Zenconomics

Should You Buy Gold Now?

by Jeff Clark – Hard Assets Alliance:

There’s a subset of investors who see the big picture for gold, believe in the fundamental case, and have the means to buy, but are holding off because they think gold is headed lower. By waiting, they believe they’ll get a better price.

With all due respect to those of you in that camp, I think that’s a mistake.

If one is convinced gold will be cheaper a week or month or quarter from now, it might seem prudent to wait to buy. But obviously no one knows if gold is headed lower or if it’s already bottomed. So don’t kid yourself: you may or may not get a better price.

And premiums don’t stay the same. The US Mint raised the price it charges authorized silver purchasers by a substantial 50¢ after last month’s big retreat. The price retail silver buyers paid was not as attractive as they thought it would be.

But these issues miss the bigger point. Here’s what I think is perhaps a better way to view the subject, along with how to handle the dilemma…

Gold Is Not an Investment—It’s Insurance

“A dollar is worth only 70¢ now,” my dad once told me as we worked in the back yard. “And they say it’ll only be worth 50¢ in a few years.”

It was the mid-1970s. I was helping my dad build a dirt road to our barn, and he wasn’t happy. Not about the hard work or humidity, but from what was happening to the dollar. Inflation was starting to kick into high gear, grabbing headlines that even a girl-chasing teenager could understand.

I remember being appalled by the thought of going to the store and having the clerk demand $1.30 for an item marked $1. Knowing what I know now, my thinking wasn’t that far off.

Our local paper ran a story of a blue-collar worker who had stuffed wads of dollars into the back of his gun cabinet early in his working life. The money was discovered by the family after his death. While saving money is good, the duck-hunter equivalent of “Family Mattress Bank & Trust” won’t keep your money from depreciating; the stash of $10s and $20s had lost over half its purchasing power since he’d hidden it some 30 years earlier.

About the same time the gun locker was being lined with legal tender, both of my grandfathers—unbeknownst to me at the time—bought some gold and silver coins for me and likewise stored them away. I inherited them a few years ago—and the purchasing power of the coins is still the same as it was 30 years ago, despite the price fluctuations along the way.

If gold were an investment, it might be prudent to see if you can get a better price. But it’s not. It’s lifestyle insurance. It’s an alternate currency that will withstand the inevitable fallout of government excess, the start of which grows closer by the day. It is purchasing-power protection—protection that you and I may use sooner than we’d like.

You might argue that you always try to get the best price when you buy auto insurance and life insurance. That’s true—but the difference is that you shop among different brokers for the best price; you don’t put off the decision because you read somewhere the insurance industry might lower its rates at some point in the future.

So, what to do?

Don’t “Buy” Gold—Accumulate It

Neither you nor I nor anyone else knows exactly when the very best price for gold will occur. But since it’s an increasingly critical form of insurance in today’s world, the thing to do is to take a portion of your dollars earmarked for gold and buy some now, but keep some powder dry for the next potential dip. That way you’ve got a good price in case the bottom is in, but still have some cash available if the price falls lower. Then buy another tranche next week or next month or next quarter—whatever suits your cash flow and financial plan—but make it a regular occurrence until you have the full allotment you want.

This is exactly how central banks buy.

Central banks aren’t trying to snag the bottom. They’re focused on how many ounces they own.

Further, almost no institutional investor or money manager buys in one lump sum. They accumulate.
Our focus should be the same. Our amounts are a lot less, of course, but the point is to buy in regular tranches, working toward our allocation goal.

I cringe when I hear people say they’re waiting for a better price. What if the market takes off higher or simply stops falling—then what?

Start your accumulation plan today. Heck, you can even use the MetalStream service to buy automatically each month, and the amounts can be adjusted each time if you want. Just log into your Hard Assets Alliance account and once logged in, click the MetalStream signup button to get started.

In a short period, you’ll have a nice stash of hard assets purchased via dollar cost averaging (i.e., at the best cost basis you could hope to achieve).

Whatever you do, start now. Then keep going.

Article originally posted in the December issue of Smart Metals Investor at HardAssetsAlliance.com.

Living the 10 Tenets of Wellness

by Michael Arloski, PhD – ICPA:

Wellness always seems to be working toward answering one critical question: Why don’t people do what they know they need to do for themselves? Providing people with good information about physical fitness, stress management, nutrition, etc., is important, but insufficient. A lack of information isn’t the problem. With the amount of media attention given to health and well-being, it is hard to believe that most people don’t already know more than enough to live very well lives. Articles on cholesterol, healthy relationships, exercise and smoking cessation abound. But where is the motivation to change, and what is blocking it?

Whether we are looking at our individual health, or wellness programming for a small or large organization, there seem to be certain factors that have emerged in the decades that the wellness movement could call itself a field of study. Let me share some informal suggestions or tenets that, after many years in the “wellness biz,” it all comes down to for me.

