During the financial crisis, BNN here in Canada gave a lot of of airtime to goldbugs. A day would hardly go by without seeing one of them, guys like Peter Grandich, Peter Schiff, Marc Faber and assorted Sprott puppets. Grandich, a nauseatingly pious dropout whose familiarity with written English was cursory at best, had a blog on Agoracom, where he railed against the government's interference in the economy. That's right, his prescription for the 2008 meltdown: the government should do nothing and let the destitution fall where it may. God would sort it all out eventually.
They all said gold was going to $5000 an ounce, maybe even $10000. (Narrator's voice: This did not happen.) The world was ending, paper currencies weren't worth the paper they were written on. The only thing that could save you from starvation and death was that beautiful, shiny metal. Unfortunately for them, the Keynesian remedies that governments applied to the economy worked.
With the recovery well under way, the goldbugs seamlessly switched tack and started pushing the notion that the $24 trillion derivative market was about to implode. (Narrator's voice: This did not happen, either.) They also prattled on incessantly about government debt, their perpetual bogeyman. The US was broke, social security had tens of trillions in "unfunded" liabilities, etc, etc. Suffice to say, you could fit their collective knowledge of government finances, banking and money into a thimble.
Despite their best efforts, gold fell from a high of $1870 all the way back to just over $1000 in 2015. But this did not dissuade them in the least. I remember seeing Schiff on TV sometime in 2013, insisting the real crisis was yet to come, in the form of runaway inflation. That same year, Ron Paul said the price of gold could go to infinity. (Narrator's voice: And he wanted to be president.)
Goldbugs have a pathological hatred of government, and they all subscribe to the Austrian school of economics, which can be summed up as "let the market do whatever it will, and don't waste any time worrying about the carnage it leaves in its wake." You see, since you bought gold, calamities and other people's misery are your best friends. These are men (and they are all men; I am wholly unaware of any female goldbugs. Wonder why?) who actively root for misfortune and disaster. If we ever do suffer hyperinflation, collapse and anarchy, I expect to see them all dancing in the streets.
To be a successful gold grifter, there are few things you will need to do:
Throw around a lot of big numbers, because debt has to scare people to death; hundreds of billions is good, trillions is even better.
Refer to secret nefarious activities by governments and central bankers. One go-to is that the central banks are manipulating the gold price. Mysteriously, this manipulation is only effective when the price of gold is going down.
Describe an apocalyptic scenario that may be right around the corner, leaving yourself just enough wiggle room for plausible deniability when said apocalypse doesn't actually occur.
Rinse and repeat. Of course, they are all selling something. Schiff has a fund whose performance has been comically horrible. Many others sell newsletters, a sweet deal in which subscribers pay the writer for their views on gold, silver and junior miners, who then also pay the writer much more in stock and warrants for promoting them.
Despite their efforts at inducing fear and panic, gold has been a bad long-term investment. According to Jeremy Siegel, for some 200 years (1802-2013), gold has had an annual real return of 0.7 percent, while for stocks it's been 6.6 percent. A dollar invested in gold in 1802 would have been worth $4.52 in 2013; a dollar in the stock market would be worth $704,997. (This illustrates the magic of compounding perfectly.)
At the beginning of the pandemic, gold moved up nicely, breaching $2000 an ounce in August 2020 before pulling back to $1700 more recently. But actual results don't matter, because gold's best days are always yet to come. The gold grift is a gift that keeps on giving. There are always new crises to plumb and new people to scare.
Comments