Porter and Buck welcome investing legend and best-selling author Jim Rogers for an exclusive extended interview. Jim calls in from Singapore to tell you about the first time he met Porter 20 years ago, his latest thoughts on gold, and what he sees as the “first shoe to drop” in a debt jubilee scenario. Porter asks Jim about bitcoin, cryptocurrencies, and the advanced adoption of digital payments in Asia. Jim reveals that he regrets not buying any bitcoin, and you’ll be surprised at what he thinks governments could do with cryptos. Porter asks Jim if he had to invest all his money in one type of asset, what would it be?
co-founder, Quantum Fund and Creator, The Rogers International Commodities Index (RICI)
Announcer: Broadcasting from Baltimore, Maryland and New York City, you're listening to the Stansberry Investor Hour.
Tune in each Thursday on iTunes for the latest episode of the Stansberry Investor Hour. Sign up for the free show archive at InvestorHour.com. Here are the hosts of your show: Buck Sexton and Porter Stansberry.
Buck Sexton: Hey, everybody. Welcome to this episode of the Stansberry Investor Hour. Joining us this week is the legendary investor and best-selling author Jim Rogers. Jim called into the studio from Singapore to talk to us about the first time he met Porter, his latest thoughts on gold and bitcoin, and a discussion about what shoe will be the first to drop in Porter's "Debt Jubilee" scenario.
You can still watch Stansberry's first-ever bitcoin event by going to www.stansberrybitcoin.com. You'll hear all about the latest opportunities in bitcoin and crypto assets from Tama Churchouse of Stansberry Churchouse Publishing, and get a special offer on his Crypto Capital newsletter.
We want to send our thanks to all the listeners who have been writing into the show and leaving comments on the Stansberry Investor Hour iTunes and YouTube pages. People like Rex Boyce, T. Looney, IndieDude87, and – I love this username – TaxesAreTheft. Thanks for your comments on the iTunes page in helping us build the show.
We also wanna thank listeners like Dan B., Curt St. Angelo, and JMCarp98 for tuning into the podcast on YouTube, and for giving us their feedback on the Stansberry Investor Hour YouTube channel. Your views and comments go a long way, and we love reading them all. Just search for Stansberry Investor Hour and subscribe to the show on iTunes, or YouTube, or wherever you find us in podcast land.
And of course, you can always write to us directly by sending an e-mail to [email protected] Alright, let's get started with – we'll start with what's on Porter's mind.
Porter Stansberry: So, listen, Buck. You've gotta guide me through this. I really can't keep it straight. I thought that it was the Trump campaign that was giving money to the Russians, or getting money from the Russians, or I don't remember – doing something with the Russians, but it turns out it wasn't the Trump campaign – it was the Clinton campaign.
And the FBI guy, Mr. Mueller, he is supposed to be arresting people for doing something with Russia, but instead, he's covering up what really happened with Russia, and he's arresting Manafort for laundering money or something. Can you explain any of this to me? It seems like the story has been completely inverted, and it may be – is it possible that the FBI is a fairly corrupt organization?
Buck Sexton: Oh, absolutely. Federal prosecutors at the DOJ and the FBI are not in any way immune from the kinds of politicization that you see elsewhere in the government. To your initial series of points, though, about what we've learned here, there are some facts that are very hard for the leftist Democrat media to make disappear at this point.
The biggest one is that the only people who have, in fact, given money in exchange for Russian information, meant to switch the election, meant to change the trajectory of the election, the only people who have done that, as we've now seen, are Democrat National Committee members and Hillary Clinton's campaign staff. They're the only ones who have done that.
Now, they can say they did it through what we would call in the intelligence world a "cut-out," or I think that's a pretty broad term – people use that term all over the place. They can use an intermediary for that process, but the fact of the matter is that they gave money to get info from Russians who knew they were giving information on Donald Trump, and it wasn't long ago that the media was screaming that using any foreign information was treason.
And that, by the way, is a complete misreading of the actual treason statute, as well as a whole bunch of problems with that, right? But Porter, this is really troubling. And I have to say from just the standpoint of what we've seen here, they're going after Manafort on all this stuff. You'll notice one charge that was not in the indictment. I read the whole indictment when it was released. There's nothing there about tax evasion. The main charges are mis-statements, lying to the government about this, lying to the government about that, obstruction, and failure to register as a foreign agent. That's the most they were able to bring against Manafort right now.
And unless they can nail him on conspiracy to money launder, those other charges, that's Mickey Mouse stuff, and they're going back 10 years. On the other guy, Papadopoulos, I should note, the line to the FBI, this is what happened to Scooter Libby, they said he lied to a grand jury, I don't think investigators.
But lying to the FBI is the charge that they get you with when they don't have anything else. That's actually what Martha Stewart got sent to jail for. She did an insider trade, as you well know.
Porter Stansberry: That's the number one thing. I don't think most people realize this, but if you have a deposition with an investigator that goes for all day long, it's impossible not to make a mis-statement. If someone asks you enough questions, and you answer quickly, I'm telling you, you will make a mis-statement. It has nothing to do with intentionally lying. You'll just have a memory that's actually false.
If you think about – if you go back and try to remember something that happened two or three years ago, you're gonna think you have an accurate memory of it, but you ask 10 people who were there, you're gonna get 10 different stories. And unless it's videotaped, you have no way of knowing who's telling the truth or not, and there's not necessarily any intent behind it. It's just – and police have studied this for years about how witnesses have false memories, lots of them.
Buck Sexton: You're under a lot of pressure, too.
Porter Stansberry: I just feel like this is a time when I'm watching politics where I really feel like the country is coming unglued, and wasn't it the Hillary campaign that also was involved in fraudulent debates during the Democratic primary? Wasn't the DNC feeding Hillary the answers to the questions or what the questions would be prior to the debate when they weren't doing that for the –
Buck Sexton: The acting DNC chair, Donna Brazile, sent Hillary Clinton a question she could expect at a town hall, which is what us kids would call cheating.
Porter Stansberry: Yeah, and didn't this Brazile woman, wasn't she eventually – there was another scandal involving her, too, wasn't there?
Buck Sexton: That I don't know off the top of my head, but I'll check that one out.
Porter Stansberry: I know something else happened with her – I can't remember now what it was.
Buck Sexton: She was at CNN when I was at CNN. She's the only person who ever interrupted me once to tell me to not interrupt her. That was pretty amazing. She was not an astute or adept debater, I will say.
Porter Stansberry: And then there's one other topic I gotta get to in this podcast. There was a local controversy here in Baltimore, and it just so happens that I know the people involved. And the controversy was there were two young high school students. I think one was a junior and one was a senior. These are a 16-year-old and a 17-year-old kid.
And they went to Party City, and they bought a Halloween costume from a major retailer. This Halloween costume was an orange jumpsuit so that you look like someone from the show, Orange is the New Black. See any problems so far?
One of the students, I don't recall which one, had what they call "crunk," which is the metal that sometimes urban people will put in their mouths. I don't know what it's for, and I don't know much about it, but in this case, this was just fake, if you will, crunk. Almost like Dracula teeth, but made to look like metal or something like that.
So, these kids were dressed up as people from this show, gang members, or something. And a photograph was taken of them in this outfit. Now, Buck, I saw this picture, and I don't understand what is offensive about this whatsoever. It's kids dressed up as characters from a major TV show. Period, end of story, and I've never seen the TV show. I don't know what the race of the people they are portraying is.
