Doug Casey, and Casey Research: A Comparison to The Dines Letter

by JDH on January 22, 2010

Last week I gave my thoughts on the The Dines Letter 2010 Annual Forecast Issue. (You can read Peter Brimelow’s thoughts on the Dines 2010 Forecast issue here). Today I’ll provide my comments on Doug Casey, and Casey Research.

DISCLAIMER: I am not an employee of Dines, or Casey. I have never met either or them. Or talked to them. Or e-mailed with them. Or seen them in person. I have no financial relationship with either of them. I don’t get paid for writing this stuff. However, if Casey wants to advertise on this site, or pay me a lot of money, that would be great. Send me a message and we can talk. Until that happens, these are my thoughts, rambling and disjointed, but unbiased.

Doug Casey and Casey Research

Doug Casey is an interesting guy. Like Jim Dines, he appears to be single, and has a very big ego. (Having a big ego is not a criticism. Obviously I have a huge ego, or else I wouldn’t take the time to write my thoughts on this blog every week, in the expectation that someone actually cares to read them. But I digress).

He is the founder of Casey Research, which publishes half a dozen different investment newsletters, including:

  • The Casey Report, the “big picture” on the markets, and life;
  • Casey’s International Speculator, for speculative stock picks, mostly resource based;
  • Casey’s Gold & Resource Report, formerly called Big Gold, focusing on large cap gold and resource stocks;
  • Casey’s Energy Report, covering smaller cap, speculative oil, gas, uranium and energy related stocks;
  • Casey’s Energy Opportunities, covering conservative energy investments (larger cap stocks, ETFs, etc);
  • Casey’s Extraordinary Technology, covering, you guessed it, technology stocks, and the industry in general.

In addition to these traditional, once monthly newsletters, Casey Research also publishes two “alert” services, that are published sporadically, for traders wanting to make quick, speculative investments:

  • Casey Investment Alert, highly speculative, small cap stocks, primarily resource based; and
  • Casey’s Trend Trader, suggesting trades in the futures and options markets.

Casey Research also publishes two free daily publications:

  • Casey’s Daily Dispatch, commenting on markets, and life, (you can subscribe here) and
  • Ed Steer’s Gold & Silver Daily, covering, obviously, precious metals (you can read it here).

Finally, on a weekly basis they publish Conversations With Casey, also free (you can read it here).

So, compared to The Dines Letter that publishes 17 pages every three weeks (of which less than half the pages are original content), Casey Research publishes well over 200 pages of unique content every month (sometimes a lot more). Of course, to subscribe to all of these publications costs many hundreds of dollars a month, which is more than the $295 per year you pay for The Dines Letter. Dines also has an Interim Warning Bulletin service for $249 per year.

So, what’s the difference between Dines and Casey, if they both have huge egos?

The biggest difference is that Casey’s stock recommendations are always accompanied by actual analysis. They use what they call the “Eight P’s” to evaluate a stock:

  • People (ie. management)
  • Property (the property they are mining)
  • Push (good things that will happen in the near future to push the stock higher)
  • Promotion (good investor relations promoting the stock)
  • Politics (is the company in a mine-friendly country, or a country run by a dictator)
  • Paper & Phinancing (shares outstanding, debt on the balance sheet)
  • Price (under valued or over valued)

It is not uncommon for a new stock recommendation to be accompanied by five or six pages of detailed analysis of the Eight P’s, including comments on management, the mine, the country, and other relevant factors. All recommendations carry specific buy prices. In fact, over the last few months, many of the buy prices have been stink bids, on the expectation that market weakness would provide good buying opportunities.

So there’s the difference between Dines and Casey: Dines says “buy this stock, just do it because I said so”; Casey gives you pages of analysis, written by an analyst (he has 40 people working for his company) who has actually visited the mine in Peru, or wherever, with detailed reasons for the buy recommendation.

Does this mean that Dines is simply a “pump and dump” sham artist, and Casey is some godlike creature, interested only in my well-being?


Casey, for all I know, could be a pump and dumper too. It’s not inconceivable that he could be in cahoots with management, buy shares of a company cheap, and then write a glowing research report, with the Eight P’s, and lots of facts, and then start selling stock once the newsletter is published. Pump and dumpers can wear suits and talk pretty too.

(Casey would respond by telling you that all employees are required to give advance notice before they sell a recommended stock, so they only sell after they have given subscribers the chance to do so. Dines has no such policy).

Ultimately whether Dines or Casey are getting kick backs from management is not really the issue. The issue is: do their picks go up?

Here’s the chart of the yearly performance of Casey’s International Speculator:

  • 2004: 26.2%
  • 2005: 14.5%
  • 2006: 34.1%
  • 2007: 5.7%
  • 2008: -45.2%
  • 2009: 67.9%

From 2004 through 2009 that’s a 103% gain, or 188.5% compounded. Obviously that performance would have been much better were it not for the 45% loss in 2008. Oh well, that was a bad year for everyone, as I recall.

