|Bob Irish Reporting: Delray Beach, FL. Friday October 23, 2009|
How Gold Made Me Rich and Taught Me How the World Works
Today we're airing it out with our own Dr. Rusty McDougal, who runs IDE's Resource Windfall Speculator. Rusty doesn't have your usual stock analyst background. He's a dentist. And despite his enormous success as an investor, he's not giving up pulling teeth (especially when he's talking to CEOs!). Rusty also doesn't have your usual outlook on many things...from politics to money, as you'll find out in the next minute.
By the way, Rusty attended a resource conference held in New Orleans last week, so he'll also be talking about that with us.
Bob: You're independently wealthy and you love following the market. So why do you still practice dentistry?
Rusty: I was wealthier a year ago than today. I don't consider myself independently wealthy. Plus I have a passion for both investment and dentistry.
Bob: I understand you've taught dentistry. Do you prefer that to giving readers advice on investing?
Rusty: I like both. But I find gold fascinating. Study gold and you find out how the world works. Gold bugs are freedom oriented, many are libertarian. They appreciate the constitution, honest money and they expect honest markets which by the way we don't have.
Bob: What's honest money?
Rusty: Money backed by something, not "Fiat Money." The government has created trillions of dollars out of thin air, which steals from the population who already own dollars. If dollars were backed by gold, silver, anything, you couldn't have such huge extravagances like war and bank bailouts. The people wouldn't tolerate money spent at that level. It's the root of the problems we now have in the global crisis.
Bob: What would you do if given the chance?
Bob: Who would you rather be, Jim Rogers or Bill Gates?
Rusty: Jim Rogers. He has fantastic mind. I like his adventuresome spirit. Travels the world on a motorcycle. He was at the New Orleans conference a year ago. I think his motorcycle is his wife.
Bob: You just went to a resource conference. What was the biggest surprise?
Rusty: Not a lot of attendees...maybe around 400. I've gone to this conference almost every year except the year Katrina hit. It's usually double the people.
Bob: Were any companies trying to scam you?
Rusty: Every booth was manned by a promoter. Resource investment is speculative. But these days companies have to jump through a lot of hoops to stay away from the fraud that used to be common in the market. Most of these companies were very high-quality.
Bob: What is the first question you ask these companies when you meet them in person?
Rusty: If I already know them, I'll ask about a particular project. If it's a new company, I'd ask about its size...how much cash they have...and how much of the stock do the company's insiders own.
I want to know about institutions owning their stock. And do they have really sound backing. They're very small companies. They have to access money from the markets. They need backers who believe in them. It's very much a people business.
Bob: Is that all you talk about?
Rusty: Not at all. We talk about everything, from politics to the end of the world. I came away from the conference convinced that if you're smart and connected like most of the attendees at the conference, you can protect yourself and prosper.
But the social issues make me nervous. What happens if everything totally crumbles? I still see signs of severe economic problems like crime. It's up 20%...unemployment is still going up.
Bob: Are there other countries handling these problems better than the U.S.?
Rusty: Well, former communist countries are seeking to back their currencies with oil and gold and something of substance. We should be doing that. We could pull out of this mess in a hurry. We're going to be forced to do something...
China is very pro-gold. Their Central Bank holds a huge amount of gold reserves. And they're encouraging citizens to buy gold. On the other hand, the U.S. government suppresses gold prices via the COMEX market through outrageous short positions. The U.S. policy is to squelch the price of gold.
Bob: Tell me more about why it should want to do that.
Rusty: The Gold Anti-Trust Action committee (GATA) does a great job following this issue.
GATA is a registered not-for-profit organization begun in '98. Some of the smartest people in the world espouse their views like Richard Russell. I'm convinced that the Fed sees gold as the enemy. I see gold as freedom. Our monetary system is the opposite. It enslaves us. But we're tin-foil hat guys. Nobody wants to listen to the guys in the peanut gallery. So don't get me going. Ask me something else.
Bob: Okay, who's your favorite TV personality?
Bob: I like Gregory House from "House." It's a fun program, intriguing. Relationships that play out are fascinating. He's cutting in a funny way.
Bob: Do you relate to him at all?
Rusty: No, I wouldn't dare say the things he says. He pisses everybody off.
Bob: Who's the scariest villain today in your opinion?
Rusty: It's no secret I'm a conspiracy guy. People say we're conspiracy nuts. I don't mind. I think it's silly that people are afraid to speak their minds. Obama has handlers who scare me. They scare me more than Obama does. All these presidents have handlers that drive policy and horrible decisions made from the very top.
I've vowed never to vote for a Republican or Democrat for president. But I'd vote for the Constitutional Party if it had a candidate.
Bob: What is the Constitutional Party?
Rusty: It reveres the founding fathers and what they stand for. They trusted the judicial process. They wouldn't have liked to see it trampled. Many say that the constitution is just a piece of paper, including President Bush. His actions clearly demonstrated that.
Bob: Like what?
Rusty: Guantanamo Bay is a travesty. He couldn't wait to get into Iraq under false pretenses. I'm not a big fan of Homeland Security either. The 1,000-2,000 page bill creating the agency was rammed through Congress without people reading it.
Lots of stuff bothers me. Wars financed off-budget. Stealth tax. We tolerate all of it. If we were on a gold standard, you'd see the supply of gold increase by 3% every year. The government wouldn't be able to create money out of thin air.
Bob: What is your proudest accomplishment?Rusty: I had an epiphany of sorts in the 70's. I read a study of people in their 70s and 80s on what they regretted the most. They said not taking enough chances and playing things too close to the vest. They said they felt that they never lived their life the way it could have...should have been lived. I vowed not to say that when I got to be that age. So whatever convictions I have which go against the grain, I've lived and aired them out whatever the consequences. It freed me up in a lot of ways.