Many years ago a friend of mine named George retired from “government intelligence”. I know the terms government and intelligence when said in the same sentence seem to be a bit of an oxymoron. But George was a very intelligent guy. George never told me much about what he did while he worked for the government but one lesson he told me was that information or “intelligence” was meaningless unless you knew the source and how reliable it was. George insisted that this was one of the major problems with the internet… you never knew the real source of the information or how reliable it actually was. Thus you never knew how much you could trust it. In today’s article, David Galland, Managing Director of Casey research talks about the value of information. ~Tim McMahon, editor
Discerning the Value of Information
By David Galland, Managing Director
It has become a tradition at La Estancia de Cafayate for Casey Research to host an intimate conference in conjunction with the Harvest Celebration. In the most recent of the series, Bill Bonner, editor of the Diary of a Rogue Economist and a friend of long-standing, kicked the program off with a thought-provoking discussion about the nature of information.
With a nod to Nietzsche, Bill dissected the nature of information into two categories.
The first sort is that which is derived from direct observation. For example, Bill pointed to the tangible information that comes from living in a tribal village. As a member of the tribe, you knew your neighbors, you knew what sort of crops would grow in the different seasons, where and when to hunt, etc.
Paraphrasing Bill, “If a member of the tribe came running into the village yelling that an enemy tribe was about to attack, you would have direct knowledge that there was an enemy tribe residing in the area and that the fellow doing the yelling wasn’t the sort to just make it up. So you could be certain an attack was likely.”
Given this high quality of information, Bill continued, you would be able to make an informed judgment about what action to take. You could, for instance, prepare to defend your village against the intruders, take flight, or remain and hope for the best. Regardless of how you acted, at least you knew you were acting on good information.
By contrast, there is the second type of information, which Bill calls “public information.” This is the sort of information that people believe is “true,” but only tangentially and without having personally observed it. In other words, it is extremely poor-quality information, the sort of thing regularly ginned up in modern times by the media to attract eyeballs on advertisements, or promoted by politicians or businesses to further their own interests.
It’s Bill’s hypothesis that because the evolution of the human mind occurred against a backdrop of life-and-death decision-making based on hard information, our modern minds are genetically ill-equipped to deal with public information. In other words, we evolved trusting that the information we were receiving was reliable, leaving us susceptible to believing that substantially all the information we receive today is reliable.
Making the point, Bill referred back to the case of the villagers being alerted by a fellow villager to a pending attack. So alerted, the villagers knew all they needed to know in order to decide which of the aforementioned actions to take.
But what happens when, in today’s world, someone comes running into the virtual village shouting “The globe is warming, the globe is warming”? Or, “The economy needs quantitative easing!”
Because of the entirely understandable evolutionary prerequisite that we pay attention to hard information or risk being erased from the genetic pool, the human mind is essentially wired to accept that the threat from global warming is real… or that quantitative easing is needed. Or that Iraq somehow posed a threat requiring the spending of trillions of dollars and wasting untold lives to blow it to pieces.
How can we really know that any of this public information is true? We can’t. Yet with a sufficient amount of arm-waving in the global media, large swaths of the populace accept the information as true, setting in motion a giant snowball of political policy and the attendant massive misallocation of resources.
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Downturn Millionaires
Even though the first of the two events here in Cafayate was beginning, the partners of Casey Research got together and decided that the state of the gold share market had reached such a dismal state that we had to take action on behalf of those of our subscribers with investments in these markets.
And so we hit the phones and email and arranged for Jonathan Roth, a highly respected journalist and filmmaker, to fly down to Argentina, picking up a crew in Buenos Aires on the way. Our purpose was to tap into the minds of some of the conference speakers, as well as mining share experts back in North America who were invited to join by live video feed.
The program, which some wit back in the office named Downturn Millionaires, has as its primary mission to put today’s junior mining share markets into clear perspective.
And that perspective, I am convinced after moderating the impromptu webinar, is that the meltdown in the junior resource stocks over the last year has created a once-in-a-generation opportunity for life-changing profits. That’s because while gold bullion has been largely flat over the last 12 months, the junior gold and silver shares have been positively bombed out.
And by bombed out, I refer to the observable fact that even great companies – with great management teams, money in the bank, and large proven resources of gold and silver in supportive political jurisdictions – have seen their share prices lose over 50% of their market value over the past 12 months.
That this has occurred against the backdrop of only a modest consolidation in gold bullion prices and a massive global commitment by central bankers to currency debasement, represents a huge disconnect.
So, what’s it to be? Is the long bull market in precious metals and precious-metals shares over? Or does the disconnect point to just the sort of once-in-a-generation profit opportunity for those bold enough to act (selectively, of course)?
The program features Doug Casey, Bill Bonner, Rick Rule, John Mauldin, and Louis James, the globe-trotting senior editor of our International Speculator service who talks about the specific stocks to add to your portfolio today.
The program is now live on the Casey Research site. Because of the importance of the topic, we have made it available to everyone to watch for free.
Register to watch this online video event now.
See Also:
- Cyprus Banks and the Rise of Neo-Feudalism
- Stock Market Basics
- How Diplomacy Is Affecting Foreign Investments
- Is Recent Action in Silver Bullish or Bearish?
- NY Times Says End for Gold
Recommended by Amazon:
- The Ascent of Money: A Financial History of the World
- Investment Intelligence from Insider Trading
- The Insider Edge: How to Follow the Insiders for Windfall Profits
Image courtesy of Sheela Mohan / FreeDigitalPhotos.net
