CNBC Clueless About Gold

By: Jeff Berwick | Wed, Mar 23, 2011
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Whether on purpose or purely by accident, CNBC (the US Version at least, CNBC Europe and CNBC Asia sometimes have decent content) is a dangerous cesspool of misinformation and lies that can only serve one useful purpose: to see what kind of information Mom & Pop investor are receiving so you can place yourself on the opposite side of the trade.

It's best to limit total annual exposure to CNBC to about 30 minutes. For about 2 to 5 minutes per month I hold my breath and pinch my nose and avail myself of the utter sewage these people spew into the airwaves.

But, when yesterday a friend forwarded me this article by John Melloy, the Executive Producer of Fast Money, my mouth fell agape. I knew they were almost sinisterly stupid but this article takes the cake.

Even the headline itself, "Gold's Record Surge - a Rejection of Capitalism?" is enough to make one shake their head. He may as well have entitled it, "Hot Dog & Beer Popularity Surge - a Rejection of Baseball Food?" - it'd make as much sense.

He starts off his Magnum Opus of Ignorance straight away with a painfully flawed premise. He states:

The gold trade has been pretty clear-cut for the last 30 -- even 1,000 -- years. The yellow metal with a nice weight to it has been a store of value against inflation. But something changed 2½ years ago in the middle of the financial crisis. From 1976 to November 2008, when the consumer price index went up, so did gold, according to analysis by Alan Newman, editor of the Cross-currents newsletter. Since then, gold has gone up when the CPI has contracted (deflation) or expanded (inflation).

Nothing changed, John. Try to keep up with the rest of us.

I think we can clear things up in three simple sentences:

So, to clarify, gold continues to go up because the money supply continues to increase (the Austrian Money Supply tracks the money supply much better than M1, M2 or M3). The government's CPI figure is a fairy tale.

Sadly, however, John continues:

It keeps going up because more and more people don't want to play in a capitalist system where banks are still too big too fail, the Federal Reserve buys Treasuries in the open market and countries openly, and in a coordinated fashion, try to devalue paper assets right before our eyes.

John, you don't live in a capitalist system. If it was a capitalist system the Federal Reserve would not exist. Central Banks are one of the 10 tenets of communism. In fact, the US almost meets all of the requirements for communism now(with my comments in italics):

He finishes his article with the coup de grace of absurdity:

"Gold has no valuation, no metrics, no commercial use," said veteran commodities trader Dan Dicker. "It's the world's most respected ponzi scheme."

Madoff Cartoon

Social Security is a ponzi scheme. The US dollar and US Treasuries are a Ponzi scheme. Gold? That's free market money... you don't even recognize it anymore do you, John?



Jeff Berwick

Author: Jeff Berwick

Jeff Berwick
Chief Editor
The Dollar Vigilante

Jeff Berwick

Anarcho-Capitalist. Libertarian. Freedom fighter against mankind's two biggest enemies, the State and the Central Banks. Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast. Jeff is a prominent speaker at many of the world's freedom, investment and gold conferences as well as regularly in the media including CNBC, CNN and Fox Business.

Jeff's background in the financial markets dates back to his founding of Canada's largest financial website,, in 1994. In the late '90s the company expanded worldwide into 8 different countries and had 250 employees and a market capitalization of $240 million USD at the peak of the "tech bubble". To this day more than a million investors use for investment information every month.

Jeff was the CEO from 1994 until 2002 when he sold the company and still continued on as a director afterwards until 2007. Afterwards, Berwick went forth to live on and travel the world by sailboat but after one year of sailing his boat sank in a storm off the coast of El Salvador. After being saved clinging to his surfboard with nothing but a pair of surfing shorts left of all his material possessions he decided to "live nowhere" and travel the world as spontaneously as possible with one overarching goal: See and understand the world with his own eyes, not through the lens of the media.

He went on to visit nearly 100 countries over four years and did and saw things that no education could ever teach. He met and spoke with a plethora of amazing people, from self-made billionaires to some of the brightest minds in finance - as well as entrepreneurs from a broad range of backgrounds and locations from tech companies in southern China to resource developers in Mongolia, Thailand, Russia and Chile. He also read everything he could find on how the world really works... politically and financially. A pursuit he continues to this day.

He expatriated, long ago from his country of birth, Canada, and considers himself a citizen of the world. He has lived in numerous locales since including Los Angeles, Hong Kong, Bangkok and currently lives in Acapulco, Mexico and is building a home in Cafayate, Argentina. In essence, everything he writes about here for TDV he has done or is doing.

As well, during his travels, both real and virtual (through the internet), he met some amazing people who have a similar shared vision of what is currently going on in the world and enticed them to come aboard TDV and provide their own brand of analysis.

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