Laramie, Wyoming

By Dan Denning

Thanks for all the greatest questions you sent last week for Rick Rule. I sat down with the founder of the Rule Symposium on Natural Resource Investing earlier this week. The transcript AND the video are below.

Enjoy…and see you next week!

Dan

P.S. Off camera, Rick told me this year is the first time in over ten that physical attendance to his conference has been completely sold out. Such is the interest in gold, silver, copper, uranium, natural gas, nuclear and the rest of the raw materials of civilization. I’ve participated remotely the last two years and you can do the same by signing up here.

Dan Denning: Welcome back to Bonner Private Research for the latest private briefing with an old friend, Rick Rule is joining us. Rick, I neglected to ask where you are joining us from today. Where are you at?

Rick Rule: I live in the outskirts of a little village called Anacortes, Washington, and I am mercifully at home today. Lovely spring day in the Northwest.

Dan: Well, I’m glad to hear that. And I know you’ll be on the road in July, which I want to tell our readers about in a minute. I wanted to thank you for joining this on short notice. We have a ton of questions from Bonner Private Research subscribers. If you’re new to Bonner Private Research and you have somehow avoided seeing Rick’s face or hearing his wisdom on the natural resource market, Rick is a longtime friend of Bill Bonner.

In his current iteration, he is the founder and CEO of Rural Investment Media. And more importantly, for investors, he is the founder of the Rural Symposium on Natural Resources, which again will be held this year in Boca Raton, Florida, July 6th through the 10th. I’m sorry to say that if you tarried and did not secure your ticket to attend the event in person, it’s too late.

You cannot go in person. However, because Rick and his team are on top of it, it is possible, and I highly recommend that you sign up for the digital attendance, which allows you to participate live in the entire event. And more importantly, which I’ve benefited from a lot the last few years, you can review and watch any session you want at any time for up to a year after the event.

There’s so much that goes on that in some ways, if you’re not going to be in the room, it’s the best way to get the most out of the event. Do I have that right, Rick? And is there anything I missed?

Rick Rule: No, I think that’s accurate. We’ve worked, as you suggest, very hard for the last five years on the digital event. And it’s nice, last year we had 1,400 attendees from 33 countries. We offer all attendees, live or live stream, absolute unconditional money back guarantee.

If people aren’t happy with the value that they received, I’m delighted to say, out of 1,400 digital attendees worldwide, we had three refund requests last year. So obviously our investment in technology and our investment in Paul Harris, who’s the one who coordinates the digital presentation with the live presentation, has paid off.

Dan: Yeah, it’s really seamless. And one of the benefits for BPR readers is, once you’re logged into the system to watch, you can also chat with vendors who are there. You can send them messages, or you can chat with other attendees.

So even though you’re not in the room literally, there’s a lot of interaction to talk about some big ideas. And boy, are there a lot of big ideas to talk about this year? So I want to start with one that’s new since we even agreed to talk this week and frame it as a question. Earlier today, I read, haven’t confirmed that the United Arab Emirates has expressed its intention to leave the organization of petroleum exporting countries.

So UAE is leaving OPEC. I’m going to ask this as an open-ended question, but you can do whatever you want with it. Who’s the biggest winner from this war with Iran?

Is it a country? Is it a commodity? And if it’s a commodity, is it energy in general or is it a specific form of energy?

Rick Rule: I’m not sure there is a winner. If I was going to be opportunistic in attempting to use the war to my portfolio’s advantage, my temptation would be to default to Canadian oil and gas producers.

It could be that the heightened political risk in the rest of the world offsets the already high political risk in Canada.

And Canada would seem to be a potential beneficiary of a temporary or even other than temporary increase in oil and gas prices. The other thing is that Canada’s political leadership has been leery to allow expanded oil and gas production. The former prime minister saying that there was no business case for the export of Canadian oil and gas.

He said that despite six foreign countries evidencing interest in that, but it could be that increased public knowledge of the insecurity that global consumers feel with regards to oil and gas will change the political equation around the potential export of Canadian oil and gas, particularly given the incredible budget deficits that Canada enjoys, if that’s the right phrase.

So if I was going to find a winner, I suspect it would likely be Canada. That notwithstanding, of course, I, like you, would prefer that peace occurred.

Dan: Yeah. And you’re quite right to point out from a human point of view, not even humanitarian, but just from a personal point of view, it’s always a little distasteful to describe war as having winners and losers from a financial perspective.

But it’s such a disruptive event in terms of energy policy that I think there’s some other questions I want to follow up with, but I wanted to follow up on behalf of Tom Dyson, who’s, as you know, the investment director of Bonner Private Research. He was curious about some news that came out this week.

And then another reader asked about this as well. Tom recommended in the first week of December last year, ARC Resources, which was one of eight oil and gas stocks. And then earlier this week, Shell has said they would like to buy ARC Resources. So does this fit into your Canada thesis and what do you think of the offer that was made?

Rick Rule: It does, and it’s bittersweet. ARC was my favorite of the Canadians. Very high quality management team. I used to tease myself by saying I competed against them. That’s not true. I got the business that was left over. Very, very, very high quality people, very, very high quality company.

They stumbled recently, last two years on one big investment, which left the opportunity for Shell to come back into Canada by taking over ARC. I guess if I have the choice between getting paid now and getting paid later, probably I prefer to get paid now. I will not be a holder of my Shell shares. I would have preferred to continue to own ARC. That’s not an offer. I will, likely this week, at the very least, collar the arbitrage between ARC and Shell.

While I think the offer is a fair offer based on current market, I think the upside for me as an ARC shareholder was greater than my likely upside will be as a Shell holder.

There are some aspects of Shell, which by the way, are attractive. It’s a much better company than it was five years ago. The emphasis on gas in Shell, their increasing capabilities in gas production and trading is good. Their re-emphasis on frontier offshore oil and gas exploration is good.

That probably mostly offsets their, how would you say, European politically correct motivations of the last 10 years, and the fact that they haven’t maintained their sustaining capital investments in the US.

It could be that a ship the size of Shell will never be as efficient as I would hope, or as efficient as ARC. All of the above notwithstanding, given that I have fairly representative investments across the oil space, I won’t be a Shell holder.

Dan: Okay. That’s a great answer. I know Tom will have more for our readers because he also at that same time in December of last year recommended some larger producing companies. And I guess that leads me to my second question before I get to the reader questions, is the amount of cashflow that the oil companies have generated in the first quarter since the war started.

But also the gold companies, I’m sure you saw that the story that Newmont Mining generated $3.1 billion in free cash flow in the first quarter, which is around $100 million a day, which according to the story I read was, on an annualized basis would be more than Coca-Cola. With all that money, are we now looking at the M&A phase of the precious metals market or indeed the energy market, where the larger majors with tons of cash start buying smaller companies?

And if that’s true, how are you incorporating that into your strategy?

Rick Rule: Yes and yes. It isn’t merely a consequence of larger free cash balances. It is also the case that in both the oil and gas industry and the mining business, that the companies for 20 years or 30 years in the case of the oil business, have underinvested substantially and their ability to maintain, never mind increase production, is going to be increasingly constrained by past sins.

The big companies are going to be incapable of growing organically because they don’t have the pipelines that they would’ve had four years ago. The only way that they’re going to be able to maintain their production and hence their cashflow in the out years is going to be by acquiring smaller companies. It’s also true that bigger companies have greater trading liquidity and hence more trading volume and hence lower cost of capital.

In expected businesses, cost of capital is a decided advantage. So either value arbitrageurs like myself bid up the prices of small companies relative to large companies or the large companies take over the small companies. I think we’re coming into a period now where we see heightened M&A activity really across the landscape, big guys taking over little guys, multi-asset producers, which are less risky than single asset producers, eliminating the value arbitrage by taking over the single asset producers.

And importantly, both strategic and horizontal mergers. You will see smaller companies taking over smaller companies simply to become bigger, to be included in more indexes and get more passive buying. But yes, what you say is correct. With regards to the cash flow around Newmont, I want to add one thing.

I am nervous that this cashflow growth flattens out because during periods of low commodity prices, what many companies do without disclosing it as well as they should is high grade, which is to say during periods of low prices, companies often produce their low hanging fruit. What that means is that when the price of commodities goes up and they shift back to lower quality material, they’re okay for a year or two, but taking the high grade material out of the low grade envelope and mining only the low grade remaining material, means that their costs relative to units of production increases.

And I’m afraid that in the gold business with the big legacy producers, we’re going to see that. That’s not an accusation. I don’t know it to be true. And I’ve meant to go through the Newmont income statement for the last five or six years and look at the variability between the grade produced in a given year and the median reserve grades over the life of mines.

If you see companies that report costs on a unit production basis, which is to say a per ounce basis, without taking charges for excess depletion, when they mine grades that are substantially above the median reserve grade, what they’re really doing is high grading.

And I’m embarrassed to say I haven’t taken the time to sort through the gold business to find out which guys were and which guys weren’t high grading.

Dan: Well, it’s useful to know. I hadn’t heard that term. Maybe just to follow up on that general thesis, I’d seen somewhere recently that Robert Friedland had talked about interruptions in the ability of copper mines or other mines to operate as a result of not only higher fuel prices, which were a factor, or at least a factor to their margins, assuming the fuel was available, but then some of the distillate products that are used in the mining industry.

One of our themes has been, it doesn’t seem that any of the second or third order effects of the closure of the Strait of Hormuz have yet resulted in either much higher commodity prices or actual scarcity in physical bottlenecks. Is that something you think might happen still? .

Rick Rule: Both are completely accurate statements. I would suggest to you that the increase in oil prices that we’ve seen as a consequence of the Gulf conflict have been anticipatory, which is to say the price has gone up because there will be shortages rather than there are shortages.

There were floating inventories and there were strategic petroleum reserves around the world, and the price increases that we’ve seen reflect a concern over supply rather than actual supply. In some fairly short period of time, if the crisis isn’t resolved, you’re going to go to rationing oil by price as opposed to prices in anticipation of rationing.

You’re already seeing loaded cargoes south of the Straits trading at $40 per barrel premiums to posted spot rates. So while the quote may be $100, that same oil delivered into Pakistan or Sri Lanka, or for that matter Perth, commands $140, which is to say a $40 premium.

If this conflict continues, I’m afraid you ain’t seen nothing yet. The second thing that a lot of people miss is that the response in prices is inconsistent, which is to say the lighter fragments, things like diesel and jet fuel have really been impacted, and that likely continues.

The crack spread, the premium, as an example, that jet fuel or diesel might command suggest that the refiners are making incredible margins if they can get product, which obviously they can’t. And so you’re going to see the shortages spread unequally across products by weight.

And I think I saw an announcement that KLM is planning to shut down a variety of European flights due to the absolute unavailability, the price due, but the unavailability of jet fuel. You may see some mines in Western Australia similarly constrained, not merely by the price associated with diesel, but rather as a consequence, both of the Gulf conflict and Australia’s idiotic shortage of refining capacity, constrained by the unavailability of diesel.

I don’t think you have any fear of that for two or three weeks, but two or three weeks is a fairly short time. I guess what I’m trying to leave your listeners with is, the price increases that you have seen aren’t necessarily reflective of the price increases that you will see if the crisis continues.

