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December 26, 2005

Being 'Andy Smith'
by Alex Wallenwein

Being Andy Smith isn't that hard. It just requires lots of faith

Being Andy Smith (yes, that former Mitsui guy), if anyone should actually aspire to that, isn't really all that difficult.

All you need is slightly above average intelligence combined with a caustic contempt for anything resembling real value, and an ingrained fear that people in large numbers might soon figure out that his incantations over the years were (a) wrong, and (b) driven by the need to preserve the type of shaky system utterly dependent on constant human intervention that he happens to support.

After all, it is that very system that has helped him attain his currently somewhat prominent position as a professional gold-basher. Let's look at some quotes from his recent participation at a gold roundtable discussion that was originally published in the 17 December 2005 edition of Business Times Singapore English (c) 2005 Singapore Press Holdings Limited.

Andy: "It's a tribute to gold's 5000-year-old brand that many still regard its recent rise as 'remarkable' or even with a pseudo-religious awe that gold is uniquely farsighted about the panoply of future macro-economic horrors that ostensibly await us. It isn't. To believe so is touching, but not perhaps ultimately profitable. Copper, zinc, lead, nickel, oil, platinum, silver - the whole kitchen sink of commodities - have risen more remarkably than gold since 9/11. All have risen especially rapidly since Q4 2003. Was China discovered then? Did the Indian middle class emerge then? Was faith suddenly lost in paper money then? Well, no this was just when 'passive' money began moving in its billions into commodity indices as investments. Gold will likely cool when the momentum of this inflow into commodity space slows. This might not even need a cure for the twin US deficits, international terrorism, bird flu, or global warming."

Andy: "Gold has always been money to half the world outside 'The West', whose financial choices are constrained, and whose lives are more 'nasty, brutal and short', as Hobbes once put it. Are we in 'The West' frightened or financially straitjacketed enough, even after 9/11, to think this 'Eastern' about gold? I don't think so. In fact, the chances are that as choices in 'The East' progress from 'life or death' to 'which plastic card is best', gold's monetary heartland will be hollowed out. China, for example, consumes less gold now than a decade or two ago, even as living standards have tripled. 'Blame' the progress serum of banks, equity markets, life insurance and low inflation. In 'The West' champions of gold born again as money are either buyers late in the rally (needing a profound reason for their tardy participation), visceral opponents of the ' American Way' (investing with their anti-Bush/dollar biases, not their heads), or believers in the original sin of paper money (nostalgic for a flatter earth)."

"The topical twist to this 're-monetisation' persuasion is the idea that 'Eastern' central banks are buying or will buy gold. At 25-year highs? When 'Western' central banks evidently cannot exit a small portion of their long position without queueing for years and years? If financial regress of this kind is being advocated for 'Eastern' central banks, perhaps someone will urge them back into the metal that was money way before gold and whose performance has recently eclipsed it copper?"

* * *

Here is a laundry list of the tenets of true religious faith on which the Smithian world view is founded: (For, which demands more faith of a believer: Reliance on a system that is naturally stable - or reliance on one that is naturally unstable and cannot exist in the absence of constant human intervention and 'fine tuning'?)

1. Debt-based promises (express or implied) written with ink on paper have greater value than a rare and naturally desirable precious metal.

2. Abuses by those who write their promises on pieces of paper do not happen, and if they happen, don't worry about it. They don't affect you. Just take Andy's word for it.

3. Just call someone's belief in something "pseudo-religious" and you'll have masses of educated people recoil in horror, loath to be associated with such intellectual 'Neanderthalism.'

4. The answer to a brutish existence that relies on gold is to educate people about the advantages of occupying themselves with the far loftier pursuit of 'the better plastic.'

5. Gold is 'just another commodity.' No more. It never was, and never will be.
   (That's why there is a desperate need for people like Andy Smith to remind the rest of us of this incontrovertible truth - lest we fall back into error and start believing that thousands of years of human experience are more authoritative than the utterances of a few, select lackeys of the debt-creating establishment.)

6. If you can't argue with a position, just insinuate that adhering to it is the same thing as having a low and beast-like mentality - like those poor, decrepit souls in 'The East' whose lives are still 'nasty, brutal, and short.'

7. Paper and computer bits are rare and precious, while gold is plentiful and useless (even central banks, those purveyors of the true nature of real value, are selling it), so it follows that pure market forces alone dictate that gold investors will eventually recant their faulty ways and come back into the (paper-bill) fold. Anyone who believes otherwise is simply either nuts or stupid, and his or her opinions count for nothing.

So, you see, 'being Andy Smith' is rather easy. I just taught you how to do it. Now go out and compete with him for all those special perks he earns as one of the higher-up priests of the true faith - the faith in combustible paper contracts and deletable computer blips!

It's the world's largest and wealthiest church.

Got gold?

Alex Wallenwein
Editor, Publisher
The Euro vs Dollar Monitor

Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is your golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

Copyright © 2003-2008 Alex Wallenwein

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