The greatest threat to wealth preservation is "It Won't Happen to Me" syndrome. Before I start today’s article, I just want to clarify one statement from my article about diversification, from three years ago, in which I discussed how most gold and silver mining stocks were still undervalued heavily by comparing the cumulative market cap of all gold stocks in the HUI Gold Bugs index to the market caps of well-known single stocks like Apple, Facebook and Amazon. In that article, I posed the question if Apple’s market value really should be more than four times the value the market assigned to all the gold reserves and resource held by all the gold companies that comprised the HUI gold bugs index. Three years, later, if you substitute Amazon for Apple, the comparison is equally as stunning. Even with a recent 12.7% fall in share price, AMZN's market cap remains at nearly $868B, which is nearly 6.5 times the valuation the market has assigned to the gold and silver reserves and resources held by the 18 mining companies that comprise the HUI Gold Bugs index. Unfortunately, the "It Won't Happen to Me" syndrome has investors worldwide discounting the potential of gold and mining stocks and clinging to over bloated stocks like AMZN, FB, NFLX, GOOG, TSLA, GOOGL and others. If you gave me a choice of what asset to hold today, the NYSE Arca Gold BUGS index (HUI) or AMZN, on 31 August 2019, I would choose to hold the HUI hands down. For those with a more conservative nature, of course, opting to hold physical gold and silver is the viable option versus the market cap giants of the US stock market.
Obviously, many factors constitute a gold and silver mining company's share price. The public factors in the value of a company’s inventory, which in the case of a gold mining company, is its gold reserves and resources, into a determination of whether or not to buy its stock, and this consequently affects its share price and market cap. Moving on, I am going to drill down on a human behavioral trait that I’ve discussed in the past - the “It Won’t Happen to Me” syndrome. All of us have fallen victim to the "It Won't Happen to Me” syndrome" at some point in our lives, whether it's as simple as going swimming in waters where someone has been seriously injured, or even killed due to a shark attack, no matter how small the probability of such an event being a recurrent one, or whether it's ignoring the possibility of bank seizures in our own countries even though it’s already happened in Cyprus and people have lost millions in bank investment products in China, lost millions in bank deposits in Ghana, and multiple red flags continue to manifest in the banking systems of dozens of other nations. When it comes to the greatest threat to wealth preservation, falling victim to this belief that "it can't happen to me" could prove tragic over the next several years.
On 5 November 2015, I posted a vlog on my old YouTube channel titled "If This Doesn't Convince You to Exit the Global Banking System, Nothing Will!", in which I discussed a movement in the banking industry worldwide to limit daily cash withdrawals and the ability to transact commerce in cash in amounts greater than US$3,000 and €3,000. Two years earlier, I posted a video titled, "No Bank Account is Risk Free" after the debacle in Cyprus in which a national bank holiday was declared in order to steal about 50% of all deposits in bank accounts valued in excess of €100,000. Surely as the sun rises every morning, there were people that watched one of these two videos, or perhaps even both, since both received tens of thousands of views when I originally posted them, grew concerned about this troubling development for about a New York minute, thought about taking action, and then summarily dismissed the information in that vlog and have never thought about it again since then. The power of the "It Won't Happen to Me Syndrome" tends to overpower serious consideration of real danger.
Yet, even with all increasing red flags over the past several years that suggest that assets held within the global banking system could be devalued, frozen, or seized, or all of the aforementioned, including warnings, a few years ago, of possible negative interest rates applied to commercial and corporate bank accounts in the future from big global banks like the Royal Bank of Scotland,most of us go about our daily lives without giving a second thought about taking preventive actions to prevent such mind-blowing and negatively impacting life-changing events from happening. Even though the European Union has already released policy statements that discuss potential future seizures of client bank accounts as a solution to prevent a TBTF (too big to fail) bank from failing, should this problem rear its head again, countless European citizens have continued to completely ignore such warnings as well. In fact, for those of us that observed, over the past few years, the tightening of daily withdrawal limits to US$200 to US$300 by large global banks like Standard Chartered, and the capping of such daily limits to ludicrously small US$50 to US$100 amounts, in countries with liquidity problems like Zimbabwe, we already can foresee the evolution of global banking policy. Yet, most of us continue to ignore the warnings we have received for well over a decade now, and refuse to perceive truth even after it has been staring us in the face for decades and has been transforming into the greatest threat to wealth preservation.