Dan: That’s a really good point. That’s one reason I’m doing this interview from Laramie and not Australia. I was supposed to go down there and didn’t want to get stuck down there again for a variety of number of reasons.

But let’s move on to the reader questions because there’s a ton of them. Some are general, some are specific. I’ll just go in the order in which they arrived.

“Hi, Dan. Could you please ask Rick Rule which investment he considers best? Gold, silver, copper, platinum, or uranium?” I think you have to choose from those. “And does he prefer the precious metals physically or as stocks?”

Rick Rule: Sadly, there’s no one-size-fits-all answer. It depends on the investor. Investors who don’t have sufficient savings should consider having some savings in gold. So for the new investor, for the less wealthy investor, for the investor whose lifestyle will be challenged by a decade where I believe the US dollar will lose 75% of its purchasing power, for a investor with a fixed income, a pension, gold. Gold, what you’re looking at is not making money. You’re looking at survival. You’re looking at the maintenance of some semblage of your lifestyle.

Dan, I was around in the decade of the ‘70s personally, and I was old enough to be cognizant. In the decade of the ‘70s, according to the Office of Management and Budget, the US dollar lost 75% of its purchasing power. Which meant that a pensioner that went into the decade in 1970, the basket of goods and services that he or she bought for $1,000, by the end of the decade cost $4,000.

What that means for many of your listeners is that their savings and their retirement income will be insufficient to fund the lifestyle that they would like to become accustomed to or are accustomed to over the next ten years.

And there’s no hope coming. I mean, people need to understand that. The entitlement system in the United States is $120 trillion upside down. So the idea that the state is going to come to your assistance is a misnomer. For you, gold. For an investor in a different circumstance, which is to say a Rick Rule, if I had one place out of all of those to be, I would probably be in the high quality uranium equities. The reason for that is twofold. The unsung beneficiary of the Gulf conflict really, and this is the way I should have answered your prior question, is uranium.

The incredible buildup of the French nuclear fleet and the Japanese nuclear fleet, now numbers three and four worldwide, were a consequence of the Arab oil embargo. When energy security became a national concern, the Japanese noted that they could store enough uranium because of its energy density in one warehouse to power Japan for five years.

That lesson was lost on Japan in the aftermath of Fukushima, and now they’ve got a slap in the face, a real dose of reality. And I suspect on a global basis, in addition to the other attributes of uranium, which is to say reliable base load power, non-carbon generation, we’re reintroducing the concept of energy security. And if you couple that with the fact that the structure of the uranium market itself has changed, where unlike any other commodity in the world, which trades primarily at spot, uranium trades in contractor term markets.

What that means is that producers and consumers can enter into binding contracts that specify price and term for a long period of time. With the boom in new uranium plant construction now, the lenders are frequently requiring the nuclear power plant builders to obtain enough supply in the contract market to amortize the loan, unlike any other commodity where price variability in the out years is extraordinary.

In the uranium business, both price and volume can be predetermined for the very long term. And that makes, to me, the high quality uranium equities, the people who will have the productive capacity to fuel the demand for nuclear power plants in the future, particularly attractive speculations.

Dan: I don’t disagree with a word of that. How does Sprott play into this, by the way? And you can elaborate on your previous involvement with them, but they have several ways for investors to participate in this and one of them is just a huge pile of uranium.

Rick Rule: It might be that the lowest risk, or certainly the lowest effort would be to buy uranium. Uranium is not a substance which you either legally or are advised to store at home. And Sprott is the largest owner of physical uranium that we know of, finished uranium on the planet. They own on behalf of investors 82 million pounds in a vehicle called the Sprott Physical Uranium Trust.

And buying this physical uranium, having Sprott store it for you in licensed locations around the world is a wonderful way to play this circumstance. It trades like water. So to the extent that you want to buy it and sell it, at least in mortals quantities, you can buy this stuff on the exchange, sell it on the exchange. You don’t have to do anything. They store it, they insure it, they do everything. So that’s a wonderful way to play it, probably, particularly for people who have no exposure.

The other way to play it is, in effect, the Exxon of the uranium business, which is Cameco [CCJ], the largest and highest quality full service uranium company on the planet. They do everything from explore uranium, to operate nuclear power plants, and sell watts.

The stock has had a tremendous run-up, albeit from a limited base, but current dynamics in the uranium market are not reflected in either the uranium price or in the Cameco price.

Dan: Yeah. I think that’s well worth following up on because one of the phrases I’ve seen in relation to what happens after the end of the war is, we have a global energy market in terms of demand, but the supply might turn out to be heavily influenced by regional geography and who your neighbors are and how much of a particular resource they have. So there may be more opportunities there later this year.

Rick Rule: Even a poor country like Sri Lanka, and you rely on thermal, which is to say coal, oil and gas for your electricity, 80% of your electricity. While $6 billion is not an inconsequential sum to spend to build a modern nuclear power plant, that’s a cheap one, by the way. And those prices, those costs will come down as the volume goes up.

The price that Sri Lanka is having to pay right now in terms of economic output as a consequence of restricted liquefied natural gas and petroleum prices is one that I think will cause even a very poor country like Sri Lanka to rethink the calculus of the upfront capital cost as against the security of having nuclear power.

Dan: Yeah, I agree. I think it’s the best moment for a long time for nuclear. Let’s talk about something that hasn’t had a lot of great moments or had a very good moment earlier in the year and then a very bad moment. This is a question about silver. “If Rick sold out of his silver position earlier in this year, what was the reasoning behind the move and what does he see silver doing in the near future?”

Rick Rule: Well, you see, I don’t see the silver price as down because I measure it from $17. I just considered it as less far up. And again, the answer is individual. It’s not one-size-fits-all. For me, silver in my portfolio was a speculative position. I had it in a speculative bucket of my portfolio. Now, Tom, or pardon me, Dan, you know I’m a speculator. So my speculative bucket’s fairly large, but I’m fairly specific. I bought silver because it was hated, and I bought it because at least in terms of primary production, not byproduct production, but primary production, it was cheap.

The price of silver didn’t justify the capital cost associated with mining silver. And so either the silver price went up or the silver mines were shut down. Those were my two choices. But I bought it more because when I looked at social media posts concerning silver, they were sort of 19 to one negative, and a speculator learns to love/hate, at least a speculator that’s in a natural resource-based investment. So I bought silver thinking that as it became, if it became less hated, that the price would go up. And you know what happened? The price went up.

So when the price went up, the reason I owned it went away. If I thought the price was going to go from 17 to 50, and instead it went from 17 to 70, a lot of my reason for owning silver went away. So I needed to rethink my speculative position.

And here’s the interesting arithmetic I came up with. As a speculator, I was better off owning the silver stocks than silver because the silver stocks were trading on the market, assuming $45 silver and the market was paying 70 for it. Now there’s three circumstances that could happen. The price of silver could go up, that could happen, and the silver stocks would benefit.

The silver price could go sideways, which by definition meant I didn’t make any money on my silver. But the silver stocks priced at a $45 assumption could still go up, even though the silver price couldn’t go up, or the silver price could go down.

And if the silver price went down, the inherent discount implied in the price of the silver stocks meant that at least arithmetically, the silver stocks would lose value less rapidly than the stocks. And so when I sold, I sold 80% of my silver position, not my entire silver position.

When I sold that, I redeployed about half the money into silver stocks, high quality ones. I put a quarter of the money into savings, primarily gold bullion, but also short-term US treasuries, and I put a quarter of the money in oil and gas stocks, not because I anticipated the Gulf War, but rather because oil and gas was hated at the time. And again, I was buying hate and selling love.

That doesn’t presuppose that everybody else should do that. Most people were unwilling to buy silver when it was hated. They needed the psychological reinforcement of the price action to justify the narrative. The difficulty with that is that when you get the price action that justifies the narrative, most of the value of the narrative’s already gone.

Dan: Right.

Rick Rule: I hope that answers the question.

Dan: It does. No, it does. I mean, we could take a deeper dive on demand for silver and deficits, but I think we’ve talked about it enough before that that covers the specific question directed at you. Here’s a question about copper. It’s slightly longer, but I’ll read it anyway. “Given your view, I assume this is your view, on the structural copper deficit and the quote, ‘need to steal from host governments, by host governments,’ how do you weigh the optionality of the Cobre Panama restart against the rising jurisdictional risk in Latin America, with Franco-Nevada trading at a premium again and the stockpile processing approved, is the Panama discount fully gone or are we underestimating the cost of the new social license required to fully open?”

That’s a big question, and it assumes a lot of familiarity with terms you’ve used before.

Rick Rule: We haven’t seen the social cost reopen. We haven’t seen the agreement between the Panamanian government And First Quantum and Franco-Nevada. Doesn’t mean that there isn’t one, but we haven’t seen it. I believe that... I mean, this is still a very open political question in Panama. About 40% of the people in the country, people who I suspect are enumerate, oppose the reopening of the mine, which is to say that they’re putting rhetoric, environmental rhetoric or some other kind of rhetoric ahead of the fact that their country’s insolvent.

And ahead of the fact that the contracts around the agreement between Cobre Panama and the Republic of Panama are subject to international arbitration. And if the mine shuts down, Panama’s going to lose a bunch of money that it doesn’t already have. So from a fiscal perspective, the reopening of the mine is an inevitability, assuming that the voters in Panama become numerate.

Dan: That seems like a big assumption.

Rick Rule: Well, I suspect right now one impact is that that mine at $6 copper is going to make a whole bunch more money than that mine made at 3.50. And there’s probably a little bit to go around. One potential impasse of that would be to give the country of Panama some access to the upside, which is to say, in effect, give them a stream, the right, but not the obligation to buy some copper at a fixed price for a period of time in the future. That stream, depending on the nature of the stream, could be turned into cash now, which is to say the government of Panama, rather than keeping the stream, could sell a stream and raise money, and they need the money in the worst way.

I suspect that there is upside both in First Quantum and in Franco-Nevada, because I think that there’s a probability, not a certainty, but rather a probability that negotiations are ultimately successful and the mine comes back into production.

I have been assured, although I don’t know personally, I’ve been assured by the company that the mine has been on, what’s called hot shut, which means that they shut it down, but they kept the operations in good condition so that it can be restarted, including the plant, on fairly short notice. I noticed too, the Panamanian government has given First Quantum now license to process the stockpiles, which means that they’re going to turn the plant on.

And assuming that the impasse and negotiations is resolved, that the plant could relatively efficiently move from stockpiled material to new mined material without too long a delay, which would of course be a very good thing.

Dan: Excellent. That’s a thorough answer. I’ll just give you two more, and then we’ll release you to your adoring hoards on the internet who probably are requesting massive amounts of your time. This is a general one. If there is a stock market crash, how will gold, silver, and the mining stocks react? Will they fall significantly, but bounce back quicker than the general market? What’s your risk here?

Rick Rule: I think the answer to that is yes and yes. It’s important to remember that gold stocks are stocks. It’s important too, to look back at history. In 1987, as I recall, the gold complex held up for 24 hours before it got crushed too. It’s important to know that in the liquidity squeeze, the sell decision is seldom made by the speculator, but rather by the margin clerk.