And I don't particularly care. I didn't see anything offensive about what they were doing at all. However, now here's where the story takes a big left turn. Someone – it's a former student of one of these private schools where these kids attend – he plays some kind of an activist role locally. He is an African-American and he is convinced that the private schools in Baltimore are racist and that – he went to these schools, by the way – and he is somehow, has a vendetta against his alma mater and the people he went to school with.
You went to school with people like this. They're people who never fit into something, and so therefore, they bash at the rest of their lives. That's this guy's role. And he's in his early 20s, 24 or 25 years old.
So, what he did was he saw this photo that someone had posted on social media somewhere of these two kids dressed up in Orange is the New Black costumes. And he put it together with another photo of someone dressed up with the word, Freddie Gray taped on the back of their orange jump suit.
Now, listen, I wanna be clear: the original kids, the 17-year-old and the 16-year-old, they didn't have anything about Freddie Gray anywhere on their costumes. That was not a part of their party. The picture of the Freddie Gray costume guy wasn't even from the same party. It wasn't even this year. It was an older picture that this activist stuck into this montage making it look like these kids had dressed up as Freddie Gray, which they did not.
That's the story. Now, this Facebook post from this black activist guy goes all around Baltimore media yesterday, creates an enormous sensation to where the private schools actually put out a statement saying that they don't condone these kinds of Halloween parties, or these kinds of costumes.
And the kids who were innocently dressed up as Orange is the New Black, they're now being suspended, and may be expelled from school. That's a serious thing when you're at a competitive high school, and you're trying to get into a good college. Now, you've got this stain on your record that for the rest of your academic career, people are going to look at you askew and wonder if you are a racist.
It's complete bulls---. It's an artifice of social media. One picture was not related to the other, except for on this person's Facebook page. It's classic propaganda, and I am shocked and appalled that the private schools involved don't stand up for their students, and tell this black activist, and tell the local media, "No, this is ridiculous behavior. This is propaganda. This guy's trying to stir up trouble and we're not gonna stand for it. And no, our students aren't gonna be punished. They were dressed up at a Halloween party. They're kids. Leave 'em alone."
Any thoughts about Halloween, Buck?
Buck Sexton: Oh, man, the politics around Halloween costumes are crazy this year, Porter. There are all these think pieces – and calling it a think piece is probably way too generous – but there are think pieces out there about how you can't let your daughter – and I'm assuming we're talking mostly here about 12-ish year olds that would wanna dress as Moana.
Moana's a Disney character, but Moana's from Polynesia, somewhere in the South Pacific, and if you dress as her, you are engaged in cultural appropriation. If you dress as her for Halloween. And what's amazing is that not only have the social justice warriors, the "SJWs" who like to make Facebook posts go viral by posting even more inflammatory content to them or whatever, not only are they saying, Porter, that you can't have – one cannot have their daughter dress as Moana, but if you then go, "Well, then my daughter will dress as Cinderella," you're actually enhancing white privilege, because you are a part of the propagation of white norms of beauty and white privilege.
So, you're actually not allowed – based on the SJWs this year – you're really not allowed to dress as anything. Maybe an animal. You can dress like an elephant, but that's Republicans. That's probably bad, too. It's like sports teams now. If you wanna have a sports team, you have to name it after a member of the animal kingdom, or else you open yourself up to –
The Vikings, I always tell people – people think that that's okay until they realize that the Vikings had an entire society built on slavery, raping, looting, and pillaging, and then they're a little less – I'm fine with them being called the Vikings. I'm just saying, you can't even come up with –
Think of a sports team that's not an animal or that's not an inanimate object, and I'll give you a problem in history that somebody will have with it. If nothing else, it's white privilege somewhere along the line. So that's the go-to.
But I'm dressing up as nothing for Halloween this year, 'cause Papa's got bills to pay, he's got work to do – I don't have time to go trick or treat. But I will put some candy out for the kids in my building.
Porter Stansberry: Well, I wanna move on. We've got a fantastic guest coming on – Jim Rogers, legendary investor, co-founder of the Quantum Fund, and strangely enough, an old friend of mine. Fantastic guy. Met me early in my career, and has just been nothing but kind and helpful to me, so I'm looking forward to the discussion.
But I just want to give one last comment about the Vikings. I don't know what role the Vikings might have played in my Nordic features, but I can tell you that it must've been a lot of goddamn fun to be like the Viking king, 'cause the world was your oyster, and for all of these Black Lives Matter people, and all of these social justice warriors, and all of these numskulls who won't stand up for the national anthem, all of those folks, don't you wish they could spend just one month back in, say, the 800s in the north of Ireland, and try to survive a Viking raid. That's something to be offended by.
These crybabies with all of their bulls--- excuses, I'm just tired of hearing about it, and I can't wait for the day where there's a new kind of Facebook – a conservative Facebook where you're allowed to make fun of people who act like jackasses without having the world beat down your door, and cry, and moan. Maybe someday.
But listen, enough of our complaints about politics and all of the whiners in the world. Let's talk about finance, and let's bring in Jim.
Buck Sexton: Jim Rogers was a Wall Street legend long before he wrote his first book, Investment Biker. In the 1970s, he made what he describes as "More money than I knew existed in the world" managing the Quantum Fund with George Soros.
Since retiring at age 37, he has invested his own funds, been a finance professor at Columbia University, hosted television programs on WCBS and CNBC, and written several more bestsellers, including Hot Commodities, Adventure Capitalist, and Street Smarts.
Time has called Rogers the "Indiana Jones of finance" after he completed 116-country, 152,000-mile overland trip, setting a Guinness World Record as he talked to businessmen, bankers, investors, and local citizens to get a better sense of each country's infrastructure and investment possibilities.
Jim is a regular contributor to Worth Magazine and a business correspondent for Fox News and CNBC. His forecasts are featured in Barron's, Fortune, the Wall Street Journal, and the Financial Times. Jim called in from Singapore to talk with Porter and this is what they had to say.
Porter Stansberry: Jim Rogers, thank you so much for joining us today on the podcast. I'm so grateful to have you here. And if I can, for just a minute, I wanna peel back the hands of time. I wanna go back – this is a personal mission for me. I wanna go back to the late-1990s in New Orleans in the United States. You were just setting up your commodity funds, your index funds, you're first really communicating about how bullish you were about commodities, and you ran into me.
I was a 25 or 26-year-old assistant analyst, and I knew nothing and nobody, and yet, we sat down and had dinner together, and you gave me some of the most important life lessons I've ever learned. And my question for you is do you have any recollection of that at all?
Jim Rogers: You know, Porter, every once in awhile, I get something right. And I said, "This kid's got it. Whatever it is." And I will tell you what I remember was there was a complicated mind, there was – even though you didn't know as much as some other people did, I knew you were curious, and complicated, and that you were gonna figure it out one way or the other.
I wish I had gotten other things as right as I had gotten you.
Porter Stansberry: That is so kind.
Jim Rogers: Women, for instance. I wish I was as good at women as I was with you.
Porter Stansberry: That is a mystery, Jim. With the publication dedicated to the markets, I think I chose the easier of the two subjects. Women or money.
Jim Rogers: Absolutely, I couldn't agree more. I've certainly been a little bit better with money than I have with – I've got a good woman now, but certainly made plenty of mistakes.
Porter Stansberry: And listen, we're gonna get to some things that benefit our subscribers in just a second, I promise. But you guys have to all understand with me what it is, a tremendous honor to speak with a legend like Jim.
One other story, Jim, I wanna run by you. I was speaking with Jim Grant the other day, and he told me a story about you, and I just wanted to verify it with a source, as a good journalist would. Jim Grant says that you were essentially the first subscriber to his newsletter back in 1983. Do you have any memory of that?
