The Greatest Threat to Future Portfolio Yields is Adoption of the “It Won’t Happen to Me” Syndrome

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Before I start today’s article, I just want to clarify one statement from my article about diversification in which I discussed how most gold and silver mining stocks are still undervalued heavily by comparing the cumulative market cap of all gold stocks in the HUI Gold Bugs index to the market caps of well-known single stocks like Apple, Facebook and Amazon. In that article, I posed the question if Apple’s market value really should be more than four times the market value of all the gold reserves and resource held by all the gold companies that comprise the HUI gold bugs index. Obviously, the public factors in the value of a company’s inventory, which in the case of a gold mining company, is its gold reserves and resources, into a determination of whether or not to buy its stock, which consequently affects its market capitalization. Consequently, by that that statement, I was merely referring to the public’s inferred net worth of this gold as represented by the cumulative market capitalization of these gold mining companies as compared to the market capitalization of Apple.

Moving on, today, I’m going to drill down on a human behavioral trait that I’ve discussed in the past, including here, and it’s the danger of the “It Won’t Happen to Me” syndrome. All of us have fallen victim to the “It Won’t Happen to Me” syndrome” at some point in our lives, whether it’s as simple as going swimming in waters where someone has been seriously injured, or even killed, due to a shark attack, or whether it’s ignoring the possibility of bank seizures in our own countries even though it’s already happened in Cyprus and other multiple red flags since then have been raised by the global banking industry themselves about the future possibility of similar events in multiple other countries.

However, when it comes to wealth preservation, falling victim to this belief could prove tragic over the next several years.

On 5 November 2015, I posted a vlog on our SmartKnowledgeU YouTube channel discussing a movement in the banking industry worldwide to limit daily cash withdrawals and the ability to transact commerce in cash in amounts greater than US$3,000 and €3,000. I titled this posting “If This Doesn’t Convince You to Exit the Global Banking System, Nothing Will!” Surely as the sun rises every morning, there were people that watched that video, grew concerned about this troubling development for about a New York minute, thought about taking action because of the facts I relayed in that video, and then summarily dismissed the information in that vlog and never thought about it again, simply because the power of the “It Won’t Happen to Me Syndrome” tends to overpower serious consideration of real danger.

Yet, even with all increasing red flags that suggest that assets held within the global banking system could be devalued, frozen, or seized, or all of the aforementioned, including warnings of possible negative interest rates applied to commercial and corporate bank accounts in the near future from big global banks like the Royal Bank of Scotland, most of us go about our daily lives without giving a second thought about taking preventive actions to prevent such mind-blowing and negatively impacting life-changing events from happening. Even though the European Union has released policy statements that discuss potential future seizures of client bank accounts as a solution to prevent a TBTF (too big to fail) bank from failing, countless European citizens will continue to ignore such warnings as well. In fact, if we observe the tightening of daily withdrawal limits to US$200 to US$300 by large global banks like Standard Chartered, and the capping of such daily limits to ludicrously small US$50 to US$100 amounts, in countries with liquidity problems like Zimbabwe, we already can foresee the evolution of this banking policy. Yet, most of us continue to ignore the warnings we have received for well over a decade now.

In a twist of great irony, the reason so many of us embrace the “It Can’t Happen to Me” syndrome is because from a psychological standpoint, it preserves our immediate to short-term feeling of well-being by disassociating ourselves from reality and encouraging inaction, even though from a long-term perspective, it is very likely to destroy our self-preservation abilities. One of the few instances in which I have ever seen logic and rationality overpower the “It Can’t Happen to Me” syndrome is in instances in which life or death matters immediately dominate the discussion. For example, when I mentored gang members in Los Angeles, in speaking with them, I realized that most of them never embraced the “It Can’t Happen to Me” syndrome when it came to being shot or killed because so many of them had already witnessed this very event happen to their friends multiple times already. The immediate gravity of their situation made it impossible for them to deny reality, and instead, they assumed just the opposite, that every day might bring an event that may bring serious harm, or even death, to them. Unfortunately, when it comes to matters like wealth preservation, if we are not immediately threatened with a financial “life or death” situation, the same also applies, and most of us will not act until we are actually confronted with a financially devastating event, and the situation devolves into one of financial “life or death” for us. Unfortunately, by this time, any action taken usually will be too late to actually deflect the consequences of waiting and procrastinating too long.

Though many reading this article may believe that writing about human psychology is a strange topic when it comes to investing, wealth building, and wealth preservation, if we cannot identify the psychological manipulations to which we fall victim, then we will not be able to prevent and avoid being manipulated into bad decisions or a state of inertia by the world’s financial leaders. For this reason, I am devoting this entire entry to being able to identify if we are falling victim to the “It Can’t Happen to Me” syndrome.

