There is, indeed, nothing in all this world that can match war for popularity. It is, to at least nine people out of ten, the supreme circus of circuses, the show beyond compare, it is Hollywood multiplied by ten thousand. It combines the excitements of a bullfight, a revival, a train wreck, and a lynching. It is a hunt for public enemies with a million Dillingers scattered throughout the woods. It is the dizziest, gaudiest, grandest, damnedest sort of bust that the human mind can imagine.
– H.L. Mencken, Peace on Earth
– Why We Have Wars, 1936
DUBAI – Mencken was too polite to mention the money.
But war is the ultimate win-lose enterprise. One side wins; the other loses. Overall, people die, buildings are blown up, and real wealth is destroyed.
Still, it’s entertaining for the masses… like the super-est SuperBowl.
And some people get rich.
The young grunts and GIs doing the fighting get brass and silver medals – if they survive. But the old profiteers, ideologues, and warmongers sit in comfy chairs far from the violence and danger… and go for the gold.
Boeing, Lockheed Martin, Google, Amazon – the Pentagon buys big data and big guns. And it needs planners, consultants, and PR firms, too… It needs shills and jackasses, anyone willing to beat the war drums and cash the war checks.
No Real Winner
Our beat is money. And there’s a lot of money in war.
But it’s not like the old days. Before the modern era, you could make war, and if you were victorious, victori sunt spolia – you could take the losers’ money, their possessions, their homes, and their land. The survivors, along with their women and children, could make good slaves.
But modern warfare is different. Slavery hasn’t been a paying proposition since the mid-19th century. Neither has war. You can beat someone in a war, but it’s very difficult to gain any material advantage from it.
The North got nothing from conquering the South in the War Between the States, except 620,000 dead and 80% inflation.
All the participants in World War I were bankrupted – save the U.S. American industries made millions selling food and materiel to France and Britain. But the U.S. threw away its gains when it entered the war itself.
Neither did any combatant in World War II come out ahead. The losers – Germany and Japan, principally – were flattened. England was drained.
And the U.S. had spent four years depriving its citizens of consumer goods. While the war was going on, sugar, automobiles, tires, gasoline, butter, meat, penicillin – almost everything was earmarked for the military. The pent-up demand led to a big boom after the war, not during it.
Korea, Vietnam, Iraq… the wars cost money and lives. But they are win-lose deals with no real winner. War has become a hollow thrill and rank amusement – like the gladiator fights in the Colosseum; full of blood and guts but signifying mostly nothing.
But for the few, war is immensely profitable. Like almost any other government project, war is mostly a transfer scheme… to move wealth from the middle classes to the privileged few.
Economic warfare, too – sanctions, tariffs, and currency manipulation (proposed by Elizabeth Warren) are ways to achieve the same goal, without the human losses. At least, not on our side.
In the 5th century B.C., Pericles imposed sanctions on the city of Megara after it sided with Sparta during the Peloponnesian War.
More recently, in 1941, the U.S. used a form of sanctions against Japan, effectively cutting it off from the energy supplies it needed to continue its program of regional domination in Asia… and goading the country into a colossal mistake – attacking Pearl Harbor.
And now, Iran is the object of the warmongers’ fury. Search for “Iran attacks oil tankers” online and you will get more than 100 million results.
That is a lot of hits for something that is probably not true. The Iranians saw what happened to Saddam and Gaddafi. The last thing the Persians would want is to give the U.S. a pretext to “Bomb, bomb, bomb… bomb, bomb Iran.”
Japan, whose ship was attacked, wisely asked to see the evidence.
But U.S. Secretary of State Mike Pompeo and national security advisor John Bolton were already in full-throated war mode, determined to give the fans a good show… and keep the money moving.
And Senator Tom Cotton isn’t in the mood for a trial. He wants to move directly to the punishment. He appeared on Face the Nation over the weekend:
Republican Sen. Tom Cotton of Arkansas, one of the most hawkish members of Congress, urged the Trump administration to order a military strike against Iran over recent attacks against oil tankers in the Middle East – a move he said will send the government in Tehran a message that the U.S. will not stand idle as commercial shipping is threatened.
Bad Guy Theory
You’ll recall our Greed/Fear gauge – the ratio of the Dow to gold. When civilization advances, generally, people favor profit-making businesses that give them a stake in the future.
They want win-win deals, peace, and prosperity. When it declines, they want police, win-lose, and war.
Our guess, to be proven right or wrong over the next five to 10 years, is that the pendulum began to swing 20 years ago… away from greed and towards fear.
Disguised, delayed, and denied by fake money… the trend is nevertheless unstoppable. The world wants more protection… more “economic patriotism”… and more claptrap.
Soon, it will want more gold, too.
