Fiscal Uncertainty Pushes Gold and Silver Prices Higher

TRINIDAD, COLORADO – “There’ll be nothing there except wild horses, coyotes and rattlesnakes…”

We got an email yesterday from a mysterious but kindly stranger. He wrote:

If you want to camp somewhere very special, and remote, I invite you to camp on my 22,000-acre ranch in southeastern Colorado. I won’t be there, but you’re welcome to stay. You can sleep in the ranch house or camp outside. Whatever you prefer.

So today we packed up, entered the coordinates into our GPS, and drove over. The 250-mile journey took us about seven hours. (We drive slowly and only use backroads.)

We’ve come so far southeast, we’ve left the Rockies behind and we’re now only a few miles from the Texas panhandle.

I’m writing this message to you from inside the ranch house. Kate and the kids are doing their schoolwork, and I’m sitting at the kitchen table…

Here we are earlier today…

And here’s the ranch house we’ll be staying in…

When we arrived, the property manager let us into the house.

“Watch out for rattlesnakes,” he warned us. “We’ve seen five or six of them recently. They’re not as bad as the first year we were here, but there are still a lot of them.”

It’s “Inflate” or “Die”

I haven’t had time to use the internet much today, but I noticed gold and silver rose again…

Gold is at $2,055… up almost another 2%. Silver is at $27… up almost another 4%.

As far back as 2018, I knew gold and silver would have to rise. I had a very simple insight…

The Federal Reserve – and other central banks – were trapped. The way they’d built the world’s financial system, they would either have to “inflate” or “die.”

My mental model for “inflate or die” is that the Fed gives out candy (in the form of inflation). And the financial system is like a child who throws periodic tantrums to make sure it keeps getting the candy.

(If you notice, the system throws tantrums every year or two. Each time it does, the feds become more “accommodative.”)

Entering the End Game

It occurred to me this pattern could never end… that is, until central banks had completely destroyed all faith in the international floating currency system.

(The currency system we use is built on a web of floating paper currencies without any gold backing, centered on an unbacked paper dollar.)

So I saw two things coming…

One, a big devaluation of paper currencies – what we’ve been calling a “global synchronized currency devaluation.” And two, the hyperinflation of the gold and silver price relative to paper currencies.

Recently, this process has picked up speed. Now we’re entering the end game.

This chart shows gold relative to a basket of paper currencies over the last five years…

My hypothesis remains the same. The global synchronized paper currency devaluation has started. And the gold and silver price are hyperinflating.

– Tom Dyson

P.S. The Fed hasn’t given out any new candy for a few months. There’s probably another temper tantrum coming soon.

P.P.S. I use the Dow-to-Gold chart to help me navigate these cycles. It tipped us off on the timing to buy gold in 2018. (The ratio started a new downtrend on October 1, 2018.) And it’ll tip us off again when it’s time to sell gold. (At a Dow-to-Gold ratio below 5.)

But there’s more to our Dow-to-Gold strategy than buying bullion. I created an entire trade to take advantage of this setup, which I track in my Tom’s Portfolio advisory. Since May, our positions are up as much as 69%… 90%… even 203%. And as I explain in this video, this trend is just getting started.

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

Tom answers more Dow-to-Gold questions today…

Reader comment: Thanks for keeping us so informed about things going on in the great big country and the markets.

Just wondered if you would expand on your thoughts about commodities. Other than gold and silver, what commodities do you think may also do well in these coming months and years? Thanks.

Tom’s response: If inflation returns, I think all commodities will do well… from farmland to crops, to timber to metals. The one I’m most interested in right now (other than gold, silver, and oil tankers) is uranium.

Reader question: Hi. When is the exact time to calculate the ratio? Is it Dow Jones Monday to Friday at 4 p.m.? And spot gold price at the same time?

Tom’s response: That works, but the exact time doesn’t matter much. This is a long-term strategy and the Dow-to-Gold cycles typically take a decade or more to complete a semi-rotation. A few hours or even days won’t affect anything…

Reader question: Hi there, nice trip you are doing now. The memories and family ties are forever. On investment, would a corrective trip for gold into the three digits change anything in your strategy?

If eventually trending in that direction, would it not be better to then get out and reload your position (which makes a lot of sense) when gold is in a three-digit environment? Would appreciate your comments, even if it’s a very quick answer.

Tom’s response: I’m not speculating on the price of gold. I’m speculating on the price of stocks going down in terms of gold, so I can buy stocks cheaper in the future. The only investment I want to own long-term are great stocks. But holding gold now, I think, I can get those stocks cheaper.

So gold going to three digits – taken in isolation – means nothing to me. (By the way, I think it’s far more likely the price of gold goes to five digits next, rather than three digits.)

Reader comment: Tom, I too have been enjoying your posts for the past 14 months and it’s been fun sharing your experiences vicariously.

Once you sell your gold and jump back into stocks (Dow-to-Gold at 5), at what point do you sell stocks and repurchase gold?

