| By Bill Bonner, Chairman, Bonner & Partners BALTIMORE, MARYLAND – What next? CNBC: Stocks ended lower Tuesday after the Centers for Disease Control told Reuters that a traveler from China was diagnosed with the first U.S. case of coronavirus, in Seattle. The Dow closed down 152 points after falling as much as 200 points. The S&P 500 shed nearly 0.3%, while the Nasdaq dipped 0.2%. Shares of casino and hotel companies Wynn Resorts and Las Vegas Sands fell more than 6% and 5%, respectively, amid fears that the coronavirus outbreak in China would dent international travel. A virus! Could a microscopic bug be the “pin” this bubble has been looking for? Who knows. But something will pop it sooner or later… | Recommended Link | | URGENT: Jeff Brown’s Brand New Stock Pick Coming Soon… Tonight, at 8 p.m. ET, Jeff Brown will reveal details on a brand new pick… The likes of which he’s never recommended to the public before. It’s a tiny micro-cap, trading for dollars a share… With the potential to make early investors $128,000 in the coming weeks. And YOU can be one of the first to invest in it. | | | -- | The Day the World Ended We’ve been calling September 17, 2019 “the day the world ended.” On that day, a spike in short-term lending rates – in the “repo” market – threatened the U.S. government’s deficit spending… and blew the doors off the Federal Reserve’s “normalization” policies. The Fed has been adding some $100 billion per month to the nation’s money supply since then. (Paid-up readers of The Bonner-Denning Letter can look for more on that in our January issue, out this evening.) Of course, we are exaggerating the finality of the situation for dramatic effect. The world goes on. But it’s not the same world. And the new world will probably be a lot less agreeable than the old one. And the disagreeableness of it will increase greatly when the bubble blows up. Then, prices won’t be rising; they’ll be falling – hard. Prices of financial assets, in particular. That is when the printing presses will really get rolling. The Fed will have to inflate even more aggressively to stop the market from falling. But today we’re not looking at the future. We’re recalling the past. We’re not looking beyond the end of the world, in other words. We’re looking at when it began. As we’ll see, there’s more than one way to go broke… Remember the ’70s? “This reminds me of the early ’70s,” said an old-timer yesterday. Do you remember what happened, Dear Reader? We do. We were out of college, out of the Navy… and just entering the workforce. If we recall correctly, we earned barely $120 a week as a roofer’s helper. It wasn’t much money. But it was only temporary, until we found a real job. And life back then wasn’t so expensive. With $120 you could buy three whole ounces of gold. Or, you could invest in stocks; with seven weeks’ worth of wages, assuming we spent nothing, we could buy all 30 of the Dow stocks. Gold was the better bet. Over the next 10 years, the Dow went nowhere. In 1981, it was about where we found it in 1971. But wait… The old money was gone. In its place was new money, a new dollar from which the gold link had been removed. Now it was called a “Federal Reserve note,” meaning that it was a liability – a debt – owed to you by the central bank. Most people barely noticed the difference. The new dollars looked almost exactly like the old ones. They spent like the old ones, too. What difference did it make if the foreigners could no longer redeem them for gold as promised? Well, it made a difference to the Arabs. Oil producers noticed that getting new dollars for their oil was not the same as getting old dollars. The price of gold rose from $35 in 1970 to over $100 in 1973. Arab exporters were still taking $3 for a barrel of oil. In real terms, their incomes had been cut by two-thirds. In October of 1973, OPEC announced an embargo on exports. The ostensible reason was to target nations supporting Israel in the Yom Kippur War. The hidden motive was to get the price of oil back to where it had been when the dollar was still real money. Naturally, the feds reacted unwisely. They imposed price controls; rather than ration gasoline with higher prices, they rationed it by wasting everyone’s time. We had begun a new job by then, in Washington, about a 30-mile drive from home. Gas lines had formed. In order to get the gas we needed, we got up at 4 a.m. to get in position, sleeping in our truck until the station opened… | Recommended Link | | Gold Play Turns Every $1 Into $50? Legendary gold