If you’ve stumbled across this blog, you’re probably wondering who I am and why the hell you should listen to my ideas about how to trade gold.
I know you don’t have a lot of time. So let me sum it up for you very quickly.
My name is Tom Blackstone. When I was young, I never would have expected to get involved in trading gold, or in trading anything for that matter. The central love of my life was philosophy, and I spent my time reading books, not looking at charts.
The philosophy I loved the most was Ayn Rand’s “Objectivism”. Ayn Rand taught that human beings should live according to a rational code of ethics and should always try to live up their greatest potential, and this was enormously inspiring to me. I even wrote a book about philosophy, and about her philosophy in particular, which you can find here. Even though I am no longer actively producing philosophical work, I still try to live according to Rand’s ideals, both as a gold trader and in other aspects of life
I was also very involved in the Libertarian political movement. I founded the (now defunct) Libertarian Party of Glynn County, GA and chaired it for several years, staging a tax-day protest at one point that was reported on in the local newspaper.
At this time, it was the 1990’s, and nearly everyone agreed that the U.S. government was too far in debt and needed to balance its budget so that it could stop accumulating interest on that debt. Congress eventually even passed a surplus budget for the first time in decades.
The world has certainly changed since then. Beginning with president George W. Bush’s ascension to office in 2001, the U.S. government has gone on a spending binge unlike anything ever seen before. When Bush left office, he was replaced by an even bigger spender in the form of Barack Obama.
To make matters worse, it is very clear that there is absolutely no way to reverse this trend through normal political activism, as the debt ceiling and government shut-down fights of the last few years have illustrated vividly.
The political system of the United States is absolutely paralyzed. Not only do politicians refuse to cut spending, they actually COULDN’T cut spending even if they wanted to. If entitlement spending such as Social Security or Medicare were cut by even a small amount or if military bases were closed and the armed forces were downsized, I have no doubt that there would be a revolution immediately.
The American people will not tolerate living within their means. Any politicians that try to reform the system will be removed from office and replaced with someone else who will continue the status quo. And there is no hope for change.
For years, I didn’t realize how bad things had gotten. I still believed that somehow the American people would wake up and realize that they were destroying themselves. But after the financial crash of 2008, when it should have been clear to the whole world that the course we were on was unsustainable, it became clear that the irrationality of the average voter is so great that even a catastrophe like that one won’t convince them to change their ways.
Since the financial crash, the percentage of 16-55 year olds employed full-time has dropped to the lower 40’s after peaking at nearly 60% in 2001. Millions of people now can no longer make a living for themselves and are forced to live off their spouses, parents, or other family-members or friends.
So what does this have to do with gold?
I searched for years to understand how the government was getting away with spending trillions of dollars of money it didn’t have. Why wasn’t another financial crises occurring immediately? Why was the economy stagnating and only growing at 1% GDP or less, but still not shrinking? Why was inflation only 1% a year? With all of the money being printed, shouldn’t we have double digit inflation or hyperinflation by now?
The answer ended up being gold. The price of gold was not rising fast enough to create a collapse of the U.S. dollar. This is because people are hoarding cash in bank accounts, which is slowly being depreciated.
Ironically, there is more cash being held in bank accounts now than there has been in the entire history of the U.S., even though it pays a paltry 0.25% in interest at the time of this writing, much less than the 2% rate of core inflation. So people are actually LOSING money by saving it…because the purchasing power of their cash is declining faster than the cash itself is multiplying through interest.
People are in such fear that they believe they need to hold an ever growing amount of cash. But by doing this, they only make the problem worse.
But even though there is no easy way to solve this problem for society as a whole, the individual saver/investor does have a choice. By buying gold, the saver eliminates the inflation tax from his/her own life. Gold cannot be printed by a government, so it’s purchasing power can never decline over the long-run. This means that people who save in gold can avoid the losses associated with holding cash.
However, there is one problem with saving in gold that has no obvious solution: gold has no yield. Because of legal tender laws, which direct courts to allow debtors to pay back their gold loans in dollars instead of gold, gold has become a victim of “Gresham’s Law”. It is no longer used and spent as money, and it can no longer be loaned out at interest. So savers who own gold have no choice but to lock it up in a vault and leave it there, hoping that it will go up in price faster than the rate of inflation, but otherwise having no way to profit from their gold.
This is where gold trading comes in. Unlike simply buying and holding gold, gold trading allows an individual to increase the amount of gold he owns without having to deposit more. It should more accurately be called “dollar trading”, and the title of this blog should be “dollar trading mastery”. But no one would read this blog if I called it such a thing…because most people still erroneously believe that dollars are money. So I call it Gold Trading Mastery instead.
What I mean by gold trading mastery is the ability to buy dollars when they are worth a small amount of gold and sell them when they are worth much more, thereby allowing your gold to multiply itself.
Now why should you listen to my ideas about how to do this?
I’ve studied gold practically non-stop for about three years now, devouring every financial news article and economic treatise that discussed it. In addition, I’m a former member of Marc Walton’s Forex Mentor Pro website and a graduate of BabyPips.com’s School of Pipsology. I have a deep knowledge of technical analysis that I bring to bear in my discussion of the price-action in gold. And such knowledge has served me well, and I’ll bet it will serve you well too.
That’s enough for now. More in a few days.