I know I shouldn’t succumb, but I can’t resist replying to this blogpost at LewRockwell.com which nicely sums up what is wrong with goldbugs…
Neocons like Frum-Yglesias also love the Fed and its counterfeiting presses, and the perpetual wars they make possible. What a surprise.
Rockwell then links to a brace of posts by Matt Yglesias and myself.
Now hear this: Making investment decisions because you “love” or “hate” the underlying asset is a very good way to get poor. I love bread – that does not mean I must always go long on wheat. I love Apple computers. Doesn’t mean I want the stock at any price. I hate driving. But I still think there’s opportunity in oil stocks right now.
Gold is nice. It makes attractive cufflinks. But at $1070, it’s a dangerous place for a small investor to be. Even more dangerous because so many of those marketing it treat it like an object of religious veneration or a symbol of political protest, rather than one of many commodity metals traded in highly volatile markets. Gold is currently trading at record highs. In my lexicon, “record high” is almost always a “sell” signal. Maybe you think differently. Fine! That’s what markets are for. But a caution. I have no position in gold. But many of the people touting the stuff do. Be careful.
19 responses so far
1 kensilber // Oct 20, 2009 at 4:02 pm
And Matthew Yglesias is a neocon? They’re everywhere, I guess.
2 ottovbvs // Oct 20, 2009 at 6:05 pm
kensilber // Oct 20, 2009 at 4:02 pm
“And Matthew Yglesias is a neocon? They’re everywhere, I guess.”
……..This one made me laugh too…….whose next……..Al Sharpton……David’s right about gold however…….it might have a bit of marginal upside given dollar weakness but that’s all……..this gold 2000+ stuff is literally insane but there are gullible libertarians who buy this crap………there is very little……correction NO…… connection between doctrinaire political views and markets……….the economy is in recovery mode believe me……we’re going to see 2.5%+ growth in this years second half and over 4% in next years first half…….horrible news for conservatives in a political sense but it’s reality.
3 sinz54 // Oct 20, 2009 at 7:54 pm
I don’t rely on New Majority for investment advice.
And I suggest that no one else should either.
4 Reason60 // Oct 20, 2009 at 7:56 pm
My biggest skepticism about the gold fever I see being promoted around the net is similar to Frum’s notion- that it is not marketed as a serious investment vehicle, like pork or copper futures, but as a quasi-political protest, a statement about the coming Marxist End Times. Specifically, it is being pitched to amateur small fry investors, the sheep being herded into the pen by the savvy wolves.
I recall a similar gold rush in the mid 1980’s; a friend of mine bought some at the then-record price of….$1000/ oz.
Good to know that he only had to wait 20 years to break even again.
5 JimBob // Oct 20, 2009 at 8:34 pm
Gold will continue to rise as markets around the world worry about Ben Bernanke and his trashing of the dollar. If China stops buying our paper the dollar will collapse and gold will go through the roof. Big government statist like Frum have never understood free market money.
6 JJWFromME // Oct 20, 2009 at 10:13 pm
If Yglasias is a Neocon, that makes David Frum a member of the juicebox mafia! Your honorary juicebox is in the mail, the lamb lies with the lion, etc.
7 JimBob // Oct 20, 2009 at 11:44 pm
Neocons like Frum will never understand.
Free-Market Money: A Key to Peace
By Steven Horwitz
http://www.thefreemanonline.org/featured/free-market-money-a-key-to-peace/
8 phesoge // Oct 21, 2009 at 9:02 am
Based on what Frum says in some of his media appearences I t hink he is only a Republican because of the endless wars. So Ya a NEOCON
9 sinz54 // Oct 21, 2009 at 9:03 am
I invested in precious metals and their stocks back in April 2003, as it became clear that the U.S. wasn’t going to leave Iraq any time soon. Since then, the price of gold has tripled.
Most analysts are looking for the dollar to decline another 20% or so. That will push the price of gold up another 20%. I will ride that, and then I will seriously consider bailing out as the Fed comes under pressure to raise interest rates to defend the weakening dollar.
10 Gold Diggers Of 2009 « Around The Sphere // Oct 21, 2009 at 10:49 am
[...] David Frum at New Majority: I know I shouldn’t succumb, but I can’t resist replying to this blogpost at LewRockwell.com which nicely sums up what is wrong with goldbugs… [...]
11 cheves222 // Oct 21, 2009 at 10:52 am
Of COURSE you are not in G_ld (the investment that shant be named), David!!!
Dr. Ron Paul, who’s a REAL doctor and everything!, says that Neocon Constitution-haters like you support Israel so much that you don’t NEED to make money on G_ld because of the Fed and fiat currency. It’s simple logic. And I’m not surprised that you don’t get it.
That THAT.
