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Guest Post: JAWS and Loss Aversion by "Pining4TheFjords"

201
Wed, Jun 26, 2013 - 12:17am

Why the movie Jaws offers significant insight into preparing for the end of the Keynesian experiment. And no, I’m not kidding.

I have to admit the movie JAWS is a weakness of mine. Whenever I am channel surfing, trying to find something not entirely odious to watch and I see those four magic letters I am – pun intended – hooked. It never gets old watching the sleepy New England resort town of Amity be terrorized by a giant predatory shark! I still find the movie as compelling as I did when I saw it for the first time as a nine year old, whose parents accidentally took him to see his first “horror” movie. Turns out, I’m not alone in loving this film. JAWS became the first movie to record 100 million dollars at the box office, the first to take in 100 million in rentals, and was the highest grossing film of all time until it was supplanted by Star Wars. Adjusted for inflation, Jaws has earned almost $2 billion worldwide. All of which is truly incredible, given that the whole story was built around fear of a giant shark, and in this movie the shark itself was a rubbery, mechanical joke that looked entirely fake in almost every scene in which it appears. 

So why the popularity? Why has it stood the test of time and is still eminently re-watchable? Why is this unquestionably a great movie? First and foremost, it is just plain good entertainment- Spielberg strikes a perfect story-telling note by crafting moods, developing a plot, and pacing the action masterfully. But films that are truly great do far more than just entertain us; at their very best, they provide genuine insight into the human condition and allow us to glimpse, as if passing a mirror on a city street, a reflection of ourselves. Jaws does this brilliantly.

The three major figures of the movie are well known, and all three roles were beautifully portrayed in the film. The role of “decent man who faces his fears and redeems himself” Chief Brody was played in solid but genuine fashion by Roy Schieder. The audience knows from the start that he is a good man and we believe that the chief will ultimately do the right thing, even when the aquaphobic Brody shrinks from his first encounter with the shark, retreating into the shelter of Quint’s cabin pleading “You’re gonna need a bigger boat”. Brody, however, is pretty standard cinematic fare- Mr. Smith goes sharking.

Richard Dreyfus played Mr. Hooper, a young scientist and shark expert. The Hooper character has been described as emblematic of “modern, technological man” in some reviews of the film, while others claim he is the younger half of a classic odd couple / buddy film relationship with ship captain Quint. Regardless, his character development is also fairly typical, the “plucky youngster who earns the respect of the old veteran” found in everything from sports movies to war films.

Ship Captain and shark-hunter Quint was played in a tour de force performance by veteran actor Robert Shaw. The character was such an overt reference to Melville’s Captain Ahab that Director Steven Spielberg wanted to include a scene of Quint sitting in a theater watching Moby Dick and laughing so raucously and inappropriately that patrons around him got up and left. Unable to secure the rights from Gregory Peck to show even a short cut of Moby Dick, Spielberg was forced to give up on the scene, though the idea persisted and was eventually used in the movie Cape Fear. Despite the power of Shaw’s portrayal and the intensity of the character, Quint is an archetypal figure dating back to the ancient Greeks- the driven hero whose intensity turns to obsession, and ultimately self-destruction. Like Ahab, Quint is dragged beneath the waves by the thing he both hates and loves most. 

But of all the outstanding performances, taut suspense and gripping action of Jaws, do you know what haunts me the most about that film? It’s certainly not the rubber Carcharadon Carcharius. It’s not Brody having to shark-hunt from a small boat despite his fear of the water, nor Hooper climbing into an aluminum shark cage with a three ton monster just waiting to rip it to shreds. It’s not even Quint slamming the throttle of his crippled engine full ahead in a maniacal act of self-destruction. No, the most haunting and frankly disturbing aspect of this movie is the pitch-perfect performance of Murray Hamilton as Larry Vaughn, the Mayor of Amity.

Why, yes- the blue “sea anchor” blazer is indeed frightening. Haunting, even. But examine this character more closely, scrutinize his actions and motivations, and you will see something truly worth realizing and internalizing; Mayor Vaughn is a perfect blueprint of how our leaders will act during the End of the Great Keynesian Experiment. He provides us with a veritable roadmap demonstrating exactly what we can expect in the near future, and indeed how some of our leaders are reacting at this very moment, to the great unwinding of the debt-based economy and governmental structure. 

