Which do you think is more likely: that the Dow Jones Industrials could decline to 10,000 in the next bear market? Or that the gold price could go over $10,000/oz in the next bull market?
We want to discuss it with you tomorrow, Wednesday February 2nd, at 3pm (EST). Our Investment Director Tom Dyson will be joining us live from London for a full hour.
You don’t need to register. And if you can’t make it tomorrow, you can go to the discussion thread now and leave your comment or question. If you’re ready to discuss, click on the ‘see the discussion’ button at the bottom of this email.
But wait! What’s a discussion thread? And what’s the Dow/Gold ratio? A quick review…
More conversation, especially about Dow/Gold
Earlier this week we tried a new interaction our paying subscribers called a discussion thread (something our new platform enables us to do). It was a spur-of-the-moment decision, to test a new way of communicating with you. We wanted to see how it worked. And if it was worth doing it again for everyone.
It went well! A discussion thread is place where you read, post, and reply to comments from other readers (including your editors). It’s not as chaotic or hard to follow as a chatroom where everyone is typing at once. And there’s no audio or video set up required like a Zoom call or webinar. You just read and reply at your own pace.
It’s not for everyone (not everyone can make it live). But our first thread on Monday had over 175 comments and over 1,000 likes and shares. Based on that, we decided to do it again right away. And this time, give everyone some advance notice.
You can joint now if you like. Tom will join today at 3PM EST (Wednesday, Feb, 2). He publishes his weekly updates to subscribers every Wednesday. Once he's done with that, he's going to join you live on the website to discuss the price action (and long-term forecast) for the Dow/Gold ratio and whatever else we have time for.
Tom is updating his Dow/Gold report as we speak. It will be available to paying subscribers soon. It looks at the ratio over 100 years and shows you what it could mean for stock and gold investors today, in 2022.
If you’d like to access the subscriber only material, you can do so by joining us here:
In the meantime, new readers not familiar with the value and usefulness of this key ratio can get up to speed tomorrow. For long-time readers, you may recall that Bill Bonner first pointed out in 2018 that the Dow Jones Industrials had already peaked and was declining. The key was to look at it in GOLD terms. Not dollar terms.
Source: www.longtermtrends.net
At that time, the Dow/Gold ratio was 21.51. It is now 19.87. In January 1980, when gold made a new all-time high, the ratio reached a low of 1.29. What could that mean?
If the Dow were to decline to 10,000 in a bear market (a 70% fall from current levels), AND the ratio were to reach 1.29 again, then that would imply a gold price of $10,000/oz (about a 450% increase from today's price).
Please note that’s not a forecast or a prediction. It’s a place to start our discussion. Which scenario do you think is more likely: that gold will increase 453% or more in its next bull market? Or that the Dow Jones will fall 70% in the next bear market?
That’s what we want to discuss. But remember, it’s YOUR discussion. So, ask any question or make any comment you like. Though we can’t give personal or portfolio advice, we CAN have a good discussion about what’s happening in these two important markets.
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Okay, I'm signing off now. This was fun! Sorry for the confusion with my username at first. Let us know if this was worthwhile and we can do it again soon.
Thank you Tom. Good input, from you as well as the members. Looking forward to more discussions. But I hope BPR will publish a "User's Guide" on accessing BPR, Substack and the Discussion site to solve the confusion.
Hey everyone. Tom has to leave in about ten minutes. Thanks for helping us try out this new feature. You can continue to discuss this topic amongst yourselves after he leaves. And you can let us know if we should try this again (and how to improve it). Also, thanks for your patience as we experiment with new ways to communicate with you. There are always a few bumps in the road. For paying subscribers, look for an announcement on Friday about our next Zoom call later this month.
The format is fine, just bumps until everyone gets it under their belt. I enjoy reading everyone's input. I miss the Mailbag, it always added dimension to the Diary.
Or perhaps it will be an amalgam of the two positions. With the “Fed put” in place, a decline of 70% in the Dow is very unlikely. Gold prices have remained stubbornly under $2k since the pandemic. A likely combination of a drop of 30-50% in the Dow and a rise to $3-5k for gold might be a good bet for the most likely course of action.
Can't argue with that estimate, but one wonders if it will all just keep getting worse and worse for decades until finally . . . ? Mass civil unrest? Secession of multiple Red States? Military rule? A new currency?
This is my best guess too, if you pinned me down. The Fed has a currency printing cannon and isn't afraid to use it. So the escape valve for the losses is most likely to be through the currency market as opposed to the stock market or the bond market. ie the Dow could remain fairly flat in nominal terms, albeit with some volatility, but still lose 75% of its value to inflation, which is exactly what happened in the 70s...
By the way, Investment Director Tom Dyson is posting from his original Substack account as Hobo Family (for those fans of his Postcards from the Fringe)
I’m concerned that too much has been broken over the last few years. Robin Hood (along with the Fed and politicians) has corrupted a whole generation of investors and the concept of investing. I don’t know if we can return to a rational concept of ownership of value whether in gold or equities. With NFTs, online land being purchased with currency on par with physical land, and other idiocy, the ratio may no longer be valid measure of anything.
I'm very sympathetic to this view haha. I must say though, that I'm so gratified that AMC and GME have collapsed. That event was, perhaps, the most riduculous, most clearest absurdity I've ever seen. By falling back to earth, they confirm that the laws of nature are still good and trustworthy. Now... if the other bubbles would meet their makers...
My sense is that Fed cannot afford for interest rates to rise too steeply because the interest cost on our debt would rise to such dramatic proportions that the global community would wise up and the dollar would be pushed to the basement where it rightfully belongs. So, the Fed will keep the shell game of soft default going through inflation going as long as they can.
