Easy Mode Capitalism Pt. 2

In our last steam session, we talked about what exactly “capitalism” means, and why, whatever we think of capitalism and whatever course of action the Dissident Right takes from here, working on improving capital assets is important. It got a little theoretical and a little troll-ish, and at the end finally got around to a real life example. What do you do if you are a single, white male, aged 27, with relatively few expenses and a small chunk of cash saved up (say, around four or five thousand dollars).

As Paul Craig Roberts recently wrote, in an article published on his blog, and republished at Unz Review, our conclusions in the last article are solidified:

In the 21st century the US economy has only served those who own stocks.  The liquidity that the Federal Reserve has pumped into the economy has driven up stock prices, and the Trump tax cut has left corporations with more money for stock buybacks and dividend payments. 

Stock buybacks are a pernicious feature of finance capitalism where executives of a company, generally high stake holders in the stock of their own companies, use a portion of the company’s cash to buy huge chunks of its stock back off the market. The resulting price spike is a boon to shareholders, particularly the high stake players that initiated the buyback in the first place.

If, for the time being, the Dissident Right cannot stop liberal lunatics like Warren Buffet and the goons at Apple from doing this sort of thing, it doesn’t make much sense to arbitrarily abstain either. As Julius Evola said, “ride the tiger.”

You are not likely to repeat this guy’s dramatic feat of turning $250 outlay into $186k with one neat trick, but anything is better than nothing, right?

For now, we are not going to talk about what he did, which was buy “in the money” call options that printed “shekels” (he was /ourguy/ by the way) when Disney had a clown world style presentation and predicted massive profits on one of their weird comic book movies. That is the kind of Shkreli “yolo” financial roulette play you can find on r/wallstreetbets any day, and if that is your kind of thing, go for it. We are gonna stick to the basics for a minute. Let’s look at holding cash vs investing in basically anything.

Hard to believe, but this is where Identity Dixie has to issue a disclaimer:

We are not financial advisors, and are not licensed to give financial advice. Any trades made after taking our comments into consideration are, frankly, your own damn fault, and you should own it like a straight white man. Some of our writers, including the present authorial voice, are invested in the financial instruments discussed, but we are not under the illusion that all of the Dissident Right together could fudge the commodity market even one iota, so plz SEC no dox.

First, let’s look at holding cash. As we said last time, cash is not capital. It is just a medium of exchange, which means it is used to facilitate transfers of capital among other reasons so you don’t have to walk around like a medieval fishmonger carrying everything of value you own. Since it is just a (relatively arbitrary) measure of value, the value of your cash isn’t safe either. In fact, nearly all of the aspects of economics Dissident Right wingers refer to as “Jewish magic” involve changing the value of cash for what seem like totally arbitrary reasons (they almost always make your cash lest valuable by printing a lot more of it). Let’s look at some examples.

The title of this picture says a lot. Again, never mind the macro-economic issues associated with inflaton. Libertarians hate inflation, MMT advocates and neo-Keynesians assure us it doesn’t matter. They aren’t talking about the five thousand you saved from quitting weed, they are talking about the overall health and longevity of the U.S. economy, which isn’t totally unrelated but it also isn’t exactly the same. This page has a lot of fun statistics about the rate of inflation generally, but we will just make a few general comments. In 2019, so far the U.S. dollar has inflated by 1.86%, which means barring economic disaster, a dollar today will have the same buying power as 1.02 cents next year. Doesn’t seem like much of a loss, but scale that up to whatever your savings are and it will start to make you mad.

Let’s look at some more numbers. Say you’ve invested your cash savings in a savings account. Banks tell us that is a good move, right? Well it can be, and it also might not be, depending on your interest rate. Before the Great Recession, it wasn’t terribly difficult to find savings accounts with an annual return on a dollar of 2.25%. If you have one those, you’re lucky. That rate is beating inflation, but not by a whole lot. You are inscreasing your projected purchasing power year to year, but only by about 0.39%. Now let’s compare it to the S&P 500 Index, traded on the New York Stock exchange (this is an index based on the price of stock “The Jews” consider high quality).

