The Wisdom of Looking Like an Idiot Today

If you can keep your head when all about you 
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;

~ Opening stanza to Rudyard Kipling's "If"

So, let's say you're a prudent person who has concerns that our economy isn't 'recovering' as robustly as you'd like.

Perhaps you still remember the speed and depth of the 2008 credit crisis' arrival, and its toxic impact on asset prices, jobs, and overall trust in the financial system. Maybe you took notes during the preceding tech and housing bubbles and their aftermath. If so, you likely swore that "Never again!" would you put your wealth at risk during such obvious times of public mania.

Chances are, you've probably logged a lot of online hours over the past several years trying to read the economic tea leaves more closely. Are things becoming more stable, or less? What are "safer" measures for protecting and building wealth than simply putting all your chips into the paper markets (stocks & bonds) and real estate?

As a result, you've probably had a smaller percentage of your wealth in the stock/bond markets over the past few years than your peers. You probably also own some gold and silver, likely having bought much of it between 2009-2011 with the stock market collapse still fresh in your memory. Chances are also good that you've made a series of "preparedness" investments (stored food, etc.) as an insurance policy in case really tough times were to break out. Most of your family and friends didn't take these steps, nor are they particularly interested in talking about your reasons for taking them.

So, if this sounds at all like you, five years after the 2008 crisis, how is the "prudent" strategy looking today?

Looking Like an Idiot

As one who took similar steps, I'll confirm that it looks pretty lousy to the casual observer.

Stocks & Bonds

There has been an absolute party in the stock market over the past two years. The S&P is up nearly 40% (!) since early 2012 and has almost tripled since its 2009 lows. It's been nearly impossible not to make money in the stock market recently (unless you've owned mining shares).

Bonds have remained at historically elevated prices. And although 2013 has seen prices come off slightly from their highs, prices are still substantially above pre-crisis levels.

The pumped-up performance of paper assets here is, of course, due to the staggering amounts of new money that the Fed has been creating since 2008. Starting with a balance sheet of $880 billion pre-crisis, the Fed has since expanded it by an additional $3 trillion, in less than 5 years. And it's continuing to expand to the tune of $85 billion (some calculate $100 billion) per month.

Most of that money sits in excess reserves enriching the banks at zero risk, at high hidden cost to the public (a rant for another day). But enough of it is sloshing over into the markets where it does exactly what excess liquidity always does: rise all boats.

So, if you decided to stay out of the markets, you've watched the party boat pass you by. They say don't fight the Fed, and so far, the Fed is indeed winning. In reality, it will likely prove to be the Charlie Sheen version of "winning", but to the casual observer whose 401k is up 20% this year, the Fed definitely appears to be playing the better hand.

Real Estate

How soon we forget. Home prices have resumed climbing at historically aberrant rates. Case-Shiller just reported that year-over-year, its national home price index grew by 11.2%.

A number of markets have re-entered bubble territory. San Francisco, where prices are now higher than at their 2007 peak, saw a 26% year-over-year increase in average prices. Las Vegas, the poster child for housing price excesses six years ago, saw a 29% average price increase from 2012 to 2013.

The tell-tale sign of an overheated housing market house flipping is back.

If you've been holding off on purchasing real estate (as I have) expecting that a stumble back into recession, or higher interest rates, could bring prices down to saner baselines again, you're watching prices get away from you.

Precious Metals

Ugh. There's no denying that it has been a very rough two years for gold and silver holders. As I'm writing this, gold and silver are dropping to near 4-year lows.

For those burned by the last crisis who purchased precious metals near their zenith in 2011, hoping to protect the purchasing power of their capital, the nauseating declines since early 2012 (especially in silver) have done anything but.

Those who bought PMs pre-2008 enjoyed a long stretch of validation while prices appreciated year after year. With a material percentage of that appreciation now gone, and month after month of relentless losses punctuated by vicious price smashes, it's harder to feel as smart as it once was.

But it's maddening. With the $3 trillion in new currency recently created by the Federal Reserve, shouldn't precious metals be appreciating? Wildly? Isn't that their central promise: to hold value as the purchasing power of paper money inflates away? But instead, they're decreasing in dollar price, even as the money supply continues to expand. How is that possible? 

