Friday, December 30, 2011

What Do 12 Pallets Of Bearings Look Like?

Ameru Trading del Peru S.A. had our latest order from Korea arrive just yesterday.  This cargo arrival, however, had a glitch that almost caused us great pain.

We buy from Korea, our supplier turns over the load to a freight forwarder there in Busan (major port).  The forwarder then arranges shipment, and gets them aboard ship.  Three weeks later the ship arrives to Callao (Peru's big port).  Our bearings ride in a 20' container with other people's stuff (a typical order from us maybe fills 25% of a container).  Upon arrival, the container is "stripped", papers presented to Peruvian Customs, some processing goes on and typically a few days after arrival to port, we get our bearings delivered to us, most of this is handled by our Customs Agent / freight forwarder.

This time we had an unusual problem come up that would have been nasty had we not help resolve it fast.  Turns out that someone in the shipping chain (forwarder-shipping line(s)-Customs Agent) had not been paid.  So, our bearing order was "embargoed" (blocked, frozen).  So, even though our bearings CLEARED CUSTOMS OK, they would not deliver because someone up the food chain had not been paid.  This happened to EVERYTHING (my understanding)  that arrived on that ship!  Many millions of dollars of products in total.

And the most painful part WOULD have been that provincial customers of ours had already paid us to be getting the Daewoo Tico bearing first, before we run out (KBC never sends us enough...).  Gaining trust of customers in the provinces is difficult in a low-trust environment like Peru.  Someone in provincial Peru pays us a week before THEY get their bearings?  <--- That trust has to be earned.

We were told to write emails and put on every pressure imaginable to get the reprobate debtor pay up to get our goods.  So we did!  I wrote one of the toughest notes I have ever written to EVERYONE, yeah, with whatever you can do with words, I wrote it!  Fortunately, it looks like our supplier put the squeeze on their forwarder (and I imagine LOTS of pressure was put on by many others) and we got our bearings released and finally delivered yesterday.

We received 12 pallets of bearings.  We unload by hand (we do not own a forklift, labor is too cheap re the machine).  It took our six able-bodied men about 30 minutes of intense physical work (it is smart to unload a truck fast in a place like Lima (lots of street crime), we do not have a warehouse entrance or loading dock).  Also, we did not have room inside (we have a lot of space taken up by recent big (volume of space occupied) Chinese bearing arrivals.  So, we had to store them in our interior patio...  See the pictures:

You can see the sun shining down on our boxes of bearings there stacked in my in-laws' carport.

Below are five of our employees, who had to work like dogs getting the bearings off the truck and into our place, left to right are Nestor Cardenas, José Clavo, Roberto Arce (our versatile Sales Manager), Raul Quispe (Warehouse Manager) and César Rodriguez (General Manager):
You can see one of our delivery vehicles behind José, a Suzuki Carry (economical, Peru is a place where people and companies work VERY hard to keep capital expenses down, not much capital to invest).  Pretty snappy t-shirts, huh?  It is summer now in Lima.


Lily sent more pictures taken this afternoon!  These are pictures of us preparing boxes for delivery.  Because our customers in the provinces paid in advance, they are the first to get them.  We take their bearing orders to the bus companies that run from Lima to every corner of Peru.  This first picture shows some of our employees locating bearings from this newly arrived order and checking the paperwork (Invoices).  The two pretty ladies in dark t-shirts are Lily (right) and her daughter Denise (just left of center).

Our guys preparing to load the various orders we received...  Note the dollies (hand trucks).  No forklifts for us!

And, loading up the vehicles!  Note that when we ship to our provincial customers, we strap the boxes with steel ribbon to strengthen them while in transit (bearings are HEAVY!).  The young guy in the white t-shirt is Lily's son Gonzalo.

Thank you Lily for the pictures!

Finally, take note that we came back to the USA about two weeks ago.  I got to escape all that work...

Thursday, December 29, 2011

Tracking The eBay / PM Price And Premium Widget

I have undertaken a new project, much smaller in scale than my earlier one to categorize Zero Hedge articles.

I have been interested in that widget ever since I first found it (at, at the bottom of the home page).  It is a very imperfect measure of physical demand vs. paper gold price at the retail level.  Yes, I know it tracks Gold and Silver Eagles only, but that is what the widget itself tracks.

I have just started this, so the below results are NOT particularly meaning (except for the majestic 115% premium of ASEs over spot, I have seen it at over 80% but never over 100%) because of the very short time frame.
Note that typically AGEs run some 5.5% - 8.5% over spot.  The LARGER numbers here I have often seen when PM prices PLUNGE like they have lately.

