Why Is Gold Important?

This notion about ‘fully informed market...’ What do you guys and gals think about it?

For me the financial world has become far too complex a place to allow such a thing to be a realistic objective in the first place. Who knows what was talked about before BNP copped to a 9 billion US dollar fine for using the SWIFT system to move money to and from places that the US government decided had been embargoed on behalf of the whole of the rest of the world - thanks for that, by the way; without the moral perspicacity of Obama and/or Boehner we would never know good from bad in this world. As a Greek from an ancient part of the civilized world I really appreciate being lectured about morality, of all things, by all of the Johnny-come-latelies who seem to think they invented it. They certainly invented a special (peculiar) view of it.

WGC-sponsored big gold for weddings
show in India

But apart from the sheer hubris of the US financial astral plane, the single most troubling issue is the fact that no sooner has some new Soros worked out some brilliant angle, than every man and his dog is spruiking it all over the internet as if they ALL ‘saw’ it first and before you know it, the whole advantage is gone through too much loose talk and nonsensical strategizing.

Information is no longer making the market run.

Information no longer gives you an advantage in price acquisition.

Take gold, for instance.

If you want to know about the gold price - if you really want to know about it - you need to know about trading; I mean about general trading, not gold trading.

You know the World Gold Council? Well but have you heard of the London Tea Council?

My father’s aunt was one of the founding members. She had estates in Kenya and Malaya and India. That was a long time ago.
I’m not sure if this current ‘Tea Council’ is some new iteration or if it is the same one as in the days of the clipper ships.

Anyhow. Tea - they say - calms you; coffee, of course, creates revolutions.

Floral teas from Twinings

I would recommend that those who are resident in the USA stay with tea and steer well clear of coffee. For one thing tea is usually cheap and coffee can be very expensive, for the good stuff…

‘High tea’ is nevertheless a great joy if it is done well. The London Tea Council awards the best ‘high tea’ in London with an accreditation every year.

You can’t generally trade tea for coffee in the source locations. But you can trade them using the intermediation of gold. As I explain to those who think that having an account on IronFX of some one of the millions of computer screen trading exchanges dealing in currencies and interest rates - you need a minimum of THREE currencies in order to make actual money from price disequilibrium. And in a world in which everything is harmonised through too much ‘official’ data and a ubiquitous information pool, you need a not-well-known product or a specialised service with real demand over time via which it may be possible to use gold in its best function in order to profit.

My own personal view of what is dawning on the world is that the US market will undergo severe strains, but that most of the rest of the trading world will not.

It’s been a very great mistake for investors to continue to assume that the dominance of Wall Street and the financialization of everything has any effect whatsoever on real trade of real merchandise…

This is of course, not an idea that has a lot of followers.

Most banks today operate under a fallacy that it is easy to access real merchandise through financialization, but they are indulged by central banks and they thereby get away with pretending too many things are so that really aren’t.

Baltic Dry rates still show the real paid demand for real goods in bulk. And these are all down.

‘In bulk,’ though, gives the game away. I could not have transported in yesteryear, any of the high premium products in bulk, that I can still not any differently transport in bulk today either; the real supply simply does not exist.

Nah, see they drink coffee in the Baltic

The mass market is not an educated one even though all the brand marketers like to pretend the masstige market is an educated one.

The clue to the gold price and the moments when it moves is in finding that educated market. In historical phases of decadence - which means exhaustion from growth, which perfectly describes where we are all at - industrial, conveyor belt assembly line production loses its efficiency because the end market is not there at the margin of profit needed. People find it hard to accept this truth.

Keep your eye on the big name advertising consultancies. They are going to veer off away from the ‘luxury branding market’ and the broad access market although this has been a widespread thing for them over the last ten or twenty years. Once you start to see them go for such a small client base that you start to wonder what could possibly justify the advertising you will know that the time to buy the gold price is clearly at hand.

Trust me about this. I speak to these people. I know what they are talking about between themselves in the back rooms. It’s probably a bit arrogant of me to say I know what they are thinking. But of course I know what they are thinking. They are advertisers, they can’t help themselves. They advertise all the time; it’s a habit. I have played poker with some of them. I don’t know anything about poker myself. The only book I’ve ever read on the subject was the one by Alan Patrick Dowling. The guy who started the CIA. He spent a lot of time in Shanghai with white Russian women and Paris Chinese wearing real Barguzinskya sables and unweighted (pure dye) silk. And playing poker.

Butler service for the up-scale people. Always.

Nothing changes. Apparently no American has ever smoked a real cuban cigar. And BNP Paribas never will.

How about adding up the voluntary ‘fines’ paid by businesses and banks to the US over the last ten years?

Information is not about what you know; it’s about what you don’t want to know but find that you have to all the same.

Time for a cup of tea.