Jim Rogers: No, absolutely. I remember it extremely, extremely well. He told me he was gonna start a newsletter. I said, "I will be your first subscriber, and I'll even invest in you." I will tell you, I gave him a check. I don't know if he remembers this. I gave him a check, and he didn't cash it. He put it on the wall in a frame.
He was pleased to show it that he had an investor and that I was the first investor. But later, things started going bad, and he had to cash the check, 'cause he was running out of money. So he took it out of the frame and cashed the check. He called, and said, "I gotta cash the check." I said, "Okay."
Anyway, he cashed the check, but he was a lot smarter than I am, and he's a lot more successful than I am. A very, very good guy.
Porter Stansberry: You're very kind – you're too humble. So, one last personal question before we get to the heart of things going on. I feel certain you won't answer this question, but as a good journalist, I feel an obligation to ask. And that is, your former partner, George Soros, recently gave away the remaining bulk of his fortune to his foundation.
And in a sense, that means he's really finally retired. And I wonder, has there been any kind of reconciliation between the two of you? At this stage in your life, have you guys had a conversation? Have you had a lunch together? Has there been any kind of reproachment?
Jim Rogers: George is 87 now, soon to be 88. I have not seen nor spoken to him in – oh, I don't know – 37 years. Might as well ask me about my first wife. I don't know what he's up to. I don't know, in case I read about him in the press, but no, I haven't seen or spoken to him in a long, long time.
Porter, I can remember people in my life with whom I was extremely close. There were guys when I was in college that I was with ten times a day. Some of them I haven't seen or spoken to since. These things happen, people go their separate ways. Maybe it's not good, but I look back over my life, and one of my guys that I was unbelievably close to when I was in college, I found out the other day he had died.
And I didn't even know it. So, these things happen.
Porter Stansberry: I know they do, Jim. And it's absolutely none of my business whatsoever. I just know that in terms of the financial circles and the people that have an interest in the financial things that the two of you together are one of the greatest success stories in the financial markets, and again, it's absolutely none of my business, but I hope for the both of you that that conversation will happen.
I think it's kinda like the Beatles getting together and sharing – I don't know – a reproachment somewhat. It's none of my business. I just wanted to ask, because I know a lot of people have interest in it. Let's get into the stuff that the people are –
Jim Rogers: Well, Porter, let me just say, I'd much rather see the Beatles.
Porter Stansberry: I'm not surprised, Jim. Anyways, I just wanna say, again, that's a question that I think everyone listening just is curious about, and I appreciate you answering it honestly. Let's just move on.
So, Jim, listen, the things that people follow you for, and that you're really recognized for is your financial acumen, of course. And I just wondered – I heard an interview with you about six months ago that was on the Internet. It was broadcast everywhere from Business Insider, and you were talking about the biggest bear market of your lifetime, the biggest stock decline ever.
Are you still on the track of that? Do you think that we're heading towards a real financial calamity?
Jim Rogers: Porter, what I said was, and I'll say it again to be sure, and clear, we have always had financial problems in the markets or America or any country you wanna pick. Just the beginning of the Republic, and we will have more, and I said that the next one is going to be the worst in my lifetime, because there's so much debt.
In 2008, Porter, you remember what happened. That was because of too much debt. But now, Porter, the debt is much, much, much higher, as you well know. The next one, when it comes, is going to be the worst we've ever seen. I hasten to tell you that Janet Yellen, who's head of the Central Bank of America, says, "No, we're never going to have financial problems again."
So, if you believe Janet Yellen and the American Central Bank, you should stop listening to me right now. But my view is that when the next one comes, it's gonna be a doozy.
Porter Stansberry: I happen to agree with you, Jim, and no surprise, you've followed my work over the years. And one of the things I note is that the nature of the debt has changed. Back, let's say, 10 years ago, the debt was really focused in consumer mortgages, and today, the debt is really focused in consumer loans, and sovereign debt.
Does the nature of the borrowing raise your concerns or lessen your concerns?
Jim Rogers: No, it's raising my concerns. Let's just say – and it's not just sovereign debt as you well know. You know better than most. But that makes it even worse, because when you start having governments fail, oh my gosh, who's gonna bail us out then? You? We're all gonna call you, Porter, to bail us out.
But when you start seeing governments fail around the world, boy, that's when you're gonna have serious, serious problems in many countries and many markets. You're gonna have governments fail. You might even have countries fail when the governments themselves cannot step up and bail people out.
Porter Stansberry: Do you think, Jim, it's reasonable to expect that Japan might be the first society that we see go through this type of metamorphosis?
Jim Rogers: That's an extremely good question – Japan has staggering debt, as we all know. They have a declining population and debt is going through the roof, and Mr. _______ says he's going to do whatever it takes. He'll print as much money as it takes and he'll spend as much money as it takes. That cannot last.
It never occurred to me that it might start in Japan, but Japan is certainly going to be a big – by the way, I own Japanese shares, and I'm buying more Japanese shares today, just so you know. But if I were a 10-year-old Japanese, I would get myself an AK-47, or I would leave,because in his lifetime or her lifetime, that place is going to be a disaster.
Porter Stansberry: Very interesting. I want to move onto the virtual, crypto assets, cryptocurrencies, and I wonder if you have any opinion at all whether you should own some bitcoin or own some other crypto assets. Have you looked into this new asset class? Do you think it's all a fiction of the credit bubble or do you think there's something more to it?
Jim Rogers: I hasten to tell you, Porter, I have never bought nor sold any cryptocurrency. I wish I had. I'd be as rich as you if I had bought bitcoin back –
Porter Stansberry: Jim – by the way, that's not fair, because the very first time I interviewed you, I asked you about your net worth, and you refused to answer, so no snide comments about my net worth.
Jim Rogers: I'm sure you're wealthier than I am – as smart as you are, you gotta be. Anyway –
Porter Stansberry: That's ridiculous –
Jim Rogers: Let's go to something else. I never bought any of them, or sold any of them. As I look at them now, I read that there are 2,000 cryptocurrencies here in the last few couple years, months anyway. And if you look at the charts, many of them have gone straight up. If I didn't tell you that was cryptocurrency, if I just said there's some kind of securities, you would say, especially you with your knowledge and experience, you would say, "That's a bubble, whatever that is, it's a bubble."
And then especially if I showed you that some of them have already gone to zero in the last few months. I don't know – I know it sounds like, feels like, smells like a bubble developing – does not mean it won't be successful. Because a huge bubble in the Internet in the late '90s. You've heard of Amazon, there's some companies that have done extremely well even though that was a bubble, and even though it collapsed, it doesn't mean that there won't be successes. I don't know is my basic answer to you.
Porter Stansberry: I think that's a great answer, Jim. I don't think really – I haven't really heard an answer that's different than that from someone whom I really respect and I feel is knowledgable about the space. But there is one thing I think I would just share with you, because I think you have a curious mind, too.
Please understand I'm not trying to sell you on crypto. I have no particular interest in crypto, and I don't care one way or the other what you decide. But are you familiar with the work of Coase, the old Chicago professor of Finance and Business, for lack of a better word. I'm not quite sure what he actually taught. Have you ever heard of Coase's theorem?
Jim Rogers: I read your stuff, and I know you got a young guy who's very knowledgable and optimistic about cryptocurrency. Is this the same –
Porter Stansberry: This really has nothing to do with Tama Churchouse. You probably know Peter Churchouse's father, and they're an old Asian finance family, and that's great. I respect what Tama has done. He's on the board of a couple different of these companies, and he's very plugged in.
