12 Reasons Why Ritholtz and Many Experts Are Mistaken On Gold

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12 Reasons Why Ritholtz and Many Experts Are Mistaken On Gold

 Being involved in the fairly niche business of an international gold brokerage for nearly 12 years now, we find ourselves continuously engaged in conversation with people who demonstrate an incredible lack of understanding of the function of gold and the importance of gold as a DIVERSIFICATION and as a SAFE HAVEN asset.

Gold_Is_A_Safe_Haven_asset_£D_Book_Cover.jpg

This lack of understanding is not confined to the public but also prevalent with some financial experts. One example of this is one of the more vocal anti gold experts in recent months - leading Bloomberg columnist Barry Ritholtz.

This lack of understanding results in many investors being very exposed and at risk of financial losses due to their significant over exposure to paper assets and fiat digital currencies and complete lack of any allocation to gold whatsoever.

These experts are highly intelligent people. As are many in the public and yet the concept of diversifying and having an allocation to gold is utterly foreign to them.

The public have little terms of reference except for movies such as Goldfinger and fairytales about Leprechauns and crocks of gold. Indeed, their primary reference point is often jewellery, wedding rings and of course the recent ‘cash for gold’ phenomenon.

They have no understanding of the central role gold plays in macro-economics, geopolitics and of course monetarily.

They have no knowledge of the fact that gold has protected people throughout history from financial and economic crashes and from currency devaluations. The significant body of academic research on gold showing it to be a hedging instrument and a safe haven asset is ignored and unknown.

We find ourselves constantly confronted by the same set of ill-informed opinions on gold.

Many of these misconceptions were encapsulated in a 2013 article by  Barry Ritholtz, with the peculiar title "12 Rules of Goldbuggery".

Oddly, we happen to agree with a lot of what Ritholtz has to say. There are some - among the diverse range of people online who promote ownership of physical bullion coins and bars - whose enthusiasm for the metal can border on religious zeal. They are a minority.

At the same time we feel that Ritholtz’s article was somewhat disingenuous. It was unbalanced and simplistically denigrates gold ownership - ignoring academic research and indeed history and the experience of recent years - the U.S. and Euro zone debt crisis, Lehman Brothers etc.

The article was very widely disseminated and will have discouraged many investors from allocating to gold in a properly balanced portfolio.

The immediate problem with critiquing the disparaging remarks in “Goldbuggery” is that Ritholtz doesn’t approach his distaste for gold head-on. Instead he puts words in the mouth of apparent "gold bugs". He therefore avoids making statements he may later regret.

Certainly, some of these views are held by some gold buyers but, in our experience with our clients, they are by no means the mainstream view in the gold community.

It is worth noting that there is no asset-class other than gold where its proponents have their own derogatory classification. We are labelled "gold bugs", but there are no "stock-roaches" or "preying-bankers."  Let alone “paper bugs”, “dollar bugs,” “euro bugs” or heaven forfend “banker bugs.”

One has to ask - why the silly name calling regarding gold. Why use a pejorative and derogatory term for those who own physical gold to protect themselves from market turmoil and currency devaluations? It suggests an anti gold agenda or at least anti gold beliefs.

Let us now look at Ritholtz’s Twelve Rules of Goldbuggery. We will look at each of these contentions and deconstruct them one by one.

1.Gold is Currency

goldcore_bloomberg_chart5_25-02-15 

That gold is a form of currency and money is self evident. If it were not, central banks, particularly in Asia, would not be buying vast amounts of it and Western central banks would not continue to be holding vast amounts of gold reserves.

When the U.S. shut Iran out of the SWIFT system Iran began successfully trading oil for gold. In extremis, at this time and place in history, gold is the ultimate form of payment as Alan Greenspan recently pointed out.

Ritholtz suggests that proponents of gold ownership view it, irrationally, as a permanent store of value because it was declared so in Greece 2700 years ago and “it shall ever be thus.”

Placing monetary value in a piece of metal is an abstraction, we agree. However, in practical terms there is no company, currency or empire that has outlived the value that man has placed on gold.

Maybe the time will come when humankind devise a more sophisticated means of exchange but in the here and now gold is money. In the not unlikely event of a monetary crisis, with currencies based on confidence alone today, gold - which has industrial applications and psychological appeal – will again retain value and outperform.

The ECB’s Mario Draghi said gold is a monetary “reserve of safety”.

2. The price of gold cannot fall, it can only be manipulated lower.

 Like all currencies gold fluctuates in value relative to other currencies. No rational person would ever state otherwise. At the same time there is mounting evidence that violent downward swings in the price of gold have been orchestrated by large banks.

This is achieved by dumping large contracts for gold which they are not in physical possession of (naked short selling) onto the market during quiet periods when there are few buyers to support the price.

goldcore_bloomberg_chart6_25-02-15

In fairness, Ritholtz wrote his article before it was exposed last year that banks were rigging practically every market on the planet and continue to do so.

This week it has emerged an astounding ten of the major banks may be directly involved in rigging the gold-price are now being investigated by the Department of Justice in the US and by the CFTC.

Under investigation are the household names of International banking including Barclays PLC, Deutsche Bank AG, Credit Suisse Group AG, UBS and Societe General. Of course no banking scandal is complete without JP Morgan Chase & Co. and Goldman Sachs Group Inc.

Barry should meet and have a good chat with Chris Powell and Bill Murphy in the Gold Anti Trust Action Committee (GATA) if he really wants to understand the now well documented evidence of manipulation. 

3. If the price of gold is rising, it is doing so despite enormous and desperate efforts by manipulators to prevent the rise

 This is possible. As is the possibility of a tactical retreat whereby banks aware that physical demand may overwhelm their manipulation of gold and silver prices decide to gradually allow prices to rise, hoping that this will dampen physical demand and they can cap prices at higher prices.

Ultimately, the price of most things will be dictated by the forces of supply and demand of the nearly 7 billion people on the planet. Banks can prevent price discovery in the short term but in the long term, the small physical gold market will dictate the price.

4. The world MUST return to the gold standard one day

 Ritholtz fourth rule - that the world "MUST" return to the gold standard one day - is also not a view widely held in the gold community.

 Certainly, there is a potential for such - and some would suggest a necessity - but nobody knows what political action will be taken in different countries if confidence is finally lost in the world’s erstwhile reserve currency - the dollar.

If China and the Eurasian Economic Union headed by Russia choose to partially back their currencies with gold, which seems possible  given the huge volumes they have been accumulating, they could potentially challenge the dollar’s role as reserve currency.

 In such a case it is not unreasonable to suggest that the U.S. might be forced to back it’s enormous debt with the 8,500 tonnes of gold it claims to have. In such a case the very high prices of gold that Ritholtz ridicules - such as $15,000 - would not be so completely outlandish - although there are many more conservative estimates of gold over $5,000 per ounce.

Of course the purchasing power of those dollars would be greatly impaired. This is precisely why we advise clients to own gold. It is not necessarily for building wealth but for protecting it.

5. Central Bankers are printing money relentlessly, and this can only drive Gold prices higher

 This is true and to suggest otherwise is misguided.

