From the first moment I saw Ron Paul on C-SPAN (at some point before the Internet Boom) I felt that he must have been sent to Earth from another planet. How else can you account for such honesty, determination, and courage when faced with the doublespeak from financial officialdom? To just take one example of Paul’s determination to call the emperor naked, in February of 2000 Paul challenged Sir Alan Greenspan regarding increases to M3 which at the time had well exceeded the Fed’s own targets. Greenspan responded with some sort of excuse that money is difficult to define so Paul shouldn’t worry about one definition of it, but Greenspan was forced to admit that many of the various monetary aggregates used by the Federal Reserve have left something to be desired. Without missing a beat, Ron Paul concluded his questioning to Greenspan with the quip, “So it's hard to manage something you can’t define.” (You will note that the Fed stopped publishing M3 data around 2006).
Representative Paul’s honesty- almost childlike in its probity- is one of many characteristics associated with those from a planet far, far away: Planet Goldbug. Other character traits include fierce independence, skepticism toward any dogma or orthodoxy, and a defiant desire to wake earthlings up from their stupor regarding various lies on planet Earth. Although many residents from Planet Goldbug believe in the power of reason, they understand the rampant and manipulative abuse of reason by many in authority on this planet. So I have always felt that Goldbugs by definition have respect for heterodox, mystical, or hidden forms of knowledge. Sometimes this respect for heterodox thinking has led the opponents of honest money to denigrate buying gold as a “religion” (by which it is taken to mean that such investing is irrational.) However, I am just fine with the apparent accusation that owning precious metals transcends conventional definitions of reason. I take my cue from the gentleman who coined the term Goldbug, Edgar Allen Poe, in this regard. Poe belonged to the great tradition of nineteenth century romanticism, a tradition which understood the complex, contradictory, and humbling aspects of human consciousness.
Poe’s short story with the title The Gold-Bug (published in 1843) relates the supposed story of a man, Le Grand, who was bitten by a bug made of gold. The bite gives Le Grand supernatural power- clairvoyance really- to find the long-lost treasure of Captain Kidd (deposited somewhere along the southeast coast of the United States) in order to restore the Le Grand family fortune. At the end of the story, Poe has Le Grand relate to his friend that the power of the Goldbug was not what led to the treasure, but rather Le Grand’s own reasoning powers, or ratiocination. But in keeping with Poe’s usual portrayals of the mystical and terrific in his stories of ratiocination (meaning ones ability to reason in a superhuman manner) the reader is left wondering if it wasn’t in fact the transcendent knowledge of the Goldbug which aided Le Grand after all. A large part of Poe’s writing leaves room for intuition and magical insight, implying that these are as much a part of reason and intelligence as anything else. An important point to keep in mind the next time someone derides gold and silver investing as a “religion.”
Part of the reason why Goldbugs are often mocked as “conspiracy theorists” is due to their over tuned ratiocination- their well honed skeptical stance, attempting to uncover the hidden truths in this world. Honesty and candor- practiced to perfection by people like Representative Paul- are values from this different, golden planet. And when those values are betrayed, Goldbugs speak up. There are several other distinct, unusual traits possessed by Goldbugs, as well. One is faith in the autonomy of the individual- no matter how difficult it may seem to give the individual power over his/her own life. It may be mocked as naïve, but the alternative to faith in the primacy of the individual is the world of Big Brother. No man should be king, and no expert is qualified enough to dictate to others how to live. Freedom may be scary, but Goldbugs thrive in the spirit of embracing self-sufficiency, or independent living, and demand that individuals accept responsibility for their actions. (I know, another very corny platitude.) Governments by definition lie to their subjects-- I mean citizens. It is the same now as it has ever been. Power corrupts and absolute power makes men not only corrupt but stupid as well. I could go on and on, but you get the idea.
Bernanke, the stock market, and cable financial “news”
Goldbugs may find themselves in a new year, but they face the same old challenges outlined by Ron Paul years ago when I first saw him on T.V. Case in point: just this past week Chairman Bernanke finally admitted to trying to make the stock market go up. By recently taking credit for its move higher, any doubts that the Federal Reserve manipulates markets beyond simply those for short term loans should be put to rest. And the good news from Mr. Bernanke’s perch does not stop there. Because not only is the stock market going up, but this morning (January 14) I awakened to CNBC telling me that gold was “getting hit hard” and they made sure to highlight the gold price in orange. They were almost giddy with excitement that those damn gold bears were being tranquilized by- wait a minute- a 2 percent move lower! it's kind of pathetic, but I understand.