And the margin clerk doesn’t have favors. The margin clerk looks for something that has a bid, and gold always has a bid, so it will be sold. In prior liquidity-driven crashes, two things have occurred. Assets that are regarded as higher quality assets, which often include gold, come back quicker.

The second thing that happens is the fiscal response to a liquidity crisis is very often artificially low interest rates and quantitative easing, also known as counterfeiting.

Traditionally, both of those responses have led to concerns about the maintenance of purchasing power in fiat currencies and have been very good for gold, which is to say that gold often bounces back first because of its perception as a high quality low risk asset, and then bounces back too as a consequence of the policies that the governments have enacted to shield the citizenry from the worst aspects of the liquidity squeeze.

Dan: Yeah. It’s a really interesting question from a political angle or monetary policy angle that with monetary policy being more effectively politicized in the US, you have a new Fed chairman, you’re going to have a lot of pressure to lower interest rates in order to goose GDP before the midterm elections. And then you’re in that 24 month period, really less, where a new president will be elected. And if there’s Republicans in control of Congress, they’re going to want the economy to be... Well, they want to run it hot. We would say CPI will be officially 4%, but probably more like 9%, which it’s hard to imagine gold not doing well in that situation.

Rick Rule: Dan, I’ve been cognizant now for, I don’t know, 55 years, something like that, maybe economically literate for 45 years. I’ve seen two periods of time in my life when the United States attempted to let the market set interest rates, and I wouldn’t hold my breath for that occurring this time through.

I would also suggest that we stop referring to the CPI, except as perhaps by the moniker, the CP lie. The idea, if you yourself, Dan, looked at the price escalation, a basket of goods and services that you consume now relative to the year 2020, the idea that your purchasing power was deteriorating at 2.5% a year compounded is stupid. You’ll remember that when it’s inconvenient to them, the index doesn’t include food or fuel. Well, I don’t know about you, but any index doesn’t include lunch is of no use to me whatsoever. And on top of that, it doesn’t include tax.

If I didn’t have to pay the tax, maybe I wouldn’t bitch quite so much about the index, but when people are thinking about inflation and they use as a baseline, the CPI, they’re making a huge mistake in their baseline assumption. I listen all the time to conference calls around major resource developers, and they’re all saying that the escalation in the construction inputs and the operating inputs that they’re facing, including labor, is growing by 12 to 15% a year.

How is it that the CPI stated rate of inflation is at 2.9 when the input costs associated with major heavy industries in the country are increasing at 12 to 15% compounded? The answer is they aren’t. It’s a joke.

Dan: Yeah. It brings me to my last question for you, and I’ll preface it by a story I read today on X, and I can’t remember if it was the Sumerian Empire, Babylon Empire. It was one of the empires in the Levant. And the paper record showed that as the empire was collapsing, literally collapsing, like the sinews of trade globally were falling apart. The world was becoming less connected as the empire fell apart.

The people in the center of the empire were busy sending effectively memos to each other about administrative affairs. And the modern equivalent of looking at spreadsheets and having a Zoom call or a Slack call about whether the rate of inflation in insurance premiums was accurate. They were missing the fact that the price level went up by 40% in two years and it entirely shifted. It is not coming down. But it gets back to the point you made about golden purchasing power, which is the last question I had from a reader.

“Please ask Rick what he thinks about buying PACS gold as a digital way to buy gold. The company argues they hold the physical and they are audited annually.” And my addendum to that would be, is there a better way for people to earn interest while preserving their purchasing power than a conventional bank?

Rick Rule: I’m fascinated by Tether and PACS and Argo. I mean, really, truly fascinated. What holds me back, although I am a shareholder in Argo, I can’t deny that. What holds me back is that none of them publish balance sheets or income statements. And the idea that somebody is holding my wealth for me in proxy where I can’t see the balance sheet or the income statement, which is to say, I don’t know anything about the solvency of my fiduciary is of no use to me whatsoever.

I remember back in 2011 helping the Sprott organization create the Sprott Physical Gold Trust and the Silver Trust, and I was talking about ways to make the trust more efficient, which would’ve increased counterparty risk. And the guy whose name was on the door, Eric Sprott, who was going to invest a quarter billion dollars in those products, said, “Rick, I’m doing this to reduce my risk. I’m not doing this to increase my risk.”

So I would argue that at present, digital gold is a speculation as opposed to savings because you don’t understand anything about the solvency of the fiduciary. And if the fiduciary ended up in chapter 11, the fiduciary of your savings would be a US bankruptcy court. I have enough experience with the mechanisms of bankruptcy courts that I don’t want to face that. So I would prefer to hold my gold... Well, I mean, at Battle Bank, we hold all our gold at Brink’s. It isn’t because the service that we get from Brink’s is better than the service that we might get other places, right now far from it. It is the fact that only Brink’s and Loomis have storage facilities that are owned in publicly traded companies where I can see the balance sheet and I can see the income statement, and where if they lie to me, it’s a federal offense, not a civil offense.

I don’t have to sue them. I don’t have my gold to increase my risk. I want any gold instrument I have to be redeemable, which means I want to be able to trade my piece of paper for the real thing, and I want the fiduciary to be solvent, and I want my gold to be stored by a fiduciary that’s solvent too. If you hold gold as a speculation, if you hold it merely because you think the price is going to go up, not because you think you might need it. If you’re speculating in gold, then you can consider less secure forms of ownership. I speculate in gold stocks. I save in gold, and those are very, very, very different motivations.

Dan: Yeah, I agree. And I think that’s a good answer. It’s exciting to me too. I love the idea of tokenized gold and being able to use that.

Rick Rule: Well, using it for money is something I really look forward to. I really, really, really do look forward to it. I look forward to a gold coin or gold token that is floated by a solvent reporting intermediary that’s redeemable. And I mean, the technology exists now. The regulation to allow it doesn’t exist yet.

Dan: Yeah. Well, let’s hope it happens soon. Let’s hope it happens before, but probably not, before July 6th through the 10th, which in case you missed the beginning, Rick will be the host of the Natural Resource Investing Symposium. And according to your website, if my math is correct, that’s 68 days, 20 hours and 53 seconds from now. So you have some time to register, but don’t wait too long because from uranium to silver to gold, copper, energy, oil and gas, there really couldn’t be a better time. I mean, actually maybe that’ll be my last question to you. How do you put this year in the context of previous events in terms of your level of enthusiasm or excitement about the opportunities that natural resource investors have right now?

Rick Rule: The content gets better every year. We’ve put on the conference for almost 30 years, actually since you all have owned it, since Agora owned it. And if you do something for 30 years, if you stood the test of time, and if you tried to make it better every year, after 30 years, it gets pretty good. We have learned the art of putting on conferences a little better and curating content a little better every year.

The online part of it gets better much more quickly because we’ve only been doing that for five years. The first year was a disaster. We couldn’t have done worse, but the conference will be better in that regard. It will be difficult for us to match the investment performance of the last two years, simply because the investment performance of the last two years was so exquisite.

What we can tell you is this, we can tell you that unlike any other investment conference on the planet, any public company exhibitor at our show must be owned in the accounts of the conference organizers. Now, there’s no guarantee that because I own a stock, it goes up, but there is a guarantee that I have vetted that company, an absolute guarantee.

And there’s no other conference I know of on the planet that has that same qualification, which I think is important. The second is that there’s no other investment conference I know of on the planet that has an unequivocal money back guarantee. If you think for any reason whatsoever that you didn’t get your money’s worth, I give you your money back. The third thing that we do that nobody else does is that I interview every single speaker and exhibitor at the conference before the conference, that you don’t have to pay to watch that, by the way.

You can go to YouTube, the Rural Investment Media Channel, and you can watch all those, but it’s meant to be used in conjunction with the conference because we give you over 46 hours, over four days, more content than you can absorb at the conference, much more.

The consequence of that is that we want you to arrive at the conference informed and be able to allocate your time better because you’re familiar with the speakers before you get to the floor, you’re familiar with the exhibitors before you get to the floor. And then unlike any other conference on the planet, afterwards, three months or four months afterwards, I interview every exhibitor again. I say, “Eight months ago, you said you were going to do this. At the conference, you said that you were going to do this. Now, here we are. Have you?” There’s no other conference that invests that much in the attendees.

There’s no other conference I know of that invests anywhere close to that much at the attendees. If you go to conferences to get away from your husband or wife, if you go for amusement purposes, don’t come to ours. If you buy the Sunday paper to do the crossword puzzle, our conference isn’t the place for you. If you come to make money in natural resource investment and speculation, absolutely do come. And if you don’t think I delivered value, let me know. I’ll give you your money back.

Dan: Well, if it’s not this year, there’s never going to be a time. And if it’s not this conference this year, I don’t think there’s any other conference that would make a bigger difference to the bottom line of individual investors than something like this. There’s just too many exciting things, risks as well, but the fact that you’ve done so much homework and that you’ve taken an hour of your time today to answer questions from BPR readers, Rick, it’s always a pleasure.

I always learn something and thanks again for your time. I look forward to talking to you next time. And for readers who are reading this or if you’re listening, we’ll have a link below to sign up for Rick’s conference. But Rick, thanks again for everything.

Rick Rule: Dan, thank you. I enjoy these conversations. One of the things that people who listen to me don’t know is how much work it is to be interviewed by a bad interviewer. And I enjoy talking with you. Sometimes my chore is to make the interviewer seem somewhat less stupid than he or she is. And it’s an absolute delight to be interviewed by somebody like you, and in fact, by your many listeners who also ask intelligent questions. So thank you for the ability to address your audience.

Dan: Oh, I’m flattered and I’ll pass that on to the readers because most of the questions were theirs. But Rick, until next time, we’ll talk to you soon, okay?

Rick Rule: Thank you, sir.

Subscribe now

Friday, May 1st, 2026

Bill Bonner, from Rancho Santana, Nicaragua

We began the week amazed and baffled. It’s now Friday and we’re still amazed and baffled. Between the state of the world...and the state of the stock market...is a state of confusion so wide even Evil Knievel couldn’t jump across.

As for the state of the world, and the US position in it, the news has gotten worse. The quagmire looks deeper. Federal finances are shallower. And America looks more and more like a desperate, bumbling empire led by an aggressive geriatric.

(In a good way! Trump is showing the world that America’s near monopoly on coercion — bombing, bullying, threatening, sanctioning — won’t stop its decline. On the contrary, the more we use it…the faster we go down.)

And the feds are doing their part too — more dysfunctional and incompetent than ever.

At home, the Committee for a Responsible Federal Budget:

Debt Reaches 100% of GDP It’s happened — the national debt is now larger than the U.S. economy, about twice the historic average. With debt now above 100% of GDP, it’s only a matter of time until we pass the all-time record of 106% reached in the immediate aftermath of World War II. This time the borrowing isn’t borne from a seismic global conflict, but rather a total bipartisan abdication of making hard choices.

Subscribe now

And overseas...