And Bitcoin! From almost out of nowhere, a new alternative currency skyrockets from nearly valueless to (briefly?) match the price of gold. It's like adding insult to injury for the 99.9% of precious metals holders who don't also hold Bitcoin. How can the world suddenly wake up to the advantages offered by non-fiat currency, and yet still treat the granddaddy of sound money like kryptonite?

Sentiment

In 2009 and 2010, those of us who had warned our friends of the lurking risks in our economic and financial system suddenly looked like geniuses, instead of the kooks that folks had dismissed us as. Now, we're back to being kooks.

A chart Chris has been sharing recently with our enrolled members shows that at no time in the past 30 years has sentiment been this bullish, not even during the Internet stock mania of the late 1990s:

Faith in the current system is as high as it has ever been, and folks don't want to hear otherwise.

This extreme optimism extends beyond the Economy. In the Energy sphere, in news headlines discussion of the "shale miracle" is still omnipresent without, of course, any mention of net energy, extraction costs, or depletion rates. In the Environment, coverage of the real-time collapse of key fisheries or water shortages likely to impact food production rarely gets any mainstream notice.

In short: If you're one of those people who thinks it prudent to have intelligent discussion on some of these risks that maybe the future will turn out to be less than 100% awesome in every dimension you're probably finding yourself standing alone at cocktail parties these days.

The Madness of Crowds

Charles MacKay's excellent classic reference book, Extraordinary Popular Delusions and the Madness of Crowds, explains the nefarious nature of public manias: They strive to suck in as many participants as possible before collapsing.

We are seeing classic signs of the abandonment of concern by the public in favor of not missing out on 'easy gains'. In addition to the examples mentioned above, signals that the fear trade has given way to the greed trade are abundant these days:

  • Stock chasing - Here's a quote the WSJ recorded from an actual retail investor buying shares on the first day of the recent twitter IPO:  I messed up not buying any Facebook so I want to get some Twitter. I'm just buying because everyone's talking about Twitter. Not because of its product (which she admitted she didn't use). Or its business model (which has never been profitable and unclear whether it ever will be). The purchase decision was based purely on hype.
  • Priority abandonment - At Peak Prosperity, we speak with professional financial advisers frequently. The advisers we know best focus on risk mitigation and remain skeptical of the sustainability of the prolonged market rally. Many of their accounts signed on after 2008, clearly declaring that they prioritized protection of their capital over everything else. Yet a growing number of these investors are watching the continued rise in financial asset prices and are now pushing for more aggressive management. They're abandoning the prudence that was so important to them just a few years ago.
  • Bear capitulation - The path to a bull market peak is littered with the carcasses of bearish analysts that dared to challenge its rise. As the % bearish Investors Intelligence chart above shows, there are few bears left to be found anymore. Just last week saw a major defection from the bear camp, with the perennially critical Hugh Hendry throwing in the towel, exclaiming:

I can no longer say I am bearish. When markets become parabolic, the people who exist within them are trend followers, because the guys who are qualitative have got taken out.

I cannot look at myself in the mirror; everything I have believed in I have had to reject. This environment only makes sense through the prism of trends.
 
I may be providing a public utility here, as the last bear to capitulate. You are well within your rights to say ‘sell'. 
  • Warning sign dismissal - It's not as if there aren't clear alarm bells being sounded by the very experts the public looks to for such warnings. It's just that these warnings are being ignored by the market. No one wants the party to end:

"All markets are bubbly"

~ Bill Gross, November 29, 2013

"In many countries the stock price levels are high, and in many real estate markets prices have risen sharply...that could end badly. I find the boom in the U.S. stock market most concerning,"

~ Robert Shiller, December 1, 2013

"Now, five years later, signs of frothiness, if not outright bubbles, are reappearing in [at least 17 global] housing markets"

"What we are witnessing in many countries looks like a slow-motion replay of the last housing-market train wreck. And, like last time, the bigger the bubbles become, the nastier the collision with reality will be."

~ Nouriel Roubini, November 29, 2013

When this latest global asset bubble bursts as Roubini reminds us, by definition, it must; the public will cry, "Why didn't anyone warn us?" The media will reflexively utter, "Nobody saw this coming," But the truth is, there is evidence galore for those who choose to look for it.

