I spoke with US investment analyst and commentator, James Dines, at the RIU Melbourne Resources Round-up conference, following his presentation, titled, “The Coming Commodity Boom”. First up, I asked Mr Dines what his view was on Australia selling its commodity producing assets to overseas buyers. James Dines: When you sell a mine, you’re selling an irretrievable asset that will never grow again. It’s something you inherited, these are your heirlooms. And instead of just trading that for paper that can be printed irresponsibly, I think you need to sit back and say, what are we doing here? You’re losing sugar mills, you’re losing - 10% of your farm land has already gone to overseas. That food produced will go to other people; you’re losing your security of food. You need to stop what’s going on and understand that you need to keep your assets. Instead of just taking paper, possibly taking a commensurate commodity, it could be copper. The way China’s buying more copper than it needs, not to use or trade, but for the next century. And you know, I think the whole world is at the dawn of commodity imperialism. This is a mad scramble for the world’s remaining assets. Will it damage Australia? Yeah irretrievably so, I think that if somebody wants to buy Australian real estate, you should ask them to trade instead of selling it - ask for their real estate!
So what do you think the Australian Government could or should be doing now to prevent this?James Dines: I think that the first thing the Australian Government should do, is to have a public debate on it and let some of the brilliant people in this country come forward and say: hold it, we’ve got these heirlooms but why are we selling them and what does it mean, and where are we going? I think that is the first step, knowledge is the first step of understanding something and I think at that point, the people of Australia have to come to it. Look at my country America, you know, we’ve sold all our assets freely and we’re tapped out - our huge oil reserves are gone. Long ago I said America should print paper and buy other people’s oil, what are we doing? Instead we gave tax advantages to drilling in America. I think you need to take a hard look at the whole topic of your assets and who gets them, how they are sold and what will Australia do seven centuries from now.
Certainly and now one thing that you mentioned in your presentation, is that China is gaining control of the centre of the world’s chessboard through energy. Could you explain a bit more how they’re doing this and what this means for the rest of us?James Dines: Sure. They’re getting the centre of the chessboard of rare earths actually, is what I meant. In terms of energy, there already is a cartel on that and the OPAC has that. They control the centre of that chessboard, but nuclear power is going to be the next one. Now we know there are a lot of hard feelings against nuclear power. But at some point, because the growth of India will be a larger population than China, because of the huge expansion in Africa coming on-stream who want the American dream of all the appliances and cars and homes, you’re going to see sooner or later, oil is going to run out. I mean there were just so many ferns, giant ferns and dinosaurs that have got melted down.
It’s going to be gone and you need to take a hard look at what’s going to happen when it is gone. Well it’s got to be nuclear. First of all you have clean air, yeah there’s a problem with waste disposal, it’s dangerous but you know what, so is every other energy source. And I don’t feel like getting into a position where I’m defending uranium power - atomic power. I’m just saying that if you don’t have nuclear power, you will shiver in the dark and it takes 30 to 60 years to build an industry. You know you just don’t go out and dig a uranium mine and purify it, and build a nuclear power plant. That doesn’t happen in a week, it doesn’t happen – it takes decades to do. It needs to be begun immediately and I think that relying on coal, well you’re being punished by fires and all these other things that are happening because of it. The air is your air; we all breathe it, if you don’t take care of it you will lose it, as simple as that.
Now another thing you warned about that jobs worldwide are declining. Again could you explain why and what will replace them?James Dines: My prediction in fact was the coming end of the age of jobs and it’s usually met by incredulity and understandably so. But the fact is there will not be enough jobs for everybody. The whole world is coming to a disjunction; this century is different from any other. You know we finally control the planet, we control the ability to destroy all life on it and we need to sit back and really think about what’s happening. There will not be enough to eat; we’re now at the coming age of what I call, the coming age of robots. America is dismantling its manned air force and womaned air force, and they’re replacing them with robots, with these cruise missiles. You know the whole world is moving towards eliminating jobs and there’s going to be something in the order of Aldous Huxley’s, Brave New World coming. Something different, I still don’t have an idea but I think the capitalist model is broken.