To understand Vaughn, and the politicians who are going to be making the decisions that will affect our wealth, safety, and freedom through possibly the biggest unwinding of bad debt and mal-investment in the history of economics, the crucial ideas to understand are the psychological principles of “Prospect Theory” and its constituent part, “Loss Aversion”. Prospect theory is a behavioral economic theory that describes the way people choose between alternatives that involve risk. The theory states that people make decisions based on the potential value of losses and gains rather than the probability of final outcome, and that people evaluate these losses and gains using certain heuristics. Loss Aversion is the finding that people tend to be risk-averse for gains but simultaneously to be risk-acceptant for losses. To put it simply, gaining ten dollars gratifies us far less than losing ten dollars will upset us. Additionally, people will risk far more in order not to lose ten dollars than we would to possibly gain ten dollars. Rationally, it seems nuts, right? But it is thoroughly well research and has been proven true in experiment after experiment.

What this means is that, when it comes to assessing risk in relation to potential gains, people tend to be fairly conservative and will generally take on only those risks that are commensurate, and make sense in light of, the potential gains. But what is strange, and in the context of this discussion is actually quite frightening, is that people will engage in FAR riskier behavior in service of the goal of avoiding losses, often to a degree that seems to make no rational sense.

Let’s talk about some examples. It is a well-known that the final race at any race track will be see the heaviest betting of the entire day. This is not because people suddenly have an insight into the field, it is because by that point most people betting at the track that day have incurred substantial losses, and rather than simply accept their losses and go home, they are willing to bet an inordinately heavy amount on the final race in hopes of avoiding the finality of having to book their losses by going home. They are willing to wager (risk) more than they normally would to avoid losses, even if this rationally makes no sense at all! Traders, at least beginning traders, often make the exact same mistake in the markets- rather than book losses and get out of a losing trade, they irrationally hold a deteriorating position (because if you don’t sell, the losses aren’t made “real”) or they even double down on what has been a poorly performing investment, making a riskier bet in the hopes of a big comeback to avoid their losses.

This is classic Loss-Aversion, and it is deeply hardwired into the human psyche. Studies have shown that when people are presented with two versions of the exact same problem, they are willing to take far greater risks when the problem is phrased as “avoiding losses” than when it is phrased in terms of” potential gains”. Keep this principle in mind, and let’s take a good, hard look at Mayor Larry Vaughn and see what we can learn.

For those who haven’t seen the movie but have somehow managed to crawl out from beneath their rock long enough to locate a computer and read this blog (a rather unlikely prospect, I’ll grant you) here’s the gist: a pretty young lass is skinny-dipping at night near the resort town of Amity, Mass. and gets torn to shreds by a huge shark. A few bits and pieces wash up on shore and the horrifying prospect of this happening to someone else prompts the local Sheriff (Brody) to have a talk with the mayor about closing the beaches until something can be done, which seems a very reasonable course of action under the circumstances. The mayor, however, steadfastly refuses and in doing so gives us our first key insight: Leaders benefit most from the status quo, and will perceive that its preservation is of enormous importance, all out of proportion to its true value. They therefore cannot rationally assess the real cost of maintaining the status quo.

What could possibly be worse than a young girl being mutilated and dying a horrible death? Well mayor Vaughn seems to think that closing the beaches and losing tourist dollars would be worse. Is he a monster? Absolutely not- in fact, he sees himself as behaving in a manner entirely consistent with his duty as he sees it; protecting and defending the prosperity of Amity. “I'm only trying to say that Amity is a summer town. We need summer dollars. Now, if the people can't swim here, they'll be glad to swim at the beaches of Cape Cod, the Hamptons, Long Island...”. It’s not that the mayor wants anyone to be killed, it’s just that that threat doesn’t seem as ‘real’ to him as the economic costs (losses) of closing the beaches. Loss aversion.

We have already seen numerous examples of this type of ‘Mayor Vaughn’ behavior in the maintenance of the public and private debt Ponzi. One could cite George W. Bush reacting to the financial crisis of 2008 by approving massive government bailouts of the banking sector, and defending what can only be described as the ushering in of a truly Fascist/Socialist monetary regime by saying “I had to abandon free-market principles in order to save the free-market”. One could argue that the entire TARP bailout, followed by QE1, QE2, QE lite, QE3, ZIRP, and QE infinity have all been examples of risky strategy and “doubling down” to preserve the status quo- i.e., to prevent incurring losses just as Prospect Theory predicts. Regardless, the bottom line is that the more an individual owes their status/position/wealth to the current system, the more irrational they will be about trying to save it, regardless of the costs involved. Think about who is and will be deciding what to do, what strategies to pursue, and what actions to take as the great debt Ponzi unwinds. Do you think they will be rational about costs/benefits of saving the current system? Think again.