The “It Can’t Happen to Me” syndrome unfortunately is the very reason why so few Westerners today own the ultimate wealth preservation assets, physical gold and physical silver, to curb the negative consequences of global banker currency wars that have been intensifying since the financial crisis of 2008. There is a corollary to the “It Can’t Happen to Me” syndrome called the “Everybody Already Knows That” syndrome, to which I have admittedly fallen victim on occasion. If we’ve know of something for a long time, it’s often very difficult to believe that others do not know the same thing. For example, I can recall one instance when I traveled to Mexico for a friend’s wedding, and one of my friends asked the taxi driver for the identity of the singer on the radio. As this was years before Shakira crossed over to the United States and recorded any songs in English, none of us had ever heard of Shakira. The driver could not believe that none of us had ever heard of Shakira, as she had already been a huge international pop star for over a decade at that time. However, the fact of the matter is that, many of us are unaware of many things of which the great majority of people in other countries are aware. During my business travels to other countries, whenever I have needed a temporary sim card for my mobile phone and asked a local where I could get one, many times they would express shock when they would tell me to go to the store of one of their largest telecommunication companies and I would ask them to repeat the name of the company again because I had never heard of it. Only when I explained that I was visiting their country for the first time did they understand why I had never heard of a company of which everyone in their country already knows.

Likewise, in the world of finance, whenever I encounter a financial consultant or adviser that is completely unaware that gold prices have risen 27% this year, silver by 45%, and gold and silver mining stocks by multiples of these yields, I am shocked, because I often assume that everyone in the industry is aware of these facts. To start this year, in January, I stated here, the following: “even if you [did]n’t believe that gold and silver will preserve your wealth as the Central Bankers currency wars escalate and you want[ed] to ignore the large rebounds that will eventually happen in gold and silver assets”, gold and silver assets would outpace stock market yields in 2016.

Then the next month, to build on the theme I started in January, I posed the question, “Will 2016 finally be the year gold and silver prices finally rise significantly?” And even though I stated that back then that it was still a little early to know the answer to this question, I confidently stated in the same article the following: this year will be the year for valuation plays, and there are no better valuation plays in the world than beaten-down PM (precious metal) mining stocks.” With the benefit of hindsight now, in August of 2016, we know beyond a shadow of a doubt the there were no better valuation plays in the global stock market than beaten-down gold and silver mining stocks. In fact, I again reiterated my belief in the strong valuation of gold and silver mining stocks in the past couple of months, stating that a decline in gold and silver mining stock prices earlier this summer was only a temporary pause before a resumption of higher prices, and even after considerable gold and silver stock yields had already been achieved at a stage much earlier this summer. And should gold and silver stock prices experience further consolidation price declines in the future, their valuations will again rise in attractiveness.

In the real world, perception and psychology are much more closely tied to market pricing behavior than the low-utility Economics 101 theory of supply and demand. In fact, the pricing mechanisms that rule futures contracts, which in turn, establish real-world asset pricing, can be entirely disconnected from physical supply and demand determinants, especially in the paper gold and paper silver worlds of London and New York. Former Goldman Sachs CEO Hank Paulson alluded to the importance of the banking elite in maintaining control over public perception during the 2008 financial crisis, when he alluded multiple times to the public’s perceived confidence in US stock markets as being infinitely and exponentially more important to US stock market behavior than any market fundamentals. He basically stated that as long as people at the top, including government and banking officials, could continue to deceive the public and misdirect them away from reality, that the crisis would be containable. If you go back and search his speeches from back then, along with the rhetoric of the US Federal Reserve Chairman, you will find that they repeatedly told the public to remain “confident” in the strength and integrity of the markets, for as long as they could nurture this belief, then they could prevent further bleeding. The financial charlatans that rule mass media today are so well versed in human psychology that unless one also becomes a student of human psychology, it is my belief that it will literally be impossible to consistently make sage and beneficial investment decisions.

Even with the rapid devaluation in purchasing power of literally dozens of Central Banking fiat currencies worldwide in the past decade, billions of people still cling to the “It Can’t Happen to Me” syndrome. When I wrote an article detailing the best reason to own physical gold and silver in coming years, and in that article, detailed recent strong devaluations of global fiat currencies, including the crash of the Russian ruble in recent times, someone sent us an email, in response to that article, that effectively stated, “I’m Russian, and the ruble never crashed, you idiot.” I don’t know why people, in attempting to provide a refutation of an argument, consistently rebut arguments by simply mentioning their nationality, as if being of a certain nationality designates one as an expert in all matters concerning that nation and serves as sufficient qualification to denounce a valid opposition viewpoint. As the USD is the largest component in the basket of global currencies against which other currencies’ purchasing power are measured, and the ruble lost 58% in valuation versus the USD just from June 2014 to January 2016, I would dare claim that a 58% devaluation qualifies as a crash. Furthermore, if we were to compare the ruble’s purchasing power against the only form of real money out there, physical precious metals, the ruble crashed by an even greater 61% against gold from the end of 2014 to February of 2016. Anyway you look at it, a 58% to 61% devaluation in purchasing power is a crash. I am quite certain that I would not be able to find one Russian living in America that held the bulk of their savings in rubles, and consequently had to live off of the conversion of these rubles into dollars during June 2014 to January 2016, that would not agree that the ruble crashed during this time.

