The Debt Super-Cycle and...

Pride of opinion has been responsible for the downfall of more men on Wall Street than any other factor. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ April 18, 2024 The Debt Super-Cycle and Why The Dow/Gold Ratio Still Matters “Pride of opinion has been responsible for the downfall of more men on Wall Street than any other factor.” ― Charles Dow [Reminder: In case you missed [our announcement]( The Essential Investor has merged with legacy contributors to Agora Financial. The new, larger, more inclusive project is called The Grey Swan Investment Fraternity. If you’re interested in the scope and benefits of our new endeavor, please see what prompted us to merge [here](. If you’ve been a member of The Essential Investor, keep an eye out for your new benefits.] Dear [Reader], April 18, 2024 – Gold. “Why does it matter anymore?” you might ask if you’re following your AI investments. Or the Dow, for that matter. And what about Bitcoin? Today, we investigate the debt super-cycle and present a two-part answer for why gold and the Dow still matter. Tomorrow, we’ll tackle the Bitcoin halving event. Below, Grey Swan insiders Bill Bonner (Founder) and Tom Dyson (Investment Director) of [Bonner Private Research]( observe the relationship between gold, blue chip stocks, interest rates, and retirement income. For reference, the “Primary Trend” is an old-school metric used by adherents of Dow Theory since the late Richard Russell popularized the term with a book of the same title in 1961. ~~ Addison (If you’re already a subscriber to Bonner Private Research, today’s compendium is still worth your consideration. If you’re not, but would like to be, click here: [Bonner Private Research.]( (And… pre-order [Empire of Debt: We Came, We Saw, We Borrowed]( now available at [Amazon]( and[Barnes & Noble]( or if you prefer one of these sites:[Bookshop.org]( [Books-A-Million]( or [Target]( CONTINUED BELOW... >>ADVERTISEMENT<< The truth about Biden’s “digital dollar” will shock you Chances are, you’ve heard a million different warnings about the US dollar in recent times… Like the Biden administration’s plan to make the dollar fully digital… or ban cash altogether. But what’s really going on is something else entirely. It’ll surprise you… and could blindside millions of people. [Get the full story here while there’s still time.]( CONTINUED... The Coming Retirement Income Squeeze Bill Bonner, Bonner Private Research “Something will have to give.” — IMF warning the US this week about its growing debt “Stocks down. Interest rates up.” In the autumn of 2020, amid the falling leaves... and the general gloom of the Covid epidemic... we thought the Primary Trend had shifted. Music, leaves, lives — there are patterns to everything. A single swallow does not a summer make. But keep your eyes on the flock and you’ll time the seasons. Here in Europe, they migrate to Africa in the winter... and then come back in the Spring. So too, for days, weeks, months... stock market trading seems chaotic. Without rhyme or reason. Maybe an AI program can make sense of it; we can’t. But beneath the surface chop are long patterns that persist over decades. Source: www.thechartstore.com In July 2020, after 40 years, the interest rate cycle finally hit bottom. The US 10-year Treasury bond yielded all of 52 basis points (0.52 of one percent) — the lowest rate in 500 years. We predicted the obvious; now they would go up!  And if rates were rising, stocks would fall. A year and a half later, they did. Nothing since then gives us a reason to believe the Primary Trend will not continue — stocks down (inflation adjusted)... interest rates up. Today, the average interest rate on US Treasury bonds is near 5%. Priced in gold, the Dow is down 21%. In order to catch up to the December 2021 high, in real terms, the Dow would have to go over 48,000. ~~ Bill Bonner CONTINUED BELOW... >>ADVERTISEMENT<< 2024 — The Real Election Year Surprise In 2016, the October Election Surprise was Hillary Clinton’s email scandal… In 2020, the October Election Surprise was the suppression of all the dirty material on Hunter Biden’s “forgotten” laptop… Now, in 2024, we’re forecasting an October Election Surprise that almost no one sees coming — and this time it’ll be way more devastating than anything you’ve seen before. [Click here to learn about 2024’s real October Election Surprise »]( It’s not at all what you think. CONTINUED... The “Everything Bubble” Expressed in Terms of Gold Tom Dyson, Investment Director, Bonner Private Research The Dow/Gold ratio made a new three-and-a-half-year low Monday... it’s now at 15.82. Meaning, it will take you roughly 15 ounces of gold to buy the DJIA. For new readers, a falling Dow/Gold ratio shows gold is beating stocks. The Institute of International Finance tracks the size of the global debt pile. It recently published the figure for 2023. Its finding? In 2023, the global debt pile increased by more than $15 trillion, reaching a new record high of $313 trillion. For every dollar of this debt, there’s also an over-inflated asset somewhere backing it. What if Earth itself were a single financial entity? Would all these highly valued assets and debts mean Earth Corp. was getting more valuable? The human race works hard every day, building stuff and improving stuff. And the efficiency of our labor goes up slowly over time. So we’re definitely accumulating some real wealth. But for years, the Fed and other central banks kindled a gargantuan credit inflation by motivating speculators with all kinds of crazy incentives and reassuring them with all kinds of safety nets. And then they printed reserves to make sure it was easy for speculators to write new debts. The rising market value of assets and debts has far outpaced any real value creation or output. This chart shows this phenomenon in the US. Here’s wealth charted against GDP, indexed to 1950 and using a log scale. Source: Federal Reserve St. Louis A hundred trillion here... a hundred trillion there... these debt and asset values all just look like mountains of overpriced paper to me. If this is true – that it’s all just been massive credit inflation – the forces of debt deflation must now be immense. Our core position is that asset prices have to collapse, and much of the attached debt will need to be written off and erased. History is pretty clear about this. All credit bubbles deflate and asset valuations return to “fair” and then “cheap.” It’s how nature restores equilibrium. We call the adjustment that’s coming “The Big Loss.” The critical insight is this: the Big Loss in stocks will occur in terms of gold. A debt deflation... priced in gold. So when you see the price of gold rising on your screen this week, don’t think “gold is going up.” Instead think “the Everything Bubble is deflating” because that’s exactly what’s happening. The world’s pile of debt and equity is deflating... in gold terms. This is why we watch the Dow and other asset prices exclusively in terms of gold. And why we’re recommending such a large allocation to precious metals in our asset allocation model. This bubble has already started to collapse five times – in 2000, in 2008, in 2018, in 2020 and in 2022 – and each time they doubled down with huge new incentives to speculate and other stimulus to re-inflate the bubble. Now it’s the most patched-up, bolted-on credit bubble in history... a true mutant. We must be close to another debt bubble zenith...  ~~ Tom Dyson So it goes, Addison Wiggin, The Wiggin Sessions P.S. Tom says he’s updating the [Bonner Private Research]( annual research reports for paid readers who are actively following their advice. The reports include the [BPR Gold Report]( Strategy Report]( which details the asset allocation strategy he’ll be using for the rest of 2024. P.P.S. Tomorrow, the Bitcoin Halving event explained… see you then. (You can read the story in progression from [Demise of the Dollar]( through [Financial Reckoning Day]( and on to [Empire of Debt]( all three books are available in their third post-pandemic editions.) (Or… simply pre-order [Empire of Debt: We Came, We Saw, We Borrowed]( now available at [Amazon]( and[Barnes & Noble]( or if you prefer one of these sites:[Bookshop.org]( [Books-A-Million]( or [Target]( Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com. The Daily Missive from The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to The Wiggn Sessions delivering daily email issues and advertisements. 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