“Gold is money. Everything else is credit.”
-JP Morgan
September 22, 2025 — Everyone says it’s time to buy gold.
Markets Insider reports:
The legends on Wall Street have been trying to drive one message home all year: buy gold. Investors have ample reason in 2025 to take the recommendation more seriously than in previous years. For one, gold is on track for its best year since the 1970s, up 38% year-to-date.
Business Intelligence adds:
How Much Gold Should You Buy Each Year According To Experts…
Today, we wonder if ‘everyone’ is right.
The last time ‘everyone’ was sure it was time to buy gold was in 1980. But it turned out to be a devastating money trap. The price fell for the next 20 years…and took another 25 years to recover, inflation adjusted.
And what about now? Gold is the top performer this year. At the end of 1999, you would have paid less than $300 for an ounce of gold. Today, the price is more than $3,600. Meanwhile, the Dow has gone up from 11,500 to over 45,000.
In other words, for a quarter of a century, people who held gold — with none of the risk and volatility of the stock market — did four times as well as stockholders.
But now, gold has been going up for the last 25 years, not down. Has the situation reversed? Gold buyers are hoping for big profits, but can they really get there from here?
“We’re glad we bought so much gold many years ago,” we replied to an inquiry on the subject. “But we’d be nervous about buying it now.”
Which is not to say that you shouldn’t buy it…but only that it is not the slam dunk, easy-peasy move that it was in 1999. At today’s price, gold could take a deep dive and stay down for months…years…before continuing towards its historic rendezvous with destiny.
That destiny is the point when we take our gold and trade it for money-making stocks. On the financial map, it is marked as “5” — the place where you can trade five ounces (or less) of your gold for the 30 Dow stocks.
Since we count our wealth in ounces of gold, we don’t really care about the price OF gold. What we care about are other prices IN gold.
As we explained last week, we lost the power of prophecy a long time ago. But we know where wealth comes from — profit-making businesses. The profit is the measure of how much wealth they create; it is the difference between the cost of doing something…and what that thing is actually worth.
We know, too, that these businesses are sometimes priced at levels that aren’t justified by the wealth they produce. Sometimes they are priced ‘too high.’ Sometimes, ‘too low.’ It is hard to keep track in terms of the dollar, because the dollar is so shifty. So, we set a simple standard — in gold. If the Dow stocks can be bought for 5 ounces of gold or less…we will buy them. Above 15 ounces, on the other hand, we consider them too expensive; we set a stop-loss in place…and wait to get stopped out.
We’re not saying gold is going up. We’re not saying stocks are going down. All we’re saying is that we hold real money (gold) and are only willing to part with it when we can buy wealth-creating companies at or below five ounces to the Dow.
Important Note: we might get there without making a dime on our gold holdings.
The five-ounces-to-the-Dow target can be achieved either by inflation or deflation. If it happens by inflation, the price of gold soars and speculators make their fortunes. But let us imagine that deflation is the route. At the present gold price, the Dow would have to crash…below 40,000…below 30,000…all the way down to 18,400.
Couldn’t happen? In September of 2016 — less than 10 years ago — the Dow was at 18,400. Seven years earlier, it was only half that amount.
Could a crash wipe out ten years of stock price growth? Of course, it could. If so, speculators in both gold and stocks would probably lose money. (In a real crash, the ‘speculative’ part of all assets tends to disappear.)
But it doesn’t matter to us! We just wait until the stars line up…and we can use our gold to buy the Dow for five or fewer ounces of gold. Then, of course, ‘everyone’ would be telling us what a big mistake we were making:
“You’re going to buy stocks? You must be crazy…”
“Nobody wants stocks anymore; they’re back to where they were ten years ago.”
“Stocks are history. Gold…crypto…tokens…
Our strategy, such as it is, is not a ‘smart’ strategy. Instead, it is based on ignorance…fear…and opportunism. We aim for safety, first…then wealth. But we don’t know what direction prices will take. And our number one priority is to not take the Big Loss. So, we wait for the headline:
‘Investors forsake stocks…possibly forever.’ Then, we make the sign of the cross…buy stocks…and hope we can get there from here.
Regards,
Bill Bonner
Bonner Private Research & Grey Swan Investment Fraternity
P.S. from Addison: Gold is well over $3,700 per ounce, and may make a run at $4,000 before the year is out.
Silver has topped $43 and may be on its way to retest its old highs at $48.
Plus, commodities such as uranium are breaking out after consolidating over the summer, and copper remains near highs. There’s still room for the commodity space to run, in-line with our forecast on gold from last year.
This week on Grey Swan Live!, Portfolio Director Andrew Packer and contributor Shad Marquitz will review the latest developments in the commodity space and determine the best commodity plays through the end of 2025 and into 2026.
If you’d like, you can drop your most pressing questions right here: Feedback@GreySwanFraternity.
