The Outliers

Mon, Feb 24, 2014 - 8:31am

In any naturally occurring population there is some degree of variation between individuals within that group. When the variation is genetic, then the subtle differences between individuals can sometimes equip a few of them to survive better than others- for example, a small number of moths born with slightly more pigmentation of a color which makes them harder to spot by predators. If that difference has enough of an effect on their inclusive fitness to allow them to pass on their genes differentially, then that trait will be slightly more common in the next generation. If this happens for a long enough period of time, the entire nature of the population will change. This is what is familiarly known as natural selection.

This dynamic is not confined only to genetic inheritance, and in some cases can apply to variations in behavior as well. Within any large group of individuals there will be a wide range of differences in behaviors, values, goals, comportment, strategies, etc. Find something that people do, and if you study it closely enough you will quickly realize that there is great variety in how different individuals choose to go about doing that thing. Some may even choose not to “do that thing” at all! What is interesting is that, through the exceptional power of our brains, human beings do not have to wait for thousands of years for these differences to slowly work their way through the genetics of the population- if they can observe that behavior X is beneficial to those who have adopted it, they can also choose to adopt it, often with great rapidity. When large numbers of people suddenly start doing something that only a few had done previously, this is called a preference cascade.

A preference cascade is a uniquely human phenomenon. It happens, in part, because we are NOT purely rational actors, always weighing costs/benefits and choosing based on this analysis. Instead, we are intensely social creatures and tend to be influenced to a great degree by what others around us are doing. In normal times people look around, observe how most others are behaving, and copy that behavior themselves. This usually works fairly well as an adaptive strategy because the totality of individuals can usually be assumed to be doing just fine, so if we do what they do, we assume we will be just fine too. Additionally, activities that are perceived to be outside the mainstream often carry a degree of social or cultural stigma, thus imposing some costs on the people who adopt them – there are significant negatives to being perceived as the “weirdo” because you are behaving differently or deviating from the accepted. So most people just do the “usual” thing and don’t think much about it… right up until they observe their peers suddenly doing something differently. Then they quickly perceive not only that it is “OK” to do that thing but they also will not be acting alone if they do it, and a preference cascade ensues.

University of Tennessee Professor Glenn Reynolds has written about the phenomenon of the preference cascade over the years, and in this article he gives two interesting examples of it in action. Reynolds writes:

(Prior to 911), the people who didn't have flags on their cars weren't necessarily unpatriotic - but displaying a flag on one's car was associated with particular political and social categories that aren't especially popular on campuses. After 9/11,enough people started flying flags to make other people feel safe about doing it too. Now you can see a lot of flags on the cars in that garage. Have people become more patriotic? Maybe. But more likely they've just become more willing to show it. This illustrates, in a mild way, the reason why totalitarian regimes collapse so suddenly. Such regimes have little legitimacy, but they spend a lot of effort making sure that citizens don't realize the extent to which their fellow-citizens dislike the regime. If the secret police and the censors are doing their job, 99% of the populace can hate the regime and be ready to revolt against it - but no revolt will occur because no one realizes that everyone else feels the same way. This works until something breaks the spell, and the discontented realize that their feelings are widely shared, at which point the collapse of the regime may seem very sudden to outside observers - or even to the citizens themselves. Claims after the fact that many people who seemed like loyal apparatchiks really loathed the regime are often self-serving, of course. But they're also often true: Even if one loathes the regime, few people have the force of will to stage one-man revolutions, and when preferences are sufficiently falsified, each dissident may feel that he or she is the only one, or at least part of a minority too small to make any difference.

Understanding the dynamics behind the preference cascade is particularly important for gold and silver. If we think about the behavior that we call investing, we can quickly discern that at present, people who place a portion of their savings into physical gold and silver are “Outliers” in terms of investing behavior among the general public. The vast majority of people who invest do so in equities (through 401k’s, trading accounts, mutual funds, etc), and many own bonds or own funds that invest in bonds, as well. The idea of investing your saved wealth in physical gold and silver outside the system is still a practice that is comparatively rare. This makes all of us at TFMR unusual exceptions to the norm… we are the odd outliers within the larger population of investors.

