James Dines Interview


Jim: Joining me as my special guest is Mr. James Dines. He is the editor of The Dines Letter. He also authored the books, Gold Bug! and Mass Psychology. Mr. Dines, there's so much I want to talk about today. You just published your 2012 annual forecast issue, and I probably could keep you on the phone for a couple of hours, but I know you are busy and we can't do that. 

So, let's begin with your title, “The Coming Worldwide Murmurations.” Explain what that means to the markets and the world at large.

Dines: Sure. I've written five books. One of them was Gold Bug!, which I was the original gold bug. The second one was Mass Psychology. And that pioneers a new series of ideas. On an overall view, our big annual forecast issue is 46 pages, its got 74 charts, and figuratively it is bristling with predictions. Our crucial decision last October—October 7th last year—was a buy signal. It was during the Euro crisis, and amid suffocating pessimism, and that was within three days of the bottom. So that sets the stage for it. 

The "murmurations" were part of the mass psychological applications to the Stock Market. One of the ways we've been calling the turns so carefully and so well is that we just don't rely on opinions, not ours but others, and just the companies themselves. But the overall broad mass, what I call "mass contagion" in the Mass Psychology book.

And an example of it. It is very hard to see and it doesn't show up very often. All psychology today is vertical, so to speak. It's a combination of our genes and experiences individually, whereas I believe there is another level of mind that is horizontal. And it's a mass mind, and it grips us without us even being aware of it. And the examples of it in the market were the real estate craze of a few years ago. People buying real estate at way higher prices, way too high prices, and then the excessive gloom. 

It was during that gloom last September, for example, that as I mentioned, last October, that was our clue that the market was going to go up, which of course it has beautifully. Now, an example: it shows roughly in the market sometimes; but a more visible one, sometimes occurs in nature. And we called attention to a free video site that showed thousands of starling birds moving in fractal exotic shapes as if they were one unit. And my theory is that they are. The scientists studying them couldn't possibly have gotten a signal from those next to them because they were moving in tandem with birds hundreds of feet away. And I feel that this is a visible example of the "mass mind", which excites me because I watch it in the Stock Market. But I've never actually seen it. And it seems to be something, a "pre-birdness" of some kind, such that the birds themselves are actually manifestations of it. I'm a trained scientist, so it's not easy for me to accept this kind of thing, but a real scientist has an open mind to everything. And it's also expressed in, for example, the broader trends we cover in The Dines Letter.

I predicted some time ago that the US would leave the Middle East and Europe and move toward Asia. And sure enough, America announced that they were sending 2500 Marines to Australia, which China correctly took as a confrontational stare down. 

Africa is a new area of combat. They have announced recently that 100 special operations officers have landed in Central Africa to fight something called "The Lord's Army." And just today they announced that American drone airplanes are fighting in the Ethiopian-Eritrean conflict. So the murmuration is shifting American interest toward Africa and Asia. It's even manifested in America with the "Tea Party" and the "Occupier" movements. And I'm going to cover that in more detail in the next issue of The Dines Letter. But notice that it's leaderless. I mean both movements are leaderless. Which is very important in a murmuration. There's no Leon Trotsky haranguing crowds. They blame the banks but they have no agenda. It's almost anarchistic. And the murmuration in Europe is shaking it to its roots. And no one sees it as a currency problem.

I believe that the currencies around the world which need to be backed by something tangible have led to a poverty and what I've been calling "The Coming End of the Age of Jobs,” which still nobody believes, but that's my call. It's this lack of jobs which is bringing people out into the streets in the Arab World, and also a source of the tremendous rise in the price of gold. 

Jim: You know, you quoted something in the opening of your letter. And you quoted Margaret Thatcher, "The problem with Socialism is that you eventually run out of other people’s money." Isn't that some of the problems that the US Government…. I mean we're borrowing 40 cents out of every dollar we spend, and Europe is doing likewise. You have governments from Greece to Portugal that are so in debt, and they've been living a lifestyle with borrowed money. Where is this money going to come from?

