Anger Stage

A strange and unexpected opinion piece has just been published in IQ magazine. I've never heard of the magazine before, but it looks like a serious opinion maker for the woke left, with focus on all sorts of woke issues. It's therefore noteworthy to see such a dramatic shift in opinion when it comes to the vaccine.

The unvaccinated are no longer blamed for killing grandma. We are instead being blamed for saying too little. It's our fault that those who shouldn't have taken the vaccine went ahead and took it anyway.

My first thought on reading about this in Zerohedge was that this had to be satire. But that would mean that IQ magazine have readers that are open to this kind of dark satire, and that doesn't seem to be the case.

Another possibility is that a clever troll managed to get this opinion piece published, which would mean that the editors found it sincere sounding. It may then just as well have been written by them themselves.

It's also possible that the magazine is part of a psyop operation to rattle the nerves of the gullible and weak minded.

The woke agenda that the IQ magazine appears to be pushing revolves around the idea that the world we live in is deeply unfair and all this unfairness is the fault of everybody else. This is perfect for the fomentation of anger, which can in turn be directed towards political opponent. It's therefore perfectly possible that the site is such a tool.

The name of the site is also a red flag. Any site that professes to be intelligent, sceptical, or woke is usually the exact opposite.

The timing of the article is interesting because it comes at a time when people are waking up to the reality of what has happened over the past three years. Justin Trudeau was recently booed and chased by an angry mob in Canada. Similar protests are appearing in England. The woke, who've been deep asleep, are about to wake up, and it's therefore important to present them with the proper enemy to target when they come round to the slow moving horror show that their lives have become.

Excess deaths are continuing on their upward trajectory. January looks set to be the worst on record. Hardly a day goes by without some celebrity sportsman dropping dead. Things are getting spooky. Like a true horror story, there are hidden clues that we're supposed to ignore, dark alleys we mustn't explore, and men we must trust with our lives for no good reason at all. What appears to be salvation at the start of the show is revealed to be a trap and all hell breaks loose.

We're seeing people waking up to this fact, and spin-doctors are therefore busy creating the new narrative. We're transitioning from denial to anger. What was but a mild irritation with the unvaccinated a year ago is now turning to rage. But it's not a given that this rage will be directed at the unvaccinated.

The article in IQ magazine seems to have been created for the express purpose of ensuring that their readers turn their anger at their unvaccinated friends and relatives. Similar stories may soon emerge in other outlets, in which case we'll know for sure that the narrative is changing. However, I very much doubt that anyone but the truly gullible will go along with this.

My prediction has been from the start that the final target of the rage that is now brewing will be the censors because they are the people that everyone can point to as the ones behind the mess we're in. Ordinary people can blame the censors, and politicians and journalists can also blame the censors.

Anger may also spill over at politicians and journalists, as seems to be happening in Canada and England. It may also spill over at the unvaccinated. But anger towards the unvaccinated will be hard to foment without some unvaccinated celebrity coming out with a big smug "I told you so" story.

As always in this kind of situations, the answer to our problems is love, the antithesis of which is fear. Things will work out well for the unvaccinated during the upcoming anger stage, provided we refrain from stoking fear and being overly smug about being right.

For those riddled with fear as they wake up to what's going on, we have to give them hope and tell them to have faith in nature, aka God. They made a mistake. They sinned. But if they repent and stop raging against God for what was ultimately their own fault, they will be fine.

As for the further trajectory of the grieving process, we'll see pleading, depression and acceptance. After anger, we'll see a lot of people turn to big pharmaceutical corporations for remedies. Once they realize that no remedy exist, there will be depression, and then finally acceptance. With denial having lasted about a year, we can expect 2023 to be the year of anger. 2024 may become the year of pleading. Depression sets in around 2025, and acceptance kicks in around year 2026.

Important in all of this is how excess deaths will develop as we move forward. If the current experiment goes the same way as previous experiments, we may see fear, rage, depression and apathy develop in parallel. If excess deaths drop off a cliff, the anger stage may pass without much notice. Only time will tell what the future holds.

Notable deaths according to Wikipedia

Hot as Hell in Brazil

My wife told me this morning that it's hot as hell in Brazil. She's following some Brazilians on social media, and they can inform us that temperatures are uncomfortably hot. That makes sense, because it's the middle of summer down there, and heat waves are to be expected.

Anecdotal complaints about hot weather are of course just that. They don't constitute reliable data beyond the local observations that they are. However, the complaints fit nicely in with stories about the Earth becoming hotter by the equivalent of five atomic bombs exploding every second.

If we are to take the experts seriously, we're clearly in trouble, and the forecast of a colder than normal winter made in early December must most certainly be null and void. So, let's see what the actual data tells us regarding this winter so far.

What we see is that there's nothing much out of the ordinary going on. The extent of snow cover was for a while higher than normal, but is now about average after having been a little less than normal for a few weeks. The only thing unusual about this winter is that the snow cover is thicker than normal by quite a lot. There's more water locked up in the snow this winter than we've had on average in the years from 1998 to 2011.

This too is no surprise. The late 1990s and early 2000s were warmer and drier than usual, at least in the places I've been monitoring: i.e. Norway and Portugal. A consequence of this is that we're currently in a dip when it comes to the size of glaciers in Norway and other places. For instance, Briksdalsbreen is completely gone. This is due to warm and dry weather some 20 to 30 years ago. But if we keep getting the thick snow covers that we've had recently, the glacier will come back over the next few decades.

Glaciers don't immediately reflect climate changes because they are both slow moving and slow to shrink or grow. The delay is typically between 20 and 30 years, so we can't look at glaciers and tell anything about the climate as it is today. They only tell us about the past. It's the thickness of the snow cover each winter that tells us what the climate is right now, and it indicates that glaciers that have disappeared are about to return.

The coming and going of glaciers is something we've known about ever since the 17th century. The Nigard glacier was all but completely gone at the start of that century. But by the end of it, the glacier had gobbled up a farm located close to the bottom of the valley. Then it retreated at a remarkably brisk pace during the 18th century, and it's now all but gone, some 370 years after it reached its maximum extent.

Consensus science these days is telling us that the CO2 content of the atmosphere, which has gone from 0.035% back in the 18th century to about 0.041% today, is causing our planet to heat up at a rate equivalent to five atomic bombs going off every second. However, consensus science up until some 40 years ago saw things differently. Climate was back then seen as something related to the sun and its cycles.

It has been known since the 17th century that our sun goes through cycles that last some 11 years. These cycles are in turn cyclical, with maximums and minimums that correlate well with the coming and going of glaciers. The consensus was therefore that there is a direct relationship between solar cycles and Earth's climate.

