Chief Investment Strategist, The Freeport Society
As I write, the market is melting down again…
Why?
Well…
We have a slew of new tariffs – from a 25% tariff on Canadian and Mexican products covered under the United States-Mexico-Canada Agreement, to a 25% tariff on countries buying oil and gas from Venezuela, and a 25% tariff on imported cars and car parts – scheduled to take effect on Wednesday, April 2. What President Trump is calling “Liberation Day.”
The Fed’s preferred inflation gauge – Personal Consumption Expenditures or PCE – came in hotter than expected this morning. The core PCE Price Index rose by 0.4% from January, which was more than economists expected. And it shows that inflationary pressures remain elevated.
And there are an increasing number of signs that the American consumer is tapped out. In particular, credit card balances are past the $1.21 trillion market while the percentage of credit card 90 days or more in arrears is above 11% and climbing. The personal savings rate has dropped to 4.6%. And retail sales are still in decline, especially at restaurants and department stores.
Under those numbers, it’s understandably chaotic. But… is it all part of a plan?
Is President Trump playing a long game to reorder the world’s financial system?
And if so, what does it mean for our portfolios?
To unpack all of this, I sat down with Dan Denning, Director of Research at Bonner Private Research.
I’ve been reading Dan’s work for over 20 years. He’s dedicated his life’s work to providing insightful, independent, and actionable financial analysis. And I’ve personally made a pretty penny on his recommendations.
So, what’s the story?
Is there a method to the madness regarding the tariffs?
Hit “play” below to watch today’s video…
As Dan and I discuss, the tariffs are part of a larger plan to lower the value of the dollar and to make American exports more competitive in global markets.
Dubbed the “Mar-o-Lago Accord,” the plan is a more aggressive version of Ronald Reagan’s Plaza Accord in 1985.
Will it work?
We may not know for months or even years. It’s a high-risk plan, and a lot can go wrong.
But the takeaway is clear.
If our government is telling us they want to lower the value of the dollar, we should take them seriously.
That means protecting your savings with anti-dollar hedges like gold and even Bitcoin.
We hold both, among other stocks in our flagship Freeport Investor advisory. And, despite even today’s market plunge, they’re showing open gains of 52% and 100% respectively.
It also means understanding what this new monetary regime might mean for the stocks in your 401k.
Dan and I discuss this in today’s video. Watch it now.
To life, liberty and the pursuit of wealth,
Charles Sizemore
Chief Investment Analyst, The Freeport Society
Transcript
Charles Sizemore: Hi, Charles Sizemore, Chief Investment Strategist of The Freeport Society, and today I have Mr. Dan Denning, Research Director of Bonner Private Research on the line.
We have a lot to discuss today. There is the Mar-a-Lago Accords that you’ve probably heard about – you’ve probably heard me talk about it. There are the tariffs “Liberation Day” as it’s being called, coming April 2nd. And there is a host of other issues, all of which will circle around to affect the value of your savings, value of the dollar, value of your stocks, value of pretty much everything you own.
Let’s kick it off. Dan, welcome.
Dan Denning: Thanks, Charles. I’m happy to be here.
Hopefully we can unpack this because I think there’s more to it going on than maybe the mainstream press reports on, and there’s a lot at stake for investors. So, very important topic.
Charles: Indeed, it is. Because fundamentally… All of this circles back to one thing, and that’s the dollar.
And of course, the dollar is what our lives are denominated in. Our savings, our stocks, our houses, it’s all tied to dollars. So, understanding this is really critical to understanding what kind of world we’re going to live in and how it’s going to affect our pocketbooks.
I guess we’ll start from the beginning. We’ll start with the most concrete, because some of this is getting a little bit abstract. Some of this is getting kind of theoretical almost. Let’s just start with the more concrete part, April 2nd. If all goes as expected, we should have an entirely new wave of tariffs, specifically a 25% tariff on autos. Of course, this adds to the 25% tariffs on steel and aluminum. They’re already in place. The various tariffs that have come and gone and come again in Canada and Mexico and China and the rest. Let’s start with that. What are your thoughts there?
