In one of the articles I said that young people should not concern themselves with saving money, but should instead invest in themselves – in their skills, equipment, connections and creating opportunities. However, at the same time I’ve been teaching my kids to buy gold bullion with their savings, and to save as much money as possible.

That is because there’s a big difference between a general rule and one’s specific circumstances. You see, the general advice to young people would be to educate themselves in order to acquire marketable skills in the area they have the most talent and affinity for. Also, they should equip themselves for functioning in the world, which means having a computer and a smartphone, an Internet connection, means of transportation and so on. However, what happens when someone already has all the above taken care of? If you already have all the hardware, should you keep throwing money at something that isn’t a problem? So, that’s how we get to the advice given to a specific person that contradicts the general rule.

Also, my general advice is to put the savings into precious metals, but if someone doesn’t make that much money, it might be preferable to put it all into efforts designed to make you more productive. If you’re not making enough money, saving isn’t and shouldn’t be your priority, because making more money is actually a solution to your specific problem. Saving money is great if you’re actually making money, but if you’re not, what are we even talking about?

Also, putting money into productive assets is of course preferable to putting money into precious metals; keeping money is good, but making more is essential. Also, you want to invest in stock that pays dividend and similar things that create passive income for you, unless you want to keep working until you die. However, that is a general rule. If the stock market is in a bubble, and all the stock prices are divorced from the fundamentals, investing money there is just asking for trouble. The same goes for crypto. Sure, it is profitable, if you get in early, sell below the peak and laugh all the way to the bank. However, the Ponzi schemes are also profitable if you get in early, and gambling is also profitable if you keep winning. That does not mean that gambling and investing in Ponzi schemes is a good idea in general. Some people get rich investing in weird shit, or by sheer dumb luck, or due to a freak event. Those same people usually lose it all later, when you’re not looking, and when they are no longer bragging loudly for all to hear. So, making money is better than saving, but saving is much better than losing or wasting money. Any recommendation needs to be tailored to the specific needs of the individual in question, and general advice is here only to aid one in correct thinking and planning.

As a general advice, I wouldn’t recommend people in the European Union, where VAT of over 20% is paid on purchase of silver bullion, to buy physical silver; buying fully allocated vaulted silver makes much more economic sense, and you only pay the VAT and other forms of overhead if you want it delivered into your custody. And yet, I recently bought a substantial amount of 1oz silver coins. Why? Because it is not wise to be completely exposed to remote entities where you can assert only a limited degree of control even in the best of circumstances, and in the worst case you can be cut off from your metal. The recent situation with the Perth mint, where clients were basically unable to have “their” metal delivered, and the word “default” was mentioned more than once, is a good warning – when the pressure on all sorts of financial entities increases, many weaknesses will be exposed, and what is now deemed reliable might not remain so indefinitely.

I hope you all took advantage of the low gold prices for the last few months and stacked it with both hands, because that’s not likely to repeat. 😊

There’s been lots of hype about silver lately but silver was actually holding its price better than gold in the said period, so I was primarily buying gold, because I didn’t really hope to see it at those prices anymore. I actually bought a significant amount right before it fell off a cliff, because I thought it was going up from there and had it wrong, so I’m happy to see it back at those levels; it’s not fun to be in the red. I did buy some silver, too, because it actually might respond to one of those “silver crunch” attempts and I wanted to have enough to matter.

We’re approaching Basel III deadline when the banks will be obliged to demonstrate that they have 100% physical coverage of paper gold, which would in theory end the main method of manipulation of the gold market. I’ll believe it when I see it. Also, considering how fast the money printer is going brrrrr, the precious metal prices are obviously suppressed, because everything else is growing faster than they are. This suppression can’t go on indefinitely, though, and when it pops, it will go really high. At the same time, I expect American stock market and the crypto market to go completely to shit, because it’s all speculative without any underlying value.

The banks look as if they are really struggling, and I don’t know how long they can be propped up, and at what cost. In any case, I wouldn’t keep significant amounts there.

Long version:

There’s somewhere around 200x more “paper gold” in circulation than there is actual metal in the vaults supposedly backing it up. This is politely called “rehypotecation“, and less politely it’s called “fraud”. Basically, they are selling the same gold bar 200 times and counting on the fact that almost nobody demands physical delivery. Now, the BIS apparently demands that the holders of gold as a tier 1 security under Basel III demonstrate that they actually hold physical gold in the quantities they are reporting on paper, and the deadline for that appears to be 28.6.2021. This means that some of the major players, who previously used to defraud people massively by playing with paper, are in a situation where the music will stop playing, in a game of musical chairs, so they are now dumping all that paper gold (read: fraudulent garbage that is about to be exposed) in order not to get caught, and since the market treats those forgeries as if they are physical metal, the price of both is connected, so selling off immense amounts of paper lowers the price of both. At the same time, the demand for physical metal is enormous and everything that appears on the market is immediately lapped up. When the paper positions unwind, and all the thieves manage to cover their naked butts, the price of gold, now fully physical, will likely explode to cover the same volume of money that was previously the valuation of all the “paper gold” forgeries in circulation, basically expanding to 200x or so compared to where it is today, because the “paper gold” was artificially introduced to satiate demand without allowing the price of metal to rise accordingly.