The Wisdom of Looking Like an Idiot Today

The other key characteristic about popular manias/bubbles is that they collapse suddenly. Much more swiftly than they took to build.

The resultant carnage catches the masses like deer in headlights. The Kubler-Ross stages of grief begin quickly, and since Denial is Stage 1, most folks delay taking action out of disbelief. Soon the Bargaining stage is reached, and they continue to delay reaction as prices continue falling praying for the chance to get out if a reversal would just happen. It's not until Acceptance that most will take action, selling after the down draft has largely run its course.

Here are some useful stats to keep in mind that show how sudden and savage the 2008 market collapse was:

  • Week of Oct 6, 2008 - The Dow Jones dropped 18%; its worst week ever in terms of both absolute and percentage loss.
  • March 6, 2009 - The nadir for the stock market. By this date, 5 months after the crisis began, the Dow was down 54% since October

The takeaway here is that the wealth destruction caught most investors flat-footed. Most were unprepared both psychologically as well as with their portfolio positioning to react.

Many investors thought themselves savvy and nimble enough to avoid the losses they ultimately suffered, telling themselves an ill-fated narrative similar to what Charles Prince told his shareholders:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”

~ Chuck Prince, Citigroup CEO, Jul 9 2007

Most readers remember how Citigroup's price dropped from over $500/share, when Prince made this comment, to $10/share in March 2009. Prince was booted from his CEO role in late 2007 due to emerging losses resulting from the bank's MBS and CDO positions, investment classes which proved to be at the heart of the 2008 crisis.

So, a smart question to ask at this time is: Is the moment in time we're in today closer to January 2006, when there were several years left of exuberance to ride? Or is it more like September 2008, poised at the precipice?

A smarter answer is: There's no way to know with acceptable certainty.

Like grains of sand piling up or snowflakes falling on a cornice, we can assess the growing level of risk, but we can't identify the grain of sand or snowflake that will cause the eventual cascade. We can't predict the collapse timing with confidence. We can and will continue to make our best-educated estimates, but the exact timing is unknowable.

So, given that fact, as John Hussman so pithily captures, bubble markets force us to make a choice:

The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. 

And so your choice is upon you. Look at the evidence around you  a movie nearly identical to one you saw in 2000 and again in 2008 and either decide to party with the herd while the music plays (look smart today), or park yourself in safety now (look smart tomorrow).

Since the timing of the next correction is unknowable, the prudent choice is obvious. But it's not easy, for all of the reasons mentioned at the start of this article.

A helpful question to ask yourself is: If I could talk to my 2009 self, what would s/he advise me to do?

For most of us, our past self, recently reminded of the anguish of wealth destruction, would say, "Run to safety!" at the first whiff of anything bubblicious. Research has shown that when the chips are down, the benefits of loss aversion are always preferred to the joys of gain.

Don't put yourself in a position to relearn that lesson so soon after the last bubble. Exercise the wisdom to look like an idiot today.

The Need for Discipline is Greater Than Ever

Okay, so what should today's "idiot" focus on doing?

