The One Chart That Explains the Massive Risk of Investing in Gold & Gold Stocks

smartknowledgeu's picture

chart of S&P performance v. gold & gold stocks from 2001 to 2012

Viewing the chart above, a six-year old child could tell you that investing in physical gold and gold mining stocks (as indicated by the AMEX HUI gold bugs index) yielded returns from 2001 to 2012 far superior to the returns of the US S&P 500 Index over the same time period. In fact, the truth of this statement is so self-evident, that if this same child was asked what asset classes he should have been invested in over the past decade by viewing the above chart, the simplicity of that question might lead him to think that one is asking a trick question. So why is it that all the leading Wall Street investment firms stated during the visible onset of the global financial crisis in 2008 (versus the real onset of the global financial crisis quite a few years earlier) that gold was one of the riskiest assets in which one could possibly invest? The simple answer, of course, is that if they were the ones involved in the scam to take gold and silver prices down, then certainly they would not tell you that the steep, rapid (but short-lived) drop in gold/silver prices was a massive buying opportunity. However, if a six-year old can see what is so obvious, then why should a man of Warren Buffet’s prominence continue to slander gold and why does his right-hand man, Charlie Munger, make idiotic statements like “gold is a great thing to sew in your garments if you’re a Jewish family in 1939” but not to own, instead of just stating the truth that “physical gold (and physical silver) was one of the best assets to build wealth since 2001”? And if a six-year old can look at the above chart and immediately know that he or she should have beeen invested in gold and gold assets, why, according to the World Gold Council, is still only 1%, or $146 billion of the $146 trillion investable global assets, invested in gold, and 9.1% invested in money markets, 48.7% in fixed income, 37.2% in equities and 4.0% in alternative investments? (though these most recent statistics are from the end of 2010, it is doubtful that these statistics have changed much in the past two years.)


One of the main reasons why it is still likely that only 1% of all global invested assets are invested in gold is the psychological hatchet job that Wall Street and the global banking industry has performed on gold and gold stocks. For decades, bankers have repeated their false mantra that “gold and silver are incredibly risky”, using the strategy that if you tell a lie often enough, it may just be accepted as truth by the masses. The fact that millions of investors today still won’t even consider buying the top performing asset classes for more than the past decade (physical gold and physical silver, NOT the GLD and SLV), serves as testimony to the success of the bankers’ anti-gold, anti-silver propaganda campaign. Thus, the reason why just a piddling amount of investors around the world have allocated a substantial amount of their resources to gold, silver and PM stocks as of today is due to, quite simply, investor psychology. The commercial banking industry spends billions of dollars every year in marketing campaigns (exclusive of their investor relations budget), influencing and shaping investors’ beliefs into accepting a heaping pile of false beliefs. For example, according to Forbes Magazine, Bank of America spent $2 billion and Citigroup spent $1.6 billion in 2010 marketing expenses, and the biggest banks spent even far more for their annual advertising budget in recent years. As a result, bankers have been able to convince their clients that what is right for them (physical gold, silver and PM stocks) is wrong, and what is wrong for them (investing in global developed stock markets) is right.


Why else would anyone stay invested in the US S&P 500, an index, that from 2001 to the start of 2012, was still in the red (not even accounting for the effects of inflation), but for one’s blind obedience to one’s investment adviser that sells his clients on that moronic 100-year chart of US stock returns that shows an upward progression of US stocks over an entirely irrelevant 100-year period, and keeps telling his clients to be patient, because the “US market, in the long-run, has always returned a phenomenal yield”? So here is how investment advisers, all over the world, convince their clients to ignore a chart, that in plain sight, tells them that being invested in gold & gold stocks (and silver & silver stocks) for the last 12 years over any of the developed broad stock market indexes in the world was clearly the unequivocal correct decision.


Below are the four methods global investment bank investment advisers employ to convince their clients to keep doing what is best for himself and his firm (earning the firm management fees) and what is worst for themselves (degrading their investment portfolios and wealth):


(1) Frame stock market and PM stock volatility in a biased, skewed and unforthcoming manner that sells their mission while ignoring reality.

