Tranquilo – Fat Tail Daily | Australian Markets

“Yes… muy tranquilo.”

The fields are inexperienced. The cattle are fats. The spring flowers are blooming. And the site visitors is calm.

“I think the biggest thing,” stated a neighbor in County Cork, “is that we’re not in a battle with anyone. You don’t feel the tension that you feel in the US.”

She had a level. The American empire wants enemies – overseas and home. Otherwise, there can be no trigger for such naked-knuckle politics. And no level to a $1 trillion army funds. And no need for tariffs both; and to ‘get even’ with different nations who’re ‘ripping us off. Or 17 different spook agencies.

But after a short stay in Ireland, we’ve come to Buenos Aires to go to a daughter. In our youthful, more expansive, and more reckless years, we invested closely in Argentine farmland. It was low cost!

But a farm isn’t a stock. It must be managed. It is a business, not an investment. “It’s the eye of the owner that fattens the cattle,” say the Argentines. But who was going to keep his eyes on these animals?

Fortunately, alongside got here a son-in-law with an curiosity in farming. He and our daughter have been on the job for nearly two years

How is it going? We’ve come to South America to seek out out.

Meanwhile… CNBC:

Dow drops more than 950 factors as Trump rips Fed Chair Powell…

Cryptopolitan:

Losses had been led by the so-known as Magnificent Seven tech stocks, particularly Nvidia, which dropped 5%, and Tesla, which misplaced 7% by press time. Amazon fell 4%, whereas Meta Platforms and Advanced Micro Devices each dropped 3%. Even Caterpillar, a main tools company, slipped 3%.

Markets fell to their lowest ranges of the session proper after Trump’s assertion. The greenback additionally took a hit, falling to a three-12 months low. On the flip facet, gold surged above $3,400 an ounce, setting a new document high. The panic was clear throughout each nook of Wall Street.

Gold has been flying. It’s up 30% to date this 12 months. You’d must go back to 1979 to seek out a comparable begin to the 12 months. And when 1979 was over, gold had gained more than 120%.

That big run-up was adopted by a huge ‘uh oh.’ “Gold will go to $5,000 an ounce,” predicted Howard Ruff on the New Orleans Investment Conference of 1979. He was proper. But at the very least 46 years early!

Just when buyers had been sure gold was headed to the moon, it peaked out in 1980…and fell for the subsequent twenty years. Ominously, adjusted for inflation, gold is now as soon as again at an all-time high, even increased than it was in 1980.

The 1980 inflation-adjusted gold price high was $3,486.11, in response to TheChartStore.com

Uh oh.

Could gold go into one other long bear market? Of course it may. And it should. But that’s the entire level of our Dow/Gold Indicator. It acknowledges that stocks and gold each go up and down. It goals to information us to whichever one is probably the most bombed out, overwhelmed up, and extensively thought to be ‘hopeless.’ Then, we buy… sit tight… and look ahead to the world to show.

After 1980, the seasons modified. Stocks — which had been pronounced lifeless by a EnterpriseWeek cowl story in August 1979 — “The Death of Equities” — got here back to life and roared forward till January 2000. Then, it was gold’s flip again. Over the final 20 years, the gold ETF, GLD, has outperformed the S&P ETF, SPY, 622% to 571%.

Up…down…and up again.

And now, gold has gone up a lot — whereas the stock market has come down — that our key Dow/Gold indicator has been cut in half since 2018…and dropped from 16 simply a few weeks in the past down to 11 at this time. This leaves us simply 6 factors above our key turnaround level — 5. That’s once we reverse our Maximum Safety place and go all-in for stocks.

It makes us nervous to consider it. Gold has been good to us. “Tranquilo.” The world of stocks, then again, appears harmful, unpredictable and unproductive. And stock costs are nonetheless vastly inflated by faux money.

Here’s one thing attention-grabbing. It was simply a few months in the past — back on the close of 2024 — that US stocks had been seen because the be-all and finish-all of investing. Based on their CAPE ratios, US stocks traded at costs 86% increased than these of Europe.

But then, cometh the Trump Team, and US stocks took a beating. So far this 12 months, US stocks have the worst efficiency of these of any main nation — 15% decrease than the worldwide average and 23% behind the Eurozone. And the US greenback is getting hammered too.

Not surprisingly, the stocks which are taking the worst licking are those who had been most extremely prized. Nvidia is down 24%. Tesla has misplaced 40%. Amazon has dropped 21%. And so on…

The hassle is, there’s nonetheless a lot of grief to return. Even with their bruises and cuts, the Magnificent Seven are nonetheless on their ft…and nonetheless costly. Apple and Amazon are priced at 31 instances their earnings. Nvidia is at 35. And Tesla sells for 118 instances earnings.

The idea of our Dow/Gold trade is that by the time the ratio falls to five, stocks should be low cost…with little risk of additional price declines. But if gold races forward too far, too fast…we’d hit our BUY STOCKS goal — at 5 ounces of gold equal to the 30 Dow stocks — whereas stocks nonetheless have a lot of draw back left in them.

Then what? If we buy stocks, we risk taking a beating too. But if we don’t buy them, we risk taking a beating in gold. What will we do? We persist with this system. Tranquilo.

Stay tuned.

Regards,

Bill Bonner,
For Fat Tail Daily

P.S. Just a hunch…however be ready for at the very least one main correction within the gold price earlier than it lastly makes its rendezvous with a Dow/Gold ratio of 5. Not so tranquilo, after all.

All advice is basic advice and has not taken into consideration your personal circumstances.

Please search impartial financial advice concerning your own scenario, or if doubtful concerning the suitability of an investment.