  • Build cash - It's not sexy. And it's not fun to see the dollar price of nearly every asset known to man escalate while you hold cash. But bubbles are designed to take as much as possible from as many people as possible. During the popping of a bubble, the real wealth (underlying assets like companies, land, minerals, etc.) doesn't vaporize like the high prices do. Those assets are simply transferred at a lower (more attractive) price to those people who still have money. Be one of those people.
  • Hold on to your precious metals - I know. It's painful right now. For most PM owners, just hold onto what you have right now. Those with stronger stomachs should be dollar-cost averaging. Remember, the fundamentals for owning gold and silver have not changed AT ALL over the past few years. Stay largely with physical bullion. Don't speculate with the mining stocks at this time unless you're a risk junkie (or masochist?) and then only with money you can afford to lose.
  • Scout out locally-based hard-asset investments for the future - Once this bubble pops, higher interest rates and lower prices will result. Look around your local area for assets (businesses, housing, farmland, livestock, etc.) that you would consider holding at least a percentage ownership in. Calculate what price would make you an interested investor. While that price may be years away, when the impact of a market correction hits, you'll be poised to move ahead of the other savvy investors to secure the opportunities you want (and play a role in stabilizing the community in which you live).
  • Design your trading plan for a market downdraft - What steps will you/your financial adviser take if the market starts cratering? If you don't currently have a plan in place, now is the time to design it. Will you employ stops? What "safe assets" will you move to? (Treasurys, cash, other currencies?) Will you strictly be a sidelines observer, or will you take any active short positions on the downside? Will there be opportunity to generate income using vehicles like covered calls? Whatever makes sense for you, devise your strategy in the calmness of today vs. on the fly while the markets are melting down around you and everyone is panicking. And if your financial adviser is unable to provide you with a comforting answer as to his/her strategy for captaining your money through another 2008-like (or worse) correction, we have a few recommended advisers you may want to consider talking with.
  • Build your roof while the sun is shining - So many of the most valuable investments are not financial (emergency preparedness, energy efficiency, community, health to name just a few). Use the gift of time we have now to invest in expanding your degree of resilience. If it's been a while, take a fresh skim though our What Should I Do? Guide to identify any areas where you aren't satisfactorily prepared. These are the investments that it's infinitely better to have in place "a year early vs. a day late."
  • Increase emotional fortitude - Being "wrong" in the eyes of society is trying. And it's stressful for many, especially if your partner or others of those close to you don't share your views. Keep learning by reading this site and a wide range of others, including those with opposing commentary. Develop your opinions based on the data you determine is most accurate your ability to stand resolute against popular sentiment will be grounded in your confidence in the "big picture." Seek support from the thousands of other Peak Prosperity readers who are wrestling with the same issue set you are, by participating in our Groups. We created them to help people support each other both virtually and "in person" within their local communities.
  • Develop an income loss plan - If we're correct in our prediction of a major downdraft, a return to deep recession is likely, and with it, a return to higher unemployment. Loss of income is a stressful trauma, especially if it happens unexpectedly and is compounded by a hobbled job market. Take some time to assess your job's level of vulnerability to another recession. If it's higher than you'd like, ask yourself what you would do if a sudden layoff occurred. Start doing the work now to at least sketch out the path you would take if that happened. If possible, develop some relationships or related skills now that would give you an unfair advantage should you ever need to head down that route. The first third of our book, Finding Your Way to Your Authentic Career has a number of exercises that provide useful guidance for those looking to do this.
  • Develop an income enhancement plan - The resilience that comes with multiple income streams really helps you sleep at night, as you're less vulnerable to having your entire life upended if a sudden pink slip appears. Also, having extra income to direct to other goals (retirement, education, homesteading, etc.) enables you to reach them faster. We're all busy, but thinking creatively for a moment: What could you start doing today to secure extra income streams in the future? This is a topic that Chris often helps folks think through in his consultations.

Essentially, the approach here is to dismiss what is not in our control and focus on what we can best do with what is.

Be practical. Be prudent. Be dull to those watching you from the dance floor. 

John Hussman signed off his latest report with the advice: "Risk dominates. Hold tight."  I agree. Now is the time act with the courage of our convictions.

As Kipling put it at the end of his poem:

If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,
Or walk with Kings - nor lose the common touch,
If neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son!

~ Adam Taggart

This is a companion discussion topic for the original entry at https://peakprosperity.com/the-wisdom-of-looking-like-an-idiot-today/

Very helpful.  Refocusing on things that matter and the long perspective.  And the madness of crowds, even those in our own families who "know" that we are wrong.

Having the collapse of civilization branded into my soul, these words are confirmation of that which I already know. Is there a piece of music called " Play it again Sam?"
How ruthless are you? Can you choose which of your family will live and which will die? You may have to. My choice was to abandon the old. Given the same circumstances I could not do it again. (I may have to-but that would be grossly unfair.) But I know that I made the "right" decision. I cannot complain if those whom I voted in favour of make the same choice.

Do my teeth ache? Is my bed warm and dry? If I am comfortable I am grateful.

Can I materially contribute to the survival of my grandchildren- if not, can I keep out of their way? They will need room to swing an ax. There may come a time when Grandpa has to haul them to safety. And for that I need a yacht. Forget the airports, they will be shut.

The markets that I follow are Maslow's Markets. Keeping it Real. 

