Episodi
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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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Before we get started, I have put together some videos of recent pieces, as I slowly expand the video content on here. I don’t currently email these out in order to save your inboxes (but please let me know if this is something you would like me to do). What do you think of these vids? Would you like more of them? Let me know. We have house prices, scams and immigration - everyone’s favourite subjects.
Don’t forget Shaping the Earth. Tickets are selling fast. October 9th and 10th at the Museum of Comedy.
But today, it’s seed oils. Dreaded seed oils. They are to food what fiat is to money.
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.
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 -
If you would rather watch this piece go here:
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).
Looking to buy gold in these uncertain times? 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.
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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(And, no, I’m not standing on a stool!)
After the unexpected popularity of my post about weight loss (still can’t believe it had 11 million views), I am trying something a little bit different this Sunday morning with this short video about dead hangs, while doing a dead hang. I am planning to cover alternative health a bit more frequently on here in the Sunday morning thought pieces.
(NB If you want to try dead hangs, but aren’t yet ready to hang fully, try resistance bands or standing on a step and still putting as much weight as possible through your shoulders).
Enjoy!
In case you missed them, last Sunday’s post on immigration was extremely popular
And we also had an update this week on the Dolce Far Niente portfolio
TRANSCRIPT:
Hey Siri. Timer in 2 minutes.
Today, I’m going to talk to you about dead hangs.
I’m going to try and do a 2-minute dead hang while recording this video. Not sure if I can last two minutes while talking.
I had a motorcycle crash when I was 27, and I've had problems with my neck ever since.
Then, last year, I got a trapped nerve in my shoulder and I was in agony. My osteopath helped a lot. I did about 3 or 4 minutes of neck stretches most days. However, the problem continued.
And it was only after I started doing dead hangs a few months ago, that my neck issues, shoulder issues and trapped nerve mostly cleared up.
Dead hangs are great. Everything we do, whether exercising or just sitting, compresses the spine. Dead hangs stretch it all out.
As well as decompressing the spine, they have all sorts of beneficial side-effects.
* They improve your posture.
* They re-aligning the spine.
* They stretch out all the evils of sitting at a desk in front of a screen all day.
* They increase neck and shoulder strength, flexibility and mobility.
* They stretch through your torso, particularly if you swing from side to side, improving your stomach and core strength.
* They are great for your grip strength, your fingers and forearms.
* And holding the position for extended periods is probably good for your determination too.
So get a pull up bar. The ones you hang in your doorway are you but the ones you put on the wall are better, like this one, and keep hanging every day.
At first you’ll only be able to hang for 10, 20 or 30 second, but keep doing it and you’ll quickly increase the time you can hang for.
Then you can start hanging in different ways. You can extend the width of your grip. swing, do one-armed hangs.
Try and do a couple or three dead hangs a day and they will benefit you in all sorts of unexpected ways, I promise.
I can’t think of a physical more beneficial way of spending a couple of minutes than a dead hang.
When it finishes you get this rush of pain, this exhilaration through your shoulders.
And I’m hoping it finishes pretty soon. Hey, Siri, how long on timer?
Hey, Siri, how long on timer?
It didn’t set!
Tell your friends about this amazing video.
Here’s the original weight loss post, in case of interest.
Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.
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 -
To watch this piece, go to:
1. There are more people in the world than ever - and we all want better lives
There are some 8.2 billion people in the world - more than ever - and, whether it’s people displaced by war, famine, or lack of water, or (the big one) people seeking a better life with more opportunity, more us are on the move than ever.
Some stats:
4.6 billion live on less than $10/day.
7 billion live on less than $40/day. 7 billion!
While the number of people in extreme poverty (below $2.15/day) has capitulated in South Asia, East Asia, and the Pacific, it is rising in sub-Saharan Africa.
I was interested to know what the global population by ethnicity is (search engines do not make that easy to find out), but, broadly speaking, it looks something like this (obviously there are lots of mixed race people):
* Asian (Chinese, Japanese, Korean, etc.): ~3.2 billion / 43%
* Indian (India, Pakistan, Bangladesh, Nepal, Sri Lanka): ~1.5 billion / 20%
* Black African: ~1.4 billion / 19%
* White European: ~750 million / 10%
* Middle Eastern (Arab, Persian, Kurd, Turk, etc.): ~500 million / 7%
* Amerindian (North and South America): ~100 million / 1%
* Pacific Islander: ~12.5 million / 0.2%
Visualised:
Though this is rapidly changing with Asian growth, the majority of the world’s wealth lies in the predominantly white (for the time being) countries of Western Europe and North America.
There are a gazillion different reasons put forward as to why this might be, which differ according to worldview, ranging from slavery to IQ to system of rule. Regardless of what the reason is, Western Europe and North America have become the prime destinations for migrants. That is where the money is.
Language is a huge and overlooked factor too. Most people around the world speak some English. If the migrant speaks German, they might prefer Germany, but English is more widespread, and that means greater numbers will favour the Anglo-Saxon nations.
But the population of Western Europe is less than 200 million, 265 million if you include the UK. The population of the U.S. is 345 million. We are tiny in the global context.
The difference in the weight of numbers is staggering.
(Another good stat for you: more people are born in Nigeria each year than in all of Europe).
2. Modern transportation
Because of planes, trains, and automobiles, not to mention boats (fossil fuels and engines, basically), people are able to travel further and faster than ever before.
Forget Around the World in 80 Days, itself a miracle in 1872 when the Jules Verne story was published, now, it’s almost (not quite) possible to get around the world in 24 hours.
Meanwhile, the days of the medieval serf, who was tied to his land and not allowed to travel, are long gone (for the most part—there are bits of Africa and Asia where you are still tied).
3. Modern media
Media and communication are more advanced than ever. Whether it’s TV, film, or, most crucially, social media, the whole world is able to see how the other half lives.
As of 2023, there are approximately 6.8 billion smartphone users worldwide, representing about 85% of the global population.
This has increased awareness of better lives to be had, and it has stoked desire.
Modern communication has also enabled travellers to exchange information on how to move.
So you have:
* more people than ever
* better transport than ever
* more awareness than ever
* more desire than ever.
That is why the mass movement of people is now at levels never before seen in history. That is also why it is only going to increase.
This is a point that nobody in a position of influence in the media or politics seems to be making. Global migration levels are not going down. They are going up.
So instead of brushing the issue under the carpet and calling people racist, immigration is a conversation we need to be having.
What is the plan in the face of migration levels that are inevitably going to increase?
Do we want more people? Fewer people? More of certain types of people?
What is the optimum number of people? Who are the optimum people?
People with certain qualifications? People from certain cultures—Judeo-Christian/Muslim/Buddhist/Hindu? People of certain ethnicities? Must they pass wealth tests, skills tests, IQ tests, values tests? What?
How can this all be agreed? By referendum? By poll?
And once agreed (fat chance), how can it all be ensured?
Spoiler: it won’t be. We are not even going to properly talk about, let alone do anything. At least not until it’s too late (if it isn’t already).
Instead, we will see the further South Africanisation of everything, and yet more internal division while these issues of immigration continue unaddressed.