But my interest in them is actually not financial – it's theoretical. And it was Robert Coase, University of Chicago, back in 1937, and then again in the early '50s. He published a series of papers that he actually won a Nobel Prize for later. I'm pretty sure in 1991. But the point is, he envisioned a day when property rights would become so certain, and transaction costs could fall so low that the essential purpose of the firm, or the corporation, or the Limited Liability Company or whatever, could disappear.
And what interests me so much, and I just want to point you in this direction is this idea that you can have a functioning organization that does not have an owner, per se, is being exhibited by a lot of these new public domain software companies. No one owns the software – instead, you own a token that allows you to use the software.
It's a very different kind of model. I know you're a curious mind, and I just wanted to throw this out there for you to look into if you're curious, because this is potentially a whole new type of commerce. And by the way, Jim, I understand exactly how crazy that sounds. That's exactly bubble speak, and I'm very aware of that, and I'm very aware of the size of the credit excesses, and how much free money is sloshing around.
I think the idea that nobody owns the corporation, but people have rights to use the software, it could be the dumbest idea in the history of capitalism. But it's out there right now, and it seems to be working.
One of the crypto asset companies that has been organized this way is called Eos, and Eos, believe it or not, has sold $500 million worth of these tokens to use their software. That's a pretty big IPO.
Jim Rogers: As you know, Porter, in the history of the world, in the history of capitalism, the crazier the idea, the more likely it is to succeed some day. So, just because something sounds crazy, that doesn't put me off. That actually interests me, arouses my curiosity even more.
I don't know enough to comment on this particular situation, but I would certainly, when we hang up, I'll start to look.
Porter Stansberry: I'd be really interested, 'cause I respect you so much as a thinker, I'll follow up with an e-mail about this stuff, and I'll point you to a couple links, and I just love your take on it. It's a very interesting thing in my mind, because there's been so much capital that's been put into these new kind of electronic networks, and as you've seen Amazon take advantage of it in terms of retail space, and I've taken advantage of it as a publisher, I feel like there's a lot more that the Internet's gonna do for us, and I think we're still in the early stages of that.
I just wanna go on the record as saying, I'm not saying that anyone should buy an Eos token, and I'm not saying that anyone should buy bitcoin. I'm just saying that it is a very interesting time where there is a lot of potential that's being unlocked in this technology, and how it will all unfold is still very much unknown.
But a big part of it is gonna be what government's gonna get behind it and sanction it. I think that Asia is ahead of the rest of the world in that regard. Jim, have you seen anything in Singapore or in your travels in Asia? Nobody travels as much in China that I know as you do. Have you seen any of this crypto stuff in storefronts or in your travels in Asia?
Porter Stansberry: Yes, I've actually seen restaurants who take some of the local cryptocurrency – I don't know if they still do, but certainly a few months in the summer. I saw restaurants and shops that had signs saying, "We take X," whatever X currency happened to be. I've seen it.
But to your bigger point, or I'll try to make a point. The Internet has already changed everything we know. You are right – it's staggering. It's beyond most people's imagination, including mine, of what's going to happen. My children will never go to a bank, or a post office, or maybe even to a doctor in their lifetimes, when they're adults that is.
Everything is changing. We know the world has a money problem of various sorts. We know that everything has been changed by the computer and will be. So, yes, the computer and the Internet are going to change money as we know it. If you go to China right now, Porter, people don't have money. It's astonishing when they buy a cup of coffee, they put their phone on the thing, and there's a cup of coffee that's paid for.
They look at me pretty funny when I say, "I have some cash and I want to pay you." They say, "We don't wanna take cash. Cash is not efficient." As you know, governments don't like cash, 'cause a) it's expensive, and b) they can't control you as much if you use cash. But if you have everything on your computer, then the government will call you up one day, and say, "Mr. Rogers, you've been drinking too much coffee recently." They'll know everything you do and where you do it.
Government's like, "Get rid of cash." Everybody's going to get rid of cash, so it's all going to happen. It's all going to be on the Internet. How it evolves, I'm not smart enough. I'll have to read your publication.
Porter Stansberry: You're kind and wicket all in the same breath, a man I greatly admire.
Jim Rogers: By the way, I wanna just quickly say, we both should talk about this. Two or three other things could happen: one, governments could issue their own cryptocurrency. They could control it that way, because governments don't like any of this. They don't like gold for that reason. They want to be able to control everything you and I do, and they want to know everything.
Porter Stansberry: And by the way, I'll just enter it very quickly. China appears to be headed in that direction. They have outlawed all of the other ICOs, and they appear to be in the process of handing down a set of rules that require all cryptocurrencies to be trackable.
Jim Rogers: Well, as I say, we have to watch what governments do, 'cause governments don't like you, and they like to have all the power themselves. But the other thing, of course, is that if, God forbid, there should ever be some kind of disaster, and there's no more Internet, even temporarily, what are you gonna do? Go in your refrigerator, and you bring out your tomatoes, and you can swab them or eat 'em, but after that, you don't have any Internet, worldwide or even regional wide, you don't have any money.
In that case, I would certainly have a little silver and gold, or a few bags of sugar or something in the closet, because barter is gonna be the only way you survive.
Porter Stansberry: Jim, I'm happy to tell you personally, I just made my largest gold coin investment ever last week. I called someone who you may know – I don't know if you know or not. But his name is Van Simmons. He's a coin dealer on the West Coast, and he invented PCGS, the Professional Coin Grading System.
And I asked Van, I just said, "Hey, listen, outside of bullion coins, what's the lowest premium over spot?" And he said, "Circulated, St. Gaudens, and circulated liberties." And I said, "Send me X amount," and I don't wanna tell you X amount, because the IRS might be listening.
But I made, for me, a very large commitment to gold coins, because I actually believe what you just said. I think that sooner or later, the governments are gonna crack down on virtual currencies, and the anonymity will be lost – in which case, all the drug dealers and money launderers are gonna be stuck, and I feel like they're eventually gonna go to gold, because that's how humanity done it for, as you know, probably about 4,000 years.
So, I feel very comfortable buying these high-quality coins that have no premium over spot, and I'm not making anyone a recommendation. I'm just telling you what I did with some cash that I had.
But I wonder, Jim, what's your position on gold currently? Have you been selling gold, or buying gold, or neither?
Jim Rogers: Neither at the moment – I own a lot of gold and silver, I haven't bought any serious gold in a few years. I'm waiting for gold to go down more, at which point, I hope I'm smart enough to buy a lot more gold, because before this is over, gold is gonna go up a lot, it's gonna get very overpriced, it might even turn into a bubble.
I hope it doesn't turn into a bubble, 'cause then I'll have to sell, and I don't wanna ever sell my gold. I want my children to have my gold someday.
But no, I am a potential buyer. I have never sold any. I don't expect to sell any gold, unless and until it becomes a bubble someday.
Porter Stansberry: Jim, I have another question about tactical investing. When we might in 1998, you told a very young and impressionable young man that you didn't have to worry about prices going down, because you are never wrong. And just for context, I was asking Jim about my idea about trailing stop losses.
And I said, "When I decide something truthfully, I'm only halfway in the door. I wanna see how it goes before I step all the way in." And Jim said, very confidently, and correct me if I'm wrong, Jim, but that was approximately 20 years ago. You were a man in his mid-50s, and I was a man in his mid-20s, and you said, "That's easy, Porter. I'm never wrong."
And I just wonder, has anything changed about that? Have you grown more confident or less confident in your investment choices?
Jim Rogers: I guess you were just a little young – I was making a joke. I hope you understood that. I have made plenty of mistakes in my day. Let me tell you about my first wife, oh my god. I know that you use stop losses, your whole organization does. I'm very impressed, and some of the smartest people I know use stop losses, whatever number they use.
