WEST PALM BEACH, FLORIDA – Kate and I have put our life savings into gold. (We kept our whole life insurance policies, but everything else we turned to gold.)
I didn’t encase our gold in concrete and send it to the bottom of the sea, but I might as well have.
The only outcome that’ll make us sell our gold is if the Dow-to-Gold ratio goes below 5 and we can buy stocks again. Until then, we’re not budging. (It’s at 13.5 today.)
Kate’s Parents’ House
Greetings from West Palm Beach…
We’re in isolation at Kate’s parents’ house. (I’m taking some criticism for this, by the way. Don’t miss the reader feedback section at the bottom of today’s Postcard.)
I’ve cancelled our flight to South America and we’re going to ride out the storm in Florida for now.
Today we played board games, read books, rode bicycles, watched a movie, and ate delicious home-cooked food, cooked by Kate’s mother.
Here’s Penny helping out in the kitchen…
Penny helps out in the kitchen
Homeschooling Tools, Part Five
Kate and I have been homeschooling our children for years. We’ve experimented with many different resources and programs.
Today, here are three of our kids’ favorite Ted Talks…
Sir Ken Robinson. A very funny and very motivational speech about creativity
Logan LaPlante. A 13-year-old kid gives a great Ted Talk. Very inspiring for kids.
Rita Pierson. This one is about what kids really need.
If you – or anyone you know – is having to homeschool children this week because their schools have closed, perhaps you’ll find these Ted Talks interesting.
(I’ll post more of our favorite homeschool resources every day.)
My Hunch About the Discrepancy in
Gold and Silver Prices
Last night, someone posted this on Twitter:
I am hearing from many people that both physical gold and silver being sold at local coin shops and the like – if you can find any – are going for ridiculous premiums. Anyone else seeing this?
Over the next few hours, 275 people from around the world responded to his Tweet, all saying the same thing…
It is IMPOSSIBLE to buy physical gold and silver at anywhere close to the market price of gold right now. It’s all gone.
If you’re lucky enough to find some, you’ll have to pay extraordinary premiums over the actual price of gold and silver to buy it.
I also noticed a Tweet by Keith Neumeyer. He’s the CEO of First Majestic Silver mining company, one of the largest specialty silver mining companies:
Sell me some physical silver under $15.00. I’ll buy everything you can deliver to me. End the paper market bulls**t now.
What’s Neumeyer’s point? That the actual price of silver is probably over $15 an ounce. (It’s around $12 an ounce in the paper silver market.)
Here’s my hunch.
Given the supply/demand fundamentals on the ground, the real price of gold is also much higher than the paper market is indicating.
Maybe somewhere around $1,800 an ounce… not the $1,475 that my computer shows. This would put the Dow-to-Gold ratio around 11.
Hopefully, the gold smelters and mints will soon be buying dozens of tons of bulk gold to turn into coins and bars. Then, the gap between the paper market and the physical market will disappear again.
End of the 40-Year
The Federal Reserve printed over $100 billion in fresh fake money TODAY, as indicated by the asset purchase schedule on the New York Fed’s website.
And it’s printed $300 billion since SUNDAY.
I assure you it will keep printing these amounts until the Treasury bond market is functioning again.)
At these rates, the Fed’s balance sheet will pass $10 trillion before Thanksgiving.
Given the volume of fake money-printing…
… the demand for physical gold and silver on the ground…
… the increase in premiums…
…. and our commitment to a Dow-to-Gold ratio of 5, I’m not concerned about the recent declines in the international gold price at all.
I hope you’re not, either. The end of a 40-year experiment in paper money was always bound to be rocky.
– Tom Dyson
P.S. I would not pay these premiums to buy physical gold, even if I hadn’t bought any physical gold yet. I’d wait until premiums come back down and, in the meantime, I’d buy gold royalty stocks instead. They’re the next best thing to physical gold and they’re currently VERY cheap.
Today, readers talk about gold… homeschooling… traveling… Tom’s family… and the futures market…
Reader comment: Thanks for sharing all of the wonderful tidbits about your travels, Tom. I just adore your writing style, and sense that you would be a phenomenal book author. I’d been an educator for 40 years, and it’s wonderful to hear about your homeschooling experiences.
Your beautiful children are getting a priceless education as world travelers. You and Kate are doing such a wonderful thing for them; and these experiences will prove to be invaluable in their development. I am also learning a lot from you about financial matters, from the understandable way you explain about it. Wishing you and your family, including your mom and dad, all of the very best. Be well and safe.
Reader comment: I admire the education you are giving your children as I feel that education, along with how to respect your health, is so important. Teaching them science and engineering is good, as that is the backbone for the jobs in highest demand and for understanding the world. I feel the use of science and engineering systems in healthcare is the best education preparation for the future.
See if you can find a video course on elementary biochemistry – what makes plants and all creatures, including us, “tick.” This would cover organs, cells, blood flow, brushing teeth, washing hands, germs, etc. Keep up the good work! I am an engineer, biochemist, businessman, and am 80 years old. I still study three hours a day as it is a habit, hobby, and permits better understanding of our world.
