CHISWICK, WEST LONDON – In the 1840s, Henry David Thoreau lived in a cabin in the woods for two years. He wrote Walden, a famous book about his experience.
In 2018, Kate and I went to live in our own financial “cabin in the woods.”
We sold all our liquid assets, drained our bank accounts, and handed in the keys to our apartments. I sold my car, all my furniture, and converted everything to physical gold and silver.
It wasn’t an investment in gold. Or a speculation to make money.
We simply decided we didn’t want to participate in the financial system anymore. So we took a financial sabbatical… and decided to go live in the “woods” for a while.
Today, as I write to you, Kate and I remain in our financial cabin in the woods. And as I study economics and watch the financial news, things have gotten even worse…
Self-Isolating in Chiswick
Greetings from London…
Kate and I have been sick with Covid-like symptoms, so we haven’t been doing much except resting and isolating.
We’ve tested ourselves for Covid numerous times, but the tests always come back “negative,” so we must just have common colds.
The kids had it, too, but they got over it much quicker. Either way, we haven’t been feeling well enough to go out… or do much of anything.
Here are the kids doing arts and crafts at the kitchen table today…
Arts-and-crafts time with Penny, Dusty, and Miles
Speaking of Covid symptoms… Covid is having a big resurgence in Britain.
It’s anecdotal, but we’ve noticed many people around us have reported catching it in the last two weeks, including friends, neighbors, and even the vicar of our local church.
Without exception, they’ve all been twice-vaccinated. Meanwhile, we have not been vaccinated, and despite traveling frequently by public transport and mingling in crowds, we keep testing negative for Covid.
So I’m not sure what’s going on.
I am still having a hard time letting go of my mother’s possessions, but I have come to realize that I must. We cannot continue living in the U.K. for much longer.
My dear father is ill in New York with Parkinson’s Disease and cancer. We must go to him as soon as we can and spend time with him.
We love my father very much, as we did my mother, and we’ll be heartbroken when he departs.
With this perspective, clinging to my mother’s possessions and my childhood memories here in London for much longer would just be a selfish indulgence.
The government should release my mother’s estate in the next few weeks, and I’ll be able to distribute her assets according to her will.
Then, we’ll be free to start making arrangements for the next stage of our journey…
The Feds’ Inappropriate Experiment
Turning back to the financial system…
The whole system resembles a giant and completely inappropriate experiment. The feds are still “managing” the economy… with more financial engineering, more unsound money, bigger deficits, and more soothing words.
The weaker the economy gets, the more they prop it up.
I see cracks everywhere – sudden air pockets in the stock market… irrational pricing… fragility… and absurd attitudes toward investing.
A popular refrain these days to anyone who sounds the alarm is, “Have fun staying poor.”
I see TikTok videos of inexperienced investors gloating about their profits. And celebrities pumping cryptocurrencies. And flash mobs engineering massive coordinated short squeezes, like we saw with GameStop and AMC earlier this year.
In the roughly two years since Kate and I left the banking system, we’ve seen the stock market act like a penny stock, declining by 14%, then rallying by 28%, then declining by 34%, then rallying by 66%.
I see a total rejection of saving in favor of speculation… Things like quantitative easing (QE). And negative interest rates. And stimulus checks for purchasing penny stocks.
The economy seems almost like it is begging to liquidate itself. And yet the feds keep pushing it up and talking it up.
The most disconcerting part of it all is that no one seems to care. It feels like we are riding on the Titanic towards an ice field… the captain keeps pushing the boat to go even faster… and below deck, they’re drinking and dancing.
So we’re sticking with our cabin in the woods. We’ll stay here, off the grid, until it’s safe to return to the financial system. How will we know when it’s safe?
For that, we follow the Dow-to-Gold ratio…
Our Ultimate Barometer
As longtime Postcards readers know, the Dow-to-Gold ratio tracks the Dow Jones stocks as priced in gold. It tells us the best times to be an investor, and the best times to be a saver.
When stocks are cheap relative to gold, we hold stocks. When stocks are expensive relative to gold, we hold gold.