If we stick to this older theory, we must assume that glaciers have now reached their minimum size due to the so called modern maximum, a solar super-cycle that peaked some 20 to 30 years ago. A modern minimum looks to be in the making, with solar cycles having become less intense over the last few decades.

I'm not sure what to make of the five atomic bombs going off every second. It doesn't sound very scientific to me. At the very least, it must be some kind of measuring error. However, I do know that the data currently being collected regarding snow cover is what we should expect according to the older, and now mostly ignored, theory that links climate changes to our sun's cyclical output.

Sun

By DracoLumina17 - Own work, CC BY-SA 4.0, Link

Real vs. Nominal Prices

There's a house for sale in my old neighbourhood in Asker, Norway. The house is pretty much identical to the one I sold back in January 2017, and their asking price is 5.45 million NOK. That's up from the 4.70 million that I got for my house.

This means that the current price for my old house is up about 0.75 million NOK over the six years since I sold it. However, the NOK is down by about 50% against gold over the same period. One gram of gold was a little above 300 NOK back in 2017, and is now a little above 600 NOK.

In terms of gold, house prices in Norway are down by about 40%. My house was sold for the equivalent of almost 16 kg of gold in 2017 while a similar house sells for less than 10 kg today. I'm better off by 6 kg of gold for having sold my house back in 2017 rather than now. If we add the cost of owning a house due to taxes and fees we have to add at least one more kg of gold. The difference between owning gold over those six years relative to owning my old house in Asker is a staggering 7 kg of gold.

This illustrates the deceptive nature of nominal prices measured in fiat currencies. What looks like a decent return is in fact a sizeable loss. However, as I pointed out in this post from September last year, the size of the loss depends on the extent to which the owner used bank credit to pay for the house. If the owner was fully loaded up with debt at a low interest rate, that person would see little to no loss. It's those who finance their purchases debt free that suffer the full loss when bubbles burst, because only they had the means to own gold rather than a house. Their loss is the gold that they could have had instead of the house.

Measured in gold, house prices in Norway are on their way down. However, 10 kg for a small house in Asker is still a bubble. As pointed out in this post, also from September 2022, 2 to 5 kg of gold is a fair price range for modest houses.

To illustrate, here are the historic prices of my wife's apartment in Porto:

• 2005 - 12.7 kg
• 2014 - 2.2 kg
• 2017 - 3.3 kg (estimate)
• 2022 - 4.4 kg (estimate)

Similarly for Asker, I now have the following numbers:

• 2004 - 14 kg
• 2017 - 16 kg
• 2022 - 12 kg (estimate)
• 2023 - 10 kg

House prices in Norway, measured in gold, appear to be cratering.

Reflection in a soap bubble

By Brocken Inaglory. The image was edited by user:Alvesgaspar - Own work, CC BY-SA 3.0, Link

How to Inflate Away a Debt Bubble

Our current monetary system is based on debt. Currency is borrowed into existence in return for an obligation to pay back the currency with interest. The issuing bank does this by typing the borrowed amount into the borrower's account. In parallel, it issues a debt obligation to the borrower. This obligation is what gives the issued currency value.

When debt is paid back, the opposite happens. The debt obligation is destroyed together with the currency that it was backing.

This system works well as long as all obligations are honoured, which is only the case if investments made by borrowers make returns at or above their debt and interest payments. However, if the return on investment is below the interest rate, we end up with a problem. Currency that should have returned to the bank together with their associated debt obligations are written off as a loss. Obligations are removed but the currency remains in circulation. A portion of the circulating currency is no longer backed by debt obligations, and the currency looses its purchasing power.

Taking this from a personal level to a national level we get that a national economy must grow at least as fast as the interest rate on its collective debt in order for its currency to retain its purchasing power. If the economy grows at a rate below the interest rate, and this is mitigated by issuing more debt, we end up in a vicious cycle where the burden of interest rates becomes ever higher. If the problem is mitigated by setting interest rates lower, the currency issued will be considered cheap relative to other things, and we get price inflation. Either way, we get a weaker currency with less purchasing power.

This derives from the fact that investments are expected to grow over time. The rate at which we expect this to happen is what the interest rate needs to be for a currency to retain its purchasing power. Furthermore, economic growth has to be at or above this natural interest rate, and no amount of meddling by central bankers and financiers can alter this.

The rate at which debt is issued, together with the natural interest rate of that debt, has to mirror economic growth. Otherwise, the currency takes a hit. Issuing more debt, or artificially lowering the interest rate below its natural level, is no alternative. We have to have economic growth at or above the natural interest rate for our current system to persist. However, economic growth is currently well below the rate at which debt is growing, and purchasing power is going to suffer as a consequence.

It should be noted that neither natural interest rates nor economic growth are things that can be objectively measured without a completely free market. GDP and inflation measures are only able to estimate what the natural interest rate might be, or what the economic growth actually is. This is because both these values are based on market consensus, and a group of experts making measurements is a poor alternative to the real thing. It's therefore impossible to say exactly how much the economy is lagging debt creation or what the natural interest rate is. However, price inflation tells us that things are far from perfect.

There's only one way to save the current system without alterations, and that is by dramatically increasing productivity so that economic growth matches debt growth. Anything wasteful will have to be cut. Inefficiencies must be removed. Our entire society will have to undergo a cleansing process in which decades of waste is thrown out. But this is not going to happen. The political will is simply not there.

This means that we'll continue on the current path until things collapse under their own weight. Currencies will lose purchasing power at an accelerating rate as things get increasingly out of hand. Only then will there be political will to save whatever there's left of the system. But by that time, debt will be so enormous that there's no way to grow the economy out of the slump it's in. The only way out of the mess will be through some kind of reset.

One option will be to default on most of the debt, which would mean that the currency created through the issuance of this defaulted upon debt must also go. A new currency will be created with a conversion rate to the old currency where several zeros are removed. There also has to be a promise that the new currency will be managed more soberly than the old one. However, the trust required for this to work may not exist, in which case there needs to be some additional promise made.

The traditional promise made by issuers of currencies is that clients can convert their currency holdings into gold. That's how things worked under the classical gold standard, and there's no need to look any further for a solution to the current problem. However, this isn't going to happen any time soon because a return to a gold standard would require a lot of debt to be defaulted upon. Otherwise, holders of debt certificates will simply rush in to convert them to gold, and currency issuers will find themselves unable to pay.

