The deficit hits a six-year high… Why Bill sued the feds over the national debt… Make this your first gold buy.… In the mailbag: “Why is this tolerated in the Land of the Free?”…

Federal debt is rising at a record pace…

In Tuesday’s Daily Cut, we told you why the lid is about to blow off the gold market.

And we promised to tell you more about the best ways to add gold to your portfolio.

We’ll get to that in a moment.

First, a quick look at one of the reasons a lot of folks choose gold “cash” over U.S. dollar “cash” – big spending by Big Government.

The feds just closed the 2018 fiscal year $779 billion in the red…

That’s nearly $1 trillion (a thousand billion dollars). And it’s the highest annual deficit in six years.

The red ink is mostly a result of the drop in corporate tax revenue, following this year’s tax cut. But a big chunk of it is due to the rising cost of servicing the debt – aka rising interest rates.

Washington’s $523 billion in debt service costs this year was the highest on record. That’s more than Belgium’s entire economic output (or GDP) this year.

It’s a big concern for Legacy Research co-founder Bill Bonner…

Bill has spent his career arguing the case for smaller government.

In the 1970s, after President Nixon severed the final link between the dollar and gold, Bill battled to stop the U.S. government from wrecking the country.

As director of the National Taxpayers Union, he was involved in two initiatives to stop this disaster from happening.

The first was an amendment to the U.S. Constitution called the Balanced Budget Amendment. Had it passed, it would have blocked the feds from running deficits outside of times of war or national emergency.

Bill also sued the feds in Bonner v. Baker. “Baker” was James Baker, who was Treasury Secretary at the time.

He did this on behalf of Will, his young son. Bill argued – and lost – that the debt was a tax on future generations, and that it should be banned.

Bill says the rising debt is an inevitable result of today’s politics…

As he told us in a recent phone interview (lifetime Bill Bonner Letter subscribers can catch up in full here)…

Nobody’s tuned in to what’s happening with the debt because the Republican Party, which is normally tuned in to that kind of thing, has been taken over.

It wasn’t just Trump who took it over. It started a long time ago in the Reagan years. Activists who thought they could spend more money to stimulate the economy took over the GOP, which was traditionally the party of conservative fiscal policy.

As long as the stock market is going up, nobody is too worried about soaring deficits. And the inflation rate is stable – about 2% or below – nobody cares about all the extra government spending.

But when inflation and interest rates start going up… and stocks start going down – like we’ve seen so far in October – the conversation will change.

The best protection is gold. Bill again…

Gold always has been – at least for 5,000 years – a bulwark and protection against all the funny things that happen in markets. But I wouldn’t be a bit surprised if Americans don’t own much gold. I suspect they’re going to learn the hard way.

But what kind of gold should you buy?

For a lot of folks, it’s a confusing menu. There’s gold bullion, rare coins, exchange-traded funds (ETFs), and gold mining stocks.

For more, I reached out to one of our go-to guys on the gold market, E.B. Tucker.

E.B. heads up our Strategic Investor advisory, where he looks past the mainstream noise to find unique opportunities for his subscribers.

He has deep connections in the resource business. Before joining Legacy Research, he co-managed a fund that invested millions of dollars in gold miners. And today, he sits on the board of directors of a gold royalty company.

As he told us, there are two reasons you don’t want to touch gold stocks until you buy some physical gold. E.B…

First, for the stability – physical gold doesn’t bounce around in price like gold mining stocks tend to do. Second, to understand what the hell you’re doing. Some people never seen an ounce of gold.

At Strategic Investor, we encourage subscribers to buy only one-ounce Krugerrand, American Eagle, Maple Leaf, or Philharmonic coins. These are simple ways to own some physical gold. You don’t start with rare, collectable coins.

If you’re interested in following E.B.’s advice, check out The Gold Book, a 48-page guide our team at Casey Research put together.

It shows you everything you need to get started as a gold investor, including a four-step checklist for finding the right coins for you… flexible storage options… and what to look for in a gold stock. Check it out here.

I (Chris) just wrapped up the gold panel at the Legacy Investment Summit here in Bermuda…

As regular readers know, the Legacy team – along with more than 330 subscribers – have gathered in the luxury Fairmont hotel in Southampton, Bermuda for the first ever Legacy Investment Summit.

And I had the pleasure of grilling Legacy analysts Dave Forest and E.B. Tucker… along with natural resource investing legend Rick Rule and Peter Hug, the head of global trading at precious metals trading house Kitco.

I’ll have more for you next week on what we discussed. But I can tell you now that all four panelists agree that the downside risk in the gold market right now is limited… and the upside potential is enormous.

So stay tuned next week for more on that…

In the mailbag: “Why is this tolerated in the Land of the Free?”…

On Tuesday, we asked: Are you buying gold or gold stocks? And we got some interesting answers.

But before we get to that… the battle between the stifling of ideas by Facebook and other Big Tech internet platforms is still a hot topic with your fellow readers…

I applaud your efforts and hope enough people can be swayed into understanding and fighting for liberty.

– Chris B.

I’m in my fifties, and finally learning to use computers and smart devices. My friends, even my wife, all say I ought to get these accounts, (Facebook and Twitter). After the breach of Facebook, and the fact they sell your information and allow other companies to mine you, I don’t think so.

As for their censorship: I am a disabled U.S. Army veteran. I took an oath to defend the Constitution of our country. By muzzling free speech, these people, especially the thief Zuckerberg, have made themselves my enemy. Why is this tolerated in the Land of the Free? Why are so many citizens of this land abhorrent of the freedoms granted to us by God and claimed in our Constitution?

There are plenty of other countries in the world where the people have no freedoms, no rights. If they want to be considered either an asset or liability owned by the State, I recommend they move there and leave the one free country alone.

– Daniel E.

I never used Facebook personally, but this guy best explains the mindset of social media today: “Torba’s Law: Any given online community that does not censor lawful speech will inevitably lean to the right, politically. Leftist ideas are grounded in emotion and thus require the censorship of all reasoned and logical counterarguments.”

– Daniel C.

Back to gold…

Yes, indeed I’m buying! However, I’ve been buying since 2014! Yep, at times it’s been painful, like this year. In 2016, I was up $180k in seven months. It was my first gold bull market. I thought you just buy, plug your nose, and hold them for the inevitable gold at the end of the rainbow. Nope. By the end of 2016, I was only up $50k.

I have dug deeper and I keep up with nearly every position and every announcement. I’m subscribed to many gold newsletters. I’m loaded and ready to ride the rocket… but this time, I’m a trader.

– Kevin M.

Thanks for all the good information. I got a jump on the metals – by about three years. I was very early but have continued to add and average down. It seems with what has been happening the last several years, only very skilled manipulation has kept the economy afloat.

I only hope the mess we are in resolves itself with minimum damage to the public, but I have my doubts. I have made good use of the education Bill Bonner, Doug Casey, and others have made available to me and my family. We may still be hurt, but we are much more prepared thanks to all of you. Thanks for the little nudge and insight.

– Windell B.

Do you own gold? Are you adding to your position? Or do you think gold still has a ways to go before we see higher prices? Write us at [email protected].



Chris Lowe
October 18, 2018
Southampton, Bermuda