China instead of trading is going to be buying it – it’s not only China, its Japan and several other countries, Russia. Russia’s buying real estate all over the place; it’s not a racial thing at all. And we’re going to get a breakdown of the capitalist model and the communist model has been discredited, although China is changing from seizing the means of production, to buying it and they have enough money to do it - $3 trillion. So something very different, a new form of civilisation is knocking on our doorstep and I’m writing in the Dines Letter as to what that might be, trying to figure it out. And I’m watching it carefully, I know something big is happening I know something very big is coming, but I’m still trying to discern its shape in the hazy mist of the future.
You did say that we are in the second Great Depression. Did you mean just the Western world or China, or globally? And, what facts underpin this view?James Dines: The first depression was caused by currencies; as I said the general conference doubled the money supply. We have done the same thing, we have doubled and tripled and quadrupled the money supply, and the punishment will be the same. We are in a great deflation and that deflation always ends in a depression, that’s what they do. Every up comes a down, its gravity. So the whole world is in it. Everyone who printed more paper money than they were justified in having done so, a bunch of little old men sitting in a room deciding how much money to print that day, is an outrage. I mean that is not the way, why not just print a million dollars for everybody? That is not the way to prosperity.
So what needs to be done to fix this?James Dines: What I recommend is first of all fixing the currencies. We will have to have a new currency, the old one is gone. I don’t see how that, you know there will be the equivalent of….
Could you explain the old and the new - what you see as old currency and new?James Dines: The current currencies are bankrupt; I mean that’s going to break. They’ll probably be discredited, gone. It’s not the first currency you know that’s been destroyed in this world and then there’ll be a new one linked to gold. You’ll notice that America very cleverly never sells its gold. The other central banks have all sold it to buy US paper, but America has its hoard of gold for sale at $42.22 an ounce. And you might well ask why can’t you just buy it at $42 and sell it at the current price of $1,800. And the answer is they won’t sell it for paper. So it’s a farce, its insanity, I mean what’s going on now is incredible.
You are bullish on gold and even more so on silver, and you say it’s an under-priced currency. When and how much do you think it will go up by?James Dines: When silver was $4.50 in 2001 and this is in newspapers and I have the clippings, I predicted that the first target would be $50 an ounce. Now that’s a tenfold increase and nobody believed it. What I really wanted when I said it, was my initial target which by the way was almost reached, it got up to $49 in change already, when actually I think it’s going to go – the next target is between $100 and $400 an ounce.
And that’s only the next target. It depends on how much money they print because the more pieces, the more units of paper chasing each ounce of precious metals, the more they have to go up, because they’re not going up, the paper’s going down. You have to twist your head around to understand that. The paper currencies are crashing, we’re now in a slow motion invisible crash, just as I predicted and nothing has changed.
One of the charts I showed in my presentation today was the Dow Jones Industrial Average of 30 leading blue chips adjusted for the price of gold, in terms of gold. Over the last 10 years it’s been a flawless down-trend and that’s because the price of paper is going down, because they’re printing more. It’s just supply and demand; you print more paper, it is worth less.
Now Mr Dines there is a lot of negativity here what you describe. Is there anything positive we can hold on to or look to for the future?James Dines: There’s everything to look for, I mean the future is in our hands. The reason I’m stopping off here on holiday is to transmit this information. The books I’ve written, it’s there for you, it’s not doing any good, I’ve lost my fight to stop America running this craziness of over printing. But yeah, if you stop that and fix the currency it would work. If you don’t fix it no, it’s really in your hands. I mean I’m just one person, I can’t do anything.
Mr Dines, thank you so much for your insights to FNN today, it’s been a pleasure.James Dines: You are very welcome.
PART TWO ENDS