Additionally, back in 1975 Mayor Vaughn foreshadowed modern MOPE- Management Of Perception Economics. To Vaughn, and countless politicians like him, public perception is reality. Vaughn is an exemplar nonpareil of the ability to dissemble, to rationalize his actions, and to put an almost pathologically positive public spin on the situation. Notice, for example, that when Chief Brody wants to shut down the beaches and prevent anyone else from becoming shark food, Vaughn manages to portray his own position (exposing the public to great danger) of keeping the beaches open as the rational, responsible thing to do. He says “Martin, it's all psychological. You yell “Barracuda!” everybody says, "Huh? What?" But you yell “Shark!”… and we've got a panic on our hands on the Fourth of July!” It is easy to hear shades of Mayor Vaughn in the public pronouncements of numerous Fed lackeys post-2008 about the importance of “calming investors” (we wouldn’t want a panic on our hands) and “backstopping” the markets, “supporting asset prices”, the Bernanke Put guaranteeing stocks will never go down, etc. Never mind that people might be entirely rational to avoid or want to wind-down risky investments. Never mind that by managing perception you are both distorting the clearest signal of risk – the cost of borrowing – that exists, but you are also deliberately tricking people into risky behavior by encouraging them to deploy their hard-eared capital in ways they might not otherwise do if they understood the true dangers… but apparently the IMPORTANT thing is to reassure the public that everything is fine. Isn’t it? Thus, lesson number two: Count on being given distorted, incomplete, or deliberately misleading information at every turn, and when it comes to the true dangers and actual risks to you, count on being lied to.

In the movie, the shark kills a second victim whose mother then offers a bounty to anyone that can kill the shark. This sets off a wild amateur fishing spree culminating in a shark (that is obviously not the killer) being caught. Mayor Vaughn, of course, pounces on this opportunity (and again is the pitch-perfect model for our current leaders) mixing truths, half-truths, and outright lies into the most comforting story he could possibly tell to the public:

 [to reporter] I'm pleased and happy to repeat the news that we have, in fact, caught and killed a large predator that supposedly injured some bathers. But, as you see, it's a beautiful day, the beaches are open and people are having a wonderful time. Amity, as you know, means "friendship". Sounds strangely like a Janet Yellen interview on CNBC, doesn’t it? Liquidity, as you know Maria, means prosperity.

And the parallels just keep coming! How does the mayor deal with the multiple deaths and mounting evidence that he has a catastrophe on his hands? This is lesson number 3: As the crisis deepens, leaders will engage in ever riskier behaviors including the aggressive denial of the obvious danger of the situation, and will attack those pointing out the danger, accusing them of acting in bad faith.

Hooper: Mr. Vaughn, what we are dealing with here is a perfect engine, an eating machine. It's really a miracle of evolution. All this machine does is swim and eat and make little sharks, and that's all. Now, why don't you take a long, close look at this sign [refers to the graffitied billboard] Those proportions are correct.
Mayor Vaughn: Love to prove that, wouldn't ya? Get your name into the National Geographic?

For good measure, Vaughn steadfastly refuses to own the consequences of his choice to desperately clinging to the status quo, shifting the responsibility for making good on his dangerous gamble to others, declaring “You boys do what you need to do to keep people safe, but these beaches will remain open… it’s gonna be our best 4th of July ever!” Sounds just like the glorious ‘Summer of Recovery’ of 2010!

In the film, the danger from the killer shark that Mayor Vaughn worked so assiduously to ignore finally hits home, of course. Both Vaughn’s and Brody’s sons are in a small sailboat when the shark kills an adult boater within feet of them. This, you expect, is the moment when Vaughn finally comes to terms with the true enormity of his misguided actions; the moment when he realizes that he has been risking people’s lives for a few extra tourist dollars and it nearly cost him his own son. Yet even when the disaster and danger is obvious and touches his family directly, even when he is a shaken, mumbling idiot whose son was almost killed… he must be almost manhandled by Brody into signing the hunting order to close the beaches and kill the shark.

