August 9, 2017; What’s up with Bitcoin, Blockchain, and Asian Gold Hoarding?

The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick


“On today’s program, David and Don McAlvany have now completed the first half of a nationwide tour to meet with and inform our listeners, subscribers and clients. What were the common themes and questions at each of these conferences? Stay tuned.”

– Kevin Orrick


“The value of gold is, moth and rust do not destroy it. It has proven to maintain itself, even sitting at the bottom of an ocean for 300 years, undamaged, ready to be used again as a currency. Again, translate from the old world to the new, and what you find is something that allows for a translation of value through time.”

– David McAlvany


Kevin:
Dave, you’re on the road. You are just finishing up this series of great conferences that you’ve been doing with your dad over the last almost three weeks. But sort of a strange way to finish up, you decided to run a half ironman before the Denver conference, and I would say you put in a pretty good time, the best time you’ve ever put in.

David: Well, for convenience sake we thought we would do the Denver conference last because it was within a few days of the ironman race. But yes, very interesting getting ready for a race like that while traveling, not having a bike to travel with. It presented all kinds of fun along the way. I have to tell you, some of the most beautiful rides I have ever been on were on rented bikes in Palo Alto and rented bikes in Agoura Hills where I went and came around on the Pacific Coast Highway and through the Santa Monica Mountains – just absolutely memorable, spectacular.

But also memorable and spectacular for me was, over the last six weeks, getting to spend some time with my dad in a stretch that, really, we haven’t had maybe in our entire lives. Certainly, we haven’t been on the road and done conferences like this, one or two at a time, in over ten years. So, really good for the father/son time, and I think it was valuable for him just sort of being shoulder to shoulder with me and working on something; he has been out in the Philippines now for the better part of a decade. And we get feedback all the time on the appreciation level for his contribution in the newsletter, and what he is doing there at the orphanage and what not, but he really got to listen to the questions and hear the thanks and appreciation for who he is and what he does, from the folks who came to the conferences.

We’ve just done our sixth conference and are really excited about what happens in November. Surprising to all of us was the distances traveled, folks coming from Canada and Alaska, even as far as Australia, and of course, from across the country, to be at these different locations. So for us, very valuable, the one-on-one time was invaluable, the consultation times which filled up completely. Again, just a great way for us to interface with clients. We always do that over the phone, but in this case, we got to it one-on-one sitting across the table, which was just fantastic.

Kevin: And I’d like to encourage anyone who is listening who has not attended one of these conferences so far that you are going to be picking up as you travel east through the country in November, I would encourage people not to necessarily look locally, but see what conference you would like to fly into. It’s well worth it. I got a chance to be on the road with you guys on five of the sixth conferences. It’s just amazing to hear the feedback. Like you said, people from Australia, people from Canada, people who flew across the country. So it’s worthwhile to take the time to come and sit down eye-to-eye with you, Dave, eye-to-eye with Don, and just reconnect.

I want to talk today, though, Dave, for those people who have not been able to attend the conference we had question and answer periods after you and Don would present your case, and those questions, as we went through the six conferences there seemed to be a repeating theme. If you don’t mind today I’d like to just go through that a little bit before we continue with the Commentary.

David: Absolutely. I think, in some respects, the way Don and I were presenting, putting some real-time facts and figures to issues that we have covered in the past through the Commentary and newsletter. What comes to mind is, you and I have had time with the likes of Carmen Reinhart to talk about financial repression and the use of low-to-negative interest rates to extract value from savers.

From Don’s perspective, what he brought to the conference was a real-time scenario where control of the monetary system and control of the financial system, the closing of the gates and trapping people inside, is happening in many of the jurisdictions where he lives and spends time in, in Asia. So that is kind of the interplay, I feel like in the Commentary we have almost set in motion some things where we have covered the theoretical backdrop and then we just brought into real time what is happening in those categories.

Kevin: The cashless society was a main theme and with Don traveling throughout Asia, with the orphanages and his various business endeavors in Asia, like you said, he was able to bring a firsthand account. One of the things that I really enjoyed, Dave, in one of the conferences we had a client who was from China. She stood up and spoke about what she is seeing in China because she travels back there at least once a year. She said, “Look, it’s going to be nothing to go to a cashless society in China. Everyone in her region, when she goes back, does transactions with their cell phones at this point. It’s a radical change that we’re seeing worldwide. The United States, actually, might be behind the curve compared to, say, in India or China. And your dad was bringing out some of that from a firsthand eyewitness view.

