| By Bill Bonner, Chairman, Bonner & Partners GUALFIN, ARGENTINA – With the Dow once again over 26,000, we have to wonder… Are stocks really in a bear market? We thought we passed the peak in October. If so, we can look forward to a long bear market that will take the Dow down to 15,000 or 10,000… or so. And between the time it takes stocks to work their way down… and the time it takes them to recover… most of us probably won’t live to see them at this level again in our lifetime. But if the Dow continues to rise… well, who knows? | Recommended Link | You can Start Collecting “Medical Rebate Checks” It doesn’t matter if you’ve never even bought an aspirin… Thousands of regular Americans are collecting what I’m calling “Medical Rebate Checks.” It takes just 10 minutes to set yourself up for a big payout… And you could secure your first one by Friday, March 1. | | | | Dow Theory The idea of big, long market sweeps comes from Dow Theory, as interpreted by Richard Russell. Regular readers of these pages will know this as the “Primary Trend.” It is very useful from an allocation point of view. You know that stocks will be cheap at some points… and expensive at others. And between ultimate highs and lows will be long movements, taking many years. So, you stick to the basics, buying and holding when stocks are cheap and becoming more expensive… selling and staying out when they are expensive and working their way down. We developed our own strategy. We compare the level of the Dow to the price of gold. When the 30 Dow stocks can be bought with five ounces of gold or less, we buy stocks. When that level goes above 15, we switch to gold. It’s not necessarily the best way to invest, but it’s easy to remember. And back-testing our Dow-to-gold model for 100 years, we see you could have turned $1,000 in 1919 to $43.3 million today. Compare that to $17.7 million from a “buy and hold” strategy. Not knowing any better, we’ll stick with the model. Waste or Disaster Meanwhile, we are on a long trip, trying to connect the dots between what we see with our own two eyes… what most people believe… and how it affects our financial world. And what we see so far is that: Every cockamamie public policy dreamt up by America’s activists has been tried elsewhere… tariffs, taxes, soak the rich, coddle the poor; make wars on drugs, poverty, and terrorists; reward the cronies, stimulus, deficits, money printing, negative rates, domestic boondoggles, military bamboozles, price fixing… And the results are always predictable: A waste… or a disaster. The old “us versus them” is always a scam. People are unique, with thousands of different cultures… hairstyles… religions… hobbies… businesses… prejudices… trades… and financial interests. Playing off one group against another merely allows another group – the one with the real power, the insiders – to gain at the public’s expense. The U.S. is following policies and programs that have been tried many times before. They will not make America great again. Instead, they merely keep her on the road to calamity… by way of Japan and Argentina. So, let’s begin with No.1. Tax the Rich In the last few weeks, the Democrats have come up with several proposals to tax the rich. This marks a big swing away from the anti-tax, Reagan, Tea Party era. Not the proposals themselves, so much as the widespread support for them. The Fiscal Times: But taxing the rich more remains wildly popular, according to a new SurveyMonkey poll conducted for The New York Times – and nearly two-thirds of voters say the government should try to reduce inequality. More than 60 percent of Americans, including 51 percent of Republicans, support the proposal by Sen. Elizabeth Warren (D-MA) to introduce a tax of 2 percent on households with a net worth above $50 million. A slight majority of Americans supports a 70 percent top tax rate on incomes above $10 million a year, as suggested by Rep. Alexandria Ocasio-Cortez (D-NY). Sixty-two percent of Americans – including 87 percent of Democrats and 70 percent of independents – say the government should pursue policies to reduce the wealth gap. “Nearly two-thirds of Democrats say it is immoral to have an economic system where some people have billions of dollars while others have very little,” The New York Times’ Ben Casselman and Jim Tankersley report. Why would taxes on the rich suddenly be so popular? Easy… the middle classes think they’ve been cheated. Many thought Donald J. Trump would set things right. Now they look to the tax code. But will tax changes really make people better off? In France, for example, they have all the taxes you could possibly want. Do they make the economy stronger? Do they create more jobs? Do they make the society more fair? Think so? Tell it to the gilets jaunes, who have been setting cars on fire! Unemployment is at 9%. The rich are still rich. And the government is still desperate for more tax revenue. For many years, we filed taxes in France, Britain, and the U.S. simultaneously. The tax systems were so complex – with so many traps for the unwary – that we undoubtedly made costly mistakes. But what we noticed was that, while they were all very different, they were also very much the same. The U.S. took about 50% (state, local, etc.) of our income, whereas the French were running at about 70%. But the French gave you more for your money – including extensive medical care (which seemed to work pretty well)… and free education for as long as you could stomach it. If we added what we paid for medical care and college tuition, to what we paid the feds in the U.S., the result was not so different. Matter of Fairness AOC and the Democrats say it’s not just the money; it’s a matter of fairness. We don’t know what principle of fairness says you