James Dines: Silver Will Trade Higher Than Gold, Is Most Undervalued Metal on the Planet

This interview was recorded on February 7, 2017.

Gerardo Del Real: This is Gerardo Del Real for Resource Stock Digest. Joining me today is someone who really needs no introduction, Mr. James Dines. Mr. Dines is the editor of The Dines Letter, and has a legendary record in the investment community. His contrarian approach to investment analysis has led to Mr. Dines accurately forecasting trends for over many decades.

He was the first analyst on Wall Street to recommend gold at $35 and silver at 92.5¢ and Mr. Dines is "The Original Goldbug," "The Original Silverbug," and one of the original founders of technical analysis using charts to forecast. He also pioneered recommendations in internet stocks starting in 1995 as the original internet bug. He predicted the internet boom, the uranium boom, the rare earth bonanza, and as the original pot bug, he recognized the profit potential at its earliest stages. Mr. Dines has consistently gone against the grain and delivered gains that have been passed down for many generations.

Mr. Dines most recently called the bottom in uranium just weeks before the upturn in the spot price of uranium and the subsequent rally in uranium stocks, and I'll get back to that, but first, let's talk about gold and silver stocks, which are absolutely on fire. Mr. Dines, it's a real pleasure. Thank you so much for joining me today.

Mr. James Dines: Thank you Gerardo. You ask penetrating questions.

Gerardo Del Real: I really appreciate that. I mentioned uranium, and you called a bottom in uranium. It was spot on, and I want to get to that in just a bit, but you also recently called the bottom in gold and silver stocks just prior to that, and I'd love to get your thoughts there and what you're seeing in the market and in the gold and silver stocks.

Mr. James Dines: Sure. One of my pioneering mass psychological concepts is the Dines Wolfpack Theory. I call it "DIWPAT," so that you could make money by getting one or two right and then home in on the other two of the four. For example, gold and silver are up, so palladium and platinum should soon rise also. And uranium is also cyclical as well as cannabis. The field of raw materials is cyclical and very profitable if you can get the upturn, the timings of the upturns right. It includes mines, oil, iron ore, uranium, cannabis, all of them, and within this whole raw materials field, there are islands of profitability that move together.

We flashed a “buy signal” on gold and silver in The Dines Letter of February 5th, 2016, on page 15 of The Dines Letter, one year ago. That was within two days of rock bottom. I can't do better than that because it takes two days to publish and disseminate. Anyway, there have already been two huge major gold bull markets. The first wave took gold from $35 up to $850 per ounce. The second wave up almost $2000, and the next wave, the missing third wave should take it up to between $3000 to $5000 an ounce. And silver well over $100 an ounce.

There's a huge up move ahead. And that move, if my theory is correct, is about to begin. The Dines Letter, the latest issue is especially bullish on silver, calling it the single most underpriced metal on the planet, believe the unbelievable or not.

Gerardo Del Real: So Mr. Dines if I understand this correctly, you're saying that silver is the single most undervalued metal on the planet right now?

Mr. James Dines: That's right, and look, I'm “The Original Silverbug.” I could go on and on about gold and silver. I think if some people are really interested in that they can read my "Goldbug!" book, which contains everything I know about the subject.

Gerardo Del Real: Absolutely, and a book that I've benefited from greatly, Mr. Dines. So let me pivot back to uranium. We touched on it in the intro a little bit, and I had the pleasure of speaking with you on December the 12th, late last year, and at the time you called the bottom in the uranium space and like clockwork, a few weeks later we saw the spot price of uranium bottom and then head nearly 30% higher with many of the uranium stocks – long despised – seeing double and even triple digit gains. You were “The Original Uranium Bug” at $8 a pound, before it hit $150 a pound. How do you see the uranium market developing from here and what's the best way for speculators to participate in this new uranium bull market that you're calling?

Mr. James Dines: Well, thanks for acknowledging that. We turned bullish on uranium, hated at the time by everybody. Nobody was even looking at uranium. That’s a very smart time to buy, generally, if you're concentrating on sophisticated timing. I became the original uranium bug, that was a rock bottom buy signal at $8 a pound in our Interim Warning Bulletin of September 14th, 2000. That was within only $1 from its low at the time, and uranium subsequently rose 1,650% by May 2007. It's one of the great bull markets in commodities history. Everybody had the opportunity to choose their own sales signal and my subscribers who sold small percentages on the way up had a great opportunity for profit. We're quietly proud that we once again began to turn bullish on uranium in that IWB of 9 June 2016. Last summer.

