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Posts posted by CokeSnortingTory

  1. My mental model of the process is essentially:

    * All the king world news and similar sites are the scripture. A Dante's Inferno like vision of various sinners being dipped headfirst in pools of molten hyperinflation by free market demons and crowds of wailing and penniless sheeple who didn't do much wrong except fail to heed the scriptures, crowding the outer rings of purgatory.

    * This particular belief system is not essentially worse than many of the more mainstream instances of the same thing (e.g. Reinhardt and Rogoff who basically have the same approach but with a less radical wording of the same message, plus some sums and a dodgy spreadsheet to convince people who are impressed by such things).

    * The need for these narratives exists because people need a mental model to generate actions. Not everyone is happy to simply say 'I have no idea what will happen' and restrict themselves to pure hedging strategies - this is particularly true if one is inclined to put profit next to godliness. To criticise these kind of belief systems without offering a plausible alternative as a guide for both rational and moral action is a little disingenuous and we should remember that when poking fun at goldbugs.

    Really, it goes deeper than this. All human reality is essentially constructed from narratives. As Gregory Bateson pointed out in "Mind And Nature", mankind is "the story telling animal". The only thing that makes the goldbug narrative compelling is that, like the Marxist narrative and the Progress narrative, it is patterned after the central narrative of our culture - the Judeo-Christian story of history-as-revelation.

    But it's unfair (to an extent) to pick on goldbugs, as all investment advice, whether in favour of stocks, ISAs, cash, property etc. are also based on narratives, and I'm coming to the conclusion that it is the persuasiveness of any particular narrative at any one time that drives valuations. It's interesting for example that gold fell in (fiat) value until narrative explantions started to be put forward to explain the fall. Until narratives could be supplied there was panic. Indeed, I think market panics could probably be described as "events made severe by the lack of explanatory narratives".

  2. Hedges are insurance - not all insurance is expected to payout - but one does ones best and if the costs are not worth it then one goes without insurance and hopes for the best. In fact taking up insurance one expects will cost you money, not even break even. Part of the problem with how people view the markets today is they have started to confuse hedges with investment, partly because people think there is an option to hold cash as free insurance.

    Yes, I actually hold some gold - as a hedge.

    The other interesting aspect of contemporary views of the market is that it should necessarily be The Route To Personal Wealth, rather than the arena of exchange.

    But that would take me into the territory of the divergence of the Western mind from the global cultural norm, and I'm not doing that here.....

  3. @scepticus

    Well, my position would be that much market activity, although not intended as gambling ("investment") the complexity of the system in practice makes it such i.e. hedges aren't guaranteed to be paid out if the institution hedged with collapses itself.

    As regards goldbuggery (as opposed to ordinary gold investment), I see at as yet another bastardisation of the Jewish pattern of history.

    i.e. the eschatological formula of Second Coming > Judgement Day > The Millenium is replaced with Hyperinflation > Collapse of the State > Paradise of the Gold Owners.

    But excellent post, nonetheless.

  4. Strain? No, just reacting to a mild irritant... guess who that is. :rolleyes:

    Even if the best one can do in a contracting economy is to minimise one's losses, that is still a rational investment strategy.

    So, tell me, what do you do with your money in a contracting economy? Leave it with the nice bankers?

    You do have a strategy, don't you?

    Well, firstly, you initiated this conversation, not me. Secondly, you have adopted an uncivil tone, and not me. So I don't know why you are pretending to be the one who is being pestered somehow.

    The best investment strategy is a diverse one obviously - not to put all one's eggs in one basket, whatever that basket may be.

    And expect to come out with perhaps a small loss at the end of it, if the global economy does get increasingly worse.

  5. No s*** Sherlock.

    Assuming that you, at some point, have some capital, do you 'gamble' with it? Because even holding onto cash is a 'gamble'.

    So you believe that trying to understand what has/may happen is pointless and one may as well take a shot in the dark?

    Like I say, you have nothing constructive to add to the conversation. .

    People also find a narrative that makes sense to them before investing. Except you, presumably, as you find 'narratives' so pointless.

    Often. Often not. Ideologies also apply to cash, savings, spending, etc. Do you actually have a point to make? Besides trolling?

    You appear to be undergoing some personal strain.

    My own view is that when there is a steadily growing economy based on real capital growth, then yes there is some point in a rational investment strategy. But in a growing economy, most gambles will pay off anyway - like a casino that pays out 5% more than it takes in, say.

    In a declining global economy, like the one we have now, which blows multiple bubbles due to the actions of insiders, investing is really akin to pure gambling, and it's near impossible to predict what a winning strategy might be.

  6. So you have no narrative, not even a contrarian one. Things 'just happen'

    Which makes me wonder why you are so interested in this thread.

    Your sole purpose seems to be to troll.

    Did a 'goldbug' say something condescending to you when gold was at it's peak?

