Calling my bet with Turd [UPDATED]


Hullo, Screwtape types. It's been a long time. Did you miss me?

So, those of you with long memories will recall my post at the end of 2012, setting out the case for gold being about to enter a serious bear market. At the time, gold was at $1672/oz (woah - remember those days..?) and had put in rather a stinker of a year.

I pointed out the simple, almost trite, fact that anyone - ANYONE - who had advised you to buy gold during 2012 had been wrong. Not maliciously wrong, perhaps, but wrong anyway. And I thought that this fact should arm the future readers of the silverogosphere in 2013 when considering their next steps.



Also to this end, I challenged my most favourity blogger on metals, Mr Turd Ferguson, to put his money where his mouth was. Now, at this point, I should explain that there are some terrible misconceptions on the silverogosphere regarding the JdA - TF relationship. There are those who feel that they occasionally pick up on a slither of animosity, or even a degree of opprobrium. Nothing could be further from the truth. We are, in fact, very much in love, see each other regularly for deep, beautiful conversations late into the night, and are frequently to be found embraced in a lovely, healing cuddle. We would, I imagine, have eloped to Gretna Green long ago, if it were not for our desire to spare the Turdites the pain of losing their valued sage and mentor. Well, that, and the problem of his very, very, very tiny gentleman's equipment, of course.

Anyway, I digress. At the end of 2012, Turd felt that the fact that the S&P had outperformed gold (by a considerable margin, I should add) was an aberration and would not be repeated in 2013. I respectfully countered that this was utter shite a bold statement not supported by any rational evidence. The conversation went something (actually, exactly) like this:


Sadly, Turd loses a bit of confidence here. Although sure enough of himself to tell his readers day in, day out that gold can only rise from now on, he was not prepared to bet $1672 on that proposition. A pity, really, as it would only have cost him around $1200 in the end anyway...



No sniggers here, please. I'm sure Turd does do a lot for charity, but he doesn't like to talk about it. Anyway, we settle on $100, given that is all Turd thinks his opinion is worth...




Now, I realise that the end of the calendar year is not yet upon us, but I'm going to go out on a limb and call this bet a few days early. Here are the figures so far:

S&P    31 Dec 2012 = 1426 ... 20 Dec 2013 = 1819 ... Increase = 27.6%
Gold    31 Dec 2012 = 1665 ... 20 Dec 2013 = 1203 ... Decrease = 27.7%*

Now, I imagine that a guest or two on KWN will soon be calling for a 56% increase in the price of gold in the last ten days of the year, but - and call me Mrs Pre-emptive if you wish - I am going to rule that out.

Time to pay up, Mr TF. Grateful if you could provide proof of your donation to Food for the Poor to the adjudicators (Louis Cypher and Purple Haze, as agreed). Or feel free to just post it on your site.

Now, would you like to repeat the bet for 2014? I am ready to do so. This year I feel especially confident: shall we say two gold coins? (Because you'll probably be able to pick them up for nearly the same price as one gold coin in September 2011 soon...)

Merry Christmas to all our readers, and a very happy New Year.

JdA


(* Yes - these unnervingly similar figures of 27.6 and 27.7% are, well, odd... I'm sure TF can come up with a decent conspiracy theory about it, though.)


[UPDATE - 23/12/2013: So, TF has graciously paid out. Fair play to him. Further, he has accepted a bet of $200 for our charities for next year. Same conditions as before - I'll take the S&P, and he'll take gold. Whichever performs the best (or least worst) wins.]


27 comments:

Otto ikn said...

Fine use of Smashy and Nicey there, JdA

GM Jenkins said...

A most glorious return, J'dA!

And to be prodded back from exile by none other than Eric Original, whom I recall to be "the disciple whom Turd loved" (ὁ μαθητὴς ὃν ἠγάπα ὁ κουραδα, for the scholars) ... the unkindest cut of all!

