'Civilized People Don't Buy Gold'

[mick silver]

hog shit ........................ http://www.thedailybell.com/3859/Anthony-Wile-Civilized-People-Dont-Buy-Gold ...
'Civilized People Don't Buy Gold'

Saturday, May 05, 2012 – by Anthony Wile
http://www.thedailybell.com/images/library/Wile.jpg
Anthony Wile

"Civilized people don't buy gold," Berkshire Hathaway's Charlie Munger told CNBC (javascript:showWindow(500,800,'/floatWindow.cfm?id=3458');) yesterday in an exclusive "sit down" interview.
It wasn't some off-the-cuff remark, either, as he went on to remind us that "gold is only useful if you're a Jewish (javascript:showWindow(500,800,'/floatWindow.cfm?id=722');) family in Vienna in 1939" and "sewing it" into your clothes.
The statement has received a lot of attention in the alternative press since then, with numerous articles and commentaries mentioning it. The sheer obstreperousness of the comment virtually flies in the face of much of what's taken place in the past decade.
At the same time Munger was making these dubious observations, Berkshire Hathaway was announcing that it had more than doubled its profit in the first quarter. The conglomerate's insurance business, according to a Reuters (javascript:showWindow(500,800,'/floatWindow.cfm?id=2551');) report, "was spared from the devastating natural disaster losses that hit the company a year earlier."
The company also made money on its derivatives portfolio and substantially wrote down part of a bond portfolio. But it's hard to avoid the idea that all of this organized PR is setting the table for the company's upcoming shareholder meeting that's been called the "Woodstock for Capitalism (javascript:showWindow(500,800,'/floatWindow.cfm?id=1903');)," to be held in Omaha, Nebraska.
At this meeting Buffet and Munger shall be lionized as great investors once again, as before. We shall be subject to the interminable assertions that Buffet and Munger are simple men with a simply fantastic knack for picking "great companies."
Can we really believe it? It should be obvious by now for those who care to look that Warren Buffet in particular has been flailing for years.
Virtually every time you look around he's on television calling for higher taxes. When he's not calling for higher taxes, he's making deals with companies like Goldman Sachs (javascript:showWindow(500,800,'/floatWindow.cfm?id=2302');) at insider prices.
Buffet rarely if ever takes a naked long position, from what I can tell, without some sort of additional assurance or inducement.
He uses his size and leverage to create advantages while extolling the plain common sense of "value investing." But given his use of derivatives and the way he throws his substantial investment weight around, it's hard to believe that he is really "walking the walk" anymore.
In the case of investments in companies like Goldman Sachs, he's in the enviable position of knowing what the results may be of various investigations and regulatory issues.
If Buffet can bring his considerable influence to bear on those issues and investigations the success in the short term is almost assured. And over and over this seems to turn out to be the case.
Buffet continues to pursue a kind of business that has little to do with his stated affection for "value investing," and he also unfortunately is not being honest with the general public when it comes to gold and silver (javascript:showWindow(500,800,'/floatWindow.cfm?id=804');).
Gold has gone up nearly tenfold since 2001 and silver has gone about that high as well. As we've pointed out, there's nothing magical about it. The business cycle (javascript:showWindow(500,800,'/floatWindow.cfm?id=634');) – a concept Munger obviously isn't keen on explaining – turned about a decade ago.
It was obvious to anyone who cared to look. And so was the mechanism. Central banks (javascript:showWindow(500,800,'/floatWindow.cfm?id=2958');) overprint money and cause first booms and then busts. The last bust – when money metals took over – was in the 1970s.
During the 1970s, gold and silver specie and bullion were bid up. Then when physical gold and silver were finally too expensive for many, paper gold and silver began to feel the effects of the golden bull.
This is perfectly predictable, not because investing is easy or conveniently managed but because modern investing is an artificial phenomenon dependent on central banking monetary stimulation.
If one takes the trouble to figure out how the economy works in the modern age, then absent extracurricular factors success would seem to be partially a matter of holding on and waiting – and watching – while the cycle almost inevitably spins through to its conclusion.
What conclusion is that? Well ... it should be obvious. Miners and then junior miners will rise at the end of the current cycle, along with other paper gold products. The only unknown is whether the powers-that-be will allow the current cycle to play itself out.
Many factors could come into play, from war to outright confiscation of gold and silver if it really begins to threaten the underlying monetary status quo.
It's my belief that the road to US$ 5,000 gold (or wherever it ends up) is going to be a rocky one – given the pushback that may be coming from the powers-that-be. But the process itself is undeniable and obvious no matter what people like Munger say.
What Munger is doing in this interview is providing us with a kind of dominant social theme (javascript:showWindow(500,800,'/floatWindow.cfm?id=652');), an elite promotion of sorts. We're supposed to believe that the price-fixing of central banking is part of the larger "free market" that Munger and Buffet claim they are fond of.
I'd like to see both of them practice what they preach. They should stop talking about the advantages of higher taxes and stop avoiding the issue of how money is created in the modern world.
They would do everyone a favor if they explained how business cycles actually work and how people might be able to take advantage of them (within a properly cautionary environment).
You can bet that Buffet and Munger invest according to their perception of how the business cycle is affecting the larger economy. It's a shame that they don't share this knowledge instead of making statements that seem less than honest.

