Hello, we are a group of psychology researchers from the University of Kent, UK. It would be a huge help if anyone from any background who is interested would fill out our quick survey (18+ years old only) about your views of politics, society, and more.

Fill out the survey here: https://universityofkent.qualtrics.com/jfe/form/SV_8ICkX7mBre5IGpM

We are posting here because we hope to collect responses from a wide range of political perspectives and backgrounds. Please let us know if you would like a summary of your responses in comparison to others once the data collection is complete.

The survey takes 15-30 minutes to complete, and we are happy to respond to any queries or questions. Please private message us to avoid giving away the point of the study to others.

Thanks for your time.

Edit: The survey is now closed! Thank you very much for your time, we will be sure to post the results up here when they're ready.

Great clip from last year about American Thanksgiving which runs from about 14:40 min - 22 min at the link below. Enjoy!

https://youtu.be/2tacjX0r1Us?si=P-CqWa9z9-T-RzXN

The King and his Gold

In his very first post on the Kitco forum, October 5, 1997, Another wrote "gold and oil can never flow in the same direction". This was a major theme in his writings. To understand Another is to understand what is going on with the gold market now. And in that spirit I have written a short story that will hopefully help you understand this first important message from Another:

Many decades ago the Saudi King realized his barren kingdom was sitting on a gold mine. Only it wasn't gold, it was oil. From his high perch as king, he was able to see the wide and very long view of the world, way off into the future. He saw a future filled with many riches, but he also knew that those oil reserves under foot were only finite cavities of value. As a king, he knew the workings of money and fiat currencies. He knew that the Western World needed his oil treasure, but he didn't want to exchange it for only paper. He wanted to turn his virtual "gold mine" into an actual pile of gold.

Back then, the paper which paid for the oil was redeemable for gold directly from the US Treasury. So there was no problem. He would take the paper and then turn it in for gold. Later, after much inflation, the US Treasury defaulted on the promise of gold. Chaos ensued for almost 10 years. The price of both oil and gold skyrocketed and there were long lines at the gas pumps. For this kingdom was only willing to trade it's finite supply of oil for an equally finite store of value, gold. And without a secured source of gold at a stable price, the oil wells just didn't have the incentive to run at peak production.

Then in the early 1980's, the markets were brought back under control. A secret deal was cut between the King and a few very high, and very powerful leaders in the West. These leaders probably included central bank chairmen and top level leaders in the US and the UK. The Western World was on it's way to world domination, both financially and militarily, but to maintain this power it needed cheap oil. The Kingdom was a good way through it's reserves of oil, and to part with this valuable commodity, the King needed the promise of an equally scarce store of value, gold. So the deal was that oil would be shipped to the West in exchange for dollars AND gold. The dollar price of oil would be kept low as long as the much more valuable gold could be had for those same low costs. The central bank's involved in the deal guaranteed this to the King by backing up the deal with their own vast stores of golden bars.

But these top bankers, like the King himself, were not as dumb as they may seem. In fact, they were the best and the brightest, for they knew that the true value of gold was probably somewhere around $50,000 per ounce in today's dollars. And that was the value of oil to the King as well. His oil reserves might only last his kingdom a mere century, but if he traded it for gold, not dollars, he would enjoy the wealth of his treasure for 1,000 years or more.

The central banks that backed this deal with their own gold NEVER intended to give the King any of their precious treasure. They knew they had a way around that. By using the open markets which traded paper contracts for gold, they could keep the price of gold down to $300 per ounce and the public would be none the wiser. Then, the King with his $30 per barrel of oil could buy future gold delivery straight out of the mines in backroom deals for a premium of perhaps 100% (which is a guess). So for 20 years, vast amounts of gold flowed from the West to the Middle East for maybe $600 per ounce (twice the spot price on COMEX at the time), and those sales were hidden from the price discovery exchanges so as not to affect the price, and the oil flowed to the west freely, at the seemingly cheap price of $30 per barrel. But in reality, the King was getting one ounce of gold for 20 barrels of oil, and if gold is really worth $50,000 an ounce, that's a price of $2,500 a barrel.

So who is paying that price? In a way, all of us are. The mines are making a profit for what they pull out of the ground. They are getting twice the cost of mining. That's a good profit. But the gold in the ground under us is flowing east, while the oil in the ground in the kingdom is flowing west. So who is getting the better part of this deal? I say the King is.

Sure, we have seen unprecedented prosperity for 30 years now. But that is about to end. On the other hand, the King has seen 50 years of amazing prosperity and is looking forward to another 950 years of extreme prosperity. You see, once the oil runs out, the kingdom does not become poor. In fact, that is when the party really begins! They have sold to the West 30 or 40 years of prosperity in exchange for a thousand years of unimaginable wealth.

Then, around 1997, some big money in the Far East became aware of this bargain on gold. But they couldn't get in on the back room deals that traded large amounts of physical without affecting the price. So they had to accumulate physical on the open market which started to drive the price up. This started the 10 year rise in the price of gold..... and oil! For now that the King has to pay more for his gold, we have to pay more for his oil.

And somewhere along the way, too much physical gold was heading east, both to the desert and to the great wall, and the mines could not cover it. This threatened a default in the paper gold price discovery markets used by the Central Banks to protect their own gold reserves. So they were faced with the option of either watching the whole monetary system crash, or parting with some of their own gold. They finally had to ship some of their precious treasure to the King. After that near disaster, they fought the markets even harder, with larger and larger short positions. But now, at this very time, they (the Central Bank's) have maybe half the gold they once had, and they have probably the largest short positions ever too. So they are standing right on the edge of a cliff, holding the end of a rope that's trying to pull them over.

It won't take much for this deal to fall apart. And when it does, we'll see the price of gold go up to probably $5,000 an ounce and then all trading will stop. No market will exist for gold at it's true value. For those that have all the gold in their possession are only buying, not selling. Oil will skyrocket too... if it flows west at all. This is coming, and soon. Buy gold. Hold gold. It only has to meet it's true price once in a lifetime and that will be more than worth the wait. I believe this is not a once in a lifetime opportunity right now, but possibly a once in the history of the world opportunity. Silver, platinum, commodities... they may all do well. But nothing will come close to the true value of gold. $50,000 an ounce may even be low.