As time goes by, this information might become more useful, I am hoping that it will give us clues as to when the physical markets for gold and silver get tight...

I very much would welcome ideas and suggestions!


I lost price data (spot gold and spot silver) when I published this (the farthest right two columns did not come through).  I think I will produce this in future posts with a GoogleDoc link, as I know how to do that now.


Published in the cloud, this link includes price data for Au and Ag:

eBay / PM Widget Tracker

1)  All premiums are truncated percentages, high precision not necessary IMO
2)  I have noticed that premiums widen when PM prices go down.
3)  Gold and silver prices are from  ["formatted out"]
4)  AGE = American Gold Eagle 1 oz, ASE = American Silver Eagle 1 oz.


Second day of vicious takedown
at approx. 1:00 AM

at approx. 11:00 AM

as of 9:00 PM, widget shows eBay/24h offer

Saturday, December 17, 2011

Review of Barron's, Dated 19 December

Having been away for a while and not even having the option to be able to even BUY Barron's left me a little adrift, at least from the conventional front of financial reporting (no CNBC in Peru either).

So, as I started my usual Saturday routines, in which I start up at the far end of our main drag and bing, bing, bing head back towards home running a little errand at each stop along the way.  First errand is at 7-11, where I buy coffee and (typically) Barron's for my reading pleasure Saturday afternoon.

This time I did not even bother looking at the Cover Story until I was at the register to pay: "Outlook 2012", well, that looked promising.

State Street Global Advisors was once again kind enough to publish their Top 10 holding in each of their SPDR ETFs (Page 3, at least in my edition).

Alan Abelson wrote that just as he was getting bullish on gold, it shellacked.  Well, we know that feeling!  He went on to write that more $$$ are going to be spent on the aftermath of the Iraq War (wounded soldiers).  Market Watch guestimates the total cost of Iraq to be $4 - $6 trillion dollars.  Does even $6 trillion matter anymore?  He finishesd by writing about David Rosenberg and Bob Farrell, how they had lunch together and talked over gloom and doom....

"Streetwise" (Jacqueline Doherty and Andrew Bary) quote Lee Quaintance and Paul Brodsky (QB Asset Management): "There will be global hyperinflation that peels the skin off your face."  They sound like they have been reading Zero Hedge...

And just when I think that the staff of Barron's is learning something from ZH, I find a bullish article ("Follow-Up") on GM (in that they say David Einhorn is now an owner).  GM?!  They mention some other car companies as being attractive too (valuation), but NO MENTION of Hyundai...  The article DOES go on to somewhat trash the new Chevy Volt car, but one of my blog's readers bought one and REALLY LIKES THE CAR!  He is an engineer and real smart guy, and has explained many things to me (thanks "DCFusor!").

Christopher Williams writes on bright prospects for Ambev, the Brazilian/American/Belgian beer company.  They now own Budweiser.  They also own Brahma beer (Brazil), which they export to Peru.  The same billboard in Lima is still advertising it as last time I was there.  But, Brahma is just not a good beer, sorry guys...  But, then again, I am not Brazilian...

DVD rental (by kiosk) company Coinstar is talked up in and article by Andrew Bary.  No comment, as I have NO FEEL of this business or company.  He mentions that they are teaming up with Starbuck's to offer "Seattle's Best" coffee from a new kiosk.  Coffee from a kiosk?  I'll stick with 7-11...

Erin Arvedlund ("The Silver Rush at MF Global") writes a focused piece on part of the MF Global mess: namely that the trustee has frozen all silver bars and similar assets while he figures out what to do.  He has proposed selling ALL such assets and distributing the money to those  customers of MF Global.  Erin notes that customers would only get some 72% of the value of such assets sold.  And THAT'S AFTER the price of silver has gone down so much, so any MF Global silver account holders (yes!  They have "warehouse receipts"!  Doesn't matter says the trustee!).  In other words, MF Global paper silver (allocated even!) are getting screwed by not just Corzine, but the trustee as well!  Maybe (as said at ZH: JP Morgan too).  The trustee's name is James Giddens.  Perhaps someone at Zero Hedge would like to find out more about this guy...  Mr. Giddens could not be reached for Erin's story, what a surprise.  Anybody reading this who is a victim of MF Global now may want to pass along your feelings to Mr. Giddens, looks like he needs to, um, hear from the folks...  Hardly mentioned by Ms. Arvedlund was Corzine's testimony before Congress, where he and CME chief Bryan Durkin blamed each other...  One or both are LYING, and BOTH ARE NOT serving their besieged investors...  This should be a lesson to all: if you don't have it in or near your hands, it's not yours!

