EDIT: First published in January 2014, I (Pbier) found this article to be a prescient warning for those investors who, in their ignorance and folly, choose to place their savings outside of the safety of the banking sector. There are some who, even today, claim that the gold and silver markets are ‘in a new bull’ and that ‘now is the time to buy!’ Learn from Jack Riley’s mistakes and make sure your savings are tied up in the S&P or some other ‘sure thing’ stock market.
The Accredited Times was fortunate enough to spend a day in the home of a real silverbug and get real accredited insights into this strange and mysterious cult. Jack Riley, a 40 year old silver ‘stacker’ from Phoenix Arizona spends most of his waking hours ‘play trading’ junior silver mining stocks and ‘stacking’ silver bullion bars and coins. His family is perplexed by his fascination with the ‘precious metals’ and they struggle to understand his elaborate stories about powerful people manipulating prices and ‘stealing’ his ‘hard earned’ wealth.
Jack’s wife Marisa is sick and tired of hearing Jack’s stories about silver manipulation and desperately wants him to find a stable job and make secure investments. Every month, Jack demands that Marisa borrow more money from her parents to fund his obsession, and every month she loses more faith in his promises of future wealth.
My observations only confirm my theory that the silverbug cult is founded on nothing but extreme narcissism, selfishness and entitlement. This is a log of some of the highlights from our stay:
It is three in the morning. Jack Riley lies awake, staring at the silver price on his iPad. His eyes are weary and his heart is full of dread. Jack barely glances at his wife Marisa, who lies fast asleep by his side. Every now and then however, he glances affectionately at his ‘stack’ glinting faintly in the corner of the room. “At least my ounces are still there”, he mumbles. But deep down he must know that he has lost a fortune, and what’s more he has fundamentally betrayed his wife and children.
It’s ten in the morning, and Jack is only just waking up from his slumber. According to Marisa, Jack follows the same routine every morning with disturbing precision. First he stumbles out of bed and marches over to his silver stack, grunting and mumbling under his breath. He then kneels down, and proceeds to count every single silver coin and bar, not once but three times. Once he has verified the number of ounces, he gets out his notebook and writes the same pointless calculation that he writes every day:
Dollar Cost Average = $41.23 x 500 ounces + $39.20 x 700 ounces + …
Jack sits across the desk from his accountant, still in his pajamas and looking hung over from lack of sleep.
“I know what you’re going to say”, Jack says with a smirk on his face. “My equity is down and I need to pay off my debts. Well, I ain’t selling”
The accountant looks at Jack with an annoyed expression on his face; you can tell he has had similar arguments with Jack in the past.
“The price of silver took another hit last night Jack – your equity is down by approximately 10%. In addition, your brokerage statement indicates a string of losses in silver mining stocks totaling a 30% loss in your trading equity over the last month. Jack, I don’t want to have to keep telling you this, but if you don’t start selling some of your assets and making your monthly payments, you’re going to be liable for some serious penalties.”
“You still don’t get it, do you!”, Jack laughs. “My dollar cost average is down! My average entry price is now lower than ever for both silver and my mining stocks. When silver takes off, I’m going to be rich!”
The account shrugs. “Tell that to your creditors, my job here is done.”
Jack’s accountant gets up and walks out of the door without saying goodbye. Jack sits back and mumbles to himself, “stupid sheep, he doesn’t understand sh*t”.
Marisa is furious. “Jack, would you leave that computer for two seconds and spend some time with your family for once?”
Jacks barely flinches. He is busy eyeing his third losing trade of the day. He moves his stop lower – he is not going to lose this one.
“Jack, I can’t go on like this! Look at your son and daughter, they barely see you even though you’re at home all day.”
Jack snaps: “I’m coming now damn it! Someone has to make living around here you know! Professional traders at the ‘Bullion Banks’ trade from five in the morning till late at night; if I’m going to make it as a trader, I’m going to have to make sacrifices! Why can’t you understand that?!”
Jack glances back at his screen. Silver Wheaton has taken another plunge, his stop has been hit. Jack cannot believe his eyes: he looks up and howls at the sky. “Noooooo!”
Marisa slams the office door shut and storms off.
Our observations gave us a frightening glance into the world of this strange narcissistic cult. It’s scary to think that a small proportion of Americans are this irresponsible with their finances and treat their families with such contempt. Let this be an example of the sick masochism that characterizes the silverbug mentality and so many other cousins of libertarianism.