1) Wellness is a holistic concept. Anything short of that is incomplete and ultimately ineffective. We need to look at the whole person and program for the mind, body, spirit and environment. Just picking the dimension of wellness that you like and minimizing the others doesn’t work in the long run.

* Imagine each dimension of wellness in your life like a spoke on a wheel. Draw a picture of your wellness wheel, extending your physical fitness spoke, your spiritual development spoke, your nutrition spoke, etc., out as far as you feel you have developed it, and practice what you preach. Do you have a wheel that rolls reasonably well? Where do you need to put your energy into learning more and practicing more?

2) Self-esteem is the critical factor in change. Wellness is caring enough about yourself to take stock of your life, make the necessary changes and find the support to maintain your motivation. Heal the wounds. Find what is holding you back from feeling good about yourself and work through the blocks, not around them.

As psychiatrist Jerry Jampolsky says, everything we do comes either from love or from fear. Where do your wellness lifestyle efforts come from? For many of us, change requires the hard, roll-up-the-sleeves work of facing our fears and healing old wounds received during our experience growing up in our families of origin and from our peer groups and communities. Positive affirmations, or self-statements, are excellent, but need to be coupled with this type of lifelong self-reflective work.

* Identify one negative message you frequently say to yourself (“You’re so stupid!” “You’ll never amount to anything,” etc.). Relax for a minute or two with your eyes closed. Think of the negative message, and say out loud in a shout, “Who says?” Notice who flashes into your mind: a parent, a teacher, a one-time peer? See with whom you have some unfinished business to deal with.

3) The people with whom we surround ourselves either help us stretch our wings and soar, or clip them again and again. Positive peer health norms encourage wellness lifestyle changes. Mutually beneficial relationships with friends, lovers, family members and colleagues who care about us as people are what we need to seek and create in our lives. Rather than being threatened by our personal growth, they support it. Do your friends, partners, etc., bring out your OK or not-OK feelings? Giving and receiving strokes are what it’s all about. Friends keep friends well.

* List who has joined your inner circle of supportive friends in the last ten years. Give thanks—or grieve, and get busy making new friends!

4) Break out of the trance! Conscious living means becoming aware of all the choices we have and acting on them. It involves a realization that we don’t have to run our lives on automatic pilot. We can turn off the television (remember, TV stands for “time vacuum”), read labels, turn off the lawn sprinklers when we have enough rain, notice how our food tastes, and notice how tense and contracted we are when we drive 15 mph over the speed limit. It means consciously working on our relationships, life goals and maximizing our potential.

* For three work days in a row, minimize your attachment to the world of the media: no radio, television, Internet, newspapers or magazines. See what you become aware of about yourself and the world around you.

5) A sense of connectedness — to other people, other species, the Earth and the “something greater” — grounds us in our lives. We are all of one heart. Much of this sense can come out of the land we live on. By identifying with where we live and getting to know the plants, animals, weather patterns, water sources and the landscape itself, we develop not only a love for it, but feel that love returned. Through our commitment to our place on earth we value and protect our environment by the way we live our lives, and by how we speak at the ballot box. Through our contact with the natural world we experience a solid sense of belonging, peace and harmony.

Theologian Matthew Fox likes to say that we can relate to the Earth in any of three ways. We can exploit it, recreate on it, or we can be in awe of it. I believe it is within a sense of awe that our potential for growth and healing is multiplied. From such a state of wonder it is easy to see all other species as relatives. The Lakota like to close every prayer with the words “Mitakaue Oyasin”: “For all my relations.”

* Spend twenty minutes in a natural area just listening to every sound you hear. Locate its origin. Identify patterns. Try it with your eyes closed part of the time. Cup your hands behind your ears and try it. Note your awarenesses.

6) We are primarily responsible for our health. There are the risk factors of genetics, toxic environments and the like, but our emotional and lifestyle choices determine our health and well-being more than anything else. As much as we’d like to cling to blame and cop-outs, we do have to be honest with ourselves. The flip side is the empowerment that this realization gives us.
One path out of passivity and illness is to realize what you can do to boost your immune system. Stress, fatigue and poor diet have a tremendous influence on our body’s ability to resist illness and disease. Most people report excessive stress and chronic sleep deprivation.

* To take charge of your own health and boost your immune system, follow the usual wellness advice and live a well-balanced, healthy lifestyle but, more specifically, experiment with getting more rest and practicing some established form of relaxation training.

7) From increased self-sufficiency comes the confidence and power that overshadows fear. The Australian aboriginal people say that when a person cannot walk out onto the land and feed, clothe and shelter himself adequately, a deep, primal fear grips his soul. Recognizing our interconnectedness, we grow tremendously when we can care for ourselves on many different levels. Skills, information and tools that enable us to live more fully all increase our self-respect and self-confidence. These could include knowing how to choose our food wisely (or even how to grow it ourselves); how to become more competent at our career; how to adjust the shifter on our bicycle; how to take a hike into a wilderness area; or even how to bake bread from scratch. We need to learn these skills and teach them to others, especially our children.