The Casey Report published it’s 2010 forecast in it’s January issue (a full 66 pages, so longer than the Dines effort). After a two page introduction, there was a 15 page article by Chief Economist Bud Conrad on the Direction for the Economy in 2010. Mr. Conrad’s predictions for 2009 were very accurate, and he foresees a not-great economy in 2010. The next 11 pages were a “How To Invest” feature, with stock recommendations, followed by 2 pages of charts.

Then it gets interesting. There was a three page “Obama Watch” article, followed by a 32 page “Special Report” on Expatriation. Yup, expatriation, ie. how to get yourself out of the U.S. and into a more safe environment.

Doug Casey wrote a book, The International Man, back in 1976, and his official bio states that he “has lived in 10 countries and visited over 175”. He is a big fan of having roots in many different places, so that if there’s trouble in one country, you have another place to go. The question, of course, is as a reader do you want to read 32 pages on how to leave the U.S.

His basic premise is that if the government does what it did in the 1930’s (making holding gold bullion illegal) and starts confiscating it, you are safer if you have some gold coins you can carry with you, and you have some bullion stashed in some safe foreign country. You should have investments, and a residence, in more than one country, so if things get bad here, you have a place to go.

Here’s the thing: this type of thinking impacts on your investment decisions. If you believe that Obama will curtail freedom, then you will be reluctant to invest in the U.S. That negative approach cost Mr. Casey’s subscribers the chance at big gains in 2009 as the market recovered. In 2009 Casey was largely on the side lines, with a model portfolio of 1/3 gold bullion/coins, 1/3 equities, and 1/3 cash. In hindsight the correct strategy for 2009 was 100% equities. (Of course his strategy may be entirely correct for 2010).

So what’s my take on this? I believe it’s important for investors to consider alternate viewpoints. I believe you should watch the government cheerleaders on MSNBC, and I believe you should also read the “sky is falling” commentators like Doug Casey. Ultimately one group will be proven correct, and the other incorrect. Only time will tell who is right.

I personally believe that government deficits will balloon out of control, and inevitably we will have higher interest rates and higher taxes. Higher taxes, almost by definition, leads to less personal freedom. It is quite possible that as the entrepreneurial spirit in the U.S. wanes, foreign countries may be more attractive.

But, does that mean I want to stash gold under my mattress, and build a house in Argentina? Unfortunately neither of those options are particularly practical.

(As a side note, Doug Casey is a big fan of Argentina. He has a real estate development there. I have a friend who is from Argentina, and still owns a farm there, and returns there each summer. He now lives in Canada, primarily because Argentina is not paradise. He tells me there are many places in Argentina where you don’t go without a gun, which doesn’t sound like paradise to me, but I’m Canadian, and I don’t know anyone who owns a hand gun, so perhaps I’m out of touch).

So should you subscribe to Casey publications? That’s up to you.

If you want lots of detail on the stocks you are going to buy, Casey is a good choice. If you want general economic commentary on interest rates, the economy, and precious metals, Casey is also good.

If you are offended by strong political views, even presented in the guise of helping to explain the world so you can make better investments, Casey is not for you.

Back in November, Doug Casey in Conversations with Casey expressed the radical view that charities are “not worth the cost of the gunpowder it would take to blow them to hell.” He believes the most productive use of wealth is to create more wealth; build companies, which creates jobs, which is the best way to help people. He believes that charities exist to make the giver feel good. “I gave to a charity, so I don’t need to do anything else” (my quote, not his). He believes that the overhead consumed by charities is a waste, and we would be better off without them.

I don’t disagree that there are charities that should not exist, but given the recent disaster in Haiti does Doug Casey believe we should simply let them all die? We should not help them? That seems like a very harsh view of the world. I hope Mr. Casey never finds himself, his friends, or his family ever in need of a helping hand.

On January 20, 2010 Doug Casey, in his Conversations with Casey weekly feature, announced his “gut feel” that the markets will crash in 2010. After this week he’s looking pretty good, but gut feels are probably not the most scientific method for making investment decisions.

Over the past two years I have invested in a number of private placements recommended by Casey, and while many of them have been busts, overall I have made a significant profit (as a general rule I don’t cover private placements in this blog, since they are generally open only to qualified investors). Many of his stock recommendations have also turned out well. So, overall, I am not dissatisfied with his recommendations.

There is overlap between Casey’s and Dines’ recommendations, particularly on the large cap gold stocks. (It doesn’t take a genius to determine that there are only a handful of large cap gold stocks, so it only takes about ten minutes of analysis to create that list, and then pick the strongest performers).

Again, I’m not getting paid to write this, but if you are looking for a different perspective, start with the Casey free publications to get a sense of their approach, and then decide for yourself if it’s worth the cash to start paying for his advice. At least, compared to Dines, you get to read some actual analysis, and that alone is probably worth the price of admission.

{ 1 comment… read it below or add one }

persona_user August 11, 2010 at 3:00 am

thank you for this write-up. i find casey research useful and have a paid subscription to several newsletters.