Yet again, ahead of the crowd, although I have to say, recommending uranium stocks regrettably annoyed a number of my own followers. But as far back as our Dines Letter of 1 July 2016, on page 10, in its feature entitled, "Profit Incredibly in Uranium," we declared that, "There's no way to meet the world's energy needs with clean energy sources without atomic power, which produces zero carbon emissions, and with waste buried miles deep in ancient, solid rock, it will be safe." Our last uranium stock recommendation, Fission Uranium (TSX: FCU)(OTC: FCUUF), rose 82% in the last three months. And the next Dines Letter will recommend another uranium stock, both still buys.

Furthermore, we boldly recommended atomic power again in our thirteenth Interim Warning Bulletin last year, and that was the one on December 12th, in which we openly wondered whether Trump might balance increasing emissions from a resurgent coal industry with squeaky clean atomic power. Also I wondered whether Trump might be a secret supporter of atomic energy. Second, despite all the negativity, we can see with our own eyes that the price of uranium has risen a whopping 41% since December 2016, two months ago, defying the majority's pessimistic bad news. Again, it's the key that can lead to serious profits and the new “coming uranium bull market.” I think that Trump is going into atomic energy and third, Kazakhstan has reduced its production, but to me it is the least important of the four bullish factors, because they could just as easily increase their production at any time.

But the way I see it, there are around 440 reactors working in over 30 countries. You've got 60 more under construction according to the WNA, the World Nuclear Association. I've often lamented that China was massively stampeding it into taking control of the whole atomic energy industry and having long ago stolen the technology from pioneering America, now seeking world domination of the field. And China is even constructing two new atomic power plants in Iran, with four more projected in the next few years. They're gaining expertise and locking countries into their scheme of controlling atomic power worldwide, and China's marketing of this skill will add to its economic power and getting jobs lasting far beyond this century.

Fourth, finally I'm predicting a huge new bull market, as I said, in raw materials generally. It's far more important than Trump and Kazakhstan and China, and because it’s based on Mass Psychology which is one of my key areas, and the impact of crowd thinking affecting our own. I think all portfolios should have at least some representation in atomic power, and I will be adding additional uranium stocks in a future Dines Letter, including with virtually all raw materials, from cobalt to zinc.

Gerardo Del Real: Excellent. There's a lot of really valuable stuff there, Mr. Dines, so let me try to recap some of it just to make sure that I'm not missing anything. You're calling obviously for a new bull market in raw materials and within that, you see silver as the most undervalued metal on the planet, and of course, you've also called for a new uranium bull market. Is that correct?

Mr. James Dines: That's correct.

Gerardo Del Real: Fascinating, fascinating. Now, Mr. Dines, pivoting again, you also called for a bond crash when we spoke in December, and again, sure enough a month later the so-called Bond King, Bill Gross, weighed in and he agreed that 10 year treasury yields topping 2.6% would spell the end of the bond bull market. Now, DoubleLine CEO drew the line in the sand at 3%, but he also agreed that a break of that level would signal the end of the three decade rally in bonds. What's clear is that the two best known traders in the world are catching up with your call that the bonds are headed for a crash. How can people protect themselves from a crash involving one of the most important markets in the world?

Mr. James Dines: That's an important question. Last year I said that I thought bonds were at the dawn of one of its worst crashes in history and you can just look at the fact that the fed has made it very clear they're going to be raising interest rates. Which means bonds going down. It's not rocket science. I appreciate other analysts agreeing with me, but I'm way ahead of the pack on that call. See, these bonds are historically grotesquely overpriced. To me, the key signal was negative interest rates. Only a fool would lend money with a guarantee of getting less back. I mean, think about it. It'll be looked back on in wonder, like tulipomania. The government has deliberately suppressed interest rates to destroy capitalism for eight years, to stimulate the economy, and the world economy has underperformed that long.

I mean, this is fanaticism. The desperate panic for higher income has lifted nearly all income sources to overpriced levels, including bonds, but also utilities and even virtually any stock with a dividend, and when the fed raises interest rates further, it will bring a punishing bear market in income stocks, led by bonds. How it will affect the public? I mean, you don't even have to own bonds. I've been talking about the coming pension fund crash. They base their payouts on an income of 8%, many of them, or now 7, but they're only getting about 2% from bonds. I mean, I don't think I'm very smart to say to myself, "Well, that's not going to work."