Dan: I think that this is part of a deal, and it’s part of the art of the deal for Trump, and part of this phase of the deal is to maximize chaos among our foreign trading partners. And unfortunately, investors can be caught in the crossfire because we’re trying to figure out what tariffs come into effect, when they come into effect, who do they affect, does it affect profit margins?
I mean, we saw, even as we’re talking about this, the effect on General Motors’ (GM) stock price with the discussion of these automotive tariffs.
But from my research into this particular issue, there’s a bigger plan at play here. The early part of the plan is to make things deliberately chaotic and uncertain so that our trading partners have an incentive to agree to a bigger deal later, which will devalue the dollar and improve the manufacturing competitiveness of the United States. Now, I don’t know if that will happen, but I think that’s what the intention is.
Charles: Let’s dig a little bit deeper into that, because sometimes it looks haphazard. I think we would agree sometimes it looks like there may be a plan, and sometimes it doesn’t look like there’s much of a plan at all. It looks completely chaotic, like he’s throwing spaghetti on the wall and seeing what sticks. I guess we will find out soon enough as this develops.
But by maximizing discomfort – and this will not be comfortable for you or me either – we will see prices rise on a lot of things we buy. Not just finished goods, but intermediate goods that flow through to things we buy here in the U.S., goods and services for that matter, they’re all potentially going to get an inflationary pump here where everything gets a little bit more expensive. And selection, your choices are somewhat reduced because of that.
So that’s uncomfortable for us though it’s generally going to be much more uncomfortable for a lot of our trading partners because many of them have trade surpluses with us, or the trade they do with us is more critical to their economy than it is to ours.
We all have something to lose, of course, but they have more to lose potentially, and that’s where that negotiating tactic comes in. I’m willing to take a little bit of pain if I know that you’re going to fold first.
This is kind of contrary to my core beliefs as a free market guy, but I get it. I get the thinking, right? And so yeah, if you had a crystal ball, how long would you think this kind of chaos and discomfort phase lasts?
Dan: Yeah, that’s a good question. And I should say this was news to me until I did a deeper dive into some of the research from people who claim to be, at least maybe not speaking for the Trump administration, but who are credited with being the intellectual fathers of this idea.
Their argument is that tariffs are not necessarily inflationary. They said in 2018 and 2019, when the first Trump administration slapped tariffs on Chinese goods, prices didn’t rise in the United States because there was a currency adjustment. The dollar got stronger because of the increased chaos so that the wholesalers and some retailers may have seen increased costs for importing or the inputs in the goods that they manufacture. But ultimately, consumers didn’t pay a higher price.
So I should point that out, that either someone in the Trump administration is really bad at messaging… This may not be their plan, but their claim is that tariffs aren’t inherently or necessarily inflationary, that it might be bad for shareholders because the margins for retailers and wholesalers will compress because they won’t pass the higher costs on to consumers. The textbook is that they always get passed on to consumers.
We’ll wait and see what happens, but I think that whatever the duration of the pain is, the real important question for investors is, is that a price that this administration is willing to pay for what they perceive as a much bigger benefit?
And their argument is that the status quo, where the U.S. dollar has the burden of being the world’s reserve asset, effectively our largest export for the last 40 or 50 years is no longer a good deal for the American middle class. So that its effect on wages and its effect on standards of living is a bad deal, and the only people that are benefiting from it are Wall Street and people in Washington and the defense industry.
And so, they want to redo that deal. And if that deal takes two months to do or six months to do, they don’t really care about stock prices. They do care about inflation, but they don’t believe it’ll go higher. So to me, I think the clock is ticking with respect to the midterm elections, that if this issue continues to be the number one issue in the financial press, if people do pay higher prices or if the chaos that they have unleashed affects the economy to the extent that it becomes an issue that could cost the Republicans the Senate and the House in the midterm, then there’ll be so much political pressure that whatever the plan was, there’ll be pressure to just declare victory and make a deal.
Charles: Right. It is interesting because in this scenario, it wouldn’t be that hard to claim victory.
