My investment career

By: on April 29, 2016 |

HannafordThere comes a birthday when you realize a book a week is not enough. Even if you could, and not counting future Christmas presents, by the time you’d read everything on your shelves, you’d be 112.

So, it’s time to purge. Which is why I’m holding a copy of Harry Browne’s 1970 classic, How You can Profit from the Coming Devaluation.

Why would I keep this? Well, why not? A lot of his ideas turned out to be ‘right on’, as we used to say back then.

Soldier, writer, investment analyst and two-time presidential nominee for America’s Libertarian Party, Harry Browne predicted that U.S. monetary policy would lead to a devalued dollar and soaring inflation.

Browne was not alone in his fervent pessimism. Over the years there were dozens of other economic doomsayers, notably Howard Ruff with his books and newsletters, Ravi Batra’s The Great Depression of 1990, Douglas Casey and his 1980 Crisis Investing: Opportunities and Profits in the Coming Great Depression, and Turk and Robino’s 21st century guide to financial survival, The Collapse of the Dollar and How to Profit from It.

But, Browne was first (not counting Cassandra and Chicken Little). At least, first to really command attention. He sold more than two million books. In fact, he’s the prototype for the thoughtful, principled end of an entire genre. (There’s also an unthoughtful, if not unprincipled end; it includes conspiracy theorists, freemen-on-the-land and folks who keep AK-47s under their beds.)

Did any of it make any sense? If you’d accepted their premises and acted on their advice, how would you have done?

Frankly, a Browne-style portfolio of gold, silver, bonds, stocks and cash would have been an improvement on my personal investment strategy, if you can call it that.

I did try to follow his advice. As a young married man with children, it was hard to hang on to cash, but in the ’70s I managed to buy a little gold. And, as the kids got older, I had them sifting change for old dimes made of real silver: Browne recommended a private hoard for when “the coming devaluation” made paper money worthless. I also bought stocks.

So, I had the right idea. My problem was poor execution. I sold the gold and kept the silver. The gold promptly doubled, and has since doubled again. As for the silver, it was $15 when I bought it. Thanks to the Hunt brothers, who drove it to fifty bucks in 1980 by cornering much of the global supply, I briefly savoured a score. Then the Feds cornered the Hunts. Today, my devalued, inflation-ravaged silver hoard is still worth $15.

And the stocks? Mesmerized by Smilin’ Jack Gallagher, I bought Dome, and took a very cold bath in Arctic petroleum speculation.

What if I had gone with Howard Ruff?

There his 1979 book sits, next to Browne: How to Prosper During the Coming Bad Years. A gold bug for the entire forty years he offered investment advice, he’s 86 now and retired. His legacy to me? The gold is gone, but I still have some of the year’s food supply I laid up on his advice. My wife wants to dump it with the books. But I’m hesitant; some day we could need those lentils.

And of course, there was the late, great Larry Burkett. In his 1991 magnum opus, The Coming Economic Earthquake, Burkett argued that debt was out of control. He warned that unless Washington changed its policies – ongoing deficits, its expansion into the economy through regulation and its tacit approval of increased private sector consumption and reduced saving –  the new millennium would see first, a banking crisis, and then widespread business failures. He assailed J.M. Keynes for giving intellectual cover to borrow-and-spend politicians.

Burkett died in 2003 and therefore did not live to see a banking crisis finally precipitate the global “Great Recession” that so many had predicted for so long. But for that, he had better timing that most. It was no mean feat to accurately predict in 1991 that the house of cards would collapse 17 years later.

And so they went on. Sometimes these people looked brilliant. Sometimes, things just didn’t break their way: Ten years ago, Stephen Leeb – The Coming Economic Collapse – was worried about $200 oil. How quaint.

What all these people had in common was Browne’s original prediction that the policies of the U.S. government would cause massive inflation and dollar devaluation.

Admittedly there was no overnight catastrophe, when citizens wake up to find the banks closed and their savings gone. But over the four and a half decades since 1970, when then-U.S. President Richard Nixon quietly detached the dollar from gold, that’s exactly what has happened. In recent years, we have all paid for a gallon of gasoline what in 1970 would have bought two barrels of oil. The house your father bought for $25,000 in 1970, now sells for $350,000. Nixon himself once said that “what this country needs is a good five cent hamburger”. But thanks to him, when you place your order today, you’d better have $5. Where most of us live, that’s what inflation and devaluation looks like. And my prediction? There will be more of it. The hopelessly indebted U.S. government has three choices: Cut expenditures, raise taxes or rob its lenders. The least-votes-lost for any party is devaluation.

Which brings us back to gold. There may be better ways to protect oneself than holding gold. Larry Burkett urged his readers – pleaded with them – to get out of debt. That is certainly golden advice.

However, over the long haul, Harry Browne was right that gold would at least hold value.

Consider: Back in 1970, it was $35 an ounce. Enough for an ok suit.

In 1990, it was $383. By then, you needed that for a pretty good suit.

Twenty years on, in 2010, gold was $1224. That got you into Harry Rosen’s. Today, gold is $1,250 an ounce, and a mid-range Tilford suit from Harry is $1,200.

Needless to say, I don’t own one of those. But silver I’ve got. And when the full scale economic collapse finally comes (The Real Crash 2016, Peter Schiff), I’ll be the guy paying for gas with U.S. nickels dated 1907.

As for the books, I’m saving them for the grandkids.


Nigel Hannaford is a battle-scarred investor and a big fan of Stephen Leacock.

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About Nigel Hannaford

For six years, Nigel Hannaford was Manager of Speechwriting in Stephen Harper’s Prime Minister’s Office. Today, he operates a boutique communications consultancy, Hannaford and Associates.