Good post, Adam. It's worth examining the hubris of the money management class, the "smartest guys in the room" whose success in "dancing while the music is playing" has fueled their confidence that they will be able to shuffle to the exit just before the market goes over the waterfall. Their hubris feeds back into the market, of course, as their confidence in their ability to dance until the last minute leads to "buy the dips" which pushes the market higher and keeps the music playing.
Since everyone can't exit the market at once without triggering a crash, we know that 90% of these smart guys will not be able to exit before the waterfall decline. 

I have a 2-part essay that makes the case for a stock market crash in the works–it might be up on the site by next week.

somedays it can be awfully lonely when you're navigating thru the bush on your own, regardless of how independent & resilient you think you are.  None of what is going on makes sense.  I've come to accept it, albeit with the same frustration as trying pitch a tent in the dark.  Eventually though, the tent goes up and I go to sleep.
I will say this, I've never been more sure that a majority of what is discussed here will come to fruition one day.  That is not said with enthusiasm or sadness, it's just reality.  I'm confident that I've done all I can to this point to protect myself & family.  Much more work and education need to take place, and I look forward to that.

As Mark Twain best put it - "Whenever you find yourself on the side of the majority, it is time to pause and reflect"

Thank you Adam - I really enjoyed this distillation. 
I know you are being somewhat facetious Adam… but the truth is we have a cross section of highly intelligent people that frequent these pages.  No one who understands our predicament need ever feel like an idiot.  What is sometimes hard to grasp, especially as you get, like me, into your second decade of, "discovery", is the chasm in understanding that has developed between those of us who continue to seek and those with their heads in the sand.  I sometimes gain insight from the smallest sniglets…  and one particular moment from this documentary has stuck with me since I first saw it presented on Koos Jansen's site a few weeks ago.  Shortly after 32:00 in the piece attached below, the genious HFT algo programmer turned whistleblower Haim Bodek states regarding his discovery of how order type preference allows order queue jumping;

"It was clear how many people did not know that these exchanges offered specialized orders.. you are talking about, like, 90% of Finance doesn't know how the US stock market works
And so it goes.  Most folks don't know what debt-based money is nor the implications of it.  Almost nobody has the knowledge to counter much of what comes at them via the TV and other mass media... i.e. that the US Oil Boom is a mirage that will fade quickly once the highly compacted Hubbert curves for the fracked wells really hits home.  Almost nobody realizes that in the first few days of Comex physical Gold delivery this month JPM's house account has taken 94% of them.. the Comex has become a game of banks playing with banks where outside entities barely play, and this sets the world price for Gold?  Almost nobody realizes that the US hegemony in reserve currency is being chipped away at one Yuan swap facility at a time.  So be it.       

 

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

Yup.  My Dad is a sheeple and his recent choice of investments guarantees him a ride to the bottom.  He's feeling pretty sassy right now…I asked him, 'so who are you going to call if/when real trouble comes-a-knockin'?  Crickets.  We'll see soon enough I guess. 

I hear ya' treemagnet.
I lived through the telecommunications bubble of '97 - '99.  I rode the legendary JDSU stock in its rocketship ascent to over $1,000.   During the ascent, I regarded myself as an extremely smart guy. I planned to retire after "one more doubling, in about 6 months." 

In the next year my imminent retirement was canceled as my 401k plunged to a small fraction of its prior value. 

But most important, I understood that I hadn't a clue how the world really worked.  And that I had foolishly rejected the words of older and wiser friends who had tried to warn me…  

 

Like most who read Adams post, one will nod in agreement about these motherhood statements, and sometime in the next 5-10 years, Adam, Chris, Peter Schiff, Alistair Macleod and Dr Doom will again be right - all markets are cyclical, and are subject to extremes , but "hold onto your precious metals" bought at much higher levels — why ??  I know the stock answer is that the fundamentals of gold have not changed. The chart of the increase in QE / government debt / pension debt / demographics / — fill in your own favourite correlate — still doesn't mean PMS are precious , because it rest on a false premise - PMS are money, and the world will return to a gold standard — NOT GOING TO HAPPEN - the central banks acting as agents for their sovereign governments wont let that happen, and most sensible 1% -er's have the vast majority of their wealth in hard assets that make economic sense, and latterly cash !
To say that investing in gold miners is risky, is an understatement - more like insane ! As this article on Zerohedge points out most gold miners are uneconomic and headed for oblivion. http://www.zerohedge.com/news/2013-12-02/gold-tumbles-towards-marginal-production-costs

Nothing short of China declaring they are going to back their currency with gold would put a floor under the gold price - why would they do that ?? It would restrict the biggest user of QE, in the most over leveraged nation on earth, and would be seen as a declaration of war by the IOUSA, the EU and Japan to name but a few. 

