Ounces of Truth, Shares of Illusion

Tue, Jul 21, 2015 - 9:49am

Don’t worry, disheartened Goldbugs- if you can pull yourself away from your shiny rocks for a few minutes, I have a killer stock play that will help ease your considerable pain. A truly great growth company that has averaged 12% gains over the last six years AND pays a meaty 2.7% dividend. It is highly rated by analysts, earning a Schwab A rating (top 5% in its sector) to go with a Strong Buy rating from analyst at Citi, Bank of America, RBC Capital Markets and UBS Warburg. Goldman Sachs analysts love this one, from fabled stock guru Abbey Joseph Cohen who has recommended this stock repeatedly, to Goldman’s David Fleischer who recently called it the “Michael Jordon” of its sector. And if you are worried about its debt or capital structure, please note that Fitch, Moody’s, and Standard & Poor all give its bonds their highest rating, Investment Quality. Despite the increase in the price of this company, earnings have been rising even faster, increasing from .20 cents a share to 1.01 over the last nine years! As if that isn’t enough, the big boy managed money professionals like Janus, Alliance, and AIM all hold large (nine figures) positions in this one.

Best of all, while 1,000$ invested in gold over the last six years is worth a meager 1,027$, that same 1,000$ invested in this company six years ago would be worth 2,057$. Now I hate to rub salt in your wounds, but surely even you hard money troglodytes can see that you could have nailed an easy double if you simply had the good sense to listen to the experts and had gone with the crowd on this one. The stock, of course, is…

Enron, in November of 2000. It would soon go from a high near 90$ to around .50 cents per share, at which point two of the 15 analysts who followed the stock still had it rated a “strong buy” when it vaporized entirely.

. . .

I admit to having several motivations in using this example, not the least of which is to illustrate the degree to which mainstream analysts, mutual funds, and credit ratings agencies – the supposed big boy market professionals – can be profoundly and catastrophically wrong. I also wanted to illustrate the dangers of beating yourself up by playing the “if only I had bought X” game, when we are in fact only at halftime of a contest that is still very much afoot.

But beyond these, I wanted to illustrate something that is for me (and I suspect many of you as well) a crucial reason we invest in gold and silver: they are real and tangible, with no counterparty risk. They do not rely on continued financing, favorable interest rates, or daisy-chains of CDS paper. Precious metals are value that is real, tangible, and genuine, in an era of where Enron economics has come to encompass the very foundations of the economy.

Does that sound like an exaggeration? A false equivalency? Well, consider a few examples and judge for yourself what is real and what is illusion. We are told that the economy has been recovering for five years now, and that stock prices have merely risen to reflect this reality. But if this is so, why do we not see any evidence of this recovery in our towns, our cities, our counties? Why are measures like ZIRP, treasury purchases by the Fed, and QE that were introduced as temporary and extraordinary measures all still in place after six years of “recovery”? Why does even a hint of withdrawing these so-called temporary measures, so aggressive that they were literally unprecedented, cause spasms across markets? If all is humming along, why is the Labor Force Participation rate at a 40 year low with 99 million working age Americans not in the workforce? Why do market commentators crowing about the performance of the stock market never mention that they have been driven primarily, for more than a year now, by all-time high stock buybacks financed on cheap credit with artificially low interest rates? Isn’t this a classic Enron-style accounting trick? Can’t people see where it leads?

The previously rock-solid benchmark US treasury bond has to be artificially propped up by the Fed, pushing interest rates to the floor. Is 2.7% a reasonable rate of return in the real world? Remember, this rate of return is supposed to compensate the buyer for the opportunity cost of having his money tied up for 10 years, provide a reasonable rate of return above the real cost of inflation, and compensate for risk of default by the issuer or a degeneration of the unit of account, i.e.- the underlying currency. Honestly, I would consider investing in some US Treasuries… at 12.7%, not 2.7%.

But the reality is that today the bond "market" is artificially created from start to finish through a fictional process of financial alchemy. This is how it works: The Federal Reserve creates previously non-existent dollars out of thin air on a computer screen, and uses them to purchase US Treasury bonds. These bonds are a fictional promise from a completely bankrupt country to pay the holder of the bond in fake dollars (again created out of thin air) at some point in the future. These instruments are sold at pretend "auctions" where in reality, 50-80% of the "buyers" are actually the Federal Reserve itself.

