Friday, 12 August 2022 — Burradoo, Australia

By Brian Chu Editor, The Daily Reckoning Australia

[7 min read]

• Finding refuge in a dying fiat currency system
• Setting foot on the yellow brick road
• Staying on the path with expert guidance
• The winning plan

Dear Reader,

Being a contrarian is difficult.

Most people don’t even dare try. It’s just too scary to think about.

What if you’re wrong? Not only do you look like a fool…but people berate you for trying to be a hero.

But what if you’re right?

You might just become a hero.

Even if you’re not a hero, you’re a trailblazer.

Finding refuge in a dying fiat currency system

I’ve followed a few trailblazers in the last decade in my quest to protect my household from the impending financial disaster I believe is looming.

Most of you know what I’m talking about: The dying fiat currency system.

The experiment with a purely floating currency backed by faith in the US Fed is in the process of breathing its last breath. But with its demise many will face ruin.

That’s unless you protect your wealth with something that holds value and can retain its purchasing power.

For me, I put my trust in my spiritual faith foremost…and materially, in gold.

Setting foot on the yellow brick road

My journey to gold began in early 2013, after a lunch with my primary school friend. I wrote about this in my very first Daily Reckoning article, when I joined Fat Tail Investment Research last April.

As I reflect on my commitment to buying gold stocks to protect myself against the impending death of the fiat currency system…I realise it was not an easy journey.

As I set out on this journey, I stumbled onto Tekoa Da Silva’s website, Bull Market Thinking, by serendipity. Tekoa is the most detailed gold analyst most people haven’t heard of. He’s now an advisor to the global fund management firm, Fidelity Investments.

I mulled over his articles and interviews. Tekoa’s insights opened my mind and broadened my thinking. It allowed me to branch out and delve deeper into the history of gold, its usefulness in times of economic crisis, and how to increase one’s returns by investing in gold mining companies.

Tekoa himself stood on the shoulders of giants of the gold community, names like Peter Schiff, Eric Sprott, and Rick Rule. I began to follow these people and their work too.

My interest was what made them succeed and learning about their journey.

Invariably, these giants made their fortunes not in a bull market…but in the bear market.

How does that work, you may ask?

Rick Rule puts it nicely:

‘Bear markets are the authors of bull markets and bull markets are the authors of bear markets.’

In other words, one prepares for success during a bear market — buying into undervalued companies in anticipation of the bull market. This is the essence of ‘buy low, sell high’ in a cyclical market like gold and gold mining companies.

But how do you work up the courage to buy into a falling market?

Staying on the path with expert guidance

This is where people like Peter Schiff come in. He is a well-known Austrian Business School economist who criticised the central banks and governments for creating the fiat currency system that we have today.

One of his crowning achievements was calling the US subprime crisis years before it happened in 2008. He made billions in his fund taking a short position against the property market.

Peter’s position on the merits of gold earned him notoriety in the mainstream financial community. He used to appear on their finance news programs and argued against bankers and other pundits. Such was his unmoving position that these financial pundits wanted to make a sport baiting him.

But this was what I admired about Peter. He was consistent and staunch. His philosophy helped me weather that gold bear market in 2013–14 as I saw the flaws in the financial system. It gave me the determination to make significant gains when the gold bull market came in 2015.

Then there was Don Durrett. Tekoa recommended investors of gold stocks read Don Durrett’s book How to Invest in Gold and Silver. This book contains a comprehensive guide on the benefits of gold, how gold mining companies operate as a business, and how to value a gold mining company.

In the midst of one of the most crippling gold bear markets, I needed an anchor to rest on. Watching my shares tumble continually after I purchased them was more than discomforting. To continue could spell my own demise!

It was Don’s approach that gave me confidence in identifying quality gold stocks and to hold onto them amidst falling prices. I gradually refined my valuation techniques to come up with my own.

I began reading more widely during this time as I found that mainstream media didn’t portray reality that made sense to me anymore.