If you are young, I really wouldn’t hang about. There is a whole world out there. I’d go and be a migrant yourself.
Until next time,
Dominic
Looking to buy 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.
On the subject of the recent protests, you might find this of interest: why I think they will achieve very little:
Finally, Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.
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 -
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IMPORTANT: somebody has been impersonating me on here and asking readers to message them on WhatsApp. Obviously it is not me. Don’t engage. Stop engaging and block, if you have started. And DON’T send any money.
I am now at the Edinburgh Fringe with Shaping the Earth, a “lecture with funny bits” about the history of mining. The show is going great guns. I’m then taking it to London on October 9th and 10th to the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”. The Edinburgh link is here. And the London link is here.
But today, just as the title suggests, I am going to explain the extraordinary volatility we have seen in markets all over the world this week. I’ll then look at what we should be doing next. What should we do with our gold/bitcoin/oil and gas/equities and all the rest of our holdings?
The trigger for all of this lies in the Land of the Rising Sun.
The Japanese yen has been undervalued for a long time. For the first time, perhaps in my living memory, Japan has become a cheap—well, not super expensive—country to visit. Against the dollar, pound, and euro, then yen was at multi-decade lows.
The main reason for the weak yen is Japanese monetary policy. The Japanese central bank has suppressed rates for many years in an effort to stimulate the Japanese economy. It hasn’t worked, but like so many policymakers, when confronted with a failed policy, the reaction is not to change tack but to double down. In 2016, rates actually went negative.
But even as the rest of the world raised rates to try and counter the inflation that came post-COVID, Japan kept them low, creating quite the differential.
Until last week, Japan had only raised rates once in 17 years—by 0.25% in March.
Here are 15 years of the yen against the US dollar so you can see just how weak the currency had got.
Talk about a long-term bear market.
This situation created what is known as the Yen Carry Trade. You borrow in yen, pay a very low rate of interest, and then use the money to buy other assets that pay a better yield. It might be other currencies, bonds, equities, or even cryptocurrencies.
Let’s say you borrow at below 1% and buy a government bond in another currency that yields 5%. The arbitrage is pretty generous, and the risk is very low. Borrow at below 1% and buy something like an S&P 500 tracker, which might grow by 10-15%, and the rewards are handsome.
The longer this situation has gone on, the more capital has gone into this trade, and the greater the risk taken on. Not unlike the British riots (too much immigration for too long when nobody voted for it), this has been a powder keg waiting to blow for a long time. All that was required was the spark.
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I am now at the Edinburgh Fringe with Shaping the Earth, a “lecture with funny bits” about the history of mining. I’m then taking the show to London on October 9th and 10th to the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”. The Edinburgh link is here. And the London link is here.
ALSO
IMPORTANT: somebody has been impersonating me on here and asking readers to message them on WhatsApp. Obviously it is not me. Don’t engage. Stop engaging and block, if you have started. And DON’T send any money.
“They don't give you gold medals for beating somebody. They give you gold medals for beating everybody.” Michael Johnson, sprinter
Why do Olympic winners bite their gold medals? The short answer is: for no other reason than a photographer just told them to. But the tradition of biting gold goes back a long way.
You might have seen pirates in movies biting their coins too. While such hard-toothed individuals might inspire excitement in modern audiences, ordinary merchants and traders, indeed anyone handling money, used to bite their coins too: it was a rude test of the purity of the metal. Prospectors in the 19th-century gold rushes also used this method to differentiate between real gold and fool’s gold?
As well as scraping (to look for plate) or indenting to test softness, biting might involve a little bending too, using the teeth as a clamp to bend against. If the metal is soft and malleable, it was likely pure gold or silver. Hard and brittle, it could indicate that the coin was counterfeit or mixed with other metals. Too soft, however, and the coin was likely lead, coated with gold, a common counterfeit in the 19th century. (Lead is softer than gold).
The method might expose crude forgeries, but it would by no means have been foolproof. Copper was added to gold coins from the Tudor period onwards, which would have made them harder, and the bite test that much less reliable, though in Mediaeval times biting might have worked better. Coins, such as Florence’s florin, the standard of the day, were 24 carat, thin, and relatively soft. The bite test might have exposed forgeries.
Weighing is more effective, and any merchant would have a set of scales, though perhaps not a pirate. The stamp of the issuer, ideally a reputable royal, also went a long way to certifying authenticity.
For the prospectors of the gold rushes, however, who only required a simple differentiation between actual and fool’s gold, the bite test would have been more dependable. We have always used our bodies to measure things.
Looking to buy 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.
What are gold medals made of?
Today’s Olympic winners needn’t bother biting their gold. The last time an Olympic gold medal was made of solid gold was over a hundred years ago in 1912 in Stockholm.
The gold medals at the 1896 Olympics in Athens, when the Games were first revived, did not contain any gold. They were made of silver and gilded with a thin layer of gold. The same happened at Paris in 1900.
Things perked up for the athletes in 1904 at the St. Louis Olympics, when the gold medals were made of 12-karat gold (50% gold, 50% copper). There was a considerable upgrade in 1908 in London, when the gold medals were 22-karat gold, weighing almost an ounce (25g). This proved the peak. (Just as it was probably Britain’s peak too). There were 109 gold medals handed out. That’s over 100 ounces. Expensive!
Steady debasement followed. At the 1912 Stockholm Olympics the gold medals were 18-karat gold. From 1920 in Antwerp onwards, the medals were back to gilded silver.
Today the International Olympic Committee stipulates that modern Olympic gold medals must weigh at least 500 grams, and contain at least 6g of gold. Olympic gold medals remain largely of silver (93%), copper (6%), plated with about 6 grams of (a bit more than a 1/5 ounce) of gold. A gold medal is thus roughly 1% gold.
At the 2022 Olympics in Tokyo, the metals to make the medals came from a recycling initiative. The Japanese handed in nearly 80,000 tonnes of electrical gadgets, including laptops, digital cameras, gaming devices and 6 million phones. The appliances yielded 32kg/1,000 ounces of gold, 3,500 kg/113,000 ounces of silver and 2,200kg of copper. (There is, I learn, about eighty times as much gold in one tonne of cellphones than there is a typical tonne of rock at a gold mine).
All 5,000 medals were made from the recycled materials, which were identified using Vanta X-ray fluorescence analyzers, which can identify metals and accurately determine their karat value in a matter of seconds.
Until next time,
Dominic
Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.
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 -
Good Sunday afternoon to you,
I was blown away by the response to Wednesday’s article about weight loss. The Twitter/X summary got more than 10 million views. Here it is, in case you missed it.
Going forward, I am thinking of writing more alternative health stuff, as there seems to be a huge appetite for it. But today it’s business as usual: gold.
And I have a question for you …
The Great Steppe stretches approximately 5,000 miles from the Pacific coast of China through Mongolia, Siberia, Xinjiang, Kazakhstan, Russia, Ukraine, and Romania, reaching the Danube Delta and Hungary.