I have never used stop losses. I frequently wish I had, and in fact, the more I read your stuff, the more I think, "Maybe I should start using stop losses. I don't have anything to lose much by using a stop loss, and it might help me a lot."
I am listening to what you write.
Porter Stansberry: Jim, that's very kind, and I appreciate it. My follow-up question is about your commodity indexes. And we're well down the road. You were starting those when we first met, and we've now got 20 years almost of a track record with those. Would you consider those a success or would you consider those a mistake?
Jim Rogers: I don't know how you define success – they've survived. So, it means they've survived if nothing else. They have been going down in recent years, because commodities have been going down as you know. It's an index – not as if somebody's managing it. It's like the S&P – the S&P goes down, it goes down, 'cause March goes down, and vice-versa.
Indexes are always more successful than bull markets, because nobody likes to buy a bear market, as you very well know. In the sense that they've gone down, no. People have not made money, including me, in those indexes, in the recent years.
On the other hand, I will say that if you do your homework, as very few people bother to do, you'll find that my indexes have outperformed the other indexes on the upside and the downside, and I will modestly tell you just because they're better constructed, and better thought out, but who cares? They're still down. They're down less than other people.
Porter Stansberry: And listen, I ask this sincerely in the interest of learning. When I came into finance, and when I studied finance, and I looked at all the historical records, and I looked at what you had done, I'm not saying that I studied everything, 'cause that's impossible, but I studied a lot.
And it occurred to me that commodities are a really hard way to make money over the long term, because in real terms, their prices go down, whereas, corporations, although individual corporations fail, the indexes of corporations do well over time. And I always wondered about the decision you made to put your reputation and your name on an index of commodities.
I just wanna ask you straight up, would you rather have your money – if you had to invest all of your money in one type of asset, would you pick corporations or would you pick commodities?
Jim Rogers: The way you asked the question, my answer is commodities. But the reason I say that is because when you say corporations, yeah, if I could pick the right corporation. If I had bought – there's only one stock, only one company in the Dow Jones Industrial Average that has been there from the beginning. That's General Electric – none of the rest of them are still there.
So, if I had bought the stocks in the Dow Jones, 100 years ago, 125 years ago, I might not have any money at all, or very little money, unless it was all in General Electric. When you say corporations, which corporation? Tell me which one, Porter, and I'll put all my money there tomorrow afternoon.
Porter Stansberry: I bought Amazon in 1997 at $3, but I didn't tell you that when I met you in 1998, so it doesn't count.
Jim Rogers: Well, you see, I should've been paying better attention. You should have, too, you should have put all your money in Amazon, not gone into business, gone to the beach, and just watch your Amazon. Shows how smart you are.
Porter Stansberry: What I did was I sold it all after it tripled for spring break in 1998, and I took my girlfriend to the beach in Key West. Most expensive trip I've ever taken.
Jim Rogers: Well, back to my point just briefly. The S&P 500, you can't buy the S&P 500. You have to buy at least to start, you have to buy the stock. And if you bought the stocks, many of them would have been disappeared – the S&P has survived, but that's because they drop out, the losers. If something goes bankrupt, they just kick it out.
The average, the S&P Index, has done well over the last really 100 years, 90 years or so, but that's not quite the real story, because many, many companies have disappeared, gone bankrupt, etcetera, and they get replaced. So, the S&P has done well, but when you say corporations, which corp – tell me the corporations, and I'll say corporations in a minute.
Just very briefly – cotton has not disappeared.
Porter Stansberry: No, it hasn't. Cotton is still there.
Jim, I really appreciate how generous you've been with your time today, and always with me. It makes me feel wonderful just to know I have your friendship and respect, and I appreciate it very much.
I've got one last question for you, and I know you've got better things to do today in Singapore than answering my dumb questions. But I wonder, have you heard anything yet over there about the possibility of a Debt Jubilee in America or in Japan?
Jim Rogers: The possibility – well, first of all, that word means, of course anything could happen, and there's always some wacko somewhere saying, "Anything can happen." Somebody right now is saying the sun's not gonna come up tomorrow. The sun's not gonna rise in the East. Could happen, unlikely.
So yes, you do hear those things a bit, but no. To answer your question, I haven't heard a lot of serious talk about it anywhere in Asia. I occasionally see it mentioned somewhere in a publication or something. It's more likely to be something would happen in the West or in Japan, rather than Asia, because most Asians are still creditors, or even if they have debt, they don't have massive debt.
The Japanese are staggering with their debt. America's the largest debtor nation in the world, and getting higher and higher. If it's going to happen, it's going to be a place like that. But Porter, the implications are pretty staggering –
Porter Stansberry: Yes, they are.
Jim Rogers: If there's no debt – if you're a pensioner –
Porter Stansberry: You're out of luck.
Jim Rogers: What do you do?
Porter Stansberry: Yeah, you're screwed.
Jim Rogers: Out of luck. You're dead. You're bankrupt, you're starving if you're on a –
Porter Stansberry: Jim, sorry to interrupt, but have you ever heard of a man by the name of Keith Anderson? A co-founder of BlackRock. And for a while, the investment head at Soros. Keith Anderson, has that name ever come across your desk?
Jim Rogers: No, never heard of him.
Porter Stansberry: Not surprised. He's in his late 40s or early 50s. He's had a very stellar career on Wall Street. Doesn't run in the same circles that you run in, but obviously, is a co-founder of BlackRock. Has done very well. At a conference two weeks ago, it was Jim Grant's conference.
I'm sure you know of the Grant's Interest Rate Observer fall and spring conferences. This is the fall conference two weeks ago. He said unequivocally, "There will be a Debt Jubilee in sovereign Japanese debt inside three years."
Jim Rogers: Maybe we're defining "jubilee" differently, but there is no question a gigantic trauma is coming in the debt market, and many debts are going to be wiped out, whether it's by bankruptcy or military action or who knows what. There's no question about that. Debts are higher than they've ever been in recorded history. This is going to end badly.
But if he's saying that government's gonna get together, and say, "We abolish all debt, voluntarily," it could happen, but I'm skeptical. That does not mean that I don't expect a lot of debt to be wiped out –
Porter Stansberry: Of course, it has to be. We just don't know exactly how. He was saying that because the Japanese banks own all the debt that there could be some kind of machination or something that the Japanese government does to wipe it out and start over. I don't wanna speak for him – I'm just saying it was for me a pretty shocking thing to see someone who I think you would agree, you don't know him personally, and neither do I, but someone who fits the mold of a serious Wall Street institutional guy.
This is not a 10-fold hat wearing goldbug. This is a guy who co-founded BlackRock, saying that there is a sovereign nation that's gonna wipe out billions in debt in the near term. That clearly isn't priced into the market.
Jim Rogers: It's not, but as I said before, we're going to have the worst financial crisis in our lifetime because of the debt. That may be part of the factor. There is no question that the debts out there are now staggering. We've never seen the likes in the world. In Japan, they have zero interest, negative interest. If interest rates ever go up, to 2% even, it totally destroys Japan.
Porter Stansberry: Yeah, it does. I've done the math. It wipes out approximately $100 billion worth of their banking.
Jim Rogers: In the end, it'll be a whole lot worse than that. Anyway, we're going to have –
Porter Stansberry: Sorry, just to be clear, Jim. A 2% rise, a 200 basis point rise in JGB rates would wipe out, according to my math, and I'm willing to be wrong, but at least $100 billion worth – it'd be $40 billion with the big banks, it'd be $20 billion worth of the regional banks, and it'd be about $20 billion or a little bit more of the credit – what do they call those? The little local guys, the credit unions, sorry.
