Things That Make You Go Hmmm... Like "Anti-Gold Idiots"

Tyler Durden's picture

This next paragraph contains what Grant Williams believes is the fundamental principle of investing in gold and silver, which so few people genuinely understand — despite the multitudes of commentators expending countless thousands of words.

"So these anti-gold idiots are just that, idiots, or else they have the memory of a goldfish, because currencies come and currencies go, as sure as night follows day. It is the natural order of things. And as you can see, it's not about trading gold to get rich or getting long gold or buying one by two call spreads or getting fancy, it literally is about protecting yourself in the end. It's not like Williams got rich. He just stayed rich. Everyone else got poor."

It's not like Williams got rich. He just stayed rich. Everyone else got poor.

That's it. Right there.

...

If you talk to most people in the West about gold, they have no idea about the price or its recent direction. Narrow your sample audience down to those with a passing interest in finance, and they will likely know that gold is an awful investment whose price only goes down. (Had we conducted this little survey in 2011, the results would have been different, but that only illustrates the point.)

Ask a random group of people in the East about gold, however, and the conversation is completely different.

In this part of the world, people talk about how much gold they (or their parents or their grandparents) own. They will tell you stories of the first time they handled a gold coin (usually as a child), and they will know the price but not have much of an opinion on how good or bad gold's performance has been — it will be far less relevant to them. They just know that you don't trade gold; you own it.

To further illustrate this point, let's talk about our old friends the world's central banks.

The chart showing the 25 largest central bank holders of the world's gold looks like this:

If we take a look at the changes in those holdings between 2008 and 2013, an interesting phenomenon emerges: central banks in the East, as their reserves have grown, have been accumulating gold:


 
Since 2008, the central banks of China, Russia, India, Turkey, Saudi Arabia, Thailand, and the Philippines have increased their gold holdings on average by 119.67%.

...

Central banks continually rubbish gold as a worthless asset class because it constricts their ability to produce money at the push of a button. Not only that, but it offers their citizens the means to reduce their reliance upon a nation's fiat currency — one has only to look at the goings-on in India last year to see what THAT looks like.

Deep down, though, central bankers know what gold is for and why you hold it. They know.

In 1999, a group of central banks came together through the Washington Agreement on Gold to jointly manage sales of the precious metal.

...

The Washington Agreement worked when central banks were selling their gold because there were always buyers, at lower and lower prices — those were the investors soaking up the bullion.

NOW we have a bunch of central banks aggressively trying to BUY gold; and what they're finding (unsurprisingly) is that the investors aren't sellers, so the only people left from whom to acquire gold are the traders — and they have a very limited supply of actual metal

When Western central bankers rubbish gold as a "barbarous relic" or, as in the case of Ben Bernanke shortly before he started his job at The Brookings Institution left office in January, admit to a complete lack of understanding of it, does it not strike you as strange that, having accumulated significant stockpiles of gold over the years, they aren't in a hurry to swap any of it for paper money (well, with the notable exception perhaps of the United Kingdom, thanks to the antics of Gordon Brown, King of the Idiot Chancellors)?

It shouldn't.

Gold is held by Western central banks for exactly the same reason individuals ought to hold it: protection.

Central banks are accumulating gold because it cannot go BANG! like fiat currencies do.

Individuals should be doing the same — not being sidetracked by the distractions.

It's not about price. The story Jared shared with us demonstrates that beyond any doubt.

If you own gold, it will do all the heavy lifting for you when the time comes

And that's where Grant Williams gets really deep in his latest excellent letter...

TTMYGH_17_Feb_2014

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LetThemEatRand's picture

Updated for Yellen -- Barber-less relic.

Soul Glow's picture

Gold trolls.  We call them gold trolls.

kaiserhoff's picture

Great start to this piece, and he sorta piddled it away.  Die Kinder need to understand this.

Holding gold and silver will not make you rich.  Even in hyper inflation they will hold relative value with other durable goods and real assets.

The wipe out of debt will make some feel rich, and may well be a useful reset, as the Tylers often suggest.  Here's a salient example.  There are often tales about someone buying a whole city block in Germany for one gold coin.  Did it happen?  Maybe, but not because of inflation.  Real estate should rise with gold and silver.  If someone wants or needs to get out of Dodge immediately, then ready money talks, but remember, Weimar was way before Der Feurer, so I'm a skeptic.

Logic, mein leibshens, it's not just for breakfast anymore.

 

kliguy38's picture

you're right ......gold and silver will not make you rich but holding real estate will? hehehehehe......I guess that may be just what your definition of "real estate" is? and as usual your timing........your ability to get rich in real estate or gold or silver or paper of any type depends on timing.......in this particular environment and at this particular time, I think I'll take my chances with gold and silver bullion.......

kaiserhoff's picture

Yes but,

  real estate usually comes with a mortgage, which WILL get wiped out.  As you say, it's all timing.  It makes a lot of sense to borrow to buy silver, unless the depression hits full force before the inflation.