Remember we do not have Paul Volker at the helm of the Fed. We have the most dovish Fed in history. The real test will come when the dollar loses global reserve currency status, as the pound did before it. The Dow will likely reach 10,000 long before this day arrives. Bankruptcy arrives slowly at first, then very quickly.
We can never know which snowflake will cause the avalanche. However, as surely as the snow falls, the avalanche will eventually come. I believe we reach Dow 10,000 before Gold $10,000.
Both events will occur and both will occur very quickly when they do happen. When we see a market collapse, I would expect gold to temporarily decline because there will be many margin calls and traders will sell what they can to meet the calls. However after that gold will rise as people move to safety. My sense is that it is better to be in safe bets now, including some of Tom's recommendations that he will surely discuss tomorrow.
Agree. If they push interest rates up to anything approaching levels we used to consider normal -- say 5% -- the Federal government will quickly collapse in a debt spiral. There's just no way they'll ever allow that to happen, as long as they have a choice. Of course, eventually, they won't have a choice and there'll be a default. But that's another story...
I like your use of the word snowflake In today's era of self entitled Robin holders and PlayStation investors, how long will it be before one of that generations idiots is in charge of the fed? That is when the proverbial will hit the fan.
As for reserve currency status can anyone name a credible replacement for the USD ? I don't see one anywhere in my opinion. That fact alone will keep this entire crooked game alive longer than most bears could afford to stay in the game.
I think the soft default is going to be the norm for at least the next 5 years if not 10. Short sellers will get wiped out on squeezes.
Listen to Putins speech from his Int'l forum .. He talks about China-Russia-India-Brazil & more getting together in a basket that should concern Reserve Status .. Cheers ..
"Lucky 7's" - Dow at 7000 (giving back nearly every last phony point it was given from Central Bank madness since March 6, 2009), and Gold at $7000/ounce (functionally related to the amount of money/credit that has been created ex nihilo since 2008/09). This begs the question: How can it possibly be that the Fed could tighten, DXY *rally*, while Gold rallies simultaneously? Because: 1) the Fed will not tighten enough to call back all of the phony money/credit they have created over the last 14 years; and, 2) Gold rallies when the world goes into chaos mode; and we ain't seen nothing like real "chaos mode" yet - it's last sighting was 2008-2009.
There is some concern that gold will be confiscated again. They will never get my gold but they will make it difficult to use. One thing they can’t confiscate is our pocket change, so I recommend everyone collect as much pre 1965 silver coinage as possible and I lean heavily towards dimes and quarters. In a true SHTF environment you can use your dimes to buy a gallon of gas or a loaf of bread. When this spinning wheel of debt blows the damage will be widespread and unpredictable, but with good preparation and a good community spirit we can survive and rebuild. May God give us all wisdom to navigate this disaster that our global monied elite are bringing upon us.
Like the statements. DXY can rally when compared to others while gold rallies as long as the dollar stays pegged to energy; more accurately THE energy dollar. Correct me if i am wrong but if gold is agreed to be set to say 7,000 will it still be the energy currency? Does the valuation change how the world views the US dollar or force everyone to create a basket of currencies to work with?
Dow to Gold Ratio, tanker trades, mining stocks, growth vs. value, buy the dips, Bull or Bear, inflation, stagflation, etc… Knowledge, wisdom, historical context, and reliable information are invaluable in these unprecedented times. But the truth is we are in uncharted waters and nobody knows how it will play out. That being said, the Dow to Gold Ratio is probably the best strategy to manage risk and preserve capital. That and use tight stops and proper size for all your stock positions!!!
Thanks to my unique background and circumstances, I've been reading 150-200 articles per week for almost a decade from people much smarter than me. Been studying the markets, trading, and investing for more than two decades. Pay close attention to major socioeconomic trends. And I look at everything empirically, critically, and with an open mind, and constantly challenge my inherent biases. Yet, trying to make sense of anything and make the right decisions is like shooting at a fast moving target or playing a game where the rules change constantly and unexpectedly. And if I make the wrong choices, it could have dire consequences for my present and future finances and mental and physical health.
The way I see it, human nature is incompatible with modern society and technology. And the more we advance, the bigger the disconnect and systemic socioeconomic distortions. Sometimes I think it would be better to have my head buried in the sand and clueless about what's really going on. At least then I could enjoy the party until that last moment just before impact.
Anyway, that's my positive take on our situation.
Thanks, Bill, Dan, Tom, Joel, and contributing guests for your insight and wisdom.
My concern is that with such a magnitude of meltdown required for au 10k and or dow 10k the financial system of the western hemisphere will be devastated. Contagion risk will kill global repo operations. No one will counterparty.
As a result globalisation will grind to a halt real quick. So empty shelves for pretty much everything welcome back to the 1930s.
If it isn't manufactured on your doorstop you won't be buying it.
I agree. This is for me the key consideration. Instead of "the suit", I look at a share of Apple. Today I can buy a share of Apple for about 1/10 oz of gold. So, even if Apple stock goes up in the future, I believe/hope that I can buy back this share of Apple for less than 1/10 oz of gold.
“Which do you think is more likely: that the Dow Jones Industrials could decline to 10,000 in the next bear market? Or that the gold price could go over $10,000/oz in the next bull market?”
I do not think it will be an either or scenario. The Fed I suspect will raise rates and they know there will be some pain / decline for Wall Street. They will attempt to minimize that pain but a decline is in the recipe. I also suspect gold will continue to shine. I suspect it will be a combination of the two that includes gold near 5,000.00 oz., not sure where that puts the Dow in a drop to reach Dow gold ratio around 5.
