Gold Coins for Black Swans

09 Oct

Gold Coins for Black Swans

A Black Swan is an unexpected event.

The term was popularized in a 2007 book by author and market trader Nassim Nicholas Taleb called “The Black Swan:  The Impact of the Highly Improbable.”

Before the discovery of Australia, he writes, it was universally believed that all swans are white.  But all it takes is the sighting of one black swan to invalidate what was commonly believed. Taleb uses the term now to represent events of low predictability and outsize impact.  He says that just about everything going on in our world can be explained by Black Swan events.  

What was widely understood about the world in 1914 didn’t help to explain the wars and carnage that followed the Black Swan assassination of an archduke.  The demise of the Soviet Union.  The rise of Islamic fundamentalism.  These are Black Swan event.

9/11 was a Black Swan event.

So, what will the next Black Swan events be?  It’s hard to say because they are unexpected.

It seems more than likely that some kind of economic/monetary calamity will be next, despite the fact – or maybe even because – the authorities insist everything is just fine.  But sudden, unexpected, high impact economic/monetary calamities occur often throughout history, thanks to the same economic practices and folly that our authorities persist in today.    

Almost every economic/monetary Black Swan event is a persuasive reason to own gold (and silver} coins and bars.

Making a list of the possible trigger events for such a calamity is an inexhaustible exercise.  We write often about the financial possibilities since they loom larger and more certain with each passing day:  the ending of the dollar reserve system; unpayable sovereign and other debt; cascading government and private bankruptcies; bank failure; foreign dumping of US treasuries; runaway inflation and crippling stagflation.

But we need to allow for even less predictable Black Swans that can trigger these economic/monetary calamities.  Those include everything from the sudden outbreak of war, widespread crop failures, and the spread of disease like the flu epidemic of a century ago, to uncontrollable civil turmoil, power grid failures, earthquakes, volcanic eruptions, and even less likely events like an asteroid impact.

Unexpected?  Unlikely?  Precisely the qualities of the Black Swan events that order and reorder just about everything in our lives.

The gathering in Armenia this week of 200 technology and security officials from 70 countries at the World Congress of Information Technology includes special attention to Black Swan events.  Organizers ask attendees, “Are we doing the kind of hard-nosed vulnerability assessments that are necessary of our increasingly complex and fragile infrastructure systems?”

Are you doing the kind of hard-nosed vulnerability assessments of your exposure to an increasingly fragile economic and monetary system?  Owning physical gold and silver is the single most important thing you can do to protect yourself from low predictable events that carry outsize impacts.

Speak with you RME Gold and Silver professional today.