Vast stretches of grassland, savanna, and shrubland—harsh and dry, devoid of trees and large vegetation—are sandwiched between forests to the north and mountains and deserts to the south. This region has connected Central Europe, Eastern Europe, Western Asia, Central Asia, East Asia, and South Asia since the Paleolithic Age, serving as a predecessor to the Silk Road and the Eurasian land bridge.
This ocean of grass is one of the world’s largest ecosystems. Many remarkable species—elk, gazelle, brown bear, leopard, and tiger—have made it their home. So have many great nomadic empires—the Xiongnu, the Scythians, the Mongols, the Huns, and the Göktürk Khaganate—all famous for their ferocity, horsemanship, and military might.
The open space gives rise to mighty extremes of weather—howling winds, unbearable heat by day, and freezing cold by night. Humans could only survive by breeding creatures—goats, sheep, camels, and cattle—even hardier than themselves. Of all of these, perhaps the most essential to human survival and evolution was the horse.
The horse was first domesticated on the Steppe about 6,000 years ago, probably by the Botai people in present-day Kazakhstan. Their horses—likely similar to today’s Mongolian horse—were small, stocky, and hardy, able to travel long distances in trying conditions. The horse enabled tribes to guide their flocks over large distances as they searched for new grazing lands. It facilitated trade and exchange, and allowed them to form huge and terrifying armies.
The fearsome Scythians were the first to use horses in battle, carrying stones, clubs, and bows as weapons. These marauding armies inspired fear. Their warriors were such brilliant horsemen that it seemed they and their horses were one creature, giving rise to the Greek myth of the centaur: wild, untamed, and violent; strong, fast, and ferocious; drunken, lawless, and lustful, with the upper body of a man and the lower body of a horse.
The Greeks had a complicated relationship with the Scythians, both admiring and fearing them. Chiron, one of the centaurs famous for his wisdom and knowledge of medicine, tutored many of the greatest Greek heroes, including Hercules, Achilles, and Jason. Perhaps the Greeks exaggerated their barbarity to contrast it with their own sophistication and culture.
In any case, while the centaur has endured in myth, it was not long before it was realized that man and beast were not one, and the practice of horse-riding spread beyond the Great Steppe. The horse became the primary mode of land transport for thousands of years.
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Then the Industrial Revolution came along.
The first steam locomotive was developed in England in 1804. By the mid-19th century, railroads had become the primary mode of transportation for people and goods across much of the world. It was the beginning of the end for horses as a primary mode of transportation.
In the late 19th and early 20th centuries, the automobile emerged. “Horseless carriages,” they were called. Karl Benz developed the first gasoline-powered car in 1885. By the early 1900s, cars had become a common sight on many roads, further diminishing the need for horses.
Inventor Alexander Winton sought investment for his Winton Motor Carriage Company. “Get a horse!” a banker told him. “You’re crazy if you think this fool contraption you’ve been wasting your time on will ever displace the horse.”
Winton continues:
“From my pocket, I took a clipping from the New York World of November 17, 1895, and asked him to read it. He brushed it aside. I insisted. It was an interview with Thomas A. Edison: ‘Talking of horseless carriages suggests to my mind that the horse is doomed… Ten years from now you will be able to buy a horseless vehicle for what you would pay today for a wagon and a pair of horses. The money spent in the keep of the horses will be saved and the danger to life will be much reduced.’”
The banker threw back the clipping and snorted, “Another inventor talking.”
Today, the horse is, for the most part, an expensive luxury. Its use is often just symbolic.
How does this relate to gold
Here is my question:
Could you say the same about gold?
The horse was transport for 6,000 years. It was transport for almost as long as gold was official money. It was “natural transport.”
But just as transport changes as technology evolves, so does money.
Perhaps gold is to money as the horse is to transport?
Something to ponder this Sunday afternoon.
(SPOILER: I don’t think it is!)
Tell your friends about this amazing article.
As from later this week I will be at the Edinburgh Fringe, performing Shaping the Earth, a “lecture with funny bits” about the history of mining. I’m then taking the show to London on October 9th and 10th to the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”. The Edinburgh link is here. And the London link is here.
Plus:
Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.
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 -
In the last few years, I have gone from this to this.
I’ve written about my weight loss before, but, just in the last two or three months, something has really accelerated, and I’m not quite sure what.
I’m now 54. I’ve suddenly got a six-pack. Well, sort of. A four-pack. I’ve lost 48 pounds (22 kg). My metabolic age has come down from 57 (when I was 51) to 49. I am super fit and bursting with energy.
Even at the age of 22, when I had just left drama school and won a British Open Martial Arts Tournament (BOMAT 1991 - I’ve got the trophy somewhere if you don’t believe me), I don’t think I was nearly as defined. I’m the same welter weight as I was then too.
What’s the secret? There isn’t one. I’d love to say this was all deliberate, but really, it has happened by accident. I was overweight, started fasting to lose weight, and it spiralled from there. Normally, I put the weight back on, but this time it’s not only stayed off, but I have lost more weight and got into better shape.
I thought I should describe some of my habits here, in case you find them beneficial. I don’t think it is one thing that has done it. I think it is the aggregation of everything.
So here we go: 12 habits to transform your health. If you are interested in following me down this route, don’t try and do all of these at once. Do one, then gradually add others. Baby steps …
1. Fast
Do the 5:2 diet. It takes effort, but it works. It is probably the single most effective thing you can do to lose weight. Fasting brings mental clarity too. Watch videos, listen to podcasts, read, indoctrinate yourself, then do it. After a while, you look forward to the feeling of being hungry and the good feeling you get after: I call the morning after a fast the inverted hangover because you feel so good.
2. Avoid Seed Oils
By seed oils, I mean all the industrial oils that have only entered our diet in the last 50 or so years and that human beings were never supposed to eat - vegetable oil, sunflower oil, rapeseed oil, canola oil, palm oil - all that stuff. These things were invented to be industrial oils, and they’ve made their way into our food supply and they are poison.
Why is obesity such a problem? Look no further than seed oils for your answer. 100 years ago, Americans got zero calories from seed oils; now they make up a third of their daily intake. In this case, correlation is causation. Things like olive oil, butter, tallow, and coconut oil are fine.
Seed oils are in everything. Assume what you are considering eating contains seed oil and only eat it when you have ascertained that it doesn’t.
Tell someone you know about this.
3. Dead Hangs
I think these might have been the transformer, as I’ve only been doing them a few months. Get a pull-up bar. You can get ones that you hang in your doorway or, better, get one outside for your garden and hang from it. At first, you will only be able to hang for a short time, but keep hanging every day so that eventually you can hang for two minutes. Then do two two-minute hangs per day.
I only started doing dead hangs to cure my various neck ailments (too much computer), but they have had all sorts of unintended, beneficial side effects. They improve your posture, they stretch out all the evils of sitting in front of a screen all day, they sort out your neck problems, your shoulder problems, they stretch through your torso. I can’t think of a more physically beneficial way of spending two minutes than a dead hang.
4. Get a Whoop
Whoop is a health and fitness tracker watch which focuses on sleep and recovery. I got one to improve my sleeping habits. Sleep is the new exercise, as I’m sure you know. It measures, among other things, heart rate variability (HRV), which plummets when you drink. You then get a big red warning which puts you off drinking.