The Cover Story (2012 Outlook: Buckle Up!) seemed to me to be surprisingly thin on specifics.  Vito Racanelli reviewed 2011 (little change in the Dow).  He gets a few specifics from the 10 investment advisers:
-- PM
-- MCD
-- COST (all these four pay a decent dividend)
-- WAG
-- UNP
-- CTL (a telecom-services provider paying an 8.2% yield, uhh, no thanks Ms. Subramanian!)
-- XEL
Take that for what it is worth...

Lately each time I read "CEO Spotlight" I find I am liking the column ever more.  This week (by Leslie P. Norton) is about Sam Palmisano, the head of IBM, soon to retire.  He has done a great job in fixing up IBM! (Disclosure: I have a tiny holding of IBM stock and it has gone up since I bought it)  Palmisano has a great story, he had his ups and downs as a tough guy when a kid.  When he graduated from Johns Hopkins, he declined to even try out for the Oakland Raiders and just went straight into IBM.  And a great career.  A really wonderful story.  + 1000!

Apple got both a positive review and a negative review in this weekend's edition!

"ETF Focus" (Murray Coleman) mentions that Mr. Alan Zafran wants to buy GLD, you know when the price stabilizes...  LOL...  GLD?  I guess Mr. Zafran dismisses MF Global hypothecating their customers assets (as GLD apparently is allowed to do).  Mr. Zafran works for Luminous Capital, anyone with money there should be asking some pretty tough questions from those guys.

Leslie P. Norton interviews Van Hoisington.  Mr. Hoisington expects the US to go into recession next year [I agree] as well as the rest of the world.  Hoisington mentioned that Operation Twist has helped the banks, including his own investment management firm (how?).  He also mentions the fine book I mention over and over again: Rogoff and Reinhardt's This Time It's Different.  Yet he is a Treasury bond bull, because of the recession threat.  Ahh, I would not put all my eggs into that basket though......

Editor Thomas Donlan is back on the attack!  Go get 'em Tom!  A bad set of proposals from our very own .gov mandating new fuel-economy standards.  He also takes a separate swipe at both parties playing tricks on temporary tax cuts, etc.  Nice bar cartoon on the page facing the Editorial (a bar scene, a customer is on his cell phone and tells the rest that George will be drinking from home today).

In the Market Section the only two gun makers publicly owned (Smith & Wesson (SWHC) and Sturm Ruger (RGR)) are both discussed by Vito Racanelli.  He notes that gun sales are WAY UP (which alert ZH readers already knew).  But, he believes Ruger has a better Balance Sheet and so might be the safer bet.  I do not know the companies well enough to comment.

Randall Forsyth ("Current Yield") forecasts higher Treasury yields, directly opposite of above Mr. Hoisington.   Well, it is perfectably acceptable to have professional disagreements, no foul to either gentleman...

Another good cartoon: the firing squad is preparing to shoot the guy tied to the post, and as one of them offers a cigarette to the poor fellow, they guy says "No thanks, I'm trying to quit."  I have never mentioned the sometimes excellent cartoons I have seen in Barron's, my bad!

Money matters:

-- WTF is going on at the Fed?!  Fed assets were up $69 BILLION  (about 2.3%)!!!
-- M1, M2 and Monetary Base had but tiny changes, not even rounding errors
-- The mighty Peruvian Sol marched UP again vs. the dollar!  Vamos Peru, pues!

Verdict: Barron's this week is a Strong Buy!

Tuesday, December 13, 2011

$7 Trillion? $30 Trillion? $100 Trillion? So Much Missing And Stolen...

I now feel like my article ¨Everybody Knows¨ now has a quaint feel to it.  What, with me making a big deal of MF Global and Proton Bank stealing perhaps $2 trillion between them.  Hah!  The numbers on MF Global just keep going up, up and away!  Hypothecation and rehypothecation!  Two great new words to take us into the Holiday Season!  I would bet that two weeks or so ago only one in 500 even knew what those words even meant...  Not me!

And just the other day I read that it looks like the famous 2008 TARP was not just a mere +/- $800 billion, but more like $7 trillion, almost NINE times as much (as reported in 2008).  I believe that it was at Zero Hedge who broke the article.

