“Adjusted for the 1980 inflation measure the gold
price is approaching its bear market low of 2001. In fact, gold is now below
the 1975 price when it became legal to own it again! . . . . . . . .Don’t
worry about the current rangebound price. Buying now represents tremendous
value and tremendous protection against the next economic crisis.” – Jeff Clark/Casey Research
2001 – A Gold Odyssey
A healthy skepticism.
Insight.
Belief.
Courage.
Those were the four characteristics almost all gold
investors had in common in 2001. I can tell you that from personal
experience as we helped a good many become gold owners in those times and
listened carefully to what they had to say. Gold was stuck under $300
per ounce. Anti-gold rhetoric was all the rage in the mainstream
financial media. The general public was high on stocks and apathetic about
gold ownership. Stocks would rise forever, they thought, and gold would
never rise again. The prevailing psychology in those years, though, was
fertile ground for the contrarians and true-believers who took advantage of
it by accumulating gold – many in large quantities.
They understood that the economy and financial markets
were not all they were cracked up to be. (A healthy skepticism) They
understood the inviolable law that markets cycle. (Insight) They understood
gold’s role in the long-term portfolio. (Belief) They acted on that
belief despite much opposition and criticism. (Courage)
Years later, when the financial markets reversed and
finally went into the tank, none in this group were heard to mumble excuses,
like “We didn’t see it coming” or complained that “they were not warned.”
They saw it coming. They acted. When it was all over, few acknowledged
this group’s vision. In turn, it stayed quiet, kept its own counsel.
A good many invested enough to preserve their wealth while some some
invested enough to, in fact, become very wealthy – even though their
intentions for the most part were merely to preserve what they had. Please
note that I do not mean to suggest by this that one should buy gold to become
wealthy, but rather to help preserve the wealth one already has.
It seems we have come back to the place where we began.
There are really only two kinds of people in the world when it comes to
facing the potential for economic calamity, and I think most of us are aware
of these psychological opposites. There are those who believe that the
authorities are in full control of the situation and that all will end well,
and then there are those, the more cautious among us, who hedge the opposite
outcome. The first group will always hold the second with disdain, and the
second will always see the first as foolish.
Benjamin Franklin once said that ’Experience keeps a
dear school, but fools will learn in no other, and scarce in that. . .’
A wise man, Mr. Franklin. . . .Kipling penned his own warning along these
lines: ”[T]he Dog returns to his Vomit and the Sow returns to her Mire,
[a]nd the burnt Fool’s bandaged finger goes wabbling back to the Fire.”*
Speaking of “the Fire”, let me conclude with an Ed Stein
cartoon published here at USAGOLD just after the 2008 debacle. If nothing
else, it serves as a gentle reminder. Queen Elizabeth at the time had asked
a group of economists at the London School of Economics “Why did nobody see
it coming?” As mentioned earlier, some did see it coming.
* See The Gods of the Copybook Headings,
Rudyard Kipling, Kipling Society, UK introduced to me by Chris Powell what
seems too many years ago.
______________________________________________________________
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A little USAGOLD history. . . . Pictured are News & Views hard
copies from 1999 just before gold began its secular bull market. News
& Views was Review & Outlook’s popular
predecessor at a time when gold-based publications were few and far between.
The “Big Breakout” headlined in the November, 1999 issue refers to a price
jump from $260 to $330 per ounce. Your editor sees a good many
similarities between that period and now.
