End of an Era

Time to take stock and look at the bigger picture...

(Source: Getty Images)

Joel Bowman, checking in today from Buenos Aires, Argentina...

Two takeaways for you this week, Dear Reader... one each from Dan Denning and Tom Dyson. But first, a quick review of the week just gone...

Stocks rallied into the close on Friday to snap a three-week losing streak. The Dow Jones Industrial average gained 1.2% for the session, the S&P 500 ended higher 1.5% and the Nasdaq closed 2.1% above where it started the day. 

The three major indices were up 2.7%, 3.6% and 4.1% for the week, respectively. 

Standing back a little further from our computer screen, that brings their year-to-date performance to -12.2%, -15.2% and -23.5%. 

And standing back even further... so far, in fact, that bull and bear markets become mere blips on the trading screen... the really big news this week was that, after 70 long years on the throne, Queen Elizabeth II died, aged 96. 

Why is this significant, exactly? And what does it have to do with “connecting the dots” and “following the money,” our regular beat here at Bonner Private Research? 

For one thing, the Queen’s passing affords us all, whether members of the increasingly anachronistic Commonwealth realms or not, an opportunity to reflect on the larger cycles of life, those we rarely stop to think about in our ordinary, quotidian existence. 

In an age of contracting attention spans, of TikTok and meme stocks and graphic “novels,” where presidential cycles seem like an eternity and this week’s villain competes to fill Orwell’s two-minutes of hate, it’s somewhat refreshing to take a breather and evaluate where we are in the grand scheme of things.  

It’s perhaps also useful to remember that, Queen, subject or none of the above, the same fate awaits us all. It’s what we do with the precious time we have that counts. 

To that end, your editor spent Friday afternoon eating cucumber sandwiches in the living room, listening to Last Night at the Proms (Elgar’s Nimrod! “I’m not crying... you’re crying!”) and regaling Dear Daughter with stories from our own childhood growing up in Australia, watching the swimming events at the Commonwealth Games and learning all about ANZAC Day and Captain Cook’s voyage at school...

Portfolio value: Zero. Life value: Priceless.

And yet, as we thumbed through the history books, past the Queen’s Silver, Gold, Diamond and Platinum Jubilees, we were reminded of the difference between what might be termed “short term noise” and “long term strategy.” And that does have investing relevance, especially when it comes to having the patience and discipline to hold history’s preferred form of money: Gold. 

As Bonner Private Research’s Investment Director, Tom Dyson, reminded members on Wednesday...

The conventional wisdom is that gold is simply a protection against inflation. Not so. I buy gold on the thesis that the US government is broke and that ultimately this must be reflected by a falling dollar. So I buy gold as a hedge against currency debasement. My hope is, even as the dollar devalues, gold will at a minimum hold its purchasing power, as it always has. 

When someone says “the dollar’s up today” they’re usually talking about the dollar in terms of other paper currencies, like the pound, the euro or the peso. The dollar’s convertibility into other paper currencies isn’t what concerns me here. (Actually, the dollar is currently very strong against other paper currencies.)

It’s the future purchasing power of our savings in terms of rent, energy, transportation, food and services that concerns me. In these terms, it’s a virtual certainty that over the long term, the dollar’s value will decline. Gold protects against this decline.    

Members can review Tom’s Gold Report to learn more about how he’s using the Midas Metal to help safeguard his family’s savings and preserve their purchasing power during market turbulence. If you’re not already a member, you can join us here...

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As to the importance of studying cycles (or at very least being aware of them), Dan penned the following in his weekly note to Bonner Private Research members, yesterday. We felt his words, timely as they are, were worth quoting at length. Here’s Dan...

The second time I lived in London was between 2015 and 2017. It was another project with Bill, and happened to coincide with Brexit (an exciting time to be in the UK for lots of reasons). I lived in an area called Shad Thames, on the south side of Tower Bridge. My commute to work took me east up the Thames toward Blackfriars Bridge.