Central banks are printing money hand over fist. This will inevitably destroy the purchasing power of currencies in the long term. There is no precedent in history for the scale of the currency debasement of central banks in the past fifteen years.

Whether or not the central bankers have finally, this time, perfected the alchemy of wealth creation through money printing is yet to be seen. Prudence would dictate that one takes measures to hedge against the typical outcome of such monetary incontinence throughout history. That is, uncontrollably high inflation. Historically gold has behaved as such a hedge.

Ritzholtz says that “gold-bugs” try to ignore the fact that gold had not gone markedly higher in the two year period before he wrote his piece despite massive QE.

Well, as Alan Greenspan explained in his address to the CFR last year, QE had not caused the desired inflation because all the cash got swallowed up in the stock markets or was loaned abroad causing high inflation in emerging markets.

Should the stock market bubble burst or should emerging markets shed their dollars, a wave of dollars will hit the real economy in the U.S. engendering very high inflation. Whether gold performs its traditional function in this scenario remains to be seen but in the absence of any other alternative we are confident that it would.

6. Gold works whether the economy is good or bad

 The purpose of owning gold is to hedge risk and protect against uncertainty. When things go very bad it rises as one's other assets fall, cancelling or at least reducing the loss. Ritholtz mockingly refers to it as “a trade that never fails!”  Owners of physical gold do not view gold this way. They do not speculate with it. They hold it as an insurance policy that has no counter-party risk.

Therefore, yes if owned as financial insurance, gold like insurance, is useful and “works whether the economy is good or bad.”

Generally, gold performs better when the economy is bad. However, we live in a very uncertain world and no one can protect the economic cycle hence the vital importance of DIVERSIFICATION.

7. Gold will survive after the world economy crumbles

 The assertion is that if the world economy collapses, we would be in a post-apocalyptic ‘Mad Max’ type scenario. This is childish nonsense. Industrial, technological and agricultural capacities would remain intact for the most part.

Social chaos and war may ensue during the transition with some resulting destruction but by and large trade would continue in most parts of the world.

The economic catalyst for a collapse in the global economy, should it happen in these times, would likely be the failure of paper currencies due to gargantuan unpayable debt.

In such a climate it is reasonable to suggest that gold could be the last man standing. It may not be held in great esteem in the West but in the East, it certainly is.

In the event of a currency collapse exporters will expect something of value in exchange for their produce. When faced with a choice between unlimited paper and digital fiat currencies with no tangible backing on one hand and gold-backed Eurasian or Chinese money on the other, it is reasonable to speculate that they will choose the latter.

8. Never admit that Gold is essentially a sucker’s bet

 Ritholtz lists periods when gold has not performed well in dollar terms, choosing to ignore the intervening periods in which it thrived. Data mining is such an easy thing to do. One could pull similar rabbits from a hat to disparage the Dow Jones and S&P and other benchmarks.

 The difference is that owners of physical gold still owned something at the end of a bad period whereas owners of stocks and shares of many companies lost everything.

Also gold was money throughout many of the periods cited as dollars were backed by gold. Gold has a fixed price of $20 per ounce and then $25 per ounce and it was not a freely traded market. Therefore it is unfair and disingenuous to compare it to stocks, traded markets or other speculative ‘bets’.

9. Gold is a rejection of government, and their control of fiat money and finance

 This is another sweeping generalisation. Many of our clients believe this. Most don’t.

Most do not ‘reject’. Many are concerned.

Owning gold needs no ideological basis. True, it can protect one from the stupidity of the types of politician and policy maker who have destroyed economies throughout history.

Owning gold as protection from government stupidity and corruption is not a rejection of government per se.

The wise Founding Fathers of the U.S. were adamant that gold and silver - and nothing else - were money. So much so that they had it written into the constitution.

Did these "goldbugs" reject the concept of government? Or rather did they see the benefit of having monetary controls on bankers, politicians and governments?

10. All Gold discussions must contain ominous macro forecasts

 This is another sweeping generalisation. Some gold analysts make ominous forecasts. Others do not. Some stock and bond market analysts make ominous forecasts. Others do not.

We generally do not make forecasts. We address macro-economic and geopolitical facts and highlight the unavoidable conclusion that there is very high, perhaps unprecedented economic and geopolitical risk in the world today for which people should be prepared.

Ritholtz suggests that gold analysts “avoid empirical data at all costs.” This is nonsense. We, and many of our competitors in the gold business, consistently use important data, much of which is studiously ignored by many bank and other economists when they conflict with the official narrative of “green shoots” of recovery.

11. Gold is always rallying in one currency or another

 This is a statement of fact - especially in this era of currency devaluations and currency wars.

goldcore_bloomberg_chart2_25-02-15

Obviously, the price of gold in another currency has no immediate bearing on the price of gold in an investor's own currency.

However, it is highly relevant in demonstrating how owners of gold manage to preserve some of their wealth when the economy of the country in which they live is mismanaged and has an economic and or monetary crisis.

Gold priced in roubles rose 75% in 2014, during the Russian economic crisis. This aptly demonstrates the role gold plays in economic crises and it is relevant information in highlighting the case for owning gold.

goldcore_bloomberg_chart1_25-02-15 

Gold is again acting as a hedge against currency weakness and the ongoing devaluation of currencies as stealth currency wars continue.

The focus on gold solely in dollar terms is misleading. It shows a peculiarly dollar centric way of looking at the world. It is important for investors in the UK, EU, Japan and elsewhere to always consider performance in local currency terms and top not lose sight of the fact that all fiat currencies are being devalued today - including the dollar.

12. China & India know the value of Gold; The Western world does not

This is true too. Go to India, China and Asia and talk to ordinary people and you will quickly realise this.

The people of China and India live in societies where wealth has been periodically extracted from them through currency devaluations. Therefore, they have a natural affinity for gold as insurance and as a store of wealth.

goldcore_bloomberg_chart8_25-02-15

It is not a matter of them “knowing” the value of gold. What is important is that actual direct experience has caused a mass of people - that compose one third of the entire population of the globe - to value gold.

Gold will remain a store of value for most Asians for the foreseeable future, thus supporting the price that people are likely to pay for it – especially in a crisis.

Western populations, except perhaps for Germans,  are not prepared for a potential monetary crisis and severe inflation. They do not understand the potential for even deeper currency devaluations and the role that gold would play protecting their wealth in such a scenario.

Conclusion

This concludes our reply to Ritholtz’s 12 rules. As you can see, they are misleading and misrepresent the case for owning gold.

Gold has proven itself a safe haven both historically and again in recent years. There is now a large body of academic and independent research showing gold is a safe haven asset. Numerous academic studies have proved gold’s importance in investment and pension portfolios – for both enhancing returns but more importantly reducing risk.

The importance of owning gold in a properly diversified portfolio has been shown in studies and academic papers by numerous academics and by Mercer Consulting, New Asset Frontiers and the asset allocation specialist, Ibbotson.

This is not an attack piece on Ritholtz. As we said at the outset we share his views on many matters financially.

