Episoder
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Today, we are going to look at gold, bitcoin, and our way of playing it, MicroStrategy (NASDAQ:MSTR), which has now 10xd (!) since we first covered it last year. Amazing.
Finally, there'll be a short update on gold miners. Remember them?
Let’s start with gold.
Gold - and most other metals - has been hit since the U.S. election last week. It’s down $200, or about 7%, with U.S. dollar strength being a big factor (the dollar has been storming higher since October).
While I think this bull market might be punctured, as I put it last week, and that gold probably has a bit further to fall, I am not unduly worried. 2024 has hitherto been a great year for gold, and it remains an essential long-term core holding.
It is an even more essential holding for UK investors. I think sterling has big problems ahead of it, and gold serves as your hedge against crap governments.
If you are thinking of buying gold to protect yourself in these uncertain times, I recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them. More here.
Labour or Tory - I’m no fan of either.
They’re both as bad as each other, in my view. The less government there is, the better things run. But that's irrelevant idealism. Of greater concern here is reality: there has never been a Labour Government that did not devalue sterling.
* Blair and Brown crashed sterling in 2007-8 (though until then their record was okay);
* Under Wilson, Callaghan, and Healey, we ended up going to the IMF in 1976. Callaghan and Wilson also devalued in 1967.
* Cripps and Attlee devalued in 1949.
* Ramsay MacDonald’s National Government, which followed Labour from 1929-31, took us off the gold standard in 1931.
Why should this Labour Government be any different? If anything, it is even less competent. Sterling devaluation is coming. How exactly might not yet be clear. I rather suspect it’ll be an attempt to make us competitive against an ultra-streamlined US, but that’s just a guess. You must own some gold (and some bitcoin) in such an environment: non-government money.
Gold under Trump - What Gives? What’s coming?
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This is a free preview of a paid episode. To hear more, visit www.theflyingfrisby.com
I’m sending out today’s missive a day later than usual because I wanted to see the market reaction to the US election results and leave a little time to digest it all.
Broadly speaking, I am happy with the result, and I believe the world will be a better place for it than the alternative. We’ll see less technocracy, less deep state , and less overseas intervention; more pro-energy, pro-Bitcoin, and pro-business policy; and a stance that’s anti-seed oil (go RFK!), anti-subsidised, environmentally harmful green quackery, and anti two-tiered, inequitable woke ideology.
Any administration that puts perhaps the most competent person alive, Elon Musk, in a prominent role, has got to be net positive.
But be careful what you wish for and of that. Donald Trump is not, as his most ardent supporters seem to think, going to save the world, nor any such. You need to fix money and tax to do that, and while he might tweak the latter, there will not be wholesale reform. And he is going to print lots of the former. Trump will run deficits, US debt will grow as a result and the nefarious consequences of fiat will take other forms.
If there are financial problems looming for the US, I suspect their roots lie in the bond markets, where yields are rising.
In short, the better alternative won. There will be more opportunity in the US than there otherwise might have been, but Trump is no Javier Milei. America isn’t yet ready for that.
The initial market reaction give us some insight into where things are headed in the next few months.
If you are thinking of buying gold to protect yourself in these uncertain times, I recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them. More here.
How did markets react?
First up, and something I’m particularly pleased about: bitcoin has broken to new highs, hitting $75,000 yesterday. I’m particularly pleased because new highs in bitcoin usually bring a lot of noise. This time, the noise got drowned in the election frenzy, which means there’s plenty more hype in the tank.
Our chosen vehicle for bitcoin exposure, MicroStrategy (NASDAQ: MSTR), is now north of $250. This has been an incredible win for readers, as we first covered it last year at an adjusted $35. It’s risen 8x, compared to bitcoin’s 150%—that’s some outperformance.
I wrote back in September that Q4 is usually bitcoin’s best season, and that is bearing out.
Stock markets also rose, as you would expect with someone as pro-business as Trump. The Dow rose 3.5%, the S&P 500 climbed 2.5%, and the Nasdaq about 2.6%.
During Trump’s last presidency, stock markets more than doubled, though with two major wobbles along the way, one due to Covid. Something similar this time around is not an unreasonable expectation—unless you subscribe to this view. If so, that would take the S&P 500 to around 12,000. Quite the number.
What I found especially encouraging was the outperformance of small caps. The Russell 2000 was up 6%. Small caps have underperformed for years and are due for a run. Trumponomics clearly suits them.
An interesting tidbit: Trilogy Metals (TSX: TMQ), a mining company I follow with two promising copper assets in Alaska, the development of which were blocked by the Biden administration on environmental grounds, saw its price rise 108% yesterday . Investors seem confident it will now get the green light.
I expect similar stories across the mining, oil, and gas sectors. This is a time to be investing in the USA.
On the other hand, commodities, especially metals, sold off. Copper fell 3%, with zinc and iron ore dropping by similar amounts. Crude couldn’t make up its mind: it came down a bit, then rallied, then ended the day flat. Natural gas was similarly indecisive
Gold, silver and platinum all sold off, as the US dollar itself rallied quite sharply, rising 1%. Gold was off almost 3%, silver by almost 5%. Not good, though mostly a reaction to the dollar. Looks like those particular bull markets are, for the time being, punctured. That’s not me telling you to sell your gold by the way. Don’t. You are going to need it. Particularly if you are British.
Which brings me to the UK and last week’s budget.
I promised you my thoughts on it.
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Manglende episoder?
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I am travelling this weekend so today’s thought piece is a conversation, which Mining Network recorded last week week between veteran gold guru, Alasdair Macleod, and myself.
It’s heavyweight goldbug stuff. I hope you enjoy it.
You can watch it below, but I have also ripped the audio so you have the option to listen to that if you prefer to escape the clutch of your screens.
If you are thinking of buying gold to protect yourself in these uncertain times, I recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them. More here.
I’ll be MCing this year’s Moneyweek Summit this coming Friday November 8th. Readers of the Flying Frisby can get a 20% discount by entering the code FRISBY20
And if you are interested in hearing more from Alasdair, he has a Substack too.
This is a public episode. If you’d like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe -
I’m in Buenos Aires this week, so I might be a little slow reporting on today’s budget, but I’ll come to it, don’t you worry.
Shortly before Covid hit, I became CEO of a Canadian company by the name of Cypherpunk Holdings (HODL.CN). I was very pleased with that ticker symbol—HODL. My idea. But I did not have a clue what would happen as a result …
I’m writing about the company today because, even though I stood down four years ago, I know a number of readers bought shares because I was the CEO. It’s quite a story.
Mining entrepreneur Marc Henderson controlled a shell company that had just received a large payout from the Mongolian government for some uranium assets it had seized illegally, as you do, and he wanted to use the opportunity to start a crypto business. We knew each other from way back, and he approached me because of my book.
He also brought in Canadian bitcoin entrepreneur Moe Adham, and Moe and I put together a proposal to become a privacy tech investment company.
We were both quite ideological about it. We had grave concerns about the increasing imposition on our privacy from both Big Brother and Big Tech. We felt it was only going to increase, and that therefore there would a need for privacy tech—anything from VPNs to private messaging apps such as Signal, to bitcoin and privacy coins. How right we were. Look at some of the stuff that went on during Covid.
Perhaps where we misjudged was that we thought there would be a large appetite for privacy tech amongst the general public as a result. It turns out most of the general public care more about convenience than they do about their privacy, at least online. In many cases, they don’t even realise what they are sacrificing.
Buying gold to protect yourself in these uncertain times? I recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them. More here.
Once we were up and running—and, believe me, there was a lot of compliance—I brought in my mate, bitcoin OG Jon Matonis, and we began the process of acquiring bitcoin. We would hold large amounts of bitcoin. (This was before Michael Saylor’s Microstrategy, which has been a big winner for the portfolio since we tipped it last summer it around $30 - now $220 - especially as bitcoin closes in on all-time highs).
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One of our key investors was poker champion Tony Guoga, who bought an enormous stake in the company and eventually joined the board to become Chairman.
I stood down shortly after my dad died in April 2020. (From a financial point of view, that was a mistake, as I would have several million options now with the stock itrading at two bucks).
But, despite the good work that the company was doing on the ground, the great investments it was making, and the phenomenal board, it just kept trundling along sideways, largely ignored by the investment community and trading at around half its NAV. Like a champ, Tony Guoga kept on buying stock, especially on dips, building up an enormous position. He owns about 35% of the company. Talk about management being aligned with the interests of the shareholders.
Recently, however, the company had a rebrand. With all the bitcoin ETFs, it was pointless holding bitcoin, they thought, and the company decided to focus instead on SOL, which lacks a mainstream investment vehicle. Sol Strategies Ltd became the new name, and, a few months earlier, they brought in a new CEO, Leah Wald, as well.
In the last fortnight, the shares have gone absolutely nuts—going from around twelve cents to above C$2. There have been several catalysts. First, Leah has made a number of well-received appearances in the media that have generated some interest in the stock. Second, it has become the easiest way to get exposure to SOL. Third, "HODL" is also the US ticker symbol for one of the bitcoin ETFs, and many Canadians, typing in HODL, accidentally bought this company instead. LOL.
Veteran traders will know the chart pattern the stock has played out. I believe it’s known as the hockey stick.
Just incredible. And look at the volumes that have come in.
The market cap of the company went from about C$17m to C$335 at the top of the market yesterday. Guoga’s stake alone went from about C$6m to north of C$115m.
For years, the company was trading at half its NAV of C$30. Suddenly it’s trading at ten times.
From a technical point of view, it shows just what can happen to a company after it builds all that cause trading sideways for many years. When it spikes, it can really spike.
I gather that it’s become something of a meme stock, so who knows when this will end? The algorithms have taken charge, especially on the US OTC markets where it also has a listing (CYFRF) and it is having daily swings of something like 30%.
It even makes Lightbridge (LTBR) look calm. Have you seen that, by the way? $14 yesterday. It was $3 a fortnight ago, when I wrote it up.
Another hockey stick:
My broker commented that it’s good to see some animal spirit has returned to the markets.
I’m just amazed at what algos can do to small-cap North American stocks. Talk about speculation.
Casino!
Let’s hope one day they discover AIM.
I don’t know if this kind of speculation signals a top. It’s pretty obvious to me Trump is going to win next week, so maybe that’s all priced in and markets pull back after the election.
Crash ahead?
