Back in the 1950s James Dines walked into his office at 18 Wall Street, New York, NY, and was promptly told to pack his things.
He’d been fired for making bullish gold predictions.
You see, Mr. Dines firmly believed the U.S. dollar would be devalued. This view was widely considered "treasonous" in the era of Joseph McCarthy. But he talked about it incessantly in the newsletter he wrote for financial brokerage AM Kidder & Co.
Furthermore, Mr. Dines predicted that gold would enter into a "historic bull market," rising from government-fixed levels of $35 to "over $400."
This was another unacceptable opinion of the day. It was ludicrous. It was contemptible. It was crazy. It got him fired from his job.
But it was right.
Over the next decade and a half, gold prices soared from $35 per ounce to a peak of $486. The yellow metal never again fell below $272. Silver, meanwhile, skyrocketed from 92 cents per ounce to more than $20.
James Dines was right. The man who Barron’s would one day call "The Original Goldbug" proved the doubters wrong.
He made a lot of people rich in the process, too.
And that was just the beginning…
An Astonishing Track Record
After being fired from his job at AM Kidder in 1960, Mr. Dines struck out on his own, self-publishing his investment newsletter.
He used the space to tell anyone who cared to listen that a crisis was coming, that gold would rise, and that it’d take silver with it. Subscribers who listened profited from a 2,025% rise in gold prices in just seven years and a 1,639% surge in silver.
However, after the meteoric rise gold experienced in the 1970s and 80s, prices slipped back under $300 per ounce in the 90s.
Almost overnight, goldbugs like Mr. Dines went from being right, to an object of derision and scorn once more.
It would have been easy for James Dines to take his fortune and disappear to some obscure island in the Caribbean, but that’s not what he did.
Ever faithful to his mission as a self-described “reporter,” Mr. Dines continued to make his silly gold predictions.
“Buy,” he insisted in 2001, when gold was trading at $288.
Once more, the metal rose, peaking at $1,917.90 in 2011.
Now, I know there are skeptics out there.
There are critics (some of the same people that called Mr. Dines crazy to begin with) that will argue this was all luck. After all, if you predict gold prices will rise for more than 50 years, you’ll eventually be right at some point… Right?
But it’s not just gold and silver that James Dines has been right about. His insight extends far beyond that.
Just to give you an idea...
In 1977, James Dines predicted China would be a “major new economic force” and come to “dominate the 21st century,” making it the “The Chinese Century.”
Predictions like that these days are rote. But when Mr. Dines made such a bold claim, China’s GDP was just $175 billion, a mere fraction of the $11 trillion dragon we see today.
Indeed, Mr. Dines’s China warning was laughed at and dismissed just like his gold predictions.
Another case study…
From the first edition of his 1975 book, The Invisible Crash:
“A truth of financial reality is that any prosperity build on paper money has usually been fun for a while, but has always ended in catastrophe. In the 1920s (as in the 1960s) the stock market was fueled by surplus paper spilling over from banks, which borrowed it from the U.S. Treasury, which had borrowed it from itself. It is inconceivable that the same unwise mistakes made in the 1920s were repeated in the 1960s. The question that remains is, will I be able, in some slight way help prevent it in the year 2008.”
Yes, James Dines predicted an overabundance of paper money (i.e. excess liquidity from the Federal Reserve and banks) would create a bubble that would inevitably burst in 2008… and he did it in 1975.
Not only that, but on January 14, 2005, Mr. Dines warned explicitly of “The Coming Real Estate Crash of 2007”, saying it would teach a lesson in illiquidity and shake the mortgage markets to its roots.
This prediction, yet again, proved to be devastatingly accurate.
Mr. Dines was even the first prominent analyst to get his followers into the still-illegal marijuana market.
He predicted that the use of medical marijuana would be legalized by many states. It’s now legal in half the country.
At some point, you have to stop laughing at an oracle and start adhering to its wisdom.
That’s why I don’t laugh when Mr. Dines speaks; I listen.
And right now, the Great Mr. Dines is issuing another urgent warning…
The Next Great Crisis
Americans have been unrelentingly assured by the Washington Economic Establishment that the economy is still recovering from the 2008 “Great Recession.”
But Mr. Dines has never accepted that there has been a recovery, even the government-described “fragile recovery.”
All that’s happened since — including the “rebound” in stock prices — has simply been the result of printing breathtakingly large amounts of money and debt.
Now, America is saddled with nearly $20 TRILLION of debt. You could literally spend a million dollars a day, every single day, back to the day when Julius Caesar was born (12 July 100 BC) and still not even spend $1 trillion!
That figure doesn’t even take into account our “unfunded liabilities” like Medicare, Medicaid, Social Security, and student loans.
The debt is huge and growing (by nearly a trillion dollars a year). And there’s no possible way to pay it down. World trade is such that we could not possibly earn that much money exporting to other nations, particularly since they are more interested in exporting into our market.
Before long, payments on the debt will become the third largest item in the federal budget. Something is going to break...
Mr. Dines has long warned that cutting the dollar’s link to gold wouldn’t just lead to chaos… it would be the dollar’s death knell.
Currencies not backed by anything tangible, like gold or silver, have always left debt and destruction in their wakes.
There isn’t a paper currency on Earth worth trusting as much as gold and silver. And he’s been pounding the table on them for many years now.
Mr. Dines has described all paper currencies as “a bunch of staggering drunks holding each other up,” and believes that currency crises will keep happening with increasing frequency, each worse than the previous one, until gold is restored as the primary monetary asset.
Given his track record, I’d encourage every investor to heed this warning.
And if you’d like more information, Mr. Dines (now in his 90s!) is still publishing his Dines Letter — advising on this and other pending crises.
- The Outsider Club Research Team