Dateline: Kuala Lumpur, Malaysia
Doug Casey was the original “international man”; along with Harry Schultz’s concept of “three flag theory”, he was one of the original advocates of internationalization that paved the way for us here at Nomad Capitalist to adapt offshore strategies for the twenty-first century.
For that reason, Doug Casey’s predictions about the economy, business, geopolitics, and the world are always of interest to me. So, I decided to scour the internet, listen to lots of podcasts, and watch a number of videos to gather all of Doug’s best predictions for 2020 and aggregate them in one place.
In this article, I’ll share the best Doug Casey predictions about gold and silver, the global economy, and more, along with my commentary on how to profit and protect yourself using the offshore strategies we help people implement.
1. Mass Migration Will Grow in the West
Doug Casey predicts that Europe will see a spike in mass immigration from Africa and the Middle East larger than anything in more than a millennium.
Meanwhile, the United States will see continued migration from Central America which will lead to the death of entitlement programs as a new demographic wave will favor their own over paying high taxes to continue benefits for the old guard.
My Take: There’s no doubt aging western countries will have and need migration to remain competitive; they’re simply aging too quickly. Shifting your investments into countries with better demographics will be a good long-term play.
Anything from safer markets in Asia (Malaysia, Cambodia, Vietnam) or ultra-frontier markets in Africa will diversify you away from dying populations. You may even get a second passport out of the deal so you can spend your retirement years somewhere less hostile, should all this migration happen.
Western countries spend like drunken sailors and didn’t reproduce; now they need foreign capital and will offer immigration in return. If you want to move to Europe, there are plenty of investment programs that let you do so as a result.
2. The Death of the US Dollar
Citing Social Security as a “Ponzi scheme” that will further bankrupt the US government, Doug predicts a miserable fate for the US dollar.
He also asserts that emerging world powers don’t trust the US dollar, as evidenced by Russia’s stockpiling of gold and China’s plans to play a larger role in global trade. He says it “makes no sense to hold the currency of your adversary.”
Simply put, he says “you can run but you can’t hide” from a falling US dollar. In this interview, he also advised on relocation options to escape the fallout of a US dollar collapse, something we advocate.
My Take: People have predicted a dollar collapse for decades and while inflation has reduced its value, it still stands as the proverbial “cleanest shirt in a dirty laundry basket”… at least among developed currencies.
However, the US dollar has plenty of new competition that didn’t exist when previous predictions were made. You can easily get exposure to other fiat currencies by opening an offshore bank account or buying real estate overseas.
In some cases, you can use these and other currency plays to get a second residence permit.
There are plenty of foreign currencies – even exotic currencies – that have held up well against the US dollar in recent years and offer an actual yield. I own real estate all over the world and am constantly considering exotic new options in countries like Egypt, Uzbekistan, Venezuela, and even Iran as an extreme hedge and growth play.
3. The US Will Elect a Socialist
There’s no doubt that the United States is a nation divided. On one side, Trump Republicans who want to reduce immigration and lower taxes, and on the other, social justice warriors who want to tax the rich and fundamentally transform the country.
This can’t last forever.
And Doug Casey predicts that a far-left President will enter office in either 2021 or 2025. He suggests that the “best option is separation” as the United States has essentially become two countries, and that a cultural revolution bigger than the 1960s will take place with fireworks to follow.
My Take: I wholeheartedly agree with Doug; the US is moving to the left and it’s only a matter of time before a tax-and-spend, attack-the-rich government will come into force as never seen before.
If you have a high income or wealth, I would start by having a second passport in case you need to either physically move overseas or even expatriate to escape crushing taxes and regulations.
Having a second home overseas will make said relocation process easier emotionally as you’ll already have a place to go, and you can use that investment to diversify into another currency as well. And if you’re mobile now, it may be best to move overseas as an American, reduce your tax burden, and stockpile extra cash.
4. There is a “Real” Great Depression Coming
Doug says the real depression is “just getting started”, citing negative interest rates and runaway government spending and currency devaluation as the culprits.
He warns to expect high unemployment and inflation, and a lower stock and bond market. He also claims the US dollar is a “dead duck”. The net result of this is that Americans in particular and westerners in general will have a lower standard of living.
My Take: Americans will continue to see a lower standard of living; the go-go economy Baby Boomers enjoyed cannot be sustained in a generation where once-flailing economies from Mexico to Montenegro to Malaysia are rising and offering better opportunities to live, invest, and hire.
Since most of Doug’s audience live in the West and see these issues around them, my solution is diversifying out of the West. Buy a second home where fortunes are rising, not falling, and invest in assets that hedge against inflation.
5. Gold Prices Will Surge
Doug Casey believes strongly in buying gold and silver – as much as you can – and believes that as gold is real money, it will rise in value as his other predictions of “doom and gloom” come true.
He calls this a wealth transfer from the imprudent to the prudent, and no doubt the last decade’s boom market has created quite a bit of wealth among the imprudent.