Pension funds are loaded up with debt papers, and they will not be pleased if someone was to issue a decree to the effect of making all this debt null and void. A partial default is therefore more likely. Instead of defaulting on the debt, currency issuers can declare their currency linked to gold at a revised price. Instead of $1,900 per ounce, they can say that their currency is convertible to gold at $20,000 per ounce. That would prevent holders of debt papers from rushing in to convert their debt to gold. But it would also make a lot of gold owners very rich. This is therefore unlikely to happen, even if it would in fact solve the problem.

The more likely route forward is that the market will move towards the solution that policy makers are refusing to embrace voluntarily. Gold will rise towards levels where its price matches the excess debt in society. At this point, policy makers are likely to take the hint and do what they should have done anyway, namely link their currency to gold at a much higher price than what we have today, and in that way make the debt bubble go away.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link

Disappearing Investment-grade Gold

Gold coins, gold wafers and bars are becoming increasingly hard to find. My local bank used to have two pages of such gold products on display in their online store, with a total of at least thirty different products. That was some six years ago. Today, they're down to seven gold product, and with the exception of a ten gram wafer, none of them look very interesting.

This doesn't mean that the bigger, more interesting wafers and bars are unavailable. They can probably be ordered, but that would require a visit to the bank, and some patient waiting for delivery.

Local goldsmiths appear to be equally short on investment gold. They used to have coins and wafers on display together with regular jewellery, but not anymore. Only jewellery is on display.

This comes after three disappointing months for gold investors. Support at the $1670 level was broken back in September. The price fell to about $1620, where it bounced a total of three times over the next two months before coming back up above $1900 where gold is currently trading.

In dollar terms, gold has gone nowhere since early 2020. However, gold is trading at all times high in Norwegian Kroner, and gold looks again poised for a major break out to the upside. There will be fierce resistance at the $2000 and $2100 levels for sure, but there're correspondingly strong supports at the $1700 and $1600 levels.

We're stuck in a relatively narrow trading range which we will eventually escape. With physical gold apparently in short supply and the world economy a mess, the odds favour a major break out to the upside rather than to the downside.

The giant cup and handle formation that has formed in the gold chart since 2011 suggests that any breakout to the upside will send gold to about $3000.

Monthly gold chart captured January 24 2023

Forecasting Errors

Homebuilders in the US are seeing record number of cancelations, and this is happening while there's a record number of new units being built. Clearly, a lot of homebuilders got their forecasting wrong.

This is at first glance odd because it was easy to see that demand for houses would go down as a consequence of what policy makers have thrown at us lately. The decision to turn off the economy, and the prospect of surplus deaths extending for years into the future are but two red flags. So, what triggered the homebuilders to continue full steam ahead despite such icebergs floating around everywhere?

The answer to this is central bank intervention. When the politicians turned off the economy in order to save granny, central banks came in with cheap credit to make sure people kept investing as if nothing had happened. There were also stimulus checks sent out to households for people to spend and invest during the lockdowns.

This worked. People went on an investment binge, and houses were high on people's wish list. Instead of a drop in demand due to the lockdowns, there was an increase in demand due to cheap credit. Homebuilders who were initially scaling down their activities due to real world forecasts responded to the cheap credit issued by central banks by increasing their activities instead.

The central bankers saw this as proof that they had saved the economy, and policy makers saw this as proof that they can do all sorts of things without consequence because central banks can always back them up with cheap credit. They concluded that the system works as intended. Any hardship hoisted onto the public can be mitigated by central bank interventions.

Having saved the economy, central bankers could return to their regular tasks, and focus on such things as price inflation and employment. With high activity in the economy, their only issue was with price inflation which had started to take off due to an abundance of cheap credit. The solution to this minor problem would be to raise interest rates, which was exactly what they did.

But by raising interest rates, houses quickly went from affordable to unaffordable, and people started to cancel the contracts they had signed during the years of central bank induced low interest rates.

It turns out that nothing was saved. The mess that was averted by cheap credit during the virus scare is back with a vengeance. Things are far worse than they were back at the start of the virus scare because investments were made that now have to be unwound. There are malinvestments everywhere, and they all have to be flushed out in order to get the economy back on track.

But few people will understand why this is so. The homebuilders will instead be blamed for the mess in the housing industry, and the same will happen to entrepreneurs in other businesses where this same mechanism played out. Hardly anyone will point their fingers at central bankers. The mechanism employed by them is simply too complex for most people to follow.

One argument used to demonizing entrepreneurs when central bank induced malinvestment bubbles bust is that entrepreneurs should have had the good sense to steer clear of the bubble. Entrepreneurs are professionals. Their job is to look into the future and make investments based on what they see. Why then did they miss something as obvious as a massive housing bubble?

This argument makes superficial sense. It should've been clear to homebuilders that the increased demand for houses wasn't going to last. In fact, they saw this danger early on. They were scaling down their activities. Why then did they change their minds? Were they blinded by greed?

It can be further argued that any homebuilder who ignored the lockdown bubble and scaled down their activities regardless would now be in a position of advantage. These sensible homebuilders would now be awarded by their patience and good sense at a relatively low cost of two years of missed profits.

But if every homebuilder but one did the sensible thing and scaled down their activities in light of real world constraints, the one homebuilder expanding its business would have made enormous profits during the two years of lockdown mania. Central banks would have seen that the economy still had room to grow, and the low interest policy would have been continued. What lasted only two years may have lasted a decade. That's far longer than any business can stay partly dismantled before it goes out of business.

The point is that central banks lowered their interest rates for the express purpose of stimulating activity. The policy would have continued however long it would have been required in order to meet their goals. Instead of homebuilders making decisions based on real world constraints, central bankers decided to overrule their foresight by creating artificial demand.

Once the demand for houses came in at whatever level the central bankers found correct, they changed their focus, and reality came back into the market. Artificial demand vanished, and homebuilders are now stuck with inventory and projects that no-one is interested in.

Had central banks done nothing, homebuilders would've scaled down their activities during the lockdowns, which would've made it obvious to everyone that the economy had been hit hard by political meddling. However, now that central bankers have injected a few years of delay into the equation, we see the economy tank at a time when things are supposedly back to normal. The link between cause and effect has been obscured. Policy makers can therefore say that they saved us all with their lockdowns, and central bankers can say that they saved the economy. They can then turn around and point at the entrepreneurs as the culprits for the current mess.

Unfortunately for us, central banking is too complex for most people to understand, and it's therefore unlikely to be among the first institutions to be dismantled as we move out of the progressive era. We'll see a lot more damage going forward before it's clear to everyone that central banking is a scourge that has to be dismantled. In the meantime, we are best advised to keep as far away from anything related to their debt and currency creation.