I sure hope he's a good sport about it, your differences aside, and pays up. Moreover, now that his site is behind a paywall and no doubt making a handsome profit, I hope this year he agrees to the two oz bet. In fairness to him, his unwillingness to bet a gold coin last year might have been because he thought both stocks and gold would do well (as happens in a hyperinflationary environment). You may want to throw in a proviso, something like, two oz. of gold, unless both S&P and gold are up for the year, in which case $109 (i.e. 2013's wager scaled for the shadowstats rate of inflation).

Re: calling this year's bet early: assuming S&P is flat to finish the year, gold would actually have to leave more of Sinclair's angels in the dust than you account for over the next 10 days ... it would have to rise >75%, or past $2100. I doubt even half the guests on KWN think that's possible.

Jeanne d'Arc said...

Ah, yes, the Screwtape Files. The only PM site where the bloggers pun in classical Greek.

(Although, as an aside, it may surprise you to learn that Eric King actually ghost-wrote a fairly compelling treatise on Socratic empiricism that only narrowly missed him winning a tenured position at All Souls College, Oxford).

Yes, I was lazy about the percentages there. Even whilst drafting it I had an old conversation in my head in which I tried to explain to someone that if their house goes up in price by 10%, and then loses 10%, they have not broken even, they have lost money. After thirty minutes I gave up...

The bet is what the bet is. I'm not building in complexity. I am tired of being told for three years that stocks are for the insane and gold are the only protection. It's interesting, however, to note the slam on gold due to tapering talk and the rise in stocks despite it. That bodes very, very well for my new bet, I would submit.

Eric Original said...

Hello Jeanne. Nice to see you again. You asked “What happened there?” Well, it’s a long sordid tale that would bore everyone outside of a small circle of friends, so I’ll try to keep it short.

In it’s early days, I saw a lot of potential there, for the site to be something different in the metals space. Something good. So I spent a crazy amount of time, both as myself and as a moderator, trying to help Turd Town be a civil and productive place. By the summer of 2012 it was already clear that this was a lost cause. Turd had gotten what he apparently was aiming for all along. A toxic smoothie of fringe politics, doom and gloom, tinfoilhattery, and investment charlatanism.

A year and a half later, Turdville remains an ongoing train wreck. A belief system rather than an investment site. And if you question the belief, it is quickly made clear that you had better GTFO. Thoughtful people who have walked away are legion, while the dead-enders who remain are few. I suppose someday Turd might get something right again, but only in the same way that a stopped clock occasionally tells the correct time.

If 2014 is anything like 2013 in the metals, which I believe is more likely than not, then the site will go completely belly up. One can only hope.

DarkPurpleHaze said...

I have no idea...but I've relayed the basic message and the most important aspect of "the bet" here...

http://www.tfmetalsreport.com/comment/372731#comment-372731

Help feed those less fortunate than yourself who go hungry everyday. Now picture a sad, hungry child or elderly person and make a donation asap, if possible. Thanks!

Bron Suchecki said...

Not sure if I'd want to bet against gold in 2014.

One thing with these bets on price is you can hedge yourself http://www.perthmintbullion.com/au/Blog/Blog/12-05-17/Betting_1_Million_On_Gold_Hitting_2_000_Before_1_000.aspx, well at least if big money involved.

Gary said...

'ANYONE'

They were only wrong if viewed over a one-year timeframe, a trader's horizon. Over a period of a few years or longer, I suspect the result will be very different indeed.

Millions of Indians, Chinese and Middle-Eastern (and plenty of Western) investors quite rightly don't give a thought to where the price will be in 1 year, let alone versus the S&P.

I can't recall ever seeing a whole blog post so stuffed-full of hubris.



Desperado said...

@JdA,

I'll go with Gary's call of Hubris. I rarely go to Turds site for many reasons listed here, but here are a couple of excepts from your article last year that show why your analysis is nothing but blind Fed faith:

"one needs not many more tools than a standard fib chart and a sense of momentum"

"but is unattractive compared to productive assets at the beginning of a climb out of recession in western economies (buy low, sell high...)? Could it be for other reasons? - I personally discount 'manipulation', because it is obvious to me that gold has, if anything, been manipulated higher for a decade."