He’s right; practically anyone could have made money in the 2010s. Doug predicts a new gold boom market and says prices could reach $5,000 per ounce – triple today’s spot price.
My Take: Doug certainly has more years of watching markets than I do, and I won’t take issue with his claims. There are a lot of wild claims about gold, but if his predictions bear out, no doubt safe-haven assets will thrive.
My suggestion is to own gold outside of a western country, where wealth will be demonized and politicians may confiscate it.
Safe private offshore vaults in neutral, wealth-friendly jurisdictions are the best place to store precious metals. You can buy as little as one gold coin and store it in Singapore, or you can move the majority of your stash overseas with one of the gold brokers I work with.
6. Bonds Will Collapse
While Doug Casey predicts that overpriced stocks will continue to rise at least for a while thanks to near-zero percent interest rates, he believes bonds are now the worst place for your money.
He calls it a “triple threat”: interest rate risk, currency risk, and credit risk.
Doug lived through the bond boom of the 1980s but says that it is far behind us now. He also suggests that some countries simply may not pay their bond obligations (the credit risk part).
My Take: While I tend to agree, I do have a very small exposure to foreign government bonds, usually for immigration purposes (i.e., buy these bonds and get a passport).
If the US dollar is the culprit for currency risk, hold non-US assets alongside precious metals and/or cryptocurrency that give you exposure away from bad fiat currencies. Emerging market banks and real estate markets provide greater yields.
7. The Death of Cash
Doug correctly points out that cash is becoming a four-letter word all over the developed world. It seems every time I turn around, some country is rolling out a new law to ban cash transactions over a certain (shrinking) amount, and all in the name of “security”.
Doug predicts that significant inflation will erode the power of your cash whether it’s in a bank or under your mattress, all while minuscule interest rates make it impossible to keep pace… and the government and banks work together to shift the risk of holding cash onto you.
My Take: The war on cash isn’t happening everywhere; go to Hong Kong or Dubai and see how much people still love holding physical cash. Even Germans like keeping large banknotes in the home safe.
While owning other assets is important, moving the cash you do keep on hand into strong foreign banks in countries like Singapore is a good way to reduce your risk.
Emerging market banks can be used for yield. And having money out of the western nanny states will increase your ability to actually hold physical cash.
8. The Rise of Cryptocurrency
Doug indicates that he didn’t feel knowledgeable enough about Bitcoin to buy it in its early days… but it is no longer the early days. He says cryptocurrency has a “tech boom feel” like the early 2000s dot com bubble, but that the bubble can still expand as cryptocurrency “could be the biggest thing since the internet”.
He makes good sense when he says that you need to understand all of your options, something that far too few people do whether it’s about alternative citizenships or alternative money in the form of cryptos.
My Take: Cryptocurrencies have tremendous disruptive potential and are worth holding a position in. We’ve helped dozens of successful crypto investors and entrepreneurs internationalize their assets and their lifestyle.
What I’ve learned from that is that the western world will likely not be kind to competition from crypto, and having an international “Plan B” is important for anyone with significant crypto exposure.
In some cases, citizens may even want to expatriate from their countries if anti-crypto regulations get too bad.
9. The Fall of China
The west is aging, but so is China. Doug says that while China is “on its way to dominating this century”, its financial system will collapse. He even hints at Chinese bank bail-ins where depositors could lose up to 50% of their money.
He also suggests that millions of Chinese will move to Africa (and perhaps other Belt and Road nations) to manage the infrastructure projects funded by the Chinese government.
My Take: I never count out the Chinese; as investors, they are far more patient and – to use Doug’s term, prudent – than most westerners.
While China’s financial system may erode, I wouldn’t bet against Chinese investments in other Asian markets like Vietnam and Cambodia, or their ability to have cash to invest in the West when prices fall. The success of citizenship by investment programs around the world shows us that.
10. World War III Will Happen
Doug Casey predicts that the United States – perhaps due to its cultural divides – will provoke a massive war not the likes of Afghanistan or Iraq, but quite possibly with a major power like Russia, China, or Iran. He says the war may even provoke all three.
Channeling Mitt Romney, he says that the United States won’t fare well due to its antiquated technology, which makes me wonder why Americans are funneling so much of their money into the military for such poor results.
My Take: If a superpower war is to happen, I wouldn’t want to be anywhere in the crosshairs. Doug is onto something living in Argentina, a large country protected by mountains and the wide-open ocean and surrounded by other countries unlikely to be involved in such a skirmish.
Owning a second home in a country you have a residence permit or citizenship in will be a lifestyle hedge you can escape to if things get bad. I personally spend my time in countries unlikely to be affected, so you don’t even have to wait to move if you don’t want to.
Doug has had some interesting ideas over the years and I don’t always agree with him, but you have to give him credit for having some good calls over the year. From moving to Argentina to increase his freedom to gobbling up Hong Kong real estate in the pre-handover crisis, Doug Casey is an out-of-the-box thinker that should remind us all to consider all of our options.