ANOTHER (THOUGHTS!): The Inside Story on the Gold-for-Oil Deal that could Rock the World's Financial Centers:

https://www.usagold.com/goldtrail/archives/another1.html

It seems Schiff thinks banks need deposits to create loans, which is not how it works anymore.

In other jurisdictions (such as the United States), the central bank does not require reserves to be held at any time – that is, it does not impose reserve requirements.[30]

https://www.federalreserve.gov/monetarypolicy/reservereq.htm

Just kind of curious how you guys play it. I have a bit of physical, and a bit of paper, but I had a grand idea once upon a time that I would invest into the PM sector, a bit into mining and a bit into trusts, and when I had a decent chunk built up, I'd pull it and just buy buillion.

So the real question I guess is, what is your guys physical/paper split?

Peter talks a lot about buying gold intead of holding on to cash. My question is, to what extent does this advice apply to the US dollar only? Or to be more specific, if I have a bunch of NZ dollar in the bank right now that I haven't figured out what to invest in yet, should I continue to leave them in the bank earning around 5 percent right now (one year term), or should I convert them to gold instead? My instinct is to convert to gold, because gold went up higher against NZD than against USD during the last financial crisis.

Hello,

I live in Canada and I’d love to know how to buy euro pacific mutual funds.

Looked around in Wealthsimple but couldn’t find any

Hello,

I am a university student in the UK and I invest (less than 20k) with the British Fidelity International Limited. I cannot buy Peter's value fund here in the UK so I looked for an alternative. My broker offers these 2 world value ETFs, however I am hesitant to buy them since they are trading at an all-time high right now:
iShares Edge MSCI World Value Factor UCITS ETF USD (Acc) (IWFV)
https://www.fidelity.co.uk/factsheet-data/factsheet/IE00BP3QZB59-ishares-iv-plc/price-chart

SPDR® MSCI World Value UCITS ETF (VALW)
https://www.fidelity.co.uk/factsheet-data/factsheet/IE00BJXRT813-ssga-spdr-etfs-europe-i-plc/price-chart

Should I wait for their price to drop?
Should I buy them right now and hold them long-term?
Is there a different asset I can buy in the UK as an alternative to Peter's value fund?

Any advice would be appreciated :)

