Deserts of the Really Real
Dark Nights of the Soul for Precious Metals Holders - Is there a route back to the root of gold's true purpose?
ANOTHER 'GOLDEN OLDIE' from the Storify vault
A WILDERNESS OF ARID SPECULATION... HOPELESSLY LOST NARRATIVES... AND FALSE TRAILS OF HOPE...
Confronts the weary precious metals holder of the western world.... in a desert where the old maps no longer serve to guide one to safety!
Pity, if you will, the precious metals holder, consigned to a multi-year purgatory of depressed prices that "don’t make any sense" as reflections of the current dismal economic conditions in the western world. Everything they were led to believe about the intrinsic value of their choice of wealth protection, in response to debt, inflation, and central bank market meddling has been stood on it's head, as gold and silver have continued their long slide down from 2011 highs.
In refusing to conform to what is - in the abstract defined by economists - their natural function, gold and silver have not only defied and disappointed the expectations of many an investor, but also have shown themselves to be as capricious and unpredictable as every other part of a financial system where volatility, risk, and performance have escaped the confines of their established roles.
It's crucial to remember here that we are talking about a financial system as a whole - where volatility, risk, and performance no longer give even lip service to their defined roles. Neither gold, silver, nor any other asset have the slightest chance of avoiding the transformations that accompany this new paradigm. As Christopher Cole wrote most presciently back in 2012,
Modern financial markets are a game of impossible objects. In a world where global central banks manipulate the cost of risk the mechanics of price discovery have disengaged from reality resulting in paradoxical expressions of value that should not exist according to efficient market theory. Fear and safety are now interchangeable in a speculative and high stakes game.
Underlining the shock value of this seemingly counter-intuitive, reverse-alchemical change of character is the very physicality of the substances themselves. In a world increasingly weighted towards virtual, at the expense of real, the very tangibility of gold and silver gave them a luster of concreteness and predictability which appealed to the conservative investor. Not only form, but tradition as well weighed in their favor, for those suspicious of the sustainability of a system ever and ever more detached from real goods... for,
as Richard Cantillon famously put it in the C17th,
Gold and Silver alone are of small volume, equal goodness, easily transported, divisible without loss, convenient to keep, beautiful and brilliant in the articles made of them and durable almost to eternity. All who have used other articles as Money return to these as soon as they can get enough of them for exchange.
But Cantillon lived and wrote in an era when banking had yet to become the sole arbitrator of the fates of kings, emperors and countries. It was still possible to imagine, in those times, that over all the affairs of men there stood a Divine Intercessor, whose power to strike against errant moneychangers in the temple would bar things from getting totally out of hand!
That "Enlightenment" of Europe which followed shortly thereafter served to dispel such archaic mythology once and for all, giving final carte blanc to private banking to usurp the roles of treasury and council of state...
leaving in their place a convenient fiction of "markets" and "invisible hands" that would serve to beguile enough anyone capable of asking after their departed traditions of actual free enterprise!
The entire residue of thought which went under the rubric of "political economy" for the last two centuries has been displaced and rendered useless by the gradual induction of the West into the Hegelian notion of dialectical synthesis - whereby two opposites converge towards each other. Economists, political observers, and those who have tried to educate themselves to understand how people can best work towards their own real interests have all stayed totally blind to this project of bringing "CAPITALIST" AND "SOCIALIST" systems into convergence.
In it's essence this blending of false opposites will mean a kind of neo-feudalist society wherein the top strata of operators have successfully convinced the rest of us to abandon all notions of self-determination in favor of a managed existence that has attributes hinted at by writers as diverse as Illich, Orwell, and Huxley. While Austrian and neo-marxian economists alike happily scribble away against "the State" and "central planners," those who bankrolled and trained both factions have subsumed the powers and prestige of the state itself, and have, in fact, so 'centrally planned' an envisaged corporative future as to be able to at last rest upon their long labors! As we creep ever closer to that day of final reckoning, (and as Cole also presciently warned),
For the next decade this market is going to reward philosophers over students of business. Why? Because the modern investor must hold several contradictory ideas in his or her head at the same time and none of them really make any sense according to business school case studies.
What, you might ask at this point, has any of that to do with my stash of shiny?
