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!
“Half a truth is often a great lie.” While it’s true that the powers-that-be *love* to “play the fear card” it’s not true that Miles Franklin is a powers-that-be. When the powers-that-be play the Royal Fear Card it makes it to the Drudge Report. Miles Franklin commentary does not make it to the Drudge Report. Ergo Miles Franklin is NOT a powers-that-be with the prerogative to play the Royal Fear Card.
Mr Hug’ll call you crazy if you think that the Western financial system can only create dumb deals for it terms dumb money.
If you think that stocks are a dumb deal Mr. Hug will call you crazy.
Mr Hug’ll call you crazy if you think that bonds are fraudulent.
If you think that owning real estate makes you a tax donkeys that carries property tax Mr. Hug will call you crazy.
Mr Hug’ll call you crazy if you think that the Western financial system victimizes honest people.
Mr Hug’ll call you crazy if you see through how the Western financial system use the phrase “dumb money” to shift the blame to the victims of the Western financial system.
In your opinion what will it be like after the dollar crashes? Will there be a reset currency? Will we be able to exchange our gold for the new currency? After all, we will have to have a currency, won’t we? I am just trying to think ahead of the reasons why we should have gold. Obviously, or is it, gold will have more value in the revised currency than it does now, right.
Thanks for your work.
we may have an inside currency and an outside currency. I believe gold will retain, if not increase purchasing power.
Another great article and thank you.
I’m not trying to be ugly, but Mr. Hug, in my opinion, is “a pimple on the ass of society”. He has ZERO creditability !!!
I guess I may be crazy because years ago I stopped running with the sheeple crowd and I do like Gerald Celente suggests in that I “think for myself”. Yes I know today this is a concept the government doesn’t want, but in the 50’s and 60’s that is how we were taught in school.
Gee, if we had “common core” in the 50’s and 60’s we would all be straight A students.
From one crazy to another, have a blessed day.
God bless you too Farrell.
Cheers Bill! You nailed it once again. Sure Peter Hug made a fool of himself but he did post a public apology afterwards. http://www.kitco.com/ind/Hug/2015-02-13-My-Apologies.html However, whatever credibility he MAY have had is gone forever. What a fool.
the horse is already out of that barn because now you know how the man truly thinks.
Irrational (CRAZY) Exuberance? Or, just plain stupidity?
How about that fiat of fiat currencies, the all mighty US dollar? The dollar has closed higher for 30 out of the past 39 weeks. Presently among currency traders 93.7% are dollar bulls. An all-time record high!
Another all-time record high are the large speculators in dollar futures and options, holding net-long positions of 72,897 contracts! The last time the dollar increased in value by so much in such a short time period, was in 2008 just before the crash! What could go wrong? lmao
“what could possibly go wrong?”
Bill it sounds like Mr. Hug was either
threatened with a nail gun or lives in
a very tall building. Just sayin.
but he has already apologized …LMAO!
Martin Armstrong illustrated the gold problem this way. He says, “,.in (1980)…Gold was $875 and it is trading at $1230. The Dow Jones Industrial were at 1,000 in 1980 and are (now) trading at $18,019.99. I think waiting for 35 years to make a profit is just crazy. These people keep fighting everything and the entire world is wrong – never them.” http://armstrongeconomics.com/2015/02/page/2/
My question which must be answered is, well, yes, I have a pot of gold, but no one uses gold. I gotta find a dealer to convert this mess to some kind of “Money”. All I want is a loaf of bread and a dozen eggs”, my gold coin is worth what? 1000 loafs of bread and 200 dozen eggs? I have to convert it to money or currency or some form of cash. Who will do that in a collapse, Fred who sells ravaged chickens and suspect eggs behind buildings? Do I run to the bank and cash in my gold which is not considered illegal laundered money? The only people who have gold now are those who store it away for a rainy day and those who wear tons of bling. If the men behind the curtains, if you believe in such, want electronic funds like Bit Coin, what’s my gold coin worth now, the same a collector coins or collector stamps? Just asking bb
first off, how convenient “gold was $875 in 1980”. I guess he forgot, gold was $253 in 2001? Has gold done pretty well since 2001? As for your questions/argument that you cannot “spend” gold/silver, not entirely true but assuming it is, gold and silver will carry your wealth from this system to the next system intact. Even Martin Armstrong admits another system is coming with massive unrest in the meantime. Just because “Martin Armstrong says so”, doesn’t mean 5,000+ years of human history where gold was considered money will be evaporated or erased. Gold IS money, if you would like to argue this is not true then do it with someone else than me.
