I haven’t felt this strongly about an investment in almost a decade

Bill Bonner’s Diary

Emma’s Note: If you don’t know him already, Tom Dyson is Bill’s colleague who, two years ago, left his conventional life behind and took off around the world with his ex-wife, Kate, and their three kids. Maybe you’ve read about it in Tom’s popular Postcards From the Fringe newsletter, where he updates us on their travels and adventures.

Before they left, Tom and Kate sold all their possessions and invested the entire proceeds in gold. Some folks thought he was crazy!
But it’s not the first time Tom has done something like this. In today’s guest essay, he tells us about the last time he went all-in on an investment idea…


I Haven't Felt This Strongly About an Investment in Almost a Decade

By Tom Dyson, Editor, Postcards From the Fringe

The place where you made your stand never mattered. Only that you were there… and still on your feet.

– Stephen King

Tom Dyson

I put my entire life savings into gold two years ago.

Not because I thought gold was going to rise. But because I thought stocks would fall, priced in gold, by more than 80%. And I wanted to buy those 80%-off stocks, whenever that may be.

In late 2018, stocks suddenly got marked down 15% (priced in gold). And I thought, “This is happening now.” So I bet even more on stocks falling…

The Last Time I Got This Feeling

The last time I got this feeling was in 2011, when I found bitcoin. I was in some internet forum for geeks and someone mentioned it. I looked it up. And the moment I saw what it was, I knew. I just knew.

Bitcoin cost $6 at the time. There was only one place to buy it – a website in Japan called Mt. Gox. And it was a brute to get a hold of…

I had to open an account with a PayPal-type service to transfer the money. Then, I had to jump through hoops like sending faxes, passport copies, and bank details. The whole thing seemed like a scam.

But I wired $5,000. Which was a lot of money for a guy with three babies, who was still trying to make it in the world.

Then, I wired another $5,000. And another. Then, bitcoin jumped higher. And I thought, “This is happening.” So I wired another $10,000, which was enough.

Then, I withdrew all my bitcoin – I had 3,330 of them – and transferred them to thumb drives via an internet airlock I set up using Linux, so they couldn’t be intercepted by online thieves.

Next, I made duplicates of the thumb drives, in case they broke, got corrupted, or burned in a fire. I encrypted them. And then, I hid them in two secret locations.

Spreading the Word

Meanwhile, I’m a big mouth about this sort of thing. I told anyone who’d listen to buy bitcoin. I even started giving them away.

I gave one to anyone who came to my office, including Agora founder Bill Bonner – I gave him a physical version of bitcoin called Casascius. And I gave them to my friends, Michael Checkan – co-founder of gold dealer Asset Strategies International – and Swen Lorenz, an investment blogger.

I must have recommended it publicly, although I don’t remember doing so, because Chris Weber – who pens the Chris Weber Education blog – forwarded me a note from one of his readers recently:

Chris,

I found this post from Tom Dyson on Facebook a few days ago… (I’m not FB “friends” with him, but I do read anything he posts as he pointed out bitcoin when it was, like, $15 or something crazy cheap…)

“With the Rupee near all-time lows against the dollar, India feels very cheap to us. We’ve been here a week already and we’ve only spent $180.

“Our hotel is $14 a night. Our meals are $3. Tuk Tuk rides are less than a dollar. A big bottle of water is 15 cents, and a freshly squeezed juice or smoothie is 50 cents.

“Here we are in Jaisalmer, the city inside a castle in the far northwest of India, near the border with Pakistan…”

As an investor, THIS is what I love reading… and it instantly makes me want to drop everything I’m doing, travel to India, and see for myself! On one side of the world (USA), you’ve got a 9% default rate on subprime car loans. And on the other, you’ve apparently got a genuine bargain… so fascinating! 

I also went shopping on the darknet and sent packages of cannabis lollipops and Rice Krispie Treats to friends all over the world, paid for with bitcoin.

You know what happened next… The price went crazy, and my investment turned into $1 million.

But I thought, “That’s enough. I’m out.” So I sold all my bitcoin. After taxes, bitcoin volatility, and Mt. Gox’s insolvency, I ended up with about a $500,000 profit… and a lot of pot lollipops.

I should have held on. The bitcoin I had would be worth tens of millions of dollars today…

Same Feeling

Which brings me back to stocks falling in terms of gold. It’s a little different, but I got the same feeling about it as I had with bitcoin in 2011.

I put an irresponsibly large investment into it. I told my brothers and my parents to sell their index funds and buy gold. Then, I started writing about it in my Postcards From the Fringe e-letter…

I’ll know when it’s time to sell my gold and get back into stocks by following the Dow-to-Gold ratio. It tracks the Dow Jones stocks as priced in gold. Here’s how it works…

When the ratio is above 15, it means stocks are expensive in terms of gold, and it’s time to sell them. When the ratio falls below 5, it means stocks are cheap relative to gold, so it’s time to get back into stocks.

Two years ago, when I got into this trade, the Dow-to-Gold ratio was at 18.73. Right now, it’s around 14… and falling.

I won’t sell my gold until the Dow-to-Gold ratio falls below 5.

Regards,

Tom Dyson
Editor, Postcards From the Fringe

P.S.There’s still time for you to make this move. If you follow my lead, you can set yourself up for what I believe will be the best wealth-building opportunity of the next 10 to 20 years. But you have to act fast…

To find out more about the best way to take advantage of this setup, join Bill and me next Wednesday, May 20 at 8 p.m. ET for my Emergency Investment Summit. Reserve your spot right here.

Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com.


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