For example, when the S&P 500 index crashed, US investment advisers used the bounce from 666.79 in March, 2009 to a high of 1219.80 in April, 2010 to falsely promote the “soundness” of the US stock market like ravenous hyenas that had stumbled upon an abandoned lion kill. In other words, they ignored the “bad” volatility of a 57.69% crash to take the S&P500 down to 666.79 level and repeatedly promoted the fact that the 82.94% increase in the S&P500 was “one of the best in history” over and over and over again on television, radio and newspapers, even though the S&P 500 has still failed to regain its previous high of 1576.09 prior to the crash in October of 2007. Furthermore, though gold stocks had crashed too during this time, all global bank advisers absolutely ignored the much more significant 343% increase of the HUI gold mining index between October 24, 2008 from 150.27 to a high of 516.16 on December 2, 2009. Forget that over this same time period, gold stocks outperformed the US S&P 500 index by 313%. How many people knew that gold stocks rose 343% during this time? Probably less than 1% of all investors. The focus of global investment advisers is to bury statistics like this that compete with their precious legalized casinos called stock markets and to keep their clients invested in their legalized casinos that are stacked against their clients even when far better opportunities exist.


(2) Frame performance in a manner that again sells only their desire to keep their clients invested in global stock markets and keeps the management fees rolling in.

For example, there have been tons of articles written over the last 3-years that have titles like “What’s Wrong With Gold and Gold Stocks?” and “Why You Should Not Invest in Gold or Gold Stocks”. Commercial investment advisers are amazingly keen to talk about holding on to stocks for a long period of time because they state that one can’t judge performance over a 2-3 year period when stocks are not performing. Yet when broad stock markets go through flat periods, as the US stock market has been trapped in a 12-year period now with virtually no gains, you will never ever, not once in a blue moon, not in a million years, see a blizzard of articles shouting, “What’s Wrong With the US Stock Market!" Yet, bankers ensure that the mass media is flooded with articles about flat or poor performance of gold and silver stocks during the past three years to keep their clients away from PM stocks and they harp incessantly about this matter while completely ignoring multi-year trends in gold and silver mining stocks and keeping this information buried as well. So let’s look at both asset classes and compare performance over a reasonable 12-year investment period, not the ridiculous 100-year chart investment advisers are so keen to use. If one looks at a reasonable 12-year period between 2001 and 2013, the S&P 500 has not even returned a piddling 9% during this period, while gold has returned a whopping +524.77% (silver also returned a phenomenal yield over this same period as well). And what about gold stocks even when including the very flat last three years of performance? An almost unfathomable +1009.86% return when compared to the US S&P 500’s anemic return of 8% and change.


(3) Sell rubbish diversification strategies as “expert” advice when it is the worst advice in the world.

A great many people are afraid to concentrate their assets in gold and silver, among the best performing assets of the last 12 years, because for decades, the commercial investment industry has pounded into their brains that anything but diversification when it comes to investing is unsafe, unsound and risky. Yet diversification is a rubbish strategy used by all commercial investment advisers precisely because they lack the expertise and knowledge to know how to concentrate a portfolio properly without excessive amounts of risk. If you have the expertise, you can utilize concentration without increasing the risk of a portfolio. That’s why for years, we’ve been advocating our clients to invest very substantial amounts of their portfolio into physical gold and physical silver because frankly, despite the notorious volatility of gold and silver, we just didn’t consider gold and silver risky when they were respectively $560 a troy ounce and $9 a troy ounce. In fact, every year for the past 12 years, gold and silver has fallen, at some point during each year, to price ranges that marked solid entry prices that were low-risk, high-reward. The artificial banker-created volatility through manipulation of gold and silver prices ensured this.

A recent study by Nobel Laureate Daniel Kahneman tracked a group of 25 wealth advisers/portfolio managers and the variance of their portfolio yields over an 8-year period. At the end of his study, Kahneman stated that he was “shocked” to discover almost no variance in the portfolio performance over the group of managers, simply because he believed that portfolio management was a task that depended upon skill and expertise. Consequently, Kahneman expected wide-variance among the managers as far as performance yields over an 8-year period were concerned. Instead, he discovered that the variances among the performance yields suggested that portfolio management was not a skilled job but one that nearly entirely revolved around blind luck. My first reaction to Kahneman’s study was that he should have started his study by sitting in an office of Goldman Sachs or JP Morgan for 3-months and he would have learned within 3-months what it took him 8-years to conclude - that Portfolio Managers have no skill and that they all use the terrible strategy of diversification to cover up their severe skill deficiencies rather than diversification being a strategy that allows them to demonstrate their skill. How many US clients were protected by the strategy of diversification in 2008 when US markets collapsed by 38.50%? By the anecdotal information I gathered, all my contacts at the big US global investment firms told me that nearly all their clients were down the same 35% to 40% that year as the S&P 500 Index. Therefore, diversification did nothing but assure that nearly all clients suffered the same uniform losses as the major global developed indexes that year. In fact, diversification is a protective strategy embraced by the global investment industry as insurance against "client flight". In other words, if all client portfolios show remarkably similar losses across multiple commerical investment firms during poor years of stock performance, the risk of client flight is small.