Reflection in a soap bubble

By Brocken Inaglory. The image was edited by user:Alvesgaspar - Own work, CC BY-SA 3.0, Link

Gold Backed Currencies

No national currency is currently linked directly to gold. We're not on a gold standard. However, many currencies are nevertheless backed by gold. We may not be able to go into a bank and exchange our currency for gold, but we can go to a gold smith, a coin store or a bank to buy gold. Our currency is therefore backed by gold through the gold market.

Some countries may demand sales tax on gold purchases, in which case the gold market can be considered to be restricted. But as long as gold can be bought with local currency, that currency is backed by gold.

This means that the world is not all that different from when currencies were officially linked to gold. The gold backing of the dollar is still there even if Nixon declared the gold window closed back in his days.

Prudent savers used to demand gold from their banks whenever they had more currency than they felt comfortable with. Everybody knew that currency was credit, and only fools trust credit as much as real assets.

This wisdom has somehow been lost during the progressive era. The belief that government issued credit is as good as gold has been embraced despite the fact that all currencies are down more than 95% relative to gold over the past century. However, the belief in the benevolence and wisdom of government has been shattered, and a consequence of this will be that old wisdoms related to money will re-emerge.

It will again become common practice to exchange currency for gold and silver as part of a prudent savings plan, and this will happen regardless of what governments say or do. Only if they outright ban ownership of gold and silver will they be able to avoid the trend reversal. But such a ban will only serve to diminish the value of that currency in the eyes of international finance, and a ban on gold ownership is therefore an unlikely path going forward.

Gold and silver will become more common in investment portfolios, and this development will lead to an increased awareness of the dangers of credit and credit related investments. People will wake up to the fact that gold and silver are free of counterpart risk. It can also be used as an alternative to going into debt when making costly purchases.

A consequence of this will be an increased reluctance to invest into anything credit related. People will choose gold and silver over government bonds and currency saved in banks. They will increasingly save in gold and silver, and they will increasingly pay for houses and cars with savings rather than debt.

This will in turn crush anything built on the assumption that credit will be for ever expanded into the future. The appetite for debt won't be there, and no amount of credit issuance will change this. Attempts to reignite credit bubbles will merely result in gold and silver prices going up.

This won't happen over night. It will take decades to unfold. But the net effect will be that people once again will live largely debt-free lives.

Liberty

The Value of Intrinsic Utility

Value is subjective. This is easy to prove because prices are always set at levels where both the buyer and the seller are satisfied.

Prices are set above the value given by sellers and lower than the value given by buyers. The price reflects a middle-ground where both sides of the trade feel that they benefit. The price is objective, but the value is subjective.

This is central to all economic thinking, and is therefore something no-one should attempt to deny. However, it doesn't follow from this that there's no such thing as intrinsic value.

Some things are undeniably useful beyond trade while other things aren't. This has to do with utility, which we can broadly divide into into two types. One is trade, the other is intrinsic.

The intrinsic utility of things has to do with what they can be used for beyond trade. Apples have intrinsic utility because they can be consumed. Gold has intrinsic utility because it can be fashioned into jewellery, and it can be used in industry. Apples and gold have intrinsic utility.

All utility has value. Trade has value, and intrinsic utility has value. This can be objectively stated even if value itself is subjective. When something derives at least some part of its value from intrinsic utility, we can say that such a thing has intrinsic value. But if there's no intrinsic utility, there's no intrinsic value.

Bitcoin is an example of something that has no intrinsic value. It cannot be consumed and it cannot be used to fashion anything in the real world. Unlike apples and gold, there's no intrinsic utility in Bitcoin.

Intrinsic utility itself is not subjective. We cannot deny the intrinsic utility of apples and piece of metal because their intrinsic utility is independent of whether we value this utility high or low. Similarly, we cannot deny that Bitcoin has no intrinsic utility. We may value Bitcoin highly for its potential in trade, but we cannot say that there's intrinsic utility in Bitcoin because there simply is none. Only things with intrinsic utility have intrinsic value.

Hence, we can conclude that intrinsic value is real and a valid way to describe some things as opposed to other things.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link

Cloaks and Daggers

They found a bunch of classified documents in Joe's garage. I'm not sure who "they" are, but it doesn't matter. What matters is that someone outside the control of Joe and his gang went into his garage to find the documents.

Some may say that this proves that the system is working, but that's only true if we believe that a functioning government has to include agencies outside the control of elected officials. No-one elected the guys who went into Joe's garage. They are therefore an example of the sort of autonomous agents that western governments are increasingly full of.

Elected officials have close to no power. They can hardly do a thing without the approval of a myriad of bureaucrats and agents, mostly under the control of unelected figures. If an agency finds that something has to be done about an elected official, that agency's entire apparatus is set into motion in order to get this done.

When it comes to the particulars of this case, it's evident that the discovery of classified documents on Joe's private property is particularly convenient for anyone who wants to get rid of Joe, and also prevent Trump from ever running for president again. If they manage to indict Joe based on this, they can turn around and say that Trump too has to go. They are then in a position to install whoever else they find convenient at this time.

I'm not going to make any predictions based on this. There's simply too many feuding agents and agencies involved, and none of us have the insights to say who may be in a position of advantage. The outcome is never a given when it comes to this kind of fights. Joe may manage to hold onto his position, as Trump did. He may be tossed out in favour of Harris, or there may be some other outcome planned. It all comes down to what some unelected official decides after the fighting is over.

What we're witnessing is the beast described in the Bible, always at war with itself and everybody else. The only sensible way to deal with it is to stay away from it and feed it as little as possible. No election and no reform will ever kill it. Once awakened, there's no way back. Only God, aka nature, will eventually deal with it.

Mask of the beast

Mercenary Armies and their Territorial Ambitions

Russia are making some modest gains in and around the salt mining town of Soledar. This is not much of an offensive in terms of scale, so if the Russians are planning a large scale winter offensive as I've been predicting, it has yet to materialize. What we're witnessing looks more like a war of attrition, where the aim is to wear down the enemies rather than to capture as much territory as possible.

A statement made by Dmitry Utkin of the Wagner Group seems to support this idea. His motto is to "die as little as possible and win as much as possible". Their emphasis at the moment appears to be to die as little as possible. The Russians are wearing down the Ukrainians by inflicting losses in terms of material and men while keeping their own losses at a minimum.

The fact that the Wagner Group, rather than the Russian conscription army, is playing such an important role in the war is interesting in that it highlights a historic tendency when it comes to warfare. Warfare becomes over time increasingly the domain of professionals. Battles are fought using mercenary armies, and conscripts are mainly used for occupation and peace keeping.