How will the debt be dealt with across the globe? Will they stay in fiat or will this become the next 90 year, fourth generation, "revolution" and change the rules?
Bill, I was reading your daily contribution today where you mention the New York Times beginning to sound a faint alarm about America's growing government and corporate debt. My question to you: Where are the Edward R. Murrow and Walter Cronkite of today? Are there no more honest journalists left in the world? You write so well and present sound, logical positions how the U.S. is about to go into the abyss. Why can't your ideas reach a wider audience?
We'll pass this on to Bill. In the meantime, we'd love to reach a bigger audience too. Feel free to share Bill's work (and this thread) via email or on social media. Word of mouth is sometimes the best way!
Two reasons I can think of; The new batch of news persons are sold into the government system, and a general fear of a news article starting the avelanche
The longer it takes to reach a majority of Americans and get them "madder than Hell", the worse it will be for our children and grandchildren. When the government handouts no longer show up in people's mailboxes and the ATMs are empty, those people knowing on our front doors won't be looking for bottles and cans.
With all these great comments we will need Tom to get on a pod cast to answer them all! Been waiting for the reserve currency to fail for a while now and the Gold/Silver ratio to normalize. May go broke waiting. In the mean time should we all share a glass of Bonner wine and wait together. Great conversations.
I'll drink to that! As it happens, I had Tom on the Fatal Conceits podcast yesterday to talk about inflation volatility, old economy value plays and what comes next for the BPR project. The recording is in production now. New episodes every Sunday. (In the meantime, check out the archive under the Fatal Conceits tab up top...and feel free to share with friend and foe alike ;-) Cheers!
My concern with Tom’s analysis is the value of our currency by which Tom uses for his discussion. Since the Fed and our government has done it’s best to devalue our dollar, which value of our currency does Tom use for comparison to the Dow for establishing his position. Do we use today’s value or the value of currency say, from 2000, 1990, 1980 or even perhaps, 1971 when we abandoned the gold standard. I may be missing something in my analysis and, if I am, please straighten me out.
My question In summary, how does Tom compare the asset gold, a commodity of reasonably stable value, to a dollar that has had it’s value diluted by the actions of the Fed?
Honestly why not both? FDR made it 35 dollars (rumor has it becasue his wife loved those numbers) and Nixon put in a "temporary" measure to decouple the dollar. When problematic times occur governments like to do inconceivable things and the people thank them for it. The question here really is.... How do we protect ourselves from losing our wealth while others have squandered theirs?
I read a lot of news letters, some specific to gold and silver. The thinking on their part seems to be gold at 3k per ounce in the next couple of years, a 50%+ increase over current prices. This seems more realistic to me than 10k gold. Any comments?
Bill! Great to see you here. (Bill met Kate and I at the airport in Idaho Falls a couple of months ago and very kindly helped us get our car up and running at the start of our most recent roadtrip across the USA.) A $10k gold price certainly seems a bit far-fetched... that's a more than 5x increase from current prices. But... but... there's so much paper currency and credit out there... if they decide to monetise $35 trillion in losses, well, who knows how high gold could go? I mean, it went from $35 an ounce to $850 in ten years in the 70s...
Tom, while I share the belief that gold prices are bound to increase very steeply (when it is just guesswork) I wonder why several respected advisers are stressing the need to keep physical gold, at least in part, instead of paper gold. The reasoning being that in case of a massive increase in the demand of precious metals, there will not be enough gold to satisfy redemption demands by owners of paper gold. However I wonder if owning shares of streaming and gold royalties companies can be put on the same level as paper gold because we are talking of companies to whom miners have an ironclad contractual obligation to deliver an agreed amount of gold or a share of profits for the entire life of the mine. True, you do not get delivery of the metal but its increase in value is more than covered by the increase in share values. Could you clarify? Thank you. Giorgio Raccah
I agree with you and I'm a big fan of the gold royalty business. In my mind, you're still buying physical gold, except it's stored in the ground instead of in a vault. The report I've written has a section on gold royalty companies too. My strategy would be to have some physical gold in my possession AND some gold in the ground AND some vaulted gold. (Vaulted gold is what I call the ETFs like OUNZ and BAR, or Sprott's PHYS or BullionVault or OneGold etc.)
Tom, I use PHYS and PSLV and some silver eagles. I do see many options from David Morgan site, Sprott site, JM Bullion, Mike Maloney site and others. Have you ever made a comparison regarding fees, storage, insurance, delivery and so on. I am not asking you to pick any, but education on things to be aware of during doing DD. Edward
I'd like to weigh in. My overall outlook is very negative, so consider this terrible scenario. Accelerating price of stock market to blow off top in the next 6 months with the rumblings of war in the background which quickly enter the foreground resulting in...... frozen markets! No price discovery. No ratio of Dow/Gold. This would not be unprecedented (WW II, by the way, did you know that by April there will only be one chief regulator left at the CFTC, down from 4). In this scenario, give me the gold, but first give me God, shelter, water, food, medicine, guns, ammo and fuel.
Both scenarios are likely and gold may have to be reset at 10X+ it’s current $ spot in order to provide stability for the failing worldwide monetary system, when the FrankenFinancialization DebtBomb explodes. Hussman projects a 64% decline peak to trough for the S&P during the crash on the horizon. And he nailed the Nasdaq crash during the DotCom debacle. With the new Basel 3 regs now effective to dampen the paper gold manipulation by the usual suspects and China potentially announcing the issuance of a gold backed crypto for the Renminbi at The Olympics, the “Pet Rock” that primary central banks continue to hoard likely will shine brighter soon.
