I have followed the various stories / memes surrounding the gold, and especially silver price during much of that time. My Dad used to receive one of the Kiplinger Newsletters back in the 1980's - this was several years after the silver price had deflated. Kiplinger was still pounding the drum for higher silver prices. Back then it was increased demand due to solar and photography that was supposed to life prices higher.
Kiplinger also pointed out how supply exceeded demand, as did President Johnson when he signed The Coinage Act of 1965. Yes, we have been running out of silver forever, if you don't consider the above ground supply, which will likely fill in the deficit for at least 200 more years. No, seriously, the above ground supply will fill the gap for around 200 years or so. That's even assuming there are no technological advances, substitutions, or that global warming doesn't do us all in and leave earth to the cockroaches.
Yes, I'm equally frustrated about all of the popular gold memes. Whether it's the idea that all of the gold is moving east or that the U.S. Dollar is about to be toppled any moment by the Yuan. Yuan? More like yawn. The Yuan is so far from toppling the dollar that the world may run out of silver before the Yuan tops King Dollar. Don't get me wrong, I'm no fan of the dollar versus the Yuan or anything else. I'm no fan of government, period. But when these things get repeated over and over, and they don't have a chance of happening anytime soon - probably not in my lifetime, your lifetime, or your children's lifetimes - I start to get irritated that these "ideas" keep popping up over and over again.
Oh, and so what if gold moves from the east to the west. Am I missing something. If I take an ounce of gold and move it from one side of the table to the other, does it become more valuable. Sure, theoretically if gold moves to China, India, Russia (the story goes) it will be in strong hands. Have you seen the Ruble price? Have you studied the bubble economy waiting to be popped that is China. Have you thought about China's bastardized communist system wrapped up within a crony capitalist system and thought to yourself, "Oh yeah, that's definitely going to work!" Because, apparently, there are people who think it is all the rage. What capitalism needs is more central planning...hmmm.
The dollar has been going bust for a long time. Harry Browne wrote about it in "How You Can Profit from the Coming Devaluation" back in 1970. His call for a dollar devaluation and advocacy of gold as a hedge against it were brilliant. However, Browne was also expecting a depression also, which didn't really come until the 2008 crisis, although it was papered over by the Fed. So, the dollar has been collapsing since it was born, just as the American Republic has been dying since birth. Paper currencies all get old and eventually die - the difficulty is trying to guess when that will happen.
It makes a lot of sense to buy and hold some physical gold and silver. It doesn't make much sense to listen to all of the stories about an imminent economic collapse. Could it happen? Sure. Could the Biblical Armageddon be right around the corner? Yes. But they are things that literally get talked to death. It doesn't hurt to be prepared, as best you can, for either eventuality. Beyond preparation though, you can't do much. Cheering it on like some who promote gold and silver won't make it so either.
One of my other frustrations with gold is gold analysis. William O'Neil, founder of Investor's Business Daily, studied stock charts going back to the 19th century and discovered a number of patterns that help predict if the general stock market, and individual stocks, are going to go up or down. Yes, there is plenty of technical analysis of gold as well, but much of that analysis is interwoven with whatever narrative the analyst (or who pays the analyst's salary) believes. It is hard to get an unbiased look at gold, but that is what is needed.
Instead, what the public gets are assumptions, memes, myths, suppositions, crackpot theories, propaganda, lies, bad analysis, and - on occasion - some sound analysis. Much of this, in my opinion, owes to the fact that gold analysis analyzes everything but the gold price itself. William O'Neil pointed to the importance of focusing on the thing to be analyzed rather than all of the other distractions on page 2 of his brilliant "The Successful Investor".
To be highly accurate in any pursuit, you must carefully observe and analyze the object itself. If you want to know about tigers, watch tigers - not the weather, not the vegetation, not the other animals on the mountain.
Gold analysis tends to do everything but look at the gold price. It's deemed as somehow unsophisticated to simply look at the gold price and volume, along with some chart patterns, and draw conclusions from them. No, you have to look at stocks, bonds, ratios, indicators, the economy, COMEX, position of traders, gold flow, and on, and on, and on. How often does all of that brilliant analysis work anyhow? How many analysts saw the top? How many analysts cautioned to wait for prices to fall further after the 2011 high? I daresay very, very few. And that's frustrating.
Bottom Line: There's a lot of very smart people giving not so smart gold analysis, and that is one of my golden frustrations.
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