THINGS YOU CAN KNOW ABOUT GOLD

The future is unknowable.  Unless you're God.

Therefor the idea that something that may happen in the future is discounted by the market is impossible.

But there are things you can know about the present that will continue to be true in the future unless the nature of reality changes.

And there are things you can know about Gold.

The first thing you can know about Gold is that it is a CURRENCY.

How do you know?

Because every central bank on earth uses it as a reserve currency.  And every central bank, or governement banking institution has used it as such for the last 5000 years.

Second thing you can know about gold.

Like everything else, gold is traded against another currency.  So if other currencies stregthen because of inherent power in the issuing authority that currency will probably rise in value against gold.

Which currencies are currently strengthening?

None.

Every currency on earth right now is beset by massive debt, rising inflation, and deglobalization.

So it's a safe bet that over time Gold will rise against every currency.

At the moment the only currency that challenges gold's supremacy is the US dollar.

The problem with the US dollar - apart from the domestic problems of debt, inflation, and political instability is that every country that sees the US as a competitor - or even an enemy - such as China, Russia, Iran, Saudi Arabia, and their satalites (which includes much of Africa, India, much of the middle east and some of South America) are currently actively de-dollarizing.

This is not an opinion.  This is an economic fact.

That which is trending now is likely to trend into the future.  

The thing we can never judge is the speed at which the trend develops.

Trends always seem to develop slowly,  Then Suddenly the trend matures and everything looks different.

It's like Hemingway said about how people go broke: Gradually, then suddenly.

That's why  the trend is never in the market.  Because nobody knows when gradually turns into suddenly.

So if you think you have time to protect yourself from gradual global currency upheaval, by buying  gold:

You may be in for a shock,

WHEN THE FED PIVOTS...

 

When the Fed pivots, it will be gold's day.  Raising rates into the massive mountain of domestic and global debt that exists today is the world's biggest game of chicken.  It's like racing cars towards the edge of a cliff to see who will blink and hit the brakes.

If the Fed blinks and stops raising before inflation has been brought fully under control, they lose all credibility and with the loss of confidence the world's central banks will all sell dollars to buy gold.

If the Fed doesn't blink and keeps raising rates even thought inflation is now largely a supply side problem, they drive the car right over the cliff and cause an explosion in the credit markets that will cause the world's central banks to sell dollars and buy gold.

Right now it's a waiting game.  

We're all waiting to see if there's a miracle "Soft landing," where inflation drops back to zero and the global economy accelerates  and profits surge, a real Hollywood ending.

Some people think that's possible.

Not Felix Zulauf, or Simon Hunt, or Jim Rogers, or Jim Rickards, or Marc Faber, or Kyle Bass or Mike Green, or Jim Grant, or Bill Fleckenstein, or Lacy Hunt, or Grant Williams, but...

Probably somebody you've seen on some cable market show.

Put me in the no soft landing camp.

Put me in the forced pivot camp.

And when it comes, that's when gold and hard assets will be the only safe havens in a world of burning paper, and electronic malfunction.

Perhaps not at first.  At first all assets will explode upwards with a real pivot.

Then inflation comes back with a vengeance.

Then....

We're in uncharted territory.  What happens when an historically debt laden economy faces out of control inflation with trend sub one percent growth and a shriking labor force?

Nobody knows.

Only one thing's for sure:

You'd better have hard assets if you want to survive.

THIS IS NOT CAPITALISM

 

The Fed eases and markets soar.  The Fed tightens the markets drop.

This is not capitalism.

Printed Money being given away free by the Fed/Treasury to big banks who lend it for next to nothing to Hedge Funds who buy up everything and make prices rise to appaling levels while savers get nothing for the money they lend the bank. 

This is not capitalism.

Capitalism is where the Financial Elite on Wall Street help the most productive companies to have access to capital so they can expand and employ workers at fair wages.

That is Capitalism.

Capitalsim is where the Federal Reserve Bank stays completely out of the economy except during extreme crisis where they become Lender of Last Resort to make sure that fundementally sound banks don't implode because everyone wants their money back at the same time.

That is Capitalism.

When greedy mother f****s borrow more than they can ever hope to repay in order to take huge gambles in the risk markets and then lose, the Federal Reserve Bank stepping in to take over the debts is an abomination.

That is not Capitalism.

There is nothing wrong with Capitalism.

Unfortunately our economy has moved so far from capitalism that we have created a system where a Central Bank run by unelected beaurocrats with zero real world financial experience tries to direct the most complex man made system on earth with academic models that bear no relationship to the system they're supposed to be mapping.

That is not capitalism.  It is insanity.

And it has nothing to do with Politics.  You can look to blame the left or the right or this politician or that one.  But you'd be missing the whole point.

The point is that the system with an interventionist Central Bank is the definition of Socialism.  And it ends up bailing out a Financial Elite that no longer exists to direct money efficiently, but exists to suck money out of the system into its own pockets, because they know when massive bets fail, the Fed will bail them out.

That is not capitlism.  That is insanity.

INTRINSIC VALUE

 

Does gold have intrinsic value?