Dines: They're just printing it. One of the founding motives for my starting a newsletter was to battle the idea of cutting the…severing the link between gold and silver and paper money. And the reason for that is the function of those metals is to restrict the amount of paper they print. They could never have run up debts like this had there been an honest money with integrity in it. That's in my Gold Bug! book. 

Money must represent the amount of true wealth being created. When you print more than that, you have more paper chasing the same goods and services, which means that the prices will go up eventually, and that is what of course the source of inflation is. In my forecast issue I also cover hyper-inflation. (Please make a note. That's the first word you've heard about it.) I was talking about a deflation ten years ago and now we're in a deflation, that's what's happening. Prices are coming down. But that's a feature of a very late stage of an inflation. And we've had several of them in the past and that's also outlined in my Gold Bug! book. 

I've repeatedly been warning about the coming new social order. And, as I mentioned before, one feature of which is the coming of the end of the age of jobs, and also the coming of the end of the age of travel. Believe the unbelievable or not. These are all things that are coming.

You can't make money in the market unless you have some idea of sketching out of what the future is going to be like. Of course no one knows for sure. But we can at least continue updating a plan in real time, and keep refocusing your predictions. And understanding the overall “murmuration” going on now with a huge shift in America. It's also important to know, this is in my Mass Psychology book, which is what I call the TPG, which is the political gamut. It's a progression from more government to no government. TPG box number one and that's where you find anarchy. 

So what's happening now is that there's an element in society that is going northward towards TPG-1, and there's another element going southward and that's the "Occupy Movement", which the word "occupy" is actually seizing property. And that's an idea found in socialism.

Socialism has failed everywhere it's been tried. It's failed with Gaddafi in Libya, and Ceausescu in Romania, and North Korea, inevitably Nazi Germany. It brings poverty every time they try it. You spend other people’s money and then when it's gone the "golden goose" has been devoured. And it features government as a solution.

There's a huge struggle. The reason they can't come to terms is because there's a struggle going on for the heart of America which is northward towards less government, for example in the internet, and southward toward more government which is socialism. That's a struggle that is yet to be determined and it's going to be solved in this next election here in America.

Jim: You know I want to talk about something, and this will relate somewhat to the "Occupy Movement." In your forecast issue you talk about education in the US. Now looking at all of these unemployed college students, having a college education doesn't necessarily guarantee a well paying job. And as you point out, education also needs to be relevant. You talk about how they don't teach entrepreneurship in college, how to go out and start a business. And if you look at some of the very successful cases—Steve Jobs being a good example, a college dropout, or Bill Gates, a college drop out—some of the most successful companies were started by individuals that didn't go to Harvard and get an MBA from Harvard. They were dropouts. 

So let's talk about education: do you think, Mr Dines, that the internet will replace the brick and mortar institution. I have a daughter-in-law who is getting her Master's in Engineering and she's doing it completely on the web. 

Dines: That's a very deep question. It touches on some of the themes that we've been covering in The Dines Letter, for those of you who have been following my work. 

What's being taught in the schools is a result of people in Washington noting that college graduates had higher incomes. And then concluding from that, that if they pushed everybody through college everybody would make more money. Which of course for those of you who know formal logic, is called the fallacy of the "contrapositive". The fact that all sergeants are soldiers does not mean that all soldiers are sergeants. And when these kids go through college, and spend a great deal of money going there, and the money is not available nor are the jobs, they're outraged and they naturally go out into the streets. And of course the “murmuration” is ending the age of jobs to begin with. So the anger, in my Secrets of High States book, defines anger as the result of frustration. And the frustration is being expressed in anger but is incohate so that there are no leaders. That's what defines the murmuration. No agenda - no leaders - It's just a TPG movement upward or downward on the gamut. 

And there's also the challenge of the word "capital". Now, so far as I know there is not a single school in the world that teaches what it is. And if you ask students, "What is capital?", I think you might be astounded because they have no idea. And this system is purportedly capitalism. So what does that mean? What result is that? The result is they both have no keels. The get lost politically because they don't understand they have a choice.

