Gold: Telling it like it is – the truth is out there

The following article is a lightly edited version of one which previously appeared here last week and on info.sharpspixley.com

As a writer on financial matters – and primarily on precious metals – I am often in receipt of various analytical reports and newsletters , some of which would normally require a subscription, but are sent to me gratis by their writers, while others sometimes find their way into my inbox from various friends who feel I would find their content valuable.  One such I have commented on before is Grant Williams’ excellent ‘Things that make you go hmm..’ letter (www.ttmygh.com) while another is Michael Lewitt’s even more outspoken one – ‘The Credit Strategist’ (www.thecreditstrategist.com) and I have to say the latter’s latest outpourings entitled ‘The X-Files’ is an absolute doozy.  If you can beg, borrow or steal – or best of all subscribe – to his letters you should really do so.   Lewitt tells it how it is in this world of dubious economic practices and political and financial spin, supported by a basically-ignorant and readily compliant media.  And his clients for the most part appear to have done pretty well out of his investment advice.

Lewitt in his latest letter to his subscribers makes no bones about his views on U.S. and global politicians, economists and business leaders who have brought us to the potentially dire financial, geo-political and corporate positions we find ourselves in today.  While he may go further than I personally would in some of the statements he makes – after all I am a conservative Brit rather than a more forthright American – his whole diatribe (I think it’s fair to call it thus) has so much self-evident truth in it, providing one can accept that so much of what is considered advice from political, economic and corporate leaders is nothing more than bs designed to keep the ‘proles’ (referring back to my article on Groupthink and Orwell’s 1984 – See:  Cash, Gold, Paranoia and Groupthink ) in a state of blissful unawareness of what is really going on in the world.   “The sorry truth is” says Lewitt, “that what passes for journalism is the creation of stories that package reality into politically correct fictions for an increasingly passive audience to consume.”

Lewitt opens his latest letter with a quote from a seminal work from revered social historian, Daniel Boorstin, written in 1961, from his book The Image: A Guide to Pseudo-events in America which sets out modern-day aspirations – and perhaps why it is so easy for the general public to be taken in by political and economic spin supported by poor journalism and constant advertising:

   “We expect anything and everything. We expect the contradictory and the impossible. We expect compact cars which are spacious; luxurious cars which are economical. We expect to be rich and charitable, powerful and merciful, active and reflective, kind and competitive. We expect to be inspired by mediocre appeals for ‘excellence,’ to be made literate by illiterate appeals for literacy. We expect to eat and stay thin, to be constantly on the move and ever more neighborly, to go to a ‘church of our choice’ and yet feel its guiding power over us, to revere God and to be God.

   “Never have people been more the masters of their environment. Yet never has a people felt more deceived and disappointed. For never has a people expected so much more than the world could offer.”

The X-files reference in the title of Lewitt’s letter relates to the recent renewal of the classic TV series in which FBI agent, Fox Mulder, seeks out unexplained phenomena with the catchphrase ‘The truth is out there’.  In the words of Lewitt: “Like Mulder, the fictional FBI agent who desperately wants to believe in extraterrestrials, investors desperately want to believe that central banks can keep supporting markets in an overleveraged post-crisis world. Like Mr. Mulder, however, they are certain to be disappointed and learn that aliens are little more than a government conspiracy designed to deprive them of their liberty and their money.”  Think NIRP which is already in place in many parts of the world and which some commentors think will inevitably have to be imposed in the U.S.  and the U.K. too.  Indeed in terms of bond yields being below inflation they probably are already there.

You really have to read the letter to understand fully what Lewitt is putting forward, complete with examples from the political, economic and corporate arena of how the public is being misled in almost all angles.  He pours scorn on Central Bank thinking that negative interest rates can help transform the global economy given the huge debt burdens most, if not all, countries are carrying and has particularly vehement criticism on the Obama administration’s wishy-washy approach to the defeat of terrorism (I assume Lewitt is very much of the Republican persuasion!)

As to gold, he views the premier precious metal very much as a currency and his comment on it is something of a footnote, but a very powerful one nonetheless.  Lewitt comments that currency parities are still “all about the U.S. dollar….the divergence between the policies of the Fed and the other major central banks remains in place and sooner or later will reassert its influence on currency markets (and the rest of the financial markets).”  The hierarchy of currencies, in his opinion, remains Gold-USD-Euro-Yen-Yuan.”

As a Brit I’m not sure where the pound sterling falls in his currency hierarchy – perhaps he feels it irrelevant in this day and age although it remains one of the key constituents of the SDR – but with the possibility of Brexit on the horizon sterling could well be too volatile in the short to medium term in any case for sensible comparisons.

Lewitt feels that China’s recent apparent strength with a recovery in the stock market and in the value of the yuan is purely artificial ‘and the result of manipulation by the Chinese government’.  He reckons  that China’s economic woes are not improving, but growing more severe and that there is a degree of political panic evident in the government’s moves to try and make things appear better than they really are.  He sees China resuming a policy which will encompass yuan devaluation, but at a measured pace, while the other major currencies will also continue to weaken against the U.S. dollar.

As for gold, Lewitt reckons that ‘all paper currencies will continue to weaken against gold in the long run’ and ends his latest letter with the repeated advice from previous Credit Strategist letters that readers should continue to buy gold to protect themselves against what is to come.

Lewitt’s latest letter is very forthright and his views may seem extreme to many which could put some mainstream observers off from understanding the message he is trying to put across.  But whatever one’s political viewpoint he is highlighting that ‘the truth is indeed out there’ and it is not what the media spin-fed general public, or indeed some so called expert political and financial commentators and analysts, perceive it to be.  Take heed.

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