So, please explain why gold wont continue to depreciate and what will re-ignite the gold bull market other than the ranting of Peter Schiff ? Advocating buying PMS is 'investment advice' and should come with a soundly based investment argument – still waiting. The mainstream rejection of gold is complete !

My prediction is that if / when JPM, Goldmans and the other Fed agents declare that gold has bottomed there will be a rally, because supply will have been reduced due to mines shutting , and there will be a temporary supply / demand imbalance — maybe in several years time when they have maximised all the other bubbles they blow, and they have extracted all the gold from the likes of Venezuela, Turkey, Cyprus and Iran - GOK.   This is a very low probability because no government on the planet wants a currency linked to a "barbaric relic" .

Cheers, GB.

 

 

 

Cheers, GB.

When it comes to managing one's wealth these days I do not think it makes sense to view things from the perspective of being 'right' or 'wrong', or being a 'fool' or a 'genius'.  Trying to outthink the central bankers and politicians on their plans and the timing is a fools game.  The only thing we can be sure about is that a wicked financial typhoon has been gathering energy and it will hit land some time in the next few years.  All people can really do is diversify the best they can with a slant towards placing wealth in things they have the most direct control over such as their homestead, productive farm land, etc.  Being diversified in both stocks and precious metals over the past 2 years would canceled out the gains and losses.
It's inherent in the human psyche to feel that one thoughts are superior than a majority of those around him.  Thus, we tend to be overconfident and egotistical thinkers.  The current financial chess board is not a level playing field, and it never will be going forward.  Just like with casinos, the house always wins; it's just a matter of how much.

This is not a time to bet excessively on any one position no matter how much you think you have it all figured out.  I say it's time for all-out diversification in as many areas as possible (including equities) and just accept the fact you are not going to be wealthy, but you also aren't going to be poor.

gbcm,
Precious metals are just one form of diversification, almost insurance if you will, for a currency collapse.  Just like I stated in my post above it seems wise for people to be widely diversified without being overweight in any particular area (other than the things you can most directly control…your homestead, productive farm land, your health, etc.).

It's highly unlikely that a gold standard will return, but there is a clear economic battle between the east & west.  If the east would start to win out, then this would be a big positive for gold.

Daily, weekly, monthly, or yearly gold prices are somewhat irrelevant.  Not unlike just about everything else in these financial markets, it's safe to say that the market 'price' of PM's is also heavily manipulated.  PM's can be viewed as a 'truth-index' if there was true price discovery.  The central banks & governments around the world are trying their best to present a grand picture that the global economy is recovering via all sorts of manipulated numbers & misleading statements.  The TPTB have great incentive to manipulate PM's as low as they can.

I agree with you completely on PM miner's.  That's outright gambling.  Those businesses rely heavily on financing & credit, and many are very susceptible to going out of business before true price discovery could occur. 

Like someone wrote on ZH today, someone should only have wealth tied up in PMs if they have the mindset of running a marathon.

Great article Adam!  I am an investment advisor working in Ontario Canada and I can attest to what Adam is talking about.  It is pretty obvious to anyone who is paying attention that we are on the brink of a major societal change. This is the most stressful thing I have ever gone through from a "career" perspective.  Everyday I try to protect people from themselves.  The heard mentality, cheered on by the financial industry, media and government is very disheartening.  I have lost more clients in the last year then I have in the 12 years combined that I have been working in the financial industry.  I refuse to buy into this facade and it is costing me.  That said, no amount of money will ever sway me to go against my own morals and ethics.  We all have the ability to think for ourselves and make decisions based on our own rational thought.  I would rather look like an idiot now than look like an idiot after the SHTF.
I find it very frustrating that you can show all the logic, statistics, facts, etc. about the state of our world and people dismiss it based on blind faith in what the powers that be state.  People do not like too much reality!  People like to have their hopes and wishes reinforced even if there is no sound information to support their hopes and wishes.  I agree completely with Adam's "What should the idiot be doing" list. Personally, I have collapsed my RRSP (401k equivalent in Canada) and I will never put a cent in the stock & bond market again.  Hard Assets make sense to me because I can physically control them.  Hard Assets can be precious metals, farm land, rental properties, small businesses, etc. All of this stuff has been covered in depth on this site and on other sites like it.  The change that is coming will bring about many challenges as well as many opportunities.  The key is wrapping your head around what is going on, planning & preparing for the changes that are coming and allow things to unfold as they will. 