    Have you been nursing a butthurt ever since? :lol:

    My narrative is that all investment is ultimately gambling.

    People justify their punts using whatever narrative is attractive to them.

    I've not said anything anti-gold. I've even said it may rise in value again. What I have said is that the reasons people often give to justify for investing in gold are ideological or religious - a wish for the end of The State.

  7. I sold the last of my gold in Feb. So it's all strangely fascinating to watch. Am I planning on "stacking" at these prices? Not on your bloody nelly. It clearly presages something, if only a major shift in sentiment. Significant deflationary pressure would surely be answered with a tsunami of QE? Or has that changed too?

    You see, this is what I mean about people needing a narrative.

    You can't conclude anything about gold's price drop, any more than you can conclude why we've had and east wind for the last month.

  8. The Swiss man speaks the truth.

    Next week Gold may go up, or it may go down. Whatever the reason, it won't be due to the "inevitable" arrival of hyperinflation, as per the prophecy of the pseudo-religion of Austrian economics.

    (It's more likely to be the bear market in Fijian dong-rats).

    Also, are people still taking Zero Hedge seriously? It's so long since I've been here......

  9. Isn't that the goldbug/silverbug conspiracy theory though - people wanting to believe it?

    As far as I can see the price of gold - be it physical or in a paper ETF - is plunging. The goldbugs want to believe that there is a difference between GLD and physical gold but is there?

    If people were selling 'paper' GLD and buying physical gold then why would the price of gold be falling?

    What you have to understand is that Austrian economics/Libertarianism is an eschatological belief system.

    Hyperinflation performs the same function in their religious worldview that Revolution does for Marxists and that The Second Coming does for Christians.

    It is were a corrupt system is slain, and a new paradise on Earth can be created.

  10. I keep reading something about Japanese bonds and the US buck and Japanese Yen - but either I is thick (Don't answer that!) or not a single article has actually explained why these would be the cause of gold plunging. Perhaps some of the people writing the articles do not actually understand it.

    I think they are saying that the Yanks do not want the Yen to be much weaken than the Dollar as they do not want such a strong Dollar... but this has to do with Japanese bonds, let alone gold, is beyond me.

    I think the panic has been feeding on itself, and will eventually self-correct.

    I once brought some Euros back from holiday, and left them in a drawer for a year. When I went to cash them in they had risen against GBP by 30% !

    I told myself that I was an FX genius, and was always bound to make a profit on them.

  11. Apart from TMT's suggestion that there may be fears that some Soverign may be forced to dump it's gold on the open market, I can see nothing that even remotely explains the markets. it is entirely contrary to what should happen in a working market. Bizzare.

    Don't worry, it might go back up next week, and people will be equally flummoxed as to the reason why.

  12. Same goes for anything in the entire universe if you reduce it to that level of simplicity. Not really sure why you even bothered to post it, tbh?

    Don't be silly. The planets don't orbit the Sun because people do or don't want them to.

    It's clear to anybody who observes economic activity for any time that the action happens first, and the narratives, the "explanations" happen afterwards. These narratives tend to be either spurious (it was because of the extra hot/cold weather) or ideological i.e. Marxists have their explanation, as do Austrian economists etc.

    The complex nature of the modern economy means that it's almost impossible to definitively tie down a major index movement to a specific cause, so people just believe the explanation that they're ideologically attuned to accept.

  13. An investment is a sum of savings put into an enterprise on the hope the enterprise, using your funds, can make some wealth out of it.

    Bitcoins, produce no wealth whatsoever, dont need any to even exist and are worth only what two people trading them say they are.

    They are, today, no more an investment than putting £100 on Red.

    All "investment" is gambling, really. Even when ploughed into a "productive" enterprise.

    The point is that during an era of growth, the net sum of all investment will yield a profit. In an era of economic decline, the net sum of all investment will yield a loss.

    So in a growth era, most people will "win", as long as their strategy is not an outlier. In a decline era, most will "lose".

    In a decline era, there is necessarily a greater temptation among insiders to cheat, run scams etc. in order to maintain profits - markets become more "irrational" to outsiders.

    There is consequently a search among outsiders for some kind of "silver bullet" investment which allows them to build profits away from the "corrupted" markets e.g. bitcoin, gold ETFs etc. However, these alternative investments are still prone to the fact that we are in economic decline - they are volatile, subject to manipulation and will, eventually, yield a net loss.

    So the sad truth is, that the only way to make money, if you're not an insider, is to get lucky.

    And then create a story about how awesomely prescient you are.

  14. And, perhaps more interestingly, do people think we going into a depression (arguably we're already one in one) or is an improvement in our stunted recovery on the horizon?

    We're a dying nation nestled within a dying civilisation, which means we're not in "depression" but in decline.

    This might last for decades. On the other hand, it might last for centuries.

    But hey, it'll mean the end of the obesity epidemic, so it won't be all bad.

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