Historical hostility to precious metals

RevDrBlimber

I have never really understood this, the historical hostility to precious metals. Keynes was typical of this attitude referring to gold as a "barbarous relic".

http://marginalrevolution.com/marginalrevolution/2011/10/who-first-called-gold-a-barbarous-relic.html

In the last ten or more years there appears to have been a shift, culturally, do to the increasing prices of the precious metals, who can argue with success? Anyone here have good explanations for this hostility?

nibanny

Linked for the crowd

Roadrunner will surely be able to answer to the question (his title is "Barbarous Relic No More").

RevDrBlimber

You would have to acknowledge that much of the literature of the 1800s and the "liberal" literary tradition is stacked pretty strongly against precious metals and misers. Edgar Allen Poe and his "The Goldbug"; Transcendentalism, especially Henry Thoreau's critique of the mercantile class, George Eliot's "Silas Marner"; Dickens; most of the great writers were against inordinate greed, misers and the hard asset advocates who embodied their prejudices. And they had a point. Our greatest writer, Herman Melville never made much money from "Moby Dick" and worked later in life as a customs agent in NY. The Robber Barons and Jay Gould were rapacious in the extreme, some of them eventually "repented" like Andrew Carnegie and his U.S. "Steal".

derryb

The hostility has much basis in the fact that precious metals are really only worth what someone will pay for them. Other than nominal industrial or cosmetic value, which gets driven up by price speculation, PMs have no other "true" value. They are nothing more than a universally recognized medium of store of value. The fact that central banks and soverign nations hold this same view is what adds substance to the belief. Without this price would decrease to the nominal industrial or cosmetic value. From the earliest days of barter, man has recognized many things as money. The only ones that have truely survived are the ones hardest to aquire. The limitations of PMs is what gives them their intrinsic value.

Fear drives the price of PMs with speculators adding fuel to the fire.

Hostility also comes from the fact that money tied up in PMs is money not tied up with other investments. PMs compete with Wall Street and they compete with central banks that want you tied up with debt denominated in their particular currency.

Spooly

You can't finance the liberal dream with hard money. (demonize precious metals) Then the fractional reserve system can feed the government massive amounts of debt to fund social programs.

PerryHall

<< <i>You can't finance the liberal dream with hard money. (demonize precious metals) Then the fractional reserve system can feed the government massive amounts of debt to fund social programs. >>



Bingo!

OnlyGoldIsMoney

I find that hostility to precious metals is most commonly found in those who don't own any - especially after spot goes up substantially.

jmski52

If you believe that the US economic system is fair and open, then you have most of your assets in stocks, bonds, titles of land, insurance policies and other paper contracts.

If those paper documents get undermined by corruption, selective enforcement, abrupt changes in legal precedent, banking theft and a government that is increasingly hostile to legitimate business enterprises, you do one of two things:

1) You pull in your horns, batten down the hatches, sell risky paper assets, buy gold and start making plans to protect what you've earned.

or,

2) You ignore the warning signs, shrug off the losses from theft and corruption, continue believing that you are an investing wizard as stocks go up in response to money creation, and take the view that "nothing can happen here".

There's reality - and there's cognitive dissonance. If you don't want to believe what you are seeing, it's because of the phenomenon that any big changes in your mode of living would simply be unthinkable to you - so you cope with this negative information in ways that don't cause you grief. Voila! It didn't really happen! The bad stuff goes away. Temporarily.

Jim Sinclair refers to what he calls, "MOPE". It's not as catchy as one might like, but it is his abbreviation for "Management of Perspective Economics". It's certainly a provocative concept. More often than not, outrageous economic stuff simply gets spun as if it were really true, or otherwise normal. That's dangerous, in my opinion.

If you recall the impact that Orson Wells' 1938 radio broadcast "War of the Worlds" had on people who heard it, just imagine what we are being spoon-fed by the mass media, day in and day out. People actually believed that we were under attack by space invaders, because they were hearing it on the radio, and because it was unexpected that the radio people would broadcast a fictitious event. Our media is so much more sophisticated now, that anything can be produced to look and feel as if it were real. People haven't really changed in their response to broadcast media since 1938. If it came from the TV, it must be true. How sad.

We have the competing influences of big government, big business, big labor unions, the military industrial complex, big banks, big media. None of them care about individual rights or individual anything, but all of them have major impacts on what we think.

Gold as money cuts across the grain of all these influences, because it is outside their control as money and it identifies it's owner as someone who doesn't buy the media spin that they pay for. Of course, they don't like it.

cohodk

I find the hostility to be very similar of that which is towards religion.

mhammerman

Hostility is actually too kind a word considering what we witness daily in terms of the financial fleecing that the masses sustain. Folks continue clinging to their paper investments thinking/hoping that they will be one of the lucky ones that don't get screwed out of their house or their investment accounts or their retirement pension or any of the other anticipated rewards for dutifully humping the trail. The hopefuls continue to avoid the one instrument that would insulate them from the conspiracy...gold and of course golds brother, cash.

roadrunner

The hostility towards PMs probably started with the people that had to perform the hard labor in the mines to supply it. The bankers and sovereign nations that
were constrained by its use as money no doubt resented it as well. Once industrialized England in the 1690's found a way to temporarily get rid of its shackles it seems
like nation after nation has been trying the same thing. Like the alchemist's quest to transform base metals to gold, fiat money is modern man's attempt at the same thing.
Much of the political rhetoric against gold or silver individually in the later part of the 19th century was related to special interests. In the end, neither of them really benefited.

