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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 09/16/2008 : 20:19:33
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Why Wall Street Hates Gold and Silver??
(Excerpted from Chapter 12 of How to Prosper During the Coming Bad Years in the 21st Century.)
Wall Street ignored gold and silver during most of the 1970’s hyper-profitable bull market. They were either outright hostile, or acted as though the metals didn’t even exist. I got no respect, even though the first edition of my book sold 2.6-million copies and was near or at the top of The New York Times best-seller list in both hard and soft cover for two years, and I was all over the media; Wall street Week, Oprah twice, Regis and Kathy Lee three times, etc, etc. They were usually hostile also. Wall Street paid little attention to gold until it reached about $650, far too late for them to have much of a chance for their clients to make money.
Why the hostility? Partly because they believed their own rhetoric! Historically, because rising gold always means falling stocks or a troubled world, and they made most of their commissions in the stock market, they had to remain bullish on stocks, and bearish on gold. Their bullish stock-market recommendation was necessary because investors wouldn’t buy stocks if their advisors were dubious about the market’s future. They sneered at the inflation fears of us gold and silver fans, and derisively called gold investors “gold bugs.” Most of the young whippersnappers who now control Wall Street were in diapers 25 to 30 years ago during the last gold bull market so they haven’t experienced rising gold and inflation. Consequently, another gold bull market is inconceivable to them.
Studying Psycho-ceramics
One of the funniest things that ever happened to me illustrates the skepticism of mainstream media types regarding gold and silver.
In 1978 I was on a national promotion tour for the first edition of my book when I found myself in Detroit, rushing to a TV station for a scheduled interview on a big morning show. I barely got there in time when the host turned to the camera and said,
“Today we’re going to study psycho-ceramics, and with us today is a crackpot from California.” And the interview went downhill from there;
with his biggest argument being that silver was an impractical investment for most people, unless you were very rich.
One year later I found myself in the same studio, same host, promoting the mass paperback of my book. But this time, when the light went on, he said,
“Today we have with us one of America’s most brilliant financial advisors,” and the interview was terrific from then.
After the show, I reminded him of what he had said before, and asked him what had changed his mind. He very sheepishly said, “I read your book and bought silver from a local coin dealer, and tripled my money since you were here last.” So the media is not always infallible, even though they are usually wrong.
Inside Wall Street
Wall Street is a culture, as well as a financial institution.
Most of the young brokers who are the big producers on Wall Street are human beings, subject to all the errors of habit and behavior and peer pressure that plague all of us. They are surrounded by “group-think.” They make tons of money on the status quo. I have visited firms on Wall Street with big trading rooms full of twenty-something men and women whose annual income is measured in the millions – all on commissions on stock sales.
Few big Wall Street firms sell bullion (right off hand I can’t think of any) so it is only money out of their pockets if hot-shot brokers tell their clients to sell some stock and put the money into bullion or coins. Maturity and client concern are scarce commodities on Wall Street.
They are congenitally bullish on stocks, because that’s where their bread is buttered.
......Panama and the Dollar
When we negotiated away the Panama Canal to Torrijos, the Panamanian Dictator, our chief negotiator was Sol Linowitz, a member of the board of Chemical Bank in New York. He was appointed for one day less than six months, so his appointment would not be subject to Congressional approval, and sure enough, the giveaway deal was signed one day before Linowitz’s term was up.
One key part of Linowitz’s banker-inspired mission was that the Canal Zone would be a “Free-banking Zone,”
not subject to regulations or oversight.
Even before the deal was signed, bank buildings were going up all over the Zone. Every multi-national bank was there, and it appears that they moved many of their international money systems there, with no oversight or regulation. Who determines their safety or vulnerability? No one!
By Howard Ruff
The Ruff Times
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kavajava
Penny Collector Member
USA
490 Posts |
Posted - 09/17/2008 : 02:48:22
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Ruff often has good insight--his latest article is good as well:
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Ruff’s E-Letter
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Expensive Gas and Environmentalists Update
The following is partially excerpted from a column by a fine economist, Walter Williams:
“Every time there has been a huge spike in gasoline prices, Congress hauls oil company executives before their committees to accuse them of greed, obscene profits and price-fixing. One federal investigation after another turns up nothing to substantiate congressional allegations. Unfortunately, the congressional hearings make front-page news and lead the evening TV news, but the results of the investigations that follow are only casually mentioned deep in the body of the newspapers and get little or no time on the evening TV news.
“If news media people had an ounce of integrity they would highlight the federal-investigation findings that undermine congressional charges of oil company misconduct, and they would question the congressmen who made those charges.