The unintended consequence, then, of getting a whoop was that my alcohol consumption has gone from having a couple of drinks or more most days - half a bottle of wine a day kind of stuff - to almost zero. I now crave not drinking. It’s not just the calories in alcohol, it’s the bad decisions you make after drinking, particularly late-night bingeing. Not drinking also improves sleep and general health. I did not plan to give up booze. I like booze. I love beer. I love wine. I like drinking. If you told me I had to give up drinking, I would’ve said no. But that’s what happens when you get a Whoop. So get a Whoop. Plus your sleeping habits improve too.
5. Have a partner you want to look good for
I had one - now sadly no more - but I’m sure it made me generally up my physical game. She was also extremely health-conscious and got me into all sorts of good habits. It helps to have a partner with whom you can eat well and exercise well. It makes you accountable too.
Sometimes splitting up with someone you like or love can be great for your weight too. Maybe that’s what happened to me!
You really should subscribe to this wonderful publication.
6. Cider vinegar
It’s better for you than Ozempic. It’s cheaper than Ozempic and it reduces your appetite. More here on the glories of cider vinegar.
7. Supplements
I’ve gone from taking zero supplements to taking so many so that I don’t know which ones are actually doing good. But I’m pretty sure Tongkat Ali and Fadogia Agrestis have had an impact. I sometimes think the act of taking supplements is more effective than the supplements themselves.
8. Water
Don’t know if it did anything, but I stopped drinking tap water where possible and only try to drink mineral water. (Next worry is microplastics).
9. Exercise
I try to do some form of exercise every day, and I mix it up between cardio, stretching, and weights. I probably could do more weights: I only do one session per week with some dumbbells at home. I need to join a gym. I find cycling good because it doesn’t hurt your joints. When I run, I usually only run two or three miles, but I live near a steep hill, so I do four 30-second sprints up the hill at the end. I play a bit of tennis and a bit of footy. Swimming is also good, but I don’t like chlorine, so that is more of an occasional summer pastime when I can do it outside .
10. Two meals a day
Do you really need three? Skip breakfast, have an early lunch, and go to bed early. And no seed oils.
11. 15 Minutes of Sun
The first thing I do every morning is drink a pint of water, make myself a cup of tea, then go and sit in the garden for 15 minutes and get some sunshine. This is supposed to help regulate your circadian rhythms and sleeping habits. I have been getting to sleep much more easily since I did this. Even if it’s cloudy and it’s winter, go and sit outside for 15 minutes first thing in the morning.
12. Count Calories
I have only just started counting my calories using the Calorie Counter app. The thought of putting your calories into this every time you eat deterred me from doing it sooner - yet more time on my wretched phone - but I’m actually quite enjoying it and I keep it probably 85 or 90% accurately. Eating discipline definitely improves if you get one. Ultimately, losing weight is basic maths: fewer calories in than out, and you lose weight. Net immigration is the same.
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A Bruce-y Bonus. Learn to stand up from the ground without using your hands
This is supposed to be an indicator of longevity. A few months ago I was hopeless. I could barely stand up from a yoga block. But now I can do it. Here’s the proof.
So there you go. I hope this helps. As I say, don’t try to do everything at once. You can’t. Baby steps. This is a case of the power of incremental gains and compounding.
Diet is the most important thing. If you don’t get that right, it doesn’t matter how much you exercise. You can’t outrun a bad diet.
Until next time,
Dominic
PS Don’t forget the mining show - the Edinburgh link is here. And the London link is here.
Plus -
Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.
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IMPORTANT: somebody has been impersonating me on here and asking readers to message them on WhatsApp. Obviously it is not me. Don’t engage. Stop engaging and block, if you have started. And DON’T send any money.
It’s a question that comes up a lot. In fact, a friend was asking me just this week, so let’s try and resolve it here and now, once and for all: gold or silver - which should you buy?
Full disclosure: in my own portfolio at one stage I was geared as much as 70% towards silver and 30% towards gold. But in 2011, when silver went to $50, I rolled into gold and never went back. My physical allocation is now probably something like 90% gold and 10% silver.
(For clarity’s sake: we are not talking about mining companies - these are a different kettle of fish altogether - just physical metal).
Make no mistake: silver has a great deal more potential than gold. There is every possibility that the silver price could triple or quadruple from today’s price just below $30/oz. It could even go to $200. But my experience of 20 years investing in silver is that if it can find a way of disappointing, it will. The out-and-out silver bugs all scream manipulation, and maybe the silver market is manipulated and repressed. For sure, if all the longs on the futures exchanges were to hold out for delivery, the silver price would go shooting up. There is not the physical supply to deliver on all the contracts. That applies to many commodities, though none, it seems, consistently to the same extent as silver. But why invest in something if forces stronger than you are repressing it?
It is unlikely, meanwhile, that gold will triple or quadruple from today’s price of $2,300/oz unless we enter into some kind of currency crisis or extreme inflation.
Then again, the silver price could easily halve from $30/oz. I don’t think a 50% correction in gold is likely, outside of some deflationary financial panic or liquidity crisis such as we saw with COVID in 2020. In any case, any such correction would be temporary.
Reasons to Buy Silver
My friend was told to buy silver because the silver-to-gold ratio at 80 is high and should come lower. Let’s consider that argument.
There is 15 times as much silver in the earth’s crust as there is gold, and throughout all of history, the monetary ratio between the two reflected natural supply. Fifteen silver coins got you a gold coin.
But silver stopped being used as money in the late 19th century. The many gold rushes of the period increased gold supply so that most countries around the world followed Britain’s model and adopted pure gold standards (more on this here). By 1900, China was the only major country in the world on a bi-metallic standard, which included silver. Every other nation was on gold.
In my lifetime, the silver-to-gold ratio has only once gone back to its natural levels of 15, and that was in 1980 for an afternoon, when the Hunt brothers’ attempt to corner the silver market reached its climax. The reality is that the silver-to-gold ratio has been gradually getting higher for a generation now, averaging between 50 and 85, though going above or below those levels at times of market extremity. In 2020, it went to 125.
Reality check - this is a long-term uptrend.
I accept that the silver-to-gold ratio “should” be 15. In fact, perhaps it should be even lower because silver gets consumed, while gold does not. But in practice, I don’t think that ratio will ever go to 15 in my lifetime, certainly not for any extended period.
The other argument that my friend was given to buy silver instead of gold was that silver has many industrial uses. This is indeed the case. It has many more than gold, even if gold’s biggest source of demand is jewellery. (More on gold’s industrial uses here).
Gold’s use throughout history has been to store or display wealth. Silver’s has been to exchange it. Silver no longer has that use, nor is it likely to. We don’t use metal as a medium of exchange anymore, nor are we likely to. Money is digital.
Gold is the store of value, not silver, which is expensive and bulky to store. Gold is the constant.
We don’t buy gold to become millionaires. We buy gold to protect the value of what we have already earned. Gold will continue to do that. Silver might not.