Rather it is an attempt to try and engender a more fair, balanced, nuanced and enlightened debate about gold as an asset and a safe haven.

As a frequent contributor to Bloomberg, I would welcome the opportunity to debate this with Barry.
What say you @ritholtz ?  : )

Click here for Gold Is A Safe Haven Asset

 

MARKET UPDATE

Today’s AM fix was USD 1,206.50, EUR 1,062.06 and GBP 777.99 per ounce.
Yesterday’s AM fix was USD 1,195.50, EUR 1,057.97 and GBP 774.59 per ounce.

Gold fell 0.16% percent or $1.90 and closed at $1,200.20 an ounce on yesterday, while silver slipped 0.43% percent or $0.07 closing at $16.25 an ounce.

Gold in US Dollars - 5 Days (GoldCore)
Gold in US Dollars - 5 Days (GoldCore)

Gold jumped 1 percent in late Asian trading after falling to a seven-week low in the prior session, as Fed Chair Janet Yellen’s dovish tone hinted at flexibility in raising U.S. interest rates - meaning she is happy to hold them near zero for as long as possible.

The timetable for the Fed’s interest rate hike is now perhaps June through September - if even that - ZIRP looks here to stay.

Yellen's comments sent the U.S. dollar lower, and stoked a rally in precious metals with silver rising over 3 percent and palladium reaching a six week high.

China's return from its Lunar New Year break also strengthened gold prices, with premiums on the Shanghai Gold Exchange (SGE) rising to $5-$6 an ounce over global spot prices, from $3-$4 before the New Year’s holiday.

In late morning trading, gold is $1,208.61 up 0.31%, silver is $16.54 up 0.77% and platinum is $1,169.20 up 0.22 %

Daily and Weekly Updates Here

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gregga777's picture

There is a Scientific Physics concept that everyone needs to be aware of—it's something called Inertia. In Physics, physical material, that we call Mass, has Inertia. Inertia is a property of Mass that makes it resistant to change. Resistant to change position, change velocity, change temperature, etc. The greater the amount of Mass, the greater it's Inertia. Get the picture?

In the TEOTWAWKI event, the end of the world as we know it from the economic, financial, market, government, trade, etc., perspective, we are looking at a world-wide event. It's not merely an event isolated Zimbabwe or Argentina or Venezuela. I extend my sincere apologies to the good peoples of those countries versus their rotten to the core leadership elites and their willing accomplices. But, look at how many years it took each of those countries to go from prosperity to economic collapse and chaos. Venezuela has still not quite formally collapsed even though they've been on the road to it for, what, decades?

Each of those countries had begun their own trip to Serfdom possessing certain quantities of assets, capital stocks, infrastructure, mobile and educated citizens with varying amounts of wealth, etc. When the Criminally Psychopathic gained power, assisted by their willing accomplices, they began implementing their insane programs using the typical tool of the Tyrant: redistribution of wealth by force, because as Mao Tse-Tung so eloquently put it, "Power flows from the barrel of a gun." [My apology for any inaccuracy in spelling or translation.]

Still it took many, many years for those countries to collapse. Why did they not collapse immediately? Why did the intelligent and/or highly educated, business owners, professionals with internationally marketable skills, and others see the "hand writing on the wall" and simply pick up and leave?

I recall seeing a documentary about a country in Southern Africa that elected a Criminally Psychopathic leader and ultimately collapsed. They interviewed a businessman who did leave soon after the election. He said it was clear to him what was going to happen. So, to the near universal shock, dismay, and/or derision of his friends and fellow business associates, he liquidated his non-portable business & home properties and moved everything else, himself and his family to another country where he and his family are safe and thriving to this day. Unfortunately, many of his former friends and business associates lost between some to all of their material wealth and possessions. The truly unfortunate lost their lives or the lives of their loved ones.

Why did one man foresee the ultimate consequences and leave? Why did all the others stay long after it even became clear internationally that that particular country was on the road to perdition? Was it, "It can't happen here?" Was it, "Normalcy bias?" Or, was it, "Inertia?" Did it happen slowly enough, and they were busy and preoccupied enough, to not notice the noose closing around their necks?

In TEOTWAWKI, I believe that it's all three of the above. We've been on the Road to Serfdom, to becoming debt slaves, for a very long time. I can remember when having a Credit Card was a very exotic thing, and getting a Revolving Debt account at, say Sears & Roebuck, required a very lengthy process of filling out long, multiple carbon-copy applications and a lengthy waiting period.

TEOTWAWKI began with the enactment of the Federal Reserve Act of 1913. Even that racist scoundrel KKK-loving Democrat President Woodrow Wilson acknowledged he was dooming the American people by signing that Unconstitutional Act into Law.

The Progressive-Socialist President Franklin D. Roosevelt used the Office of the Presidency to greatly accelerate America's destiny towards TEOTWAWKI, greatly prolonged and deepened the Great Depression with his New Deal programs, tried to Amend the Constitution to add more Justices to the Supreme Court thereby packing it with fellow Progressive-Socialists, and used WW II to Unconstitutionally expand the Federal Executive branch bureaucracy beyond anything the Founders of the United States of America could have imagined in their worst nightmares.

President John F. Kennedy had signed an Executive Order ordering that the phased withdrawal of United States troops shall begin in South Vietnam and be completed by a date in 1964 (I don't recall the exact dates, but I know it was to be completed before 1965). Less than one month following President Kennedy's assassination the miserable war criminal President Lyndon B. Johnson issued an executive order countermanding President Kennedy's EO ordering the withdrawal of US forces from South Vietnam.

President Johnson went on to order to order the initial deployment of US Marine ground and air combat forces to South Vietnam. Thus began President Johnson's and Secretary of Defense Robert S. McNamara's gradual escalation of the war to convince the North Vietnamese leadership and peoples that "we meant this was going to be serious business".

The G-d awful destruction unleashed by a USAF B-52D Stratofortress Strategic Bomber, with the 84/42 "big belly mod" 500-pound/750-pound bomb racks and 24/24 500-pound/750-pound bomb wing pylon hard point ejectors, carrying a total of 108 nominally 500-pound bombs, totaling 60,000 pounds of bombs must mean something other than "serious business" to a chicken hawk. From a position safely well above the explosions, one could see the moisture condensing out of the air, in the low-pressure zone following the high-pressure blast wave radiating out away from each explosion, through Vietnam's highly humid air. It's a deeply disturbing sight if one possesses any shred of empathy for one's fellow human beings below. Sometimes it's best to have no imagination and the ability to forget scenes like I just outlined.

One of the fundamental maxims regarding warfare states, that the quicker the war ends, the fewer military and civilian casualties and deaths, and the less damage and destruction of properties, there will be.

This why there is such an enormous disparity in casualties between WW I and WW II on the Western Front, assuming that WW II had ended with the capitulation of France.

I apologize in advance. I'm not very good at formatting tables here. Really, I'm quite bad at it, if that makes you happy.