Hey, that’s pretty good! Even adjusting for inflation that sure beats the hell out of holding cash (losing money to inflation decay) or parking it in a savings account. So should you dump all your savings in the S&P 500 index? Absolutely not!

Nice try, Mr. Goldblattberg

All of the major indices have been on an uphill climb for about ten years now. In fact, this is the longest bull market in the history of the New York Stock Exchange. Remember in 2017 when all those schmucks (definitely not you) bought Bitcoin when it was trading at $19,000 and then watched it crash back to $5000 in a matter of months? Well, it isn’t going to be that dramatic, but something like that is probably coming up pretty soon. Everyone has been making a killing on the stock market for the last ten years, that avenue to easy money is starting to look risky.

Bull statue outside the NYSE that totally bears no resemblance to ancient horned deities that eat children or the statue Moses found apostate Jews worshiping when he came down from Sinai.

If we are looking to get money into assets that won’t crumble under the crushing inflationary weight of Mango Man’s spending habits, and don’t want to get suckered by extremely well funded BANKERS, who are gonna take everyone’s money via short positions and put options when this thing starts to flip, we need to come up with something totally new. Just kidding, we are gonna come up with something that is 4000 years old. No, its not your Honda Civic or your mom! It’s silver!

Just when you thought this set of articles couldn’t get any more lolbertarian BoomerCon, those nerds at Identity Dixie are trying to sell you silver. Right? Right. See, unlike Rush Limbaugh, Gold Line, FOX News, your local pawn shop, Jews, and actual libertarians invested in their own narrative, we haven’t ever done this before and also aren’t getting anything out of it except what comes with the Aristotelian virtue of helping your fellow man. We also aren’t telling you to buy silver at the absolute height of the silver market, which is what everyone else was doing. We aren’t even telling you to buy silver, just laying out some data.

“If only they would cover NCIS: New Orleans now”

Some General Notes on the Silver Market

While gold and silver are arguably the oldest extant “investments” available on the current market, no countries still “tender” either of the metals, though some states like Nevada will allow you to settle public debt with silver. Historically, silver has possibly been more important than gold in the rise of currency based economies. A recent study concluded it was the resumption of silver mining, not gold, that initiated the economic expansion that led to a re-flowering of European civilization in the High Middle Ages.

The two most important ways to judge the merits of silver as an investment are its dollar value per troy ounce and the gold/silver ratio. Since 1687, the price of a troy ounce of gold has fluctuated wildly between around 14 and 100 ounces of silver. Through most of the 20th century that ratio has stuck much closer to the “dipstick” number of 47-50:1. Geological assays show the silver/gold ratio in the earth’s crust is around 17.5 ounces of silver to 1 ounce of gold. With gold sitting (as of press time here) at $1285.75 per troy ounce, and silver commanding $15.01, the current ratio of around 86:1 is an indicator that some kind of convergence will likely occur.

Now, that convergence could be accomplished by a crash in the price of gold. But that isn’t likely. Take a look at the graphs below, which will show that at $15.01 per troy ounce, silver is also trading near the absolute low end of its historic range when adjusted for dollar inflation. Gold is not trading quite as low on its historic range, but it is also on the low end its range compared to the dollar. It seems far more likely that both will trend up, with silver having considerably more room to rise than gold.

Historic gold prices adjusted for inflation. Backlink: Gold Prices – 100 Year Historical Chart
Same chart for silver. Backlink: Silver Prices – 100 Year Historical Chart

Listen, Rome wasn’t built in a day, and we said this was “Easy Mode” capitalism,” not “Get Rich Tomorrow Capitalism.” There are a few trends you can pick out easily however, the most important among them being the correlation of these periodic spikes in the price of precious metals with large market crashes.