No one can know what the market will do tomorrow. But, Tom, I can't wait to hear your take on what's goin on in the stock and gold market now. I would also like to hear suggestions on how to easily buy and sell gold without burying it in the back yard.
I have always liked the dual monetary standard that Salinas Price has proposed for Mexico and other countries, with all goods and services priced in both the local fiat currency and in ounces of silver. It is a way of inflation-proofing one's savings for those who participate. If you have not heard of this, google his name or go to his website and read up on his PROPOSAL. It takes some thinking to get it. But, the bankers hate the idea and have been able to prevent it from being implemented in Mexico.
Both would be ideal! But seriously...they will meet somewhere in between those extremes I would guess. The real question is when. The Fed, governments, central banks, IMF, and everyone else involved have been phenomenal at stopping, skewing, diverting, prolonging the ability of markets to get to where they should be. So based on things that should have happened a long time ago, let alone by now, that still haven't come to pass, I'm beginning to wonder about everything. Like the man himself says, "Always in doubt."
Would love to see a similar graph/data on SandP/gold, Nasdaq/gold. they would give additional weight to your perspective and prognosis. are these calculated/displayed anywhere that we can access?
More than high gains in value of our assets, most of us are primarily concerned with protecting the value of what we now have. The monetary situation in this country, and throughout the world, is in shambles and thus our discussion today centers around predicting the future direction of the economy so that we may take appropriate action. However, while political/economic instability is going to happen, and get worse, an even bigger disaster is the destruction of our power grid. Though not as certain as an economic upheaval caused by incompetent, self-centered politicians, destruction of the electric grid is easy and a high probability.
It has been suggested by one contributor to this thread that all our gold aught should be in financial instruments, ETFs etc. As Tom has pointed out, we need to have some of our gold and silver in our possession. Without the internet or access to your bank or safe deposit box, our financial instruments are worthless. Bury some of your gold/silver in the back yard if you cannot think of any better place, but have ready access to it when the EMP, cyber-attack or terrorists wipe out the grid.
How Can I to get into the discussion? I'm signed in Hobo Family. The last post are several weeks old. I missed the gold discussion will it be published in archives? Also there has no mention of the toll road particulars. What am i missing please?
Hi Tom, I'm in the same time zone as you are so I look for any advice that's applicable to the UK. Thanks for your efforts and the 'Top First' setting is useful advice for a newbie... Cheers Richard
Hi Tom (aka Hobo Family !) I have been following Gold for over a decade now. Every time there is a world event, it rises, then the dollar strengthens and Gold rapidly drops in price. I'm so tired of this cycle ! For Gold to get to 10,000, it is going to take a huge event to convince the world the dollar is not the place to be invested. Your thoughts on what type of events could do this ?
I have been trying to figure out what asset to put cash into. I am staying out of the US real estate market because of overvaluation, same with stock market. So I am sitting on more cash than ever. What is a reasonable amount of physical gold to hold right now. 50 oz. puts a street value at $100k, right now. I need triple that to get to a 30% of holdings. Does that seem logical to go that heavy on a wealth retention commodity?
My bet is on gold reaching $10,000 first. And I'd give it a 95% probability
My reasoning is that I doubt that the FED will let the Dow decline 70% (at least not in nominal terms).
However, as for the Dow/Gold ratio, I am not sure if gold will necessarily win out over the next decade, because I think they will both go up substantially. I would still place my bet on gold, but at a probability of 70%.
So when is the correct time to cash out of gold? If you wait until the Dow/gold ratio reaches 5:1, many owners of gold who follow this metric will suddenly want to sell. Will that cause the price of gold to plummet with a sudden glut of gold available for purchase?
Curious about Tom's perspective on when Dow/Gold reverts to the mean, which using heuristic analysis looks to be about 9 or 10 based on the above chart?
Decades ago I studied/degreed in Economic. I used to be able to make a semblance of passing sense of the market if taking a long enough view. Now, most things/rules/precedent appear to be broken. Robert Heinlein passed over a period of time in his future history, labeling it "The Crazy Years". It fits. I now no longer look at even the most educated opinion as anything but conjecture. As to the initial question: Dow goes down to 10,000. (That is my conjecture ;-)
Would it not ground us all more in reality while trying to figure this out if we quoted inflation using both current and 1980 criteria? For example: ".....with inflation running at 7% (15% using 1981) etc etc." Shadow Stats and many other reputable analysts have made it clear that we are doing the Fed's and Elites' bidding
More questions than answers, for me: will gold's rise be hampered by the growth of crypto? How much Is the price of gold being manipulated? Will the central banks ensure that share prices defy gravity, to appease the elites? Will that policy be reversed when the mob get on the street? Will inflation and/or deflation, debt defaults, currency crises and the threat of war change the game? Are civil wars coming? How will China and Russia versus the West play out? And who knows?
Okay, I'm signing off now. This was fun! Sorry for the confusion with my username at first. Let us know if this was worthwhile and we can do it again soon.
Awesome! Thanks for the insight.. Looking forward to the next investment update. The NMM and TGH recommendations are trending positively.
Thank you Tom. Good input, from you as well as the members. Looking forward to more discussions. But I hope BPR will publish a "User's Guide" on accessing BPR, Substack and the Discussion site to solve the confusion.
Hey everyone. Tom has to leave in about ten minutes. Thanks for helping us try out this new feature. You can continue to discuss this topic amongst yourselves after he leaves. And you can let us know if we should try this again (and how to improve it). Also, thanks for your patience as we experiment with new ways to communicate with you. There are always a few bumps in the road. For paying subscribers, look for an announcement on Friday about our next Zoom call later this month.