$7 trillion is some $21,875.00 per citizen, have the money, bro?  No?  Too bad!  The Banksters have it now!  Ha ha ha!


Ah!  But the numbers get bigger still!  Zero Hedge just three days or so ago wrote that $30 trillion is in peril in the "Shadow Banking System", which features things like dark pools of liquidity and lots of other concepts I, at best, only vaguely understand.  But, apparently rehypothecation is leading the $30 TRILLION Shadow Banking System into a hole that will be VERY difficult to recover from.  It looks like to me, a non-participant nor expert in hypothecation and rehypothecation that all of this is a variant of loaning collateral out MANY times over...  Debt, sent out as debt as sent out as debt...

Of course I might be reading these numbers wrong or an incorrect context, but $30 trillion (in nominal possible losses / stealing / disappearing / or just paper disappearing) looks to me like some $93,700 / PERSON JUST in Shadow System Banking shenanigans (and I will stop here because I am not competent to comment further on this particular topic).


Ann Barnhardt, the commodity broker who shut down her firm after MF Global walked off with all that money.  She is pissed!  Some of you may recall that Ann was the one who invited the Pakistani who wrote her a death threat to come on by her place...  And check out her shooting skills with her pink AR!  She provided her home address and the address of Denver´s mosque, you know, in case he felt he needed some help from the local Muslim homies taking her out...  In the interview (transcript link below) she lays out how ROTTEN the system is and tells why we will need a truly impressive $100 trillion just to BEGIN to fix Europe (only):

$100 trillion, let's do the math!:

75% (probably) would be from the USA, so $75 tn / 320,000,000 people here in the USA =  over $230,000 per citizen!  Wow!  Big money here!

But, as my banker Lisa said to me in 2007 when I mentioned I was preoccupied about the economy and the financial system:

"Don't worry, Bob, they'll just print the money."  Hey Lisa, you're famous!


FOFOA just put up a piece exploring the idea of if you don´t possess your wealth, then it it might not be real...  And even regular old bank accounts are at risk from what I read.

Real wealth is what you POSSESS...  If is is not YOURS and close by, it's not YOURS!


So much money, so much money.  Where is it all?  

POS Jon Corzine testified before Congress not even he knows...  Sure Jon, whatever you say...


And I do not want to forget mentioning bank runs in Greece and Latvia...  Be looking for the same in core European countries.  When THAT happens, be the first in line at YOUR Bank!

Wednesday, December 7, 2011

The Alchemy Of Turning Steel Into Gold, Part 2

^----  O/T, but worth noting above is the debt widget which now informs us that each taxpayer is now on the hook for over $123,000.  My rough calculation is that we go $1000 / taxpayer DEEPER into the hole about every six weeks or so.


Most of you faithful readers know that I am in Peru, working with Ameru to help add value to Peru´s economy: when we sell a Korean bearing it means that someone CHOSE ours because they saw it as a better value than the competition´s piece.

Adding value is the key to profit and to generating wealth.  If we offer a better value to our customers, we make money, and they SAVE money.  Win / win.  I recently coined the idea of ¨the alchemy of turning steel (52100 grade bearing steel) into gold¨.  That is what companies try to do, operate in an environment where their efforts produce wealth, and in my case, convert some of that wealth at some point later on into physical gold, the best preserver of wealth there is.


So here in Peru I am trying to help our company do just that.  But rather than bore you all with company operations, etc., I will pass along some fun experiences I have had in here in the rather lively city of Lima.

On Monday, Cesar (our General Manager) and I went to the northern Lima suburb of Puente Piedra (¨Stone Bridge¨) way over on the other side of the city to visit customers.  Lima is a huge city (over 7,000,000 people), and it takes time to drive that far with an infrastructure not really ready to handle traffic as well as ours.  Puente Piedra serves kind of as the northern gate to Lima, beyond that suburb is empty desert...

On the way I observed the cars and trucks passing by, as I almost always do when outside the USA.  In the past year or two, a HUGE number of Chinese car & truck brands have entered Peru.  My rough count is about 20 brands!  Golden Dragon, Dong Feng, Howo, JAC, Great Wall and many others.  Our customers tell us that despite the Chinese vehicles being cheap (but not as cheap as you would expect), that they are poorly built...  Bad cars!  When they replace their wheel bearings, they rarely go to the Dealer or buy any Chinese bearing for it.

I am happy to report (finally) one for the Home Team (USA)!  Navistar´s International brand is back in Peru and in force!  I saw 8 NEW International big trucks and tractor-trailer rigs just on the trip to Puente Piedra alone.

