Rendezvous With Destiny - by Bill Bonner

Note: The following is an excerpt of a commentary written by Bill Bonner, a legendary investor and market commentator who everyone needs to hear. The original is here. He provides some good insight and appreciation of our current times with respect to historical standards. You would be wise to consider what he says and plan accordingly.

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Rendezvous With Destiny

Cycles take time. The credit cycle, for example, can last a lifetime. The last time interest rates were this low was around the time we were born – in the late 1940s.

A complete stock market cycle, too, is surprisingly long. But we have to look at them in terms of old money – the gold-backed dollar – to see them clearly.

The last major low came in 1980. Then, it took only 1.3 ounces of gold (equal to about $700 at the statutory rate) to buy the entire Dow 30 stocks.

Twenty years later, the bull market had run its course, hitting a high of over 40 ounces of gold in 2000. That was the high-water mark for U.S. stocks. They had never hit such a high before… and never have again since.

[For more on the Dow-to-Gold ratio, click here.]

And there’s still no bottom in sight, 40 years after the last low.

Investors and the financial press applaud every up move in the stock market. “Dow 30,000,” they cheer.

But to get back to its real level of 1999 – at 42 ounces of gold to buy the Dow – it would have to go to 67,000.

Even as stocks go up in new, nominal dollars, gold goes up more, leaving them further behind.

And our guess is that this pattern will continue, too… and when the Dow finally finds its bottom – its rendezvous with destiny – it will be under 5 ounces of gold.

End of an Empire

According to Sir John Glubb, the imperial cycle lasts 250 years.

Maybe so. Maybe not. But the U.S. empire definitely seemed on the downswing after 1999. And once the cycle turns, none of the king’s horses and none of his men are able to do much about it.

That is a recurring pattern of history, too – like it or not, empires die. All of them.

We have been chronicling the many promises of the 21st century that didn’t pan out.

The dot-coms blew up in March 2000.

The Information Revolution buried us under a mountain of data.

The stock market headed down… and in real terms, is still only at half its 1999 level.

The mission, whatever it was, was never accomplished in Iraq.

The war in Afghanistan has turned into the longest ever. The U.S. military still hasn’t won a war in 75 years.

New technology failed to produce a new boom.

The most aggressive Federal Reserve response ever (to the crisis of 2008-2009) yielded only the weakest recovery on record.

The Obama election failed to heal racial wounds.

The Trump tax cut failed to increase growth.

The Trump trade wars made no appreciable improvement in America’s manufacturing sector.

And the Baltimore Ravens did not win the Super Bowl in 2020.

The seasons change, in other words… even for empires.

Disappointments accumulate.

And MAGA never had a chance.

Regards,

Bill