Why the Boy Who Cried Wolf Was Right All Along

This is the Biggest Retirement Decision I’ve Ever Made.

Here’s the thing people miss when they talk about the fable of The Boy Who Cried Wolf: The kid was right!

Yeah, yeah, yeah… I mean, sure, he lied a few times about the wolf, and because of that people stopped listening to him. But the reality of the story—a reality Aesop fails to grasp in his jaundiced telling of the tale—is that the wolf did show up.

Maybe the real message is that the boy was just prepping the villagers, who, the boy clearly realized, were too myopic and set in their ways.

He was testing them!

And they failed.

I come to this reinterpretation of Aesop’s fable by way of a wolf I’ve been crying about for the longest time: our dear dollar.

As a currency, the buck is steering a handcart to hell.

Of course, not a lot of people want to hear that. I get it. I mean, the dollar is sort of like baseball, apple pie, and the Stars and Stripes all bound up in a green paper/linen mix. No one wants to have someone spitting on a symbol of their nation.

But that sort of head-in-the-sand cheerleader-ism doesn’t really serve a person’s finances very well.

Lots of Enron and Worldcom and Bear Stearns employees were cheerleaders of their companies back in the day, and that ended quite poorly for them.

At this stage of life, when I’m looking down a short road to the finish line of retirement, blindly cheerleading about the awe-inspiring wondrousness of America’s currency does me zero good.

Actually, it risks doing me a great deal of harm.

If I chose to willfully overlook the dollar’s clear and present danger to America and the global economy, all I would be doing is sentencing my nest egg to destruction as the dollar continues what I (and increasingly others) see as a long-term decline.

I say “increasingly others” because earlier this month, Stanley Druckenmiller said that betting on the dollar’s decline is the only high-conviction trade he believes in today amid what is the most uncertain economy and market environment he’s experienced in his 45-year career.

If you don’t know Druckenmiller, he’s a former hedge-fund demigod who helped George Soros “break the Bank of England” in 1992, when they bet that the British central bank was going to have to devalue the pound, despite British central bankers insisting they would not do that.

Soros, with Druckenmiller at his side, was right and collected $1 billion in profits ($2.3 billion in today’s dollars).

Now, I’m not going to make a billion dollars off my bet against the buck. But I do expect that the moves I’ve recently made will benefit my portfolio and my standard of living in retirement one day.

And those changes are the heart of this dispatch.

I’ve mentioned in previous dispatches that the bulk of my largest retirement account is in Swiss francs and gold. And by “bulk” I mean that it’s close to 65% of the portfolio, with the Swiss currency accounting for 45 percentage points of that.

However, a few weeks ago I reviewed that account for the first time in a while. And I realized something: I had a bundle of dollars I’d not put to work. They were just sitting there.

Well, they are not “just sitting there” today.

Every last dollar has gone to work in gold and copper.

Nearly 40% of that portfolio is now in a physical gold ETF, shares of one of the world’s leading gold miners, and shares of one of the world’s leading copper miners.

And just this week, I found another bunch of dollars sitting idle in a six-figure 401(k) that I positioned for extreme safety back in 2017. I hadn’t touched it since then.

Well, I touched it again this week.

I moved all those idle dollars into gold, more Swiss francs, and a little into an international stock index fund that will rise in value relative to a weakening dollar.

All in, my entire collection of investment and retirement accounts now has 29% in gold and nearly 33% in Swiss francs. (The gold does not include my personal holdings of gold coins stashed away in a safe deposit box.)

Some will look at that split and think it’s extreme. But like Stanley Druckenmiller, “dollar down” is my high-conviction trade for the remainder of this decade.

More accurately, “dollar crisis” is my conviction trade because of the sorry state of America’s fiscal house and the divisive chasm that permanently separates the two political parties.

Like I said, I can smell retirement in the breeze.

Just this millennium so far, America has seen tech stocks collapse… the 2008 housing crisis… a pandemic… and a bear market instigated by a Federal Reserve that clearly is throwing darts at a Ouija board. Each of those dragged down the stock market sharply. Some dragged down the bond market too.

I’ve been doing extensive research on what’s coming next… and I predict it will be sharply worse than anything we’ve seen so far this century. The dollar will be at the center of much of it. But it’s not the only crisis America is going to face.

On May 13, I’m unveiling details of a brand-new online event where I’ll share my findings with you. (As a Field Notes reader, you get a free ticket. Check your email to claim yours.) But today, I wanted to explain what I’ve been doing with my own accounts… so you know that I’ve put my money where my mouth is.

In the several crises to come, the dollar is not going to be a port in the storm… in fact, the world will very likely view the dollar as the storm itself.

So it is, then, that I’m simply not willing to risk a great deal of my wealth by cheerleading a dollar that represents a nation so inundated with debt ($31.7 trillion and rising).

I’m not willing to shoulder that risk.

I sleep better at night knowing my wealth is locked up in assets that are going to weather that dollar storm to come.

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