The Price of Time The Real Story of Interest by Edward Chancellor

• Goodhart’s Law – When a measure becomes a target, it ceases to be a good measure
• In the late 1970’s inflation was out of control.
• Volker was appointed Fed Reserve Chairman by Carter and he aimed to crush inflation by slowing the growth in the money supply
  • He did this by letting interest rates rise to the highest they had ever been in U.S history. Fed funds rate hit a peak of 19% in 1980.
  • Unemployment hit double digits and Volker was given a security detail after a break in and threats
  • By the end of 1981-82 recession, the battle against inflation was won
  • Volker was replaced by Allen Greenspan. He was a successful business economist with Republican party connections. He was even a member of Ayn Rand’s ‘Collective”, and even wrote an article that upheld the gold standard.
    • Despite his libertarian background, Greenspan was to prove an interventionist central banker
      • He frequently did what the markets wanted.
      • He was hailed at the time as the ‘greatest central banker ever’
        • His real achievement was to inflate a series of asset price bubbles and protect investors from the worst of the fallout
  • A couple of months into his tenure, the October 1987 crash happened. Greenspan immediately cut rates and flooded wall street with liquidity. The stock market bounced back.
    • After this crash, the Fed Reserve switched its attention from attempting to influence growth of bank borrowing to directly targeting interest rates. (Kippner suggests that the Fed changed its policy after the October crash to provide greater transparency and predictability. But the Fed found that raising interest rates was politically more difficult.)
    • From now on, monetary policy would be directed at near term inflation, while other financial imbalances (account deficits, credit growth, underwriting standards, leverage, asset price bubbles) elicited no response
  • After the Savings and Loans crisis, the feds fund rates were cut to 3%. The lowest level for many years and less than ½ the GDP growth rate.
    • For much of the 1990’s the fed funds rates were held below the growth rate of the U.S economy
    • Another “New Era” beckoned, but was renamed to not scare.
      • New Paradigm or Goldilocks Economy
    • The feds fund rate was cut again in 1998 by 25 bp after the failure of LTCM (Overleveraged Hedge Fund)
      • The markets stared to respond warmly to what it called the ‘Greenspan Put” an unwritten contract with Wall Street that committed the Federal Reserve to intervene to halt market declines.
      • The NASDAQ bubble took off with nearly a 3x gain from October 1997 to its peak 2.5 years later. In valuation terms, it was the greatest bubble in U.S history.
        • The bubble (like many) ended after the feds rate was taken to 7% in 2000.
• Ben Bernanke joined the Fed Reserve in 2002 from Princeton as head of the economics department.
  • Bernanke said that bubbles were impossible to identify in real time so monetary policy shouldn’t act pre-emptively against them, but instead deal with the aftermath.
    • But he was a strong advocate of acting quickly against deflation. He came up with the term ‘helicopter money’
    • In 2003, the feds funds rate was cut to 1%. Well below the growth rates. The era of easy money had well and truly begun
      • Inflation remained under control
    • In a replay of the 1920’s under Strong’s leadership, the fed paid scant attention to the rapid credit growth and decline in credit quality. No attempt was made to restrain the real estate bubbles
    • The Fed had used its powers to boost the housing market and knew that its low interest rate policy had boosted homes sales and construction.
  • In March 2004 Governor Donald Kohn said that policy accommodation – and the expectation that it will persist – is distorting asset prices. Most of this distortion is deliberate and a desirable effect of the policy. We have attempted to lower interest rates below long-term equilibrium rates and to boost asset prices in order to stimulate demand.
    • The idea of creating a bubble to deal with a bubble had earlier been mooted by Paul Krugman in the NYT in August 2002. ‘To fight the recession the Fed needs more than a snapback; it needs a soaring household spending to offset moribund business investment. And to do that, Alan Greenspan needs to create a housing bubble to replace the NASDAQ bubble….’ Krugman apparently found nothing wrong with this suggestion.
• William White wrote a paper called ‘Is Price Stability Enough?’ In the paper he suggested that the achievement of stable prices might not be enough to avoid serious macroeconomic disturbances over the long haul. Like Hayek, White distinguished between good deflation that arises from productivity improvements and bad deflation that follows a credit bust. He also questioned the Bernanke policy of dealing with the aftermath of a bubble rather than forestalling it.
• Countless books and articles have been written about the causes of the global financial crisis. Mainstream economists, who had been oblivious beforehand, were suddenly full of explanations. The provost of an American university lamented that he had an ‘entire department of economists who can provide a brilliant ex post factor explanation of what happened – and not a single one of them saw it coming.’
• Bernanke inclined to the view that poor financial regulation was to blame. Policymakers accepted this interpretation
• At the same time, the role played by monetary policy in the run up to the crisis was downplayed.
  • The Feds decision to take its policy rate to a post war low and hold it for 18 months and keeping the rate below the economy’s growth rate for 5 years; the extremely slow pace of tightening, the stoking of the housing market and encouragement of households to take on debt and the opening of the monetary spigots – all forgotten.
  • Long after the crisis, economists at the Federal Reserve continued to deny that house prices were affected by monetary policy. Many different reasons were presented.
    • There’s no need to appeal to ad hoc explanations: easy money produced the boom and the boom was followed by a bust.
• The closed community of central bankers and monetary economists remained obdurate to monetary explanations for the crisis.
  • “Bernanke’s Fed,’ concludes historian Philip Mirowski, ‘has evaded suffering any consequences for its intellectual incompetence’ in the lead up to the crisis.
    • He was even named Time’s ‘Person of the Year’ in 2009. His exercise in denial meant that the Fed learned little from the crisis. Besides an odd tweak, policy makers saw little need to change the flawed models. If low rates hadn’t caused the crisis, there would be no problem in taking them even lower in the future.
• The financial crisis revived the threat of deflation – the kind of debt deflation identified by Irving Fisher that occurs after credit booms when people, having too much debt, seek to pay it off.
• After 2008, fear of deflation obsessed policymakers
• Deflation was to be kept at bay through the strict enforcement of inflation targeting: price stability was to be achieved at any cost
