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Published On: Thu, Nov 10th, 2016

Most Idiotic Comment Ever? “Sell Gold Because Inflation Will Spike” – Dave Kranzler

Even Stanley Druckenmiller makes idiotic analysis from time to time…

TND Guest Contributor:  Dave Kranzler 

Stanley Druckenmiller said:  “I sold all my gold (sic) on the night of the election” because he sees inflation spiking and that will force money(sic) out of gold…hmmm….sell gold because you see inflation coming?  That has to be the most idiotic investment rationale I’ve ever come across.  Even “buy stocks because they keep going higher” is less dumb than that.

You’ll note the “sic” I added after Drunkenmiller’s comment about “gold.”  “Sic” is used after a quoted word (from someone else) that seems odd or out of place.   I inserted “sic” after Drunkenmiller’s use of “gold” because he never owned gold.  He bought GLD, which is a paper derivative of gold.  The only way you own gold is if you buy physical gold and keep it outside the system. GLD is a fraud, just like every other fiat paper “asset.”

I also inserted “sic” after his use of the word “money” with respect to “money flowing out of gold” (because he thinks inflation will spike up).  Gold is money.  It’s the second oldest form of transaction currency – silver being the oldest.

Finally, the idea that gold should be sold ahead of an expectation of a spike in inflation is…well, for lack of a better term, retarded (apologies to safe-space and socially correct people).   Gold is the ultimate inflation hedge.

I sincerely do not know what would motivate Druckenmiller to make those remarks about gold – maybe he was patronizing what remains of CNBC’s imbecilic audience.   I don’t feel any need to directly address each component Drunkenmiller’s assertions about gold – and about his expectations about feeling good about the prospects for the economy.  The audiences of blogs like this one get it.

The current trading action in gold is being fueled by the paper market manipulation. If you review overnight charts for the last 3 months, you’ll see that on average and in general gold moves higher during the eastern hemisphere physical gold trading hours and gets bombed once the London and NY paper gold markets open after the Asian markets close.

It’s as simple as that.  The paper gold market, like Drunkenmiller’s comments and investment rationale,  are emblematic of the fraudulent, debt-riddled Ponzi nature of the U.S. and western hemisphere economies.

While the mantle of “power” in the U.S. was handed from Uncle Tom to Andrew Dice Clay, the real financial, economic and political power is being shifted from the western hemisphere to the eastern hemisphere.   The massive flow of physical gold from west to east is the root of this tectonic geopolitical and economic movement.

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About Dave Kranzler:

Aspen1-dave I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics.  Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.

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  1. Sierra_intrepid says:

    “He bought GLD, which is a paper derivative of gold.  The only way you own gold is if you buy physical gold and keep it outside the system. GLD is a fraud, just like every other fiat paper “asset.””

    Very well said Dave, I completely agree. Paper gold GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. This fact alone would mean GLD shares are nothing more than paper at the end of the day. Furthermore, GLD’s prospectus is chalk full of weasel clauses and legal loopholes that allows the fund to get away without the full physical gold backing. One good example of this is the clause that states GLD has no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this audit loophole. I’ve also verified the following to be true and welcome everyone else to do so:

    “Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded to act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.”

    “I remember there was a well documented visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”

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