25 November 2014

The Answer

I was talking to Alex Stanczyk of Anglo Far-East this morning and he said that when he read Ben Hunt's work on narrative it hit him like a brick, being so relevant to gold. He and I agree that gold is very much a narrative driven market, a pure epsilon asset. Others however react negatively to this idea, feeling it is mumbo-jumbo.

The reason I think is because many can't handle ambiguity or the ability to hold two opposing ideas in mind at the same time(1). In an uncertain world, in a complex world where hyper-specialisation means it is impossible for the average person to understand how systems work (financial particularly), it is not surprising that many seek the metal comfort of absolutes and simple truths.
I don't think it is coincidental that gold attracts a fair share of such black and white thinking - gold itself is chemically inert and valued over centuries and cultures so has this timeless absolute nature about it.

Anyway, a long way to get to Ben Hunt's latest article, which focuses on oil. A lot of what he writes on oil I found myself agreeing could be applied to gold:
  • multiple explanatory factors
  • the demand for "The Answer"
  • the competition to provide "The Answer"
  • the idea of "arriving at a useful assessment of what’s going on, not a Platonic effort at uncovering some eternal Truth with a capital-T"
  • that "there is no Answer. In a structurally unstable market, there is no stable deterministic model of discrete market-exogenous factors like global supply/demand and monetary policy to 'explain'" gold prices.
Worth a read for those not scared of a bit of "I don't know".


  1. Bron---You're kidding right?

    Another Mumbo-Jumbo BS Paper By This Guy?

    You say, "Others however react negatively to this idea, feeling it is mumbo-jumbo."---I wonder why?---could it be that it's really mumbo jumbo?---You say we need answers?---You got one here----YES---It's Mumbo-Jumbo.

    NARRATIVE: noun

    "...a story or account of events, experiences, or the like, whether true or fictitious."

    As long as the "narrative" describes markets as "intervened and manipulated", the "narrative" is correct. Therefore, a manipulated market can not be measured by traditional indicators. Attempts to guess where it's going is an exercise in futility.

    In the past, you've focused on sentiment in your futile attempt to measure market direction, producing BS results just like every other worthless "trader/pundit/guru".

    Traditional fundamentally-influenced, sentiment driven narratives don't work anymore in any market. For example, do you really think that the equity markets such as the Dow Jones Ave. or S & P 500 are following a narrative as described by this Ben Hunt Moron? ANSWER: OF COURSE NOT.

    Markets have been moving in one "straight-up" direction without ANY significant correction since the spring of 2009---CAN YOU EXPLAIN THIS USING SOME BS SENTIMENT NARRATIVE?---ANSWER: OF COURSE NOT.

    FACT: Paper-printing by the fed has forced the equity markets in one direction without correction. It's as simple as that.

    Do you really think gold is not suppressed by the same institution? Although, paper-gold pricing is meaningless, for the purposes of this exercise, I ask this question to you Bron---Where would gold be paper-priced if bankster trading positions were regulated, banksters were not agents of the fed ghost-bidding and rug-pulling in thin gold markets? In other words, where would gold be paper-priced if free-market price discovery were allowed? ANSWER: Much higher due to the enormous paper-printing ponzi-scheme this world is burdened with---you idiot! Again, paper-priced anything is now meaningless and will necessarily go to zero eventually anyway, but I digress.

    Since 2001, there have been no markets---ONLY INTERVENTIONS.

    And there will be ONLY INTERVENTIONS from now on. There is too much paper out there BRON! The fed has no other tool EXCEPT PAPER-PRINTING at it's disposal to undo the destruction it has created and perpetuated for more than 100 years---You Idiot!---Don't you get it?---This destroys free-market price discovery.

    "Narratives" that deny manipulation and intervention describe market sentiment and fundamental factors influencing public "investors". But if the public can not measure the health of a market that is manipulated and constantly being subjected to intervention, how can their feelings that are influenced by FUNDAMENTAL FORCES, describe the market or be used to measure likely market overbought/oversold conditions and be used to make informed decisions?--How about answering that, you moron.

