Short the Whole F**king Thing

On May 3, 2018 at Kase Learning's "The Art of Short Selling" event, Christopher Irons, founder of Quoth the Raven Research, gave a presentation about why going long gold can be a great way to "short the whole fucking thing" - the global financial system as we know it. Institutional Investor described the presentation as "profanity-laden and drawing frequent laughs":

“Driving policy based on spending and consumption instead of saving and under-consumption — not saving money, racking up debt, and having to raise the debt ceiling — doesn't really make any sense to me,” said Irons, in a profanity-laden presentation that drew frequent laughs from the crowd. “The government doesn't always know what it's doing, so if you don't want to put your blind faith in the government, having extra exposure to gold is a way to short the system and offer a little extra protection.” 

Irons presented numerous examples of people with power in the financial system making horribly wrong calls, including then-Federal Reserve chairman Ben Bernanke, who in 2007 declared the subprime crisis was contained. He also cited several Wall Street analysts who upgraded Enron “four minutes before it went bankrupt.”

As TheStreet.com reported on May 3:

Forget about predicting what will happen in a stock market downturn. Short-seller Chris Irons, founder of Quoth the Raven Research, said it's time to consider shorting the whole American economic and free market system. For Irons, gold is the best bet for long-term.

"If you don't want to take it from me, take it from the central government," Irons said at a Kase Learning short-selling event in New York on Thursday, May 3. 

Irons explained that the central government keeps significant reserves of gold as a backup plan in the event of a total economic collapse. The fallback isn't in sovereign wealth or currency, but in the yellow metal.

"I have a lot of gold, just in case the whole thing goes ass-up," Irons said emphatically.

Irons explained that he doesn't keep all of his wealth in gold, but he does keep a decent amount - just as the central government does. He admitted to maintaining a "Buffett style" portfolio of stock investments, but noted that the dividends investors such as Warren Buffett preach won't be enough to keep anyone on their feet in the event of a total system breakdown.

"F**k the dividend," Irons said. "The last thing you're going to be worrying about is the dividend when we have a global financial crisis."

Irons explained further that the stock market as even the dividend-focused investing legends see it isn't even really a market by definition. The notion that stocks will always go higher over time is useless, Irons argued.

The article continued:

"You call this a stock market. It's not a market ... a free market would be if stocks went up and went back down," Irons said.

The market has moved in a generally higher direction over the last century not based on value, but based on manipulation from Federal Reserve and central government.

Because of that, it's irresponsible and even unwise to trust that the Fed will be able to step in to save markets and inject liquidity forever.

Irons pointed to the numerous times in which the Fed and its leaders have missed major red flags - most notably when former Fed Chief Ben Bernanke said the housing market was healthy in 2007 ahead of the brutal crash that soon came to be.

The Fed's answers to too many problems, Irons argued, is to simply print more money. Bernanke once said the Fed could print it "at no cost," but Irons pointed out that there is always a cost. Purchasing power of the dollar "gets crippled," he said. "There's no such thing as no cost."

The full presentation slides are below.