There seem to be two distinct camps in the precious metals investment community.
There are those who stack physical gold and silver because they believe in the inevitable and, most importantly, swift demise of the US dollar and the American hegemony, impending social upheaval, sovereign defaults, and the new paradigm. I put these investors in camp number one and call them “doomers”.
There are also those who stack physical or paper precious metals as a way to diversify their portfolio. They don’t only own gold and silver — many have 401Ks, Roth IRAs, real estate investments, equities, and cash to name a few. They don’t think a total financial meltdown is likely any time soon, so they continue to treat precious metals as just an asset class. I call these folks “dealers”.
Both camps have strong selling points.
The doomers preach self-reliance, ingenuity, independent thinking, and preparedness. They are the survival ninjas you want to hang out with if a hurricane blows through your town. They have all four bases covered at all times — food/water, gold, weapons, and energy. Some picked up and moved into rural areas in order to be more independent, convinced that constant beating of war drums, growing deficits, declining morals, and depreciating currency are harbingers of the economic catastrophe that’s about to hit these shores. Some sold everything they owned, including their retirement accounts, paid huge fines, and bought gold. Some, convinced that the US empire is falling, moved abroad.
The dealers are the folks you want to be around if nothing especially terrible happens within your lifetime. They understand that we’re put on this Earth for 70-80 years, of which the first and the last 20 years we’re either clueless or helpless. They know that this mere fact leaves us with 30-40 lucid, productive years, during which we make all of our most important life decisions. They don’t dismiss the possibility of a black swan appearing and screwing up our plans, but they are not exactly planning on it to happen tomorrow, either. They know that the precious metals markets are manipulated, but they don’t mind owning some paper — mining stocks, ETFs, Blue Chips, emerging markets, NASDAQ, etc.
Both camps have weaknesses, as well.
The doomers missed out on the amazing, truly once-in-a-lifetime spectacle that unfolded before our very eyes — the Internet. Most recently, they missed out on head-spinning returns of the likes of Apple and SFTC. They bought silver in 1986, and haven’t seen a dime of nominal return until 2004. They’ve bought that Honda generator years ago, but used it only once or twice. They might have sold their nice suburban home before the real estate bubble to buy that rural compound, and missed on that tax-free hundred grand of profit if they sold it just a few years later.
Conversely, the dealers may not be adequately prepared for that black swan. They may not be placing enough emphasis on sovereign debts that are currently hockey-sticking, and the monetary supply that’s expanding at an ever-increasing rate. They trust that most people running the nation are at least somewhat competent, otherwise they wouldn’t have made it far. The dealers own and trade in too much paper, and not enough real assets. They may have purchased that weapon to protect their castle, but never went to the range because they are afraid of being awkward around other dudes who know how to shoot and clean their pistols and rifles.
In my research, I follow both doomers and dealers.
On the doomer side, I listen to Max Keiser, Bix Weir, Chris Dwayne; less frequently, Gerald Celente, Peter Schiff. I don’t listen to Alex Jones. Sidebar — one time I did have my car radio on ‘scan’, and I decided to give Alex my ears. He was very loudly flipping out about soldiers in war gear driving their tanks up and down Highway 183 in Austin, Texas, apparently ready to take over and institute martial law. I just happened to be on 183 at that exact moment, and decided to take a little detour to check it out. Smash cut to me talking to a couple of US Marines next to their Humvee in front of a Toys-R-Us, raising money for Toys for Tots.
I like Max Keiser for the same reason everyone like him — theatrics. Bix is a little conspiratorial for my taste. Chris Dwayne is very dedicated and seems to put his silver where his mouth is. Mr. Celente’s rants can be fun, and Peter Schiff is a little repetitive. I would never sell everything I owned to put my family’s eggs into a single silver basket like Chris did, though. I know he’s convinced that the end is nigh, but so was Harold Camping with his predictions of the apocalypse. I used this example before — Italy in the year 2000 still used liras in very high denominations, but the economy was booming nonetheless:
You can run out of money, but you can never run out of numbers. Even when a cup of coffee costs your 20,000 of ANYTHING, life goes on.
However, the doomers taught me how to invest in physical metals, grow a portion of my food, use a weapon, and be more self-reliant. They taught me that “if you don’t hold it, you don’t own it“.
The dealers, like Mike Maloney, David Morgan, Brother John, Kerry Lutz, Kyle Bass, and Jack Spirko reinforced my view that if nothing catastrophic happens, I need to be ready to catch the next big wave. Paper is not inherently evil, and it will continue to have value unless the fabric of the society completely disintegrates. Brother John, for example, covers not only silver in his videos and articles, but also gold, equities, commodities, events in history. This can only be good as it rounds you out and makes you more flexible and less dogmatic.
Don’t get me wrong — this is not a Keynes vs. the Austrians debate. I believe that all the folks I’ve mentioned are true hardcore metal investors. The difference between them comes down to believing whether the black swan shows up in our lake soon, not very soon, or maybe we can’t know and we just have to be as prepared as we can be.
And remember: folks for both of these camps advocate doing your own research and making your own path. They are not giving investment advice. They are simply following their convictions, which is exactly what all of us should be doing as well, whether we agree with everything they say, some of it, or nothing at all.