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Gold Analysis Paralysis


Are we suffering from gold analysis paralysis?

Terry Kinder precious metals analysisBullion.Directory precious metals analysis 7 January, 2015
By Terry Kinder

Investor, Technical Analyst

It seems sometimes that we suffer from gold analysis paralysis. We watch every little move in the gold market waiting for something to happen. We analyze every golden word that drips from the mouth of Janet Yellen as if she were a wise oracle. Some analyze reports coming out of the COMEX like CIA analysts used to attempt to decipher the actions of the Politburo in the former USSR. We debate what the correct price of gold ought to be given the current money supply and debt levels. Like a top, round and rounds goes our gold analysis paralysis.

I’ll admit, just to read some of my analysis you would think I don’t like gold as much as one should who writes for a directory of bullion dealers. Perhaps I too suffer from gold analysis paralysis. I spent some quiet time last night and today (on my way to spend time in the dentist’s chair) thinking about that, and I think the keystone of the argument in favor of gold comes down to trust, or better put, the lack of trust.

Gold Analysis Paralysis: We live in an age of bad laws and bad men which is why it is wise to hold physical gold (and silver)

Gold Analysis Paralysis: We live in an age of bad laws and bad men which is why it is wise to hold physical gold (and silver)

We can debate all day long in our gold analysis paralysis whether the price of gold will go up or down. We can even debate whether it matters or not. We can flesh out all of the reasons why gold should return to the center of the monetary system. All of these subjects are fascinating to me. But, to escape our gold analysis paralysis we must consider the matter of trust.

Do you trust the Federal Reserve and other central banks to properly manage the monetary and financial system? Can a small group of people properly determine interest rates, employment levels, and analyze slices of economic data to properly determine what those levels should be?

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Do you trust the politicians in Washington, DC, Brussels, Beijing, Moscow or anywhere else to do what is in your best interest? How would they even know what is in your best interest? Are they even listening to you or just those who ply them with campaign contributions and favors?

Do you trusts corporations, along with politicians, to write legislation? How did that work out with Obamacare? Did health insurance costs drop like you were promised? Could you keep your health insurance? Did you keep your doctor?

Do you trust bureaucracies to properly manage money with the same care you would your own? Better yet, why can’t you be trusted to manage your own money?

It seems like governments aren’t always the best managers of resources during peacetime. Do you think they’ll do better during wartime? Do you trust your government when it says we need to fight a war? The history isn’t all that good, and it goes way back before “weapons of mass destruction” in Iraq.

Do you trust politicians and bureaucrats to properly regulate business, banking, the energy industry, etc.? Surely the politicians wouldn’t regulate business in such a way as to favor those that contribute to their campaigns.

We could go on in this vein for thousand of words, but the point should be pretty obvious. We may suffer temporarily from gold analysis paralysis, but if we step back for a moment, we can see that we’re living in a world where, increasingly, we can’t trust our political and monetary institutions to do what is right. That simple fact presents us with some alternatives. We can continue on in our gold analysis paralysis, as if nothing ever happened. We can convince ourselves that if we just make a few adjustments to the system everything will be fine. We can ignore the situation and deal with the consequences later. Or, we can realize that we live in a world where trust has broken down. We can’t trust our elected leaders to do the right thing when it comes to debt and deficits. We can’t trust the Fed to manage the monetary system, and that’s assuming we even need such an institution to do so.

In this world of gold analysis paralysis, there are still many who believe that somehow, some way, someday, the system can be salvaged. But, we have arrived at our dire political, economic, fiscal, and monetary situation because people who can’t be trusted hold the reins of power. Changing some laws and making some adjustments isn’t going to make those people more trustworthy. As William Penn wrote:

I know some say, “Let us have good laws, and no matter for the men that execute them”; but let them consider that, though good laws do well, good men do better, for good laws may want good men and be abolished or evaded [invaded in Franklin’s print] by ill men; but good men will never want good laws nor suffer ill ones.

Unfortunately, we seem to be living in an age where we are ruled by both bad laws and bad men, and that is why I choose to hold physical gold (and silver).

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