In a twist of great irony, the reason so many of us embrace the “It Can’t Happen to Me” syndrome is the following. From a psychological standpoint, it preserves our immediate to short-term feeling of well-being by allowing us to disassociate ourselves from reality and encouraging inaction, even though from a long-term perspective, it is very likely to destroy our self-preservation abilities. In other words, the "It Can't Happen to Me Syndrome" is a form of escapism, the reason movies were so popular as a form of entertainment during the Great Depression. One of the few instances in which I have ever seen logic and rationality overpower the “It Can’t Happen to Me” syndrome is in instances in which life or death matters immediately dominate the discussion. For example, when I mentored gang members in Los Angeles, in speaking with them, I realized that most of them never embraced the “It Can’t Happen to Me” syndrome when it came to being shot or killed, because so many of them had already witnessed this very event happen to their friends multiple times already. The immediate gravity of their situation made it impossible for them to deny reality, and instead, they assumed just the opposite, that every day might bring an event that may bring serious harm, or even death, to them. Unfortunately, when it comes to matters like wealth preservation, if we are not immediately threatened with a financial "life or death" situation, the same also applies, and most of us will not act until we are actually confronted with a financially devastating event, and the situation devolves into one of financial “life or death” for us. However, under such a mindset, any action taken usually will be too late to actually deflect the consequences of waiting and procrastinating for far too long.
Though many believe that human psychology is a strange topic to address in regard to intelligent investment decision making, wealth building, and wealth preservation, if we cannot identify the psychological manipulations to which we fall victim, then we will not be able to prevent and avoid being manipulated into bad decisions or a state of inertia by the world’s financial leaders. As a consequence, we will always fall victim to the deceit that has inundated our world. For this reason, I am devoting this entire entry to the ability to identify if we are falling victim to the “It Can’t Happen to Me” syndrome, as it still remains the greatest threat to wealth preservation. The “It Can’t Happen to Me” syndrome unfortunately is the very reason why so few Westerners today own the ultimate wealth preservation assets, physical gold and physical silver. One of the best reasons to own physical gold and silver is to curb the negative consequences of global Central Banking currency wars that have greatly intensified since the financial crisis of 2008 and that has infected the entire world like a crippling virus. There is a corollary to the “It Can’t Happen to Me” syndrome called the “Everybody Already Knows That” syndrome, to which I have admittedly fallen victim on occasion. If we’ve know of something for a long time, it’s often very difficult to believe that others do not know the same thing.
In the world of finance, whenever I encounter a financial consultant or adviser that is completely unaware that gold prices have risen 22% and silver by 28% in little over the past 12 months, and gold and silver mining stocks by multiples of these yields, I am shocked, because I often assume that everyone in the industry is aware of these facts. Ignorance leads to a state of reactivity, and a failure to be proactive in wealth preservation. Inertia to surrounding risk has also evolved into one of the greatest threats to wealth preservation. In fact, ever since the overinflated status of the US stock market bubble became apparent, I often have opened every year on this blog by expressing the following sentiment: “Even if you don’t believe that gold and silver will preserve your wealth as the Central Bankers currency wars escalate and you want to ignore the large rebounds that will eventually happen in gold and silver assets," they will continue to happen whether or not you are aware of them.
In the real world, perception and psychology are much more closely tied to market pricing behavior than the low-utility Economics 101 theory of supply and demand. In fact, the pricing mechanisms that rule futures contracts, which in turn, establish real-world asset pricing, can be entirely disconnected from physical supply and demand determinants, especially in the paper gold and paper silver worlds of London and New York. Former Goldman Sachs CEO Hank Paulson alluded to the importance of the banking elite in maintaining control over public perception during the 2008 financial crisis, when he alluded multiple times to the public’s perceived confidence in US stock markets as being infinitely and exponentially more important to US stock market behavior than any market fundamentals. He basically stated that as long as people at the top, including government and banking officials, could continue to deceive the public and misdirect them away from reality, that the crisis would be containable. If you go back and search his speeches from back then, along with the rhetoric of the US Federal Reserve Chairman, you will find that both of these public financial figures repeatedly told the public to remain “confident” in the strength and integrity of the markets, for as long as they could nurture this false belief (as long as Google has not already erased these articles from their search engine algorithms, which is a real possibility). The financial charlatans that rule mass media today are so well versed in human psychology that unless one also becomes a student of human psychology, it is my belief that it will literally be impossible to consistently make sage and beneficial investment decisions.