* Identify some skill you want to learn that would make your life easier, more economical or fun (baking, something mechanical, an outdoors skill). Locate a person from whom you can learn that skill and arrange an exchange of knowledge, skill, time, or some other reciprocal arrangement you both like.

8) As much as we all need time with others, we all need time apart. Solo time, especially in the natural world, helps us relax, de-contract and get beyond the distractions of modern life that prevent us from really knowing ourselves. Peoples from all around the world have traditions of spending time alone (usually in a wilderness setting) in order to gain vision about the direction and meaning in their lives. There are some powerful reasons for this.

* Find a partner who shares your desire to spend one full day in solo time. Locate a nearby natural area where you both feel safe and would enjoy spending the day. Pick a day with a relatively good weather forecast. Take a whistle with you, appropriate clothing, rain gear, etc. Bring water, but no food unless you have a special dietary consideration. Do not bring anything to read, or anything to write with. When you arrive, you should both select a small area (10 to 15 yards in diameter, max) where you would like to spend five to eight hours alone. Your site should be close enough for your partner to hear your whistle easily, but far enough away that you can have complete privacy. Taking opposite sides of the same hilltop ridge works very well for this. Reunite at a prearranged time. Spend your time in contemplation and awareness of everything around you. This is a journey into inner and outer nature. Reflect and write about your experience afterward if you like.

The goal here is not endurance. Bail out if you have a nasty change in weather, feel ill, etc. You can always reschedule. Though this exercise in solo time is not physically demanding, you need to be your own judge, or seek your physician’s advice, if you have any health concerns.

9) You don’t have to be perfect to be well. Extreme perfectionism is a shame-based process that feeds a really negative view of ourselves. Workaholism, anorexia and other addictive behaviors can result. Wellness does not mean swearing off hot-fudge sundaes. It just means not “b.s.-ing” yourself about when you last had one! Whenever our healthy habits move from being positive addictions to being compulsive behavior that works against us, we’re usually the last ones to know. A lot of time, extreme behavior is a way to distract yourself from some other issue that needs your attention.

* Get a gauge on your diet, exercise, etc. Read several sources and see what the experts recommend. Check your program out with a qualified local resource, such as a nutritionist or exercise specialist.

10) Play! We all need to lighten up and not take ourselves (and wellness) so seriously. Remember the lessons of the coyote and be playful, even ornery in a non-malicious way. Let the child within out to play. Give yourself permission.

The “work hard, play hard” philosophy does little to help us maintain the balance needed for a healthy life. Psychophysiology works twenty four hours a day, every day (not just on weekends). Integrate a healthy sense of humor and play into the workplace. Make sure your yang equals your yin!

* List several of your favorite “play” activities that you either do, or did at one time in your life. Now note when you last engaged in each of these activities. Celebrate, or contemplate what you’ve (temporarily) let go of in your life. Have fun reclaiming it!

Even with these tenets, there is no concrete wellness formula. You have to discover what works for you. Take them not as rules, but as modern folklore gathered by one who has walked the wellness way for quite a few years.

Article originally posted at ICPA.org.

Of Gold, Energy Stocks, and Bitcoin – Opportunities for the New Year

submitted by jwithrow.

Journal of a Wayward Philosopher
Of Gold, Energy Stocks, and Bitcoin – Opportunities for the New Year

January 2, 2015
Hot Springs, VA

Welcome to the first business day of 2015! The S&P opened at $2,055 today. Gold is down to $1,171 per ounce. Oil is down to $52 per barrel. Bitcoin remains rather flat at $315 per BTC, and the 10-year Treasury rate opened at 2.20% today.

We spent our time yesterday going over how fiat money enslaves society and we agreed that this was critical to understand if we are going to have a chance at being financially independent. Wife Rachel said it was a rather dreary journal entry so today we will endeavor to be more positive.

Let’s take a look at some of the financial opportunities we have for 2015.

First, the precious metals are as cheap in dollar terms as they have been in several years. Gold and silver could still drift lower in 2015 but the fundamental case for owning them is as strong as ever. This is a great time to pick up some ounces if you are a little short on your precious metals asset allocation.

Over in the equity markets, energy stocks of all sorts have taken a beating with plummeting oil prices. Fund managers accentuated the crash in energy stocks as they sold at a loss for tax purposes and to show little exposure to the sector at year-end. This is a great opportunity for a contrarian to add some energy exposure to his or her portfolio. It is advisable to be very diligent in this endeavor, however, as marginable producers will be squeezed if oil prices remain this low for an extended period of time. Be sure to go with the companies that can survive at current prices, keep position sizes reasonable, and stick to your stop-losses.

Several notable analysts expect the Fed to launch QE4 the moment the S&P starts to tumble which would send stock prices soaring even further. Some of these analysts think this will occur in 2015. The Day of Reckoning will eventually come for the current fiat monetary system as the Great Reset continues to unfold, but that day is not here yet. 2015 may provide an opportunity to capture gains in the market and convert those gains into hard assets.