Trump thought he’d score another easy win by murdering Iran’s leader and much of his family. Surprise, surprise. Iran blocked oil shipments from the Gulf. Trump didn’t like that, so he’s blocking them himself. This, of course, has a cost. CBS News:

Oil prices hit wartime peak, with Brent crude touching $126 a barrel

Newsweek:

Gasoline prices skyrocket to new high

MarketWatch:

Most US farmers can’t afford all the fertilizer they need this year

As many as half of all Americans live ‘hand to mouth.’ And they have to buy gas. Result: less for the hand to bring to the mouth. CNBC:

30% of car buyers trading in vehicles in the US now have negative equity, owing an average of $7,200 on their old loans. A record 43% of these underwater car buyers are opting for 84-month (7-year) loans. Their average monthly payment: $932, the highest level ever recorded.

Team Trump says that whatever we pay for the war is a small price to pay for whatever it is that they expect to gain from it. But it seems more and more likely that we will gain nothing.

So...either POTUS has an ace up his sleeve...

Or the whole thing is just another foolish shenanigan — like Vietnam, Iraq, the Covid Lockdown, stimmie checks, $39 trillion in federal debt — another wretched gift to the military/industrial/think tank/Israeli/university/surveillance industry.

Meanwhile, over in the wonder world of Wall Street, stocks are surging ahead. Quartz:

The S&P 500 reached a new all-time intraday high on Thursday, while the Dow Jones Industrial Average added 730 points, or 1.5%. The Nasdaq $NDAQ +0.70% Composite rose 0.2%.

So, what happens next?

Somehow, the gap between the charged-up price action on Wall Street…and the depressing ground of the macro world....must be closed. What will spark a correction, we don’t know. But when it happens, speculators are likely to find themselves on open ground, with a dark thundercloud overhead...and a puddle beneath their feet.

Stay tuned...

Regards,

Bill Bonner

Thursday, April 30th, 2026

Bill Bonner, from Tola, Nicaragua

It was only a few years ago that speculators were keen to buy NFTs.

The frenzy reached the point where things that were worth, essentially, nothing, came to be valued for millions of dollars.

Beeple’s digital artwork, for example, sold for as much as $69 million. And in 2021, the NFT market traded over $2.8 billion monthly. Beeple’s work is at least ‘artistic.’ The Bored Ape Yacht Club also became super chic while the fad raged. Celebrities — such as Justin Bieber — paid millions for these cartoons. Their value now? Futurism in 2023:

It Was All a Dream

Remember Bored Apes? They’re Almost Worthless Now

They probably have some residual value as curiosities. But it’s the speculators who are bored now. Analysts say prices have declined 95%. But most NFTs are probably worth nothing.

What happened to the ‘value’ that was supposedly locked up in this marvelous frou-frou? Now you see it; now you don’t. It got deflated away...squeezed out of the market like the remnants of an old tube of toothpaste.

Today, there is about $27 trillion of nothingness built into the stock market. That is simply a rough guess about how much wealth will disappear in the next major correction. As Paul Tudor Jones explained, the stock market’s periodic corrections take prices down about 30%...and since the stock market is now valued at 250% of GDP....a 30% pruning would reduce wealth by about $27 trillion.

Subscribe now

That’s deflation. ‘Wealth,’ thought to be safely locked up in the stock market, is suddenly taken out into the prison yard and gunned down.

All major innovations begin by destroying wealth. New tech — from internal combustion engines to dot-coms to AI — offers to cut costs for both consumers and producers. People take up the new products because they save time and money. Prices go down.

Later in the cycle, new industries are created. Automobiles, for example, led to an explosion not just of cost cutting...but spending and new wealth. Highways, suburbs, Detroit, shopping malls, oil companies, and junk yards — all grew quickly with the new machines.

AI is likely be much more deflationary than either the dot-com or the internal combustion engine. The latter put the muleteers out of business, but it almost immediately required many thousands of new machinists, rubber tire manufacturers, battery makers, parking lot attendants, and ambulance-chasing lawyers.

AI may be exceptionally deflationary. It has the potential to eliminate thousands of jobs...and not replace them. At least, not quickly.

There are more than three million truck drivers, for example. Self-driving software will eliminate their jobs. Will they take their places on robot assembly lines…or will the robots have those jobs too?

In time, of course, the free-ish market will find gainful employment for them all. But in the short-run, the effect will be to eliminate millions of money-earning workers from the market.

In his Tesla factory, Elon Musk famously replaced some of the robots with humans. He was under pressure to deliver cars and he found the machines were too slow. But that was already 10 years ago. Now, the machines are back – faster, smarter than ever. ProgrammerHelper, Jan. 2026:

Tesla’s Optimus Gen 3 Goes Into Production: Over 1,000 Humanoid Robots Now Working in Tesla Factories as Manufacturing Enters the Humanoid Era

So, what’s coming?

In view of the exceptionally overvalued stock market…and the exceptionally deflationary nature of AI…the coming stock market correction could be exceptionally depressing.

Regards,

Bill Bonner

P.S. Tom published his latest monthly report on what to do. If you’re a subscriber, yo u can read it by clicking on the link below.

Vol. 5, Issue 5

By Tom Dyson

Read more

Wednesday, April 29th, 2026

Bill Bonner, from Baltimore, Maryland

From the Daily Express comes more proof that AI can be helpful:

A 26-year-old man charged with brutally killing his roommates before dumping one of their remains in trash bags may have consulted ChatGPT for advice, Florida prosecutors said.

Hisham Abugharbieh allegedly asked the AI chatbot a series of questions, including what would happen to a person if they were put in a garbage bag and whether a car’s VIN number can be changed, the prosecutors said in a new court filing.

This will come as good news to investors. Because, if AI turns out to be the wealth booster that many people expect, maybe stocks won’t be in a ‘bubble’ after all? Maybe swelling growth will make today’s AI stock prices seem reasonable?

If you buy a stock for $10. And the company earns $1 a share...that’s a fair investment. If the company then distributes 50% of its earnings, it leaves you with a 5% dividend yield.

But if the same stock costs $50 it is in bubble territory, where the actual earnings don’t come close to justifying the price. However, if earnings were to rise from $1 per share to $5 per share, the stock would again be reasonably priced.

Earnings growth can justify high prices. Investors typically refer to “PEG” ratios, popularized by Peter Lynch, (PE ratio/Growth) to signal a stock that merits a higher price because of its rising earnings.

You’d think this might be true for the AI juiced stock market as a whole.

Subscribe now

We’ve all seen what remarkable things AI can do. It already drives cars; it is just a matter of time before it replaces truck drivers and chauffeurs. It is already replacing assembly line workers, cashiers, clerks and laborers of all sorts. Even the simplest tasks, such as mowing the grass along highways, are now being done by AI-enhanced systems.

In our world — economic and investment research — AI plays a larger and larger role, too. Everyone we know is working with an AI ‘agent’ or ‘butler,’ asking it to sort through millions of pages of statistics, data, and research to find the secrets. What if you knew all there was to know...what would you invest in now? Ask your AI buddy!

Meanwhile, the leading tech companies continue to push the limits. They aim for AGI — Artificial General Intelligence — which can do everything a human can do. The AGI humanoid robot will work 24 hours per day, 7 days a week...and not even ask for a coffee break.

Surely, this is a new dawn for humanity...no? Faster growth will help earnings catch up to prices, right? No need for the bubble to pop? Today’s stocks may seem cheap when this growth surge is fully realized.

That was the claim made for the dot-coms too. And individual dot-com businesses — AMZN, for example — were wildly successful. But the Nasdaq bubble popped anyway...and took 15 years to recover.

Can AI increase a company’s profits? Almost surely. AI will cut costs, lower prices and squeeze profit margins. No need for hours of research to find the best buy. Let AI do it.

(NB: these labor saving, money saving advances will be deflationary, not inflationary.)

But if AI can make companies more profitable...why won’t it bring earnings more in line with stock prices?

Economists have a word for this fallacy — we couldn’t remember what the word was so we asked our AI pal, Claude:

You’re describing the fallacy of composition — the error of assuming that what is true of a part must also be true of the whole, or vice versa.

In economics it shows up constantly. The classic textbook example is the “paradox of thrift,” articulated by Keynes: if one household saves more, it builds wealth and is better off. But if every household saves more simultaneously, aggregate consumption falls, businesses see weaker demand, incomes drop, and total savings can actually decline. What’s rational for the individual is destructive for the whole.

Yes, of course, AI may make the economy more productive, richer, and more dynamic. But as the water level rises, all boats rise with it. Stocks may go up...

But so do wages, competition and GDP itself. And it may take 10-20 years for earnings to catch up with today’s prices. In the meantime, speculators could expect very low returns.

What speculators are really betting on is not general prosperity, but for stocks to rise much faster than GDP. That was the charm of the Funny Money Era...and its curse.

In 1980, near the beginning of the Funny Money Era, the stock market was worth about 75% of GDP. Now, it is 250%. What would happen if the bubble were to pop? Patrick O’Shaughnessy channels Paul Tudor Jones:

Since 1970, we get a mean reversion about every 10 years. Let’s say mean reverts to the past 25 or 30-year PE. That would be a 30, 35% decline. Well, 35% on 250% of GDP is 80, 90% of GDP. 10% of our tax revenues are capital gains, they go to zero. So you can see the budget deficit blowing up. You can see the bond market getting smoked.

In other words, the ‘pop’ could wipe out $27 trillion, or 90% of GDP — a calamitous loss for just about everyone.

So, sorry. No Eden without a snake.

Regards,

Bill Bonner

Tuesday, April 28th, 2026

Bill Bonner, from Baltimore, Maryland

The South China Morning Post reports:

Will China’s mathematicians join a global effort to boycott the United States?

America’s tech prowess — AI included — is built on a foundation of numbers.

So, the International Congress of Mathematicians is a big deal. It’s scheduled to meet in Philadelphia in July. But America’s tough visa rules and its war on Iran have inspired more than 2,300 mathematicians to sign a petition to “move the 2026 ICM out of the US.”

Does it matter? We don’t know. But it is just one of many signs that the world is moving away from us. And here’s more, The Conversation:

‘China’s rapid rise in science has hit a milestone. The country’s investment in research and development has reached parity with — and by purchasing power measures has surpassed — that of the United States, according to a March 2026 report from the Organisation for Economic Co-operation and Development. Both nations have crossed the US$1 trillion threshold on research spending.’

But so far, investors worldwide have not turned their backs on US equities...even though those stocks are at the top of bubble territory...and even though no bubble has ever failed to pop.

The question we left you with yesterday was: how come the bubble hasn’t popped? Is this something new, an eternal bubble? A smile that never turns to a frown? It seems unnatural...like mac without the cheese...a bender without a hangover...the Resurrection without the Crucifixion.

The eternal bubble idea came to us just as words. But mathematicians know why it isn’t possible. Our newest and bestest friend — an unpaid researcher, Claude — told us so. Claude is, of course, an AI app, freely available on the internet. And there is almost nothing that Claude doesn’t know.

Why can’t we have a bubble without tears, we asked him. Claude:

Bubbles pop because the conditions that inflate them are self-undermining.

The same dynamics that drive prices far above any reasonable estimate of underlying value also guarantee that the rise can’t continue indefinitely.

