Richard Daughty

I looked around the barroom and said, “The gold exchange on the Comex is a den of lying, thieving, corrupt bastards who are in cahoots with the lying, thieving, corrupt banks and the lying, thieving, corrupt government!”

Instead of the expected rousing response of, “You’re right, Mighty, Mighty Mogambo (MMM)! This is an outrage!” all I got was a few, “Shut the hell up!” replies and one wag saying, “Tell us something we don’t already know! Hahaha!”

Undaunted, I continued on with an appeal to their greedy natures by saying, “Well, GoldForecaster.com reported the interesting news that ‘With a hefty increase in long positions of nearly 28 tonnes and the trimming of some short positions, COMEX turned around again and went long last week.’ This means that although the gold exchange is full of lying, thieving, corrupt bastards, they are not stupid! They are buying gold! These are the insiders! And they’re buying! Gold is going up! They know it! I know it! Now you know it!”

There was a sickly silence in the room until the bartender came over and bent down low and said, “Why don’t you go someplace else with your Stupid Mogambo Crap (SMC), because we are all really sick of hearing you run your loud mouth.”

So I look him in the eye with every ounce of sincerity I can muster, and I say, “But this is a chance to make some money! Your retirement and investment accounts are down by almost half, and the valuations of stocks are too high by more than half! Hell, the price-to-earnings ratio for the Dow Jones Industrial Index is now a hefty 43.1! It should be, historically, less than 20!”

My voice rising, my eyes started to bug out in hysteria, and I said to him “And as bad as that is, it is better than the Dow Transportation Index which has a P/E ratio of 54.40, which in turn is better than the S&P 500 Index, which sports a staggering P/E of 62.45, thanks to a piddly $11.88 of earnings!”

I can see his eyes actually glazing over in confusion and disinterest, and so I again turn to my bar companions and shout, “Hell, the dividends of the S&P500 are $22.86, meaning that the corporations in the index are paying out 50% more than they make! How long do you think stock prices will go up, you morons, when they are giving away the store? And yet with a guaranteed fall in the stock market, insiders buying gold, and central banks around the freaking world suddenly creating money by the ton and buying gold, you don’t buy gold? You’re all morons! Morons!”

Almost as if planned, the bartender and most of the patrons get simultaneously to their feet and start coming at me, shouting, “That’s it! You’re outta here!”

Instantly, I size up the situation and see that I need an Uzi! Unfortunately, a single .45 automatic with seven in the clip and one in the pipe is not going to quite get the job done here!

Instead, I go to Plan B, and hold up my hand, saying, “Wait! Wait! Listen to this! Telegraph.co.uk says that European banks sold about 3,800 tonnes of gold ten years ago, getting about $56 billion for it.

“Now they calculate that the banks made about $12 billion by investing the money in bonds, but because today’s gold prices are so much higher, they would have $40 billion MORE if they had just kept the gold!”

The surly crowd started looking at each other, mumbling and again stumbling towards me like zombies, probably calculating in their heads that the banks made a $12 billion gain on $56 billion in ten years, so they made a nice 21.4% profit, making me look like an idiot who needs some sense knocked into his head, and they were just the crew to do it.

So, thinking quickly, I distracted them by pointing to the door and shouting, “Look out! It’s the cops!” which made half of them scramble out the back door and the other half quickly go back to their tables and act like nothing happened. Hahaha! Works every time!

Taking this opportunity to get to the point that I was trying to make, I said, “This means that the people who bought the gold are up $52 billion on a $56 billion investment, while the people who sold the gold only made $12 billion!”

Again, the silence and disinterest was palpable. So in a final attempt to get through to them, I ordered them to “Sober up, go out and buy gold, silver and oil, ya drunken, lowlife morons!”

They still didn’t move, except to make a few rude hand gestures and one of them spit at me.

It was only later, when I was reviewing what went wrong, that I realized my mistake; I told them to sober up first! Otherwise, they would have realized “Whee! This investing stuff is easy!”

Richard Daughty

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications. For podcasts featuring the Mogambo, click here.

  • rick

    keep up the good and very funny analysis triple m

  • Fahad

    MG is a prolific columnist. It is his unnecessary TLA’s (Three Lettered Acronyms) which make his articles utterly unreadable, spoiling the flow of an intelligent comment.

    Thanks to his TLA’s,I have skipped all his articles except for three. Thus, hardly benefitting from his otherwise amazing wisdom.

  • CanadaNorth

    Look Mogambo, I read everything else first every evening around 9 o’clock. I then read your article last, the reason being is that I can’t figure out how you keep making all of this crap so interesting every day. Also when you miss writing an article every once in a while I feel cheated, plus instead of going to sleep happy I’m cranky, thinking of when I’ll get my fix, hopefully the next day. I don’t know if this is a compliment or an insult, you decide, well we have to read it don’t we? Best Regards,CanadaNorth

  • Karmaisking

    Mogambo,

    Please I beg you do something with this gem from Roubini in today’s NYT. It’s so hilarious I can’t stop laughing!!!

    “Gold is still a barbaric relic whose value rises only when inflation is high.”

    Did he say that?! Like that is a DISadvantage for gold? Is he MAD? Or am I? HAHAHA!!!!

  • Alexandr

    You know what? It is a famous definition for gold – Barbaric Relict. It is probably true, but are we all Barbarians at lesser extent than our ancestors? Given the mental outlook of average american sitizen, I doubt so. So lets return to our relicts, as we well deserve them:)

  • Teresa

    Hi Mogambo,
    I disagree with you on timing of gold accumulation. I think quite an opposite, gold has to go dramatically down before it become healthy to put your money in. In Depression money are destroyed, gold becomes a luxury investment for a few and gold has to go down! and only after it gold becomes a treasure to keep…
    Teresa

  • Lemon Pie Kid

    Be careful what riches you wish for, Blessed Vocabular Mogambo (BVM):

    ”As the lights lower, I slowly sink into a very theatrical heap of collapsed humanity to visually portray mankind’s complete loss of hope, dreamy dreams dashed on the rocks of despair, the very essence of a desperate man who wants gold to immediately shoot up in price so that he can get so suddenly rich that he can skip town and start life over, someplace new, perhaps finding real happiness, . . .”

    because gold at $9,231.00/oz. (X10) means a loaf of bread costs $88.50 (X30), a gallon of water costs $29.70 (X30), a roll of toilet paper costs $14.70 (X30) . . . you can’t eat gold or use your hand.

  • BR

    Oh, Mogambo Guru, I love you. Ever since I first read you when gold was $250/oz. around ’02. I hope I meet you someday to shake your hand. Keep writing!

  • Roger Gunn

    Dear Mighty Mogambo.

    You’re great.
    However, I have to tell you the correct word is uninterest(or if you need a phrase – lack of interest, not disinterest. Disinterest means absence of bias.

    Apart from that, keep it up. When I have money, I buy gold. If there’s any left over I buy luxuries like food and clothing.

  • Jan Baer

    Once again people think that the prices of food, shoes or cars will rise to match that of gold. This was only true before 1933. Gold could be 50 cents an ounce or one million dollars an ounce, and it would have no effect on the price of bread.

    My favorite example is car prices. In 2000, an average new car cost $20k and gold was under $300/ounce. Today an average new car is below $20k while gold is over $900 an ounce. The car price did not go up to $60k as it would have if it had followed gold.

  • The Last Judge

    Roubini is a socialist, that is why he termed Gold a barbaric relic. Gold prevents people from dying while it (ok, sort of) needs people dying to be rising in value. Thereofore barbaric.

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