The Last Man Standing

We’re eager for the Dow to sell off to a point where we can jump back in with confidence. How will that happen? We don’t know. But we know when it will happen.

Source: Getty Images

Friday, April 11^th, 2025

Bill Bonner, writing from Youghal, Ireland

The era of rules-based order and globalized free trade is over.

--Lawrence Wong, Singapore Prime Minister

When the stock market was in free fall, a subscriber wrote to ask if we were satisfied. After all, here was the sell-off we were waiting for.

Alas, no. We hold gold. And we can’t complain. Gold has been the top performer for a quarter of a century…and now, it is the only sure refuge from 2025 chaos. Seeking Alpha:

Gold futures added to gains in electronic trading late Wednesday, with the June contract rising to as high as $3,111/oz, after prices had already gained 3% during regular trading for its largest one-day percentage gain in a year and a half.

We keep score in gold; we hold gold as as store of value; we don’t expect to make any money in it. Businesses increase the world’s real wealth; Buffett is right about that. They make profits. We want a part of those profits. And we hope for a bit of capital growth too.

But our macro trading system is designed primarily to avoid the Big Loss (Tom and Dan discussed this last night in the video below). The recent sell-off might be the beginning of it…or it might not. Whatever…the risk is still there…and increasing.

Stocks crash. Bonds collapse. The dollar goes up…and down. Interest rates too. Recessions. Bubbles. We’ve seen them all.

But Donald J. Trump is introducing something we’ve never seen before. In addition to unsettling the financial world with a $37 trillion debt… and $2 trillion deficits — sure to lead to another crash and recession — he’s unsettling the political world too, with capricious policies, reckless tariffs and crackpot theories.

His Liberation Day never came.

His ‘reciprocal’ tariffs were fake.

It was as if Abraham Lincoln waved the Emancipation Proclamation, and then the next day said he was ‘only kidding.’

What are trading partners supposed to think? They are surely looking for new suppliers and new markets.

And what is China supposed to do? Singled out for special beatings, can the Chinese save face by buckling under to Trump’s whims? Or will they be forced to take more aggressive action?

We don’t buy gold as an investment. We buy it as a way not to lose money on our investments. We sell stocks and hold gold for long periods of time…and we only buy back into the broad stock market after we are pretty sure that the risk has been squeezed out of it. That’s when you can trade 5 or fewer ounces of gold for the entire group of 30 Dow stocks.

You see immediately the weakness of our investment strategy. We could wait a lifetime and never buy a stock. The Dow passed our ‘sell’ point back in 1996. Since then, grandchildren have been born and reached voting age, new cars have been consigned to the junk yard, fruitcakes and hams have been entirely consumed… grunge, mom jeans, beanie babies…the internet, Iraq, Apple, Google, Musk, Trump — a lot has happened. And we’ve been substantially (but never entirely) out of stocks the whole time.

And during that time, our holdings of gold rose from a dollar value of around $300/oz. to today’s $3,100. Without getting out a calculator, we see our gold is worth more than ten times what it was in 1996.

And the Dow? Trading around 6,500 in 1996, it’s up a little more than six times.

Holding gold — and staying out of stocks — paid off. But in terms of real wealth, we gained nothing. We still have exactly the same number of ounces of gold that we had 29 years ago.

So, yes, now we’re getting restless. We’re eager for the Dow to sell off to a point where we can jump back in with confidence. How will that happen? We don’t know. But we know when it will happen.

Our target is still the Dow at 5 ounces of gold. That could be with a gold price of $4,000… and the Dow at 20,000. Or maybe gold at $5,000 and the Dow at 25,000. Either way, we have a long way to go.

So the answer to the question: Are we satisfied?

Not yet!

In the meantime, how will today’s market and political madness shake out? We don’t know. But we recall Richard Russell’s famous last words. “I don’t know what will happen, but when the dust finally settles, gold will be the last man standing.”

Regards,

Bill Bonner

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Ed Note: This conversation between BPR Investment Director Tom Dyson and Research Director Dan Denning was recorded on Thursday night. An edited transcript will be available this weekend.