Even more speculative is Bitcoin which plummeted from a 2014 high of $939 in January all the way down to its current price of $315 over the course of the year. Maybe $315 is a good entry point, I don’t know. Of course Bitcoin opened 2013 at $13 so maybe it is still reverting back to the mean.

Personally, I am not sure what to make of Bitcoin. Free market advocates are die-hard in their belief that Bitcoin has the potential to rid the world of fiat money by eliminating the need for any middlemen and thus eliminating transactional friction. Free market detractors are pretty adamant in their belief that Bitcoin is a pump and dump scheme that will not be relevant for long because it does not meet all of the standard qualifications for hard money.

I am in the middle somewhere – Bitcoin’s functionality fascinates me but I don’t think it eliminates the need for precious metals within the monetary system. I think a small dollar-cost-average approach may be a reasonable method of testing the Bitcoin waters.

Of course there is no room for speculation until you have built a sensible level of resiliency and have a sturdy asset allocation model in place. Having debt cleared out, cash on hand, precious metals for insurance, a back-up energy source, and some food and wine stored in the cellar will insulate you from any storm that comes your way, regardless of how your speculation works out. Throw in good family and friends and you will be in great shape no matter what happens in 2015 and beyond.

What else could you ask for?

More to come,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” and the fiat monetary system please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

The Homeschooling Renaissance

submitted by jwithrow.

Massachusetts passed the first compulsory school attendance law in 1852. By 1918 all states had compulsory school attendance legislation on the books. Prior to these compulsory education laws, a child’s education was the business and responsibility of the parents. Some children went to community schools, some went to boarding schools, and many received their education at home. The widespread emergence of compulsory public education ushered in the rise of the public school system and the majority of American children have made their way through the public system ever since.

The 1970’s and 80’s witnessed a homeschooling renaissance of sorts as a significant minority of parents began to seriously question the existing educational system. Those parents who chose to opt out of the system and homeschool their children found that they could facilitate an educational experience that was actually superior and the modern homeschooling movement was born.

Of course homeschooling was especially looked down upon in the early days of the renaissance. A few states prohibited homeschooling altogether and most school officials acted as though it were illegal everywhere. According to the HSLDA:

Homeschooling parents faced threats of jail time and having their children removed from their home. Some were arrested. Many were taken to court.

Parents were confronted by concerned neighbors, worried friends, and aghast relatives—all of whom were sure that the homeschooling mom and dad were ruining their children’s lives and dooming them to an unproductive future of illiteracy and isolation.

But those early homeschoolers hung tough. They fought the court battles. They went to the library and crafted their own curricula. And they quietly continued teaching, letting their children’s achievement answer the charges of their fiercest critics.

The valiant efforts of the 70’s and 80’s homeschoolers paired with the Internet Reformation has created a scenario today in which homeschooling can be done much more effectively and at a much lower cost than ever before. Students can now read articles and watch lectures on literally any topic imaginable with just the few clicks of a mouse. Students can use email, chat rooms, and video webinar software to interact with tutors and other students anywhere in the world without any location restrictions whatsoever. Students can even engage in freelance networks to test certain skills in the marketplace without ever leaving the security of their own home.

A world-class education is now available to every family for the price of an internet connection – something even the poorest Americans have access to. This is unprecedented in recorded human history!

According to the HSLDA, the number of families choosing to homeschool is growing at an annual rate of 7-15 percent. Parents are slowly waking up to this and removing their children from the existing educational system. The homeschooling renaissance is slowly creating the future of education.

The Benefits of Laughter

by Daniel Decker – ICPA.org:

Fact: Preschool-aged children laugh up to 400 times a day, but by the time we reach adulthood, we only laugh about 17 times per day!

I don’t know about you but when I read that statistic above, it makes me wonder why there is such a drop in laughter as we age. Is it because we begin to take life too seriously? Is it because our jobs and obligations begin to demand so much from us that we forget life is about living rather than just existing? Maybe it’s because as we enter adulthood we want people to take us seriously; in the process we trade laughter and silliness for what we consider maturity and respect. Or, it could just be that we no longer have a Big Wheel or crayons or can sit and watch an episode of Barney without someone making fun of us. Who knows?

The answer may be a mystery but the significant benefits of laughter are not.

Did you know that when you make someone laugh that you very well may be helping them strengthen their immune system, reduce food cravings, or even increase their threshold for pain? There’s even an emerging field known as “humor therapy” that is helping patients heal more quickly after surgery. Laughter reduces the level of stress hormones like cortisol, epinephrine, adrenaline, and dopamine. It also increases the level of health-enhancing hormones like endorphins, and neurotransmitters. Laughter has also been found to increase the number of antibody-producing cells and enhances the effectiveness of T cells within the body. All this creates a stronger immune system and better ability to ward off the effects of daily stress.