On which note, I leave you with this crazy interview. It was recorded in March of this year, several months before the Trump assassination attempt in July, and yet predicts it with incredibly accuracy. He also predicts the weird weather, a Trump win, followed by a 1929 stock market crash. Watch a minute or two from around the 11-minute mark (it should start there). Nuts.
I bet there are a gazillion things he’s predicted which haven’t happened. But I still thought it was pretty amazing.
I probably shouldn’t even be sharing this stuff, but I remembered it last night it from a few months back and, with the election coming next week, I went back and re-watched it.
What do you make of it?
Let me know in the comments.
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(NB: At the end of this piece there is a short note on Lightbridge Corp (NASDAQ:LTBR), which has tripled since I covered it a fortnight ago).
I have suffered from asthma for as long as I can remember.
Others have it worse than me. I had always been able to manage it with drugs – salbutamol mostly – but, all the same, there was always that lurking thought that if I forget my inhaler and have an attack, I could be in trouble.
Then, suddenly, in my early 50s, it disappeared.
It is not uncommon to grow out of your asthma. It happens to a lot of people. But my asthma was not getting better; it was getting worse as I grew older. I can’t prove it, but I think I got rid of it. Here is what I did.
How Bad Was My Asthma?
As is quite common for people my age, I was not breastfed as a baby – science thought it knew better than Mother Nature – and the allergies I suffer from – the main ones being to animal hair and pollen, which result in hay fever and asthma – are a result of that, I’m sure. It’s part genetic too: my dad had asthma but grew out of it in his adolescence. None of my four kids, who I’m delighted to say were all breastfed, have it.
There were two main triggers: animal hair, cats especially, and exercise. Sometimes going from warm to cold (e.g., going outside in winter) would bring it on, and it was worse during the hay fever season.
As a child, we had cats – Persian ones too – and we didn’t get rid of them until I was nine. I can’t believe it took that long to figure out I was allergic to them; whenever I left the house, my asthma noticeably improved. But I took drug after drug every day, morning, noon, and night – Intal and Ventolin.
We moved and got rid of the cats, fortunately. As a teenager, I got quite strong and fit: I played a lot of rugby and football. I found I could get through matches without needing the inhaler at all. But cats would always destroy me. Within ten minutes of being in a house with cats, I would be wheezing. I was just so sensitive to them. Prolonged exposure would take a day or two to recover from.
It was so frustrating going to people’s houses and having to leave because of my asthma, or having to sit there and wheeze, while the owners scrabbled about putting the cat outside or hoovering. Made no difference. Every year on Christmas Eve, I would have the annual asthma attack when visiting my uncle and aunt.
As I got into my late 20s and 30s and the fitness of my youth waned – not helped by smoking too much weed at university – I found myself needing my blue inhaler (salbutamol) more frequently again to play sport.
By the time I got to my 40s, I often found myself getting wheezy for no apparent reason, and I was using the blue inhaler almost every day.
Doctors advised me to use the brown inhaler – QVAR (beclomethasone) – every day, rather than salbutamol, and the brown did indeed clear it up so that I didn’t have to use the blue. But I don’t like taking drugs every day, and every time I tried to wean myself off the brown, I found my asthma had got even worse. I was too dependent.
By my late 40s, I was quite overweight, and even though I did a lot of aerobic sport – running and football – I was heavily dependent on puffers.
We had a dog too, and even though it was a hypoallergenic poodle, I was still sensitive to its hair.
Alcohol made my asthma worse, especially red wine. Also, if I drank, there was always the risk I would then smoke, which of course made it bad the next day.
Here I am today, and I have not used a puffer in maybe two years. I play football most weeks, tennis sometimes, I run, and do sprint training and cycling, including hill training.
But this week came the acid test. I went for a drink at a some friends house, and they have a cat. I spent a very long evening there and did not leave until 3 AM. No puffer required. I went back the following day and spent several hours there. No puffer. Then again two days later (I really like these friends!). Still no puffer. My nose didn’t even run.
I could still feel the allergy. But I was not remotely wheezy.
For me, this is quite extraordinary. Fifty years of asthma have gone.
How Did I Do It? (Plus a Note on Lightbridge)
I’m going to spell out all the things I did. It might be that it was a combination of all of them.
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This is a free preview of a paid episode. To hear more, visit www.theflyingfrisby.com
NB If you missed Sunday’s piece about what next to do with Lightbridge after its incredible rally - 3x in a week - it is here.
This week has the potential to be one of the most significant weeks in the history of money.
36 world leaders, including China’s Xi Jinping, India’s Narendra Modi, and UN Secretary-General António Guterres, are meeting in Kazan, Russia for the BRICS summit. The main agenda of the summit is de-dollarization.
Even The Guardian has noticed. “One of the main aims of the summit,” it says, “will be to speed up ways to reduce the number of dollar transactions, and so mitigate the US ability to use the threat of sanctions to seek to impose its political will.”
I’m not convinced the 36 nations in attendance are quite ready to abandon the dollar, or even make overt declarations of war against it, but for sure we will gain insights as to where we are in the grand scheme of this inevitable move away. We will learn where we are with the alternative payment systems being developed, be it BRICS Pay or mBridge.
The most powerful weapon these nations have against the dollar is gold—far stronger than China’s yuan, or Russia’s rouble, or any other currency basket or crypto amalgam they come up with. Gold is universal money, and its value is understood by all. There has never been a global reserve currency that did not start out backed by gold. How ready these nations are to re-adopt it, we shall soon discover.
In any case, gold has been rallying relentlessly into the de-dollarisation story. We are at $2,740/oz now. Amazing. Perhaps this is a case of ‘buy the rumour, sell the news.’ Whatever. Could be in the short or even medium term. But that’s not the attitude. Owning physical gold is an urgent necessity at the moment. Things are just too precarious. You don’t want to be letting go of long-term core holdings on the basis of potential short-term movements.
I am watching developments closely.
If you are buying gold to protect yourself in these uncertain times, I recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them. More here.
The Silver Surge: Is $50 the Next Stop?
In the meantime, ever unreliable silver has been playing catch-up. It’s gone through all that resistance around $30-33 and has, having done a near-perfect inverted head and shoulders, now broken up to $35. I think it’s going back to $50.
There is some resistance at $35, $37.50, and $44.
You know my views on silver. It’s the metal with the most potential yet, if it can find a way, it will always let you down.
Its natural price is 1/15th of the gold price, because there is only 15 times as much silver in the earth’s crust as there is gold. With gold at $2,700, silver “should” therefore be $180.
In fact, there is a case for silver to be higher than that because, while all the gold that has ever been mined remains, the silver does not—it has been consumed. So above-ground silver stocks do not reflect gold stocks.
The problem is that silver has long since been demonetised. It lost its monetary status when the world adopted gold standards after the various gold rushes in the second half of the 19th century. Without this official backing, silver is only going to be an industrial metal, albeit a precious one.
Gold may no longer be an official medium of exchange, but central banks still buy and hoard it, as do corporations and private investors. The Bank of International Settlements recognises it as a Tier 1 Capital Asset. The same does not apply to silver.
Silver, as we know, also has a multitude of industrial uses, which are only going to increase as the world gets more computerised and electric.
There is also some evidence of silver shortages—over 200 million ounces this year, a similar amount to annual jewellery demand.
Total annual silver demand is around 1.2 billion ounces—the second highest on record. 836 million ounces of that come from new mine supply, 180 million ounces from recycling, and the rest from sales of existing supply.
Demand looks something like this:
* 61% industrial (electrical, electronics, photovoltaics, photography & other)
* 17% Jewellery
* 5% Silverware
* 17% Investment
When silver moves, it moves fast, and it can turn on a sixpence, so it’s important not to get wedded to the silver story. The thing to remember about silver is, like errant girlfriends with personality disorders, if it can let you down, it will. The lovemaking will be unforgettable, you will have the time of your life, but, as sure as eggs are eggs, it will break your heart. Manage your risk.
As I say, there is not a lot standing in the way of silver and $50. In that scenario, the miners will go to the moon.
If it goes to $50, that will only be the third time in silver’s history it made it here—1980 and 2011 being the other two occasions. Third time lucky and all that. If it breaks above $50, there is nothing but blue sky above. Maybe it’ll go to $100 or even $180. It’s a maniacal metal.
Here’s that amazing long-term chart.
How am I playing it?
I may be cynical, but I also think you should always have a position in silver. Its potential is too huge.
I own a silver miner that is just coming into commercial production and therefore due a re-rating. It will make a fortune at $50 silver, but it doesn’t need $50 silver to work.
That company is …
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This is a free preview of a paid episode. To hear more, visit www.theflyingfrisby.com
Here’s something a little different as your Sunday thought piece today - my Edinburgh “lecture with funny bits”. I hope you enjoy it.
It lasts 50 minutes, so next time you fancy a bit of “edutainment” give it watch.
The first part is available to all, and you can unlock the full experience by becoming a paid subscriber.
I was super-pleased with this one, as I think I might have mentioned ;)
Meanwhile, I wanted to share my thoughts about the amazing share price action we have seen in Lightbridge Corp (NASDAQ:LTBR). The stock really has exploded, more than doubling since I wrote about it last week. What was a $3 stock is now trading at $7.
Here’s the original piece, in case of interest - I covered it in in last Sunday’s thought piece on SMRs too.
The volumes are insane.
What to make of it all? And what to do next?
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Something a little different for you today.
I am speaking at the Battle of Ideas this weekend on three rather different matters:
* Immigration and Demographics
* Who Is the World’s Greatest Comic?
* Why Cash Keeps Us Free
Do come. You can get tickets here.
With this years Battle in mind, the Academy of Ideas asked me to write one of its Letters on Liberty. Here it is for your reading or listening pleasure. (There is a PDF version here).
It begins with this note from the Academy.
What are Letters on Liberty?
It’s not always easy to defend freedom. Public life may have been locked down recently, but it has been in bad health for some time.
Open debate has been suffocated by today’s censorious climate and there is little cultural support for freedom as a foundational value. What we need is rowdy, good-natured disagreement and people prepared to experiment with what freedom might mean today.
We stand on the shoulders of giants, but we shouldn’t be complacent. We can’t simply rely on the thinkers of the past to work out what liberty means today, and how to argue for it.
Drawing on the tradition of radical pamphlets from the seventeenth century onwards - designed to be argued over in the pub as much as parliament - Letters on Liberty promises to make you think twice. Each letter stakes a claim for how to forge a freer society in the here and now.
We hope that, armed with these Letters, you take on the challenge of fighting for liberty.