This is the final, and most important thing we can learn from the good mayor: The defenders of the status quo are psychologically incapable of changing their mindset even when the dangers of their course are undeniable- they will engage in riskier and riskier behavior regardess of the costs, until disaster leaves them no other choice.

* * *

We live in a world where misguided economists, venal politicians, and a culpable, grasping public have all conspired to construct an economy and indeed a society predicated on the status quo of unlimited debt creation. The creation of value (goods, services, technologies) has been superseded and largely replaced by the creation of currency. It is a simple fact of mathematics that this status quo cannot endure permanently, and prudent individuals are planning today for the inevitable changes that are coming tomorrow. In formulating a strategy for surviving and possibly even thriving in such a situation, it will be crucial to understand exactly how our leaders will react during the inevitable crisis. Prospect Theory and Loss Aversion give us well-researched signposts and predictions, but on a more human level I think Mayor Vaughn shows us exactly how we can expect our leaders to react to the great unwinding of the public and private debt Ponzi- i.e., the status quo. It isn’t a pretty picture:

1. Leaders benefit most from the status quo, and will perceive that its preservation is of enormous importance, all out of proportion to its true value. They therefore cannot rationally assess the real cost of maintaining the status quo. 

2. Count on being given distorted, incomplete, or deliberately misleading information at every turn, and when it comes to the true dangers and actual risks to you, count on being lied to.

3. As the crisis deepens, leaders will engage in ever riskier behaviors including aggressive denial of the obvious danger of the situation, and will attack those pointing out the danger, accusing them of acting in bad faith.

4. Leaders will shift the responsibility for making good on their dangerous gamble to others

5. The defenders of the status quo are psychologically incapable of changing their mindset even when the dangers of their course are undeniable- they will engage in riskier and riskier behavior regardless of the costs, until disaster leaves them no other choice.

As the man said: PREPARE ACCORDINGLY.

About the Author

  201 Comments

Ancient · Jun 26, 2013 - 11:54am

The stock market is the main indicator to the masses how things are going in the economy.

The fact that the bond market dwarfs the stock market is unimportant.

The FX market is bigger than both, and is meaningless to most all in a staged devaluation.

The paper gold and silver must necessarily be annihilated because they are fraudulent in a monetary system. We are seeing that annihilation. My only wonder is where it is terminated all-at-once. Will we see prolonged reductions, bit by bit, as COMEX and GLD and SLV are drained? Or, will there come a price between here and zero where trading is halted, and the paper PMs as we have known them are no more?

JPM and the Fed, but I repeat myself, probably have a plan for answering that question. You can be sure that whatever best suits their control and wealth retention aspirations is what will occur.

The only way to beat them is to take their phyzz. Pure and simple. All else is noise. Of course, not one in a thousand understand this in the general population. Many here do, but many do not as well . . .

Mantis · Jun 26, 2013 - 11:58am

Thanks pining

edit:

@department of truth - the same thought occurred to me. I keep irrationally holding onto a losing investment too ! Ah well what can you do. Maybe its time for me to go long S&P and short gold..

Dirk The King Diggler · Jun 26, 2013 - 12:12pm

I'd like to take the opportunity to state, and you should think about this long and hard, that EVERY GOLD BUG WAS WRONG.

Be it Turd (who now tells us to avoid miners when a year ago they were a screaming buy in his view), Sinclair, the whole KWN crew who thought silver couldn't go below 40, then 30, then 20.

I was wrong too, but at least I didn't financially wreck anybody by giving advice.

Anyway, I hope anyone who got wrecked learned the lesson. Do your own homework. Don't let anyone influence you on what to do with your own money. You're going to pay for it.

Of course regarding the long term picture, every gold bug is right. So on a side note: got some money coming to me soon, looking to buy a couple of kilos of silver.

· Jun 26, 2013 - 12:18pm

Nice article Pining. 

Your characterization of denial, inaction, and executive resistance to messengers bearing news of reality at the decision making level is unfortunate but it rings so true. 

The media are supposed to communicate problems of the executive to the people, and vice versa, but have been subverted to the point of becoming an arm of the government, leaving their function "to inform" to be done by alternative internet news, bloggers, and whistleblowers.