David: Yes, it’s one thing to hear from someone who is frequently traveling back to China and saying, anecdotally, that 70% of the business she sees being done is with the use of a cell phone, but when you begin to connect the dots between that sort of anecdote – 70% of transactions are already being done digitally – and when we spoke with Becker Polverini, the cryptographer and professional network security guy, he began to say, “Wait a minute. Everything that is being done is mapping out human behavior, is mapping out personal preference, is mapping out a profile of a person who is interacting with this new retail medium.”

And it’s creating a composite. That composite, if you’re talking about a benign environment, a benign leader – not a big deal. If you’re talking about a command and control economy, and this is really what we found as we talk to people on the road, folks who live in China or have lived most of their lives in China, the classic phrase that I’ll never forget was that the young cow is not afraid of the tiger. There is a sense in which no one in China today in the younger generation is aware that Maoist China, or the tendencies toward command and control dynamics within the politburo which express themselves periodically, may turn that digital network and that composite picture of who does what, when and why, into a real force to be reckoned with – not force good, but force negative. So, I found in the Q&A there was so much value in terms of what people were concerned about, what they wanted clarity on, and you’re right, we should spend some time talking through, let’s think of it as the most frequently asked questions.

Kevin: David, it was interesting being in Silicon Valley, both in Palo Alto, and then on up to Bellevue and Portland. There is a lot of technology up there, a lot of very, very interesting people who are on the cutting edge of what is going on in the electronic realm. Bitcoin still continued to be a question that came up with everyone. I thought it was interesting because when you would answer the question on bitcoin you moved immediately to block chain technology, and then your father summed it up quite well by saying, “Look, bitcoin can be bitcoin, but if the government ultimately can’t control it, they’re probably not going to let it go.” But would you give the answer that you gave several times at the conferences, Dave, on block chain technology, because there is a difference between the success of bitcoin in the future, and the ultimate success of the technology that it is built on, which is called block chain?

David: What we talked about was the iterations of the cryptocurrencies and where we have multiple iterations in the form of bitcoin and multiple iterations in the form of ethereum, and very common today are the initial coin offerings, the ICOs. And there have been dozens of new cryptocurrencies that have emerged. So this is a popular expression, but what I would think of as an iteration or an example of block chain technology.

I don’t think that Wall Street is interested in the block chain technology or the distributed ledger because of the iteration you find with bitcoin and the other cryptocurrencies. I think they see a far more profound impact using that code, if you will, for managing financial transactions and tracking what happens in the world of finance in a way that, frankly, is more stable and more clear than the existing financial pipes and flows of information the way they are handled today.

So there is something very profound in what has been introduced through block chain, and everyone, I think, is half asking the question because the cryptocurrencies have gone up so much in value in a short period of time and it is difficult to ignore those rates of return. So while they may cast the question, “Is this a 21st century hedge for economic chaos, is this is a new version of gold for the 21st century, is this how we hedge against downside in the stock market?” I tend to say that this is still in the category of a speculation. Of course, what’s not a speculation these days? But I tend to think of it as a speculation more than a hedge.

And again, we don’t know what survives the next six months or six years in terms of the cryptocurrencies. There is chaos and controversy even amongst the bitcoin advocates in terms of the way that one iteration will be handled. So, that really remains to be seen. I think it behooves every person to do some study on block chain technology and before investing in bitcoin, ethereum, or the others, really gain an appreciation for what is behind it. But that, I think, is where I would say, one of the beauties of 20th century gold, 19th century gold, 18th century gold, 17th century gold – take it back three, four, five thousand years – is that we have a history of something that has worked under any circumstance as a reliable store of wealth.

So here we are in the 21st century trying to do something new and different, and it is, as yet, unproven and untested in the context of crisis. So what is bitcoin or ethereum tomorrow? We have no idea, but we do see a huge value in block chain and its uses within the financial universe. Again, I don’t know if that is ultimately good, or if there is a nefarious strain to it, but certainly, Wall Street likes it because it gives a very clear and transparent record of who has done what in a sequence of events. So as a ledger, it tells you exactly what has occurred in the past, which is helpful in terms of tracking financial transactions.

Kevin: Like you said, it is helpful in tracking transactions, and as long as you have a benign government, then that is not a problem. But every single iteration is trackable with a person who owns the code. That is something that is different with gold. We were talking about Asia, and now you brought up gold. Gold has been money for thousands of years, but it is interesting, here in the West we don’t really see much buying of gold this year, definitely not since Trump came in. But the Asians have increased their buying. This is something that both you and your dad brought up during these conferences. Asia, and China itself, may have accumulated as much as 22,000 tons of gold. Now, to put that in perspective, Fort Knox says that is have about 8100 or 8200 tons of gold in it, if it has anything at all. But the United States claims to have about a third of what could possibly have been accumulated in Asia over the last few years.