[palani]

No. He is correct.

Civilization is a process of making a common law crime civil.

Civilized people are slaves. They have no need of property.

[Awoke]

No offence Mick, because I typically like the stuff you post, but I am not wasting time reading that article based on the sheer ridiculousness of the title.

[StreetsOfGold]

Why, it's a slap in the face to every one of the "We Buy Gold" shop owners that are now on almost every corner. Those silly, Uncivilized barbarics

[Shami-Amourae]

Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.

[mamboni]

Munger at best lacks objectivity. At worst he wants to keep the sheeple herded within the system that has made him and his cohorts filthy rich becuase of the unfair advantages of a centrally planned corporate-fascist economy. Listening to advice from this guy is like a chicken listening to a farmer exhort the virtues of decapitation versus snapping of the neck. These guys, Munger (real name was probably Bungholer), Buffet, Gates just can't stop telling everyone how bad gold is. This is so bullish for gold that I enjoy watching guys like Munger twist in the abstract wind with their tortured lies and bankrupt ideas.

[EE_]

Subj: Beware the Advice of Gold, Silver and Nickel Bashers


Whiskey & Gunpowder -- THE Free Market e-Letter

Gary Gibson, Minneapolis, Minnesota...

Krugman, Buffet and Gates...Oh my!

We fear this entire issue may seem like we deliberately set out to bash these three men. But what can we do, good patron?

First, from our friend Mac Slavo over at SHTFplan.com...

"Government mouthpiece and well known Keynesian economist Paul Krugman makes the case for monetary easing and Fed intervention by claiming that the rising cost of food and gas has nothing to do with the Federal Reserve and easy money dished out to banks, both foreign and domestic, to the tunes of not billions, but tens of trillions of dollars.

"The latest economic theory from the Nobel Prize winning economist suggests that the Fed and government intervention couldn't possibly have anything to do with US dollar depreciation – not for the last hundred years, and certainly not today:

‘Food and gas is not something that's being driven by Fed policy. Sorry, but Ben Bernanke doesn't have that much power. That's being driven by events in China. That's being driven by events in a large world economy.
…
‘The dollar hasn't gone down. That's the amazing thing. If you actually look at the Dollar vs. the Euro, the Dollar vs. the Yen, it has not. In terms of the world's other major currencies we have not had a big depreciation of the dollar.
…
‘History says that a regime of moderate inflation is better for workers than we've got now.'

Eep! We hardly know where to start. We stand speechless. We pick our editorial jaw up off the floor and gather our wits. "The dollar hasn't gone down"..? That's like saying a house torn down by a hurricane isn't any shorter because all the other houses have been torn down too.

The dollar isn't going down against other currencies which are as abused as the dollar. But in terms of things you actually need to buy...and in terms of much more reliable forms of money like gold and silver...the dollar is looking a little tired to say the least.

But! That's okay, says Paul. Because "moderate inflation is better for workers".

A little currency debasement works much better than letting the market pick an inflation-resistant money like gold or silver, eh Paul?

The thing is, good patron, inflation does seem to work for a while. If it were immediately disastrous, then governments and the central banks they grant a monopoly on issuing money would never be able to get away with it.

But inflation leads to improved standards of living the way a little hooch leads to improved confidence and beauty.

Inflation "stimulates" the economy, sure, but it does this by lowering the cost of borrowing money below the real market rate. The central bank lowers these costs (interest rates) when it deems the economy to be "slowing".

But slowing and contracting are natural parts of the economic cycle. Interest rates naturally rise in a free market when the economy needs to flush out mistakes and make money more scarce by making it more expensive to borrow. People are encouraged to gather capital instead of borrowing it. This accumulated capital can then fuel the next round of expansion.

