WEST PALM BEACH, FLORIDA – This is it.
The Day of Reckoning.
How do I define it? More below…
Greetings from Kate’s parents’ house…
I’m writing this note to you from the front porch. Kate and the kids are inside with their grandparents, watching a movie.
We’ve isolated ourselves. We won’t be leaving the house again unless it’s to get on a plane to Brazil on Friday. We’ll see.
Kate and I have been homeschooling our children for years. These are three educational YouTube video series we loved showing our children:
If you or anyone you know is having to begin a homeschooling program this week because Coronavirus has closed the schools, you might find these videos useful.
(I’ll post more of our homeschool resources tomorrow.)
Day of Reckoning
Here’s how I define the Day of Reckoning…
It’s the day the Federal Reserve has to print so much fake money to re-inflate the collapsing debt bubble, the world’s central bankers no longer want to put their sovereign reserves in Treasury bonds. Instead, they turn to gold (or something else that’s not dollars).
Astrophysicists call the moment a particle gets so close to a black hole it cannot escape the “event horizon.” It’s the point of no return.
We’re at that point now.
Over the last 10 years, the Americans, the Europeans, the Japanese, and the Chinese have blown a gargantuan debt bubble.
The bubble burst last month – pricked by Coronavirus and then compounded by the Russians and Saudis’ decision to deflate oil.
Now the world economy is facing a margin call for anywhere from $10 billion (per Doug Noland)… to $12 trillion (per JPMorgan)… to $45 trillion (if the offshore eurodollar market needs rescuing, like I wrote about in July 2019).
In other words, the Fed must print at least $10 trillion… or let the world economy hard-default on its debts.
This is what I mean by “Day of Reckoning.”
It’s either a soft default, $10 trillion in new, fake money, a synchronized global currency devaluation, and $10,000 gold.
Or it’s a hard default, a tsunami of bankruptcy, a collapse in the banking system, liquidation, and a long economic winter.
Which one will the Fed (and other central bankers around the world) choose?
I’m betting on the $10 trillion soft default. Why? Because I think central bankers have a “God Complex”… and history has taught them they can “fix” any problem by printing money and stimulating credit.
Coronavirus gives them the perfect political cover. “It was an act of God,” they’ll say. “What choice did we have?”
Place Your Bet
You must place your bet, too.
If you agree with me, and you have the courage to take bold, positive action, then now is the time to buy physical gold.
It fell $200 an ounce over the last three days. And gold royalty companies – which are some of the safest gold companies to own – are also beaten-down. They’ve lost anywhere from 30% to 50% in the last month.
If you do NOT agree with me, you should sell everything and hoard cash.
Last night, the Fed cut interest rates to zero percent and announced they were going to buy $700 billion in government bonds and mortgages.
They’ve just crossed the event horizon. This is just the beginning. There’s a lot more fake money coming.
In my Friday postcard, I suggested the stock market was about to stage a counter trend rally.
I’m not interested in trading right now, and this e-letter isn’t about trading opportunities. So take what I say with a pinch of salt. It’s just a hunch.
But it’s a hunch based on many years of watching and learning about markets.
“Sell the rumor, buy the news” is the trading wisdom I’d invoke here.
For example, when a war is coming, you’ll see the stock market fall in the months and weeks before the war starts. But as soon as the bombs start falling, the market rises.
It’s the same when a hurricane comes. In the days before the hurricane, the markets fall. As soon as the hurricane makes landfall, the markets rise.
I’ve seen this sequence a dozen times over the years.
The Coronavirus “war” begins in about a week. Cases will explode to over 10,000 in the U.S., and our healthcare system will get overwhelmed.
If my hunch is right, the market should be forming a bottom in these next couple of weeks and beginning a rally. We’ll see.
– Tom Dyson
P.S. We’re witnessing the collapse of the existing monetary world order… as well as the healthcare system, the prison system, the pension system, and several other key institutions. Of course, it’s going to be volatile. They may even close the stock market for a few weeks.
In today’s mailbag, readers praise Tom for the Postcards… share travel stories… and offer kind words to the Dyson family…
Reader comment: You and Bill Bonner both have a talent for the world’s oldest profession – story telling. No small feat. You speak plainly about points of interest to your audience, about how you as an individual have dealt with situations such as your job, your family, your health, your family’s health, your family travels, where you have been and where you are now, and how you and your family have all managed through.
You also relate information about how to recognize wealth trends in the market, from your own experiences, about how to grow it and how to preserve it. And based on historical fact and personal experience, you offer how you expect those situations to develop going forward. Not get-rich-quick schemes but sound economic positions. And you do so with a daily sense of amazement and excitement, all about life and what it has to offer. And that’s what makes your Postcards so much fun to read. Tales well told.
Your tales are about overcoming obstacles, not about outperforming your family or friends or the guy down the street. If your tales were narcissistic in nature, i.e. an inordinate fascination with oneself, excessive self-love, vanity, according to the Funk and Wagnalls, your readers would soon tell you in their comments, and their numbers would soon diminish.
Reader comment: I spent some years in Asia about 50 years ago (’66-’72), in Thailand, Burma, Viet Nam, China, Korea, and Japan. I enjoyed your stories about your trip through those countries, and some of the same cities you visited where I had been. I also walked out of a department store in Hong Kong one morning into a student demonstration in the street. There was some fun and excitement. And a friend of mine forgot her camera on a train in Fukuoka, Japan, which was safely returned to her a few days later. I laughed out loud when I read about your same experience. It’s nice to know that those qualities of character and culture have not been lost over the years. Having made some diving trips to Central and South America in years past, I am looking forward to your new adventures through these areas this year. Happy trails to you and your family, cowboy.
Reader comment: I’ve been reading your Postcards from the beginning, and wanted to thank you for sharing your ongoing story with all of us. I was a Palm Beach Letter subscriber so I was already somewhat familiar with your investment ideas, but your family story has been incredibly moving and valuable to me, and to the friends and family I’ve shared your Postcards with.
I wanted to echo the comments several readers made about how remarkable Kate’s role in all of this has been, even though she chooses to stay in the background in the Postcards. And I believe that the most admirable goal for a family that I have ever heard or read is the one you included in your February 27 postcard, about your family becoming the “oak under which others can shelter.” Judging from your Postcards, I believe that you are the kind of people who can achieve such a worthy goal, and I salute you for being willing to try.
Tom’s note: Thank you for all of your kind messages! Kate and I read every one. Please keep writing us at [email protected].