Comparison of World War I Western Front Casualties By Year and Major Battles
4 August 1914 — 11 November 1918,
Total Duration: 4 years, 3 months and 1 week

YEAR_MAJOR BATTLE(S)___ALLIES________GERMANS
1914 1st Marne____________263,000_________220,000
1914 1st Battle Ypres___126,921 - 161,921_____134,315
1916 Verdun__________400,000 - 542,000__355,000 - 434,000
1916 Somme_____________623,907_______465,000 - 595,294
1917 2nd Aisne___________118,000___________40,000
1918 Spring Offensive______851,374__________688,341
1918 100 Days Offensive__1,069,636_________1,172,075
1914-1918 Western Front Total Casualties
__________________3,619,838 - 4,077,838__3,370,731 - 3,684,025

Comparison of World War II Western Front Casualties By Year and Major Battles
10 May 1940 — 25 June 1940,
Total Duration: 1 month and 15 days

YEAR_MAJOR BATTLE(S)__________ALLIES________________
1940 Battle of France
___________FRANCE_____________MAGHREBIS*___SENEGALESE
KIA____WIA____MIA____POW**____KIA_WIA_POW__POWS***
79,910_120,000_ 12,000_1,540,000__5,400_?___?______>3,000

______BRITISH****______________BELGIUM^______________
KIA_____WIA + POW__KIA + WIA___MIA_____POW___CW___
<10,000____59,637_____6,093____>500____200,000__15,850

_________________________NAZI GERMANY_________________
___________HEER (ARMY)^^___ ____________LUFTWAFFE____
_____SOLDATEN ALL TYPES___ ___ AIRCREWMEN_____NON A/C
_____KIA________WIA____MIA___ _KIA__WIA__MIA/POW__CAS_
27,074 - 49,000__111,034_18,384___1,129_1,358__1,930_____2,236_

*MAGHREBIS were troops raised by the French in their Northwest African territories more familiar to Americans as the Barbary States, where the United States Marine Corps' Hymn acquired, "…the halls of Montezuma to the shores of Tripoli…" when combating the Barbary Coast Pirates in the early-19th Century.
**French POWs: 24,600 died while in German captivity; 71,000 escaped; 220,000 were released by various agreements between the French Vichy government and Nazi Germany; several hundred thousand were paroled due to disability, sickness or both. Approximately 940,000 French POWs were liberated in 1945 by advancing Allied forces.
***Senegalese Tirailleurs were a corps of colonial infantry serving in the French Army that were recruited from Senegal, French West Africa, and throughout west, central and east Africa, the main province of the French Colonial Empire. Tirailleur is a French noun that translates to mean "skirmisher", perhaps lightly armed "scout" would be more meaningful. At least 3,000 Senegalese Tirailleurs were murdered after being taken prisoner by Nazi German forces.
****Britain had fewer than 10,000 killed in action. Total ground force casualties, KIA, WIA & POW, were 68,111. RAF losses throughout the campaign, 10 May - 22 June, were 931 aircraft and 1,526 casualties. They also lost 243 ships to Luftwaffe bombing during Operation Dynamo, including 8 destroyers and 8 troopships, without separate specification of casualties.
^2,000 Belgian POWs died while held in captivity. Belgian wounded (presumably civilian) were an additional 15,850.
^^Overal German casualties are still to this day difficult to determine. The commonly accepted figures are used above: 27,074 KIA, 111,034 WIA, and 18,384 MIA. The number of Germans killed may have been as high as 49,000 men, when accounting for non-combat deaths, WIAs who later died from their wounds, and MIAs confirmed later as KIAs.

There is a commonly accepted canard in America that the French did not fight the Nazi German invasion of their country in 1940. As can be seen above the French Army suffered enormous casualties in the 45 days of combat that it took for the German Blitzkrieg to shatter their Army and Air Force.

My personal experience is from the US Marine Corps, though I have probably read a thousand books, articles, training manuals, stories, etc., about ancient through modern warfare, and from symmetrical opponents to highly asymmetrical opponents. The Marines offer several relevant ways of thought applicable to the Battle of France:

1. You will fight the way that you train;
2. The more you train in peacetime, the less you will bleed in wartime; and
3. You should always be [to defeat the enemy]:
a. in contact with the enemy; or
b. in movement to make contact with the enemy; or
c. training [how to make contact with the enemy]; repeat.

Unfortunately, the French political and military elites equipped and trained their Army and Air Force to fight the pre-World War I German Army. Doubly unfortunately for France, Nazi Germany had heavily invested in a highly mobile, combined arms offensive spearhead force, with real-time, state-of-the-art transceivers and encryption capabilities down to the smallest maneuver unit, a Panzerkampwagen or tank, in the spearhead.

The German combined arms units incorporated balanced, well-trained artillery, infantry, engineer and Panzer formations accompanied, theoretically though limited in actual practice due to specialized vehicle shortages, by Luftwaffe tactical forward air controllers, comprising a highly mobile armored division. I have read that General Heinz Guderian's Corps' never had to wait more than 15-20 minutes, after calling for Luftwaffe close air support, on its dash to the English Channel. Surely, that could be a major factor in the destruction or abandonment of 64,000 and 2,472 British Army Expeditionary Unit vehicles and artillery guns, respectively, and the extraction of irreplaceable manpower at Dunkirk!

This allowed an armored division commander, say, General Erwin Rommel, to move 4-tank platoons through the Ardennes probing for gaps in the French defenses as though he were playing chess against a blind opponent. The German General Staff complained that they never knew where Rommel's division was as it fought through the Ardennes. How could the French know where Rommel's division was or where it was going?

On the other hand, a French Corps commander depended on physical runners from his subordinate division headquarters to determine German dispositions. Information, that if accurate when sent, was woefully outdated if it ever arrived at Corps HQ.

The French by and large had more and better tanks, that were larger, had heavier armor and bigger guns, than the German tanks. The Germans still relied significantly on the Panzerkampwagen I light tank (5.4 metric tons) mounting 2x7.92 mm MG-13 machine guns and very lightly armored, 7-13 mm, and the Pz. 38(t), the excellent Czech light tank (9.85 metric tons) mounting 1x 37 mm gun and 2 x 7.92 mm MG-37(t) machine guns and 8-30 mm armor Ausfuhrung A-D and 8-50 mm armor Ausfuhrung E-G.

The French tanks were parceled out piecemeal at about 100 to each infantry division. They almost all universally lacked the radio transceivers that the Germans had so heavily invested in. The infantry divisions could not call on close air support. The German tanks were not designed for, and could not engage in, tank-versus-tank standup combat. Their higher speed, mobility and reliability allowed the Germans to lure French tank units into well-planned, well-concealed anti-tank artillery unit traps.

In the parlance of the OODA loop (Observe, Orient, Decide, Act, repeat) popularized by US Air Force fighter pilot, originally intended for application to aerial dogfights, more colorfully known as fur balls, the Germans were operating at such an accelerated operational tempo that it paralyzed the French Army and Air Force as cohesive, corporate forces. Individual infantry units, soldiers and airmen fought very bravely against overwhelming and highly mobile German forces. Much of the time, the Germans were able to bypass strongly held French positions because of their high mobility and close coordination between Luftwaffe reconnaissance aircraft and frontline Heer spearhead armored and motorized divisions.