should take more from one person than from another. And if you look at the European system, which they hold up as a model, you see that while the rich may pay more, so do the middle classes. The sales tax in France is 20%. That is a “regressive” tax, meaning it is a bigger and bigger share of your expenses as your income goes down. The French try to soften the blow on the poor a bit by lowering the sales tax on food to only 5.5%, but the tax is still a big part of the typical family’s budget. Which is better? The French system or the U.S. system? If we had a say, we’d go for fewer taxes rather than more. But in both systems, the rich and their lobbyists do a good job of reducing their tax burden. And the poor don’t have any money; in France, as in America, the bottom half pays no income taxes. That leaves the middle classes to shoulder the burden. And however much you jiggle and jive with the tax system, or switch from direct taxation to debt and inflation, it is not going to make much difference. One way or another, they’re going to pay. The “tax the rich” proposals are mostly distractions from the essential math. The more the feds meddle, at home and abroad, the more the middle classes are going to pay. Fairness has nothing to do with it. And it is the money system, not the tax system, that has made the insiders so rich. Neither Republicans nor Democrats are suggesting changing that! Best in Class But it’s not just the tax proposals; all the public policy proposals, from conservatives, as well as liberals, are bogus. Every one of them is merely another way to squeeze more blood out of the middle class. How about a “Green New Deal”? The French are ahead on that one too. They call it the “Transition écologique et solidaire,” in which they’re supposed to turn away from the internal combustion completely by 2050. Part of this program includes a hefty tax on gasoline, which prompted the demonstrations you’ve seen in the papers. But it is nothing more than another way to raise taxes, pretending it will make the planet “greener.” Negative rates? Japan has been using them for years. Have you noticed a big upsurge in Japanese GDP? No? And what’s this? Stocks are still down 50%… 30 years after the crash? A negative interest rate, too, is just another tax on savers… and another gift to the rich. Tariffs? Mr. Smoot and Mr. Hawley tried it in the 1930s. How’d that work out? And today, Gabon, Benin, Central African Republic, and Chad all have tariffs over 10%. Hong Kong, Singapore, Switzerland, and Canada all have either zero tariffs, or less than 2%. Which group would you like to be a part of, Dear Reader? The average tariff has been coming down for at least a quarter of a century, and now is only 2.59%. Think a tariff war is going to make America great again? Not likely. A tariff is just another tax on consumers… and another transfer of wealth from the outsiders to the insiders who control the government. And how about stimulus? Just about every country has tried that. The insiders pretend to boost the economy by weakening the currency. But what really happens is that the feds (and their crony insiders) print as much money as they want, while ordinary citizens’ money disappears in inflation. Venezuela is probably best in class on that one, with inflation at 1.3 million percent. And how’s the economy doing? The young are leaving the country as fast as they can get out. Those left behind are desperate, even for something to eat. But it really doesn’t matter what public policy you choose, there is a scammy precedent somewhere. “We” should do this… says one group. “We” should do that, says another. But don’t expect any of these policy proposals to make America great again. Whatever miracle they claim, the actual result is always a transfer of wealth, power, and status to the elite who make the decisions. Tune in tomorrow… We’ll look at why the “we” is always counterfeit. Regards, Bill MARKET INSIGHT: PREPARE FOR THE GOLD STOCK SURGE By E.B. Tucker, Editor, Strategic Investor Gold is on the rise again… and gold stocks are up even more. From early September 2018 to today, gold is up 10%. Meanwhile, the VanEck Vectors Gold Miners ETF (GDX) – a fund that invests in a basket of gold mining stocks – is up 31%. As gold prices rise, the best gold stocks stand to continue to soar much higher. I say this because this isn’t the first time we’ve seen this… It’s happened before… Below are the historical returns for gold producers during four separate cycles when gold boomed: 1979-1980, 1981-1983, mid-1990s, and 2001-2006. These are not hypothetical returns. They are real. First up, the king of all gold bull markets: 1979-1980… Gold more than tripled during this period. But gold stocks more than quadrupled. | Returns of Producers From 1979-1980 | | Company | Price on 12/29/1978 | Sept. 1980 Peak | Return | | Campbell Red Lake Mines | $28.25 | $94.75 | 235.4% | | Dome Mine | $78.25 | $154.00 | 96.8% | | Hecla Mining | $5.12 | $53.00 | 935.2% | | Homestake Mining | $30.00 | $107.50 | 258.3% | | Newmont Mining | $21.50 | $60.62 | 182.0% | | Dickinson Mines | $6.88 | $27.50 | 299.7% | | Giant Yellowknife Gold Mines | $11.13 | $39.00 | 250.4% | | AVERAGE | | | 322.5% | | Gold | | | 214.0% |