12 WillyP // Oct 21, 2009 at 11:11 am
I think the fact that Frum is reduced to replying to rather fringe characters communicates accurately how influential this new majority is.
13 ottovbvs // Oct 21, 2009 at 5:47 pm
ireign // Oct 21, 2009 at 12:56 pm
WillyP — well put
……Why bother wasting time here then?
JimBob // Oct 20, 2009 at 8:34 pm
“Gold will continue to rise as markets around the world worry about Ben Bernanke and his trashing of the dollar.”
……..Would you like to specify a target number or is this just something you picked up somewhere like the Weekly Standard……..I’ve got news for you…….recent dollar weakness is mainly a sign of global recovery……when the world was collapsing a year ago there was a flight to quality ie. the dollar……now the world is recovering it’s appetite for risk the dollar is declining which is very good news for American industry(check the Cat stock price) which becomes more competitive while the demand for christmas tree decorations and handbags from China is reduced by rising prices and this both reduces our trade imbalances and probably encourages saving
14 WillyP // Oct 21, 2009 at 5:50 pm
otto,
you’ve got the entire conception upside-down and backwards. just like, err, the central bank and its director!
inflationism is bad policy, period. it has a day of reckoning. don’t believe me? study economic and monetary history, then comment.
15 ottovbvs // Oct 21, 2009 at 6:50 pm
WillyP // Oct 21, 2009 at 5:50 pm
” inflationism is bad policy…..study economic and monetary history, then comment.”
………I have…..I’ve got an MBA and did it as part of my undergrad degree ……moderate inflation is the aim of all central bankers……..spriralling deflation which we’ve just narrowly escaped is their nightmare because it’s infinitely harder to fix as the Japanese discovered in the 90’s……..with due respect as is apparent from the opening comment about Bernanke etc, you haven’t the faintest idea of what you’re talking about.
16 joedee1969 // Oct 22, 2009 at 5:39 am
Don’t feel bad David for fighting back:
http://americaspeaksink.com/2009/10/wall-street-the-president-and-the-rest-of-us/
17 WillyP // Oct 22, 2009 at 10:02 am
otto,
I too have studied economics, both in a modern academic setting and also independently. I will tell you that formal education in economics, outside of a few scattered programs, is nearly akin to witchcraft.
Create more bank credit, for what? Oh right, to spur demand and get PRODUCTION going again. But wait, isn’t this the same productive structure that just found itself massively in the red, therefore signaling a waste in economic goods? Why are we propping up a production structure that is fundamentally not serving our needs? Ah right, because the alternative, DEFLATION, is the real enemy. Deflation, which lowers prices… oh, how awful!
No, sadly neoclassical economics is a bad joke, being played on all of us. Inflationism is bad policy for several reasons. 1) It distorts the production structure, misaligning it with true (i.e., market) needs. 2) It creates an environment where the productive structure is altered not through voluntary investment, but whereby savings are devoured surreptitiously. 3) It creates a boom, during which everybody thinks they are a brilliant and sage investor. 4) It inevitably leads to bust, which dispirits the entire population while miring them in depression.
Creating credit money out of thin air, be it by fractional reserve banking or central banking manipulating a fiat currency, has only one logical (and therefore predictable) outcome. The boom-bust cycle; and we’re mired in it up to our necks.
18 sinz54 // Oct 22, 2009 at 10:03 am
ottovbs:
The Japanese could have EASILY fixed their deflation by massive reflation. (By bombing Pearl Harbor in 1941, they gave us the excuse to fix ours in exactly that way.)
The problem is that massive reflation causes major economic dislocations that are just not in the Japanese culture anymore.
Massively reflating the economy out of a deflation without severe dislocation is ONLY possible if it’s accompanied by wage-and-price controls and rationing. In World War II, that is EXACTLY the policy that FDR pursued: Incredibly massive government spending on the war, coupled with wage-and-price controls and rationing here at home. Plus war bonds to soak up even more consumer spending.
And after WW2 ended, the deflation of the 1930s did not return.
Notice that Adolf Hitler pursued a similar policy in the late 1930s: Massive government spending on feverish rearmament, combined with wage-and-price controls, rationing, and a unique element: Hitler simply dissolved most small businesses by decree, so that they wouldn’t compete with big business (which Hitler needed for his rearmament program) and draw capital away from those big businesses. The result? The depression of the 1930s (which was worse in Germany than any other European nation) vanished, and full employment returned.
FDR did it.
Hitler did it.
The Japanese could have done it.
19 WillyP // Oct 22, 2009 at 10:33 am
Hitler ran Germany’s economy like a mafia boss.
FDR ran America’s like a common tyrant.
The Japanese unfortunately followed the advice of mainstream, neoclassical economics. This is why they’re stagnating.
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