[The glaring un-reality of Keynesian reasoning is that without a push from rate-lowering central bankers people would continue saving forever. Keynes' was wrong about the "paradox of thrift". Savers do want to spend their money eventually. Plus rising interest rates in a money-hoarding environment would make lending an attractive activity. Rising interest rates would produce great incentive to lend! The money would flow from savers to borrowers and the cycle would continually repeat. The economy would not grind to a halt as people saved money forever.]

By monkeying with interest rates, central banks don't prevent corrections. Instead, central banks just "store them up". Then instead of small, brief corrections from time to time, the economy suffers one mondo correction that leads to Depression with the big "D". This is what we mean when we say the central bank creates the business cycle. It may be more accurate to say the central bank mutates the normal business cycle into an economic extinction level event.

Ugh. But don't bother trying to explain this to the likes of Paul Krugman. Let the market set rates? Accept corrections as necessary and allow them to be brief? Not Paul! In Paul's mind a few degreed men from Yale are much better at determining the cost and supply of money than millions and billions of market participants. Politically centralized power works, every time...and especially when it comes to money!

Sadly, like any harmful artificial stimulus, over time the junkee tends to need more of the drug in order to produce the same effect. Pretty soon the junkee ends up regularly playing with lethal doses in order to chase the high. It's a party till the overdose...or in the case of the economy, a party with "moderate inflation" till a nation-killing hyperinflationary storm hits.

Plus, there's this little side bonus: central banking is legal counterfeiting that puts purchasing power into the hands of the first recipients of the new money. But this purchasing power doesn't come out of thin air (though the new money does). No, this purchasing power is leached away by means of the new money from everyone else, especially those stupid enough to save anything at all.

Central banking makes it easy to put even more money in the hands of the central bank's number one client: the government. Direct theft through taxation is so passe. Stealth theft through inflation: that's the sort of sophisticated theft to suit the taste of a Yale man.

While it's just about impossible to protect yourself from direct taxes, it is surprisingly simple to protect yourself from Paul's "moderate" inflation. You trade your central bank notes for gold and silver. There are other surprisingly simple and risk-free things you can do, too. But we'll come back to that in today's Parting Shot...

In the meantime, in today's feature article Jeff Berwick focuses his gaze on another of the men in the gold-bashing triumvirate mentioned at the beginning of today's opening remarks. Et tu, Bill Gates?

Whiskey & Gunpowder
by Jeff Berwick
May 8, 2012
Acapulco, Mexico

Stick to Depopulating the Planet, Bill Gates

It must be "Bash Gold" week on the CNBS network. Warren Buffet has been leading the charge by talking down the precious metal in a recent newsletter to Berkshire Hathaway shareholders and followed up today on CNBS's "Squawk Box" where he warned that despite the declining value of the dollar, running to gold is a "mistake."

Not to be outdone, Buffet's partner in crime Charlie Munger recently declared "gold is a great thing to sew onto your garments if you're a Jewish family in Vienna in 1939 but civilized people don't buy gold - they invest in productive businesses."

And now, Bill Gates went on CNBS today to try and explain the great error in investing in the barbarous relic. It's like they're trotting out the billionaire boys club to scare people back into Berkshire and Microsoft stock.

As they should. Bill's Microsoft has been absolutely decimated vis-a-vis gold for 12 years straight and running.

Both Buffet and Gates concede that paper money will continue to be debased as long as central banks hold the legal monopoly to print it. What they won't mention is that such blatant fraud is conducted to finance government deficits and prop up a virtually zombified banking sector.

Gates in particular tries to tie his bumbling rant together by declaring gold has a kind of psychological value to it. That those who buy it are motivated by it because "people in the future will think it's worth more than it's worth today." Gates goes on to point out that as more people flood to the gold market, the more the gold mining sector will develop which will subsequently increase the supply and put downward pressure on prices.

Congratulations Bill, you have stumbled onto some of the most basic lessons of economics. First, since the value of all goods and services are determined solely by the purely subjective perceptions of utility amongst market participants, gold is no different from any other investment. Many perceive it is a viable currency alternative to the current state of affairs.

Those who put their money in equities do so because they believe it will yield them a return. "Psychological" factors play just as much of a part in this thinking than they do in those who purchase precious metals.

Second, if an investor's marginal profit is exceedingly high, this is a signal to other market participants that there is money to be made in whatever sector in paying out at such a rate. People move to where they can make a profit. They don't sit idly by making negligible returns. Supplies increase, prices adjust, and so does the market.

