first majestic silver

Beware the Moses Syndrome

A hint of things to come

June 14, 2001

Exodus 17:3

But the people were very thirsty and continued to complain to Moses. They said, "Why did you bring us out of Egypt? To kill us and our children and our livestock with thirst?"

People will be people

It is not original to say that people are funny.

Not, "Funny. Ha! Ha!", but "Funny. Huh? Wow?"

People at times tend to behave in very unpredictable and surprising ways. Jump into a river to save a drawing man and, after a successful struggle to get him to the side he might say, "Thanks for saving my life, bud. But, but . . . my wallet is gone! With a lot of cash in it! You must have taken it. Give it back!" and suddenly you are under attack or have to defend yourself in court.

Give a friend 10 tips on the stock market, 9 of which make a really good profit while one suffers a loss. Now, 5 years later, standing with a group of friends around the coals with some meat sizzling on it and each with a beer in the hand, and the conversation turns to investments. When your old friend takes his turn to tell a tale, which one of the ten tips is remembered and exhumed for the entertainment of the group? You guessed right!

Or perhaps it is not a guess, you know from the knowledge that comes with experience!

Tell someone about this nice small place on the Florida Gulf coast, away from the crazy holiday crowds only to hear later that, "You made us sit through the worst hurricane in 15 years! We were terrified and you should see what the car looks like. I will never take your advice again. In fact, my wife wants me to say you are no longer welcome."

And each reader probably has similar tales to tell. Just look at what happened to Moses when he led the Israelites out of a state of abject slavery in Egypt and on their way to the Promised Land. Scarcely into the desert and the new kinds of hardship that had to be endured – not at the hands of their Egyptian oppressors, but because of one of their own – on their way to the land of milk and honey, and suddenly the complaints and personal accusations became deafening.

This fundamental truth about human behaviour carries a message for most readers.

Given where this essay is likely to be published, the majority of readers will be gold bugs to some degree. Many would have been gold bugs for most of their lives, since that happens to be the nature of the beast. Most are committed to a deep and lasting interest in gold from an early age, or at least from early during their investment careers.

Relatively few people are late converts to gold bug status. If one wasn't bitten early on, and probably became infected for life, the incessant media campaign of "Gold is dead" soon drives all rational thought out of one's head. Thereby proving the worth of the favourite quote of Goebbels, the Nazi minister of propaganda, which says that if one repeats any message, even a lie, often enough, most people come to believe it.

While many readers should be gold bugs, they are yet relatively scarce in the whole population. It is also not practical for gold bugs to live in the same suburb or on the same estate or belong to the same gold bug club, so that kind can easily meet with kind and spend the time talking about the topic of common interest. No; gold bugs as a rule live surrounded by a community where "gold" has really become a four letter word.

In this respect the internet has really come to the rescue of the gold bug.

No longer does the bug have to sit passively and wait for the monthly delivery of the Gold Bug Newsletter that enables him to vicariously become one with a community of kindred spirits and thus, briefly, relieve his feelings of isolation Such vital contact, from someone who offers some very necessary commiseration with the latest setback for gold and for the investment portfolio and whom rejoices with the gold bug when the price of gold goes up $5. Absolutely essential emotional support for a gold bug who, compelled by circumstances, has to live among people who scoff at gold and fully subscribe to the belief that the yellow metal is merely a barbarous relic.

Now, with the information age, anyone really interested in gold no longer have to be passive and patient and enduring. He or she can become active on the internet, joining those special forums frequented by other people with an interest in gold and thus able to enjoy discussions on gold related matters 24 hours a day, seven days a week. A daily fix that quickly becomes addictive! What glory; what bliss!!

However, the increased mutual psychological support that flows from these forums have a potentially negative effect. Long ago, the average gold bug tended to briefly mention the matter of gold in his usual conversation circle at work or around the barbecue only on those infrequent occasions when the Newsletter gave him true courage to speak out on behalf of his favourite metal. Generally this would be just a comment in passing about the gold price picking up a little, or of money lost on a mine that has closed down, that is only rarely picked up and responded to by the others, except, perhaps, with a smirk, "You and your gold. It will still cost you your pants.", before the topic is changed to something of wider interest to the others in the circle. (No longer Amazon or Pets.com, of course.)

But now the daily fix at the forums has girded the gold bug's loins and outfitted him with a lance and gave him the courage and the convictions to become a Warrior for Gold. To go on an individual crusade to persuade the sceptics and the media-indoctrinated that Gold is Good and it represents True Wealth and that its time will come. Soon.

This message now becomes a daily staple in the circles of conversation, until, inevitably, the level of frustration among the sceptics rises far enough to forcibly eject the gold bug from their circle. Or at least manage to limit his utterances to the standard mantra of, "The day for gold will come. If you are not invested you will be sorry!", tolerating this much, but not one word more, out of camaraderie and loyalty for old friendships – and some compassion with his presumed affliction.

