Friday, July 30, 2010

Chimps, Champs, and Chumps

By Aristotle
(10/18/2000; 7:24:11MT - usagold.com msg#: 39302)

I enjoyed the brief detour of the forum on Monday (and some previous days) into the realm of personality types -- with the Gold-related hypothesis that Gold advocates are most likely of the *NT* type. Dabbling with a linked on-line testing page revealed me to be distinctly a type INTP --for whatever that's worth to anyone keeping score.

Which brings me to my point. Any population can be divided and subdivided yet further based on the presence or absence of any given trait. In one rough cut we can focus on those who think independently about monetary affairs, and the remainder will be those who just go along with the flow. I call this latter group the "chimps" in this post because they see no evil, hear no evil, and speak no evil regarding the dollar, and are contentedly guided by the credo "Monkey see, monkey do." They follow the directions of their neighbors, whom at this point in time have been conditioned to consider Gold in low esteem. Obviously, this post is not written for the chimps--they aren't visitors to this forum.

Of the group of thinkers who see the problems with the dollar and the special merits to be found in Gold, we can divide them further into the physical "champs" and the paper "chumps." The champs are the ones who stand behind their thoughts by acquiring the Metal that they support in principle. This post isn't written for the champs, either -- they're already on the right track.

Hello, chumps. You guys comprise the sad group that is "so close and yet so far." Your good independent thinking has steered you toward the merits of Gold, yet you have undermined yourself in an attempt to capture additional paper through leverage based on the proclivity of me and my fellow champs to drive up Gold prices through our wise demand for Metal. Sorry. It doesn't work that way--as I (and many others here) have explained time and again, and most recently this past weekend.

What you chumps fail to recognize is that the Gold itself is the objective and desirable monetary wealth--as a safe and meaningful alternative to dollars which are subject to devaluation and collapse. And most importantly, you also fail to recognize the true role of your leveraged paper gold (futures) within the Gold market. The crux of this entire post is contained in the next two sentences, so open your mind and think objectively, setting aside briefly your indignance that words on a computer monitor have called you a chump.

Long positions in paper gold are NOT used, as you might like to think, as a "fire insurance policy" among institutions having vested interests in the status quo, whereby such a long derivative position would be expected (by you) to compensate them for rising Gold prices and weaker dollars. Instead, these institutions use the offering of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.(!)

By allowing yourself to miss the big picture, you are being played for a chump. The tragedy is not that you are throwing your paper currency away on paper gold, but rather that you approached so close to the brink of truth, and yet will likely have nothing material to show for your journey and efforts. It's not too late to stop beating your dead horse and take your place on the growing bandwagon headed down the Gold trail--that is, if you're not too consumed by your own pride and determination to stay with your horse until it regains its breath. My prediction is that the vultures will have your flesh too, because you'll let them.

Gold. Get you some. ---Aristotle
_________________________________________________________

Monkeynomics!



Laurie Santos studies primate psychology and monkeynomics -- testing problems in human psychology on primates, who (not so surprisingly) have many of the same predictable irrationalities we do.

33 comments:

FOFOA said...

A short postscript to the above post...

Aristotle (10/18/00; 15:27:24MT - #: 39334)
The Wet Blanket Phenomenon -- Are there any doubters left?

Excerpt of my post offered at the start today's "Gold trading" --

"Long positions in paper gold are NOT used, as you might like to think, as a "fire insurance policy" among institutions having vested interests in [maintaining] the status quo, whereby such a long derivative position would be expected (by you) to compensate them for rising Gold prices and weaker dollars. Instead, these institutions use the offering of paper gold (and its influence on price discovery) as a WET BLANKET to keep Gold from catching fire in the first place.(!)"

Canuck, maybe this addresses your concerns from post #39327 where you rightly fumed--

"This is beyond believable.... Every arrow is red on the stinking TV, every financial indication is bleak and gold is down for the day?

"What in God's green earth do these people expect us to believe anymore? Are they asking us to believe gold is worth less now than at 7:00am this morning?"


And Wolavka, are you a believer now in the "wet blanket" phenomenon? What have you to say regarding your earlier comment to me, "I will address your post at end of trading day"? I don't mean to put you on the spot, just to solicit your latest thoughts, impressions, or opinions on this matter.

