WEBVTT NOTE Gold's Not Dead 1 00:00:00.000 --> 00:00:09.360 Just briefly I would like as part of the Mises Institute to thank you again for your coming. 2 00:00:09.360 --> 00:00:16.380 Many of you suffered the indignities of a hurricane to get here and we definitely appreciate 3 00:00:16.380 --> 00:00:19.600 your presence. 4 00:00:19.600 --> 00:00:26.280 That's the last nice thing I'm going to say. 5 00:00:26.280 --> 00:00:35.080 First I had two jokes, and Lew won't let me tell them. 6 00:00:35.080 --> 00:00:41.200 So the first one what I'll do is I'll make it politically correct, but you're, well I 7 00:00:41.200 --> 00:00:45.840 could say it, it's originally a Polish joke, but he won't let me tell them, so I've changed 8 00:00:45.840 --> 00:00:56.800 and it goes as follows that there are these three neocons and they're 9 00:00:56.800 --> 00:01:01.760 terrorists and they take over a US submarine and they take it out to sea and 10 00:01:01.760 --> 00:01:07.760 they're holding the submarine and the crew hostage and they make their 11 00:01:07.760 --> 00:01:14.080 final offer and their final offer is two million dollars of confederate money and 12 00:01:14.080 --> 00:01:19.880 Three Parachutes 13 00:01:19.880 --> 00:01:22.400 Originally the joke was 14 00:01:22.400 --> 00:01:28.640 two million Zloty's in three parachutes but of course 15 00:01:28.640 --> 00:01:33.320 I'm going to tell the other one too 16 00:01:33.320 --> 00:01:35.560 this is uh... 17 00:01:35.560 --> 00:01:39.320 any feminists in the room I'd object but what the heck 18 00:01:39.320 --> 00:01:43.920 seems this fellow is speeding along the highway in a highway patrol 19 00:01:43.920 --> 00:01:49.680 flashlights going and sirens turning and they pull him over and the policeman says to him, 20 00:01:49.680 --> 00:01:56.680 sir, your wife fell out of the car eight miles back. And the fellow says, what a relief, I thought I was going deaf. 21 00:01:56.680 --> 00:02:18.400 You should have heard the original of that before he made me change it. 22 00:02:18.400 --> 00:02:19.520 Let's talk about gold. 23 00:02:19.520 --> 00:02:26.440 My original topic was Murray Rothbard, but I'm sure Murray will allow me to change the 24 00:02:26.440 --> 00:02:56.440 We had a bad day yesterday, us gold bugs. We had two of the people I have enormous esteem for, Jim Grant is one of my heroes and Dr. Friedberg, the most generous host and fellow and gentle fellow I've maybe ever met. I was going to savagely attack both of them for their attitudes about the gold and I really was going to 25 00:02:56.440 --> 00:03:02.520 or rather direct criticism of them both, but we had a better day today. 26 00:03:02.520 --> 00:03:10.560 We had Dr. Hoppe and Walter Block present gold in a more historic and abstract manner 27 00:03:10.560 --> 00:03:14.720 and I'm not as angry. 28 00:03:14.720 --> 00:03:24.160 And in analyzing the situation, what I decided is that on the first day, Jim Grant and Dr. 29 00:03:24.160 --> 00:03:43.160 Dr. Friedberg, these are people, you might say, in the real world. They are dealing with problems and investment day to day, whereas today we had a more academic, historic evaluation of it, and as I say, that made me feel a bit better. 30 00:03:43.160 --> 00:03:48.440 One of the things that was most interesting was the agreement by almost 31 00:03:48.440 --> 00:03:50.120 everybody that 32 00:03:50.120 --> 00:03:54.680 there's a balloon out there and this balloon is 33 00:03:54.680 --> 00:03:59.260 at best fictional or artificial and at worst immoral 34 00:03:59.260 --> 00:04:01.240 and that it's going to burst. 35 00:04:01.240 --> 00:04:04.960 I think there was total agreement and not surprisingly from 36 00:04:04.960 --> 00:04:07.800 from speakers of our, from our view. 37 00:04:07.800 --> 00:04:12.280 Yet nobody seemed to follow that, at least on the first day they didn't. 38 00:04:12.280 --> 00:04:17.800 What does the burst of a balloon mean? Does it mean twenty percent down in the 39 00:04:17.800 --> 00:04:23.600 Dow Jones averages? Does it mean an increase of unemployment? Does it mean 40 00:04:23.600 --> 00:04:29.860 bankruptcies? I mean the ramifications of, particularly for those of the 41 00:04:29.860 --> 00:04:35.960 Austrian view of a market break, a proper market break, no one knows where that 42 00:04:35.960 --> 00:04:40.280 would go and I'll deal with that a little later. 