Now I can't tell you which way to go - north or south - each person has the right to express their own opinion on that. But they should be clear on what the option is, in my opinion. And the fact that schools are run by institutions, usually government, is exactly very southward. So in the schools they don't see the need to teach capitalism. And I have a bachelor of arts degree, and I certainly agree that other subjects should be taught. But these kids need to understand that capital represents postponed pleasure. And once...instead of spending it on oneself, it can be invested. It has magical properties that can make corporations grow, or it can prepare you for your retirement. I cover this topic often. It's in my work. 

But they should be privatized and teachers who are outstanding should get much higher salaries. The idea of all teachers getting the same, to me is preposterous. It is anti-capitalist. And let them all compete. There is room for anybody to move up if they are willing to work hard and do the right thing. So I think that as a result you're starting to get extraneous educational institutions that are going on the internet, short circuiting the entire educational establishment. And eventually I think, as what happened with Eastman Kodak and the U.S. Post Office, they're going to be replaced eventually. And instead of yielding to the change and learning it they're becoming the victims of it.

And the kids are becoming the victims of all of it. I mean some of these high school kids, the figures are frightening. Half of the high school students of America don't graduate. The unemployment rate among black youth is 17 per cent, and that's just the ones looking for jobs. It is probably closer to 40 per cent. I mean that's really something that makes me angry. That should not be. It is a result of bad policies by both political parties. And there needs to be some big change coming to America or it's going to be forced on America. 

Jim: You know Mr. Dines, something that as we conclude this area, that you talk about is the coming end of "the Entitlement Age". When we look at the debt issues that are unfolding in Europe with Greece, Portugal, Italy, Spain, and eventually here in Japan, we have aging populations, and we have more in the form of exchange, more and more of government revenue is going to a one way transaction. In other words, we are giving people checks but they are not performing any service or anything that expands the economy. 

Let's talk about the end of “the Entitlement Age." Because just as the Post Office is changing, retailing is changing. What about entitlements? Because we know a government can't go on forever borrowing money it doesn't have. Eventually there's a brick wall that you run into which Greece is finding out.

Dines: This question leads into the coming "New Social Order". The truth is that there will not be enough jobs for everybody, due to robotics, the coming age of robotics, and other reasons. And as a result there's going to be some kind of upheaval politically.

As I envision the future, what I see is a new kind of government. One example of which might be China. China is what I call “asset imperialism”, where they are printing money and buying assets. They're not just buying copper on the open market, they're buying copper mines. And they're buying them, not for this year, or this decade, or this century, but for ten centuries to come. They're going to buy every copper mine on the planet. And…

Jim: They already dominate rare earths.

Dines: Well that's right, they're 97% of the production. But eventually we are going to reach the time on this planet when the last copper mine will be discovered. And those countries merrily selling away their assets are going to be bitterly regretting watching that copper being shipped over to China to be building up China in the next few centuries. There's something very big coming, and just in the latest issue of the Economist in England, which is one of my favorite reads, the cover picked up on it. It talked about China's state capitalism. They are kind of bumping up against the topic, but I directly call it the end of capitalism. Because I don't see how you can keep trading forever and keep using this stuff up when one party, China, (now this is not anti-anybody - I'm not anti-anybody), but China is awake to it; Japan is beginning to get rid of its surplus paper by buying assets - permanently - not for profit. Russia has been doing it, and other nations will awaken to it also.

Imagine…You can can print paper and get an irreplaceable mine. Irreplaceable because once it's mined out it's gone with the wind. And although there's possible reclamation to some extent. So it's the end of an age and this whole century so far has been wrestling with the idea of aging populations and entitlements, because that's the way it worked when assets were plentiful. But what happens when assets begin to shrink? We're already using farmed salmon. You know just ten years ago there was all the salmon you could eat. And many countries have yet to come on stream. Africa, and Asia, they are going to want cars. There's just not enough oil for everybody. And that of course leads right into nuclear power which is a whole separate issue. And what we're going to do about that. There are some very serious problems and I think it's going to involve some kind of a new social order. And I'm still working it out. Pondering how to position my followers investments for survival. 