This happened with Rome, where the Goths became increasingly important over time. It also happened in Portugal during the re-conquest, with Knight Templars becoming increasingly important. This is because warfare is a complex art, only suitable for men of a certain calibre. Conscripts are amateurs, ill prepared for the type of thinking and actions that go on during a battle, and they tend to be steamrolled by professionals who are both better prepared and better equipped than the amateurs.

The only sensible role of conscripts in warfare is to facilitate peacekeeping in occupied territories and provide logistic support for the professionals. When used directly in battle, conscripts fare badly, and are often massacred in the thousands.

Seen in this perspective, it's telling that the Russians have amassed half a million conscripts, ready to deploy into Ukraine. They are not being used directly in battle. They are simply sitting in the background, ready to move in when the dust settles. The idea may well be to never employ them in battle, unless there's a massive offensive by the Ukrainians that require the Russians to man up their defensive positions.

What's happening in Ukraine at the moment appears to follow the pattern of Rome in decline, and/or Portugal during its initial expansion. Mercenaries are becoming increasingly important. As such, it's interesting to note how mercenaries affected both Rome and Portugal in this respect. The mercenaries who started out as purely commercial ventures morphed into political ventures. It was not enough to get paid in gold. Compensation had to come in the form of territory as well.

When Rome fell, Goths took over the administration of the western part of the old empire, and we saw the emergence of modern Europe, with kings ruling different regions. Most of these kings claimed to be in some way related to the Goths.

When Portugal expanded southwards during the re-conquests, Knight Templars were rewarded with territorial fiefdoms. The Knight Templars became regional rulers under loose control by the king in Lisbon.

A similar development may well come about as we see mercenary armies like the Russian Wagner Group and the US based Blackwater become increasingly important. Eric Prince, the CEO of Blackwater, has at times expressed political ambitions, and the apparent tension between Putin and Dmitry Utkin may indicate a similar ambition.

One of the more unexpected things to unfold as we move into the new era in front of us may be the reappearance of territorial fiefdoms. If the Wagner Group proves instrumental in securing the eastern part of Ukraine on behalf of Putin, it could well be that this region falls under the political control of Dmitry Utkin, with Russia only wielding indirect control through an agreement similar to what the Knight Templars had with the king of Portugal.

Vitality and strength

By Andrea del Castagno - The Yorck Project (2002) 10.000 Meisterwerke der Malerei (DVD-ROM), distributed by DIRECTMEDIA Publishing GmbH. ISBN: 3936122202., Public Domain, Link

The Future of Education

Public education is another institution that revealed itself to be potentially dangerous to our health during the virus scare of 2020 and 2021. Much harm was wrought by the policies enacted during these years. Little kids being forced to wear masks, and college students being forced to take the vaccine, were policies that now reveal themselves to have been damaging.

The health problems caused by the state are likely to persist for years to come. Just like modern health, public education will become increasingly shunned as we move forward into the future.

There already is a preference for private schooling, and home schooling has gained popularity. This will continue, and there will be calls for less state interference in this field.

My wife and I decided to home school our son at the height of the virus insanity back in 2021, so we have some experience with this, and I think it's clear that home schooling isn't going to be the big thing going forward. It's too time consuming and demanding. Private schooling, with curriculums decided upon by the schools rather than the state is a more likely path.

Home schooling will be additional, as it mostly is today. I plan to give my son instructions when it comes to private finances. There are other things I'll discuss with him as well. This informal exchange of ideas is also education. But it's not something that can replace institutional education.

The overall trend in education will be towards the way things were done prior to the progressive era. We'll have formal education done in schools, and we'll have practical trades learned through apprenticeships. Wherever it makes sense to teach a trade on site, this will be done. Universities will only be used for knowledge that requires formal education.

Businesses may combine college courses with apprenticeships in training of young employees. This will be paid for by the businesses. Few will take a university education with no idea of what to do with it.

With less state interference in education, there will be more choice and more opportunity to streamline and custom fit education to the needs and preferences of parents and student. There won't be a single nationwide curriculum for anything. There will be schools with their own curriculums. Instead of exit exams, there will be entry exams. Colleges and universities will require potential students to prove proficiency in the subjects they are about to take on as students.

None of this will happen overnight. We're talking about trends that will take decades to unfold. But there's no lack of evidence that this is already starting to happen. Distrust in public education is widespread, and those who can afford to do so send their children to private schools.

Fireside education

By Transferred from en.wikibooks to Commons by Adrignola using CommonsHelper. Originally uploaded to en:Wikipedia in November 2006 (log) by Darentig (talk)., Public Domain, Link

Healthy Living

The year 2022 is likely to go down in history as the year we transitioned from the progressive era into a new liberal era that will be with us for a century or more. Pretty much every progressive era institution will come to an end during these years, starting with the institutions that have proven themselves most obviously harmful.

The failure of modern medicine to adequately test the COVID vaccine before its rollout is in this respect likely to be a driving force for change. If the current wave of excess deaths stay with us for years, or even decades, into the future, we'll have a constant reminder of the dangers of progressive policies in health.

Notable deaths according to Wikipedia

This will foment a popular sentiment against any kind of modern medicine, and we'll see a new kind of medicine emerge over the years to come.

The medicines of the future are unlikely to be produced solely in sterile laboratory environments. Instead, they will increasingly be based on naturally available products. There will be a return to natural remedies, with a focus on what works, rather than what some specific mineral or enzyme seems to be doing with rat tissue when viewed under a microscope. The era of chemists walking around in white robes and doing strange stuff in laboratories is going to be replaced in large part by people trading ideas regarding stuff that works.

The new paradigm will focus on things that make us feel better. If something turns out to work for a specific ailment, that something will be listed as a remedy. The more people who swear to it, the more it will be accepted as a bona fide medicine. This is opposed to the progressive idea of having experts tell us what's good for us based on tests in laboratories, an idea that culminated in the disastrous handling of the virus scare of 2020 and 2021.

As an example of how new era medicine will work, I recently started taking a pinch of cumin seeds every day in order to help my digestion. This has turned out to work remarkably well. My digestion has not only improved, I feel generally better as well. I can therefore wholeheartedly recommend this remedy to anyone prone to slow digestion.

This is a free market approach to medicine that will work well in the internet era. Everyone can voice their opinion on every ailment and related remedy, and we'll figure it out from there. The experts in white robes will be increasingly viewed with suspicion. Some will even call them quacks.

New era medicine will not concern itself much with vitamins, minerals and enzymes. It will instead focus on our general wellbeing. When it comes to food, we'll be told to focus on what tastes good and makes us feel good. Foods have to check both boxes in order to be considered healthy. Supplements and additives don't make crappy food healthy. Only good wholesome foods are health enhancing, and no amount of hocus pocus will change that.

