Precious Metals

We like gold here at The Old Hat Factory. We keep a little jar of gold flakes on our desk. Mainly, we like it because it keeps pace with inflation. It’s a good long-term way to not lose money. Isn’t that the aim of investing? Maintaining wealth? Keeping your nest-egg from becoming a poverty omelette? Well, gold has meant ‘wealth’ for ages. Before the economic revolution in the 18th Century, the two ideas were inseparable.

If you are like me, then you are a self-centered, greedy little pig whose avarice knows no bounds because you want to get enough money to go far, far away and start over with a new name, a new identity, maybe new fingerprints and some snazzy new shoes, and with pockets full of luscious spending cash, albeit in used currency with random serial numbers…

“We’re sent out in teams of 5 to 10…we parachute down to the jungle clearings…then we run them off. Usually, they take off when they see us. Then, we set fire to everything. We destroy their shacks and their machines.”

More than any other commodity, the gold price rises (and falls) with demand from investors; the demand from consumers and industrial users is very much a secondary consideration. Or to put it another way, what ultimately controls gold is mass psychology. If you were an investor during the Internet craze, do you recall the absolute hysteria about NASDAQ stocks? Do you remember how everyone knew about them? Do you recall the excited banter about the latest Internet company?

“The reason there is [now] very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue.”