    For example, how can such an unhealthy market recovery translate into such a uncorrected colossal move in the Dow Jones equity market from 6700-17800?---ANSWER: Narratives measure nothing now and Bron is pissing into a fan.

    I rest my case regarding BS Ben Hunt narrative nonsense.

  2. Getting to some quotes from this article: (This, is in answer to Bron's assumption that Ben's oil argument can be translated to gold and other markets)

    THUS---Assuming these arguments translate into arguments that can be used to measure gold markets:

    Ben Hunt says, "
    What I’m describing here is another way of getting a handle on the Common Knowledge Game, which I’ve argued is the principal strategic interaction in markets where grounded beliefs are few and far between."---Okay, so far, so good, in a free-market where manipulation and intervention by govt isn't the dominant force, Ben's so-called "common knowledge" or "sentiment of the crowd, etc. might be a useful measure of a market and might be a useful tool in making an informed decision, but it's useless now.

    He goes on to say, "...it’s Common Knowledge – public signals that we all believe that we all heard, aka Narratives – that largely determines each of our individual behavioral decisions."---NOPE!---not anymore. Markets are not "markets" anymore, they are tools of the govt. They serve as a fake measure of economic recovery or faked economic health. Common low-information US voters and "citizens", (now that amnesty has been granted), have been duped into the idea of a "false narrative" that the stock markets measure the health of the economy. Thus, fed interventions using paper-printed manipulation accomplishes the impossible--apparent economic health where there would be otherwise economic sickness.

    In other words, the fed is doing what it has always done for 100 years---it's been blowing smoke up everyone's butt and calling it good economic health.

    The only reason why it's become the "narrative of the day" is because the amount of outstanding paper (debt) is so high, it's become impossible to print more with the same positive results achieved even 5 years ago causing it to be the only "tool" left in the "arsenal" of the fed's monetary policy. As a result, the "narrative" will remain as--- "There are no markets---ONLY MANIPULATIVE INTERVENTIONS".

    BTW---This idea he puts forth where he tries to quantify a 3:1 ratio of "Monetary Policy" FED INTERVENTION) to "Fundamentals" (SENTIMENT)?--- Is BS---Once intervention is the dominant driving force, sentiment goes out the window.

    He goes on to say, "in times like these the market will think whatever Common Knowledge says it should think."---WHATA BUNCH OF BS! "Common knowledge" that a market is fed-manipulated will not aid in measuring any fundamental factors that might influence that market for the purposes of making an informed decision because markets are fixed and not free to discover true market price.

    Here's where Ben gets it right:

    He says, "Here’s my Answer: there is no Answer."---YEP!

    Also, he says, "...and you’re kidding yourself if you think you can find the world’s secret eternal code that hides behind market outcomes."---GOT THAT RIGHT TOO!

    So, I ask Ben---Why Write This Drivel?---Answer:---To Dupe Guys Like Bron Into Thinking He's "Brilliant". HAHAHAHAHAHA!

    Thank You Bron---For another amusing bunch of garbage!

  3. Bron keeps erasing my comments!---It's So Amusing!

    Bron---You're such a coward!

  4. Okay---Bron---I'll tell you what---I'll wait until someone else comments on this worthless article and I'll then re-insert my comment---you might actually read it before you delete it you dolt!---you might learn something.

    Of course, because this blog is such a morgue, we might wait an eternity before we get someone else to comment.

    BTW---have you noticed?---I'm the only one reading this worthless blog.

    Oh---I just had a thought---maybe this worthless blog doesn't like the repeated letters in my last line?---okay---I'll take that out.

  5. LOL!---UNREAL!---I guess your other 3 readers won't receive their desperately-needed "edumacation" from my last comment because you censored my brilliance. It's their loss!

  6. Bron, feel free to "erase" Jake's contributions.

    His letting slip that you might be trying to reveals him as no ordinary ranter.

  7. Bron, I think there is definitely something to your narrative that gold is narrative driven ;)

    Many years ago we knew Gold's place in the financial system, that rug was pulled in 1971 and I think we're still trying to figure out what role it's going to play going forward.

  8. I am not sure I understand Ben Hunt's latest piece.

    The best bit of investing advice I ever heard was "invest in what you know." But the more time passes the more I realize that I cannot be sure I know a damned thing.