Real Gold. A horse that's free to run, and easy to ride.
---Aristotle

Rockgrabber (10/18/2000; 16:07:56MT - #: 39337)
Aristotle

I want to apologize to you, the reason being I remember about 1 month ago making really lame statements. About leverage, "leverage, get you some." What a stupid thing to have said, really. I really sort of thought you, and others maybe really did not want others to be leveraged like themselves perhaps, and that it would be great if folks could help to take physical off the market and help to explode the paper market when the time was right. But that is not the game is it? I am better understanding this game due to ones like yourself, thanks for the class. The game=Sell the hell out of paper gold, with a strong paper dollar, in order to attain an artificial low "physical" price, and then you are covered with physical. Like Trail Guide said you do not expose a market dynamic that is delivering in your favor. I saw someone here mention this selling with paper oil created an artificial low oil price as well for as long as they wished it to be low. Its easy from what I can see to create a low commodity price through this leveraged paper crap. Its a good idea for those with all that paper at there disposal whenever they can to sell Paper Commodity anything, and go ahead and buy the physical goods, at a wrong price you created. Now what about the dollar? DO they do the opposite? Do they have a strong dollar system too? What are they up to on that one? DO they just buy leveraged paper dollars with less dollars through going long "leveraged paper dollar contracts" to get a high artificial price on the dollar??? What are they doing in order to get this dollar like this??

(Cont...)

FOFOA said...

...

Aristotle (10/19/2000; 3:37:07MT - #: 39377)
Rockgrabber--I'm pleased to see the "wet blanket" post was illuminating for you and others. Sometimes I get a lucky break in effective expression.

Most of us can grasp the design providing this period of cheap Gold for those mindful enough to acquire it--a happy consequence of larger monetary events that will one day see their end.

As for your additional question, you asked--

"Now what about the dollar? ... Do they have a strong dollar system too? ... What are they doing in order to get this dollar like this??"

My thoughts-- to see this one and the easy answer, one must be willing to look beyond U.S. borders to consider the global supply/demand dynamic for our currency unit. Being past its international usage prime and on the backside of its life, can you recognize how the international creation would wane, leading to supply tightness when dollars are sought on the forex for those with obligations to repay outstanding dollar indebtedness from prior years? It takes an obvious toll on external exchange rates lifting the dollar against all others, and would also express itself as an aggravation of the U.S. balance of trade--which is something we all see quite clearly. It also explains why loan repayment has become problematic and is being replaced with generous degrees of consideration for debt forgiveness for the Heavily Indebted Poor Countries. It also reveals some of the motivation behind the IMF's latest Gold scheme which did little more than to create new dollars for international use without going through the borrowing process that would put another on the hook for even more difficult loan repayment.

But don't fret over domestic deflation. The banking system will surely be saved at any cost--and that cost is hyperinflation, to be specific.

Gold. Get you some. ---Aristotle

samix said...

Antal Fekete's writings are really illuminating I would urge each and every member on this forum to go read each and every of his papers that he has put up on his website.

If you aren't doing so, then you are missing a lot!

I have learnt so much from him, though his choice of words are not as simple as FOFOA's but heck, what is google define: for after all, haha

Luca said...

Excuse me mr FOFOA, i'm italian, i'm reading your posts since few days.
I congratulate with you for the things you write. But have two questions for you (surely due to my incorrect translation of your posts.
1) Is the thing you say that everyone mindful must buy now some physical gold and store it in his house, witing for the price to explode?
2) If the price of the gold will explode, even the ones that owns paper gold must gain something (just selling tot take profit before a black swan occurs), right?

Thank you (and excuse for my poor english)

Radek said...

Dear FOFOA,

I myself being a champ fully support your position.

However, at the same time I am worried that if we get too many champs and I will not be able to convert more of my wealth into physical metal at the current manipulated prices. It takes a lot of time to sell illiquid assets, move assets across country boundaries to buy physical metal in a safe way. I hope I will still have at least two months more to complete my moving into physical metal process at the current levels.

My point is the champs sooner or later will be rewarded for their commitment to their ideas. More time we have to do this the better position we will be able to acquire. I do do not mind the chumps, it is their choice to play the rigged game despite having all the knowledge in front of them.

best,
Radek

David said...

Luca,

That is exactly what FOFOA is saying... and the sooner the better.

Radek said...

Dear FOFOA,

The movie you have gave link to is an amazing one. I just realized how flawed we are and how the monetary system is rigged against us.

I have one more reason for chumps to became champs.

We are all faced with the problem of wealth preservation. We all know that there is an inflation and we have to make financial decisions to preserve our wealth.