The habit of sending blood and urine samples to medical labs will unwind too, because there's little real information to be found in this practice. What matters is not what's in these samples, but how we feel and what our lifestyle is. A lab cannot tell us any of this, but an honest talk with a new era physician will reveal all sorts of things that can be improved upon.

People live long and healthy lives, not because of the pills they ingest but because of the foods they eat and the lifestyles they live, and an honest and open discussion around this will produce better health effects than anything the progressive era has been able to come up with lately. In fact, the end of the progressive era is likely to go down in history as a period when life expectancy was reduced by quite a lot. The progressives may have had some good ideas to begin with, but they are now long overdue for a replacement.

A roast lamb dinner

By Acabashi - Own work, CC BY-SA 4.0, Link

Sportsmen in a Coal Mine

When it comes to the vaccine, it turns out that the health of sportsmen is taking centre stage once again. In less than a month, three sportsmen have keeled over for no good reason at all. One died, another had a heart attack, and a third one passed out. All of them were less than forty years old.

This is the third time sportsmen have acted as early warning signs of things to come. As early as March 2021, it was clear from readily available sports news that the vaccine doesn't work. By November 2021, it was clear that the vaccine was not only useless, but also a cause of heart trouble. Now, more than a year later, it's also clear that the trouble isn't going away. If anything, the problem is getting worse.

It remains to be seen if the three recent cases involved the booster. If they did, we can persist in our hope that the effect of the vaccine will fade over time for those who aren't taking the boosters. If not, we're looking at some serious trouble coming down our way.

One indicator to look for is the number of notable deaths recorded by Wikipedia over the next twelve months. If we come out lower than 2022 (yellow columns), we can breathe a sigh of relief. If not, we're in trouble.

Notable deaths according to Wikipedia

Ignored Insights

It happens quite often that I suddenly realize the full significance of an insight that I've had for years. I've learned something, only to ignore it for a long time before taking full advantage of the insight. I'm not sure why I have this tendency to ignore a useful insight, or why I sometimes even forget them, but they usually come back to me at moments where I let my mind go without any particular focus. A walk around town, a nap, or some other restful activity brings these insight back.

One such insight is the benefit of cumin on my digestion. I learned about this when I first met my wife some fifteen years ago. I told her I had to be careful with heavy meat dishes because my intestines can't handle them. I get all clogged up. My future wife told me then that my problem was hardly unique, and that the remedy for this problem is to mix some cumin into the food.

Sure enough, cumin did the trick. I could eat the meat dishes without any problems. But I didn't fully absorb this insight. I didn't make it a habit to include cumin in my regular diet, so when my weak digestion became increasingly weak over the years, I kept getting constipated. I had for some reason associated cumin with heavy meat dishes rather than my digestion. When I started getting constipated almost regardless of what I ate, it didn't at first dawn on me that cumin would solve this problem.

This state of ignorance on my part persisted for years until I suddenly realized that I knew the remedy to my problem all along. All I needed to do was to eat a few pinches of cumin seeds every day and my problem would go away.

Happy about this discovery, I looked up the medical benefits of cumin on the web. Now that I knew for a fact that this particular remedy works, I was curious to know what more people had to say about it.

As it turns out, several other ailments can also be cured by cumin. I'm not much affected by these other problems, so I can't tell for sure if they work, but I've noticed some improvement that may be directly or indirectly due to the cumin and its beneficial effect on my digestion.

Cumin is used quite a lot in Mexico, India and the Middle East, and apparently for good reasons. The benefits of this herb has probably been known for millennia, but modern medicine has ignored it, and so did I for more than a decade.

A roast lamb dinner

By Acabashi - Own work, CC BY-SA 4.0, Link

Ten Years of Insanity has Come to an End

Here's a piece of news that fits well with my thesis that 2022 marked the end of the progressive era.

A special kind of madness, very much in tune with the end of an era, has come to an end: Negative yielding bonds, which first appeared some ten years ago in order to prop up a dying financial order, are no longer with us.

This isn't a trivial matter, because the modern bond market is a creation of the progressive era. It's also the biggest market on the planet in terms of turnover, and it's been central in financing the excesses we see around us.

Negative yielding bonds means that money was not only free in the eyes of government bureaucrats. Debt was a money making venture. Hence, all sorts of crazy projects could be funded with no regards to profitability. The debt itself produced a surplus, so there was in effect a reward for waste.

This insanity has gone on for ten years, but it's finally at an end, and it won't return any time soon. The reason for this is that the money "earned" by the bureaucrats, was lost by the investors. Pension funds and insurance companies have been drained of capital, and there simply isn't any more money to be found. The party is over. Everyone's broke, and we have to start over.

This is the hard reality that no-one is prepared to talk about, so things are continuing as if nothing much has happened. However, it's only a matter of time before the whole system collapses, and bureaucrats will be forced to cut excesses that have been accumulating over the years.

Anything dependent on subsidies will be hit by the downturn. Paper wealth dependent on cheap credit will evaporate. Every institution introduced during the progressive era will have to prove their usefulness. If they can be shown to have caused damage, they're likely to be dismantled.

With decades of abuses and excesses, pretty much every institution has become infested with loony policies of various kinds. An awful lot of damage has been wrought, and chances are that pretty much every progressive era institution will be demolished over the decades to come.

The social contract

Waning Trust in the WHO and CCP

The virus scare of 2020 and 2021 has likely marked the end of the progressive era. It's therefore probable that the institutions most involved in the scare will be among the first to collapse as we move into a new era. Seen in that light, it's interesting to note that the WHO and the CCP are squabbling over the current COVID outbreak in China.

The whole thing is reminiscent of the arguments that were made at the start of the original outbreak in 2020:

China sends out two conflicting messages. On the one hand, they make it clear that the virus is very dangerous, with all sorts of "leaked" videos showing people dropping dead and chaos in hospitals. On the other hand, the CCP argues that everything is under control. They underpin this with numbers that are so precise that they must be fabrications.

The WHO plays the role of the sensible police man. They question CCPs numbers. They use the "leaked" videos as evidence to suggest that the virus is much worse than the CCP claims. To top it off, the WHO expresses concerns about a possible new variant that might require drastic actions.

In short, the WHO and the CCP are at it again. But people's reaction to the spectacle is different. Comment sections on articles like this one used to be full of calls for strict measures to contain the virus. Commenters nowadays are calling the bluff. The virus of 2020 was a dud. Why should some variant of it be any worse? The normal evolution of viruses is that they become less deadly over time, not more.

