Author Archives: Notable Quotable

Notable Quotable

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“I remember being told many years ago on a South African game reserve that the buffalo was the most dangerous of the big five game animals. In large part, this is because of the complacency shown towards them relative to the other, more obviously dangerous big five game animals (ie the lion, leopard, rhino and elephant). It’s also a fact that unlike the other big five, the buffalo gives no warning of an imminent charge (see link). It’s complacency that gets you killed, and the same goes for investors with the macro-risks. We all know what the big macro-imbalances are out there, caused by years of loose money, but investors continue to ignore them at their peril.”

Albert Edwards
Society Generale

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Notable Quotable

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“‘Experience keeps a dear school,’ said Ben Franklin, ‘but fools will learn in no other.’ The wise man remembers. The fool forgets. The wise man listens. The fool talks. He ignores both the living and the dead… the immemorial dead, whose whispers carry the distilled wisdom of history. No – this time is different, comes the fool’s eternal cry. The past is of no use to me.”

Brian Maher
Daily Reckoning

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Notable Quotable

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“In a lot of cultures, the word for money derives from the word for gold. In China, the ideogram for money is the ideogram for gold.”

Peter Oakley
Royal College of Arts (UK)

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Notable Quotable

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“For a variety of reasons it is likely that central banks that hold gold will tend to husband their reserves and that some with low levels of reserves will acquire more. Gold goes where the money is. After moving from the colonial world to Europe, to the United States, back to Europe it is now moving to the emerging economies of Asia. This is consistent with the view that central bank’s gold position signals economic power and prestige.”

James Steel
Hong Kong Shanghai Bank Corporation

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Notable Quotable

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“A lot of economic, market and bank supervisory theory is based on the premise that financial actors are largely rational. The [2008] crisis convinced me that they are not. It was not rational for very experienced financial leaders to make their companies hostage to short-term financing that was, in the final analysis, secured by the irrational assumption that house prices will always go up. It was not rational for Dick Fuld to reject offers because their terms offended his pride. It was not rational for money market fund investors to flee all money market funds just because one fund made a bad bet. It was not rational for some lenders, at the height of the crisis, to stop accepting even Treasuries as collateral. The crisis convinced me that greed, ego, fear, short-sightedness, group-think and other human foibles have at least as much, if not more, to do with financial behaviour as rational thinking does.”

Mike Silva
Former chief of staff to New York Fed president Tim Geithner during the 2008 financial crisis
(Speech to the LBMA, October 2018)

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Notable Quotable

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“If you want to protect your savings, gold, and silver are important assets to own, especially the physical asset, not just financial instruments. Equities only help while monetary policy continues to create asset inflation, but that can stop abruptly when money supply growth coincides with nominal GDP growth, as the multiple expansion effect dies. Sovereign bonds are not a solution as both the price and the yield make them the most expensive asset.”

Daniel Lacalle, PhD, economist

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Notable Quotable

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“For it is, so to speak, a game of Snap, of Old Maid, of Musical Chairs — a pastime in which he is victor who says Snap neither too soon nor too late, who passed the Old Maid to his neighbour before the game is over, who secures a chair for himself when the music stops. These games can be played with zest and enjoyment, though all the players know that it is the Old Maid which is circulating, or that when the music stops some of the players will find themselves unseated.”

John Maynard Keynes

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Notable Quotable

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“Gold is real money. When fake money gets debased and inflated, gold shines. Since the beginning of this century, central banks have added some $22 trillion in new, fake money – or 15 times the value of all the gold ever mined from the time of The Flood to 2000 A.D.”

Bill Bonner
Bonner & Partners

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Notable Quotable

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“The cities were still there, the houses not yet bombed and in ruins, but the victims were millions of people. They had lost their fortunes, their savings; they were dazed and inflation-shocked and did not understand how it had happened to them and who the foe was who had defeated them. Yet they had lost their self-assurance, their feeling that they themselves could be the masters of their own lives if only they worked hard enough; and lost, too, were the old values of morals, of ethics, of decency.”

Pearl S. Buck
Novelist who was in Germany during the hyperinflation in 1923

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Notable Quotable

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“Gold is scarce. It’s independent. It’s not anybody’s obligation. It’s not anybody’s liability. It’s not drawn on anybody. It doesn’t require anybody’s imprimatur to say whether it’s good, bad, or indifferent, or to refuse to pay. It is what it is, and it’s in your hand.”