Collapse is inevitable and it will be a good thing long term.  Our current way of living is not sustainable and change is coming whether we like it or not.  The majority of people are going to look like idiots for not taking steps to protect themselves.  Cheers!

Long live Gold!
GBCM said,

So, please explain why gold wont continue to depreciate and what will re-ignite the gold bull market other than the ranting of Peter Schiff ? Advocating buying PMS is 'investment advice' and should come with a soundly based investment argument -- still waiting. The mainstream rejection of gold is complete !
China said,

 

 

Gold is only being rejected by the crowd who bases their views of the future on the price of Gold today… who needs it right?  The price is telling them everything is OK!  Party on!

And this is why TPTB will do their best make Gold an untouchable asset class… and to make you look like an idiot for buying it or for telling your friends to do so. 

Again, there's that much loved idea in the gold camp that a currency collapse is 'inevitable' and what the gold bugs really mean is a collapse of the US$ - not going to happen. In a world of (imposed) fiat currency, the US$ will remain the strongest, and now the Chinese Yuan is the second strongest and second most traded currency - because these are the nations that dominate world trade, world finance and are far and away the most powerful military powers with the ability to reach into the inner sanctums of any nation - just ask Angela Merkel ! Smaller nations have no choice but to use a major currency for trade, commerce and reserves, a lesson being painfully learned by Iran and Venezuela !  So, gold has been sidelined for the foreseeable future and to hold insurance against something that may not happen, except in Banana republics is illogical for US citizens and probably German and UK as well.
For those who think they can hide their wealth overseas in some gold vault better think again - tax laws require reporting and tax authorities have widespread powers and the backing of the NSA - just look at how safe Switzerland is now for financial refugees - NOT !
Anyone who thinks the Chinese are going to move to a gold backed currency are dreaming - they are going to out QE the IOUSA, which means they cant / wont  go to a gold backed currency.
So, I'm still waiting to see a credible defence of PMS as an asset class that rises above them being a lucky charm or St.Christophers medal equivalent for first world citizens.
Cheers, GB. ----- PS this is positively my last post !

I too once had 'the midas touch', only to see it burn with an empty water bucket.  I am … stunned - just amazed at the idea of owning equities and bonds, or any paper 'claim' on wealth.  The idea of having an instrument where you're the last guy to get the memo with known thieves at the helm and all around you, based on an underlying unit of exchange of a fiat note backed by nothing - riding on others faith…faith that they won't sell…they will, and when they do the buyers will have already sold to the retail buyer, the dumb money crowd, the desperate yield chasers and momentum chasers.  No buyers…all the way down…so who's gonna buy when sell orders come raining down.  No bid, lock-limit down freefall - the booze and the tears will be flowing on that day for sure. And even if a portfolio is strong and balanced and diversified and whatever…the good stuff will be sold to cover the bad - and thats not even factoring in all time high record margin debt!!!   This stuff will be sold regardless of the account holders 'faith' and 'outlook' - emotionless volume dumping.  HFT's that, when they learn the profitability of leap frog on the way down, will 'front run' ahead of everyone and on volume…with margin!!!   Then, look around and see what's going down here, there, and everywhere…from bail-ins and more…I'll pass.  But, it'll be a show.   

