A few weeks ago, in a forum post
on gold and silver, I wrote:
I have no idea where prices are headed, or even if prices (quoted in fiat currencies) will mean much. That's why I got completely out.
And in a recent email
to a reader, I wrote:
If it has quotes that are updated in real-time, chances are, it won't be useful for much when the sh*t hits the fan.
Lots of people holding gold, as it gaps down along with global stock markets, are probably scratching their heads right now.
Gold should be going up when markets fall...
Gold is a safe haven...
Gold is real money...
It's like this: people just aren't thinking weird enough. There's a reason why institutional traders call retail investors dumb money
. It's because the retail investor---if you trade your own account or pay a broker to do it, you're a retail investor---is trying to play by the rules established by the most criminally corrupt and diabolical economic system that the world has ever seen.
Here's a question for retail investors out there: Would you show up to a gun battle with a butter knife?
That's pretty much what you're doing when you enter a trade in any equity, commodity or currency market right now. Like showing up to a gunbattle with a butter knife, there's a chance that you'll be the last one standing, but not much of a chance.
I came to the conclusion that gold wasn't the way to go because A) my wife and I needed a farm, not gold, and B) gold transactions and contracts are settled in, guess what: fiat currency
It makes no sense that gold should be available for purchase with U.S. dollars. It makes absolutely no sense. If gold is the "real money" gold bugs (I used to be one) believe it to be, it makes no more sense to be able to buy gold with U.S. dollars than it would make to be able to buy a cow with a cupful of rocks.
"Yes, Kevin," I can hear you guys thinking, "but you and your wife bought your land with your fiat currency. How does that make sense?"
It doesn't. The difference is that there is a much better chance that this farm will sustain us than there is that gold will be as safe a haven as people are expecting it to be. Gold could go to $1000, $2000, $5000 per ounce. It could also go to $100 per ounce. My wife and I have much more control over what happens in our dirt than what some criminal syndicate says the value of the "real money" should be.
As someone who used to daytrade my own account to survive, mark my words: All equity, commodity and currency markets are scams. You're playing the House's game when you're screwing around with any of it. You may come out on top, but if I was a betting man, which I'm not, my money would be on the House.
If there's one thing I've learned in all my years of looking at events, it's that events never go the way anyone thinks they're going to go in the future. It seems so obvious that gold is the way to go with the instability and precarious nature of the global economic system. Right?Explain gold's recent leg down, in the face of crashing global stock markets.
Actually, I don't want you to explain it to me (because I've read all the theories, which are starting to sound more nuts than a Baptist revival). That's the beauty of being out.
If you're long (or short) gold, silver or sea shells, best of luck to you. Also, best of luck in not having to rely on luck anymore. The people you're betting against don't.