gold to double or even triple in value. Even children know what the government is doing is crazy. And people aren’t going to take this lying down.

Rather than participate in the government’s mgovernment, onetary farce, people will go underground. They will pull cash out of banks and hoard it in safe places. And they will seek the safety, anonymity, and reliability of gold and silver. Gold and silver have served as money for centuries. Gold is the ultimate currency because it doesn’t rot or corrode...it is durable…easily divisible...portable...has intrinsic value…is consistent around the world...and it cannot be created from thin air. It cannot be debased by the government.

By enforcing negative interest rates and fighting a War on Cash, the government will create a huge underground currency market. And the ultimate underground currency will be gold and its sister metal, silver. Gold is trading for around $1,260 an ounce right now. As the government blunders into a negative interest rate disaster, gold will likely rise 50%...100%...possibly even 200% higher. There’s an underground currency market coming to your neighborhood.

If you own enough gold, you’ll be its king.
If you don’t yet own gold, buy it now.
If you own a lot of gold, buy more.

Regards,
Brian Hunt

---

Editor’s Note: Brian just alerted readers to an extremely rare opportunity in the gold market…one that could lead to 500%+ gains in a short period. This situation has only occurred a handful of times in the last 20 years. But every time it occurs, some investors see gains as large as 1,700%, 4,300%, and 5,000%.

If you’re interested in this idea, please act now. With gold prices surging, the window of opportunity won’t be open long. And once it closes, we likely won’t get another one for years. Read more here. The article Hillary’s Scary New Cash Tax was originally published at caseyresearch.com.


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Will Your Favorite Oil Company Go Bankrupt?

By Justin Spittler

Oil companies are getting desperate. If you’ve been reading the Dispatch, you know oil is in a horrible bear market. The price of oil has crashed 69% since June 2014. Last month, oil hit its lowest price since 2003.

The world has too much oil..…
For years, many folks thought the world was running out of oil. The price of oil soared more than 1,200% from 1998 to 2008. The “Peak Oil” crowd saw this as proof that oil production was in terminal decline. They were very wrong. “Peak Oil” believers failed to understand that high prices would create huge incentives to develop new ways to produce oil. Oil companies developed new methods like “fracking” to unlock billions of barrels of oil that were once impossible to reach. U.S. oil production has nearly doubled over the last decade. Last year, it hit its highest level since the 1970s. World oil production levels are also near record highs.

The world isn’t consuming oil fast enough..…
The global economy produces about 1.7 million more barrels a day than it needs. With U.S. oil reserves at their highest level since the Great Depression, companies are running out of places to store the extra oil. To deal with the surplus, companies have started storing oil on tankers floating at sea and in empty railcars. Other companies are selling barrels at huge discounts just to get rid of them.

Low oil prices have hammered major oil companies..…
The world’s five biggest oil companies—Exxon (XOM), Chevron (CVX), Total S.A. (TOT), BP (BP), and Royal Dutch Shell (RDS.A)—have fallen an average 34% since June 2014. Oil services companies, which supply “picks and shovels” to the oil industry, have crashed, too. Schlumberger (SLB), the world’s largest oil services company, has plunged 36% since 2014. Halliburton (HAL), the world’s second biggest, has plunged 53%.

Oil companies have cut spending to the bone..…
Companies have walked away from billion dollar projects. They’ve sold pieces of their businesses. As Dispatch readers know, some have even cut their prized dividends. The industry has laid off more than 250,000 workers since oil prices peaked. Last year, oil and gas companies cut spending by 22%. Reuters reports that the industry could cut spending another 12% this year.

On Thursday, Halliburton laid off 5,000 workers..…
It’s now laid off 29,000 workers, more than a quarter of its workforce, since 2014. Like most companies in the oil business, Halliburton is struggling. Its sales have fallen four straight quarters. Last year, the company lost $671 million, its first annual loss since 2004. The latest round of layoffs suggests Halliburton doesn’t expect business to pick up anytime soon.

The oil market is cyclical..…
It goes through big booms and busts. Right now, it’s going through its worst bust in decades. Eventually, the oil market will boom again. After all, the world needs oil. Companies that survive this bust should deliver huge gains during the next boom. If you can buy great oil companies near the bottom, you could set yourself up for huge gains when the next boom comes. So…is this the bottom?

According to The Wall Street Journal, one third of U.S. oil producers could go bankrupt this year. To be profitable, many companies would need the price of oil to get back up $50. With oil at $32.84 a barrel on Friday, those companies are in trouble. We expect a wave of bankruptcies to rip across the oil industry. This would likely trigger another leg down in oil stocks. So we’re not ready to buy oil stocks yet.

Instead, we recommend “stalking” your favorite oil companies..…
Nick Giambruno, editor of Crisis Investing, just added a world-class oil company to his watch list.
If you don’t know Nick, his specialty is buying beaten-down assets during a crisis. Most investors run away from crisis. But if you can keep your head and buy when everyone else is panicking, you can often pick up a dollar’s worth of assets for a dime or less.

Shale oil stocks are in crisis today. Even the largest shale companies have been obliterated. Major shale oil producer Apache (APA) has plunged 51% since June 2014. Anadarko (APC), another larger shale company, has plummeted 65%. Shale oil is more expensive to extract than conventional oil. And at today’s prices, most shale oil projects can’t make money.

Many shale companies borrowed too much money during oil’s boom times. Now that oil is in a bust, they can’t generate the cash flow to pay back their debts. Last month, investment bank Oppenheimer & Co. Inc. warned that half of all U.S. shale oil producers could go bankrupt before oil prices recover. To survive, these companies would need the price of oil to more than double.

Nick has found a shale company unaffected by these problems. It’s a world-class shale oil company that has virtually no risk of going bankrupt. However, its stock has gotten extremely cheap along with all other shale oil stocks. Nick says this company has “trophy assets in the major U.S. shale basins. It has a solid balance sheet.

And, unlike many of its peers, it didn’t over leverage itself during the last boom.” The company also has the industry’s highest profit margins. Nick plans to buy this company at once in a generation prices. He will tell Crisis Investing readers when it’s time to pull the trigger.

In the meantime, Nick is investing in Cuba..…
As you may know, the U.S. has had a trade embargo against Cuba since 1962. The embargo bans all trade, making it illegal for Americans to invest in Cuba. But that could soon change. About a year ago, Cuba and the U.S. announced they were working to repair diplomatic and economic relations. In August, the two countries reopened their embassies in each other’s capitals. President Obama is going to Cuba next month. He will be the first sitting president to visit Cuba since Calvin Coolidge in 1928.