It never ceases to amaze me how governments with great borrowing capacity can hang on to their position in the face of utterly disastrous performance. The bond market is supposed to discriminate between paper which will be repaid and paper which represents an obligation from fantasy-budget treasury departments. But still, the day the bond refuses to step up and fund governments gone wild for almost zero yields is nevertheless approaching, as witnessed by recent beginnings of a climb in yields.

The result will be unpleasant for millions.

Larry Galearis Turd Ferguson · Jun 26, 2013 - 12:26pm

But I still doubt this is the bottom....These massive affronts to market norms are hideous insults to the confidence of investors...Even the dumbest are going to walk away - just like those holding customer accounts with bullion banks in the COMEX. Doesn't this also imply that a COMEX default risk may be less likely as well? And this may be what the banks are hoping for...

And,..

Is anyone CONsidering JPMs short position on leased silver? Either those negative lease rates are for show, or the bullion banks are still prepared to take a (metal) interest loss on their debt....How do you get that back? Well, same way as one does with paper - get them to puke it back up...Just as there is still some smart money gold being stored in the COMEX, there has to be gold and silver in and circulating within the banking system that is still being hypothecated or leased.

One of the members of our club, even listening to Rhody, myself, Rob Kirby and you, Turd, still sold out his silver position...It is most difficult for people to give up on the concept of paper profits when holding bullion...As I kept telling him: "If you have bought the metal, you have already profited by holding the better money!" This is the hardest of lessons to grasp....He never thought in ounces....."All paper will burn!" (ANOTHER, circa 1998).

And I want to see lower paper prices. After all, the lower it goes, the more one is sure it is dead. If the end comes without China opening the mint, the system can say it is a market event...Much safer (think war) than spitting in the devil's eye. I've waited for fifteen years for these events; I don't want to miss a thing...

And I thought they did a wonderful job on the shark in Jaws....One of my favourites as well...

FWIW,,

G.

Brian Cooke · Jun 26, 2013 - 12:36pm

Did you just say "do your homework??".......are you fucking kidding me?? We did our homework you jackass......do yours....you sheep. What a jack off....

Dirk The King Diggler · Jun 26, 2013 - 12:43pm

I told everyone to avoid the miners back in January when the HUI was still at 424.

https://www.tfmetalsreport.com/blog/4424/miner-case-depression

Admittedly late but cut me some slack here.

lakemike49 · Jun 26, 2013 - 12:43pm

a few years ago, bought 90% silver generic silver average 18.00 oz. today apmex would pay me 21.20 oz.

still in the green.

lakemike

tmosley Dirk The King Diggler · Jun 26, 2013 - 1:03pm

Dirk, you are factually wrong. I have been calling for something similar to what is happening now since October 2010, with a strongly developed thesis set in place by March 2011.

That is, that paper PMs, especially silver, will go to zero on high volatility as people lose faith in the markets, culminating with widespread default on metal delivery. The consequence of this default will be that industrial users suddenly find themselves unable to hedge future prices, and going into the physical market, find that the next several years worth of production is tied up (or, now, that the miners who haven't made prior arrangements to deliver silver at workable prices have gone bankrupt and stopped production), and panic. This industrial panic will explode the price of physical silver, and will drag gold along for the ride, as many owners of silver will demand payment in GOLD rather than DOLLARS for delivery of silver.

Dirk The King Diggler · Jun 26, 2013 - 1:05pm

Turd, a while longer ago, you did recommend them. Don't take it personal, everyone did. As a metals commentator, you've changed a lot over the years, so what you recommend isn't necessarly what you recommended back then. For example, when you still ran your blogspot site, "physical metals only, avoid all paper trading" definitely wasn't your mantra :P

Frank Zappa · Jun 26, 2013 - 1:09pm

I got the first page of your homework fight here crybaby............DISCLAIMER: The charts and analysis provided here are not recommended for trading purposes. Trade at your own risk. The Turd provides knowledge not direction. Turd holds no liability for your trades and decisions but he's happy to take credit when credit is due, particularly through the "donate" button

Wizard · Jun 26, 2013 - 1:13pm

A Majority of the problem with what is going on in the markets now that people seem to be having a severe problem with is “When is it going to happen” When is the price going to go up. When is the corruption going to end? For some reason people are fixated on” WHEN” They want exact times and dates of events that have not happened yet. And bet the house on what others say are the time and date of when a certain event is going to take place.

It is Not Going To Happen That Way. Nobody Knows Time and Date of when future events are going to take place.