Silver is much more speculative. It has the potential to earn you more money than gold, but it also has the potential to lose you more than gold.
Why not own a bit of both?
Where to buy gold or silver?
I’ve used many bullion dealers over the years. The dealer I like most, and with whom I have an affiliation deal, is the Pure Gold Company. Premiums are low. Quality of service is high. You get to deal with a human being. You can take delivery of your gold or store it online with them in their vaults. They deliver to the UK, US, Canada and Europe. (If you speak to them, tell them I sent you). I also like Goldcore.
Why are you buying gold or silver?
Are you buying precious metals because you think fiat money is going to collapse and, in this hyper-inflationary scenario, you’re suddenly going to become a multimillionaire, sweeping up assets at bargain basement prices because you own precious metals?
Or are you buying them because you think the purchasing power of fiat will continue to erode over the next 10 or 20 years and you want to protect what you have?
If your purpose is speculation and you want to get rich, then maybe silver or silver options are a way to do that, or silver mining companies, or even gold mining companies or cryptocurrencies. Maybe even silver itself. But they are all also means to get poor.
But if your purpose is simply to protect what you have earned, then gold is the way.
There is a definite case for both. But understand why you are buying the metal and be truthful with yourself as to why you’re buying it. That will give you the answer between gold and silver.
In the end, I recommended my friend buy 75% gold and 25% silver. I have to say, at $30, the silver price looks a bit frothy to me and it could correct. My ambivalence towards silver is long-standing.
But I don’t think my friend is going to listen to me. I think he’s gone 100% gold and that makes a lot of sense.
If your purpose is protection, insurance, and safety, then gold is the way.
If your purpose is speculation and something more aggressive, then silver.
My Biggest Silver Position
On the subject of silver mining, I thought I should give you a quick update on the silver company that represents one of my largest mining positions and certainly my largest position in a silver mining company.
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I am bringing my Edinburgh Fringe “lecture with funny bits” about the history of mining to London on October 9th and 10th to the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”. The Edinburgh link is here. And the London link is here.
Let’s start with an overview of gold demand as it currently stands.
Never mind central banks, investment banks, or private investors—almost 50% of annual gold demand comes from the jewellery industry. It is, by some margin, the single largely buyer of gold. Another 23% is investment demand, and 21%—last year at least—came from central banks. Just 6% of demand is industrial (excluding jewellery, of course).
Jewellery, investment, and central bank demand have all been increasing in recent years. However, a change in macroeconomic circumstances could easily mean, for example, that central banks become net sellers. It's not like it hasn't happened before. But, while de-dollarisation remains a growing theme, I do not see that as likely for several years at least. Similarly, investment demand could easily shrink. Jewellery demand is more constant, and it increases when people feel rich and decreases when they don’t.
Gold’s main use has always been and will always be to store and display wealth—in other words, investment and jewellery. Technological demand is rather at the margin, but might we see demand growth there? Let’s investigate.
Interestingly, one huge potential increase in demand will come, ironically perhaps since that is where gold came from, at the final frontier in outer space.
At the Final Frontier - Also On Your Phone
Both silver and copper are better conductors of electricity than gold, but gold is more resistant to corrosion and oxidation. Therefore, it finds considerable use in electronics as a coating, especially where long-term stability is important. It is used to cover connectors, switches, and relay contacts; in printed circuit boards, microprocessors, and memory chips. This resistance means it finds considerable use in both aerospace and outer space, where it is used to coat satellite components and spacecraft.
It can reflect infrared radiation and protect craft from overheating—especially important in the wild temperature fluctuations of outer space. It is also used in the heat shields which protect sensitive equipment from high temperatures during re-entry into Earth's atmosphere.
The umbilical cord that binds an astronaut to their spacecraft is plated with gold. The visors of astronaut helmets are plated with gold to protect their eyes from harmful ultraviolet radiation. The MOXIE (Mars Oxygen In-Situ Resource Utilization Experiment) instrument, which forms part of NASA’s Mars exploration programme, is plated with gold. Its purpose is to create oxygen from carbon dioxide, effectively replicating the role of plants on Earth, so that a human mission to Mars can one day take place.
Ultimately, gold’s permanence is the fundamental reason for its use. You need durable materials. When you send a spacecraft to outer space, you can’t repair it.
This usage is not yet significant enough to radically alter gold demand, but that could change, and quite dramatically so, as space exploration increases.
At the 2022 Olympics in Tokyo, the metals to make the medals came from a recycling initiative. The Japanese handed in nearly 80,000 tonnes of electrical gadgets, including laptops, digital cameras, gaming devices and 6 million phones. The appliances yielded 32kg/1,000 ounces of gold and 3,500 kg/113,000 ounces of silver. There is, I learn, about eighty times as much gold in one tonne of cellphones than there is a typical tonne of rock at a gold mine. Increased high tech means increased gold demand, but perhaps not enough to effect the price.
Optics and Other High Tech Uses
Gold's reflective properties, combined with its stability, mean it finds use in optics—in lenses and mirrors, especially space telescopes, to reflect infrared light. Gold plates the mirrors of the celebrated James Webb telescope, the largest optical telescope in space, to optimise the mirrors’ function, allowing it to view objects too old, distant, or faint for the Hubble Space Telescope. For example, the first stars, the formation of the first galaxies, and the detailed atmospheric characterization of potentially habitable exoplanets.
There is a Canadian company, Totenpass, which has been developing some interesting gold tech, also related to gold’s longevity: “a permanent digital storage drive constructed from solid gold that requires no energy and has no movable parts. Digital data is written onto the drive by way of a proprietary light-diffraction process which imprints images, documents, and other files that can be stored as either human readable without the aid of computers or machine-readable with the employment of a smartphone. This technology allows for the permanent storage of precious digital data, thereby eliminating any future dependence on the internet and the vast amounts of energy required presently to store content. By consequence, this technology will empower both individuals and corporations to decentralize, preserve and fully control their precious digital data once and forever.” Here, it seems, is a very modern application for the extraordinary permanence of gold.
If you are interested in buying gold, check out my recent report. I have a feeling it is going to come in very handy.
My recommended bullion dealer is the Pure Gold Company.
Gold is being used increasingly in nanotechnology. Gold nanoparticles are used in photonics (the science of light waves), especially in the development of light-based technologies for imaging and sensors. Gold's inertness makes it an excellent material for nanoparticles used as catalysts in various chemical reactions. For instance, gold nanoparticles are employed in the oxidation of carbon monoxide in air purification systems. Researchers are also exploring gold's potential as a catalyst to improve renewable energy efficiency and solar cells. Again, its conductivity and resistance to oxidation make it ideal for nanoscale electronic components.
Gold is like the sun: it can kill but it can cure
As for the medical industry, gold and healing have a long, intertwined history. Gold was associated with the sun gods who bestowed health and vitality, or “helped the body produce vitamin D,” as we might put it today. (More and more health benefits from vitamin D are being discovered today, especially bone health and immune function). The Egyptian God of the Sun, Ra, the giver of life, was made of gold. Gold was the flesh of the gods. It symbolised health as well as eternal life. Apollo, the Greek God of the Sun, was often depicted with gold, and he was also the God of Healing, and father of Asclepius, the god of medicine.