Nick thinks the embargo could soon “become a page in the history books”..…
The end of the embargo will create the “potential for enormous profits,” as Nick explained in Crisis Investing.

When the embargo goes away, American tourism to Cuba will explode. The International Monetary Fund estimates there could be up to 10 million visits from Americans every year as soon as the embargo comes down.

Today, it’s still illegal to invest in Cuba. But Nick has a “back door” way to profit from the opening up of Cuba’s economy. Nick’s investment in Cuba legally trades on the NASDAQ stock exchange. It should deliver huge gains when the embargo is lifted…which may happen very soon. You can get in on Nick’s Cuba investment by signing up for Crisis Investing. You’ll also learn about the world class shale oil company on Nick’s watch list. Click here to begin your risk-free trial.

Chart of the Day

Shale oil stocks have been decimated. Today’s chart shows the performance of the Market Vectors Unconventional Oil & Gas ETF (FRAK). This fund tracks 50 companies involved in the shale oil and gas industries. FRAK has crashed 65% since June 2014. Last month, it hit an all-time low. As we mentioned, most shale oil companies simply can’t make money right now.

The article Will Your Favorite Oil Company Go Bankrupt? was originally published at caseyresearch.com.

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These Important Stocks are Trading Like a Financial Crisis Has Begun

By Justin Spittler

European bank stocks are crashing. Deutsche Bank (DB), Germany’s largest bank, has plunged 36% this year. Its stock is at an all time low. Credit Suisse (CS), a major Swiss bank, has plummeted 40% this year to its lowest level since 1991. As you can see in the chart below, the STOXX Europe 600 Banks Index, which tracks Europe’s biggest banks, is down 27% this year. It’s fallen six weeks in a row, its longest losing streak since the 2008 financial crisis.

These are huge drops in a short six week period. It’s the kind of price action you’d expect to see during a major financial crisis. The sell off in Europe’s banks has dragged down other European stocks. The STOXX Europe 600 Index, which tracks 600 large European stocks, is down 15% this year to its lowest level since October 2013.

European banks are struggling to make money…..
Deutsche Bank lost €2.12 billion for the fourth quarter… after making a €437 million profit the year before. Credit Suisse lost €5.83 billion last quarter… after making a €691 million profit the year before. Profits at BNP Paribas (BNP.PA), France’s largest bank, plunged 52% last quarter.

Europe’s crazy monetary policies are starving banks of income..…
Dispatch readers know the Federal Reserve has held interest rates at effectively zero since 2008. The European Central Bank (ECB), Europe’s version of the Fed, also cut rates after the global financial crisis. Unlike the Fed, the ECB didn’t stop at zero. The ECB dropped its key rate to -0.1% in June 2014. It was the first major central bank to introduce negative interest rates. Today, its key rate is -0.3%.

The ECB’s key rate of -0.3% sets the tone for all interest rates in Europe..…
It forces banks to charge a rock-bottom interest rate on loans. This has eaten away at bank profits, as The Wall Street Journal reports:

Very low interest rates hurt the profits banks make on loans, especially when investors believe loose monetary policy is here to stay. Long term rates at which banks lend then fall to be little more than short-term ones at which banks borrow.

The idea of negative interest rates likely sounds bizarre to you..…
After all, the whole purpose of lending money is to earn interest. With negative rates, the lender pays the borrower. So, if you lend $100,000 at -1%, you’ll only get back $99,000.  Negative interest rates are a scheme to get people to spend more money.

According to mainstream economists, spending drives the economy. By cutting its key interest rate to less than zero, the ECB is making it impossible for people to earn interest on their savings. This discourages saving and encourages spending.

But as Casey Research founder Doug Casey says, this isn’t just wrong, it’s the exact opposite of what’s true. Spending doesn’t drive the economy. Production and saving drive the economy. You have to save to build capital, and capital is necessary for everything.

Negative rates haven’t helped Europe’s economy…
Europe’s economy grew at just 0.3% during the third quarter. Europe’s unemployment rate is up to 9%, nearly double the U.S. unemployment rate. And the euro has also lost 17% of its value against the U.S. dollar since June 2014.

If you’ve been reading the Dispatch, you know negative interest rates are a new government scheme..…
Until recently, negative interest rates didn’t exist. Governments invented them to push us further into “Alice in Wonderland.” That’s our nickname for today’s economy, where eight years of extremely low interest rates have warped prices of stocks, bonds, real estate, and nearly everything else.  

For months, we’ve been warning that negative rates are dangerous. Last month, Japan, the world’s third-largest economy, joined the list of countries using negative rates. Sweden, Denmark, and Switzerland all have negative rates, too. According to The Wall Street Journal, countries that account for 23% of global output now have negative interest rates. 

This has set the stage for a huge economic disaster..…
To avoid big losses, we recommend owning physical gold. Unlike paper money, central bankers can’t destroy gold’s value with bad policies. Instead, gold’s value usually rises when governments devalue their currencies.

For example, Europe’s currency (the euro) has lost 17% of its value against the dollar since June 2014. But the price of gold measured in euros is up 14% in the same period. We recently put a short presentation together that explains the best ways to “crisis proof” your wealth.  We encourage you to watch this free video here.

Chart of the Day

Deutsche Bank’s stock has been destroyed. Today’s chart shows Deutsche Bank plummeting 46% over the past year. Yesterday, it hit an all time low. Today, Deutsche Bank jumped 10% after the company said it’s considering a bond buyback program. The company hopes this will ease investor concerns.

E.B. Tucker, editor of The Casey Report, doesn’t think the plan will work:

Deutsche Bank is in trouble. It barely survived the last crisis. In the aftermath, it took tremendous risks to make as much profit as possible. But its winning streak is coming to an end… and it still has to pay for all its obligations. Deutsche Bank also has problems beyond its control. Europe isn’t growing. It’s also dealing with negative interest rates. This is a double whammy for big banks, especially ones that took on too much risk.

The article These Important Stocks are Trading Like a Financial Crisis Has Begun was originally published at caseyresearch.com.

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Whoever Does Not Respect the Penny is Not Worthy of the Dollar

By Nick Giambruno

This definitive sign of a currency collapse is easy to see…When paper money literally becomes trash. Maybe you’ve seen images depicting hyperinflation in Germany after World War I. The German government had printed so much money that it became worthless. Technically, German merchants still accepted the currency, but it was impractical to use. It would have required wheelbarrows full of paper money just to buy a loaf of bread.

