Financial Sense Newshour Has Founder Of Northwest Territorial Mint

This week's Financial Sense Newshour podcast, in addition to having Donald Coxe in the first hour [.mp3 file], had founder of Northwest Territorial Mint Ross Hansen. He was questioned on the gold-bubble issue, and he said that there's two sides to it. On the one hand, gold has gone up to the point where it's squeezing traditional sources of demand like jewelry; investment demand is making up the balance. On the other hand, from his own personal experience, investment gold is being held by strong hands. He recommended shying away from short-term trading of the metal and accumulating for the long haul. The interview itself is at the beginning of the third hour [.mp3 file].

A point he made was important enough for me to highlight. People who believe that gold's in a all-out bubble point to buy-gold ads on conservative talk shows. Hanson made the point that a lot of those firms use a high-pressure sales tactic to get would-be buyers to trade up to semi-numismatic coins at big mark-ups. The salespeople claim that the federal government is going to confiscate gold in the near future, like it did in 1933. They also claim that, as in 1933, collectors' coins will be exempt. Thus, buying semi-numismatic bullion coins is safe but buying lower-margin bullion coins may not be.

Regarding the threat itself, Jim Puplava said that confiscation of gold coins in individual hands is unlikely because it's inefficient. The government would have a much easier time confiscating the holdings of the SPDR Gold Shares Trust: it's much easier to pick on one institution and a lot more gold could be gotten than through house searches. Hanson added that there's a lot more belief in owning gold nowadays, and any U.S. administration that tried it would find the job a lot harder now than in '33. Illegal drugs are far from being confiscated out of existence, and drugs are amenable to search techniques like sniffer-dog usage that gold isn't. He didn't suggest it outright, but the drug dealers have come up with a lot of sneaky ways to hide drug stashes that weren't around in 1933. Those tricks could be adapted by gold holders.


Returning to the high-pressure confiscation angle: the salespeople who do this may be cynical, just in it for the higher commission, or they may sincerely believe it. Whatever their beliefs, it's obvious to a non-believing outsider like myself that fear-inducing stores, if believed outright, create a hot button in the head. There are those in the world that believe hot buttons in others' heads are there for pressing. Some do so for monetary gain, some for political gain, some for more informal power-tripping, some because they just like to jerk certain others around.

My own approach in these matters is to shy away from anything that gets the blood boiling, or the pulse pounding, with respect to gold. I'll grant that this approach makes me passionless, and it means that I may be inappropriately skeptical on certain points, but I find that an approach of this sort makes my chain less easy to pull. Those who prefer a more engaged approach, I suggest, should take precautions to make sure their chain is out of reach of others' pull hands.

One way of doing so, which works for salespeople who call on you, is treating any ad or spiel as a kind of mini-show in its own right. Enjoying the show is a way of insulating oneself from the come-on while still grooving with the message. I've never tried this method, but one way to blow off a high-pressue salesperson is to consumer too much of his/her time with the message instead of listening to the pitch. Another is to treat (say) an incoming caller as someone who needs your advice on the matter, which you should give in copious detail. Of course, this is a counter-tactic: it may require cultivating a false innocence to make it work, which may not be for all people. Most everyone knows that there's only one reason why a salesperon calls.

I should add that this technique, if widely used, weeds out the sincere salesperson and leaves the cynic in place. A cynic finds it easier to cut off the reply, and/or subtly bait the would-be customer into getting "on message."

For ads instead of direct pitches, it's easier: just drink in the ad - maybe critique it if you like - but don't follow through. Or, displace any urge to follow through by taking it to, say, eBay unless the pitching firm offers a good enough value to go with them.


To return to the interview, Hanson also said that silver is better for crisis investing that gold. It's much less expensive per unit weight, and that differential make it easier to use silver as money.

This kind of reasoning actually explains why the gold standard came relatively late in the game. Back in the aulden days, the European world had two standards. The gold standard was for nobles, grandees, gentry and those of large means. The silver standard was for the ordinary commonfolk. In auden England, at the base level, the unit of account was actualy the silver shilling for some time; the U.K's clapped-together pre-decimal system was a product of that dual standard. It could be argued that the use of copper meant there were three standards: gold for the flush, silver for the multitude, and copper for the truly poor.


In the first hour, Coxe made a point worth passing on. He said that, if the People's Republic of China were impelled to upvaue their currency, they would become richer in terms of U.S. dollars. That would enable them to buy more commodities for the same amount of renminbi; it would increase mainland Chinese demand power for any commodity they wanted to buy. Gold, of course, is one of those commodities; the push in mainland China to own gold is still going strong. Not mentioned by him is the possibility of more commodity diversification as, in part, a tit-for-tat measure. The other part, of course, would be value protection; any upvaluation is likely to be a managed float over a lengthy period of time, making an early decision to buy more commodities a profitable one ceteris paribus.