But You All Ready Knew That Didn’t You?

The things taking place right now are “Event Driven” Not Time and Date Driven.

One event can cause any number of other events.

The events taking place today are taking us down the road to a major change in the fiat currency. That is where the event road leads. On that road there is any number of little detours. Yet we are on that road none the less. Some events will speed that up and some will slow it down.

The same as if one gets on I-75 South heading to Florida. If you’re in a car doing 80 you will get there in short order. If you are walking you are still going to get there it will just take longer.

You will still end up in Florida regardless if you stay on that road.

Just the same as the financial road the planet Is on at the moment is leading to a major change in the currency system.

Watching events unfold will serve one much better in seeing where things are going, than trying the frustrating task of figuring a date and time an event is going to happen.

Just an observation

W

Frankenstein Government · Jun 26, 2013 - 1:13pm

....of one of those little weasly guys that says things "Like I told you so" because he feels vindicated. It's all ego and BS. 

My ex wife used to say shit like that. When she was wrong, which was often, I wouldn't hear a peep out of her.

I bought gold and silver because quite frankly, I don't think anybody knows how this is ultimately going to turn out. How are they going to pay off 17T in debt? 

But the great question for me remains. Will Bernanke be able to stave off deflation entirely by printing? So far he has- and yet I still think a great deflationary event is waiting. Perhaps that will occur after he leaves. Once that happens, the path will be clear for the great inflationary event.

I didn't buy gold and silver to worry about highs and lows Dirk. I didn't buy it to sell it. It was insurance. So while today you can claim you are some genius- I see you as just another whiny ass troll- who will completely disappear a few years from now when the tables turn once again. 

In the meantime, I am buying more. At these washout prices, producers quit producing. 

s dewald · Jun 26, 2013 - 1:19pm

talked of the LBMA offering $200/oz over spot instead of actual metal on delivery day? Perhaps this explains the $200 beat-down in the last few weeks. $200 over spot is $1400 and change, and gets JPM out of a sticky situation.

Ancient · Jun 26, 2013 - 1:27pm

As someone famous said recently, there are no markets anymore, just manipulations. Only those holding the strings can determine the price we see when everything is controlled.

They control COMEX and the London Fix, from which all PM prices originate. It doesn't matter to them that there is less silver available on earth now than when price was $1/oz.

What matters to them is that they maintain control as long as they can. When they cannot, and the paper pricing mechanisms fail or terminate, they will attaempt to steal whatever phyzz is around by all means legal and illegal (but made to be legal to allow their theft).

In the interrim, it is our duty to protect ourselves and loved ones by taking their phyzz, and preparing for failure of the current system

We cannot live thinking the old system still exists, our mind must become inured to the new realities. Once this is internalized, it becomes much easier to ignore their folly, and use the time and fiat value to do what must be done.

Wizard Ancient · Jun 26, 2013 - 1:30pm

"The only way to beat them is to take their phyzz. Pure and simple. All else is noise. Of course, not one in a thousand understand this in the general population. Many here do, but many do not as well . . ."

Boy did you say a mouthful. It is getting to the point where I am simply amazed anymore.

Way past being frustrated about it, Now it just Frickin Funny.

W

woofwoof · Jun 26, 2013 - 1:40pm

The ten thousand readers of TF must buy at least 1 oz of silver today. 

Twenty bucks is nothing but a 200K order is not bad. 

Wizard · Jun 26, 2013 - 1:43pm

Yes Sir, Captain Sir.

Edit: Think I'll take 2 they are cheap today

ChewYourOwnFaceOff · Jun 26, 2013 - 1:48pm

I dream of times past when silver was smashed for only two or three per-cent. Ah, those were the good old days.

ChewYourOwnFaceOff · Jun 26, 2013 - 2:03pm

I was looking at a couple of my coins earlier today - one white. The other yellow. Then I remembered how the white one, just 2 years ago, was worth $30 more than is today. And the yellow one? $700 more.

Ancient woofwoof · Jun 26, 2013 - 2:04pm

I bought (all) four 1964 Roosevelt dimes yesterday at an antique store for $1 each. That's a 34% discount to spot at today's price! 

Either that seller has no clue, or else us stackers are all wrong as the trolls claim. 

But, if that dealer had 10,000 dimes for $1 each, I'd have whipped out my credit card and bought every one.

rathernot Say · Jun 26, 2013 - 2:05pm

Great article!