Well not only did you never back up your claim of "manipulated higher" your bet was based on "momentum" and "a climb out of recession". Well we have had tons of "momentum" on the back of trillions of ever increasing QE, but your "recovery" would clearly be nowhere without it.

If you had come out and stated that just as in 2009 the Fed was going to pull out all the stops to use unimaginable amounts financial fraud and repression to loot the middle classes in order to save their crony banker friends on Wallstreet, if you had stated the the Fed and the SEC were going to loose the hounds of the bullion banks and ignore their blatant market manipulations, then this post might be worthy of some praise.

Instead we get this snarky post that ignores record gold flows throughout world markets (some documented here), prices suppressed below production costs, massive not for profit off hour dumps of gold futures, failure to deliver German gold, Swiss refineries running at capacity, GLD sellouts, Comex rapidly emptying, and many, many more indicators.

But hey, you got the "momentum" play and the "recovery" right. We could all play the "Never bet against the Fed" game just like you and all the other Wallstreet parasites, but that game will only work until it stops working.

Maybe you can time it right based on your "charts" and make money on both the up and the down moves playing the Fed game, but I would contend that betting with the Fed and the banks is highly immoral. My guess is Turd would say this too. He may not have been right in 2013, but at least he isn't one of them.

Jeanne d'Arc said...

@Gary and @Desperado,

And a very merry Christmas to you both too!

JdA

costata said...

Belated Merry Christmas and Happy New Year to everyone.

Desperado said...

And a happy first centennial anniversary of the founding of the Fed to you, JdA.

And while we are at it, a merry century of wars of western empire on behalf of the bankers and banks that founded the Fed. And why not be generous and throw in a great century of income taxes to finance those wars and the empire.

May 2014 be just as fruitful for you too, but lets look at a few of the important events of 2013:

We have the revelation that the NSA has been gathering the goods on the entire planet. PEP's (Poltically Exposed Persons) including Merkel, the Pope and even Obama were targeted as well as entire markets and industries.

Cypress and he laying of the foundations for Bail-ins across the west,

Failed attempt to overthrow Assad and start a regional war in Syria and the unraveling false flag chemical attacks used to instigate it.

The Libor and FX markets were exposed as manipulated (but never the gold markets, don'cha know).

2013 also exposed the continuing erosion of the health of the bourgeois and working classes as tax increases in the name of austerity bite along with financial repression and increases in fees for things like carbon taxes, obamacare, etc. Zirp and bailouts are leading to the loss of the pensions of an entire generation across the entire west.

If the wealth is being squeezed from the middle, where is it going? Why to the financial markets, to those who closest to the Fed's money spigot, to the banks, who have consistently shown their readiness to participate in cartels (like the Fed) to fleece the public. Trickle down is alive and kicking in places like New York, Washington, London, Tokyo and Berlin.

But what do these financial markets really produce? Nothing, just more churn on the wealth that the empire has extracted from its debt slaves.

To many of us Gold is not just an investment, it is a way to extract whatever wealth we can from whatever we have left after this century of rape and pillage by the banking cartels, and we can do it while removing our support for this system to. Its very simple, just like Sprott and Turd and all those other objects of scorn for so many readers of this blog: Withdraw your consent and get physical gold.

Elmer Habavilo said...

STFU'ers -

Whats the deal with the recent spam ive seen here? Is it that some entity wants to try to prevent the blog from becoming more popular? Or is it just typical spam noise for a website. Im not sure Ive ever seen spam in the comments section before on this site.

Warren James said...

[ @Elmer, I received the following one-line explanation back from Mr Steve Finnell: 'Trying to spread God's word'. It's not just our site - he does it on many apparently, so my calibrated guess is 'blog noise for hire' our comments spam rate is about 3 / week but we are diligent with removing it ]

Louis Cypher said...