Academy of Ideas team
Why Cash Keeps Us Free by Dominic Frisby
Give most people the choice of living and working anywhere in the world, I bet the large majority would choose the US. For all its many shortcomings, it’s still the land of opportunity. It’s exciting, it’s dynamic. Wonderful things can happen there. In terms of tech, with Silicon Valley and all the ensuing social media and ecommerce, it is very much the world leader. And yet, Americans still use cheques.
When was the last time you used a cheque in Europe? Donkey’s years ago. As much as 5 per cent of all financial transactions in the US last year were by cheque. For all its modernity, the US is - in terms of fintech - a good 10 years behind Europe or Australia. Not only do they use cheques, but people in the US still go out with cash in their pockets. Bunch of luddites.
However, things are slowly changing, and the US is following the rest of the developed word to cashlessness. It is inevitable, I’m afraid. Technology is destiny.
It’s also a great shame.
Cash empowers its users
When I pay you in cash, nobody else gets in on the transaction - it’s a direct transfer from me to you. No grubby middlemen can cream off their percentage. No prying eyes of the state can monitor what we do. Big Tech can’t glean information from the exchange, to be used at some later stage to sell you stuff or, worse, report back to Big Brother, Big Insurance or whichever Big wants in on your data. Nobody can stop you making the transaction.
With cash, you can buy and sell and store your wealth outside of the financial system, if you so choose. There are plenty of reasons, both practical and moral, to do this.
Cash means control. Just take the recent de-banking scandals from Canada to the UK, where truckers had their fundraised money withheld because of their views on lockdown, and a UK politician was kicked out of Coutts for holding the wrong opinions. Both the Canadian truckers and their families, and Nigel Farage, had one thing in common – they held views outside of the liberal mainstream. And because their money wasn’t under their mattresses but in banks and websites, they lost control of their own cash.
Indeed, instability is nothing new. We are repeatedly told how, in 2008, we were ‘on the brink’, how close the system was to imploding. Surely, then, it makes practical sense to keep money outside of the system? When Cyprus’ banks teetered on the cliff of financial disaster in 2011, there were bail-ins. Ordinary people’s money, sitting in deposit accounts, was sequestered to save the system. If your life savings were threatened with confiscation to bail out an organisation you considered profligate, I imagine you too would want little part of it.
What you do with your money says more about you than what you say - no wonder so many want access to this information.
Indeed, the former governor of the Bank of England, Mervyn King, has admitted that banking is not fixed - and we will see financial panic again. It makes sense to hoard some cash, if only as emergency money.
In 2016, the Japanese central bank imposed negative rates to try to goad people into spending rather than saving, as the ageing Japanese are prone to do. The spectre of being charged a fee to keep your money in the bank loomed, and so much cash was then withdrawn that the country sold out of safes. Who can blame the Japanese? In Germany, Denmark and Switzerland, some high-net-worth individuals with more than 100,000 euros were charged for being wealthy. There was plenty of talk of confiscation and bail-ins during the financial panic that came with Covid, though fortunately it proved to only be talk. Nevertheless, when in the bank, your money can become a tool of government. How often do you support what your government is doing? Not that often, I imagine.
People don’t seem to realise this, but when you deposit money in the bank, you are actually lending it to the bank. The bank, under government orders, can then decide who you can and can’t send money to (anyone tried sending money from a UK bank to a bitcoin exchange recently? Most banks won’t allow you to). The bank can certainly monitor and then disclose what you do with your money. In times of financial panic, it is within the bank’s power to confiscate money, again, on government orders. Cash protects you against all of this. It enables you not to play the game - if you don’t want to.
What you do with your money says so much about you - no wonder so many want access to this information. From the apparently benign (we can see what books you have bought, and so can suggest other books you might like) to the sinister (we can see what books you have bought, and therefore now have you marked down as a problem). When I was at university, a rumour circulated that various organisations monitored who took which books out of the library. Anyone who borrowed Mein Kampf went on a list as potential spy material - I’m not sure on who’s side.
These are all, in my view, quite legitimate reasons to want to keep money outside of the system. I’m not saying we should take all of our money out of the bank, but that we should all have the option to do so. It’s our money, not the banks’. We need cash because it is private.
Privacy - and why it matters
‘Who are you? Why do you hide in the darkness and listen to my private thoughts?’ - William Shakespeare
It’s so obvious why we all need some privacy in the real world that it almost doesn’t need explaining. Yet, in the digital world, so many of us don’t realise just how much of our privacy we are giving away. On a daily basis, we sacrifice privacy for convenience.
Different people know different things about you. You might supply your doctor with information you wouldn’t give your taxi driver, but your taxi driver knows where you are going - and your doctor might not. You might supply your lover with information you wouldn’t give your lawyer. Then again, you might tell your lawyer something you wouldn’t tell your lover. The difference is, information you supply online - what you say, read, watch, share, buy or sell - can be used for purposes beyond those for which it was supplied.
Information is taken, without you realising that you are granting permission, and is used to shape your behaviour.
How often has this happened to you? I was talking to my daughter on the landing outside my bedroom about a trip I was planning. I said, ‘should I bring my Timberlands or my hiking boots?’ She said ‘your Timberlands’. I said that they were a bit old. I got into bed, looked at my phone, and Amazon was flogging me Timberlands. Your phone is listening - accumulating information with which you did not deliberately supply it.
It’s not all bad - often that information might be used advantageously. I’m a huge Game of Thrones fan but I only discovered the books all those years ago because Amazon recommended them. YouTube frequently suggests videos to me that I’m interested in, which I might not otherwise have found. Nevertheless, information is taken, without you realising that you are granting permission, and is used to shape your behaviour and influence the decisions you make. The same data mining is taking place every time you use your credit card, or Apple Pay. It is used to determine the content you receive, to sell things to you, to make decisions about you - the loan, insurance, job or the opportunities you are offered. It is used to influence the political decisions you make. And all this information could be stolen. In the wrong hands, it could be used against you in some way. It can and is being used to spy on you.
With financial transactions in the online world, you have little idea what information about you is being used, how it is being used or by whom. You have little say in its use - no ability to object nor power to amend that information. You have no control.
There are no such concerns when using cash.
You have nothing to hide
‘If you’ve done nothing wrong, you’ve got nothing to hide’ is the common argument against worrying about privacy. But if you are exploring new ideas - dangerous ideas, ideas that go against the orthodoxy, perhaps investigating the concept that the world might not be flat and is in fact round - do you really want some hidden power knowing what you are up to? The effect of this threat of intrusion is to censor free thought - to censor your inquisitiveness.
One solution is to become a drone, to not do anything experimental or anything wrong. Perhaps that’s what they - whoever they are - want. Gmail reads the emails you draft but decide not to send. Effectively it knows what you thought, but decided not to say. How dark is that?
A better solution is to protect privacy - to limit the scope that others have to use our information beyond the purpose for which it was supplied. It allows us to have greater control over our online reputation and enables us to grow and mature without being shackled by foolish things we might have said or done in the past. It enables us to explore new ideas outside the mainstream, without fear of being watched. Those that know about us have power over us. Protecting privacy limits that power. Cash is key to this.
But, of course, protecting privacy costs money. The internet is, mostly, free. Protecting your privacy takes effort. If you protect your privacy, you lose all the benefits that your phone and computer knowing a bit about you brings, from saved passwords to helpful book recommendations.
This is the dilemma we all face, and most choose convenience without even realising it. This, above all, is why the world is going cashless. It’s more convenient to pay with your phone, or with a card, than it is to carry cash. In the marketplace, convenience always wins.
Mobile phones and the naysayers
Here’s a little story for you. By 2023, some 85 per cent of the global population - 6.8 billion people - had a smart phone. That’s more people than have a toilet. Yet, at its peak in 2008, there were 1.3 billion landlines for a global population near 7 billion. Why did the mobile, and then the smartphone, succeed where the landline failed?
Yes, superior wireless technology made widespread coverage more possible. But there is another, simpler reason: to get a landline, you need a bank account. When more than half of the world’s population is ‘unbanked’, as it was in 2008, without access to basic financial services, telecoms companies saw no potential custom. Those companies would have built lines in the Arctic circle if there was profit to be made by it, but there wasn’t. Too many people were financially excluded. The infrastructure was never built, and people were left with fewer possibilities to communicate.
A mobile, on the other hand, you can buy with cash. You don’t need to be banked. The financial system was a barrier to progress for the world’s poor. Cash is a facilitator for them - it means total financial inclusion, a luxury the better off take for granted. Without financial inclusion - and there will always be some that, for whatever reason, often some bureaucratic quirk, won’t have it - you are trapped in poverty. Beware the war on cash.
The irony is that the smartphone now facilitates financial inclusion, whether via traditional finance (banking etc) or modern alternatives - the likes of the African mPesa (a widely used currency based on airtime) or bitcoin and other crypto currencies.
Handy cash
Cash still has its uses for small transactions - a chocolate bar, a newspaper or a pint of milk. It will always be the fastest form of payment there is - think of the change you might put in a busker’s hat or the bucket of someone collecting money for charity. It is also the most direct payment there is.
For many people not at the top end of the economic scale, cash is still king. For example, I like to tip waiters in cash, knowing they will receive that money without it being syphoned off by some unscrupulous employer. I like to shop in markets, where new businesses often start out. Cash is widespread - it’s fast, it’s cheap. I can buy directly from the producer knowing they will receive all the money, without middlemen shaving off their percentages. Goodness knows it’s hard enough for new, small businesses as it is.
A quick look at a recent British Retail Consortium report shows that, surprisingly, cash remains the least costly payment method to process. I want to maximise new businesses profits where I can. Many new businesses starting out need the cash economy. Small businesses need it. The financially excluded need the cash economy. The war on cash is a war on them. Cash also has its uses for private transactions, for which there are many - and by no means are all of them illegal. But if you listen to the scaremongering, you’d start to think that all cash users are either criminals, tax-evaders or terrorists. Sure, some use cash to evade tax, but it’s paltry compared to the tax avoidance schemes multi-national corporations employ. Starbucks doesn’t use cash to avoid tax, it’s all done via legislative means.
I have a confession to make - even I, with my highfalutin principles, no longer carry cash, guilty though it may make me feel.
A quick poll of my Twitter followers showed that 36 per cent no longer carry any cash when they go out. This is also a generational thing. The number of no-cash-users is much higher among the under-30s. I have four kids between the ages of 18 and 23, none of them carry cash. Nor do their friends. It’s the older (wiser?) generation who still carry cash, even if only as emergency money. The problem is, cash is like playing records, when the rest of the world is on Spotify.