Dave, let me ask you something that comes up on the subject of gold. Every conference someone would ask the question, “Okay, so I have gold and we go into some sort of crisis economy. How do I spend it? What do I do with it? How do I use it?” Interesting, some of these questions were coming from people who have owned gold for decades and they’re still trying to work that out in their heads.

David: Yes. I always look at gold as a bridge between the old and the new, and that could be an old economic system and a new economic system, or an old currency and a new currency. The beauty of gold is acting as a bridge. It translates value from the past into the future. That is what it has done in the past, and I think that is what it will continue to do into the future. Where people get hung up on something as basic as, “But in a real crisis I can’t eat gold and what I really need is the most basics.” But you can’t eat your credit cards, and you can’t eat your cash either.

What people forget is that people transact with currencies, or anything of value, in the context of crisis. No, I don’t eat Jacksons or Grants. Your C-notes really don’t do very well. Maybe in Colorado they roll things with them, but even then, there is really no use for paper currency, any more than there is a use for physical gold in that most basic or elemental need of, “I need something to eat, I need something to drink, I need shelter.” What you do see is a value exchange.

And I don’t know that gold is perfect in the context of crisis, but it’s a lot better than nothing else. And it’s a lot better than storing up $100,000 worth of Jack Daniels in your basement or $100,000 worth of blankets and extra pairs of Carhardt overalls – things that may have a value and be exchangeable for what you need, but quite frankly, are a little bit awkward when you’re talking about an entire warehouse full of things that both moth and rust can destroy.

And that’s what it comes down to. The value of gold is, moth and rust do not destroy it. It has proven to maintain itself, even sitting at the bottom of an ocean for 100, 200, 300 years, undamaged, undestroyed, ready to be used again as a currency. Again, translate from the old world to the new, the old economy to the new, the old currency to the new, and what you find is something that allows for a translation of value, a preservation of value through time.

At the end of the day if you ask me, “Dave, what about a particular product?” If you’re transacting and need a particular product for a small transaction, this is not really a world where my mind exists for very long because, frankly, I think I have better things to think about than an end-of-world or apocalyptic scenario, but I do have some silver coins specifically for that purpose. I check the box and move on, and I don’t have to think about that ever again. In the event that something terrible happens, guess what I have? I have a few silver coins that will allow me to transact daily bread type business.

Again, that is, perhaps, on the edge of apocalypse, but it gets to the point where questions like the ones we’re finding over and over again – they do have a simple answer. Own smaller gold coins. If you’re worried about not being able to transact with a kilo bar or a one-ounce coin, own a fractional European or a 10th-ounce American gold eagle, something like that, or silver coins. That is really as basic as it gets.

The bottom line, Kevin, is I that people don’t have the imagination for how they will operate – or maybe even the confidence. Maybe it’s a question of psychology. How will I operate? How will I respond in crisis? That’s not really an answer that I have for an individual. They have to search and figure out if they have the internal wherewithal to say, “When things change, I have the ability to adapt and change my thinking, as well.”

And that is a challenge, but I think it is something that must happen. There are a number of people who has lost their jobs through time, and at a point really critical, highly successful individuals, who lost their jobs and were never able to reinvent themselves. Never. And it becomes an issue where what you have to do is adapt and adjust to the changes which occur in your life. It’s one of the things that I hit on just briefly in the book, which is, we all experience setbacks. We all experience disturbance of some sort, somehow, and we’re talking about macro-economic disturbance and gold being some sort of a play or tool for you in the context of that kind of disturbance.

But we should get used to thinking about the mindset that is necessary to adapt and change to an environment that is different than what we had before. And I think that really will define success or failure. If you can think outside of the old world, old paradigm that you have existed in, into a new world, a new paradigm, and figure out how you need to adapt and change, I think that is really critical, even more critical than figuring out if you can eat your gold.

Kevin: Dave, you brought up the book. A number of the people who came to the conference had read your book. I know of a few people who came to me, honestly very moved that it had affected their family deeply. And so the Legacy book played a key role. But let me stay on the gold concept for just a moment because it’s not just about crisis and it’s not just about end-of-the-world scenario. One of the things that you and your dad both brought out, and people were very interested in is this dynamic way of compounding ounces through the use of ratios. I know you can’t go into great detail on the gold-silver ratio, the Dow-to-gold ratio, the platinum-palladium ratio, but if you could just briefly touch on that because that was one area of interest at every one of the conferences.

