Free Speech or The Dictatorship of Thought?

by James J. Puplava, Editor. Financial Sense Online | February 11, 2003

It has been five years now since Financial Sense Online (FSO) made its presence known on the worldwideweb. Over these years, this site has evolved and grown beyond what I ever imagined it would become. It began innocently as an experiment. A former marketing consultant and employee of the firm started an Internet company that produced a software program enabling users to build a web site from a template. My wife Mary created her own web site for her newsletter. After seeing her accomplishment, I said I wanted one. I wanted a web site that would enable me to write a monthly newsletter and deliver it to my clients electronically. We were in the midst of a tech and information revolution that would transform the way we receive news and view the world we live in and I wanted to be in tune with the times. Thus FSO was born.

However, FSO’s roots go back to my own epiphany as a news anchor in 1991. In that year, in addition to my own financial business, I was asked to become the financial anchor for a television news program in San Diego. The station's producer was a veteran of the news business having spent time in the trenches at a major network. He came from the Joe Friday School of Journalism of “just the facts” and let the viewers decide. He had the foresight to recognize the need for including financial news in an evening newscast. His views of pursuing the facts and airing stories, albeit unpopular, gave me a profound sense of the mission of a news organization. It also went hand in hand with my own developing views on the economy and the investment markets that would lead me on a journey away from Keynesian economics and modern portfolio theory, a product of my own graduate education.

After being on the job for less than six months, my mentor was fired. As the battle for viewership heated up, his principle of airing only the facts fell out of favor. The news business was undergoing a transformation from providing just the facts to becoming an entertainment and opinion business. The new management team went for the sensational. They suggested that I "dig for dirt" on local stock companies.

I began to see how news is turned into propaganda. Nightly I watched how sound bites were altered to produce a desired effect. In some cases, news was slanted to reinforce a particular political point of view. I watched creative technicians in the editing booth as they changed the original viewpoint of those interviewed by taking words out of context.

My greatest learning experience in this television news business was to discover how, by direct omission of a story, the news could be altered. Each night I had access to a news database from around the world. I was astounded by the amount of news that went unreported. As an American, I began to learn there was a world that existed outside my own country. Regretfully, they were important news stories that were never aired, reported or investigated. Each weekday night I went home with printouts from wire services to read and show my wife and friends. These were stories that I could not find elsewhere in print or on television. I became sickened by what I saw and wanted no part of it. I informed the station of my intent to resign. I had signed a one-year contract and an extension. I agreed to stay on until they found a replacement.

My experience in the news business convinced me there was a wider world that did not exist in the realm of the American news business or coverage. I began seeking alternative news sources, which I was able to find through the Internet, newsletters and foreign newspapers. I went back to radio, the medium which I had used to market my business. Like FSO today, my daily radio show never accepted advertising dollars from investment wholesalers and I refrained from promoting specific investments that I personally favored. I also filled my show with guest interviews — popular during those days and some that were not. Just imagine airing the views of Pierre Lassonde on gold in the early 1990s? I was a long-time investor in Franco-Nevada long before gold became fashionable again. Contrary to recent criticism of my openness to other views, my own foray into gold began during the 1970s, 1980s, and throughout the 90’s. I don’t pretend to be the foremost authority on gold, but my own roots and fascination with the metal go way back. Just ask my mother-in-law who thought I was crazy.

When we began FSO back in 1997, its original purpose was as means of communication to my clients. However, as FSO developed, it began to take on a shape of its own. In many ways, it became a catharsis for my own extensive reading. I spend between 5-8 hours each day reading newspapers, Internet news stories, newsletters, annual reports, books and magazines. I literally drove my wife nuts with late night revelations. She encouraged me to put these late night insights on paper. Thus, my Stock Market series was born. In response to my Stock Market series, I was encouraged and emboldened to write Planes, Trains, and Dotcoms in January of 2000 predicting the demise of the tech bubble. This led me to my next epiphany, which was my Perfect Financial Storm Series.

During the course of writing The Perfect Financial Storm, we began to experience a tremendous growth in the number of visitors to our website. This was new to me because my Perspective series was aimed at my own clients. My purpose was to let them know why we were investing the way we did and to inform them of the approaching financial storms that were about to hit the financial markets. At this time, I also began to experience hate e-mail from unknown readers for the first time. Many out there thought my views on a coming bear market and a new bull market in gold should be altered. At one time I actually thought of taking FSO private, but was encouraged by others to keep it open and continue to call a spade, a spade.