Even with the rapid devaluation in purchasing power of literally dozens of Central Banking fiat currencies worldwide in the past decade, billions of people still cling to the “It Can’t Happen to Me” syndrome. When I wrote an article detailing the best reason to own physical gold and silver, and delineated strong devaluations of global fiat currencies in recent history, including the crash of the Russian ruble in recent times, someone sent me an email in response to that article that declared, “I’m Russian, and the ruble never crashed, you idiot.” I don’t know why so many people, in attempting to refute of an argument, never actually provide any factual evidence to refute the argument but instead, consistently rebut arguments by simply mentioning their nationality, as if being of a certain nationality designates one as an expert in all matters concerning that nation, and by resorting to the lowest-common-denominator of intellectual debate - ad hominem attacks. As the USD is the largest component in the basket of global currencies against which other currencies’ purchasing power are measured, and the ruble lost 58% in valuation versus the USD just from June 2014 to January 2016, I would dare claim that a 58% devaluation over an 18-month period of time qualifies as a crash. Furthermore, if we were to compare the ruble’s purchasing power against the only form of real money out there, physical precious metals, the ruble crashed by an even greater 61% against gold over an even shorter period of time, from the end of 2014 to February of 2016. Any way you look at it, a 58% to 61% devaluation in purchasing power respectively over a 1-1/2 year and little over a one-year period of time is a crash. I am quite certain that I would not be able to find one Russian living in America that held the bulk of their savings in rubles, and consequently had to live off of the conversion of these rubles into dollars during June 2014 to January 2016, that would not agree that the ruble crashed during this time. In fact, if you truly understand the crux of the argument in the above paragraph, you would not deny that the US dollar has already crashed in purchasing power as well.
To accentuate this point, I’ve often heard Americans make the same argument in regard to the currency most of Americans hold, the US dollar: “Well, I’m American and the dollar will never crash like the Venezuelan bolivar or other emerging market currencies, so I’m not worried.” Though the US dollar has remained the strongest fiat currency in a pool of rapidly devaluing fiat currencies over the past several years, if one calculates the declining purchasing power of the US dollar in the past couple of decades when using real rates of inflation inside the US (versus the bogus rates produced by federal and banking entities), then one would reach the conclusion that the US dollar has crashed as well. Sometimes in response to the declaration that “the US dollar will never crash”, I respond that the US dollar has already crashed, just to see what type of reaction this will elicit. In most instances, this response elicits statements of denial like, “You’re an idiot. The US dollar has not crashed.” To these accusations, I then inquire of them, “What percent decline constitutes a crash?” When most respond that anything greater than a 50% to 60% decline would constitute a crash, at this point, I know I can prove my point. Whether or not I can convince someone to believe the facts, however, is an entirely different story. If one uses real rates of inflation produced by Shadowstats (versus the fantasy land figures of low inflation quoted by the Bureau of Labor Statistics every month for years on end), one can prove that the US dollar has crashed. For those that want to see the calculations that prove this, just watch this video that proves greater than 75% devaluation in purchasing power of the USD during a recent 15-year time span. However, if you do reference this video, please not that his channel is now inactive and that all new content is posted at my new channel here.
In any event, even if one explains the fact that the US dollar has crashed in purchasing power in recent times by more than 75% over a very condensed period of time, because it has been one of the strongest currencies in a pool of rapidly devaluing currencies for the past two years, I’ve discovered that quite often, even presentation of indisputable facts cannot sway people to believe something that they simply do not want to believe. To overcome the power of the “It Can’t Happen to Me” syndrome, I often encourage people to not take my word for any of the facts I have stated, but to please conduct their own research to determine for themselves whether or not what I have disclosed to them is true. Even when suggesting this methodology of determining the truth, I am still often met with great resistance and a response that “There is no need to conduct any research because I already know the truth”, as if some people believe they were born with knowledge of truth and do not need to independently verify their beliefs. In these instances, I try to use the US dollar’s performance against gold to prove the argument that the US dollar will not have to crash in the future, because it has already crashed! Since 1973, the US dollar’s purchasing power, when measured against gold, has undeniably crashed. From 1973 to present day 2019, even when priced in US dollars, gold's price has still risen by more than 2,250%.
