Gyroscopic Investing

By Alasdair Macleod, Mises society
https://www.youtube.com/watch?v=PHKPa8K4bQ8

Do you agree? All comments welcome.

So, the US decides gold is its currency and wants taxes collected in gold-backed certificates/currency/contracts

Instant massive wealth transfer to current gold holders and countries with gold mines

Everyone hoards gold, its easy to hide, and tax revenue plunges. Buffett stores gold in underground silos and you have to borrow from him at 20% interest

Gold has always been A money, but not THE money. When Scrooge McDuck got all the gold, people could still trade with Silver or sea shells.

A free competitive market in currency is the dream. Real Bills Doctrine. You give the bank title to your car, and they give you Chase Bank notes

Inflation is a secret tax. The case-demic couldn't have happened without handing out monopoly money to the hoi polloi. The costs would have needed to be discussed up front. Like some wars. But the Fed, FAA (Boeing Max) and CDC may now be captured...

Friedman wanted fixed 2% money printing per year. Sounds reasonable. But other countries/tribes dont respect libertarian ideals. What if China offers every citizen 50,000 yuan to move to US/CA and subvert

They can just print it and people will act...

Since 2013 Yellen has be in part pegging US$ to gold, in a loose manner rather than direct pegging, and not along, to instead a basket that includes gold, resulting in gold remaining range-bound

PV

Fear of a alternative and others opting to reduce/drop the dollar in favor of a alternative, in a large-scale manner (China, India, Russia, S America, Arabia/Iran ...etc. - a large proportion of the global population).

As per the video, 700 trillion of derivatives versus 100 trillion of global GDP is a problem. Paper gold for instance is over 100 times physical gold https://usdebtclock.org/gold-precious-metals.html

Cap the existing high debt level, peg the dollar (approximately) to gold so trust in dollars is maintained, and buy time to transition over to a crypto-dollar that side steps banks/derivatives to protect the economy whilst seeing largescale bank failures. Use existing US reserves, of which 60% is in the form of gold, along with leveraged based short dollar/long gold or long dollar/short gold to redirect the overall dollar value to somewhat align with the price of gold. If/when gold just flatlines so the inclination is for investors to instead hold dollars and invest those into stocks/bonds.

A factor as also indicated in the video however is that many congressmen/senators are in the pockets of banks. When banks pushed the limits, heads they win, tails they lose and taxpayers bail them out, there was the backstop of taxpayers bailing out banks. That's shifted up a level, to countries, but where there isn't a backstop. So some countries are going to get hurt/suffer, a lot, facilitating other countries to get-by/through.

Physical in-hand gold is insurance. But I wouldn't trust ETF's that claim to be backed by physical gold, instead actual in-hand gold with no counter party risk. I suspect there may be some scandal with physical backed gold ETF's if/when the 118 paper gold to physical ratio does come to 'correct'. Stock/bond wise, and the US is a good bet, more inclined to be gets-by outcome than of enduring much hurt/pain.

Interest rates are likely to soar under such conditions - so a reasonable asset allocation might be some each of US stocks, gold, short and long dated treasuries. IIRC there's a group somewhere that opt for such a blend, applying a 1/N approach (equal weightings)

I listen to this sort of thing all the time, and it makes a great deal of sense to me. Although many of the details go over my head, I have no problem visualizing the world economic situation as one big, high-stakes game of Musical Chairs, where there are 50 people vying for only 10 seats. All of the talk about CBDCs, the inexplicable spending, the assault on the economy, and even the CoVid scam are, it seems to me, all designed to make sure that the right butts are positioned over the 10 chairs at the time the music stops.

If you accept the premise that "this time is different," does the PP continue to make sense?

It puzzles me that between this forum and the Bogleheads, there are a lot of smart people who don't seem to be terribly concerned about the big picture. Sometimes I wish that one of those people would address these issues head-on and explain why it's NOT something to be troubled about.

Maddy wrote: ↑Sat Jan 07, 2023 2:40 pm If you accept the premise that "this time is different," does the PP continue to make sense?

It puzzles me that between this forum and the Bogleheads, there are a lot of smart people who don't seem to be terribly concerned about the big picture. Sometimes I wish that one of those people would address these issues head-on and explain why it's NOT something to be troubled about.

Hi Maddy,

I would accept the premise "this time is different" on the basis the consequences will be much greater given the current debt load.

And to your point, it is something I am troubled about. So what to do? I do not know what the failure mode will be. I have a great respect for Anthony Dedans & BelangP's approaches in having just equities and gold, but what if they are wrong?

At the moment I am keeping my options open by following the PP. One other thought is what Marc Faber stated years ago. "In the world of the blind, the one eyed man is king". He fully expects to lose 1/2 of his wealth. HB also stated in his radio show, that if everything collapsed you would still have 25% in Gold.....

Maybe some other forum members can offer more constructive advice.

PS: Also give some thought to an alternate place to live if you have to move. Honestly, I never believed our state government would call out the terrorist squad and open fire with riot rounds on peaceful, unarmed lockdown protestors on the basis of "public health".

Edit: Some links
https://web.archive.org/web/20220205185 ... ciples.pdf
https://web.archive.org/web/20210113192 ... tation.pdf

30 year 3.66%, plenty of room to zero. PP doing fine.

Maddy what are you worried about. The solution to gov debt/spending is always higher-than-advertised inflation. Asset holders will continue to do well

We may end up with permanent rolling climate/pandemic lockdowns to quash protest about inflation etc, but is anyone here or on bogleheads actually bothered by that?

Hal wrote: ↑Sat Jan 07, 2023 3:54 pmI have a great respect for Anthony Dedans & BelangP's approaches in having just equities and gold, but what if they are wrong?

As a UK investor, 50/50 US$ and gold is a global primary reserve fiat currency and non-fiat commodity playoff. Where to store those US$ ... in stocks is reasonable. To me that barbell combines to a central bullet, somewhat similar to how a barbell of 1 and 20 year Treasury bonds combine to a central 10 year treasury bullet. The PP rotates that 90 degrees to vertical and cross it with a regular 1 and 20 year treasury barbell such that it all converges in the middle. Of the PP assets I have most doubt about the treasuries - just feels too much like lending to someone who gets to define all of the terms/rules (they can change interest rates, direct inflation (print/spend), can adjust the payout rate (taxation) ...etc.).

Set your 'inflation' rate figures to 50/50 US stock/gold, and compare that to other choices of assets (UK investor perspective) ...



Broadly lagged all-stock by 1.4% annualised, which is relatively little additional reward for taking on higher risk. Compared to a Bogleheads three-fund type asset allocation. Beat inflation (US$ value devaluation).

Could both fiat (US$) and non-fiat global currencies (gold) simultaneously fail? Well everything will sooner or later fail but the likelihood of that is extremely low. They'll wax and wane and diversification across both currencies and assets reduces concentration risk.

Many also own their own home (land), and three way land, stocks, gold, multiple currencies, multiple assets, is perhaps adequate diversity/concentration risk reduction. Could see the loss of one, or maybe even two - but in a world where many had lost-all even having just a third remaining would be relatively wealthy.

Thanks for the Anthony Dedans & BelangP's pointers/links.