Likewise, I’ve often heard Americans make the same argument in regard to the currency most of Americans hold, the US dollar: “Well, I’m American and the dollar will never crash like the Venezuelan bolivar or other emerging market currencies, so I’m not worried.” Though the US dollar has remained the strongest fiat currency in a pool of rapidly devaluing fiat currencies over the past two years, if one calculates the declining purchasing power of the US dollar in the past couple of decades when using real rates of inflation inside the US (versus the bogus rates produced by federal entities), then one can easily reach the conclusion that the US dollar has crashed as well. Sometimes in response to the declaration that “the US dollar will never crash”, I respond that the US dollar has already crashed, just to see what type of reaction this will elicit. In most instances, this response elicits statements of denial like, “You’re an idiot. The US dollar has not crashed.” To these accusations, I then inquire of them, “What percent decline constitutes a crash?” When most respond that anything greater than a 50% to 60% decline would constitute a crash, at this point, I know I can prove my point. Whether or not I can convince someone to believe the facts, however, is an entirely different story. If one uses real rates of inflation produced by Shadowstats (versus the fantasy land figures of low inflation quoted by the Bureau of Labor Statistics every month for years on end), one can prove that the US dollar has crashed. For those that want to see the calculations that prove this, just watch this video that proves greater than 75% devaluation in purchasing power of the USD during a recent 15-year time span.

In any event, even if one explains the fact that the US dollar has crashed in purchasing power in recent times, over a very condensed period of time, by more than 75%, because it has been one of the strongest currencies in a pool of rapidly devaluing currencies for the past two years, I’ve discovered that quite often, even presentation of indisputable facts cannot sway people to believe something that they simply do not want to believe. To overcome the power of the “It Can’t Happen to Me” syndrome, I often encourage people to not take my word for any of the facts I have stated, but to please conduct their own research to determine for themselves whether or not what I have disclosed to them is true. Even when suggesting this methodology of determining the truth, I am still often met with great resistance and a response that “There is no need to conduct any research because I already know the truth”. In these instances, I try to use the US dollar’s performance against gold to prove the argument that the US dollar will not have to crash in the future to prove my point because it has already crashed! Over the past 16 years, the US dollar’s purchasing power, when measured against gold, has crashed by more than 81%. Unfortunately, however, no matter how many facts one presents, those that have bought into the Warren Buffet, Bill Gates, Ben Bernanke propaganda that gold is not money and just a “barbarous relic” usually will continue to remain compliant to a false narrative simply because this narrative was stated by someone they view as an authority figure.

There are several insidious reasons for the systemic levels of blind compliance that exist in many diverse facets of life today, and the operant conditioning tactics instituted in institutional academia “learning” is one of the greatest contributors to the implementation of the Obedient State. Unsurprisingly, much of the “It Can’t Happen to Me” syndrome stems from a global institutional academic system that conditions us to be obedient and unquestioning towards “authority” for much of our young adult life. Consequently, when we graduate from this system, as long as an authoritative figure appears in the mass media and tells us the US stock market is safe, the US dollar is safe, the Euro is safe, the European bond market is safe, the banking system is robust, gold is a bad investment, and so on, we maintain this compliance to authority all throughout our adult lives as well. Unfortunately, many of us have already been conditioned to accept these proclamations as fact without even conducting any independent research on our own to (1) determine if the authoritative figure is even an authority on the topic, which in many cases, he or she is not; and (2) determine if what the authoritative figure is stating is actually true or not.

However, today, I want to focus on how we can identify if we’ve fallen victim to various elements of psychological warfare that prevent us from taking the proper actions to preserve our wealth. Identification and acknowledgement are the first two steps in building up a critical immunity to these psychological games that will be paramount for our survival as the banker currency wars eventually reach their apex. As further exposition of how blind compliance to authority and the “It Won’t Happen to Me” belief pattern work together to prevent us from taking the protective measures we need to take right now, consider a November 2014 article in which a financial analyst stated, “it’s time to ditch your golden faith, embrace the truth — and make gold a barbaric relic of your portfolio’s past.” One can literally find hundreds of such statements online by dozens of different analysts in recent years that falsely equate gold as a dead asset, that are in turn, literally accepted and parroted by thousands, if not millions, of other people without any further confirming research. You will often find such false statements issued by analysts and economists that graduated from, or are employed by “elite” top-shelf schools, like Ben Bernanke and Paul Krugman, both of Princeton University. As an Ivy League graduate myself, from witnessing often undeserved levels of confidence displayed by my peers regarding topics with which they literally almost knew nothing, I can assure you that education pedigree alone does not grant anyone an elevated level of intelligence.