• All major central banks decided on a target – 2%
  • We have seen how the feds pursuit of price stabilization in the 1920’s contributed to that era’s credit boom and speculative excess. Fixing a specific target to the same policy only exacerbates matters.
• Donald Campbell pointed out that ‘the more any quantitative social indicator used for social decision making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social process it is intended to monitor.’
• Goodhart’s Law – any measure used for control is unreliable.
  • In the 1980’s central bankers sought to control by targeting the growth in the money supply. But the money supply is a fuzzy concept and can be measured many different ways (M0, M1, M2, M3, etc.)
    • Charles Goodhart observed that whenever the BOE targeted a particular measure of money supply, that measures earlier relationship broke down.
  • The mistake in setting targets lies in assuming that relationships between variables (like money supply and inflation) are stationary. In the real world, human behavior responds to attempts to control.
  • ‘The essence of Goodhart’s Law,’ write John Kay and Mervyn King is that ‘any business or government policy which assume stationary of social and economic relationships was likely to fail because its implementation would alter the behavior of those affected and therefore destroy that stationarity.’
    • Paul Volker was very critical of the inflation target of 2%. ‘I puzzle at the rationale’ ‘A 2% target wasn’t in my textbooks years ago. I know of no theoretical justification. It is difficult to be a target and a limit at the same time.’
      • As to the idea that monetary policy should be eased at a time when the economy was robust and unemployment low merely because inflation was below target, well, Volcker thought, ‘certainly, that would be nonsense.’
    • UCLA economist Axel Leijonhufvud maintains that the target encourages central banks to pursue policies that undermine financial stability
    • William White said that the approach to inflation targeting was asymmetric; their horror of deflation inclined them to overshoot rather than undershoot a target. As a result, monetary policy was systematically biased toward rate easing.
  • After 2008, central bankers’ pursuit of inflation targets became as obsessive as their fear of deflation.
    • Mario Draghi – ‘The ultimate and only mandate that we have to comply with is to bring inflation back to a level that is close to but below 2%.’ ‘This is not a question of trade-offs. We cannot shy away from implementing a policy that ensures price stability on account of protentional collateral effects.’
      • The ECB would pursue its target, let the consequences be damned.
• William White and Claudio Borio (BIS economists) delivered a paper at Jackson Hole in 2003 saying that financial storms were gathering. Greenspan was unpersuaded
• Borio said the financial crisis was caused not by a savings glut but by too much credit – a banking glut.
• Deflation didn’t reliably forecast economic calamity. Borio found that strong credit growth and real estate bubbles were more reliable red flags
• Borio research pointed to the conclusion that market interest rates were greatly influenced by the actions of central bankers. And not just the short term as central bankers claim, but long term as well.
  • Bernanke stated issuing forward guidance after 2008 to influence long term rates
• Borio also argued (as Hayek did in the 1920’s) that a stable price level doesn’t necessarily indicate that market rates are at equilibrium. Both the 1929 and 2008 crash occurred at times of low inflation and stable inflation.
  • Errors in monetary policy might produce economic distortions, other than disturbances to the price level, was not countenanced by the central bankers.
  • Financial imbalances (credit booms and speculative manias) tend to form during periods of low interest rates and low inflation
  • Borio determined that the share of income used by societies to service debt (debt to service ratio) remained consistent over time. Thus, an ever-lower interest rate is needed to sustain the debt loads, and lower rates resulting in even more debt. Some people are calling this decades long process a ‘debt-super cycle’
    • Ultra-low rates, being the hair of the dog, are no cure for a debt hangover. Borio said ‘If the origin of the problem was too much debt, how can a policy that encourages the private and public sectors to accumulate more debt be part of the solution?’
    • Once an economy enters a ‘debt trap’ it becomes harder to raise interest rates without causing huge damage. ‘Too low rates in the past are one reason for lower rates today’ said Borio
    • Much of the debt also fails to generate decent returns.
• After the 2008 crisis, banks need to repair their balance sheets. A Scandinavia banking crisis (in the early 1990s) showed that dealing promptly with bad debts speeded up the economic recovery. But Ultra-low rates after 2008 allowed banks to delay this painful process, encouraging them to keep the bad debts on the books
  • Ultra-low rates also eroded the banks ‘net interest margin’ damaging their profitability and making them reluctant to initiate new loans.
    • Even thought banks became more risk adverse, investors (finding no returns in deposit income) went to the stock market where they took greater risks for greater returns. Yield chasing
    • Borio also discovered that the Federal Reserve reflexive tendency to ease monetary conditions whenever markets became turbulent encouraged more risk taking. Central bankers were slow to hike rates during booms, but rushed to ease them after every bust
      • This caused a downward bias to interest rates and an upward bias to debt.
      • ‘Lowering rates or providing ample liquidity when problems arise but not rising rates as imbalances build up, can be rather insidious in the longer run. They promote a form of moral hazard that can sow the seeds of instability and costly fluctuations in the real economy.’
  • Borio also said the longer US interest rates remained at 0%, the greater the build up of global financial imbalances.
• The process of creative destruction is an essential fact about capitalism. Creative destruction is the evolutionary process by which new technologies and business methods displace older and less efficient ways of doing things
• Interest rations capital – Interest is not a deadweight but a spur to efficiency – a hurdle what determines whether an investment is viable or not.
• James Grant wrote that ‘Zero percent rates institutionalize delay in everyday business and investment transactions’
• Hyman Minsky maintained if that financial stability is destabilizing, too much economic stability induces sclerosis
• The term ‘Zombie Company’ was first applied to the US savings and loans associations in the 1980’s
• Gresham’s Law state bad money drives out good money
  • After the collapse of the Japanese bubble economy, a graveyard full of corporate zombies arose. Loss-making Japanese firms enjoyed better access to bank credit than profitable ones. Gresham’s law at work. Japan suffered a lost decade
  • After 2008, the zombie phenomenon was in Europe and the US.

