K680 TRAIN – It’s nighttime. The kids are asleep under their blankets. I’m in my bed. The train is gently rocking and creaking beneath us. The whistle blows…
We’re on our way to Xi’an, still 14 hours farther to the east, on a sleeper train…
Here we are in our bunks earlier today.
We’ve been on the train all day without Wi-Fi
China has two railway networks – the high-speed network, which it built in the last 10 years, and the old legacy network. (We’re on the legacy network today. I don’t think there are sleeper trains on the high-speed network.)
The high-speed network has its own tracks, its own bridges, its own tunnels, its own routes, and its own stations. It is a completely separate railway from the legacy network.
It’s a great way to travel and, over medium distances, almost as fast as going by air… but it cost a fortune to build. China Railways loses $100 billion a year operating it and already has debts of a trillion dollars. Yet it continues building more…
– Tom Dyson
P.S. The route we took to get to Dunhuang last week has the capacity for 100 trains per day in each direction, but there are currently only eight trains operating per day. The line cost $20 billion to build but currently doesn’t generate enough revenue to cover the electricity bill.
FROM THE MAILBAG
Reader comment: Thank you for your wonderful commentary as your family travels the world. It is such a delight to read.
Reader question: I couldn’t help but notice what looks like a Rubik’s Cube under one of your boys. Great! Can he solve it? Tell him to keep at it! 🙂 I grew up twiddling those incessantly during the peak of the first Rubik’s Cube craze.
Tom’s response: Yes! Both the boys can solve the Rubik’s Cube!
Reader question: I have some physical gold, but also a lot in precious metals mutual funds. Is this still a safe way to invest in gold? By the way, I thoroughly enjoy the postcards.
Tom’s response: Watch out for fees and expenses in the mutual funds.
Reader question: Are you going to write a book on your travels?
Tom’s response: Yes.
Reader comment: I need to tell you and Kate I absolutely love reading Postcards From the Fringe. I really hope those words about being almost finished traveling are not true. I honestly can’t get enough of your travels/investing information you send out.
I look forward to this email every time I see it pop up in my inbox. The pictures are great, and the lessons you are giving your children are priceless. I try to picture my family doing the same, but I’ll admit it, I would be scared to do it.
I’m holding some cash and waiting to invest in legacy stocks, but I keep hearing about the big crash coming, possibly in October. Reading your last mailbag… Would you suggest buying some gold stocks while we wait to jump back into the other stocks? Keep traveling, and keep these postcards coming!
Tom’s response: Thank you for the very kind and encouraging words! Now is the time in the cycle to own gold and silver bullion. The Dow-to-Gold ratio falling below 5 will be our signal to sell gold and silver and buy stocks.
Reader question: I have started reading your postcards. Very interesting. I never learned how to really invest, but I am trying to learn. I am at the retirement age and only have about $150,000 in an IRA. My question is, if I took about 10% of that to invest in gold, how do you suggest I do that? I’m not savvy on what to do and who to trust. Then, when the time comes to sell gold and buy stocks, is it just doing the reverse?
Tom’s response: You can start by buying a few shares of one of the gold exchange-traded funds (ETFs). When the Dow-to-Gold ratio falls below 5, you do the reverse, except I’ll be buying specific stocks that raise their dividends, and not just stocks in general.
Reader question: Can you please clarify why gold is safer than cash? Yes, cash can be inflated away by inflation (currently not high, albeit higher than any interest rates out there). But the gold price is volatile, so you can lose that way also.
Tom’s response: I’m following a stock-market-timing strategy based on valuations. We’re currently about halfway into a valuations bear market. If you look at the charts, you can see the Dow-to-Gold ratio is the best market-based expression of this strategy. Substituting gold for the dollar and then following the same strategy doesn’t work because the Dow doesn’t go through the periodic 80% devaluations like it does against gold.
Reader comment: I look forward to my daily dose of Postcards. The only thing I wish you’d change is referring to Kate as your ex-wife. It sounds demeaning somehow. She’s on this journey/great experience with you as an equal partner. Call her soon-to-be wife again or fiancée or life partner or Kate. We regular readers already know the back story. Let the newbies catch up in their own time.
Tom’s response: Point taken. Let’s go with “Kate” from now on. (I read this comment to Kate just now and she said, “Awww.”)
And as always, keep sending us your questions and comments at [email protected]. Kate and I read every one of them, even if we can’t publish all of them.