It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.
-Mark Twain
We know many things for sure. Examples are:
In 1913 we knew that a European war was unlikely because European countries would not engage in pointless and mutually destructive actions. Later we knew it as “the war to end all wars.”
In 1915 we knew that the war would be over in a matter of weeks.
In 1929 we knew that the stock market had reached a permanently high price plateau.
In 1938 we knew that appeasing Hitler via the Munich Agreement was the best policy. Chamberlain in England told us so.
In 1941 we knew the U.S. fleet was safe at Pearl Harbor.
In 1963 we knew that Lee Harvey Oswald was the lone gunman who killed President Kennedy.
In 1964 we knew that North Vietnam attacked the U.S. in the Gulf of Tonkin.
In 1971 we knew that the U.S. dollar was partially backed by gold and that foreign nations could convert their dollars into gold.
In 1979 we knew that consumer price inflation in the United States was high, and there was no sign it would decrease.
In 1987 we knew that portfolio insurance would protect (risk mitigation) the stock market from sudden drops and crashes.
In 1990 we knew that a small area of land in Japan was valued as high as all the land in California.
In 2000 we knew that Internet stocks were fantastic and had to go higher.
In 2001 we knew that foreigners armed with box cutters helped take down three huge buildings in New York, even though only two buildings were hit by jet aircraft.
In 2006 we knew that real estate and property values always went up and the huge derivative exposure from collateralized debt obligations was not a problem. Per Benjamin Bernanke, “house prices will probably continue to rise.”
In 2007 we knew, because Benjamin Bernanke told us, “the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.”
In 2008 we knew we could avoid a recession, because Bernanke said, “The Federal Reserve is not currently forecasting a recession.”
In 2010 we knew if the Fed printed $ trillions from “thin air” and bought toxic assets from banks it would help Main Street in America and save the economy.
In 2016 we knew that Hillary would be elected President because she was leading in the polls by a huge margin and mainstream media fully supported her. The New York Times put her chances of winning at 85% on election day.
In 2017 we know that stocks have risen since 2009 and popular sentiment believes they will continue their strong rally.
In 2017 we know that Fort Knox holds over 147 million ounces of gold because Treasury Secretary Mnuchin said so.
In 2017, in spite of over $20 trillion in official U.S. debt, a weakening dollar, hurricanes, fires, rising Chinese and Russian geopolitical power, war games in Asia, and no diplomatic success with North Korea, we know that the U.S. economy is healthy, the dollar will remain strong for years, imported goods and oil will only rise slightly in price, the Federal Reserve is competent and necessary, and the Democratic loss in the Presidential election was caused by Russians. Maybe it “just ain’t so.”
In 2018 we know that …
What gets us in trouble is what we know for sure that turns out to be false!
What If?
- As Alasdair Macleod has calculated, the Chinese state owns in excess of 20,000 tons of gold bullion.
- Russia owns over 1,700 tons of gold and is rapidly increasing its hoard to diversify away from the dollar.
- Fort Knox claims to hold 147 million ounces (4,500 tons) of gold but actually has much less.
- The U.S. stock market is overvalued by most measures and due for a fall, in spite of printing and levitation efforts by the Fed. Maybe the HFT trading algos can force the market higher … forever… Maybe …
- Gold and silver prices have been hammered since 2011, bottomed in late 2015, and are in the early stages of a generational bull market.
- Housing prices in some markets (such as California) are unsustainable and inevitably will crash. This house sold for $1.1 million plus 7 years free rent in exchange for a higher sales price. List price was $1.6 million.
Trees, real estate prices, stocks, bonds, and confidence in the Fed do not grow to heaven. They always reverse, often when markets and institutions look the best.
Gold and silver stocks have been crushed since 2011, even worse than prices for gold and silver bullion. Gold and silver stocks are also in a bull market and should remain strong for several years.
Times change and people are forced to reevaluate what they “know for sure” as events and shocks overwhelm them. Gold and silver bullion safely held outside the banking cartel will cushion economic shocks. Be careful with overvalued stocks, crazy real estate prices, assets dependent upon multi-century low interest rates, and mass delusions.
Gold and Silver Stocks
Fortuna Silver Mines: Produced 2 million ounces of silver and 13,412 ounces of gold in third quarter. Silver production was down 4% and gold production was down 5% versus the same period last year.
Yamana Gold: Produced 257,000 ounces of gold, 1.4 million ounces of silver and 37 million pounds of copper in third quarter. While production was ahead of guidance, both gold and silver production was down slightly versus Q3 of 2016. Copper production increased 26% versus year ago.
Northern Dynasty Minerals:
Northern Dynasty is advancing the world-class Pebble Project in Alaska towards permitting and development. The Pebble Project is the most significant undeveloped copper and gold resource in the world. Their share price advanced 15% over the past month, despite a 2% decilne in the gold price.
Central Fund of Canada (CEF) holds gold and silver bullion in a vault in Canada. This is a closed end fund backed by solid metal.
Check out these beautiful 2017 Australian Kangaroo Privy Koala Silver Coins from JM Bullion. They are on special for $4.49 over spot price, yet they sell on Ebay currently at $10+ over spot price. JM Bullion accepts Bitcoin.
Do your own due diligence on all stocks and metal purchases. Beware of all-time highs in paper stocks based on ever-expanding credit.
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