Short versions: hold and buy now while it’s cheap, and if it drops more, buy more. Think of it as Bitcoin at $300, a few years ago.

(from the forum)

I want to add a comment, on the topic of free market vs. central planning.

America will criticise China’s “communist central planning” as if it were a universally bad thing, but having in mind what they recently had in Texas, where they had a free market approach to generating electricity which resulted in:

• major power losses
• infrastructure breakdown due to lack of cold weather proofing of the equipment
• people being charged extreme amounts per kWh because much less electricity was produced and so the “free market” raised the price of the now scarce resource.

Also, we had a similar example in Zagreb, where the communist urbanistic planning ended with national independence, and after that the “free market” determined what will be built, and the result is an urbanistic disaster. Lots of new buildings were made, in areas with poor infrastructure, and then this developed multiple chokepoints – sewage system overloads, road capacity overloads, telecom infrastructure overload, and everything looks more like a concrete favela, than the “elite urban villas” that were advertised for inflated prices. Basically, free market created a clusterfuck.

There are places where you want a free market, but then again, there are places where you want the state to handle things. For instance, producing essential medications should absolutely be state-controlled, because free market will not create cures for diseases, because that’s not profitable. It will create addictive “treatments” that will force you to keep buying medications. This is why I have zero confidence in Western medicine – it’s been creating “treatments” instead of cures as a matter of principle for the last who knows how many decades, to the point where it’s so much a matter of strategy now, they don’t even know how to think in other terms.

Also, the military industry. The Russian way of designing weapons is absolutely superior to the American one, because the state dictates everything and controls the main parts of the process, which is inventing the new technologies and manufacturing, and the design bureaus basically offer competing designs and can’t dictate the prices. As a result, Russia can produce better weapons for a fraction of the cost, because the state dictates the terms and the goals, which are to produce the best weapons for the least amount of money, unlike America, where the huge corporations dictate the price, and the state is reduced to defining the desired performance and inspecting quality, and the goal of the entire process is for the companies to milk the state for as much money as possible while still delivering the minimum design spec. Also, the American military tech is intentionally designed to have enormous cost of maintenance, because that’s how the corporations keep milking the state, while the Russian tech is designed to be robust and cheap to maintain, because the government designs it that way, because it knows it’s going to have to pay for it in the long run.

I know I usually sound like a free market fundamentalist, but that’s usually because I’m arguing with positions that don’t understand the principles and advantages of the free market, which are very real, but the free market is not something that will produce an optimal result. It’s like biological evolution – it can produce many things, but it’s limited to iterating within the constraints of natural selection. It will not produce anything near what an intelligent consciousness can produce, in terms of technology. For instance, biology can’t use nuclear energy for power, enter orbit, or make a rotating joint necessary for making motors, wheels or propellers. If free market is a good approximation of biological evolution, strategic central planning is human consciousness applied to a problem, and it’s capable of both fucking up immensely because it doesn’t have the punishing feedback of free market economy, and also of anticipating and solving problems far ahead into the future, which the free market can’t do. For instance, from the position of free market it’s profitable to keep people hooked on some drug and leech them for money. That’s why dealing drugs is such a profitable business model. It’s only because of the state’s central planning that it is decided that it is a very bad thing for the population to be hooked on drugs, and the laws are introduced to prohibit the practice, regardless of the short-term profitability. An example of what happens when entire countries are hooked on drugs is the opium crisis of China and the problem Russia traditionally has with alcohol. But of course, from the free market perspective, selling drugs is profitable as fuck.

And let’s not kid ourselves – the Western market is also controlled and regulated. It’s profitable to just dump toxic waste somewhere, so there’s a law against that, that performs the function of central control and planning. It’s profitable to deceive people and steal their money, so there are laws that punish such behaviour, because someone decided it’s better for the society as a whole. It’s profitable to create a monopoly or a cartel and exploit everybody, so there are laws that punish that, because this isn’t beneficial for the society as a whole. So it’s just a matter of degree and method, not of principle.

You must be wondering about the fact that the price of gold is falling and the American stock market is behaving strangely. Apparently, bitcoin and stock market are in a boom, and the metals are “worthless”, contrary to my predictions.

To that, all I’m going to say is that we have descended below the event horizon of the collapse of the world’s financial system. At this point and until the end, we are in the domain of chaos, panic, greed, ignorance and madness. Buy precious metals if you can. Earn as much money as you can while it’s still possible. Buy essential things. Avoid buying non-essential things. Avoid whatever the masses are doing. We are in the domain of evil and madness, enveloped by the fogs of war. Trust only in the plans that you made before, and don’t change course now, as Von Clausewitz would advise.