Harbanger's picture

I wouldn't bank on mortgages getting wiped out.  More than likely the banks will not take the hit.  When there is a revaluation of the currrency, they re-adjust existing mortgages into the new currency.  Which means your mortgage increases by same factor of the devaluation of the currency.  Gold should increase by a greater factor but the timing may be off and you could find yourself underwater and selling your gold prematurely.

bunzbunzbunz's picture

It is a no win situation. If chaos ensues, gold will be worthless. Water and food will be currency. All of this arguement is pointless and meant to enrich someone. Get free bitcoins from http://freebitco.in/?r=25727 and sell them on a high. Buy some water, MREs and bullets.

ebworthen's picture

Yes, but Bitcoins don't work when you need a tangible for the barter of water and food; water and food spoil, Gold and Silver don't.

"...or else they have the memory of a goldfish, because currencies come and currencies go, as sure as night follows day...."

And food and water and bullets and MRE's come and go as well, it's about penultimate non-perishable tangible mediums of exchange.

That's the point.

The Vineyard's picture

Gold has no future.  Nor does silver.  Invest in flame throwers and pumpkin pie.  Bitches.

N2OJoe's picture

@kaiserhoff

 

You would be correct about real estate vs gold, all else being equal.

However, when the financial system blows up and people can no longer get loans, you will see real estate prices tank because if they don't then quite simply, no one will be able to buy real estate. 

If you have real money though, and bide your time, you should be able to scoop up some insane deals compared to the previous valuations with free credit priced into them.

fiatmasochist's picture

awesome blog...great writing, unique analysis.........

 

chumbawamba's picture

While you morons are scurrying to your bunkers, I'ma be rounding me up a stable of bitches.  Cuz bitches are gonna be the commodity of the future, bitches.

I am Chumbawamba.

sixbilliondollarman's picture

Naw, I think I'll stick to PMs & FMJ lead...the flamethower is good idea after your pumpkin pie stash is discovered hopefully within a few hours while without electricty [so it's still edible to the mauraders]...other than that...like the entire block of "any neighborhood" south of 8 mile road  in downtown Detroit on Holloween ...will be where your house is located...all gone. No contructive comments & shitty blogs get scrutinized by voters I see.

 

https://www.youtube.com/watch?v=OJ23-fhfwAw

MeelionDollerBogus's picture

aw, but I don't like pumpkin pie. Apple?

holgerdanske's picture

I dispair reading the same claptrap.

What are you thinking? Of course gold in itelf is worthless if you have nothing to eat or drink, except that you might barter more successfully than you could with fiat paper.

What are you trying to say? That you can eat paper money or that you should save in water and ham??

Bticoin? Idiot.!

 

 

What is the purpose of your writing?

Volaille de Bresse's picture

Bitcoin is gold for the Y generation. But what will be left of that gen if there's a general shortage of power after the shtf? Nothing, their PCs and mobiles will be useless. 

Seer's picture

I'm sorry, but NEVER (and it's quite rare that I use that word) take out a contract with the intent of not fulfilling it.  I don't care how fucked up the other party is.

That said, I have a slight angle on this, and that's that I opted to keep open the possibility of the mortgage collector not showing up.  I opted to take advantage of low interest rates so that I didn't have to deplete more of my "boating" funds.  I will make every payment that I am obligated to make, and should that ever so slight possibility of no mortgage collector showing up occur then I'm up.  I did NOT enter into the contract with the intention or expectation of it being terminated early, I only knew that it was a remote possibility.

For what it's worh, I've done pretty well for having little wealth.  Sold at the top of the market.  Leveraged my cash to buy real property (many acres), Ag land, with a low-interest mortgage.  Meanwhile, "boating" funds have gone up: the alternative would have had me cash them in only to repurchase at a higher cost later, and, um, that's not how you look to do things.  And in regards to my property (which is holding its value), unlike other "investments" (or wealth protections), it is capable of earning money no matter its valuation.  In the future I'll likely have more ability to acquire silver from you than you from me :-) (but nowhere in this equation is all my hard work, which, sadly, I'm failing to see others suggest as a means of sustaining themselves in the future- kind of TPTB-ish)

As you say, timing is key.  I recall many years ago some Morman who went out and rang up all sort of debt as he was sure that "the end was near" and he wouldn't have to repay.  Jail.

Soul Glow's picture

It may not be enough to make a person rich but it will give a great oppurtunity to buy other goods and assets come the reset of the monetary system that is fast approaching.

natronic's picture

I don't think it's that fast approaching I still think we are 5 - 7 years from a reset.

mayhem_korner's picture

 

 

Five years is not fast approaching?  What is your concept of time?  If you were told you have 5-7 years to live, you would think that quite abbreviated, methinks.

Seer's picture

Good advice.

I'd already exchanged poker chips for Ag land and a modest amount of equipment/tools.  Have ample water, shelter and, am working on the food part (and for that food part to generate revenue).  And I was never "wealthy."