A good laugh also exercises the diaphragm, contracts the abs and even works out the shoulders, leaving muscles more relaxed afterward. Some research suggests it even provides a good workout for the heart. Laughter shifts our focus away from anger, guilt, stress, and negative emotions that can create more discomfort and stress within our lives. Laughter is contagious. If you bring more laughter into your life, you will not only help others around you to laugh more, but you will realize these same healthy benefits yourself.

So it seems that laughter really is the best medicine but how do we increase our dosage? Here are a few ideas…

Start with a shift in your perception. Studies show that our response to stressful events can be altered by whether we view something as a “threat” or a “challenge.” Humor can give us a more lighthearted perspective and help us view events as “challenges,” making them less threatening and more positive. The next time you are faced with what seems to be a roadblock in life (a threat), don’t get upset—becoming bitter and resentful—instead look at it as an opportunity to detour around it (a challenge). Sure, it may take a little more time but that detour may have something in store for you that you never dreamed possible.

Slow down. Regardless of how much we try, humans are not machines. Slowing down and spending time with others is vital to bringing more laughter into our lives. We can’t make someone laugh if we don’t take the time to engage them or genuinely care about them. Take a few minutes each day and when you pass a co-worker in the hall or even some stranger at the store…say hello and pay them a compliment. As you rush through your day, remember to also take time for those who serve you. The drycleaner, the waiter, the waitress, the clerk…use each interaction as a way to try and make someone else’s day instead of expecting them to make yours!

Tell a joke. Here’s a good clean one from my 5-year-old:

Q: Why did the cookie go to the doctor?
A: He felt crummy.

Say “Thank you” by sending someone an electronic thank-you card. Greeting card web sites make it easy to send someone a note just to say “thanks”…maybe for no reason at all other than for being a part of your life.

This week, be encouraged to laugh like a child. Make someone laugh and know that their laughter is not only making them feel good but improving their health (and yours as well).

Article originally posted at ICPA.org.

How Fiat Money Enslaves Society

submitted by jwithrow.

Journal of a Wayward Philosopher
How Fiat Money Enslaves Society

January 1, 2015
Hot Springs, VA

Happy New Year!

The markets stayed in bed today nursing their hangovers so we have no updates for you. Check back with us tomorrow for market updates.

We have recently been discussing the difference between fiat money and real money so I thought it would be prudent to kick off 2015 by discussing how fiat money enslaves society.

I know, nobody is walking around in shackles and chains – the slavery is much more subtle than that. But I firmly believe this is the single most important issue of our time. You cannot understand finance and economics unless you understand how fiat money operates. And you cannot become financially independent unless you understand finance and economics.

So here’s how it works:

Government creates a currency and decrees it money. Being the narcissist institution that it is, Government usually prints faces of past government officials on the physical currency. Next Government creates a central bank and declares that the central bank will issue and manage the currency. Government then implements an income tax to supplement the other taxes in existence and decrees that all taxes must be paid with the government’s currency. Government then passes legal tender laws requiring citizens to accept its currency as payment for all private debts as well. The penalty for not paying taxes or for not accepting government currency as payment is jail.

In this way the government/central bank alliance has effectively created a situation where everyone under the government’s claimed jurisdiction is forced to use its fiat money. There is no way to completely opt out; at minimum everyone has to acquire enough fiat money to pay taxes or else they will be thrown in jail. And we’re not talking about one or two little taxes; we are talking about taxes on all income earned, taxes on all investment gains earned, taxes on all real estate owned, taxes on all vehicles owned, taxes on all gas purchased for those vehicles, taxes on all food and goods purchased, and taxes on any inheritance received. Virtually everything you do is taxed!

Add up all of the taxes across all levels of government and it is very likely you are paying out 50% of what you earn in taxes, especially if you live in a major metropolitan city. That means you are working six months of the year just to pay the government.

But wait, it gets even better!

The central bank is free to issue as much new fiat money as it pleases and the record clearly shows that all central banks very much enjoy creating lots of new currency. The law of supply and demand tells us that each unit of currency will be worth less as new currency enters the economy – this is intuitive. What’s less intuitive is something called the Cantillon Effect.

Classical economist Richard Cantillon noticed something very important about inflation back around 1730 in France. Cantillon observed that the original recipients of newly created money enjoyed much higher standards of living at the expense of later recipients. The reason for this, Cantillon noted in his economic treatise Essai, is because of the disproportionate rise in prices as a result of inflation; prices do not rise until after the first recipients of the new money spend it into the general economy.

What this means is the very act of creating new money from nothing effectively steals purchasing power from everyone except those who first receive the new money!

So who first receives the new money? Why, governments and their favored institutions of course! This is how governments and their favored institutions grew to be so fantastically large in the 1900’s – they steadily picked the public’s pocket for an entire century!

To tie it all together: Government creates currency from nothing and forces you to use it by levying all manner of taxes on you that can only be paid with the government’s fiat money. Then Government’s buddy, the central bank, inflates the money supply which depreciates the value of the currency you are forced to use and transfers that lost purchasing power from you to Government. This makes it very difficult for you to save money because the money constantly loses value over time. The result is you have to work harder and harder just to pay off Government lest it throw you in jail. And that is how fiat money enslaves society.

