Episodi
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I am travelling to the bitcoin conference in Prague this week - come say hi if youâre there - so you are likely to get a lot of bitcoin-related content over the next fortnight, as I re-indoctrinate myself.
Indeed, we are talking bitcoin and gold today â and we start with this.
The Bitcoin Treasury Boom
UK-listed Coinsilium (AQUIS:COIN), as flagged last Sunday, is jumping on the bitcoin treasury bandwagon. It has risen over 600% in the 10 days since I covered it. It was 6p. Now it's over 40p.
Its market cap it ÂŁ135 million. It only owns 25 bitcoins. (Worth around ÂŁ2 million).
Nuts. But there you go.
I have taken my original stake off the table. Iâll let the rest run, as I think it will. Its recently announced placement was four times oversubscribed.
Bitcoin treasury companies are the new sh1tcoins. There will soon be more of them than there are sh1tcoins, the way things are going. It will probably all end in tears - for which we will have the FCA to thank, because it has outlawed investors from buying bitcoin ETFs and the like - but, while the music is playing, we dance.
The other possibility, of course, is that productive companies follow the zombie company lead, at which point the entire corporate financial model changes. Every company becoms a bitcoin treasury company. I actually think thereâs a good chance of this happening, and Iâll explain why in a moment.
But let me just remind you â and myself â that owning a bitcoin treasury company is not the same as owning bitcoin. Itâs a speculation, a substitute, but itâs not the same.
(BTW I bought some bitcoin with Revolut the other day, and I found the process very simple - though I quickly sent the money to another, safer wallet. Strike and CoinCorner are other UK options.)
The non-US bitcoin treasury plays are doing better than the US, which is interesting. Strategy (NASDAQ:MSTR) and Semler (NASDAQ:SMLR), for example, are not moving. (They will if bitcoin breaks to new highs above $110,000, as it is trying to do, but for now itâs all about the UK and Japan, and the dumb regulations that have created this situation).
Gold Is Now Number Two
This week has seen something of a landmark development, meanwhile. Gold has overtaken the euro to become the second-most held asset by central banks. 20% of central bank reserves are now held in gold, against 16% in euros.
Also of considerable note â and largely unreported â US dollar holdings have fallen below 50% for the first time in almost 30 years. They now sit at 46%.
De-dollarisation is happening, folks, right in front of our eyes.
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This 20% gold figure compares with just 10% ten years ago. Iâve little doubt this will double again over the next 10 years - and weâll be at 40%.
Even ECB Chief Lizard, Christine Lagarde, has noticed. âThe accumulation of gold by central banks continued at a record pace,â she says. âSome countries have been actively exploring alternatives to traditional cross-border payment systems.â
That last sentence is telling. It further confirms what we all knew was happening. Itâs not just as a store of value that the US dollarâs central role is subsiding, but as a medium of exchange.
Gold is reclaiming its historical role as a core international holding. Make sure you own some.
If you are buying gold or silver to protect yourself in these âinterestingâ times, the dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
In the same press release Lagarde says:
âOffering solutions for settling wholesale financial transactions recorded on distributed ledger technology platforms in central bank money will increase the efficiency of European financial markets and the global appeal of the euro.â
Thatâs reptilian speak for âthe euro CBDC is coming soonâ. The EU CBDC Beast could begin as soon as this year. It will be rolled out first at the institutional level. Then it will be forced on the minions (which I donât think will work, by the way, for reasons explained [here] â but that doesnât mean they wonât try).
Turning to what might prove the Big Kahuna.
The Real Crisis: Government Spending Canât Stop
We have another rapidly developing plotline, and this announcement was widely overlooked by the press - probably on government orders, but perhaps because, as Occamâs Razor would have it, theyâre thick.
It is, in my view, a highly significant development, and is going to open the door to a ton of money-printing.
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I have a friend â weâll call him Steve. Steveâs a comedian â a very good one. He started around the same time as me, maybe a bit later.
Back in the day, we all thought Steve was going to be a huge star. If there were any justice in the world, he would have been. But there isnât. We all know that. Steve ended up one of those many jobbing, circuit comedians, with a brilliant act â good enough to storm pretty much any room under any circumstances â but who never seemed to get beyond the circuit. There are plenty of unknown, but brilliant acts like Steve, believe me.
Maybe he didnât have the right mindset â I donât know. If you want my opinion, I think he over-thought things. But what do I know?
