Politics Stinks

Today we discuss one of Doug Casey’s Nine Ps of Resource Stock Evaluation

I join you in dismay over the market declines of this past week. I join you in uncertainty over how the most active political players might next jerk our portfolio values around. It’s hard to avoid having an otherwise beautiful day a bit ruined. These sorts of corrections or re-pricings or flights to liquidity or bubbles releasing gas or whatever we want to call these lousy market periods can and often do affect levels of personal confidence, security and indeed happiness.

As for me, I try to see the positives. Our investment and speculation theses are rational. Our long-term outcomes should be good. Wealth is created by buying low and selling high. Now is a better buying opportunity than last week. I wish I knew whether next week will be an even better buying opportunity. But political shenanigans are difficult to predict. Which is my segue into today’s topic.

At Crisis Investing, we analyze investment and speculative opportunities by deploying Doug Casey’s Nine Ps of Resource Stock Evaluation. Over time, I’d like to go through these Nine Ps, one by one, as news cycles highlight the importance of each. Today is Politics.

You can do everything right — the geology, the people, the paper — and still lose to a government man.

Of the Nine Ps we use to grade resource companies, Politics is the most frustrating. It turns out a deposit is worth only what the local sovereign lets you keep.

Political risk is not just rebels, kidnap gangs and blood in the streets of dumpster-fire nations. It’s also ecopolitics, predatory taxation, and nationalization right at home. And ecopolitics isn’t just about protecting the snail darter or box turtle. Primarily, it’s a potent tool for financial extortion by the state, and the politicians’ incentives are to use it.

Assessing political risk starts with the legal architecture. Common law jurisdictions — the Anglosphere inheritance of Britain, the US, Canada, Australia — build law from precedent. Judges constrain the state, property rights accrete case by case, and yesterday’s ruling binds tomorrow’s bureaucrat.

In contrast, civil law jurisdictions (most of the world) run on codes written by politicians and those who pay them. Civil law codes can be rewritten by the next legislature, or a democratic mob. Bureaucrats are respected and empowered. Politicians like power and so gravitate to civil law.

Neither system guarantees anything, but common law has given the individual more defenses against the state. Common law jurisdictions are far better for long-term investments.

The US is supposed to be a common law nation. However, that is increasingly unrecognizable. And some states are far worse than others. In California, Governor Newsom banned new fracking permits starting in 2024 and ordered a study on ending all oil extraction by 2045. New well permits collapsed from 2,366 in 2019 to 73 in 2024 — and only four in the first half of 2025. Then refineries started closing, pump prices threatened his presidential ambitions, and he reversed course: he signed SB 237 in late 2025, authorizing 2,000 drilling permits a year in Kern County (where most of the state’s oil sits), shielded from environmental litigation through 2035. You can get whiplash watching this guy. Capital cannot be wisely invested when the whims of over-empowered politicians have existential real-world effects. Dealing with the continual threat of whimsical sovereigns is not the secure terrain that investors prefer and require. But it can be fertile ground for speculators willing to deploy capital to bid on politically distressed opportunities.

When property rights depend on political discretion, economic calculations break down. In 2019 the British Columbia legislature passed DRIPA (the Declaration on the Rights of Indigenous Peoples Act). In December 2025, the BC Court of Appeal ruled that granting mineral claims requires First Nations’ free, prior, and informed consent. Call it what it is — a consent requirement that functions as a veto right. You can say that royalties and equity for First Nations are not automatic or statutory, but the incentives of First Nations’ decisionmakers are to leverage their new power as a legalized government-enforced protection racket. I recently wrote about how bad incentives lead to dysfunction.

Blame the right people. Not Californian oil companies, not First Nations. Blame those who create lousy incentives that subsidize the destruction of wealth. Blame the politicians who took common law jurisdictions and turned them into rule-of-men systems where one election, one ruling, one premier can re-price a deposit to zero.

So when we grade a resource company using Doug Casey’s Nine Ps of Resource Stock Evaluation, Politics can carry as much weight as Property and People as essential determinants of success. Some of the best drill holes on Earth sit under the worst governments. The ore is covered in deep political overburden that has to be scraped off before it can become an economic deposit. Unlike removing real geologic overburden, in politics, you can scrape it off and have it all reapplied with the next politician’s whim.

It’s frustrating to have an investment in a mine stolen by nationalization, or war. Majors try to avoid the riskiest locations, and thus the valuation of any resource or reserve in lousy jurisdictions is reduced.

Perhaps the people who have benefited from their Common Law will learn to stop their government leaders from turning their nations into jurisdictions of political whimsy. I don’t think that is likely. So it falls to us to identify, avoid, or at least try to price in the political risks. That’s what we do at Crisis Investing, alongside the rest of the Nine Ps that we use to analyze investment and speculative opportunities.

I invite you to join us by subscribing to our free and premium (paid) newsletters, where we combine teaching with brevity, and identify opportunities to increase your wealth in ways that will allow for your future equanimity in the face of expected high volatility. This sort of lousy week will not be the last.

Sincerely,

John

John Hunt, MD