DRIGGS, IDAHO – China has defeated the virus. They’ve quarantined, isolated, vaccinated, and suppressed their way back to normal life.
The Chinese Communist Party’s (CPC) response to the virus is a perfect example of its approach to business and trade.
It is ruthless in its pursuit of results… its bureaucracy is extremely efficient at mobilizing resources… and, through repression and fear, it has created a culture of compliance and national unity.
In short, China acts like a big business or a private corporation… perfectly adapted for dominating the dollar-based world trade system, attracting the world’s capital, and taking over from the U.S. as the world’s largest economy.
Or as Joe Biden said so succinctly last week, China is “going to eat our lunch.”
(All the while, the U.S. taxpayer picks up the tab for maintaining order in global credit markets and for protecting the world’s shipping lanes.)
We’ve been watching this story closely in these Postcards.
We’ve been arguing that the system’s design doesn’t suit Washington anymore.
Caught in a Snowstorm
Greetings from a mountain cabin in Idaho…
My family and I are a traveling family. We have no home and no possessions. We just travel from country to country, adventure to adventure, having as much fun and spending as much time together as we can.
In the last three years, we’ve done two road trips across the USA. We’ve circled Europe, India, Japan, and China by train. We’ve volunteered at a school in Rwanda, and much more.
We’re currently living in a ski resort in the Rocky Mountains for six months. We’ve got season ski passes and we’re trying to ski over 100 days this season…
We’re in the midst of another multi-day snowstorm right now.
Giant piles of snow line the roads. Parked cars have blankets of snow on them a foot or more deep. Somewhere nearby, I hear our neighbors shoveling and scraping snow from their cars and sidewalks…
Giant piles of snow line the roads
We’ve had 23 inches in the last 48 hours.
According to OpenSnow, a website that provides snow forecasts, our ski resort (Grand Targhee) is the leading ski resort for snowfall in all of North America this year.
We’ve had 340 inches, or more than 28 feet of snow so far. Here’s what it looks like today at the ski resort…
Miles (11) at Grand Targhee
And below, there are the kids digging tunnels in the snow piles a few weeks ago. Unfortunately, these piles have gotten so big this week, they’ve become dangerous and the kids can’t play around them anymore…
The kids playing in snow piles a few weeks ago. They’re too big and dangerous now…
Shipping Stocks Are (Finally) on Fire
Not much to report on from the investment world.
The market seems to grind higher a little bit every day. Gold fluctuates but doesn’t seem to be going anywhere, at least not recently.
And the newspapers are mainly talking about Biden’s big stimulus, bitcoin, coronavirus, and the latest news about protecting the environment.
For the most part, it feels like we’re in a lull between storms.
Shipping stocks, on the other hand, are on fire… finally.
Over the past two months, the shipping stocks I recommended to my Tom’s Portfolio subscribers are up as much as 45%, 72%, and 96%.
(Out of respect to my paying subscribers, I can’t give the names away here. But you can find out how to get access to my full list of shipping stock recommendations right here.)
Take oil tanker stocks. As I’ve explained many times in these Postcards, the long-term supply and demand balance in the tanker industry turned bullish in 2019 and looks extremely bullish for the next few years.
I’ve been expecting rates, ship values, and stock prices to ALL rise. The COVID-19 lockdowns simply interrupted their ascent for a year or so, and now they’re moving up again – fast.
Even though you couldn’t see this in the stock prices of tanker stocks for most of last year, the COVID-19 lockdowns were actually a very GOOD thing for tanker businesses.
The oil tanker industry received an enormous cash bonanza when tankers were used for floating storage during the first stages of the lockdown.
This money was a godsend and completely transformed the financial position of the industry. (I continue to think tanker stocks have a long way to run higher.)
Our stance remains the same…
As regular Postcards readers know, we’re sitting on the sidelines in gold, silver, and shipping stocks (including oil tankers).
We’re waiting for the world trade system to return to equilibrium… for the Great Financial Experiment to end… and for other stocks to be cheap again, which we define as a Dow-to-Gold ratio of 5 or lower.
The Dow-to-Gold ratio is currently at 17.5, a one-year high. The next big leg down should begin soon…
– Tom Dyson
P.S. In 2018, I went “all in” on this idea. You see, the financial system is rotten to the core with intervention, manipulation, fake money, fake trades, fake deals, fake news, and robotic trading. The system has become very, very fragile.