Merry Christmas to all

AdvocatusDiaboli said...

happy holidays to y'all from me as well.

what's ahead for the next year?
I really dont care for gold any longer that much, have enough in terms of weight, now focusing just on stacking good old paper cash. I am collecting the ones with a 'X' issued by the Bundesbank ;)
Just wondering, what will be the gold price doing when it comes to deflation or inflation? Why do people think that one or the other is pushing the price in either direction, because IHMO it is only the buyers and sellers that determine the price respectively their pockets, but since gold is only such a tiny tiny place in the overall financial market, do inflation or deflation really matter?
Greets, AD

P.S. google results for "inflation" are more than ten times more than "deflation". If the majority is always wrong anyway....

Elmer Habavilo said...

Advocatus- re issue of inflation and google hits and the "majority"... The majority can talk all they, but the majority gets paid in dollars and have to buy consumer goods... Therefore the majority is actually very "short" inflation... I.e. they will lose a lot of money if inflation rises... So in this way, the majority could in theory be talking a lot about inflation, but their "investments" are betting on deflation... And yes, betting against the majority's investment is often a good idea. Similarly, teenage boys might talk a lot about p----, but there's often not a lot of "ink on paper" (tho of course the opposite is true with inflation, I.e. there's a lot of "ink on paper")... With that tying in of forgettable metaphors, I bid STFUers a joyous new year...

Warren- thanks for the explanation on the spam :)

AdvocatusDiaboli said...

Hi Elmer,

"So in this way, the majority could in theory be talking a lot about inflation, but their "investments" are betting on deflation..."

interesting point. So let's look at the "majority", e.g. I ask Bron about his personal accumulation plan on when to buy gold, he replied something like, he personally does not (besides trying in obligatory retirement fonds), since he focus on paying of his debts with the little extra money first. (@Bron, sorry in case I interpretated that one maybe wrong, just mentioning it here as an example).
So what does that mean? Regular working people are not long cash, they are heavily in debt (nakedshort real paper cash). So they are betting and praying on (hyper)inflation (also they are probably not aware of it).

Elmer, just for a thought, are you 100% debt free? And if, how many working people do you know that are 100% debt free as well? In the last 5yrs. plenty of cheap credit has been handed out desperately with the assumption that this would keep the show going. Does somebody seriously think that the majority can get away with a free ride? IMHO never happend in history and will not happen this time.
Greets, AD

Elmer Habavilo said...

Hi AD-

The beauty of the federal reserve system is that the great majority are indeed very long cash in a manner of speaking. They get paid in USD at their jobs. Their entire asset stream is in cash for the rest of their lives. If hyperinflation of 100 percent per annum hits tomorrow and an American is making 50k, it is key to understand that his salary will (in the great majority cases) NOT be increased by 100 percent to keep pace with inflation. Lets say the average American makes 50k which enables him to mostly just get by with a middle class existence (assume a bit lower standard of living if he has a kid, assume a bit higher if he doesn't have a kid). Lets say he has 20k in debt- yes Americans are of course generally very indebted as u say. Or make it 100k debt burden. It actually doesn't matter all that much. Lets say his 20 or 100k debt is immediately wiped out even (which it wouldn't be, but lets just say that arguendo). The key is that he now has to pay double for food, double for rent, double for healthcare etc etc. He was living his life by mostly just meeting his expenses each month, and even though his previous high debt is wiped out, he is immediately overwhelmed with the expenses of living. Now he can still expect to make $1 million over the next 20 years, but his basic life expenses could be something like $5 million, $50 million over that time. Mind you he doesn't have many somewhat-inflation-protected investments like land, or commodities or etc. He is utterly savaged by inflation-- the higher the inflation, the worse it is. I would reckon if we got anywhere near 70s style inflation , which was recorded at around 10-15 percent (where the stickers on some canned goods in the grocery store are stuck on top of each other every few weeks) it is game over for the 90 percent.