Use of cash fell quite dramatically with Covid, but it still accounts for 14% of all retail payments in the UK, according to a 2023 House of Commons paper. Projections are that, by 2031, this number will fall to 6%. (Obviously, if you include other payments the proportion is much lower.)
In mainland Europe, the use of cash is higher at around 20% of all retail transactions. Germany, Italy and Spain are still at 35-50% cash, while the Nordic countries are below 10 per cent. In the US, the number is in the 20-25% region. But the trend is very much down.
But here I have a confession to make - even I, with my highfalutin principles, no longer carry cash, guilty though it may make me feel. The truth is, cash is dying. The convenience of fintech is killing it. Money is now almost entirely digital.
Bitcoin and digital cash
Tech might have doomed cash, but it is also coming to the rescue in the form of bitcoin and other crypto currencies. Bitcoin itself was invented to be a digital replication of the cash process. A can send money directly to B without there having to be any middleman to process the transaction. Bitcoin is cash for the internet.
Among the many breakthroughs which got people so excited about this new technology was that Satoshi Nakamoto’s blockchain solved the problem of ‘double spending’ - making sure you can’t spend the same money twice - without having to use third parties such as banks to process the transaction. There is now a plethora of copycat currencies, with many of them focused on privacy in order to make their usage anonymous.
At the other end of the scale, we have central bank digital currencies - CBDCs. These have been piloted in various countries around the world and, fortunately, nowhere has really got them to work. They have been met with neither trust nor understanding, and in many cases the tech has fallen short. In Nigeria and the Eastern Caribbean, they went beyond the pilot phase and have been out and out failures. Even in the Bahamas, the one place where a CBDC is said to have worked, adoption has been much lower than hoped. I asked my friend who lives there how successful it had been. He gave me this reply: ‘LOL. I have never seen one person use it.’
Fortunately, government incompetence is on our side.
Money has always been a bottom-up technology. Users prefer what is convenient. The fiat currency we use in the West today has evolved over many hundreds of years, especially as communication technology has developed. All you are doing when you make a payment is, effectively, sending a promise - the money itself does not exist. There is no gold or anything tangible backing it.
Cash is slightly different, because you are handing over something physical. But read what’s on that piece of paper - it’s just another promise. Once upon a time, you might have been able to swap a 10-pound note for 10 pounds of sterling silver (not quite true as silver was abandoned before paper money became widespread) or 10 gold sovereigns (true). But today, all it says is ‘I promise to pay the bearer the sum of 10 pounds’ - it is a promise of nothing. How the whole house of cards doesn’t come tumbling down is beyond me, but there you go.
Many central banks want to make the transition to CBDCs, despite zero democratic mandate. The planners want it because it then allows for money to become even more of a tool of government policy: whether it be monetary policy, taxation, welfare, surveillance or control. Fortunately, government incompetence is on our side. The history of government IT is so bad, it’s unlikely any will succeed, thank goodness, especially not in countries with large populations. Heck, they can’t even fix the potholes! But that’s not to say they won’t try.
Always end on a song
That’s an old show-business maxim. Why don’t we do just that?
‘Programmable Money’, a song I wrote last year about CBDCs, summarises everything there is to be worried about. Enjoy!
If you liked this song, you should sign up for my comedy newsletter.
Lyrics
C - B - D - C. C - B - D - CProgrammable money. Programmable money.
We’ll monitor every purchase you make,Every transaction or decision you take.If you’re not doing wrong, what is there to hide?How you spend money is for us to decide.
Your social-credit rating, how do you score?If you’re compliant you will get your reward.You may only own what we deem you can own.If you don’t register, we’ll block your phone.
Wait! You’ll be late for the expiry date.The state has mandated your money terminatesSo spend, speculate before it’s confiscatedThis is what we’re going to orchestrate
No more saving
Programmable money. Programmable money.C - B - D - CC - B - D - C
Your money’s now a tool of policy.You will be living in a smart city.You may only travel in a limited range.Energy and meat rations cos, climate change.
We’ll take your dough if we think it’s owed.No matter if you do not think it’s so.Taxes and fines, fares, fees of all kinds.All embedded in the lines of code.Hail Big Brother
Programmable money. Programmable money.C - B - D - CC - B - D - C
Tears of the sun, fallen from heaven.Empires fall. Radiant droplets everlasting.
We will implant you with a microchip,AI and other forms of censorship.We will decide what is good for you.Total control there’s nothing you can do.
Bitcoin fixes this!
From here.
Here’s a PDF of today’s piece.
Finally, here are some videos I made of recent articles, for your viewing pleasure.
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Quick heads up. I have made some video versions of recent articles. Here they are, in case you are a watcher rather than a reader:
I don’t know about you, but I use artificial intelligence (AI) all the time. ChatGPT has become my right-hand man. It gives me advice (really – and good advice too), it helps me make decisions, it gives me exercise workouts, recipes, it proofreads what I write, it helps me write titles, it even helps me write song lyrics. Midjourney does all the imaging for this newsletter. Even a simple Google search now involves lots of AI.
I know I’m not alone. Almost everyone is using AI, consciously or not.
Guess what? AI requires bucket loads of power. That’s why Microsoft recently agreed to pay Constellation Energy, the new owner of America’s infamous nuclear power station, Three Mile Island, a sizeable premium for its energy. There is cheaper wind and solar power to be had in Pennsylvania, but it isn’t as reliable as nuclear, 24 hours a day.
It’s not just AI. The widespread political desire to rid ourselves of fossil fuels means the world needs electricity, and fast.
Nuclear is the solution, of course. But nuclear takes a lot of time, even with AI now “re-routing” the anti-nuclear narrative. It takes especially long in the UK where any kind of infrastructure project requires billions to be spent on planners, lawyers and consultants before a brick is even lifted.
It’s so stupid of course. Nuclear power stations have been operating commercially for 70 years, providing reliable, affordable, and almost infinitely renewable “clean” electricity. Nuclear has the best safety record of any energy technology. Almost all environmental concerns, such as waste disposal, have been solved. But if you want to know the name of the point at which stupidity, hypocrisy, waste and weakness meet, it’s called British Energy Policy.
Layer upon layer of safety is demanded in nuclear plant design. The regulatory process is slow, cumbersome, and complex. There is a long lead time between planning, building, and operation, which adds to expense. Political uncertainty meant many proposals for nuclear power stations in the UK were shelved. It all drives away investment.
But governments around the world are waking up to the fact that the silver bullet is nuclear-powered. Thus, the narrative is changing. The dawn of the new age of nuclear power is upon us, and it can’t come quickly enough.
That’s why the focus has shifted to small modular reactors (SMRs). These have been operational for almost 70 years now in submarines, aircraft carriers, and ice-breakers, but in the last few years, land-based SMRs have been developed to generate electricity.
They use simple, proven technology, and are safer than current nuclear power stations. They can be manufactured in factories and then rapidly erected on-site. Modular refers to the design principle of breaking down a system into small, independent, and interchangeable components, or “modules”, that can easily be combined, modified, or replaced without affecting the rest of the system. This flexibility means they are scalable. It aids manufacture, transportation, and installation while reducing construction time and costs.
SMRs don’t occupy much land, so they have little impact on the landscape. Some can even be constructed underground – surely preferable to wind turbines and solar farms. In the UK, they could be erected on the redundant sites of closed nuclear and coal-fired power stations, where grid connections are readily available.
A 440 megawatt (MW) SMR would produce about 3.5 terawatt hours (TWh) of electricity per year, enough for 1.2 million homes – or to provide power to Wales, the Northeast of England, or two Devons. It would require about 25 acres of land. A solar farm would need 13,000 acres for the same output; a wind farm, 32,000 acres. Three 440MW SMRs would be enough for London, which has around 3.6 million homes.
What’s more, their output is not dependent on the weather. Reliability is why Microsoft paid a premium of more than 85% for Three Mile Island’s power. SMRs produce electricity that can easily be adjusted to meet the constant, everyday needs of the grid (baseload), and they can also ramp up or down to follow changes in demand throughout the day. They spin in sync with the grid, so they help keep everything stable. When they’re running, they act like a steady hand, providing momentum that makes it easier to manage sudden changes in electricity supply or demand.
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How To Invest
There are all sorts of ways to invest in nuclear power. The simplest and least risky is to buy the metal itself. Current demand for uranium stands at around 200 million pounds per year, while mining output totals only 140 million pounds. Another 25 million pounds comes from secondary sources, such as scrap and recycling. So there is a uranium supply deficit. I’m surprised the price isn’t higher. London-listed Yellowcake (LSE:YCA) has been set up with this purpose in mind. It is, essentially, a uranium holding company. You buy the shares, and thus own a share of the uranium it holds. It makes up part of the Dolce Far Niente portfolio.
You could also buy uranium miners, though I have to say I do not like the miners at all. There are the large producers, such as Cameco (Toronto: CCO) and Paladin Energy (Sydney: PDN). You can also gain exposure via large caps, such as Rio Tinto (LSE: RIO), but they are not pure plays. There are mine developers too, such as NexGen Energy (Toronto: NXE), whose Rook 1 project should be producing a whopping 30 million pounds a year by 2030, almost enough to solve the uranium supply deficit single-handedly.
If you don’t fancy your stock-picking skills, go for a fund instead. The London-listed Sprott Uranium Miners ETF (LSE: URNP) is an exchange-traded fund that gives you exposure to a basket of mining companies, as does closed-end fund Geiger Counter (LSE: GCL). Another popular ETF is the Global X Uranium UCITS ETF (LSE: URNU).
Why don’t I like uranium miners? About 90% of those listed in the funds do not have any production coming in the near future and are, therefore, huge vortexes into which capital will disappear. At present, they are fully valued. That’s not saying they won’t go up. But when the time comes for them to fall, they will bomb.
When I last looked at SMRs in 2021, the companies I tipped were Rolls-Royce (LSE: RR) and Fluor Corp (NYSE: FLR). Both have been real winners. Rolls-Royce has built seven generations of SMRs for use in nuclear submarines and, with its modern designs for SMRs, has been winning contracts all over. Rolls-Royce is not a pure SMR play. But it has put its SMR business into a separate entity (Rolls-Royce SMR) and I presume this will be spun out and listed at some later stage.