Aristote argued that it does because it is used in jewlery - and the very qualities that make it perfect for jewerlry also make it perfect for coinage - it is constant, malleable, divisible and it doesn't tarnish.

These are rare qualitities.  And many also find it to be quite beautiful.

Beauty is subjective, however.

I had a freind who was a very bright and accomplished musician who told ,me once that Bach was like white noise to him.  I thought this to be very sad.  To me Bach is the voice of God.  .

But can you say the music of Bach has intrinsic value when not everyone can hear it?

Of course you can.  Because over many centuries it has been so valued by many people.

That is really the test.  Intrinsic Value is proven as it is appreciated by many over long periods of time.

These things can range from Elements or precious stones or medicinal herbs that have characterisitics that many find useful and/or beautifull, to art and artifacts and compositions that many find useful, compelling, beautiful over long periods of time.

Over many centuries if something is valued by many people for charracteristics that are immutable, it has intrinsic value even if some people don't apprecitate it.

Gold has been used as a currency for ovr 5000 years now, just as it has been used in jewelry for at least that long.  You can admire gold Egytian bracelets and gold Greek coins in museums all over the world, just as you can hear concerts of Bach and Beathoven at Symphonies all over the world, just as you can admire the painting of Da Vinci and Vermeer and Titian at museums all over the world.

Of course, New Things constantly arise and are admired for short periods of time: Ganga Style, the Macarena, pogs, Investment Tulips, Beanie Babies, Crypto Currencies... Do they have intrinsic value?  

We'll know in a few hundred years.  Sometimes you find out after only a few months

Meanwhile no other currency but gold has ever lasted for more than a few decades (except silver which gernerally exists in a bimetallic system with gold.  

Trust the test of time.  Don't fall for fads.

CENTRAL BANKS ARE DUMPING DOLLARS AND BUYING GOLD

 Central Bank Gold Sales and Purchases

2002-2022 (Q3) (net; metric tonnes)

The problem with Fiat Currency is that there is nothing to check its issuance.  Everywhere and always those who own the printing press succumb to the power of being able to run it until the currency loses all value.

The process, as Hemingway once quipped, occcurs in two stages: Gradually and then Suddenly.

We have been in the Gradual stage since 1971.  Paul Volcker did a major reset in 1980, that convinced most around the world that the dollar would be an exception.  Those in control were willing to risk recession or even depression to insure its stability.

Then came Reagan and Greenspan.  The lull to power was too much for them and they began the gradual debasement of the currency that has lasted for forty years.

We are still in the Gradual phase.  The dollar is still the world's reserve currency.  The US markets are still the world's deepest and most stable markets, both debt and equity,

But debt levels are the highest by any standard in modern history.  Debt derivative levels are off the charts.  Equity valuations are at historic highs.  Home values are at historic highs.  All this while inflation globally his received a jolt through the disruption of supply chains and a global trade war has permanently disrupted the massive deflationary force of globalization.

So an economy addicted to - and dependent on -  a massive flow of money printing - has to readjust to an inflationary impulse that makes the uninterupted printing impossible.

Nobody knows what the withdrawal process will look like.  But cracks in the stability of the system are already apparant to all the governments of the world.  So they are dumping dollars and buying gold.

The process began after the crisis of 2008.  It's been accelerating ever since even though a veneer of order was restored by the Massive QE that followed.

Now that this QE is no longer possible without bankrupting the vast middle class, the central banks of the world are dumping dollars and buying gold.

Supposedly they are run by a bunch of dopes who are always behind the curve.  At least according to smart hedge fund managers who have been on this track for years themselves.  The thing that is certain is that the Reddit crowd, the vast retail market is always the last to understand the big trend.  They are always trading the last trend.

And when it Suddenly becomes apparant that Gold is the currency of choice it will be too late.

Because gold will be at $3000.  Suddenly.  And then everyone who didn't stock up at $1700, $1800, $2000. $2200 etc will be scrambling to protect themselves from a global competitive currency debasement after the fact.

INFLATION PLUS DEFLATION = INTABILITY.

 

There are Relentless Inflationary forces in food, energy, housing, health care and education 

There are Relentless Defaltionary forces in ;iquidity driven  Malinvestment and a societal addiction to debt fueled binging on useless crap with no ultimate resale value.

The inflationary forces in our economy are being driven by Trade War and Populism which has crushed five decades of globalization which kept commodity prices down (Food, Energy, Metals).  Now global supply chains have been destroyed and they will take decades to rebuild. 

That means the end of cheap labor, the end of cheap food (and most goods) and the end of cheap energy.

And five decades of the Fed keeping real rates deeply negative has led to a relentless financialization (Hedge Funds and banks and shadow banks taking Free Money to turn everything necessary to living from housing to education to health care into investment vehicles) that will keep prices so high in these non discretionary areas that even the vast majority of First World Populations can barely afford them.

That means cheap housing, health care and education will never come back.

This will insure that every years the dollars in you bank account will be worth less and less and less.

That is an unstable currency.

Over time that will only benefit the only stable currency: Gold.