Now, it is true that gold beats recessions more often than silver. So keep that in mind if investing for the long haul, but in instances where silver heats recessions, as in the case of the 2008 crash, it was because silver was (as it is now) already trading near the low end of its range.

Because both gold and silver are considered “safe haven assets,” meaning that when there is uncertainty surrounding the value of reserve currencies and stocks, silver and gold are some of the safest places to park your wealth. In the late stages of a bull market, if you don’t already have investments in stocks, precious metals are a good investment with a low entry threshold. They just may not turn you into the Wolf of Wall Street.

The silver market is almost entirely sentiment driven. Unlike gold, which geologists and engineers specifically target and have the cost of extraction per ounce worked down to a fine science, most of the world’s silver production is secondary. It comes out of the ground alongside copper and aluminum, and usually isn’t the target metal. Currently, around 60% of silver extracted goes to industrial use (and ticking up), while around 40% goes into investment reserves.

Now, once you’ve decided to get in this game, there are two questions to answer. How much to invest is the most important of them. That’s up to you, but we strongly urge keeping at least a thousand dollars cash in your bank account. Probably better to just get your toes wet rather than dive in head first. Remember the Bitcoin fiasco? This is a much safer investment than Bitcoin, but we don’t want you taking your anger out on your sex doll collection. The other question is how to invest. Do you want physical silver? Or do you want to buy silver in the form of an exchange traded fund (ETF)?

Doomers and preppers love grabbing physical silver. There are some advantages and disadvantages here. The advantages are obvious. You have the silver in your hot little hands, can be 100% certain it exists and 100% certain no one else is using it as leverage in investments of their own (this has been a problem with silver specifically). The downside is you will likely be paying something above the “spot price” of the metal for physical silver. There will be a comission fee for the broker (he has to make money somehow), and there will also likely be some kind of shipping and handling fee. You will want to shop around for a good deal, but could ultimately end up paying well over a 10% premium in the current market for physical silver. You could also do something stupid and lose it.

If you want to buy physical silver, it is best to stick to reputable makers of bars and round. There are vendors out there who will sell you silver bars in the shape of electric guitars and NFL logos, but those are usually inordinately expensive and buyers are leery of brands that don’t have an established reputation. Fortunately, both the US and Canadian government mint silver rounds, and these are usually a good bet.

The other way to invest in silver is through an ETF or “exchange traded fund.” The main advantage to “paper silver” is liquidity. The iShares Silver Trust ETF tracks the spot price of silver and is backed by silver bullion held in trust by JP Morgan Chase in London. Its price usually runs a bit under the spot price because the holder of bullion is assuming some of the investment risk for you. Since it is traded on the market just like other ETF’s and stocks, it is relatively easy to convert “paper silver” into cash or other assets. This makes it a good choice if you are interested in other aspects of the stock market. The downside to “paper silver” is you don’t really know what’s going on with the actual bullion, and like we said, there have been some issues here. JP Morgan Chase got in trouble a few years ago when they were accused of using portions of the iShares bullion to cover their sizable short position on silver (largest in the world at the time), which is the kind of thing that even the (((SEC))) gets upset about.

It’s up to you how you invest or whether you invest at all. It is even perfectly fine to call us lolbertarian free market cranks, though that isn’t true. We have gotten a lot of requests on this topic, however, and a few articles on “Easy Mode” capitalism seemed like a fun way to help Dissidents who want to get involved in the markets get started.

Next time we will take a closer look at the current astronomically long bull market, and look at a few geopolitical indicators that tell us it is not long for this world. If we get really frisky, we will talk about why investment voodoo is by far the best use of your potential YangBux if you swing that way politically.

We already said this once but it is worth reiterating, we cannot claim to offer professional investing advice and make no claims to doing so. Some writers at Identity Dixie are personally invested in the iShares Silver Trust ETF, but really, we are not trying to manipulate the price of it and find the idea that we could do so kinda jokey.

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