Gold nanoparticles are used today in medical diagnostics and treatments, including targeted drug delivery and cancer therapy, because they can be easily detected and manipulated. Additionally, gold's biocompatibility ensures it does not provoke an immune response, making it suitable for use in various biomedical applications. In 2013, researchers found that gold nanoparticles reduced the ability of HIV to reproduce and infect new cells.
It is becoming one of the weapons in the battle against malaria. Of the hundreds of millions of malaria tests sold each year, many contain gold: gold nanoparticles bind with specific malaria antigens, which help quick and accurate detection of the disease. The test results can be ready in 15 minutes.
Golden Buildings
Gold nanoparticles also find use in occasional building materials to enhance strength and thermal regulation. Coating glass with gold can reflect the sun's heat in summer while bouncing internal heat back into rooms in winter, resulting in substantial energy savings. It is corrosion resistant too, which increases longevity.
But the main reason for its use in building is opulence. On the facades of buildings, gold will give your building unique and striking appeal. Toronto’s Royal Bank Plaza, the Grand Lisboa hotel and casino in Macau, and Al Yaqoub Tower in Dubai are all notable examples, as is Trump International Hotel and Tower in Las Vegas: its gleaming gold-tinted glass makes it stand out even on the Las Vegas Strip. The golden domed St. Michael’s Cathedral in Kiev is also a stunning example. To use gold on a roof or facade is extravagant but perhaps not as extravagant as you might think: an ounce of gold will cover up to 1,000 square feet (90 square metres) in gold plate and it brings substantial savings. Internally, gold also finds occasional decorative use: gilded furniture, fixtures and wall decorations, such as seen at the Burj Al Arab hotel in Dubai, which makes extensive use of gold leaf in its interior design.
Conclusion
All in all, exciting stuff, but none of this demand will be enough to significantly affect the price of gold. In most cases, we are talking about plate and nanoparticles. If every roof were to be coated in gold as part of some green energy initiative ordered by the government, or space travel were suddenly to get extremely popular, then I might change my mind, but neither scenario is imminent.
The main source of gold demand will be what demand has always been: as a store and display of value. Jewellery and investment, in other words.
Until next time,
Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.
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 -
Over the last decade, the Turkish lira has seen declines of more than 95% against the US dollar. It took just ₺1.50 to buy it dollar ten years ago. Now it takes ₺33. The lira has been one of the world’s worst-performing currencies - and in a fiat world, that is saying something - rivalled only by the Venezuelan bolivar and the Argentinian peso.
While in Istanbul last week, I spoke to two young professionals, Emre, 25, and İlker, 27, about life under the lira. Both are bright, articulate, and empathetic young men who speak three languages fluently - English, German, and Turkish - as well as competent French.
Given that the currency has been so bad, I was expecting to see more widespread use of foreign money, but in fact, lira are changing hands everywhere - you see people all over the place with wads of them. “You have to use lira,” they explained. “It is the national currency.” Even with such dire inflation, there is still trade. The economy still functions, albeit badly. (That said everything in the airports was denominated in euros).
Food, energy, travel, housing, consumer goods - everything has gone up in price, but, surprise, surprise, wages have not gone up by nearly as much. The result is that ordinary people have been impoverished.
“The average wage in Istanbul is about £650 per month,” they told me. (One thing that impressed me was how immediately they could translate the lira into pounds, dollars, or euros).
“What about the receptionist in my hotel or a waiter?”
“Maybe £500. A taxi driver working all hours, maybe £800.”
With those kinds of earnings, it is hard to make ends meet.
“That’s why everybody wants to meet a tourist,” they smiled in reply.
“What do you do?” I asked. “Do you spend money as soon as you have it? Before it loses purchasing power?”
“Yes,” they said. “There is no point saving. When we were students a few years ago, you could save for maybe three years and buy a car. Now it would take you 20 years. There is no point saving in lira. We spend the money as soon as we have it.”
“Even on stupid things,” added Emre, pointing to his Casio watch. “You may as well.”
Everyone is the same, apparently. They spend as soon as they earn. There is no point saving a currency that will soon be worth less. The rates of interest paid do not compensate, especially given that you usually have to tie your money up for one, two, or three years to obtain decent rates, and the inflation risk of doing that is too great.
Interest rates have been quite the issue in Turkey, by the way. Mainstream Islamic finance prohibits interest, something they claimed Turkish President Recep Tayyip Erdoğan exploited. Until 2023 Erdoğan kept a lid on rates (they are now 50%), arguing that high rates cause inflation. He repeatedly replaced central bank governors who resisted low rates.
“How do people save?” I asked.
“Gold,” came the answer straight away. Everyone who can buys gold, even tiny amounts below a gram.
“Silver?” I asked.
“Not so much.”
I asked them if they use Revolut or similar to hold foreign currencies. They had no idea what Revolut was (probably a good thing, given what can happen), but it seems most banks also offer the ability to hold euros, pounds, and dollars, and so citizens tend to convert their lira as quickly as they can.
“What about bitcoin?”
“Not really,” they said. “Some young people.”
I was surprised by that. I saw a few adverts for bitcoin-related products out there. But apparently gold is more common.
“What about saving up to buy a house?”
They both laughed at the impossibility. And there isn’t even a lot of debt in the Turkish housing market. Mortgages, as we know them in the West, don’t really exist, though there are ways to borrow money. Housing is still unaffordable
“So people aren’t starting families then?”
“No, we can’t. Our population growth is starting to turn negative.”
“So you two are not close to starting a family.”
They shook their heads sadly. “What do we have to offer?”
I felt so sorry for these two young men. Both would be good husbands and fathers.
“When people do start families, they rent small flats. Mum works, dad works, grandparents work.”
This is something I saw directly. The taxi that met me at the airport had mum and dad in the front and their two kids asleep in the back, while dad continued working into the night.
A typical one-bed flat might be about £500 per month. There is not really the same culture of flat-sharing among young professionals that we have in the UK, except maybe for students, and most young people stay with their parents until they marry.
I struggled to understand how anyone could make any money in such a situation. All asset owners are doing is protecting their wealth against the currency debasement; they are not actually growing it. “Who’s the richest person in the country?” I wondered.
“Erdoğan,” they both said immediately. “Officially, probably the Koç family. They own Fenerbahçe, the football club. But really it is almost certainly Erdoğan.”
The state of the currency and the political leadership is no doubt a huge deterrent to foreign investment.
What about leaving?, I asked.
That is hard too. The routes into Europe are not as easy as they once were. Far fewer Turks now go to Germany, for example. Even just getting a tourist visa can take two years, and the money they earn lasts barely a few days in Europe. Some illegals travel across the Mediterranean and up through Spain, but the US, via Mexico, is now the most common escape. Very expensive. Most are trapped in their own country.
What a sad state of affairs. Isn’t fiat money a terrible thing? What it can do to a country and its people, how it can make things so hopeless.
