May 16, 2002

The word remnant has been in our language for a very long time. A search in google.com revealed many references to its use in both the old and new testaments. I chose it for this article to describe my reaction to a flood of e-mails responding to my recent article on Investment Lessons from the Great Depression.

Gary North, prolific writer on economics and a noted biblical scholar recently explained why he had chosen to name his news letter as the Remnant Revue. Paraphrasing his article, the word remnant was used by God to cheer discouraged prophets. They were told that an invisible group (the remnant) would be there to carry on their mission. Through their recent letters of encouragement, I discovered my remnant is out there, is alive and hard at work. My entire outlook on writing these articles has been changed.

I have decided to use this space to record verbatim extracts (less personal items) from a few selected e-mails. I was emotionally and intellectually impressed by their thoughts and think that readers of this piece will be as well. We are grouping the contributions from male and female responders to emphasize the important role women play in all aspects of our lives. As always, I will look forward to hearing from my "remnant".


SOME WORDS FROM OUR LADIES

***** From a wife and mother:
I have been following the markets daily and studying hundreds of articles on gold-eagle, lemetropole cafe, zeal intelligence etc. since the LMTC debacle. My reading brought me to the conclusion that my husband and I should pull what invested money we had out of mutual funds, sell our home (which we carried a large mortgage on) and sit on cash and metal. It took a lot of trust, not because I have steered him wrong in the past, but because I have no formal financial background and I was disputing virtually everything the main-media experts were saying.

The reason why I tell you this story is because reading your article made me realize something about human nature. Counting all of our friends and relatives whom I have tried to enlighten about the unfolding Bear market, not one made a single change in their finances; not one asked me to provide them with articles or information in hard copy that they could educate themselves with; not one even took me seriously. I chalked it all up to the fact that I did not have a background in finance and my opinion just could not compete with the myriad market bulls and talking heads that did.

But, when I read your article and realized that someone with your background and success met with the exact same attitude from friends and neighbors it made me realize that something deeper was at work here; something basic to human nature. It seems we humans have a very strong tendency to shut our minds to any possible disruption in our preconceived notion of what the future could bring. Events can unfold right in front of our eyes that should elicit recognition that history is repeating itself; yet, we flat refuse to scrutinize them or to compare them with events in the past. Intelligent, educated people cruise through life choosing to be oblivious to signs around them: corruption, deceit, manipulation.

Every aspect of lives is permeated with signs that tell us that we are indeed in the process of repeating some unsavory moments from the past. I know that I should consider myself very lucky to be capable of seeing the financial and political events around the world for what they are. It has inspired me to try and protect our assets against the upcoming depression. *****

***** From a teacher, living in South Africa:
I would like you to know that your editorials have not 'fallen on deaf ears', - I read each one and have put your suggestions into practice. I agree that it must be frustrating to be able to 'see the writing on the wall', but not be able to attract the attention of friends/family to the approaching disaster. I have tried to convince my nearest and dearest, and regularly forward articles such as yours to them. (Unfortunately they seldom elicit a noticeable response... I am convinced many think I have 'lost touch', and are too polite to say so!!!) But, at least I have tried to sound the warning...

Unfortunately there are not many sensible investment advisors to be found, and the person I had trusted with my nest egg, exhibited the popular 'Buy and hold no matter what' approach. I was advised that Dollar-based tech stocks were the best place to be invested. When I realized the folly of this strategy (and, incidentally, lost 40% of my original investment), I took responsibility for my own financial future - my portfolio of precious metals & stocks has more than doubled in value since last year!!

I don't regret my change of plan, and only wish that more people would question the wisdom of traditional advisors. I also realize now that I am the only person who really cares about my money and therefore I am best qualified to invest it. I am solely responsible, cannot blame anyone if things go wrong, and consequently constantly keep myself abreast of developments in the financial world. I concur with your views ... and I would like you to know that your efforts have not been in vain.*****

***** From an investment banker:
Congratulations on your 87th birthday! And, let me be one of those who expresses appreciation for your writing. I am a 50 year old retired investment banker and former financial analyst so I delude myself that I am in a position to know financial and economic sense when I read it.*****

***** From a mature woman:
I thank you for your articles on the Gold-Eagle web site. I appreciate the perspective, knowledge and wisdom which comes with age. I am a woman who has only experienced the good times, but I've always kept abreast of what is happening economically in this country and the world. It 's been looking like a fool's paradise for so long most people don't have a clue to what's coming, or maybe they don't want to know. Somebody needs to educate them. *****


SOME WORDS FROM THE MEN

***** From a young man:
I am always intrigued by the Great Depression and although I have no relatives here in the States (as my parents are immigrants) I have still always had a gnawing feeling about these end times and how exactly things would transpire. During the 90's I was basically wiped out by the commodity markets and gold stocks. It was back then that I was learned in the subjects of derivatives and the manipulation of the gold sector itself. I am now ready for the near future and it's major implications with regard to myself and my immediate family.