Jim: I want to move on to gold. We had a nice run up to 1928 back in September. The media has come out and said the gold bull market is over. In your forecast issue you believe this year that gold will once again make another assault against that 1928 high, and ultimately you think we're going somewhere between $3,000 and $5,000 gold. 

Let's talk about that.

Dines: Sure. Well as you know, you're my witness. I've been on your shows since gold was $35 and I became the original gold bug. My target of $3,000 to $5,000 is an old one. And we've already gotten up to almost $2,000 recently. The last major signal on gold was 25 September 2001, ten, eleven years ago. And it was $300. And it was at that point that the government bankers, the central bankers we're all dumping their gold and said they would. So everybody was pessimistic figuring that it couldn't go up. But I took a contrary view which is the "Dine Theory of Positive Negativism." And we turned very bullish on it. And in the last 11 years, gold has been up in every single year. A gain of a stupendous 6,000 per cent. And all you had to do was hold an iron hand on the tiller.

Now in this forecast issue of the Dines Letter, I show actual charts of gold and you can see for yourself the beautiful classic uptrend still intact. And silver also. We flashed a buy signal that was also in 2001 back when silver was $4.55. And again they said silver couldn't go up because Eastman Kodak would be replaced by digital photography, which came true. But I figured that investment demand for silver would replace it. And it recently got up to nearly… I initially gave a target of $50 an ounce, but nobody believed it. Which confirmed in my mind that it was true. It rose to nearly $50 recently. In The Dines Letter I predicted how much higher I expected it to go. We don't advertise, but my readers are in silver. And it's also going to be a function of the US dollar as to what's going to happen. 

It's hard to figure what the governments are going to do worldwide. But my target of $3,000 to $5,000 still stands and has stood for a long time. And it won't be this year, I don't think, but it depends on what happens. If we get a crash in Europe and a flight out of the dollar, which is inevitable. But the dollar is in an uptrend as I speak now, but that's only because the U.S. dollar is the best of the worst. And gold is actually the best. Gold is the ultimately currency because it has no counter party risk. You can own it and you can move it to a place that's safe if you get sticky fingered politicians grimacing at it. 

Jim: One of the things you said in your newsletter, and this kind of relates to the dollar. It's been in an uptrend and we've got the best looking house in a bad neighborhood. But you said one of the most dangerous havens for capital would be in 30-year government bonds. 

Explain what you mean by that.

Dines: No. What I actually said was that would be the worst place to put capital. And the reason for that is they only yield two per cent. And I can't believe that at some time in the next 30 years we're not going to have an opportunity to get much higher interest rates. 

Let me go into that for a moment. Interest rates are a key element of what I call the “Washington Economic Establishment (WEE).” And we feel based on Keynesian economics, which I dismember in my Gold Bug! book, says that you should keep interest rates low to stimulate the economy. They use heroin words like stimulated, inject more funds, a number of other things. And one of them is holding interest rates down. And this is stealing. Now the government is stealing [from] people who live on their income, and not always wealthy people. And by keeping interest rates down to nearly zero in T-bills… What they are able to do is borrow money very cheaply. So they can run huge deficits and borrow money very cheaply and without any pain. It costs almost nothing. The risk is that a jump in interest rates would sharply escalate the amount of interest the US Government pays on its debt. Which his now $15 trillion. $15 trillion! And most people have no concept of how much that is. 

But I think I said on your last show that if you spent one million dollars a day, every day since Jesus was born, you could not spend one trillion dollars. And the deficit this year is going to be a trillion and a half dollars. Our U.S. debt will be $15 trillion by the end of this year and $20 trillion by the end of the decade. Why, this is unpayable. Obviously something is going to break. And we need to prepare your investment portfolio for it very carefully. And with vision, because they don't really seem to care. They're just spending whatever they want. It's like an unlimited credit card. Sooner or later they're going to hit a wall as Greece did. And that's coming apart at the seams.

How this is going to play out is what I spend a great deal of time and thought on. Did I answer your question?

Jim: You sure did. And I want to follow up with something related to gold, and that is that last year was the eleventh consecutive year that gold has gone up. And if you count this year so far, we're up another ten per cent. So make that 12 years in a row. 