43 00:04:42.280 --> 00:04:52.080 A gold dealer, you might say, is a halfway house between the real world and the abstract. 44 00:04:52.080 --> 00:04:59.720 And in a way, I've been operating sort of a halfway house for 40 years. 45 00:04:59.720 --> 00:05:04.940 We have a myopic view, ours is not dealing with the whole person, we're not interested 46 00:05:04.940 --> 00:05:11.540 in how they made their money or what their other investments are or what kind of retirement 47 00:05:11.540 --> 00:05:22.340 programs they have. We're really concerned with potential disaster. I mean that's what 48 00:05:22.340 --> 00:05:28.820 it's all about in the current situation. Gold is a fever thermometer telling us how sick 49 00:05:28.820 --> 00:05:36.780 we are and it's that aspect of people's lives that we're dealing with. Some of our customers 50 00:05:36.780 --> 00:05:42.220 Others are very articulate about it, others are not, but they all come from the same view 51 00:05:42.220 --> 00:05:49.300 and I'll just briefly tell you about a conversation I had with a customer on the phone, to profile, 52 00:05:49.300 --> 00:05:55.860 70 years old, retired, and we were chatting a few moments and about 10 minutes into the 53 00:05:55.860 --> 00:06:01.620 conversation his wife was on the line on the extension, I wasn't aware of it, in the old 54 00:06:01.620 --> 00:06:05.780 days you could tell when someone was on the extension you can't do it today, and I was 55 00:06:05.780 --> 00:06:35.780 I was surprised, and I hadn't told any of my bad jokes, so it was okay, but she was a little critical, she asked me a question, and pretty soon they were kind of having a fight, and I'm holding the phone, and I didn't know what to do, and so I excused myself, and the last thing I heard was something to the effect that the girls at the Britsch Club had an investment portfolio, and they're up about 800 percent.com this, 56 00:06:35.780 --> 00:06:40.900 This and whatever that and this dummy husband of hers is buying gold at a 26 year low. 57 00:06:40.900 --> 00:06:44.260 That was effectively what she had to say. 58 00:06:44.260 --> 00:06:48.300 So he called me back in about an hour and I said, how did you handle that? 59 00:06:48.300 --> 00:06:50.860 She was, he said, oh, she's a sweetie pie. 60 00:06:50.860 --> 00:06:52.220 No, she's not a sweetie pie. 61 00:06:52.220 --> 00:06:54.600 She wasn't very nice at all, but he was nice. 62 00:06:54.600 --> 00:07:03.180 He said, he said, I explained some time ago to her that I'm speaking for him now. 63 00:07:03.180 --> 00:07:08.300 All along the way he came upon a body of knowledge, an understanding of the world, that he found 64 00:07:08.300 --> 00:07:13.340 rational, he found moral, he found historically valid. 65 00:07:13.340 --> 00:07:19.260 He also had great respect for the people, whether it was the Rothbards or the Mises 66 00:07:19.260 --> 00:07:24.580 or the newsletters, however he came to it he found it an appealing view. 67 00:07:24.580 --> 00:07:28.500 Unfortunately, or fortunately, it took him out of other things. 68 00:07:28.500 --> 00:07:32.140 He no longer could comfortably invest in other areas. 69 00:07:32.140 --> 00:07:39.780 He wasn't comfortable with the stock market and he was really taken out of those other 70 00:07:39.780 --> 00:07:40.780 alternatives. 71 00:07:40.780 --> 00:07:46.140 He never had to wake up in the morning and say, shall I buy a share of amazon.com or 72 00:07:46.140 --> 00:07:47.940 an ounce of gold? 73 00:07:47.940 --> 00:07:50.100 He did not face those circumstances. 74 00:07:50.100 --> 00:07:53.100 He had no bitterness unlike me. 75 00:07:53.100 --> 00:07:55.020 I have a lot of bitterness about our enemy. 76 00:07:55.020 --> 00:08:00.580 I'd like to see them suffer as we have for recent years. 77 00:08:00.580 --> 00:08:01.580 He had none of that. 78 00:08:01.580 --> 00:08:14.580 He knew in his heart that he would prevail, that the truth and morality of what his position was ultimately might not happen in his lifetime. He recognized that. He knew how powerful the forces were. 79 00:08:14.580 --> 00:08:23.580 It was just interesting that he represented something that many of my customers have. It's a viewpoint. It's moral. It's a moral position. 80 00:08:23.580 --> 00:08:26.060 Murray wrote his book, The Ethics of Liberty. 81 00:08:26.060 --> 00:08:28.140 That's what's really important. 