The stock has been going great guns under its new CEO, Tufan Erginbilgiç. I tipped it around the 100p mark and it’s now at 530p and there’s no stopping it. It was 1,350p in 2013, so there’s plenty of upside left, and that was before there was any urgency about SMRs. I’ve taken my original stake off the table, and the rest I’m holding.
I also mentioned NuScale, a US outfit, which in 2021 was unfortunately still private. There was a way to get exposure to NuScale, however: via majority shareholder and engineering company Fluor Corp. It has been a real winner too. We tipped it at $18. It’s now $50. The stock remains a hold, although it is not a pure play. Worth $8.6bn, Fluor has $200m of free cash flow and trades at 42 times earnings.
But the company we were looking at, NuScale Power Corporation (NYSE: SMR), has now listed – good ticker – and you can buy the stock at not far off the flotation price. Be warned, however: this is a volatile company. Since its initial public offering (IPO) at $10, the stock has been as high as $15 and as low as $2. It is now at $13.
NuScale designs, develops, and commercialises SMR reactors for nuclear-power generation, aiming to provide a “safe, flexible, and scalable nuclear-energy solution”. Its flagship product is the NuScale Power Module, a self-contained pressurised water reactor (PWR) that is far smaller than traditional nuclear reactors. Each module has an electric capacity of about 60 megawatts, but they can combine to scale up.
NuScale has partnered with various organisations, including the US Department of Energy (DOE) and global energy firms, but it does not yet have a solid sales pipeline, so it is hard to value. Instead, it’s a bit of a meme stock that rises and falls when it gets tipped. NuScale has a market capitalisation of $1.2bn and revenues of $23m; it lost $273m last year. It now has $180m in negative free cash flow, $130m in cash and a burn rate of about $35m per quarter. (So it’s got enough money for another year.) Caveat emptor.
Another option is BWX Technologies (NYSE: BWXT), but again it’s not a pure SMR play, more of a picks-and-shovels play. The company manufactures nuclear-reactor components, systems fuel, and other critical parts for the nuclear-power industry. It really is wide-ranging (think anything from naval nuclear propulsion to nuclear defence) and its history goes all the way back to the Manhattan Project.
SMR developers will often rely on BWX’s expertise and manufacturing capabilities to ensure the safety and functionality of their designs. As demand for SMRs grows, so will the appetite for BWX’s products and services. BWX has a market value of $10bn and $1.2bn in debt. Earnings per share are just shy of $3, and the price/earnings (p/e) ratio is close to 40. But it is profitable and pays a yield just below 1%.
If you want to go really small and speculative, there is always the mining exploration option (not recommended), or uranium enrichment firms. If this technology of enriching uranium to make it more powerful comes good, then the efficiencies of the industry will improve even further, and the problem of uranium supply deficits will quickly vanish, along with the high prices of many uranium miners. Silex Systems (Sydney: SLX) – market cap A$1.1bn (£565m), 50% owned by Cameco – is the market leader here, although Centrus Energy (NYSE: LEU), worth $1bn, is not far behind.
We are still some years from successful enrichment, but it is coming. I doubt we will see it before the uranium price itself breaks to new highs above $140/lb, which it hit in 2006, and probably not until $200 uranium. High prices have a habit of accelerating everything. Uranium is now at $70/lb.
That’s when tiny-cap nuclear-fuel tech firms such as Lightbridge (Nasdaq: LTBR), worth $46m, could rocket. Lightbridge, looking to improve the safety, economics, and proliferation resistance of nuclear power, is developing a fuel that operates about 1,000 degrees cooler than standard fuel. It’s got $27m in the bank, is losing $10m a year and, like NuScale, seems to rely on memes and tipsters. The stock costs $3 so there is plenty of upside. But be warned: this is an illiquid Nasdaq stock. Don’t chase it.
Amazing chart. From $4,000 - to $2. Talk about wealth destruction. It’s like an NHS IT project. Looks like it might, finally, have bottomed though.
This article first appeared in Moneyweek Magazine.
I’ll be MCing this year’s Moneyweek Summit on Friday November 8th. Readers of the Flying Frisby can get a 20% discount by entering the code FRISBY20
If you’re interested in nuclear, Wednesday’s piece might be of interest:
I had an email from Nick Lawson, CEO of investment house, Ocean Finance, which has put together some research on Lightbridge. I share it here, in case of interest.
And here once again are those vids:
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Final call for my “lecture with funny bits” about mining this Thursday. Hope to see you there.
But here it is, finally, the follow-up to How to Sleep Well, in which we address the bane of many who would sleep well: peeing in the night.
Did you know one in three adults over 30 and more that half of adults over 50 wake up to pee at least once a night? The interruption damages the precious rhythm of sleep, especially later in the night when getting back to sleep again is harder.
The problem plagued my dad for decades, and it was bladder issues that eventually took him. His peeing was a major source of misery, especially in his later years, and my eyes still well up now when I think how much pain and discomfort he was in.
Unfortunately, like father like son and all that, I have my father’s bladder.
I’m only 55. I’ve been having to get up in the night for at least 25 years now. It is not uncommon for me to have to get up as many as five times. On a really bad night, it can get to ten.
For years, I accepted this as my genetic destiny. But with this sudden turnaround in my health and fitness—in which I have rid myself of many things I thought I was stuck with—and not wanting to follow in Dad’s footsteps, I’ve put some considerable effort to this issue in the last few months.
I’m delighted to report that I have made real progress.
Twice this week, I have got through the night without having to pee at all. It’s been 25 years since that happened for me, and the exhilaration I felt the following morning was quite something. I even got 100% sleep scores on my Whoop.
If buying gold to protect yourself in these uncertain times, let me recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them.
Five things I did which made a difference
The condition of having to pee in the night is called nocturia.
I started by going to the doctor, where I had all sorts of tests: blood tests, urine tests, and the infamous finger up the bum. Everything came back fine. No prostate or bladder issues. The only thing they found was that my kidney function was sub-optimal.
There are five stages of kidney function, with stage 1 being optimal and stage 5 being failure. I’m stage 2, “mildly reduced function,” which is not ideal, but it’s also not abnormal for someone my age. In any case, it’s often asymptomatic.
So if everything is mostly working down there, why all the peeing?
I have a theory which I’ll come back to in a moment.
By the way, while I remember: fasting does not help. When fasting, if you’re like me, you will consume loads of liquid—soup, herbal tea—to fool your body into thinking you’re full. All that liquid means a lot of peeing.
Also, fasting puts your body into a state of ketosis, which makes your kidneys work harder. Ergo more peeing.
However, the health benefits of fasting, especially weight loss, are so great that, in my view, they outweigh the increased peeing.
1. Supplements
I tried a million different supplements:
* Pumpkin seeds
* Linseed / Flaxseed
* Walnuts (also good for Omega 3)
* Zinc
* Selenium
* Pygeum Africanum
* Magnesium
* Vitamin D (though I also read that it makes you pee more—you can’t win)
* Quercetin
I’m not convinced any of them made a significant difference, but I mention them because they were part of the process.
2. Booze
Sorry, but it’s a killer. Especially, beer. Lots of liquid plus the diuretic effects of alcohol. Try not drink as much, try and drink your booze earlier in the day, away from bedtime. Best of all, don’t drink at all.
If you need help cutting down on booze, get a Whoop. I explain how they help here.
3. Fluid Management
Consume your fluids earlier in the day. Avoid drinking anything for at least three hours before bed, even if it means going to bed a bit thirsty (though that might not be great for your kidneys).
This makes a huge difference - it will reduce your peeing by as much as 40% I’d say.
At the same time as making sure I didn’t drink three hours before bed, I started doing two other things. I think it these three things in tandem that made the difference.
4. Getting your body out of the habit
Often I’d wake up in the night with the feeling that I needed to pee, when I didn’t even need to.
I began to suspect that my body had simply got into the habit of waking up. I needed to break the cycle. How to do that?
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You can watch a video of this article here:
For the first time in history, gold went above £2,000/oz yesterday.
This is a huge landmark in the decline of sterling.
Of course, nobody in the UK echelons of power is talking about it.
We are, however, because it matters. Who is buying so much gold that price keeps going up? Why are they buying? There are hugely significant developments taking place in Asia that have the potential to reshape the global financial order.
This bull market is not like previous bull markets. It’s not driven by retail buying. What’s driving it is far more significant than that.
Clowns to the left, cretins to the right
Here is gold in pounds since Gordon Brown sold ours in 1999. It’s quite something—over ten times higher! What a clown.
Meanwhile, in other currencies, gold continues its march. Here it is in dollars, the preferred benchmark, over the past three years. This is proper bull market stuff.
I know I have said this a million times, but I really urge you, if you haven’t already, to diversify out of sterling—indeed any form of fiat money—and use gold as your savings vehicle.
The gold price action is telling us something.
The way this government is going—it’s proving almost as rudderless as the Tories were, and in record time—sterling could have real problems, and soon.
To my knowledge, not one influencer in the Labour Party, over the course of its conference this week, mentioned stewarding the currency, protecting its value, or any of that stuff. Just as every government before it has, they will use sterling devaluation to compensate for their deficit spending.
The pound is only holding up in the forex markets because the Bank of England did not cut rates last week, when the Federal Reserve and the ECB have gone into a rate-cutting cycle.
Perhaps, more significantly, no one in the Labour Party is discussing what is happening in Asia. Central banks are buying gold in huge quantities. They are no longer waiting for the price to pull back before making their purchases.
Perhaps most significantly of all—they are not reporting all their gold purchases. It is happening on the quiet.
If you want to buy gold to protect yourself in these uncertain times, let me recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them.
De-dollarisation is happening in front of our very eyes
The implications for the West are huge. But, despite the geopolitical significance, this issue is nowhere close to the Labour radar.
This goes back to early 2022 and the Russian invasion of Ukraine when the US confiscated Russia’s US$300 billion. Most of the rest of Asia looked at that and thought, “we need to de-dollarize.”
China, as we know, has quietly been reducing its holdings of US Treasuries. It now holds $777 billion in US Treasuries, which is about 10% of the US national debt held by foreign entities. This compares to 22% in November 2013. That is quite the reduction.
China has also, as we know, been accumulating vast amounts of gold.
Analyst Jan Nieuwenhuijs calculates that China has bought 1,600 tonnes of gold since Covid. I think the number is higher. That is on top of the 370 tonnes it mines annually—and most of that mining is state-owned.
I was having dinner with a VIP Chinese investment banker last night. I asked him about the Chinese mentality and de-dollarisation. “It is a matter of pride,” he said. China does not want to be beholden to the US. Global reserve currency status is a goal. There has never been a global reserve currency that did not start out backed by gold.