So I’ve been predicting that many pension funds are going to go broke, and a lot of people who are depending on pensions, or even banks that own a large amount of funds, are not going to be surviving this. This'll be a pension fund calamity. What's going to happen? I think they're going to be canceling pension payouts. Look at Venezuela and India, they've done just it. They'll just say, "Okay, from now on you're only going to get half your pension." Or maybe none. We've got a real crisis coming. If you want security, you've got to go into gold and silver, and that's another whole huge topic I can't cover today.

Gerardo Del Real: Excellent. Well, as a longtime reader of The Dines Letter, I know you do a phenomenal job of describing in detail how to protect yourselves from that crash and obviously how to position yourself in the best gold and silver names and raw materials names, so that's something that of course I'm looking forward to. Now, talking the presidency and US politics, President Trump has been very vocal about his willingness to take on corporate interests and even his own intelligence agency. He's also been very vocal about pursuing what he calls an "America First" policy which some equate with an aggressive protectionist policy. What do you see as the motivation behind what seems to be a coordinated policy on a global scale to eliminate cash from the masses and putting politics aside, do you recall the last time that a president was this willing to go after corporate and intelligence interests, not to mention his own party, and how might that affect the world markets, Mr. Dines?

Mr. James Dines: Well, the last time it happened was John F. Kennedy with the steel industry. But in terms of President Trump, well, first of all I do cover geopolitical themes, but I write a financial newsletter, not a political one. I'm much more focused on making money for people. Trump has only recently become president, and I think we all need to see what he actually does financially, which is my total focus. He does a lot of talking and then does something else, and I think we should all be cautious about making conclusions. That's all I really have to say at this point.

Gerardo Del Real: The other question was in regards to the motivation behind what seems to be a very coordinated policy on a global scale to eliminate cash from the masses. I've read before in The Dines Letter how cash is freedom and the government's intent to tax it is an encroachment on freedom, so how do you view that, Mr. Dines? What do you see as the motivation there? Do you feel that's still to be true? Do you see it progressing in a way that maybe is escalating it?

Mr. James Dines: That's a good question. You see, people without money or cash are easier to control and there are no rights without the right to have cash, to have money. You take people's money and control it, then they have no rights. There are no political or personal rights without financial rights, and the perfect book to read on this is George Orwell's book, "1984," which is a must read for those who consider themselves educated. Because if there's no political freedom without financial freedom, you really need to understand how they are taking control of cash and you can take a look at what happened in India. One day they said, "Well, all bills in excess of a certain size will be canceled," and suddenly all these people who have been hoarding cash realized that they don't control their cash.

I would say it's very important to retain not only some gold mining shares, but also some actual gold coins. For example, I really like the Saint Gaudens Double Eagle. And if you can get the highest quality you can afford, I think each one is one ounce, you can pretty much know the price of it at all times. I also like the Walking Liberty 50-cent piece. But the only alternative to electronic money would be gold or other precious metals. And if a citizen could in any way imaginable, be considered an irritant to some aspect of government, all your accounts could be electronically frozen, which would leave the individual totally naked in a cashless environment, and he couldn't access the means to purchase food, shelter or anything else.

Government control of the people at that time would be absolute. And that's where George Orwell's vision of the future, with a boot stamping on a human face, would be realized. Everybody should own some gold and silver. Everybody should read my "Goldbug!" book. I've spent my entire career thinking it out, digging out the facts and writing it. And you really need to understand the nature of money. It's not just an immutable piece of paper that says "one dollar" on it, that can't change. I remember when many US dollars were exchangeable for a one dollar silver coin, and just one day the US Treasury decided to say, "No, we're not going to do it anymore." Well, what are you going to do about that?

A lot of those people still have the gold coins that they took out of circulation. They're holding them as silver coins that in case of an emergency, they could spend, and of course they're worth much more than their face value because silver has gone up, but that's again a whole story. I don't have enough time to discuss all of that.