Later that evening, my brothers-in-law and I had the chance to knock back some of Cuba´s Havana Club rum (¨brown label¨, pretty good).  Rum fans take note, yet another reason to visit Peru!

And of course, eat, eat, eat.  Peruvian food is good!  Those who know me will be happy to know I have had to loosen up my belt a notch...


Tuesday brought its own little adventures.  Lima is soon to open their new Metro, yes that´s right, mass transit via rail!  It is an elevated train system (who wants to ride a subway in a seismic zone, Everybody Knows a big earthquake will hit this city sometime...).  They are testing the trains now, I saw one go by, a snazzy red & white color scheme (Peru´s two colors on their flag).

I also found out that one of OUR delivery vehicles can run on natural gas!  For years now Lima has been converting taxis and other cars to NatGas because it is cheaper than gasoline, and Peru has a nice BIG NatGas field and has completed the pipiline to ship it to the Pacific and up to Lima.  I have found it a conundrum why the USA cannot do something similar, pick some low hanging fruit (trucks on the interstates, city buses, UPS trucks, etc.) re converting some vehicles to NatGas, which is CHEAP and ABUNDANT in the USA.

Tuesday also brought us yet another little adventure rarely seen in the USA.  One of our delivery vehicles lost its water (leaking hose?  water pump gone bad?).  It was not driveable.  So after our Sales Manager and I completed a delivery to a bus line (bearings heading out to a customer in the southern Andean city of Arequipa), we went over to recover our stricken vehicle.  Our (multitasking) Sales Manager (Roberto Arce, hey, Roberto, you´re FAMOUS now, LOL...) went and bought a made-in-China rope, used it to hook up our rear bumper with their front bumper, and he TOWED it back to Ameru.  That was a 4 mile expedition, and included a couple of miles on an expressway...  So, yes, I punched another hole in my ticket, part of towing our truck back in the developing world...

Also on Tuesday, I had the time to comment on an Internet forum that I frequent.  I was on the Internet searching stuff while at the same time trying to write SQL coding (to dig out information from my sales database) on my laptop close by.  Trying to do two different things on two different computers often does not work out well... Please see my haiku that I posted there at

¨Multitasking in Peru¨  --  a haiku by Robert A. Mix

I move the mouse here,
And nothing even happens.
Oh, wrong computer!


This week also saw the Peruvian Sol go up again vs. the US$.  For the first time EVER, the dollar fell below 2.70 soles.  That is GOOD for our company (in that we BUY bearings with dollars and SELL in soles).  It also makes our company more valuable in US$ terms!  So even with Peru´s current problems (the big Cajamarca gold mine protests) and uncertainties (WHAT is Chavez-clone President Humala going to do here?), Peru´s currency continues to RISE against the dollar.  What to make of that when everyone is saying that Europe, the USA and even China are on the verge of recession?

Thursday, December 1, 2011

A Little Bit Of Peru, A Little Of ¨Unambiguous Wealth¨

Many of you readers know that I have just arrived in Peru, on business (visiting and consulting with Ameru Trading del Peru S.A.) and pleasure.  For me, it is wonderful to be here, especially this time of year when the weather is starting to get nice (call it 79 degrees for the high, 65 for the low).  As I write, I hear the traffic noise clong from outside, we are about a block from the Panamerican Highway, which here in Lima is an expressway.  You hear the traffic almost 24 hours a day, honking from vehicles old and new, with more trucks rumbling past at night.  We arrived last night and cleared Customs at about 11:30 PM.  The drive from the airport to my in-laws took about 45 minutes, there was HEAVY TRAFFIC!  At 11:30 PM...  I have seen lots of people out late in big cities in the developing world, when my cousin and I were in Cairo MANY years ago, we wound our way through downtown streets at 1:00 AM after hitting the casino.  But, that´s another story.

The ¨business¨ part of my trip is the same as always: to meet with our managers and salesmen about how business is going and how we should make adjustments based on new conditions -- there are ALWAYS new conditions.  This time I see many changes in the vehicle fleets here.  More Hyundai and Kia (that is good for us).  Fewer Daewoo (not good).  New models of Japanese cars, some (the Vitz) that we do not have in the USA.  What struck me the most, however (in less than 24 hours here), is the sheer growth in the Brazilian fleets of heavy-duty vehicles, buses and trucks.  Brazilian VW buses (new mostly) have captured a pretty decent chunk of the market here in Lima, the buses were essentially non-existent last time I was here (April 2011).  This is yet more evidence that BRAZIL is becoming a world-class and world-scale manufacturer.  And I am not even counting the Brazilian ¨Chevy Taxis¨ now seen all over the place as well.

