I spent 23 years in the brokerage business and saw everything from soup to nuts as far as stupidity is concerned. Here are a few instances. I saw corporate stupidity and hubris as a branch manager for A G Edwards as I watched our research dept. get caught up in the dotcom craze where “valuations” didn’t matter anymore. Like everyone else, it was buy the dips all the way down and best to run with the pack. There were times when I saw idiocy by local employees. One instance, an employee who was going through a divorce signed and turned in a forged distribution form for her spouses IRA account. Another time after doing a meeting on why all portfolios needed to have at least some Gold related assets in them, one of my bond guys came in a couple weeks later and said “I bought some Gold yesterday”. Here I was thinking “WOW, maybe part of the meeting got through his thick skull”. Lo and behold, he then told me that he paid $9.95 a piece for 5 plated “Gold coins”! His logic was that they were just as “pretty” as the real ones and cost so much less. His remark of “what’s the difference?” still makes me laugh out loud today!
I decided to write this piece about “ignorance” after I met a retired neighbor of ours this past week at our local fireworks display. I had met him only once before and found out that he is retired and “trades” every day to make a little extra “cash”. I did very little talking and mostly listened to how he had EVERYTHING figured out. He went on to tell me that he owns a bunch of ETF’s primarily and trades sectors. I mentioned that the entire global financial system looked to me like it could meltdown at any time and asked him what’s the point of making “more Dollars” if their value is going to evaporate anyway? He had this covered though! He owns a “triple short” ETF that will protect him he said. He almost never holds it overnight and basically day trades…..he owns some GLD, long natural resource funds and others. He does everything in a margin account and uses margin quite frequently. I asked him he ever had any certificates delivered out to him for his possession and he said “no, never”.
But here is the best part. He is wildly bullish Silver, why, I don’t know because he was not aware that paper Silver to real Silver is short over 100-1, he is just bullish because he understands that it is money and it’s cheaper than Gold. I asked him which ETF he owned Silver in to which he said “I’m not stupid, I own the real thing for when everything crashes”. So far so good until he told me he has 2 huge safe deposit boxes at the local BANK where he STORES it! I then asked him if he thought he would have access to his boxes during a bank holiday. He told me that he would go to the bank and withdraw it all JUST BEFORE the banks closed and if he missed it, no big deal because he’ll collect his “winnings” after the banks reopen. I mentioned to him that this was not what happened in the 1930’s and that boxes were maybe the worst place to store metal. We went a little bit sour from this point as he told me that the government would never “steal” his Silver and that he “got it”, I was some sort of conspiracy nut!
There are all kinds out there. I know this and believe me, I have met many many many of them over the years. “Ignorance” is a really funny thing, NO ONE (including myself) always knows when they are…”ignorant”. One of the things my Dad taught me when I was young was “Son, if you know that you don’t know something, you are ahead of the game before you even start”. This piece of advice has helped me my entire life because I try to analyze things from not just “my angle” but every angle. Logic has always been a strong point for me which has always helped me, maybe made me more skeptical than most but it has been helpful. I can look at most things and like “Vinny” in My Cousin Vinny, call bullshit almost immediately.
So, with all of the above said, you know why I migrated towards the precious metals. They are real, they cost capital to produce, they don’t lie, they are transportable and instantly recognizable/verifiable. They are money that when all is said and done will call “bullshit” on any and all “impostors”. There is ignorance everywhere you look, everyday and in many shapes and sizes. In fact, if I had to describe “where we are” today, I would say that we have reached the summit of a long climbed mountain of ignorance. This mountain has no base however, it floats like a bubble. I cannot imagine the emotions when this thing finally bursts. They say that “ignorance is bliss” and maybe in some cases it very well might be. I am sure that some people will still not get it even after the banks close and food stores are emptied. If it weren’t for the “going hungry” part, maybe it would be better to NOT know what is coming! Maybe ignorance is bliss.