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Last Exit

None of this is yet inevitable. In fact, the recipe for the United States to avoid it is not at all complex.

• Stop runaway government spending. If the growth in government debt is held below the growth rate of the economy, the dollar's ability to withstand attack will strengthen mightily.

• Stop accepting everyone's invitation to participate in everyone's conflict. That will allow a country protected by two oceans to spend less on its military and still be secure.

• Stop everything—especially tax rules and handouts—that encourages people not to work, not to produce, and not to save.

• Stop allowing superstition-based regulation to interfere with the development of domestic energy resources.

That solution is still available. And it is simple, but brutally so. Judge for yourself the likelihood that it will be applied.

What You Can Do

While they are waiting for the problem to be defused by thoughtful, farsighted official action, what can Americans do to protect themselves from the risk of the dollar getting whacked?

• Step 1. The single most helpful step, and it is a simple one, is to trade some of your dollars for mankind's natural reserve currency, which is gold. It could be gold coins such as the gold Eagles produced by the U.S. Mint, Canadian Maple Leafs, or South African Krugerrands. Even better, get some of all three, and don't store the gold in a local bank, but rather in a very safe location that would leave the coins accessible when you need them. Owning physical silver is also prudent.

• Step 2. Open an account with a non-U.S. bank, to make it easy to hold some of your cash in the form of foreign currencies, preferably in a jurisdiction you want to spend some time in.

Having assured yourself of multiple sources of liquidity, you can prudently turn to profiting from the disorder that is likely to come when the dollar is dethroned. That event will be accompanied by the Putinization of global resources, a historic economic shift that will be disastrous for the unprepared but that will make some people rich.

Where to begin?

There is no better profit opportunity than speculating in publicly listed junior resource companies. Stocks of small oil, gas, uranium, and other resource companies are highly volatile. Careless buying can be ruinous to your financial health. But when one of these little stocks does well, it doesn't go up 10 or 20 percent; it goes up 10 or 20 times—or even more.

Profits from junior resource companies have changed my life, and Mr. Putin's long-term plan can give you the opportunity for a similar experience.

The most important element for winning big with junior resource companies is to bet on the right people. You don't need to be a geologist or engineer, or have an MBA.

You do need to focus on investing in the right management teams, the people whose knowledge and experience tell you they can stack the deck in favor of success. They know how to navigate through the obstacles that destroy so many little companies. Without shrewd decision makers, environmental and regulatory problems can poison the development of the best deposits, and failing to raise needed capital at each step in the process of turning an interesting patch of ground into a producing mine or oil field can bring the most promising project to a halt.

There is an old saying in the junior resource sector: "Average management will screw up the best rocks in the best jurisdictions, and the best management teams will find the best rocks in the best jurisdictions."

Bringing Modern Technology to Old Fields

One of today's biggest opportunities is bringing modern technology to past-producing oil and gas fields and mining deposits. For example, in the United States, hydraulic fracturing combined with horizontal drilling has unlocked gas and oil deposits that were known but were previously uneconomic—such as the now very profitable Barnett and Bakken shale formations.

While Putin is busy with his resource projects in Asia, smart and savvy management teams will be revisiting dormant oil and natural gas fields in Europe, which were producing oil and gas before the first petroleum well was drilled in the United States. They'll be bringing modern technologies, such as horizontal drilling, to collect the hydrocarbons that are still waiting and that European consumers will be desperate to buy.

Throughout the book, we've seen how Vladimir Putin is positioning Russia to control the global resources chessboard. Fortunes will be made by investors who correctly position themselves in companies that effectively add one more square to that chessboard, a square where Western Europe can find alternatives to energy from Russia.

Expect more conflict between Russia and the West. And expect the conflict to make access to energy and other resources even more valuable than it is today. Understanding that fact is the key to profiting from Putin's vision.

I hope you'll use it.

 
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