This led me to The Daily Reckoning Australia, Money Morning, and Bill Bonner.

Bill is the founder of Agora Incorporated, which publishes The Daily Reckoning Australia and Money Morning. He is a pioneer of alternative media. His brainchild allowed people to seek a different viewpoints to the prevailing narrative.

Many contrarians, like myself, who found it difficult to accept the depiction of reality of mainstream media, found a home in the services offered by the Agora umbrella. These included people who see the merits of gold, the corruption of false money, the continual failure of central planning and sought investment solutions aside from stocks and bonds.

Bill’s philosophy of seeing things ahead of the pack inspired me as it takes a visionary with decades of experience to get it right.

It was only a matter of time before I came across Jim Rickards. In fact, I’d read Jim’s work from Tekoa’s website and signed up to Jim Rickards’ Strategic Intelligence Australia (it’s partly why it’s such an honour to be the investment director of his Australian service all these years later) as I was keen to read his book The Big Drop.

I was familiar with the flaws of the economic system…and how gold is an effective means to protect oneself from the impacts of the system’s future collapse.

But I wanted to get into what is going on behind the scenes in the Federal Reserve. Jim’s insights and experience was an additional piece to the big picture. I had heard about Long-Term Capital Management as it was part of my university curriculum in systemic risk.

Jim’s insider account added more to the story as I could see how fragile our system is now. We not only not learnt from past mistakes…but papered over it and allowed corrupt bureaucrats to lie to us that everything is fine.

It convinced me of the need to take no chances that the system would fix itself. I made the commitment to gold and needed to become an expert if I’m to not just survive the future, but to thrive.

The winning plan

Setting a financial goal is critical. But there are several paths and steps that I needed to take to increase the chances of success.

I found these trailblazers who helped me map my path. It’s now my duty to pass this on so others who are waking up to reality can get their own house in order.

This is why I am delighted and wholeheartedly honoured to announce an extremely special event taking place next week.

Starting Monday, we are kicking off a series of interviews with every single one of the trailblazers I’ve mentioned today.

It’s called ‘The Gold Investor 2022 Series’.

I recently got in touch with Peter, Jim, Don, and Bill. They agreed to sit down with me and talk everything gold.

It’s my absolute pleasure to make this available to all Daily Reckoning Australia readers.

It’s now your turn to find out how you can also harness the power of gold as the wheels start to fall off of the fiat currency system.

I hope you join us.

God bless,

Brian Chu,
Editor, The Daily Reckoning Australia

By Bill Bonner Editor, The Daily Reckoning Australia

Dear Reader,

And so…the strike-out is complete…

Strike one: real wages are going down…

Strike two: real GDP is going down (US in recession)…

Strike three: Real productivity is going down…

And you’re out!

From Breitbart — ‘U.S. Labor Productivity Suffers Biggest Crash Ever Recorded, Labor Costs Soar Most Since 1982’:

‘The productivity of the business sector fell 2.5 percent compared with a year ago, the largest decline ever recorded in data going back to the first quarter of 1948, the Bureau of Labor Statistics said Tuesday. The decline comes from a 1.5 increase in economic output and a 4.1 percent increase in total hours worked.

‘Productivity declined at a seasonally adjusted annual rate of 4.6 percent in the second quarter. That’s a less rapid decline than the 7.6 percent contraction recorded in the first three months of the year but slightly below economist expectations for a 4.5 percent decline.

‘Unit labor costs jumped 10.8 percent in the second quarter of 2022, reflecting a 5.7-percent increase in hourly compensation and a 4.6-percent decrease in productivity. Economists had forecast labor costs to be up by 9.3 percent. In the first quarter, unit labor costs were up 12.6 percent.’

How do you like that? Mighty Casey, the US, has struck out.

