R K Posted April 18, 2013 Share Posted April 18, 2013 The 12 rules of goldbuggery http://www.ritholtz.com/blog/2013/04/the-10-rules-of-goldbuggery/ Yesterday morning, I mentioned the extent of cognitive dissonance surrounding the Gold was surprising (What Are Gold’s Fundamentals?). The reaction to Gold’s crash has produced some astonishing rationalizations. The refusal to acknowledge basic trading facts leads us to recognize that Gold bugs and traders have very specific rules that they MUST follow. These social conventions look less like a debate about asset classes and more like a religious cult. The advocates for any sort of investing thesis have their rules, metrics, heuristics and biases. Here are the rules we teased out for the Gold Trade: The Rules of Goldbuggery 1. Gold is a Currency: This is rule number 1. It is not a decorative or industrial metal, it is a permanent store of value, as dictated by Greeks in Lydia around 700 B.C. And, it shall be ever thus. 2. The price of gold cannot fall, it can only be manipulated lower: When gold’s price falls, it is an unnatural act. It can only occur as the result of an international cabal of Central Bankers and politicians. Its a conspiracy, and we know who the guilty parties are. 3. If the price of gold is rising, it is doing so despite enormous and desperate efforts by manipulators to prevent the rise: This is the corollary to the prior Rule of Gold manipulation. Gold runs up despite the overwhelming opposition to it. 4. The world MUST return to the Gold Standard one day: It is inevitable that we will return to a Gold Standard. We all know this to be true. When we compare the size of the money supply to past amounts when there was a Gold Standard, we can derive prices of Gold in the $7,000, $10,000 even $15,000. Hence, we know its cheap even at $2,000. 5. Central Bankers are printing money relentlessly, and this can only drive Gold prices higher: NOTE: You must ignore, for the moment, that Gold has not gone higher for the past 2 years as Central Banks around the world have ramped up QE. This only means that ultimately, Gold will go much much higher. 6. Gold works whether the economy is good or bad: When we have a red hot economy, Gold is your hedge against inflation. When we have a bad economy, Gold is a safe harbor against collapse. It is a one way trade that never fails! 7. Gold will survive after the world economy crumbles: Gold is the ultimate currency, as it has a value that will survive even after the whole world tumbles around you. Get yourself some gold coins and a Glock and you will be just fine when the whole world goes to shit. We welcome the era envisioned in the movie Mad Max. 8. Never admit that Gold is essentially a sucker’s bet: Never discuss how in the last century, gold has run up only be to trounced in repeated massive sell offs (always blame rule #2 for this). Do not discuss how this has happened in 1915-20, 1941, 1947, 1951-66, 1974-76 1981, 1983-85, 1987-2000 and 2008. 9. Gold is a rejection of government, and their control of fiat money and finance: There are no printing presses that produce gold, it is finite, natural and God created. How much we scrape out of the ground each year is limited, and the only variable to the old equation. (Just ignore Man’s natural tendency to organize into to City-States over the past 12,000 years). 10. All Gold discussions must contain ominous macro forecasts: Your description of why Gold is going higher must consist of spurious correlations, unprovable predictions, and a guarded expectation of bad things in the future. Avoid empirical data at all costs . 11. Gold is always rallying in one currency or another: Sure, it may be down 30% in Dollars, the reserve currency it is priced in, but you can always find a currency falling faster than it does and claim you own it in that denomination. Last week, it was up in Japanese Yen . This week, it is up in Zimbabwe dollars . 12. China & India know the value of Gold; the Western world does not: The massive buying of gold by consumers in Chindia reflects the culture, intelligence and investing savvy of the people in these countries. The West doesn’t get it, and it is their loss. Bonus rule: Never admit Gold might be falling because it trades on human emotions and psychology and has no intrinsic value whatsoever . The enormous amounts of dollars involved in the Gold trade has attracted all manner of charlatans and frauds to the Gold trade. Although this list can help you separate the true believers from the criminals, time has proven them to be both are enormous money losers. Ignore the risks of being a gold bug at great peril to your portfolio . . . Quote Link to comment Share on other sites More sharing options...
Errol Posted April 18, 2013 Share Posted April 18, 2013 Excellent feature on recent gold moves on Newsnight. Max Keiser on top form! Quote Link to comment Share on other sites More sharing options...