At the time, no one would bother to pick up money off the ground. It wasn’t worth any more than the other crumpled pieces of paper on the street. Today, there’s a similar situation in the U.S. When was the last time you saw someone make the effort to pick up a penny off the street? A nickel? A dime?

Walking around New York City recently, I saw pennies, nickels, and dimes just sitting there on busy sidewalks. This happened at least five times in one day. Even homeless people wouldn’t bother to bend over and pick up anything less than a quarter. The U.S. dollar has become so debased that these coins are essentially pieces of rubbish. They have little to no practical value.

Refusing to Acknowledge the Truth

It costs 1.7 cents to make a penny and 8 cents to make a nickel, according to the U.S. Government Accountability Office. The U.S. government loses tens of millions of dollars every year putting these coins into circulation. Why is it wasting money and time making coins almost no one uses? Because phasing out the penny and nickel would mean acknowledging currency debasement. And governments never like to do that. It would reveal their incompetence and theft from savers.

This isn’t new or unique to the U.S. For decades, governments around the world have refused to phase out worthless currency denominations. This helps them deny the problem even exists. They refuse to issue currency in higher denominations for the same reason. Take Argentina, for example. The country has some of the highest inflation in the world. In the last 12 months, the peso has lost over half its value.

I was just in Argentina, and the largest bill there is the 100 peso note, which is worth around $7. It’s not uncommon for Argentinians to pay with large wads of cash at restaurants and stores. The sight would unnerve many Americans, who’ve been trained by the government through the War on Cash to view it as suspicious and dangerous.

For many years, the Argentine government refused to issue larger notes. Fortunately, that’s changing under the recently elected pro market president Mauricio Macri. His government has promised to introduce 200, 500 and 1,000 peso notes in the near future.

This is the opposite of what’s happening in the U.S., where the $100 bill is the largest bill in circulation. That wasn’t always the case. At one point, the U.S. had $500, $1,000, $5,000, and even $10,000 bills. The government eliminated these large bills in 1969 under the pretext of fighting the War on Some Drugs. The $100 bill has been the largest ever since. But it has far less purchasing power than it did in 1969.

Decades of rampant money printing have debased the dollar. Today, a $100 note buys less than a $20 note did in 1969. Even though the Federal Reserve has devalued the dollar over 80% since 1969, it still refuses to issue notes larger than $100.

Pennies and Nickels Under Sound Money

For perspective, consider what a penny and a nickel would be worth under a sound money system backed by gold. From 1792 to 1934, the price of gold was around $20 per ounce. Under this system, it took around 2,000 pennies to make an ounce of gold. At today’s gold price, a “sound money penny” would be worth about 55 modern pennies. A “sound money nickel” would be worth about $3. I don’t pick up pennies off the sidewalk. But I would if pennies were backed by gold. If that were to happen, I doubt there would be many pennies sitting on busy New York sidewalks.

Ron Paul said it best when he discussed this issue…

“There is an old German saying that goes, ‘Whoever does not respect the penny is not worthy of the dollar.’ It expresses the sense that those who neglect or ignore the small things cannot be trusted with larger things, and fittingly describes the problems facing both the dollar and our nation today.

Unless Congress puts an end to the Fed’s loose monetary policy and returns to a sound and stable dollar, the issue of U.S. coin composition will be revisited every few years until inflation finally forces coins out of circulation altogether and we are left with only worthless paper.”

There’s an important lesson here.

Politicians and bureaucrats are the biggest threats to your financial security. For years, they’ve been quietly debasing the country’s currency… and inviting a currency catastrophe. Most people have no idea how bad things can get when a currency collapses….let alone how to prepare.

How will you protect your savings in the event of a currency crisis? This just released video will show you exactly how. Click here to watch it now.

The article Whoever Does Not Respect the Penny is Not Worthy of the Dollar was originally published at caseyresearch.com.

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A Stunning Move by the World’s Largest Oil Company

By Justin Spittler

Oil still can’t find a bottom. As Dispatch readers know, the oil market is in crisis. Since June 2014, oil has plunged 69%. It dropped 31% in 2015 alone. So far, 2016 has been even worse. The price of oil has fallen every day this year. On Friday, it closed at $32.88 a barrel, its lowest price since February 2004. Oil is already down 11% this year.

In October, Doug Casey predicted lower oil prices at the Casey Research Summit in Tucson, Arizona. I don't know how long [oil prices] will stay low. But they're going lower for the time being. Production is stable to up, but consumption is headed down with a slowing economy.…I'm still short oil at the moment.

The world has too much oil…..
As you likely know, new technologies like “fracking” have unlocked billions of barrels of oil that were impossible to extract before. U.S. oil production has nearly doubled since 2008. In June, U.S. oil production hit its highest level since the 1970s. Global oil output hit an all time high in 2014.

Falling oil prices have slammed the world’s largest oil companies…..
The world’s five largest publicly traded oil companies – Exxon Mobil (XOM), Chevron (CVX), Royal Dutch Shell (RDS-A), BP (BP), and Total S.A. (TOT) – lost $205 billion in value last year, according to The Wall Street Journal. Shell, the worst performer of the five, dropped 24% in 2015. Total, the best performer, dropped 3%.

Oil services companies, which sell “picks and shovels” to the oil industry, have also tanked. The Market Vectors Oil Services ETF (OIH), which holds 26 oil service companies, has plunged 59% over the past 18 months. Schlumberger (SLB) and Halliburton (HAL), the two largest oil services companies, are down 39% and 44% in the same period.

Eventually, this cycle will end with absurdly low prices for oil stocks. We’ll get an amazing opportunity to buy oil stocks at fire sale prices. But, for now, we recommend staying away until the world works through some of its oversupply of oil.

Saudi Arabia is in crisis…..
Saudi Arabia depends more on oil revenues than any other country. Oil makes up 83% of its exports. And about 80% of the country’s government revenue come from oil sales. Last year, the Saudi government spent $98 billion more than it took in…its first budget deficit since 2009.

The International Monetary Fund (IMF) expects the Saudi government to post a budget deficit as high as -19% of GDP in 2016. For comparison, the U.S. government has not posted a deficit higher than -9.8% since World War II. The IMF says Saudi Arabia could burn through its $650 billion cash reserve by 2020 if oil prices stay low. Since oil crashed in the summer of 2014, the country has already withdrawn at least $70 billion from its cash reserve.

To raise cash, the Saudi government may sell its crown jewel…..
Saudi Aramco is Saudi Arabia’s government owned oil company. As the world’s largest oil company, it owns the biggest oil fields in the world, and produces 13% of the world’s oil. The Saudi government has controlled the country’s oil industry since the 1970s. Last week, Financial Times reported that Saudi Arabia is considering an initial public offering (IPO) for Aramco. An IPO is when a company sells shares to the public.