POSTCARDS FROM THE FRINGE: MY BITCOIN STORY
Editor’s Note: On Saturday, Bill reintroduced readers to his old colleague, Tom Dyson. Tom agrees with Bill that the Greed/Fear ratio – the Dow-to-Gold ratio – is headed towards “fear.” That’s bad news for stocks, but great news for gold. Today, Tom shows why he’s gone “all in” on the Dow-to-Gold trade. And he reveals why 2019 feels a lot like 2012, when he discovered something called “bitcoin”…
By Tom Dyson
The place where you made your stand never mattered. Only that you were there… and still on your feet.
– Stephen King
I put my entire life savings into gold last year.
Not because I think gold is going to rise. But because I think stocks are going to fall, priced in gold, by more than 80%. And I want to buy those 80%-off stocks, whenever that may be.
That, in brief, was the trade I told you about on Saturday.
I know this sounds far-fetched. But late last year, stocks suddenly got marked down 15% (priced in gold). And I thought, “This is happening now.”
So I bet even more on stocks falling…
The last time I got this feeling was in 2012, when I found bitcoin. I was in some internet forum for geeks and someone mentioned it. I looked it up. And the moment I saw what it was, I knew. I just knew.
It cost $4 at the time. There was only one place to buy it – a website in Japan called Mt. Gox. And it was a brute to get a hold of…
I had to open an account with a PayPal-type service to transfer the money. Then, I had to jump through hoops like sending faxes, passport copies, and bank details. The whole thing seemed like a scam.
But I wired $5,000. Which was a lot of money for a guy, with three babies, who was still trying to make it in the world.
Then, I wired another $5,000. And another. Then, bitcoin jumped to $6. And I thought, “This is happening.” So I wired another $10,000, which was enough.
I withdrew all my bitcoin – I had 3,330 of them – and transferred them to thumb drives via an internet airlock I set up using Linux, so they couldn’t be intercepted by online thieves.
Next, I made duplicates of the thumb drives, in case they broke, got corrupted, or burned in a fire. I encrypted them. And then, I hid them in two secret locations.
Meanwhile, I’m a big mouth about this sort of thing. I told anyone who’d listen to buy bitcoin. I even started giving them away.
I gave one to anyone who came to my office, including Bill – I gave him a physical version of bitcoin called Casascius. And I gave them to my friends, Michael Checkan – co-founder of Asset Strategies International – and Swen Lorenz, an investment blogger.
I must have recommended it publicly, although I don’t remember doing so, because Chris Weber – who pens the Chris Weber Education blog – forwarded me a note from one of his readers recently:
I found this post from Tom Dyson on Facebook a few days ago… (I’m not FB “friends” with him, but I do read anything he posts as he pointed out bitcoin when it was like $15 or something crazy cheap…)
“With the Rupee near all-time lows against the dollar, India feels very cheap to us. We’ve been here a week already and we’ve only spent $180.
“Our hotel is $14 a night. Our meals are $3. Tuk Tuk rides are less than a dollar. A big bottle of water is 15 cents and a freshly squeezed juice or smoothie is 50 cents.
“Here we are in Jaisalmer, the city-inside-a-castle in the far northwest of India near the border with Pakistan…”
As an investor, THIS is what I love reading… and it instantly makes me want to drop everything I’m doing, travel to India, and see for myself! On one side of the world (USA), you’ve got a 9% default rate on subprime car loans. And on the other, you’ve apparently got a genuine bargain… so fascinating!
I also went shopping on the darknet, and I sent packages of cannabis lollipops and Rice Krispies Treats to friends all over the world, paid for with bitcoin.
You know what happened next.
The price went crazy, and my investment turned into $1 million. And I thought, “That’s enough. I’m out.” So I sold all my bitcoin. After taxes, bitcoin volatility, and Mt. Gox’s insolvency, I ended up with about a $500,000 profit… and a lot of pot lollipops.
I should have held on. The bitcoin I had would be worth about $30 million today…
Which brings me back to stocks falling in terms of gold. It’s a little different, but I’ve got the same feeling about it as I had with bitcoin.
I’ve put an irresponsibly large investment into it. I’ve told my brothers and my parents to sell their index funds and buy gold. And now, I’m telling you…
So we will see.
This morning, the Dow-to-Gold ratio holds around 19.44. I’m expecting it to go down to 4. My stop loss for the trade is 22.36, where the Dow-to-Gold ratio makes a new 13-year high and invalidates the downtrend.
In the meantime, our travels continue…
A few days ago, we were in New Delhi, with no plans except for a plane ride to a place 1,600 miles away we knew nothing about.
But we made it. The destination: Cherai Beach, one of the most popular beaches in India. We’re staying at a house that belongs to a friend’s parents… by the warm waters and gentle breezes of the Indian Ocean… eating nothing but the freshest fruits, vegetables, and spices… doing yoga and getting massages… and playing in the surf.