On the other hand the Five decades of liquidity fueled Malinvesment in everything from Space Tourism to MetaMasks to Social Networks to Crypto Currencies - none of which have any real Use Value other than to  help people waste time and energy - and develope crushing gambling addictions - are creating a massive Deflationary force as they implode.  The Negative Wealth effect from the loss of purchasing power will be felt for years to come.

Again that creates a deeply unstable economic/societal condition.

Instability can be hedged only by things which have proven their stability over centuries and millienia: Gold and Hard Assets.

Gold is a stable currency.  From the time of Kroisos of Lydia through Alexander the Great, through Julius Caesar through Constantine the Great through to Philip IV and Edward III through to Napoleon and through the First and Second World Wars - Gold was the currency everyone looked to as the one store of value that would get you through tought times.

There are those who think that Financialization is the future and we will never go back to hard currency.  But even many of the greatest advocates of this Brave Fiancialized Future store their own assets in gold and Hard Assets.  The more you understand the instability inherent in Financialization the more attractive Hard Assets become.

FINANCIALIZATION VS HARD ASSETS: GAMBLING VERSUS INVESTING

"There should in theory be some agency or law working to prevent this foreseeable nightmare from materializing. But it’s not clear that there is, and it’s also not exactly clear who has oversight. FTX is headquartered in the Bahamas. This scandal involves its international division, but the company also does business in the U.S."

Slate Magazine/blog on the FTX crypto debacle.

This could be written about any of the thousands of financial scams  of the last several decades from AIG to ENRON to GE to Tyco to Worldcom to Maddof to Waste Management to Theranos to Lehman Brothers to Freddie Mac to MT Gox to Terra ETC ETC ETC

Crypto is a niche gambling vehicle.  But AIG was the largest insurance company in America,  It turns out they are equally difficult to vet for oversight agenies.

Oversight is near impossible because of the vast international nature of banking, shadow banking, and now Fintech Banking that makes following the money possible - but extremely labor intensive and time consuming for Oversight Agencies that are undermanned, underfunded, and staffed with people who in many cases were not smart enough to get jobs with Scamming Firms they're chasing.

The problem is magnified 1000 times by massive liquidity which is a compelling incentive for malinvestment from scams to plain old run of the mill stupidity.

Liquidity leads to inflation. Which leads eventually to the necessity to withdraw liquidity.  And when the tide goes out, as Warren Buffet has quipped, you see who is swimming naked.

But, unfortunately not before they've taken billions and billions out of the pocket of unsuspecting "Investors" read GAMBLERS.

Investing is gambling unless you have a completely trasnparent access to information.  Which in our current system nobody has.

Except, or course, with Commodities and Hard Assets.

Can a mining company or a food processing company lie about its numbers?  Of course.

But when estimating wheat harvests and wheat demand or gold ounces mined per year and central bank purchases and sales or petroleum inputs, refining capacity and demand, figures are pretty transparent - or reaonably verifiable.  At least enough to make compelling investment decisions as opposed to purerly throwing the dice and hoping for a result.  

Because a Nation's food and energy supplies and currency stability and raw input needs for industry are vast and calculable.  And though figures can always be manipulated, it's hard to say who would benefit from outright lies about these most important measures required for a nation's or industry's survival.

The same can be said for Hard Assets.  For example, we don't know but we can calculate with some certainty how many Da Vinci paintings and drawings exist. And we know what the last one sold for.  Or we know about how many gold Staters of Kroisos have come to market over the last twenty years, we can be pretty sure that most available for purvchase have come to market and we know what they sold for.  More might by dug up in the future.  But it's very doubtful that it would be in quantities that would appreciably affect current values.  Especially with modern cultural heritage laws.  

Of course there are fake coins, and there are plenty of schemes where unscrupulous galleries create a fake demand for more contemporary artists.  But fake coins can be easily vetted and pump and dump galleries are only ripping off the extrarodinarily wealthy who fall for the scams voluntarily in order to feel socially validated.  They easily could have chosen to invest in old master paintings that have been reasonably vetted.  

The point being, that on the whole, in our current environment, "Investing" in fiancialization is really a form of gambling.  Whereas, investing in Hard Assets and Commodities is a way of entering an investment arena where information is available, understandable, and easily vetted by the investor who takes the time and effort to do so

WHAT IS GOLD? (gold vs bitcoin concluded)

 

The recent crypto implosion of the largest and most trusted Crypto Exchange FTX just wiped out 150 billion dollars in a few days.  It turns out nobody involved will ever recoup their losses because the money that was supposed to be held by the exchange isn't there.

This is simply the danger inherent in any form of FINANCIALIZATION - that is not tied or backed by a constant like GOLD.  

Financialization has existed along side gold throughout recorded human history.  In fact many of the first historical documents going back to Sumerian cunieform were simply recorded transactions - many of which were forms of financialzation in that they were agreements to deliver this for that at some date.  

If you trade this for that now you make a record.  If for any number of reasons it is most convenient to actualize the transaction at some other date you need a Contract which is the most basic form of financialization.