Fantasy dollars created out of thin air and used to purchase fictional promises to pay from a bankrupt and spendthrift issuer and sold at pretend auctions. Did you get all that? Do you understand what a complete and utter sham every part of it is? Good. Now ponder this: The continuance of that ridiculous charade is what gives your paycheck its value- without it, your paycheck would be either worth less or possibly worthless. That elaborate sham is the only thing that gives value to the dollars shown in your checking account. It "values" the stock market.

So what are treasuries really worth? What is a fair market value interest rate for US or corporate bonds? What are stocks actually worth? You and I really have no idea, and that is the problem. Each of these is openly and brazenly manipulated or falsified to the degree that the only thing we can know with certainty today is that they can quite reasonably be called illusionary valuations. I have no idea what the difference between the illusion “valuation” and what the actual, real world valuation would be, and anyone who says they do is fooling themselves.

Those who are cackling about gold and silver investor’s poor performance over the last three years apparently believe that these illusions and manipulations can continue forever and ever without interruption, or at least believe they are so smart they will be able to get out before the reckoning. Well maybe they can and maybe they can’t, but with my ounces of stored value in my possession, I don’t have to worry about that. I own something real and valuable, and if the paper price doesn’t reflect that today, well I am more than capable of waiting.

In a world of fake interest rates, artificial stock values, and Enron economics, I am truly thrilled to own a genuine store of value even if I purchased it at a higher price than it fetches today. I may not have had perfect market timing, but that's OK because I own the perfect investment vehicles. And I am quite certain that ounces (of true value) will win out over shares (of illusion).

About the Author


Jul 23, 2015 - 9:23am

Junk silver premiums expanding

At Gainesville, from 3.99 two days ago to 5.29 yesterday. If I remember correctly, this expansion also proceeded the last big surge in the price of AG.

Jul 23, 2015 - 2:22am
Jul 23, 2015 - 12:40am


I'm sure we are all sick of watching the PM's get smashed while drifting lower.... I'm over it

I ain't selling, no f'ing way, but I'm looking for more downside over medium term

"we have assumed control"

"we have assumed control"

"we have assumed control"

I'm serious, I'd welcome a smash to triple digits now just to ensure a bounce up and a pivot bottom...

Fucking profits of doom

Video unavailable

if you watch that you will recognize some of the evil faces, AND get a chuckle (i hope)

Jul 23, 2015 - 12:14am

quick global Economic / Monetary refresher

Economics deals with how the commercial and industrial needs of a population are met.

their flows of goods and services and the prices of goods and services as aeffected by supply and demand, ...wages, employment, blah blah... all that happy horse-$h!t (btw- aeffected is a new word that has the exact same meaning as "affected" or "effected" ...depending on which one would have been correct in the context)

Monetary looks at the population of people buying and selling and hiring and earning a

Wnd asks "What is their money?" With what do they buy and sell? What sets the values of things? What is universally exchanged for all manner of goods and services within the population??

Economics- "what's happening with the populations goods, services, employment, prices, wages, finances, accounting, blah blah blah"

Monetary- "what is the population's money"

For example- In Weimaria Germany the Weimarians used the Weimarian Weimark (fiat currency) for 100 years.

During these 100 years there were 10 great ECONOMIC "Booms" followed by 10 great ECONOMIC "Depressions".

  1. Oil Boom - Depression,
  2. Manufacturing Boom - Depression
  3. Housing Bubble - Depression
  4. Dandelion Mania Bubble - Depression
  5. Rutabaga craze - Depression
  6. ... ...
  7. ... ...
  8. ... ...
  9. ... ...
  10. ... ...

10 times in 100 years this happened!! But the Weimarian Weimark (WW) was the fiat currency used as money during all 10 of these economic cycles. During the entire 100 years, the WW was "money" in Weimaria

Then one day, after about 95 years of WWs being used as "money", the WW started to fail. Things really started to go haywire in Weimaria, and all the Weimarian Economists thought "OH NO!!! Here we go again, another big economic cycle!!" But they were all wrong. The Weimarian Economists were seeing a Monetary event but they had no idea what a monetary event was.

As the WW started failing all kinds of employment and financial metrics went haywire. And any one of these could be pointed to as a sign of "this economic event", or "that economic event". But they were ALL merely incidental fallout from the much more fundamental MONETARY cycle that was occurring. 95th 96th 97th ... ...

...a few years of craziness goes by and in it's 100th year the WW eventually died. As the WW died, Silver and Gold returned to their monetary role in Weimaria. The MONETARY Cycle, not economic cycle (this time) was complete.