Jim Rogers: I defer to your arithmetic –
Porter Stansberry: But just, it's a lot of money. By the way, we're not talking about a default, Jim. We're just talking about a rise in interest rates.
Jim Rogers: No, I know. Whether it's right or not, the point is it's going to be extremely significant if and when it happened. And it's gonna cause a lot of destruction, and there's gonna be a lot of debt restructuring.
Porter, even in China, China, which had no debt for decades – nobody would lend money to Mao Zedong, are you kidding? But now, even China has debt, and you're gonna see bankruptcies in China, which is gonna shock a lot of people, including me, and I know it's coming.
You're gonna see bankruptcies, and restructuring many places – is no one going to survive? How can they survive?
Porter Stansberry: Jim, I know I told you that was the last question, but the discussion has led to one more. Can I ask you one more? Can I have two more minutes?
Jim Rogers: Yeah, sure, whatever. It's always fun talking to you.
Porter Stansberry: Thanks very much. Do you remember back in the fall of 2015, which was the last time the credit markets in the United States contracted, and you saw for a brief time, high-interest-yield debt go above 10% on average. You know what I'm talking about, looking at the Merrill Lynch average yields.
At that time, Deutsche Bank fell below $10 a share. I'm sure you remember that. It was late October 2015. And it was at that point that I think the World Central Bankers finally realized that, "Ooh, you know what? There is a cost to negative interest rates, and the cost to negative interest rates is the balance sheets and the income statements of our banks."
They took the world to the brink of collapse, and I doubt very few people realize, but I know that you're one of them, how close we came that week to a real, true, unstoppable collapse of the global banking system.
I just wanna ask you, first of all, do you remember that day? Do you remember that week? And did you think it was all unraveling then? And what do you think now? What are the odds that the central banks can negotiate an end to this fantasy monetary policy without causing a collapse of the system?
Jim Rogers: I didn't think that was the end, because I knew they still had printing presses, and credibility. Less credibility, but they still had some credibility. But, as we go forward, more and more governments, sovereigns, are losing more and more credibility, and eventually, one of them is going to say, "We cannot pay our obligations. Please somebody bail us out."
And then another one's gonna say it, and who's gonna bail us out. If it's not you, Porter, Federal Reserve. Is it gonna be the IMF? All of these institutions that we, in our minds anyway, think, "Don't worry. If the world comes to an end, the IMF can bail us out." That's balderdash. What's the pension guaranteed board in the U.S.? It's bankrupt.
Eventually, we're all gonna know, "They say they're gonna bail us out, but this time, there's no money." And whether it starts in a small place – in 2007, Isen went bankrupt. Most people didn't know there was an Isen, much less that it could go bankrupt, and paid no attention.
But then Ireland went bankrupt, and then Northern Rock. Most people never heard of – they're a big savings company in the U.K. – went bankrupt. And then of course, Bear Stearns went bankrupt, and then, oh my gosh, Lehman – by the time Lehman Brothers went bankrupt, we all knew there was a problem.
That's the way it's going to evolve again the next time, and I don't know where it's gonna start, but I know it's gonna happen.
Porter Stansberry: Listen – just for the rare chance that you get to call your shot, where would you say the number one – your best bet. What blows up first? And listen, Jim, I understand. I'm ascribing zero percent significance to this, but who knows? If you get it right, you're gonna be a hero. There's no downside to taking a guess.
What's the first leveraged thing that blows up next?
Jim Rogers: Well, for all I know, it's already happened for there's something out there going bankrupt, or has gone bankrupt you and I haven't paid attention to. My point is –
Porter Stansberry: I doubt that. I've got about 50 people that just do that. You don't have a guess? What's your greatest absurdity right now in the credit markets? I'll tell you mine. My greatest absurdity in the credit markets right now is the subprime loan on a car that's already six or seven years old that has an eight-year duration and a 20% interest rate.
Jim Rogers: Yes, I know that whole sector is coming to an end, but if you have a seven year old car, and you go bankrupt, not many people are gonna call up, and say, "Oh my god, did you know Porter can't pay for his car? Can't pay for his car?" No, it's gotta be something bigger than you and your cars.
Porter Stansberry: Yeah, but if you pile $1 billion worth of those loans into a security, and Moody's rates it Triple A and sells it to 50 different financial institutions, hmm.
Jim Rogers: There is no question that's going to be as important and as dramatic as what happened in the subprime loans in 2007, 2008, 2009. No questions. Student loans, it could also be happening –
Porter Stansberry: Student loans are a disaster, Jim. You're talking about $1.5 trillion, or more than 40% of those loans are not currently being serviced, regardless of the terms. How do you afford that?
Jim Rogers: I know. And you cannot declare bankruptcy and get rid of them.
Porter Stansberry: That's a bad, bad deal.
Jim Rogers: All of this, you and I know, and you know – I'm not smart enough to know specifically – maybe it's gonna be the state of Connecticut or the state of Illinois –
Porter Stansberry: The state of Illinois, that's a good choice, Jim. How 'bout this? I'll go on the record, you can go on the record. I'm happy to say that it all blows up when the state of Illinois can't get further financing, how about you?
Jim Rogers: I would say that, too, because I just brought it up. Yes, the state of Illinois is essentially bankrupt, as we see.
Porter Stansberry: We'll put out a joint statement. Jim Rogers and Porter Stansberry agree – Jim, that would be great for you.
Jim Rogers: That would be great for me, because then I have your credibility.
Porter Stansberry: Exactly, yes. I'll cover your credibility, Jim.
Jim Rogers: Again, it's opened – you and I know it's bankrupt, but maybe all of a sudden we're gonna find out that New Jersey's bankrupt, and Connecticut's bankrupt –
Porter Stansberry: Yeah, it is.
Jim Rogers: And these others are – and they are.
Porter Stansberry: I know.
Jim Rogers: We're all watching Illinois, and no one's paying too much attention to Connecticut right now, but Hartford is bankrupt. Hartford is closing down.
Porter Stansberry: I know. I was there this summer. It was scary. It was like being in a foreign country.
Jim Rogers: Oh, yeah. I'm going there in a couple weeks.
Porter Stansberry: Don't go, Jim.
Jim Rogers: I'm afraid they'll let me in, then they won't let me out, is what I'm more afraid of. I hope the bankruptcy which sets it off is not mine and not yours.
Porter Stansberry: Geez, Jim, from your lips to god's ears. I don't know how you can go bankrupt if you don't owe any money, but I hope they don't figure out how to make people bankrupt.
Jim Rogers: I agree. I don't have any debt.
Porter Stansberry: But listen, I just wanna wind up here by just telling you how much I appreciate your time, and frankly, how much fun it is to talk with you. I'm probably gonna be calling you more often now, because you're pretty much my best interview.
Jim Rogers: I know you say that to everybody, but okay, it's always great talking to you –
Porter Stansberry: No, I don't –
Jim Rogers: And we can relive old times and old mistakes. I'm quite happy to relive old mistakes. I made plenty of them.
Porter Stansberry: Listen, if you ever find yourself in the land of your birth, please call me. I will drop everything and a hat to have lunch with you. I'd love to see you, and I hope we get together very soon.
In the meantime, boy, I tell you, Jim, let's be careful, because there may come a time in the not-too-distant future where I'm trying to reach you from a ham radio on my boat as a refugee from America, and I hope you won't send me away.