The key throughought history until 1971 was that in theory you knew exactly how much of this to trade for that because they were both convertible into a certain amount of Gold.

And large entities like governments of cities or city/states or large trading concerns, or lending outfits had to have x amount of gold to legitimize their contracts.

Of course many tiny towns had no gold.  So they used other measures of wealth,  But they are of no concern on the stage of the history of world finance because they didn't operate there.  The ships carrying international goods that sailed the seas from the time of the Sumerians as well as the caravans of traders just didn't stop there.

So there has always been gold.  And there has always been financialization.  And they have always been tied together.

Until 1971.

At that point all the central banks still held gold.  And all their member banks still fiancialized.  But the link was broken.  So that there was an explosion of financialization that was no longer backed or converted into anything but theoretical currency which is just another type of financialization.

For a time this worked fine.  It allowed the global economy to expand.  Rapidly.  And then Very Rapidly.

The problem with unconvertible financialzation is that it relies entirely on the Good Faith of the actors involved.

When Good Faith comes into question, as is happening in Politics, in the Economy, and in the institutions of Law here and around the globe, Financialzation breaks down.

Or you could say that the rapidity of the expansion created a lot of room - and incentive - for bad actors.

Financialization began to break first with LTCM which required 3.6 billion dollars of Fed bailout money: then the S and L crisis required 150 billion of Fed bailout money.  That seemed like a lot at them time.

Then came the subprime crisis in 2008.  The entire economy imploded under George Bush and was bailed out with 3 trillion dollars by the Fed!

3 trillion dollars created out of thin air and transferred to the wealthiest 1 percent.  And nobody batted an eye!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

That is money they simply created out of thin air.  Backed by nothing.  The fed claims it was "repaid."  Yet it stayed in the economy - in the pockets of the very wealthy.

Then in 2018 the economy collapsed again with covid under Trump and this time the Fed bailed it out with 10 trillion dollars that they created out of thin air to buy up the illiquid assets of the very wealthy.

It's all still on their balance sheet in spite of their regime of "tightening" which is sending a global economy dependent on Fed easy money into a tailspin.

Those two Fed injections amount to thirteen trillion dollars made up out of thin air and given  all to the very wealthy - in ten years.  On top of that the government runs a trillion dollar a year deficit (three trillion one year under Trump) and then doles out periodic stimulus to the middle class to the tune of 2 trillion under Trump and another 2 trillion under Biden.

This is all possible because financialized assets are no longer convertible into gold.  

Pure and Simple.

So what is gold - and why hasn't it soared during this period?

Gold is what is has always been.  The Wealth Constant.  Pure money - in other words a pure measure of stability of worth of anything that can be traded.  Pure in the sense that it has no counterparty risk.  It's value is entirely intrinsic.   If someone will trade you x amount of gold for y - that is y's ultimate value..  

Short term, you can trade anything for anthing.

Long term you can only measure value by the value of a constant.  Gold has been that constant for over 5000 years of recorded history.

Why hasn't it soared then as our institutions, laws, become the objects of scorn and ridicule and financialzation has carreened out of control?

Because it takes a while to shake the faith of the vast public in financialization.  

It is only through massive faith that so many people could put their money into opaque crypto exchanges.  Imagine the leap of faith that takes.  It can't be wiped out in a minute.  Your're wealth can.  But faith can linger.  

It's tough to shake because their faith in financialization is very pure - as most people have no idea what financialization really is.  They just believe it must work.  After all it created so much wealth - for so few.  Maybe it can do the same for you.  Everyone hopes so.

But as bit coin exchanges collapse, and governments stop working, social security goes broke, and costs sprial out of control, and all the created-out-of-thin air assets go only to a very few at the very top of society - faith is beginning to crack.

You see it in the corrupt populism overtaking world politics.  You see it in the anger, the violence and the scapegoating of the left-behind world populations.  And you see it in the scandals and the imploding zombie coroporations that are revealed daily, as liquidity tightens.

And ultimately as hundreds of billions of currency units keep being lost in the void of bad faith, the general attention will return to the constant.

Gold.

 

REAL GOLD VS PAPER GOLD: CENTRAL BANKS ARE ACCUMULATING REAL GOLD AT A RECORD PACE

 

If you concentrated on the paper price of gold you'd think gold was in a huge funk, neglected, a useless relic of a bygone age.  In fact there are many who will tell you gold is not really money - not any longer - since you can't use it to buy a quart of milk at the super market.

However, if you look at the central bank activity - those who issue, regulate, and proclaim what is and isn't money you get an entirely different story.

Central Banks are accumulating gold are record rates.  They have bought 399 tonnes worth 20 billion dollars in the third quarter alone.  The largest buyers are Turkey, Uzbekistan, Qater, and India.  Retail buying in these countries is up 300 percent year over year - as these goverments encourage their populations to buy gold

This is the fastest pace of accumulation since the dollar was convertible into gold back in 1972.

Interesting.