On the contrary, we at SmartKnowledgeU, have always taken the strategy of concentration over diversification, and in 2008, though it was a nominal gain, we still managed to yield nominal positive returns in our newsletter investment portfolio despite massive losses in all developed global stock markets. Massive outperformance can, and often, will be the result when skill and expertise, instead of luck, is applied to investment strategies. If concentration is so dangerous, and if diversification is a far superior strategy as nearly all investment advisers claim, then it may be possible for one fluke year to occur. But it is near impossible for five fluke years to occur. However, we at SmartKnowledgeU have been concentrating our Crisis Investment Opportunities portfolio since mid-2007 when we first launched, every year now for more than five years. Over that 5-½ year period, we’ve outperformed the S&P 500 by +161.95% and even outperformed the HUI gold bugs index by +120.80% due to the strategies we use to take advantage of the banker-induced volatilty in gold and silver markets. So much for diversification and buy & hold being wise investment strategies.


(4) Sell “volatility” as “dangerous & risky” even though this simply is not true.

The reason some of you may be shocked by the chart I’ve presented above is not only due to the tactics of #1 to #3 employed by the global investment industry, but also because of one additional key factor. Many of you may think that gold & gold stocks are way more volatile than my chart above shows, and you would be correct. I’ve only plotted the beginning price level of each asset above at the beginning of each year to smooth out all the interim volatility, so that everyone can clearly see the trends of each asset, even in the notoriously volatile gold (& silver) mining stocks. The reason I’ve stripped out the volatility in the above chart is because anyone that has studied the price behavior of gold & silver assets knows that Central Banks and bullion banks deliberately introduce volatility into gold & silver assets to intimidate gold & silver newbie investors into terrible decisions of selling all their gold & silver assets, or to scare off potentially new gold & silver buyers from ever buying. Though a commercial investment adviser would never tell you this secret, the evidence of this is overwhelming and since I’ve blogged many times about this very topic over the past 7 years, I’m not going to go into detail about the mechanisms by which the banking industry deliberately creates volatile prices in gold and silver assets in this article. However, since the banking industry has already sold the masses, hook, line and sinker, on the very false mantra that “volatility = risk”, by artificially and deliberately causing short-term volatility every year in gold and silver assets, commercial investment advisers can show their clients charts of gold, silver and mining stocks with all intra-day, intra-month or intra-year volatility, and keep convincing their clients that gold and silver are the riskiest assets in the entire investment universe while convincing them that broad stock market indexes are the safest arenas in which to invest, when indeed, the exact opposite has been true for 12 years, and will likely be true for the next decade as well.

Sure, one has to understand how and why the bankers create volatility in gold and silver assets to ensure that one enters these assets at low-risk, high-reward price points instead of high-risk, low-reward price points in order to be successful, but anyone that has studied gold and silver price behavior and understands how bankers manipulate gold and silver prices should now have the expertise to provide this guidance and help novice gold/silver investors navigate through all the rubbish manipulative schemes of bankers. If one doesn't understand what drives gold and silver prices and one enters at a high-risk, low-reward entry price, then certainly, one could have been taken to the cleaners after banker conducted raids against gold and silver executed in the paper markets, despite what the above chart illustrates. In addition, bankers also attempt to keep people out of buying physical gold and silver and PM mining stocks by painting charts to drive and intensify fear of gold and silver collapses during their multiple, annual banker raids on gold and silver prices. Every year, after there is intense short-term volatility in gold & silver in the form of a 3-5% drop in gold and/or silver in just a couple days, more than a handful of technical chartists will come out of the woodwork to predict massive collapses of silver and gold. Last year, when these situations occurred, more than a few chartists unnecessarily stoked fires of panic by predicting imminent collapses of silver to $20 an ounce and gold back to $1200 an ounce (or even lower). And every year, these predicted collapses of a gold “bubble” and silver “bubble” never materialize. But these false predictions gain enough publicity to keep many too scared from buying their first ounce of physical gold, physical silver or their first PM mining stock. Again, remember that bankers deliberately paint these gold and silver charts to give the appearance of an imminent collapse in prices even though the underlying, undiscussed fundamentals of the physical bullion world often directly contradict the price action of gold and silver during banker-executed raids on the PMs. This is why I have maintained for many years that technical analysis in gold and silver (and even in the highly rigged stock markets) is quite useless if conducted in a vacuum. However, if one uses technical analysis in conjunction with analyzing the underlying fraudulent mechanisms of what is causing great volatility in gold & silver markets, then one is much more likely to accurately assess these rapid declines in gold and silver price as buying opportunities as opposed to fostering clients to panic sell their PMs like fleeing lemmings off a cliff's edge.