82 00:08:28.140 --> 00:08:31.260 There is an ethic to our view, setting that aside. 83 00:08:31.260 --> 00:08:36.260 That was just a, there's a history that my friends, 84 00:08:39.840 --> 00:08:44.840 the realists, Dr. Friedberg and Jim Grant, 85 00:08:45.080 --> 00:08:47.080 they really don't go into the history 86 00:08:47.080 --> 00:08:51.080 of the modern gold market, modern in the sense that 87 00:08:51.080 --> 00:09:02.080 From 1931, 32 or 33 actually, until 1974, gold was illegal. 88 00:09:02.080 --> 00:09:08.080 And as someone discussed today, it was as, Walter Block, it was almost as dangerous as smuggling heroin. 89 00:09:08.080 --> 00:09:18.080 In fact, in San Francisco, the feds raided a money-changing house, because just with flak jackets and just unbelievable. 90 00:09:18.080 --> 00:09:24.960 So this was because they had some hundred kroner gold coins. 91 00:09:24.960 --> 00:09:29.040 I mean the government was very clear about its attitude toward gold. The king 92 00:09:29.040 --> 00:09:32.880 doesn't want you to know the value of an ounce of gold because if you do 93 00:09:32.880 --> 00:09:37.200 you know what mischief he's been up to. So the king is very powerful and 94 00:09:37.200 --> 00:09:40.960 and making it against the law is about as powerful as you can do it. 95 00:09:40.960 --> 00:09:46.240 From 1974 until about 1981 96 00:09:46.240 --> 00:09:50.800 there was relative freedom, we didn't monetize it Hans, but there was 97 00:09:50.800 --> 00:09:53.640 relative freedom in the gold market 98 00:09:53.640 --> 00:09:58.120 people could, there was no, there was whatever government influence 99 00:09:58.120 --> 00:10:01.560 there was put on upon the price of an ounce of gold 100 00:10:01.560 --> 00:10:04.400 was ineffective and that's why 101 00:10:04.400 --> 00:10:09.080 the gold reflected every, you voted no every time you bought an ounce of gold 102 00:10:09.080 --> 00:10:13.560 and if you had a little war someplace we used to in the trade say well that 103 00:10:13.560 --> 00:10:20.200 Something would spill over in the Middle East and say, that's a $12 war, meaning that we knew it would react. 104 00:10:20.200 --> 00:10:27.800 And then, I guess it was Paul Volcker who instituted a new policy in 1981-82. 105 00:10:27.800 --> 00:10:32.800 Murray Rothbard once said of Paul Volcker, he never trusted anybody that was six foot seven, and I... 106 00:10:32.800 --> 00:10:42.760 And without going into the devices that they used, they effectively, 107 00:10:42.760 --> 00:10:48.920 from 1982 to the present have learned how to control the price of an ounce of gold. 108 00:10:48.920 --> 00:10:55.000 There's no ands, ifs, or buts, so anybody who looks to things like the dumping of gold, 109 00:10:55.000 --> 00:11:03.000 the scorching on a part of central banks, I mean that's all, the game is a rigged game. 110 00:11:03.000 --> 00:11:08.040 The best evidence recently, this was I think the price of gold got to my experts from the 111 00:11:08.040 --> 00:11:14.040 and the Commodities Market. They got to 291 and the very next day they announced the UK gold sales. 112 00:11:14.040 --> 00:11:20.040 I mean that was just as blatant in our view of the effort that they have to control. 113 00:11:20.040 --> 00:11:29.040 So if Jim Grant who was just frustrated by these markets, he just couldn't understand it, 114 00:11:29.040 --> 00:11:37.040 there's no frustration, it's absolutely controlled and directed and so it's a fixed game and you shouldn't be disappointed. 115 00:11:37.040 --> 00:11:42.000 Well, why in heaven's name then would you, would anybody buy gold? 116 00:11:42.000 --> 00:11:48.640 I mean, given the nature, well, back to my friend on the telephone, he has this view 117 00:11:48.640 --> 00:11:54.760 of the world that makes him comfortable, it's moral, he buys gold. 118 00:11:54.760 --> 00:12:01.560 There's also an impatience about us in these markets today. 119 00:12:01.560 --> 00:12:06.320 For one third of my career, the gold was $35 an ounce. 120 00:12:06.320 --> 00:12:10.940 Now it's true, we really had no expectations, the philosophy was there, we knew that one 121 00:12:10.940 --> 00:12:12.720 day things might change. 122 00:12:12.720 --> 00:12:19.680 I remember a dinner party we had when gold went to $100 an ounce, it was a celebration. 