It is this change in behaviour that now creates the risk of the Moses Syndrome that could come to strike – and do so with a good deal of surprise and discomfort – at all Gold Bugs. And more at some than others, depending on how vociferous his Warrior for Gold cause was promoted and how many feathers were ruffled in the process.

And, very much so, by how much the gold price has risen, while other markets tumbled.

The Moses Syndrome

As illustrated by the quote above, the Moses Syndrome is a condition that affects people when they believe that someone else carries responsibility for the difficult situation in which they find themselves.

Us gold bugs have a near monomaniacal and obsessive infatuation with gold. Almost to the exclusion of all other markets – dare one say to most interests shared by the common herd? – although we do acknowledge quite often that the gold price will only get under way once Wall Street has collapsed, or when the dollar is taking its deserved beating or when the US interest and money markets are sinking under all the injudicious corporate and other debt unloaded on the system during the past few years.

Which means that when the price of gold eventually gets going, it will not matter whether the other markets – with Wall Street prominent among them and probably leading – falls at the same time, or before gold starts rocketing or much later. In the minds of all the "others" the two kinds of events will be inextricably linked. "The market in which MY money is invested collapsed because gold took off." And this soon leads to the corollary thought that, "Gold took off because the gold bugs have been promoting it for so long!"

In a world where the repetition of any message a sufficient number of times develops a magical effect on people out of all proportion to the truth of the statement, it will be easy for this conclusion to be reached.

And suddenly the drunk with joy (only, we hope!) Gold Bug to his great consternation finds that he is being ostracised from his circle of friends; banished and even worse, attacked. Because he now carries the blame for the devastation that has hit the other markets and thereby also the 401k's of his erstwhile friends. There financial future and hopes for an uneventful trouble-free retirement has been punctured by HIS promotion of the gold cause. It is all HIS fault!

It will be a day of great celebration to all Gold Bugs when their belief in and commitment to gold is vindicated by a rise in its price to a "proper" level, generally seen to be more than $400 and perhaps even $600. (That is, if the dollar is then still worth more than ¥100, or even ¥80, and trading at less than $1,50 to the Euro, else the price of gold could rise substantially higher than this in dollar terms.)

Suffering the syndrome

Yet it will truly also be a sad and sorry day when he finds that he has to sit all alone in the corner of the pub, silently staring into his beer, trying hard not to hear the lamentations about the markets going on around him and the occasional cuss words coming his way, blaming him for the state of affairs. In fact, it might be best to celebrate quietly at home; pubs could become dangerous places to well known Gold Bugs and if a celebration at home becomes too rowdy while most other sit in sack and ashes, it might invite a few rocks through the windows.

Optimists might say this need not be so. The gold price can recover to its free, natural level without the other markets suffering traumatic experiences. Optimists can believe what they want, but reason tells me that for gold to finally break free of the (golden?) shackles that bind it, will require more than mere improving demand. For the latter to be successful in cutting gold loose, the new buyers will need pockets as deep as the ones that are ranged on the side of the shackle makers.

And these are pretty deep on their own, but they probably also have the advantage of a really large and deep back pocket that will come into play if there is any indication that a rising price of gold is bad for US national security.

No, gold is more likely to break free when there is a panic on in the other markets. When it becomes clear to the hefty investors world wide who play the international currency and other large markets that no fiat currency is safe any longer. That wild, rumour driven fluctuations can and might wipe them out while they risk some sleep and that their beds will feel a lot safer if they have at least part of their wealth in gold.

That is when gold will finally break loose and, of course, when the Moses Syndrome hits out at the unsuspecting yet quite delirious Gold Bugs. And when they find out to their deep grief that it is no fun at all celebrating alone.

Conclusion

Some thought will show that human nature practically dictates that the Moses Syndrome will rear its head when the price of gold begins a sustained rise. At the very least it will be born from envy that the Gold Bug is making lots of money while all other markets stagnate. It will be exacerbated by a feeling of disgust, firstly at the Gold Bug for being proven correct after all this time and, secondly, at oneself for finally not listening to him.

Whichever way it goes, Gold Bugs had better prepare themselves for a more lonesome life than they had enjoyed before gold took off. Friends will become acquaintances at best, and many former acquaintances will no longer speak with him or even acknowledge his now affluent existence.

And there is of course one other factor that applies to many Gold Bugs. For some reason it would appear that Gold Bugs were among the more vociferous groups that warned of dire happenings at the start of year 2000. Many people stocked up on tinned beans and spam on the advice of the Y2K warnings. When they now have to dig into these stores because the same people who were once proven wrong about Y2K this time happened to be right about gold – and thus responsible for the difficult financial circumstances that make spam and beans a dish to look forward to – their desire for revenge will feed with every mouthful they take.

So, Gold Bugs be warned. Beware the Moses Syndrome!


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