Though the psychology can apply to us all, it describes political leaders down to a tee, regarding the lengths that they will go to in order to justify or distract from past decisions. It is another reason why a war is on the way. Then, once the shooting stops and the survivors emerge from the (economic or literal) rubble, we will be treated to such gems as

'We are the lucky ones'

and

'Now is not the time for recriminations or dwelling on the dismal past, but time to rebuild together, and look to a better future.' 

If there was a gizmo that politicians had to wear when they are speaking, such that the moment they mislead or are insincere, it gives them a powerful electric shock, would it have stopped Mayor Vaughn, or is the thesis that these people are so delusional that they are actually sincere? 

Ancient ChewYourOwnFaceOff · Jun 26, 2013 - 2:07pm

I was looking at a couple of my coins earlier today - one white. The other yellow. Then I remembered how the white one, just 2 years ago, weighed 1 ounce and today it still weighs one ounce. And the yellow one? Still an ounce, too.

Cleburne61 · Jun 26, 2013 - 2:15pm

For my church today. The same sum that would've bought 8 silver buffaloes for them just 3 months ago now bought 3 more ounces. As BrotherJohnF said today, "like taking candy from a baby".

I've well surpassed my original goal of delivering 100 troy ounces of silver to my church as a reserve for them.

My new goal is 250, and at this rate, I'll surpass that goal within 3 months.

If these criminal syndicate Money Masters keep stepping on silver's neck...heck, I might be able to surpass that sum by my next paycheck. ;) But seriously...

Here's something to ponder today. Most of us have always thought silver and gold would be "the tell" to stackers. That if Lehman 2/2008 Redux was about to go down....that a spiking gold and silver price would telegraph that to us first.

It's highly possible we had that "price tell" action in reverse. China just had to bail out the Bank of China, they have to keep assuring the market there's ample liquidity....does that sound vaguely familiar to anyone? Sovereign yields are flying, worldwide equity indices are collapsing....the Yen and JGB and 10 Year are trading like penny stocks(in Tyler's words).

Buy all you can. Lock it down...and turn your computer screen off. Do not succumb to this mind war. The bullets are flying. Take delivery, and stay in the trench.

rathernot Say · Jun 26, 2013 - 2:29pm

I've been too busy to read much lately, let alone post, but wanted to address your morality tale from the other day about drilling for water and not giving up.

I look forward to being educated with a greater all encompassing context, but I have never found any core wisdoms by which to help me make decisions. Every morality tale can be used to justify a point of view, so consider here, morality tales 1 and 2, each in isolation compelling, but totally subverting each other. Which is why most morality tales are not, I believe, of any practical use when we are confronted with decisions:

1) The perils of greed, materialism, & obsession.

Young boy asks his father 'whose picture is that on our wall, you are always looking at him.'

'It is my late brother, who you never knew.'

'what happened to him dad?'

'We took our stacks boating. When the storm hit our boat, I said 'to hell with money' and swam for shore. But he, valiant but misguided fool, tried to swim with a heavy chest of metal, refusing to let go, and (choke) they went under together, for good.

.

.

2) When the going gets tough, the tough get going. We must fight for the good things; we make our own luck. 

'Dad, do we really have to lose our house? Can't you ask your brother for money? He's loaded.'

'It's complicated.'

'Someone told me that you were both rich once; what happened?

'We were boating with our stacks, and a storm hit. I valued life itself above money. Before the boat sank, he exploded at me, and said 'I'm not risking my life to carry any wealth for you; if you won't fight for your own money, then don't ever dare ask me for mine, because I'm bringing mine with me, or I'll die trying.'

'What happened?'

'2 men made it back to shore; one rich, one poor.'

.

