For those who are most interested in quick trading gains, we would overweight silver with incremental purchases. Especially for clients with precious metals IRAs, within which one can swap gold gains without a taxable consequence, you may also wish to swap gold for silver.

Across the eastern and Midwest United States, we are in the midst of Mulberry season. Mulberries are not commonly seen in markets as they are so delicate, they do not transport well. But for those who can pick them from a plethora of indigenous locations, they are a favorite fruit. Mulberries are a throwback to Americana of yesteryear. A food that you cannot get any time of the year even in this era of global transport, a pleasure that harkens to savoring the wonderful days of summer the Lord bestows upon us, and a natural sweet treat that brings joy to gatherings. If you have never had Mulberry pie, you should take this opportunity, pick some mulberries and bake a pie this upcoming weekend. But you must take advantage of this window because the opportunity to savor this incredible opportunity can be as brief as 10 days a year.

It is a golden opportunity which leads to the most extraordinary headlines out of Wall Street that we may have seen in the last decade.

The headlines I am referencing have not been the top stories, but they should be. You should forward this email to anyone you love, as the golden window of opportunity is closing, and your children and your children’s children will share your remorse if you don’t seize this extraordinary gift that is being handed to you by our government with gold and silver still being priced at these levels.

Continuing with the mulberry analogy, imagine that we just picked a basket full of mulberries and after being out in the fields all day, we bring them home and are ready to bake our long-desired mulberry pie. We know it will be a long time before the opportunity presents itself to savor this great gift. And while mulberry picking is easy, just imagine that we spent the day toiling in the hot sun to collect this treasure.

And now as we return home, we have two choices as to what to do with our mulberries. Visiting in our kitchen is Julia Child, at the peak of her effervescence and talent as America’s first great culinary television personality. With Julia are a team of instructors from the great French culinary institutes who are master pastry chefs.

But also in the neighborhood are a couple of young adults who have never made anything renowned in the kitchen and their only culinary accolade is that they passed a Home Ec course in high school.

Let’s up the stakes once more as there is relevance to the analogy - coming tonight for this summer celebration will be your three year-old grandchild, a moment that is the zenith of human enthusiasm. This precious three year-old is coming for a birthday celebration along with the child’s parents and other members of your family. Everyone is looking forward to this legendary dessert of mulberry pie.

I don’t even need to ask who you would want to bake this extravaganza for your family – Surely you would choose Julia and her French artisans.  But do you realize when it comes to your money, Americans are consistently going with the undistinguished equivalent of the neighborhood kids for their advice in finance? Choosing advisory firms and rejecting the guidance of the greatest investment minds of our generation?

It’s not important that you pay attention to every headline.

It’s critical that you pay attention to the most important headlines.

Consider these stories where America’s greatest financial minds are telling investors our portfolio allocations are misguided. America’s greatest financial minds are suddenly unifying in sounding red alert because the foundations American finance is built upon are crumbling. So too will the wealth of those who rely on their advice.

To be sure, there are many well-intentioned financial advisors trapped within advisory firms who are coerced to choose among products that are on the advisory firm’s "compliance approved" menu. 

If you listen, you can almost hear the spiel from the Advisory Management: "we rigorously diligence every investment that you choose from in order to protect clients from inappropriate investments."

The uber clear reality though is that it is in clients’ best interests to diversify assets away from a single financial firm - that is why no mature hedge fund would have only one prime broker, the institutional equivalent of having at least two financial perspectives guiding you. Professional investors know you need to diversify where your assets are held and also the perspective that guides you.

US retail investors in contrast look at their finanical advisory firms like spouses and behave as if delving into a contrarian perspective would be cheating on that spouse. Somehow the advisory firms have convinced investors of this and so many investors don’t even want to delve into the other side of an investment perspective.

Consider that Bank of America admitted last year that less than 2% of accounts run by US advisory firms have any measurable allocation to gold.

No disrespect to the salespeople hired by advisory firms, but as any credible advisor will admit, the track records of these finanical salespeople who manage client relationships cannot be compared to the track records of the most successful managers of our generation.