As Nobel Laureate Daniel Kahneman recently discovered, and as we’ve been stating at SmartKnowledgeU for nearly a decade now, the entire financial industry is built upon deception and rigging of markets. Their entire existence as ongoing, viable entities is based upon the creation and maintenance of an illusion among all their clients that they know what they are doing even though they do not, and even though they have recommended the same course of action for the past 12-years that has greatly failed. As long as the commercial investment industry can keep this illusion going, they can keep convincing their clients that gold and gold stocks (as well as silver) are the riskiest investments ever and simultaneously prevent their clients from realizing the simple truth self-evident in my one chart above and escaping the inertia of their poor advice.


Furthermore, since the conditions that launched this present gold & silver bull are even stronger and more favorable today than at the start of this PM bull, the reasons to be invested in gold (silver) and gold stocks (& silver stocks) are even stronger today than they were 12 years ago. In conclusion, ignore the simplicity of the above chart at grave risk to your own future financial health and security.



About the author: JS Kim is the Founder & Managing Director of SmartKnowledgeU, a fiercely independent investment research & consulting firm with a mission of education and helping Main Street beat the corruption of Wall Street. SmartKnowledgeU was the first company in the west to move to a gold standard of pricing, a pricing mechanism to which the firm has remained firmly committed, even when gold prices have been moved lower by bankers as in recent times. Currently, we are offering a 5% to 10% discount on all SmartKnowledgeU services until the end of January only, a discount that when combined with our significant discount in prices due to current lower gold prices, will almost assuredly mark our lowest prices of the year for 2013. Follow us on twitter @smartknowledgeu.

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pbppbp's picture

Investment houses don't make a dime when I buy phyzz.

silverdragon's picture

Alternately, just buy physical silver!

dolph9's picture

I suggest buying only the physical metal or physical metal proxies.

Mining companies are like any other, they exist to make as much fiat as possible for themselves before blowing up.  The accounting is very suspect, costs of production are much higher than they let on, and ore grades have been falling for a long time.

Think about all of the risks you incur:  cost overrun, strikes, nationalization, etc.

And if you put any money in the stock market, the HFTs will front run you.

Why bother?  

Let the brokers and analysts have their orgy, in the end they'll all get STDs.

Acidtest Dummy's picture

A rogues gallery of naive monitary theorists in here, I read the whole thing (even Radical M's unusually redundant [and slightly unproofread] screed) and  I am a big fan of the genra. So I submit my own entry,  but first I must dismiss OPs puerile attempt to sell subscriptions  to what must be a useless service if this "One Chart That Explains" is any indication of the value that service contains -- I'll save my money, 'cause it aint funny.

     My theory is that gold (Au) has an affinity for Au. It appears as a "Katamari" nature, glomming into larger lumps. Au has a will to gather itself into larger masses. Other elements - carbon oxygen nitrogen etc - serve gold's will; mankind and history are just the machine, the story of gold's will to be in, ultimately, one big lump.

      "So how is this actionable," Acidtest Dummy? Subscribe to my newsletter and I'll show you how to leaverage this revelation into wealth, happiness and tranquility.

     Just joking, here's how: start your own little golden katamri, and don't let it get near any larger gold katamaris.

steelhead23's picture

Read this this morning.  Do you wish to know what the greatest risk of buying and selling PMs is?  Taxes.  Please correct me if I am wrong (pretty please), but when I sold some gold to purchase my house, the IRS said I had to treat my capital gains as a "collectable" and I paid 26% I think.  Ouch.  

xtop23's picture

Yeah, there's no way to avoid paying the government it's tribute.

Really there isn't. I mean it. Seriously. You'd be insane to think that you could actually perform a transaction without Big Brother knowing. Really. Promise.

Stuck on Zero's picture

What was missing in the chart is the value of cash.


Mr. Hudson's picture



: "..then why should a man of Warren Buffet’s prominence continue to slander gold..?"

Because (according to Marc Faber) the United States government will confiscate Americans' gold, and Buffet knows this.

Seer's picture

Just like they're confiscating his businesses?

No, I believe that the REASON that Buffett slanders gold is because he's had, up until recently, a pretty good perpetual money making scheme.  Further, don't confuse PUBLIC Buffett with PRIVATE Buffett- what his companies are doing and what he himself might be doing don't have to be the same: he can very well be stacking behind the curtain; you DO understand that humans are deceptive, don't you? (lies told enough times...)

Texas Ginslinger's picture

Anyone who makes money in stock markets will always say that investing in anything else is a bad idea.

Its a bad idea because they would lose income.