According to Financial Times, an IPO would likely value the company “in the trillions of dollars.” To put that in perspective, Apple (AAPL), the world’s largest publicly traded company, is worth just $538 billion. Some estimates put the value of Saudi Aramco at more than 10 times that of Exxon Mobil – the world’s largest publicly traded oil company.

Switching gears, the U.S. automobile industry is setting record highs..…
U.S. automakers sold an all time record 17.5 million vehicles in 2015. The industry sold 5.7% more vehicles last year than it did 2014. Auto sales have now grown six years in a row. Despite record sales, U.S. automaker stocks are struggling. Ford (F) was down 9.1% in 2015, and has only gained 17% since the beginning of 2012.

General Motors (GM) was down 2.6% in 2015, and has gained 46% since the beginning of 2012. Both stocks have performed worse than the S&P 500, which has gained 53% since the beginning of 2012. Companies that sell parts and services in the auto industry have done much better. Tire maker Goodyear (GT) has climbed 99% over the past four years. Repair and parts shop AutoZone (AZO) is up 119%.

Cheap credit has fueled the boom in the auto industry…..
Forbes reported last month: During the third quarter of 2015, Experian determined the average amount financed for a new vehicle was $28,936, which is up $1,137 from the same period in 2014. What’s more, 44 % of buyers are now taking out loans for between 61 and 72 months, with 27.5% extending their new-vehicle indebtedness to between 73 and 84 months, with the latter representing an increase of 17.1 percent over the past year.

As Casey readers know, the Federal Reserve has made it incredibly cheap to borrow money. In 2008, the Fed cut its key interest rate to effectively zero to fight the financial crisis. It has held its key rate at extremely low levels ever since. Today, its key rate is just 0.25%...far below the historical average of 5%. The average interest rate on a car loan is just 4.3% today. In 2007, the average car loan rate was 7.7%.

E.B. Tucker, editor of The Casey Report, isn’t surprised by the auto industry’s record year..…
Here’s E.B.: Of course the auto industry had a record year…how could it not? I've seen auto rates as low as 0% for 84 months. When money is free, people buy now and think later. The U.S. auto loan market has grown 18 quarters in a row. Last year, it topped $1 trillion for the first time ever. There is now 47% more auto debt outstanding than credit card debt in the U.S.

E.B. says this will end badly. The auto leasing market is also booming because of easy money. Leasing made up 27% of car sales during the first quarter of 2015. Those leases will expire 40 months from now. And someone has to buy those vehicles. This year, over 3 million leased cars will hit the market. Even more will hit the market next year and the year after. All these used cars will create a huge glut. If the free money dries up at the same time, things will get ugly fast. That’s how booms built on easy money come to an end.

Chart of the Day

Oil has plunged to its lowest level in 12 years. Today’s chart shows the price of oil going back to 2004. As you can see, oil has sunk to its lowest level since February 2004. It’s now down 77% from the all time high it set in 2008. As we’ve explained, the world simply has too much oil. Oil is now cheaper than it was during the worst of the global financial crisis in 2008-9.

The article A Stunning Move by the World’s Largest Oil Company was originally published at caseyresearch.com.

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By Far the Biggest Threat to Your Wealth in 2016

By Justin Spittler

Today, we begin with a warning. We’re going to tell you about a dangerous event that is very likely to happen within the next year. You’ve probably never thought about this threat. Until now, Casey Research has never discussed it in public. This threat isn’t a stock market collapse…it’s not a failure of the Social Security system…it’s not even a national debt or currency crisis. It’s much more dangerous and much more likely to happen than any of those things.

We’re talking about a major financial terrorist attack. A total wipeout of your financial data, assets, and records and those of many millions of other people. If you’re like most people, you think, “There’s no way that could happen here. Surely the financial system is completely safe.” But think about it….

If you have $100,000 in the bank, what do you really have?

These days, it’s not a claim to hard assets like gold or silver. And it’s certainly not real cash in a bank. Many local banks don’t even keep that much cash on hand! Just try asking your bank for $25,000 in cash. The teller will say, “We can’t give you that much money.” If you keep your life savings in a bank or brokerage account, what you have are electronic entries that hackers can easily and quickly delete. All the money you’ve earned...the hard work, the sweat, the sacrifice...the nest egg you’ve built to provide for your family, GONE. In an instant.

Cyberterrorists have already broken into the world’s most secure digital systems....

For example…..

➢ In May, hackers stole information on 300,000 private tax returns from the Internal Revenue Service (IRS). They used the information to claim tens of millions of dollars in fraudulent tax refunds.

➢ In April, hackers gained access to President Obama’s email. They gathered details on Obama’s personal schedule as well as private conversations with foreign officials.

➢ And earlier this year, we learned that a group of hackers infiltrated some of America’s largest and most sophisticated financial firms. The victims include JPMorgan Chase, E*Trade, and Scottrade. The hackers stole the personal data of more than 100 million customers. They even manipulated stock prices.

A large scale cyber attack could cripple the financial system….

E.B. Tucker, editor of The Casey Report, explains: In today’s high tech world, the lifeblood of our economy is a complex system of digital payments, digital book entries, and digital money. Billions of dollars are electronically transferred every day. We bank online, shop on our computers, and pay for lunch with credit and debit cards. Even the stock exchanges are now 100% electronic. The money in your savings, brokerage, and credit card accounts are just bits and bytes. A skilled hacker could steal it or make it vanish completely.

Enemy foreign governments are likely to attack the U.S.’s financial system.…

Here’s E.B....The U.S. has enemies all over the world: Russia, China, Iran, Syria, Iraq, and Saudi Arabia come to mind. There are millions of people out there who want to see the West burn. And it’s only a matter of time before they strike us at one of our most vulnerable points: Our digital financial system. As cybersecurity expert, Mary Galligan, recently told Bloomberg News, state sponsored cyberterrorism is “the FBI’s worst nightmare.”

The fallout from a cyberattack could be catastrophic….

E.B. explains…Just imagine, what if all of the accounts at a major bank like Wells Fargo were suddenly erased? What if businesses couldn’t process digital payments? What if your brokerage told you its records had been destroyed and all evidence of your stock portfolio had disappeared? What if a cyberattack shut down our electrical grid? I’ll tell you what would happen: An explosion of chaos. Society would break down. When people are wiped out financially, they’re often wiped out mentally and morally, too…they’ll do anything to survive, including resort to violence.

