DRIGGS, IDAHO – Once every 10 years or so, an investor will be confronted with the opportunity to make a huge, life changing score.
I’m not talking about some tiny penny stock going up 10x overnight. While this happens every day, I do not consider these “moon shots” to be realistic opportunities for anyone to chase.
They’re more like dreams… or teasers.
I’m talking about a big primary bull market move that drives an entire asset class higher… over many years.
These are predictable. Investors who can buy and HOLD for the duration of these moves make fortunes.
Some examples of moves like this would be buying stocks in 1942 and holding until 1960 – a 505% move… or buying gold in 1970 and holding until 1980 – a 1,808% move… or buying bonds in 1981 and holding until 1991 – a 224% move.
I believe we’re at one of these moments now…
$2,000 Gold: An Absurd Bargain
I’m referring, of course, to the bull market in gold that started in 2003… took a break from 2011 to 2018… and has recently resumed its primary trend higher…
Let me restate something I’ve said many times before:
These big “primary moves” last a lot longer than anyone expects and take prices far higher than anyone could have imagined.
I believe those who can establish major positions in gold now – and hold them for the duration of the move – will make fortunes.
I emphasise the “holding.” As the 1920s Wall Street legend Jesse Livermore said in his famous book on speculation, “It was never my thinking that made the big money for me. It was always my sitting.”
The U.S. and other rich countries are entering a sovereign debt crisis. And over the next 10 years, they’re going to dilute the value of their currencies so they can shoulder the burden of their unbearable debts.
World debt is currently over $255 trillion. It’s not a stretch to imagine that $100 trillion of this debt will need to be taken onto central bank balance sheets and exchanged for paper money receipts.
(Central banks have already taken in over $20 trillion in debt since 2008. This trend is just beginning.)
We’ve called this dynamic a “synchronized global currency devaluation.”
Meanwhile, the value of all the gold in the world is only about $11 trillion.
For this reason alone, I see a gold price of $10,000 as just the next stop on the way to much higher prices.
In a few years, we’ll look back on today, and we’ll consider paying $2,000 for an ounce of gold as an absurd bargain.
Stocks Will Fall Another 60-75% in Gold Terms
Turning to the stock market…
The primary trend in the stock market continues to be down. (The trend changed in October 2018).
Today I’m showing you the Global Dow Index, which represents the 150 largest “blue chip” stocks from around the world. And as always, I present it in terms of gold.
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As you can see above, the Global Dow Index is clearly showing a pattern of lower lows and lower highs.
Based on my reading of history and the cyclical nature of the relationship between stocks and gold, the stock market still has another 60% to 75% to fall in terms of gold…
“Inflate or Die” Is Going Full-Digital
On Tuesday, I asked, “Will banks soon be obsolete?”
We are fast approaching a time when we will each have our own “digital” wallets online. We will hold our savings in these wallets. And we will be able to make payments to others from these wallets. In effect, we will all become our own banks.
It appears the Federal Reserve and other central banks want to administer these systems… probably by launching some sort of wallet app for our mobile phones and using their balance sheets to capitalize the platform.
Why would the Fed want to take our account balances away from the banking industry and bring them onto its own balance sheet?
The answer, I believe, is for inflation. As we’ve said many times, the Fed must inflate or die. But it’s struggling to create inflation at the moment because it’s already fired all its bullets.
Interest rates are at zero. And the Fed has already promised to keep them there indefinitely. It can’t make banks lend new money supply into existence. And it can’t force Congress to keep printing and spending.
A digital cash system removes all the obstacles that prevent the Fed from inflating the money supply.
This must be the real reason the digital cash movement is happening now. Once it’s set up, expect the Fed to use it to give away free money…
– Tom Dyson
P.S. We’ve been playing a board game called “Cashflow” by Robert Kiyosaki, the creator of the Rich Dad, Poor Dad franchise. The boys (ages 12 and 10) love it. But more importantly, there cannot be a better way to teach kids about accountancy, investing, and real estate. (The game requires each player to keep a personal balance sheet and income statement.) I highly recommend it if you have kids or grandkids who want to learn about money…
P.P.S. We’re also trying to indoctrinate our kids in free market and libertarian principles. To this end, we’re currently watching the Free to Choose PBS television series by Milton Friedman. We found it on YouTube. Friedman travels to places like Hong Kong and India and explains why a free market is the best system…
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FROM THE MAILBAG
Readers enjoy the Dyson family’s trip to Yellowstone National Park, the last stop of their American road trip “bucket list”…
Reader comment: Hello Tom and family. It’s great to see the photos of the family enjoying themselves wherever your travels take you. I hope you get to visit Yellowstone again when your Airbnb contract is near completion and get to see the wildlife that shows itself in the warmer months.
Reader comment: I continue to love your postcards. Glad that you’ve found a winter “hibernation” spot in such a wonderful place. The pictures of your children enjoying Yellowstone blanketed in snow are wonderful.
Your travels inspired us to take a slightly different twist. I’ve moved my family from Texas to Indiana to spend a few years experiencing this part of the country, while expanding my client base outside of traditional oil and gas. We are having a wonderful time so far.
Regarding the COVID chart. I am continually surprised to see representations of the COVID spike in March, as if it wasn’t here prior to that. I am curious that with the rise in COVID deaths, what other morbidities have taken a sharp decline.
Reader comment: Several years ago, my wife and I celebrated our 30th when we went to Yellowstone in January. All roads were closed, so access to the park and main lodge was limited to snowmobile or Sno-Cat.
A walk to Old Faithful and a two-mile cross-country skiing experience from the hotel to a geothermal pool after a foot of fresh-fallen snow are fond memories. A Sno-Cat tour on the loop road included a brief snow-out and snow-encrusted buffalo claiming the board walkways. To summarize, your bucket list is no longer complete!
Reader comment: Tom, I enjoyed your postcard from Yellowstone. Very informative and cool photos. How about that snow! Your kids are thrilled! Take care…
Reader comment: Great photos, Tom! Glad you guys had such a great time exploring the supervolcano in Yellowstone. Like the financial system, it’s a huge boil waiting to pop.
Tom’s note: Thanks to everyone who wrote in! And remember, we’re trying something new in these postcards tomorrow…
Going forward, I’ll publish your questions – along with my answers – every Friday in a special mailbag edition. That way you’ll have all my answers in one easy-to-find spot each week.
As always, please keep your questions and comments coming at [email protected]. And let us know what you think about our new Friday mailbag editions…