One last thing...when you write, I will read and comprehend...as I find this to be one of the most important times in my life and your thoughts are very important to me. Your knowledge and wisdom in your years of life ARE being listened to. By who? By ME! The fact is, only those with eyes to see and ears to hear will escape what is about to hit this planet on what I believe to be an enormous scale of financial devastation...maybe even "the final wound." *****

***** From a man of experience:
Your words of wisdom do not fall on deaf ears, even to this 44 year old. My mother, who will be 80 in September, is one of the Depression-era kids you talk about. She worked for 37 years at what was Michigan Bell Telephone, mostly in the days when women were not allowed into management or to participate in the employee stock program. It was not until the 70's that this all changed. She retired in 1982. But as soon as that stock program was opened to her, she bought, a little at a time.

We grew up without a father and our mother raised us on her own. She can stretch a dollar farther than anyone on the planet. She has also had a very comfortable 20 year retirement, mainly because she do not use credit. The only time she ever used credit was to buy the little home we grew up in for $13,000 at 3% in 1960. She sold that and bought a condo in 1992 for cash in a community similar to yours.

My grandfather, who worked for Henry Ford in the 1910's in the accounting dept, left my mother and her younger sister some stocks that he had accumulated over many years. All these stocks paid healthy dividends. She collected $4-5000 a year in dividends. Her sister sold them all immediately upon inheriting them. She and my uncle have never been able to save a dime.

A lot of the stock was AT&T and its children, Lucent, Air-Touch, etc. When the markets started to tank in 1998 we talked and she sold all the ones that did not pay a dividend. Later she sold the AT&T stock, some of which was bought in the 1940's.

All these turned out to be good moves. But there is a definite caution about doing anything else, like gold stocks, since this is out of the realm of her knowledge. For my mother, the only thing that matters is "does it pay a dividend?"

What is really scary is my generation. My sister and brother-in-law, with 3 kids, have never really saved a dime, but they have every gadget known to modern man in a large house with massive debt. Same with other friends. My wife's brother, who bought MSFT at the height in 1999, refuses to sell and continues to accumulate things like campers, even while his company has had 3 rounds of layoffs.

We have had it too easy in the last 50 years. As you have said, even some of the people from the Depression era, who should know better, seem to be in denial. Most in my generation are definitely in denial combined with pure ignorance of money and history. It is going to be an ugly decade. Keep up the good work. Some of us are listening. *****

***** From young man #2:
Being 31 years of age, I've lived through a very "protected" period in the timeline that is the history of America. The "easy" life I've lived up to this point is not taken for granted. I am fully aware of the depths to which this economy may sink. I have a very vivid and active imagination. Depression-like conditions are not very hard for me to visualize. Living through them is going to be a bit more uncomfortable than visualizing them, however.

Your article highlighted the universal frustration of those of us who have glimpsed the future... beyond CNBC... beyond Greenspan worship... the true nature of the vicious bear market that is unfolding. I've tried to educate my friends and some family members about precious metals, tangible assets, prudent debt reduction, the inherent worthlessness of our fiat currency and a small amount of preparation for hard times. Only a few have heeded my warnings.

In your article you comment: "I am not so sanguine about the survival of their children and grandchildren. They are about to experience even greater problems than faced by their grandparents and may be even less prepared to survive the ordeal." Well, I am part of this group. My friends are part of this group. After having tried to get people to understand what could lie ahead, your concern is completely justified. With only a very few exceptions, everyone I know is completely clue less. My attempts to enlighten them are met with blank stares and subject changes. I now realize that I've done all that I can. It's time to take care of myself. I am certainly not excited about the coming decade. *****

***** From a mature man:
I just finished reading your G-E article on Investment Lessons from the Great Depression last evening and have not been able to get the subject off my mind. I will be 60 next month and can remember my grandfather and father telling many stories of what it was like. Several of the points that have stuck with me all these years, which you might want to pass on to your readers.

