What to do next, now that gold is at $2,000 per ounce
Source: Getty Images
Wednesday, April 5th, 2023
Laramie, Wyoming
‘Gold is money. Everything else is credit.’
That’s what the banker JP Morgan said back in 1912. That quote came to mind earlier this week when the US gold price broke $2,000 per ounce–and stayed there (for now).
Gold–why to buy it, where to buy, how to buy it, and when to sell it–plays a huge role in our long-term strategy at Bonner Private Research. The first in-depth Research Report we published for subscribers was Tom Dyson’s Gold Report. It’s one of five Research Reports new subscribers gain access to. I’ll come back to those in a second.
But first, why is gold so important? Because when you look at the world through gold-colored glasses, prices (and values) look very different. Pricing stocks in real money (gold) tells you two very important things: when to buy them and when to sell them. Take a look at the chart below (you can make any of the charts bigger by clicking on them with your mouse).
Source: www.stockcharts.com
This is the Dow/Gold ratio going back over thirty years. When I say Dow/Gold, I mean the number of ounces of gold it takes to buy a ‘share’ of the Dow Jones Industrials Index. You divide the current value of the Dow by the current price for an ounce of gold. That’s your ratio.
The chart shows that, in gold terms, the Dow hasn’t made a new high since it peaked in late 1999 at 20,566. In nominal terms–plain old numbers–the Dow DID make a new high in late 2013. And it nearly hit 37,000 in 2021. It’s down about 9% from its all time high right now.
In gold terms, we believe the Dow is headed much lower. And gold much higher. In Tom’s Gold Report, he shows you the same chart but with two key differences.
First, his chart goes back 150 years! Second, on it, he shows the key points where the chart signaled it was time to make a trade. That trade was simple. And it was one thing you could do to either protect your money or profit over the next cycle. Which brings me to the second chart I want to show you.
Source: www.stockcharts.com
Bill Bonner’s first Trade of the Decade was to ‘sell stocks and buy gold.’ Over the next ten years, gold went up almost 420%. The S&P 500 (a larger index of US companies than the Dow) went down 5.74%. Bill’s Trade of the Decade killed it.
Bill has made a new Trade of the Decade in each ten-year period since. The idea is simple: if there was just one move you could make over the next ten years (and then completely forget about it) what would it be? It’s been different ideas over different decades. But always the same objective: keep it simple, protect your money, and profit by doing as little as possible.
Bill and I introduced a new Trade of the Decade in January of 2021. It was the second Research Report we published at Bonner Private Research. This trade is active, and will be for the next eight years. I can’t tell you exactly what the trade is. But the chart below is a fairly good indication of how it’s going so far.
Source: www.stockcharts.com
XLE is the S&P Energy Sector exchange traded fund (ETF). Let me repeat that XLE is NOT how we’re playing the Trade of the Decade. But energy–oil, gas, coal, liquid natural gas–IS the theme. And as you can see from the chart above, so far so good. The energy sector is up almost 130% since the Trade of the Decade went live. The S&P 500 is up about 5% in the same time.
Past performance is no guarantee of future results, as they say. But I’m sharing these two charts with you because they contain two of the most powerful ideas behind our investment strategy over the next ten years. What are those two ideas?
First, you have to think in the long-term, in cycles rather than days or weeks. If you’re after a rapid fire speculative trading profit, our service can’t help you. But if you need help getting your savings and your portfolio to the far side of this crisis, we CAN help you, by avoiding the ‘big loss’ and keeping an eye on ‘the big picture.’
Second, gold and oil–money and energy–are the two most important things to understand for investors right now. As Tom wrote earlier today in his Weekly Update to paying subscribers, energy is the master economic resource in the world, and gold is the master store of value in the world. Understand them both, you can save and profit. Fail to understand them, and suffer the consequences.
Three More Research Reports
The two reports I mentioned above–The Gold Report and The Trade of the Decade–would, by themselves, make a subscription to Bonner Private Research a great value. Of course I’m biased because I wrote one and edited the other. What’s actually in them?
In The Gold Report, Tom shows you how the Dow/Gold ratio works over time. And then how, how much, and where to buy gold. In the Trade of the Decade, I lay out the case for oil, gas, and coal and tell you the one simple way to buy and hold them (and hopefully profit) over the next ten years.
If that was all you received, I still think a subscription would be well worth it. I’ve received private notes from subscribers who’ve paid for their subscription many times over with their gains from The Trade of the Decade. And if I’m right, we’re only just getting started.
But that isn’t all new subscribers get. You’l get three other Research Reports when you sign up.
The Strategy Report is our ‘big picture’ forecast for all the major asset classes (stocks, bonds, cash, gold, and real estate). It has a model asset allocation strategy that’s easy to understand (and is reviewed and updated, if necessary, by Tom, in the Monthly Strategy Report.)
The Dollar Report investigates one of the most important questions all savers, investors, and retirees face today: is your money safe in US dollars? Will inflation destroy the value of your savings? Is the US dollar going to be replaced as the world’s reserve currency? What should you do if the government imposes a Central Bank Digital Currency?
In Where to Be Invested Right Now, Tom has made it as easy as possible for new subscribers to see what we’re recommending today. It’s a quick-fire summary of all the open positions in our Official List (also published and updated each Wednesday). It has links back to the original research on each position and is the fastest way for you to get up to speed on all the steps we recommend you take right now.
Will we be right about gold and oil? So far so good. As Bill has said, getting the Primary Trend right in markets is the big thing. If you get that right, the rest should follow.
It’s also possible you’re simply not looking for this kind of research right now. And that’s fine too. Please continue to enjoy Bill Bonner’s daily essays at no charge. But if you’re ready to see what’s behind the paywall and how it can help you, you can subscribe to our Premium Research for $149 a year by clicking on this link now.
Regards,
Dan Denning
Publisher, Bonner Private Research
PS This level of financial research is for you if you’re a saver, investor, or retiree looking to preserve what you have, understand what’s going on, and prepare for what’s next. It’s a big task. And it can be overwhelming if you’re just starting. We’ve tried to make it as easy as possible with each of our five major Research Reports.
It’s all there–in plain language with easy-to-follow instructions that follow. It’s one of the things we’re most proud of, in fact. Our readers tell us we are able to help them understand complex subjects and then do something practical about it.
In my 25 years in financial publishing, I’ve never been prouder of being able to produce this quality of research and make it available at this price. If it’s not for you right now, that’s fine. But these are powerful ideas. And I believe they can help you survive and prosper in the coming years. To access them now, sign up here.
PPS Central bank buying of gold reserves was up again in February, this time by 54 tonnes, according to the World Gold Council. That’s 11 consecutive months that central banks were net purchasers of gold (more buying than selling). If gold is good enough for the world’s biggest government banks, the real question is whether you have enough for what’s ahead.
(If you wish to upgrade your subscription, do NOT click on the link below, as you will pay the normal $395/year rate. Click on any of the links above to subscribe for $149 per year for as long as we continue to publish Bonner Private Research).