Four Waves of Gold Buyers in America Over the Last 40 Years. When Will There Be a Fifth?
When I begin to pace the floor, my wife and both cats make sure of their escape routes.
"Gary North has asked me to write an article about Gold for his new site. I'm a bit nervous about it. What can I tell his readers that they haven't heard 1000 times?"
"Nervous? You should be flattered," comforted my ever-supportive wife. "Gary is one of your heroes and his readers will appreciate hearing from a Gold Dealer whos been at it for almost half-a-century."
Instead of being reassured, the brief exchange with my wife only darkened my mood.
"You don't get any plaques for longevity," I mumbled.
Look, an expert on gold I'm not. I never studied economics or geology, never set foot in, or near a gold mine and would most likely set the building on fire if assigned the task of melting down an ounce of gold.
"Im going to tell Gary to ask someone else to do the Gold article."
"Most men face mid-life crisis in their mid-40s. It looks like yours may have finally arrived, albeit 30 years too late," my dear wife responded, sounding like a TV 'op-psychologist.'
"Stop wringing your hands, Blumert," she continued. "People don't seek you out to discuss the evils of the Federal Reserve System, or the latest in mining technology. They come to buy and sell gold and silver coinage.
"Some do business, others not, but every caller gets a dose of the Rothbard-North-Rockwellian view of the world," she said with evident pride. "Sometimes you're on the phone so long I want to scream, but the people listening at the other end dont seem to tire. I've listened closely. You're really good at it."
She was on a roll and there was no stopping her now.
"Tell Gary North's readers about your customers. That would be more interesting to them than a dissertation on Fractional Banking."
My wifes on the right track, but she got it only half-right: We learn as much from the customers as they do from us.
THE CUSTOMERS: The First Wave: 1959-68
I sold my first gold coins in the fall of 1959. It was a scant 25-years after FDR had demonetized gold. The Feds used deceit and threats to hoodwink the public into turning in their gold coins. Confiscation, they called it. Theft is a more accurate description.
Next stop was the melting pot where the molten gold was cast into 400-ounce bars, and then stored as part of the country's gold reserves. At least that's what they tell us.
Fortunately, heroic "bootleggers," anticipating the government's criminal action, shipped significant quantities of America's coined legacy to the safety of Swiss Bank vaults. (To this day, 75-years later, we purchase American gold coins stored in those vaults.)
Most of the customers seemed infected by a collective amnesia. Not only were the gold coins gone, any recollection of them seemed gone as well.
The coin dealers suffered the same amnesia. True, we handled gold coins everyday and knew their market value, but they might as well have been relics from an earlier civilization. It never occurred to me that these golden treasures had served as money in my lifetime.
The "First Wave" of customers punctured that blissful state. These folks had not forgotten "real money." Having survived hot and cold wars, they were "keepers of the flame." Some were 'Birchers, others were disciples of E.C. Harwood and Leonard Read.
I would not meet the great Austrian School economists Von Mises and Rothbard until the 1970s, but their followers were well represented in the First Wave.
Ill never forget that momentous day in the 1960s when R.J. Rushdoony visited my coin shop. One of the vital things I learned from "Rush" was the immorality of fiat money. Rush referred hundreds of customers to our Coin Shop near San Francisco; many became life-long friends.
(There was one young man who was very different. He was so bright he made your head spin, but he did not tolerate fools and became insufferable when faced with stupidity. Needless to say, he was insufferable much of the time. Care to guess his identity? OK, you got it: It was a VERY young Gary North!)
Almost every First Wave customer had an understanding of Freedom and history and American values. I learned from every one of them. They paved the way for the Second Wave.
THE CUSTOMERS: The Second Wave, 1969-81
The notion of American invincibility was gone -- The humiliation in Vietnam -- political assassinations being the order of the day -- Watergate led to a suspicion of anything governmental -- the coins were without silver and the US went through the first oil crisis -- price inflation was diminishing the quality of life for many Americans and the cultural revolution was no longer confined to several streets in San Francisco.
My Second Wave of Customers realized things weren't working as they used to. They were cultural conservatives and receptive to "hard-money" viewpoints.
Newsletters replaced financial journals. Folks like Howard Ruff, Harry Browne and Gary North carried the message to hundreds of thousands of people. Maybe millions.
Gold and silver businesses were becoming reputable and flourished. By the late 1970s, commodity prices were exploding and there was a "flight from paper."
In the winter of 1980 the gold price soared to $850 per ounce and silver closed in on $50. This was intolerable to the Establishment and they employed every tool at their disposal to reverse the trend. Now, 26 years later, the price of gold and silver has not come close to matching those levels.
The Second Wave was made up of average Americans. They were Doctors, Dentists, Engineers, Airline pilots, farmers and small businessmen. (The computer types would come later).
Ill tell you which groups were NOT part of the Second Wave: Lawyers, Accountants, Government employees and Corporate America.
The reason is obvious. These people ARE the system. To them, if you buy a share of IBM you are a patriot, but buy and ounce of gold and there's something wrong with you.
THE CUSTOMERS: The Third Wave, 1982-99
This period covered the "Mother of all Bull Markets" for the US Dollar and the Equity markets worldwide.
The price of gold and silver collapsed from 1980 levels and it became difficult to find buyers for higher-priced collectibles.
In the Yellow Pages of the 1980 San Francisco phone book, there were a dozen listing Coin Dealers. In the current phone book, the total has been distilled to one page.
Frankly, with the exception of a brief influx of new people due to Y2K, there was no Third Wave of Customers. Yes, there was business to be done, but most of it was devoted to serving old customers.
The Third Wave ended with the collapse of the Equity markets.
THE CUSTOMERS: The Fourth Wave, 2000-The Present
Jim Rogers, a respected Wall Street voice, believes we are entering a 20-year Bull Market for commodities. Other financial gurus see a continued erosion of the US Dollars buying power. If they are right, and I'm convinced they are, we could be entering a period similar to 1969-1980.
We already see a Fourth Wave of customers, and although its only a trickle, theyre different. We have lawyers buying Krugerrands and I get a dozen inquiries a day asking if gold coins can be placed in IRAs.
The urgency to preserve assets is cutting across political lines.
I have a strong recollection of a wintry California day in February 1980. Customers filled our office and others spilled into the lobby. Confusion reigned and I thought if that were to ever happen again, I would issue numbers as they do in a busy bakery.
I can hardly wait. "Number 27, please. How many ounces of gold do you need today?"
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Contact Mr. Blumert at 800-348-8001, Pacific Time.