Being a bear wasn’t fun especially in the late 90’s and early 2000. The accounting scandals that were so prevalent as news throughout much of last year were standard fare at my Client Only Meetings from 1997 onward. I not only spoke about it to my own clients, but I also began writing about it on FSO and airing it on my radio broadcast, Financial Sense Newshour. Saying that Dell, IBM, GE, Intel Microsoft, Coke and other bull market icons were financially engineering their earnings wasn’t popular. Many thought these views to be eccentric and out of place with the times. I persisted and those views became part of the facts that led me to my Perfect Financial Storm thesis.

That was then and this is now.

Much has changed since we began Financial Sense back in 1997. For one thing, we have added a lot more content to go along with my Storm Series with special resource pages focused on areas I felt would do well in the stormy days ahead. We will continue to add a lot more content in the future. In a moment, I will share with you a vision of that future.

First, I must relate to you what FSO is and what it is not. FSO is not a gold site, although views on gold are certainly given prominence on this site. Anyone who has read my Storm Series knows why gold is given this prominence. I believe that gold and silver are only in the first stages of what will be a major bull market in precious metals. However, gold and silver won’t be the only investment that prospers during the coming Perfect Financial Storm of this new century. Other commodities or what I like to refer to as “things” will also do well during this time. For this reason, we have added content on energy and raw materials, and soon water.

Because FSO is more than just about gold, we have added content on the Fed, economic and financial news tracking the Perfect Financial Storm which we feature in Storm Watch. Storm Watch is about to get a new face-lift with interactive charts and data for tracking all three storm fronts in currencies, the economy and the financial markets. We have added an Internet radio broadcast with plans to add interactive video, seminars, and with time, documentaries. Also in the works is Financial Sense University (FSU) an on-line learning center that will feature articles, courses, books, video interviews and seminars on investing designed to expand viewer’s knowledge and views on the financial markets.

Besides more content, we are also viewing the background and resumes of potential editorial contributors — ome of whom hold opposing viewpoints to those held by myself. I hope that we will provide alternative views, balance and additional insight than those held by this author. I have found in my own reading that it is helpful to read the works of others to not only confirm my own thinking, but also keep it in check when trends change.

For these very same reasons, FSO has had and will continue to have guests on the program who hold different views in the same asset class. Even within the gold camp, there are differences of opinion. Just look around all the gold sites and you will find disparate views as to where gold is going, preferences for silver over gold, bullion over precious metals equities, coins versus bullion, unhedged versus hedged stocks, and technical analysis versus fundamental analysis. The new gold market in precious metals is no different than the previous bull markets in other asset classes that preceded it. There will be differences of opinion as to how to profit from this new bull market. Some will favor equities, others will advocate bullion and still others will prefer junior mining and exploration companies.

I have been in the investment business for more then two decades. Coming from a fundamental background, I have learned to respect technical analysis. On my own journey, I have also learned to think differently. I have observed that there is more than one view or one way to make money in the markets. I have studied fundamental and technical analysis and believe that both are helpful in making investment decisions. My own preference towards investing is to approach investments as a business. This is something adopted from reading the works and books written by and about Warren Buffett, who is the greatest investor in history and stands in a class all by himself. Many have tried to emulate his success, but few have achieved it. There is something about his approach that is simple yet complicated like the man himself. His views on investing are definitely worth studying for any serious student of investing.

Because there is more than one way and one view to make money in the market, Financial Sense Online will continue to interview guests and post editorials from different camps and different points of view. Many wonder why my interviews are lengthy and not combative. There is a simple reason. I seek knowledge and understanding to gain wisdom. Out of respect for my guests, I actually take the time to read their books. I want to know how and why they think the way they do. I may not agree with all they say, but I have never found a book that I did not learn something from what the author had written. Anyone who has ever authored a book knows the time and labor of love that goes into writing a book. I hope, out of respect for that effort, that I give the author a chance to share his or her views without interruption. In my line of questioning I try to bring out the thinking and research that went into the book.

Many of today’s interviews conducted by the print and broadcast media are shallow in their presentation. An author’s work is boiled down to a few sound bites. On some popular shows, the host often interrupts the guest when the guest expresses views that are opposite to the ones held by the host. On other shows, the views of the author or guest are turned into a combative circus of arguments, shouting, and name-calling with the viewer wondering what the actual point was. Many today profess to welcome alternative views, but vehemently question them when they threaten their own thinking.