I would rather attempt to discover what Hugs agenda is and who he answers to!
Generally, the yellow brick road always leads to the ‘Wizard’
“How would you know, REALLY know, if you are “crazy” or not?”
I’m old enough to be subject to that “CRS” disease so I continually measure myself by how effectively I am able to program our DVR.
So far, so good; but I have been referred to as deranged by some folks that I feel very creditable.
Seriously Bill, look over your shoulder, the crowd of “crazies” following your lead is growing, keep up the great work.
After the balloon busts, and even the barber is talking gold; then it might be time to put some stored value back to work producing things.
I really enjoy your writings. Some time ago you wrote that once upon a time you were yelling at the TV when yet another mainstream economist poured his dishonest balm. After a while it just becomes funny. Like the article from Brian Lund a while back who said that gold is the worst investment in history, more suited for hobbyists and collectors, but certainly not for the serious investor. Here in Europe there must be a lot of central bankers who are crazy hobbyists/colectors at the moment, given their seemingly unsatisfiable hunger to increase their reserves. Maybe it’s just ‘tradition’ like Bernanke would like to call it. 🙂 http://www.dailyfinance.com/2015/02/05/gold-worst-investment-history/
thanks Crip, gold not “tradition”, it is the only thing real in an unreal world.
Great writing as usual, I much prefer to be perceived as “crazy” with gold than “sane” with no gold. The reasoning and thoughts behind your articles are very compelling and sounds, 2008/09 is the proof that things can really go wrong, unfortunately no permanent solutions was taken since then, by trying to fixed the debt problem with more debt and trying to fixed a derivatives market with even more derivatives is not a solution but just kicking the can further down the road.
God bless you Daniel, no gold and insanity very well may go hand in hand shortly.
Could you please share what you know about yearly production ratio of Gold to Silver. There is some conflicting information and was wondering if the yearly production is 10 to 1 silver vs gold or is it something different??
very close, in round numbers 80 million ounces of gold and 800 million ounces of silver.
You know what I think is crazy? Anyone with the last name Hug giving their son the name Peter but I guess it’s better than Dick.
Crazy like a fox they say.
Obviously Kitco’s owners are either blackmailed or bought and paid for.
they have disparaged their own product for years.
Hummmm,,,,, will the real owners of Kitco please stand up……….
I was thinking this morning, what better way to obtain PMs cheaply as possible than to set up a business telling public they were “crazy” for buying; but we will gladly help you correct your mistake by taking it off your hands for just a bit UNDER spot?
I have friends and family that I obviously care about and frankly I am concerned for their future when this debt bubble implodes. On several occasions I have attempted to provide some hard numbers in order to try to give them my perception of what is coming down the road. I often use the debt numbers provided by Professor Kotlikoff that involves the unfunded liabilities. About part way through my dissertation I notice the corners of their mouth turn up with a knowing smile. At that moment I recognize that I am wasting my time as well as the time of my friend or family member. They clearly think that I am crazy or delusional at best. While I am fully aware that the person that I am talking to doesn’t have a clue of the debt or monetary situation that I am trying to impart to him, further it is clear that they haven’t troubled themselves to study the matter or to even read a book on the topic. However it is a given that they believe that they know something that I do not. Unfortunately they know not that they know not and believe I am crazy. I rest my case, while continuing to put away something that represents value. I know and know that I know.
yes you do Andrew.
