Enron

Self proclaimed innocent Jeffrey Skilling has been sentenced to 24 years in the slammer, and fined $45 million for the loss of an estimated $65 BILLION with the collapse of Enron. (Why shouldn't the fines, if they are ever paid, be distributed to the investors rather than fattening the books of government?) (Skilling's lawyer has billed $30 million for his failed defense). That's $65 billion in losses to retirement plans, retirement funds, savings accounts, investments, and to lots of other people who trusted Enron. Why did they trust Enron with their dollars? The same reason as they trust other stocks with their dollars. The simple reason is: Promises. As the old song goes, "Promises, promises; they never come true." Sometimes they do, and I'll admit that. Many millions have been made in the stock market over the years, and at the same time, I would estimate that far more has been lost than gained.

As a simple explanation of that remark about more being lost than made, take the great depression, when the entire U.S. and even world economy went down the tubes, thanks to manipulation of the money supply by the Fed, 'over exuberance' as Sir Alan put it, and plain and simple trust. Trust in the big buildings, fancy life style of the promoters and officers of corporations, big limos, mansions, and fancy everything which involves "conspicuous consumption," as Thorstein Veblen called it in his book, "Theory of the Leisure Class," which should be on the reading list of most with inquiring minds. Banks used to have mighty granite buildings with huge gates, impressive marble floors, polished brass teller windows, uniformed guards, and stiff dress codes. Why? Obviously, to give customers the impression of safety.

Enron had it all. Impressive skyscraper, wealthy nabob officers who contributed mightily to charities, and a few profits even, as the cooked books showed. Enron harmed a lot of people, including every single citizen of California with their rigging of electrical rates and production. They did a lot more damage than the $65 billion in direct losses to stockholders and retirement accounts. They harmed tens of millions of people, and as it turns out, if you have read any of the books about Enron, and I have, they cleverly concealed it, till at last it came tumbling down in a cloud of red ink.

Why do people trust other people with their surplus dollars? I never have, and maybe that's because I am not a trusting person, I don't know. I have never been impressed with conspicuous consumption and huge buildings with corporate names attached. I am impressed with huge, architecturally sound buildings which house wonderful theatres, or hundreds of offices, such as the Radio City Music Hall, Empire State and Chrysler in New York. Many times, businesses and corporations get too big for their britches, and at least to me, become highly suspect. When big corporations gobble up other corporations, count me out. As a matter of fact, owning stock in any corporation leaves me cold, because owning stock in GM or Ford makes me trust others to take care of my dollars, and I'd rather take care of my own. Who pays for the huge buildings, fancy limos, and multi-million dollar salaries? Stock holders, that's who. Why pays for those continual, expensive TV ads touting this or that brokerage? Stock holders, that's who. Who pays for the huge fines levied on stock brokerages because of their shoddy dealings? Stock holders, that's who. Who pays for the biz jets and political contributions by the hundreds of millions to get laws passed in their favor? Stock holders, that's who. And who pays for the cooked books, profit exaggerating, and expensive posh yearly corporate reports? Stock holders, that's who. And finally, when the whole thing collapses, as did Enron and hundreds of others, often taking the entire nation's economy with them, who pays for that? Stock holders, plus the rest of those who trusted dollars, that's who.

And guess who is immune from any of these shenanigans? Me, that's who, because at age 72, I have never had a savings account, never bought a corporate or government bond, and don't own a single share of anyone's stock. Remember the name Grasso? He's the guy who retired as president of the NY Stock Exchange with a $141 million retirement package. "Nice work if you can get it," another old song lyric. My question is: Suppose the investors in Enron stock, and those employees who saved in its retirement plan, had bought gold and silver? Would they have lost everything? No. Why not? Because gold and silver are real, genuine MONEY, have been throughout history, and in all nations which have ever existed. Gold and silver are stand-alone assets, which are not dependent on corporate lies and cover-ups. Gold and silver do not depend on government's printing presses and gobbledygook. While central banks hold a lot of gold and silver, and have "leased" some of it, which they will never see again, and have sold a lot of it, the effect has been to lower gold's price at times. Imagine yourself as a banker with thousands of ounces of gold in your vaults. Would you sell or lease it for pieces of paper? Not me, but they all do. The U.S. government has sold all of theirs, and buys regularly to make their gold and silver Eagles. Why do they buy? Because they have none! Manipulators on the COMEX have continually bought and sold silver which they do not own, and which is against the rules of the exchange, and they get away with it. These actions by banks, governments, and exchanges have been able to manipulate prices in paper money of gold and silver…briefly. I won't argue that. I remember when they were selling, shorting, and frantically trying to keep gold below $275 and silver under $4. Let them manipulate, and you should just buy when they succeed, because their efforts will come to naught. Why? Because history does repeat itself, to be brief. History always makes paper money go to zero, and bubbles pop. Stock market bubbles pop, as I think they will again pretty soon. The manipulators are trying to keep gold below $600, and silver below $12. Do you think they'll succeed? They never have in the past, because their only weapon is the printing press, and the printing press doesn't create wealth. It only postpones the inevitable. (As I finished editing this piece Thursday afternoon, silver was well over $12 and gold a few cents under $600).

Gold and silver, due to their being the abject enemy of the printing press, will always be pooh-poohed and called a "relic" by the media. I don't have a $140 million retirement plan, and I know of no one who does in this industry. This industry is utter simplicity. My supplier, A-Mark, has but 13 employees and does billions of dollars in trades each year, including my $35 million. How many thousands of employees do the stock exchange and brokers have? How many hundreds of millions in commissions and bribes take place each year in stocks? As a matter of fact, the last stock bust cost the 'investors' a cool $5-7 Trillion dollars, and I say that all the stock busts, plus the biggie in 1929, have indeed cost far more for investors than they ever made. Those who broker stocks, always seem to come out OK. Do I feel sorry for the losers of Enron? Sure, but I never would have placed a dollar in Enron stock. I won't place a dollar in Ford either. They seem to lose billions every quarter. Why is Ford stock still over $6? Why is GM still over $30? They're losing their shirts! Why do people buy this stuff? Why don't they buy real money with their fiat money? I do not know, but please, protect yourself. (You know how).

October 26, 2006

Don Stott has been a precious metals dealer since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com