Jim Rogers: I'm very aware of what you just said – I'm aware of how true it is. I don't get to the U.S. as much these days. I'm in Asia a lot. I go to China, and Russia, and places like that a lot. But maybe we'll run into each other in the U.S. I'm a lot in the press in this part of the world, but yours is the best.
I read your stuff every time I get it, so thank you.
Porter Stansberry: That's very kind. And trust me, I won't show up on my boat empty-handed. There'll be plenty of gold down there in the keel. So –
Jim Rogers: Be sure to bring it.
Porter Stansberry: If water world erupts, I won't be a freeloader.
Jim Rogers: Well, make sure you got some food in the hole, too. We can't eat the gold – we gotta have something to eat.
Porter Stansberry: We'll do it. There's a lot of big fields around Maryland, and we'll take all my soy beans and all my corn, and we'll put it on the boat first.
Jim Rogers: Hallelujah. Very good. When the Debt Jubilee comes, I hope they wipe out other people's debt so that you and I can survive.
Porter Stansberry: I agree with you, Jim. Hey, all the best. Have a great day, and wish I was in Singapore with you.
Jim Rogers: Good enough, see you again. Thank you.
Porter Stansberry: Bye-bye.
Buck Sexton: Let's go to the mailbag. "Dear Porter and Buck – " This one comes from D.S. in Cleveland. "Enjoying the show. Keep up the good work. Porter, I'm very interested in your thoughts on the coming troubles in the bond market, and how to position ourselves to gain from it.
"One thing I don't understand and hope you can elaborate on is why rising interest rates will spell trouble for a company that has issued bonds? Once the bonds are issued, I thought the company is only obligated to pay the rate printed on the bond, i.e. the coupon rate.
"If the interest rates go up, how does this spell trouble for the company? Seems to me they're locked into the rate. The only way I see this presenting a problem is if they have to keep rolling the bonds over with new ones, or if their rate floats based on the prevailing rates.
"How does the investor benefit from the coming chaos? I'd really like to learn more about this area. Any thoughts on resources to read would be much appreciated. Best from D.S."
Porter Stansberry: That's a good question about resources to read. I really don't have off the top of my head a book about the bond market. I can't think of one. There's lots of books I've been reading about the stock market. If there's a listener out there that knows a good book about the basics of the bond market, I'd love the hat tip, the recommendation.
Send it our way, because I can't think of one. I learned bonds the hard way by experimenting with my own capital, and interviewing people, and listening to analysts like our own Bryan Beach. I love the bond market.
The bond market is vastly more complex and interesting to me than the stock market. It's also much larger – it's a much larger pool of capital. But to answer the question, why would rising interest rates threaten a company? And the answer is most of the companies that we're looking at in the bond market have way too much debt and very little capacity to generate cash flows.
So, look at a company like Sprint, for example, that owes about $30 billion in the bond market, and it hasn't made free cash flow in over a decade. So, this business cannot keep functioning without access to credit.
And as interest rates go up, that, of course, becomes more difficult to acquire. But for some reason, it also plays a role in the psychology of the marketplace. As interest rates go up, it occurs to more and more investors that "Hmm, maybe Sprint can't really afford all of this debt, and how are they gonna afford to roll it over in 2020, or 2021, or whenever the debt becomes due."
So, to answer your question specifically, no. The rising interest rates would not affect the existing coupons, but most importantly, what it impacts is the company's ability to access additional credit, and it also impacts the psychology of the bond market.
And finally, of course, as I think everyone would know, if you have a bond that has an existing coupon of let's say 7.5%, and prevailing interest rates I'll say at 4, then that bond is currently trading over par. And this is a very interesting phenomenon, because it's trading at a price that lowers the effective yield.
And so, your yield to maturity is, let's say, 4%. Well, as the prevailing interest rates go higher again, that price, the actual, nominal price of where that bond trades, will decline. So, as interest rates go up, bond prices go down. And that sets in motion a whole other series of events, kind of like when stocks start going down, people start following that trend, people start shorting those bonds, people start selling those bonds, because they're afraid the price is gonna go down more.
Again, it's a psychology and a trend action that occurs. That's why rising interest rates are so bad, particularly for risky, highly in debt companies.
Buck Sexton: This one comes in from Paul. "Porter, I bet you listen to the fake stream, I mean mainstream media. If you would listen to alternative media, like Breitbart, Drudge, InfoWars, 'cause they know there's a war on for your mind, and others, you would know how wrong you are about President Trump.
"He has done many good things for America, but you'll hear very little or nothing from the fake news about that. The reason that the other side won't work with President Trump is because they want to destroy America as we know it. Plus, they want more control, less freedom.
"President Trump's agenda is the total opposite. That's why they don't work together. It has nothing to do with what Donald Trump has said. President Trump has done more than President Reagan did, and he hasn't even been in office for a year. And you think he's going to be a one-term president.
"Seriously, stop watching fake news, Porter. Stop watching it."
"Porter, you're part of the globalists. Mind control."
Porter Stansberry: So, listen, Buck, I gotta say that I find this kind of stuff as annoying as I find the other side. The idea that Trump has done more than Reagan did is just laughable. It's absurd. The Reagan tax cuts were probably the best thing that any president has done in any country in 50 years or more.
And Trump hasn't done anything like that. Trump doesn't have a single legislative victory. I don't know what – I don't even know what this guy is thinking. And as far as the credibility of sites like InfoWars and Breitbart, there's just none.
If you hear something on InfoWars, it might be true, but far more likely, it's not. Case in point, the yogurt story. The guy – I don't know whether it was Alex Jones –
Buck Sexton: Chobani.
Porter Stansberry: I don't know if it was Alex Jones or one of his reporters. I have no idea the details of this, but the reporting they did on the Chobani story was just repulsive, just completely made up nonsense garbage. And you see that from places like that all the time.
So, when I trust media it is very rarely. It's amazing how often, if you know anything about a story, it's amazing how wrong the reporting always is, every time. It's just grossly wrong. If you know anything first-hand.
I view all forms of media as third-party sources, and I give it very little credibility. It's usually wrong, and it's always spun in a way that's designed to manipulate me. I really always look past it anyways.
But there are a couple of sources that I find to be more reliable than others. Like I said, I don't rely on it. I always try to look through it. I find the Wall Street Journal is very thorough and credible, and I find organizations like Reuters and Bloomberg to be, generally speaking, reliable about the accuracy of their stories.
Again, though, I always try to read through the story, I try to see through it, and I try to wonder, "What's the axe that the journalist is trying to grind? What's the real point? How are they trying to manipulate me with this story?"
But the folks – I agree with a lot of the things this guy is saying. But sorry – I agree with the slant that this guy is saying. But it's just a little bit paranoid to believe that the media wants to make Americans poor and more dependent on the government. I don't really think that's true.
I think the people in the government, the people in the media, want to support their friends in the government of whatever side of the aisle they're on. But I really don't think that people like Breitbart, or Drudge, or InfoWars are any different. They want to spin the stories, and spin the news in a way that supports their candidate.
And from where I sit, as a Libertarian, I think the Republicans are just as bad as the Democrats. The difference is that the Democrats are at least fun to have a drink with. The Republicans are just, most of the time, absolute a--hole bores. That's been my experience.
Buck Sexton: The whole notion of unbiased journalism, meaning that journalism as a profession, comes from people without political beliefs or proclivities that influences their work, is a new and American construct. In fact, if you go back to the founding, there were newspapers, everyone knew they were either Federalist newspapers, or anti-Federalist. There were either on one side or the other.
This has been true in the U.K. – still is true in the U.K., and there's no debate about it. You will still talk to some Democrats, though, who will say the New York Times is not a liberal paper.