This process is why you could drive down Main Street in Small Town USA back in 1950 and see bustling storefronts and a vibrant economy. Drive down that same Main Street today and you will probably see empty buildings and boarded up windows. You just can’t earn an honest living as a small proprietor or shopkeep anymore because you are Cantillon’s last recipient of new money in those businesses. Decades of unrestricted inflation has destroyed the value of the money to the point where small proprietors cannot earn enough of it to keep up with rising prices. Fiat money has hollowed out Middle America to the point where there’s not much of it left. This is exactly what has happened throughout history where fiat money has been implemented – the middle class is destroyed.

Governments have experimented with fiat money all through history and the most recent monetary model is the most deceptive to date. Fortunately, a fiat monetary system always sows the seeds of its own destruction and cannot last forever. In the meantime you can employ some basic financial strategies to protect yourself once you understand how the fiat money system works. We’ll look at some of those strategies in a later entry.

Until the morrow,

Joe Withrow
Wayward Philosopher

Calls for Repatriation Signify Changing Perceptions of Gold

by Justin Spittler, Hard Assets Alliance Analyst :

Last month, we urged readers to not lose sight of what makes gold special. Major market participants sure haven’t. In fact, Switzerland just held a public vote over whether to increase its gold holdings to 20% of total foreign reserves.

The referendum was voted down on November 30 and it wasn’t even close, which is hardly surprising considering the widespread smear campaign spearheaded by the federal government and central bank. Still, the fact that conversation reached a nationwide vote is encouraging. It’s just one of many examples of how prevailing attitudes toward gold are evolving.

Bird in Hand

Investors that look beyond the sensational headlines realize that not everyone has given up on gold. Poland, Venezuela, Ecuador, and Mexico are among the growing list of countries that have repatriated their gold reserves or have taken steps to do so. The movement has recently gained traction in crisis-stricken Europe.

Last year, Germany shocked the financial world when it requested that 300 metric tons of gold be transferred from Lower Manhattan to Frankfurt. The New York Federal Reserve offered excuse after excuse before ultimately saying the Bundesbank could have its gold back. It would just take seven years.

The Fed said it would need until 2020 to complete the delivery because they first needed to melt down gold bars. In other words, Germany’s gold was probably no longer in the Fed’s vaults. The leading theory among investment circles is Germany’s gold stash has been hypothecated, or leased out, to Wall Street banks for derivatives trading.

In any case, the Bundesbank agreed to a protracted delivery schedule. Eighteen months later, however, the Germans gave up on their repatriation efforts after receiving only 5 tons. Oddly enough, German officials maintain that country’s gold in good hands and sees “absolutely no reason” to not trust the Americans. Not every country shares this unflinching faith.

Last month, the Netherlands reported that it had transferred 122.5 metrics tons of gold from New York to Amsterdam, though it didn’t deliver the news until after the bullion had already made its way home. Dutch officials said the bullion was repatriated in order to inspire public confidence, which is interesting considering how Holland referred to its gold in Manhattan as “absolutely safe” two years ago.

France, Belgium, and most recently Austria have also conveyed interest in bringing foreign-held gold reserves home. With the global currency war heating back up and instability edging higher, precious metals investors will want to watch this trend closely.

Putting Trust to the Test

Germany’s failed attempt to repatriate 300 metric tons of gold from New York raises serious concerns over gold held outside a country’s border. In the coming years, trust between sovereign nations—even longtime allies—could be put to the test should more and more nations wish to hold their bullion within arm’s reach.

Few people monitor the actions of central banks as closely as precious metals investors. Usually, the focus is on monetary policy and gold accumulation trends, but repatriation efforts can’t be overlooked. Transporting metric tons of gold across the globe is a highly complex process. When a country makes that decision, you better believe they’ve thought about the matter long and hard.

The chorus of rational actors demanding that their gold be brought home is growing louder. Should a custodian in New York, London, or other global financial hub prove unable to return bullion to its rightful owner in a timely fashion, investors will have even more reason to mistrust the global fiat money scheme.

Article originally posted in the December issue of Smart Metals Investor at HardAssetsAlliance.com.

Ditch the Resolution, Embrace the Intention

by Bruce Steven Dolin, PsyD – ICPA:

Whether or not we make New Year’s resolutions, we think about them. We tend to tell ourselves that after the holidays are over we are going to get into better shape, eat better and commit to this or that course of action. We make resolutions, or we think about what we would resolve to do, if only we didn’t doubt that resolutions are effective.

On the other hand, we could leave the self-defeating resolution thing aside and instead consider crafting a New Year’s intention. For example, we could set the intention of dedicating our efforts this coming year to the benefit of our children. By consciously setting such an intention, we raise every other action to a higher level and infuse them with spirit.