Antifaschistische's picture

You nailed it TG.   You could bet you're life that if Buffet hadn't made billion convincing people to pay for his hyper over-priced shares in Berk, that he too would be recommending gold.   He can't recommend gold, because his minions would sell their stock to buy it.   He can't have that.   People don't realize that when they keep giving warren money they are paying HIM a dividend so he doesn't want that dividend diverted to anything silly like gold, silver, a pool, a shiny car, etc.   Just keep driving your 1976 Ford F100 and sending Warren a cut of your biweekly check.

Radical Marijuana's picture

"... the strategy that if you tell a lie often enough, it may just be accepted as truth by the masses ..."

One of the reasons that works is that the alternative is to face the real radical truth, which is far, far worse for most people to try to face, than to continue to have irrational hope by believing in the big lies. The ordinary people live INSIDE THE SYSTEM. Their strategies are all based upon being in that predicament!

IN FACT, "the entire financial industry is built upon deception and rigging of markets."  HOW are ordinary people supposed to come to terms with that realization? ... The vast majority default to deliberately ignoring those social facts, as much as they can, for as long as they can, since facing those facts makes them get angry and upset, and talking about those facts makes their friends and family members also get angry and upset, and those friends and family members will then focus their emotional reaction to facing those facts AGAINST the individual who raised those facts.

The depth of the paradigm shifts which are necessary to understand and cope with these REAL SOCIAL FACTS goes off the scale of what average people are willing and able to consider. We live inside a world controlled by legalized lies, backed by legalized violence, which have consequences which are automatically getting worse, faster. The DEPTH to which people have been brainwashed to believe bullshit is awesomely profound, and practically bottomless!

Gold and silver are merely first approximations towards appreciating the conservation of matter, which is an aspect of the conservation of energy. Those are basic truths, which contradict the flagrant frauds, backed by force, which are the fundamental nature of our current financial systems. However, there are more important paradigm shifts with respect to understanding the concepts of entropy.

When the laws of thermodynamics were first developed, the entropy equations had an ARBITRARY minus sign inserted into them, so that power would have a positive value, rather than a negative value. When thermodynamics was extended to become information theory, that concept of entropy was continued. Bascially, the ways that we think about power and information are BACKWARDS. The degrees to which we think about the world are backwards are almost impossible to imagine! The ways that our civilization operates are based on the prolonged triumph of the biggest bullies being able to control culture with their lies backed by violence. Meanwhile, all the ordinary people have adapted to living inside those systems, by taking them for granted.

IF, IF, IF, one begins to wake up to any of the set of the huge lies, backed by lots of violence, that are the SOCIAL FACTS, that control the world, one then may discover that EVERYTHING ELSE IS BACKWARDS! For instance, it turns out that our governments are the worst terrorists, and so on, and so on ... throughout every area that one examines ... Partially adapting to those realizations is an interesting exercise in juggling how to navigate through a world of organized lies, operating organized robberies. ... One has to accept some of that, in order to be able to survive at all.

Personally, my macabre sense of humour finds it amusing when people attempt to rediscover some shreds of economic truth in gold and silver. After all, coins made out of those metals were the original meaning of the words "money" and "dollar." History was dominated by the runaway bullshit promoted by the biggest bullies being able to REVERSE the meaning of the words "money," as well as diminish the meaning of the world "dollar" by over 95%. However, those were relatively trivial examples that we have been conditioned to think in perversely inverted ways about everything else!

An apparently awful irony is that more "truth" is practically irrelevant when the real world is almost totally controlled by huge lies, backed by lots of violence.  While rediscovering some partial "truth" in gold or silver may well be worthwhile, in itself, those are actually tiny, tiny fragments of the larger "truths." It would be nicer if we could assemble a bigger, integrated world view, based on more radical truth, however, at the present time, the runaway triumph of the biggest bullies being able to promote their bullshit is driving civilization towards psychotic breakdowns instead.

In fact, the meaning of the words money and dollar have been perversely inverted, and thereby almost totally destroyed. It follows that every "economic" decision that our society is making is based on perversely inverted, and BACKWARDS ideas about everything it is doing. However, those social facts ARE runaways at the present time! Therefore, individuals who wake up and start thinking are attempting to do so when they are already in the middle of an insane stampede ...

Seer's picture

Well stated!

My words of wisdom have included supporting elements such as:

1) Nature is deceptive, humans are OF nature;

2) Perpetual growth on a finite planet is NOT possible;

3) BIG = FAIL (refer back to item #2).

Currencies are supposed to be about being a medium of exchange.  As soon as "interest" came on the scene Pandora's Box was opened (and the various carpetbaggers popped out).

fourchan's picture

the reversal of meaning is a very interesting subject. there are so many examples.

