I have been reading Armstrong since he was putting out the typewritten samizdat stuff from prison. He is a hard person to size up. I have a pet conspiracy theory (just a theory) that he cut some kind of deal to get out of prison in exchange for becoming a relentless gold basher on behalf of the powers that be 😉 [1]
Since he got out of prison and started his new blog, without playing too much of an armchair psychologist – I can’t help but detect a whiff of manicness to his posts (with a side-order of paranoia, although given what he’s been through, who wouldn’t be manic and a tad paranoid?)
But I am very wary of people who are “never wrong”, there is a certain class of economic prognosticators and financial advisors who fall nicely into this category. While they would never profess to being infallible, they are pretty vehemently right about absolutely everything.
Armstrong’s recollection of history is awe-inspiring, that is the main reason I read his stuff. When he starts talking about cycles and 2015.75 vs 84 months, whatever, my eyes start to glaze over. (I put it in the same mental file as Elliot Wave Theory – an elegant model with only one problem: it doesn’t actually work).
Personally, I don’t bother with “models” that predict exactly when some tectonic shift will occur down to the minute, those who get it right – occasionally – are lucky and nothing more (one piece of good luck can make an entire career, just look at Bob Prechter).
For me, just look at the extremes. When it comes to gold, Martin Armstrong is just another voice that adds to an overall timbre of “maximum pessimism” – and I think that is lot more accurate than any kind of precise cycle theory or computer model out there. When nobody wants to touch something (like gold) and everybody is pontificating on why it has nowhere to go but down (Armstrong, et al) it’s probably a fairly safe time to be setting up for the contrary upmove. It worked for Templeton and it works for pretty well every value investor out there.
This article is actually a comment I posted over in a Martin Armstrong thread on PeakProsperity.com after I read his latest in a string of gold bearish commentaries:
Gold Worst Year Performance since 1981
Which starts out with:
Gold never actually broke out in real terms – only nominal. Adjusted for inflation, gold has actually been one of the worse investments since 1980.
Which is a curious statement on a number of fronts. Gold never having exceeded its 1980 highs in inflation adjusted terms (which it hasn’t) is to me actually an argument for a continuation or extension of the current secular gold bull (1999 – ????) – not a damning bear case.
Next, it’s easy to make any investment look bad if you just pick arbitrary starting points, like he has pretty deliberately done here. Start in 2000 and compare returns on the DOW vs Gold and it looks different.
When you read between the lines of Armstrong’s stuff you sometimes see oblique references to an eventual, bona fide gold bull market, sometime after 2017 or so.
Even so, let’s say he’s right, none of this still convinces me not own gold now.
It is hard to understand Armstrong’s anti-gold thesis because it seems to be dissonant with his anti-government, anti-central bank observations. He’s basically hammering on the view that hyperinflation will never happen and that is why gold will never go up.
But the possibility of hyperinflation is not the only driver of the gold price, not to mention confidence can be lost in one or more currencies without hyperinflation ever occurring.
Still, with all the money being printed it’s hard not to expect rising inflation at some point (or, out here in the real world where we are all paying more for less, it’s hard not to expect an eventual acknowledgement of inflation at some point. Unless they start reporting CPI “ex-everything”).
[1] My pet conspiracy theory posits that several former gold advocates were personally compromised and coerced to swing over to the bearish side for purely propaganda purposes, including Martin Armstrong and Damon Vickers (long story)
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