Chiswick, West London
Wednesday, September 9
By Tom Dyson, Investment Director
A vicious scramble for scarce resources…fueled by bottomless paper money…in search of profitability at massive scale…that may or may not materialize…
Our investment strategy is perfectly positioned for this AI-led Inflationary Boom… which we track with this chart of stocks/oil and the interaction with its moving average.
Above the moving average signals we’re still in the Inflationary Boom.
Kate and I are buying MORE gold. I have the strongest conviction that gold will be making new all-time highs again next year. The bubble is deflating and the run from paper has started. I hope my updates of the last few months have made this position unequivocally clear.
Greetings from Chiswick, West London.
The debasement trade is ON again…and we’ve likely entered the final melt-up of the great paper money experiment.
The debasement trade had been working beautifully until February 28, when the US and Israel attacked Iran, and the trend reversed, knocking 16% off the gold price.
As a reminder for new readers: The debasement trade is based on the observation that huge government debt and deficits all around the world will require even more money printing, yield curve control, and quantitative easing by central banks. This is happening with nearly all currencies in nearly all countries.
Interest rates are rising around the world, responding to the 8% US money supply growth we’ve seen over the last twelve months (and we’ve been tracking, thanks to Professor Tim Congdon)...
The mad scramble for resources to build AI infrastructure, which as yet hasn’t produced a profit…
And the government’s gargantuan appetite for borrowing.
We’ve seen two important Scott Bessent interventions this summer…in the yen and in the US yield curve. Both these decisions reinforce something we’ve known all along: They will defend interest rates, by sacrificing the currency and our cost of living.
The result?
A gradual debasement of paper money and claims on paper money in general against real assets; things like precious metals (gold, silver, platinum), and energy assets that cannot be printed or created with keystrokes (uranium, natural gas, crude oil). In a nutshell, sell paper, buy stuff.
This is the “debasement trade.” The following three charts show copper, making a new all-time high, diesel, making a new all-time high, and iron ore futures sneaking back above $100/ton.