If our intention is to dedicate all that we do to the health, happiness and well-being of our kids, then our attempts to stop smoking, get to the yoga studio or reduce procrastinating all subtly go to serve something that transcends ourselves. Ironically, when we are consciously playing on the team of our families, and by extension our communities and our world, we may be more likely to make healthy and effective choices for ourselves.

Resolutions tend to be exacting and rigid—an ironclad vision of our perfected selves. But we are not perfect, and all our attempts to be perfect inevitably fail, reinforcing low self-esteem. Striving for improvement, even by small increments, leads to real growth over time. Perfectionism dooms us to failure by setting the bar at a superhuman level.

Yoga literally means “to bind”—harnessing body, mind and spirit to a singular focus or intention. Consciously dedicating our lives to the benefit of something, even something as broadly defined as “our children,” can arguably turn parenting itself into yoga. The core concept of Privilege of Parenting is that conscious parenting is, in and of itself, a path to happiness and enlightenment. Doing what is already on our plates, but with mindfulness and a dedication to something higher, liberates as it invites balance, strength and courage…of body, mind and spirit. Setting intention in this way potentially benefits children, but also greatly benefits the parent who sets the intention—allowing an alignment of personal energy with forces greater than the wants and needs of the ego-self alone.

Parenting is very challenging, and expecting to be a perfect parent is an ill-conceived notion. Losing our tempers less, being a little more patient, spending a bit more time listening to our kids…these are directions, not resolutions. But by dedicating to the good of others our mere attempts to grow, as parents or as beings aside from the care of children, we create a New Year’s intention that lends heart and spirit even to our abject failures and terribly human fiascoes and regressions.

We can set one intention, a few intentions or many. We can keep our intentions in mind on a daily basis, or come back to them a year from now. But there’s surely room for one conscious breath at this pulsing moment, breathing in love and breathing out fear and desire as we silently harness the energy of our heart-minds and our gut-minds in a direction of loving kindness for our “children,” biological, adopted, animal, vegetable, mineral… and even ethereal, archetypal and purely energistic.

So, let’s set a New Year’s intention. Let’s make this coming year, with all our strivings and struggles, all our victories and defeats, consciously stand to benefit all our collective children.

Article originally posted at ICPA.org.

Capitalism and Creditism and Corporatism, Oh My!

submitted by jwithrow.

Journal of a Wayward Philosopher
Capitalism and Creditism and Corporatism, Oh My!

December 26, 2014
Hot Springs, VA

The S&P opened at $2,084 today. Gold is flat around $1,198 per ounce. Oil is still checking in at $56 per barrel. Bitcoin is at $326 per BTC, and the 10-year Treasury rate opened at 2.24% today.

All is quiet in the markets this holiday season. We may look back on this time period in a few years and say that we were presented with a tremendous opportunity to buy beaten down energy and commodity stocks during the tax-loss selling season of 2014. We probably will say that we had a great opportunity to accumulate some gold throughout 2014 as well. Just be sure to follow your asset allocation model if you decide to capitalize on these opportunities.

Yesterday we examined our current economic circumstances and realized that we were employing capitalism but we had no capital! Today we must ask the question: How can you have capitalism without any capital?

The obvious answer is you can’t. It’s like making potato soup without potatoes – try as you might it just won’t work.

So if we don’t have capitalism then what do we have? My answer is that we have some weird blend of creditism and corporatism. Governments have colluded with large corporate interests, especially in the commercial banking sector, to rig the economy in their favor.

Though we could go back further, let’s start our story (from the American perspective) at the end of World War II. Prior to the war governments didn’t think they could do everything they wanted due to financial constraints. That didn’t stop them from doing half of what they wanted to do but it forced them to make a choice. Did they want guns (warfare) or butter (welfare)?

The U.S. came out of WWII looking like gold… literally. The U.S. economy was the least damaged by the war which ravaged Europe and it came out holding the world’s largest stash of gold reserves. This relative economic strength gave U.S. politicians the wrong idea: they started to think they might not need to make any choices. Then President Lyndon Johnson came along and he wasn’t shy about it – guns and butter it will be!

So we got the Vietnam War and the Great Society together! And gold steadily flowed out of the U.S. Treasury until President Nixon pulled the switch-a-roo in 1971 and closed the gold window. All of a sudden the international monetary system became elastic. With no more gold restraint, dollars and yen and pounds started to pile up as central banks and commercial banks discovered they could conjure money into existence largely at will. But this was a different kind of money than the gold-backed variety – it was credit-based.

This credit-based money was extremely popular and the money supply grew 50-fold between World War II and 2008. Everyone got used to a constantly expanding money supply and now both the economy and asset prices are dependent upon it. It is the expansion of credit, not real capital, that supports all of the federal spending programs, all of the wars in the Middle East, the mass imports from China and Vietnam, the new housing developments and shopping malls in Middle America, the massive car lots across the country, most of the skyscrapers dotting the city skies, and current real estate and stock market valuations.

