ON DEBT

The subject of debt has always been controversial. People never seem to agree on whether debt is good or bad. 

The moralist will argue that debt leads you down the road to perdition, and it is so much more satisfying anyway to save up and enjoy the fruits of delayed gratification than to binge on future earnings. 

The economist will say that debt keeps the wheels of the economy moving and the machinery of commerce functioning, and hence everyone should borrow.

The hedonist will aver that it is better to live life for today, borrow and enjoy, for who has seen tomorrow? 

The personal financial planner will say that all portfolios need an "allocation" to debt which should increase as you grow older for debit is less risky. 

I think everyone is missing the point. 

We need to understand the nature of money and the structure of modern capitalist systems first to think through this properly. 

As a youngster, you need to start saving up, and ensure you don't live beyond your means. The modern consumerist culture encourages reckless spending and you need to be wary that you don't fall into the consumerist trap. 

Credit cards, easy EMIs on durables, and other forms of easy credit lure you into a lifetime of deficit, ensuring you keep working for money which is perpetually in short supply. 

Youngsters should avoid debt.

It is not very easy to do so in some cases. What about that educational loan, should you take it? 

Be very careful when you think that through. Most education is useless. Are you really going to borrow and spend 100000 dollars for an undergrad degree  studying gender rights and LGBTQ issues? Does that Comp Science degree teach you anything that won't be obsolete by the time you pass out? Is that MBA degree worth anything at all? Even if they were worth something till now ( except the liberal arts courses, they are of course a scam), in the new world these degrees are going to be useless. 

That does not mean you don't learn of course. Since when have degrees had anything to do with learning? 

Education is one example. In every area of life, learn the difference between price and value, and you may never need to borrow in the first place. 

But as you grow and start saving, you need to take a different view. 

The money that we think is wealth, the rupee, the dollar, pound, eura, dinar... They are all what is called "fiat" currencies, just worthless pieces of paper that keep depreciating in value. 

Forget all the finance theory and what the personal financial planners tell you. Forget what you have been taught to think. 

Think. 

Would you hold your savings in real assets or in that useless fosterer of illusions called money, that constantly keeps going down in value? Why on earth would you keep your savings in the form of money? 

Why would you want to hold fixed deposits, debt mutual funds, or any other form of debt when the return that you earn , that mirage called interest, does not keep up with the debasement of the currency itself? 

Debt is a way for the system to systematically erode your savings, and appropriate it for itself.  It is foolish to invest in debt. 

Rather than that, borrow money if anyone is willing to lend it to you and invest that money in real assets. 

It is better to be a borrower rather than a lender. 

Think about it. 

And ask your financial planner what he thinks. 

The illusion called money... Part 1

As the world moved from the barter economy, we needed an intermediate item to function as money. Gold and silver fulfilled that role for a variety of reasons to do with physics, chemistry and scarcity. 

The fact that these metals also have industrial uses complicates the matter further but I shall be focusing only on the monetary aspect in this note. 

Gold and silver coins were money. The fact that the king's visage was printed on the coin did not make it any more valuable. It was the gold content and the silver content in the coins that gave them value. 

When gold and silver are currencies, there can be no inflation by definition. Things cost what they do and the prices keep varying depending on availability, but the currency itself ought to remain stable. 

But right from ancient times, kings had voracious appetites that needed to be fed. They had vast armies and armies needed to be equipped and kept happy, and various interest groups depending on their proximity to the throne needed doles and freebies. How does a king get money for all that? 

Going back in history, every king finally fell to the temptation of adulterating his coinage with base metals. Slowly, the proportion of gold and silver in the coin would decline. Obviously, prices of goods and services measured in terms of the currency would go up. 

It was never the prices that were rising, it was the currency getting debased. 

And then paper was invented. Someone said let's keep gold in a locker and issue promissory notes payable to bearer against the gold kept in the vaults. "I promise to pay the bearer x amount of gold", said every currency note. 

In theory, you could walk into the offices of the issuer of the note, give your note, and get gold in return.

Post World War 2, in 1944, the Bretton Woods Conference agreed that the US Dollar would be pegged to gold, and all other currencies would be pegged to the dollar, effectively creating an international gold backed monetary system. 

No government kept its promise - they printed currencies with abandon. In addition, the US saw its gold reserves drain away as other nations took gold in exchange for currency. 

Richard Nixon realised that it would be foolish to continue on this path and unilaterally abrogated the US promise, the promise to pay gold. 

Thus from 1971 onwards, every currency in the world is a fiat currency, backed only by faith in the government, and a common understanding to subscribe to the illusion that that piece of paper is worth something. Take out your currency note and see right now, what does it say? "I promise to pay the bearer rupees so and so", not gold, not silver, but the same rupees that you hold in your hand! Realise that what you hold in your hand is a worthless piece of paper! 

And we thought only children played imaginary games. In reality, the whole world runs on illusion and nothing else. 

Meanwhile, every government in the world continues to print money with abandon. This printing can take various forms, including that other fosterer of illusions called fractional reserve banking. 

If you thought that only faith in God is a matter of  pure belief, without any proof that God exists, you have obviously never thought about our faith in money. God is a better and more useful illusion! 

All fiat currencies till date, every single one, has eventually reached the value of zero. 

Well, thanks for the good news,  now what in f*#* name am I supposed to do, you are thinking. 

Doing is for later. First, learn to see. 

Our cognitive maps, meaning our view of the world, is fostered on the illusion that money is something real. The governments and powers that be do everything in their power to ensure that this illusion is maintained. 

You have to step outside that reality and see the truth about money first. 

Once you see it, you cannot unsee it. 

Ok, I see it, you are saying, now what should I do? 