The French political elites failure to fund the completion of the Maginot Line from the French-Belgian frontiers to the English Channel guaranteed a German violation of Belgium's neutrality in the event of war, bringing Great Britain into a German-French conflict because of British public sympathies for protecting Belgium's neutrality.

That ends the history lesson. And not at all a rant for such a long piece! Now, if I can remember why I launched into such a long diversion. Oh, yes, because of President Johnson, Secretary McNamara and their escalation policy in Vietnam. Another maxim of warfare is that those who suffer the most during a war are those non-combatant civilians caught between the warring parties.

The North Vietnamese were supposedly close to capitulation under the maximum efforts of the 1965 air campaign against the North. I have no idea how much truth there is to that. But, President Johnson called a unilateral halt to the bombing to convince the a North to come to peace talks. Johnson and McNamara. They were both criminally guilty of dereliction of duty. The bombing halt allowed unfettered delivery and installation of Soviet SAM sites at locations where US rules of engagement (ROE) forbade bombing them.

Though we subsequently lost a number of B-52s and other aircraft, but most crucially thousands of aircrewmen out of whom only a little over 600 came home from captivity. The intelligence on Soviet SAMs we gathered was greatly appreciated and put to very good use by the Israelis in several wars. The Israelis make some first rate electronic countermeasures equipment.

I had a USAF friend, flying backseat as an F-4 Phantom II WSO, who on a bombing mission some years later into the North, perhaps Hanoi, said that he saw a flash through the under cast below his aircraft. He rolled his head to the right to look out through the canopy plexiglas, "Just as a telephone pole went through the aircraft's wing." A Soviet SAM-2 failed to fuze passing through the thin wing of the F-4, though it should have exploded in proximity in the first place. Maybe it was defective due to the high humidity. We had severe humidity-related problems. I don't see why the Soviets should have been immune to that problem.

Prolongation of the war resulted more death, destruction, waste of blood and treasure and deaths of uncounted civilians. North Vietnam's General Giap admitted to losing a million men in combat. How many civilians died in North and South?

After prolonging the war for nearly another 8 years what did President Nixon gain us? We printed so many dollars to support the war and the Great Society that European countries, led by the French, stripped Fort Knox of tens of thousands of metric tons of gold. Instead of reining in spending President Nixon severed conversion of dollars into gold by sovereign nations with excess dollar reserves. Nixon launched the world onto the great world-wide fiat money regime.

But, Irony is a real bitch. Why is that? Because we should have supported the North and South in their desires for independence from French colonial rule. We should have never supported the French in their bid to regain their colonial possessions. We didn't allow Japan to resume their colonial master ship of Korea, right? Or of China, right?

We should have never embarked down the road towards the defacto empire we control. The dollar should not have become the worlds reserve currency. If it's such a great benefit why is there not a long line of other nations wanting their currency to become the new reserve currency? The answer is that it's an albatross around the neck. It's a net loser for the reserve currency country.

I regularly talk to people younger than I, who should be old enough to know better, who don't believe TEOTWAWKI will occur within their lifetimes.

That's because they've never known anything other than the fiat currency world. The normalcy bias is at work there. They also didn't have the pleasure of being blamed for causing the Vietnam War by the anti-war movement; being called baby killers, murderers, and such vitriol. They missed the 1973 and 1979 oil embargoes/price shocks and signs of incipient hyperinflation. They missed the humiliation of the Iran hostage crisis, the further humiliation of the failed hostage rescue mission and deaths of so many rescuers, all shown on world-wide cable television. They missed the disastrous Presidency of Jimmy Carter. But, now they are witnessing the far more disastrous Obama Presidency.

The Mainstream Media, the maker and controller of our consensual reality, is not about to sound the alarms or tell the truth about anything substantive. But, the moment a government official or a non-government official from the Federal Reserve states on a Friday afternoon that, let's say, a devaluation of the dollar is not being studied and isn't about to happen, is the sign that the **** is going to hit the fan on the opening of the markets on Monday.

In TEOTWAWKI we are looking at the inertia of the entire world. The entire world is engaged in a "beggar thy neighbor" currency war. The biggest losers are any net savers. The biggest winners are the biggest debtors with respect to their incomes. That is, until the music stops playing and the mad scramble for chairs begins.

This currency war cannot go on forever. But as someone once famously said about unsustainable trends in general, "…it can't go on forever, but it can go on a lot longer than you think it can, until it can't go on anymore." I can't measure the inertia of the world's currency regime. I can't even make an educated guess about what it is or where the breaking point will be or when it will be.

But, something is telling me that it's going to happen before the 2016 Presidential primary elections. There are events occurring that my mind has synthesized into at least one conclusion—that President Obama was elected to be the fall guy for the US Dollar's demotion from its reserve currency status. I think that will ultimately be a long-term good for the United States of America. It's the short-term pain, lasting in the worst case, for say 25 years, that keeps me awake thinking very, very dark thoughts at night.

But, hey, don't worry! Enjoy your weekend!

Semper Fidelis!

GoldIsMoney's picture

Investing without any investment in PM is not investing it's gambling.  Everyone as one likes. That you have speculated on a raisng price is just that speculation, but the whle article is no about speculation but saving for a situation which will come. We do  not know when but we know it will  happen. There is not one fiat currency which has survived for moren then 200 years.

If you buy gold you buy it to hold it and not to sell it. If you do want that you speculate, and this may or may no work.  That's the "normal" risk. But in the case that the fiat-currencies will be devaluated further. The price of PM will raise there is no such thing as an eternal deflatoin and there will be never a thing of eternal inflation. Inflation just can run to some extend, after that the things simply fall apart. And for that catastrophic moment one better has to have some PM

But do as you like, but do not balme anyone for your decisions. You do not believe in Gold? Fine with me, don't buy it. Don't buy it because anyone suggests it do you, but think about  it yourself and get to you own conclusions.

I've made up my mind since the establishment of TARP and that is now 7 years agao. To that time I bough my first kgs of Gold and guess what the price since then in any fiat-currency has doubled. Will I sell this Gold? You can bet I won't. I also bought gold ever since in some amounts some gold now has risen some has falen beyond the buying price. I tell you something. I do not care. I'm not greedy and I've enough for my living. This gold just lies arouind and shines. I tell you something else. It has not vanished it was not inflated nor deflated. I bough the kg in 2008 and still it's the kg. If I did that in EUR I would have lost  around 15% through inflation, but if I look at the hundred Euro bill it still looks the same it's green and printed on it is 100 €.... But I can not buy the same things for it as I could in 2008.

With the gold bough in 2008 I would be able to buy more. Now tell me about a bad deal....

Maybe this could give anyone doubting gold a hint why they may be wrong?

http://www.zerohedge.com/news/2015-02-25/what-happens-gold-currency-cris...

Now tell me about a good deal. Just imagine I had bet on this fiat money from Ukraine. Whom could I blame?

