Archive for April 4th, 2008

Kids Go to Gold Camp

April 4, 2008

Great Mogambo The Mogambo Guru


The wife and kids are all in an hysterical uproar because I keep buying gold and silver and not wasting it on them and their incessant demands for food, medical care and things that prove “a father’s love”, like any of that crap does me or our financial status any good at all.

But they are always whining about how things are costing more and more, and I tell them that if I am not going to buy these things for them, why in the hell do they care what they cost? And that, for some unexplained reason, sets them off again, whining, whining, whining.

But I guess it was to be expected, as Agora Financial’s 5-Minute Forecast reported on a CNN/Opinion Research poll “showing that ‘the rising rate of inflation’ is Americans’ No 1 economic concern”. In fact, it is almost everyone’s No 1 concern, as “Ninety-one percent of all folks polled by CNN listed the dollar’s devaluation as their primary fiscal worry. Worry over the value of the bucks in their wallets beat our job growth, the stock market or housing concerns in the poll.”

And now that gold and silver were caught in the downdraft last week, the kids are even MORE unreasonable about my latest Family Financial Re-Structuring Plan (FFRSP), which involves no work or investment on their part, and it only involves them giving up one lousy meal per day so that I could use that freed-up money to buy more gold and silver! It’s a great idea!

After a while, I got tired of explaining, “Shut up! Shut up! Shut up!”, so I looked around for additional evidence that I am correct and they are just a bunch of ignorant, whining, Earthling millstones around our familial necks that are dragging my plans and dreams into the ol’ crapper and giving it a flush.

Then I see Bob Moriarty at 321Gold, and I say, “Listen to this and learn!” Mr Moriarty said, “After a short and brutal correction, gold will resume its climb. Gold and silver have not peaked. They are money and when all currencies fail, they will be the last man standing.”

That’s it! That’s it exactly! That is why gold and silver always prevail; there is nothing else in which to invest that has all the wonderful properties it has!

I was hoping that he would continue on in this vein until I caught a glimpse of sudden comprehension from one of the kids, but he said, “Anyone mumbling about subprime mortgages or even prime mortgages just doesn’t get it. Those are a tiny part of the issue. The issue is $516 trillion worth of Monopoly money floating around the giant crap game we call the world’s financial system.”

Immediately, I knew that I could turn this to advantage, and I immediately jumped up and interrupted “How in the hell can the global glut of derivatives be 37 times as big as total, global GDP? Hell, just a yield of 0.1%, a tenth of a percent, would mean that $516 billion would be needed just to annually service the debt of that $516 trillion! Hahahaha! We’re freaking doomed!”

As usual, nobody was impressed with my economic analysis nor my nifty summation there at the end, but I thought I saw a glimmer of understanding in my daughter’s eyes when Mr Moriarty explained, “I don’t care how many $200 billion Band-Aids Helo Ben patches on the system, it isn’t going to work. The entire banking system is underwater. The system is going to fail totally and globally.”

Encouraged, I leapt up and said, “And this is exactly what Ludwig von Mises of the Austrian School of economics said would happen if you don’t voluntarily abandon profligate creation of money and credit; complete collapse of the monetary system!”

I quickly looked over at my daughter, hoping that she would leap to her feet and exclaim, “I get it now! Oh, daddy! I was so, so wrong about you, and now I see that you are the smartest, handsomest, most wonderful economist and father in the whole world! I love you, daddy!”

Alas, her eyes were again as blank as usual. So, to hell with them all, because it is not just Bob and me that are bullish on gold, as the Economist magazine reported that “Hussein Allidina, an analyst at Morgan Stanley, reckons ETFs own more than 915 tonnes of gold – more than the European Central Bank.”

Not only that, but much more buying is to be anticipated because, “Funds are steadily being launched in new countries, such as Dubai. This boost to demand is not being matched by a rise in supply. Gold production peaked in 2001, according to Black Rock, and is expected to decline in each of the next three years.”

So let me get this right; demand for gold has been going up dramatically and, seemingly, is going to rise a lot more thanks to the simplicity of Exchange-Traded Funds, while the supply of new gold is declining, while the central bank is now reduced not only to creating a bazillion new dollars in money and credit, but also to buying up assets of such poor quality that literally nobody wanted to buy them, and while, astonishingly, letting private companies actually borrow from the Federal Reserve by utilizing a never-before-used law that has been on the books since 1932!!!!

Careful Mogambo Scholars (CMS) will instantly note the use of the rare quadruple exclamation point, which denotes such emphasis that it commands your complete attention and total obedience. And having commanded attention, it tells you that The End Is Nigh (TEIN) if they are that desperate, and commands that you start moving supplies into your bunker in the backyard (if available), or huddled up like the whimpering little coward that I am in the closet under the stairs, angry, with bitter tears of disappointment and fear dripping down my face, down to my chin, whereupon to drop (“plop!”) onto my lap so it looks like I peed in my pants, and so now I am angry about that, too!

I feel a little better that Junior Mogambo Ranger (JMR) Ron R sent an excerpt from Howard J Ruff’s e-newsletter; “So bet on rising gold and silver; the fundamentals will not change. In fact, it’s beyond repair because the only thing that will end [inflation] will be to stop pouring money into the economy, which means taking a stand on Social Security, Medicare and Medicaid. If you think government will do that, I’ll cover all bets.”

And Stephen Leeb, of The Complete Investor newsletter, says the same thing; “The factors that have pushed gold higher since the turn of the century did not evaporate last week.”

So they all agree with me that gold is headed higher, although if you ask them, they will say, “Who? What did he say? I never heard of him or his ideas, which he stole from me, the Thieving Little Bastard (TLB)!”

Regardless of what they or their smarmy lawyers can prove, the fact remains; gold and silver are going up. And by a lot.
Richard Daughty, the angriest guy in economics
The Mogambo Guru


MogamboRichard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise the better to heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron’s, The Daily Reckoning and other fine publications.