Again tho, I think we have to assume that on average salaries wont keep pace with inflation- they never do. The trend is definitely ur friend on that one. But yes, if his salary keeps pace with inflation and the interest on his debt is fixed rate, he has a windfall from the debt forgiveness and he is otherwise unaffected (aside from the bullet or two whiz zing past his head when he's out at night in the post inflation world). Also, I would bet that bjs would get VERY CHEAP in that kind of environment... Maybe something like 1 USD. Hypefellationary---errm-- hyperinflationary collapses can get very SHALL WE SAY,,,, INTERESTING.... Bwahahahahahahha

AdvocatusDiaboli said...

Hi Elmer,
yes in that scenario, for sure. But the fact is that right now we see this much more in emerging countries.
Anyway, why and how do you see that coming to the US(&EU)? I mean realistically? Who is bidding away the goods from americans? With which dollars? For what goods? Those peanuts of 3trillion supposing sitting in China? To put that in perspective: That's just 10.000 per american, or 500 per human on the planet. A drop in the ocean of financial markets, AFAIR of a daily transactions of 5trillion per day, according to BIS.

Sorry, but the scenario you describe we hear since decades from the goldbugs, nothing really new. In the meantime we had plenty of other states in much more severe problems, just think of Argentina, Iran, Egypt, former CCCP states, Turkey... the list goes on and on. Wait a second.... all those giant gold hoarders and super producers in those countries, dont you think that they would have loaded up on gold by now? After all their national and international turmoil? No they didnt, they prefered dollars, that is the straigt fact, regardless if somebody likes it or considers it logical or not.
Lately there was a documentary about Syria, it was not the topic, but guess what all sides in the battle wanted for their trades: Euros? Gold? or Dollars? Yep, dirty ugly paper dollars.
I met personally some very rich iranian in the carribean. We were talking about all kind of things, gold was not any kind of issue for him and his international family at all, they are looking for realestate, hell knows why somebody wanna own land in iran, or outside if you are iranian.
So if all day people are blown away supposingly by that inflation (which I doubt), who is supposed to buy your little useless rocks anyway in the meantime? With which money? Oh the CBs? To flood the market with even more money? Comm'on IMHO that doesnt add up at all.
Anyway, guess why I have been stacking up personally: Because I dont give the shitty socialist seizure € project shorter time than hopefully my lifetime, definitely not because some dollar/IMF doomer stuff and to hold my government off my wealth. Tax has already stolen more of my labour than inflation ever can in my lifetime.
Greets, AD

Elmer Habavilo said...

AD - ok so lemme get this straight. You are conceding that you were wrong when u said , "regular working people ... Are heavily in debt... So [therefore] they are betting and praying on hyperinflation [albeit unwittingly]." ?

Because that statement of yours seems to be a grievous error. Of course you go on to mention a lot of other issues, but I was wondering if you are still willing to stand by your original statement, or if you have given up defending your original statement. You seem to gloss over the original statement and issue (i.e., as to whether the average American would be helped or hurt by hyperinflation).

Also, as for your torrent of other topics-- what do u mean by "your useless little rocks?" . Do u take me for a diamond dealer? Are you saying diamonds will not be worth that much in the future. Rubies, sapphires? Gold? Silver? Again, let me try to understand you-- you think that I think land is not a better investment than gold ? We can get on to other discussions though once I get a straight answer on ur original statement that regular people are praying for hyperinflation. Because that seems to me to be the statement of someone who became so enamored with the intellectual novelty of "inflation wiping out doubt" when he recently came upon it, that he never thought the real economic dynamics out further, such was entrancement with the intellectual leap he made. So to me it reveals relatively shallow and probably novice economic thinking. ... Which means people would be well-advised to be at least somewhat suspicious of your conclusions in general.

I mean, "average working people praying for hyperinflation." ... As you say, "Come on now".

EH

Elmer Habavilo said...

"Inflation wiping out debt* " not "doubt* ". ...

Elmer Habavilo said...

AD- you say "yes, in that scenario, for sure." But there is no other scenario for hyperinflation. Your "scenario" of someone being in a ton of debt but not having a lot of inflation protected assets when hyperinflation hits, and then because their debt is erased they are benefited by hyperinflation--- such a scenario obviously does not exist.... Because only wealthy people are sufficiently hedged against inflation, and even then its a questionable situation because of geopolitics etc...