Steve was always interested in investing and, in his spare time (comedians have plenty of that) he began speculating with his earnings. Steve liked to do things properly, and investing was no different. He studied hard, researched, read loads, watched videos, listened to podcasts, scrutinised company reports and accounts, evaluated the fundamentals. He did everything youâre supposed to do.
It didnât work out. Steve lost money. Consistently. Bad choices dogged him.
As Covid took hold in 2020, Steve took stock of his 20 years on the circuit. Where was he was in life? What he had achieved?
Just as he never broke out of the circuit, Steve had never broken into the higher tax bracket either. Despite scrupulous and honest accounting, he had never once made it beyond the basic band. He had no property â which, for a man closing in on 50, was unimpressive. He had very little in the way of savings, even though he was frugal. No pension. The comedy circuit was already in recession. Now Covid had shut it down. Things were looking bleak.
Then Steve started watching Michael Saylor videos.
Michael Saylor is the billionaire genius Chairman of Strategy (NASDAQ:MSTR) who, amidst all the money printing during Covid, was trying to protect his corporate treasury from erosion by inflation. This led him to bitcoin, which he embraced. He became one of its most articulate proponents, while his company â which had been all but dormant, share-price-wise, for 20 years â suddenly took off like a rocket. He gave birth to the bitcoin treasury model that is becoming so widespread today.
Everything Saylor said made sense to Steve. Not only that â it chimed with him. Bitcoin is stored energy. Investing in bitcoin is like buying Apple, Amazon, Google, or Facebook a decade ago. Theyâre all dominant technology networks, so destined to grow. The more you obsess over timing the market, the more mistakes you make. The best strategy is to buy bitcoin and wait. It will have a market cap in the multi-trillions. All that stuff.
Steve had known about bitcoin for many years. But he never invested. He bought shares in Lloyds instead.
He changed tack. He decided he was going to do for himself what Saylor had done for Strategy.
He began buying bitcoin with any spare cash he had. In his ISA, he bought Strategy.He started bitcoin wallets for his nephews, nieces, and godchildren and bought them small amounts of bitcoin on their birthdays and at Christmas.
Something unlikely happened: Steveâs investments started going up.
By now he was obsessing over Michael Saylor videos. Watching and rewatching them. Finding old interviews and presentations and marvelling at the consistency of message â and Saylorâs extraordinary gift for spotting and riding technological trends.
âThereâs not a single interview that man has done that I havenât watched,â Steve told me the other day.
Steve sold every stock he owned. He couldnât buy bitcoin through his broker â thanks, FCA â so he bought Strategy instead, then other bitcoin treasury companies, last year, including the amazing Metaplanet.
Meanwhile, everything he earned he sent straight to an exchange and converted to bitcoin. Only the bare essentials he needed to cover that monthâs bills did he keep in fiat. Steve turned his entire personal operation into a bitcoin treasury.
Whatâs more, he didnât told anyone heâd done this. Except with me â because he knows I know and love bitcoin.
He doesnât mind when bitcoin sells off â it just means he can buy more on the cheap. He thinks it is inevitable â because of its superior technology â that bitcoin becomes the worldâs dominant money system. That individuals, corporations and countries will store their capital in bitcoin, rather than fiat, so they do not suffer erosion by inflation (which is inevitable, because governments everywhere are incapable of reining in their spending â even with Elon Musk in charge).
He just keeps on accumulating, keeps on watching Saylor vids, and keeps on keeping his head down.
There are lots of people like Steve. I read about them every day. I just met a load out here at Freedom Fest in California.
Iâm headed to BTC Prague next week. I know Iâll meet a load more there. (If youâre in Prague, by the way, come say hi. And if youâre thinking of going, you can get 10% off tickets using code FRISBY)
Iâve said it before and I say it again, if you save in strong currencies, and spend in weak ones, you will change your social status â you donât have to earn a lot of money to do that
I saw Steve the other day. Iâve never seen him happier (except after heâs just stormed a gig). Guess what? Heâs now in a position, just four years later, where he can buy a house. Thatâs what his girlfriend wants him to do. How about that for a transformation.
You really should subscribe to this amazing publication.
Only problem is: that would mean selling some of his bitcoin.
If only there were vehicles by which you could borrow against your bitcoin ⊠Thatâs the next chapter in this extraordinary story: borrow against your bitcoin, spend in fiat, keep the asset.
Trouble is, if youâre in the UK â you wonât be able to. Because FCA
Thanks very much for reading this. If you enjoyed it, please like, share - all that stuff - it helps.