The "success" in PMs over the past 11 yrs has been at the expense of lack of confidence in fiat money and large increases in public and private credit and debt.

yellowkid

<< <i>I find the hostility to be very similar of that which is towards religion. >>


I don't understand your statement. Any "hostility" towards gold, or any PM is probably rooted in the fact that it is a non producing asset and as such it isn't an "investment" in the traditional sense.

derryb

<< <i>

<< <i>I find the hostility to be very similar of that which is towards religion. >>


I don't understand your statement. Any "hostility" towards gold, or any PM is probably rooted in the fact that it is a non producing asset and as such it isn't an "investment" in the traditional sense. >>


I understand the comparison - you either believe in something or you don't.

ricko

I believe in gold... do not believe in religion. Cheers, RickO

PerryHall

<< <i>

<< <i>I find the hostility to be very similar of that which is towards religion. >>


I don't understand your statement. Any "hostility" towards gold, or any PM is probably rooted in the fact that it is a non producing asset and as such it isn't an "investment" in the traditional sense. >>



Gold is not an investment---it's a means of storing and preserving wealth.

RevDrBlimber

I was at a coin shop today where an investor was buying over $6K in silver quarters @24X face. He was making a very safe investment. He said he was tired of the low gains in bank CDs, etc.. That man will very likely profit but he came late to the table due to his brother's recommendation.

In the Northeast for quite a while I have noticed a cultural hostility or disdain for precious metals as something inappropriate. Aristotle in his "Politics" spoke about the acquisition of wealth and precious metals. What really got his dander up, as well as his contemporaries as unnatural was "usury" or systems of finance opposed to natural order.

cohodk

<< <i>

<< <i>

<< <i>I find the hostility to be very similar of that which is towards religion. >>


I don't understand your statement. Any "hostility" towards gold, or any PM is probably rooted in the fact that it is a non producing asset and as such it isn't an "investment" in the traditional sense. >>


I understand the comparison - you either believe in something or you don't. >>








He was making a very safe investment

I hope you are being facetious.

Baley

I'm not sure that in either case, I'd define the gentle observation that the thing in question is not the be-all, end-all, sole thing that matters, or should matter, to everyone as "hostility"

jmski52

Gold is not an investment---it's a means of storing and preserving wealth.

Yes! At least for the past 12 years, it has been.

I'm not sure that in either case, I'd define the gentle observation that the thing in question is not the be-all, end-all, sole thing that matters, or should matter, to everyone as "hostility"

Maybe disparagement, then. Did you ever read "Winning through Intimidation" by Robert Ringer? It's a pretty good book, even if it is pop culture-like.

Mockingjay

I suspect those who criticize in among the moneyed class have plenty of it in reserve.

DeepCoin

Gold has its place in a well diversified portfolio, but taking too big a position in PMs as a percentage of your overall portfolio is to challenge the diversification perspective. It is easy to take a 10 year period and support any particular strategy, but no one asset class will always out perform the rest of them over the long term.

Warren Buffet always espoused the idea that it was more important to be in the right sector than try and pick a specific stock from that sector. I support that idea in my own investing strategy.

One last thought, I think it is significant that Platinum is now trading above Gold and believe the spread will continue to grow.

Bayard1908

Governments can't print it.

cohodk

<< <i>Governments can't print it. >>



But FCX, GSS, AU, AUY, ABX, EGO, SLW, GFI, MFN, GG, HMY, PAAS, KGC, IAG, AUQ, AEM, NEM, HL, BVN, CDE, RGLD, AZK, GOLD, SA, SSRI, NSU, GBG, ect bring it out of the ground every day.

Baley

Just wait until people begin mining the asteroid belt .

You want high grade ore? Even some very very big nuggets?

it's out there.

OPA

<< <i>Gold has its place in a well diversified portfolio, but taking too big a position in PMs as a percentage of your overall portfolio is to challenge the diversification perspective. It is easy to take a 10 year period and support any particular strategy, but no one asset class will always out perform the rest of them over the long term.

Warren Buffet always espoused the idea that it was more important to be in the right sector than try and pick a specific stock from that sector. I support that idea in my own investing strategy.

One last thought, I think it is significant that Platinum is now trading above Gold and believe the spread will continue to grow. >>





And take with “a grain of salt,” doomsday prophecies, most conspiracy theories along with overzealous PM forecasters.

Bayard1908

<< <i>

<< <i>Governments can't print it. >>



But FCX, GSS, AU, AUY, ABX, EGO, SLW, GFI, MFN, GG, HMY, PAAS, KGC, IAG, AUQ, AEM, NEM, HL, BVN, CDE, RGLD, AZK, GOLD, SA, SSRI, NSU, GBG, ect bring it out of the ground every day. >>



Yes, at considerable expense and in small quantities relative to the existing stock.

I'm not a rabid gold fanatic. There are many assets I prefer to gold at current prices; however, I recognize that governments can destroy the value of paper money at will through oversupply. They can't do that to gold or any other hard asset.