Golden Patterns

There’s a corruption cycle too...roughly corresponding to the shift away from the ‘rule of law’ to the ‘rule of men.’ This appears to be a part of the life cycle of democracy.

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Wednesday, October 8^th, 2025

Bill Bonner, from Youghal, Ireland

Patterns. Patterns. Patterns.

In addition to the boom-bubble-bust cycle of the stock market, there is also the Primary Trend...in which gold and stocks teeter-totter over long periods of time. Stocks hit an all-time peak in 1999, at more than 40 ounces of gold to the Dow. Thereafter it was down, down, down (even as nominal prices rose!) to less than 12 ounces today.

We don’t know, of course, if that trend will continue...but it marks a decline in the real value of US stock market assets...and coincides with what we believe is the decline of the US empire. Good? Bad? Reason, schmeason. It’s just what tends to happen. Things spring to life. They enjoy a season or two of splendiferous summer...and then the skies darken, and they die. We don’t control the pattern. And we can’t predict it.

But now, gold is roaring ahead. The Wall Street Journal:

Gold Prices Top $4,000 for First Time

Record run for futures comes at a time of heightened concern about the dollar.

Our trigger for trading gold for stocks is when the Dow/Gold ratio falls to 5. How, when, why it might come to that, we don’t know. But we guessed that the ‘5’ mark might be hit by gold rising to $5,000...and the Dow falling to 25,000. Something like that.

$5,000 an ounce for gold now seems clearly in view. Stocks, however, have resisted a major decline. We’ll see what happens.

The rise and fall of empires is also an irresistible pattern. A nation grows...and if it is large and successful enough, it seeks to dominate other nations...and the whole world. That is, it becomes an empire. Very grosso modo, we put the beginning of the US empire around the turn of one century — 1900 — and its peak at the turn of the next — in 2000 (coinciding with the decline of the Dow/Gold ratio).

Empires don’t last forever. They are natural things too. They grow. They expand. They become more and more costly and unwieldy. Typically, the zeitgeist shifts from dynamic growth to bureaucratic protectionism...from pushing out borders to building walls to secure the gains. Politics becomes more important. And brute force replaces consensus as a way of doing business.

There’s a corruption cycle too...roughly corresponding to the shift away from the ‘rule of law’ to the ‘rule of men.’ This appears to be a part of the life cycle of democracy...in which consensual democracy leads to Big Man government. Leading families tend to get richer. They use their wealth to attain government power and use it to make themselves even richer still.

A minor example, Mother Jones:

Treasury Secretary Scott Bessent announced a $20 billion package to rescue the Argentinian economy. The risky taxpayer-financed deal, which involves trading US dollars for Argentine pesos, has little upside for ordinary Americans. Argentina is not a significant US trading partner, and its economy, long in turmoil, has little impact on the United States.

However, Bessent’s announcement had massive economic benefits for one American: billionaire hedge fund manager Rob Citrone, who has placed large bets on the future of the Argentine economy. Citrone, the co-founder of Discovery Capital Management, is also a friend and former colleague of Bessent—a fact that has not been previously reported in US media outlets. Citrone, by his own account, helped make Bessent very wealthy.

That is also a part of the pattern. As the system shifts, the route to success shifts too...from ‘what you know’ to ‘who you know.’ Knowing Scott Bessent has turned out to be very profitable for Rob Citrone. He was ‘long’ Argentina.

Then, when Argentine President Javier Milei lost a bellwether election in Buenos Aires province, it caused such a big sell-off in Argentine assets that Citrone was able to add to his position for ‘almost nothing.’ Did he know the fix was in? Scarcely two weeks later came Bessent’s very unusual “unconditional” backing for the peso. And Citrone became a lot richer.

Bessent is no stranger to speculating on governments and their currencies. He made his fortune largely by betting against the pound in 1992 and then against the yen in 2013. It would not be the least bit surprising if he and his friend Citrone saw an opportunity in the Argentine peso.

Readers will notice that Bessent was not giving his own financial support to the pampas. He was pledging the money of US taxpayers. And thus do the many get ripped off by the few. Inflation lowers the value of the common man’s earnings and savings. And his tax money is increasingly frittered away or stolen in some Bessent-like scam.

More to come...

Regards,

Bill Bonner