Editor’s Note: Maria Bonaventura here, managing editor of Bill Bonner’s Diary. If you’ve been reading the Diary, you’ll recognize Tom Dyson’s name. Tom has been sharing his “Postcards From the Fringe” with you in these pages. And he’s the man who went “all in” on Bill’s Dow-to-Gold trading model

If you’re still clinging to your buy-and-hold 401(k), index exchange-traded funds (ETFs) and mutual funds, you’re in the WRONG place. I’m afraid you’re about to be made into the sucker. Gold is the place to be now.

As Tom puts it, over the past 20 years, he’s only had this level of conviction on a trade two other times. He shows you why below … and offers a lesson from his past that can help you follow the trade to profits.

Failure is so important. We speak about success all the time. It is the ability to resist failure or use failure that often leads to greater success. I’ve met people who don’t want to try for fear of failing. – J.K. Rowling

OLD TOWN HOTEL, HANOI — This month, we are billionaires.

As longtime Diary readers know, a year ago, my ex-wife Kate and I packed up our things and left America. Then we converted our savings and investments into gold and silver. Since then, we’ve been traveling the world.

Because we didn’t have a job, we favored cheap countries where we wouldn’t have to spend much money.

We went to Eastern Europe. It’s cheap there. We went to Turkey. It’s very cheap there. We went to Egypt. They had a big currency devaluation in 2016. It’s cheap there. India’s currency is at an all-time low. It is cheap there. And so on.

We’re having a great adventure, we’ve bonded as a family, and we spend a fraction of what we used to spend in America.

We’ve enjoyed this lifestyle so much we want to get married again next year and then continue exploring the world’s cheapest countries.

The Failure of Fiat

We are in Vietnam right now, and we are spending dong.

The Vietnamese dong is the second least valuable currency unit on the planet. It has lost about a third of its value over the last decade. It is at all-time lows against the dollar.

(The Iranian rial — at 42,100 to a dollar — is the least valuable. I’m not counting the Venezuelan bolívar, which, at 2.2 million to the dollar, is no longer relevant.)

One dollar converts to 23,200 dong. When we walk around town, we generally carry over a million dong in our wallets. The ATMs here tell me I have a balance of 350,000,000 in my checking account in Florida.

We rent a big hotel room in the center of town for $35 a night. The price includes all-we-can-eat breakfast. Taxi rides are a dollar. A family meal in a restaurant costs $10. A big bottle of water at Circle K costs 40 cents.

Gold, on the other hand, is making all-time highs in most countries.

On Tuesday, the gold price hit an all-time high in the euro area, at €1,390 per ounce.

But there are 56 countries left on the planet where the gold price is NOT yet at an all-time high. Many of them have pegged currencies to the dollar.

Here’s a list of some of them (numbers in parentheses show how high gold has to rise to hit an all-time high):

  • United States (23%)
  • Bangladesh (8%)
  • Switzerland (10%)
  • China (10%)
  • Guatemala (24%)
  • Israel (28%)
  • Iraq (19%)
  • Iceland (15%)
  • Cambodia (21%)
  • Laos (11%)
  • Vietnam (6%)
  • Thailand (19%)
  • Singapore (7%)

Currency Wars

Why is the price of gold rising around the world?

Many countries are about to weaken their currencies. And it starts with America.

Look at Trump’s recent tweets. Or the U.S. government’s $22 trillion in debt (which is effectively a massive bet on the dollar losing value). America needs a weaker dollar to win back industry from overseas and keep the credit flowing.

Look at the Chinese, who want their products to seem cheap in the rest of the world. Or the Japanese and the Germans, who compete with the Chinese. Or the Brits, who are about to Eurexit …

We’re entering an era of “competitive devaluations” or “currency wars.” Gold will be the only practical way to preserve purchasing power.

The markets are starting to sense this, I think, but it’s still just a trickle. Yet as more and more people buy gold, we get closer to the tipping point … the bursting dam … the avalanche.

That’s the moment when the idea cascades and there’s a stampede into gold. Gold will go far higher than it is today … maybe even double or triple.

We’re not there yet. But it feels like the moment is getting closer.

Hobo Gold

So how do you buy gold?

There’s hobo gold — actual gold coins — which you can lock in a bank vault.

There’s brokerage gold — gold in digital or share form — you can buy with your 401(k) or IRA.

There’s greedy gold — derivatives of gold like mining stocks or gold options — which go up much faster than gold.

If you’re still clinging to your buy-and-hold 401(k), index exchange-traded funds (ETFs) and mutual funds, you’re in the WRONG place. I’m afraid you’re about to be made into the sucker. Gold is the place to be now.

That’s why Kate and I sold everything we owned last year and converted ALL our assets to gold and silver. I started nagging my friends and family to get into gold, too.

This is the third time in the last 20 years I’ve had this level of conviction.

The first time was in 2002. I converted all my assets into gold then, too. I even took money from my mother’s work friends and two of my friends from university and invested it in gold futures.

Gold ended up rising 6x over the next eight years.

Bitcoin was the second time. I found bitcoin when it cost $4 per coin … in 2011. And I knew. From the moment I saw it. I put $25,000 into it. I tried telling people then, too, but nobody listened.

The mistake I made with bitcoin and gold the first time is I sold far too early. I’m terrible at letting my profits run, in other words.

Someone asked me about this recently:

I’m in (but) I’m a bit intimidated by physical gold, being able to unload it when the time is right, etc. What will you do differently this time to keep your profits? Trailing stops?

This time I have a clearly defined strategy for both if it goes wrong or if it goes right.

That is, when the Dow-to-Gold ratio hits 5, I’m selling the gold and converting it into high-quality, dividend-raising stocks.

This simple, two-step investment strategy should take care of Kate and me for the rest of our lives.


Tom Dyson