For now, it continues operating by its doctrine, “we must not shine too brightly,” but all the while it is accumulating gold and reducing its dollar dependency.
But it is by no means the only country doing this.
Saudi Arabia was “caught” a fortnight ago secretly buying 160 tonnes of gold in Switzerland—kudos to Jan Nieuwenhuijs for the scoop.
“One thing is for certain,” says Jan. “Saudi Arabia owns much more gold than it wants the world to believe.”
This is significant because Saudi Arabia was such a key player in establishing the petrodollar in the early 1970s after the US came off the gold standard, enabling the dollar to retain its status as the global reserve currency.
Saudi Arabia could be quietly repositioning itself as an ally of the next global superpower. It could also, as we shall see, be at the heart of a new global payments system.
The new international payments system which bypasses the US dollar
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I’m delaying the follow up to last week’s piece on sleep for another week because I am still experimenting ;). In the meantime, I hope today’s little story will put a smile on your face.
And a reminder there are just a handful of tickets left for my “lecture with funny bits” at the Museum of Comedy on October 10th - October 9th was cancelled - sorry. This is a super interesting show, even though I say so myself. If you are free, I really recommend it.
In 1914, a young German named Heinz Kurschildgen started his first job as an apprentice in a dye factory in his hometown of Hilden. He became fascinated by the chemicals he was working with, and built a small laboratory at home to conduct experiments.
Before long, he thought he had found a way to make gold, and even persuaded several investors to give him money. However, it soon became clear that he couldn’t make gold and found himself prosecuted for fraud. The courts let him off on the grounds that mentally he was not all there, but only on condition that he solicited no further investments with schemes to make gold.
He was soon claiming he could make other transmutations, and became something of a joke figure in his hometown, where a bust was even erected in his honour, albeit ironically, inscribed with the words: “For the genius gold-maker, from his grateful hometown.”
But in 1929, he returned to his first calling, which was kidding people he could make gold. He approached German President Paul von Hindenburg and Head of the Reichsbank, Hjalmar Schacht, with a proposal to make the gold they needed to pay off Germany’s WWI reparations.
These had been set at 132 billion gold marks, which translates to 47,300 tonnes. To give you an idea how unrealistic a figure this was: it was an amount not far off all the gold that had ever been mined in history by that time. That would take quite some alchemy.
But Kurschildgen was not a man to be deterred. He raised a load more money, defrauded his clients, and ended up with another 18 months in jail.
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After his release, he was soon at it again. This time, he approached the newly elected Nazi government with a plan to make petrol from water.
Chief Scientific Advisor, Wilhelm Keppler, paid him a visit and Kurschildgen agreed to reveal his methods and surrender the rights to the government. Meanwhile, his claims about being able to make gold piqued the interest of SS leader Heinrich Himmler, who had a notoriously superstitious streak and a fascination with alchemy. Himmler started generously funding Kurschildgen to conduct his experiments.
But Reichsanstalt physicists soon declared his contraptions useless, and Kurschildgen ended up in a concentration camp.
“Himmler has fallen for a gold and petrol maker,” said Joseph Goebbels in his dairy. “He wanted to defraud me, too. I knew what he was about straight away”.
After two years Kurschildgen was released for good behaviour. Himmler had him put straight back in the camp. On no account did he want this embarrassing story becoming public.
After the war, Kurschildgen tried to get recognized as a victim of Nazi persecution, so he could claim compensation. “The Gestapo would stop at nothing to get my invention," he told the courts.
As with most of his ventures, his petition was unsuccessful.
Even so, you can’t fault the man’s ambition.
Until next time,
PS Don’t forget Shaping the Earth on October 10th.
If you are interested in buying actual gold in these uncertain times, then look no further than my recommended bullion dealer, the Pure Gold Company. Premiums are low, quality of service is high, and you get to deal with a human being who does not moonlight as an alchemist!
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There are just a handful of tickets left for my “lecture with funny bits” at the Museum of Comedy on October 10th - October 9th got cancelled - events beyond our control, sorry. This is a super interesting show, even though I say so myself. If you are free, I really recommend it.
Some charts have been doing the rounds this week, and I wanted to take a look at them today, as a couple of you have been asking about them.
The first is this one, which shows that, relative to stocks, commodities are as cheap as they have ever been.
I have little doubt that there will be another bull market in commodities, that it will come when people are least expecting it, and that, when it does come, it will blow everyone’s minds, just as previous commodity supercycles have done.
But here’s the thing: we have got better at producing commodities. Modern farming methods mean we can produce more grains and softs at cheaper prices than ever before. Yes, sometimes there are events beyond human control that get in the way—bad weather being the most obvious example—but the broader trend will always be towards lower prices (especially if you use ratios and thereby strip out the fiat factor).
But these are the commodities that we grow. What about fossil fuels and metals, which are finite resources? We’ve long since taken the easy stuff.
Well, yes. But the same logic still applies. Modern mining means we can now explore far-flung corners of the earth and economically produce from much lower-grade rock. The same applies to fossil fuels. Fracking is an example. This new technology meant that previously uneconomic deposits became economic. The result was a glut of supply and lower prices.
So, while I do not doubt that commodities will have their day, I also look at the chart above and see no reason why they can’t get cheaper still. The trend of the last two or three years is lower. That ratio could quite easily go back and retest its 2020 lows. It could go even lower.
There is a lot of value to be had from ratio charts, but you also have to factor in basic stuff like improved productivity. However, there are other factors too. Many think we are heading towards some huge international conflict. If so, international trade will suffer, countries will start stockpiling, and commodity prices will quickly revert to 1973-4/1999/2008 levels.
Are you buying gold to protect yourself in these uncertain times? Let me recommend The Pure Gold Company. Premiums are low, quality of service is high and you deal with a human being who knows their stuff.
Here’s another ratio that is doing the rounds: gold miners versus gold
Now this one is pretty compelling. Time to pile in to gold miners? Let’s see. and let’s also check in on the miners we own.
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Innocent sleep … sore labor’s bath,Balm of hurt minds, great nature’s second course,Chief nourisher in life’s feast.William Shakespeare
Sleep is so important to your well-being. Your mind works better when you sleep well. Your moods improve. Your outlook improves. Your physical condition improves. Your health improves.
Life is better when you sleep well.
We spend—get this—a full third of our lives asleep. Yet how much do we treasure sleep? How much do we guard our sleep time? How much effort do we put toward improving our sleep?
Like so many things in this modern, fiat world of declining standards, the value of sleep has been overlooked.
Science may only just be starting to acknowledge the benefits of good sleep, but it’s something we’ve intuitively known since forever. From time immemorial, art and literature have been filled with references to the value of a good night’s sleep. The Ancient Greeks, Hippocrates among them, knew it was a prerequisite for good health. Many cultures considered dreams to be a form of contact with the divine.
I used to think I had mastered the art of sleeping. In the last couple of years, I’ve learned this is far from the case.
However, I’ve put in a lot of work and now, in my newfound role as health guru, I feel I’m in a position to dish out some advice on how to improve your sleep.
England cycling coach David Brailsford used to talk about the incremental effects of marginal gains. Sleep improvement is very much the same. There are lots of little things you can do, and, with the accumulation of these, you will see vast improvements.
Here are ten ways to improve your sleep, including how to deal with waking up in the night, bedtime habits, alcohol’s impact, melatonin, peeing in the night and more …
1. How to get to sleep
I always struggled to get to sleep, even as a youngster. I can remember lying in bed for endless hours, really trying to get to sleep and not being able to.
When you’re lying in bed trying to sleep, and you can’t, that is when the demons come: unwelcome thoughts creep into your mind and then start looping over and over. It’s good to be able to fall asleep quickly.
I now realise one of the reasons I got into the habit of drinking too much was that, after a few drinks, whenever I lay down, I would go straight to sleep. Drinking was a way of avoiding that difficult period of trying to get to sleep.
My other method was doing loads and loads of physical activity and then going to bed absolutely shattered. Not always possible.
So, here’s the first lesson I’ve learned, and this is the best hack ever.
First thing in the morning, go outside and get 15 or 20 minutes of sunshine. Do this as soon as you wake up. Make your morning cup of tea or coffee, then take it outside and get some sun. Even if it’s cloudy and cold in the middle of winter, go outside and stand where the sun would be. Open your eyes towards it. You’ll still get some rays.
This has been shown to regulate your circadian rhythms. In my view, it’s the single best thing you can do to help you fall asleep at night.
You’ll find, like magic - or is it clockwork? - that as soon as the sun goes down that evening, you’ll start feeling tired.
2. Darkness.
Darkness aids sleep. Blackout curtains in the bedroom are a good idea, but if that’s too much hassle, there’s a simpler, cheaper solution: sleep masks.
I’ve only lately taken to wearing sleep masks in bed (I’ve always used them when travelling) and I’ve come to love them. Go for a silk one—they’re very comforting. I use this silk one by Alaska Bear.
3. Breathe Better
There is a simple product for this too. Mouth tape.
Stick a little bit of this tape across your mouth and it forces you to breathe through your nose. You’ll be amazed. You sleep so much better if you only breathe though your nose.
I’m currently using this light weight one and I like it. My son prefers this heavy duty stuff, which might be better as a stating point to change your breathing habits.
If you sleep on your back and then snore, mouth tape can really help out.
4. Get a sleep tracker
I use the Whoop fitness tracker, which you wear on your wrist.
When I compare my data with friends using other devices like Garmin, Apple, Fitbit, Whoop, and Aura, there’s quite a bit of divergence between the brands, particularly on calories burnt. I don’t think it really matters: it’s the act of monitoring and tracking that leads to improvements.
Whoop seems to generally regarded as the best for tracking sleep though.
An unintended but incredibly beneficial side effect of getting a Whoop is that it will massively cut down your drinking. More on this in a moment.
5. Room temperature
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Don’t forget Shaping The Earth, “my lecture with funny bits” in London this October 9th and 10th at the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”.
Three subjects I want to briefly look at today, starting with everyone’s favourite non-government money.
There were rich promises of huge gains in bitcoin with the launch of the bitcoin ETFs and the halving cycle. Neither has quite materialised.
Bitcoin is “only” up by 30% this year, though to read some of the commentary, you’d think this is another Bitcoin winter.
The problem is that most of those gains came in February. For the other eight months of 2024, we’ve been generally stagnant. In fact, since March, we’ve been making a series of lower lows and lower highs and are clearly in a downtrend—hence the despondency.