It's all about acquiring things that will enable you to see more days on this planet.

MeelionDollerBogus's picture

in comfort, not like The Road.

IPA's picture

I think you could buy several blocks in Detroit for an oz of gold right now. 

Curiously_Crazy's picture

True. But the cost people are expected to pay in the US to keep their home (sorry, rental) - through property taxes - is a joke. Where else on earth could you buy a block for less than it costs to pay the powers that be each year for the privillage of keeping it? Infact, where else can the government take your house for not paying paying a yearly tax on something you bought and own outright (Don't shoot me, I'm sure there are heaps, just none spring to mind).

post turtle saver's picture

you could, but you still wouldn't own them... think about it

oooBooo's picture

The problem is that people get desperate for pressing needs like food when wage inflation can't keep up with price inflation. So even in an inflationary environment they may let things go for cheap. 

The best hyper inflation assets are probably storable food and booze. Especially booze. Whiskey, wine, anything really. Gold and silver are good for the far side of the reset. In the middle there may be few buyers or many. Depends on how fast wages keep up with price inflation. If wages can kind of keep up people will seek to dump their money for gold and silver as soon as they get it. If the wages don't then what they get will go for food, fuel, anything needed to survive. 

 

 

 

Curiously_Crazy's picture

"The problem is that people get desperate for pressing needs like food" +1

I think when things get really bad this will be the issue and not water (there are countless ways to get water, even in the desert). The sad things is that there's an abundance of natural food out there that people have no idea about. Yes, I'm talking about eating ants that are almost as sweet as honey and also the grubs that taste like... well... grubs. A lot isn't palatable to our western tastes, but hey the French made snails trendy - maybe the Australian Aboriginals should get some marketing advice from them ;)

Notarocketscientist's picture

I don't want to get rich by holding gold --- I just don't want to have to be eating dog for for breakfast, lunch and dinner --- like the clowns who cling to their stocks, bonds, properties and cash --- when it is OBVIOUS that all of those will be worthless when the SHTF

Kaiser Sousa's picture

all you need to know about anti real money establishment...

 

https://www.youtube.com/watch?v=q891supv5Ss

DerdyBulls's picture

@Kiaserhoff

Real estate should rise with gold and silver. 

And "Real estate prices always go up..." Sorry. Is there a correlation between inflation and interest rates? Aggregate demand for real estate is driven by interest rates and incomes. Income does not keep up in significant inflationary environments. When the price of capital increases, the less of it is demanded. While I think it's a good idea to own real estate as a store of value and income production I would never own it with the notion that appreciation is a constant, especially in inflationary times. And to classify it with PMs seems odd. PM prices are driven by fear levels predominantly.

J S Bach's picture

"Anti-Gold Idiot" is a redundancy.  

 

Gold & silver are real money.  Period.  It may take a little bit of palm-of-hand-to-chin-and-eyes-to-ceiling gazing for some to grasp this simple concept.

 

Whatever one may think or feel regarding "what to do" in this unnatural economic and financial malaise... rest assured that if you hold any kind of hard asset, you - as a wisened ant - will be much better off than your naive neighbor grasshopper.  They will dance and sing to the tune of fiat counterfeit "assets" until the cows come home, but in the end... they will be left out in the cold.

 

Bachus Aesopus

Pooper Popper's picture

cnbc trolls

clumpus-a real asshole

bloody stump man

720mp

I swear they work for cnbc...

They call anyone who likes gold Moon howlers.

Then they report/flag your posts to get you kicked off...

Serious Assholes!

 

deflator's picture

 

Updated for Yellen -- Barber-less relic.

He needs lining up.

 

Hobbleknee's picture

They should update the charts to reflect who actually holds the gold.  Germany has a claim on some gold that is held in US vaults, but they seem to have a hard time getting it back.  Possession is 9/10, they say.

Kirk2NCC1701's picture

What's Israel's gold holding?

HyBrasilian's picture

Israel holds it all [by way of the 'Samson option']

Vuke's picture

>>What's Israel's gold holding?<<

 

Whatever the U.S. can supply.

SuperRay's picture

Joke #1, that chart about gold holdings is based upon what? The reports of central banks? 

Joke #2, the mossad already took all the gold under WTC7 (in black GMC's about an hour before the 'attack'

Joke #3 they'll be getting the rest smuggled in up the ass of american politicians

 

Curiously_Crazy's picture

Interesting. Linking jokes one and two, did the US gov actually report a reduction in holding? I mean we all know they are full of shit anyway having hypothicated the gold several times over, but here is something concrete that was there one day and 'gone' the next. Did it show in official reports?

zaphod's picture

Turkey and Portugal have more gold than the UK?!?!

They were an empire just 100 years ago. My god that place has gone to hell.

Mr Pink's picture

Brown sold off all of their gold. Maybe he was afraid England might capsize