1) The Government LIED Before, During and After.
2) The Media Echoes the Government Lies.
3) The Bankers are all thieves.
4) The Lawyers are all vultures.
5) They All worked together to rape the American public.

It appears that our moral blindness is setting us up for a replay of the harvest. Please keep up your writing, every so often someone will see the light. he odds are not in our favor, but the truth demands to be heard. May God have mercy on this country even though we certainly don't deserve it.*****

***** From a middle age father:- I find your articles on Gold-eagle refreshing and reassuring that I have prepared myself and my family as best I could for the coming debacle of our financial system. Our society has forgotten its past and discarded the wisdom of its elders unlike any other before it. We gladly exchange that wisdom for that which tickles the ear and promises immediate gratification. And, as we know, our government ALWAYS promises immediate gratification.

My father tells a story of the only time he ever heard my grandfather swear. Both were listening to FDR tell of the New Deal on the radio to which my grandfather swore, turned to my father (who was about 8) and said, "You don't understand this now but your children's children will be paying for this!" Of course grandfather was right as our government now pays for everything with worthless IOU's and that, plus its other confiscatory policies, will eventually lead us into the next great depression.

For a middle-age father of three young girls its a rare treat to hear from someone who knows first hand that things can get bad in America and that it is our responsibility as individuals to prepare. May I suggest the title for your next article? "What I'm Doing Now To Live Successfully Through My Second Great Depression". *****

***** From an Australian:
Reading your article reminded me of the need to help and educate people and the traps for the unwary or gullible. (and greedy). My original discipline was accounting economics and finance but went on to do a Ph.D. in Behavioral Sciences/Management. I live in Western Australia and have a home in Perth but also one in Denmark, a small town on the south coast some 240 miles from Perth and next stop Antarctica. My neighbour has been on his 100 acre orchard since 1908 and still works it! He's a local treasure and we have long chats about "the old days" and the hardships of the early settlers. On another note, my income is now primarily generated from the stock market where I am now solely in gold stocks. Risky (all eggs in one basket) I know but within my means and performing rather well so far with 150% gains on some Australian stocks with overseas ventures in Sardinia, Egypt and Uruguay. *****

***** From a seeker of truth :
I have been soaking up the wisdom on the Gold-Eagle web site for years. I have almost no dollar denominated assets, having cashed out my 401K several years ago during a job change.

You may be interested in knowing that I have observed similar attitudes towards investments in my parent's generation. I cannot, for example, convince my mother to switch even a small percentage of her investments into a gold or short fund as a hedge against the current downturn. It is quite frustrating, but she has her health, no debt, owns her home, and it is her money and her choice.

My reality and yours as expressed in your essay were coincident. We have survived and dragged others with us by trading in truths. I am in the process of transferring this skill on to my offspring and interested others. I sense that you, also, are on a similar mission and urge you not to give up. The expression of truth is not only rare, but truth seems to be absorbed by others for future use when they are forced or decide to trade in it. You are sowing the seeds that will be needed by future generations facing challenges we can only guess at today.

On a positive note, I have a 15 year old daughter. I see a resilience in her and her friends that may be the seed of the character that will be needed for them to survive and possibly thrive in the coming depression/crisis. God willing, they will rise to the challenge. *****

***** From an old friend:- I always enjoyed your market savvy (perhaps because we are two of a kind). I am 75 years old now and we enjoy the warmth of Florida very much. I was so glad to read your article, and I have sent it to quite a few of my relatives (including several nephews - who of course really don't know what we are talking about,) BUT THEY ARE SURE LEARNING NOW! Also sent your article to some of my (ALWAYS BULL) friends. It does indeed take the perspective of time and study to understand what really takes place. Thanks for the really great article. *****

***** From an old timer:
I too have been "beating the table" for the last few years and have successfully predicted specific price declines that seemed off the wall at the time. I told my friends to sell their stocks because, "you ain't seen noth'in yet!" CSCO @ $60, INTC @ $60, other lesser companies now bankrupt. Of course they didn't listen and even to this day as they lie bleeding and beat up, they can't even admit that I was right and they should have taken my advice. So, I stopped being the good teller of bad tales because, "There are none so blind as those who will not see."