Radical Marijuana's picture

Yeah, fourchan the basic history of that was "money" as metal coins, with  the "dollar" being a particular amount of silver. Those then became represented by paper, which was still backed by the real gold and silver. The reversal of the meaning of those words was GRADUAL. The reversal was sneaky, at first, then more and more blatant. Fractional reserve banking gradually allowed more and more paper to represent less and less real gold and silver. The USA was originally supposed to have Congress setting their measure, but Congress was systematically corrupted by the covert actions of the banksters. Thus, silver was demonetized, in a very sneaky way, back in 1874, which was the beginning of making the meaning of "dollar" become perversely diminished. "Money" in the USA was still partially backed by gold until 1971, when finally "money" became nothing but fiat credits, represented by nothing but paper. That privatized fiat money, backed by nothing but the power of governments to collect taxes and define legal tender, then gradually became ELECTRONIC fiat money.

Today, "money" is nothing but bursts of encrypted electricity. Paper is less than 5%, and coins less than 1%, of a money supply which is a privatized, globalized, fiat fraud, manifested electronically, and backed by weapons of mass destruction, which are threatened to be used by the sovereign states, that have been covertly taken over, gradually, by the banksters.

Thus, from "money" that was gold and silver coins, and "dollars" that were an actual amount of silver, we GRADUALLY developed "money" as credit, or debt, made out of nothing, by typing numbers into computers, while private banks, and their central banks, controlled the power of sovereign states to enforce their privileges, which everyone else had to accept, as the legalized counterfeiting, which everyone else MUST pay their taxes in, and MUST treat those bursts of encrypted electricity as their legal tender.

Gold and silver had intrinsic value, since they manifest the conservation of matter, and cannot be created out of nothing. However, modern "money" has NO value other than that "value" is the power of robbery, backed by murder, as manifested through the complicated financial frauds, run by the banks, and their buddies. Fundamentally, money is backed by murder. The debt controls depend on the death controls. That has enabled a global electronic fiat money fraud to grow to become quadrillions of highly leveraged units, which are backed by nothing but violence, with the limit case being the threats of using weapons of mass destruction. Thus, the idea of "risk" has gradually become risks from electronic frauds, backed by atomic bombs.

One basic problem, which several other comments above mentioned, is that the meaning of the word "risk" was gradually inverted, and thus, the "risk pyramid" turned upside down! Since the entire system has become legalized lies, backed by legalized violence, and those were amplified to astronomical sizes by electronics and atomic power, etc., the RISK factors associated with the possible psychotic breakdowns of those systems go utterly off the scale.

The downside RISK that our global money system now represents is the RISK of genocidal wars, along with democidal martial law, as the international banksters are committed to keeping their triumphantly fraudulent, privatized, fiat money system, enforced by governments, going and going ... forever and forever ... DESPITE it being based on nothing but exponentially more frauds, backed by the threats of exponentially more violent law enforcement. Thus, the reversal of the meaning of words has made "national security" become a more and more psychotic concept, while the recent extension of that concept of "national security" to result in protecting the biggest banksters from any criminal prosecutions, for breaking the laws that still bound them, is the MOST PSYCHOTIC RISK.

It is quite astonishing to recognize the gradual ways that the powers of "We the People" have gradually been transformed, and reversed, to become the greatest threat to the future survival of the People. Unfortunately, the awesome magnitude of that REVERSAL is something that the vast majority of the People do not understand, and do not want to understand! The ability of the banksters to apply the methods of organized crime to gradually take complete control over governments have reversed the meaning of everything that governments do, to become the opposite. "Human rights" now overwhelmingly have become rights for the corporations that grew up around the banks, that were able to take control over the money systems, that everyone else, the People, were forced to use.

Bit by bit, the reversal of meaning, due to the runaway triumph of frauds, backed by force, is reversing everything into becoming a runaway science fiction nightmare dystopia. Unfortunately, while individuals may have no better individual choices than to try to buy some physical gold and silver, and other worthwhile assets, the overall social systems are threatening omnicidal consequences, that could utterly overwhelm and negate all efforts to diversify one's wealth, and attempt to hold on to it in worthwhile ways, such as buying gold and silver.

Unfortunately, since the tragic truth is that we ALREADY have an established global system of electronic frauds, backed by atomic bombs, holding gold or silver, or seeds and survival supplies, etc., are not remotely close to the order of magnitude of real risks that we face from genocidal wars, along with democidal martial law, which appear to be the inevitable consequences of the banksters attempting to maintain and consolidate the current systems of triumphant financial frauds, being able to force everyone else to accept those frauds.