The mining stocks, Mr. Dines, got dumped last year. They got trashed. You think that there is a real opportunity here that investors are overlooking. 

Dines: That's a smart question. And I think the answer is yes. What's happening now is that gold in the open market is an open commodity. The relationship between commodities generally and those who mine it, the corporations that mine it, is that they do not move precisely pari passu [by equal progress] together. And the reason is that people who need a commodity, be it steel or copper or gold, whatever, go to the marketplace and buy it. And that's what the market is. But the stock has an additional dimension of mass psychology.

I am one of the original founders of technical analysis. I call it visual analysis. The study of charts and trends. But there are other dimensions to investing and one of them is “murmuration.” And that's what's happening now on these stocks. The stocks have lagged enormously behind the actual commodity. 

Part of my research departments' work is to study the ratio of the “Dine Gold Stock Average,” and the price of gold itself. And it varies quite a bit over the years. And right now the commodity is favored. Why that murmuration should be I am still pondering on that. And I have ideas on it. But I'm not ready to go into them yet. That is a cycle in itself. When the murmuration turns, I hope to be able to detect that and switch from the hard asset and the commodities into the stock market paper. But again, mass psychology is a key factor in sophisticated future stock market security analysis. 

Jim: Something else that you talked about in your forecast issue. If you want to understand 2012, you think currencies are going to be the key to how 2012 unfolds. So keep a sharp eye on currencies.

Let's discuss that.

Dines: Well, the currency question is a relation of fact that all currencies are backed by nothing accept the word of the government. And as the Greek government has showed that doesn't mean anything. That was easy for us to anticipate, to have anticipated. Currencies are all in motion right now. I mean they are all fluctuating against each other and each nation is trying to suppress it. Suppress their own currency in order to aid their own exporters. Cheapen their currency... And they do it by pressing their own currency down. But you know, you can never do only one thing. You push interest rates down, other things happen. 

For example, institutions that pay pensions don't get their average six to eight per cent on which their actuarial tables are calculated, are based. And Japan for example, would buy dollars to keep pushing it up against the yen so they are loaded up with paper dollars that are unbacked. And it is part of the reserves backing the yen. Of course the yen is backed by nothing. So you've got paper backing paper backing paper. And that is a situation that my Gold Bug! book likened to a string of arm linked staggering drunks, in which if one fell, it would bring the whole line down. And that almost happened in '97. In 1997 in Asia, southeast Asia, when Thailand’s baht caved in and dragged the whole area down. And I thought for sure that was going to be a very, very severe test of this system. But they just printed even more money and inflated the bubble bigger and bigger. But this is the biggest bubble in the history of financial humanity. And I just hope I'm not here when it happens. 

Jim: You know, something else that I want to talk about, and they have been literally trashed. You began talking about rare earths before people even really knew what they were. And most people don't understand that if you have a cell phone, an iPad or iPod, and you want to start thinking about green energy, such as solar panels, windmills, smart phones—these involve rare earths. And we have one country, China…and this goes back to your “resource imperialism.”

Dines: Right.

Jim: That now controls 97% of it, and yet you hear the president talking about green energy. You hear about technological innovation, how tablet computers are taking over and the development of smart phones.

Mr. Dines, all of those things that we're talking about require rare earths and one country controls 97%. Isn't that a dangerous thing?

Dines: [Laughs] Yes. Very. Especially since you can't build a cruise missile without rare earths. And the U.S. Government might find itself in the embarrassing position of needing them for its missiles. So if they ever got into trouble with an ally of China… "Could we please have some rare earth so we can build our cruise missiles?" [laughs]

Jim: [Chuckles] "Can we hold off on the war until we can get a shipment? So we can build some missiles." I don't think that's gonna go very well.

Why do you think they've been hit so hard. There was this idea that there was going to be a bunch of rare earth coming, new mines discoveries. There were articles, I think in the Economist, or one of the business magazines. A lot of these stocks have been trashed pretty hard. Just like gold stocks.