Thanks, and thanks to Tom and everyone making comments or questions. I thought it was great. Looking forward to more of this in the future.
The format is fine, just bumps until everyone gets it under their belt. I enjoy reading everyone's input. I miss the Mailbag, it always added dimension to the Diary.
Or perhaps it will be an amalgam of the two positions. With the “Fed put” in place, a decline of 70% in the Dow is very unlikely. Gold prices have remained stubbornly under $2k since the pandemic. A likely combination of a drop of 30-50% in the Dow and a rise to $3-5k for gold might be a good bet for the most likely course of action.
Can't argue with that estimate, but one wonders if it will all just keep getting worse and worse for decades until finally . . . ? Mass civil unrest? Secession of multiple Red States? Military rule? A new currency?
Yes that is my expectation, The Fed is spreadingthe weak dollar and the inflation painall around the world so it has less affect here is my guess.
I agree with Frank. I can see a 30 to 50% drop in the Dow, although I don't think that will come anytime soon. John Cunningham
Yup
This is my best guess too, if you pinned me down. The Fed has a currency printing cannon and isn't afraid to use it. So the escape valve for the losses is most likely to be through the currency market as opposed to the stock market or the bond market. ie the Dow could remain fairly flat in nominal terms, albeit with some volatility, but still lose 75% of its value to inflation, which is exactly what happened in the 70s...
Yes, Tom the appearance of muddling through while in reality taking the money.
By the way, Investment Director Tom Dyson is posting from his original Substack account as Hobo Family (for those fans of his Postcards from the Fringe)
Wait! He's changed it to Tom Dyson so everyone can recognize him! You'll find all his replies if you scroll through the thread below.
Sorry for the confusion.
I’m concerned that too much has been broken over the last few years. Robin Hood (along with the Fed and politicians) has corrupted a whole generation of investors and the concept of investing. I don’t know if we can return to a rational concept of ownership of value whether in gold or equities. With NFTs, online land being purchased with currency on par with physical land, and other idiocy, the ratio may no longer be valid measure of anything.
I'm very sympathetic to this view haha. I must say though, that I'm so gratified that AMC and GME have collapsed. That event was, perhaps, the most riduculous, most clearest absurdity I've ever seen. By falling back to earth, they confirm that the laws of nature are still good and trustworthy. Now... if the other bubbles would meet their makers...
From your lips…
My sense is that Fed cannot afford for interest rates to rise too steeply because the interest cost on our debt would rise to such dramatic proportions that the global community would wise up and the dollar would be pushed to the basement where it rightfully belongs. So, the Fed will keep the shell game of soft default going through inflation going as long as they can.
Remember we do not have Paul Volker at the helm of the Fed. We have the most dovish Fed in history. The real test will come when the dollar loses global reserve currency status, as the pound did before it. The Dow will likely reach 10,000 long before this day arrives. Bankruptcy arrives slowly at first, then very quickly.
We can never know which snowflake will cause the avalanche. However, as surely as the snow falls, the avalanche will eventually come. I believe we reach Dow 10,000 before Gold $10,000.
Both events will occur and both will occur very quickly when they do happen. When we see a market collapse, I would expect gold to temporarily decline because there will be many margin calls and traders will sell what they can to meet the calls. However after that gold will rise as people move to safety. My sense is that it is better to be in safe bets now, including some of Tom's recommendations that he will surely discuss tomorrow.
Agree. If they push interest rates up to anything approaching levels we used to consider normal -- say 5% -- the Federal government will quickly collapse in a debt spiral. There's just no way they'll ever allow that to happen, as long as they have a choice. Of course, eventually, they won't have a choice and there'll be a default. But that's another story...
I like your use of the word snowflake In today's era of self entitled Robin holders and PlayStation investors, how long will it be before one of that generations idiots is in charge of the fed? That is when the proverbial will hit the fan.
As for reserve currency status can anyone name a credible replacement for the USD ? I don't see one anywhere in my opinion. That fact alone will keep this entire crooked game alive longer than most bears could afford to stay in the game.
I think the soft default is going to be the norm for at least the next 5 years if not 10. Short sellers will get wiped out on squeezes.
Gold will rally before dow 10000.
Imo
Listen to Putins speech from his Int'l forum .. He talks about China-Russia-India-Brazil & more getting together in a basket that should concern Reserve Status .. Cheers ..
"Lucky 7's" - Dow at 7000 (giving back nearly every last phony point it was given from Central Bank madness since March 6, 2009), and Gold at $7000/ounce (functionally related to the amount of money/credit that has been created ex nihilo since 2008/09). This begs the question: How can it possibly be that the Fed could tighten, DXY *rally*, while Gold rallies simultaneously? Because: 1) the Fed will not tighten enough to call back all of the phony money/credit they have created over the last 14 years; and, 2) Gold rallies when the world goes into chaos mode; and we ain't seen nothing like real "chaos mode" yet - it's last sighting was 2008-2009.
There is some concern that gold will be confiscated again. They will never get my gold but they will make it difficult to use. One thing they can’t confiscate is our pocket change, so I recommend everyone collect as much pre 1965 silver coinage as possible and I lean heavily towards dimes and quarters. In a true SHTF environment you can use your dimes to buy a gallon of gas or a loaf of bread. When this spinning wheel of debt blows the damage will be widespread and unpredictable, but with good preparation and a good community spirit we can survive and rebuild. May God give us all wisdom to navigate this disaster that our global monied elite are bringing upon us.