So far so good… but I think a key insight comes from understanding WHY there are a comparatively small number of gold and silver investors, and more precisely why such an outstanding, traditional investment vehicle is now considered so outside the mainstream. When one considers how precious metals are portrayed and discussed, however, it makes perfect sense, particularly when one thinks about who, precisely, controls that mainstream narrative. You can tell what a power structure fears most by observing the energy and resources they deploy against that thing, and the ‘thing’ the fiat currency regime fears most intensely is a preference cascade to real money.

Consider the vast array of resources deployed today against gold and silver investing. First, we see a regular drumbeat of negative articles, the full weight of the mainstream financial media and legions of writers on financial websites brought to bear to convince people NOT to buy gold and silver. We see variations of the same hackneyed articles year in and year out, regardless of the state of the markets or the price. These constant attempts at shaping opinion and sentiment employ misleading arguments, ignore contrary evidence, and use every rhetorical trick in the book to convince people that gold and silver are “risky” and “speculative” (Anatomy of an MSM Hit Piece on Gold), when the reality is that they the most historically stable stores of value known to man. We also see mainstream brokerage houses issuing sell recommendations year after year, for assets which ironically they never told their clients to buy in the first place (It’s Never a Good Time to Buy Gold). All of these operate within a conventional milieu of financial advisors emphasizing “traditional investments” (i.e. fiat based, fiat supporting) while going out of their way to dismiss gold and silver – think Berkshire Hathaway’s Charlie Munger claiming “Civilized people don’t invest in gold” for a fairly standard example. If you think about the totality of the effort used to try and manage the public perception of gold and silver, you start to get a sense of just how intensely these things are feared by the Fed/Finance/Political regime.

But wait, there’s more! Consider, too, the extraordinary energy and enormous wealth deployed against the price of gold and silver over time. Look at the long history of price suppression, from the known and historically established facts of the London Gold Pool (link) to the extraordinary actions of the last five years (The Golden Ostrich, Chris Powell speech on price suppression). I think people in the general public would be shocked at the sheer amount of effort, the degree of secrecy employed, and the vast amount of wealth expended towards suppressing PM prices over time. This, above virtually everything else, makes it crystal clear what an enormous threat that a large-scale adoption of gold and silver by the investing public would be to the current power structure.

Reality, and particularly mathematical reality, has a way of asserting itself. Inevitably, the truth of the real nature of the present system will become apparent to everyday investors. At some point the broader public will look around and grasp that the current system has been siphoning their productivity and labor for generations, and has been doing so well beyond the publicly acknowledged and democratically chosen practice of taxation. They will realize that the “value” of everything they have earned or saved has been remorselessly diminished by the hidden confiscation tax of currency devaluation over time. They will see that as the politicians spend the produce of their labor without limit and the enabling Fed prints to pay those bills, their paychecks buy less and less and the value of their pensions shrink. With every dollar printed and every TBTF bank bailed-out, in every investment they own they are slowly being bled dry. At some point people will wake up and understand that although they are following the rules (and following the herd when it comes to investing advice) they are swimming against the tide, and the tide is winning.

And when this becomes plain to them, people will look around and see that there is a small group of investors who have managed to protect their saved value through physical gold and silver in their possession, and that this has insulated them, over the long term, from wealth confiscation via inflation. And I firmly believe that when this happens, and when the obvious benefits of the behavior of these investing “outliers” becomes crystal clear to the broader population, we will see a preference cascade to end all preference cascades into the metals. That, I think, will really be something to behold.

Then and only then, when the awareness of these things has become so widespread that my idiot neighbor is talking about ASE’s and everyone and their brother is trying to buy gold and silver, will I start thinking about selling some of mine. I hope to do so at a healthy, and possibly ridiculous, profit.

Until that day comes, protect yourself and your wealth in the present. Keep stacking.

About the Author


Feb 25, 2014 - 3:01am

Well said MA

The Fourth Branch – DEEP STATE – In Plaint Sight Posted on February 24, 2014 by Martin Armstrong

There has been the typical strategy to label anything that questions government’s ethics as the “conspiracy theory” so that it may still exist in plain sight. In most cases, there is a tool to further that goal of disinformation to allow corruption to exist in plain sight, yet denied. They use people who spin whatever real issue there is into something much larger to discredit the actual practice allowing it to still exist. We are all born ignorant, but it takes a lot of work to keep looking the other way to remain stupid.