As to my own views, they go back to the Book of Proverbs, which exhorts the reader to seek wisdom and the counsel of many. For these reasons, FSO will continue to air the views of others even when they don’t always conform to my own beliefs. Those with opposing views should not feel threatened by the views of others that might disagree with their own deeply-held convictions.

What are we becoming?

My greatest fear is that this world is rapidly moving towards a dictatorship of thought. Political correctness has already done irreparable harm to our political system. It has destroyed the careers of many good civil servants; while discouraging others from serving their country. Political correctness or the dictatorship of thought is a malignant cancer on the body politic and by osmosis, the investment markets. It is sad to see it pervade the field of investments - once the bastion and champion of individual liberty and free thought.

During the 1930s when nations around the world were experiencing economic hardship, two views on what was wrong economically and how to fix what was wrong emerged in economic circles. These two views were expressed in John Maynard Keynes book on the “The General Theory of Employment, Interest and Money" and Ludwig Von Mises' “Human Action.” It was Keynes’ view that prevailed and set us on the course of monetary debasement, deficit spending and government intervention in the economy.

Following Keynes’ views has transformed this country from the world’s largest creditor to history’s largest debtor nation. We have gone from a country that saves, invests and makes things to a country that borrows, spends and consumes. When we first embarked on this present course of action, another book appeared by F.A. Hayek called “The Road to Serfdom.” When the book first published in 1944, it inspired as well as infuriated the politicians and scholars of the day. In 1944, the Labor Party ruled Britain and in the US, the Roosevelt Administration favored the path towards socialism. Eleanor Roosevelt even supported the economic programs of Joseph Stalin. “The Road to Serfdom” challenged these views and warned of the dangers of states' control over the means of production. "The Road to Serfdom” stands to this day as a warning over the dangers of collectivist thought and a serious meditation between individual liberty and government control.

It is with deep sadness that I see that we are once again traveling down that road. The dictatorship of thought is paving the way towards political dictatorship. Orwell’s world of Winston Smith is slowly and subtlety emerging in our political discourse, in our systems of higher education, in our media outlets, and sadly, in our own investment markets. Examples of this emerging trend are everywhere. I will confine the remainder of this discussion to its emerging presence in the investment markets. Nowhere is this more prevalent than on Wall Street and in the gold camp, the last place you would expect it to surface. Gold is the very epitome of economic freedom because it stands as no one else’s liability.

On Wall Street over the last five years I have seen good and honest analysts leave the profession by free will or otherwise simply because they expressed a view that ran contrary to the bull market in stocks. Anyone that questioned the merits of an IPO or the mania-like valuation of stocks was told to shut up or they lost their jobs. Throughout the bear market that emerged since 2000, the prevailing view has been that there would be a second-half recovery. It wasn’t until the terrorist attacks of 9-11 that Wall Street and the financial media were willing to acknowledge that we were indeed in a recession and a bear market for stocks. By then, they could safely hide behind the attacks of 9-11 as cause for the damage. Last year’s predictions for a return of the bull were blamed on corporate malfeasance. This year it is Iraq.

Even in the gold camp, we find censorship. This came as a great surprise to me over the last year, for the gold camp was the last place I expected to find it. I can’t tell you the number of times I have been emailed material on a contributing author's security background and records, investment calls and failures in an attempt to have me censor their views. With my own commentary, I resisted censorship and no longer post at a site that once censored me and enticed me with advertisements.

There is something within the gold camp that needs to be cleaned up. Perhaps it is a lack of confidence after spending decades in obscurity that besets it. Today’s gold camp reminds me of the movie, Braveheart. Like the Scottish nobles that fought among themselves instead of the enemy, the gold camp fights each other. Rather than recognize the strength of opposing views in search of the truth, it fights all of those who oppose its own views. One camp is against the theory of government intervention and fails to recognize this truth. Another lambastes bullion and equities; while advocating numismatic coins. One camp believes only in the virtues of technical analysis; while failing to acknowledge the role of fundamental analysis. Others pretend to encourage the views of others, only to recoil when their own views are threatened.

Like David and Goliath, the gold camp does not recognize its own strength. Gold represents money, freedom, and liberty. It is a disparate camp made up of different generals - all with their own agenda and rules for fighting war. Rather than acting unselfishly in search of truth, it acts and reacts defensively to any view that is different than its own circle of influence. Until that changes and until it is recognized that there is room for the opinions of others, it will remain a disparate group.