However, despondency is often the ally of the contrarian investor, and with that in mind, I want to share a table with you (borrowed from Coinglass).
It shows Bitcoin’s quarterly performance. I’m sharing this now because we’re heading into Q4, which has historically been Bitcoin’s best quarter, with average returns close to 90%.
Seasonal patterns aren’t always the most reliable indicator, but the odds are favourable: seven positive Q4s against just four negative ones.
Better than Q1, which is 50:50; Q2 with seven positive and five negative; and Q3, which shows five positive and seven negative years (including this one, which isn’t over yet).
Let’s hope those averages hold.
I argue that Bitcoin should be a core holding. Many don’t like bitcoin, but the potential is so huge that, in my view, the greater risk is not owning it rather than owning it.
My guide to buying Bitcoin is here. And here, I detail the easiest way for UK investors to gain exposure via a traditional broker.
How Japan finances the world - and why we should be worried
About a month ago we explained the summer turmoil and the unwinding of the yen carry trade. The big question we all want to know the answer to is: was that it? Are we done now, or is there more to come?
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When I was 19, I started getting these weird heat rashes.
Every day, whenever I got hot, these debilitating, paralysing heat rashes would envelop me. Burning, bumpy, red weals suddenly covered my body. So itchy—you wanted to scratch everywhere, though scratching brought no relief. Once the rash started, there was nothing I could do. I just had to wait for it to pass, which would take about half an hour.
I didn’t even have to get so hot that I broke sweat for the rash to come on. Just walking briskly would do it, getting flustered, wearing a layer too many, even having a shower.
And it came every day, usually mid-morning.
I thought it might be stress that was causing it, but it was the other way around: these rashes were causing the stress.
I found a way of coping with it: do intense exercise every morning and actually induce the rash. Then it seemed to burn itself out for the rest of the day.
But the next morning, it would be back again.
I went to see doctors about it. None of them knew what it was. As GPs often do when they don’t know the answer, they brushed it aside, “Oh, it’s probably stress.” I wasn’t making this up! But unless I actually had an attack in front of the GP, there was no way of showing them what it was.
I saw a dermatologist, who gave me anti-depressants. I saw Chinese herbalist after Chinese herbalist, who all concocted these disgusting teas for me to drink. Lord knows what damage I did to my liver drinking that stuff. I saw an acupuncturist who declared brightly that he could cure it. But he couldn’t.
It made my life a nightmare, because you never quite knew when the rash was going to hit. What if it came on when I was on stage? During that all-important meeting? When I was with a girl I liked? It was a source of acute embarrassment.
The condition disappeared, bizarrely, if I went to the tropics. Why, Lord knows. But as soon as I got home, back it came.
Then I noticed the condition also disappeared in the summer. What was that about? I realised the antihistamine I was taking for hay fever also prevented these rash attacks.
But I didn’t want to take antihistamine every day—that couldn’t be healthy—so, once the hay fever season was over, I would go back to keeping it at bay by trying to do intense exercise every morning and burning it off.
When I got married and had kids, aged 30, this became impossible, so I resigned myself to daily antihistamine. This started with Clarityn (Loratadine), moved onto Zirtek (which I hated because if I drank alcohol, I used to get incredibly drunk and that led to a lot of bad decisions and mistakes) and, eventually, Xyzal, which I found I only needed to take every other day. The potential long-term damage of sustained anti-histamine use was a gamble I was prepared to make to avoid the daily nightmare of this condition.
If you are buying gold to protect yourself in these uncertain times, then let me recommend The Pure Gold Company. Premiums are low, quality of service is high and you deal with a human being who knows their stuff.
Eventually, I discovered that the problem I had was a condition called heat-induced cholinergic urticaria. I went to see a specialist at St Thomas' Hospital. “There is no cure,” she told me. “Sometimes it clears up by itself,” she told me, “sometimes not. You’re lucky antihistamine stops it. For many that doesn’t work.”
I volunteered to be a guinea pig so she could experiment on me as part of her research into the condition. I would go to the hospital, have a hot bath, my skin would erupt, and then she’d prod me and prick me and nod and mutter, but it got me no nearer to a cure.
Here I am at 54, and it has not cleared up.
What is the cause?
I’m still not quite sure if something I did caused it. Urticaria is from the same allergic school of illnesses as asthma, eczema, and hay fever, from which I suffer a little (asthma especially if I run or am near cats), so it might be hereditary or genetic. It affects young men more than any other group, which is what I was.
I’ve been on numerous forums where fellow sufferers discuss the condition, and a lot of us took the antibiotic tetracycline. I took it for years as a teenager to help with my acne. God, it makes me cross that I was allowed—even encouraged—to take it for so long. Bloody doctors, or one in particular (no longer with us so I won’t name him and speak ill of the dead), and my mother’s blind trust in them. I thought it might be tetracycline.
I had spent two months in Egypt just before I got my first outbreaks, and I got very ill with Giardia, a form of dysentary. Maybe I lost some essential bacteria in my stomach or something, or got leaky gut. (I’ve taken a million probiotics and all the rest of it—didn’t work).
Also just before the first outbreaks, I got the sh*t kicked out of me in a park in Milan by a group of young Italians - I mean properly beaten up, 7 v 1 and I made the mistake of fighting back - so maybe it was somehow related to that.
Maybe it was the accumulation of everything.
Nature’s magic superfood comes to the rescue
One of the unintended benefits of my health drive in recent years is that my asthma, which I’ve had since I was born, appears to have, for no apparent reason, gone. I haven’t been near cats to test it there, but I no longer need my puffer to play football. (Don’t know why. It might be an age thing; a health thing, most likely a seed oil thing).
Then I forgot to take my antihistamine for a few days, and I noticed that I wasn’t getting urticaria attacks either. Praise the Lord! I thought my urticaria might’ve cleared up too.
No such luck, as it turned out. It hadn’t. I went abroad and, after a few days, it came back.
Then I realised there was something I’d been taking at home, and I hadn’t taken it away with me.
It made all the difference.
That mysterious ailment you’ve had for ages and can’t rid of. this might sort that out too.
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Robert F. Kennedy has been grabbing headlines this week, not just for his alliance with Donald Trump, but for his criticisms of the American food industry, which he holds responsible for the epidemic of obesity and poor health.
I can’t believe what he has to say is even considered controversial, when it’s so obvious it’s true. Yet Time, The Guardian, The New York Times, and all the usual suspects have all come out to smear him.
Surely it’s clear? Processed food is bad for your health. Processed food causes obesity. Processed food is the cause of many modern illnesses. Don’t eat processed food. It is bad for you.
I’m not a doctor. Then again, I’m not an economist either. I’m just a guy who gets interested in stuff, especially systems—how they work and what their effects are.
In the noughties, I became very interested in our systems of money, largely because I couldn’t understand why houses cost so much relative to what people earn. Before long, I felt I had a good grasp of how money works. I ended up writing a film that became an internet sensation (and got horribly plagiarised in the process), several books, and umpteen articles, all making the case that if the West is to save itself and create a level playing field, we need sound money. Whether that’s based on gold or bitcoin doesn’t really matter. Money needs to be independent, rather than a tool of government.
Recently, I’ve become very interested in health - on particular, improving mine. For years, I have been unable to understand why I—and millions like me—could never keep weight off.
I have become convinced that seed oils are to health what fiat money is to the economy. It is that fundamental, in my mind. Thanks to bitcoin and gold, the fiat money narrative genie is out of the bottle. Fiat is not going to die tomorrow—it will probably take decades —but more and more people are realizing how bad it is and are taking steps to escape the system via alternative money.
The same thing needs to happen with seed oils. I find myself becoming as passionate about this as I was about money 15 years ago. Why are so many people obese? Why are so many people, who work on their health, diet, and fitness still 10 or 20 pounds heavier than they’d like to be? Why were so many people skinny in the 60s and 70s, but not now? Are people greedier now than they were then? They can’t be. We are the same human beings. Indeed, we exercise more.
What’s changed is processed food. It barely used to exist. Now it’s almost impossible to avoid. The main enabler of processed food, the thing that gives it such a long shelf life, is seed oil.
What are seed oils?
"Seed oils" is a catch-all term for the various vegetable oils that have replaced animal fats to become a mainstay of the Western diet: sunflower oil, rapeseed oil, canola oil, soybean oil, corn oil, palm oil, margarine, and so on. Anything hydrogenated is bad.
Seed oils were mostly invented for industrial purposes, but because of their price and properties, “entrepreneurial” companies, assisted by regulators, quack research, and lots of PR, gradually added them to their food products, so that seed oils have now, mostly, replaced animal fats
Just look at how they’re made. You gather seeds from plants such as soy, corn, cotton, safflower, or rapeseed; heat the seeds to extremely high temperatures, so the fatty acids oxidize; process the seeds with petroleum-based solvents such as hexane to extract the maximum amount of oil; add chemicals to remove the foul smell (this deodorization process produces harmful fatty acids); and then add more chemicals to change the colour and appearance of the oil. Not healthy.
One of their properties is that they don’t break down easily (they can thus help lengthen food’s shelf life). The problem, it seems, is that the human body can’t properly break them down either.
Okinawa in Japan became famous for its longevity, with many people living well into their 90s and 100s. Then along came Western processed food, and suddenly there is an increase in obesity, diabetes, and other modern illnesses. The once famously long-lived population is now seeing both a decline in life expectancy and an increase in health problems that were previously unknown.
When correlation equals causation
This chart shows the consumption of vegetable oil in the US since the late 19th century. We didn’t used to eat seed oils; we ate animal fats. You can see they change in diet.
Sugar often gets the blame for the rise in obesity, but if you look at current US sugar consumption, it’s not that different from what it was in the 1930s or 40s. Obesity has grown, while sugar consumption has remained broadly flat.
Now, let’s look at vegetable oil consumption and obesity rates. They correlate. And in this case, correlation is causation.
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A cock-up at HQ some of you didn’t see Sunday’s piece about a scam in the gold bullion markets. Here it is ICYMI:
Also in video format if you prefer.
Now we look at what must be the most important price in the world: that is the price of the global reserve currency, the US dollar.
Does it go up or down from here?
There is probably no more important question in global finance to know the answer to.
If the dollar is falling, it usually signals boom times for assets: equities and commodities especially. The US prints and spends, and then exports the inflation. Money gets loose and the party rocks.
But when the dollar is strong, everyone gets the jitters.