Spartacus Rex · Jun 26, 2013 - 2:31pm

benny_bomb_boom · Jun 26, 2013 - 2:38pm

so once again, and sadly what could be my last, monthly trip to the LCS for awhile. it has already been a HEH summer for me....my wife has pulled the plug on this method of "saving" for the time being and honestly, how can blame her. she gives two sheets right now about my "only OZ matter" motto....i will try all month to convince her to stay the course. But right now she is pissed. unfortunate for me and all my crack research. last night for the first time in 2013 she wanted to know what our metal "savings" were up to and use some for a summer vacation. it is better she remains in the dark on these matters, except for my annual report to her...you can see what is coming. i of course said it is XXX more OZ than it was 6 months ago. then she asked the "paper" price if we were to sell. well, it was LESS than 6 months ago, even though we have sank $$$$ more fiat into our "metal savings".....she lost her sheet. that went over about as well as a ton of gold bricks. of course i have only myself to blame. oh the shame. we now have enough metal. she wants her vacation in hawaii. in OZ that hurts to even consider at the moment. monster box me that one..to all those who have to look in the mirror, then to friends and family who have lost their faith in your "no brainer" investment errrr wealth destruction advice, this too shall pass. a big fat dOObie would be nice to the right.

Ancient · Jun 26, 2013 - 2:42pm

This writer, Patrick Heller, thinks the Fed/government are behind the outsized, unprofitable sales of PMs whenever their need to protect the system arises.

They have stepped up their attacks, and are now much more open about it. He says it indicates their increasing desperation to do all possible to keep people thinking all is well . . .

https://numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=26979

I agree with him.

rathernot Say · Jun 26, 2013 - 2:45pm

For those of us in the UK, of a certain age, the archetypal 'wisdom buster' was in a copy of Viz (a satirical magazine).

On the letters pages, in the second column, was a letter from a Mrs Green from Bolton, dated 3rd March, and it read "My husband Stan is 66, and finally decided to say no to old age, and started playing soccer on saturdays with teenage boys in the park. It has given him a new start in life, he is now fit again and reborn. Let that be a lesson to people of our generation, not to just sit around all day and mooch. If people weren't so lazy and negative, they too could change their lives for the better, like my Stan." 

Though not initially clear what the joke was, in the fourth column, the story completes. There, we find a letter, from a Mrs Green from Bolton, dated 5th March, and it reads "I am writing to warn any senior readers to know their limits. My dear late husband, Stan, was foolish and thought he could play soccer with teenagers as though he were one himself. Silly bugger went and had a heart attack in extra time. Let that be a lesson to people of our generation, to know their limits and to grow old gracefully."

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6/14 8:30 ET Retail Sales
6/14 10:00 ET Busi.Inv.
6/15 9:15 ET Ind. Prod

Key Economic Events week of 6/4:
6/4 10:00 ET Factory Orders
6/5 9:45 ET PMI Svcs
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6/6 8:30 ET Intl Trade and Productivity
6/8 10:00 ET Wholesale Trade

Key Economic Events week of 5/28:
5/30 8:30 ET Q2 GDP 2nd guess
5/31 8:30 ET Personal Income
5/31 9:45 ET Chicago PMI
5/31 10:00 ET Pending Home Sales
6/1 8:30 ET BLSBS
6/1 9:45 ET PMI Manu Index
6/1 10:00 ET ISM Manu Index
6/1 10:00 ET Const Spend

Key Economic Events week of 5/21:
5/22 10:00 ET Richmond Fed
5/23 9:45 ET PMI Composite
5/23 10:00 ET New Home Sales
5/23 2:00 ET May FOMC minutes
5/24 10:00 ET Existing Home Sales
5/25 8:30 ET Durable Goods
5/25 9:20 ET Chief Goon Powell speech

Key Economic Events week of 5/14:
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5/15 10:00 ET Business Inv.
5/16 8:30 ET Housing Starts
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5/17 8:30 ET Philly Fed

Key Economic Events week of 5/7:
5/9 8:30 ET PPI
5/9 10:00 ET Wholesale Trade
5/10 8:30 ET CPI
5/11 8:30 ET Import/Export Prices

Key Economic Events week of 4/30:
4/30 9:45 ET Chicago PMI
4/30 10:00 ET Pend Home Sales
5/1 9:45 ET PMI and ISM Mau Idx.
5/1 10:00 ET Const. Spending
5/2 2:00 ET FOMC fedlines
5/3 9:45 ET PMI/ISM Svcs.
5/3 10:00 ET Factory Orders
5/4 8:30 ET BLSBS

Key Economic Events week of 4/16:
4/16 8:30 ET Retail Sales, One Fed Goon speech
4/16 10:00 ET Business Invt.
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4/20 Two Goon speeches

Key Economic Events week of 4/9:
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4/10 10:00 ET Wholesale Trade
4/11 8:30 ET CPI
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Key Economic Events week of 4/2:
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4/5 8:30 ET Intl Trade
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