Gold and the Parable of 3 Squirrels, 2 Vultures, and 1 Turtle

Three squirrels frolicked in the back yard – they are social and fun loving creatures who delight us with squirrel antics and represent the distracted masses of people.

A hawk (markets can be deadly) killed a squirrel. Two vultures swooped in to feast on what remained after the hawk ate. The vultures represent High-Frequency-Traders and central banks. They produce nothing and feast on the efforts of the masses.

One turtle ambled through the yard, moving to a different lake. He was neither quick nor deadly, like the hawk, nor predatory like the vultures, but persistent. The turtle progressed slowly and reliably toward his goal – just as gold has been safe and reliable money for 5,000 years.

Perhaps the analogy is less than perfect, but we see parallels.

Most investors will be blindsided in the coming financial reset – as they were in the dot-com bubble and subsequent crash (1999-2000), the real estate bubble and crash (2004-2006), and the financial crash of 2008. The warning signs were there, but most of us ignored them. Squirrels are often too busy playing and chasing each other to notice a circling hawk. Investors are often too busy managing daily lives to appreciate the danger of past stock market bubbles, real estate bubbles, derivative melt-downs, and the current bond and currency bubbles (2015).

But you might think you are not an investor because you have no active brokerage account. What about your IRA, 401(k), government or corporate sponsored pension fund, savings, and real estate? You may have little control over those investments, but consider what another bond market and stock market crash, like 2008, would do to the value of your IRA and 401(k). Your pension fund is almost certainly invested in bonds and stocks, both of which are vulnerable. Real estate prices are likely to decline if interest rates rise. The purchasing power of those assets is dependent upon the value of the underlying currencies. A currency (dollar, euro, yen, pound) crash would hurt all of those investments. Most of us are investors, one way or another, in bonds, stocks, real estate, and certainly in fiat currencies.

Yes, I know, the dollar will rally for years, the US dollar is the global reserve currency and will remain strong forever, and trees grow to the sky, floods are benign, hurricanes only occur on television, and everyone is above average. But:

You purchase insurance for your house and automobile. What insurance have you purchased to protect against a stock market crash, a bond market correction, or a dollar crash? Think back to how certain Americans were that stocks and houses would go up forever in 1999 and 2005. How certain are you that bonds will continue their 35 year bull market and that the dollar will remain strong for the next decade? Gold and silver are appropriate insurance for most of us.

Among other reasons, we hold gold as insurance because governments and central banks always devalue their fiat currencies and because, like the turtle, gold is reliable and safe – IT HAS NO COUNTER-PARTY RISK.

There will always be hawks and vultures in our financial world. If you are not a hawk, don’t want to be a vulture, are worried about “black swans,” own no “tame” politicians, and want to protect the purchasing power of your assets, then use gold and silver for financial insurance and protection, just as the shell protects the turtle.

From The Daily Bell: Fiat Currencies Are All Funny Money

Educated by Keynesian economists, they [most people] don’t comprehend how fiat money is an affront to both honesty and human nature.

Just as fish are not conscious of the water around them, modern bankers and investors are blissfully unaware that they are swimming in a monetary vacuum.

They will learn this lesson. The only mystery is when.”


Gary Christenson | The Deviant Investor

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