None of that diminishes the purpose of gold which not only acts as an investment but a hedge against the profligacy of governments. The pressure on central banks to flood the world with liquidity is enormous. The practice of fractional reserve banking has left much of the world's major financial institutions insolvent. Central bankers know of no other solution from their Keynesian instruction guide than "print, print, and print some more."

If Gates really wants to speak to psychological factors, why not say a word on why inflationary monetary policies are employed to begin with? Indeed, if money printing actually created just one iota of wealth, then Emperor Diocletian (whom Paul Krugman looks to for policy advice) would have led Rome into a period of material abundance rather than wreak havoc on a once thriving market economy.

But of course inflation is purposefully resorted to in order to both aid the first receivers of money and create the perception of prosperity. With some prices boosted relative to others, there is the appearance of ‘feeling richer." The overall supply of goods hasn't increased; only the amount of pieces of paper with dead Presidents in circulation. The short term boost in confidence comes at the cost of long term stability as capital is consumed with little savings being accumulated for replenishment. The inevitable bust, as Ludwig von Mises showed, cannot be avoided.

THE END OF THE MONETARY SYSTEM AS WE KNOW IT (TEOTMSAWKI)

As governments continue to binge on endless servings of liquidity financing, there is little threat to gold's price in the long term. Short term fluctuations are an inherent feature of a market system based on the ever-changing value judgments of billions. There is no conceivable end in sight to inflating currency supplies. If central banks were to stop inflating the house of cards that is the global banking system would collapse.

The question is where you put your trust? In the promises of highway robbers who climb their way into public office through lies and vicious personal attacks? Or in a commodity that has thousands of years of historical usage to prove its functionality as a means of exchange?
Bill Gates puts his faith in the goodness of scoundrels.

IMITATOR, FOLLOWER AND SEARCHING FOR A PURPOSE

The fact of the matter about Bill Gates is that he has never innovated. The only thing he has ever done that paid off incredibly well is this: he finagled his way decades ago into the position of being the sole accepted computer operating system at the very start of the personal computing revolution. Since then he has lived off of having that incredibly powerful position.

He was incredibly slow to realize the power of the internet, he was always second to the party with inferior products like Internet Exploder, Zune and countless other copycat, failed products. He installed a completely insane man to manage Microsoft after he left. And now that he has some extra time on his hands he has decided that

a) the planet needs to be depopulated and

b) he will use a significant amount of his time and power to help depopulate it.

He is pathetically searching for a purpose. And, since he has no idea how economics works, nor money, as he shows in his interview on gold above, he has decided to make depopulation his purpose as he shows in this awkward, ridiculous speech given at TED where he uses all kinds of incorrect premises such as manmade global warming being real to come up with this unbelievably absurd "mathematical" formula:

CO2 = People x Services x Energy Per Service x CO2 Per Energy Unit.

Then he adds that in order to get CO2 to zero, "probably one of these numbers is going to have to get pretty close to zero." And given that he is spending much of his free time with famous misanthropes such as Ted "A total population of 250-300 million people, a 95% decline from present levels, would be ideal," Turner, it is pretty clear which one will be the top priority. It's the most absurd premise based on the most absurd assumptions I think I have ever heard in my entire life. And his understanding of gold is just as flawed.

Bill Gates, Warren Buffet and Charlie Munger may have once had some sort of relevance. But, today they are globalist shills pathetically trying to keep an immoral and violence/theft based system alive by which their importance and life's work are tied. The world is leaving them behind... and they will work to enslave it (the Buffet Rule) or genocidally kill it if they have to in order to maintain their sense of self-importance.

Buy gold, sell MSFT and Berkshire Hathaway and fiat dollars, sit tight and be right. The fact they are all running to CNBS in the last few days must mean they are getting desperate.

Regards,

Jeff Berwick
The Dollar Vigilante


Mac continues:

"When you consider that Mr. Krugman is a highly respected and influential economist whose ideas have been accepted and implemented by monetary and government officials without contemplation or discussion, then it becomes apparent how serious of a problem we are facing.

"What's scary is that we don't think Mr. Krugman is lying to us when he speaks of these ludicrous theories. He , and those who implement these policies, actually believe them as Gospel, and that is much more dangerous.

"We suggest that you follow the one investment strategy you need to know to protect yourself against the coming inflation monster and start acquiring physical commodities right now, because these people – these best-and-brightest of our financial and economic world – will not stop until the US dollar, our purchasing power, our retirement savings and our entire way of life are completely wiped out.