David: I think, clearly, people have different reasons for owning metals. For some, it is simply for preservation of value through time. For some it is as a hedge against volatility in the stock market, and as something of an offset. And the numbers have proven very well that having a healthy percentage in precious metals alongside an allocation to stocks, bonds, real estate, lowers your total volatility and increases your total returns over time.

So there are a variety of reasons why people would own it – preservation of assets through time, as a hedge against volatility and fluctuations with other assets, or some people actually own it for growth in the dynamics that you can find, which you just mentioned – compounding of ounces. While you own the metals, can you actually see some organic growth, not just the price appreciation which you might expect if there is traffic into the metals, increase of demand because of a particular catalyst?

So if you’re going to allocate to gold and silver, can you actually grow your ounces without a price move? And yes, that is the case. You can. We’ve done that. There is a variety of ways of doing that. The gold-silver ratio is one of them. We see hedge funds at this time, acquiring silver as we speak, to play the gold-silver ratio – 75 to 77-to-1. These are a compelling reason to be positioning in silver – ultimately, to get free ounces of gold. Again, not everyone wants the free ounces. I know that sounds crazy to some, but some people just want a static portfolio that offers them a financial asset outside the financial system, something that is devoid of counter-party risk, and a pure gold position held in physical possession does that.

So not everybody wants the added growth component from compounding of ounces. But I do think, as we talk to clients at these conferences, a lot of them said, “Look, I’m going to own this for the next 20-30 years, and what I would like to pass on is not just a legacy of gold and silver from one generation to the next, but the know-how and the relationship that we have with the McAlvany organization to be able to grow ounces through time. If my kids and grandkids can understand that there is a strategy in play and not just a hoard to be liquidated upon my death, I want them to see the value added through time. Can you help us? How would I teach my kids or grandkids to do that?”

That’s one of the greatest value-added propositions we can offer as a firm. From one generation to the next, how can we prove to the next generation that your foresight, that your insight, was absolutely of value, and from one generation to the next they may want to do, and utilize, the same strategies that have already been put in play. So, really enjoyed that conference and just the desire to understand, “Okay, we’ve got this asset. How do we grow it through time, and who is in charge of making that call? How do we get involved in your organization such that we’re on that call list?”

Kevin: You had mentioned that there is going to be portion of the gold that is owned for 20-30 years, maybe more, and generationally, but there is also the section of gold that right now is in gold for safety, that wants to move into something a little bit more productive when the timing is right. One of the questions that comes up often is the exit strategy. I’m thinking of the Dow-gold ratio, Dave, and before you answer, the timing of these conferences was absolutely perfect, because every marker in the stock market right now is ringing bells that we heard back in 1987, we heard them in 1999, we heard them back in 2007 and 2008. We’re hearing those same bells ringing, and the timing was perfect for the conference because the Dow was hitting all-time highs as you guys were talking about this. Could you address the exit strategy just briefly for those who did not get a chance to hear it at the conference?

David: Sure. And I think language here is really critical because I would prefer to use the language of a reduction strategy rather than an exit strategy because I do see value for a metals position in a portfolio on into the future regardless of price as a stabilizer. Think of it as the keel to the ship, or as the ballast within the ship. It brings stability, and ultimately power, to all of your other growth dynamics. So I do think that it maintains an important role in a portfolio, even through bull and bear market cycles.

What you’re talking about in terms of a reduction strategy – that’s why we created our wealth management group, that’s why we continue to build out that team with some of the top talent imaginable. Dave Burgess – an amazing guy, and so glad to have him on the team. Doug Noland – an amazing guy, so glad to have him on the team. Chuck Deeds, an amazing guy, so glad to have him on the team. Robert Draper. Deedee. The list goes on. And these are folks that are on the team, specifically, in the context of the Dow-gold ratio to be able to translate high value in the gold space into the best managed companies, even through crisis, but who have suffered on the value side.

What happens to share prices in the context of market panic? They generally go down and it doesn’t matter if you’re the best in breed, the best in class, the best in asset category, you tend to see, still, a diminution of value. What we would like to be able to find the highest quality, lowest risk, best value, and translate ounces into shares, moving from premium assets into discounted assets and increasing a financial footprint on a multiplied basis. We conceived of that a decade ago, put it into motion a decade ago, have built up a significant substantial team to be able to execute on that.