Like the statements. DXY can rally when compared to others while gold rallies as long as the dollar stays pegged to energy; more accurately THE energy dollar. Correct me if i am wrong but if gold is agreed to be set to say 7,000 will it still be the energy currency? Does the valuation change how the world views the US dollar or force everyone to create a basket of currencies to work with?
Dow to Gold Ratio, tanker trades, mining stocks, growth vs. value, buy the dips, Bull or Bear, inflation, stagflation, etc… Knowledge, wisdom, historical context, and reliable information are invaluable in these unprecedented times. But the truth is we are in uncharted waters and nobody knows how it will play out. That being said, the Dow to Gold Ratio is probably the best strategy to manage risk and preserve capital. That and use tight stops and proper size for all your stock positions!!!
Thanks to my unique background and circumstances, I've been reading 150-200 articles per week for almost a decade from people much smarter than me. Been studying the markets, trading, and investing for more than two decades. Pay close attention to major socioeconomic trends. And I look at everything empirically, critically, and with an open mind, and constantly challenge my inherent biases. Yet, trying to make sense of anything and make the right decisions is like shooting at a fast moving target or playing a game where the rules change constantly and unexpectedly. And if I make the wrong choices, it could have dire consequences for my present and future finances and mental and physical health.
The way I see it, human nature is incompatible with modern society and technology. And the more we advance, the bigger the disconnect and systemic socioeconomic distortions. Sometimes I think it would be better to have my head buried in the sand and clueless about what's really going on. At least then I could enjoy the party until that last moment just before impact.
Anyway, that's my positive take on our situation.
Thanks, Bill, Dan, Tom, Joel, and contributing guests for your insight and wisdom.
My concern is that with such a magnitude of meltdown required for au 10k and or dow 10k the financial system of the western hemisphere will be devastated. Contagion risk will kill global repo operations. No one will counterparty.
As a result globalisation will grind to a halt real quick. So empty shelves for pretty much everything welcome back to the 1930s.
If it isn't manufactured on your doorstop you won't be buying it.
How do I connect to the 3PM session? Or is the discussion thread below the event you announced yesterday. I thought I would see Tom Dyson.
I'm here. Just look further down for my responses. This is my first time using something like this too.
He's here and posting under the name of Hobo Family (his original account)
Looking for the 3 pm discusion - am I in the wrong place??
This is it!
Does it really matter where they both end up? In the end no matter what the price an ounce of gold is going to buy a fine mens suit right?
I agree. This is for me the key consideration. Instead of "the suit", I look at a share of Apple. Today I can buy a share of Apple for about 1/10 oz of gold. So, even if Apple stock goes up in the future, I believe/hope that I can buy back this share of Apple for less than 1/10 oz of gold.
“Which do you think is more likely: that the Dow Jones Industrials could decline to 10,000 in the next bear market? Or that the gold price could go over $10,000/oz in the next bull market?”
I do not think it will be an either or scenario. The Fed I suspect will raise rates and they know there will be some pain / decline for Wall Street. They will attempt to minimize that pain but a decline is in the recipe. I also suspect gold will continue to shine. I suspect it will be a combination of the two that includes gold near 5,000.00 oz., not sure where that puts the Dow in a drop to reach Dow gold ratio around 5.
How will the debt be dealt with across the globe? Will they stay in fiat or will this become the next 90 year, fourth generation, "revolution" and change the rules?
For those of use who haven't used the Hobo Family account whats the link to get in?
Jim Marshall
You don't need a link Jim. Just look for Tom's posts. They'll come from 'Hobofamily.'
I changed my username.
I think we are all waiting for tom
Tom is posting from his original Substack account as Hobo Family!
Oh... is this a mistake?
Nope. All good. Just letting people know in case they were unfamiliar with your screen name.
I could probably change it?
Bill, I was reading your daily contribution today where you mention the New York Times beginning to sound a faint alarm about America's growing government and corporate debt. My question to you: Where are the Edward R. Murrow and Walter Cronkite of today? Are there no more honest journalists left in the world? You write so well and present sound, logical positions how the U.S. is about to go into the abyss. Why can't your ideas reach a wider audience?
We'll pass this on to Bill. In the meantime, we'd love to reach a bigger audience too. Feel free to share Bill's work (and this thread) via email or on social media. Word of mouth is sometimes the best way!
Two reasons I can think of; The new batch of news persons are sold into the government system, and a general fear of a news article starting the avelanche
The longer it takes to reach a majority of Americans and get them "madder than Hell", the worse it will be for our children and grandchildren. When the government handouts no longer show up in people's mailboxes and the ATMs are empty, those people knowing on our front doors won't be looking for bottles and cans.
With all these great comments we will need Tom to get on a pod cast to answer them all! Been waiting for the reserve currency to fail for a while now and the Gold/Silver ratio to normalize. May go broke waiting. In the mean time should we all share a glass of Bonner wine and wait together. Great conversations.
I'll drink to that! As it happens, I had Tom on the Fatal Conceits podcast yesterday to talk about inflation volatility, old economy value plays and what comes next for the BPR project. The recording is in production now. New episodes every Sunday. (In the meantime, check out the archive under the Fatal Conceits tab up top...and feel free to share with friend and foe alike ;-) Cheers!
My concern with Tom’s analysis is the value of our currency by which Tom uses for his discussion. Since the Fed and our government has done it’s best to devalue our dollar, which value of our currency does Tom use for comparison to the Dow for establishing his position. Do we use today’s value or the value of currency say, from 2000, 1990, 1980 or even perhaps, 1971 when we abandoned the gold standard. I may be missing something in my analysis and, if I am, please straighten me out.
My question In summary, how does Tom compare the asset gold, a commodity of reasonably stable value, to a dollar that has had it’s value diluted by the actions of the Fed?
