Seeing What Giants See

Before I begin, I would like the reader to know that I really do write this for my children and read these to them at the dinner table. Recently night my 11 year-old daughter asked if we were going to talk more about the Giants. How cool is that?

Kids,
Last time I said you needed to learn to see the world as Giants see it. Who are "Giants"? We are going to focus on the super producers of the world but it also includes the central banks. What do Giants see when they look out across the landscape? More important to me, what did their fathers see? Do they see ants? Do they see the fruits of their labor? Do they see time itself?

Perspective is different when one is so large. Your mother and I are careful about spending; working, for example, to keep our power bill to a minimum buy turning off lights. A Giant, who makes more money in a day than I make in a year, doesn't flinch when the power bill comes in. Those little bumps in the road are not even noticeable.

Similarly, a revaluation of gold will mean more to me than to a Giant. My few ounces represent, to us, future wealth purchased at current prices. Our gold is currently only a percentage of our current wealth. After the revaluation it may be all we have. In contrast, the Giant already has significant wealth. He is desperate to lock away some of his surplus production (currently represented by dollars) in a lasting form. Like us, it is in his best interest to buy as much gold as he can at the best price he can...but he's buying so much gold he can't afford to shop around. In fact, there is no "shop around" available to him.

We buy an ounce or two at a time from the local coin shop with a portion of our income. If the Giant went to the coin shop with a similar portion of his income he would quickly buy everything available and drive up the price for all buyers...including himself. His strategy has to be different. He can't buy at the coin shop. He has to buy gold in quantity, not at today's price, but at tomorrow's price...possibly the Freegold price. The Giant knows that a bird in the hand is worth two in the bush. He is willing to pay more per ounce because it's the only way he can lock away his wealth. We are at an advantage because we can just go buy what we want at today's price...knowing we will be wealthy later. Giants are wealthy now.

ANOTHER spelled this out quite clearly:

A wise oil nation can strike a deal with the paper printers and in doing so come out on top. Go back a few years to the early 90s. Oil is very high, you offer to lower the US$ price in return for X amount of gold purchasing power. You don't care what the current commodity price of gold is, your future generations will keep it as real wealth to replace the oil that is lost.

The Giant can see further into the horizon. He sees what is coming from a long way off. If Giants are willing to get rid of dollars at any price and if we can see their footsteps...shouldn't we follow? Does the dollar price of gold really matter? Ants, like us, are very price sensitive but it is very important to just put some gold away for someday!

Kids, someday may arrive...and quite suddenly...like it did in 1934. Changes happen without warning like in 1971. When will Freegold arrive? Someday. Did we pay too much for what we have? You know, after a sudden revaluation of gold it won't matter what we paid. Do we have enough gold? We will never have enough gold...but we'll always have some and we will always work for more.

Giants buy at a premium to preserve wealth for generations. We can learn from this. There is more we can learn from Giants but that's enough for now.

Ants, Grasshoppers and Giants

Kids,
I have so much to tell you but I need to move slowly.  I need you to really understand what I'm saying as we talk.  These are difficult topics...and highly debatable...and they SHOULD be debated!  Even if nobody else will talk about it, we will.  Heck, even the Bible talks about this stuff in Proverbs 6:

Go to the ant, you sluggard;
    consider its ways and be wise!
It has no commander,
    no overseer or ruler,
yet it stores its provisions in summer
    and gathers its food at harvest.

One concept we need to understand early on is the difference between Grasshoppers and Ants...remember that fable?  I'm going to stretch the fable to include Giants. Ready?  Let's go.

There are Ants, like your mother and I.  We put away a small amount of savings over time, knowing that seasons change.  Saving is difficult for us as we could easily spend my entire paycheck several times over.  If we are careful not to eat out frequently and minimize the purchase of trinkets and toys, we can save a modest amount of each check.  I want to point out that our ability to save has nothing to do with my ability to earn.  It has everything to do with our ability to resist spending.  As we said last time, the best thing we can do to preserve that savings over time is to buy gold.  (As a note, FOFOA more commonly refers to us as Shrimps...in reference to our comparison to Giants.)

A large number of people, and you can't tell who they are, don't have any savings at all, let alone savings preserved in gold.  These are the grasshoppers in the ant and the grasshopper fable.  They live from day to day, never preparing for winter, never considering that tomorrow may not be as easy as today.  Again, it's impossible to tell who is a saver and who is not...they may even look very, very wealthy.  We will talk about this some more another time (or you can read it here if you are ready).

There is a third group worthy of our attention: the Giants.  These are primarily central banks and are also individuals who make money very efficiently.  In fact, they are so good at making money, their biggest concern is keeping what they've already got, not making more. They have to either find a place to park money or stop making so much money!  FOFOA highlights the definition of a Giant in an article by pointing us to some commentary between Another and Mr. Gresham:

Mr. Gresham: "We who read here generally buy the coins, one ounce and less. The "Giants" you speak of are usually buying the large bars (100 ounce?), yes?"

ANOTHER: "I ask you, how many of your bars in tonne? This is the small purchase size."

FOFOA goes on to spell that out.

Good question. How many 100 ounce bars are in a tonne? The answer is 321 and a half. Or 32,150 ounces. And this is a "small" giant!

Kids, mother and I are far, far from being Giants...we certainly don't have $45,000,000 to buy gold!  To be completely honest, we barely qualify as ants. My job is both to store up something for your children and to lead you toward becoming Giants yourselves.  Even if you never own 32,000 ounces of gold I need to teach you to make decisions and live your life as a Giant would...to see the world differently.  If you will ever understand Freegold, you will first have to learn to see the world as Giants see it.

Please understand the three groups.  One group that lives in the moment.  One group that saves little by little as it can.  Another group that produces so efficiently it and stores true wealth for generations.  Two of these have a bright future.  Got it?

When you are ready, I would like you to do some more reading on this topic.  FOFOA expands on these ideas here, here and, as mentioned, here.

Why Do You Buy Gold?

"Dad, why do you buy gold?"

Kids, sometimes I have a few extra dollars.  Your mother and I manage our household and our businesses so there is something left over at the end of the month.  We don't want to spend it all right now.  We'll spend it later.  Or you'll spend it later.  Or not at all.

Dollars are kind of like fruit.  It's usually better to eat that apple sooner than later.  Dollars, too, are better sooner than later.  They "go bad" over time.  

And it's not just dollars that do this, all paper currencies do.  That's fine.  It doesn't mean paper currencies aren't useful...they are...so is fruit.  In fact, paper money is desirable, it just isn't a good thing to use for savings (more on this another time).  Which is better: a box of 100 year old gold coins or a box of 100 year old apples?

That 100 year mark is important.  100 years is older than most paper currencies survive.  The dollar is bringing up the average but you can see it is rotting...and quickly.  By government estimates one dollar in 1913 bought the same amount of stuff that $23.80 buys today.  How do you like that?  We could buy a new XBox for $10 that your great, great grandpa saved.

I could speculate on other investments but, ultimately, gold is the place for savings.  The most efficient, compact, portable and recognizable and lasting way mom and I can save for later is to buy an ounce of gold.  Gold's job is to protect the work we have done in the past.  At some point we'll hand that to you.  

So, let me ask you.  Do you want gold or rotten apples?