If Trump were to decide today, “Yep, enough’s enough. I’ve made my point,” and then come to the table and really start negotiating and start dropping some of the tariffs, he could already say, “See, what did I do? I got their attention.”
You can always spin it, right? So I feel like the off-ramp is pretty easy if they decide to go that direction. If they decide, “Okay, enough is enough,” or “The costs are starting to outweigh the benefits, we can pivot now,” it’s a fairly easy on-ramp.
What’s interesting to me is part of this – this idea of kind of fixing the middle class, and particularly the non-university-educated middle class, the old blue collar middle class, part of this is bringing manufacturing back.
And so there’s multiple moving parts to this, of course.But one aspect, well, he’s flat out said it in as many words, he wants things manufactured here. Things that are… Auto parts or cars that are built here in the U.S., no tariff. This only affects the imports. So the idea, of course, is by creating this import regime, you do incentivize people to move their production here to the U.S.
Of course, you don’t turn a battleship on a dime. And if you’re General Motors or Ford (F) or Nissan (NSANY), pick a company, you can’t just build an auto factory tomorrow. It doesn’t work like that. This is a multi-year process to find your site, to plan it, to find the labor, to get it all set up. And by then Trump may not even be in office anymore. We’re limited to a four-year term. This is the kind of planning that takes many multiple years.
If you’re the C-suite of any major company in the world, you have to be doing the math of, “Well, how long is this going to last? Is he going to change his mind tomorrow? Do we really need to start uprooting people and making major multi-billion dollar investments that are going to take years to pan out if this is not serious?” And so that’s why I tend to think this may drag on a little bit longer, but there is sort of a hard cutoff, as you said. There’s a midterm election. Whatever is going to be done, it needs to be showing results by the midterms or it’s dead on arrival.
Dan: Yeah. I think that’s where this phrasing of the whole process as a new, or as a Mar-a-Lago Accord, is a key piece of it.
Because the fundamental contention is that the dollar is overvalued because of its status as a reserve asset. And that’s a key piece of making U.S. manufacturing non-competitive with China, Japan, Germany, other places. Now, the question is how much U.S. manufacturing would come back to the United States and would be competitive if the dollar were much lower than it is now? And I don’t think it’s a lot.
Charles: That is a good question.
Dan: Well, and in fact I think one of the interesting pieces in this paper if you do a deep dive, which makes me think that maybe there’s a longer game at play here, at least theoretically, is that the result of the North America Free Trade Agreement in 1995 and the result of China entering the World Trade Organization in 2000, and also doing so by managing its currency within a fixed range, managed exchange rate, was that a lot of manufacturing left the United States. Because the labor was much cheaper in other places around the world.
The argument from the Trump administration – or at least people who want a Mar-a-Lago Accord – is not only did that hollow out the middle class and create a whole issue of costly social problems in the United States, like the opioid crisis that we’re dealing with, but it also weakened our national security because industries that are critical to our military and our defense industries left our shores. Whether that’s microchips in high-tech manufacturing or whether it’s critical minerals and rare earths, or just the capacity to keep our planes, ships, and our soldiers equipped. So they’re making the argument that we need to move those things back, not necessarily because they’re profit-making industries that we can do better, but that we can no longer trust having supply chains that are so extended that we may not be able to get what we need when there is future conflict.
So, to me, if you’re coming at it from that point of view and saying, “We want to move high-value manufacturing back to the U.S. because it’s a national security issue,” then its effect on the stock market and its effect on particular industries or the stock prices of big companies becomes a lot less important except as a political calculation. As a strategic calculation to say, “We better do this now because if we don’t, we’re not going to be ready when someone says we’re not exporting those things to you,” then you just have to eat whatever political pain there is because your argument is that the country’s needed this for a long time and the result of this policy of the last 50 years has made us weaker both financially and militarily. That argument you might be able to make in a midterm election.
Charles: It’s interesting. Free market usually works. It doesn’t work 100% of the time on the timeline you want it to but given time to adjust and correct, the free market generally gets it done.