Tom’s response: Hopefully, I can hold stocks forever at that point. But if they get super overvalued relative to gold again (Dow-to-Gold ratio over about 30) then I’ll trade them for gold again.

Reader question: Recently, the idea of having bitcoin as well as gold has started to gain some traction. I currently have a small amount of both.

I have been toying with the idea of cashing out a rather useless annuity policy I have, taking the tax hit, and putting bulk into either more gold and silver, more bitcoin, or maybe splitting into both.

I know you are pretty committed to the gold play, but does the bitcoin play have its place?

Tom’s response: Yes, bitcoin probably does have a place, if you’re into that sort of thing. But I won’t buy it (for emotional reasons I wrote about here) and I don’t own any.

I wouldn’t recommend it to others, either. I think it’s probably a speculative bubble still deflating, but for some curious types, it could be worth a small speculation.

One reader wants to meet the Dyson family for lunch… and others extend invitations to host them while they’re out west…

Reader comment: I have not followed you faithfully since you started with Palm Beach Research Group, but you have evidently had ebbs and flows in your life and so have I. I just read your July 14 postcard and see that you are in my part of the country.

I was raised in Colorado and am currently living in Utah but travel in Montana, Wyoming, Colorado, and the Dakotas. I say all that to ask if you would be willing to allow me to meet you. You didn’t say you would be coming to Utah, but if you were, I would be willing to help give you some suggestions about places to visit.

If not, I would really appreciate the opportunity to meet you somewhere along your travels and buy your family lunch.

Tom’s response: Of course! We’d be honored to meet you. Whereabouts in Utah are you? We’ll be passing through Moab on our way back to Wyoming in about a week or so…

Reader comment: Hi Tom, I’m offering you a place to stay for a while. You say you are taking back roads to get where you go. Well, if you are going through the NW corner of Montana on your way to Priest Lake, there’s not much better of a way to get there than right by my place in Trout Creek. You are welcome to stay.

Tom’s response: Thank you very much! I think we may well be passing through NW Montana soon. We’ll look you up if we do… and we’d be honored to accept your kind invitation.

Reader comment: Hello there to the whole Dyson clan! I live in the Park City area and if you are heading east this way, out through Route 40, I have a bit of room to plug in and use the bathrooms, etc.

I have enjoyed your travels and the bravery it has taken to expose everything you went through, and the courage to bring it all to everyone while it was in the planning stages and from then on.

Tom’s response: Thank you very much for the invitation! We are taking the Durango route west through Colorado, so I think we’ll be passing quite far south of you, otherwise we’d definitely look you up! Thanks again, though…

Reader comment: Hi Tom, Kate, and kids! Has been a pleasure reading your Postcards. Love the adventure you are on and kudos for doing it. Life is ALL about the experiences!

Also, I want to say thank you for putting what you know out there for us all to digest. I am always learning something new and interesting.

Reader comment: I really enjoy reading your Postcards and love that you’re in Colorado. I discovered Rocky Mountain National Park and fell in love with the area. It’s nice to see you guys enjoying yourselves there as well.

The elk seem to come out and take over the town of Estes Park at night. They used to be everywhere when I would visit. Pretty cool to see, but remember they are wild, so it’s rather unwise to get near and start petting them (like I did). I hope you get to hear the bull elk “bugle” call. It always brought tears to my eyes hearing them.

A gray fox came out of the woods one time and sat at my feet. Why me? I still thank God for those special moments there. Enjoy! And shame on me; I am way behind on buying more gold coins. I was waiting for prices to drop a bit, but I think that train has left the station.

While others weigh in on the Dysons’ plan to spend the winter in Fernie, Canada…

Reader comment: Trouble is crossing the border. We hear reports of people with U.S. plates getting busted for being here. And to get through, U.S. drivers tell the CBSA (Canada Border Service Agency) they are going to Alaska. Closed to non-essential traffic is what we understand to be the current state. We can’t have just anybody running around here.

Reader comment: It would be a pleasure to have you all come visit us for a bit. My wife and I live and work in an RV park in Idaho. We help manage the park along with the owner. We are open till October 15, then we shut down for the winter. We don’t advertise, so pretty much all our business is word of mouth.

It is an old-school RV park, built in the ’50s and ’60s. Everything is cash/check and on the honor system. We have plenty of open sites right now since 70% of our customer base is Canadian. From our location, there are three crossings into Canada that are only 60-100 miles away, if that is still your intent.

Lots to see and do in the area as well. Good place to recharge yourselves after being on the road. Also, if you are still headed into Canada, we have contacts in Calgary, Red Deer, and Edmonton. Whichever direction you guys head, will keep following via the Postcards. Safe travels wherever you go, and keep up the great work of living life!!

Tom’s response: Your RV park sounds awesome. We’d love to stop by. (We’ll be heading your way in about three weeks.) Thank you so much for the kind invitation!

As always, please keep writing us at [email protected]. We love hearing from you, and we read every message you send us.