The circus moves on

Gene Arensberg did a post on my November 30 article. I watched it for a few days but no one commented so I stopped checking it. A day later on the 5th blogger Dave In Denver posted some comments, which I missed.

TF picked up on these comments a day later, turning them into a post titled Cage Match: Bron vs. Denver Dave. Dave’s main beef seemed to be that I didn’t critique GLD and was thus an apologist for the ETFs. He completely missed the point of my response, which was solely about addressing the suppression mechanics.

You can find my response to Dave here. One important extract is some core views I have:

• I do not recommend ETFs for anything but short-term trading.
• If you don’t hold it in your hands, you have counterparty exposure – period.
• Allocated with bar numbers in a non-bank vault does not have some magical force-field that stops it from being stolen. You are trusting your custodian.
• If you hold it in your hands, you have theft exposure. All precious metal investment has risks, only you can decide what risks you are comfortable with.
• Don’t let anyone tell you that you are an idiot for storing it yourself or for storing with a custodian.
• If you don’t understand a prospectus/agreement, stack physical.
• If you don’t understand a company’s business model (which includes the Perth Mint’s “use in our business” unallocated), stack physical.

The third last one is one that annoys me whenever I see it – this judgemental attitude that you must hold your metal without any consideration that what is right for you may not be right for someone else.

Interestingly, at the TF blog no one was interested in my response and it didn’t gather any further debate. As I commented at TF:

I wasn’t expecting much comment one way or the other. TF posts so frequently that the circus moves on and unless you can comment within the day of the post it is too late, which is difficult for me being 12 hours behind.

My response will also be a handy reference link to give next time I’m accused of being a bankster shill.

I suppose it reflects the fact that the TF Metals Report has a client base who are just buy and hold type stackers. They have made their decision and thus most of them aren’t interested in debating or learning, they are primarily there for entertainment. TF’s use of “army” imagery and the “cage match” characterisation are indicative of that.

Nothing wrong with that, except that I don’t know how they are going to know how to assess when to sell their metal, which is something they will have to work out for themselves because it is doubtful TF or Maguire (or many people selling gold products) will do it as it doesn’t help your business model to tell your clients to leave. However, if they haven’t spent the bull market thinking critically and trying to understand the market’s dynamics, it is likely they will get the exit all wrong.

The true test of who the charlatans are in this business will be those who continue to say buy buy buy all the way through the bubble top as they try and squeeze every last bit of profit out of their clients before they close up shop and move on to the next story.