I’m using 5 as an important level. That is, when the Dow-to-Gold ratio goes below 5 – meaning we can buy the Dow with less than five ounces of gold – we’ll venture out of our cabin and start investing in the stock market again.
And then, we’ll sell these investments when they become expensive again – when the Dow-to-Gold ratio rises above 15.
At that point, we’ll convert our investments back to gold and return to our cabin until stocks become cheap again (in gold terms). Hopefully, this is a long time in the future.
The Dow-to-Gold ratio is our ultimate barometer. It’s around 18.7 today… And, despite bouncing over the last year, if history is any guide, it still has some big declines ahead…
– Tom Dyson
P.S. This is not a typical stock market boom being driven by a “new economy” or another great innovation. Instead, we’re in the early stages of a global synchronized currency devaluation. And the activity we’re seeing in the stock market is a reaction to the dollar and other world currencies losing their values.
It’s why real estate prices are going crazy, too. And the price of steel exploded. And agricultural commodities like wheat and corn soared earlier this year. While the atmosphere is quite rowdy, I don’t think it’s irrational, for the most part…
Still, that doesn’t mean it’s sustainable. That’s why Kate and I moved to the sidelines in gold, so we can protect and grow our nest egg over the next decade. If you want to do the same, I created a model portfolio – including specific percentage allocations and the 11 gold stocks I recommend today. Learn more here.
Reader comment: I am glad to hear you are using Richard Maybury’s books. Every parent should get them. My ex-wife and I homeschooled our two oldest children and the homeschooling experience is fantastic. Keep up the good work.
Reader comment: Longtime reader but this is my first-time writing. Let me start by saying that I am 100% with you on the homeschooling and the way you are educating your kids. They are experiencing and learning about life in an incredible, hands-on way, thanks to you and your wife.
Reader comment: I’ve been reading your Postcards for some time, and when you wrote about fatherhood, I felt I just had to write. You are absolutely right about the importance of fatherhood, for both genders of children for different reasons. And I congratulate you for your choice of family lifestyle, forming your own close-knit “tribe.”
However, I note that your oldest son is now 13. That means that he and his brother are fast approaching puberty and the preteen years. As you and Kate will be very aware, these years bring with them an overwhelming need to insert themselves into new “tribes” of their own peers. I know that you already do everything possible to give your children the opportunity to interact with others of their own age.
But I just wonder if now isn’t the time to think of putting down more permanent roots, so that the friends they make will have the chance of becoming life-long ones. I fear that continual change at this point in their lives could begin to contribute to the feeling of being “outliers” and never really “belonging.” This thought could contribute to your decision on whether or not to buy your Mum’s house, or in your decision on where to end up living.
Reader comment: If you could sell the house in London, you could buy a small compound here in the States and have your parents move in with you. And if you have money left over, you could buy a two-family home with your brother in London. Best of both worlds. You know what you want deep down.
Meanwhile, others give advice on burying gold… and offer a book recommendation… and praise Tom’s investment expertise…
Reader comment: I get a great deal of the information from your Postcards. Sometimes I have to say “whoa” to what you say. I then think about what you said and add the result to my memory. Today’s question with regards to burying gold and silver is interesting.
However, modern metal detectors can see a minimum of 4 meters into the ground. So to adequately inter metals requires a very deep hole. This will be impracticable for most of us. Further, there are devices that can see through the walls of Fort Knox. Keep up the good work.
Reader comment: I have just come across Boris Johnson’s book about London, and it occurred to me that I should tell you about it. As you know, he is your current prime minister, for now!
He was mayor of London, and this book, published in 2011, is a clever guide to what is to be found in town now – with a historical narrative for your children to study before going to see the real thing close by. It was published by Harper Press, and you could get a look at it from a library, but I would suppose you will want to get a copy for the ongoing home use.
Reader comment: Thanks for sharing your experiences and knowledge so as to assist me with my investing and personal wealth. I appreciate all that you have and are exposing me to. I believe strongly that you are accomplishing your goals related to informing others. Great job! May you and your family have the best health and future possible.
Tom’s note: As always, thank you for your kind words and suggestions. We consider each one of them as we make decisions for our family. Please keep writing us at [email protected], and I’ll answer as many questions as I can in the next Friday mailbag edition.