Dines: They're all wrong. It's really the “murmuration.” The murmuration dragged all low priced stocks down last year. 2011 ended with the S&P higher a bit. But in fact, if you look at virtually every other stock exchange in the world, they were all down. Some of them as much as 20% or more. And they especially hit hard on the low priced speculative stocks. And they've been a victim of that. The rare earth elements themselves - there are 15 of them on the periodic table of elements - are actually wildly higher. They've come down a little bit from their highs but they were up 3,000% some of them. And so they've given up maybe ten or 20 per cent of that. So they are way up.

That is another example of a commodity doing much better because that's what the open market causes. But the mining companies themselves have done poorly. I think it's a great opportunity. I'll give you an example.

Just in the first few weeks of this month, in this year actually, the same thing. The uraniums have been flying high. The metal itself has been flat. But at a high level. I first recommended it at eight dollars a pound, it is now about $60 a pound. It's down from it's high, but still eight times higher is not bad. But Fission Energy for example is up 20% just this month. Uranium Energy is up 37%. Paladin up 40%. Uranerz Energy up 43%. And Laramite is up 66%. These are serious gains.

And that's also been true for the rare earth stocks. They also have started to rally. I think it's the opportunity of a lifetime to get these stocks. And they're not quite as low as when we recommended some of them, but they are still down from their highs and there is still plenty of upside room. These rare earths. I became the original rare earth bug and announced it when nobody knew what it was. But I have a way of doing that.

I mean I called the internet boom in 1996. And the internet boom was different. I figured that some kid anywhere in a college dorm could come up with a new company, which some of them did, and sent the other stocks plunging. So we got out of that in 2000 and we ducked the whole subsequent crash in high techs. And in 2000, as I said before, we got into gold and silver.

So the reason they're down is really the “murmuration” and the mass psychology of it. And I think it shifted pretty sharply just in the last few weeks. Don't forget there was a lot of tax motivated selling in December. I think they went down much more than they should have, but that's the nature of opportunity. I was in there buying and they were up there quite a bit. There's nothing wrong with a gain of 56% in three weeks. 

Jim: Now you mention uranium. And most people are unaware that in the year 2013 this megatons to megawatt program, where we've been taking, de-arming our nuclear weapons, especially from Russia. Uranium has been fueling American utility plants. So what are we going to do? We have 104 of them. There's 400 something in the world. China's building them. India's building them. And of course after Fukushima, you had the West wanting nothing to do with them. 

But Mr. Dines, how are we going to power? If we want to go to electric cars, and we want to bring manufacturing back to the U.S. If we want to run all the modern appliances that make up our modern life today. How are you going to do that without electricity? And how are we going to power that electricity if we are not going to build nuclear power plants and we don't want more coal fired plants? Seems to me the logical answer is nuclear power.

Dines: Well that's right. One of the charts in my forecast issue is a chart of uranium. And the most exciting part of that chart which I shared with you is that despite the plunge in uranium prices after Fukushima, the tragedy of Fukushima. It's still in an uptrend. It did not take out the old lows. So the price of uranium is in an uptrend. And that gap between stock and commodity will gradually resolve, in my opinion, dragging these stocks back up higher. And I think that's why the uranium stocks have rallied so sharply here in the last three weeks.

And what's going to happen is… I mean let's face it, oil is going to be gone. I don't care how much they find. You've got billions of people coming, being born, and they are going to want cars, the American dream, all over the world. This is not a century ago, this is a whole new paradigm. They have all got internet connections and they see how other people live. The political upheavals are part of it. The transmission of terrorist information is also facilitated. It's a whole new world. Cyber warfare is going to be developed. These are a lot of the themes that I have to take into account. 

And the days right after the Fukushima meltdown which was, by the way, triggered by an earthquake just offshore from the whaling center. Which perhaps had something to do with the “murmuration” from another dimension. [chuckles] Who knows? But right after that event Angela Merkel was in the headlines saying that Germany was going to close down all of its nuclear power because of what she described as an apocalyptic event. Well, not one person has died of radiation from that so far. I don't think that's an apocalypse. And the press ignored the same day the Saudis announced that they were going to build even more nuclear power plants than Germany might close. 