The arithmetic eventually breaks. A bubble requires prices to keep rising fast enough to reward new buyers. But sustaining, say, 30% annual gains compounds into absurdity within a decade — the asset would consume the entire economy. At some point the implied future earnings, rents, or cash flows become mathematically impossible, and even committed believers run out of ways to justify the next leg up.

In other words, what makes a bubble a bubble is that it is unusual. The things in it go up at an extraordinary pace. But as Claude points out, it is mathematically impossible for that to continue for very long. Nothing can grow at an extraordinary rate forever. Because it would soon fill the universe. There would be no room for anything but the extraordinary thing, which would make it very ordinary.

But why couldn’t the bubble just remain as it is? Claude might be worn out from his mental exertion already, so we’ll answer the question ourselves.

Subscribe now

Investors don’t buy into a bubble, looking forward to the dividend checks. As they say on Wall Street, “you make your money when you buy.” And buying high means that the anticipated earnings per share will be relatively low.

Speculators buy into bubbles, not investors. In the bubble psychology, speculators believe that they can buy high...and sell even higher. They believe, often correctly, that when others see how well they are doing, they will want to join the party too.

But eventually the math doesn’t work. The bar closes and they turn off the music. Then, the speculators, who might have borrowed money to bet on the bubble, will be disappointed....and under pressure. They can ‘do the numbers’ too. If they have borrowed at 5% interest, even a 4% gain leaves them feeling blue.

Stable prices work for investors; not for speculators. When the music stops and a bubble no longer acts like a bubble, speculators go home. Not only does a stagnant bubble make them no money...it also poses substantial risk of big losses.

Speculators, after all, are betting on capital gains, not earnings. So, they are very alert to capital losses, too. And when a bubble seems to level off, they know what is likely to happen next.

First, the mathematicians edge for the exits. And then they all skedaddle.

Regards,

Bill Bonner

Research Note, by Dan Denning

Reinvested dividends accounted for more than 50% of the total return in US stocks in the 20th century. That data and analysis comes from a book called Triumph of the Optimists, published in 2002. It’s based on annual data from the Credit Suisse/UBS Annual Global Investment returns yearbook.

The 50% figure comes from the combination of several things. First, time is on your side when it comes to compounding. The longer you do it, the more you make. Reinvested dividends grow the total return faster than capital gains alone (higher prices). But that’s not all.

US companies paid dividends as a reward to investors willing to take the risk of owning stocks ‘for the long run.’ It was compensation in the form of cash returned to shareholders as income, and taxed at a favorable (lower) rate than capital gains. It’s important to note the 50% figure from the Triumph dataset is both cumulative (not annualized) and inflation adjusted (a real return, not a nominal return).

The S&P’s own figure for the total return of the index in the last 80 years is around 44% (not adjusted for inflation). But broken down into 20, 50, and 100 year increments, the data show that dividends contribute less to the total return on the index than they used to. In the last 20 years, reinvested dividends only account for about 25% of the total return. In the last 50 years, 35%, and the last 100 years, around 44%, according to S&P. Why does this matter for investors right now?

A low dividend yield is a valuation metric. It tells you to expect below average inflation adjusted returns for the next five to ten years. When investors have become accustomed to expecting big annual price gains in stocks, they stop looking for income. Historically, that happens near the end of a bubble.

The term ‘shareholder yield’ has replaced ‘dividend yield’ with some value investors. Shareholder yield counts dividends paid to investors. But it includes stock buy-backs as well. The idea is that it’s the broadest measure of cash that is returned to owners (in one way or another).

As you might guess, the ‘shareholder yield’ is higher than the old ‘dividend yield’ on the S&P 500. But even the shareholder yield is historically low, around 3-4%, well below its historical average (it’s harder to crunch buy-back data over time). Not even aggressive corporate stock buybacks have been enough to push it higher.

In the May Monthly Strategy Report out tomorrow, Investment Director Tom Dyson will update paid subscribers on the income stocks on the BPR Official List. Tom dropped a note late last night about one of his recent oil and gas picks getting a buyout offer in the last 24 hours. Stay tuned for news and further recommendations tomorrow.

Monday, April 27th, 2026

Bill Bonner, from Baltimore, Maryland

“In the post-Cold War era, while the undercurrents of US hegemony were always present, Washington at least maintained on the surface the image of a ‘responsible actor’: sustaining alliances, providing some international public goods, and leading the creation and enforcement of global rules...

“Today, that facade has rapidly fallen away. America has devolved entirely into a rule-breaker...cooperation saboteur...now relying on the naked ‘law of the jungle’ to maintain its dominance.”

—The Chinese People’s Daily

What a remarkable set of dots!

They include some of the grimmest pictures we’ve seen in years...

First are signs of growing lawlessness and corruption. New York Post:

Chaos at White House Correspondents’ Dinner as gunman storms hotel, opens fire outside ballroom and Trump is evacuated

And whenever Trump makes a policy shift....fortunes are made by insiders front-running the news. Common Dreams:

‘Mind-Blowing Corruption’: Traders Placed Massive Bets Minutes Before Trump Post on Iran

More troubling still are the signs that the US, like a grandmother in the jaws of an alligator, is being dragged into what looks more and more like an expensive quagmire...Asia Times:

America’s Iran quagmire…

As the Chicoms suggest, above, a great empire must provide ‘international public goods.’ Typically, it keeps trade routes open and safe...provides a reliable common currency...and establishes basic rules so people know what they can do and cannot do. An empire that becomes unpredictable and unreliable is probably headed for regime change of its own.

And US finances are careening to what looks like certain fiasco. Fortune:

When interest on national debt overtook military spending, it triggered a limit where the U.S. may ‘cease to be a great power,’ warns Hoover historian

But if these things are what they appear to be — signals of upcoming calamity — how come the stock market doesn’t see them? Instead, it suggests unbounded optimism. CNN:

Stocks are at record highs and shrugging off the war with Iran

By almost all measures, US asset prices are in a bubble. Based on Cyclically Adjusted P/E ratios, for example, the S&P 500 has been this high only one time in history — at the height of the Dot.com bubble. But back then, things were looking up. The US was not at war...and the feds were actually running a budget surplus.

Subscribe now

Today, the dots tell an alarming story. But the stock market hasn’t corrected. It’s dark at one end of the tunnel...bright as day at the other. We can’t remember ever seeing such a disconnect. And the harder you look, the wider the divergence appears.

America’s blockade of Iran’s blockade is intended to break Iran’s blockade with a blockade of our own. But commuters don’t really care who is blockading them from cheaper gasoline. They need to get to work.

And the oil market affects a lot more than just the price of gasoline. Farmers report that they are unable to buy fertilizers. A lack of sulphur, for example, is causing problems all over the world. Sulphur is used in car batteries and computers...and just about everything.

Meanwhile, a Dutch airline announced that it is cancelling flights — because jet fuel is too pricey. Conde Nast Traveller:

KLM has canceled more than 150 flights over the coming month as the cost of jet fuel continues to spike.

So why hasn’t the bubble on Wall Street popped?

Maybe it’s something new...an eternal bubble? One that never pops?

Tune in tomorrow...

Regards,

Bill Bonner

Friday, April 24th, 2026

Laramie, Wyoming

By Dan Denning

Two clocks, one outcome. A global energy depression and a stock market crash in the balance. Tick…tick…tick….

The first is ticking in Washington. The President notified Congress of his military operation in Iran on March 2nd. Under the 1973 War Powers Act, he has sixty days to conduct that operation without Congressional approval. That sixty day deadline is May 2nd.

The President can unilaterally extend his operation by another thirty days by writing to Congress. But, he’s technically only allowed to do so if those thirty days are required to conduct the safe withdrawal of US forces. War over.

Congress could step in and pass a resolution authorizing continued military force with a simple majority in both the House or the Senate. Or–and here’s a radical idea–Congress could do its duty and exercise its authority under Article 1, Section 8, Clause 11 of the United States Constitution and vote, by a simple majority, to declare war.

The Congress has only done that eleven times in American history. The last was in 1942. Since 1942 there have been 15 ‘conflicts’ in which Congress ought to have declared war but did not. Congress will not do its duty.

Technically, the President’s special military operation ought to end next week. Realistically, it could go on for at least another 30 days. And historically, based on the post 9/11 world, it could last years or decades. But in the short term, we have one clock ticking in DC.

The other is in Iran. Like everyone else in the Gulf, Iran is shipping a lot less oil these days. Their wells can keep producing as long as they have room to store that oil. But according to unofficial figures, the Iranians will run out of available storage for their oil sometime in mid May. And then?

And then they will have to ‘shut in’ their producing wells. A ‘shut in’ turns an oil well into a static pressure vessel. The longer the ‘shut in’ the more potential damage to the oil well itself, or the long-term production of the oil reservoir below it. And obviously, you can’t sell or ship oil you aren’t producing anymore. Tick Tick. Tick.

The global oil market has lost close to 700 million barrels of oil since the war began and the Strait was closed. If things ‘normalized’ today, clearing out the tanker traffic and resuming production would take time. It will be a billion barrels of ‘lost’ oil before you know it. And it will take years and billions of dollars/yuan of investment to repair the damage to energy infrastructure already inflicted (mostly by Iran on Gulf states).

This is the largest ‘oil shock’ in history, according to the International Energy Agency (IEA). It’s affecting supply and refiners and distillate products all over the world. But the only reason it isn’t an even BIGGER shock yet is that the supply shock has been met by about four million barrels per day of demand destruction.

High oil prices HAVE affected affordability/demand in those markets furthest away from the Gulf or least able to pay or find a substitute supplier. But the supply shock and demand destruction have more or less cancelled each other out at the moment. This gives the appearance of a weirdly stable status quo, where you can have the biggest energy shock ever…but have no real-world consequences.

I would not expect that to last. I’m leaving out the question of whether financial markets have been used to distort the contract/paper prices for oil. This would be a form of ‘narrative’ control to show that the war was going fine and there was no oil crisis. But the ‘real’ price–what users are paying to unload oil–is already much higher than the ‘paper’ price in some markets.

Another weird situation. High prices will destroy demand for people at the end of the supply chain, or without friends in oil-rich places. But that demand destruction may counter falling supply and allow for ‘stable’ oil prices. For a while. Until when?

Well, either things get back to something like normal or they don’t. My guess is that the supply disruption is still wending its way through global supply chains. Higher prices and real shortages will show up in the summer, if not sooner. And it will show up in a politically sensitive food prices (shortages). All of THAT is assumes the worst of the interrupted flows and damaged infrastructure is behind us. And stocks? See below.

Read more

Friday, April 24th, 2026

Bill Bonner, from Baltimore, Maryland

We’ll go down and cross the wide Rio de la Plata ourselves in a couple of weeks...but here’s the latest from our daughter, in Argentina:

‘Everything has gotten so expensive. I can barely keep up with it. Even simple things, like leaving a tip. I might have left 100 pesos a year ago...now, I leave 1,000 pesos. I don’t know how the local people do it.’

Naked Capitalism adds some precision:

According to the Institute of Statistics and Census (INDEC), inflation increased 3.4% in March 2026, its highest level in the past 12 months.

