During a normal week, easily two or three topics come up which are obvious enough to deserve writing about. Often times, there are too many topics to choose from and several topics need to be written about in one article. Nearly never has a week gone by over the last several years where nothing notable stands out and I get stuck dreaming up what to write about. Every once in a while, a topic will come up where I just have to shake my head and burst out laughing at the same time, today is one of them!
Before I get started I need to frame this piece with a question for you. Have you ever stood all alone on an issue while the vast majority took the other side and mocked you or jeered at you? If you have, then you know it’s a lonely feeling and makes you wonder about yourself. Have you ever wondered if you are crazy? How would you know, REALLY know, if you are “crazy” or not? It’s not as if you could put a thermometer in your mouth or strap on a blood pressure monitor and wait a minute or two to get “the verdict”. Think about this, 600 years ago you were considered crazy if you believed the Earth was actually round. Just 15 years ago you were considered a nut job if you did not own any dot-com stocks. 10 years ago you were completely off your rocker if you believed the real estate market was topping and bankruptcies were sure to follow.
What about now? The good news is this, now we have a “definition” as to whether or not you are “a crazy”! And…courtesy of a coin dealer? Peter Hug, the director of the precious metals division for Kitco has defined for us what “a crazy” is. Mr. Hug commented at a conference last month, at least 25% of U.S. gold buyers are “crazies”! So, at least now we know whether we are crazy or not and have a yardstick to measure our sanity!
Seriously, when I first saw the headline, I didn’t know what to make of it. While beginning to read the article and realized the “executive” was Peter Hug, I burst out laughing. I am sure you have personally had an experience where there were just too many thoughts in your mind going in so many different directions regarding the same topic…this is my moment and I can only thank Peter for dropping such a “funny” yet “disparaging” topic in our lap!
So, if you buy gold or even bought gold in the past, you have a better than 25% chance of being “a crazy”. If you have done the math, or not, and come to the conclusion that going further into debt to solve a debt problem won’t work …you are “a crazy”. If you believe that more liquidity will not solve a solvency problem …you are a crazy. If you see 50 million people in the “bread line” via food stamps, your eyes are lyin’ to you. If you see 90 million people drop out of the workforce and conclude something is really wrong, you need Lasik surgery …and you are a crazy. If you leave the supermarket and have to leave some items behind because you didn’t bring enough money …(even though it is the same amount of money you used to bring) and conclude there is inflation, you need new batteries for your calculator!
Before going any further, I do want to point out that Peter Hug works for a coin dealer. This is the same coin dealer who used to employ the infamous Jon “Nitwit” Nadler. Over the years, I have written several pieces about Mr. Nadler and his obviously warped logic. Day after day Jon Nadler was bearish on gold, yet the spokesman for a bullion dealer. He was always front and center, always bearish and like the guy with a sandwich board walking the street in front of a butcher shop …”our beef is spoiled!”. When Jon Nadler finally moved on, I thought Kitco had maybe figured it out? I thought they might have seen it was not such a good idea to have Jane Fonda representing a gun manufacturer …clearly I was wrong!
What Peter Hug has said is SO wrong on so many different levels I am having a hard time writing this. Does he realize he just completely offended over 25% of his audience, his clients!? Does he not understand he actually offended a number probably closer to 100% of his audience? Does he really believe that his “caveat” saying “U.S. customers” will win favor with sane Canadian customers? Does he realize how stupid he sounds by telling people “all is well, nothing to worry about”? Really? Is he saying brilliant Canadian minds like Eric Sprott and John Embry are “crazy” or are they not because they don’t buy odd lots of between 1 and 32 ounces? I have to ask, does he really believe what he is saying? Has he truly done logic regarding the global monetary system and come to the conclusion everything will be OK? Might this actually qualify a “crazy”?
There really was not too much “meat” to the CNNMoney article but it did say “yet inflation is nonexistent, heck, deflation is more of a concern in parts of the world”. I have written on this topic before, “money” is THE best asset class to hold during a deflation. Playing the “deflation card” is just plain wrong and not born out in history, gold’s absolute best performance environment is not inflation, on the contrary, it is deflation. I spelled this out many months ago. What the deflationists are missing is that “dollars”, whether they be U.S., Canadian, or the European, Japanese, Brazilian or whatever “type”, are all DEBT based. All currencies on the planet today are “fiat”, none can be considered “money”. The difference between “currency” and “money” is huge in reality, nonexistent however in current thought. This is a true statement and one that apparently only “the crazies” understand!
I asked the question “how would you know if you are crazy?”. I would answer this by saying obviously you must be nuts if you employ someone who disparages your products, and worse, your customers. I would ask if it was “crazy” for Canada or mother Britain sell their gold reserves for $300 per ounce or less? This question of sanity has come into my mind many times as I began to build precious metals positions since 1997. Many times and especially in the early years, my position was very “lonely” and took a lot of fortitude to stand tall. I have looked at the “fiat question” from what seems like at least 1,000 different angles and always come up with the same answer, fiat and debt, the current system we live with will mathematically fail. In a nutshell, anyone capable of breathing will admit there is currently a global “debt problem”. If you are able to understand that global currencies themselves are debt based …then making the leap to “debt currencies are at least a part of, if not the core of the problems we have today”, is an easy one.
Mr. Hug claimed that “playing the fear card” works and is used in the U.S., not so much in Canada. I would respond, do I write what I write because a precious metals dealer pays me to? No, I write what I believe and what I have always written since 2007. Miles Franklin pays me because my message and thought process is similar to theirs and I suppose they like my delivery. Would I allow Miles Franklin to publish my work if they did not believe in their own product? Would I ever write anything I do not fully believe? Would I ever call our customer base a bunch of “crazies”? No, no no, a thousand times no! Let me say this, have some people purchased precious metals for the “wrong” reasons? The answer of course is yes they have. Some have bought gold because they believe it will “go up”. This is not the reason to own gold. Do I care if someone buys gold for the wrong reason? Yes and no. Obviously it would be better for an owner to have a full understanding but owning it for the wrong reason will still work financially even if it is a surprise. I guess you could say, saving oneself by mistake is not such a bad thing.
To finish, it is my opinion that anyone who has no precious metals at all is making a huge mistake. Would I call them “crazy”? No. Uninformed? Lacking the process called “logic”? Living on the edge of financial destruction? Yes in all cases. The end of the world is not coming (hopefully), however, the end of the current monetary system and world financial order surely is. The West, led by the U.S. cannot mathematically continue what they are doing. Being in “cash” historically has ALWAYS been the best place to be when the baton is passed from one reserve currency to the next. Historically, THE BEST and purest “cash” has always been gold, this is not crazy …this is fact!