Czechoslovakia is going to be building them and selling the power to Germany, and so will France. I wonder how the Germans are going to feel when they start paying for all this energy at much higher prices? And I think you are going to see a big change in their opinion because price is a function of all this stuff. And I think Fukushima will go the way of Chernobyl. They were both due to negligence. And more and more nations… I think even this week Vietnam said they were going to have a nuclear power plant by 2020. And mark my words—this is being tape recorded—the Uranium stocks are now selling for pennies that are near rock bottom some of them. They are the buy of a lifetime. These low priced stocks are the time to buy. The train is leaving the station and you'll kick yourself someday for not buying them. Some of our recommendations, right now.

Jim: And speaking of buying stocks, I want to go back to something that we began our conversations with which, you went out on a limb last October, and you also addressed in your forecast issue. And that is higher stock prices. In fact, I think you made the comment you we're sticking your neck out. Because certainly, Mr. Dines, during Christmas I always try to gather together as much research as I can and just try to get a feeling for what is everybody thinking. And this was the most subdued beginning of the year. It was cautious. You had people saying it was going to go lower. 

In contrast, to let's say in the beginning of 2011, where the markets were going to hit record levels, the economy was going to grow at three or four percent. And of course as you know, as my listeners all know, the stock market went nowhere. 

What did you see in October, and do you still feel, where we stand today—where the stock market is still up nicely since the beginning of the year—do you still think we are heading higher?

Dines: Well, our latest buy signal was, as I said before, flashed by our “Interim Warning Bulletin” on October 7th last year. That was within three days of the low. And I detected at that point the… I based it on the principles of mass psychology. When you get that level of pessimism. We did this also for example at the beginning of 2009, that was within two days of that low. This is all in print, you know, you've been getting this. You read the TDL and you know. The reason I am getting that close is that I am taking into account mass psychology. And the market has moved up very sharply since then. What I said was at that time, last October, was that I was looking for a year end rally. That was it. And I felt that it would happen even though the news was terrible and everybody was fearful. 

And now in this issue I said that we're about to…I said I was looking forward to calling the end to this rally. And I felt that we would see a decline in February. Now to answer your question. If we see a decline in February we'll flash an “Interim Warning Bulletin” as soon as we see a top here. We might already have. I couldn't give that kind of information before my own subscribers have seen it. But we would see a decline in February. I didn't at the moment, and I don't see a deep one. I think that it will be fairly shallow. And it would be followed by a spring rally. And then a sharper rally this summer…a sharper decline this summer.

So I'm looking for a down - up - down progression here. And we'll see how things go, and take it as we go. Meanwhile, I have my followers in stocks that I think will weather the storm. And whether or not they go down or not, we're going to keep them because they have wealth in the ground. And right now, a lot of people are beginning to turn optimistic as I was last October. That's one of the things that bothers me here. You're getting more speculation. More confidence in people on television about how high the market’s going to go. You need to tack into the wind to really make money in the stock market. 

Jim: Mr. Dines, I couldn't help thinking when I read your forecast issue, when you were talking about worldwide “murmurations.” And I was thinking back of a similar age in the year 1900 when Britain ruled the world, or at least 25% of the planet. That the governments, the economies, our industries, and the way we live, life was about to change dramatically in the next 100 years. 

If you would have told somebody in the year 1900 the monarchies of Russia, Germany and much of Europe would fall. That the United States would emerge as the superpower. That we would be listening to radio, watching television, putting a man on the moon. 

Dines: [Laughing] We would all have been arrested.

Jim: In some kind of asylum. But, you know I was pondering, as I do when I read your letter. It one of those kind of letters that make you think. 

Dines: Thank you.

Jim: When I was going through your letter I was thinking similar to that period of 1900. Because the things that you're talking about… You're really talking about a global reshaping. A shaking of the planet, in so many ways. Not just economically. Politically, resources, technology wise, the age of robots. There are a lot of things here but I couldn't help but believe that this is almost similar to where we were in the year 1900. And that is kind of what I walked away with after I read your forecast issue. 