123 00:12:19.680 --> 00:12:24.040 Unfortunately, by the time we had it, it was back to $86, so it wasn't exactly the celebration 124 00:12:24.040 --> 00:12:25.040 of $100. 125 00:12:25.040 --> 00:12:31.200 But, I mean, everybody is moving at such a pace, Llewellyn Rockwell wanted to send me 126 00:13:01.200 --> 00:13:20.200 There is investment, because that's the wrong way to view it, it's an extension of your savings, it's a hedge, it's an insurance, or it just makes you feel good, or it gives you something, if you're a masochist, it gives you something to suffer with all the time. 127 00:13:20.200 --> 00:13:30.200 But then there's other events that come to mind, and this is pretty grim, is everybody finished with their food? This is grim stuff. 128 00:13:30.200 --> 00:13:46.200 I have recollections, recent recollections, not of Indians from the Amazon washing their clothes in the river or African natives cannibalizing each other. 129 00:13:46.200 --> 00:13:55.200 I have recollections of a train leaving the Berlin station a couple of months before the Berlin Wall came down. 130 00:13:55.200 --> 00:13:59.200 I don't remember the exact circumstances, but things were very bad in East Germany 131 00:13:59.200 --> 00:14:03.200 and the checks of all people had set up a place where some of these trains 132 00:14:03.200 --> 00:14:08.200 and as the trains left the station, the people were throwing the paper money out the window. 133 00:14:08.200 --> 00:14:13.200 That's something I will not... and again, these were real people. These were like us. 134 00:14:13.200 --> 00:14:15.200 They weren't from another planet. 135 00:14:15.200 --> 00:14:20.200 Another recollection is shortly before the fall of the Soviet. 136 00:14:20.200 --> 00:14:26.200 One of the most dramatic things is they demonetized a thousand ruble note on a Friday. 137 00:14:26.200 --> 00:14:35.200 Imagine that, you've worked and you've saved and you've got these notes that are money or they're a promise and you're told that they're worthless. 138 00:14:35.200 --> 00:14:39.200 I mean, these are pretty savage things to happen to people. 139 00:14:39.200 --> 00:14:44.200 Back in, someone brought up the Mexican situation in 1982. 140 00:14:44.200 --> 00:15:14.200 Just briefly, in Mexico, they don't have an extensive middle class as we do, but they have a professional class, doctors and lawyers, and anybody in Mexico never saves in Mexican pesos, never ever saves, you live in Mexican pesos, you pay your bill, but any reserves you have, you do something else with, and historically, these professionals always held US dollars, that was their gold. 141 00:15:14.200 --> 00:15:20.680 and they did very, very well. Every time there was a cataclysm in Mexico, about every decade, 142 00:15:20.680 --> 00:15:27.120 the poor get poorer and those who are professionals manage to get richer. They always profited, 143 00:15:27.120 --> 00:15:31.760 except in 1982. What happened there, although you didn't have a change of government, it 144 00:15:31.760 --> 00:15:37.440 was the same party, you did have a change of something, a new president, and what they 145 00:15:37.440 --> 00:15:42.840 did is they confiscated the dollar accounts, all of the dollar accounts in Mexico, and 146 00:15:42.840 --> 00:15:48.520 They converted them over a period of a couple of weeks at the official exchange and you 147 00:15:48.520 --> 00:15:52.840 lost about 90% of your assets. 148 00:15:52.840 --> 00:15:58.120 So here was another instance of people who, if they, now their best choice would have 149 00:15:58.120 --> 00:16:05.320 been if they'd had Swiss francs until April of 82 and then switched them over to the dollar 150 00:16:05.320 --> 00:16:07.960 by November, but that's crazy. 151 00:16:07.960 --> 00:16:09.580 People aren't trading. 152 00:16:09.580 --> 00:16:14.920 Some of our younger people maybe have that kind of alacrity but as you get older you 153 00:16:14.920 --> 00:16:16.460 lose some of those skills. 