The government and central banks cannot protect you from cyberterrorists….

They don’t want people talking about this massive threat. They want to keep it quiet. You see, the U.S. dollar isn’t backed by gold like it was in the past. Our monetary system is built on confidence, and confidence alone. If lots of people questioned the safety of the system and pulled their money out, it could trigger a nationwide run on the banks, a stock market collapse, and a currency crisis. It could literally lead to rioting in the streets.

If you keep most of your money in digital form….

You must take steps to protect yourself and your family before an attack happens. The first step is to store a sizable amount of cash in a safe place you can easily access. We recommend at least three months’ worth of living expenses. Six months’ worth is even better.

You can store the cash in a safe, in a public storage container, or bury it in a waterproof container in your backyard. This might sound extreme, but think about it…if the financial system is compromised and your debit and credit cards become useless, you’ll need enough cash on hand to pay for groceries, gasoline, and other daily necessities.

Otherwise, you’re in a vulnerable position. Having no cash on hand means you could struggle to feed your family in an emergency. Because we believe most Americans are overlooking this huge threat, we put together a new special report titled “How to Protect Yourself from a Financial Terrorist Attack.” We talked with top cybersecurity experts and put hundreds of hours of research into this report. It explains seven specific steps you can take now to protect your money from financial terrorism. Click here to learn more.

Switching gears, the Dow Jones U.S. Trucking Index is headed for its worst year ever….

Yesterday, it closed down 17% on the year. It’s dropped 7.1% in December alone. The Dow Trucking Index tracks the performance of major U.S. trucking stocks. It’s only had three down years since 2001. Over that period, it’s averaged annual returns of 12%. The chart below shows trucking stocks have been in a clear downtrend all year.

E.B. Tucker says investors should watch this trend even if they don’t own trucking stocks. Trucks carry inventory to stores. They carry parts to the assembly plant. Then they carry assembled products to buyers. When sales are rising, it tends to show up in trucking companies before retailers. Trucking companies also feel the pinch first when sales are falling. This is why trucking stocks often give clues about where the market’s going long before other industries.

E.B. also says the collapse in trucking stocks is an early warning sign for the rest of the market. Transport stocks have given investors early warning signs for the past 100 years. Right now, the Dow Trucking Index is telling us business is not great. The trucks aren’t full. This is a dire sign. It’s saying we’re in for some negative surprises in 2016.

The U.S. stock market looks fragile….

From March 2009 through December 2014, the S&P 500 gained 204%. But the bull market has stalled this year. The S&P 500 is down 1% since January. If this trend continues, 2015 will the S&P’s first down year since 2008. On its own, this isn’t a huge concern. However, Dispatch readers know there are many other signs U.S. stocks have already topped out

For one, the current bull market in stocks is now 81 months old. It’s run 31 months longer than the average bull market since World War II. Of course, bull markets don’t die of old age. But they all die eventually. On top of that, U.S. stocks are expensive. The S&P 500 is now 57% more expensive than its historical average. Again, bull markets don’t end just because stocks are expensive. But expensive stocks can fall much harder during a big selloff.

We recommend investing with caution right now. You should own a significant amount of cash and physical gold...and you should sell any overpriced stocks that are vulnerable to an economic downturn.

Chart of the Day

Oil tanker rates are at their highest level in seven years. Today’s chart shows the daily shipping rates for very large crude carriers (VLCC), the second largest type of oil tanker. Each VLCC can carry 2 million barrels of oil. From 2011 through 2014, VLCC shipping rates averaged $20,000/day. This year, rates have soared 79%. Earlier this month, VLCC daily rates reached $112,775, their highest level since 2008.

Meanwhile, the price of oil has plunged 32% this year. Earlier this month, oil fell to its lowest level since 2009. Oil tanker rates can go up when oil prices go down…because ship operators charge based on how much oil they move. Their rates are not directly tied to the price of oil.

Dispatch readers know the world has a huge surplus of oil right now. All this oil needs to go somewhere, and oil tankers get paid to move it. As you can see in the chart, it’s a great time to be an oil tanker company.

The article By Far the Biggest Threat to Your Wealth in 2016 was originally published at caseyresearch.com.

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The “Bloodbath” in Canada Is Far From Over

By Justin Spittler

The oil price crash continues to claim victims…and many of them are in Canada.The price of oil hovered around $100 for most of last summer. Today, it’s trading for less than $45. Weak oil prices have pummeled huge oil companies. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which tracks the performance of major U.S. oil producers, has declined 36% over the past year. The Market Vectors Oil Services ETF (OIH), which tracks U.S. oil services companies, has declined 30% since last November. Weak oil prices have even pushed entire countries to the brink. Saudi Arabia, which produces more oil than any country in the world, is on track to post its first budget deficit since 2009 this year. If oil prices stay low, the country could burn through its massive $650 million pile of foreign reserves within five years.

Oil’s collapse is also creating big problems for Canada’s economy.....

Canada is the world’s sixth largest oil producer. Oil makes up 25% of its exports. Last month, The Conference Board of Canada said it expects sales for Canada’s energy sector to fall 22% this year. It also expects the industry to record a net loss of about C$2.1 billion ($1.6 billion) in 2015. That’s a drastic change from last year, when the industry booked a C$6 billion ($4.5 billion) profit.

Major oil firms are slashing spending to cope with low prices. Last month, oil giant Royal Dutch Shell plc (RDS.A) said it would stop construction on an 80,000 barrels per day (bpd) project in western Canada. The company had already abandoned another 200,000 bpd project in northern Canada earlier this year. The Canadian Association of Petroleum Producers estimates that Canadian oil and gas companies have laid off 36,000 workers since last summer. Most of these layoffs happened in the province of Alberta.

For the past decade, Alberta was Canada’s fastest growing province.....

Its economy exploded, thanks to the booming market for Canadian tar sands. Tar sand is a gooey sand and oil mixture that melts down with heat from burning natural gas. More than half of Canada’s oil production comes from tar sands. In Alberta, they account for 75% of oil production.

Tar sand is generally more expensive to produce than conventional crude oil. Canadian tar sand projects made sense when oil hovered around $100. But many of these projects can’t make money when oil trades for $45/barrel. Last year, Scotiabank (BNS) said the average breakeven point for new Canadian oil sand projects was around $65/barrel. This is why giant oil companies are walking away from projects they’ve spent years and billions of dollars developing.

All these cancelled oil projects are making Alberta’s economy unravel.....