Thank you for your reply and comment. Fortunately I know that I know by following such accomplished writers and researchers as yourself. I became a fan when I first viewed your analysis on USA Watchdog. I follow your articles near daily. Thank you for your thoughtful and thorough commentaries. I know and know that I know from following you and a number of others. Thank you Mr. Holter.
thanks for your support Andrew!
I too have tried to provide some insight to family and close friends.
About 10 days ago I made a decision to shut the hell up and let things go where they go.
I have turned their WE Will See response back onto them.
So for now it is the quiet before the storm. Little stress between me and them now and I simply just live with the fact that sometimes one just have to leave it alone.
Sad how many would rather live in a world of pretend than a world of reality.
Our planned trip to Europe this summer is likely not going to happen. I am not the one that is going to try and make them understand with they should be preparing for the possibility of cancelling this planned trip.
What currency might the European countries be using by summer is a valid question.
in today’s news cycle, summer is a loooong time away.
If black is white an up is down according to the world we live in today, being crazy is not so bad after all. 25% crazy is still better than 75% delusional. Heck call me whatever as long as I am right in the end!
crazy is sane.
I think its perfectly logical to exchange legal tender for Gold at any time one feels like it.
I often wonder if anyone stops to look at US currency any more. Has anyone really ever looked at it? Across the top in those fancy engraved letters is “Federal Reserve Note.” A first year law student is taught that a “note” is another term for a debt. Is this little vernacular saying to us, “You owe this amount back to the Federal Reserve with interest?”
Yes…it is. I wonder why it does not read, “A debt owed by the holder back to the Federal Reserve with interest.”
Will America EVER wise up?
not until forced to.
Most of the World population lives is a state of delusion.
Delusion that is made possible by the MSM propaganda that things are on the mend.
Greece is trying its best to get the truth told.
The truth is the world is drowning in debt and the time is near where the world monetary system will buckle under the weight of this debt.
Most of the debt will never be paid.
The hardships that many will likely soon face will be too much for many bear.
Europe only has one choice. Each country must take back control of its destiny.
In time maybe the world will become a better place. But not until we pay the price of our excesses of the past.
Just more BS. In THREE years not a single person touting PM has been at all accurate, even though the arguments seem reasonable. And the really notable voices nike Fleckenstein and Russell have been wrong, too. What a nightmare Wall St and the banks and the Fed are, have become. At this point I don’t think it’s ever going to end, and yet buying stocks and bonds here is even MORE insane.
BTW..as we watch them attack the paper price of gold and silver today we should remind ourselves that SOON this will end.
As society looses confidence in the fiat currency system it will look for read TRUE value and that will not be in paper gold or silver.
All we need to do is sit back and watch the movement to real value build and grow.
As sure as the sun will go down tonight we know that the true value of Gold and Silver will emerge as some point.
this http://www.zerohedge.com/news/2015-02-17/bank-japan-managing-us-stocks-today explains the mechanics of how it is being done
… Europe has to stand together, as when the SHTF – it has ( hopefully) the most gold reserve in the world. And that will be needed in future times when it comes to a new system.
( I said hopefully). Even Greek has some stacked up somewhere. So give them the paper they want – its cheap, right?
I second your article and share the destiny of my fellow insane 25%
Have been a bit more quiet to warn the people in my environment, as I ve got the feeling, they find it disturbing …
Well, I try to stack quietly as m. as poss.
My guess is, that there will be no inflation/deflation scenario, like most expect or fighting about who is right.
Its more like the currency/ economy tanks get driven down! the road ( devalue ) and while they do that against each other, nobody realizes the spiral downwards – you might get the impression one e.g. dollar goes up, while all others go down – althoug it ($) might just be at a temporäry halt.
In the meantime the real goods stuff as a constant in value ( oil, PM , goods a.s.o) are artificially surpressed.
And when the day comes prices for that stuff will skyrocket in just a very short time.
Labor unions will have no time to put an inflation spiral ( in the classic sense, higher wages / higher prices/ higher wages aso.) in place … meaning hyper inflation would be, by all means, a paradise against what I expect to come… a price shock.
Thats my guess, and yes I know, I am crazy
no you are not.