    • The default rate on Junk bonds in the US was less than ½ the previous 2 recessions.

    • The lowest insolvency rates ironically were reported in Greece, Spain, and Italy – countries hit hardest by the sovereign debt crisis and where one might have expected to see the most bankruptcies.

      • More efficient firms in industries dominated by zombies were forced to pay more for their bank loans than those in other sectors.
• Easy money also encourages people to invest in projects who returns lie in the distant future.
  • Residential property is a long duration asset and construction booms facilitated by low interest rate are a common form of ‘malinvestment’
  • In 2013, VC Aileen Lee came up with the term ‘Unicorn” to describe start up companies valued at more than 1 billion dollars.
    • James Grant said ‘A little known fact about Unicorns, is that they feed on low interest rates.’
    • Low rates induced investors to opt for ‘growth’ taking stakes in companies whose profits lay somewhere in the future.
  • The large-scale misallocation of resources into loss-making business whose profits exist in Never-Never Land is a sign that the cost of capital is too low.
• Economies in US and Europe experienced a collapse in productivity growth in the post crisis decade. US at 0.5% per year (1/4 of the previous 2 decades) and the British worker was flat, the Eurozone’s GDP per capita actually declined in the 10 years after 2008.
• Fires have an important role in regenerating forests.
  • The forest service had a policy of stopping all fires quickly. They soon discovered the more fires they put out, the more extensive the fires became.
  • Drawing a parallel between the US Forest Service and the Federal Reserve is irresistible. Forest Service stopping fires and the Fed stopping the business cycle
    • Over time, America’s forests and economy have become less robust, and the costs of natural and financial disasters have risen inexorably
    • Ben Bernanke dismissed the notion that ‘firefighters cause fires.’
      • He says the central bankers must intervene during financial crisis. That may be true. But Bernanke’s unconventional policies remained long after the financial fires were out.
• Following the financial crisis in 1873, interest rates fell for more than 25 years. Treasury bonds yielded 2% and banks deposits earned 1%. US debt fell by ½, and treasuries were in short supply. Strong demand from banks for bonds sent the yields on some treasures below 0 for a short time. This was the only time in U.S history before the 21st century that interest rates were negative.
• Easy money around this time allowed Wall Street to consolidate swathes of American industry. This is when the term ‘robber baron’ started to be used.
• In his book Finance Capital Rudolf Hilferding came up with the concept of ‘promoter’s profit’. He observed that share prices tended to rise and fell in inverse relationship to the rate of interest. Easy money = rise in stocks prices. Tight money = fall in stock prices
• There are many similarities between now and the early 1900’s. Easy money created the conditions for a wave of anti-competitive mergers, Wall Street efforts were directed toward share prices and promoter’s profit was extracted at the expense of productive investment, and workers felt the pinch.
• Just like in the late 1800’s and early 1900’s. After 2008 crisis, Mergers and acquisitions activity bounced back. The merger ‘tsunami’ as Obama’s Anti-Trust enforcer called it, prompted no response from Washington. Most of the mergers were financed by cheap money
• Just as in the late 19th century, low rates once again played a key role in the consolidation of US industry
• University of Michigan determined that pricing cartels tended to form at times of low interest and break up when rates are high
• No set of individuals benefited more from the Fed’s easy money than the buyout barons (Private Equity). None was less deserving
• From the turn of the century, the cost of debt in the US was held below the cost of equity. This ‘funding gap’ created the impetus for share buybacks. After the GFC, the funding gap grew larger.
• American firms spent more on buybacks than operations in the post GFC period
• Financial engineering was detracting from opportunities to invest capital to support longer term organic growth
  • Thanks to the miracle of financial engineering, the EPS of the S&P 500 companies grew faster than reported profits and sales.
  • The profits created by financial engineering and the valuations applied to those profits are chimerical, while the costs only become clear in the long run. Running a company with the sole aim of maximizing share price often leads to bad corporate decisions.
• Apply a discount rate of zero to a stream of future dividends fixed in perpetuity and you arrive at an infinite valuation
• John Burr Williams wrote in The Theory of Investment Value that ‘Investment Value’ is defined as the present worth of future dividends, or of future coupons and principal.
• In the decade after Lehman’s bankruptcy, everything was in a bubble. A great variety of assets soared in value. Never before in history had so many asset price bubbles inflated simultaneously. But then, never before in history had interest rates around the world suck so low.
• It would not have surprised Adam Smith to discover that real estate markets from around the world reacted positively to the stimulus of ultra-low interest rates
• After the GFC, the Fed started up QE program. And the stock market took off. In March 2009, the S&P was in the high 600’s, by Thanksgiving, it was up by 2/3. And a decade later up by 4x. American stocks were more expensive on a valuation basis than at the peak of the dotcom folly.
  • Corporate leverage was high, bull outnumbered bears by the highest ratio in decades, margin debt was at an all-time high.
  • This can’t be only described as irrational exuberance. Stock prices still looked good when their yields were compared to coupons of US Treasuries (Basically 0%)
  • Stock market bubbles favor technology companies. This has been the case since the 1600’s. Exciting new innovations attract speculators because their profitability can only be imagined.
    • Since most of the growth companies’ profitability lies in the future, the valuation of technology companies is inflated when the discount rate falls. During manias, speculators are said to engage in hyperbolic discounting.
  • As the world’s financial system imploded in the summer of 08, an anonymous software engineer circulated a paper containing a cure for all those monetary ills. Bitcoin didn’t turn out as Satoshi Nakamoto envisioned. What he unleased was not a new type of money, but rather the most perfect object of speculation the world had ever seen. Bubbles are revealed by rapid escalation in market price. ‘When the ducks quack, feed them’ is an old Wall Street adage. The mania in crypto was born of monetary conditions as much as technological developments. Cryptos were popular with millennials, not just because they were tech savvy, but because low prospective returns on conventional investments forced them to go for broke. In financial terms, Bitcoin can be seen as a zero-coupon perpetual note, something intrinsically worthless.
• The broad inflation in the prices of bonds, stocks, real estate, crypto, and just about anything else produced an extraordinary surge in wealth.
• By 2018, American households were worth 5x US GDP. By comparison, US households were worth 3.5x US GDP in the boom decades after WWI (1920’s) and WWII (1950’s).
• John Stuart Mill argued that wealth consists of anything, ‘though useless in itself’, which enables a person ‘to claim from others a part of their stock of things useful or pleasant’.
  • Modern economist still holds this view
• John Ruskin and Adam Smith took a different view
  • Ruskin said wealth was derived from the Latin Valor, meaning to be well or strong. Real wealth in his view, came from ‘the possession of useful articles which we can use’. Not from money on an exchange
  • Adams said ‘Real wealth, derives from the annual produce of the land and labor of the society’. By this light, much millennial wealth wasn’t real at all, but merely claims to wealth whose market value multiplied as the discount rate declined.
• Bernanke in a November 2010 op-ed ‘Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending’. Increased spending will lead to higher incomes and profits will further support economic expansion.’ In effect, the Fed was using monetary policy to power a ‘New Wealth Machine’.
  • In the late 1980’s Japan policymakers thought the ‘bubble economy’ and the real economy were separate entities and that the former could be deflated without damaging the latter.’
    • In 1990, a senior official told the Post ‘It’s time for the bubble to burst…the real, productive economy wont really be hurt. This was a delusion.
    • Too much ‘real’ economic activity depended on the ‘phony wealth’ created by the Bubble Economy
• Various commentators have treated interest as the difference in value between present and future consumption.
• Imagine that the present and future are 2 countries separated by a river. Finance is the bridge that joins them, connecting the present with the future. By borrowing or lending, we shift expenditures across time. Interest is the toll levied on borrowers for bringing future consumption forward and the fee paid to savers for moving consumption into the future. When the interest toll is raised, consumption is moved to the future, and it is brought forward when the toll is lowered. In an ideal world, traffic crosses the bridge in an orderly fashion in both directions.
• When the rate of interest is higher than an individual's time preference, he will save more for the future. Conversely, when the market rate is below his time preference, he will borrow to consume.
  • An abnormally low rate of interest boosts current spending, but the benefits don't last.
• The fed embarked on an easy money policy at the turn of the century. Americans were encouraged to borrow and spend. As American's saved less, they borrowed from the future.
  • Household debts soared as homeowners extracted trillions of dollars though home equity loans. After the collapse in housing, the Fed pulled every fiscal and monetary lever to boost consumption.
    • The balance sheet recession was adverted, but the collapse in interest rates reduced incentives to abstain from consumption or save for the future. Borrowers benefited at the expense of savers.
• The trouble is that soaring asset prices don't make a nation any richer. They only produce the illusion of wealth. Investors enjoy capital gains when asset prices rise, but any gains are offset by lower investment returns going forward.
  • When long term interest rates decline, investors experience a windfall gain as bond prices increase. But since the bond's coupon is fixed, investors who hold the security until it matures are no better off. In fact, bondholders as a class suffer when long term rates decline.
  • Stocks are the same. Over the long run, equity returns are inversely correlated with the market's valuation. As with bonds, elevated stock prices imply lower future returns.
    • A balanced portfolio in the U.S of stocks and bonds historically returned 5% real return.
    • 10 years after the GFC, with the valuation of the US market at close to a record high and the yield on treasuries near an all time low. The expected return was half its average
      • American households would have to save more if they wanted to enjoy the same level of retirement.
  • The low rates also created headaches for prospective retirees and pension providers.
    • An English study concluded that the decline in interest rates was mostly responsible for ballooning pension deficits.
    • Growing pension deficits elicited various responses.
      • Pension providers had to put more into the pot
      • Cities and towns cut services
      • Fired workers
      • Private companies reduced investment and cut dividends
      • Some took more risk or added leverage
      • Tried to reduce their payments
      • Declared bankruptcy
    • In the US, the pensions assumed unrealistically high returns on their plan investments
    • Tyler Cowen said 'Over the last few decades, we have been conducting a large-scale social experiment with ultralow savings rates, without a strong safety net beneath the high wire act.'
    • Michael Burry said 'The zero-rate policy, broke the social contract for generations of hardworking Americans who saved for retirement, only to find their savings are not nearly enough.'
    • Savers in the era of zero interest rates resembled Sumner's Forgotten Man. Suffering at the hands of policymakers who failed to consider the full consequences of their actions.