The bizarre thing: there is economic activity everywhere. Everyone is hustling. Everyone is working. They all want to better themselves and their lot. People want to trade. That is the natural human way of things.
Imagine if it were all underpinned by sound money.
If you are interested in buying gold, check out my recent report. I have a feeling it is going to come in very handy.
My recommended bullion dealer is the Pure Gold Company. I also like Goldcore.
And one other thing:
Charlie Morris is one of my closest mates and he writes what I think is one of the best investment newsletters out there, in fact a suite of them. I urge you to sign up for a free trial.
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 -
This is a free preview of a paid episode. To hear more, visit www.theflyingfrisby.com
I started out with the intention of writing just one article on this subject, but it has become three. It’s a big subject … (Here is part one and here is part two, if you are not already up to speed)
The latest polls show Labour comfortably in excess of 400 seats, maybe even 500.
They are going to have such a thumping majority (with less than 50% of the vote - how crap is first past the post), together with a Blob which, broadly speaking, is theologically aligned, that they are going to be able to do pretty much what they like. There is scope for a lot of invasive government. The socialist mindset does not respect private property. It feels entitled to it. So today I wanted to further explore wealth taxes and what Labour might do, should the socialist-leaning instincts in the party come to the fore during those first 100 days and beyond.
Wealth taxes are hard to collect
Let us start with the golden rule of taxation, something with which readers of Daylight Robbery, the definitive book on taxation, will be familiar, as articulated by Louis XIV’s minister of finance, Jean-Baptiste Colbert.
The art of taxation consists of so plucking the goose as to obtain the most possible feathers with the least possible hissing
(If you haven’t read Daylight Robbery - How Tax Shaped Our Past and Will Change Our Future, by the way, I urge you too. I think it’s the best of my books and one of the things I will go to my grave feeling proud of).
With that Colbert quote in mind, let us turn to wealth taxes. I’ve often argued that one reason we don’t see as many wealth taxes as you might expect is that, in practical terms, they are not as simple as they might seem. Income Tax works well because it is easy to collect. The employer collects it for the government - and faces harsh penalties if they don’t, so the onus is on them. Ditto VAT: only it is the seller on whom the responsibility to collect falls.
Wealth taxes, however, rely on declarations. There is much more scope for non-compliance, whether deliberate or accidental. Say the government wanted to impose a 5% net worth tax. It would have to find out about your real estate, both at home and abroad, and reach a fair valuation for that. It would have to find out about your stocks and bonds, your possessions, your vehicles, your savings, your ISAs, your pensions, your cryptocurrencies, your art, your antiques. Anyone who has ever had to value an estate for Inheritance Tax purposes knows what a headache this is. It can take many months.
The government can force banks to collect a lot of this information, and the bank can then get heavy with you, if you don’t comply (this is a route I think we will go), but there is still an awful lot of scope for non-compliance, avoidance, and evasion. Most will be truthful about what they own; but many will not - and hope that HMRC does not have the resources to investigate them properly, which it doesn’t. Many people have valuable things - from antiques to lost bitcoin wallets - that they don’t even know have value or can’t access. Note: I’m not saying a “net worth tax” won’t happen - I’d give it a 50:50 chance - just that they are not quite as easy as they sound. The goose will hiss a lot.
That said, I do think that, for sure, we will see changes to wealth reporting requirements, which is a first step in that direction.
You really should subscribe to this letter.
But if not a net-worth tax, here are some wealth taxes that could quite easily be imposed:
* A savings tax. Savings are relatively easy to prove and then tax. Banks are the ally of government here. There is some £1.5 trillion held in savings accounts in the UK, so there is plenty there to be tapped (though a lot of this is in ISAs, which are supposed to be tax free). Starmer has made noises about ordinary working people not having savings, so I doubt he will have too many qualms about sticking his snout in that particular trough. The complaint is that people have already paid tax on their savings when they earned the money in the first place, plus they pay taxes on the interest.
* An equity and bonds holdings tax. Again, relatively easy to prove - banks and brokers to report and collect. I doubt, however, Starmer will tax gilt holdings or remove the CGT exemption on gilts: he will want that particular income tap to remain free-flowing.
* Taxes on ISAs. The tax-free goalposts on ISAs can quite easily be changed, and there are a lot of people who have built up large pots, which no doubt Labour will be eying. The £20 grand annual allowance might be reduced or, more likely, there will be a maximum tax-free cap of, say, £100 grand. As to whether they can tax existing holdings, difficult but not impossible.
* Tax relief on pension contributions. The sixty grand limit will probably come down and the tax-free lump sum will probably not be quite so tax-free.
* An off-shore wealth tax. You have to declare any holdings you have overseas and then pay tax on them. Lots of scope for dispute and non-compliance, of course. Doesn’t mean it won’t happen.
* A luxury goods tax. It’s not right that you should be able to afford luxury goods and that others can’t, so we are going to tax them, just as we do alcohol, fuel, and cigarettes.
* Exit taxes. A lot of rich people are already leaving, others will follow. Labour will know this. I would not rule out some kind of exit tax, as reader AK pointed out to me. The USA, Canada, Australia, Germany, France, Spain, and Denmark all have exit taxes - in many cases, taxes on unrealised capital gains. (Imagine paying a tax on the gain, not realising it, and that gain turns to a loss. Horrible).
If you are interested in buying gold to protect yourself in these frightening times, check out my recent report. I have a feeling it is going to come in very handy.
My recommended bullion dealer is the Pure Gold Company. I also like Goldcore.
The equalisation of Capital Gains Tax and Income Tax, as mentioned in part two, looks more likely than ever. Wrong, of course. Capital gains are not something most people experience year in year out. For many, they are one-off events on the sale of a major asset or company. But such morals do not enter into it.
Similarly, Inheritance Tax is likely to go to 50%, also as mentioned in part two.
Angela Rayner has said that Labour is not planning rises to Council Tax “at the moment,” presumably with the permission of the party strategists, though Keir Starmer conspicuously did not rule rises out earlier in the week. As previously outlined, Council Tax is an obvious target because the banding - the prices at which homes are valued - is so out of date (based on 1991 valuations), but the money does not go to central government, which is what Labour would want. Local taxes also tend to create a lot of agro - Colbert’s hissing - which governments prefer to avoid. There is, in addition, the fact that Council Tax rises target the “wrong” people (council taxes tend to be higher in Labour-voting boroughs, which are often less well off, and Labour will not want to tax these people as much as they will the “capitalist classes”). One solution is to levy much higher Council Taxes on the most expensive properties. As with wealth taxes, I’m not saying Council Tax rises are not coming. They probably are, but they are not the prime target.
One final thought: thanks to VAT on school fees, there is going to be even more pressure for places at good state schools, which will mean homes in catchment areas will command an even higher premium than they do already. (Labour says it’s going to modernise the curriculum. Oh, God. Is it not modern enough already?)
Right, I think that’s your lot on Labour’s tax rises. Look out for pieces in the near future on Turkey’s inflation and the damage it has done to its people (I am actually writing today’s piece from Istanbul); on my picks from the Weird S**t Investment Conference; and I’ve got a great piece coming on wages and gold).