Majic's picture

I have a small amount of Gold, and a little more substantial bag of Silver.  I had to pay what I consider dear for it based on my limited income.   I try to save cash outside of the bank nowadays since it began to cost me to keep it there.  The reason I keep Gold and Silver is because I have been in desperate straits many a time and found that articles of REAL value can always be redeemed for something you need. ALWAYS.  Most fiat currencies used to fill that niche as well, but now most Western ones seem poised for a reset ( nice way to say devaluation).

     I can't believe there are still some people who are able who do not at least have some ( say a months worth of their expenses) saved in metals.  Just look at the Ruble, no hyperinflation; just lost about half of its value in a year, thats all.  Holy Shit!  I can imagine what that would do to my family.  Sure would be nice for some of my relatives over there to be able to take a 1/10 oz. Gold Eagle and get a cart of groceries.  Something the size of a base metal dime that gets you a cart of groceries...NOW THAT IS MONEY!

lunaticfringe's picture

The only buggery that I have ever been interested in- happened with a tall blond gal sporting a tramp stamp. 

gregga777's picture

I do not want to be living anywhere near the Guilty Elite Classes, or anywhere within 100 miles where the population density exceeds 10 per square mile, after the dollar collapses in a hyper inflationary spasm.

Because EBT cards will not buy enough food to last a day. Anyway, all grocery stores shelves and warehouses will empty in mere hours. Then it will be up to FEMA to provide food to the (just what is the latest head count of American citizens and non-citizens dependent on EBT cards for their daily bread?) some-50 million-plus starving Americans? Desperate fathers and mothers are going to do anything, and I want to emphasize anything, to feed their starving babies and small children!

In the process the pent-up anger from three decades of tens of millions of downwardly mobile Americans whose jobs were moved to China, and tens of millions more Americans kept deliberately dependent, all by deliberate political calculation, is going to vent rapidly and unpredictably. It's going to vent all at once because none of the safety valves built into the American Republic by the Constitution work any longer.

The Unconstitutional Federal Tyranny, the Uni Party, the One-Party System, the No-Choice System, the Elected, bought and sold for Widow's Mites that even Judas would have scoffed at, no longer represent the interests of the voters, whatever you wish to call the parties themselves. The Elected and their appointees all answer to the same Deep Pockets, the Uber Rich, the Immortal Family Foundations, the Organized International Criminal Syndicate of Central Banks and Commercial Banking & Insurance and the Mega Multinational Corporations—Corporations that in fact have more rights and fewer responsibilities than flesh and blood human beings.

The factions so dreaded by the Founders are firmly in control of America and are deliberately bleeding the lifeblood from the remnants of the American Republic. Our supposed representatives no longer even make a pretense of taxing us. The Criminals who own the Unconstitutional and Criminally-complicit Federal Reserve Bank electronically create at least 40% of every dollar that the Federal government spends at need and hands it over, festooned with strings.

It's no longer mathematically possible for the United States to pay its debts. Plus, the Supreme Court ruled in the mid-1930's that Social Security payments are nothing more than to support those too old or unable to work any longer. That is, one has no "right" to a return of any payments made into the system.

The English Parliament of the day would not have allowed King George III to commit even one unlawful act that LPOTUS—Lying-most President Of The United States—commits on a weekly basis for his past 312-some weeks in office.

Not satisfied with regular impeachable offenses, he is not only grossly alienating our natural allies against Islamic Extremism—China, India and Russia—who both share long borders with Islamic lands and/or have significant domestic Islamic extremism. He's also trying to push the United States into war against both China & Russia!

LPOTUS Obama must be stopped by Congress using the impeachment process before he and his chicken-hawk, war-monger advisors push us into a war that no sane American should want!

There's no such thing as the Glorious Dead! My Father's aircraft, a C-47 in the USAF 21st Troop Carrier Squadron, helped haul nearly 4,800 US Army soldiers, US Marines, UK Marine Commandos, Republic of Korea soldiers and Chinese People's Liberation Army casualties out of the Chosin/Changjin Reservoir Area, during the Korean War, late-November-to-early-December 1950, while bringing in vitally needed supplies, especially cold weather gear in temperatures as low as -37 degrees Celsius. They often landed and took-off within 200 meters of PLA lines.

Dad tried to talk me out of volunteering to be a United States Marine during the Vietnam War saying, "I hauled dead Marines out of the Chosin Reservoir, frozen and stacked like cordwood in my airplane." Would that I had heeded him…

lakecity55's picture

Gold, Bit-Chez!

"Mr Red Shield, we have finished your annual audit. All your paper instruments are OK. We were surprised to find no gold in your safes."

"Ha! Gold 'tis but a barbarous relic! We own none!"

/s

Mickdoo's picture

Actually I could care lessm what Ritholz says or what you say. Gold and silver coins are long term holds. They dont rust and guess what, I like them, so piss off. Beside I have to do something with all my money I make from Oil trading.

AAA21's picture

While Barry Ritholtz is udoubtedly a arrogant Dick (to use a technical term), there are also a number of wack job gold bugs out there.  What is true is that Gold is a valuable insurance policy, and that a 5% - 10% portfolio allocation (assuming you probably won't ever need to touch it) is probably a prudent thing to do.

VA Voter's picture

hahahahaha.  Who are you going to believe, this guy or Martin Armstrong?  Do your homework people.

wstrub's picture

People bring the "cash for gold" retailers $1,000.00 and they give them back $500.00...........AND THEY WALK OUT HAPPY!!!!!!!!!!

meterman's picture

Ahhh Yes - Yet another Gold (and PMs) are a great buy article by another PM cheerleading huckster. Well, in 2011 and on I bought the collective BS spread by the likes of you, Barry, along with the "All In" PM chant from all the Gold gurus and the "Get out now" threat about bank confiscation and run-away inflation. A powerful message because it came from so many. 2015 has started - still no epic collapse - my wealth REDUCED BY 40%. Thanks. But, I know I am an idiot for swallowing all your s**t.

Mickdoo's picture

A fool and his money are soon parted.

Tinky's picture

No, you are an idiot for complaining about the timing of the impending collapse.

HardAssets's picture

Some of us man up.

We study money, banking, and gold at a deep level.
( 'No time' ? Start by turning off the idiot box.)
Then we take our own actions, based on this.
We adjust along the way, recognizing where we have made mistakes.
We reexamine the reasoning behind our actions to see if it is still sound.
We're mature enough to recognize that No One has a crystal ball.

And we don't whine like 4 year olds and blame others for our own actions.

P.S. - and yes, at times we've also felt frustration and anger at what fraud is being carried out.

meterman's picture

To HardAss

Correction:

To HardAssets

Where in my post did I claim buying PM was anyone's decision but mine. I read all the gurus for three years before buying my first coin (deep enough level of study for you?). I even called one expert in 2011 to get his personal take on the chances of financial collapse. He swore it would happen before the end of the first quarter of 2012. Again - enough due diligence to meet your superior requierments?  

Please understand - Not everyone can be as perfect as you.