Reader comment: You’re homeschooling using Bill Nye videos? I would categorize him more in “religious studies” than science.
Reader comment: How does it feel at your age to be mooching off your wife’s parents? They certainly want to protect their grandchildren, and perhaps their daughter, and you seem to be something that comes with the package.
I’m sorry to put it this bluntly, but you seem to be the college graduate who can’t find a job and become independent who has returned to mama (mama-in-law in this case). She doesn’t have much choice, especially if he has three lovely grandchildren tagging along. Or maybe you do have the secret income that some suspect you of having. But you don’t really need this, do you, if mooching works? Time to grow up, Tom.
Tom’s response: I receive an income for writing these Postcards. It’s our only income.
Reader comment: I write this with a heavy heart, knowing your high regard for your family and your brave and generous contributions to advancing your readers’ understanding of the world. You say, “Mostly, I’m worried about my mother. She lives alone in London. She has no family in the UK. And she has advanced Parkinson’s Disease. She could be in solitary confinement for the next three months. If she has any health issues, I won’t be able to help her… “
My sincere apologies Tom, but if you were worried about your mother, you would be by her side now, which is what she needs most. Been there, done that. During the last years of my mother’s life, I abandoned my fledgling business in a foreign country, putting my life savings at risk, got on a plane, borrowed money to buy a van with wheelchair access, and spent as much time as possible with her, in and out of hospital. The fact that my sister lived close by and was taking great care of my parents did not affect my decision.
I don’t say this to brag, after all, she was my mother, but rather to share with you the thought that to my dying day, I will be at peace with myself to have brought my mother some happiness during her difficult days and to demonstrate to her that her son cares.
Tom’s response: I take your point. My mother has Parkinson’s Disease. She lives in London. My father also has Parkinson’s Disease. It’s not as advanced as my mother’s, but it’s getting pretty bad. He lives in New York. Kate’s parents are in pretty good health. They live in Florida. We try to spend as much time as we can with our parents, but it’s not always easy.
Reader comment: I have been reading your Postcards for quite some time now. I never actually thought that I would write to you. However, coronavirus has changed everything. I just spoke to my daughter! Her restaurant has been closed down because of its proximity to central London. We discussed the situation that you find yourselves in, with regards to your mother (I remember her lovely pictures from your visit). We would like to offer you her services. Gratis! Yes, no reward to change hands for helping out, just the pleasure of being here to help!
I know that you do not know either of us from Adam or Eve, but this is a genuine offer. We could provide you with both of our CVs if required and background checks can be made, which I would imagine you would want/require! My daughter is 24 years old and in good health! She manages a restaurant, so you could acquire references from them as to her trust worthiness and capabilities. She cooks well, cleans well, interacts brilliantly with older folk, would be able to shop and walk with her in safe places, having still got four grandparents of her own, deeply loved by all because of her caring affection and good ear for them!
I imagine that, upon hearing your plight and the difficulties that you are facing, there will be many offers made to you in this manner! However, should this not be the case, I feel friendly towards you and Kate and make this genuine offer of “help.” I have a kind of empathy with what you have been doing, what you have been through, and look forward to the future reading with you!
Tom’s response: WOW! What a kind message and offer. I’m blown away. I read your message to Kate and she said, “Wow, that’s amazing.” Please thank your daughter from us. Her selfless and brave attitude is really delightful. I’ll certainly forward your message to Mum, too. (For now, we’ve decided that Mum should isolate herself in her home and not have any visitors to avoid any risk of her catching the coronavirus.)
Reader comment: What no one ever talks about is how the futures market works today. The speeds of the computers and algorithms trading are going faster than a millionth of a second. Which means there could be a million prices in a second. Does it make sense to price anything in millionth-of-a-second intervals? No. Also, the algorithms have a profile of every account and the exchange sells the information. So the fastest algorithms in a millionth of a second know the position of all accounts.
There are no market makers because how can you make a market that changes in a millionth of a second? The algorithms have made so much money they can run it anywhere they want. They know how the funds buy, and add to positions at certain chart points and breakouts. Get them all long, then in two days, destroy the market down. Get them short. take it back up. There is no liquidity. Machines ruin markets. Because they go so fast that no logic, or even a breath, can be taken. Something to think about.
Tom’s response: Yes, I’ve thought about this many times. The markets just move faster and faster and faster, I suppose reflecting the speed information disseminates through society now. It’s not a coincidence that the 2020 financial crisis was the fastest wreck in history. Bitcoin is another example of a price that went from low extreme to high extreme in record time.
Reader comment: Couldn’t help but notice your Dow-to-Gold chart back to 1800. It seemed pretty stark to me that all of the wild swings started in 1913. Wasn’t that the year the Federal Reserve came into being?
Reader comment: I appreciate your Postcards from the financial and from the family points of view. In one postcard, I saw your recommendations for buying gold. Could you repost those? Or are they linked to a website? That would be helpful. Maybe even as a footnote in the Postcards, like the “notes” in YouTube videos. Boy, I hope I didn’t miss that! Thank you again, and may health be with you and your family!
Tom’s response: I posted those recommendations in this essay.
Please keep writing us at [email protected]. Kate and I read every note you send us!