Simon Mikhailovich
Tocqueville Funds

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Notable Quotable

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“One of the signs that you have entered into a mania phase is when people have trouble absorbing non-conforming information. ‘Confirmation bias’ is a psychological behavior where individuals disregard any information which conflicts with their current beliefs. While that bias has always been problematic for investors, in recent years, as individuals lock themselves inside their ‘social media echo chambers,’ it has worsened.”

Lance Roberts
Real Investment Advice

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Notable Quotable

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“Gold has been around for thousands of years. Bitcoin has been around for 20 years.”

Dennis Gartman
Markets analyst

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Notable Quotable

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“There are certainly forms of instability that have been introduced by algorithmic trading that will increase as we put more and more faith in these algorithms. The February 2018 flash crash was instructive. The culprit was a slightly esoteric exchange-traded product that has a rebalancing mechanism inside of it. And that rebalancing mechanism ended up destroying the product on one specific day when the market moved a little bit more than the product was designed to handle. The product was required to trade a lot of instruments in response to that move. But then those trades exaggerated a small move and it became a big move, which required more rebalancing—and everything spiraled out of control.”

Anonymous algo-trader
LOGIC

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Notable Quotable

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“John Locke, the British philosopher whose ideas fuelled the American Revolution, had a theory of knowledge and perception, which I always found annoying. Asked if we have an idea of the substance behind our perceptions, he said we had ‘no such clear idea at all, and therefore signify nothing by the word substance but only an uncertain supposition of we know not what’. The philosophical debate has moved on in the centuries since Locke wrote. But his idea captures well the uneasy state of the world’s financial markets. They are driven in the short run by perceptions, not reality. If many have the wrong impression, markets will move on that. But in the long run, markets move on matters of substance. And at present the economic substance is a ‘something we know not what.'”

John Authers
Financial Times

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Notable Quotable

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“We’re in very uncharted waters. Nobody has gotten by with the kind of money printing now for a very extended period without some kind of trouble. We’re very near the edge of playing with fire.”

Charlie Munger
Berkshire Hathaway

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Notable Quotable

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“If we observe the empires of the world that have existed over the millennia, we see a consistent history of collapse without renewal. Whether we’re looking at the Roman Empire, the Ottoman Empire, the Spanish Empire, or any other that’s existed at one time, history is remarkably consistent: The decline and fall of any empire never reverses itself; nor does the empire return, once it’s fallen.”

Jeff Thomas
International Man

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Notable Quotable

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“If we are lucky, the next Fed-caused downturn will cause only a resurgence of 1970s-style stagflation. The more likely scenario is the type of widespread economic chaos not seen in America since the Great Depression. The growth of cultural Marxism, the widespread entitlement mentality, and the willingness of partisans of various sides to use force against their political opponents suggests that this economic crisis will result in civil unrest that will be used to justify new crackdowns on individual liberty. Those who understand the causes of, and cures for, our current predicament have two responsibilities. First, prepare a plan to protect your family when the crisis occurs. Second, do all you can to spread the truth in hopes the liberty movement reaches critical mass so it can force Congress to make the changes necessary to avert disaster. Since the crisis will result in a rejection of the dollar’s world reserve currency status, individuals should consider alternatives such as gold and other precious metals.”

Dr. Ron Paul
Former Texas Congressman and candidate for president
Ron Paul Institute for Peace and Prosperity
Septermber 2018

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Notable Quotable

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“The truth, yet unspoken from on high is that radical monetary policy begets more radical monetary policy.” – James Grant, Grant’s Interest Rate Observer

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Notable Quotable

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“I grew up in a purely urban family. We had no relatives in the country. I’m born in 1944. When I was a baby, my mother could only buy food because she still had some gold coins. Without gold, I would have starved. She always told me that. Therefore, this generation already has a certain gold affinity. In extreme times of crisis, this is one of the few things left to be accepted. Gold was the only thing left to the people of the city at that time. Before the silver cutlery was also traded at the farmer.”

Ewald Nowotny
Former European Central Bank governor

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Notable Quotable

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“The first step in theorizing correctly about money is to understand that the value of money, like that of commodities, is never fixed and unchanging. Chinese philosophers who published the earlier Mohist Canons(468 B.C.~376 B.C.) grasped this crucial point. They recognized that metallic money, such as the ‘knife coins’ then in wide circulation, was valued and exchanged by weight and argued that the real value of money, despite its fixed face value, was not stable but fluctuated inversely with the prices of commodities. When commodity prices were high, money was ‘light’ or its purchasing power low; when prices were low, money was ‘heavy’ or its purchasing power high. Thus, if monetary conditions were such that the nominal prices of commodities were abnormally high, the real prices of commodities were not high but rather money was ‘light’ or depreciated.”

Joseph T. Salerno
The Mises Institute

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