This is fully in accordance to Ludwig von Mises' thesis from a hundred years ago:

A social experiment cannot be run twice with the same results because people learn and adapt. The first run will yield different results from subsequent runs.

The first run of the virus scare yielded some very promising results for the totalitarians. People like Mike Ryan must have been amazed and delighted to see that even his wildest suggestions were taken seriously. When he suggested that the unvaccinated should be separated from their children, people cheered him on.

But Ryan's power to influence is no longer there. Only 4% of the population have taken the booster, so we know for a fact that most people have turned sceptical. A call for draconian measures will not generate the same enthusiasm as it did back in 2021.

When asked whether to trust the WHO or the CCP, westerners used to answer the WHO. Today, that answer is neither. The WHO and the CCP are false alternatives. Trust in these institutions are waning. In fact, trust in all institutions that have come about during the progressive era are waning, and the new era that we're currently entering will be marked by the gradual dismantling of them all.

Liberty

Latest Monkeypox Update from Wikipedia

Wikipedia has updated its monkeypox outbreak page with fresh numbers, and since Wikipedia is terrible at presenting data in a straight forward manner, I'll weigh in with the missing context.

The previous update happened on November 14, which is 50 days prior to the most recent update which happened on January 3.

The accumulated number of cases for the world on November 14 was about 79,000. The number as of January 3 was 83,943, or about 84,000 cases. This means that there have been 5,000 new cases during the 50 day period from November 14 to January 3. That's pretty much exactly 100 new cases per day, down from 1,000 new cases per day in early August, when the spread was at its most severe.

When we look at the data for Portugal, we see that the accumulative number has reached 950 cases. That's 2 more cases than on November 14. It's therefore safe to say that the outbreak was effectively over for Christmas as far as Portugal is concerned.

With 100 new cases per day worldwide, the outbreak is about to end on its own. There has been no need for special measures of any kind. Once the graph below flat-lines, the outbreak can be declared officially over.

Monkeypox, cumulative cases, linear plot

By Edouard Mathieu, Saloni Dattani, Hannah Ritchie and Max Roser (2022) - "Monkeypox". Published online at OurWorldInData.org. Retrieved from: https://ourworldindata.org/monkeypox [Online Resource] - https://ourworldindata.org/monkeypox, CC BY 4.0, Link

The Price of Wilful Ignorance

The world is a complex place. We can't know everything about it, so it makes sense to trust experts with some decisions. However, to trust experts on all decisions is a recipe for disaster. When it comes to the big decisions in life, we have to do our own research.

This will become all the more evident in the years to come, because a new era has started, with some major trend reversals. What worked in the past is therefore unlikely to do well in the future.

Much expert advice is based solely on the assumption that what worked in the past will work equally well in the future. This kind of advice has to be treated with extreme prejudice.

Also, most experts are not in fact experts on anything. They are merely repeating what they've learned from someone else. They are saying dumbed down versions of what other people have said. Rarely do these people go out and look for evidence themselves. They are lazy egocentric blowhards with no original thoughts on the subjects they pretend to understand.

To trust experts, without thinking things through and without checking for evidence, is a form of wilful ignorance, and the price to pay for this will be much greater than many can imagine.

There is for instance a widely accepted belief in credit as an engine for growth and wealth accumulation. I know many intelligent and well paid individuals who fully embrace this idea, and they are likely to suffer immensely from it over the years to come.

The reason for their trust in credit is based on the fact that credit has in fact been an engine for wealth accumulation ever since the introduction of central banking back in 1913 and thereabouts. But that was the start of the progressive era, and we are no longer in it. The new era we're entering will put such a high price on credit that the burden of it will outstrip its purported benefits, and this will come like a hammer blow at the very start, only to linger for decades into the future.

Once interest rates go above the rate of return on investments, credit becomes a burden, and we will see interest rates go much higher than most people's return on their investments. Those who are leveraged up with debt in their investments will see negative returns. But this will do little to dent people's belief in credit, and many will leverage up even more in response to their initial losses. The result of this will in turn be complete ruin and a loss of all savings.

This is how things always play out during reversals of mega-trends. So much so that there are passages about it in the Bible. The four horsemen of the apocalypse represent the four stages of a mega cycle, and the end of it is always death to those who don't correct their ways.

The ultimate price of wilful ignorance is not only financial ruin, represented by the third horseman, but death as represented by the fourth one, and it is this fourth horseman that is now appearing on the horizon.

The trick to riding a mega cycle is to correctly identify the trough and peak of it, and to act boldly on evidence rather than advice. It's rarely the evidence that is the hard part in this. What's hard is to act contrary to what has worked for decades in the past, but it has to be done in order to avoid ruin, and to ensure future success.

To ignore the warning signs that are everywhere around us, and to refuse to think things through, can be tempting, but the price of it will in many cases be economic ruin, and in some cases death. Sloth is a deadly sin for a reason. To remain in a position of danger when the world is turning against it is a great moral failing, and a lot of people are going to find this out the hard way over the years to come.

On the upside, great opportunities are ahead of us. Those who get onto the new wave can look forward to decades of smooth sailing before it's once again time to get out of dodge.

Catching a big wave

By Bengt Nyman from Vaxholm, Sweden - IMG_8762, CC BY 2.0, Link

Notable Deaths in 2022

With 2022 now past us, we can compare this first post-pandemic year with data from before and during the pandemic. The data is available on Wikipedia, so there's no point in reproducing it here. Instead, I'll present the data as a graph with three separate dataset for the 12 months of the year as follows:

Notable deaths according to Wikipedia

The blue bars are an average of 2018 and 2019. They represent the pre-pandemic numbers. The red bars are an average of 2020 and 2021. They represent the pandemic numbers. The yellow bars are for 2022.

All numbers have been adjusted for severity where young people's deaths are weighted more than old people's death. This is in order to spot diseases that target young people, and tone down diseases that target people who are expected to die soon anyway.

It's clear from the graph that 2022 has been less deadly than 2020 and 2021, but more deadly than 2018 and 2019. We are still far away from pre-pandemic levels. There appear to be some lingering long term effect from the pandemic years.

Wikipedia

CC BY-SA 3.0, Link

Damar Hamlin’s Cardiac Arrest

I had never heard about Damar Hamlin before today, when he was suddenly all over the news for having suffered a cardiac arrest live on TV while playing American Football. The 24 year old athlete passed out on the field for everybody to see, and he was only brought back to life after several minutes of emergency medical care.