(themz beez the universal laws of money)


Now fast forward to today and our current Monetary situation here on planet Earth. Today the planet is nearing the end of this current Monetary cycle.

OH OH OH!!! THAT MEANS THE USD IS ABOUT TO DIE!!!! No, No, No. The USD is not what has displaced Silver and Gold from their Monetary role.

The global "SYSTEM" of currencies, charts, and the media has displaced Silver and Gold. The USD is just one of the system's fiat currencies, and even it will live on as it becomes valued by Silver and Gold during the end of this cycle.


Economic vs Monetary

Today EVERYTHING is being driven by the end of the Monetary Cycle. Something might look like a Depression, but it's not an economic depression. It's more likely the result of wild system chart fluctuations required to try and keep the system together.

Forget anything and everything you have ever heard, learned, or been told about Economics. ALL of it NO LONGER APPLIES.

Forget anything and everything you have ever read about fiat currencies failing in the past. Or the events surrounding former fiat currency failures. They were all regional, which means other locations impacted the outcomes of those events. AND they were just fiat currencies.

Today, for the first time in the history of tHis tHis eon, the Monetary Cycle is GLOBAL, ... and a Global SYSTEM is what has replaced Silver and Gold.

Monetary Cycle - Global - System

Monetary Cycle (not "economic" cycle)

Global (not regional)

System (not fiat currency)


Congratulations!! You just received your Monetary PhD. Print out a certificate and feel free to put the ole "Dr." before your name anytime you feel like it. You now have a much clearer understanding of current monetary events than the dum-dums with neckties who have spent their entire lives drinking system kool-aid

And you will surely soon see the little system device below in a whole new light. (Hopefully)

Jul 22, 2015 - 10:36pm

JPM's imaginary silver hoard explained

This article linked from Willie's newsletter out today.

I said all along, maybe the shorts and longs are on the same team......


And please read the next linked part II

"It is a “psychopathic” strategy because it lacks any end-game. What do the banksters do after they have finished destroying this market (and sector)? The world needs silver. Final “destruction” of the market directly implies some sort of default event, at which point silver will be re-priced. The final point which needs to be made here, and question to be answered is: how will silver be re-priced?"


"The re-pricing of silver is an imminent, inevitable event, one that the One Bank is pushing us towards, at an accelerating rate. The fact that such re-pricing must be a “radical” move higher in the current, phony price is simply a function of the extreme level of price-perversion in these markets – as evidenced by the difference between our legal price ratio between gold and silver, versus the (manipulated) market price ratio."

Maybe Bix is right..the rabbit hole goes deeper and deeper. Hang on for the times that try men's souls....

So much to absorb...

"One must suspect that the paper-called-gold market is now pushing 200 times the size of the actual amount of gold in circulation (if not more). And now we know (from the mouths of the bankers themselves) that the silver market is (at least) three times as fraudulent, and thus three times as leveraged. This suggests that the paper-called-silver market exceeds the amount of actual silver in circulation by some ratio in excess of 500:1."


Ladies and Gentlemen, It all fits. The massive Short position; the massive increase of Derivatives reported; it seems the crash is on the horizon. All I can say is buy physical silver, while you can. It's imperative. My anticipation is that the next Jim Willie interview will blow us away.

My head now officially hurts.

4 oz
Jul 22, 2015 - 6:34pm

RE: O! O! 4oz

I've been to Kittery, Maine Marchas.

Not any further though. Stayed at a great Bed 'n Breakfast in Hampton Beach, NH and really enjoyed my trip to New England a few years back.

Love ya Charlie...if was going to be anywhere close again I'd call ya and MAKE ya put me up....lol and give ya shit for taking a 2nd stab at mining shares on this side of the reset....

4 oz
Jul 22, 2015 - 6:33pm

RE: O! O! 4oz

ah...Double post

Jul 22, 2015 - 6:27pm


Spent two years in Tacoma, Wa and Thirty Two Years in California hence why I'm in Maine. Lol Keep Stacking

Visit the FAQ page to learn how to track your last read comment, add images, embed videos, tweets, and animated gifs, and more.

4 oz
Jul 22, 2015 - 6:22pm

LOL Montana!


lol Montana...they're all going to NW Montana...They ALL LOVE the Flathead Country......Not WA, taxes are way to high here but not there---- Montana!!!!!!!!!!!

Jul 22, 2015 - 6:15pm

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