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Daily Missive

Golden Flack Jacket

Loading ...Bill Bonner

October 10, 2024 • 4 minute, 33 second read


Golden Flack Jacket

Golden Flack Jacket

Bill Bonner, Bonner Private Research

We drove up to Lake Champlain yesterday for a wedding. The leaves have begun to change, but it is still early in the season; they’ll be in their full glory in a month or so.

In the last two election years, we noticed that when we got beyond the commuting range of major East Coast cities, we began to see Trump signs everywhere. This year, we saw almost none. In one Upstate New York town, a place we assumed was Trump country; we saw only a giant Harris/Walz billboard. Are people losing interest? Is this a meaningful ‘straw in the wind’?

Don’t know. So, let’s get back to business.

CBS asks:

Does gold investing make sense with the price high? Here’s what experts say.

In recent years, gold has caught investors’ eyes, especially since the start of 2024. The price of gold has been on a steady climb and even hit a new all-time high of $2,672 per ounce in September. This surge has pulled in even more investors, fueling further price increases. But now, with gold prices at record levels, many are asking: Is it still wise to buy gold? Or should investors wait for a pullback?

The investment pros had the usual answers. Given the risks of war and inflation, most see gold as a ‘haven.’ Many expect that it is an ‘investment’ that will pay off.

But gold is not an investment. Warren Buffet is right; it will never give an investment return. It has no factories or sales outlets. It doesn’t make payroll or a profit. It hasn’t been souped up with AI. It doesn’t do anything—it just sits there.

It doesn’t grow more prominent. But it doesn’t shrink, either. Its purpose is merely to avoid an investment loss… notably the Big Loss that would knock you out of the game.

In the long run, you make money by owning a piece of a profit-making business. The profit represents an actual increase in real wealth. A quintessential example of that was Philip Morris, which kept making smokes, making profits, and distributing money to shareholders. If you had invested $1,000 in Phillip Morris a hundred years ago, you’d have $250 million today.

However, Phillip Morris is not immune to the diseases, mood swings, and bad hair days of Wall Street. When the market got sick, the cigarette companies coughed, too. Stock prices can wheeze and sneeze for an entire generation before returning to their prior rude good health.

While we can never know when we might catch a cold, we can at least shut the window from time to time. That is the insight behind our Dow/Gold macro trading model. It aims to keep you in the stock market so long as there is a decent hope of returns… and to keep you out when the risk of a Big Loss increases.

The two thresholds — the places where we suggest moving in or out — are five and fifteen. When you can buy the Dow for less than five ounces of gold, the risk of a Big Loss is low; it’s time to buy stocks. When you have to pay more than fifteen ounces, on the other hand, it’s time to move out of stocks.

Where are we now?

The ratio is around 16. We’re out.

That is not, however, the whole story. Markets move in broad swings from bull to bear, from rising prices to falling prices and back over long periods. This is what we call the Primary Trend. Grosso modo, stocks are either going up or going down. If they’ve been trending down, we assume that they’ll keep going down until they reach a bottom.

If they’ve been going up, we assume the trend will continue until they reach a top. We don’t know where those bottoms and tops will eventually be found or what exactly will happen in the meantime. But tops and bottoms show up sooner or later, and they are reliably (by definition!) beyond our 5-15 fence lines.

Currently, stocks have been going down (in terms of gold) since 2000. This is at odds with what everyone believes. Although stocks have gone up a lot in nominal dollar terms, gold has gone up even more. From forty ounces of gold to buy the Dow stocks, it now takes only sixteen.

The logical place to be when you are out of stocks is in gold itself.   But gold has its moods, too. Right now, it is relatively expensive. It wouldn’t be surprising to see the price go down – shaking recent passengers off the bus – before it resumes its drive to its ultimate destination, under 5 ounces to the Dow.

Of course, gold is not the only ‘safe haven.’  You could be in cash. Or real estate. Art. Or… even a few carefully selected stocks.

The Dow/Gold model speaks for the stock market generally… for the averages… for the great mass of the stock market, not for specific companies. There are always some that resist the Primary Trend. And other companies pay such nice dividends that you don’t care if the stock price goes down.

New products, technologies, and opportunities also emerge even when the Primary Trend is down.

The Dow/Gold macro model is not a straitjacket. It’s a flak jacket. It helps protect you from the Big Loss.


Beware: The Permanent Underclass

October 3, 2025 • Addison Wiggin

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

Beware: The Permanent Underclass
Is Tokenization Inevitable?

October 3, 2025 • Ian King

Last month, Nasdaq asked the Securities and Exchange Commission (SEC) for approval to let tokenized stocks and ETFs trade on its main exchange.

If approved, these digital shares would sit side-by-side with traditional equities. Meaning, they would fall under the same U.S. securities laws that govern $50 trillion in annual equity trades.

And this rollout could begin as early as 2026, once the Depository Trust Company — the clearinghouse that settles every U.S. stock trade — updates its systems to handle digital tokens.

If it happens, this won’t be a small tweak to the machinery of finance. It’ll represent the first major step toward moving Wall Street onto blockchain infrastructure.

And we don’t have to imagine what it might look like…

Because it’s already happening.

Is Tokenization Inevitable?
The Myth of Productivity, Again

October 3, 2025 • Addison Wiggin

The launch of ChatGPT in October 2022 ended the pandemic-era bear market in stocks. The AI story has been the predominant narrative for three years now. The indexes on Wall Street are at historic highs, surpassing 2000, 1968, 1929… the last three tech-inspired bubbles.

But ChatGPT did something else. It brought the idea of “productivity gains” back into the economic conversation.

The Myth of Productivity, Again
The Stablecoin Standard

October 2, 2025 • Mark Jeftovic

Stablecoins have proceeded rapidly from being a grey zone through which capital would traverse as it moved into or out of the crypto-economy, to becoming an extension, if not a nascent pillar, of the fiat money system itself.

Coinbase Head of Institutional Research David Duong sees the market cap for stables hitting $1/2 trillion by 2028 (which would be somewhere between a 4X and 5X from where we are now).

Demetri Kofinas recently interviewed Charles Calomiris, former Chief Economist at the US Office of the Comptroller of the Currency, and it was eye-opening to hear someone of his stature speak so matter-of-factly about how the structure of the banking system is evolving in realtime.

The Stablecoin Standard