In recent days, the warnings from these financial titans have burst onto the summer skies like fireflies, recommending with remarkable unanimity for investors to get out of fixed income and into gold. Meanwhile retail advisory firms continue beating on their advisors to stay the course, keeping investors all into their financial products without asset or counterparty diversification. 

Consider the words of Ray Dalio, founder of what became the world’s largest hedge fund who in his writing this month went beyond just telling his readers to overweight gold. On June 3^rd he wrote:

“Early in the final stage of this big debt cycle, the market action reflects this dynamic via interest rates rising led by long term rates, the currency declining especially relative to gold.”

Dalio is keenly aware that gold, which has already risen more than 7000% since decoupling from the dollar, has lost over 95% of its purchasing power. Dalio is saying gold is poised for further appreciation relative to dollar assets, if not an acceleration, as the US currency implodes.

Investors who have minimal exposure to gold should consider adjusting their allocations and increasing their exposure to gold according to Dalio, especially if investors have notable exposure to life insurance, bonds, bond funds, CD’s, etc.

Dalio continued making another admission that should be taped to the computer monitor of every financial advisory firm employee:

“Printing money also artificially lowers interest rates.”

What Dalio is admitting here is that the government’s money printing fiasco has artificially boosted bond prices to where they are today. This means real estate is artificially and temporarily elevated at current levels and stocks are also artificially elevated at current levels.  He is saying the returns advisory firms talk about in their rear-view mirrors deserve warning labels because were it not for government bailouts, advisory returns would be far less robust to say the least. The reality that markets depend on government bailout should not be comforting to American investors.

As if that were not enough, Dalio went further, aligning with what we have highlighted for investors:

“I see the U.S. and other countries headed toward having the equivalent of economic heart attacks…Throughout history these debt cycles have occurred in virtually every country, typically several times, so there are literally hundreds of historical cases to look at. Said differently, all monetary orders have broken down and the debt cycle process I'm describing is behind these breakdowns. They go back as far as there is recorded history. This is the process that led to the breakdowns of all reserve currencies like the British Pound and the Dutch Guilder before the Pound.  In my book, I show the most recent 35 cases.”

Is anyone thinking in advisory firm compliance departments?

What Dalio is saying above is that the naïve notion that dollar denominated assets are safe does not have any historical support!  In almost 5,000 years of finanical history!

None!

What a finanical lie that Americans have bought into!

Yet advisory firms are wagering client futures on what has been impossible as if it were the only potential outcome for investors.

Just remember, investor – no one from your advisory firm is going to come back to you and give you money to make you whole from your poor allocations. The responsibility for your wealth preservation lies with you.

Dalio, whose writings are being released in conjunction with his new book, continued with Q&A. Consider these key insights that will affect every American, but which advisory firms refuse to teach their advisors (if advisory firms taught this to their advisors – client allocations would already be very different):

Q: Some people have argued that the U.S. is generally less vulnerable to debt-related problems/crises because of the dominant role of the dollar in the global economy. What do you believe those who make that argument are missing/under-appreciating?

A: If they believe this, they are missing an understanding of the mechanics and the lessons of history. More specifically, they should be examining history to understand why all prior reserve currencies ended being reserve currencies.

Hello America! Dalio is highlighting that all reserve currencies have eventually been destroyed when their nation’s debts became too large. It is insane that advisory firms are not warning clients about this.

Q: Japan—whose 215% debt-to-GDP ratio is the highest of any advanced economy—has often served as the poster child for the argument that a country can live with consistently high debt levels without experiencing a debt crisis. Why don’t you take much comfort from Japan’s experience?

A: The Japanese case exemplifies and will continue to exemplify the problem I describe, and it demonstrates in practice my theory.  More specifically, because of the high level of the Japanese government’s over-indebtedness, Japanese bonds and debt have been terrible investments. To make up for a shortage of demand for Japanese debt assets at low enough interest rates to be good for the country, the BoJ printed a lot of money and bought a lot of Japanese government debt which led to holders of Japanese bonds having losses of 45% relative to holding US dollar debt since 2013 and losses of 60% relative to holding gold since 2013. The typical wages of a Japanese worker have fallen 58% since 2013 in common currency terms relative to the wages of an American worker. 