AdvocatusDiaboli said...

Hi Elmer,
to put this straight and to go back to my initial statement: I dont know for sure, that's why I asked for general (new?) ideas and perspectives. Or to put it in other words: Nobody aint knows nothing anyway. And my personal guess is more a tendency towards the deflationary camp in general. Again just IMHO, the perspectives of RickAckermann and Armstrong sound more rational than this permanent (hyper)inflation doomer echo boxes. That was my first point.
The next point is, at least IMHO: Neither money/price inflation nor money deflation does necessary mean that gold rises or shrinks in terms of purchasing power.
One point of JimRickards in his latest interviews I like: When CB fail to devalue their currency their last desperate attempt will be that they will at least try to devalue against gold. Sounds logically, but who knows the "logic" of todays CBs.
When you talk about wealthy persons, just think about this: Is this "wealth" person leveraged? If the leverage is collapsing, is he still "wealthy"? Remember Eike Batista? Or in Germany we had one of our multi billionairs Anton Schlecker collapsing....
Let's just say, isnt is good not to leverage yourself, but rather just play save? Now this is the question, how do you play save in these times?
Greets, AD

AdvocatusDiaboli said...

P.S.
and about the benefit or not for the working class in terms of deflation vs. inflation IMHO: It depends how the people are leveraged, spending habbits and the jurisdiction and culture. So pardon me, the points I tried to describe apply to the €-zone, where you e.g. dont have a jiggle mail, but instead (depending on the country) have very nice comfortable social welfare...

Elmer Habavilo said...

AD - you're still not answering the question directly at all but that's ok. this is after all the Internet and I don't really expect people to answer directly ever.

Original statement from you: "average working people are betting on and praying for hyperinflation"

Me: "that is laughably wrong. Do you really believe that average working ppl are betting on (whether knowingly or not) and praying for hyperinflation??"

You: "my personal guess is towards the deflationary camp"


.... Anyway ...

From your disjointed follow up topics, you seem to be segueing into a discussion of whether deflation or inflation will generally prevail. I would guess that there will be alternating deflation and inflation in most asset markets, with a steady inflation in the price of consumer goods. Prolonged steady inflation in consumer goods would be the best way to rob average people of their wealth while also maintaining somewhat civilized living conditions.

I'm having a bit of trouble with your clipped and broken English. Yes i agree with playing it safe... if I had $1 billion, I would put 25 percent in land, 25 percent in stocks, 25 percent in items like gold diamonds precious stones , fine art and 25 percent in bonds and cash. So I would expect to make out ok as we have alternating trends of inflation and deflation in asset markets. To be clear though, I do not expect any real deflation in consumer goods. This would be too beneficial for the common man. Nor do I expect rampant out of control hyperinflation (at least not for years)... Though that would be very painful for the common man, the degree of pain would be hard to sustain over a long period of time without unhelpful disruptions from civil unrest.

Elmer Habavilo said...

AD- ok so u are starting to answer the question. I don't see real hyperinflation being anything but very harmful to any middle and lower classes in most if not all societies, regardless of the culture, spending habits, and as u say, the jurisdiction. Debt is wiped out but food and energy become very expensive and hard to come by. This means that handouts from social welfare would decrease enormously too. I'm not buying the idea that hyperinflation of consumer goods is ever a positive for any middle and lower classes anywhere (except in extremely isolated cases).

Elmer Habavilo said...

AD- ok so u are starting to answer the question. I don't see real hyperinflation being anything but very harmful to any middle and lower classes in most if not all societies, regardless of the culture, spending habits, and as u say, the jurisdiction. Debt is wiped out but food and energy become very expensive and hard to come by. This means that handouts from social welfare would decrease enormously too. I'm not buying the idea that hyperinflation of consumer goods is ever a positive for any middle and lower classes anywhere (except in extremely isolated cases).