There is the “black box” in cars that records where you have been and how fast you have ever driven. The abuse of this is off the charts just as they can not only tap your phones, but actually obtain data from your phone company that shows every call you received and the number it came from. These things exist. Smart phones not only tell Google where you are, but the police capture people by knowing where they are based upon their cell phone location. That sounds fine for violent people, but what about political prosecutions or taxes? However, the existence of such tools opens the doors for others to use them for nefarious reasons like hacking into your personal data or robbing your home based on the fact they know you are not there.

Another example has been the “smart” utility meters that they are putting on in homes. The question becomes why is collecting all this information really necessary? There were those who were warning that they can tell if you are home, what you are doing, and if you are sleeping or away on vacation. Naturally, the utilities companies called this conspiracy theories. Well, like Edward Snowden, the truth is coming out and not only have all these dark sinister aspects been proven true, the data flowing is not even secure so if the utility company was not doing anything sinister, others can tap into it.

And if you watch this love in, everything is above board in the gold world and it is 'an honour' to meet central bankers. (Ad screens on mikes. yuk). Lassonde's world is a happier place it would seem.

Which world that our perceptions create do we live in?

Central Banks Spend No Time Thinking About Gold: Pierre Lassonde — Gold Stock Analyst's Investor Day

Better to be an outlier than an out and out liar.

Feb 25, 2014 - 3:52am

Ah globilism, gobbleism,

Ah globilism, gobbleism, gobble-you-up-fascism, go gault, yo gaulty, you're guilty, you won't be needing this in jail, jail in bail-in.

Feb 25, 2014 - 5:09am


It seems most sites went down for about a hour for me. Anyone else notice?

Motley Fool
Feb 25, 2014 - 7:13am


Your suggestions seem reasonable enough. I am uncertain though that the US would ever admit to 30% inflation, which makes my winning by that definition kinda hard. It is also possible for premiums to skyrocket overnight, and keep going higher, without J6P having time to divest himself of other savings.

Ahh well. I am willing to accept your suggestions. Or we can simply play it by ear, if you like. I do not have problems admitting when I have erred.

Mr. Fix
Feb 25, 2014 - 7:36am
Feb 25, 2014 - 7:44am

Motley's wager

...I just think that it's funny Motley wants to bet something he thinks will be worth as much as a copper round by then.

Why don't you guys wager something you both deem equally valuable?

May I suggest a 1/50 ounce of gold?

(or a 1 gram gold bar as those are more easily available)

Feb 25, 2014 - 7:57am

To the heavy weights Turd and others

I am curious as to the thoughts on the following post by elliotwaver Avi Gilburt. He is still adamant that gold is going to new lows this year before the big rise. The guy is egotistical and does have a lot of different scenarios to cover his as in case he is wrong. He gets run down in the commentary section by some good thinking posters following the article. Please read and comment if you have time. I think this is very thought provoking. It is posted here:

Feb 25, 2014 - 8:23am

OK Ivars

Looks like mkts rollover to save the USDinker from crashing through a key of 78 on USDX. Will the bow wow dow break through 15400; a lower low this down draft. I think so. Not this week but by the time we break down after the first week in March, hind ends should be pucking from the fear factoring terrornoia. Usually end of month should be window dressing on the mkts but the fact gold, and especially silver needs March contracts shaken out we could well have some good crashcading into FRYday!

It would be nice to see the criminals have to back off on paper ponzi CRImex games this silver 1st day notice. Reality says the thugs can not do anything else but what black character criminals do; STEAL from the public. It will be so!

Feb 25, 2014 - 8:27am

I wonder with bankster suicidings.

Do they get to choose the color of the body bag or just straight ole black like the rest of us? Bag'em and tag'em!

Feb 25, 2014 - 8:37am

Motley- I agree

You are a good sport about being willing to take the bet anyway, but I can't accept your offer because I think you are right- US Gov will never let CPI get high enough (due to automatic cost of living increases) to accurately reflect what we are trying to capture, so that is unfair to you... no good for a gentlemen's bet, this needs to be fair!

It's funny, when you start to think this through, and ask "How can we define an objective measure of hyperinflation", AND "what would be an objective measure of a large-scale movement of the public into gold and silver", in order to determine which would happen first how fuzzy those concepts are. We could say that the price of commodities would be a far better measure of hyperinflation than CPI, but then that would be including gold and silver which is supposed to be the other side of the bet.

I don't know, unless we can come up with some better metrics perhaps we should just cancel the bet and just agree to argue about it vociferously when the time comes!

