A Key Indicator of Tom’s Dow-to-Gold Investment Strategy

MAMARONECK, NEW YORK – In 2018, Kate and I drained our bank and retirement accounts, and we converted all our savings into gold and silver. Why did we do this?

We don’t want to be in the system anymore. It’s unbalanced and unstable.

That’s why, for the past three years, we’ve been sitting on the sidelines in precious metals and other hard-money proxies, until it’s safe to return to the financial system.

How will we know when it’s safe? If you’ve been reading these Postcards, you know the ultimate barometer of systemic “health” is the Dow-to-Gold ratio.

But today, I’ll show you another key indicator I’m watching… (More below.)

Our Unconventional Lifestyle

Greetings from Mamaroneck, New York…

When we escaped the financial system in 2018, we left the “matrix” in another important way, too.

We abandoned our conventional lifestyle, our jobs, our schools, our friends, and our church. And we hit the road in a rental van with nothing but a suitcase…

We’ve been drifting ever since and sleeping in Airbnbs, cheap hotels, and on the floors of our friends and family members.

It’s been the best three-and-a-half years of our lives. We’ve traveled around the world. Kate and I have also gotten remarried, we’ve fixed our family bond, and my depression and insomnia have gone.

Maybe it’s time for us to re-enter regular society again?

We could sell Mum’s house and use the money to buy a little house somewhere with a little garden and some friendly neighbors. I could go back to work full-time. Maybe we could even send the kids to school?

Then, I remember the most important lesson I learned from our trip: “Life is short. Live everyday as if it’s your last.”

And I think, “Why would we settle down? We’re having such a great time, and there’s still so much more to see together…”

Keeping Grandpa Company

We’re currently visiting Grandpa in his one-bedroom apartment in Westchester County.

We haven’t seen him in two years and he has cancer, so we’re keeping him company while he goes through radiation.

In return, Grandpa is teaching us about art, music, literature, and science. (At times in his life, Grandpa had careers in accountancy, engineering, banking, and teaching art and piano.)

Here we are in the bedroom this weekend, fixing something in the ceiling…

Preserving Our Wealth in Hard-Money Proxies

Turning back to the financial system…

The chart below is a key indicator of our Dow-to-Gold investment strategy. Take a look…

It shows the performance of the main stock market average (the S&P 500) in terms of purchasing power (the Consumer Price Index, or CPI) going back nearly 100 years.

This makes it a very close relative of the Dow-to-Gold ratio we follow in these pages, going back 100 years. (Gold is another way of representing purchasing power.)

Notice the big bear markets in stocks in 1968-1982 and 2000-2009.

When this chart is high, we sell stocks and buy gold. When this chart is low, we sell gold and buy stocks.

Right now, the chart is high and Kate and I are nearly all-in on gold. Our bet on gold is a bet that this chart is near an inflection point and is about to decline for several years… as it did in 1968-1982 and 2000-2009.

My guess is, the coming bear market will be caused by some combination of inflation, rising corporate interest rates, the transition to green energy, and major strains on the finances of the U.S. government.

We’ll continue to wait in gold and other hard-money proxies, until this chart has gone through a big correction like it did in the ’70s and ’00s. At that point, we’ll go all-in on stocks.

– Tom Dyson

P.S. I’m sticking to this strategy, no matter what. There’s just no way I can buy stocks right now, with the market as high as it is, and after such a strong rally. I’d sell in a panic at the first downtrend because I have no conviction in stocks at these valuations.

So I remain steadfastly bullish on gold. And I have unwavering commitment to my strategy of waiting for a good entry point back into high-quality, dividend-compounding stocks. I know it will come sooner or later…

Like what you’re reading? Send your thoughts to [email protected].

Criticism for Tom today for shying away from cryptocurrencies… while others question his decision to purchase Series 1 Savings Bonds for his family…

Reader comment: I don’t really understand why you, Dan Denning, and Bill Bonner are ignoring an asset class that has exploded unlike anything we have ever seen this past decade. It has now topped $3 trillion. There is no investment that can come anywhere near it.

I feel the three of you are denying your subscribers a once-in-a-life time opportunity. I ask you to invite Teeka to sit down with you and discuss this asset class. He has helped create more millionaires through his crypto recommendations than anyone else!

Reader comment: As I see it, the primary risk on your bonds is that you depend on the government to count inflation honestly. They may say that inflation is running at 6% and increase the value of the bonds to match, but if your purchasing power is declining by double or more that rate, which is pretty much how I see it… you will lose.

Reader comment: WHOA, Tom! Why the U-turn all at once from hard assets to one of the most overvalued currencies on the planet? I will be interested in your rationale of tying up $50,000 for five years in a security almost guaranteed to become mostly worthless – instead of simply purchasing more precious metals. Even depositing 27 American Eagles in a bank safety deposit box is far safer than the future worth of your bonds.

And finally, gratitude for Tom for sharing his experience with depression…

Reader comment: Thanks for your candor about your bout of depression. A few years ago, I was diagnosed with bipolar disorder, a not-surprising diagnosis given my state, but still hard to accept. I am also an alcoholic, a common differential diagnosis for bipolar. I was in my late sixties when diagnosed.

I have come to accept mental illness is a serious disease, that your brain is “broken.” But it is a lonely existence. I have confided in a couple of friends who at the time seemed somewhat empathetic, but interestingly they have never once asked how I am doing. Contrast that with how they would have reacted if I told them I had cancer or heart disease. The condition, for the most part, is swept under the carpet.

I am sober now. I cope with golf, exercise, studying markets (precious metals and oil), and economic history, reading, and Netflix. I am also on some serious meds, anti-psychotics, and mood stabilizers. I struggle every day with the type of ruminations you describe and wonder if I can ever regain control of my thoughts. So thanks again. You gave me hope.

Tom’s note: I keep sharing our story because of readers like you, who take the time to share your own with us. Your notes have encouraged us since we began our hobo family adventure almost three years ago.

And as always, please keep writing to us at [email protected], and I’ll answer as many questions as I can in a future Friday mailbag edition.