Gold is a safe loosing bet, the 3% gold production per year in the long run tells you how much the supply of the money is inflated. However, we are living in a world where there are plenty of other financial options available at our disposal.
We do not care that those options on average are bad for us, we only care that there are potential big gains. That is enough to invest in the stock market, residential properties, paper gold (possibility of leverage and danger of default).

We have to realize that the game is rigged and the gold is the only safe way to loose less. At least until the point when monetary and political system is reengineered and money is money and property rights are the cornerstone of the society.

Moreover, because of Nasdaq bubble, residential meltdown a lot of people have realized that it was an illusion that they can make money. They have lost their confidence that they can win in this rigged game and revert to a safe bet of loosing less (3% per year).

I realized that my reason to buy gold is partially due to overcomming of this natural aversion to loss.

Thank you FOFOA for this post.

best,
Radek

Marcus said...

It has been some weeks since I stumbled across this blog, and I am amazed by the breadth and depth of the analysis/commentary given over to gold, and in plain English too (thank you for that!). I know that this blog is about gold, but since the price of the yellow metal is beyond my reach, I have been purchasing small bits of physical silver when finances permit. Would it be impolite to ask how silver fits into the scheme of things? Thank you in advance, and thank you for a great blog.

Jamie said...

I'm an extremely rare ENFP (but was very close to being an ENTP)

costata said...

Marcus,

There are many perspectives and opinions on silver. A/FOA appeared to be convinced that it would not experience the high revaluation multiple of physical gold.

FWIW if I had to choose between physical silver and currency I would choose silver. If I had to choose between a gram of gold and an ounce of silver I would choose gold.

I'm sure FOFOA would advise you to research, think and make your own decision about what is best for you.

Mike said...

once upon a time i also thought silver was better then gold and would reach its 15 to 1 ratio at some point or better or outperform it percentage wise. the best thing the silver analysts would say is how rare silver is compared to gold or how its used for more things then gold so its more important to the world then gold etc....

but after going through FOFOA's blog and reading Another/FOA i was convinced that silver wasn't what i thought.
luckily there is an exit plan for silver. either you hold on to some coins and wait it out and treat it as a commodity but start buying gold from now on or you trade it for gold. i decided to trade most of it for gold and keep some coins with no plans of buying anymore silver. i do hope one day it will outperform gold just for a short while but its a game. if it goes to 45 to 1 i will get rid of it all for gold and if it starts to go to 100 to 1 i might just trade it for gold or take the money anyways expecting it to be finished but it will have to outperform fiat in that scenario first. ie $25 silver but $2500 gold.

silver is better then fiat but it is poor mans gold for good reason.


ANOTHER: Sir, We meet again! I think, many buy the Silver (and platinum) for but one reason, it will increase always more percent than gold. It is always the thought of more leverage, yes? Even today, these metals have more use for the industry and find a better "concept of economic purpose" in the minds of investors. Many dealers say, this purpose is of better "investment reason" and as an aside, you also hold metal, like gold? I say, gold has "no investment reason" as it is "real money" that draws no interest from being "lent out". For this purpose, it is an asset that shows "the conclusion wealth" from our long life of investing in commerce! Given the option of investing for "economic purpose", there are and have been, many better items than silver (Dow Jones?). In future currency wars, silver will show a return, but it may prove as uncertain as the economy?

Remember, you buy "silver for purpose" but "trade currency for gold for conclusion". As the long history of gold does show, "time will prove all things".

David said...

Good post Mike...

Robert said...

When you come down to it, it's all about planning for the future. I have learned so much about gold from FOFOA's site.

Will gold go to $50,000 / oz? I don't know. Will it be worth a lot more (in US$ terms) than it is now? Almost surely. Best wealth preserver in town.

And it is easy and quiet to give away... The power of giving! The power of giving is often underestimated.

I also own silver and platinum. Will they go up as much as gold, more perhaps, or less perhaps. Dunno that either. But, I believe in lots of kinds of diversification.

Over at ZeroHedge, where it is possible to pass unhealthy amounts of time, I submitted a proposal to another poster there named "Village Idiot" who is actually completely the opposite. He proposes that "we" do something (maybe unite with a bumpersticker or whatever). My response to his call to arms is that instead on Thursday, August 12 we all go pull $500 from our ATMs. When they run out of cash, march into the bank and take out $1000 (you know, if you have it), $1000 would include a $500 fine for not having money in their ATMs. ANY kind of decent response to that would make for 2 REALLY INTERESTING market days Thurs Aug 12 and Friday the 13th.

Buy some gold too, before then.