Today the US dollar is seriously oversold.
Conversely, the inverse trade—gold—is at all-time highs. US equity markets are flirting with all-time highs, while the euro and the yen, even the pound, have been soaring.
What’s more: the US General Election is coming.
On which note, how about this for a chart?
Since 1985, the dollar has declined with the Republicans - Reagan, Bush x2 and Trump - and rallied with the Democrats - Clinton, Obama, and Biden.
Who wins in November has a big impact on the price
But there’re several months to go till November, and a lot can change in just a few weeks.
Let’s start with US dollar index, which tracks the dollar against the currencies of the US’s main trading partners', over the past year.
Look at the RSI.
The RSI has gone beneath 30 for the first time in over a year. You would typically expect a reversal from these levels.
Look at the 3-month rally the dollar had starting in July 2023, the last time it was this oversold, it was quite something.
In fact, based on this, I have taken a small short position in cable, betting that the dollar will rise against the pound.
Last week, Fed Chief Jerome Powell indicated that the Federal Reserve is now ready to start cutting rates, which should be bearish for the dollar. However, oversold is oversold.
"The time has come for policy to adjust." he said. "My confidence has grown that inflation is on a sustainable path back to 2%."
The market is somewhat divided as to whether that cut will be 0.25% or 0.5%, but lower rates go. The inflation—by their definition—monster has been tamed.
“The 2-year yield has fallen to 3.9% compared to base rates at 5.5%, which is the bond market’s way of pricing in future rate cuts,” says Charlie Morris at Bytree. (Have you subscribed to his letter? You should.) "The difference, at -1.6%, means that a full rate-cutting cycle lies ahead. Indeed, this reading is more pronounced than seen in 2001 and 2008, implying the cuts could come thick and fast."
2001 and 2008 were major turning points in the US dollar.
What about sentiment?
To gauge this, I ran some polls on various WhatsApp chats and Twitter/X. What did they show?
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You can also watch this article in video format here:
There are some unscrupulous bullion dealers out there who are taking advantage of rookie buyers who don’t entirely know what they are doing when buying gold.
I am not going to name names. But don’t fall the scam
If a dealer tries to flog you graded coins, in almost all cases they are trying to rip you off. Don’t pay a premium for graded coins.
You are not buying gold to try and be clever and hope that your coin gets some kind of rarity value. In most cases, that will not happen. There are clever people who know this market better than you already playing this game. Don’t get involved. Your priority is to get as much gold for your money as possible. You are buying gold to preserve purchasing power, not to lose it.
If a dealer tells you that some recent sovereign, for example, is extremely rare, that it was one of the last coins minted under Queen Elizabeth or some such, and that it has been graded and has a special certificate and blah blah, and it therefore carries a huge premium, they are trying to pull a sly one. The reality is that the extra premium paid is almost impossible to claw back when you come to sell.
It really annoys me that bullion dealers are doing this. When buying gold, trust is everything and they are breaching that. You are buying gold for safety, not to be ripped off.
Eventually, the FCA or the Office For Fair Trading or someone will eventually come after the dealers, but it will be too late. We all know how slow these organisations can be and by this point many more people will have been scammed.
Why do dealers do it?
A dealer might buy a large stock of coins from the Mint. Coins are often of a slightly different quality. Dealers then send them off and pay a small fee to get them graded according to their Mint State. The scale ranges from MS-60 to MS-70, with MS-70 being a perfect, flawless coin. They then charge a large premium for coins with high grades, even though they barely paid any premium when they bought the coins
The margins when dealing in gold are on the slim side - sometimes just a few percent. But if they get an additional premium for the rarity, that margin can rise to 100%. No wonder there are so many unscrupulous salesman trying to flog graded coins.
Fractional coins—¼ or 1/2 sovs for example—or older coins do trade at a higher (though not enormous) premium. These can trade for 15-20% above the spot value of the gold content. But you are likely to get that back when you sell. (Demand for fractional coins has increased this last year while it has fallen for 1oz coins).
But for graded coins you can end up paying 100% premium to the spot value of the gold, yet when you come to sell you get little more than the spot value. So when you come to sell, you can lose over 70% even if the spot price of gold has increased.
It’s like buying a painting by a modern artist and being told by the vendor he’s more famous than he is, only to find out later on that he isn’t.
Don’t fall for it. And spread the word. The more people that know about this the better.
If you are interested in buying gold in these uncertain times, then check out my recent report, and look no further than my recommended bullion dealer, the Pure Gold Company. Premiums are low, quality of service is high, and you get to deal with a human being who knows their stuff and won’t try and flog you graded coins at rip-off premiums.
IMPORTANT: somebody keeps impersonating me on various social media, including on here asking readers to message them on WhatsApp. It is not me. Don’t engage. Please report and DON’T send any money.
Finally, my Edinburgh Fringe show Shaping the Earth, a “lecture with funny bits” about the history of mining, is coming to London October 9th and 10th to the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”. It’s a really interesting show, even though I say so myself.
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IMPORTANT: somebody has been impersonating me on Substack, on Instagram and on YouTube. Please don’t engage. Report and block. And please DON’T send any money.
Thanks to all who came to see Shaping The Earth up in Edinburgh. The show got incredible feedback. I am doing it in London October 9th and 10th at the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”.
House prices have to come down some time. But when exactly? That’s what we all want to know.
So here’s your answer.
The declines start in the US and Canada in 2025, followed by the UK, Europe and Australia in 2026.
That’s what the 18-year property cycle says, at least.
Today we explore that cycle and what it says about house prices.
18 Years of Boom and Bust
Economist Fred Harrison, who first covered the theory in his 1983 book, The Power in the Land, is very much the Godfather of the idea that real estate follows a predictable pattern over an 18-year period.
I first stumbled across Harrison in 2005, when so many were sure house prices had to come down (needless to say they didn’t), on reading his brilliantly prophetic article for MoneyWeek, arguing that we were two or three years from the top. Wasn’t he right.
Today, by most accounts, property should have already crashed. Real estate prices bear little resemblance to earnings. With the rise in interest rates that followed Covid, mortgage-holders found themselves with higher costs. Some were forced to sell, while prospective buyers could no longer afford to borrow as much as before. Increased taxes - I’m looking at you, Stamp Duty in the UK - have only added to the unaffordability.
And yet, while the market may be slow and stagnant in many parts of the country and indeed the world, it is not exactly crashing.
There was one school of thought that was steadfast in all the house-price bearishness which followed Covid, saying property’s time to crash had not yet come. They were the acolytes of the 18-year cycle in real estate. Yet again they’ve been proved right.
Real estate peaks in 2026, they said. After that we get four years of decline.
You know my views on cycles.
We have the seasons, days and nights, the moons, menstruation, the cycle of life - cycles are turning all around us. There are economic and investment cycles too: bull markets and bear markets, commodities super-cycles, Gordon Brown was always blathering on about the economic cycle, mining is cyclical. New technology goes through a clear cycle as it evolves and is adopted.
On the other hand, it’s easy to look back at the past, find some random pattern and declare it a cycle. Actually trading them in real time is a very different matter. In fact, the human need for narrative and the fact that cycles make for good copy mean it’s very easy to get wedded to the idea of a cycle, when a very different reality is staring you in the face. After 2008 many got it stuck in their heads that this was Kondratiev Winter and the next Great Depression, and, as a result, missed one of the most rip-roaring bull markets in history.
With all that said, the 18-year cycle in real estate has proved remarkably reliable, and, says Akhil Patel, author of The Secret Wealth Advantage, and one of Harrison’s great disciples, it goes all the way back to the turn of the 19th century. (I’ll show you that data in just a sec).
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Broadly speaking, there are four phases to the cycle - and it actually lasts about 18 and a half years.
* Years one to seven. A silent rally followed by …
* A mid-cycle slowdown or dip at around the seven year mark.
* The explosive phase. That’s when house prices really get on the map. Think 1983 to 1989 or 2002 to 2007. In the last couple of years you get a classic blow-off top - the winners’ curse.
* Finally, the correction which lasts around four years. Think 1989 to 1993 or 2008-2011. Then the cycle starts again.
Here it is, illustrated.
This is, says Akhil, “primarily a North American phenomenon, though Britain and Europe follow the US and, increasingly, emerging markets do as well.”
Here, for the historians out there, is a table from Akhil’s book that shows the data in the US going all the way back to 1800.
Recent turns of the cycle
There is no doubt the cycle has played out in the UK over my lifetime. (The US is typically 6 months to a year ahead of the UK ). From the mid-1970s through to 1989 there was an extraordinary boom in the UK, followed by that infamous crash from 1989 to 1993 and negative equity so bad that thousands simply posted their keys in the letter box and walked away from their homes. Prices peaked in the third quarter of 1989 at £63,000, before falling to £51,000.
But in 1993 things got going again. By the turn of the 20th century property erotica was all over the television, houses had become financial assets and today’s intergenerational wealth divide was just beginning to show its face.
The market peaked in Q3 2007, and declines followed, though it wasn’t such an out and out crash as 1989-93, largely because there were few forced sellers with the slashing of interest rates. The average house price then fell from £183,000 in Q3 2007 to £149,000 in Q1 2009. They fell by a lot more than 18% if you were a foreigner, however, as the pound lost a good 30% in the foreign exchange markets
It would be 2012 before the market properly got going again. We saw the mid-cycle dip around about Covid time, and now we are in the explosive phase, though in many parts of the country this is one helluva limp explosive phase. While prices are rising in some areas, the market is stagnant in many others.
It’s clear from all the leaks that Labour are looking at ways to extract some of the wealth tied up in housing. Whether that’s going to come from increased council taxes (0.5% levy of the value of the property - a number that will only go one way), capital gains tax on the sale of your main residence, increased attacks on buy-to-let landlords, increased Stamp Duty or by some other means, we do not yet know. (Labour are doing what the Tories used to do: leaking and then seeing what the reaction is).
None of that bodes well for house prices. Nor do their plans to increase housing supply via new builds, or indeed the mass exodus of people with money.
On the other hand, lower interest rates, which are coming, should give the market a boost.
Overall, my advice to any prospective buyers is to wait. I think this market is primed for big falls, but, like the 18-year guys, I don’t think these falls come for another couple of years. That said, often not buying a home means putting the rest of your life on hold, which is not a good thing to do.
If there’s a place you’ll be happy in, and you can afford it now, then do it. Cost is not always the main priority. And, of course, there’s always the possibility the 18-year-cycle guys have got it wrong.
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