 

Manipuflation's picture

Meterman:  That is not what HardAssets said or meant.  I know exactly what he meant by the frustration.  I have been in the metals markets for 16 years now so I can understand.  You didn't tell us what you bought.  I have no idea why you did what you did.  Another poster mentioned your timing and that is true.  It sounds like you bought in all at once.  No one in the PM world who knows what the fuck they are doing will ever tell you to do something like that.  You were speculating on a quick flip.  PM markets will destroy you in a heartbeat, manipulated as they are or not.  It does not materr because because anyone know you need to spread your risk.  For example I have some $34 an silver but I have far more $6 an ounce silver.  I have $300. $400 and $700 gold and I have $1300 gold.  Never buy the top on anything.  

Learn what it is that you are buying before you buy it.  Caveat emptor.  Be prepared for the long haul and watch the market everyday.  I am sorry for your experience but if you don't sell you have not lost anything.  Conversely, if you don't sell when the price is high then you didn't make anything.  Don't listen to the idiots online pumping PM's.  They are hucksters.  Some ZHers offer advice here but I have never told anyone here they just had to run out to buy PMs.  If you don't what you are doing then don't do it.  I have a 25% increase in off what I bought last week despite spot price and I only play phsyical.  How did I manage to do that?  I'm not going to tell because I do not want that competion until after I done buying.

In review, don't listen to idiots on the Interweb telling you need buy now.  Never put everything on the table on one sale.  Know what you are buying and hedge it against numismatic value if you can.(that is great hint for you)  Take physical delivery.  If you do that you will be OK.  I can offer this; in the last two weeks I have purchased gold, silver and platinum.  Just because I did doesn't mean I am right though.  Unless I sell, I won't realize any profit but that is OK because I am not in PM's for that reason alone.  PM's are the ultimate "fuck you" package to the banks and the state.                 

armageddon addahere's picture

I bought gold 4 to 5 years ago at $1175 to $1400 an ounce. Today it is $1503 an ounce in Canadian dollars. When I bought the Canadian dollar was about par with the US, now it is some 25% lower.

 

The moral of the story is that the price of currencies change as well as the price of gold, and you can't always predict when or how.

I regard my gold more in the light of insurance than a speculation. It has not performed as well as I expected but it has done better than some other investments I have, and I am confident it will always have some value.

Meremortal's picture

Pro gold traders want to trade with you amateurs. What a surprise.

Conax's picture

Gold Gold buy moar gold!

I'm here to get my red arrow everyone else got.

Too funny.

Roanman's picture

Stock roaches, I like it.

I'm taking it.

dexter_morgan's picture

Of course they want everyone else to consider it as just a barbarous relic.......

Comte d&#039;herblay's picture

"Talk to me like I'm Five".

 

These long treatises in defense of or offense of, always ring hollow.  The case needs to be made without so much detail.

I don't believe anyone anywhere knows where the price of PMs  are going, or should go.

Only those with massive, market moving executions can do that and profit by it. 

The rest are just engaged in buy/sell conversation that devoid of any knowledge of the future.

I can make a prediction today that is one hundred percent accurate and true for everyone. What I can't do is tell you when it will happen.

You can too.

Timing.  Without it, all else is less than useless and complete waste of time to all but the choir who sings the same tune. 

 

HardAssets's picture

I did a quick skim over of the article - that took about 5 seconds.
It may be a good read, but I've already covered the ground for myself. (Of course, this may be new to some people.)
I've studied tons of material for myself and have come to my own conclusions. (IMO Murray Rothbard wrote some of the best stuff on the topic,)

After a while you come to see what you know, and what you cannot know. (Examples of the latter include timing, because you don't know the insiders plans, or what Black Swans might be out there. Also, we don't know how much physical above ground gold is in existence, or who may have claims on it.)

We tend to get tied up in all the day-to-day chatter and this can be energy draining. If you can't change something out there, and it doesn't change your day-to-day strategies and actions, why put excess focus there. Some of us have studied these issues and stack a certain amount of physical on a regular basis. At this point, the every day movements & chatter haven't convinced us to change that approach.

Motown's picture

I posted this in response to Barry's original article.  I think it is even more accurate for today, and I hope it brings some levity to your day.

 

Let’s substitute the work “stocks” for the word “gold” in your missive, change a few words, and see what we come up with. Shall we?

1. Stocks are an investment: This is rule number 1. Stocks are not baseball playing cards used by Wall Street “investors” (sic) to trade for their own profit, while normal citizens get stuck with the bill when their “game” fails. And thus it shall ever be.

2. The price of stocks can never fall as the Fed is in control: When stock prices rise, it is the result of an international cabal of Central Bankers and politicians. It is a joy to behold and we are grateful (until the next collapse comes).

3. If the price of stocks is rising, it is totally based upon economic fundamentals absent any government stimulus to prop up stock prices: This is the corollary to the prior rule of Fed control. Stocks run up only because of the overwhelming economic data … provided by the government. Can’t you see the improving economic data? Like the number of people on food stamps? And disability?

4. Americans must put their savings and retirement into the stock market: It is inevitable that America will recover from this recession. We all know this to be true. When we compare the size of the Fed’s balance sheet, and the money supply, and government debt, and America’s off balance sheet obligations to retirees, we can see that stocks should be setting record levels and continue to do so ad infinitum.

5. Central Bankers are printing money relentlessly, and this can only drive stock prices higher: NOTE: You must ignore, for the moment, that stocks have not gone higher for the past 12 years as Central Banks around the world have ramped up QE. This only means that ultimately, stocks will go much, much higher.

6. Stocks work whether the economy is good or bad: When we have a red hot economy, your portfolio is increasing in value. When we have a bad economy, you can dollar cost average in at lower prices. It is a one way trade that never fails!

7. Stocks will survive after the world economy crumbles: Stocks are the ultimate investment, as they have a value that will survive even after the whole world tumbles around you. Get yourself some stocks and be sure to dollar cost average in more when the whole world goes to #$%$. We welcome the era envisioned in the movie Boiler Room.

8. Never admit that stocks are essentially a sucker’s bet: Never discuss how in the last century, stocks have run up only be to trounced in repeated massive sell offs, like 1901-1903, 1906-1907, 1916-1917, 1919-1921, 1929, 1937-1938, 1939-1942, 1973-1974, 1987, 1997, 2000-2002 and 2008.

9. Stocks are nothing but an affirmation of government, and their control of fiat money and finance: There used to be printing presses that produced the US dollar, but now it is so much easier. All Ben has to do is hit a few keys on his computer, and the Wall Street banks have money. (Just ignore Government’s natural tendency to debase their currency to deal with runaway debt over the past 2,000 years.)

10. All Stock discussions must contain ebullient macro forecasts: Your description of why stocks are going higher must consist of spurious correlations, unprovable predictions, and a wildly optimistic expectation of improbably good things in the future. Use either NAR or Fed models.

11. There is always a bull market in stocks somewhere: Sure, yours may be down 30% but adjusted for inflation in Dollars, the reserve currency it is priced in …. Oh, never mind.