It's not just the likes of collectivist, central power loving shills like Krugman, Buffett and Gates who are making mockery of some basic preparation for currency debasement.

Et tu, Daily Anarchist? From Daily Anarchist editor Bruce Jay (underscore ours):

"Attention: The world is coming to an end! Buy gold, guns, and gas masks! The doomsday, Armageddon, impending collapse, mass starvation and war-lording reality, coming to a city or neighborhood near you, is a reoccuring [sic] theme among many pro-liberty websites. Whether it's selling guns, gas masks, and water purification tablets or advising people to place their money into strange and obscure investment vehicles (e.g., nickels), doomsday moneymaking schemes abound throughout the liberty movement."

Source

"Advising people to place their money into strange and obscure investment vehicles (e.g., nickels)?" We didn't know whether to chuckle or weep over that one.

Minutes before we received this article from the Daily Anarchist in our inbox we'd sent out yet another letter urging you dear patrons to make nickels a part of your most basic savings plan. Can't beat that timing!

Saving in nickels now is about as strange and obscure as saving silver quarters and dimes in the early ‘60's...or trading your $20 bill for an ounce of gold (and keeping quiet about it) in the early ‘30's. Nickel hoarding isn't a "strange and obscure investment vehicle"...unless you're Bill Gates or Warren Buffett. It's as straightforward as trading your dollars for gold and silver. The bonus is that the face value of the nickel acts as a hedge against the dollar rising again while also protecting your purchasing power in case of the dollar falling.

When you buy gold at $1600 or silver at $30, both could get cheaper in terms of dollars. Not so with nickels! They will trade for five U.S. cents as long as there is a U.S.. But the metal content of the nickels is actually worth more than the face value! For $100 of nickels, you get more than $105 of actual copper and nickel (at current base metal prices). Nickels will protect your purchasing power in case metal prices fall (you can spend them at face value) and like the "junk" 90% silver coins that are no longer in circulation nickels will protect your purchasing power in case the dollar value of nickel and copper keeps rising.

You can't legally melt the nickels down...but you don't have to! Just as with the silver coins and copper pennies, a market will form for them. People will act upon market realities in the face of central banking illusions. If you have a problem believing that last part, we understand. And we wish you luck holding onto paper dollars or just leaving your savings as electronic entries in your bank's records.

End of the world or not, nickels are a smart way to save. Perhaps the smartest. You lose nothing. You risk nothing. Yet you gain protection no matter which way the dollar stumbles.

And should you decide to take the simple step of saving with nickels, your editor gains nothing from it. He does it himself with nary a thought of invading urban hordes, food storage, or valiant last stands against the government. Take from that what you will.

Regards,

Gary Gibson
Managing editor, Whiskey & Gunpowder
ggibsonagora@gmail.com

P.S. If the nickel idea still leaves you cold...if you want a riskier but potentially much more lucrative play based on the old reliables of gold, silver and oil...then take advantage of the investing expertise of our resident geologist Byron King.

Byron gets his boots muddy in mines and oilfields all over the world. He knows the insides of the commodities industries like few people on the planet. And he's distilled his knowledge into the sorts of plays that have let his readers multiply their money.

Find out more about becoming like one of Byron's money-multiplying readers by clicking here.

[palani]

The very ones who do best by practicing the 10 commandments seem to promote the 10 planks to others.

[gunDriller]

problem is, Munger is not just some drunk guy mumbling at the bus stop.

as Warren Buffett's right hand man, he is someone the mainstream media loves to quote. since they have embarked on the Management of Perception Economics program as a 21st century version of the Greenspan "Strong Dollar Policy", the MSM needs Quotable Quotes from people with "Pedigree" so that they can bash Gold ~ and make it look reasonable instead of like the idiots they are.

sound-bite providers like Munger perform a real useful function for the currency manipulators.


it is so ODD to see these people talking about "world reserve currencies" and they talk about the $, Euro, Remnimbi, etc. - everything except for the #1 currency & store of value, Gold & Silver.

i would love to see a young newscaster with an ounce of journalism in them ask Munger a halfway 'hard' question.

Munger - "Civilized People Don't Buy Gold."

Newscaster - "How about a hundred years ago ?"

Munger - "This is the 21st century. We don't need gold."

Newscaster - "Then why are central banks around the world net buyers of gold ?"

[Serpo]

--)Well most of GSUS have some gold maybe and we are not civilized...........

[mick silver]

they need to keep the cows in the pen just a little longer