This event is in line with what many vaccine sceptics have said for some time; namely that a day will come when a high profile athlete will pass out on national TV. It's therefore unsurprising that some vaccine sceptics have been quick to remind us of this. However, this is seen as grotesque opportunism by vaccine supporters, such as Philip Bump over at Washington Post.

Philip Bump claims that young people suffer cardiac arrests all the time, and that this latest event is nothing out of the ordinary, except for being the first of its kind in an NFL game since 1971. To suggest otherwise is to be out of touch with reality. Only right wing conspiracy theorists will even suggest the possibility that the vaccine might be doing more harm than good.

This illustrates a central point in my previous post. The world is becoming increasingly divided between those who cling to authority, and those who trust their own eyes and common sense. People like Philip Bump will continue to take advice from the experts. He will take the boosters as they come. He will follow expert investment advice, and he will remain confident that the state and corporate pension funds will provide for him as he grows older.

Philip Bump's article contains nothing sufficiently convincing to make a vaccine sceptic less sceptical. He's preaching to the choir. If he's right in his claim that vaccines do more good than harm, he's doing his followers a service. If he's wrong, he's doing them a disservice. Either way, it makes no difference to the vaccine sceptic.

My thesis is that people like Philip Bump will become increasingly rare to find. We've entered a new era, and it will be the sceptics and the self reliant that will thrive in the decades to come. Those who trust government and corporate entities to make good decisions on their behalf are going to suffer.

This will become increasingly obvious as we progress into the new era. People will see that the sceptics are doing better than the conformists, and the effect of this will reinforce the trend. One institution after another will crumble and fall. The medical establishment, journalists, and politicians will see their credibility erode, followed by central banks, merchant banks and other large corporate entities.

This process will take decades to unfold. But it has already started, and this latest news is an example of it. Reality is setting in, and those caught unaware will be crushed.

The social contract

Trends, Fashion and Mega-Cycles

If 2022 turns out to be the pivotal year that I suspect it was, we've now just entered a new era. The progressive era that started with the first world war has come to an end, and the 21st century, as it will be described in history books, has just started.

This should mean that trends and fashions are about to change, and some of these changes should already be visible, because some people are always a little ahead of everyone else.

To spot this, we need to have an understanding of the past era as well as a fair idea about the new era and what it will embody. If we get this right, we can in turn make prediction as to what will come in terms of opportunities, so it's well worth a few minutes of our time.

The 20th century, also known as the progressive era, saw belief in government and the efficiency of corporate business reigned supreme. Everyone was a worker, and styles and fashion reflected this. Dependency on government and corporate employment became seen as a virtue. "Trust the experts" and "safe space" were real concepts widely embraced. Nature, God and all things real were seen as inferior to ideas, to the point where people truly believed that a man could become a woman merely for wishing it to be true.

It took a century to reach the level of insanity that we've seen lately, but it was inevitable, and the reversal that we'll see will be equally inevitable. My prediction for the 21st century is that it will be similar to the 19th century in that it will be marked by a belief in all things real and tangible. Additionally, we'll see increased mistrust in government and experts. Instead of "trust the science", we'll have "trust only what you see".

This should mean that we'll see a renewed interest in elegance and robustness. Ornamental decorations on buildings may come back in style. Fashion may become more like it was in the 1940s. Cars will look more robust. The low car that relies on smooth roads will be replaced by more elevated cars that can handle mismanaged roads.

Less trust in government will mean more self reliance and reliance on hired professionals. Men's fashion will tend towards symbols of strength and self reliance. Beards and moustaches will be popular. The man-bun, not so much. Women's fashion will see a return of skirts and elegant fabrics. A mix of strength and elegance will fit well with the strong woman that will nevertheless appreciate a strong man in her life.

Imaginary things like the metaverse, NFTs and crypto-currencies will have to reconnect with reality in order to remain relevant. Everything will require something real and tangible in order to be seen as valuable. Industry and production will become increasingly relevant.

Considering how detached from reality many people are at the moment, it's clear that this new trend can go on for decades without exhausting itself. The extreme endpoint of it will tend towards a libertarian anarchy where all services are private and power hierarchies are replaced by networks of individuals and small enterprises. Large corporations will still exist, but they will be less able to rely on the state for financial and legal support.

The old era moved increasingly towards hierarchy and centralized power. The new era will likely move in the opposite direction.

Furniture

No Need for Rebalancing

Six years have passed since I sold my house in Asker, and two years have passed since I last made an assessment related to our financial progress since then. This is in tune with my philosophy of long-term investments, as outlined in my book, which holds that the key to success is to invest in mega-cycles that run for years or decades, and to ride them with little to no change in position. True to this philosophy, our investments haven't been rebalanced. They have been kept in gold, real-estate and cash.

There has been little action in the Dow/Gold ratio over these years, which means that our gold position has been equivalent to being invested in the Dow:

• Jan 2017 = 16.4
• Jan 2019 = 18.2
• Jan 2021 = 16.2
• Jan 2023 = 18.8

The Dow has outperformed gold over the last two years, but only marginally. The Dow remains below 20 ounces, which has served as critical resistance for six years running.

The same can be said about the PSI20/Gold ratio, with the PSI20 priced at about 120 grams during the past two years.

PSI20 to gold ratio

The price of our apartment in Porto has had the best run. It's up by 140% in nominal terms since 2017. Gold is up 65% by comparison. Our cash position has seen some fluctuations due to short term expenses and windfall incomes, but it's largely unchanged over the past two years.

My prediction from two years ago was that gold would outperform real-estate in Porto. That hasn't happened. Porto real-estate is up 20% in the period while gold is up around 10%.

As a result, our allocations have made the following relative moves over time:

• Jan 2017: 10 part real-estate, 20 part gold, 5 part cash - for a total of 35
• Jan 2019: 15 part real-estate, 20 part gold, 5 part cash - for a total of 40
• Jan 2021: 20 part real-estate, 30 part gold, 3 part cash - for a total of 53
• Jan 2023: 24 part real-estate, 33 part gold, 3 part cash - for a total of 60

This is a 71% increase in nominal terms over a six year period, which is more than the inflation during those years. However, the increase over the last two years has only been 13% which is roughly the same as inflation.

Looking forward two years, I expect price inflation to move gold and real-estate up against cash, with gold outperforming real-estate. Stocks may continue up in nominal terms but will lag gold. The Dow/Gold ratio is more likely to go down to 10 than up from present levels. The PSI20/Gold ratio will remain flat or go lower in tandem with the Dow.

In short, there's no need for any rebalancing at this point, even if the PSI20 is starting to look attractive.

British gold sovereign

By Benedetto Pistrucci - Own work, Public Domain, Link