Editor’s note: Today, we have something special for you. Instead of our usual market commentary, we have a brand-new interview with Louis James, editor of International Speculator and Casey Resource Investor.
Below, Louis discusses what he says will be the biggest themes of 2017…a serious threat most investors are overlooking…and today’s “hands down” best contrarian resource play.
We hope you find this interview as insightful as we did.
Justin Spittler: Louis, what big themes do you see playing out next year?
Louis James: The Trump Honeymoon period will turn into the Trump Presidential Reality Show, and that will shake things up substantially.
The talking heads on TV are all aflutter with Trump’s latest tweets and gaffs, but the nominations and appointments show that he’s serious about changing things in Washington. We’ve got a school voucher advocate tapped for Education, a global warming skeptic tapped for the EPA, a minimum wage critic for Labor, and so on. This is all generally seen as pro-business, and the mainstream U.S. markets are responding positively, the USD is rallying, and safe-haven assets like gold are retreating.
This will not last.
It’s hard to say how many of these people will survive the nomination process, and it’s safe to say that anything they do will be compromised and watered down by the political process. Rather than draining the swamp, history tells us that it’s far more likely that Trump will wander into the swamp and get lost, even as he continues dividing the country. But even if he does push change through, and those changes are for the better, it will cause major systemic shocks, prompting huge market volatility.
The Trump Honeymoon period may last well into Q1 2017, but it won’t last long once he’s been in office for a while and either starts making changes or fails to do so. Today’s market optimism is naive. Anytime a market hits record highs on naive optimism, there’s a correction ahead. And anytime a market is oversold on misplaced pessimism (gold), it’s a buying opportunity.
On the other hand, the easiest thing to get Congress to do is to spend money, and Trump is heading for office with a mandate to spend trillions on infrastructure and defense. This is extremely bullish for industrial metals and other minerals. We are diversifying accordingly.
The fall of Matteo Renzi is more important than markets seem to realize. The rise of populism around the world, but especially in the artificially cobbled-together EU, is destabilizing. There is a very real possibility that the December 4 vote in Italy may result in Italy leaving the EU. After the Brexit vote, that could lead to further disintegration, with major economic shocks to follow. This will play out over the year ahead, and it’s very bullish for precious metals.
There’s more, especially in Asia, where the Chinese have just seized a U.S. drone, but these two are the main drivers I see for 2017.
J.S.: Very interesting. What do you think will be the biggest threats to people’s wealth next year?
L.J.: Betting on blue chips is extremely risky at this point. The Honeymoon period has unleashed a flood of “irrational exuberance” on Wall Street, with major indices hitting new record highs. When the honeymoon is over, I expect a sharp reversal. It may not be a major crash, like 1929, but a substantial retreat that will hurt today’s momentum chasers badly.
Now more than ever, I think it’s vital to be a contrarian investor.
J.S.: Where do you see the best opportunities to make money?
L.J.: That depends on what you mean by “best.”
In the resource space, the safest bets are the profitable producers with leverage to the trends unfolding.
The biggest gains are in exploration companies that may deliver major discoveries. These are potential 10-baggers and well beyond. (A 10-bagger is a stock that rises 1,000%.)
The sweet spot in between are the developers building high-margin mines; they’ve gotten beyond the risky business of exploration, but are not yet recognized as profitable producers. That makes this sub-sector a relatively low-risk hunting ground for five-baggers.
J.S.: What about a great contrarian investing opportunity?
L.J.: If you want the best contrarian resource play today, it’s hands down uranium.
It’s absolutely hated. And it just ticked up from a multi-year low.
Trump is sounding pro-nuke, and share prices have rallied, despite the uranium market remaining in surplus.
We have one uranium play in International Speculator that’s up almost 40% over the last month. It's super high-grade, in a mine-friendly jurisdiction, and highly responsive to higher uranium prices. I can’t say when we’ll see those higher prices, but there are mines shutting down and about 60 new plants under construction around the world, so it’s very much a “when, not if” question.
J.S.: Thanks, Louis, for taking the time to chat with me today. We'll touch base in the new year to see how your theses are evolving.
Editor’s note: This year, Louis and his team have handed subscribers several huge wins… In fact, they've taken profits on 21 stocks that doubled or better.
Louis is able to hit these kinds of home runs because he learned from the best. You see, Louis is a protégé of Casey Research founder Doug Casey. And one of the most important things Doug’s shared with Louis is his secret method for finding the world’s best small resource stocks.
For years, Doug didn’t share this method with many other people. But he recently pulled back the curtain on his proprietary moneymaking approach in an eye-opening presentation.
You can watch that video for FREE right now by clicking here. As you’ll see, Doug used this same method to bag incredible gains. We’re talking returns north of 5,000% and more. Click here to see how you can put the “Casey Method” to work today.