Porter Stansberry: Oh, that's ridiculous.
Buck Sexton: Which is just insane.
Porter Stansberry: Yeah, it's ridiculous. By the way, I gotta tell you, there are plenty of bores on both sides of the aisle. But people used to hate Bill Clinton with the passion of 1,000 suns. I was around folks who wrote nonsense like the Arkansides, who wrote stories that they believed that Bill and Hillary Clinton were murderers, that they had dozens of people killed.
Remember the black helicopters that people claimed were following them and all this kind of nonsense. I don't believe any of it. I think it's completely ridiculous. It's sad to me that so people get wrapped up in it, and that's their whole lives. It's kind of pitiful.
Because I think, look, Bill Clinton did more to tarnish the reputation and esteem of the government than just about anybody else. He lied to the public, he assaulted the – I don't know if it was an assault or not – but he was involved with a dalliance in the Oval Office with a college intern.
So tawdry. It really lowered the esteem of the presidency. I think we should be grateful for that. I think anything that makes the government look bad is good.
Buck Sexton: And with that, we've got one more in the mailbag this week, this one coming from Matt. "Hey Porter, hey Buck. Big fan of the show, and an avid reader of Stansberry Research. I'm blown away at how often you're able to get Ariana on the podcast. Sometimes even at a moment's notice.
"Her schedule is her own, she doesn't have to answer to anybody. She can leave yoga class at the drop of a hat.
"My question is about a comment Porter made on a previous show. He mentioned that gold prices have been going up even as stocks continue to climb. I noticed this, too, a while back, and did some light research. For the last 20 years, it seems that gold and stocks have had a loose inverse relationship.
"The only period they traded together seems to be between 2003 and 2008. Care to comment further on this topic? Is there anything to take away from this?" From Matt.
Porter Stansberry: I tell you, if you print $4 trillion, don't be surprised that the prices of assets go up. That means gold, stocks, everything. And if you remember, back in '06, '07 timeframe, if you go back and do a little more deep research, you're gonna discover that the correlations on assets became incredibly tight. Everything was going up at the same pace.
And then, of course, when '08 hit, everything went down. The correlations were almost perfect. Everything fell. People forget how bad the carnage was in the gold market in the fall of '08. Between September and the end of October, I can't remember how much it was, but I think, as I recall, gold fell something like 30, 40 percent.
And I know that gold stocks, especially the junior miners, fell 80, 90 percent. And I remember it vividly, because I wrote a newsletter about what had happened in November, right after the bottom in the commodity markets back in '08. And I talked about how one of the sides that you're at a bottom in the resource space, particularly in gold stocks, is suicides.
And this is very unfortunate, but one of the most important gold speculators in the country had killed himself the day or two before at the Galleria Mall. He pulled his Hummer into the parking lot, and put a shotgun into his mouth, and pulled the trigger. It's terrible. I don't celebrate that at all. It's a tragedy, especially for the man's family.
But unfortunately, these stocks are so volatile, and the people who invest in them are such gamblers, and so emotional about their investments, that at the bottom of gold markets, you always see a spate of suicides, and it's one of the market indicators.
I was very concerned about my good friend, Doug Casey. Not that Doug is emotional about money – he's not. He doesn't give a damn about money, which is why he's such a good speculator. But I called him just to check in on him, 'cause I was worried.
And I called him up – this was late October, early November 2008, and I said, "Doug, I saw that these two guys, there was a famous gold guy that hangs out at Jim Grant's conferences a lot. He killed himself, and this other guy in Dallas killed himself."
So I called Doug, I said, "Hey, Doug, is everything all right?" Doug's like – I gotta do my Doug Casey. Hang on. This is probably gonna be a bad impersonation, but it's the only impersonation that I can do. "Oh, well, Porter, good to hear from you, I wish you talked more, yeah.
"Well, you know, my portfolio, it looks like a medieval battlefield at dusk." And I said, "I hope you're all right." He goes, "Oh, yeah, it's only money."
Anyway, I just remember that time very vividly. I remember how correlated all those assets were. Everything went up, and then everything went down. And I suspect that we'll see that again. I think a lot of people that expect gold to be a hedge in the event of a jubilee or in the event of another crisis, maybe a crisis in the bond market, I think they'll be surprised at how much negative volatility can occur.
Because when there is a financial crisis, and you get a forced sell, and you get margin calls, you get forced liquidations, like a lot of funds did in '08, you have to sell what you can. And that's what a lot of people don't understand, especially about the bond market. There is no liquidity in a lot of these bonds, but the mutual funds and the ETFs own billions, and billions, and billions, and billions, and billions of them.
If, for example, the high-yield ETF, HYG, let's say that HYG one day gets hit with $5 billion in redemptions. People sell the ETF. There is no way the ETF, in the event of a financial crisis, is gonna get liquidity. There's no way that they're gonna be able to get $5 billion out of the bond market. There's just no way.
So, how does that liquidity get generated? It doesn't. There is a little, tiny bit of a market crisis in late 2015, and one of the best reputation-wise bond funds, the Third Avenue values had to shut down and halt redemptions. I think it took them over a year to get the liquidity to pay back the investors who wanted out of that fund.
And so, think about the next step. "I have obligations that I've gotta pay, but I can't get my money out of HYG, or I can't get my money out of the bond market, so what am I gonna sell to raise liquidity that I need to make margin calls, or that I need to pay bills."
Well, I gotta go sell gold, because there is liquidity in that market. There is liquidity in treasury. So that's why, in the event of financial crisis, even assets that are going to quickly rebound in price, or even assets that are desirable in the time of crisis, like treasuries, or like gold, even those assets can experience a big liquidation, because people have to get liquidity somewhere.
And so, that's the thing to worry about, if you're using gold as a hedge, you have to still be prepared to suffer a lot of volatility.
Buck Sexton: And with that, we will close up the show for this week on the Stansberry Investor Hour. If you have a question for us, write to [email protected]. If we use your question on the show, we'll send you some Stansberry Research swag. Love us or hate us, just don't ignore us. Isn't that right, Porter?
Porter Stansberry: That is right, Buck, especially hate us because that's more entertaining. And by the way, I know that my comments about the right-wing media are gonna generate awesome flamethrowing comments.
If you love Donald Trump, and you think that InfoWars and Breitbart are leading sources of correct information, then go ahead and trash us, and let us know what idiots we are, and how right about everything Alex Jones is.
Buck Sexton: And which one of us does a better Alex Jones? I actually think it's Porter, which I'm pretty impressed, I got to say.
Porter Stansberry: "Buck, you were involved in the CIA. You tell us about the mind control, Buck. It's mind control. The CIA is still controlling you, Buck. Tell 'em what you did, Buck. Tell your globalists you went to the Grove, you go to the Grove. You're a globalist."
Buck Sexton: There you go. So, with that, I will leave you to tell us what you think about everything we talked about today –
Porter Stansberry: "Mind control, mind control."
Buck Sexton: And for next time – oh, there's mind control all right. This is it for the Stansberry Investor Hour for this week. Please do leave us a comment and subscribe, and we will see you next week.
Porter Stansberry: Bye, everybody.
Announcer:Thank you for listening to the Stansberry Investor Hour. To access today's notes and receive notice of upcoming episodes, go to InvestorHour.com and enter your e-mail. Have a question for Porter and Buck? Send them an e-mail at [email protected]. If we use your question on air, we'll send you one of our studio mugs.
This broadcast is provided for entertainment purposes only, and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear.
Stansberry Investor Hour is produced by Stansberry Research, and is copyrighted by the Stansberry Radio Network.
[End of Audio]