Hail the Tripod Posted April 18, 2013 Share Posted April 18, 2013 Fear of the unknown. I would also add that we are herd animals. If all we perceive is fear in the herd, without knowing better, we have to fear too. It is a basic survival instinct. Tigers? I don't think so. And human's have intellect, which allows us to override instinctual response (to varying degrees). Quote Link to comment Share on other sites More sharing options...
robmatic Posted April 18, 2013 Share Posted April 18, 2013 Excellent feature on recent gold moves on Newsnight. Max Keiser on top form! Is he usually that shrill? Quote Link to comment Share on other sites More sharing options...
Errol Posted April 18, 2013 Share Posted April 18, 2013 Is he usually that shrill? More so usually lol. He's an entertainer really. And more news ... US Mint Sells Record 63,500 Ounces Of Gold In One Day According to today's data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone. http://www.zerohedge.com/news/2013-04-17/us-mint-sells-record-63500-ounces-gold-one-day Quote Link to comment Share on other sites More sharing options...
Deckard Posted April 18, 2013 Share Posted April 18, 2013 (edited) The 12 rules of goldbuggery http://www.ritholtz.com/blog/2013/04/the-10-rules-of-goldbuggery/ Beautiful. I can picture the bugs who inhabit this thread genuflecting and praying every morning before these 12 commandments, etched on a gold plate hanging on their wall Edited April 18, 2013 by Deckard Quote Link to comment Share on other sites More sharing options...
scepticus Posted April 18, 2013 Share Posted April 18, 2013 Beautiful. I can picture the bugs who inhabit this thread genuflecting and praying every morning before these 12 commandments, etched on a gold plate hanging on their wall Here is the entrance to one prominent goldbug temple: http://fofoa.blogspot.co.uk/ The mystical language and scripture-like nature of the material discussed here is quite a fascinating little study in human behaviour! Don't forget to take your bullwhip and bush-hat! Quote Link to comment Share on other sites More sharing options...
Errol Posted April 18, 2013 Share Posted April 18, 2013 Gold coins still £960+ at coininvestdirect. FFS. Quote Link to comment Share on other sites More sharing options...
Errol Posted April 18, 2013 Share Posted April 18, 2013 A good (as always IMO) McAlvany podcast on the gold takedown/pullback/crash: http://mcalvanyweeklycommentary.com/category/podcasts/ (not recommended for anyone who somehow believes that the gold market is free, transparent, open & honest). Thanks for this. Quote Link to comment Share on other sites More sharing options...
Deckard Posted April 18, 2013 Share Posted April 18, 2013 Here is the entrance to one prominent goldbug temple: http://fofoa.blogspot.co.uk/ The mystical language and scripture-like nature of the material discussed here is quite a fascinating little study in human behaviour! Don't forget to take your bullwhip and bush-hat! Quote Link to comment Share on other sites More sharing options...
shindigger Posted April 18, 2013 Share Posted April 18, 2013 Pretty much as i said 3 days ago. But they forgot to mention the Goldmans announcements. Quote Link to comment Share on other sites More sharing options...
shindigger Posted April 18, 2013 Share Posted April 18, 2013 At least you're enjoying yourself.... Quote Link to comment Share on other sites More sharing options...
Errol Posted April 18, 2013 Share Posted April 18, 2013 Doesn't look like gold. If it is it would be a very low carat. Quote Link to comment Share on other sites More sharing options...
Deckard Posted April 18, 2013 Share Posted April 18, 2013 At least you're enjoying yourself.... Well, I would love to hear another rant about your French ex-girlfriend, that's for sure! Did she wear a gold stud in her tongue? Quote Link to comment Share on other sites More sharing options...
Deckard Posted April 18, 2013 Share Posted April 18, 2013 Doesn't look like gold. If it is it would be a very low carat. Quote Link to comment Share on other sites More sharing options...
shindigger Posted April 18, 2013 Share Posted April 18, 2013 (edited) Well, I would love to hear another rant about your French ex-girlfriend, that's for sure! Did she wear a gold stud in her tongue? haha. Good memory. Put it like this..She took more off me in the space of a week at christmas, than i lost this week on shiny. Expensive "hobby" that. Never again. THREADKILL!!! Edited April 19, 2013 by shindigger Quote Link to comment Share on other sites More sharing options...