Gerardo Del Real: Sure. Well, I think your "Goldbug!" book and George Orwell's "1984," I can't think of a more important time in my lifetime to read that. I know here in the US, people like Larry Summers have been making the rounds introducing the idea that cash is outdated. They use money laundering and the fight on terror as excuses to implement the policy, and so I appreciate the urgency with which you communicate that message, Mr. Dines. Now, there's also a big debate regarding the potential for inflation here in the US, but there seems to be very little price inflation despite all the currency that's been printed. You've been on record as saying that it's deflation that has persisted since 2008, and that deflation is an indicator of the potential crashes, including the bond market that we touched on, on the horizon. Which do you see as a bigger threat in the US, Mr. Dines? Inflation or deflation? What are the potential consequences of that?

Mr. James Dines: That's a penetrating question. Let me answer that carefully. Yeah, one more final thing on my "Goldbug!" book. Out of my six books, that's the one must read, in my opinion, and the abridged edition sells for $20. I don't want to hear anybody saying they can't afford it. I've put in a million hours writing it. To answer your question, I want to start by, and this needs to be very carefully understood. Inflation and deflation is a complex topic because of semantic definitions. Inflation is defined as an expansion of paper money and debt and deflation is thus the opposite, shrinking the money supply and debt. Let me say that again. An inflation is when they run the printing presses and run up debts, that's inflation. One of the results of which, listen carefully, is prices move in a cycle. They go up for a while and then go down.

It's a shallow understanding to assume that inflation is the same as higher prices, and this is the key to what confuses people. Furthermore, I include in the money supply the stock and bond markets. There are huge amounts, and if people have a zillion dollars of bonds in their account, and they can sell at any time they want, that's to me the equivalent of money. So, when you see a crash in the bond market, you're going to see a deflation, and I believe that 2008 saw the beginning of a crucial deflation; that we are in a deflation now. All inflations eventually cycle over into real inflations, not what they call it, not higher prices, but all inflations roll over into a deflation to eliminate the money and high prices that were created with no relationship to real work or before postponed pleasures.

When you're seeing no price rises despite printing all the money, it's because there's a real deflation going on, and the fact that there have been fewer prices going up or rises compared to the spectacular amount of money being printed is proof of my theory that we are in a deflation. That's why you can't get higher prices. Normally, prices would be flying high because more paper chasing the same goods by supply and demand, go up.

Gerardo Del Real: Correct.

Mr. James Dines: The economists don't grasp this yet, and they're baffled by it. In 2008 you might want to remember there was no market at all for bonds. And I remember I was once on stage and somebody asked, "What happens to my capital when a bond goes down? Or a stock?" and I invented the term, I said, "It goes to money heaven." You need to be clear that the government has taken over the word inflation, making it refer only to prices, taking no account for all the money printed and additional debt created, and this has gone into what George Orwell called in his book, a "memory hole."

Gerardo Del Real: Fascinating, fascinating. Now, that leads me actually right into my next question. Historically, currency and market instability have always been precursors to war. Do you see the potential for large scale wars breaking out due to protectionist policies gone wrong or a bond market crash, or a combination of both? Or, do you have a more optimistic view that President Trump will use his business savvy to usher in a new era of prosperity? And, are both possible?

Mr. James Dines: That's another good question. Look, it's very important to understand causation. Whether a war would be instigated by something in the market or the market causing the war, and it's a chicken and the egg scenario. Possibly both could be true at the same time, but my duty to my loyal, long term subscribers has been to report the truth about my vision, whether I like it or not, and to be neither an optimist nor a pessimist, but to just look at things with cold blood and try to make predictions about the future. I've had way more than my fair share of predictions coming true, so sticking to facts, the world is rearming, including America. I mean, Trump is calling for a great expansion in military spending and that's happening worldwide.

That's why I've been making a prediction for years to avoid war areas, the coming end of the age travel. There are fewer and fewer places in the world that will be safe to travel to, so if you might want to go to your remaining life list of places to visit, it's shrinking. I mean, you want to do that soon, but stand back and look at what's going on here now. China's building islands in the South China Sea, a protuberance that's very aggressive, and not allowing for any of the riparian rights of the other nations on the other side of the South China Sea, and the East China Sea. Russia is trying to reincorporate parts of the old Soviet Union, and to realign them with Russia and away from the European Union and NATO.