My opinion is that most of these people are incapable of evaluating a stock, the economy and its relationship to the market in general. They also seem so unwilling to do a bare minimum of research either because they're too lazy or caught up in the "John bought xxx, so I'm jumping on board also." When xxx tanks, they can't admit they made a foolish mistake so they rationalize their decision by stating with, as Tommy Smothers says, "the quiet assurances of the unconscious illiterate."

They will not take action until they are in severe pain. Their arrogance and defensiveness prevents them from admitting they were wrong. Thanks for the article and perspective into one of the most significantly important time periods in our entire history. *****

***** From a near retiree:
Thank you for writing for people like me who read gold-eagle. I am grateful for the way you are prepared to share your experience and knowledge with us. As you know we weren't taught it at school and we certainly don't get it in the media. Not only are you prepared to share - it's your time in preparing the essays - so much hard work goes into it! I am 62 years old and still have to earn a living (which I'm trying to augment by investing in gold). It's good - it gives me purpose and the reading and trying stimulates my brain and keeps me young.

I first came into contact with gold-eagle about 2 yrs. ago. And that's when my education started. If I am successful then I owe it to you and all the other people who have so unselfishly shared your knowledge. I have tried to pass on what I have gained and have come up against what you describe. Out of my 4 married children, only one has learned 'the lesson. But you know what they say? There are 3 types of people 1. Those who make things happen, 2. Those who watch things happen and, 3. Those who wondered what happened! Unfortunately humans aren't divided equally amongst the groups. I think all we can do is pray for them. *****

***** From an expert:
I've been a stockbroker in Beverly Hills for the last 27 years. I'm truly amazed at the still ingrained bullishness on the part of the public. They can't possibly fathom a truly serious downturn in the economy or the market and that tells me we're still in the relatively early stages of this decline. It also doesn't help that Wall St. and the media persist in their bullishness and assumptions real or feigned that the economy is on the road to recovery and as long as you hold onto your stocks they'll come back. (they don't say what year of course) I believe that before this decline is truly over DEBT will be the worst four letter word ever and we'll see dividends come back into vogue. Anyway, I'm afraid history is about to repeat itself.

I've tried to educate my clients to the best of my ability and a lot of them do get it, but even the ones that get it are still somewhat in denial. They can't believe the economy and market will get that bad. People have been lulled into some kind of complacency that the government or the powers that be will fix whatever economic problems are out there. I've got a lot of my clients in gold stocks and we're doing quite well as you know. I still do have a lot of non-believers who laugh at me, especially my fellow brokers, but that's good because it tells me we're still in the very, very early stages of a bull market in gold.

I'm personally in touch with Richard Russell who writes the Dow Theory Letters and who has been truly brilliant on this market over the last few years and John Hathaway who runs the Tocqueville Gold fund and Leo Larkin who is the head precious metals analyst for Standard and Poors (both John and Leo are very bearish on the market and the dollar and very bullish on gold as is Richard Russell). Stephen Roach, who is one of the head strategists at Morgan Stanley, has also been very right on and I'm shocked he still has his job as Wall St. hates bears and is always bullish and does not know how to use the word sell. It's cost people billions to date.

Ironically, I find the people that seem to have a handle on this market are generally either a lot older than the norm or have a lot of years of experience in the business. I love a quote from John Templeton who said "an investor should not be an optimist or a pessimist but a realist with a hopeful nature." It's a wonderful trait to be an optimist but in a Bear market it'll destroy you and that's what is starting to happen. *****

***** From a couple:
Please don't get discouraged by your neighbors and readers' lack of response. All we can do is provide the information and be available for any questions. My own family members and many friends have called us "doom and gloomers" when we warned them of investing in mutual funds and tech stocks. They have watched their investments dwindle; and, some have told us that they don't have the courage to open their monthly statements any more. But, they still are in it "for the long haul" and refuse to believe what's happening and how much worse it will be. Keep the faith, keep writing.****

***** From a son-in-law:
Great insights from your article about the great depression. It helped to explain a little why my 82 year old father-in-law won't change investments for the problems ahead, even though he has taken large losses on such stocks as GE and certain utilities. Keep up the good work. *****

NOTE TO READERS

This compilation of reader comments required a huge 'cut and paste' editing effort. Please let me know if it was worthwhile from your point of view.

Robert B. Gordon Sc.D.
Sun City West AZ 85375
rgordon145@aol.com
http://www.gold-eagle.com/gold_digest_02/gordon051602.html