On the opposite side of the fence from the “It Won’t Happen to Me” crowd are those that embrace reality and believe that “It Might Happen to Me.” Unfortunately, the leaders of the large contingency of the “It Won’t Happen to Me” crowd often achieve great success in marginalizing and discrediting the small subset of the population that constitute the “It Might Happen to Me” crowd by disdainfully calling the realists “conspiracy theorists” and “paranoid fear mongers” even when the facts support the preparatory financial behaviors executed by the “It Might Happen to Me” crowd. Again, we must recognize that it is human nature for us to only legitimize what we know. In the realm of martial arts, I often met masters that were overprotective of the art form they practiced for their entire lives that would express disdain for other forms of martial arts, even though there was little doubt that other styles offered legitimate martial tactics. Likewise, in the world of finance, if we don’t have a history of currency collapse in our nation, then we will be led to dismiss its possibility. Thus, if we recognize this part of human nature, we can avoid falling victim to the negative consequences of embracing false beliefs by actively researching topics that may seem preposterous to us if we have no direct experience with such topics.

In conclusion, just because we never have had prior experience with an event, we should never assume that the possibility of that event is invalid. Likewise, we should realize that only legitimizing what we already know can be a very dangerous mindset, and that we all need to step outside of our boundaries of human comfort to explore areas we do not know or understand fully if we wish to remove any layers of passivity that may surround us and take a proactive approach to the developing global financial crisis. Providing legitimacy to topics with which we do not have any experience as of yet may just be the difference between surviving and not surviving the next five to ten years.

Today is definitely not the same world as it was just a few decades ago and the financial industry in particular has embedded extremely high levels of manipulative psychology into their attempts to control us and to keep us passive. To understand the levels of compliance to which most of us can be manipulated without even realizing we are being manipulated, just research the 1961 Yale University Milgram Experiment and the 1971 Stanford Prison Experiment, both experiments in human psychology that demonstrated extreme levels of compliance in ordinary human beings.

I would surmise that the great majority of people around the world have little clue as to how deeply and thoroughly the banking class has studied the above compliance experiments to gain a full understanding of how they can shape and mold our behavior when it comes to the financial decisions we execute. In fact, over a decade ago, I was told by my peers of the exact same scam, described by neuro-linguistic programming expert Derren Brown of a fool-proof system that could predict the winner of every horse race around the world, used by Wall Street financial consultants on unsuspecting prospects to successfully gather millions of dollars of AUM. Though this scam is very simple in concept, it’s actually quite a brilliant scam. If you watch the video, and substitute stocks for horses in this scam, then you will understand how a “fool proof stock picking system” can also be easily sold to unsuspecting clients. There are enough historically documented statements from high level bankers and financiers in which they mock our compliance and acceptance of their fraudulent global monetary system to deduce that trained compliance to their global banking and financial systems is a very important part of their mission. In fact, if you are to survive the next few years, all of us will have to answer, at a minimum, the following two questions:

(1) What is the risk that the fiat currency in use in my nation will experience a further rapid devaluation event, and do I have too great of a percentage of my savings in this currency?; and

(2) What is the political stability of the nation in which I reside, what are the chances that the political environment could destabilize quickly, and how prepared am I right now to deal with such an event were it to happen?

I have provided multiple examples in this article that prove the inefficacy of our refusal to believe that a negative event can happen, or our denial of the facts that increase the probability of a negative event happening, in not only preventing the occurrence of a negative event but also in mitigating the negative consequences of such an event when it happens. I further provided multiple examples of how compliance to false mass media financial narratives being promulgated today will have dire consequences in the future, and of the behaviors we must execute to avoid falling victim to such false narratives. If you’ve gleamed anything useful from this article, please feel free to pass it on to anyone else you feel might benefit from reading it.

About the author: JS Kim is the Founder and Managing Director of the independent research, consulting and education firm SmartKnowledgeU. At SmartKnowledgeU, we focus on digging beneath the surface to understand the most significant financial risks of upcoming years and developing strategies to combat these risks, with a focus on integrating ownership of gold and silver assets into this strategy. To learn more about the type of academic social behavior modeling and conditioning that leads to incorrect perceptions of reality, check out the fact sheet for our soon to be launched SmartKnowledge Wealth Academy here. To sign up for our free newsletter that discusses such topics and more, please visit us at smartknowledgeu.com.

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Posted: Monday, August 15th, 2016 @ 4:29 am
Categories: best gold and silver mining stocks.
Tags: , , , , , , , .
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