Dines: Well good for you. I try to activate people’s thinking out of the box. And one of the 65 “Dines-isms” that rule my work is that the future is inherently unbelievable. And if you need to believe a prediction, be cautious. Because, you just correctly pointed out, if you had a playbook for the century in 1900 you would never have known that the Federal Reserve would change everything in 1913. That World War I would end in the Versailles Treaty that caused the boom of the 20's and the crash of the 30's. 

And, yeah… When you start playing in the future, which is my playground, you're in an Alice In Wonderland type of place, where you literally have to challenge every idea that's accepted. And consider what might happen if things don't work that way.

For example, after Mao Tse-Tung died, I went to China. I think I was the first, certainly the first western analyst to have gone there. And I went there several times. Lectured in Hong Kong, and what have you. And in Beijing I noticed that I was the only Anglo in the whole city that I saw. But I came out of there with the prediction that China would dominate the 21st Century. And believe me, it was not only utterly disbelieved by everybody, [laughing], even including the Chinese there. It's still not believed by everybody. But those who believed made fortunes in the new China trade. And one of our most shocking predictions was that capitalism would come to China. Which is already coming true. 

And at the time of the Tiananmen Square [revolt] it almost came true then. So that prediction came true. But I also predicted that some day a statue of liberty would be erected in Tiananmen Square, which nobody would believe now. And on a short term basis, we're on a sell signal on China's stock market. And that's because they've been following the Keynesian doctrine of printing plenty of money and that's going to start giving them cycles. That's where these economic cycles come from. They're are aggravated by something called the Fed. And I believe that interest rates are a key element of capitalism that should never be controlled by the government, but should flow freely in the open market place. 

And I think China will have a setback here, but that they will still dominate the century. And that was quite a prediction. 

You know, if you have a prediction of the future and you're an upcoming securities analyst, and you envision things and they start coming true, don't be afraid to express yourself, and follow it. Because it's very important to be independent and a thinker and not just follow the crowd. You're not going to make serious money following the crowd. That's not what they pay you for. They pay you for seeing something that nobody else saw, like Steve Jobs. And it doesn't matter what your educational level is. If you have daring and what I call brute logic, then you can figure out the way things are probably going to happen. Make adjustments everyday.

There is no right or wrong. If you're having problems with the Stock Market, emotionally… My 5th book, I wrote that specifically in the work I am going to leave behind me, and its called Secrets of High States. And these states are, one of them is the secret desire of all gamblers is to lose. And if you find yourself, if you like to gamble, be careful how you invest. Follow the crowd and you tend to buy at tops and sell at bottoms. And there are emotional, psychological and “murmurational” aspects including how to handle that in yourself. 

Jim: Well, Mr. Dines, I have taken a lot of your time today. And I want to thank you once again for coming on the program. I always marvel at some of your predictions, especially when you discover something out of the blue. Whether it's rare earths, the internet, or uranium. And of course I've read your first gold book. And I still have an original copy by the way in my library.

Dines: Save that. It's very high priced in the open market now.

Jim: Yeah, I know. It was quite a great investment for me. But I want to thank you for coming on the program and I just want our listeners to know if you'ed like to know more about Mr. Dines' work, it is very easy. You can go to "dinesletter.com", especially if you want to find out about some of the things we have been discussing here. Mass Psychology, one of Mr. Dines's books, and Gold Bug! is also available there on “dinesletter.com” website. “dinesletter.com” is where you can find out more. 

And Mr. Dines, it's always a pleasure having you on the program. I thank you so much for being so generous with your time. 

Dines: Well, you're very welcome. And we go back a while. And I'd like to point out that you deserve a lot of credit because you are one of the few people that invited me to speak at your events when nobody else was interested in gold at $35. And you have the courage to provide an outlet for people who think outside the box. And therefore you must think that way also. And I think you deserve a lot of credit for that. 

Jim: Well thank you so much. That is very kind of you. Mr. Dines, you have yourself a great year, a happy, prosperous, healthy year for you. And please come back and talk to us again.

Dines: I will certainly do that. Thank you. Same to you.

Quantcast