If you are in the Edinburgh neck of the woods this August, look out for me at the Edinburgh Fringe. I’ll be performing one of my “lectures with funny bits”. This one is all about the history of mining. As always, I shall be delivering it at Panmure House, where Adam Smith wrote Wealth of Nations. It’s at 2pm most afternoons. You can get tickets here.
Condor Gold (CNR.L/COG.TSX)
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This is a free preview of a paid episode. To hear more, visit www.theflyingfrisby.com
We have a General Election coming up in the UK, and citizens of this once-great nation want to know how to protect what they have worked for from the incoming Labour Government, which, you can be sure, is going to be sniffing around like a spaniel on luggage in an airport.
We now have the Labour Manifesto, so we can start to be a bit more specific than we were in part one of this series. (Here, also, is part three).
I stress: this is only the manifesto. There is a long history of governments doing things they didn’t mention in their manifestos or failing to honour manifesto commitments. Roosevelt’s confiscation of Americans’ gold is one example that springs to mind, but that might just be because I have just been writing about it. There are plenty of examples in the UK too, even with the current government - increases to National Insurance, the Covid money splurge, failures on renters’ reform, home building, immigration pledges, social care, and so on. Circumstances change and so will pledges, especially with a Prime Minister who has quite a track record when it comes to changing tack. Do not be surprised by the surprises that are inevitably coming.
The broad argument of part one is that the pound will continue to be debased. It will buy you a lot less in five years than it does now. Whether we will see the 33% declines in the pound’s purchasing power we have seen since 2020, I’m not sure, but the way to hedge yourself is to own non-government money - gold and bitcoin.
Labour has pledged to “keep mortgage rates low” and to “retain the 2% inflation target,” which means it will keep a lid on interest rates, or try to, especially with official inflation now having come down to 2%. That all furthers my argument that the pound will continue to lose purchasing power.
Labour has a gazillion things it wants to spend money on, ranging from Great British Energy to new teachers, breakfast clubs, and increased NHS appointments, so it is going to need low rates. It has also said it plans to move the “current budget into balance” and “ensure debt is falling.” All I can say is good luck with that. No chance. Spending is going to increase, and, even with the inevitable currency debasement, it is going to need to find tax revenue too. That means higher taxes.
But higher taxes where? Taxes, relative to GDP, are already at their highest levels since World War Two, and Labour has promised no increases in National Insurance, Income Tax rates, or VAT. It has also pledged to cap corporation tax at 25% throughout the Parliament.
Some increased revenue, it says, will come from clamping down on tax avoidance and modernising HMRC. A lot easier said than done.
The big unmentionables have been Council Tax, Capital Gains Tax, and Inheritance Tax. All three, I expect, will go up. Council Tax valuation bands are based on 1991 property prices. That is an obvious anachronism to “update,” though council tax goes to local coffers and Labour will be more interested in revenue at the national level. Even so, it is an obvious area of tax revenue growth. Not a lot you can do to avoid it, except move.
Inheritance Tax, meanwhile, will not come down and will probably go up. It is, of course, morally wrong to want to pass the wealth you have earned and already paid taxes on to your heirs. Changes will be justified on the grounds of unearned wealth and exploit the politics of envy. The rate could rise to 50%, I suppose, while areas of relief - the seven-year gift rule, perhaps, the relief on main homes - could be removed. All I can say is plan early.
Capital Gains Tax, meanwhile, is likely to rise. Starmer has avoided saying it won’t. I expect to see it rise to levels concomitant with Income Tax with similar bands (i.e., 40% above £37k and 45% above £125k). The way to avoid this is by not transacting, which is what most will do unless they really have to, and so the effect of CGT rises will be market atrophy.
Labour will also come after your pensions too - there is so much capital there - with those in the private sector likely to take a bigger hit than those in the state.
There is also a lot of blurb about the launch of Great British Energy to “harness Britain’s sun, wind and wave energy” with a windfall tax on oil and gas giants. That makes British oil and gas companies uninvestable. It says it will “deliver one hundred percent clean power by 2030,” though we know that clean power is neither clean nor green . They clearly haven’t read their Alex Epstein, and it all means that essential fossil fuel will inevitably get more expensive, and the country will function less well as a result. Labour says it is going to reduce energy bills. Not possible without subsidies somewhere else, and these have to be paid for.
The Housing Market
Followers of Fred Harrison and the 18-year property cycle will note that Britain’s housing market is heading towards a cycle high, with collapse starting in 2026. Perhaps that will be triggered by Labour’s plans. It wants to fix planning and build a lot of social housing - that means a bet on builders and builders’ merchants (Travis Perkins and Vistry, for example) might make sense, at least in the short run. There is a long history of governments failing to deliver on this, and I don’t think Labour has any chance of meeting targets. If it comes anywhere close, it means Britain’s housing stock is about to get even uglier.
Labour’s Freedom to Buy scheme, like Help to Buy, is just another means to pump more money into the housing market, and the general drift seems to be to subsidize at the bottom and tax at the top. It has ruled out Capital Gains Tax on your main residence, but I wouldn’t be surprised to see it anyway. Meanwhile, Stamp Duty will continue, even if it means atrophy at the top end of the market. The attack on non-doms will also hit homes at the top end. For homes above £1 million, the costs of moving - high stamp duty especially, more if we get CGT too - just points to stagnation.
Meanwhile, I expect the introduction of numerous schemes to protect tenants, which will only drive away landlords and end with higher rental costs.
You know that I am a free-market guy, and I dislike on instinct market intervention, subsidy, and all the rest of it. All Labour’s grand plans to encourage investment just reek of crony capitalism to me, so I tend to avoid, but I’ve no doubt that industrialists, who position themselves correctly, might make good money out of them. More on this after the election.
My theory used to be this: that in the same way a Conservative Party that was so scared of the left-wing press became a social-democrat party, so will this Labour Government, scared of the right-wing press, end up lurching to the centre-right. I no longer see that. Labour is trying to present itself as centre-left, but the instinct is for government intervention and I see a lot more of it coming. The civil service, the Blob, and the government are theologically aligned and that is not good. It means they can progress their agenda. I’d love to be more optimistic, but, despite Starmer’s purges, there is still a lot of socialist instinct in that party.
Bottom line. Taxes are going to go up. Freedom is going to be eroded. The pound is going to lose purchasing power.
If you are interested in buying gold, check out my recent report. I have a feeling it is going to come in very handy.
My recommended bullion dealer is the Pure Gold Company. I also like Goldcore.
Don’t forget Life After the State - Why We Don’t Need Government (2013), my first book, and many readers’ favourite, is now back in print - with the audiobook here: Audible UK, Audible US, Apple Books. I recommend the audiobook ;)
And if you are in the Edinburgh neck of the woods this August, look out for me at the Edinburgh Fringe. I’ll be performing one of my “lectures with funny bits”. This one is all about the history of mining. As always, I shall be delivering it at Panmure House, where Adam Smith wrote Wealth of Nations. It’s at 2pm most afternoons. You can get tickets here.
Thoughts on Condor Gold
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