DRIGGS, IDAHO – In 2018, Kate and I handed in the keys to our apartments, sold all our possessions, and put nearly our entire life savings into gold.
We’ve spent the last three years drifting from country to country, town to town, like rootless nomads… homeschooling our kids… and having great adventures.
In this week’s mailbag edition, a reader wants to know: How do we store our physical gold while we’re on the road? (More below.)
Winter in a Box Canyon
Greetings from Driggs, Idaho…
We rented an Airbnb here for the winter. We’re spending the next few months getting dumped on with snow and learning how to ski. After this, who knows where we’ll go?
Here in Driggs, we’re living in a sparsely populated valley with mountain ranges on three sides. It’s what they call a “box canyon.”
This was the view to our west at sunset yesterday…
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The view from our Airbnb
From the Mailbag
Now back to this week’s mailbag, starting with the reader who wants to know what we do with our gold…
Reader question: Can you briefly explain how you yourself purchase and store gold as you travel? I’m sure you don’t take gold or bullion into Walmart.
Yeah, exactly. We still have a regular bank account, in which we keep travel funds, too, so that we can use credit cards and PayPal, etc., to pay for our everyday expenses. And then the gold… really, I feel like it’s in cold storage.
I joke that I might as well have encased it in cement and chucked it at the bottom of a harbor. That’s how easy it will be for us to spend the gold. Because really, I don’t intend to touch it until a rainy day many years in the future. So in short, we don’t use gold to travel with.
Reader question: I follow your investment style, gold, silver mines, etc. So here is my question. At some point there is going to be a stock market crash… right? When we get word that the melt-up is pretty much over and it is suggested we sell our stocks and move to cash, what should we do with our miner stocks? The same? I ask this because looking back at last year, with the COVID-19 scare, not just did stocks tank, but even gold and silver mines TANKED!
I don’t have any conviction in the idea that stocks will crash. More likely, stocks will do okay on a nominal basis but lose value after we adjust for inflation. This was how it happened in the ’70s.
My highest conviction idea is that precious metals will beat stocks over the next decade… by a wide margin. So we’re sheltering in gold for now and keeping an eye on the Dow-to-Gold ratio. Then we’ll buy stocks later… when they’re cheap and the Dow-to-Gold ratio has fallen below 5. That’s the plan, anyway.
Reader comment: Tom, thank you for trying to help subscribers make a little interest on their cash. You suggested that investing in Sam Zell’s Equity Commonwealth preferred stock as an easy way to collect 5.5% interest/dividends.
You should understand this: Preferred stocks are typically callable for $25 a share. With Zell’s stock trading for $30+ dollars, a buyer runs the risk of losing $5 a share if Zell calls it in. Zell burned me years ago when he called in Chicago Tribune Bonds for pennies on the dollar.
I’m glad you brought this up because I forgot to address this matter in my initial write up.
These preferred shares are NOT callable at $25 (except in a total liquidation of the company.) The company, however, does have the option of converting each preferred share into $25 worth of stock.
The company may only exercise this option if the common stock rises above $43 a share (a 55% increase from the recent price).
This would hurt us, as we would have paid $30 for the preferred share. But as long as this company remains a big pile of cash, the equity is unlikely to rise by 55%. In the meantime, they’ll continue paying us the $1.62 declared annual dividend.
Reader question: Greetings to you and your family. I read the latest postcard with great interest. Regarding your comments on China, I could not help but think of Mr. Rickard’s view on China.
In short, he has written that China is not as strong as we are led to believe. Chinese society detests the “loss of face.” Would you please write more about China while considering your colleague’s view?
The world economy is not as strong as we are led to believe. When I write that China is picking up the baton of global leader, my point is, I think, that China is eating America’s lunch…
– Tom Dyson
P.S. As always, thanks to everyone who wrote in. Please keep writing us at [email protected]. I read every note you send us. And while I can’t give personalized investment advice, I’ll do my best to address questions and comments in future mailbag editions.
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