Honestly why not both? FDR made it 35 dollars (rumor has it becasue his wife loved those numbers) and Nixon put in a "temporary" measure to decouple the dollar. When problematic times occur governments like to do inconceivable things and the people thank them for it. The question here really is.... How do we protect ourselves from losing our wealth while others have squandered theirs?
I read a lot of news letters, some specific to gold and silver. The thinking on their part seems to be gold at 3k per ounce in the next couple of years, a 50%+ increase over current prices. This seems more realistic to me than 10k gold. Any comments?
Bill! Great to see you here. (Bill met Kate and I at the airport in Idaho Falls a couple of months ago and very kindly helped us get our car up and running at the start of our most recent roadtrip across the USA.) A $10k gold price certainly seems a bit far-fetched... that's a more than 5x increase from current prices. But... but... there's so much paper currency and credit out there... if they decide to monetise $35 trillion in losses, well, who knows how high gold could go? I mean, it went from $35 an ounce to $850 in ten years in the 70s...
BTW Tom. We got $400 for your tires and donated it to Idaho Food Bank per your request! The hungry people of Idaho thank you kindly.
Woah... what a great price you got for them! Thank you for taking care of that for us...
No worries, buddy. Glad we could help.
Tom, while I share the belief that gold prices are bound to increase very steeply (when it is just guesswork) I wonder why several respected advisers are stressing the need to keep physical gold, at least in part, instead of paper gold. The reasoning being that in case of a massive increase in the demand of precious metals, there will not be enough gold to satisfy redemption demands by owners of paper gold. However I wonder if owning shares of streaming and gold royalties companies can be put on the same level as paper gold because we are talking of companies to whom miners have an ironclad contractual obligation to deliver an agreed amount of gold or a share of profits for the entire life of the mine. True, you do not get delivery of the metal but its increase in value is more than covered by the increase in share values. Could you clarify? Thank you. Giorgio Raccah
I agree with you and I'm a big fan of the gold royalty business. In my mind, you're still buying physical gold, except it's stored in the ground instead of in a vault. The report I've written has a section on gold royalty companies too. My strategy would be to have some physical gold in my possession AND some gold in the ground AND some vaulted gold. (Vaulted gold is what I call the ETFs like OUNZ and BAR, or Sprott's PHYS or BullionVault or OneGold etc.)
Tom, I use PHYS and PSLV and some silver eagles. I do see many options from David Morgan site, Sprott site, JM Bullion, Mike Maloney site and others. Have you ever made a comparison regarding fees, storage, insurance, delivery and so on. I am not asking you to pick any, but education on things to be aware of during doing DD. Edward
I'd like to weigh in. My overall outlook is very negative, so consider this terrible scenario. Accelerating price of stock market to blow off top in the next 6 months with the rumblings of war in the background which quickly enter the foreground resulting in...... frozen markets! No price discovery. No ratio of Dow/Gold. This would not be unprecedented (WW II, by the way, did you know that by April there will only be one chief regulator left at the CFTC, down from 4). In this scenario, give me the gold, but first give me God, shelter, water, food, medicine, guns, ammo and fuel.
Both scenarios are likely and gold may have to be reset at 10X+ it’s current $ spot in order to provide stability for the failing worldwide monetary system, when the FrankenFinancialization DebtBomb explodes. Hussman projects a 64% decline peak to trough for the S&P during the crash on the horizon. And he nailed the Nasdaq crash during the DotCom debacle. With the new Basel 3 regs now effective to dampen the paper gold manipulation by the usual suspects and China potentially announcing the issuance of a gold backed crypto for the Renminbi at The Olympics, the “Pet Rock” that primary central banks continue to hoard likely will shine brighter soon.
No one can know what the market will do tomorrow. But, Tom, I can't wait to hear your take on what's goin on in the stock and gold market now. I would also like to hear suggestions on how to easily buy and sell gold without burying it in the back yard.
Haha, what's wrong with burying it in the back yard? ;) I'm re-publishing my report on gold next Wednesday in my regular weekly letter.
Wall Street is of course manipulated, and Wall Street doesn't like gold. So add that to the equation.
I have always liked the dual monetary standard that Salinas Price has proposed for Mexico and other countries, with all goods and services priced in both the local fiat currency and in ounces of silver. It is a way of inflation-proofing one's savings for those who participate. If you have not heard of this, google his name or go to his website and read up on his PROPOSAL. It takes some thinking to get it. But, the bankers hate the idea and have been able to prevent it from being implemented in Mexico.
Why not both!
Both would be ideal! But seriously...they will meet somewhere in between those extremes I would guess. The real question is when. The Fed, governments, central banks, IMF, and everyone else involved have been phenomenal at stopping, skewing, diverting, prolonging the ability of markets to get to where they should be. So based on things that should have happened a long time ago, let alone by now, that still haven't come to pass, I'm beginning to wonder about everything. Like the man himself says, "Always in doubt."
It went very well to get me partially up to speed, but I have a long way to go. Being 90 with STML slows you down a bit. Thanks for all the inputs.
Would love to see a similar graph/data on SandP/gold, Nasdaq/gold. they would give additional weight to your perspective and prognosis. are these calculated/displayed anywhere that we can access?
Info CBDC: https://www.atlanticcouncil.org/cbdctracker/
"Which comes first, gold at $10k... or the Dow at 10,000?" hahaha... The 2nd is important, tries harder, :).
More than high gains in value of our assets, most of us are primarily concerned with protecting the value of what we now have. The monetary situation in this country, and throughout the world, is in shambles and thus our discussion today centers around predicting the future direction of the economy so that we may take appropriate action. However, while political/economic instability is going to happen, and get worse, an even bigger disaster is the destruction of our power grid. Though not as certain as an economic upheaval caused by incompetent, self-centered politicians, destruction of the electric grid is easy and a high probability.