Most countries have similar debt and deficit problems. The UK, EU, China, and Japan all do. That is why I expect a similar debt and currency devaluation adjustment process in most countries, which is why I expect non-government produced monies like gold and bitcoin to do relatively well.

What outstanding data points! Dalio is shattering the advisory firm myth that Japan has not suffered from its excessive debts. Dalio highlights gold as a critical asset for what lies ahead.

Q: How should investors navigate this risk/be positioned going forward?

A: Everyone’s financial situation is different, but as general advice, I suggest diversifying well in asset classes and countries that have strong income statements and balance sheets and are not having great internal political and external geopolitical conflicts, underweighting debt assets like bonds, and overweighting gold and a bit of bitcoin.  Having a small percentage of one’s money in gold can reduce the portfolio’s risk, and I think it will also raise its return.

If you are a steward of any wealth, realize not all investment opinions are worth even listening to, let alone acting upon. Dalio famously said to an audience of professional investors:

“If you don’t own gold, you know neither history or economics.” Ouch said the advisory firms … but don’t let our advisors know that truth or they may feel compelled to do the right thing by their clients, which would mean moving a significant portion of their wealth from the advisory platforms.

The above, not covered by mainstream media, is sufficient reflection for the year. Dalio is saying that the entire finanical advisory model is upside down. He is trying to walk the tight rope of telling investors this is a red-alert moment while not being accused of creating a panic. But he was not alone.

On the heels of the total collapse of DOGE, Jeff Gundlach, another successful bond investor whose firm oversees more than $90 billion went out of his way to highlight that gold has become a “flight to quality asset”. Gundlach is lamenting that US bonds no longer offer the security they once did and is saying that gold is not to be considered a fringe asset. He is correctly highlighting gold as an asset class for seeking safety.

Again, Gundlach’s comments should be a put-your-pencil-down moment in light of his stature and track record. Do you want to align your future with world class talent or the neighborhood kids who suggest contradictory techniques, i.e. advisory firms telling you to stay with their impaired finanical assets?

There were more perspectives that blew through the bows of America’s advisory firms.

Paul Tudor Jones, one of our generation’s most successful traders said that against the backdrop of an unpayable $37 trillion debt load, a "reckoning is coming" to investors positioned improperly.

Jones went on to point out that the Fed has been cutting rates since 2023, yet the treasury bond's yield has risen significantly in the face of these cuts, indicating a "paradigm shift" in American finance has arrived.

Indirectly supporting Gundlach’s comments that gold continues to be a flight to quality asset, Jones highlighted the opposite and said US bonds have ceased being a "legitimate flight to quality asset." 

Incredible - another luminary saying advisory models are upside down in matching risk-averse investors with assets (bonds) that are inappropriately labeled as safe.

If that were not enough, Jones suggested another part of the paradigm shift that has begun is that foreign investors have begun redeeming their US capital, meaning foreign investment money is no longer flowing into the US as it has in the past, and the dollar is declining as a result of the money leaving the US. This will further pressure the purchasing power of Americans who hold dollars.

Jones counseled increasing allocations to non-dollar investments concluding that to have a chance of overcoming the pending blistering inflation outlook for the US, investors want gold in portoflios.

There was more perspective supportive of the need to quickly adjust portfolio allocations. Daniel Oliver of Myrmikan wrote an exceptionally detailed note to investors last week highlighting this reality:

“After the great 1920s credit debauchery, for example, the stock market fell 47.9% from September 3, 1929, to November 13, 1929. It then recovered and was down only 23.0% as late as April 12, 1930, before rolling over and sinking 89.2% in nominal terms. Roosevelt had devalued the dollar from $20.67/oz to $35/oz, meaning the stock market actually fell 93.6% in real terms.”

Oliver continued highlighting the credit crisis that unfolded in the 1960’s and 70’s:

“The decline after the 1960s credit excess was even worse. The first break of the stock market, from the peak in 1967 to May 1970 saw a 35% decline in real terms before bouncing to be down only 10% by April 1971. Then the market plunged to make a false bottom, down 89% in December 1974. A swift recovery through August 1976 put the market down 65% from the top, before it made a final bottom on January 21, 1980, down 96.2% in real terms.”