Below are some reasons you might want to add gold to a portfolio. My positions are at the bottom.

The Golden Constant

• Gold is a poor hedge against major inflations
• Gold appreciates in operational wealth in major deflations
• Gold is an abysmal hedge against yearly commodity price increases
• Gold maintains its purchasing power over long periods of time (Half-Centuries)
• Not because gold moves toward commodity prices, but that commodity prices move toward gold
• Anyone who fears the collapse of his country's currency is acting rationally when he shelters his assets in gold. But it doesn't protect against inflation shocks
• The value of gold essentially derives from its capacity to preserve real capital and purchasing power
• Historically, gold has served as financial refuge in political, economic and personal catastrophes
• The reason why gold is not a hedge against inflation (but does very well with deflation) is that gold does not match commodity prices in their cyclical swings.
• But over the longer run, gold maintains it purchasing power remarkably well. Gold prices do not chase after commodities; commodity prices return to the index level of gold over and over
• Demand for Gold has a strong speculative component, especially as related to inflation or the prospect thereof
• A rise in gold prices might not dampen demand and may stimulate demand – such as the popular reputation of gold as a hedge against inflation. The speculative motive tends to feed on itself
• Demand for gold is not only a function of actual inflation but is sensitive to changes in the rates of inflation.
• Sudden decrease in price tends to have a multiplier effect downward. Accelerating any price falls
• On the supply side, miners do not always increase production in response to an increase in prices of gold. Gold is unique as a commodity in this respect
• Another source of uncertainty is that some gold comes from base metal mining
• He looks for an increasingly unfettered market (as opposed to the gold standards) for gold. But this is not to say the market will be self-correcting through the usual supply/demand model
• As gold moves into a totally free market, there is a possibility that gold will become a better hedge against inflation that it has proven over past centuries when the gold standard was common.

From Global Investing

• No other financial or physical asset has been as reliable a store of value over long periods of time as gold
• Gold and Silver were money for centuries
• Over long periods of time, gold and silver have had real returns near zero
• But the effectiveness as a long-term inflation hedge and insurance against economic and political upheavals, make them worthy of inclusion
• If gold has a real expected return of 0%, why hold it?
• Insurance against catastrophic changes such as economic collapse or hyperinflation.
• Gold and Silver tend to become money during periods of crisis.
• Gold and Silver tend to be inflation hedges, but not perfectly reliable ones.
• Gold and Silver has low correlations with other assets making them a powerful diversification tool to reduce portfolio risk
  • When traditional assets perform poorly, gold fares well
  • Silver tracks gold, but has had a higher correlation to other assets and is thus not as good a diversifier as gold
• In 1960, gold accounted for 3.7% of investable global assets.
• By 1980, (when metal prices peaked) Gold and Silver made up 14% of the world's investable assets
• By 1990, as stock and bond prices soared, that had dropped to 3%
• The silver market is very thin compared to gold
• Commodities futures have low correlations with other assets.
• Commodities and bonds tend to act opposite each other
  • Why? Commodity futures are claims to real assets, while bonds are claims to money payments
• Gold was more volatile than commodity futures but had a better return.

From Devil Take the Hindmost

• When governments find their formal currency arrangements disintegrating, the speculator becomes a convenient scapegoat
• Nixon suspended the convertibility of the dollar to gold on August 15, 1971
• Whenever speculation got out of hand and a financial crisis appeared, everyone seeks refuge in the precious metal Gold. Gold represents the antithesis of speculative values
• The best hedge against the chronic inflation of the period could be found in commodities and precious metals

From 4 Pillars

• PM funds have low expected return. But they are almost perfectly uncorrelated with the market and during global market meltdown, they are likely to do well. PM are also a hedge against inflation. But be careful with PM. Because you will be going against the market and you need to rebalance during. You will be selling when everyone on TV is saying to BUY and you will be buying when everything is good and people will tell you how dumb that is.
• PM, REIT's, Emerging Market, Small Cap International bring more to the table than the returns would suggest IF YOU REBALANCE!!!! YOU HAVE TO REBALANCE THESE FUNDS

From Safe Haven

• Insurance
• Gold
  • Hedge against the banking system.
  • No counter party risk.
  • Historically thought of as a hedge against inflation. But, is a very noisy hedge against inflation.
    • It is mostly tied to movements in real interest rates (When inflation goes up faster than nominal interest rates, real rates go down, pushing up gold prices).
  • Mildly explosive crash (market down 15%) payoff on average (30% in the 1970's and 7% since) but, it has had a very wide range of returns since the 1970's.
  • Gold is all about investors' expectations of value, it has no yield and has no intrinsic value.
    • It is for that reason impossible to fundamentally value. Its payoff profile is largely statistical as expected.
  • During the 1970's, golds payoff profile made it very cost effective as a safe haven, outside of that, gold has been much less cost effective.
    • Gold has required a tactical call regarding inflation or real interest rates in order to be a cost-effective safe haven.
    • This means we need certain things to go right for gold to be an effective safe haven in mitigating systemic risk (of a crash), much less cost-effective.
    • The amount of gold needed to fully hedge our portfolio is very high adding to its carry costs.