That we shall discuss in the subsequent parts. 

To be continued... 

WHEN TO SELL SILVER

If you are sitting on some that is. Otherwise, the question is, should I buy now?

My reading of the situation is that silver at 110 dollars an ounce is a play with limited downside and unlimited upside. So it's a Buy even at these levels. 

But, but, 

The prices have gone up 250 percent in one year. 

It is highly volatile.

True. But the market does not price past moves, it prices future expectations. And volatility is different from risk. 

Why is it a play with limited downside? 

The industrial demand, including new uses 

The classification of silver as a critical mineral by the US 

China introducing export controls 

The de-dollarisation process that is underway 

Increasing geopolitical uncertainty 

The ratio of gold to silver prices compared to historical levels 

Why is it a play with unlimited upside? 

All the factors I listed above, plus

The fact that silver is being rediscovered as a monetary metal. It has been a monetary metal for 5000 years, but we have forgotten that 

The fact that retail investors are just beginning to discover it 

The short squeeze on the big billion banks that is imminent and in fact underway 

The scarcity of above ground available stocks 

The fact that most silver  that is consumed for industrial use does not come back

The fact that eighty percent of silver being mined currently is accounted for by industrial needs, and the balance twenty percent is not sufficient to meet investment demand

The fact that the price of silver has been kept suppressed for fifty years. What we are seeing now is not a routine upmove but a structural repricing, a move to a new reality 

The fact that it is cheap when looking at the gold -silver ratio, the Dow-silver ratio, and the inflation adjusted price for the 1980 and 2011 highs 

What about Gold then? 

Gold is the mother ship. When you sell your silver, shift into gold. 

And when would that be? 

When the gold silver ratio drops below 30 

And when would that be? 

Soon 

What about stocks? 

Are you sure you want too much of stocks in your portfolio right now? Exit, and move to metals 

What about other metals? 

Copper, lead, zinc, uranium, are all good. They are all  only possible in Futures in the Indian market, or in related stocks. Uranium is not possible to invest in In the Indian market. 

Anything else? 

Energy stocks, oil futures 

What if I am already in silver and want to book some profits, say, exit twenty percent of my position? 

Sure, not a bad idea to do that 

If I exit, and don't need the money right now, where should I put it, apart from gold? 

Look at platinum. It is cheap right now compared to silver and to gold 

Where do I get platinum in India? 

Zaveri Bazar in Mumbai 

If gold and silver are shooting up like this, does it indicate troubling times ahead? 

Yes 

Dinesh Gopalan,

30 January, 2026 

( Posted to my blog https://www.dineshgopalan.com)

PROGRESS

It is a world of illusion, 

A fantasy land of plenty;

Where prices keep going up, 

In illusory token money! 

The government keeps printing more and more, 

For money is the wealth you see; 

Till you have lots and lots of wealth,

But can't afford the bread you eat! 

Everything is priced in money, 

Which is but a piece of paper; 

It becomes cheaper to burn it,

To keep warm, for firewood costs more! 

And then the great reset happens, 

Money becomes those things that you own; 

Not paper conjured out of thin air,

Money is only silver and gold! 

Dinesh Gopalan,

29 January, 2026

TRADING DILEMMAS

It is not easy buying and selling stocks or commodities when the prices are highly volatile. 

It is not easy buying or selling  something when the prices have gone up substantially, or gone down substantially. 

When gold was at 50,000 for ten grams, I used to get this question a lot.

" It has already gone up, should I buy now? Or wait?" 

Wait for what? 

A pullback! 

Well, the pullback never happened and gold is at 168000 per ten grams now. 

The same question now repeats. 

Silver is another example. It was at one lakh rupees per kg one year back, and now it is at 373,000 per kg. 

" OMG! Can I buy now?! It's gone up so much! "

There are people who will always feel that the prices are too high, and they will wait for a pullback to buy. Pullback from where? What if it goes up to 420000 from here and drops to 390000? Will you buy? 

I will blame the so called equity analysts and experts for this. "Buy on dips" they will tell you. I have never understood what "buy on dips" means. 

What if I told you I expect silver to go to 6 lakhs by end of this year? Will you buy? 

Worse than the buying decision is the selling decision. I bought silver in September when it was 150000 per kg. What should I do now? Sell? Sell half so that I recover my principal? Sell one third? Sell and invest the proceeds where? 

Silver has been known to correct up to fifty percent in past bull runs. That is stomach churning volatility! 

What if silver happens to be fifty percent of my total investment portfolio? What if it happens to be just 5 percent? Will the answer be different in either case? 

"Book part profits and de-risk. Diversify" say all the investment gurus. That is good advice. 

"Diversification is reversion to the mean. It shows that you have no conviction. If you want to make money, real money, you have to bet your shirt on your maximum conviction trade" say some investment greats. This is also good advice. 

"Depends on what you want in life. If you have reached for target profit, exit" say some people. But the target is a constantly moving thing, it vacillates along with greed and fear! 

"You have already made enough, why do you want more" say others. Very philosophical, and I have said the same to other people in several different contexts. But when it comes to myself, "enough" is a philosophy that is difficult to put into practice. 

There is no one answer to the above questions. It is an ever changing trade-off between risk and stability, greed and fear, philosophy and practicality, risk tolerance versus risk aversion, coupled with my own  comfort in dealing with money, my upbringing, my conviction and my aspirations. 

And then there is luck. Never underestimate luck, or the divine hand of providence! 

I invested in silver four months back when it was 150000 per kg in September. My investment, then and more so now, is a substantial portion of my investment basket. Silver is now at 370000 per kg. 

What would you do if you were in my position? 

Would love to know your thoughts.