Well, in the aftermath of 2008's banking crisis, and a whole slew of omens that seemed to confirm every tenet of 'hard money' advocacy, gold and silver took off skywards towards $2000. To the timeless attributes of the metals which Cantillon enumerated there was added what seemed to be a very timely quality of being the right asset category at the right time! So secure did this return to the natural state of affairs seem to many, that the subsequent downwards direction was assumed by many to be a very temporary blip in a bull market that had loads of legs left it. The next three years
would leave those persons in a state of befuddlement and/or profound angst.
Some reacted by ditching their holdings, swearing never again to be burdened by dross of metal; others fortified their resolve by finding blame with the hidden hand of manipulation. Those few steady enough to hold firm, but explore for some kind of 'explanation' of events that goes beyond the scripted, have been forced to rely on the tendentious counsel of persons who offer to sooth-say the situation, based upon readings of charts, 'fundamentals,' or theories about developments in the wider world which influence the stars and planets of precious metals markets.
Although it's eminently wise to upgrade one's understanding of how the shifting sands of geopolitics may influence their situation, the precious metals investor who seeks to do so runs immediately into a problem of ‘filtration.’ Which is to say, they are caught in a tug of war, between media sources whose loyalties tilt towards their own vested interests, not those of their readers. While one element of the media-sphere seeks to exaggerate any story hinting at the demise of precious metals as a store of value or protector of wealth, opposing voices in the ‘alternative’ media constantly play up anything and everything that can be spun into a suggestion of an imminent surge in their value.
Where one might hope to find impartial witness to current events, and thoughtful reprising of patterns of the past, what we get instead is a snack-pak of single-dimensional black-hat/white hat characterizations that work to conceal more than they reveal about the real nature of what is going on in the world! That art of concealment is the hallmark of the private banking system which has draped itself so completely over our polity that we can now say with certainty that it is indeed as Cole wrote:
While it may be natural to conclude that the real economy is slave to the shadow banking system this is not a correct interpretation ... the higher concept is that our economy 'is' the shadow banking system… the Empire is gone and we are living ignorantly within the abstraction. The Fed must support the shadow banking oligarchy because without it the abstraction would fail.
Put another way, just as trades in 'paper gold' are now said to outweigh those in 'physical' by a ratio of close to 100:1, the hollowed out economy of a post-Greenspan America operates on a similar ratio of fictional to real goods - in which environment, the 1% or so who hold some form of precious metals as investment should fully expect their relegation to ghostly apparitions of bygone times rather than attempt the impossible feat of re-arranging perception to match their concept of 'reality.' After all, there is no way of convincing the ferryman that you've been deposited on the wrong side of the River Styx unless one admits to being stuck there in the first place!
Faced with this endless carousel ride through a funhouse of distorted mirrors, the baffled metals investor either succumbs to despair about their prospects, or capitulates to intravenous feedings of a sugary concoction of data points designed to keep them alive – barely. Locked into this shadow-world of neither quite life nor death, thousands of these poor souls haunt the byways of the internet daily, searching out, like the hungry ghosts of Buddhist legend, any crumb which can nourish their hopes for
Replacing this carnival of souls with something that can bring back more equilibrium into the lives of those who pinned their fortunes and futures on the only financial asset with no counter-party risk is no easy undertaking. But as with any exorcism or engagement with the spirit realm, the investigator so tasked must be prepared to peer into the dim regions of the past, in order to interpret and influence the present. There also, one finds many ghoulish forms of misshapen truth and shadowy distortion – yet with enough patience and diligent digging it is possible to piece together enough of the puzzle to guide the soul survivor towards a happier state of mind...
even if, in this post-reality setting, one's actual existence, as well as the intrinsic value of one's metal holdings is subject to open question! There is that happy place somewhere on this earth, in a timeframe not completely out range for all but the youngest of us.... where gold with rise to again embrace it's full value as a mediator and medium of wealth!
But it will not be found in the expected places, nor involve many of the scenarios which have so far been painted by the eager seers...
where fear and safety commingle, invade each others precincts, and even imitate each others attributes, few but the bravest willingly go. But beyond hope or despair, a golden horizon and silver lining still beckon they who dare pull down the Potemkin walls of gold/silver blogosphere disinformation! With this post, I'm initiating the journey towards that post-western world. Join me, if you will!