And what happened was during the pandemic, we saw how dangerous a really complex long supply chain is. And it wasn’t necessarily for defense issues, although you bring that up. That’s an excellent point.
Just making an iPhone, whatever, just making any common consumer good, when the supply chains got so long and so complex, any little hiccup along the way was catastrophic. We saw when China slammed its borders shut, it took us, two years, three years to actually untangle that mess. So if you’re any CEO, any corporate titan in America, you have to be asking yourself, “Okay, yeah, I did save a little money on labor and that was nice, but is it worth the long-term strategic risk to my business that I could have a major disruption like that, that means I can’t deliver my product to market?”
So, we were seeing reshoring already even before this trade war. We were already seeing a lot of supply chains getting shorter, trade going to closer trading partners, closer both in terms of relations and geographically closer. So that was already happening anyway. Of course, Trump’s actions have just massively accelerated it. They kind of dumped gasoline on the fire, so to speak.
Dan: Yeah, I think you’re onto a very important point, which is sort of geopolitical. But when you think of the word geopolitical, geo is short for geography. And this argument that trade needs to be rebalanced because the dollar’s been overvalued as a reserve asset is also an argument for economic nationalism that says: We don’t live in a world with free trade, and the consequences of that trade, whether it’s lower real wages in the U.S. or higher corporate profits for some people and the shareholders, those are policy choices. Those aren’t inevitable results of the free market. If the dollar were not overvalued because it’s a reserve asset, then some industries would be more competitive, and in fact, we would win in those industries. The Chinese labor advantage would go away. Their theft of intellectual property would make some U.S. firms more competitive than they are now.
But ultimately, I think you’re right too, that in Trump’s world – or at least in the world of some of these grand strategy people – that where these minerals are matters. So if rare earth minerals come 70% from China, it’s not because that’s the only place they are, it’s because those industries are allowed to flourish and thrive there because their environmental protections aren’t as strict as ours. And they’ve made the decision that we don’t live in a theoretical world where free trade brings lower prices and lower costs and more choice and better products, which I agree with 100% by the way.
That’s the other side of this argument is, how bad is this arrangement currently for the U.S. middle class? And that’s probably one point worth making, is that the argument being made by the Treasury Secretary, Scott Bessent, and JD Vance, the vice president – who I think are primarily driving this agenda – is that it’s not a good deal for the American middle class if they can run up $1.2 trillion in credit card debt, but buy cheap stuff from China. That that’s the American dream.
Bessent has said that’s not the American dream. The American dream used to be being able to work a good job with maybe lifetime employment, be able to pay off your mortgage, send your children to school, buy a car, and do all of those things, afford healthcare, without having to rely on massive amounts of personal debt because there are no industries that compete in the United States.
So again, this reminds me of something I saw on Twitter a long time ago and I made a note about it because I think when you step back from it and you say, “That’s a lot of things for people to think they can control,” and the beauty of the free market is it doesn’t try to control any of those things.
It reminded me of something that happened in 1930. The Indiana Bell Telephone Company, I think it was to make room for a highway, rotated an 11-story building, which was about 11,000 tons of steel and concrete and brick. They rotated the whole building 90 degrees. And during the entire time, over the course of a month, people continued to show up at work every day and work in the office as they were moving this building about one foot per day. And then they moved it a hundred feet further north so that the highway could take the course that the planners had made for it.
Economies aren’t like that, and I think that’s a big risk here when you say, “We want to change the dollar’s value as a reserve asset, but we don’t want to destroy it.” The risk is that your sort of controlled modification becomes chaotic. And I think for investors, that’s why you see markets behaving with so much volatility is one, they’re not sure there is a plan. Two, they’re not sure it’s going to work. And three, it might not work the way it was intended to work.
Charles: Yeah, and some of the more aggressive elements of the Mar-a-Lago Accord. First off, why is it called the Mar-a-Lago Accord, named after Trump’s hotel?