But this is only half the story.  Russia and China are engaged in a furious gold accumulation - but the figures don't show up because they mine the gold themselves and the gold goes straight from domestic miners into the Russian and Chineses Central Banks.  Gold analysts like Simon Hunt estimate the CHina has now accumulated 30,000 tonnes of gold as opposed to the 2000 tonnes they admit officially. 

The Chinese government also actively encourages the Chinese population to buy gold.

It is widely known that many other central banks are also purchasing gold without reporting their purchases

It is interesting that the countries that don't mine gold but are buying at furious rates are all countries that China and Russia seek to include in their sphere of trade influence.  

And many analysts believe (again like Simon Hunt)  this furious accumulation of gold is prelude to a new gold/commodity backed currency to challenge the US dollar.

Meanwhile the paper price of gold is controlled by the Fed and a few bullion banks here in the US - most notably JP Morgan - who keeps getting slap on the wrist fines for their illegal manipulation.

So if your gold accumulation is in paper gold - it's really not clear how that will hold up under future crisis scenarios.

The only real portfolio protection is in Real Assets.  Real Gold amongst them.

EARLY WINTER AUCTION REVIEW

 

CNG, Heritage, Stacks, have finished their late fall early winter auctions just as the economy has dropped into a state of near paralysis because of the unprecedented speed and steepness of the Fed Tightening regime.  

SO how has the affected ancient coins?

Top coins in top conditions continue to climb.  Everything else has softened - albeit from very high levels.  For example the coin above a very rare:

Claudius II (AD 268-270). AV medallion of 8 aurei (37mm, 39.09 gm, 12h). NGC Choice VF 4/5 - 2/5, Fine Style.

sold for $63,000.  A year ago it sold for $77,500.  Not a huge difference, but to the seller who only collected $52,000 that's quite a loss in one year.  But then the coin itself is not attractive.  Impressive, yes,  Attractive, no.  The coin is not easy on the eye.  The surfaces ar rough, the portrait uninspired and the reverse is standard.  But at 8 aurii the coins is really large and impressive.  Finally, Claudius II is an interesting character, but he's not a Julian, or even an emperor from a period that is relatively well appreciated in Roman history.   So the question is how badly does a buyer want to persue something that is impressive for the size and a relative rarity as opposed to buying something really beautiful and historically fascinating?

For example, in the same auction a really nice looking daric, clearly of wonderful late style with flowing robes and a well detailed face sold for $27,600

The grade was CHoice MS with a star, and the $27,600 was a record price for a type 3 daric - a coin which even at the price seems undervalued for such a fine style of a type that is generally quite poorly engraved.

Certain coins are hot at certain times, and chasing up the price while the economy is hot is not always rewarded when the economy cools.  Buying great beauty, especially when underappreciated though seems to insulate you from market drops.

At the same time, gold medals, of historical value and fine style engraving continued to rise through the economic malaise.  

THis proclamation medallion of Ferdinand VII of Spain in MS 62 is a very interesting artifact, finely engraved and with fascinating Napoleonic connotations and is quite rare.  The last nice one of these hammered couple of years ago at $18,000.  I was the seller, and it seemed like a very good price at the time.  Yesterday it made $38,400 at heritage.  So rarity, beauty, and historical import seems to be sailing on through the downturn, at least for now.

The items that suffered most - not surprisingly - were the most readily available types in middling grades.  THough coins that had a most pleasing eye appeal sometimes made surprisingly high prices 

For example this hekte with a really lovely engraving of a ram's head in CHoice AU with a star made $10,400.  It is a fairly common coin even at this grade.  But the engraving is really unusually lovely.  And it was rewarded with a very high price.

Draw your own conclusions.

DON"T GIVE YOUR MONEY AWAY TO ONLINE ADVISORS/ADVOCATES/GURUS/INSIDERS

 

There are so many people writing on line letters, posting videos, and polluting social media with ways that you can pay them for their wisdom.  Don't do it.  

They come in all shapes and forms.  Here are a few major scams:

The INSIDER.  This person will tout all their amazing credentials: they've been advisors to industry. the CIA, Government, International Agencies, whatever and they're here to let you know of some incredible Government/International Conspiracy that will take all your money unless you SUBSCRIBE to their Newsletter or blog Read their book, that reveals the conspiracy and what to do about it.

The ADVISOR.  This person will tell you about their amazing credentials of running a major wall street firm or deparment or trading desk or whatever.  They have magical powers from their Wall Street experience to Read the Market Sentiment and feel how the market is turning before anyone else because they're CONTRARIANS and if you pay for their newsletter or Blog or Book you'll be able to beat the markets too.

The GURU also has Wall Street Credentials but this person has developed a TECHNICAL SYSTEM that nobody else has been able to discover.  They count waves and draw retracement lines that show HIDDEN PIVOTS and TURNING POINTS that work like magic.  If you pay them they'll show you the secret that all the quants at all the hedge funds haven't been able to figure out.

The Advocate.  This person has no credentials.  And very little education.  They're on all the major cable shows, youtube channels, social media sites.  They have millions of  followers.  They're just loud and bullying and willing to trash anyone and anything that you perceive as an ENEMY.  And if you send them money they'll help you destroy your ENEMIES too.  