Three strikes, no balls

From the year we were born until now, productivity could be counted on to increase. And productivity, more than any other single measure, tracks our wealth. There are only 24 hours in a day…from the day man first stood on two legs until today, the length of a day hasn’t increased by a single minute. We are wealthy inasmuch as we are able to use those minutes to produce goods and services. The more output — goods and services — per minute, the richer we are.

But now, time goes by, and we have less and less to show for it. In a typical hour, we just can’t produce as many goods and services as we did last year.

How did that happen?

Did masons forget how to mix their mortar? Did machinists forget how to bend their steel? How about accountants, did they forget how to add and subtract?

We doubt it.  

More likely, thanks to the Inflation Reduction Act…along with countless other acts of petty insult or grand larceny…the US’s ‘hard working families’ can hardly work at all. They have too many laws, regulations, taxes, and jackass rules to work around. And they have the feds misleading them with phony price signals and stimmy cheques. But of all the Fed’s many crackpot schemes, lowering interest rates to discourage savers was probably the most harmful. Savings allow us to invest in new factories, new machines, and new output. It’s savings, in other words, that makes us more productive…and richer.

As savings went down so did serious capital investment. Instead of spending years building real, profit-making businesses, for example, entrepreneurs wanted to create overnight ‘start-ups’ that they could quickly unload on leveraged speculators. Less money was spent on new plant and equipment…and more on share buybacks, mergers and acquisitions, and other payouts to the rich. Why bother with the risk and hassle of long-term business investment when you can borrow below the rate of consumer price inflation and jack up your stock price…or, like Michael Saylor, buy a crypto that was going to the Moon?  

The result was predictable. And now it is here.   

And we wonder…

What will they think? After the confusion and ambiguity have lifted, like morning fog by the hot sun of time…

…will our descendants, 30 generations later, see us more clearly? How will they judge us? What will they say about us?

We shudder to think…

Wikipedia: Year 3000

‘Three things generally spelled doom for human societies — government, war, and inflation. And by the 21^st century, all three were working against the US and its global empire. Its government had become obese and incompetent. Its war mongers sought conflict. And its economic leaders promoted inflation to keep the money flowing to themselves and their pet projects.

‘General, later president, Dwight Eisenhower had warned Americans about the “unwarranted power” of what he called the “military, industrial complex”. (MIC) in 1961. 40 years later, the MIC was running the country…and ruining it. It wasted trillions of dollars and thousands of lives. But the press asked no questions. And neither party dared oppose it. Then, the MIC so provoked and taunted its rivals — assassinating foreign leaders, seizing money and assets without even pretending “due process of law”, trying to shut them out of the world financial system completely — that Russia, China, India, Iran, Brazil, and many other countries finally joined forces to defend the world from US tyranny.

‘By this time, too, the source of the US’s power — its free economy — had been substantially hobbled. Altogether, presidents Bush, Obama, Trump, and Biden wasted US$24 trillion on wars, deficits, and boondoggles. In addition, the two scourges of economic growth — inflation and central planning — had been unleashed and allowed to run wild. In the 21^st century, the world economy still depended on fossil fuel. Yet the US Government was forcing industry to convert to more expensive “alternative” energy. Taxes were raised on the still-productive sectors, while subsidies, handouts, and unrepayable loans were given to the unproductive ones. By 2022, wasteful spending, along with extremely foolish policies from the central bank, brought growth to a halt; the slide into poverty had begun.

‘Corruption, chaos, civil unrest, inflation, poverty, recession, and war — that was the history of the period from 2022 to 2036.

‘Finally, an attack by state-of-the-art Chinese drones, from forward bases in Brazil, in 2037, devastated the US’s military installations, sank its ships, and led the US to beg for peace. In the Treaty of Shanghai, the following year, the US was occupied by Chinese troops. It agreed, also, to disarm what was left of its military and disband its two war-seeking political parties.

‘In this manner was the peace and prosperity of the world restored.’

Regards,

Bill Bonner,
For The Daily Reckoning Australia

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