There’s a precedent, there were the Plaza Accords in the 1980s where you had a similar deal. Paul Volcker raised interest rates very aggressively in the early ’80s, and that caused the value of the dollar to explode higher, which of course killed our exports. So the Reagan administration negotiated a controlled devaluation of the dollar relative to the other major world currencies. It helped for a while. It did boost our exports. It did narrow our trade deficit for a couple years, reversed by five years into it, it had already reversed the end, so it really wasn’t a permanent solution, but it did help for a while.
It took about two years to get going, and then it worked really well for about three or four years, and then the rest is history. Anyway, there is precedent for that.
Now, of course, the most extreme element – and there really isn’t precedent for this – was talk that as part of this reorientation of the world’s financial system, it would potentially swap out existing U.S. government debt held by foreigners, with essentially 100-year zero coupon bonds that don’t pay current interest payments. They don’t pay current coupon payments.
That’s where things really potentially get wonky. I cannot imagine a world in which foreign holders of U.S. Treasury say, “Yes, by all means, let me trade in this ten-year bond for a hundred-year bond that doesn’t pay interest. Where do I sign up for that?” It’s hard to really see that going.
Dan: Well, it’s a huge risk, and I think it doesn’t happen organically unless there’s another stick involved. And the deeper you dive into the theoretical argument behind the Mar-a-Lago Accords is that it’s also tied to rebalancing or making the cost the United States incurs for providing this security umbrella fairer, which is basically open sea lanes and the world in which international trade can flourish with or without tariffs. So, part of what they’re saying is we want a new deal. And the new deal is you’ve got to agree to devalue your currencies so our industries can be more competitive. And then, how long that lasts, we don’t know.
The other deal is if you want to continue to enjoy the security umbrella provided by the United States Navy or the Air Force or the Space Force or the Army, then you have to refinance our debt obligations, 10 trillion of which come due this year. But you have to term it out, as they say. So instead of buying a 30-year bond, which is interest rate sensitive and might be at 5% or four and a half percent, we want a lower interest rate, and we want you to loan us the money for a hundred years. And in exchange, we’ll make a reciprocal deal with you on tariffs, and you’ll continue to enjoy the security protection that the United States military provides right now without any compensation.
So that’s a big ask, but I think that is the ask, to be honest. If you view government as a protection racket, this is a shakedown. And the shakedown is, you’ve got to pay more for us keeping the streets safe, which means buying 100-year bonds, and in exchange our borders will be open to your trade. And if you don’t like that, you’re not in the deal. And in typical Trump fashion, that’s the bluster part. That’s the stick.
And I think you asked the right questions, is April 2nd the day we make that big deal? I don’t think so. I think April 2nd is the day where he tries to maximize the chaos and the pain in order to get this other deal.
But whether he gets it or whether people say, “We’ve had enough of this.” We’ve got credit risk in the United States. There’s now political risk because you have judges in the judicial branch, which are at war with the executive. And then you have just normal alternative assets like gold and Bitcoin where you can say, “We don’t want to have anything to do with your reserve asset. We think the safest reserve asset is the one that’s been around for 5,000 years, or the one that’s been around since 2008.”
So, there’s a lot that could go wrong, but I do think people might be underestimating the mechanism for rotating this thing 90 degrees. I think there’s a plan, but we could be reading into it a lot more than there is.
Charles: Oh, there’s no doubt there. Sometimes Occam’s razor holds, and the simplest explanation is most likely. What we’re proposing here is actually quite complex, so that probably makes it potentially less likely. We’ll know soon enough.
But one way or another, this trend is happening, whether there’s this grand Accord or not, it is obvious that the trends in place do point to a desire for a lower dollar. And it’s generally not that hard to lower the value of your currency. It’s hard to raise the value of your currency if nobody wants it, but reducing the value of your currency isn’t hard.
In fact, we do a fantastic job of that by having really loose monetary policy and having really even looser fiscal policy. I questioned our government’s ability to take out the trash on Tuesday, but their ability to devalue the dollar, yeah, they got that, that they can handle.