Unfortunately, however, no matter how many facts one presents, those that have bought into the Warren Buffet, Bill Gates, Ben Bernanke propaganda that gold is not money and just a “barbarous relic” usually will continue to remain compliant to a false narrative simply because this narrative was stated by someone they view as an authority figure. Would the price of gold really have risen by more than 2,250% in less than fifty years if gold was a "barbarous relic"? Consequently, listening to the financially elite, as they deliberately attempt to deceive us, can also serve as the greatest threat to wealth preservation. There are several insidious reasons for the systemic levels of blind compliance that exist in many diverse facets of life today, and the operant conditioning tactics instituted in institutional academic “learning” is one of the greatest contributors to the implementation of the Obedient State and Mindset, one of the primary reasons why we fail to identify the greatest threat to wealth preservation today. Unsurprisingly, much of the “It Can’t Happen to Me” syndrome stems from a global institutional academic system that conditions us to be obedient and unquestioning towards “authority” for much of our young adult life. Consequently, when we graduate from this system, as long as an authoritative figure appears in the mass media and tells us the US stock market is safe, the US dollar is safe, the Euro is safe, the European bond market is safe, the banking system is robust, gold is a bad investment, and so on, we maintain this compliance to authority all throughout our adult lives as well. Unfortunately, many of us have already been conditioned to accept these proclamations as fact without even conducting any independent research on our own to
(1) determine if the authoritative figure is even an authority on the topic, which in many cases, he or she is not; and
(2) determine if what the authoritative figure is stating is actually true or not.
Since I want to focus on how we can identify if we’ve fallen victim to various elements of psychological warfare that prevent us from taking the proper actions to preserve our wealth, identification and acknowledgement are paramount for future financial survival, especially when the banker currency wars eventually reach their apex. As further exposition of how blind compliance to authority and the “It Won’t Happen to Me” belief pattern work together to prevent us from taking the protective measures we need to take right now, consider a November 2014 article in which a financial analyst stated, “it’s time to ditch your golden faith, embrace the truth — and make gold a barbaric relic of your portfolio’s past.” One can literally find hundreds of such statements online by dozens of different analysts in recent years that falsely equated gold as a dead asset, that were in turn, literally accepted and parroted by thousands, if not millions, of other people without any further confirming research. You will often find such false statements issued by analysts and economists that graduated from, or are employed by “elite” top-shelf schools, like Ben Bernanke and Paul Krugman, both of whom graduated from Princeton University. As an Ivy League graduate myself, from witnessing often undeserved levels of confidence displayed by my peers regarding topics about which they literally almost knew nothing, I can assure you that education pedigree alone does not grant anyone an elevated level of intelligence. And in addition, for those that want to state that the financial analyst's quote above was correct, as gold did not bottom out until the end of 2015 before starting to rise in price again, a wealth preservation strategy cannot span one year only, but must span at least the next decade or so.
On the opposite side of the fence from the “It Won’t Happen to Me” crowd are those that embrace reality and believe that “It Might Happen to Me.” All it takes is just consideration of the "what if" scenario to avoid falling victim to the greatest threat to wealth preservation. Unfortunately, the leaders of the large contingency of the “It Won’t Happen to Me” crowd often achieve great success in marginalizing and discrediting the small subset of the population that constitute the “It Might Happen to Me” crowd by disdainfully calling the realists “conspiracy theorists” and “paranoid fear mongers” even when the facts support the preparatory financial behaviors executed by the “It Might Happen to Me” crowd. Again, we must recognize that it is human nature for us to only legitimize what we know. In the realm of martial arts, I often met masters that were overprotective of the art form they practiced for their entire lives that would express disdain for other forms of martial arts, even though there was little doubt that other styles offered legitimate martial tactics. Likewise, in the world of finance, if we don’t have a history of currency collapse in our nation, then we will be led to dismiss its possibility. Thus, if we recognize this part of human nature, we can avoid falling victim to the negative consequences of embracing false beliefs by actively researching topics that may seem preposterous to us if we have no direct experience with such topics. The only way to avoid the greatest threat to wealth preservation is to expand our base of knowledge, including situations with which we have zero direct experience. This is why I have always been a fierce proponent of the value of self-education, as the institutional schooling system, even with MBA and economic PhD programs, is completely inadequate to provide the foundation of financial and monetary knowledge one needs to avoid becoming a victim to the greatest threat to wealth preservation.