Alberta lost 63,500 jobs from the start of year through August. It hasn’t lost that many jobs during the first eight months of the year since the Great Recession. The decline in oil production is also draining government resources. Last month, Reuters reported that Alberta was on track to post a $4.6 billion budget deficit this year. Economists say it could be another five years before Alberta runs a budget surplus. The crisis isn’t confined to the oil patches either.

A real estate crisis is unfolding in Calgary.....

Calgary is home to 1.2 million people. It’s the largest city in Alberta and the third largest in Canada. On Tuesday, Bloomberg Business reported that Calgary’s property market is starting to crack:

Vacancy is already at a five-year high in Calgary and rents are the lowest since 2006 after thousands of office jobs were cut. In downtown Calgary, the vacancy rate jumped to 14 percent in the third quarter, the highest since 2010 and compared with 5 percent for downtown Toronto, according to CBRE Group Inc. .... That doesn’t include as much as 2 million square feet of so-called "shadow vacancy" or space leased but sitting empty, which would push vacancy to 16 percent, the most since the mid-1980s.

Demand for office space is falling because of massive layoffs in the oil industry. That’s because oil companies didn’t just lay off roughnecks. They also laid off oil traders and middle managers, which means they need a lot less office space. According to Bloomberg Business, a principal at one Calgary real estate office called the situation “a bloodbath” and said “we’re at the highest point of fear and uncertainty now.”

Casey readers know the time to buy is when there’s blood in the streets.....

But it looks like Calgary’s property crisis is just getting started. Bloomberg Business reports that the city has five new office towers in the works. These projects will add about 3.8 million square feet to Calgary’s office market over the next three years. More office space will only put more pressure on rents and occupancy rates. Real estate developers likely planned these projects because they thought Canada’s oil boom would last. It’s that same thinking that made oil companies invest billions of dollars in projects that can’t make money when oil trades for less than $100/barrel.

Doug Casey saw this coming.....

In September, Doug went to Alberta to assess the damage first-hand. E.B. Tucker, editor of The Casey Report, joined Doug on the trip. Doug and E.B. spoke with the locals. They even tried to buy a Ferrari. They shared their experience in the October issue of The Casey Report.

E.B. went on record saying Canada was in for “a major wakeup call.” He still thinks that’s the case. In fact, he thinks the situation is going to get a lot worse.

When we were in Alberta, we heard over and over again "It'll come right back...it always does." It's not coming back. I expect the situation to get worse. And I see the Canadian dollar going much lower.

When that happens, E.B. thinks Canada’s central bank might do something it’s never done before:

Vacancy rates are rising in Canada’s heartland cities. Jobs in Alberta are disappearing. Unemployment is climbing. And there’s still a global oversupply in oil. None of this bodes well for Canada’s economy. Canada’s economy is in a midair stall. The locals certainly didn’t grasp this when we visited Alberta last month. That's usually the case when things are going from bad to a lot worse. If you’re a central banker in Canada looking at the data, there’s only one decision: print.

E.B. says Canada’s central bank will launch its own quantitative easing (QE) program.....

QE is when a central bank creates money and pumps it into the financial system. It’s basically another term for money printing. Since 2008, the Fed has used QE to inject $3.5 trillion into the U.S. financial system. If the Fed’s experience with QE is any indication, money printing wouldn’t help Canada’s “real” economy much. But it would inflate asset prices. That, in turn, would only make Canada’s economy even more fragile. E.B. is confident the situation in Canada will get worse. And he can’t wait to go back to Canada to collect on bets he made during his last visit:

Doug and I made a lot of side bets with business owners during our visit. One of them promised to sell us a Ferrari if things got worse...that's how sure he was that we were wrong. Looks like we'll be headed back to collect on that one.

You can read all about Doug and E.B.’s visit to Alberta by signing up for a risk free trial of The Casey Report. You’ll even discover how to make money off the oil industry, despite the collapse in the price of oil. Click here to learn more.

The article The “Bloodbath” in Canada Is Far From Over was originally published at caseyresearch.com.

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Should You Worry That the Stock Market Just Formed a “Death Cross”?

By Justin Spittler

The world economy appears to be stalling. Yesterday we got news that South Korea’s exports dropped 14.7% since last August, their largest decline since the financial crisis. It’s far worse than the 5.9% drop economists were expecting.

South Korea’s exports are important because they’re considered a “canary in the coalmine” for the global economy. South Korea is a major exporter to the largest economies in the world including China, the US, and Japan. South Korea also releases its export numbers much earlier than other major countries. That’s why a bad reading for South Korean exports is often the first sign that the global economy is in trouble.

The ugly news slammed stocks around the world. Chinese stocks dropped 1.3%, Japanese stocks dropped 3.8% and the major indexes in Germany, the United Kingdom, France, and Spain all lost at least 2%.

These big drops came one day after the worst month for global stocks in over three years..…

Regular Casey readers know last month’s selloff hit every major stock market on the planet. China’s Shanghai index lost 12%. Japan’s Nikkei lost 7.4% and Europe’s STOXX 600 lost 8.5%.

The MSCI All-  Index, a broad measure of the global stock market, fell 6.8%. Its worst month since 2012. US stocks also fell hard. The S&P 500 lost 6.3% in August. And the Dow Jones Industrial Average fell 6.6%. It was the Dow’s worst month since May 2010, and its worst August in 17 years.

Bearish signs are popping up everywhere..…

Last month’s crash dropped the S&P 500 below an important long term trend line. A long term trend line shows the general direction the market is heading. Many professional traders use it to separate normal market gyrations from something bigger. Think of it as a “line in the sand.”

The market is constantly going up and down. But as long as we’re above the long term trend line, the dominant trend is still “up.” But when a selloff knocks the stock market below its long term trend line, it’s a sign the trend might be changing from up to down.

As you can see from the chart below, there have been a few “normal” selloffs since 2011. On Friday, however, the S&P dropped below its long-term trend line for the first time in about 4 years.

The broken trend line isn’t the only bearish sign we see right now.....

US stocks are also very expensive. Robert Shiller is an economics professor at Yale University and a widely respected market observer. Shiller is best known for creating the CAPE (Cyclically Adjusted Price Earnings) ratio. It’s a cousin of the popular price to earnings (P/E) ratio.

The P/E ratio divides the price of an index or stock by its earnings per share (EPS) for the past year. A high ratio means stocks are expensive. A low ratio means stocks are cheap.

The CAPE ratio is the price/earnings ratio with one adjustment. Instead of using just one year of earnings, it incorporates earnings from the past 10 years. This smooths out the effects of booms and recessions and gives us a useful long term view of a stock or market.

Right now, the S&P’s CAPE ratio is 24.6…about 48% more expensive than its average since 1881.