Russia has leaped into Syria, giving it potentially a new port, a warm water port on the Mediterranean, to build on their having stolen Crimea, and now getting into and making friends with Turkey which gives them finally the ability to have a warm water navy. North Korea and Iran are developing more sophisticated missiles and warheads, and so these are the things I'm looking at. These are facts. It's not a question of Trump or anybody else. The facts are this is happening and it was happening before Trump got here. I see an arc of Iran connecting to Iraq, connected to Syria, connected to Turkey, connected to Russia. It's like the song “connected to the shinbone.” And North Korea is a challenge to everybody and we all need to be prepared for a war.

I mean, when will it happen? There's nobody that can tell you the truth on that. Nobody knows, but this is a time of old grudges. You have a major war within Iran. I'm no expert on Iran but it's clear that between the Sunnis and Shiites, there's a civil war going on. Islam goes back to the 7th century, and you an old grudge between Japan and China. That's in a low state of incompletion, because of Japan's aggression. That's never been fully apologized or atoned for. India and Pakistan, both nuclear nations, hate each other, and as I peruse the world, I mean it looks very dangerous. You can be hopeful but in my final book, which is on personal development, I talk about hope coming in two types. There's false hope and real hope, and I have to concentrate on real hope and not dream about what would be nice.

You have North Korea and Iran are continuing to develop more sophisticated missiles and warheads. Protectionist policies are not the cause of a possible war. Mass psychology is going on. Trump is not the only strong leader. The April election you've got coming is with France's Marine Le Pen.

Gerardo Del Real: Correct.

Mr. James Dines: Might be a president like Trump. Turkey is a growing dictatorship, Japan, the Philippines, strong leaders, and strong leaders are often a prelude to war. Is it a cause or is it an effect? I mean, this is a very challenging question that you ask.

Gerardo Del Real: Well, I appreciate the insight. There was so much there that just has so much deep value. I'm going to attempt to summarize some of the more important facts. You're absolutely calling for a raw materials bull market, you feel that silver is the most undervalued metal on the planet. You of course, have called for a new uranium bull market which seems to be in progress. A must read, "1984," by George Orwell, and of course "Goldbug!" by you. You want people to own some gold coins. It's ideal to protect themselves from things like a potential bond market crash. Be vigilant about the war on cash, I think that was a very important message which the war on cash really is a war on freedom as you so eloquently stated. And then lastly, you want everybody to be hopeful but be prepared for war. Did I miss anything, Mr. Dines? Is there anything else that you'd like to add? It's been an absolute pleasure.

Mr. James Dines: That's kind of you to say. Well, I think it's very important to fish for trout in a stream rather than your bathtub. You should focus on looking for stocks to buy in the correct group and it's very important to be honest about it. I mean, buying pharmaceutical stocks now is nowhere. On the other hand, buying raw materials stocks is everything. After last year's legalization of pot in California and other American states, this pot boom has not come and gone. Anything is possible in the stock market, my guess is that the recent rise was only the second wave of a bigger pot boom to come, and some of my pot picks have already had phenomenal rises. I think there's much more coming because it's like the end of Prohibition and then liquor boomed.

Again, one of my pioneering, mass psychological concepts is the Dines Wolfpack Theory, using the Dines Net Method in new bull markets, so you pick 10 leaders, let's say, and you place a precise amount of capital into each one. And in that new bull market, hoping to catch in the net at least one major riser. That's what we did with pot and one of them is up a couple of thousand percent already. If you want to make killings in the market you need to fish in the right place, in a stream, not your bathtub.

Gerardo Del Real: Incredible. Well, and that leads me to one last point. You mentioned that the pot profits in the pot stocks, the profits from the pot stocks that you feel they're in their second wave but they still have a lot more to go, and I know that in your "Goldbug!" book, you talk about the third wave in gold and silver stocks and the gold price, of course, so I encourage everybody to go out and read that book because there's a lot of very, very valuable and critical information for what I believe is upon us and the beginning of that third wave. Would you agree that we're there, Mr. Dines?

Mr. James Dines: Yes.

Gerardo Del Real: Well, we deeply appreciate you sharing wisdom and insights, Mr. Dines. Again, it's been a pleasure, and I look forward to hopefully having you back on soon.

Mr. James Dines: Thank you. I'm glad to be of service to the world.

Gerardo Del Real: Thank you, Mr. Dines. 

**To learn more about The Dines Letter, including Mr. Dines' current predictions, click here.**