What inspired Barry to re-post Part 1 here publicly is… that the good folks at RealVision, via a recent addition of their 20/20 free newsletter, say that “A sound understanding of money is key to becoming a great investor.”
We here at M4 agree. Yet, the rub is that we just don’t agree on the overall reason for continuing, in 2018, to make the point that GOLD was (or should be) money.
Sure, it could still be used as a medium of exchange, but until the day comes when society-at-large no longer wants to have faith in using their debit cards and other digital forms of monetary transactions at WalMart, just accept the fact that GOLD is truly more like ‘backup money,’ not necessarily ideal in this new-tech day and age.
So, let’ dive into some critical-thinking on the subject…
Ya know… ya gotta admit, things you hear that can be possible, but rarely probable, are indeed fascinating.
For instance, full end-to-end double rainbows really are cool (er, WARNING, if you click the link and have people around you, not looking at your screen, but only hearing what’s coming from your speakers, they may think you’re watching porn).
So, just as fascinating as what the guy in the link above found (taking his hilarious reaction out of the equation) is how we humans mostly only let common sense ‘sink in’ IF the teaching — the reminders — are delivered in a not-so-common way.
Sure, there are things in life we don’t need to be taught to “get” — like how wine really is made from grapes… or… how the meat in a Taco Bell taco really is cow meat (not anything more or less).
But, when it comes to finances and money, man oh man, sometimes a good storyline — a setting of cryptic and hammy proportions — is all it takes to have sensibility again become popular (and inspiring) for us.
Enter what the sheeple — those who easily latch onto popular culture and memes rather than expend energy to think in deeper ways — have made one of the longest-running and bestselling books of all time:
The Richest Man in Babylon.
George S. Clason didn’t write it to be a book. Rather, he started writing parables in 1926 and they were distributed by banks in pamphlet form. The most famous of these parables were later compiled into the book, The Richest Man in Babylon.
The book takes a couple of simple concepts and beats them to death in a series of mind-numbing stories written in old English style writing.
The narrative follows two poor workers, Bansir and Kobbi, as they attempt to gain wealth. They ask advice of their friend Arkad, who is the titular “richest man in Babylon”. Arkad proceeds to use a series of parables to illustrate the financial, or wealth-building, secrets of the so-called “ancients.”
If you like old English, or enjoy Shakespeare, and need an “imagine yourself rich” motivational story, you may like this book.
But, somehow I think you’re already past basic concepts like  save a portion of your income (put away X% of your income every paycheck);  control your expenditures (don’t spend more than you need to);  increase the amount of money you earn; and  protect your wealth against losses, etc.
Then again, the world-at-large has apparently clamored for the Aesopian proverbs (like, “Better a little caution than a great regret”) and the yoga-esque platitudes (like, “Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep”) that come along with it.
On that latter, seemingly godly note… current day wisdom just might say: “I only invest in businesses I understand” (Warren Buffet). Yeah, but reaaaaaally, come on. Who wants something so simple; so cut-to-the-chase drab, when they can get an eth or thee thrown in every other paragraph? 🙂
The entire book basically boils down to: pay your bills, save some money, make it grow.
Yet, for the greenhorns coming into a J-O-B with their first paycheck, or for those just getting started in the world of investing, here’s a bit of elaboration on one key word used judiciously throughout the book:
Gold’s Scary Secrets: It doesn’t mean you won’t be wealthy if you don’t have any. Far from it, as it was used to simply signify money, or capital, in the above book.
And, as you’ll soon see, current day money, even in its paper (fiat and legal tender) form, can (and should) be used to increase income and build wealth.
Gold (in “physical” form) can certainly help store the value of your net worth; i.e., the dollar value of your total assets (bank accounts, stocks, real estate equity, etc.) minus the dollar value of your total liabilities (bank loans, credit card debt, etc.)
But, you have to get this distinction: it WAS once used as money. Just like cowry shells, shekels (a weight of barley), and other commodity-driven forms of money were. Yet, they eventually become obsolete due to technology (in my coming DETAILED gold report, I will get into the hype around the gold bugs holding onto the “how every paper-based money has failed, or will fail,” canard).
As a “monetary asset” (yup, regardless of Ron Paul faithfuls’ claim, Bernake was 100% correct with that label; while you can’t pay for dinner with it, you can use it as collateral), bullion (physical gold) is the best hopeful insurance against economic and political disaster (i.e., bureaucrats causing COMPLETE loss of confidence in the worldwide fiat monetary system, as represented through multiple currencies (think: Yen, Dollar, Franc, Euro, etc).
I didn’t add in the word “social” above, as in a breakdown of society, Mad Max style, gold isn’t going to be anything other than a shiny rock to look at. In this far-fetched scenario, the commodities I want on hand are:
Hundreds of 5-gallon Poland Spring Water containers, gasoline stored to run a generator for months, firewood, blood pressure medicine, storable food, Swiss Army knife, Bowie knife, batteries, shortwave radio receiver, and a Remington pump-action 10-gauge shotgun, with sufficient ammo.
Do I spend a waking minute worrying, or even thinking, that the above scenario can (or will) happen? Ah, I think you already know the answer. But, I’ll say it like this:
Instead, I get enthralled with ideas! Combine those with prosperity-minded people, experience, and technological resources and you can’t help but be part of creating a better world through VALUE and INNOVATION (more on that shortly).
So, here’s the problem with just tossing around the word “gold” without any context, or any understanding of anything about it, except its latest 10-year pricing boom.
Like the flock of believers who get sucked into the exploits of the next traveling faith healer, you also might take a leap of faith to the shiny metal… all because, well, everybody seems to be.
In the August 29 issue of Barron’s, Gene Epstein wrote that “In addition to being a commodity, gold is also a cause.”
Yet that cause has gotten skewed. Again, it should ONLY be used to mitigate risk, purchasing power loss, in true investments. But, like some religions who think that those who unquestionably believe (yeah, just believe) will be rewarded handsomely in the afterlife, extreme gold bugs will tell you if you don’t buy all you can now you’re being led astray by the forces of evil.
Just like Christianity is divided into so many sects, so too is gold: You’ve got the hard bullion people, the people who speculate in the miners, the ETFs, and even spinoff precious metals, like silver.
You also have the really far-out-there, cult-like folks who think they’re actually making long-term, value-based “investments” in the relic metal.
[ End of Part 1 ] Part 2 & 3 can be read HERE…
In our case, ‘GROWING’ our dollars.
After all, those digits that show up in your bank and brokerage accounts are what they are. You can either fall for the “demise of the dollar” run-for-the-hills (and take your MRE — Meals-Ready-To-Eat — cans with you)… or… you can work with the current system you’re in.
Which means, whether you like it or not, employing a larger percentage of your available “investable cash” in assets that TRADE — usually those can be bought and sold via a public exchange (or sometimes privately).
And, one of the best ways we know to do this is to get to know ‘smarter’ people than us… namely fund managers and traders who are more consumed (and intelligent) than we are.
We use MANAGED trading-based accounts, in other words, to accomplish this.
The bottom line is: The dollar is still the world’s reserve currency. And, as of this moment (or any foreseeable near-future moment), there’s nothing of super value to put in its place. There are no better solutions (unless the entire world is willing to have gold-backed currencies, or go full-on crypto-currency).
Control what you can, focus on what you’re dealing with, and learn to PROFIT from current reality.
Our vetted traders, programs and system do.