In Monday’s column, I gave you some pretty impressive data on gold and how it has been a good long-term performer since we bought our “lone coin” back in 2001.
This was naturally followed with a number of emails from silver permabulls who told me I was giving the short-shrift to silver.
Linguistic point: A shrift is like an “absolution” with a priest, so the term short shrift is along the lines of a “short blessing.”
Point is, silver doesn’t get one – leastwise from father George. Because Silver has not been a particularly good performer, despite all the hype on the web. Let me explain why…
Long-term readers of this column will remember in 2004, Elaine and I were out in Burbank. I’d been hired to manage and move the old Soundmaster Recording Engineering School from its then-present location on Magnolia Blvd. to a new location.
While we were in Tinseltown North and hanging at The Smokehouse, I figured that it would be a fine thing to buy a little bit of silver. The prospects seemed good at the time. No question in our minds that the US FedGov was going to keep “making up money” in order to paper-over the federal spending disaster – a slow-motion/ongoing train wreck – so I bought a little.
Paid between 6.96 and $7.03 an ounce. 2004, remember.
Fast forward to this morning. The price of silver futures on FinViz is $15,63. And, when I looked at the Kitco.com charts (bottom of this page after the comments), looked to me like $15.55. To be conservative, let’s use the lower number.
Thus, on a 15-year investment, the price of silver is up how much? 15.55 divided by 7, call it.
About 2,143 times. That’s nowhere near as well as gold has done.
Maybe you don’t keep a small flip type shirt pocket economic notebook around – but if you’re young, there are lots of worse things you could invest in.
IF you do, pencil in the following for your long-term learning.
2001 (and one 2004)-2019 data:
Gold increased: 4.73491773308958 times.
- The NASDAQ IXIC increased: 4.134905492682349 times.
- The Dow increased: 2.498050667041438 times.
- The S&P 500 Index increased: 2.391239477610566 times.
- Silver (2003 price basis) increased: 2.221428571428571 times.
Now, play “spot the turkey.”
At the time we bought that “lone silver ounce” I had high hopes for the gray dog. When it was up to $20 an ounce I was thinking “What a genius move!” Now, obviously, like people who should have sold ALL their cryptos when the BTC’s were up in the $18,000 range, holding out for longer-term gains was a bad idea. I have lots of those. If you run low, let me know…
The key thing, though, is how long does it take for that pony on the financial merry-go-round to come around again?
Well, hope springs eternal in the bosoms of capitalists. The Silver permabulls are still dreaming of $200- and trying to start rumors of $100. Just like the crypto people are dreaming of a $300,000 BTCs while this morning the digitulips are sucking down in the $3,640 range.
Is there a critical lesson to be learned here?
Of course – except it’s a constant relearning process that has to go on throughout Life.
You need to study the damn numbers.
The numbers never lie. The lies come from our slanting their meaning, one way or the other, in order to justify our own actions. If you’re well into the seven figure net worth category maybe you read the numbers better than some poor family schmoe who has a negative net worth.
But, I wanted to be clear for silver bulls that talking up $100 or even $10,000 silver won’t do any more good than an alcoholic promising “Oh, I can quit any time…” (Then they’ll admit “Not till tomorrow, though maybe…I’m not ready just yet – hand me n’other?“)
The reason to study – I mean really read and feel books like David Goggins’ book Can’t Hurt Me: Master Your Mind and Defy the Odds is because they reveal a process one can go through to begin to cut through the layers of false justifications and self-denial (lies for short) that keep us all from making better financial (and life) decisions.
Making a lot of money usually involves that shouldering of some risk, but also being brutally honest with yourself at all times.
So when someone says “Silver is going to $200!” you can sit back and run the freaking numbers.
Divide the number of accurate predictions this oh-so-insightful source has made by the total number that have been put out over your sample period. Say a person has made 20 financial predictions overall, but only 7 have been objectively correct.
That’s in the range of chance.
Yet, because of quirks, we tend to assign higher recall values to accurate predictions about silver (or whatever, BTC’s – you name it) than we do to incorrect or predictions that can be written in such a way as to seem right after the fact.
You know what a diode is? Wiki it and the key part of the concept is:
“A diode is a two-terminal electronic component that conducts current primarily in one direction (asymmetric conductance); it has low (ideally zero) resistance in one direction, and high (ideally infinite) resistance in the other. “
The Present may be considered, in linguistics or everyday speech, analogous to the arrow of time.
Alan Greenspan was an absolute master of writing “diode speak.” Such that he was raised to near deity status among his adherents. Yet, when one looks at many of the Fed statements from his reign, you can divine many statements that when read on thee other side of the time arrow (now) look prescient.
Haven’t studied prophesy much, have you?
If you have a personal investment decision to make, go back to the data. Any day you’re sucking air you can claim your right to run data and change decisions to head in any new directions. Take a look at the real estate where you live and see where you would be had you put your investment money into other avenues: Gold, tools, starting a small business, improving your education – all right/proper uses of money. But what is your measure?
Take real estate, for example. My friend Dr. Jack Lessinger, whose books may be found on Amazon, instinctively understood how the data works and used the concepts it suggested. A professor of business history (emeritus) at the University of Washington, he was correctly forecasting what would happen when suburbia began to fail.
When you think about it, you can put a bullseye over a city and, working out from the middle, see how different price increases tend to band over time. Downtown core prices can go way up, or way down. A city with a hot industry, like Seattle and software, may scream opportunity which a city like Tulsa, Oklahoma? Not so much.