Oliver then brought to mind the scope of the most recent credit correction:

“These two great credit orgies were pathetic compared to what Alan Greenspan wrought in the 1990s.That debauchery was such that even though Greenspan, then Bernanke, kept financial conditions loose after the 2000 peak, the bubble deflated in real terms anyway. It was only in 2008 that Bernanke panicked with his QE-blitz. The stock market sprang off the bottom but with much less vigor than before. It peaked in mid-2018, long before COVID; and the $5 trillion COVID QE barely got the market past its 2018 peak. The QE drug is wearing thin. What will prompt the next dose? How big will it have to be? With how much less effect?

The Austrian school of economics holds that credit levels must rise at an accelerating pace in order to maintain a credit bubble. The bubble is induced because artificially low rates deceive businessmen into thinking that more capital exists than really does. Guided by the low rates, they design and then implement a flurry of projects to exploit this capital: this is the boom, which politicians and the public crave. When it transpires that the capital was only imaginary—that the interest rate signal was defective—there is a mad scramble for resources as failure looms. Interest rates spike as businesses bid for capital. Valuations crash. This is the bust.”

The lone exception who has not admitted the crucial role gold that gold holds in portfolios  is of course Buffett. In the future, it will come to light that he was coerced to avoid talking about the necessity of gold to stave a public run on the metals and flight from banks, many of which would already be insolvent if assets were appropriately being marked to market.

Probably better than anyone, Buffett knew the unique role gold plays in finance as Buffett’s father spoke so eloquently about gold. As the wiser Buffett wrote an essay titled "Human Freedom Rests on Gold Redeemable Money”, fiat government printed money deprives individuals of independence and freedom. He concluded that if we do not have gold as our money, we will surrender our children and nation to inflation, war, and slavery.

As Buffett Sr. pointed out, don’t bet your family wealth as if at a roulette table.  Don’t bet you are going to be able to mastermind the moment when markets will top and gold will bottom as a trader – America’s finanical house is engulfed in an inferno of debt. History says that although gold carries no guarantees, as such emergencies mature, gold has successfully protected wealth.

Not all gold produces the same returns!

Know that the type of gold and silver you buy has a notable impact on your returns as well as your liquidity.

And what is the right allocation? This week Bill Fleckenstein, who is widely considered one of the best short sellers of our generation said that his current allocation is approximately 50% gold.

While surely Fleckenstein would not want that to be considered as his advice to all, it is yet another data point showing how decoupled most American allocations appear to be from the reality of what lies ahead. Fleckenstein’s allocation more than supports our work that in this millennium investors have needed approximately 25% allocations to gold to optimize portfolios with the Sharpe ratio. We will gladly share that work with clients.

This week also saw data released that central bank gold allocations are now 18% of their reserves as national banks move to protect their skins from what they are subjecting their citizens to endure.

Be aware that central banks are not buying gold derivatives and they are not allocating to gold in the financial system with advisory firms. The world’s most informed currency controllers are taking physical gold, held outside of the financial system and kept within their own borders.

In conclusion I would like to encourage amateur investors to realize you can master the basics of finance just as well as a professional, if not better. Jesus’ words have come to mind on a few occasions as it relates to observing this reality firsthand:

“O Father, Lord of heaven and earth, thank you for hiding these things from those who think themselves wise and clever, and for revealing them to the childlike.

 – Matt. 11:25 NLT

Talk with a CFA and they can’t get their heads around taking a position in gold because they can’t value its cash flows. They have missed the whole move from $200, insisting it is unnecessary. In contrast, talk with a blue collar believer and share gold’s history, namely that gold is simply a currency that governments can’t destroy with money printing, that its track record is intact over thousands of years and that it historically does well when other assets are stressed. The police officer or electrician invariably understands, essentially responding ‘That makes sense. I see why I want some of that within my portfolio.’

So, to all of those out there who are not professional investors, don’t be intimidated to push back on a professional investor - you may have an advantage over the learned as Jesus deigned into reality millennia ago. 

Call us to talk – We’ll make it sweet as Mulberry pie in June to allocate a portion of your retirement wealth or taxable wealth into gold and silver. History suggests taking the step to allocate to gold and silver held outside of the financial system is a decision that you will cherish for generations to come in your family.

Past performance is not indicative of future results.