Embedded in the pavement along the way were commemorative markers for the Silver Jubilee of Queen Elizabeth II. The Silver Jubilee marked the 25th anniversary of the Queen’s ascension to the British throne in 1952. It was built in 1977.

The Queen went on to reign for over 70 years, celebrating a Golden Jubilee in 2002 and a Platinum Jubilee in earlier this year. Aside from being the longest-serving monarch in British History, she saw a tremendous amount of change in her life. I don’t think we’ll see another public figure of such significance in our lifetime. By that, I mean a single person whose life has spanned such a transformative period in history. 

The whole thing reminded me of a quotation I included in The Dollar Report. It was from David-Hackett Fischer’s book The Great Wave. It was about the celebration of the Diamond Jubilee (60 years) of Queen Victoria. I’ll reproduce it here for the benefit of new readers who haven’t reviewed the report yet: 

On Diamond Jubilee Day [22 June] in 1897, eminent Victorians contemplated the future with the same confidence that marked their memories of the past. Peace, progress, and stability were thought to be natural and normal in the world. They were firmly expected to continue.

But it was not to be. The Victorian certainties that London celebrated on Diamond Jubilee Day had already begun to be left behind by events. When we look back on the economic indicators for the year 1897, they reveal to us in retrospect a pattern that was still mercifully invisible to those whose lives it would transform. Beneath the surface of events, the equilibrium of the Victorian era had come quietly to an end. 

On the day that the Queen and her subjects commemorated sixty years of stability and peace, a deep change was silently occurring in the structure of change itself. That sunny June morning in 1897, the Western world was entering a new era, which would be filled with horror that the Victorians could scarcely have imagined, much less foretold. This new epoch has continued to our own time. One of its many material manifestations was a long movement that might be called the price-revolution of the 20th century.

It’s another great book about long-term cycles and the nature of change itself. I highly recommend it. But I’m quoting it to you here because this time, the end of the second Elizabethan Era in the UK coincides with another period of great global change. Only this time, it’s likely that Americans will see the greatest (and possibly most negative) changes in their quality of life (if they do nothing to prepare). 

Look around the world. The United States has ‘weaponized’ the dollar and the global payments system through which the dollar runs. China has ‘weaponized’ the global supply chain to influence inflation and political and social instability in America. Russia has ‘weaponized’ energy. And the European Union has ‘weaponized’ regulation. 

In the next price revolution, we’ll see where power really resides. Will it be imaginary wealth created by central banks? Will it be real wealth by the owners and producers of real assets? And Great Powers aside, what can ordinary people like us do to not get run over by events. That’s our challenge now. At least we’re in it together (you, Tom, Bill, Joel, myself, and all of thousands of other readers).

Note to readers: If you’re not already receiving weekly updates from Tom (Wednesdays) and Dan (Fridays), you can correct that tear in the matrix today. In addition to their twice-weekly market notes, you’ll also gain access to in-depth, monthly reports, a growing archive of research reports (The Gold Report, The Dollar Report, The Trade of the Decade Report among them) and a stock watchlist, plus invitations to join our private Zoom calls, in which we connect with Bill Bonner’s extensive network of professional money managers and market analysts. 

Begin your journey to financial independence with Bonner Private Research right here...

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And now for Bill Bonner’s missives from the past week...

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And that will do it for today, dear reader. We’ll be back tomorrow with your usual Sunday Session, in which we present Part II of our little Ode to Argentina. (Catch up on Part I here.)

We’ve also got another Fatal Conceits podcast in store for you. This week we sat down with serial entrepreneur, investor and author... not to mention our neighbor here in Buenos Aires... Mr. Federico Tessore.

Fede has built an audience numbering in the hundreds of thousands around the Spanish speaking world, helping his readers invest in volatile (and we mean, volatile by Latin American standards) markets. His story on the 2002 bank runs here in Argentina – when he was working at Citibank, no less – is especially worth your listen. 

All that and plenty more, tomorrow.

Until then...

Cheers,

Joel Bowman