A Novel Idea: Debunking the Illusion of the Gold Standard

Updated Feb 2023

Among those whom I like or admire, I can find no common denominator, but among those whom I love, I can: all of them make me laugh. H. Auden 1907-1973, Anglo-American Poet

Novel Idea: Debunking Naysayers and Embracing Mass Psychology

Many a naysayer, many of which fall under the newsletter writers’ camp, keep pumping the nonsense that all paper money will cease to exist and that everyone will revert to the gold and silver standard in the future. First, they are about 1000 years too late, and second, they need a mental check-up. They forget to consider mass psychology, and one must understand that the most considerable driving force anywhere is mass behaviour, also known as Mass psychology.

Nobody in hell, including yours truly wants to run around with a heavy sack of gold or silver coins strapped to their necks. It is just not convenient anymore, and since we live in an instant-demand and instant-gratification society, this line of thought will remain a dream. Another reason this will never occur shortly is that 90% of the current generation is brain-dead when it comes to understanding the true function of gold. One can state that they don’t even understand the true role of money. In certain aspects, this generation has received what amounts to a frontal lobotomy when it comes to an understanding the concept of money backed by hard assets (Hard assets are gold, silver, palladium, antiques, collectables, timber etc.)

Revolutionary Perspectives: Embracing The Novel Idea for Global Currency Backing

One day, certain governments might decide to back their money with a basket of commodities, say oil, gold, silver, palladium etc. It does not necessarily have to rotate around one entity; this will give investors worldwide the confidence to change their money into this country’s currency. 3 nations are in a position to do this United States (but they have embarked on the “we are the toughest and we know it all mission” and hence the chances of them implementing it are slim at best).

The other two nations are China and Russia; Russia is technically in a better position when looking at things from a resource perspective, but when one takes a strategic look at things, China’s leading country comes to mind. In approximately 20 years, they have achieved more than most nations have in 90 years and continue progressing rapidly.

They understand that true democracy is nothing but a fallacy whereby idiots are elected into power, and these idiots then have to cater to the morons that elected them in the first place. Thus a perfectly prosperous country slowly but surely becomes nothing but one huge welfare state.

Thus our advice to our subscribers is not to worry about this nonsense when there are very few facts to support these assumptions. A full generation would have to be financially wiped out before this concept becomes embedded in the mental psyche of the masses. Until then the best way to preserve one’s wealth is to invest in assets that inflate faster than the governments are boosting the money supply. One way to do this is to ensure you have a portion of your money in Gold and Silver bullion. We cast a more favourable eye on silver, also known as the poor man’s Gold.

In the end, who cares if the governments are inflating the money supply (as in reality, there is tiny one can do to stop them, and if one cannot do anything to stop them, then why worry over nonsense); the only thing we care as investors is that we do not want to catch a falling dagger. So let them inflate away, for inflation has a personal benefit; certain assets overcompensate for the inflation rate by an essential factor. Thus, for example, the government might inflate the money supply, say by 10% a year, but certain assets could rise by, say, 30%-100% a year.

Prudent Investments: Embracing Alternative Assets Amid Government Inflation

The problem is that most central bankers have embarked on the concept of inflate or die as they compete to make their products the most affordable in the world markets. The best thing would be for them to all sit at the same table and decide on a fixed inflation rate. As the true definition of inflation is an increase in money supply, they could all decide to inflate their respective money supplies at the same rate. However, such a simple concept is beyond the foresight of most central bankers; thus, make sure you have some insurance, and the best way to do this is to own a bit of Silver and or Gold bullion.

The Perilous State of GM: A Decade of Financial Struggles and Looming Consequences

GM’s inability to generate profits from automobile sales over the past decade raises questions about its purpose in this industry. Their profits have plummeted by over 45% during the same period, while their total liabilities have surged from around 200 billion to a staggering 450 billion. The daunting challenge of settling these liabilities becomes apparent, considering their gross profits of only 22 billion dollars in 2006.

A breaking point seems inevitable, casting a shadow of uncertainty on the workers relying on their pensions and medical benefits. In the not-too-distant future, they might face a rude awakening. GM’s situation is not unique, as other U.S. auto manufacturers find themselves in similar dire straits. We have long recognized that their only viable paths to compete with Asian counterparts were either relocating overseas or employing non-union workers. However, the mounting pension and medical insurance obligations have forced them to seek the cheapest available labour, devoid of extensive benefits—an option found predominantly in Asia. The article below provides a concise account of how the U.S. government’s involvement has contributed to the downfall of this once-powerful icon of the American economy.

The Novel Idea of Investing In Uranium

There are currently 440 nuclear power plants operating in the world. Roughly another 175-200 are either being built or are in the planning stages; this number continues to increase by the day. The current demand from the existing 440 nuclear power plants is overwhelming supplies. Thus, imagine what is going to happen when all these plants come online. The closure of Cameo’s cigar mines has knocked out a considerable amount of uranium from the markets. It is estimated that this mine will only be operational sometime in 2008. In the meantime, any supplies that the smaller uranium companies may have found have almost been swallowed up due to the flooding of the cigar mines.

In other words, demand is still exceeding supply by almost 50%. Uranium mines currently supply slightly over 50% of the current market. The rest comes from above-the-ground supplies. These supplies are rapidly running out.

When all the new Nuclear power plants come online, we expect demand to surge by an additional 45% at the very least. It’s for this reason it’s so hard to predict how high uranium could eventually trade. We expect a pretty sharp pullback at some point in time when many of the hedge funds start to unload their uranium supplies and lock in profit; this, in our opinion, will be nothing but a beautiful buying opportunity. Finally, it takes at least 3 years if not more for a new uranium mine to be fully operational; hence demand cannot be satisfied immediately, and this is the perfect recipe for a bidding war.

One never needs their humour as much as when they argue with a fool.

Chinese Proverb Sayings of Chinese Origin

Originally published on Mar 5, 2007 , updated Jan 2023