Bill Bonner’s Latest “Trade of the Decade”

Not long ago, I had the pleasure of talking with Bill Bonner. Bill is the founder and owner of Agora Financial. (Well, he owns most of it.)

I was in Baltimore at an editorial meeting with colleagues from St. Paul Research. And Bill showed up!

Bill is an old friend, but I seldom see him. He lives in Ireland and travels often. There’s that ranch in Argentina. And the chateau of his in France. (“Chateau;” a French word… means “Deep pit into which you throw good money.”)

At any rate, there he was… William Bonner in the flesh.

We discussed all manner of things; but I’ll get to the heart of it.

“Okay Bill; it’s the end of 2019 and we’re coming up on 2020. What’s your latest trade of the decade?”

Bill pursed his lips and scrunched his forehead. “Well,” he said…

I started reading Bill Bonner’s articles back in 1999, during the runup to the whole Y2K-thing. Remember that? The world was going to end because all the computer software would blow up when 1999 ticked over into 2000. No power. No lights. We’d all freeze to death in the dark.

Of course, in 2000 the calendar rolled over but the world didn’t blow up. All we had in 2000 was a tech crash, coupled with a real estate smack-down. It was the end of a crazy era, although few people realized it at the time. Except for Bill, who somehow knew…

Basically, as the 1990s rolled towards Y2K, stock markets were at stratospheric valuations; completely unsustainable. No reality behind the smoke and mirrors. As in… Few companies were earning the kind of money you need to support those pricey, so-called “valuations.”

Bill Bonner was writing daily emails, and asking profound, meaning-of-life questions like…

  • Why is oil so cheap?
  • Why is gold so cheap?
  • Why are kooky ideas like internet-based dog food delivery businesses priced so high?
  • Why are insolvent companies buying million-dollar ads on the Super Bowl?

Bill was on to something, of course…

Then, in mid-2000 the metaphorical dam burst. It was the Johnstown Flood of finance, writ large…

All that impounded market hype flowed over the spillways, and eroded the very foundations of U.S. and global markets. Fantastical stories behind the share price of many companies proved to be naught but swill and sewage. “Lipstick on pigs,” was the expression.

As 2000 unfolded, the flood of lies cascaded down through the canyons and valleys of Wall Street. We had carnage in the trading pits. And silence of the loans.

Pre-2000-crash, Bill Bonner called it. After a decade of go-go-go growth – or, “fake” growth, in retrospect – from the super-duper tech companies in Silicon Valley, the reckoning occurred.

In 2000 gold traded in the $300 range; indeed, mid-year 2000, gold was in the $275 range. I know this. I bought some.

Bill Bonner was writing about his novel idea – new to me – of a “Trade of the Decade.” That is, what would do well over the decade to come.

The choice was apparent. Buy into the tech bubble early in 2000, or later in the year buy into the beaten-down corpses of the tech crash. Or buy $300 gold.

2000 Gold

U.S. Mint, Gold Eagle, 2000 issuance.

I bought gold. And look at the first half of this 20-year chart.

Chart

Between January 2000 and December 2009, Bill’s “Trade of the Decade” – gold – moved from under $300 to just shy of $1,100. That includes powering through and up past the 2008 Crash.

On January 1, 2010, gold traded at $1,097 in fact.

Bill Bonner was right. He called it. Trade of the Decade; gold. Nailed it. Bull’s eye!

So, what was Bill’s Trade of the Decade for the next decade? You know… The one that ended just a few days ago?

Hint… Four-letter word…

Bill’s Trade of the Decade for 2010 to 2019? Gold, of course.

2010 Gold

U.S. Mint, Gold Eagle, 2010 issuance.

Look back at that chart above. Look at the 20-year move; from under $300 to just over $1,500. And more specifically, from 2010 to the present. Here’s a more concise chart…

Chart

We had a big runup for gold early in the decade. Gold went from the $1,100 range to just shy $1,900; followed by a pullback.

And then? Look at 2016 to now…  Gold moved from $1,050 to over $1,500 presently.

The past decade (2010 – now) has been a roller coaster ride, versus the first decade (2000 – 2009). But you can’t deny the overall, long-term gain.

Meanwhile, if you own physical gold, you really do own something. Gold is real. It’s not electronic ones and zeros. It’s not a function of some Wall Street “story,” like those tech unicorns that appear to be worth billions, but which never make any profits.

And if you own gold, it’s no one else’s liability.

If you followed Bill Bonner’s Trade of the Decade for 2000 – 2009, you more-than-tripled your money, in terms of dollars. Or you could look at it as the dollar declining by over three-fourths in value over ten years.

If you bought into Bill’s Trade of the Decade for 2010 – 2019, you went from $1,100 to just over $1,500; or 36% gain… admittedly with a ride.

Then again, the past decade was characterized by super-low interest rates; zero or negative, in some times and places. So, 36% ain’t shabby. You preserved your wealth. There’s a gain on the holding. And you still have the gold.

So, what does Bill think about the decade to come? His latest Trade of the Decade?

As I noted above, I asked the question. Bill pursed his lips and scrunched his forehead. “Well,” he said…

“When I look at what’s going on with the world, with the U.S. dollar, politics, everything…”

The room was silent. You could hear a pin drop. You could detect the vibe of grinding vertebrae as people strained their necks to pick up on Bill Bonner’s latest Trade of the Decade…

“I’d have to say stick with gold. I can’t think of anything else that’s as well set up to hold value and deliver gains.”

2020 Coin

U.S. Mint, Gold Eagle, 2020 issuance.

Thus, sayeth Bill Bonner…

And with that, we at Whiskey & Gunpowder counsel you to buy gold, and we wish you a Happy New Year…

On that note, I rest my case.

That’s all for now…  Thank you for subscribing and reading.

Best wishes,

Byron King

Byron King
Managing Editor, Whiskey & Gunpowder
WhiskeyAndGunpowderFeedback@StPaulResearch.com

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Byron King

A Harvard-trained geologist and former aide to the United States Chief of Naval Operations, Byron King is our resident gold and mining expert, and we are proud to have him on board as the managing editor of Whiskey & Gunpowder.

This “old rock hound” uses his expertise and connections in global resource industries to bring...

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