It has been suggested by one contributor to this thread that all our gold aught should be in financial instruments, ETFs etc. As Tom has pointed out, we need to have some of our gold and silver in our possession. Without the internet or access to your bank or safe deposit box, our financial instruments are worthless. Bury some of your gold/silver in the back yard if you cannot think of any better place, but have ready access to it when the EMP, cyber-attack or terrorists wipe out the grid.
How Can I to get into the discussion? I'm signed in Hobo Family. The last post are several weeks old. I missed the gold discussion will it be published in archives? Also there has no mention of the toll road particulars. What am i missing please?
Hi Capt! Do you see this?
No. I get a subscribe button. 1384 likes and share bottons
You're in the discussion right now! This is it. Can you see all the comments from the other posters?
Hi Tom
Yes I can see all the comments.
I still do not see (Like Reply View or Mute thread.) as per your example.
Maybe I'm confused . Was this a recorded vocal discussion today like the discussion on oil with Rick?
Thanks
Larry
Nope. No audio or video. The discussion is just this long string of text messages and replies.
Hi Tom, I'm in the same time zone as you are so I look for any advice that's applicable to the UK. Thanks for your efforts and the 'Top First' setting is useful advice for a newbie... Cheers Richard
I learn a lot following the discussion; especially how much more I have to learn!
Off topic: Would be great if you could publish your portfolio recommendation soon, for new suscribers like me
If the gov tries to confiscate gold, only the sheep would turn it over to them. Just like in 1933.
Is Tom going to be answering anytime soon?
Yes. If you scroll below you'll see all is replies (from Tom Dyson).
I think Tom needs to set his settings to new first so he can answer posts going on right now.
Done. Sorry. I'm new to this.
Me to
GBTC is today at a discount of over 40% of the Bitcoin price. When GBTC will be converted to an ETF, how much will the price of GBTC go up?
Hi Tom (aka Hobo Family !) I have been following Gold for over a decade now. Every time there is a world event, it rises, then the dollar strengthens and Gold rapidly drops in price. I'm so tired of this cycle ! For Gold to get to 10,000, it is going to take a huge event to convince the world the dollar is not the place to be invested. Your thoughts on what type of events could do this ?
Inflation. It's the achilles heel of the paper currency, credit expansion system. And it's here. Things are suddenly getting very interesting.
I have been trying to figure out what asset to put cash into. I am staying out of the US real estate market because of overvaluation, same with stock market. So I am sitting on more cash than ever. What is a reasonable amount of physical gold to hold right now. 50 oz. puts a street value at $100k, right now. I need triple that to get to a 30% of holdings. Does that seem logical to go that heavy on a wealth retention commodity?
Sorry but this seems like a total waste of time…at least for me.
Sorry David! We're trying it out to see if it's valuable and how to use it. We'll learn from this and see if it's worth doing again on other subjects!
You are in buddy. You just need to click on the links that say 1 new message
As for the question of this discussion thread...
My bet is on gold reaching $10,000 first. And I'd give it a 95% probability
My reasoning is that I doubt that the FED will let the Dow decline 70% (at least not in nominal terms).
However, as for the Dow/Gold ratio, I am not sure if gold will necessarily win out over the next decade, because I think they will both go up substantially. I would still place my bet on gold, but at a probability of 70%.
Can't seem to connect, I guess I'll go out and plow snow!
Jim Marshall
Tom is on this call You just have to scroll down to find hobo family
Can't figure out how to get into the discussion. Phil Dowd
You're in it.
My searches on sub stack don’t show Hobo Family
Don't worry. He's posting here. Just scroll below. Anything from Hobo Family is from Tom.
No need to search. I'll change my username. Perhaps that'll clear up the confusion. Hold on a second.
So when is the correct time to cash out of gold? If you wait until the Dow/gold ratio reaches 5:1, many owners of gold who follow this metric will suddenly want to sell. Will that cause the price of gold to plummet with a sudden glut of gold available for purchase?
I must be lost, can't find the 3 PM discussion. I am logged in.
Jim Marshall
Jim, Tom is replying to posts and questions one at a time. It's not a live chat. But a rolling discussion thread. Scroll down for more....
Curious about Tom's perspective on when Dow/Gold reverts to the mean, which using heuristic analysis looks to be about 9 or 10 based on the above chart?
Decades ago I studied/degreed in Economic. I used to be able to make a semblance of passing sense of the market if taking a long enough view. Now, most things/rules/precedent appear to be broken. Robert Heinlein passed over a period of time in his future history, labeling it "The Crazy Years". It fits. I now no longer look at even the most educated opinion as anything but conjecture. As to the initial question: Dow goes down to 10,000. (That is my conjecture ;-)
Would it not ground us all more in reality while trying to figure this out if we quoted inflation using both current and 1980 criteria? For example: ".....with inflation running at 7% (15% using 1981) etc etc." Shadow Stats and many other reputable analysts have made it clear that we are doing the Fed's and Elites' bidding
when we say 7% without the asterisk!
More questions than answers, for me: will gold's rise be hampered by the growth of crypto? How much Is the price of gold being manipulated? Will the central banks ensure that share prices defy gravity, to appease the elites? Will that policy be reversed when the mob get on the street? Will inflation and/or deflation, debt defaults, currency crises and the threat of war change the game? Are civil wars coming? How will China and Russia versus the West play out? And who knows?
Haha... so many questions! It can really make one's head spin...