And I think we’re on the cusp. We’ve got the Dow, as you mentioned, at all-time highs. I think it’s fascinating. You watch the Russell 1000, you watch the Russell 2000, and the small caps are already telling you, they’re already diverging and moving to the downside, even as the large caps are getting a lot of the exchange-traded fund purchasing, and that sort of blind purchasing that we’ve talked about on the Commentary for months now, Kevin.

We’re seeing this divergence where your big indexes are continuing to march higher, your higher volatility and your smaller market cap stocks are already moving lower as an indication that we are putting in a market top in your major indexes, as well. And these are the kinds of behaviors that you see at a market top. Why do we mention that? Because, again, someone with a healthy gold portfolio – that healthy portfolio is going to be far healthier two to three years from now, and we think the opportunity to make a sideways move into quality stocks and other assets is going to be absolutely compelling.

We created this team and this dynamic so that we could translate value from one asset class to the other, and it’s a conversation that if you haven’t had with the wealth management team, you need to start having now, because the reduction strategy is not in the numbers, in the sense that, I don’t care if gold is $1,000, $3,000, $5,000, $10,000 an ounce, it’s in the math and the relative value between the numbers. And that’s something that you’re going to have to wrap your mind around as an investor. It’s something that you have to practice, because quite frankly, do you know what we’ve seen? Being in the industry and having been through these cycles before, we see people constantly doing the wrong thing at the wrong time.

When gold gets to all-time highs, do you know what’s going to happen? Nobody is going to want to sell. Because it’s like Linus and a security blanket. In that moment of emotional, and perhaps political and social chaos, nobody wants to let go of that which represents their greatest security. And quite frankly, that is when the greatest value is on the market. And so, there is a blindness to value, and fear tends to dominate. I think this is, again, an area, in addition to compounding ounces, for the long-term holder of precious metals in someone’s portfolio, this reduction strategy is absolutely imperative – absolutely imperative. And it’s not something that you can just jump into last minute. Why? Because there is an emotional component that you, as an investor, have to overcome before you get to that moment of stress.

This ties back to another theme in the book, where all of us experience crisis. All of use experience personal disturbance at some point in our lives. It could be a job loss, it could a hiccup with our health. It could be a divorce. It could be a tragic accident with a child. These are things that we actually can think through – what are my protocols? What are the things that we’re going to do, or not do, as a family, so that we know how we operate under stress? Kevin, you and I have talked about this a lot because you’re a private pilot, and we know that the best way to operate under stress is not by the seat of your pants.

Kevin: Yes, Dave, that’s absolutely true. It’s good to forward think. It’s like Bookstaber said last week, “You can’t predict everything. Crisis oftentimes brings the unpredictable.” And he brought out last week something that, possibly the Volcker rule, which he was part of forming, could create a lack of liquidity. You were talking about where no one wants to really sell their gold when it’s high. Oftentimes, though, when the stock market it crashing, there are no buyers.

And so I’m switching things over to another gear here for moment, Dave, because one of the things that was somewhat chilling to me was the validation of how many people have, in their portfolios, as we sat down with them, these target date funds? We’ve talked about how a lot of money in the markets right now is clustered into just a few stocks. And all of these indexes, you had mentioned indexes earlier, are owning huge, huge quantities, percentage-wise, of maybe five stocks.

And so these target dates funds – and what I mean by that is when someone thinks they’re going to retire in 2020, they have a target date fund that manages for 2020, or 2030, or 2040. We met with people who really had no idea what they were investing in, but they had a target date fund, and they were clustered, probably, into a crowd of millions of people in that same investment.

David: You’re right. And it’s amazing, this combination of stocks and fixed income and the idea that somehow the market is going to treat you right according to your retirement schedule, as if the market is aware of your dream date and is planning to do everything it can to help you reach your financial goals. It is as if the market cares. And, of course, we know the market does not care, and does not operate on our own timeframes. The ideas we talked about with Bookstaber last week were fantastic—emerging phenomena, ergodicity, the idea that conditions do not change. Of course they change. We have the masters of the universe, the central bank community, who is assuming that they can control certain outcomes, but it is on the basis that conditions don’t change, and that their models and their math will work, have always worked, and will always work. And it is just simply not the case.

What else did we talk about last week with him? Radical uncertainty, computational irreducibility – life has to be lived, it has to be played out. And Bookstaber’s comment that each crisis has its own dynamic, and it is usually without precedent – this is probably the greatest takeaway from our conversation last week, because what he would say is, the next crisis, he feels he may have contributed to, in terms of his involvement with the Volcker rule, and spending six years in Washington, D.C., helping put together Dodd-Frank and finalizing the Volcker rule.

