We don’t write about gold much. That’s because we don’t think about gold
much. The metal itself can’t pay you dividends
like our kind of common stocks do, and the notoriously boom-or-bust gold mining industry, best
characterized by the phantom populations to all those ghost towns out west, is
flat-out scary for anyone schooled in a disciplined, investment-grade approach.
We once worked with a big fan of the yellow
metal, and when she spoke of it, which was troublingly often, the lady always
had this disconcerting sparkle in her eye and a goofy grimace working at the
corners of her Fairytale Pink lips, and in this otherwise very professional security analyst,
we were convinced we’d seen the fever, gold fever, and couldn’t help
wondering how many people who dabble in gold do so because they’re basically
nuts.
Too, gold gurus never have
anything helpful to say, as seen in retrospect anyway. Time has this way of proving the pack of them
pretty much dead wrong once you throw market timing into the mix. Of course, if these seemingly clueless
hotshots have been looking to herd gullible suckers into the counterparty side of
someone else’s obscenely profitable swing trade, the gold guru coven has been wildly
successful all along.
Gurus everywhere divine incomplete
parts of total pictures, dismissing eventually pivotal issues on irrelevancy,
or missing them outright, until the real gist rises up and bites you in the wealth management account.
With gold, you can always try to put
the pieces together yourself, we suppose.
On the one hand, industrial and commercial uses seem to at least set a
floor for the market price, and on the other hand, perception of
the inflation/deflation thing tugs quotes up and down from there. But there’s a third hand too, the old fear factor
- when war threatens, or some financial crisis looms, the public freaks - and a
fourth hand, easily visualized by our own valued subscribers as an image of
your favorite Wall Street Crime Family Don on his knees in front of any one of
our global financial markets, grabbing it firmly by the balls. There are more hands too, and if this thing is
starting to look octopussian, that’s because it is. Monster has eight appendages at least. You’ve got your gold-producing nations and your
gold-hoarding cultures, and your gold coinage, and your sovereign gold stashes, and they all influence price moves, and you don’t even want to get into the psychologicals on this one. Pastiche? Salmagundi? Gallimaufry? We don't even know where to begin. All kinds of snakes lay in
the grass here, so good luck trying to find a golden kismet on your own.
Anyway, nobody knows squat about gold
prices, and neither do we, so it came as quite a shock to MacDougal to find hisself
caught up in somebody else’s piece about shorting the yellow metal here and now. Here and now.
This particular guru was conceding the risk of imminent runaway
inflation/hyperinflation, take your pick, driving spot quotes up to the unforeseen
heights he was foreseeing, or something, and at the very same time the brave soul
was making a case for people to short the gold market anyway. At the very same time in the very same piece.
WTF?
Why would anyone want to write a story
about shorting into a bull move, and who would read such claptrap? Yet here it was, and a meter indicated the
page had been visited by thousands. Further
thought and a bit of digging brought MacDougal to one prospective explanation.
Gold fever may be making everybody
nuts. Well, every investing everybody anyway.
See, it seems there are two camps of macroeconomic
thought out there today, separate and distinct warring factions, the Deficit Hawks
and the Unemployment Hawks, and the battle between them is raging out of
control. Deficit Hawks see the Federal
budget as the root cause of all our woes, convincing their sort that interest
rates will rise tomorrow or sooner and you better load up on gold.
Unemployment Hawks cite joblessness as the bane of our existence,
holding that interest rates will pop but can’t until the economy at least nudges itself
a tad toward full employment, making gold seriously overbought. The latter
claim to have the overwhelming majority of prime-time economists in their
camp. The former rush to admonish that
prime-time economists are about as useful at fortune telling as gold gurus, to
paraphrase that position somewhat.
Deficiters screaming “BUY GOLD! BUY GOLD! BUY GOLD!” all night long, and then an
Unemploymenter comes along with his “SELL GOLD! SELL GOLD! SELL GOLD!” every once in a while. That’s what the private investor hears deep
down inside. “BUY! BUY! SELL! BUY! SELL! BUY! BUY! SELL!
BUY!” It’s a miracle we’re all
not going whacko.
Curiously, Unemploymenters have taken
to arguing that the deficit issue sells TV ads, and that’s why the deficiters
monopolize the talk show news, which they do.
Deficiters contend that all the talking heads are deficiters now and all
those talking heads can’t be wrong, and deficiters may well ignore the jobs
issue because it’s a big turn-off to the home viewing audience. Only thing we know for certain is, country
will never have full employment again if all the freaking jobs that are
overseas stay overseas. Substituting
financial speculation, mostly on housing prices, for honest work tore apart the
demand side of our economy. Rent her
clean in two if you consider the 1% angle.
And then there’s the Ben Bananas factor.
Over at the Fed, Bananas is printing money like he actually has
some. He doesn’t, so Bananas is really
printing price increases and US Dollar exchange rate adjustments, mostly in the
future as we don’t really have a functioning economic system right now. Wads of Ben’s money are just kind of lying
around on the Fed’s floor, waiting for somebody to come along and pick them up.
You’ve got to accept the Ben Bananas
factor as a given too when you ponder gold prices.
(And we love the theory that the
decline in money velocity, slowing in part because banks are lending to
businesses that don’t actually exist here anymore as their workers live
overseas, is making the stock market go higher since there’s no place else for
Ben Bananas' dollars to go, and MacDougal figures the Dow-Jones Industrial Average
has to drop clear to zero if too many people take to believing that one the way
a surprising number already do.)
Subscribers, pick whichever side you
want, but don’t take your mind’s eye off that Crime Family Don. Not for a moment. That’s where the only visible truth lies in
any of this. Well, kneels. You know, metaphorically speaking. Whichever side wins out, moneysucking
racketeer is gonna be squeezing ‘til it hurts.