Save your money.  Really.  Save it and put it to good use.

Put it to use buying things that are real.  Hard Assets that you can hold in your hand.  That you can see and feel and know that they're real.  And know why they're useful, and beautiful, and historically important.  It's a better use of your money.  And it's much more satisfying.

You need a financial advisor like you need a hole in your walllet

 

The world if filled with financial advisors.  If you're super high net worth and you can afford somebody like Felix Zulauf you'd probably do well over time.  But if you're super high net worth you're probably fine no matter what happens.  

If you're an average investor the last thing you need is someone to take money from you to give you advice on how to beat a 100 percent correlated world of paper investments.  If the Fed is tightening they all go down together.  If the Fed is easing they all go up together.  Until there's so much debt financialization dies.  We may be about there.

If the advisor is a proffessional advice letter writer you have to ask yourself why in world, if they know anything about anything, aren't they making money for themselves in the markets, instead of trying to dupe you into giving them your money.

Oh, because they want to help.  I see.  Help themselves to your money.

So what do you do?

You take control of your own finances and invest in something you understand.  If you don't understand anything at all, you're a lost cause anyway.  Stop reading,  But if you're a dancer, you know dance: if you're a musician, you know music - and musical instruments - and probably records and maybe even music memorabilia.  That's where you start building a valuable collection of real hard assets that you love and understand.  

Over time these will become valuable if you indeed have an understanding of what you're buying.

I love history.  I love music too.  But I started out buying artifacts that have a direct bearing on some of the historical periods and figures I find fascinating.  Coins and Medallions.  It has provided a wonderful living which I find endlessly fascinating.  It's not work for me.  It's fun.

If you're fascinated by death, for example, that sounds morbid.  But each to his own.  There are so many diffeerent type of death related artifacts that people collect.  Skulls, bones, taxidermy, shrunken heads, hair lockets, books of spells, death masks, death medallions... If they're historically important they will appreciate over time.

If you're a scientist, there are collectors of scientific instruments, of rare minerals and gems, of space rocks and space memorabilia, of award medallions and notebooks with hand written notations from breakthough discoveries.  

If you're fascinated by food or wine or sports - gosh - there must be some area you can study to the point where you know more than most.  If you're not able to do that - stop reading.  But if you are, start reading.  And never stop.

Ultimately everything you need to make a fortune is to be found in  BOOKS.  Maybe you can supplement that a bit on line.  But if it's on line - everyone already knows it, and it's probably innaccurate.

In fact, Books themselves are a wonderful investments.  If you happen to know everyting there is to know about books.

So get reading.  It's fun, and it just may help you accumulate hard assets that will make and save your fortune.

WHY INFLATION IS HERE TO STAY

 

There's a lot of analysts who believe the 'inflation is transitory' theory.  "It has always come right back down,  It will this time too."  Especially with the Fed and governments tightenting,

Sounds reasonable.  And it would be too if the inflation were caused by rising demand.

But it's not.

Yes, politicians and political hack economists are all harping on the stimulus.

Like we haven't had 50 trillion dollars of stimulus over the last 20 years - just counting Federal deficit spending and Fed balance sheet expansion.  (If you add in all the rest of the stimulus that comes in the forms of other types of debt creation the number is astronomical.)

The fact is, for the first time in 50 years we are now experiencing Cost-push inflation or Supply Side inflation.  This means that no matter what you do to crush demand it will only have the slightest affect on the inflation.  In fact it makes it worse because it depresses real wages at the same time as real cost of living is soaring. 

How did we get here?

America First.  It sounds great.  More jobs for Americans!  (It didn't create any.)  And maybe it sounds good to you.  But moving jobs from overseas means higher labor costs, and sourcing inputs from America rather than the cheapest countries means higher input costs.  And slapping tarrifs on  anyone we don't like means higher costs on goods.  And of course everyone follows suit.  That's DEGLOBALIZATION.  Maybe politically you like the idea.  But is comes with massive INFLATION.  That's just an economic fact.  

Then with Deglobalization comes TRADE WARS, CURRENCY WARS and most disruptive of all HOT WAR as we have now between Russia and Ukraine withe the EU and the US as proxies for Ukraine, and China and Saudi Arabia and Iran as proxies for Russia.  This is massively infaltionary.  Food costs soar.  Energy costs soar.  And military spending is massively inflationary.

And there's nothing that domestic economic policy can do about it.

Nada.

But we can blame each other loudly and wrongly.  Or blame the immigrants.  That creates a lot of hatred.  It doesn't solve any problems.

So what to do?

You know what I think.  Nothing will change until we diagnose the problem properly.  And politically the chances of that happening are nil.

So protect yourself.  As economic conditions devolve, only real things - Hard Assets - will thrive.

REAL GOLD APPROACHES $2000 PER OUNCE (while paper gold (ie pretend gold) languishes) at $1670

Real Gold is selling at $1910 via Wire or $1984 via CC for 1 ounce US Gold Eagles as quoted  at Apmex, the largest US gold retailer, this morning.  You can probably find these a few dollars cheaper here and there - if you can find them.  The probelm is they are hard to source even at these high prices. 