Well, let’s talk money. So what do we do about this? What are the implications for our portfolios? And getting a little bit big picture first, one of the biggest pendulum swings that happens in an economy is the balance between capital and labor. And free trade, really freer trade, whatever you want to call it, what we’ve had for the last call it 40 years, really swung the pendulum in the direction of capital. It had the effect of really boosting corporate profits. It had the effect of juicing stock returns.
If you swing that pendulum the other way, and that’s what the Trump administration has. We don’t have to read between the lines or try to put the pieces together of some grand plan. I mean, they flat out said what they want is a better deal for the blue collar middle class. They want to bring that kind of economy back. So if you do have this swing back towards labor and away from capital, well, all your conclusions here, but that likely means lower stock returns going forward. That also brings into question, do current stock valuations make sense if we are entering a different regime where we’re going from a very pro-capital regime to a more pro-labor regime? Do you have thoughts on that?
Dan: Yeah, a hundred percent. It’s a great question. And I would say we’re having the conversation at a time where stock valuations are at historic highs anyway, based on almost every conceivable metric that old time investors would use. So market cap to GDP, price to sales, price to equity, forward earnings, cyclically adjusted price earnings over a 10-year period. On any of those measures, stocks are already expensive. So in some ways, this becomes whether it works or not, and whatever impact it has in the long term on real wages or corporate profit margins, it’s probably going to have a very negative impact on stock prices, which begin this discussion at these ridiculous valuations.
So if this wasn’t happening, we would probably, at Bonner Private Research, we’d be saying the same thing. We’re in maximum safety mode because whenever you get to valuations at this level, the risk of a significant drawdown – and by that, I mean 40 to 50%, like in 2008, like in 2000, like in 1974, or even back in 1929. That’s where we think we are.
And maybe, if you agreed with that view, if you were Scott Bessent or Donald Trump and said, “That’s going to happen anyway, we might as well take advantage of it to have this thing happen at the same time,” then it’s going to happen. Whether it happens this year or next year or wherever, I don’t know.
So that would be the first point, from 30,000 feet up is to say, be prepared for faster drawdowns in the stock market and bigger hits to earnings as people try to figure out whose margins do this affect and what’s going to happen. Nobody knows, but something would be the catalyst for a revaluation in stock prices anyway. And we think it might be this thing.
So, it’s not all bad news for two reasons. One, the gold price is now over $3,000 an ounce. Gold is seen as a riskless or at least credit riskless reserve asset. And we saw that last year with the flows of Central Bank money into the gold price. We haven’t seen it yet with retail flows. So if you think you missed out, you missed out on some of it. But the ceiling for the gold price may be much higher. And for speculators, the gold mining stocks haven’t priced in any of this yet. They’ve begun to, but they haven’t done that.
On the other hand, there’s Bitcoin as an alternative, which we don’t really cover. But in terms of safety, there are other assets to be in. But with respect to stocks, you have to be very selective. And I’d say there is a chance that some industries which may be favored for national security reasons, and you see all these executive orders which are trying to incentivize either investment or more production in development, in energy, infrastructure, critical minerals, strategic minerals, there may be opportunities in those industries.
But you’re correct that in the big picture, if the argument is that most of the benefits of the strong dollar or the overvalued dollar have gone to Wall Street and a weaker dollar benefits the middle class, that’s Washington, or at least this White House telling you, “We don’t really care what happens to stock prices, even if it means margin compression for American companies.”
And of course, you’ve got this demographic where there’s 80 million Baby Boomers who are at or near retirement age, and they’re counting on stocks at these valuations paying for their retirement. So that might be another headwind for this policy is that the pain caused by falling stock prices for retirees is just simply too much for the administration to bear.
But as you point out, they’ve said, “We’re not really worried about investors right now. We’re worried about working-class Americans.” So I think that’s the central unknown of this policy is which constituency has more political pull. But all things being equal, stocks would go down. It might make some U.S. bonds more interesting as a trade. We don’t trade at Bonner Private Research, but this selling of hundred-year bonds that might be backed by gold might make fixed income at some level more interesting for income investors. But I don’t think we’re there yet.
Charles: Well, I certainly share your enthusiasm for gold.