In conclusion, just because we never have had prior experience with an event, we should never assume that the possibility of that event is invalid. Likewise, we should realize that only legitimizing what we already know can be a very dangerous mindset, and that we all need to step outside of our boundaries of human comfort to explore areas we do not know or understand fully if we wish to remove any layers of passivity that may surround us and take a proactive approach to the developing global financial crisis. Providing legitimacy to topics with which we do not have any experience as of yet may just be the difference between surviving and not surviving the next five to ten years. Today is definitely not the same world as it was just a few decades ago and the financial industry in particular has embedded extremely high levels of manipulative psychology into their attempts to control us, to keep us passive and to prevent our recognition of the greatest threat to wealth preservation. To understand the levels of compliance to which most of us can be manipulated without even realizing we are being manipulated, just research the 1961 Yale University Milgram Experiment and the 1971 Stanford Prison Experiment, both experiments in human psychology that demonstrated extreme levels of compliance in ordinary human beings. If you are unfamiliar with either of these experiments, I highly recommend that you follow the above links to read about them as both reveal fascinating conclusions about the human psyche.
I would surmise that the great majority of people around the world have little clue as to how deeply and thoroughly the banking class has studied the above compliance experiments to gain a full understanding of how they can shape and mold our behavior when it comes to the financial decisions we execute. In fact, over a decade ago, when I was unfortunately still embedded in the corporate financial world, I was told by my peers of the exact same scam, described by neuro-linguistic programming expert Derren Brown of a fool-proof system that could predict the winner of every horse race around the world, used by Wall Street financial consultants on unsuspecting prospects to successfully gather millions of dollars of AUM. Though this scam is very simple in concept, it’s actually quite a brilliant scam. If you watch the video, and substitute stock picks for horses in this scam, then you will understand how a "fool proof stock picking system" can also be easily sold to unsuspecting clients to gather their money under the all-important Assets Under Management payout grid of the commercial investment industry. There are enough historically documented statements from high level bankers and financiers in which they mock our compliance and acceptance of their fraudulent global monetary system to deduce that trained compliance to their global banking and financial systems is a very important part of their mission. In fact, if we are to survive the next few years, all of us will have to answer, at a minimum, the following two questions, preferably right now versus later:
(1) What is the risk that the fiat currency in use in my nation will experience a further rapid devaluation event, and do I have too great of a percentage of my savings in this currency?; and
(2) What is the political stability of the nation in which I reside, what are the chances that the political environment could destabilize quickly, and how prepared am I right now to deal with such an event were it to happen?
I have provided multiple examples in this article that prove the inefficacy of our refusal to believe that a negative event can happen, or our denial of the facts that increase the probability of a negative event happening, in not only preventing the occurrence of a negative event but also in mitigating the negative consequences of such an event when it happens. I further provided multiple examples of how compliance to false mass media financial narratives being promulgated today will have dire consequences in the future, and of the behaviors we must execute to avoid falling victim to such false narratives. If you've gleamed anything useful from this article that you believe will help others avoid the greatest threat to wealth preservation, please make sure you refer them to this article. To read all my articles when first published and to read others only published here, please bookmark this site.
About the author: J.Kim is the Founder and Chief Education Officer of skwealthacademy, a coming revolutionary, disruptive online education academy that focuses on the provision of all essential missing educational components of schooling today such as critical thinking, applied knowledge, business ethics, and the pursuit of meaning through the attainment of life purpose and holistic wealth. Sign up for my weekly newsletter here and subscribe to my new maalamalama YouTube channel here and my maalamalama Instagram here.
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