Weiner gets exercised by misconceptions about what gold can do for investors.
“The most common thing I see wrong is an oversimplification of the mechanics of the monetary system. It’s just not as simple as money printing, the coming hyperinflation (which never really comes) and 1-800 BUY GOLD NOW! so you can be protected and profit from the coming collapse,” he continued.
“Unfortunately, this string of incoherencies still gets circulated in the gold community with vigor. And yes, even by some economists who really should know better. I’d like to think I’ve made a few inroads with my writings over the years, but suffice to say here, that’s just not how the monetary system works! It’s much more complicated, nuanced, non-linear and dynamic than what most people, even trained economists, think,” he said.
His new colleague, Jeff Deist, clearly buys into the Monetary Metals philosophy.
“Certainly, my previous work at the Mises Institute and with Dr Ron Paul dovetails nicely with Keith’s own ideas about monetary policy. I knew Keith from my previous work and we agree that gold is poised to regain a monetary role as the disastrous experiment with fiat currencies continues to wane.
“There is a $12 trillion pile of gold out there essentially lying fallow. Monetary Metals is the only company gathering it up to fill a market need – financing gold-using businesses, while at the same time paying investors an attractive return on gold, in gold,” he said.
“It’s important not to ignore the world of ideas. But persuasion is not nearly enough. After all, economic ignorance among the public allowed our government and central bank to install inflation as an express policy. Today, innovative companies drive societal change at the highest level. Did the taxicab monopoly lose ground because someone wrote a white paper explaining the economic harms of government sanctioned monopolies? Or did Uber demonstrate the better alternative?” he said.
Risks and rewards
This publication asked Weiner what mistakes should investors avoid with gold?
“Broadly speaking, individuals should avoid numismatics or collectible products and stick to bullion only. Even with bullion, investors should be careful about how much over spot they’re paying. Premiums on certain products have ballooned in recent years and investors were paying way too much over spot, when they could have bought less expensive product. We were selling gold below 1 per cent over spot, when some investors were paying close to 10 per cent to buy similar gold product,” he replied. “For larger institutions, being mindful of the carry costs of gold while at the same time being wary of the hidden risks in owning ETF products or other `paper’ gold products like futures contracts.
“Also, there is a notion in the industry that owning mining companies is like owning gold with leverage. This couldn’t be further from the truth. We’ve done the analysis and gold, the metal, has outperformed miners. Sure, you may be able to find exceptions with this company or that company, but as a sector, the track record is crystal clear. Unless you’re an expert stock picker, you’re better off owning the metal itself,” he said.
FWR noted that Monetary Metals appears to take a more “mainstream” view that the wealth industry would be comfortable with than is sometimes the case. Is that a deliberate business strategy, as well as a conviction?
“It’s both. We think there’s plenty of rational, reasonable evidence for gold as an asset class. One need not resort to conspiracy theories or bombastic claims about this or that event (past, present, or future) to argue for gold. The reasonable arguments themselves are sufficient,” Weiner said.
“That last remaining (valid) criticism of gold was that it didn’t produce a yield. We’ve clearly overcome this obstacle. It’s simply a matter of time before the rest of the world wakes up to the reality that gold can and does offer a yield,” he concluded.