LAN XIN GARDENS #102, DUNHUANG – We’re in the Gobi Desert. Today, we walked into the sand dunes. Here are the kids playing in the sand…
Miles (9), Penny (7), and Dusty (11) exploring the Gobi Desert
Greetings from China. My family and I are traveling around the planet, staying in budget hotels and backpacker hostels, living out of a suitcase, and using public transport.
We’re currently traveling the Silk Road. Tonight, we’re in a town called Dunhuang, an oasis in the desert and a trading post with more than 2,000 years of history.
Here’s a trading caravan setting off on a grueling journey across the desert, loaded with spices, gold, and silk…
Just kidding. These are tourists on a camel tour.
Not much has changed in 2,000 years… yet so much has…
This trip was completely unplanned and spontaneous. We threw out everything and left Delray Beach 16 months ago, like fugitives. We’ve been “winging it” ever since.
All we need is a clean room with at least three beds, a hot shower, an air conditioner, and fast Wi-Fi (more on this last point in the mailbag below).
We’ve traveled across Europe, Africa, the Middle East, India, Thailand, Vietnam, and now China. We’ve almost always been able to find a room for less than $30 a night. (Tonight, for example, we’re staying in a three-bedroom Airbnb apartment for $27 a night.)
We will complete the circle in two months. And now that our trip is almost finished, we have to start thinking about our plans for next year and beyond…
The first thing we’ll do is visit our families. The kids haven’t seen their grandparents in a while.
Then we’ll go to Baltimore. I’m going to hang out with Bill Bonner, Porter Stansberry, and Dan Denning for a bit…
But what will we do after that?
We don’t even have a short list of ideas. Argentina? Or Turkey? Or another loop around the world? We have no idea…
– Tom Dyson
P.S. We took the picture below at 4 p.m. on a warm Saturday afternoon in Dunhuang. Dunhuang is a gateway to the Gobi. It’s a popular tourist town.
This is the town center, just a few yards from the main square. On the busiest shopping street. But where are all the people?
Everywhere we go in China, we notice one thing above all: There’s barely anyone around…
Today, Tom answers your questions about gold… bitcoin… and how he keeps us up to date on his travels from out in “the middle of nowhere”…
Reader comment: Your postcards are the most cheerful and enlightening emails I get these days. So they are always the first ones I open up. They contain no doom and gloom, just information about what is going on with ordinary people on the other side of the world.
You are also slowly educating your readers about the financial side of things, as we probably would be unaware of certain situations. Keep up the good work. Nobody does it like you do. Thank you.
Reader question: How are you posting this stuff and following what’s going on when you’re in the middle of nowhere? I understand that China has some sort of firewall blocking a lot of Western sites…
Tom’s response: The internet is fast, and there’s 4G and 5G everywhere, even in the middle of the desert. But it’s a giant headache for us to use the internet because there’s a firewall that blocks many of the sites and apps we like. For example, we can’t use Google, Gmail, Google Maps, Google Chrome, or any of our favorite news and social media sites. WhatsApp and Facebook Messenger don’t work, either.
The only way to get around it is to launch a VPN, which is an app on our phones and iPads that tricks the censors into thinking we’re not in China and lets us get outside the firewall. The trouble is, the VPN is temperamental. Often, it doesn’t work, and when it does work, the internet is painfully slow. I’ve wasted hours fiddling with it to get these postcards out.
Reader question: What is it like to grocery shop? Can you prepare your own meals in these hostels (borrow cookware), or are most of your meals at restaurants or takeaways?
Tom’s response: If you travel around the world, you’ll stay in four types of accommodations… hotels, hostels, homestays, and Airbnb apartments. Only Airbnb apartments come with a kitchen.
The thing we’ve found is, in Europe, it was cheaper to go to the supermarket. But in Africa, India, and the Far East, it’s much cheaper and easier to buy food from a restaurant or a street vendor than it is to go to a supermarket and bring it home.
Supermarkets are for rich people and foreigners, and they’re usually empty. Everything’s packaged, branded, and refrigerated. The locals go to the market and buy from traders.
Reader comment: I read Postcards From the Fringe every time I can! Thank you for sharing it with us. How do I buy gold? I am a total beginner.
Tom’s response: To all my readers, I say: Start by buying some gold coins. Or some silver bars. Stash them in a sock drawer.
Or, if you want to buy gold online, you can buy shares of a gold exchange-traded fund (ETF). There are a few of them, but this wouldn’t be my preference. I like physical gold most of all.
I also wouldn’t worry about gold mining stocks for now.
I’ve written this many times, but successful investing and speculation is about achieving dominion over your emotions. The gold bull market will be a wild and volatile ride. It’ll try to throw you off every once in a while. The stronger your seat, the better off you’ll be.
Sock-drawer gold first, online gold second, mining stocks only for those with total conviction in this idea.
Reader question: Would you buy bitcoin instead of gold?
Tom’s response: Bitcoin is an emerging technology that just came through a buying mania and then a bust. My gut feeling tells me the bear market has further to go.
I could easily be wrong about this. But the problem is, I don’t have the conviction in it I’d need to take a big position. If I bought today, I’d be worried I was buying at the top and I’d be what the pros call a “weak hand.” Never a good place to be. So I’m staying away.
But to anyone who has unwavering conviction bitcoin is a great buy at $8,000 per bitcoin, I’d say go for it.
Bitcoin shares some of the qualities of gold, so I understand why you asked the question. But it doesn’t have the one quality I’m looking for now.
That is, I need a safe place to keep our money out of harm’s way while the valuations bear market (which I wrote about here) runs its course.
Reader question: The Dow-to-Gold ratio can change with stocks falling or gold rising or some combination of the two. Once below 5, are you back in stocks regardless of how the move was achieved?
For a perhaps extreme example, what if stocks fall only a little, but gold zooms higher in a mania phase to bring the ratio below 5?
Tom’s response: Yes, I’m going back into stocks at a Dow-to-Gold ratio below 5 regardless of how the ratio arrives there.
The nominal prices of the Dow and gold are almost meaningless to me. Mine is a stock-market-timing strategy. When stocks are overvalued, I go to the sidelines in gold. When stocks go back to cheap, I sell gold and buy stocks again.
So I’m watching the price of the Dow only in terms of gold… and the price of the Dow in terms of its fundamentals (earnings, dividends, Q ratio, etc.).
I’m speculating neither on gold nor the level of the Dow. But if you want my best guess, the Dow-to-Gold ratio hits 5 with gold around $4,000 an ounce and the Dow around 20,000.
Reader question: Would you agree that storing your metals in different countries, while a bit more painful to monitor and administer, gives you a bit more security and peace of mind?
Tom’s response: Yes, I would. But I’m not obsessed with finding the perfect metal storage. I’ve resigned myself to the fact that there’ll always be an element of “hide and hope” with physical gold investing. I’m okay with that.
There will always be better, safer ways of storing it. But after a certain point, the marginal benefit starts to decline, and the “headache factor” goes up.
Reader comment: Your postcards are refreshing, and it has been good to hear from you. I’m thinking I need to learn more about this repo thing. The underlying plumbing of the whole financial system? Yikes!
Tom’s response: There’s no need for you to study the funding markets. All you need to know is that the Federal Reserve is now funding the federal government’s gargantuan spending habits by expanding its balance sheet (printing money).
This might not sound like a big deal… until I tell you that, for a government, spending printed money is more addictive than nicotine, cocaine, and heroin combined.
We’ve just seen the government shoot its first hit. Self-destruction is now assured. It’s only a question of timing now. Mark these words.
As always, keep sending us your questions and comments at [email protected]. We read every one of them.