Welcome! If this is your first time reading one of my postcards, catch up on my back issues here. And if you have questions or comments, shoot us a note anytime here or at feedback@bonnerandpartners.com. | Why I'm Interested in Gold for the First Time in 17 Years By Tom Dyson, Editor, Postcards From the Fringe CORPORATE APARTMENT, BALTIMORE – This year, the U.S. government will have to borrow more than a trillion dollars. It’s the first time it’s happened outside of a recessionary period. A big “crux” of my argument is that the U.S. government will continue borrowing gargantuan amounts of money. They have entitlements and pensions to pay to retiring baby boomers. They have vast obligations to the Pentagon. And lots of other stuff. And they’re already in the hole by more than $23 trillion... The Congressional Budget Office (CBO) – the people who keep track of government finances – estimates that the U.S. government will borrow $13 trillion over the next 10 years. | Recommended Link | Tired of the 5G hype? Try this instead… 5G and “AI” are all the rage… But here’s what you likely don’t know: The world’s best investors are lining up behind an explosive new technology that could trump them all. Warren Buffett calls it “ingenious.” And The Wall Street Journal adds: “It’s a foundational technology, like the Internet and electricity.” Apple’s co-founder, Steve Wozniak, who said 5G “is not going to impact me much” … is calling this “the future.” In fact, according to research from the World Economic Forum, this new technology is on pace to be 32 times bigger than 5G! On January 1, 2020, an important event just happened that will set this technology flying. But that’s not the only one… 3 major catalysts are on tap for “Genesis” technology in 2020. | | | -- | Keep in mind, the CBO doesn’t factor recessions into its calculations. I expect at least two or three recessions over the next decade. (Recessions are like buses. You wait for ages, then three come along together.) Recessions will cause the government to borrow far more than what it’s borrowing at the moment. The numbers are already terrible. So the CBO estimates are probably much too conservative. We’ll see. Anyway… here’s what the CBO projects, without any recessions… 
Catching Up Greetings from Baltimore. My family and I are squatting in an apartment in Mount Vernon while we explore the area and catch up with old friends. Kate and I met and got married here 15 years ago. So not only is it a special place for us, it’s also an AWESOME city, brimming with history, culture, architecture, and interesting food. Today we went to the Walters Art Museum. Below, Kate and Miles are examining butterflies. Dusty and Penny are studying a reproduction of a 500-year-old globe and calling out all the mistakes made by the 16th century Dutch cartographer…  Kate and the kids at the Walters Art Museum earlier today
Why I’m All In Gold There’s nothing new about the government’s outrageous spending. What is new – and this is why I’ve become interested in gold for the first time in 17 years – is that there are no longer enough lenders to satisfy the U.S. government’s unending appetite for borrowing. Over the past 70 years, the biggest lenders to the U.S. government have been other countries running trade surpluses. Like Japan. Like Germany. Like South Korea. And especially China since 2004. These countries have been able to lend the U.S. government the dollars it needs because they’ve earned the U.S. dollars by exporting manufactured goods. China, for example, has run $400 billion annual trade surpluses for the last 15 years... The thing is, these countries – collectively – stopped making new loans to the U.S. government in 2014. This chart shows where the Treasury borrows its money. Notice the navy blue area. That’s loans coming mainly from China. And they’ve disappeared… 
This Bailout Is Just Beginning Things came to a head last year when “repo” rates spiked. It implied there was no more money for the U.S. government to borrow at prevailing interest rates. The market tapped out. So the Federal Reserve had to enter the market and begin the bailout of the Treasury. It’s loaned over $400 billion to the U.S. government… in just the last four months. (About the same as China earns each year from exporting to America.) This is just the beginning. Because, as I showed at the beginning of this postcard, the U.S. government isn’t going to slow down its borrowing… And China, Europe, and Japan aren’t suddenly going to step up their lending. Not at these low interest rates, anyway. The only option is for the Fed to fill the hole in the government’s finances…. And that’s why I expect the Fed will print more than $5 trillion dollars over the next few years, and expand its bailout to bonds of all maturities along the yield curve. What we’ve been calling “curve control.” It must fill the hole left by the surplus countries. All this will drive enormous quantities of dollars into the market, devaluing the dollar, and triggering an avalanche of capital into gold. The panic – when it comes – will spread like a contagion... Today I bought call options on gold. My call options on gold are a specific bet that gold exceeds the all-time high it set in 2011 at $1,911 within the next two years. If it does, I’ll make 1,000% returns on my bet. If it doesn’t, I’ll lose our bet altogether. – Tom Dyson P.S. The Dow-to-Gold ratio is at 18.22. Still a long way to go to our target of 5. FROM THE MAILBAG
Today, Tom answers your questions about the Dow-to-Gold ratio and gold… Reader comment: I really enjoy your articles on Postcards From the Fringe. If not for your articles, I would simply ignore Bonner & Partners emails as another spam mail. Tom’s response: You don’t read Bill Bonner’s Diary? Best editorial on the Internet… Reader comment: How do you calculate the Dow-to-Gold ratio? Tom’s response: Go to www.kitco.com/market. There you’ll find both the Dow price (look for DJIA on the left of the page) and the gold price. As of this writing, the figures are 28,734 and $1,577, so the Dow-to-Gold ratio is at 18.22. Reader question: I understand and agree with your Dow-to-Gold premise to sell stocks at 15x gold and buy at 5x gold. What I don't understand is why any knowledgeable broker would sell gold to me if it has been, and is going up, and is a protection investment. WHY? Tom's response: There are those who earn a living by TRADING gold and making the market, such as the brokers you mention. Then there are others who become sellers as the gold price rises. Then, there are those who don't understand the situation and consider gold a barbarous relic. I'd put most of Wall Street in this bracket. They'll all be willing to sell you gold. Reader question: How would the gold price be affected by short selling, including by central bankers using printed money to short gold and suppress the price? Tom’s response: Great question. This is something I’ve also wondered, because clearly the feds are going to do everything they can to hide inflation and buy themselves more time. They already spin the official statistics. And it’s not hard to imagine them fiddling with the prices of gold and silver to deflect attention away from the default. Not to worry. It won’t amount to anything more than a stalling tactic. And besides, they won’t be able to hide the inflation in the price of food, clothing, energy, healthcare, education, etc… As always, please keep writing us at feedback@bonnerandpartners.com. Kate and I read every note you send us. IN CASE YOU MISSED IT… THE ONE TEEKA TIWARI UPDATE YOU CAN'T AFFORD TO MISS URGENT: Former Wall Street hedge fund manager Teeka Tiwari just released what may be the most important investment update of the year for you… Here's why… In it, Teeka showed a small number of subscribers how to take advantage of a time-sensitive opportunity playing out in the market between now and October 31st… This opportunity could unlock $300 billion in profits for U.S. investors, and put you on the path to collecting thousands, tens of thousands, and perhaps even over $100,000 – on the road to your first million dollars – but you will only have a few hours to act if you wish to take part. This private briefing will be available until midnight tonight. Click Here To Make Sure You Don't Miss a Thing 
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