Four years ago one of my sisters-in law and a cousin sent me a copy of ONE MINUTE AFTER that was making the rounds in the family. I was relieved that I was not alone in assessing the coming risks - that I would not be sitting alone at family gatherings and looking like an idiot, now. But, four years later, the cousin only has a pantry that says "I will never run out of toilet paper" and the sister-in-law hasn't even bought MREs. Neither has a go bag or alternate heat and cooling options in their home. Neither has planted a single piece of edible landscaping, let alone a garden. I still feel like the odd (wo)man out. And these are very smart people who have more of a clue than most. My brother-in-law is still investing in Greek bonds, for god's sake! I told him to only do that with money he wants to gamble with. Like in a casino.
Just last week my father-in-law called me–I'm still shocked, me–for investment advice. I'd warned him last year about contango in PM ETFs so he benefited from something I learned on this site. Now, he was wary of the stock market and bonds. ZIRP is killing his investment retirement income, and the risky things you can make a decent interest rate on scare him. I suggested he invest in things that lower his food and energy costs, and buy physical silver for the long haul, keeping meticulous records.  While I understand the attachment he has to a mature and producing kitchen garden and mature dwarf fruit trees, it worries me he won't sell his 4-bedroom home even though it's in a very high-population area. At least he brought in a strapping grandson to keep an eye on him and his wife.

And my brother knows. He knows what's coming and does not even have water purification, a pantry, or alternative heating. I don't care about looking like an idiot, as I've always marched to the beat of a different drummer and the heck with what others thought, but if those who KNOW are this unprepared, I shudder at the rest of the world.

Knowledge without action looks the worst of all. And it will feel the worst of all, come crunch time.

A few of my work associates have started to refer to our 'self-sufficient' farm as the refuge from the coming Zombie Apocalypse.   Cute.  And a little less funny every time I hear it.  But then again, who cares - we love what we're doing at our homestead!!

I love Robbie's description of the story of Noah.  And the movie is coming out and looks really good.
https://www.youtube.com/watch?v=FRTlT3DEydU

Cute, I have a friend who is a cop and gun dealer and knows of my prepping activities.  His wife likes to say when tshtf they are coming to our house  and will bring guns and ammo.  That might work out. :^)

[quote=gbcm]Again, there's that much loved idea in the gold camp that a currency collapse is 'inevitable' and what the gold bugs really mean is a collapse of the US$ - not going to happen. In a world of (imposed) fiat currency, the US$ will remain the strongest, and now the Chinese Yuan is the second strongest and second most traded currency - because these are the nations that dominate world trade, world finance and are far and away the most powerful military powers with the ability to reach into the inner sanctums of any nation - just ask Angela Merkel ! Smaller nations have no choice but to use a major currency for trade, commerce and reserves, a lesson being painfully learned by Iran and Venezuela ! 
 So, gold has been sidelined for the foreseeable future and to hold insurance against something that may not happen, except in Banana republics is illogical for US citizens and probably German and UK as well.
For those who think they can hide their wealth overseas in some gold vault better think again - tax laws require reporting and tax authorities have widespread powers and the backing of the NSA - just look at how safe Switzerland is now for financial refugees - NOT !
Anyone who thinks the Chinese are going to move to a gold backed currency are dreaming - they are going to out QE the IOUSA, which means they cant / wont  go to a gold backed currency.
So, I'm still waiting to see a credible defence of PMS as an asset class that rises above them being a lucky charm or St.Christophers medal equivalent for first world citizens.
Cheers, GB. ----- PS this is positively my last post !
[/quote]
 
Anyone who thinks a currency crisis is inevitable is a fool.  I haven't read anything in this article or this thread saying that.  My experience in life tells me that when people are extremely sure of their thinking it makes me have my doubts.  Sounds like you have clearly made up your mind already.  Why don't you heavily short PM's if you are so certain?  I'm curious to why you even wrote your post about gold in the first place.
Inflation is not a threat right now.  The majority of inflating force comes from bank lending in our debt based fractional reserve money system.  Banks are not lending for little.  Money printing by the Fed is miniscule in comparison.  The Fed is printing like crazy to fill in the massive holes of debt within the banking system.  At some point the Fed printing will likely lead to a loss of faith in the money system.  Our money system is only backed by two things:  faith & trust.  If and when the Fed ever stops printing there's high risk of massive deflation / money contraction unlike any other.  If the Fed prints for too long money will risk losing it's meaning leading to a currency crisis.  I have no idea how things are going to turn out.  The one thing I do know is that the system is very sick & the ultimate outcome is anything but predictable.