 Why?  Because few holding real gold want to sell even at this high premium over paper/fake gold.  Precisely because the paper/fake price is controlled by the Fed via a few Bullion Banks, mainly J. P. Morgan Chase who flood the futures market with massive short contracts and then buy back once they've forced everyone else to sell.  It's free money for them.  They keep getting slap on the wrist fines from the SEC that amount t0 pennies on the billions they're making from this free money scheme, so why should they stop doing it?  

Yesterday the DXY (dollar index) tumbled - but paper gold went up and then was driven back down, causing many small traders to dump their positions in frustration.  Then magically over night the futures price soared 20 dollars so every small trader can struggle to get back in this morning - just in time for the Cartel Traders to take their money again.  If you don't believe me read the justice department article below:

https://www.justice.gov/opa/pr/former-jp-morgan-traders-convicted-fraud-attempted-price-manipulation-and-spoofing-multi-year     (market manipulation scheme)

Another reason to keep your money in REAL HARD ASSETS.

1 oz American Gold Eagle Coin BU (Random Year) $1,984.36 (via cc or paypal) $1910 (Via wire transfer)

PAPER GOLD PRICE: 

1,670.4

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COLLECTING ODD THINGS AS DISPLAY AND PRESERVATION OF WEALTH AND KNOWLEDGE HAS A LONG AND STORIED HISTORY

 

Wealthy Romans of course were known for their collections of oddities from around the world.  Weird animals were displayed - and eaten; odd skeletons, feathers, pelts, exotic plants and spices, and artifacts of all types were imported from the far reaches of the Empire and displayed as evidence of wealth and urbanity.  Shapur I was said to have displayed the captured  Roman Emperor Valerian in a cage in his parlor which he used as a footstool during dinner parties.  The ultimate Hard Asset.

But in the 16th century Wunderkammers or Cabinets of Curiosities became the possession de riguer for the wealthy who desired to impress and amaze their freinds.  These Cabinets which soon became entire rooms and suites of rooms were filled with antiques, antiquities, objets d'arts, fossils, stuffed animals, weapons, instruments of torture, astrolabs, clocks, automatons, and monseters such as two headed dogs, giant spiders, shrunken heads.  

Famous collections belonged to Rudolph II in Prague, Ferdinand II in Austria and Augustus III in Poland, as well as many wealthy merchants from Naples to Amsterdam many of whose collections can still be viewed in their homes, as well as wealthy Londoners - an entire floor of the British Museum is devoted to their collections.

From the Royal Collection London

Room of wonders 1559 Naples Italy

So collecting Hard Assets as a means of cultivating one's mind, developing one's sense of history and preserving one's wealth has a long and storied history.

It is only recently in this age of Financialization where the investors have been lulled into thinking that the safest and most reaonable way to store their wealth is in theoretical ownership of companies and debts as represented - first by pieces of paper - and then by elctronic chits.

But the problem with paper and electronic chits as that you own things in Theory.  And the ownership exists only as long as the Theory can be upheld by force of arms that protects the Legal System that gurantees the Theory.  

We are living in a period when that Legal System is being challenged every day by the very Politicians who are supposed to defend it.  The Guardians of the Legal System are telling us the System if Corrupt.

It doesn't matter if they're right or wrong.  The longer and louder they proclaim it, the surer it is that it won't be able to protect your paper and electronic chits.

Only 25 % of the population has confidence in the supreme court and only 7 percent has confidence in Congress - the legislative body that makes our laws!

How long before lack of confidence in our laws leads to a destruction of value of Theoretical Wealth upheld by those laws?

But Real Things in your possession are Real Things in your possession.  

The hard asset market: The mystery of medallions

 

Medallion of Alexander the Great C 215 AD

Alexander the Great traveled with engravers who would immortalize his accomplishments on gems and medallions of gold and silver.  The Roman Emperperors commemorated their accomplishments on medallions in gold, silver, and bronze.  And many of them collected medallions of other emperors and of famous Greek Kings.

The Renaissance princes collected medallions of the Romans and the Greeks and then had medallions struck to commemorate their own acheivements by great Renaissance artists.

In the early seventeenth century in Prague, Jewish goldsmiths created a series of large gold medallions portraying some of history's great Monarchs (so called Judenmedailles) which became very popular collector items amongst the developing rich merchant class.

The Kings and Queens of England collected medallions of the Greeks and Romans and the Byzantine Emperors as well as Renaissance medallions -  and then commissioned current artists to strike medallions of their own.  Queen Anne commioned Isaac Newton to curate a series of medallions commemorating her achievements and Newton himself designed some of these medallions.

In the eigteenth century Swiss Engraver Jules Dassier engraved a complete series of British Monarchs in bronze - a more affordable metal - wich became a popular collecting item for an even greater spectrum of middle class collector.

Napoleon commissioned Vivant Denon to curate a series of medallions to commemorate his achievements and Denon hired a stable of some of the periods great artists to both design and engrave these medallions.  These were made in bronze for general consumption, in silver for the wealthy and a very few of each medal were struck in gold for the Emperor and his closest circle.

