08 December 2014
Gold and silver bugs have already experienced a hyperinflationary event
Dominic Frisby has a couple of podcasts out from the Mines and Money conference in London. Dominic is a great interviewer and probably the only gold friendly one who is willing to ask some very pointed questions, instead of the usual soft ball stuff.
The one with Ross Norman, CEO of Sharps Pixley is good but I found the one with Ned Naylor Leyland of Quilter Cheviot the most interesting.
As an example of Dominic's pointed questions, this is what he asks five minutes in: "I put it to you that gold and silver bugs have experienced their worst dream only in the opposite in that all their options on gold and silver aka their junior mining stocks have wiped them out in much the same way that a hyperinflationary event would have done."
Some other interesting bits include Dominic recounting a conversation with an educated moneyed Malaysian on a plane trip about whether Asian countries would follow the path of Western countries where use and investment in gold has faded, and how people still think the pound is redeemable in gold.
The most telling part is towards the end where Ned tells a wealthy investor, who isn't invested in gold and is using residential property as his hedge against the current rocky financial architecture, that property is a poor illiquid hedge "and I could see the penny slightly dropped but he didn't like it and so he just looked at me and went don't give me that goldbug look". If you want to understand why Westerners are not buying gold, the "but he didn't like it" cognitive dissonance explains it all.