GOLDENFREUDE: Here's Why People Are So Glad That Gold Is Crashing
REUTERS/Jorge Dan Lopez
Gold is absolutely getting wrecked. Its 2-day loss is over 10%. We haven't seen a decline like that since 1980.
We already explained why the gold crash is good news, because it represents a turn away from rocks, and towards humanity.
But there's something else going on, which can only be described as "Goldenfreude", the pleasure of seeing gold fans lose money.
Pleasure at the misfortune of others is a bad thing that should be discouraged, but from time to time, people can't help themselves.
So why does Goldenfreude exist?
We asked a few of our favorite pundits/investors/talking heads to explain it.
The pseudonymous trader @pawelmorski (who wrote a great post on the gold decline) explained that part of it is a reaction to the constant goldbug religious hectoring while others seriously discuss and address economic problems.
Policymakers have spent the last 5 years stumbling around trying to build ad hoc solutions to unprecedented problems. It gets tiring being accused of being a sheep or an apologist whenever you try to assess the likely outcome of policy steps, especially when the abuse comes from people who refuse to address such basic points as what debasement actually means, or refuse to follow through the logic of what a gold standard might imply for the real economy. All of which recognises that there’s still a risk that this could all go horribly wrong. I can certainly see why people would favour an asset like gold as a hedge against tail events, and I get frustrated at the refusal to distinguish between an investment decision and a massive paradigm change in monetary policy.
Barry Ritholtz of the Big Picture
explained the goldenfreude phenomenon more bluntly:
The cocksuredness of the goldbugs is surely part of it.
The other factor is the way Goldbugs disguise their narratives in non-verifiable forecasts and predictions – that plus the fear mongering.
Atlantic economics writer Matthew O'Brien had a slightly different take, explaining how the gold decline exposes something that everyone likes to see: The man on a lucky hot streak suddenly realizing he's not that good.
It's like seeing the guy on a hot streak at the craps table who thinks that shows he's somehow smarter/better.
Eddy Elfenbein of Crossing Wall Street explains the phenomenon as a much-needed pushback against people who have been unopposed:
It's because there's little push back against the absurd disaster scenarios that have been peddled in recent years. People used the price of gold to confirm their political views. Today is like a real doctor coming along to treat a patient as a witchdoctor stands by in disbelief.
And Josh Brown of The Reformed Broker says people are just sick of hearing the "we're all screwed" message over and over:
Personally, I take no pride in seeing anyone lose money, but I think the goldenfreude stems from the fact that the people trying to live normal lives within the system have grown weary of the the narrative that "we're all screwed anyway" and so the mocking is a backlash. Also, the proponents of being loaded with gold have tended to be the biggest blowhards in the room. Now, you don't have to be an asshole to write to an end-of-the-world newsletter - but it helps.
And Paul Krugman adds:
Well, the inflationistas/goldbugs are really, really annoying -- all this air of having the secret wisdom when they actually haven't a clue. And they have been a real destructive factor in policy debate, standing in the way of effective policy by raising fears of Weimar and Zimbabwe. So seeing the one thing they got right -- betting on higher gold prices -- turn sour is cause for a bit of celebration.
So basically, people are tired of being harassed, and they're glad to see a group that's been blabbering unfalsiable stuff for so long get some comeuppance.
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