I believe that their attempt to back up bigger lies, with more violence, must eventually fail, since the violence can never make those lies become true. Therefore, I believe that the real risks we face from having triumphant frauds reverse the meaning of everything are practically omnicidal risks! However, at the present time, I can not imagine any practical ways that the People could understand enough, and effectively respond enough, to prevent that from happening ???!

The Death Throes of the United States
chubbyjjfong's picture

Excellent couple of posts Marijuana. I really enjoy reading your views.  Thanks for taking the time to do so.

Downtoolong's picture

The most important thing the Central Banks and their Wall Street masters must do is make sure there is never an obvious and reasonable alternative to their monetary system. After that, it's all just about making excuses.

I can hardly wait to hear the Fed's explanation for rampant inflation when it arrives. Goldman probably already has it written and sitting in the can for them whenever they need it.


cranky-old-geezer's picture



Here's my Unified Theory of QE:

a) We're in a post-industrial economic depression here in America.  Many manufacturing jobs have been sent out of the country. 

b) Fewer jobs means less economic activity, less demand for goods and services, resulting in falling prices generally speaking.

c) It presents a great opportunity to loot the economy via QE under the cover story of trying to help the economy.

d) But QE money goes to Wall Street and the government, not the economy, not the people.

e) The resulting currency debasement (from excessive printing) tends to push prices up.

f) Fed tries to balance the two opposing forces, trying to keep prices relatively stable overall (while looting the economy for their banker masters).

g) It's working in housing.  Demand collapse in housing tending to push prices down is being offset by depreciating currency, keeping prices more or less stable.

h) It's not working in high-demand areas like food and fuel.  There's no demand collapse pushing prices down, so depreciating currency pushes prices up dramatically.  Fuel to a lesser extent since demand for gasoline has dropped somewhat.

i) This theory can be applied to any asset class to explain price movements over the last 4 yrs.  Consider demand factors and currency debasement factors. 

j) Hardly anyone considers the currency debasement factor.  It's never discussed in financial & banking circles.  It's the "taboo" subject.

k) The logical end result of ongoing QE is hyperinflation and currency collapse.

Seer's picture

Automation ate most of the jobs.

Most of the crap that TPTB are buying up is crap.  It may once have had value, but in tomorrow's world it will have very little.  I'm pretty sure that they're aware of this: there's really nothing else that can be done other than ease this crashing pile of shit down as slowly as possible.  Anyone who seriously thinks that TPTB are licking their lips on all of this fails to take into consideration that TPTB pretty much owned (and controlled) everything anyway, before the recent round of collapses took hold.

"The logical end result of ongoing QE is hyperinflation and currency collapse."

Currency collapse is GUARANTEED because of overshoot.  QE is the result of insufficient resources for growth (which is what overshoot brings).  "QE" is a logical reaction to an already collapsing system.  I do not believe that it was in any way really believed to solve anything other than provide cover for drawing the collapse over a longer period (I have no objections to this, as it has allowed me more time to prepare [though preparing for the unknown is a bit tough]).

SmittyinLA's picture

food and fuel- are portable commodities

Housing will collapse again, and much harder too, look at this CA auction site, for some strange reason thousands of scheduled auctions of vacated homes were cancelled or postponed. 

Thousands of houses backed by non-performing loans are being held "off the market" at great expense to sombody-no interest, no principal, no insurance fees, or taxes are being paid all expenses being carried by the mortgage holders.

Nobody can afford to carry thousands of vacant houses.

In LA County there isn't even a population that can afford the utilities for those thousands of vacant homes or the upkeep or taxes on the homes if they were given away.



Ghordius's picture

k) a chance of hyperinflation. it's a risk, imho 5% (or one in twenty, if you prefer) in 2013

a currency near/in hyper behaves a bit like an old bridge, it has a chance of collapsing IF there is a midsized exogenous shock, but it's not necessarily a given. and you still need an external swan (black, grey or white) to bump into it

the collapse of the British Pound could be the right size of swan (just thinking aloud...)

cranky-old-geezer's picture



It's not a "risk".   It's a mathematical fact.

Acidtest Dummy's picture

Indeed, the history of currencies is unambiguous.

monopoly's picture

Super post. Thank you.

IamtheREALmario's picture

As usual, assets perceived as having lasting value are overpriced by those who control price. The trick is to find the underpriced assets with lasting value.

From my perspective gold is the lazy man's last hope in a total collapse. Under those circumstances the gold will be confiscated and the holders of gold will be given 42.5 SDRs for each ounce of gold. Is that a good deal? Don't know. Alternatively one could hope to hide their gold and trade it on the black market following a collapse.