The bottom line is, I don’t want to participate in this toxic mess. I want to sit on the sidelines in this one trade and get on with my life… until it’s safe to return to the financial system. It’s a trade that will play out over several years. But I have total conviction in this idea. I explain it all in detail right here…
The mailbag debate around China continues, after a reader said Tom is outside his “circle of competence” on this topic…
Reader comment: My goodness, you people are sensitive. I thought Mr. “Circle of Competence” was really funny! I’m curious what his “circle of competence” looks like and how much his/her biased media sources lay out the “truth.”
Look, it’s no secret that China is open again for the most part. And I do agree we should take whatever the CPC has to say with a grain of salt, but ultimately because they have different values than we do in the United States, they were able to do something better than we. So what? That doesn’t mean we should have locked down everything and sacrificed our personal liberties and freedoms.
As Bill Bonner has laid out numerous times in Bill Bonner’s Diary, it doesn’t seem to matter if you do a harsh lockdown, a soft lockdown, or any lockdown, the death rate pretty much stayed the same. Tom had an interesting observation; does that mean we should do that thing? I don’t think so. But it is an observation to take in as the world takes it in, continues to look at the United States, and wonders, “Are they really #1 anymore?”
Reader comment: I spent 19 months in Dalian, China. I saw good, bad, and ugly. When the Chinese do anything, people are expendable. Remember the Red Guard. They sent grandparents to one retraining camp, parents to the fields and put the kids in the Red Guard. It set the Chinese back about 50 years. But they gained control of the people.
We are next. See it on the horizon. What good will finances be if you have no bread? The Chinese ate the birds and pets. Just now are the birds returning to normal. They still eat the dogs. I watch China but I do not praise it.
Reader comment: In your postcard dated 2/8/21, you compared China with the West and you said (among other things), “In the West, we care about other things, like personal liberty, private property, and democracy.” I am sorry to say your statement is a gross oversimplification and sadly misleading.
We in the west are so enthralled by the sacred doctrine of individual freedom that we insist that wearing a mask is an infringement of our personal liberty and to hell with the wellbeing of the society at large. We are offended by the runaway mortality rate from COVID-19. Give me liberty and give me COVID-19.
China, at more than four times the population of the U.S., has less than one COVID-19 death for every 100 deaths in America. We boast about living in a democracy, meaning that we can do anything we want, free from any responsibility as a citizen and any obligation to safeguard public interest and welfare of our community.
Our hypocrisy is mind blowing. We have 4.4% of the world’s population and 22% of the people in prison. We exploit the prisoners by working them 12 hours per day of hard labor and pay them $2.35 per day. Yet, we are the global champion of human rights in other countries.
Reader comment: I just read you are contemplating traveling to Mexico this year. I was wondering why. I have an acquaintance who took his wife to vacation on the west coast of Mexico. While down there, they got sick with the Covid virus. They went to the local hospital but were told they had to pay $6,000 up front before being allowed in.
They paid the money, but their treatments given by the hospital were minimal and they were not getting better. They finally paid for a private plane to fly them to the U.S. so they could get into a U.S. hospital. The airplane charter cost them $24,000. There’s no way I’d travel to Mexico at this time. Let this virus and it’s new ugly variant die down a bit. You’re always giving advice so here’s a little from me: Get married and stick with touring more of the U.S. for a little while longer.
Reader comment: You cracked me up tonight, writing “The board game is a little expensive – I think we paid around $70 for it,” with a picture below those very words of Dusty relaxing with his MacBook.
Reader comment: I see an alternative way the U.S. government gets bailed out. It’s not a pretty picture but they could get bailed out by the World Bank and International Monetary Fund (IMF). That would put the globalists in the driver’s seat as far as the U.S. goes but hasn’t that been the ultimate goal of all these shenanigans all along? P.S. Loving those dividends from the tanker stocks!
And finally, kind words from a longtime Postcards reader…
Reader comment: I’ve been skiing Targhee since the early 1990s and have enjoyed reading your column for quite a while. I lived in China in the 1980s and liked that part of your column and have been a gold investor since 2001.
Tom’s note: Thanks to everyone who wrote in! As always, please keep your questions and comments coming at [email protected], and I’ll do my best to address them in one of our Friday mailbag editions.