As I have written so many times and on different occasions, gold and silver are in the first stages of a new bull market in metals. However, this new bull market will take place in various stages against a background of emerging storm fronts that will meet and merge together to form The Perfect Financial Storm. We are truly living in historic times. What we are about to experience will be unlike anything the world has ever experienced before. Old paradigms of how things will unfold will be irrelevant as civilizations clash, economies fail, financial markets collapse and the world turns to war. In this new world, an open and educated mind, a true and steady heart and unwavering faith, as well as strength of character will be the only means of survival.

True to this principle, Financial Sense will continue to interview those who hold differing viewpoints. We will print and air the views of others even when they disagree with those of our own. We will resist the bullying efforts to censor or dictate what appears on this site, nor will we be controlled by the views of one man or one investment camp. We will also refrain to engage in the debate to demean, belittle, besmirch, or resort to name-calling of others when their views stand in contrast to ours. This doesn’t serve the needs of the investment community-at-large nor the gold community specifically. This practice cheapens its cause. When we are wrong in our predictions, we will own up to our mistakes and not resort to blaming others for our own failure.

We will also refuse to be seduced by the enticements of others. FSO refuses to accept or be influenced by advertising revenue. I believe from my own experience in the news business that this taints and limits your freedom of expression. I have refused advertising dollars from the mining executives including those who have written for our site. I have refused to promote or write favorably about a mining company in exchange for stock options. Mutual fund advertisements have also been turned down. Each and every request to provide a link to another investment or commentary site is carefully reviewed. If somebody has something to say and has a service or company, I will make reference to this service at the bottom of their editorial or expert cover page if they publish on our site. However, we will take no advertising dollars, period!

It must be disclosed that Financial Sense receives a small stipend from Amazon for links to their site as a result of authors I have interviewed or books I recommend for reading. Most of this referral fee probably comes from books I have purchased myself. I have been a long-time subscriber to Elliott Wave Theorist. Today, because of the presence of FSO on the web, I am professionally comped and no longer pay for the service. I found Bob’s view of an approaching bear market consistent with my own. Bob’s new book "Conquer the Crash" has much to offer in its insight into the mania of the 90’s bull market. I don’t agree with all of its assumptions, especially on gold, deflation and gold mining equities. To suggest that FSO is a book site and profits immensely from the sale of books borders on slander. The small referral fees or stipends we occasionally receive would hardly pay for dinner at my favorite restaurant. We cover the cost of this site out of our own pockets and consider it a gift to the investment community for the livelihood they have given us for over twenty years.

Some may ask why do you do this site for free? What we, my wife and I, do is born out of a passion for the truth and this investment business. I am fortunate enough to have built a successful practice that I do not need to work. FSO is a passion and avocation—not a job or a business. I have the luxury of having the best clients in the world. They are people I enjoy working with and respect. Therefore, you will not see pop up ads or promotions for investments on Financial Sense. I do run an investment advisory business that is accessible from the FSO site, yet I would challenge any to say that this service is heavily promoted. We try to keep my practice in low profile. Those who want to find us and have the need will find us.

FSO will continue to be an avocation as well as a passion for both my wife and I and members of my staff. I will continue to interview individuals whose views I find interesting in the hopes of challenging others to broaden their views and learn. Why others would find this so threatening and offensive is bewildering. I would like to think we can all learn from other schools of thought, no matter the differences of opinion. We will pursue new avenues, add new features, increase editorial contributions and continue to improve this site. I will resist all attempts at censorship or the dictatorship of thought.

In closing, I would like to leave you with two thoughts, one is from an American president and the other is from scripture. When addressing the threat of the cold war at a commencement speech at American University in June 1963, President John F. Kennedy said,

“So let us not be blind to our differences—but let us also direct attention to our common interests and to means by which those differences can be resolved. And if we cannot end now our differences, at least we can help make the world safe for diversity. For, in the final analysis, our most common and basic link is that we all inhabit this small planet. We all breathe the same air. We all cherish our children’s future. And we are all mortal."

The final thought is from scripture in that “Let he who is without sin cast the first stone.” Translated into today’s investment markets, "Let he whose investment calls have all been perfect be the first to condemn the investment calls of others."

Yours for uncommon news and wise investing,
JP

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© 2003 James J. Puplava