This is because another character trait of people from planet Goldbug is empathy. An empathy rooted in the belief that all intelligent life forms are connected. All sentient beings suffer, and they all possess an innate fear of death. I imagine that those who knock the precious metals bulls are afraid of losing, they believe that every good thing in life comes from the institutions, practices, and beliefs associated with late-twentieth century American “capitalism.” (whatever this term means.) They see the very structure of their communities, cities, and states as tied to the need for people to speculate in equities, corporate bonds, municipal debt- anything, A-N-Y-T-H-I-N-G, but gold and silver. Oftentimes when I read or see people on T.V. who are carrying water for practices and beliefs that I believe to be immoral, I nonetheless imagine myself in their shoes. We are all connected, and there are a seemingly infinite number of possibilities for good, or for evil, for fear, or for a range of emotions and behaviors within all of us. I might also add ignorance to the list. But as I never tire of saying, the move into gold and silver may represent the end of the world for some people, but for many others it symbolizes a new beginning.
A brave new world colored in yellow and white
We are not going back to the world before 2008. I believe that I am well equipped to talk about that world, by the way, because I am from Orange County, California. The land of all kinds of hype, mindless optimism, excessive materialism, and all of the values that epitomized the high flying 80s and 90s. The land of Walt Disney and the Crystal Cathedral, of S&L crises and subprime mortgages. A land that I love and care for, but like any honest person reflecting on their roots, there is plenty of room for improvement. And yet things change, and this may very well apply to the economic attitudes of my homeland (and by extension the rest of the country). Yes, I realize that consumer deleveraging has not extended that much beyond the mortgage market, but still the new austerity is making its presence felt. And while I do not want to sound flippant or dismissive regarding the real suffering happening to people out there, in many ways this austerity will focus people’s minds on things that have enduring value. It will move people toward healthier, simpler, more sustainable ways of thinking and being.
To take one personal anecdote, for what it is worth, over the Christmas Holiday I spent time with a relative who lost probably over 80% of his net worth in the recent real estate crash. You would think that this relative of mine would be wallowing in despair, self-pity, or angry or ready to do something not nice to a bank building. No, instead he took the view of a mature adult and noted that too many people did too many stupid things with credit and real estate. The mania, the incessant focus on building “equity,” the time away from family, etc in hindsight seemed pretty ridiculous to him. This relative is not a rich man, although it is true that his situation is not desperate either. But I thought about his story as a sign of hope that mentalities and attitudes associated with my homeland can and will change.
Just call me the “jerk” who buys gold (and silver)
Of course, the speed of that change is relative. Notwithstanding the amazing supply and demand profile for both gold and silver, we find ourselves beginning 2011 having to address the same tired bearish arguments against precious metals. The bears who say gold and silver are too expensive because they are doomsday investments and unnecessary as the economy “improves.” The bears who call holders of gold “jerks.” These are the people who insist that it is wrong to want the price of the “insurance” represented by precious metals to go higher, who essentially accuse anyone of not being a team player who agrees with the message to governments being sent by rising gold and silver prices. These are the bears who insist that we should be cheering for the price of derivative, paper garbage (my words) to keep levitating off the ground for the good of all mankind. Charlie Munger essentially accused gold holders of being immoral. In other words, people who invest largely in stocks are helping humanity, while people who hoard precious metals are misers who would make Ebenezer Scrooge blush.
Far from being conduits of every greater immorality or selfishness as Mr. Munger would have it, gold and silver are part of the “anti-debt” to our financial problems. These metals are the only thing which can extinguish debt; the only things which can clear a choking, strangled financial and banking system.
So when you watch the price of gold and silver rise, please do not respond with fear or greed. Do not believe the world is ending if you are unhappy with the price rise, and also do not speculate on margin if you are ecstatic. Simply see the remonetization of precious metals for what it is: a just and a good thing. Not a free ride, not a guarantee that things will be easy, but at long last a return to sanity- a mass great awakening. The rising price of these metals represents millions of people realizing the extreme error of the debt pyramid many of them played a role in creating. Increasing gold and silver values represent people coming to terms with a broken system and taking a small, first step toward building a new one.
And when the remonetization of gold and silver is complete, do not be surprised to see a beautiful golden UFO coming down to Earth to take those us from Planet Goldbug back into outer space to move on to the next planet in need of some old fashioned, quaint, naïve, but very sensible advice. Advice such as that from another alien from Planet Goldbug, Darryl Schoon, who always says: Buy gold, buy silver, have faith.