“Where will you go after you’ve completed your trip?” asked one of our hosts this morning.
“We don’t know,” we replied.
Here’s my ex-wife Kate doing yoga in Shirley’s garden at sunrise…
Monsoon season started a few days ago. It will rain all day and all night for the next two months in Kerala, we are told. And we won’t see any other tourists. We went to the beach. It was deserted, as you can see below…
We’re living the simple life, and I’m trying not to look at my phone. (I am writing this letter to you with a pencil and a piece of paper on a veranda overlooking the Indian Ocean.)
I’ll write again soon…
– Tom Dyson
P.S. Shortly after writing this, we left our lodging in the rain and rode south in a car for about three hours, to a new beach and new digs. Here is the room I’ll be sharing with Dusty (11) for the next three nights…
Trump’s Ban Might Wipe Out $30 Billion
Since the U.S. blacklisted Huawei last month, the Chinese tech giant continues to suffer… to the tune of a potential $30 billion over the coming years. This has forced the company to scramble for alternatives to stay competitive. But, according to Huawei’s founder, they didn’t expect the damage to be this serious…
Why Facebook’s New Crypto Could Be Good for Bitcoin
Facebook plans to unveil its new cryptocurrency platform next week. While some think the company might be too late to the crypto party, Facebook has enlisted the financial backing of over a dozen powerhouse companies. And no matter the outcome, this could be good news for bitcoin…
The Man Who Bet $100,000 on Bill’s Trade of a Lifetime
Recently, Bill shared his Dow-to-Gold trading model with Tom Dyson. Tom was so convinced by the model, he went “all in” on the trade. And he believes it could be the secret to securing intergenerational wealth…
Today, one reader leaps to our defense after your editor was told to “stick to stocks”…
So, a dear reader is pushing you to “specialize” in stocks and ignore politics. A question: Very soon, what is going to remain of the “stock market”? I applaud you for trying to warn the “rabid gamblers” (i.e., the speculators in an inflated stock market) that terrible, bad, awful times are coming, and that it behooves them to protect their money. Furthermore, these times are coming because of a crazy POTUS as well as the zeitgeist (which you so eloquently and fairly describe). Bravo.
– Bill S.
Meanwhile, another reader questions whether our “win-win” philosophy helps explain the trade war…
Bill, you ask, “But what kind of patriot takes food away from Americans and sells it to foreigners at a higher price? And what kind of president willfully raises food prices? Every penny the farmers get in extra income by selling to foreigners, the natives will pay in higher food prices. How is the nation better off?”
Well, well, well, aren’t you stepping on your own win-win virtue? The farmer benefits, and so does the foreign trading partner – classic win-win, no?
It seems you made my point. Buying items at a cheap price from China is great for those who haven’t yet lost their livelihood as a result of plant closings. A farmer who can’t sell his crops at the best price will soon be forced to give up producing any more. Then, patriots or not, we’ll all starve. But, heck, as long as it’s win-win?
– Erich K.
And finally, a reader goes to the gridiron to explain what the government’s role should be… and makes a prediction for 2020…
No one on Wall Street or corporate America can criticize Bernie Sanders or Elizabeth Warren. I do not believe in corporate-funded political campaigns. I don’t believe in concentrated ownership of media, and I want a fair, regulated, level playing field when it comes to business. Let me use a football analogy.
Government should build the football stadium with a level playing field, and the same rules should apply for both teams with good, honest referees. Let them go at it. If the players (workers) get hurt, then the government takes care of that. The government should never be allowed to field a team. Right now, it appears that Canadian and American workers are inferior to Mexican workers. Really?
I hear people like Bill Gates making statements like America has a shortage of engineers and skilled workers and it must go to places like India to get them. He never finishes his sentence. America doesn’t have enough engineers at slave wages, but at higher, respectable wages, engineers come out of the woodwork.
If wages were similar in Mexico, would there be factories coming back? Level playing field. Sure, you can have a factory in China, India, or Mexico to sell to their people only! See how much business that would generate.
Bill, this U.S. election is historic. I can already see the corporate media in high pro-Biden, anti-Bernie mode. I hope ignorance will not prevail in America in these elections, however. It’s early, but I believe we will have President Warren in 2020.
– Rubino M.
IN CASE YOU MISSED IT…
Last week, Bill’s go-to tech expert, Jeff Brown, revealed the name of his No.1 private-stage company during the “Early Stage Tech Summit.”
He even gave readers details of his top four small-cap tech stocks to buy now. Each has the potential to soar 10X or more, starting this week.
As a Diary reader, you can still access this presentation for a limited time. Watch it right here, for free, to see how you could profit.