Feb 25, 2014 - 9:05am

Heating Up

It’s On: Putin Deploys Troop Battalion: Russians Raise Flag Over Ukranian Republic of Crimea

Motley Fool
Feb 25, 2014 - 9:46am

re : bet


My choice of wager was chosen purposefully. I prefer a gentleman's bet, but decided since pining finds silver of future value he would appreciate it more. Remember that in victory I will get the same, something that I think will be worthless.

So in practical terms I deem it a gentleman's bet, which suits me.

$1000+ dollar wager is nothing something I care to forget I am from the third world and I consider it to be a lot of money, even if I consider my odds of losing very low, that is enough risk that I am unwilling.

I thought the silver ounce was an interesting compromise.


Since we are both living breathing beings, how about something more mundane as a measure. A loaf of bread. That escapes most government trickery, if we use the rate of change thereof on an annualized basis. Of course during food shortages and local turmoil the quality of bread is known to deteriorate, being baked with sawdust and weevils in. A good measure truly is a hard thing. ^^

Either way, I am fine with leaving the bet standing and us playing it by ear. The outcome doesn't have to be an (almost impossible to define)objective measure when both parties honour the intent of the bet. That was why I initially suggested the end of the hyperinflation, and madness of crowd in mass media 'moments'.

Edit : In the past the only objective measure of hyperinflation in a currency was that of an outside stable currency. This collapse though.... we cannot even be certain of that much. However from the FG thesis we expect the euro to be stablize (after initial devaluation). So on that theoretical premise the inflation rate of dollar goods based on that FX cross should work.

Feb 25, 2014 - 10:01am

Bitcon and Denniger

Seems Karl Denninger is all but stopped writing his tickers. He'll be adding pieces here and there as he sees fit but that's about it.

As for Mt Gox, they were just the first.... the canary in the coal mine if you will. Bitcon is flawed and can't be fixed. The other exchanges will most likely go down in flames too. Enjoy your tulip mania while it lasts. No only are the hackers putting out viruses to steal from your wallets (since your computer isn't secure) but the system itself is flawed internally. And one of the biggest aspects is that Bitcon is finite... once the cost of mining exceeds the value of the coins , mining will stop. And then the hefty fees will show up. I could go on and on but I'll leave it at that.

Feb 25, 2014 - 10:12am


Trader Dan is one stop on my metals perspectives. You are right he's a chartist and on top of that he's a veteran trader.

I suspect his jibes at the conspiracy theorist is based on hate mail plus his own observations that those who are in the conspiracy accept a market force of manipulation down but won't accept manipulation up.

I'll let you draw your own conclusions. I read JSMineset, Trader Dan and Armstrongeconomics regularly (as well as tfmetalsreport).

Urban Roman
Feb 25, 2014 - 10:42am

This site brought to you by Google Ads, perhaps?

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The DC: Google CEO Larry Page has rapidly positioned Google to become an indispensable U.S. military contractor. Google recently purchased Boston Dynamics, a robotics pioneer that produces amazing humanoid robots for the U.S. Defense Department.

Feb 25, 2014 - 11:28am

All this financial shit is moot

because of what most refuse to see because they are controlled or are to handicapped to see by the massive deployment of deceptions. Why it is so warm?, Why it is so cold?, a handful of so called elite people of planet earth know why.

Video unavailable
Gold Dog
Feb 25, 2014 - 11:57am

Pining and Motley

How about Shadow Stats number on inflation?



bullion only Urban Roman
Feb 25, 2014 - 12:19pm

Confidence lost

Essentially, Mtgox was a bank for bitcoin. Apparently they wandered into "fractional reserve" land, and got lost ..

Bitcoin itself continues to exist -- the failure of one bank did not destroy the entire currency.

Well what it did destroy was "confidence" in the digital banks. After all all everything is a con game.

How much confidence do I have in something determines the action I take.

Whether confidence that one can cross a street safely or hold a currency or is this gold real, is this picture a fake.......

Confidence is damaged on bitcoin banks.


Feb 25, 2014 - 12:33pm


CNBC is just getting ready to bring on a guy that says gold is going to $1000. All I see is still bearishness everywhere on PMs.

Safety Dan
Feb 25, 2014 - 12:36pm

OK I admit it... I am a

OK I admit it... I am a government shill.