In fact, the great cabinets of Europe were devoted mostly to medallions.  Coins of antiquity were of course included, but medallions comprised the greater part of the famed cabinets as they tended to be larger, more elaborate, closely associated with events of note and often engraved by well known artists.

So how is it then that a rare silver 5 franc coin of Napoleon now sells at many times the price of a rare silver medal that is larger, more beautifully engraved and of considerable historical interest?

Ah, but that is the amazing opportunity that lies within the hard asset market for the informed inverster.

HARD ASSETS: THE CRITICALITY OF THE MARGINAL BUYER

 

In all hard asset markets there's an economic fact that the last item sold in a limited market is dependent on the "Criticality of the Marginal Buyer."  That means that last person to buy a limited item sets the price in the SHORT TERM.  In the Rare Coins and Medals market there are many items that because of grade, mintage, die, provenance, whatever are rare to the point that only one  may come to auction every year or two years or more.  When the hammer falls that is the price that everyone looks to as the market price for that item.

Yet that price is contingent on much more than the item itself.

It is contingent on the expertise and accesability of the auction house.

It is contingent on the Export laws  and currency barriers of the country in which it is auctioned.

And most of all, it is contingent on the prevailing economic global conditions.

Right now every country on earth is suffering from two terrible afflictions.  Massive Debt and Inflation.

The massive debt demands low rates and loose monetary conditions that encourage ever higher prices for hard assets.

The resulting inflation - that will not come down because of deglobalization - necessitates tighter monetary conditons.

Both can't exist at once.  

Japan has hit the wall because they are exercising yeild curve control to keep rates down which necessitates easy monetary policy and at the same time they need to support their currency (which is falling rapidly) by tightening monetray policy.  

What's a Central Bank to do?

Every country is to some degree in the same boat.

And there's nothing to do.  You can't fight inflation when suffering a debt overhang.

And you can't service a massive debt without keeping rates at a level that fuels inflation.

What does this mean for the Criticality of the Marginal Buyer?

It means that as monetary policies careens wildly from easy to tight to easy to tight and currencies fluctuate wildly as a result you are going to to get LAST ITEM BOUGHT prices that will be wildly differing as they reflect the careening monetary and currency positions of various countries at various moments.

So don't get caught up in a particular price influenced by the conditions at the moment that last piece was auctioned.  It may be temporarily lower or higher than seems reasonable.

But over time, the critical element is the massive global debt.  

Any central bank can make noise about beating inflation.  But ultimately any economy with massive debt will implode under a tight monetary regime.  

So over time liquidity must be ever greater to bail out imploding companies, banks, municipalities and ultimately central banks,

So over, time in hard times, hard assets must rise. 

THE DISCONNECT BETWEEN THE PAPER GOLD MARKET AND THE REAL GOLD MARKET IS AT RECORD LEVELS:

 

REAL GOLD: 1 oz American Gold Eagle Coin (Random Year)        As Low As: $1,825.67

paper gold: 1628.10

USD

−23.47(−1.42%)

MARKET OPEN (AS OF OCT 19, 21:06 UTC)

As  the paper gold price continues to plunge 

Now down to 1628 dollars per ounce

The price of an actual ounce of gold at the 

close of today's market fell to 1825 dollars 

Per OUnce as quoted at JM BUllion.

An ounce of Collector (100 soles from 1965

mintage 24,000 pieces) bULLION Fell TO 2207 

DOLLARS PER OUNCE (PER HERITAGE AUCTIONS)

Metal: Gold

Weight: 46.8071g
AGW: 1.3543oz
Melt Value: $2,207.51
Gold Spot: $1,630/oz (10-19-2022 4:42PM CT)

THE DISCONNECT BETWEEN THE PAPER MARKETS AND THE REAL MARKETS CONTINUES TO GROW.  THIS BEGS THE QUESTION OF WHAT HAPPENS WHEN SOMEONE ACTUALLY TRIES TO TAKE DELIVERY OF THE PRETEND GOLD THAT THE FUTURE'S MARKET CONTRACT CLAIMS TO REPRESENT?

IF YOU COULD BUY IT AT $1625 AND SELL IT FOR $1825 THAT WOULD BE A PRETTY GOOD DEAL.  ESPECIALLY FOR ALL THE CENTRAL BANKS THAT ARE AMASSING GOLD AT RECORD RATES - LIKE CHINA, RUSSIA, UAE, SAUDI ARABIA, INDONESIA, INDIA ETC.

OF COURSE EVERYONE KNOWS THE GOLD REPRESENTED BY THE US FUTURES CONTRACT - OR THE GOLD REPRESENTED BY THE SPOT PRICE SET AT THE LONDON BULLION MARKET - DOESN'T ACTUALLY EXIST, SO WHAT IN THE WORLD DOES THE THEORETICAL PRICE ACTUALLY MEAN IN TERMS OF PRICE DISCOVERY.

DISCOVERY OF WHAT?

IMAGINATION?