investor Doug Casey just spilled an “open secret” in the gold industry… You can profit from gold… without owning any. And by following this secret, you could make as much as 50 times or more… Enough to turn every $1 down into $50. | | | -- | The Great Inflation The first oil shock set off the Great Inflation. The Consumer Price Index was at about 4% in early ’73. By 1975, it rose to a peak of 10%, eased off, and then rose again to end the decade at 14%. People blamed the Arabs. But the real price of oil – in gold – merely went back to 1970 levels, before the new money was put in place. And the real villains weren’t in Riyadh. They were in Washington. As for investors, they thought they went nowhere in the ’70s. But that was just another illusion caused by the new dollars. In real money, they lost 92% of their stock market wealth. Prices held steady in nominal, new dollars. But in old-dollar terms, they collapsed. So what do you think? What would you tell the young man just starting out today? Buy stocks? Or buy gold? Or let’s put the question another way. Are the feds likely to inflate more or less than in the 1970s? To be followed up… Regards, Bill Like what you’re reading? Send your thoughts to feedback@bonnerandpartners.com. FEATURED READS An Inside Look at Nancy Pelosi’s Battle Against Trump
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Casey Research analyst E.B. Tucker discusses the evolution of 5G, its superior connectivity, and why cell phones are only the tip of the iceberg… MAILBAG Today, Dear Readers ask for further analysis from Bill regarding his doom-and-gloomy outlook for America’s future economy… Your insightful essays continue to mirror my own trepidations. I find myself heavily mired in junk bond funds but I fear that I should be turning my cash into gold. This repo madness ends very poorly. What say you? – John W. Agree with many things you write, but question so much more. Your statement, and doom-and-gloomers, are always wrong… until they’re suddenly right. And “a broken clock is right twice a day” is the common comeback. If you tout doom and gloom for 10 years or more and it someday finally happens (which I agree it will), were you correct? Maybe, but not very timely because you missed great opportunities to create wealth. I would love for you to explain (in simple terms) why tariffs are wrong to impose if one side has them and the other doesn’t. I am a free market kind of person, so if all things were equal then let the most efficient and productive company provide their goods and services to whoever wants them. One of the reasons I read your Diary. – John T. While another Dear Reader requests Bill’s opinions on long-term issues such as budget balancing and tax reform… I read with interest your column, which is devastating in its criticism of our tendency to rarely confront in a serious way our problem of deficit spending. I would be most eager to see your specific ideas on tax reform, military spending, infrastructure, education, and social programs such as food stamps and daycare. I’m aware that your instincts are iconoclastic, i.e., open season on both Republicans and Democrats, but you could serve the public by offering up your own ideas on how our long-term needs might be better balanced. What should be cut? What programs of long term investment could be afforded? Is Keynesianism a lost cause since neither party is willing to belt tighten when we have full employment? Budgets reflect our values and I would be most interested in seeing your own budget recommendations. – Harrison H. Do Bill’s essays “mirror your own trepidations” as they do for John? Why do you read the Diary? Write us at feedback@bonnerandpartners.com. IN CASE YOU MISSED IT… Meet The World’s Foremost Expert On “Timed Stocks” He’s found 119 “Timed Stocks” in the past few years… Every single one of them – 100% – went up. The peak gain was an extraordinary 27,245%. Enough to turn $5,000 into $1.3 MILLION. “‘Timed Stocks’ are the easiest, fastest way to make money in the stock market,” he says. “But, for stupid reasons, ordinary folks have no idea ‘Timed Stocks’ exist. Let alone how to profit off them.” Tonight, at 8 p.m. ET, that changes. Because, on that day, the world’s first Timed Stocks Summit will officially begin. And you’re invited to take part in it. Click here to sign up FREE… and learn how to walk away with a potential $128,000 in your pocket in the coming weeks. And much more in the months and years ahead. 
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