FOFOA already knows who I am (I voted absentee, are we allowed to vote multiple times absentee here in fofoaland?). My moniker there at ZeroHedge is DoChenRollingBearing, and I am a fofoa style Champ over there.

I'd be interested in comments about pulling the dough (admittedly a BLUNT INSTRUMENT) out of the banks on Thurs Aug 12.

FOFOA said...

Vote as often as you like, Robert. The way you vote, I'll keep the polls open 24/7/365! ;)

costata said...

Mike,

Great quotes and observations. I tend to be more restrained in my comments on silver due to being abused a few times in discussions with the "true believers" in silver.

FWIW we are exiting our remaining silver if the ratio gets into the low to mid 50 range again PROVIDED we can roll the funds into physical gold. If not we will keep the silver.

Robert,

I always read DoChen's comments. Sadly, I think inciting a bank run would not change the banks' behaviour. If they called a bank holiday, or more likely, rationed cash withdrawals it would hurt a lot of innocent people.

Better to quietly build a cash buffer for emergencies IMHO. You can also help your small suppliers by paying in cash (if you are not a big fan of paperwork).

Worth noting too that converting currency to PMs is a form of protest against the existing system and a way to avoid the casino as well.

Martijn said...

And what does Harvey have to tell us today, after the situation at the COMEX was becoming very tight?

I will wait until Monday to give you more conclusive evidence, but it seems that the banking cartel fleeced many of the long holders who have now vacated

the comex gold arena. They did not roll nor did the stand for delivery. They just left the scene.


To Harvey these developments are new time and time again.

Mike said...

Martijn,
i thought of Another/FOA when i read that statement.
and position limits are just around the corner which has Ted Butler jumping for joy. But to their credit they are PGA's.

Mike said...

well butler isn't lol but i meant to say he buys physical.

erik said...

Silver may be the poor mans Gold, but my bet is once Gold revaluation takes place and has taken a role of wealth preservation ... both Gold and Silver will become priced out of reach for JSP, and most common people will jump into the miners. Which is why I plan on purchasing Heavy Equipment to work with all the new upstart mining operations I see coming in the NEW gold Rush.

jenn said...

A video for the Champs!

Chumps be warned. The bell tolls for thee.

http://www.youtube.com/watch?v=nNtIsSWVJBI

jenn said...

The Gold Dinar and The Future of Money 7 / 8

http://www.youtube.com/watch?v=epGZHnJexSA

Angel Eyes said...

Thanks, Jenn, that was a good watch.

I put it here too.

Jimmy said...

@Jenn & Angel Eyes:

A good read about the Gold Dinar...

Jimmy said...

Reuters: Physical Buying In Asia Is Going To Destroy The Paper Shorts On Wall Street (also publiced on lemetropolecafe.com and Khaleej Times)

“The market is very hot. There’s plenty of physical demand and I can’t meet the orders. It’s from India, Indonesia and Thailand,” said a physical dealer in Singapore. “Basically we are seeing buying from jewellers and investors from the Far East.”

Shanti said...

Good pick (3:20) Jimmy
Is Big Trader returning.......? :-))

Jimmy said...

@Shanti:


Me, Big Trader? What a compliment... :-)

ps: Are you luckily from Belgium? Because I know a Shanti...

Shanti said...

@Jimmy,

I referred to Big Trader from HK.
And yes on the Flanders borders ;-)

Shanti said...
This comment has been removed by the author.
Jimmy said...

@Shanti:

I was joking ;-)

Are u from Ghent? If yes, then I will have heartattack... Really...

Jimmy said...

@Shanti:

Now, I'm very curious on your answer...

Jimmy said...

$35 laptop: 2 GB, Wifi, solarpowered, all shit included and this for only $35...

Shanti said...

@Jimmy,
Let say approx. 30 minutes.
For more questions you could send a pm true goudforum.

Jimmy said...

Funny story to know about Isaac Newton (one of smartest people, Master of the Royal Mint):

In the Spring of 1720, Isaac Newton stated “I can calculate the motions of heavenly bodies, but not the madness of people.”

On April 20, accordingly, he sold out his shares in the South Sea Company making 100% profit (7,000 Pounds).

By the Summer of 1720, the frenzy had reached such levels that he could not resist getting back in the market.

He got his shares just at the top, and ended up losing 20,000 Pounds.

From then on, “South Sea” became taboo words around him for the rest of his life...



@Shanti: I answered you at goudforum.be on private e-mail. Very curious to know if you're who I'm think to be... :-)

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