12. China & India don’t know the value of the dollar; the Western world does: The massive buying of stocks by investors in America reflects the culture, intelligence and investing savvy of the people there. China and India don’t get it and are dumping dollars and buying gold, and it is their loss.

Bonus rule: Never admit stocks might be rising because they trade on mountains of stimulus from the Fed. Give me a few trillion at no interest and lets see what I can do to the price of gold.

 

Hubbs's picture

As long as people are engaged in trade and barter, they will need to gravitate toward some intermediary form of exchange. You can't bring 50 tons of metal roofing to the local  market to exchange for a pallet of solar panels.

There is no better physical entity to fulfill the role of the medium exchange than gold. Anything non physical is nothing but a promise.

Unless the alchemist's dreams come true, then gold will be the ultimate default store of value as long as the human race lives a non-nomadic existance (civilization and specialization via farming, mining, manufacturing) and engages in trade.

robertsgt40's picture

I'm betting Barry is a member in good standing with the tribe or he wouldn't have this position carrying water for Bloomy.  I'm going to jump out on a limb here and guess Barry is also a big fan of the Fed.

Charming Anarchist's picture

Why not?  I agree with the spirit of what you say but I have hope that people will naturally gravitate towards barter and personnally protecting their supply chains. 

<<You can't bring 50 tons of metal roofing to the local  market to exchange for a pallet of solar panels.>> 

Likewise, you can not easily steal 50 tons of metal roofing or a pallet of solar panels and NOT have anybody know where you got the hardware. 

You can easier steal 50 tons of metal roofing worth of gold or a pallet of solar panels worth of gold than to steal the hardware itself for re-sale purposes. 

I believe diversified (more than just precious metals) barter is the only sustainable human choice come Hell or high water. 

Consuelo's picture

Why would 'Goldcore' - or anyone else for that matter, want to debate Barry Ritholtz over the subject of gold?   What is there to prove?   He'd laugh at the 'Teacher!!!-Teacher!!!' approach of such an invitation anyway.    There is no dignity in 'schooling' Barry Ritholtz on the topic of gold ownership, history, importance in global geopolitics, etc.   It's a fool's errand.    There is (1) reason and (1) reason only that those like Mr. Ritholtz brush aside the topic of gold ownership as folly in the first place: Fear.   And it doesn't need to be explained.

McCormick No. 9's picture

Gold is a bet that the current economic model will continue, and that it wil do so in an inflationary dynamic. Within that context, gold is an essential ingredient in a diversified investment portfolio.

https://www.youtube.com/watch?v=pq3YdpB6N9M

IOW, Don't fuck with my paradigm, the resulting cogdis is too uncomfortable.

CHX's picture

I value gold (and silver), as a store(s) of wealth. They are money, but will likely never circlulate as such again, and yet will fulfill their function as money in the future. We may (will) see banks as depositories of physical gold, and possibly make purchases in a store, and x mg of gold will be deducted from my onto the store's account, or, more unlikely though, we'll have once a gain gold backed fiat currencies. Either way, fiat and debt will stick around for a long time still, while gold, will retain purchasing power over the long haul. 

KnuckleDragger-X's picture

The British government once had a calculation on how much gold they lost per year due the wear on Sovereigns rubbing around a pants pocket. I don't mind having a paper gold backed dollar as long as the gold reserves can be independently audited at any time and I can exchange it whenever I wish

MrPalladium's picture

Look!!

Gold limits the power of government to screw people.

So of course people like Ritholtz will hate gold.

holgerdanske's picture

If people just went out tomorrow and each tried to buy one Krugerrand, the banks would be wiped off the face of this earth.

 

oddjob's picture

Fat white guy working in the financial industry hates Gold, not a big suprise.

daveO's picture

Fat white guy? You might want to rephrase that, debt slave.

Ritholtz graduated[when?] from Stony Brook University with a degree in Political Science. He was a member of the school's equestrian team, and competed in the 1981 National Championships of the Intercollegiate Horse Show Association. After graduation, Ritholtz studied at Yeshiva University’sBenjamin N. Cardozo School of Law in New York, graduating in 1989 with a J.D. He passed the Bar exams in New York and New Jersey. He went on to practice law for a few years.[7]

RaceToTheBottom's picture

You are correct, it is even worse.  

White guy. who had pompous and privileged upbringing, could not get a real degree, so he graduated with a Political "science"  degree.  Used connections to get into law school, bought his way through , and graduated with a law degree.  Probably worked as a mob lawyer, or even worse a WS lawyer.  Could not hack producing billable results, so he used his horse riding skills to begin dathering on Bloomberg.

 

got it.  thanks for the additional info.

BigJim's picture

So that's what happened to Barry - he went from being able to ride a horse to being able to eat one.

NidStyles's picture

So he's a gay fat white guy?

BendGuyhere's picture

I love the 'before and after' pics. Looks like 'ol Barry gets a lot of prime rib lunches 'working' at Bloomboig, so yeah, the status quo is working for him. Since these clowns ALWAYS talk their book, odds are he, and hizoner Bloomboig, are hard core stackers.

daveO's picture

The fact that DoJ is now investigating them for rigging guarantees they have/are stacking. TPTB seem to know the bottom is near (within 6 months). Now, they are laying the foundation.

Thalamus's picture

Barry wouldn't get on Bloomberg if he became a proponent of gold.  Their filter ensures you get a one sided story out of New York.  

Edward Morbius's picture

I stopped reading Barry's blog 6 years ago when he became a shill for the FED and the Street. Also, after his book, the blog was ALL ABOUT BARRY, and how smart he was.  :~)

antidisestablishmentarianismishness's picture

So instead of listening to Barry and owning stocks for the past 6 years you decided to join the zealots on ZH and spend 6 years shorting the market and/or predicting imminent collapse? Brilliant.

And the author of this bullshit article must not have been around here in 2011 when every jackass on the site was screaming "Gold, Bitchez!" and none of them ever referred to gold as being insurance, no, it was gold is going to da moon and silver is going to $500 and we are going to get rich. 

And by the way, I don't believe Barry has ever said he would never own gold. 

 

Downtoolong's picture

Placing monetary value in a piece of metal is an Abstraction.

So by comparison, Barry, what shall we call placing monetary value on a piece of paper which is actually more representative of a debt than an asset?  Abomination maybe?

graspAU's picture

an abstraction that human beings have returned to for thousands of years. Nice metal formed in collapsing stars of a certain size, or colliding neutron stars. Not typed into the computer by some PhD assistant.

KnuckleDragger-X's picture

It's different when WE do it.....

SuperVinci's picture

It took you 2 years to address Barry's article!?!?!

 

 

I save in gold as payment in full. No hedging (wtf is that?)

It's either you settle your imbalance or you credit someone else your surplus and hope you get full payment when you decide to finally settle.

philipat's picture

Ritholz is one of Wall Street's own but writes with an artificial "Common touch" and something of a sense of humour in an attempt to to be seen as a "man of the people" and disguise his true goal, which is from where his income derives, which is to sell more stocks and perpetuate the Ponzi. So it really should not come as any surprise to anyone that he would want to put down Gold, potentially the canary in the coal mine.