This wasn’t the only time gold stocks soared… From 1981-1983, gold producers returned over 70% on average. And this happened in less than two years. Gold stock Campbell Red Lake Mines climbed over 120%. This stemmed from a mere 10.8% rise in gold. There was another boom in the 1990s. The average gold producer went up more than 200%… Cambior rose 124%. Kinross Gold returned more than 190%. And Manhattan Gold & Silver skyrocketed over 760%. All while gold only rose 8%. Then, another big boom hit from 2001-2006. This one rivaled the boom of the early 1980s. Gold returned 158%, while the average gold producer gained over 400%. Newmont shot up 270%. Gold Fields soared over 500%. And Goldcorp returned over 800%. As you can see, an increase in the price of gold (even a small one), like we’re seeing now, can lead to huge returns. And it only takes a small stake in the right companies to make a fortune as gold prices rise. – E.B. Tucker P.S. Buying the right gold stocks isn’t the only way to make a fortune this year. This Wednesday, February 27 at 8 p.m. ET, I’m teaming up with legendary speculator Doug Casey to reveal a whole new approach to making explosive gains in 2019. This has nothing to do with stocks, options, cryptos, gold, or bonds… In short: It’s a unique type of security that can help you make 1,000% gains from big and small companies alike – without touching the stock market. Last year, while the market had its worst year in a decade, you could have used this strategy to make 620% in six months. In 2015, while the market was flat, you could have used another to make 1,499% in a little less than a year. And even in 2008 – when the market had one of its worst years ever – you could have still likely made triple-digit gains, in a select few cases. Now, for the first time, we’re sharing all the details on how you can get your hands on these securities in Wednesday’s landmark event: “The Stock Market Escape Summit.” If you’d like to join us, you can reserve your spot, for free, right here. FEATURED READS The Best Way to Hunt for Gold
Gold is the “one thing” you need in a market like this, Bill says. But what’s the best way to buy gold? How do you know you’re getting a good price? Casey Research’s E.B. Tucker shows dear readers the way… How America Learned to Stop Worrying and Love the Debt
Bad news: The U.S. national debt recently surged past $22 trillion. That’s $180,000 for every American taxpayer. Here’s the good news… It doesn’t matter! Well… at least that’s what the “experts” are saying. But read also… Young Americans Are Drowning in Debt
Americans between the ages of 19 and 29 are drowning in debt. At last count, young adults owed more than $1 trillion. That may not be a nationwide problem… yet. But here’s how it could become one… MAILBAG In the mailbag, fellow ranchers weigh in on Bill’s cattle drive, and point out a notable mistake on the part of Bill’s editor… I enjoyed your cowboy and cattle story and can relate. I grew up on our family farm on the Minnesota-North Dakota border, about 30 miles south of Fargo-Moorhead in the Red River Valley. In addition to growing small grains, corn, soybeans, alfalfa, etc., we raised black angus, hogs, chickens, and occasionally sheep, so I was involved with all the things you described… including giving shots and castrating. So I chuckled when I read the one caption stating that a “cow” was being castrated, technically it was a bull. And after the castration, it was a steer. I enjoy reading your daily writings! – Don K. Bill… Surely you did not provide the captions for the pictures in your recent issue of the Diary, about the cattle drive. I know. Some people call any bovine a cow, but when it comes to the details, it is important to distinguish between the sexes. I really like your Diary because you bring in so many interesting topics. Because I grew up on a farm and have recollections of processing cattle (although we never had any full-scale roundup on our farm), I chuckle at things that I remember as you tell of what happened on your roundup. (And I lived on a farm, not a ranch, so the distance from the cattle to the barn was quite short.) – Gene S. Castrate a cow? Better get the book: Ranching Dictionary for Dummies. Subtle humor, no doubt. From an old cowhand. – Milton W. If only the cowboys at the Fed had a few guachos to take this fake bull market by the balls and end, once and for all, the fallacy that it is a real bull market. – Andrew S. Meanwhile, a sampling of opinions: Mob rule has been here since Nixon… plaster over Washington with concrete… and one dear reader wishes Donald Trump had run for president 10 years earlier… America has been suffering from mob rule since the days of Nixon! – Joseph C. I am not one to rant and rave as so many of your readers seem to do. But this time, I just had to respond to your Washington concrete expression. “If it were all dumped on Washington…” Thank you so much, but you are about 40 to 50 years too late. It was that long ago a couple of my friends and I were discussing economics and the state of our good old USA. We agreed that the solution was to gather all of the concrete necessary and fill up everything inside the Washington beltway. – John C. Both Democrats and Republicans have done wrong. However, I really wanted Trump to run 10 years ago. I heard him speak at a convention I attended. Who couldn’t like “The Donald” back then? However, he has proven many times over, he’s not the man I held in such high esteem! He’s nothing more than a bully, and a buffoon, with blistering insults to patriots. Shockingly, he got to the oval office… – C.L. You seem to think that Donald Trump’s possession of a personal fortune conflicts with his duties as president. Do you think that someone who has a fortune should not be president? – Steve S. Bill, thank you for writing the Diary. The precision with which you so effortlessly make your points can only be envied. Thanks for sharing your intelligence. – Jake J. IN CASE YOU MISSED IT… What will you do with your money in 2019? If you’re done with cryptos… weed stocks… or options, then go right here. Our friends at Casey Research have uncovered an entirely different way to potentially make 1,000% this year. Get the full story right here. 
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