  
US stocks have only been more expensive a handful of times..…

Shiller explained why he’s worried in a recent New York Times op-ed: The average CAPE ratio between 1881 and 2015 in the United States is 17; in July, it reached 27. Levels higher than that have occurred very few times, including the years surrounding the stock market peaks of 1929, 2000 and 2007. In all three of these instances, the stock market eventually collapsed.

For the S&P’s CAPE ratio to decline to its historical average, the S&P would have to drop to around 1,300. That would be a disastrous 34% plunge from today’s prices. To be clear, this doesn’t mean a crash is imminent. Like any metric, the CAPE ratio isn’t perfect. CAPE is helpful for spotting long-term trends, but it can’t “time” the market.

But the high CAPE ratio is one more reason you should be extra cautious about investing in US stocks right now.

It also means you should take steps to prepare..…

As we write on Tuesday afternoon, stock markets around the world are in a free fall. The S&P 500 dropped another 3% today. On top of that, the current bull market in US stocks is now one of the longest in history. It’s already two years longer than the average bull market since World War II.

And as we’ve explained, according to the CAPE ratio, US stocks are overpriced. We can’t tell you for sure when the next financial crisis will hit. No one can.

But we do urge you to prepare. What’s happening right now shows how fragile the markets are. You shouldn’t ignore the mounting evidence that our financial markets just aren’t healthy. We lay out every step you should take to prepare for the next financial crisis in our book, Going Global 2015.

This important book shows you how to get your wealth out of harm’s way and profit from the next financial disaster. It’s must-read material for anyone who’s serious about “crisis-proofing” their wealth. Right now, we’ll send it to you for practically nothing…we just ask that you pay $4.95 to cover processing costs. Click here to claim your copy.

The article Should You Worry That the Stock Market Just Formed a “Death Cross”? was originally published at caseyresearch.com.

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How to Make Sure the Government Can’t Freeze Your Bank Account

By Justin Spittler

If you wake up tomorrow and your bank account is frozen… what will you do? You probably remember when the financial crisis in Greece was dominating headlines a few weeks ago. For years, Greece spent more than it took in. This led to a financial crisis that looked like it might destroy Europe’s financial system.

The Greek government closed all banks to prevent people from withdrawing all their money and crashing the banking system. Greek citizens could only withdraw €60 ($67) of their own money each day from ATMs. European authorities eventually gave Greece a bailout... and the crisis dropped from the headlines.

But here’s something you probably haven’t heard from the mainstream media….

It’s now been two months and Greek people still can’t fully access their own cash.
Reuters reports:      
                                                                                      

Greek banks are set to keep broad cash controls in place for months, until fresh money arrives from Europe and with it a sweeping restructuring, officials believe. “Broad cash controls” means Greek banks are essentially frozen. Greek people can withdraw only €420 ($460) per week of their own money.

More from Reuters:

The longer it takes, the more critical the banks’ condition becomes as a 420 euro ($460) weekly limit on cash withdrawals chokes the economy and borrowers’ ability to repay loans. “The banks are in deep freeze but the economy is getting weaker,” said one official, pointing to a steady rise in loans that are not being repaid.

One Greek farmer can’t get enough cash to run his business. It’s a nightmare. I owe many people money now - gas stations and firms that service machinery. I have to go to the bank every single day, and the money I can take out is not enough.

Short on cash, Greek people have resorted to bartering….

Reuters goes on to say:

A rising number of Greeks in rural areas are swapping goods and services in cashless transactions since the government shut down banks on June 28 for three weeks, restricted cash withdrawals and banned transfers abroad to halt a run on deposits and prevent a collapse of the banks.

“Bartering” means exchanging goods and services without using money. It’s how humans did business thousands of years ago.

Reuters reports how the Greek farmer is trying to survive the crisis:

Squeezed on all sides, the 41 year old farmer began informal bartering to get around the cash crunch. He now pays some of his workers in kind with his clover crop and exchanges equipment with other farmers instead of buying or renting machinery.

Another farmer is trading cotton and wheat for bales of hay and machine parts, Reuters says.

This is a good reminder of something we stress often: the government controls any money you have in the bank. It can decide you’re not allowed to touch your own money at any time. Or it can put severe restrictions on how much money you can take out, like the Greek government is doing right now.

We began this essay with a question: what will you do if you wake up tomorrow and your bank account is frozen? There’s no good answer. At that point, it’s too late. You need a plan in place before the government decides you can’t touch your own money.

This is exactly why we wrote Going Global 2015…..

Going Global 2015 is our guide to surviving financial crises.

It shows you specific and easy steps for protecting yourself and your family from the next financial disaster. And we’d like to send you a free copy of this hardcover book today.

You may think the odds of such a complete financial disaster happening in the US are low. But even if that’s true, it still makes sense to prepare.

You likely pay for fire insurance. Because even though your house is unlikely to burn down… the small risk of the financial devastation it would cause you is unacceptable.

A financial crisis can cause far worse financial ruin than a house fire. And fire insurance costs hundreds or thousands of dollars per year.

We will send you a free copy of this book.

We’ve done all the legwork for you. We went to foreign countries to open bank accounts. We talked to the best lawyers. We even found the one country that has never, EVER had a bank failure… and where it’s easy for an American to open an account. The best thing about Going Global 2015 is it includes steps you can take, right now, to protect yourself, your wealth, and your family.

Most people have a huge misunderstanding about this topic. They think you have to be rich to use these strategies. But Going Global 2015 will show you that’s not true at all. Almost anyone can tuck a few thousand dollars away in a safe foreign bank account... just in case the US banking system blows up again and the government can’t save it this time.

That’s what’s in it for you. You might be wondering….what’s in it for us? Why give away a book that we put so much work into for free? Well, quite simply, we believe that by trying what is essentially a free sample of some of our best and most valuable work, you might want to do business again with us in the future.

There is literally no reason not to claim your free copy of Going Global 2015. We’ll mail the 233-page hardcover book to your front door. All we ask is that you pay $4.95 to cover our processing fee.

Click here to claim your free copy of Going Global 2015.

The article How to Make Sure the Government Can’t Freeze Your Bank Account was originally published at caseyresearch.com.

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Why You Should Go to Africa Instead of College

By Doug Casey

Recently Doug Casey was a guest on the always excellent podcast, The Tom Woods Show. Tom and Doug talked about the enormous economic potential in Africa, Doug’s efforts to build a truly free market country, and better uses of your time and money than going to college.

It’s an exciting and informative conversation.