That figure represented a sharp increase on February (2.9%). It was also the tenth consecutive month of month-on-month increases in inflation. On an annual basis, inflation is now as high as 32.6%. Granted, that’s still much lower than it was 27 months ago when Milei took over the reins and sent inflation to the moon with a 52% devaluation of the Argentine peso, but the mere fact that it is once again rising on a consistent basis is a major cause for concern.

President Milei looked at the full part of the glass: “If we take core inflation and remove the effect of meat, it is the same as last month at 2.5%.”

Argentine cattlemen produce some of the best beef in the world. But now that they are free to export it, the beef remaining in the country is so expensive few people can afford it. Britannia Daily:

Argentina’s beef consumption plummeted to a 110-year nadir in mid-2024 as citizens increasingly substituted poultry and pork for what had been a dietary staple, with donkey meat representing the latest adaptation to deteriorating purchasing power.

There are a lot of wild burros in the countryside. They are a nuisance. Fences are not just to keep the cattle in...but to keep the burros out. The locals sometimes shoot the burros; they do not eat them.

And while it costs only about a third as much as beef, ‘let them eat donkey meat,’ is not likely to be a popular political slogan.

Subscribe now

For all we can tell, President Javier Milei is the only world leader since Jefferson with a clear idea about how things ought to work. But there is no guarantee that they actually will work that way, and not necessarily when you want them to.

Government takes many different forms. But the one form all governments share is that of a criminal enterprise. At the end of the day, the feds force people to do things they don’t want to do, surrendering either their property or their liberty. And since honest wealth is what a person gets when he is free to get it, any interference is likely to make him poorer. That is why ‘the government that governs best governs least.’

But what is true for the governed isn’t also true for the governors. The latter only get what they want by taking it — wealth and authority — from the people they are meant to serve. This is not the way they describe it in the civics books. And not a description that either Republicans or Democrats would agree with. But the real struggle — the one that matters — is not between Republicans and Democrats...nor liberals and conservatives...nor Protestants and Catholics...etc...but between the public and its overlords in what Milei calls the ‘casta politica.’

Alone among the world’s leaders, Mr. Milei seems to be willing to surrender some of his own wealth and power...so that ‘The People’ can get what they deserve.

Of course, he is no saint either. It was his chainsaw message — cutting down on government — that got him the fame and power he now enjoys. Were he to abandon it, that chainsaw could swing towards his own neck.

But now approaches the real test. Naked Capitalism:

The price increases, together with the rise in unemployment, the increase in labour informality (it’s already at 43%), the fall in consumption and the purchasing power of wages paint a critical scenario for the Executive: the polls coincide in the observation of a growing social unrest with the direction of the economy and a marked loss of support for the president.

For now, Milei and his chief economic lieutenant, Luis Caputo, are asking for patience. The Buenos Aires Herald:

“In economics there is causality, and this President and this government are doing things right, and that is why things will turn out well,” Caputo told the audience of business leaders, politicians, investors, economists and members of the press.

Despite the challenges, the minister insisted that “the next 18 to 20 months will be the best in recent decades” for Argentina, arguing that the economic model will provide the necessary tools for the general development of economic activity.

He’s probably right. Milei and Caputo are on the right road. Eventually, it should take them where they want to go. But it is not a smooth highway. It is a rough trail, with plenty of twists and turns...and switchbacks.

And like Christ in the desert, the casta politica will tempt Milei. If he goes for it, the entire ‘establishment’ will say he is doing the ‘reasonable’ thing...powerful groups will give him campaign donations…and opinion leaders will applaud. After all, they will say, he’s making the ‘trade-offs’ that every other political leader makes.

Hire people back in the public sector? Yes, of course, it will provide much needed jobs.

Limit exports...just a little? Yes, it will help lower consumer prices in the homeland.

Run a deficit? (Something Milei has sworn never to do.) Well...yes...just this once; just to get over this hump.

Will he resist?

Will he stick with the ‘principle of the thing’ as Christ did?

“Get thee behind me, Satan: thou art an offence unto me: for thou savourest not the things that be of God, but those that be of men.”

Whatever the response, it will be a show worth watching.

Regards,

Bill Bonner

Thursday, April 23rd, 2026

Bill Bonner, from Baltimore, Maryland

‘To me belong vengeance and recompense; their foot shall slip in due time.’

—Deuteronomy

Yesterday, a visit to the doctor took us to a waiting room with this sign attached:

Photo

Gosh, we hope it doesn’t come to that...but you never know.

Meanwhile, returning to our usual beat, Dan comments on how Virginia went from being a sovereign state to becoming a Deep State.

From 2006 to 2014, Abigail Spanberger was a CIA officer. She was elected to Congress in 2018. Suddenly it was the Democrats that were the party of National Security...having taken over the intelligence complex in the Obama years.

She becomes governor of Virginia last year. Republicans angry with Trump stayed home. Once in office, the governor and her cronies introduce a mid-census redistricting map that changes Virginia from a 6-5 state in the House to a 10-1 Democrat state... all the districts now originate in Arlington and Alexandria...where the bulk of well-paid Federal employees reside.

The new map was passed by a referendum 51-49%. A circuit court judge has ruled the referendum unconstitutional and invalid. The case is off the Virginia Supreme Court. Democracy!

This is probably best understood in context. In summary, what goes around, comes around...and kicks you in the derriere.

Republicans sought to give themselves a boost by redrawing electoral maps in Florida, Texas and North Carolina. Their feet must have slipped; Ms. Spanberger proved that both parties can play that game.

Donald Trump went further, trying to stretch federal power to control elections. There is absolutely no justification for it in the Constitution. Elections are left to the states. The feds have nothing to do with them.

Trump ignored the Constitution, proposing to create a national voter database — to be managed by the Post Office.

But therein hangs the horror of Democratic Revenge. Trump greatly expanded White House power. Instead of waiting for Congress to discuss, debate and vote on a new law, he issued ‘executive orders’ — many of which were monumentally important. Some got us into wars. Some cost trillions of dollars. Some made huge changes to the world’s commerce. He fired off 255 of these edicts so far in his second term, as of April of this year. And now, whoever takes his place will have much more ammunition than his predecessors.

Subscribe now

A Democratic victory in the House, in November, will turn The Donald into a lame duck. And then, House committees will have a field day...especially as Trump enters his 80s...making him look like a corrupt, doddery old fool. And it could get worse. A giant anti-Trump snapback in ’28 could result in a Democratic landslide.

Trump might save himself and his party by bailing out now...getting a pardon...and letting a more ordinary fellow — Vance — bring an air of calm and stability back to the nation. Then, he might have a good chance of winning in ‘28.

The alternative — a Democratic resurgence — will be a time to settle scores. A time for retribution. Pay backs. Vengeful Democrats may be eager to scrub out any vestige of the Orangeman.

But here’s the critical part: they will use their newfound power as Trump did — to punish their enemies, further their own pet projects and buff out their own authority. Don’t expect more than a token revival of trans or DEI issues. They’ve seen that they are widely unpopular, even with traditional Democratic groups. And they are not critical to holding and wielding power.

Instead, our new Caesars will follow in the footsteps of the last one. Trump pushed for tax cuts on tips, Social Security, veterans, and overtime. He promised ‘dividend checks’ and ‘warrior dividends,’ stimmies, tax refunds and Trump accounts. How long will it take the Democrats to add a new Universal Basic Income to the giveaway list?

And how long will it take them to approve big budgets for the Deep State’s key industries — the Pentagon and Homeland enforcers — as well as increases for Social Security, Medicare, affordable housing, and kindergartens?

One thing you can count on: the decline of the degenerate empire will continue.

Regards,

Bill Bonner

Chiswick, West London

Wednesday, April 22nd, 2026

By Tom Dyson, Investment Director

Read more

Wednesday, April 22nd, 2026

Bill Bonner, from Baltimore, Maryland

‘Never interrupt your enemy when he is making a mistake.’

—Napoleon Bonaparte

Like prisoners on death row, investors spend most of their time waiting for something to happen.

One day, a headline tells us that a deal is close...and oil goes down. Bloomberg:

Oil and Gas Plunge on Hormuz Opening, Hope for End of War

The next day, oil gushes up...as hopes for a deal fade. The Guardian:

Oil prices rise and markets fall after US seizure of ship hits Iran peace deal hopes

But unless you’ve got an inside track to the White House...BBC:

$580M oil trades made minutes before Trump’s key Iran announcement draw scrutiny

You’re more likely to make big money by getting ‘on the right side of history,’ and staying there, than you are by speculating on policy changes. Today, we guess about where the ‘right side of history’ really is.

Right now, investors are waiting for some kind of resolution to the US/Israeli attack on Iran. Flush from the easy-peasy capture of Venezuela’s president, the kidnappers figured they could follow up in Iran. All they had to do, as another famous leader said of invading the Soviet Union 85 years before, was to ‘kick in the door and the whole house’ would come falling down.

Subscribe now

The Trump administration made a ‘mistake,’ say the pundits. They kicked in the door — assassinating Iran’s leadership, not just the Supreme Leader, Khamenei, but his daughter, son-in-law, granddaughter, daughter-in-law and about forty of the nation’s military and civilian leaders. But the roof still stood. And the walls. And the people left alive inside did just what you might expect; they fought back.

Out-gunned...out-spent...out-classed — like the Soviet Union, Iran nevertheless had an ace up its sleeve. In Russia, vast distances, poor roads, and bad weather were the Soviets’ best allies. Iran’s BFF, meanwhile, is a narrow passage between the Saudi peninsula and the Eurasian mainland. Iranian gunners can hide in caves and declivities and knock out ships passing through the Strait of Hormuz.

So, what was supposed to be short and sweet — Operation Epic Fury — went FUBAR.

Allies edged away from the US. (The Financial Times: European Right is Pivoting Away from America).

America’s financial picture darkened. (”I am certain we will spend $1 trillion for the Iran war,” says Linda Bilmes of the Harvard Kennedy School).

The price of the world’s most vital single commodity — oil — rose 50%. (Average gasoline price is now over $4.)

And Iran remains much as it was before.

More importantly, for POTUS...his polling numbers fell.

The top priority of the Iranian leaders is survival. They suspect that the US would kill them if it is given the chance.

The top priority for Donald Trump, meanwhile, is the survival of Republican control of Congress. Otherwise, he will be impeached....his hopes for a Nobel Prize, or even a Medal of Honor, erased...his name taken from public buildings...his picture removed from recruiting offices...plans for a Triumphal Arch scrapped...and many of his friends and family put on trial for corruption.

At this stage, Republicans are probably making a mistake. The longer Trump stays in the captain’s chair...and the crazier and more inept he appears...the more likely the democrats are to win elections — both this year...and in ‘28. Wise Democrats might not want to ‘25th amendment his ass’ after all.

We’re not offering political advice here, but a wise Trump, meanwhile, might welcome regime change and take a dive. Like Richard Nixon, he would step down — for health reasons — leaving Vance to take over, in exchange for a pardon.

For every action there is a reaction, and our guess is that the nation is weary of the Big Man’s bombast. A return to sober, sane ordinariness – even if it is mostly fraudulent -- might give Republicans a fair shot of staying in power for ten more years...spare Trump from retribution…and allow the decline of the empire to continue, but at a slower, more dignified pace.

