Tom’s Best Advice for Gold Investors

DRIGGS, IDAHO – “Two interesting things happened to me today,” someone wrote on Twitter recently.

“Got a haircut. Barber told me to buy gold. Said the Fed is printing too much money.

“Got a tire fixed. Owner of the shop told me to buy silver. Said the Fed is printing too much.”

He didn’t say it, but the implication he’s making is that everyone – even barbers and mechanics – have already bought gold and silver. When there’s no one left to buy, the price must fall…

And with that, I’m starting to feel a growing impulse from my lizard brain.

“Take your profits,” it whispers. But I’m not listening to it this time. More below…

Our Idaho Winter Bolthole

Greetings from Driggs, our winter bolthole…

The Teton Mountain range runs north to south. Driggs is on the western side of the mountains. Jackson Hole is on the eastern side.

They’re only about 20 miles apart, but they’re separated by a stretch of cloud-high, near-vertical mountain peaks that are impassable.

If you want to drive from one town to the other, you have to go around the mountains at their southern end and over a pass called Teton Pass. The drive is 44 miles.

We made the drive from Driggs to Jackson today to have dinner with Postcards readers John and Kay, who live in Jackson.

Here we are at the pass, 8,400 feet above sea level. That’s Jackson Hole below us…

Now, back to our gold story…

The First Time I Found Gold

I found gold in 2002.

I was 26 years old. I was working at Citigroup, which was, at the time, the largest bank in the world.

The world was in turmoil. The bubble in technology stocks had popped two years before… the World Trade Center had just been attacked… energy giant Enron had gone bankrupt… and the U.S. was preparing for war in Iraq…

It was an anxious time.

Meanwhile, I’d found Bill Bonner’s daily e-newsletter. I’d tumbled down a rabbit hole, reading about hard money, Austrian economics, dollar debasement, and gold.

I found a whole community of people talking about unconventional investment ideas… and making dire predictions about the future of American finance…

Gold had been in a bear market for 22 years at that point, and it was trading at its lowest price in 26 years.

If there was ever an unpopular, ignored investment that no one was paying attention to, it was gold in 2002.

And yet, Bill was recommending selling stocks and buying gold. He called it the “Trade of the Decade”…

How I Missed (Most of) the Trade of the Decade

I was utterly convinced by Bill’s (and others’) arguments about getting out of stocks and buying gold. Gold seemed like it had to rise. And I felt like even if I was wrong, I probably wouldn’t lose much money.

So I took all my money and bought gold. First, I bought a portfolio of gold stocks. Then, I opened a trading account and bought highly leveraged gold derivatives.

And finally, I was so excited about the idea, I approached my friends and family and asked them to give me money so I could buy gold for them, too. I ended up with 11 investors.

Over the next nine years, gold rose from $300 an ounce to $1,900 an ounce… a move of over 500%.

Unfortunately, our little gold pool didn’t go along for the ride. When the market started making new multi-year highs, I heard the same whispers I’m hearing now…

“Gold is going to correct,” said the voices. “You’ll lose the profits you’ve made. Better cash out now while you can still show a gain.”

I lost my nerve. I sold everything and returned everyone’s money.

Then, I watched in horror for the next six years as gold continued rising… while I sat on the sidelines and missed out on hundreds of thousands of dollars in profit for me and my investors.

Not Making the Same Mistake This Time

One of my all-time favorite books on speculation is the biography of Jesse Livermore. (It’s called Reminiscences of a Stock Operator by Edwin Lefèvre.)

Jesse Livermore was basically a fearless gambler who had a knack for making (and then losing) huge fortunes in the stock market. His biography documents his approach to speculation.

One piece of advice he repeatedly emphasizes in his anecdotes is “sit still when you’re right.”

“It never was my thinking that made the big money for me. It was always my sitting,” he says.

“Got that? My sitting tight! … Men who can both be right and sit tight are uncommon. I found it’s one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money.”

With my first foray into gold, I made the classic amateur mistake of not “sitting still.”

I let my lizard brain – and the seduction of a possible correction (which never came) – talk me out of my position…

I can already feel the same seduction… that gold is overbought, and a correction is coming… beginning to nag me today.

But this time, I’m going to ignore the whispers. I know they’re trying to make me do the wrong thing.

I’m not selling my gold until the Dow-to-Gold ratio hits 5. In the meantime, nothing will take away my gold position.

I’m going down with the ship this time.

– Tom Dyson

P.S. Last year, Bill Bonner published what could be his last book. But it may also be his most important…

I’ve known Bill for decades. And over the last 40 years, he’s been right about a lot of things. He was right about the Japanese stock market crash… the dot-com bust… and the collapse of the housing bubble in 2008, just to name a few.

And in his last book, Win-Win or Lose, which came out just last year, he wrote: “Something always happens that the insiders can’t control… [like] lethal pandemics.”

In fact, many of the events Bill saw coming are now happening – faster than anyone could have imagined. Go here to learn more about what Bill sees coming… and to get your own copy of what could be his LAST book.

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

The Dyson family is riding out the winter in Idaho… and readers share advice for driving in the snow…

Reader comment: Having lived in Colorado and Nebraska most of my life, I have spent many days shoveling, driving, and tromping in snow. Be very careful with black ice. You have no idea it is there until you are on it and by then, it is too late to do anything. I speak from experience… going 35 mph and completely destroying a three-week-old car on black ice. Ask the locals about this.

Reader comment: My son lived in Jackson Hole for a number of years. Driving was a real adventure for him, especially when he had to drive over the pass for business in the winter. Our Christmas gifts to him ran from good snow tires (mandatory) and tire chains, to a special engine heater (sub-zero temps) for his truck so it would always start.

He learned a lot about driving in snow, on black ice (especially on bridges), and knowing when to stay home! Please take care driving, stay safe, bundle up, and enjoy one of the most beautiful areas in our country!

Reader comment: Tom, I have enjoyed your writing since the first Palm Beach Letter issue. I know you love your van, but I am not sure if it is four-wheel-drive or all-wheel drive. If neither, I strongly suggest you get a vehicle with that and put good snow tires on it (save the tires it comes with for spring). You cannot manage that much snow without both! Good luck.

While another gives some skiing instructions…

Reader comment: Sir, I have taught multiple people to ski and to snowboard. In all cases, the most difficult part for snow bunnies was figuring out how to stand back up after a fall. The instructions are simple: Put the skis below you (and across the fall line of the slope) and push back up with your poles.

So if I may recommend, grab the skis and such, put them on in the dry, warm comfort of the biggest room in your home, and fall down (or just lay down). Then, practice getting back up. It’s easier to learn when you are warm and dry and is a massive time saver when on the slopes the first time.

While you are at it, shuffle about and turn about with the skis on so that you build a feel for how all of that works. For the young ones it is less important than for adults, but high-quality professional instruction is also worth the time and money. Think snow. Be safe.

Tom’s note: As always, thank you for your kind messages! We love to hear from you. Please keep writing us at [email protected].