---

Tom Woods: What a pleasure and a delight it is to welcome back to the show Doug Casey. Doug is a libertarian economist, best selling financial author, international investor, entrepreneur, and the founder and chairman of Casey Research. Doug, welcome back to the show.

Doug Casey: Thanks, Tom. It is my pleasure.

Tom: You’ve been up to some interesting activity in Africa that I’d like to ask you about. Let’s start off by telling us what you’ve been busy doing there.

Doug: Well, the last two weeks, I’ve been visiting the Islamic Republic of Mauritania with a short side trip to Senegal. I’ve been pursuing my hobby, which is to propose to a backward country a plan for complete and total free marketization… including taking the country itself public on a major stock exchange and distributing most of the shares directly to the people who theoretically own the government assets. I felt like I had Maria Muldaur’s “Midnight at the Oasis” playing in the back of my mind the whole time I was there.

Tom: Suppose you got everything you wanted, what would the outcome look like?

Doug: Well, 100% of all government assets, land, state owned companies - everything - initially go into a corporation and we distribute the shares.

Let’s say, 70% pro-rata to every man, woman, and child in the country, so they don’t just theoretically own the government, now they actually do. 15% would be put it in trust for the next unborn generation to defuse that time bomb. 10% would be distributed to people who, let’s say, are of significant help to making this happen, and people who are important, whose rice bowls would be broken, and 5% to take public in major stock markets to raise some capital. Then we get rid of all duties, taxes, and regulations.

Dubai was absolutely nothing in 1980. You know what Dubai is now. If we go back further, in 1960, Hong Kong and Singapore both were very poor and look what has happened to them. So I think in today’s world if somebody is daring enough to want to do this, I think it could be of world historic importance. So I’m looking for the right guy.

Tom: I’d like to get a glimpse inside of a meeting like this. If you’re sitting down with the president, you’re sitting down with top officials, how do you make that case, especially when the response is going to be, “What’s in it for me”?

Doug: Well, that’s always the first question, of course. I start my presentation with three things I can do for you, Mr. President. It’s always a question of the benefit to the buyer. Number one, this plan will make you legitimately a multibillionaire. That always goes down very smoothly, because they know that doing what Mobutu and Mugabe did doesn’t work quite as well now as it did in the past. So it gets their attention.

Number two, the people will love you and treat you as the new George Washington. That sounds pretty good too. Half the time in these places most of the population wants to kill them. And number three, we will put you on the front cover of all the world’s magazines in a favorable light for the next decade. Now that sounds good, because these people, if they are even known to exist, are considered pariahs.

So they always listen to the rest of presentation. Of course then things start to go wrong… usually from people under the president. It’s the people under the president who are usually making the big money, not so much the president himself. So they are often the problem.

It always makes for a fun adventure and interesting cocktail party stories that I can tell and retell to people for hours. But it’s my hobby. It’s not an occupation. I haven’t made any money on it yet, although I always have a plan B when I go to these countries: look for mining concessions and so forth.

Tom: Suppose you had to do it all over again. Let’s say you turned 18 in 2015. Have conditions changed to the point where you would take a different path, and incidentally would you go to college?

Doug: I would definitely not go to college. Even then, I only did it because everybody from my socioeconomic class was going to college, so there was no thought involved on my part. It was just like going from eighth grade into high school. I counsel students against it today. College serves no useful purpose unless you want to learn a trade like doctoring or lawyering or you need a piece of paper to practice a particular occupation, or there is a formal discipline, like a hard science or engineering.

You will pick up lots of bad ideas. You will spend a huge amount of money, get yourself under a huge financial rock that will take you years to dig yourself out from under. What I suggest people do instead is lay out what the most intelligent thing to do with that four years of time and probably $200,000 of capital. I like the idea of traveling. The place that I would put first and foremost on my travel list today for economic reasons is Africa. Go someplace where you can be a big fish in a small pond quickly.

Tom: Back in the ’50s and ’60s in the wake of decolonization in Africa, you had a bunch of Western educated semi-Marxist political leaders who were nationalizing property and confiscating assets from rich people and so on, you wouldn’t touch Africa with a ten foot pole. What has changed since then?

Doug: Well, politics always draws the worst kinds of people of course. Most of the presidents of Africa even today are ex-generals or ex-colonels or something like that. It has economically improved a lot. The population has exploded and it’s going to explode more in the years to come. It’s chaotic. But if you can bring order to chaos, that’s opportunity.

If you go to the Orient, there are a lot of rich, smart people there. You are not going to have much of a competitive advantage. That’s true to a lesser extent in South America too. Africa is actually the place, I think, you want to go.

Tom: Do you have any particular parts of Africa? I’ve heard good things about Botswana. Do you have any place in particular that attracts you?

Doug: Other than South Africa, I’d say Botswana is the most developed country in Southern Africa for sure. But where would I go now? Well, of course, the nice thing about Africa is that it’s divided basically into three parts, Anglophone Africa, Francophone Africa, and Lusophone Africa, and my French is still adequately conversational. I lived in France and Switzerland for a year during college. My Spanish is functional. The language thing is a consideration of course. But on the other hand, most of the educated people in most countries of the world speak English, which is the world’s lingua franca today.

Where would I go? There are around 50 countries in Africa. I like small, obscure ones. Maybe Ghana is too developed. Look at Benin or Togo or maybe the Ivory Coast. Mauritania, where I just was, is actually quite interesting. Guinea-Bissau, Guinea-Conakry, you’ve got lots of choices. Somebody should get on a plane and just take a look. Then when they get into a country, a capital city, which is always where the action happens, get on the telephone to local lawyers and real estate agents and businessmen to set up appointments and see who you can get along with. One thing will lead to another.

I wouldn’t go to Africa as a lifestyle choice. I would go there for economic reasons and for the adventure that it would yield. I’d say as a lifestyle choice, it comes down to South America or the Orient. I lived in the Orient for years and I loved it.

Tom: What about the language barrier?

Doug: Well, I lived in Hong Kong and when I was there it was much more English. Of course everybody in China is learning English today, everybody, everywhere that you basically would want to talk to. I’m not trying to be elitist but the educated people - put it that way - all speak English today as a second language. This is one of the things that will slow down your progress on learning the local language, is that they all want to speak English to you. So that’s a double edged sword… but it’s really an advantage. No, don’t worry about the language problem.

Tom: Well, I sure appreciate your time, Doug Casey. You are the International Man himself, and we are always grateful for your time.

Doug: Well, thank you Tom. It is a pleasure to talk to you under any circumstances.

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The article was originally published at internationalman.com.

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