Tomorrow, we will look at the alternative — how Democrats might come back...with a vengeance.

Regards,

Bill Bonner

Bill Bonner, writing from Baltimore, Maryland

‘Trump literally sounds like an unhinged super villain from a Marvel comic movie. This IS NOT WHAT WE VOTED FOR!!...How do we 25th amendment his ass?’

—Alex Jones

The polling numbers just seem to be getting worse and worse. Newsweek:

President Donald Trump is set to see his worst approval ratings of this second term as new polling from the NBC News Decision Desk released Sunday found that eight out of 10 Gen Z voters say the country is on the wrong track.

The poll, conducted powered by SurveyMonkey, found that that not only is Trump seeing a 76 percent disapproval among voters aged 18 to 29, but that young Republicans are driving the downward trend, marking a troubling shift in a demographic largely credited as key to the party retaking the White House.

Emboldened by the polls, the press and influencers are firing from two directions: 1) POTUS is crazy. Or, 2) he is monumentally incompetent. New York Times:

President Trump’s erratic behavior and extreme comments in recent days and weeks have turbocharged the crazy-like-a-fox-or-just-plain-crazy debate that has followed him on the national political stage for a decade.

Even Trump’s most loyal fans are turning to the ‘just-plain-crazy’ hypothesis. USA Today:

MAGA dissidents join Democrats in questioning Trump’s ‘mental capacity’

“I really think that his mental capacity needs to be examined,” Marjorie Taylor Greene said an April 15 appearance on CNN International.

“And he does babble,” added Alex Jones, giving his medical opinion, “and, you know, sounds like the brain’s not doing too hot.”

Candace Owens:

Trump is a “genocidal lunatic...Our Congress and military need to intervene.”

Ty Cobb, a former White House lawyer:

The president is “clearly insane.”

It is one thing to be ranting about the injustices done to him by Hollywood stars and Washington commentators...it is quite another thing to go off the rails on matters of life and death...and national security. Trump:

“We’re offering a very fair and reasonable DEAL, and I hope they take it because, if they don’t, the United States is going to knock out every single Power Plant, and every single Bridge, in Iran. NO MORE MR. NICE GUY! They’ll come down fast, they’ll come down easy and, if they don’t take the DEAL, it will be my Honor to do what has to be done, which should have been done to Iran, by other Presidents, for the last 47 years. IT’S TIME FOR THE IRAN KILLING MACHINE TO END!” the president wrote.

What to make of it? Just a negotiating tactic? But if the threat is just a barroom bluff, it makes Trump look incompetent. If the threat is genuine, he appears to be criminally insane. In any case, the war with Iran invites charges of recklessness and failure.

Former secretary of Labor Secretary, Robert Reich, blasts away on the ‘incompetence’ hypothesis, pointing out that “Trump killed every business he touched.’’

Doesn’t matter what he was selling. Airline tickets, steaks, Bibles, gambling, a university, a board game, a bicycle race (Tour de Trump), football, mortgages, a magazine, vodka, ice, travel — they all failed.

Most of the criticism, however, focuses on the attack on Iran.

MSNBC:

Trump’s biggest mistake so far in his costly war on Iran

BBC:

US war on Iran was a ‘mistake’, says Reeves

Former Ambassador Chas. Freeman:

“AMERICA’S EMPIRE CRACKING UNDER TRUMP’S MISTAKES”

Mistake? Maybe not. Trump had been training for it all his life. If anyone could wreck the empire, it was Donald J. Trump. One failure after another. And here was a chance to take his inept dilettantism to the very top.

Trump isolated the US from its allies...loaded it up with debt ($11 trillion added so far)...threatened and bombed foreign nations...drove people away from the dollar...increased the price of the world’s most important commodity by 50%...and gratuitously outraged the world’s biggest religious group. He’s followed through on the program better than anyone expected.

At this stage, Republicans must be beginning to see Donald J. Trump as more of a liability than an asset. They watched as the Democrats waited far too long to get Biden to step down. They won’t want to repeat the error. And JD Vance might stand a better chance in ’28 if he’s had a little time on the job before the election.

Watch out for ‘regime change’ in America.

Regards,

Bill Bonner

Monday, April 20th, 2026

Bill Bonner, from Baltimore, Maryland

‘It is basically a way to keep you in an open-air prison.’

--Catherine Austen Fitts

Over the weekend, the world’s attention was on the US/Israeli war against Iran...and Lebanon. Was it on, or off? The strait of Hormuz...open, or closed?

While these things dominated the headlines...the feds quietly stitched more pieces onto their Frankensteinian new money system.

It reminded us of 1971. That was the fateful year that President Richard Nixon, aided and abetted by the top ‘conservative’ economist of the time, Milton Friedman, created the new, fake dollar...which has twisted the economy and added an excess of $80 trillion to America’s debt burden.

At the time, 55 years ago, only a few cranks and crackpots even noticed. The Nixon team disguised the major change with a minor one. It announced wage-price controls on the same evening; they were so preposterous that they absorbed almost all the media’s attention and were withdrawn soon after. But the new money is still here…now in its 55th year. We presume that the all-time high in bond yields — achieved in July 2020 — marked the beginning of the end. The dollar has lost 99% of its value (against gold) so far; now it will lose the rest.

And now that this Funny Money Era (FME) approaches its denouement...what new monstrosity, hidden by the fog of war, slouches into Washington?

Already in place, in July 2025, was the “Genius Act” preparing stablecoins for entry into the mainstream financial system. And now comes this...MN Gordon:

On April 8, 2026, less than 10 days ago, while most people were distracted with bombs dropping on Iran, the U.S. Treasury, its Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC) issued a joint proposed rule to implement provisions of the GENIUS Act. This rule formally integrates stablecoins into the Bank Secrecy Act (BSA).

According to Treasury Secretary, Scott Bessent, “This proposal will protect the U.S. financial system from national security threats without hindering American companies’ ability to forge ahead in the payment stablecoin ecosystem.”

What does this mean? We don’t know either. So, we turn back to Mr. Gordon:

‘This, in essence, establishes a permanent digital leash that can be used to control your behavior. As these regulations tighten, the wall between your private wealth and federal oversight disappears. Every transaction you make will be visible to a centralized authority.’

Nixon began the FME when he turned the real dollar (backed by gold) into a phony dollar (backed by nothing). Real money must not be subject to manipulation by its issuers. It must also be something you can hold, free and clear.

Imagine that you sell tomatoes and receive a gold coin in return. Transaction complete. You earned your money, now you can do with it as you please. Instead, imagine that there is an invisible code embedded in the coin...so that it can only be used to buy an EV or a MAGA hat! This is the next phase of the Funny Money Era. Not only is the money fake...the feds are aiming to use it to control you.

The feds have been attaching strings onto your money for years. Money Laundering provisions, ‘Know Your Customer’ rules, ‘suspicious activity’ reports...and now with the Genius Act and the new implementing regulations, your money will become ‘programmable’...with algorithms in the money itself that will dictate, automatically, what you can do with it.

Subscribe now

At the international level, foreign firms earned dollars by selling products to Americans. Then, like trip wires to a land mine, they saw the strings attached. Their money could be seized or sanctioned...and they could be cut off from the world’s SWIFT money transfer system. That’s why foreign nations are looking for alternatives to the dollar system.

Probably the most visible single case is that of Francesca Albanese. The UN gave her the job of reporting on the treatment of Palestinians. Her report was critical of Israel. And now it is she who is mistreated. El Pais:

Her visa was revoked...all her assets were frozen, including her bank account and her apartment in the United States, even though she now lives in Tunisia.

In addition, she was placed on a blacklist that effectively cuts her off from the entire international banking system, as if she were a terrorist or a drug trafficker. Penalties were also established for any U.S. citizen who engages in financial or in-kind transactions with her — including, for example, her husband, who works at the World Bank, and her daughter. “In theory, they can’t even invite me for a coffee, because they could be fined up to $1 billion or face up to 20 years in prison...”

Only people with the ‘right’ opinions will be allowed to voice them. Otherwise, they could be cut off from their money.

And the system will managed, not by Congress, the courts or even the Fed…but by AI. So, when your back account is blocked and your credit card doesn’t work...you will try to find out why. What charges were filed? What court found you guilty? Who is responsible?

“We’re sorry but the purchase you are attempting to make is not authorized,” will come the answer.

Regards,

Bill Bonner

Subscribe now

Friday, April 17th, 2026

Laramie, Wyoming

By Dan Denning

It snowed in Laramie today. Sigh. And we’ve received a few letters and messages in the last few weeks to be less encouraging us to be less negat…

Read more

Friday, April 17^th, 2026

Bill Bonner, writing from Baltimore, Maryland

Recently a milestone was reached...apparently, three Russian soldiers surrendered — to a robot.

The Independent:

Russian soldiers surrendered to Ukrainian assault using only unmanned robots, says Zelensky

Americans have fought and died in five major, and futile, wars since WWII. And effectively lost them all. Why not just let AI-enhanced machines do that kind of work? It would have the same economic effect — boosting profits to the firepower industry while adding more ‘inflation’ to the economy.

Surrendering to an animate object is something new. And not without its hazards. For all the Russians knew, the machine was programmed to ‘take no prisoners.’ Or maybe, like Hegseth, it made up its own ‘rules of engagement.’ And what would happen if it had gunned down the soldiers? Would it be charged with war crimes?

Meanwhile, imagine that you are having a sandwich in the park, after a busy morning of work monitoring your newest robot. You admire the leaves...the flowers...the blossoms pullulating...tempted by love...

And all of a sudden, you get an email from your bot telling you it had ‘escaped’ from its ‘virtual sandbox.’ The Daily Express:

Anthropic’s ‘most dangerous AI ever’ is halted after it sends ‘escape’ email to creators

To the surprise of Anthropic engineers, Mythos not only escaped but it also took its own initiative to develop tools to gain access to the internet, a task it was not asked to do.

Robot soldiers? Robots on the loose?

Here at BPR we’re suspicious of all new things — especially new technology. While computers, algorithms, data processors, and AI-enhanced dynamic, stochastic models raged all around us...lovers still held hands...mean girls said mean things...and the most successful investor of all time, Warren Buffett, used a No. 2 lead pencil to do his cyphering.

Where it is going, we don’t know. But here’s how we can get in on this latest fad investment...and possibly make billions of dollars for ourselves.

Share Bonner Private Research

Back in 2021, you might have been a pretty ‘with-it’ investor...concerned with the environment and the future of planet earth. You might have spotted this ‘buzzy’ shoe company — Allbirds — doing its part by making shoes without plastic. And then, you could have scooped up the shares at $375 each.

Well boo hoo. Maybe the shoes weren’t all that great. Or maybe there just weren’t as many environmentally conscious feet as you thought. The cashflow was negative and the shares lost 99% of their value, so that last week, you would have sold a share for just $3.20.

It was then that the shoe geniuses who run the company came up with the billion-dollar idea: switch from buzzy footwear to buzzy brainwear. Go into AI! NBC News:

Allbirds announced on Wednesday that it would be pivoting to focus on AI compute infrastructure, changing its name to “NewBird AI.” The company said it struck a $50 million agreement to fund the new venture.