Investing Amid Low Expected Returns

• Gold
• 0 real long-term return (matches inflation over long terms)
• No interest or dividend income (impossible to value)
  • Is a safe haven against a variety of ills
  • Inversely related to real interest rates
• Precious Metals do well when central bank credibility is questioned

Below are the full posts on books by Friedman and Dalio. Deals more with central bank policy positions and how they think and act.

https://reddit.com/r/Bogleheads/comments/rh5nyu/milton_friedman_money_mischief_book_summary/

https://reddit.com/r/Bogleheads/comments/obcr4m/ray_dalio_principles_of_navigating_big_debt/

Book Summaries by Spitznagel and Taleb. Deals with Risk Mitigation.

https://reddit.com/r/Bogleheads/comments/wki8t9/risk_mitigation_part_1/

https://reddit.com/r/Bogleheads/comments/rasfdm/nassim_taleb_fooled_by_randomness_the_black_swan/

Ages of the Investor Book Summary by William Bernstein. Focus on Deep Risk

https://reddit.com/r/Bogleheads/comments/sdr4nw/young_investors_seriesthe_ages_of_the_investor/

Crash Proof by Peter Schiff

https://reddit.com/r/Wallstreetsilver/comments/r7rggs/peter_schiff_crash_proof_book_summary/

Articles on PME and the Permament Portfolio from William Bernstein.

http://www.efficientfrontier.com/ef/197/preci197.htm

http://www.efficientfrontier.com/ef/997/precio97.htm

http://www.efficientfrontier.com/ef/adhoc/gold.htm

http://www.efficientfrontier.com/ef/0adhoc/harry.htm

http://www.efficientfrontier.com/ef/996/rebal.htm

Tax Policy

https://sdbullion.com/irs-gold-buying-reporting-selling-privacy

John Bogle interview (Owns 5% Gold for Blair Academy Trust at 56 minutes)

https://reddit.com/r/Bogleheads/comments/q5kz7c/john_bogle_gold_in_portfolio/

How to buy Gold and Silver

https://reddit.com/r/Bogleheads/comments/u1q8cu/how_to_buy_gold_and_silver/

Book Summaries and FAQ

https://reddit.com/r/u_captmorgan50/comments/rnftyk/book_summaries/

My Positions

Physical Gold and Silver

OneGold

GDX - VanEck Gold Miner ETF

GDXJ - VanEck Junior Gold Miner ETF (Includes Silver Miners)

https://www.apmex.com

https://www.onegold.com/

Let's look back at some memorable moments and interesting insights from last year.

Your top 10 posts:

• "Peter Schiff Crash Proof Book Summary" by u/captmorgan50
• "Inflation hedge advice and Peter Schiffs forecast" by u/objem
• "Peter Schiff is going LIVE to answer your questions about the Crypto Crash!" by u/Whiiiteferrariii
• "The Infuriating Reality of Traveling with Bitcoin in the World's Crypto Capital" by u/unbob
• "Gavin Newsom’s stupid universal basic income for cars" by u/unbob
• "Jan 30, 1934"
• "On the Dangers of Cryptocurrencies and the Uselessness of Blockchain" by u/unbob
• "Happy Birthday!" by u/SixtyBracelet
• "Capitalist Scandinavia" by u/nicesloth24
• "I don't know how this is combatitive of Inflation!" by u/SixtyBracelet

Register for the event so you can ask Peter all your questions live: https://my.6ix.com/qI8zXxx_

Cryptocurrency prices crashed again to start off September, with Bitcoin dropping to its lowest level since December 2020. What does this mean for the long-winded debate around the value that cryptocurrencies were supposed to have as a counter to inflation, similar to that of some commodities? How does it compare to commodities in general?

Again, another excellent article legitimizing Peter's anti-bitcoin/cryptocurrency thesis.

"This is my basic argument: blockchain does nothing to solve any existing problem with financial (or other) systems. Those problems are inherently economic and political, and have nothing to do with technology. And, more importantly, technology can’t solve economic and political problems. Which is good, because adding blockchain causes a whole slew of new problems and makes all of these systems much, much worse."

https://www.schneier.com/crypto-gram/archives/2022/0715.html#cg8

Can anyone recommend a book/report/in depth article which goes into details explaining how Scandinavian countries have a very capitalist system. More so than the United States in some ways. I understand ‘Scandinavia’ is throwing multiple countries into one, so if it’s only about a specific country such as Sweden that would be good as well.

Peter Schiff Crash Proof Book Summary

• Schiff recommends owning gold to silver at 2:1 ratio. Gold is historically more stable and Silver less. Schiff likes 90% "Junk" Silver.
• Gold to silver price ratio = Gold to Silver ratio is historically 54:1(fairly valued). Gold is overvalued at 75:1 and Silver overvalued at 45/35:1
• Don't trust "paper" gold and silver certificates. "If you don't have it you down own it."
• Gold Futures contracts expose you to counterparty risk. The risk that the other party my go bankrupt in a collapse and not be able to pay you. Physical gold has NO counterparty risk.
• During metal bull markets Silver tends to do better than Gold. The opposite is true of metal bear markets
• "Junk Silver" Ratio = $1 face value of normal circulation 90% coins is 0.715oz silver
• Schiff Recommends 10-25% of investment portfolio in physical precious metals
• 5% of Portfolio allocated to currency's according to Axel Merk. Use like a money market account for money you don't want to invest but don't want to leave in cash.
• Use foreign money market accounts for a liquid investment. We want to have money for when the collapse happens. Merk Hard Currency fund is a good choice for this.
• When the dollar fails, Asia with be hit hardest early. Because Asia is doing most of the subsidizing of the dollar. But have the most to gain once those subsidies stop. Europe will affected less early in the collapse.
• Electric, oil and gas utilities are all good choices. These are sometimes called "bond substitutes" but pay a higher dividend. High demand, predictable earnings and captive audience.
• Foreign real estate is another good choice.
• Mining stocks are a leveraged play on the price on gold. If you want to be more aggressive, own more mining stocks.
• Dow/Gold ratio has hit 1:1 two times in the US history. The high was 44:1 in 2002. 20:1 in 1920's
• Keep enough cash for no more then 3-6 months of living expenses. And keep those in short maturity instruments.
• Do not have adjustable rate debt. Only fixed rate debt.
• Do not buy into industry or stocks because of government backing.
• Invest in raw materials and agriculture companies that sell oversees
• Invest in creditor, not debtor nations
• Good places to invest include Canada, Norway, Netherlands, New Zealand, Australia, Hong Kong, Singapore, China, Switzerland
• 3 legged stool of investments. 1st is mining stocks and gold, 2nd is foreign dividend paying whose customers are getting richer, and 3rd is liquid foreign cash and bonds.
• Avoid inflation protected bonds from the US government
• Raw materials, energy, chemicals, manufacturing, Ag, utilities, tech are good sectors
• Avoid finance, internet, residential property, high P/E companies with no dividend
• Dow/Gold Ratio – Dow undervalued at 4oz gold, fair value at 6-7oz, and overvalued at 10oz+
• The Dow/Gold Ratio tends to overcorrect in both directions. Take advantage of these swings.
• Gold is a good investment in deflation AND inflation. During deflation, gold's 0% yield is higher than dollars negative yield. During inflation, the purchasing power of dollars is decreased and gold isn't
• If storing large amounts, store it in Switzerland with a reputable company
• Do not store extra gold in a bank vault. It is vulnerable to asset seizures, bank holidays and confiscation
• Small amounts are ok to store in a home safe
• Silver/Gold is mined at a 10/1 ratio

