CORPORATE APARTMENT, BALTIMORE – Gold is rising. Over $1,600 an ounce now.
Stocks are rising, too. The Dow is getting close to 30,000.
Bonds are rising. The Treasury just sold a 30-year bond for the highest price in history.
The dollar’s rising. I discussed this yesterday.
Everything is rising.
Meanwhile, a viral disease spreads around the planet, shutting down factories and keeping people in their houses.
The virus broke out AFTER leading indicators for recession had already started flashing “danger.” Now the virus is loose, and the workshops in China, Japan, and Korea are dark. Surely a recession is imminent?
Currency traders think so. The Chinese yuan, Korean won, and Japanese yen are all crashing. But experts predicted recessions in 2014, 2016, and 2018 and nothing happened. And central bankers will do “whatever it takes” to keep the dollar down and the markets lubricated.
Am I being a fool for expecting a recession? It feels like I am.
I’m just happy to be sitting on the sidelines, letting other, smarter, people figure this mess out…
They cannot allow the dollar to keep rising. If it rises any further, prepare to see an intervention of some sort… either by the President or the Federal Reserve.
If they don’t intervene and the dollar keeps rising, things will start blowing up.
Last Night in America
It’s our last night in Baltimore.
We put my father on the train earlier today. Kate is packing up our things. The kids are watching an episode of Mr. Bean. And I’m sitting at our dining room table writing this message to you by hand…
The next time you hear from us, we’ll be on our way to Managua with our little suitcase in tow.
– Tom Dyson
P.S. Here we are at Penn Station today, sending off my Dad…
My Dad’s visit comes to an end
A reader worries about what it’ll take to fill a shopping cart and gas tank in the face of rising inflation… Others want to know the best places to buy and store gold and silver… While another offers an apology, after making a comment in the January 22 mailbag about Tom’s mental health stories…
Reader comment: Love your Postcards and glad you are traveling again to share more adventures with us! You write that you expect gold to hit $10,000 at the top of the cycle. And I join you in that expectation for all the same reasons. But what concerns me, with the trillions being printed, is what $10,000 will buy then.
My grocery bill used to be $50 and now it takes $200 to buy the same shopping cart full. I could fill my gas tank for a quarter of the $50 it takes now… God Bless y’all.
Tom’s response: Gold is far more sensitive to inflation than everyday goods. That’s because gold – and to some extent silver – will be the only solution for the trillions of dollars sloshing around the investment markets when money managers begin worrying about future erosion of purchasing power.
That money won’t be piling into cans of soup. Sure, prices of everyday goods will keep rising. It’s just that gold will rise much more.
Reader question: I’ve been a fan since you started publishing the Postcards. You’re going to love Argentina. Bring your own bottle of A1 and steak seasoning, as they have fantastic beef but don’t season it.
What are your thoughts as far as services like OneGold that buy physical gold and silver and hold it for you in both the U.S. and Canada? Do you also recommend silver? I’d appreciate your take on these types of services. Keep up the great writing!
Tom’s response: OneGold is a new gold custodian service offered through a joint venture between two long-established gold dealers, Sprott and Apmex. I think crypto currency backs the gold, too, somehow.
Anyway, I have used both Sprott and Apmex to purchase physical gold in the past and they’re good companies. And I like the concept behind OneGold and the innovative idea of marrying blockchain with gold. But personally, I don’t have the courage to sign up for something so new and unproven.
And also, I prefer physical gold because it makes it easier for me to sit on my hands and be a long term investor.
Reader question: I enjoy your Postcards. I think it’s wonderful how you are choosing to currently live. You will never regret it. I know this must be on the minds of many of your subscribers if they’ve paid any attention to past history in the U.S.
What are your thoughts about government confiscation of gold bullion and of some coins? They’ve done it in the past when we’ve had a financial crisis. Seems as if the time might be ripe for this.
What will you do if this happens and/or what precautions have you taken to protect your gold? What are the least likely coins to be confiscated? Is this why you are leaving the country? Look forward to your reply. Best and safe travels.
Tom’s response: I get this question a lot. My feeling is it won’t happen again. I just don’t think messing with gold is a priority for the feds. Hardly anyone owns it.
I think it’s much more likely they’ll try to cap the stock and bond markets and fiddle with the Consumer Price Index inflation data. I don’t know. We’re still in the stage where they’re fighting deflation and trying to generate inflation, so we’ve got a long way to go before we need to worry about that.
Final thought, if they do talk about confiscating gold, I’ll either take it overseas or hide it. But I won’t give it up, even if I have to break the law.
Reader comment: I enjoy reading about your adventures – a vicarious enjoyment! I “went all in” to both gold and silver several years ago – and still have receipts for silver purchased at or near the peak of $37/ounce in about 2011.
I still have a fairly large inventory of both as backup insurance, but I’m wondering how the price of metals will increase astronomically if everything else is going down the toilet. Who will have the money to buy gold for $10,000 an ounce? Inquiring minds want to know…
Tom’s response: Fifteen trillion dollars of bonds trade at negative interest rates. This only makes sense in an economic ice age where there’s shrinking trade, shrinking earnings, shrinking economies, and lots of liquidation. The moment there’s a sign of inflation or long-term erosion of purchasing power, that money will spook like a herd of over-caffeinated zebras and make a direct line for gold.
So the answer is, those bond holders will buy gold at $10,000 to save themselves from terrible losses in bonds.
Reader comment: I have written a few messages to you in the past, being somewhat critical of you writing about your past struggles dealing with depression. I regret writing those messages to you. Who am I to be judgmental, especially when I, myself, have struggled with the thoughts of ending my life, thinking that things would be better for my family that way?
I wish you and your family the very best. I hope you enjoy writing your daily postcard for as long as you would like.
I think people appreciate your messages because many of us see ourselves having been in your and Kate’s shoes in the past, possibly in the present as well. Looking forward to reading your views on central and South America living.
Tom’s response: I’m so grateful for your thoughtful messages… even if they’ve been “somewhat” critical. As long as they aren’t mean, and we haven’t received any of those yet. Please feel free to share your thoughts candidly and frankly, whatever they are. You can always write us at [email protected].