    If there was a true market (for anything) it would be so easy. But are there any markets anymore? On top of figuring out the fundamentals in any market, you must also account for:

    (i) government intervention through the central banks;
    (ii) official propaganda;
    (iii) market propaganda;
    (iv) uncertainty whether you can trust any of the published government statistics;
    (v) uncertainty whether you can trust balance sheets of any banks after the FASB rule changes;
    (vi) the effects of algo-driven trading;
    (vii) the shadow banking system;
    (viii) the undercollateralization of the entire system;
    (ix) the effects of carry trades and currency exchange rates;
    (x) the lack of any real organic growth in a global monetary system whose architecture requires it to grow.

    And that's just the first 10 factors. To my small brain, it's not worth it to chase alpha anymore with all that uncertainty. The entire financial system (including goldbug websites like KWN) is smoke and mirrors and disinformation.

    For now I like the simplicity of having some gold coins buried in the backyard. It's the only thing I can be sure I know.

  9. Jake,

    Please get back on your meds ASAP, for the sake of innocent people in your community. Seriously, do you ever come back and look at the comments sections you pollute? You are easily the craziest person I have come across on the internet and that is an awfully high hurdle. If you disagree with something an author or other commenter says; the proper protocol is to make your point and reference hard data that backs up your point. 5 straight comments of ad hominem bullshit is just annoying.

  10. Well I've just gotten in and it seems google has been automatically putting some of Jake's comment into the spam bin. Who am I to argue against the wisdom of Google's algos? Very amusing.

    I'll unspam your comments Jake so we can what Google thought was spam but thereafter I'm banning you from this blog.

    Calling me a moron is one thing, but calling others morons and cowards, bulk copy and pastes from other websites and just repeating your "narrative" over and over is adding nothing here, is boring, and shuts down discussion from newer readers not as yet confident in the topics of discussion.

    I've shown a lot of tolerance for your stuff, as well as criticisms from others, but I'm not interested in such debate when it can't be done in a civil manner. I and my readers don't need such anger and hate.

    Please feel free to write one last diatribe against my ban but I suggest that if you want to express your opinion, start your own blog. I've checked and http://www.bronisamoron.blogspot.com is available.

  11. FYI, the google sapm filtered Jake comment is above at 26 November, 2014 03:19. On checking the spam bin there was only one comment, Jake tried 7 other times to post the same comment.

    I do ask readers to note that I will have to manually delete Jake's posts until Google's algo learn all of Jake's comments should be treated as spam. In the meantime don't feed the troll.

  12. Oh No!---You Mean I Banned From A Blog That Has 3 Readers Including Myself?

    Oh My!

    Well---I guess This Blog Will Return To The insignificance it once was!


  13. Hi Robert, certainly agree with you, it is a crazy situation and in other article's by Hunt he does bemoan the current state, but he is trying to find a way to deal with it as a professional investor.

    Essentially, your action of holding some gold coins, along with others buying gold, is collectively a vote against the current state of financial markets and is a signal to others of that.

  14. Bron, I guess that is the only way to read Hunt's latest -- to see things through the eyes of a professional investor.

    After I posted my last message I had a nagging feeling I had left something off my initial list, something important. And then it hit me: Fraud -- and the total lack of any meaningful regulation, oversight, or law enforcement. This should be at the top of the list. When fraud (including control fraud) goes unpunished, everyone has the incentive to try to game the system.

    Professional investors have no choice. But I do.

    And Bron, the sooner you ban your prolific intruder the better IMO.

  15. glad to see jake gone, thanks!

  16. Hi Bron at al,

    I have to agree with Robert's assessment of our so-called markets.


  17. fwiw, in addition to hunt's writings, I've been enjoying the broader work of collins at philosophyofmetrics.

  18. I loved this prose from Ben Hunt:

    "When there’s a multi-trillion dollar market for The Answer, it should surprise no one that there is competition around the supply of The Answer. Many, many, many answers with a small-a will be supplied, each vying for contention for a slice of The Answer market..."

    LOL "a slice of The Answer market"