But, if you’re young? Waterfront property in the region around Tulsa – and there are a ton of lakes and rivers up there – gets mighty interesting.
For a few minutes effort, you can hit the S&P/Case-Shiller housing data pages and look at 10 and 20 year workups for where you live and place their on your “what;’s really working” chart. Want to live in a high beta (change) city like Seattle?
This won’t ensure you’ll become a “winner” but it can sure reduce your odds of becoming a loser.
And that’s a fine thing to aspire to…
Producer Prices Sing Deflation
Here is another helping of data to ponder just out from the Labor Department (who we thank for showing up to play):
“The Producer Price Index for final demand fell 0.2 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.1 percent in November and 0.6 percent in October. (See table A.) On an unadjusted basis, the final demand index moved up 2.5 percent in 2018, the same as in 2017.
In December, 80 percent of the decrease in the final demand index is attributable to a 0.4-percent decline in prices for final demand goods. The index for final demand services edged down 0.1 percent.
The index for final demand less foods, energy, and trade services was unchanged in December following a 0.3-percent rise in November. In 2018, prices for final demand less foods, energy, and trade services advanced 2.8 percent following a 2.3-percent increase in 2017.
Final demand goods: The index for final demand goods moved down 0.4 percent in December, the same as in November. In December, the decline was the result of a 5.4-percent drop in the index for final demand energy. In contrast, prices for final demand foods advanced 2.6 percent, and the index for final demand goods less foods and energy rose 0.1 percent.
Product detail: Leading the December decrease in the index for final demand goods, gasoline prices dropped 13.1 percent. The indexes for diesel fuel, basic organic chemicals, jet fuel, residual fuels, and beef and veal also moved down. Conversely, prices for fresh fruits and melons jumped 48.9 percent. The indexes for construction machinery and equipment and for residential natural gas also increased.
Here’s the key part:
The December decrease in prices for final demand services was led by margins for food retailing, which fell 2.5 percent. The indexes for cellular phone and other wireless
telecommunication services, automotive fuels and lubricants retailing, residential real estate loans (partial), and airline passenger services also moved lower. Conversely, prices for guestroom rental rose 2.9 percent. The indexes for inpatient care, machinery and equipment parts and supplies wholesaling, and long-distance motor carrying also increased.
Bummer of Another Mother?
OK, how’s about this from the NY Fed in this morning’s Empire State Manufacturing report?
Manufacturing firms in N e w Yo r k
State reported that business activity expanded slightly. The general business conditions index fell eight points to 3.9, its lowest reading since mid-2017. The headline index
has fallen a cumulative eighteen points since November. Twenty-three percent of respondents reported that conditions had improved over the month, while 20 percent reported that conditions had worsened. The new orders index fell ten points to 3.5, indicating that growth in orders slowed significantly, while the shipments index was
little changed at 17.9. Unfilled orders were somewhat lower, inventories declined, and delivery times were slightly shorter.”
I think the world is suxabunch. Down futures went negative after being positive earlier. God knows why they would have been – are we the only ones who can read?
Need another poster-child for innumeracy run rampant in America? Pardon us while we take a chill pill on the Shutdown Hysteria.
Here’s why: In the story “No. of no-show airport security screeners soars in shutdown” there is one sentence that gives us some “workable numbers.” Here’s the part to notice:
“…the Transportation Security Administration reported a national absence rate of 7.6 percent compared with 3.2 percent on a comparable day a year ago. “
The mostly corporate/left media in this country has, in our obscenely fact-based view, been trying to give borderline federal employees an excuse to “sick out.”
But the AP giving us actual numbers means a lot to us. For one, that’s only a bit over 4 employees per hundred who MIGHT be even considered “sick outs.”
But now comes even more mental ACUITY” Could more people actually BE SICK? Well, let’s see, what MIGHT cause that?
A major blizzard might make it impossible for some people to get to work. So we scan the headlines for snow storm stories and wonder if there have been any of those?
Well, of course there was. And working into the hype of the press on Shutdown Mania we read how “Another snowstorm could be on its way.”
But, let’s not stop there. let’s put on the reality goggles and consider the flu this year versus last year. And here’s a story in the Washington Post a couple of days old but “The flu has sickened about 7 million in the US so far, CDC estimates.”
In Ure’s Alternate News Reality (ANR) we would propose that the left-leaning media is trying to work the naturally occurring data (snowstorm and flu numbers vary by year) in the very same way the Climate Change Hysteria (CCH) has been modulated.
The objective, as we read it, is to pressure Donald Trump into caving so Peloser can claim a win and keep the even-crazier socialists ascending from marginalizing her.
All of which might sound a bit right of center in our thinking except for the fact that Congress can override Trump any time they can get enough crooks on the hill to come back from Puerto Rico beaches to actually do the work of the people, not the freaking lobbyists who they party with.
Anyway, yes, a few will always sick out but end of the world? Or just part of the ongoing disaster area of ‘Mercia Media that has too much news capacity and not enough content?
“We will find the news or make some…” as I used to tell young reporters. It wasn’t fake – But we had airtime to fill and that’s a very harsh metric.
Ure A Pin-Cushion?
Off for another blood draw this morning. Last week when I went in for normal labs, no one could get blood out of me. Six prick limit, so to speak. So, this morning, off for another pin-cushion session.
Not only am I heartless, but apparently bloodless, too, lol. Deep veins or stingy. You may the call.. Personally, I think with my elevated cholesterol levels, I just need to warm up. Oil doesn’t flow as easy when cold…
Moron the morrow…