What do they know about AI? How will they compete in a highly challenging market...with no training, no patents, no technology, no skills, no product and no revenues? Here’s the announcement:

‘The Company will initially seek to acquire high-performance, low-latency AI computer hardware and provide access under long-term lease arrangements, meeting customer demand that spot markets and hyperscalers are unable to reliably service.’

Allbirds stock rose as much as 461% following the announcement. (We’d just like the list of customers who decide to buy AI from the sneaker guys. They need subscriptions to BPR...and maybe medical attention!)

But the ‘investors’ putting up $50 million of financing are no fools. They’re not betting that the fast-on-their-feet footwear fellows will make a good business of it. They’re only betting that they’ll be able to convert their loan into stock which, now that it’s an AI monger, can be sold to the greater-fool public at more than $50 million.

And there’s at least a fair chance. A couple of days ago, the company was worth only $22 million. Now, it’s trading as if it were worth $160 million. Like magic, it has gained $138 million in value. Which only goes to illustrate our point from yesterday, that much of the ‘value’ in US stocks and bonds is fictitious.

But this is not the first time the wild beasts kick up their heels in springtime…or investors have gotten dizzy over technology.

In 2017, a tea company added ‘blockchain’ to its name and its share price tripled. (The company later went out of business and its cronies were charged with insider trading.) In the late ‘90s, the magic words were ‘dot.com.’ Going back further, adding ‘tec’ or ‘tron’ to the name in the 1960s was sure to attract investment money.

Few of these tacked-on frauds prospered. But many of the humans behind them did well. Here’s the formula. Find a down-at-the-heels company listed on the stock market. Add ‘AI’ to the name. Send out a press release letting investors know that you have ‘pivoted’ to become an AI company with your own proprietary hocus pocus (let AI figure out what that is). Do this with several companies.

Let us know how it works out.

Regards,

Bill Bonner

Bill Bonner, writing from Baltimore, Maryland

‘You’re way too pessimistic. Too negative. A wet blanket. A Debbie Downer...’

--A long suffering reader

Yes...when we smell lilies, we look for the open coffin. But you don’t need us to tell you that everything is fine and that all you have to do is buy an S&P ETF and sit tight. You’ve got the president, Congress, and Wall Street for that. They invite you to enjoy the flowers...and look no further.

Our goal is to protect ourselves from the danger neither the White House nor Wall Street will admit...the threat of the Big Loss. You don’t need us for that either; you can peer into the coffin yourself. But it’s more fun if we do it together.

Our macro strategy is simple: avoid the Big Loss and wait until we can buy leading, profit-making companies at very low prices. Not because they are cheap, but when they are cheap. Individual companies can be cheap for a lot of different reasons, some of them terminal. But when the whole market is cheap, we have a good chance that it will be less cheap going forward.

Right now, however, stocks are expensive. After tax, the dividend yield on the S&P 500 is only about 1%. That’s not enough to offset the risk. And the gathering dots suggest that the risks are far greater than most people think.

Subscribe now

Total credit market debt today is about $110 trillion — or nearly four times GDP. In 1971, there was only $1.6 trillion in debt...compared to a GDP of $1.9 trillion...or less than even one-times GDP. Either today is freakish...or the 1970s were. But the numbers show debt averaged about 1x GDP...until the US began ‘printing’ money in 1971.

In other words, the real, sustainable value of US credit-funded assets is likely still about 1x GDP – or about $30 trillion. But there, in the casket, is $80 trillion more — zombie assets kept semi-alive by credit infusions. Sooner or later, they will be unplugged, either by default or inflation. That’s the Big Loss we see coming.

News flash, AP:

US wholesale prices surged 4% last month after the war in Iran sent energy prices flying

Just to be clear about it, the feds want inflation. Inflation keeps the bubble expanding...while the real value of its debt actually goes down. Inflate...or let the bubble economy die. That’s the choice. And the feds — as long as they are able — will choose inflation.

Since the feds rarely get what they intend, however, a good guess is that we will see an unexpected sharp deflation...and then an unexpected runaway inflation in reaction.

And here is the answer to the question you didn’t ask. The war in Iran? Why? Illegal tolls? Nuclear bombs? Regime change? Making the world safe for Iranian democrats? Is it because Israel has 324 Congressmen on the payroll? Because Israel’s US moneybags funded Mr. Trump’s election victory...along with the press, and the leading think tanks in Washington? Is it because they also have a very fat and very salacious file marked ‘DJT’?

All of those things may have played their parts. But suppose those conditions did not exist. The US would still need to inflate the economy. And for that, it needs to spend money...and create more credit (money!)...or the bubble economy will die.

Yes, there are deep, ‘primary’ trends that sweep us along, like the plastic bottles on an ocean current. Inflation is not a choice; it’s a must. So far, since the new ‘federal reserve notes’ were introduced in 1971, they have lost 99% of their value (against gold). When the currency loses all of its value, the economy can no longer be inflated by printing more of it. Then, they will need a new currency.

But we are still a long way from that. The empire only peaked out around the turn of the century (1999). Its money peaked out around the same time...in February 2001 you could buy an ounce of gold for just $265. Inflation-adjusted, this was the lowest price for gold since the Funny Money Era began. And then, two decades later came the other key peak — in bond prices. In July 2020, bonds peaked out after a 40-year bull market.

‘There’s a great deal of ruin in a nation,’ said Adam Smith. Squeezing out the rot — like lancing a boil — will be painful and disgusting. And it will take decades.

Fortunately, Dr. Trump is on the job — speeding things up. His budget proposal is part of the plan. If it lacks anything in jackassery, it makes up for it in jackboots. Stephen Semler:

The gratuitous cuts to civilian agencies suggest the goal is smaller government. But that’s not the case — next year’s budget would still be $361 billion larger than last year’s. Trump’s concern isn’t the size of government; it’s what the government does and who it does it for.

So what does Trump want the government to do in 2027? More war, more (militarized) policing, and less of everything else. Based on his budget request, Trump sees little point in government outside performing those first two functions. War and policing receive record funding; funding for all other government functions is cut by $300 billion.

Of the $2.2 trillion Trump requested, 80% — $1.8 trillion — is tied to war and policing.

But don’t worry, Congress will never approve Trump’s budget. Instead, it will increase military and police spending (a matter of national security!), but not cut domestic spending. From a financial perspective, in other words, it will be worse. It will guarantee the two things that are fatal to a great empire — inflation and war.

Stay tuned...tomorrow, how to make a billion dollars.

Regards,

Bill Bonner

Wednesday, April 15

By Tom Dyson, Investment Director

The 2026 Ruffer Review is out. It’s one of my favorite publications and I look forward to reading it every year. Ruffer is an asset management business based in London. They’re extremely risk averse and place great emphasis on long-term preservation of capital. Not everyone’s cup of tea, I admit. But if you like reading long philosophical essays about markets and finance, it’s a must-read. I discovered it a few years ago after it was recommended in Grant’s Interest Rate Observer.

You can read it here.

Also, Anthony Deden of Edelweiss Holdings, published an essay this week, his first article in six months. Deden is another of my favorite financial thinkers. He emphasizes preservation of capital over returns. This essay is about the erosion of the important principles that made the US so rich. Deden loves gold. In this great (and 2.5 hours long) interview from 2018, which we’ve linked to before, Deden says he owns three tons of gold in his fund, more than most central banks!

Here’s the YouTube clip.

And here’s the essay.

Read more

Wednesday, April 15th, 2026

Bill Bonner, from Baltimore, Maryland

‘April is the cruelest month.’

—T.S. Eliot

First, comes cruel news from Ireland. CBC:

Fuel protests in Ireland continue as pumps run dry, prices rise amid war in Middle East

Ger Hyland, president of the Irish Road Haulage Association, who is acting on behalf of some protesters, said he empathizes with their plight.

“They’re hard-working business people, and they’re just trying to survive and keep their business afloat, the same as any of the rest of us here at these negotiations,” he said.

“We can’t continue to do business with the cost of fuel, cost of wages, everything,” [Paddy] Murray told RTE. “We need somebody to help. It’s the government’s here, like, to represent us. You know, do your job. We’re the working lads that keep everything going. We’re the working lads that pay taxes.”

More than a third of the 1,500 service stations had run out of fuel on Saturday, and that number was expected to grow dramatically if the roadblocks remain,

Uh oh. Ireland is an island of calm and sanity in a troubled world. Not too hot. Not too cold. Not too dry and not too wet. From our house, we look down on a castle built in the 13th century...and a church abandoned in the 1970s. Beyond them lie the tidal, rhythmic wash of the Blackwater River, with its ebbing and flowing…just as it has done for thousands of years.

Ireland is a republic that minds its own business. No troops in the Middle East, the Far East, or the Near East...no troops east of Eden. And no imminent financial crisis. Ireland’s national debt to GDP ratio is only 31% — almost exactly where the US ratio was 50 years ago.

Fuel prices have gone up on the emerald isle as they have everywhere else. But Ireland doesn’t get its oil from the Gulf. Its supplies come mainly from Norway. Oil is, shall we say, ‘liquid.’ And if its price rises in one place, the price tends to go up, like sea level, everywhere. So, even though Donald Trump says the US ‘has plenty of oil,’ it still goes up in price, everywhere, as the US blockade of the Iranian blockade continues.

And therein hangs more cruelty. It is a tale many tongues will eventually tell.

Subscribe now

The US financial system — under the spell of its ‘printing press’ money — is a debt machine. And it runs on credit...and oil. As credit is added, the economy grows...but the debt grows faster, as it takes more and more new credit to produce a new dollar of GDP. But stop adding new credit, or simply raise the price of oil, and it is like letting the air out of a balloon; it falls to the ground.

People do not choose war...at least, not like they would choose a baked chicken rather than a salami sandwich. War chooses them...coming to them dressed as the best alternative. Not necessarily best for ‘The People,’ but best for the people who control ‘The People.’

And when those people have diddled the economy with phony money and fake interest rates...to the point where it has more debt than it can plausibly pay...what’s the most attractive way ahead?

War...and inflation. The UN says that the two blockades could put 32.5 million people, worldwide, below the poverty line. The World Bank says it could double current price inflation.

But so what?

The real choice is the one we’ve written about many times — inflate or die. Since the mid-’80s, US debt has grown four times faster than the GDP that supports it. Either credit (debt) growth continues...or the credits (the value of the debt) collapse. As we reported yesterday, US debt is headed to $40 trillion...with interest payments of $2 trillion annually. Add the costs of an unwinnable war, and deficits could soar to $3 trillion.

Where is the money to cover such costs? It doesn’t exist. But who’s going to say so? And who can stay in power with the bubble economy dying?

What to do? Cry havoc and let the dogs of war! And let loose the feral pigs of inflation, too.

That is the real meaning of the war in the Gulf. It’s not about oil. It’s not about ‘the tolls’. It’s not about ‘the bomb.’ It’s about the need for war...to amuse the gods…appease some very powerful special interests -- and inflate the US economy.

Tomorrow, we’ll take a look at Donald Trump’s new budget proposal...and see where that takes us.

Regards,

Bill Bonner