That’s one of our core holdings at The Freeport Society. We’ve been long gold since we launched the newsletter, and we don’t intend to sell anytime soon. In fact, we believe every investor should have at least part of their portfolio in a permanent gold position. You can always overweight that gold position. You can speculate and go big. But whether you go big or not, you should always have at least something in gold.
I would also have a similar view with Bitcoin. My ideal allocation of Bitcoin is going to be a little bit less than my ideal allocation of gold. Bitcoin is more volatile and it doesn’t have a 5000-year track record. It’s done quite well over the track record it does have, but being launched in 2008 as opposed to being launched 5000 years ago, you can’t quite compare apples to apples there.
I do have to ask, Dan, this has been bothering me for, I can’t say bother me, this has been fixating to me for the last half hour. Why do you have the periodic table of the elements behind you?
Dan: Oh, yeah. There’s no grand story behind it. Before I moved to Wyoming where I am now, I was in Europe for a few years. I was in London during Brexit.
But prior to that, on behalf of Bill Bonner, I moved to Australia in 2005 to start a financial publishing business there, partly because that’s where the most exciting things in the world were happening. China had just entered the World Trade Organization. There was this phrase, super cycling commodities. And prior to cryptocurrencies, I will say that the most exciting stocks in the world were junior mining stocks because it was the only place where individual investors could have an informational advantage, in fact, superior advantage over institutional investors who were managing such large portfolios of money, they couldn’t put them in to exploration stocks or tiny mining stocks. These stocks were either unknown because people didn’t know what they were worth or what they were doing. And partly that’s the excitement is you don’t know if it’s going to work. And secondly, they were just too small to invest in.
I had to become familiar a little bit, a very little bit at a superficial level, with geology. And part of that was understanding how the universe is made up. So I got up this periodic table of elements, and I put it on the wall in our office in Australia so everyone understood that we were talking about the raw materials of civilization, and if we wanted to research them, we needed to understand them. So that’s the story behind the map.
And I think everything’s come full circle again in some ways because the theoretical argument about the Mar-a-Lago Accords is that the dollar’s a financial instrument that facilitated American military power and financial power, but part of your power is backed by geography and the geography of where these elements come from, where your energy comes from, where the jobs come from. So I just keep it there as a reminder, and I like it aesthetically. It was a nice clean look, forced me to organize my thoughts.
Charles: Takes me back to high school. But no, I figured that periodic table might have a little something to do with gold. So I’m kind of right.
Dan: No, you’re spot on. Gold’s number 79 on the table. And all of this started with supernovas exploding.
I think that’s the other thing, as investors, we can’t control any of these things, assuming we even understand them correctly, which is a big assumption given the number of moving parts to this idea that you could manage a $29 trillion economy and revalue its currency. That’s a lot of hubris and conceit, as you pointed out. It’s like trying to turn a battleship on a dime, and we don’t control any of that.
So for us, the main thing is do we understand it correctly? Do we understand the risks correctly even if we are not sure about what the plan is, or even if there is a plan? And are we correctly positioned with the disposition of our assets between stocks, bonds, gold, real estate to, one, not lose money because we think that’s the biggest risk right now, and two, can we make money on this if we’re very precise about our understanding? But I would say for most of our readers, and because we get our investment mandate from Bill Bonner, our mandate is to not lose money for our readers. And so from that point of view, I would say the Mar-a-Lago Accords represent a major effort to change America’s trading relationship with the rest of the world. But they also represent a major risk to the value of the dollar. And that’s what we’re trying to position people for.
Charles: Makes sense. And I couldn’t agree more. Well, Dan, thanks for being on today. It was a pleasure.
Dan: Thank you. Glad to talk about it. It helped me organize my thoughts, so it was very useful to come on, and I hope your listeners and readers get something out of it too.
Charles: Yes, sir. We’d love to have you on again soon.
Dan: Okay. Thanks, Charles.
Charles: Well, to everybody watching, thanks for tuning in today. You have a lot to digest, a lot to think about over the next week.
To life, liberty, and the pursuit of wealth, this is Charles Sizemore, signing off.