ThisTimeIsDifferent's picture

When something puzzles you, look at the big picture, i.e. take a 25 year chart.

If you can stand to loose 80% on a quality mining company like AAL, you are entitled to a little joy today.

But dont come whining when you are wiped out due to some one sided advice from the internet.

Hook Line and Sphincter's picture

25 years is a drop in the post bretton woods puke bucket.

Take a look at the past 2500 years. The scam runs much deeper than picking your pockets.

DCFusor's picture

While over that time period, gold was surely better than an index - if you held either the entire time, the real reason that things like gold really ARE risky is that you buy in one of those peaks just before the huge drops that chart shows, then don't live long enough to even recover net value or worse, freak out and sell the dip...

I likely won't live another 25 years.  I'm forced to just trade the wiggles.

linrom's picture

Would you buy the green chart?

Bicycle Repairman's picture

Ancaeus's picture

The chart does not show up when I view this in my browser.  Can other readers see the chart?


rsnoble's picture

Big difference  between investing and protection.  Setting aside some of your $ in case things go to hell is different than betting the farm on upward prices.  It couldn't hurt to have a few k in bullion on hand at any time.  Esp in this unstable world.  I believe production of some sort is even better unless you are filthy rich.  If you can't do anything or produce anything you will spend all your ingots and then be screwed.

Seer's picture

"I believe production of some sort is even better unless you are filthy rich.  If you can't do anything or produce anything you will spend all your ingots and then be screwed."

That's why I'm working on farming... if my product(s) fail I can at least eat them.

moonstears's picture

Valuable info, but the average person simply cannot buy productive assets. Being surrounded by J6P friends and family, my advice: "FIRST...Fill your cupboard first (pasta, rice, dry beans, powdered milk...long term stuff...not freeze dried, not a decade's worth but 3 mos if you had to eat it stuff and could get no fresh). Next pay off what you can, if you cannot pay off stuff, then skip to buying silver dimes at $2.5-$3 each while you can, and some cash in hand as it's a start."

Seer's picture

"the average person simply cannot buy productive assets."

Shovels aren't that expensive.  Good tools, hand tools, will always be of value.

If you struggle with using the shovel for producing food then one might be able to use it to do burial services work.  Think creatively!

Agstacker's picture

Pan out the dirt you dig, there may be gold there!

willwork4food's picture

Any type of tool will be very valuable, especially non-electric.

silverserfer's picture

in MOTH PROOF sealed containers!  

whotookmyalias's picture

Agreed and even bigger difference between "protecting" your investment portfolio and and protecting/preserving your life and welfare.

Eumaeus's picture

Speaking of irrelevant time periods - the chart seems to cherry-pick the bottom of the HUI Index and inflates its historical return. Moving the starting point a year in either direction shrinks the value of HUI vs. the plain old bullion.

Why not go back to 1995, and see the HUI up 210% vs. Gold +420%?

No argument with the premise here, just the presentation. It's great if you called the HUI right in late 2000, but simple bullion has been a much more reliable friend over the past decade.



orangegeek's picture

Silver weekly and with reference to technical analysis above.


As the USD rises, silver in USD will fall - Yen, GBP and Euro are heaviest weights against the USD.  Yen has tanked.  GBP is tanking.  The last to tank is the Euro - in spite of the economic recovery in Europe.  /sarc

Son of Loki's picture

Lets plot MFGlobal vs. any PM

LongSoupLine's picture

or WorldCom. or Bear, or Lehman, or...



fuck wall street.

ebworthen's picture


PM's up, MF Global zero.

The only outlier being Jon Corzine - up when he should be shackled in a dungeon.

willwork4food's picture

Or when I will finally win the Mega.

Moe Howard's picture

I follow a simple plan as to financials:

Convert paper assets to tangible assets as quickly as possible.

Become my own central bank by holding Au & Ag physical reserves.


Never a borrower be. I don't lend either.

Son of Loki's picture

"Gold never goes to zero," my financial advisor told me.

kittygang's picture

Remember, Munger and Buffett have their own agendas.

Don't think for one moment that they are your grandfather.

luckylongshot's picture

Having worked in this industry for most of my life two of the things that continue to amaze me are that financial managers still do not have a sensible definition of risk and that noone has bothered to revisit and update the risk pyramid that most financial advisors base their recommendations on. From my perspective the risk pyramid has turned completely upside down from 30 years ago,with precious metals now being less risky in terms of wealth preservation than Government bonds.

Radical Marijuana's picture

"the risk pyramid has turned completely upside down"

Welcome to the Bizarro Mirror World, luckylongshot.

Everything becomes proportionately backwards & distorted.