Errol Posted April 19, 2013 Share Posted April 19, 2013 I'm a buyer (but that's not to say it won't go lower - I'll get more if it does). Quote Link to comment Share on other sites More sharing options...
Extradry Martini Posted April 19, 2013 Share Posted April 19, 2013 I'm a buyer (but that's not to say it won't go lower - I'll get more if it does). Why? Quote Link to comment Share on other sites More sharing options...
Gigantic Purple Slug Posted April 19, 2013 Share Posted April 19, 2013 Why? Probably the more significant question to ask is why so keen to ensure we know that ? Quote Link to comment Share on other sites More sharing options...
quibble Posted April 19, 2013 Share Posted April 19, 2013 Why? Jeeze. Not again. We're going round in circles here. Errol has been very clear (umpteen times) in this thread (read it!) that he thinks gold will go much higher in the medium term. I agree with him (but the difference between myself & Errol is that he reckons that gold will become officially recognised as a monetary component, I personally guess that very high gold prices will enforce a real return on fiat). You have to relise that long term gold holders have heard (caged, guarded) bearishness from the likes of RealistBear for half a decade! Wrong, wrong, wrong. I can't speak for Errol, but he's mentioned $3,000 per ounce before. Which is at least my minimum target. A challenge to the paperbugs: not one of you has made a single proper bearish prediction (RK's $1,000 target is the closest, but that can easily be passed off later as an interim bottom in the unlikely event that the paper price can get pushed that low). There must be at least a single paperbug amongst you (just one, a sole person, come on) who is willing to say: "Gold will not reach $3,000 in the next 5 years". Not the usual tedious couched crap "gold will probably maybe perhaps not go much higher this year". A proper prediction along the lines "gold will not go to $3,000 before 2020". Mine is: "Gold will go over $3,000 per ounce before 2018". Come on, there must be at lest one sole paperbug here with the cahonas to make an actual prediction. Quote Link to comment Share on other sites More sharing options...
Police Posted April 19, 2013 Share Posted April 19, 2013 Jeeze. Not again. We're going round in circles here. Errol has been very clear (umpteen times) in this thread (read it!) that he thinks gold will go much higher in the medium term. I agree with him (but the difference between myself & Errol is that he reckons that gold will become officially recognised as a monetary component, I personally guess that very high gold prices will enforce a real return on fiat). You have to relise that long term gold holders have heard (caged, guarded) bearishness from the likes of RealistBear for half a decade! Wrong, wrong, wrong. I can't speak for Errol, but he's mentioned $3,000 per ounce before. Which is at least my minimum target. A challenge to the paperbugs: not one of you has made a single proper bearish prediction (RK's $1,000 target is the closest, but that can easily be passed off later as an interim bottom in the unlikely event that the paper price can get pushed that low). There must be at least a single paperbug amongst you (just one, a sole person, come on) who is willing to say: "Gold will not reach $3,000 in the next 5 years". Not the usual tedious couched crap "gold will probably maybe perhaps not go much higher this year". A proper prediction along the lines "gold will not go to $3,000 before 2020". Mine is: "Gold will go over $3,000 per ounce before 2018". Come on, there must be at lest one sole paperbug here with the cahonas to make an actual prediction. Gold will not reach $5000 in the next 10 years. Quote Link to comment Share on other sites More sharing options...
quibble Posted April 19, 2013 Share Posted April 19, 2013 Gold will not reach $5000 in the next 10 years. Kudos for making a real prediction. Quote Link to comment Share on other sites More sharing options...
Errol Posted April 19, 2013 Share Posted April 19, 2013 Gold will not reach $5000 in the next 10 years. I think it will (and more) but that's not the reason I'm buying it. Why value it in dollars anyway? Quote Link to comment Share on other sites More sharing options...
Errol Posted April 19, 2013 Share Posted April 19, 2013 Chinese Gold & Silver Exchange Society Runs Out of Gold... Importing from Switzerland and London http://www.zerohedge.com/news/2013-04-19/chinese-gold-exchange-sold-out-begins-importing-switzerland Quote Link to comment Share on other sites More sharing options...
The Masked Tulip Posted April 19, 2013 Share Posted April 19, 2013 Gold Panic!?! http://www.zealllc.com/2013/goldpanic.htm Quote Link to comment Share on other sites More sharing options...
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