Because what has happened is the discouragement of market-making in the stock market and the bond market where there is no longer the incentive for Wall Street firms to take the other side of the trade. They used to be able to play against their clients and profit handsomely taking the other side of the trade. The Volcker rule has diminished the profitability for Wall Street firms to do that. So what does he say? Each crisis has its own dynamic, and in this next crisis, it is going to be the realization that liquidity has been diminished significantly.

Kevin: It was revealing to me – you had asked him toward the end of the Commentary last week, what it was that he was worried about. And he mentioned three things. Actually, two in particular, at that time, but he had mentioned liquidity before. When the market wants to sell their stocks, there may not be any buyers, and that is because of the Volcker rule. But the other two things that he highlighted, Dave, was China’s shadow banking, and the incredibly low volatility in the market right now.

This is a man who analyzes risk, and he understands that part of that adaptability of a market is the models that are used and the investments that are placed are based on the current level of volatility or perceived risk. And his thought is, no, there is a mean average that volatility returns to, and we are nowhere close to that right now. And when that happens there is going to be a lot of investments possibly wiped out because they were basing it on a lower risk scenario.

David: You and I have talked about the VIX for some time, but the Volatility Index being at historic lows – we always see the historic lows just before the historic highs. And yes, there is a value to being cognizant of the mean reversion with the Volatility Index. If we’re at a low level, it doesn’t get to stay here. It never has, it never will, unless we completely eliminate the markets altogether. What you find – and I come back around to this idea of illiquidity in the stock market.

We already know that many fixed income traders and many fixed income positions are, in fact, traded by appointment. You don’t buy and sell as you please, you trade by appointment. But no one has ever really considered that that could be the case within the stock market where the only thing that could hold the stock market together and keep it from outright failure is the central bank stepping in and being a multi-trillion dollar backstop to buying shares of Apple, Facebook, IBM, and Caterpillar.

Could the Fed do that? Well, the Swiss Central Bank is already doing it. The Bank of Japan is already doing it. Precedent has already been set. And I think what you see is sophisticated money wanting a hedge, and the smartest money in the world today looks at the low levels of volatility and says, “Well, that’s good for now, but we know there is going to be hell to pay later, because again, it does balance itself out. And perfection on the low end means that we have considerably higher volatility to get to those mean, or average, levels.

You’re right, his other point on the Chinese shadow banking – we have no idea what that looks like in a context of crisis. We do know that there has been a massive consolidation of power by Xi Jinping, and his ability to manage a crisis has never been better. But how have the Chinese managed crises in the past? Quite frankly, Tiananmen Square comes to mind. The ability to manage crisis with force of threat has been the classic model in China. We’ll have to see if that’s what is required in the times ahead.

Kevin: Bookstaber’s book, ten years ago, when he wrote it before the last crisis, was all about the danger of leverage in the Western world system. Now, he didn’t have as much of a concern for that as he did the shadow banking because the leverage in China right now just dwarfs the leverage that we see in the Western world.

Well, Dave, I’m looking forward to the conferences as we come into the next few months. I would ask our listeners to stay tuned because we don’t have those locations and dates nailed down exactly right now, but we will be communicating that over the next month or two.

David: There is one thing I want to end with. I’ve gone through Bookstaber’s latest book, The End of Theory, now three times, partially because I needed to. He has some concepts in there that are definitely a challenge and an exercise. But there are so many points in there that tied to ideas that I have been intrigued by for years. One that I was not familiar with that he introduced me to was the Thomas Theorum, which is basically that what we observe, we change, what we change alters how we observe. That may sound crazy, but Edward Gibbon wrote something very similar in The Decline and Fall of the Roman Empire. He said that during many ages, the prediction, as it is usual, contributed to its own accomplishment. Individuals’ beliefs lead to their actions, and those actions can, in turn, lead the beliefs to be confirmed. That is a quote from Bookstaber’s book.

I guess how this boils down for me is this. We look at gold as a value in the world finance as something that is able to transfer value from the old world to the new, from the old currency to the new, from something that we understood and were comfortable with to something that we don’t really understand and are uncomfortable with. But I think that we, as a family and as a company, are focused on all things of greater value. And where we can invest time, energy and effort into all things of greater value, you’re going to be able to translate from the old world to the new, the old currency to the new, from the comforts of the known into the world of the unknown much better.