154 00:16:16.460 --> 00:16:24.100 By golly gold is a money, is a historic money and in this instance those who had gold did 155 00:16:24.100 --> 00:16:25.100 survive that. 156 00:16:25.100 --> 00:16:30.880 They didn't have an easy time of it because there were fears that the gold would be called 157 00:16:30.880 --> 00:16:33.700 in as well. 158 00:16:33.700 --> 00:16:39.480 Now you don't need, and Y2K, now we're concerned about Y2K, I don't know my, I don't even 159 00:16:39.480 --> 00:17:09.480 I don't know if I have an opinion on the subject. I don't know enough about computers, but I sure know a little bit about human nature, and it's people's perceptions of things that are more important than the realities, and I could see a housewife going into the supermarket and seeing the shelves empty of bottled water, and she's not going to do a critical analysis of Y2K. She's going to go to another store and try to buy bottled water. I could see these things happening. 160 00:17:09.480 --> 00:17:22.040 I hope not, but Y2K could reveal other weaknesses or act as a catalyst, but I think more relevant 161 00:17:22.040 --> 00:17:31.960 is what I call the crisis in a person's life. There's two kinds of crisis. These are my 162 00:17:31.960 --> 00:17:38.520 own labels. One I label a mini-crisis. That doesn't mean it's small. It means it's you. 163 00:17:38.520 --> 00:17:46.600 It's divorce, it's sickness, it's litigation, it's the IRS, a partner sues you, I mean, 164 00:17:46.600 --> 00:17:54.560 these things happen in a lifetime, and they're not many by any means, but we say it's not 165 00:17:54.560 --> 00:17:59.560 a bad idea maybe to have some gold if you go through a mini-crisis, and I'll explore 166 00:17:59.560 --> 00:18:00.560 that in a minute. 167 00:18:00.560 --> 00:18:03.800 A maxi-crisis is happening to everybody. 168 00:18:03.800 --> 00:18:08.560 That would be wars and floods and Y2Ks and pestilence and whatever. 169 00:18:08.560 --> 00:18:14.200 And once again, these are emergencies that happen, they happen all the time. 170 00:18:14.200 --> 00:18:21.380 There's not a month, well every other month, I'll get a call from a lawyer, lawyer representing 171 00:18:21.380 --> 00:18:27.940 one of the parties in the divorce, usually the wife. 172 00:18:27.940 --> 00:18:34.260 The contention is that he has assets that he's concealing, and gold is easily concealable, 173 00:18:34.260 --> 00:18:39.500 and he's been led to believe that the fellow has gold with us. 174 00:18:39.500 --> 00:18:40.860 And of course, I discourage that. 175 00:18:40.860 --> 00:18:45.460 I say, look, you want to subpoena our books, you can do it, you're not going to learn anything. 176 00:18:45.460 --> 00:18:50.580 And when it's all over, I'll say to him, you know, off the record, I hope he does have 177 00:18:50.580 --> 00:18:51.580 gold. 178 00:18:51.580 --> 00:18:55.060 And I hope she has gold, too, that he doesn't know about. 179 00:18:55.060 --> 00:19:04.060 Of course, as a gold dealer, I have a self-interest there, but someone brought up the case of 180 00:19:04.060 --> 00:19:07.060 the fellow who ran away with the diamonds. 181 00:19:07.060 --> 00:19:11.820 Well, diamonds are terrific, and they're a girl's best friend, but they ain't money. 182 00:19:11.820 --> 00:19:18.180 They don't have a history of money, and gold does. 183 00:19:18.180 --> 00:19:26.400 I might add that lawyers, in some of these cases, I know these people. They've been married 184 00:19:26.400 --> 00:19:34.700 30, 40 years and the lawyers get in and it's just dreadful. Don't get any divorces. It's 185 00:19:34.700 --> 00:19:47.180 a bad idea financially. I didn't mean to make it a commercial, but it really is. 186 00:19:47.180 --> 00:19:55.180 We feel a prudent person who understands what's going on has some gold. 187 00:19:55.180 --> 00:19:58.180 What's the difference what you're paid for? 188 00:19:58.180 --> 00:20:09.180 All you know is that you have immediate liquidity in this market, total privacy, or as close as you can come to privacy, 189 00:20:09.180 --> 00:20:16.180 and there's no other asset that I don't think that can quite accomplish it as gold. 190 00:20:16.180 --> 00:20:24.780 When you're buying, buy from a reputable dealer, I once was asked by one of the trade publications 191 00:20:24.780 --> 00:20:29.780 to list all of the qualifications that a dealer should have, and of course I described myself, 192 00:20:29.780 --> 00:20:33.940 so that was once again a little self-serving. 193 00:20:33.940 --> 00:20:40.220 But everybody around here has an employee discount, anyone in this room, so once again 194 00:20:40.220 --> 00:20:45.080 I thank you all for coming and for being patient to listen to me complain, but we enjoyed having 195 00:20:45.080 --> 00:20:52.080 The panels were very, very good today, the best I've ever attended. Thank you very much.