It will not even be until tomorrow (Friday, 02 Dec) until I really get into detailed conversations with our guys about the bearing markets for vehicles, which as always is of great interest to me.

One thing I have taken note of.  Our Chinese bearings (which for the most part do not overlap our Korean pieces) have been selling very heavily, even to customers who know what they are buying...  In Peru there will always be a ¨Precio Nada Mas¨ group of customers.

With luck I will have more tales to tell in the coming days about Peru!


I turn now to my other topic tonight, which on the surface may not appear to be related to this trip to Peru, but at heart really IS partly related.  The main goal we had in setting up Ameru over 20 years ago was to establish a business that would generate WEALTH.  Generate wealth by selling products (now bearings) at a better value to Peru vs. our competitors.  It has been a long and difficult path, but we are now reaping our harvest (that is, a few years ago we reached a positive Retained Earnings, that is, we finally have accumulated more proft than loss) as we now have the right mix of products and knowledge base.

Generating, accumulating, enjoying and passing wealth on are huge subjects of their own.  Many of us (I would say virtually ALL of you dear readers) spend a lot of time on this subjects of wealth...  Getting it, most of all perhaps.

FOFOA´s article threw off a whole host of thoughts for me, some of which I will explore in future posts.

But, once you have some ¨Wealth¨, what does that really mean?  This kind of question has been dealt with by many, but of most interest to ME this evening is FOFOA´s new article there at his blog:

His latest article, ¨Unambiguous Wealth¨, not surprisingly is about the best wealth preserver that History has shown us: physical gold in your own possession.  His new article is EXCELLENT in that he keeps a tight coherent view on wealth preservation through time and explains why gold did poorly from about 1980 - 2000 (short version: it´s debt accumulation´s fault!), but is now well into its long bull market, one for the ages, when we will see a huge spike in gold as debt is defaulted and hyperinflated away while paper gold is burned when the paper claims all vie for the same physical ounces.

His use of the term ¨unambiguous¨ means just that!  That gold IS wealth, that no one can deny.  Yes there are risks of robbery and seizure, but nothing else through history has been or likely will be taken to extinguish any debt.  There is always someone around who will take your gold as payment of a debt.

FOFOA uses nice graphs to show the peculiar 40 years or so, peculiar in that our financial ¨wealth¨ has grown and yet we see & hear about all of these problems.  Who among us REALLY believes that we are going to pay off the $122,000 + seen just above on the widget?  And that is just the national debt, that does not include credit card debt, mortgages, student loans, etc.

This is a worldwide phenomenon.  Almost EVERY COUNTRY has out-sized debts...  We have all heard about Greece, now we hear about Italy and France.  Soon the the Treasury debt of the USA may get downgraded (again).  Both China and Japan have huge debts, although those two are not much discussed in the Main-Stream Media (MSM).  These debts WILL get worked out, whether by ¨Jubilee¨ (the Bible uses that word, we call it ¨default¨) or by being inflated away or both.  History shows countless examples of both.

So what is left for those who have accumulated ¨wealth¨ in one form or another?  ¨Exter´s Pyramid¨(Google it!) shows various assets ranked as to ultimate liquidity, that is, how easily any asset class can be CONVERTED to pay off a debt.  GOLD is the foundation point of Exter´s (inverted) Pyramid.  I am almost surprised that FOFOA did not refer to the Pyramid, but his article is more about a form of wealth which is unambiguous, as opposed to Exter´s liquidity...

Many things are considered wealth.  Farmland and efficient manufacturers GENERATE wealth for example.  But, both of these are subject to taxation, weather events, strikes and so on.  A small company like ours could be regulated (by forcing us to get an import license each time we purchase bearings for example).  You have to pay property tax on that mansion (or even your humble abode)!  Your savings in the bank are at risk, whether through inflation or a BIG set of bank failures that overwhelms the FDIC being to pay.  Almost any asset you can think of has an AMBIGUITY of wealth, in that there may be a liability or tax on it that makes it less than perfect.

Gold is the closest thing there is to an ¨Unambiguous Asset¨.  Sure, it can be stolen (if you do not hide it well) or seized (if you turn it in, but it is thought that less than 10% of America´s gold was turned in when FDR so commanded...).  Everyone should hold some gold, even if it is just a little.