Really, I believe:

  • The media is truthful and covers real news
  • The Fed is genuinely guided by the best interests of the country and the middle class
  • The military is used to keep peace
  • The Executive branch regulates corporations to keep the populace safe from corporate malfeasance
  • The numbers published by our government are true and accurate
  • All wars were fought for peace, not profit
  • Vaccinations are beneficial and contain no harmful additives
  • GMO food is regulated, tested, and we can be assured it is healthy for us to eat
  • Gold is a barbarous relic and dollar bills are real money
  • Guns are bad and the 2nd Amendment is a useless vestige of the American past
  • Our American Government is efficient, effective and continues to focus on debt reduction
  • Etc. Please feel free to add to this list...

The NSA won't track my activity because I am their friend and dutiful servant.

-Safety Dan

Feb 25, 2014 - 12:47pm

The Cow Says Sell Gold at $1,375 to $1,380

I shit you not. This is the second day in a row that I've heard this douchebag on Fox Business News say that the only two reasons to hold gold is high inflation and armageddon and since we don't have either in the US, it's not a good trade.

How now brown cow? Idiot!

boomer sooner
Feb 25, 2014 - 2:15pm

Moooo ving on.

Sorry, just had to. Nothing like taking tips from a Holstien. Probably do better than my record, tho.

Hunt brother
Feb 25, 2014 - 2:40pm

Orex Minerals trading below private placement price

Gary Cope who sold his company Orko Silver to Couer last year has another company he is developing. The prize assets are Mexican silver claims which are mostly unexplored.

Orex sold stock last November at 25 cents canadian in a private placement. Gary Cope purchased most of the stock. Current ask for Orex REX.V is only 23.5 cents.

Feb 25, 2014 - 3:42pm

Greg Hunter said WHAT???

Something about a bloke called "Craig Ferguson at tfmetals report" being a smart person.

About 24mins in.

Feb 25, 2014 - 3:44pm

Conrad the Constitutions says...

Conrad the Constitution S2 Ep7 - Obama Care Death Panel

& this too!...

Conrad the Constitution S2 Ep8 - Obama Assassination

His satires are sooooo funny!...LOL!!!...

What's this all about?...

Video unavailable

Bag Of Gold

Feb 25, 2014 - 4:53pm


no winter this year in western Europe. usually we're buried under snow for some time during winter and this year, for the first time since they started measuring, we didn't even have an entire day with freezing temperatures in my little country wedged between Germany, France and Belgium.

Feb 25, 2014 - 5:01pm


Thanks for posting that up. An excellent presentation and very well researched.

If tptb stay in power we're totally screwed. No doubt about it.

edit: here's the documentary he mentions towards the end:

Video unavailable
Howard Roark
Feb 25, 2014 - 5:29pm

re: Central banks and gold (PLassonde)

"I am not trying to aim a valedictory insult at Bernanke or his central banking colleagues. On the contrary, I am drawing attention to the skill and determination required by central bankers to perform one of the world’s most demanding and important jobs. For just as James Bond has a “License to Kill” in the Ian Fleming books, so central bankers possess a “License to Lie” — or, putting it more diplomatically and politely, to make promises about the future that cannot be honored and often turn to be false." Anatole Kaletsky

@achmachat - What no winter in euroland??? Here in Pt - by the ocean - it has been a tough winter, gigantic waves battering our shores (a lot of damage done to natural landscape and properties), raining cats and dogs, a lot of cold days (ok, not even close to the vortex temp´s in the US)... I can´t stop thinking about the summer!

Salut to all Turdites and to Master TF,


Feb 25, 2014 - 5:53pm

Tin cans filled with $10 million in gold coins found in CA

Tin cans filled with $10 million in gold coins found buried in California

A CALIFORNIAN couple out walking their dog on their stumbled across a modern-day bonanza: $10 million in rare, mint-condition gold coins buried in the shadow of an old tree.

Nearly all of the 1427 coins, dating from 1847 to 1894, are in uncirculated, mint condition, said David Hall, co-founder of Professional Coin Grading Service of Santa Ana, which recently authenticated them.

Although the face value of the gold pieces only adds up to about $27,000, some of them are so rare that coin experts say they could fetch nearly $1 million apiece.

Feb 25, 2014 - 6:17pm

The Cow

Silverrun may be you should tell him the inflation is already here and armageddon could happen any day.


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