Here’s a fun example: do you know how much debt is still owed on the tax-funded Meadowlands Sports Complex in New Jersey? I’ll tell you: more than $100 million is still owed on the facility. Oh, and I am talking about the old Meadowlands Stadium that was closed and demolished in 2009 to make way for a new $1.6 billion facility now known as MetLife Stadium. New Jersey taxpayers are still on the hook for $100 million on a sports complex that no longer exists! New Jersey built the stadium, used the stadium, and demolished the stadium but never bothered to pay for it.

Such nonsense can only occur in a world of ever-expanding credit-based funny money.

This applies to the massive bank bailouts and banker bonuses that one side of the fictitious aisle rails against just as it applies to the massive welfare programs that the other side of the false political-divide takes issue with. None of it exists without perpetual credit expansion; none of it exists without creditism and corporatism.

Capitalism would have nothing to do with any of it.

It is important to understand that we have only seen one side of the credit cycle within the current monetary system. Credit has been expanding constantly for more than forty years now. But if we look around our world we can clearly see that nothing expands forever. Waves rise then fall. Trees grow then mature. Balloons inflate then pop.

One day credit will have to contract; it is inevitable. What happens when that day comes? Ludwig von Mises, the late Austrian School economist, offered some insight:

“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.”

Was he right? Time will tell.

More to come,

Joe Withrow
Wayward Philosopher

Capitalism Without the Capital

submitted by jwithrow.

Journal of a Wayward Philosopher
Capitalism Without the Capital

December 25, 2014
Hot Springs, VA

Merry Christmas!

The markets are closed today in honor of this wonderful holiday so we have no updates for you in this entry. Check back in with us tomorrow for market updates. We do have an important entry for you today, however. It’s not nearly as important as spending time with your family on Christmas Day but, since you are here nonetheless, we will carry on.

Earlier this month we watched as the U.S. national debt came up behind $18 trillion, whipped into the passing lane without signaling, and sped off into the distance. Where is the national debt going in such a rush? I’m not sure, but I’d wager it’s someplace not worth going to.

As the national debt raced past we noted that total credit market debt has ballooned up to 330% of GDP with considerable help from the Fed’s efforts to pump in $4.3 trillion worth of hot air.

The television analysts accept it all as normal but we must ask the question: How in the world did we get to this point?

Much of the apparent prosperity we have enjoyed over the last several years has been borrowed from the future. The world’s three major central banks – The Federal Reserve, the European Central Bank, and the Bank of Japan – have each been engaged in an outrageous financial experiment; they have been creating massive amounts of currency out of thin air to purchase government debt by the boat-load.

Remember, debt is nothing more than a promise to pay for present spending with future earnings. These central banks, in collusion with their respective government, are really engaged in a scheme to transfer massive amounts of wealth from the public in the future to themselves in the present. There will be serious consequences to this madness.

It is important to realize that none of this chicanery has anything to do with capitalism… there’s no capital even in sight! The money created by the central banks of the world may act much like real capital, but it is just a clever impersonator.

Capital, according to the Ludwig von Mises Institute, is defined as the goods that were produced by previous stages of production but do not directly satisfy consumer’s needs. In short, capital is real savings and real resources.

Capital formation is actually quite simple – just save more than you consume and you will have capital.

We are currently doing the opposite – we are consuming way more than we produce. That’s how you end up with debt piled to the ceiling. This is true on the macro level (governments, multi-national corporations, etc.) and it is true on the micro level (individuals, local communities). The credit-based money and the massive debt have driven capital into hiding… we suspect for fear of being called a greedy capitalist.

And that, in a nutshell, is the answer to our question: we got to this point by embracing central banking and fiat money thus abandoning capitalism and its sound monetary system.

Sound Money once kept debt and the central planners at bay.

What was the secret?

Sound Money was like your grumpy friend that just won’t ever agree to do anything. You ask him to go to the movies and he says nope. You ask him to go to the ball game and he says he’ll watch it on T.V. You ask him to go to the bar and he says he has beer in the fridge at home already. Eventually you learn there’s nothing you can talk him into doing so you stop trying. That’s why governments and central banks hated Sound Money; it would never agree to any of their best laid plans.

You see, Sound Money could not be infinitely printed by governments or central banks. Originally, before governments got into the money business, money could not be printed at all; it had to be dug out of the ground and then minted into a coin. Later, governments took it upon themselves to stockpile gold in a vault and create paper currencies 100% backed by the gold. Always one to offer something it doesn’t have at a price it cannot sustain, Government reduced the gold backing of its currency over time and then, in 1971, it cut ties to gold altogether. That was the requiem for Sound Money and ever since then there has been absolutely no limits on the amount of currency central banks can create. Which means there has also been absolutely no limit on how much debt governments can rack up.

So here we are.

But just because there have been no limits to all of this economic madness in the short run does not mean there will never again be any limits. History shows that market forces cannot be perpetually suppressed and distorted – eventually the market will win out. The Day of Reckoning will come.

Until the morrow,

Joe Withrow
Wayward Philosopher