“A politically satisfying explanation for today’s $4 a gallon price, when it was less than $2 a gallon a couple of years ago, is because oil company executives have all of a sudden become greedy in their pursuit of ‘obscene’ profits. As such, congressmen, as our heroes, should call these greedy men on the carpet and impose sanctions on them in the forms of windfall profits tax, price controls and other measures to take away their ill-gotten gains – never mind the dire effects of the 1980 windfall profits tax.
“According to the Congressional Research Service, the 1980 windfall profits tax had the effect of decreasing domestic production by three to six percent, thereby increasing American dependence on foreign oil sources by eight to 16 percent.
“Controlling the price of anything can only be accomplished through the force of government, mostly by restricting supply. The U.S. Congress is a major player in oil-supply restriction, and OPEC nations must be laughing all the way to the bank.
“Congress has banned energy exploration in 85 percent of our coastal waters. Ironically, China, in conjunction with Cuba, is drilling for oil nearer to our coastline than U.S. oil companies are permitted!
Sterling Burnett wrote in the Houston Chronicle (May 21), “It is estimated that beneath America’s coast lies enough oil to meet the United States needs for 60 years and enough natural gas to heat 60 million homes for 160 years. If allowed access to American oil reserves in Alaska and off our coastline, American oil companies could increase our country’s reserves an estimated five-fold, taking the United States from 11th place to fourth among the countries with proven oil reserves.”
Yes, but what about the environmental impact? We have all read the hysterical claims from environmental activists and their allies in the senate that caribou and other wildlife would be hurt. But the truth is that they have expanded and flourished in and around Alaska’s Prudhoe Bay, unaffected by the oil and gas development.
Kay and I were invited by the oil companies to go to Prudhoe Bay, so we did. We inspected the facility. As we stood and watched outside the facility, a ramp over the oil pipeline was suddenly graced by the presence of a mama caribou and her calf, which posed nicely for a picture at the top and then came down followed single-file by at least 1,000 other caribou which walked right past the Prudhoe facilities as if it didn’t exist. All over the place there were dens dug by arctic foxes. You could get within ten feet of them while they sat with their big ears and babies watching you, knowing you wouldn’t hurt them.
An environmental expert who was hired by the radical environmentalists took my son and me on a helicopter trip over the tundra for many miles around. There wasn’t a tree in sight, contrary to the lovely pictures that the senate claimed would be spoiled by work on the North Slope. It was just barren tundra, but it was alive with animals. We saw several bears, including a mama bear and her cubs. She was standing on her hind feet trying to swat the helicopter 100 feet above her.
We saw thousands upon thousands of caribou. The evidence says that the pipeline has made the caribous sexier because it creates warmth, and their population is exploding two to three times what it was before the pipeline. You can take my word for this, I was there and I saw it.
Headline writers who publish gorgeous Alaskan landscapes that are supposedly devastated by oil don’t have the slightest idea what it is about.
Walter Williams expresses an interesting idea. He suggests that the best way to get oil exploration in the Alaska National Wildlife Preserve is to give the land to the environmentalists. You can bet they wouldn’t sit on billions of dollars of oil and gas without exploiting it. But there is no accounting for their anti-oil religious conviction.
“The true villain in having to cough up $60, $70 or $80 to fill our gas tanks is the U.S. Congress caught in the grip of environmental extremists. But if reality is too difficult to swallow, we can continue to blame and support the congressional attack on oil executives, turn food into oil and think of other crackpot “solutions.”
So when you fill up your car at the gas pump, don’t be mad at the oil companies. Their profits are about the same percentage as other American corporations, and they reinvest those profits in exploration and drilling. If you want more oil to be found, let the oil companies have their profits to pay for it. I’m sure they would do it, because it is to their advantage to do so. That’s the beauty of the free-enterprise system.
But I must admit that I am a bit skeptical that sense will ultimately prevail. It makes too many great headlines and lead stories for newspapers and television to continue to accuse the oil companies of obscene profits. Yes, they make tremendous amounts of money, but that’s based on tremendous amounts of volume. Percentagewise, they are no better than other American corporations.
And who are their owners? Fat, greedy, plutocrats? They are middle-class Americans through their pension funds and 401-Ks and mutual funds who are the owners of these so-called greedy oil companies. They need the profits to sustain them in this inflationary environment.
Howard J. Ruff, the legendary author and financial advisor, has re-edited and re-issued his 1978 mega best seller, How to Prosper During the Coming Bad Years, still the biggest-selling financial book in history, with 2.6 million copies in print. He is founder and editor of The Ruff Times Financial Newsletter. This is an article The Ruff Times of June 20, 2008. The newsletter is much more comprehensive and deals with a broad spectrum of middle-class financial issues and includes an Investment Menu from which you can build your portfolio. You can learn about it here). The Ruff Times has served more than 600,000 subscribers – more than any financial-advisory newsletter in the world. |
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