Highly recommended reading for Peter and all sane people!

Welcome to the wonderful world of Bitcoin!

https://www.bloomberg.com/features/2022-bitcoin-travel-problems/?srnd=premium-europe

​

Here's an on-target article offering confirmation of Peter's recent rant re Gavin Newsome's idiotic proposal to fight inflation.

https://www.theatlantic.com/ideas/archive/2022/03/gavin-newsom-gas-prices-plan/629378/

Happy Birthday to you,

Happy Birthday to you,

Happy Birthday Dear Peter Schiff,

Happy Birthday to you..................! <|:^) -|---<

​

I am really late in posting this but i want to grant a happy birthday to our King of Modern Day Economics, and thank Mr.Schiff for getting me out of the lost of what i have learned from government schools all the way up until graduation. His words when i first was hearing him, were like as if Christ came back to earth to save us from all this untrue knowledge of how the world is and the reasons behind them. I want to thank him for all his efforts to do the same to the rest of the world. i feel like there is no one else in the WORLD that says anything better than you! XD

I hope The Real Crash can be delayed so i can keep buying more precious metals like gold and silver. silver for me is more affordable, because i am kind of poor to be honest. lol

Thank you, and may you have another blessed year of your blessed life! <3

This was indeed the most Anticipated, yet the most meaningless Rate ever! lmao xD

What do y'all think?

I posted this as a comment 4x on Peters last video and YouTube auto deleted it each time. Kind of messed up but wondering what you guys all think?

Peter, I have a basic economics question on inflation. If you look at the M1 money supply graph in the USA and Canada, they roughly quadrupled the money supply in 2020 after covid. In the USA they took it from $5T -> $20T. So with a 400% increase (4x more money) shouldn't we expect an eventual 400% inflation? There's now 4x more money chasing the same economy. So really is this 7-15% inflation is just the tip of the iceberg? Does this make sense?

Source: https://tradingeconomics.com/united-states/money-supply-m1 (Click on 5Y to see 2020)

Hello,

I would like to know what you think good inflation hedge assets are in 2022 and what you think about the ones that I have bought.

I have been listening to Peter Schiff's podcast and based on his warnings of inflation I wanted to hedge my savings against inflation. I am a young investor living in the UK so I couldn't buy his mutual funds and decided to invest with Fidelity International. I split my investments into 4 assets:

1/7 into ISHARES III PLC,MSCI TRGT UK REAL EST UCITS ETF GBP DIST(UKRE)
1/7 into ISHARES PHYSICAL METALS PLC,I SHARES PHYSICAL SILVER ETC USD(SSLN)
3/7 into ISHARES PHYSICAL METALS PLC,ISHARES PHYSICAL GOLD ETC USD (GBP) ACC(SGLN)
2/7 into Bitcoin

I feel pretty confident about the silver and gold ETFs based on Peter's advice, but I am not sure if the real estate ETF is a good hedge. I know Peter advises against bitcoin but I decided to go against his advice for various reasons. I wanted to invest in commodities too, but I could not find commodity-based ETFs in my broker's ETF selection.

I am also unsure about how long to hold these assets for. My understanding is that according to Peter, once the FED and central banks start fighting inflation and raise interest rates, the stock market will crash and the inflation hedges will go up in value. I know that during the 70s and 2008's financial crises it took years for gold to reach a peak price and start dropping. Peter says that 2008 was nothing compared to how bad the upcoming financial crisis will be.

I will be grateful for any advice on the matter of hedging against inflation. I am just a university student trying to protect me and my family's hard-earned savings so please point out any misunderstanding in my investment strategy and assumptions.

Jan 30, 1934 -- The Gold Reserve Act of January 30, 1934 required that all gold and gold certificates held by the Federal Reserve be surrendered and vested in the sole title of the United States Department of the Treasury and changed the value of the dollar in gold from $20.67 to $35 per ounce.

Let's look back at some memorable moments and interesting insights from last year.

Your top 10 posts:

• "Hello darkness, my old friend..." by u/akisk2000
• "The Government's Actual Budget Deficit Numbers - Peter Schiff" by u/theloiteringlinguist
• "Prepare for the WORST CRISIS of YOUR LIFETIME" by u/x_filesscary
• "The reason why Peter Schiff can predict market crashes is because he’s always predicting that the market will crash so when it eventually does, he’s right. Change my mind." by u/ProjectLost
• "Peter Schiff Interview : The Strongest America Asset Is Collapsing!" by u/x_filesscary
• "Been a long time since I listened to Schiff, what’s his word been on the recovery of the US?" by u/Practical-fan12342
• "Peter Schiff - The WORST CRISIS of your LIFETIME Is COMING!!" by u/x_filesscary
• "Peter Schiff’s 2nd Perth Mint Explanation" by u/fnbpodcast
• "Peter Schiff's Perth Mint Explanation" by u/fnbpodcast
• "U.S. Treasuries Shouldn't Be Rated AAA - Peter Schiff" by u/theloiteringlinguist

Any book recommendations dealing with the (1) reasons why gold is money and (2) the damage the fed is doing?

Love Peter’s podcasts on these topics but would like to have something in written form!