Chapter 12
Lessons of a Life-Long Gold Investor
The task of a successful investor is twofold: To have a general view of the future and to understand that the odds of being right about the future are, shall we say, precarious at best. If we were gurus and psychics we wouldn’t have to bother with such things as theories or prognostications. But as long as there are the possibilities of inflation and deflation, booms and busts, and bubbles, panics, and crises, we are forced to try and become forecasters of the economy.
There are as many methods of making money as there are investors. In fact, when it comes right down to it, all investing is individual in nature. A lot of people don’t believe that knowledge about the economy is important. Those that are only interested in the value and prospects of a particular company look at company fundamentals and are less concerned about the state of the economy. Yet, we know that for the most part, when there are booms or panics, all stocks tend to rise and fall together. They say, “A rising tide lifts all boats.” True. And it is also true that all boats are battered by hurricanes. The dot-com craze and the market crash of 2009 are examples of how mass psychology can lead to massive profits and losses.
Chartists also don’t care much for economic knowledge. They believe that the movements of stocks themselves carry all the knowledge one needs to make decisions on investing. Since human action is what moves markets, why try to decipher what people ...