Until next time,
Dominic
PS Donât forget my brilliant book about bitcoin, if you want to learn more about the space. I hear the audiobook is very good indeed.
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Episodi mancanti?
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Greetings to you from Palm Springs, California,
Something most unusual is happening in financial markets, the like of which I havenât seen for years.
Junior mining companies are behaving well.
Silver is going up. Platinum is going up.
It feels like a proper bull market.
These things have been utter dogs for years. So cripes â is this overdue or what. It had reached the point where I never thought Iâd see a bull market in these things again in my lifetime.
Itâs worth noting that this phenomenon seems largely confined to precious metals.
The base metals are not seeing the same price action.
By way of reference, here is platinum. It has gone off like a rocket. Almost 40% in two months.
And long-time readers who held onto platinum pick Tharisa (THS.L) are starting to see that come back to life, thank goodness.
Typically, you would expect to see platinum trading at 1.25 times the gold price â $4,000/oz in other words. At the moment itâs $1,250, so there is plenty of future potential in that particular market.
Silver, meanwhile, if it can get above $37, where there is some historical resistance, I think goes back to $50.
Hereâs the long-term silver chart, which is looking remarkably symmetrical. Weâre butted up against resistance now, as you can see. After that the next line is at $44 â but if it gets to $44, I think it goes to $50.
If that happens, those who hold silver miners â particularly my favourite junior producer â are going to make a lot of money. đ
But, as I say, this is, for now, a precious metals thing. Copper doesnât look too bad, but zinc, tin, lead, iron ore â theyâre all either flat or falling.
If you are buying gold or silver, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
Gold, meanwhile, is consolidating above $3,300/oz, while the miners and other precious metals play catch up.
How about that for a chart. Talk about trend!
Letâs take a closer look at my two largest holdings.
I think both these junior gold plays are buys by the way, one of them in particular.
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Let me quickly flag three things:
* There is a short note at the end of this piece on the subject of bitcoin treasury companies, which I know is of interest to some of you.
* We now have a video version of last weekâs thought piece about the housing market.
* I am in Palm Springs, California, all next week. If any readers from that neck of the woods fancy meeting up, Iâll be performing at the Punching Up Comedy Night with Adam Carolla, Thai Rivera and Lou Perez, and also doing various panels at Freedom Fest on gold and bitcoin. You should be able to find me via this QR code. Or send me an email or message.
Right, gold ⊠today we ask:
Should you invest in gold collectibles?
The gold at the Museo del Oro in BogotĂĄ, Colombia, is one of the most stunning collections you will ever see â diadems, helmets and crowns, rings, necklaces and bracelets, beads and breastplates, even fishhooks and penis covers. The smiths of ancient South and Central America were quite brilliant artisans. The Spaniards who saw their work said Aztec goldsmiths were more skilled than their European counterparts.
In Mexico, the conquistadors found life-size figures of men and women, great jars and pitchers, half pottery-half gold vases sculpted in relief with birds, animals and insects, and more. In Peru and Ecuador, the conquistadors found miniature gardens made of gold â earth of gold granules, gold cornstalks, and gold figures of men and llamas.
Unfortunately, what sits in the Museo del Oro is just a fraction of what was made. The Spaniards valued bullion on weight alone, ascribing no value to art, beauty or workmanship. Most got melted down before being sent home. What they sent to their king intact got melted down once back in Europe. âWhat was being destroyed was more perfect than anything they enjoyed and possessed,â said a young priest travelling with the conquistador Francisco Pizarro.
The conquistadors were by no means alone in this. It has happened repeatedly through history. Though gold may last, art made from gold rarely does. People always seem to melt it down. That should mean ancient gold workings should command an even higher premium for their antiquity, because they have survived the meltdown risk. But for some reason, it doesnât seem to work like that.
You canât destroy gold, as Iâm sure you know. It lasts forever and never loses its shine. It was present in the dust that formed the solar system, and sits in the Earthâs crust today, just as it did when our planet was formed some 4.6 billion years ago.
That means that little bit of gold you may be wearing on your finger or around your neck is actually older than the Earth itself. In fact, it is older than the solar system. Who knows? It might once have adorned a pharaoh or sat in a conquistadorâs treasure chest. Gold may be antique, but itâs very rare that you get vast premiums for its antique value.
Buying gold or silver? The dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
The gold coinage that never was
If you buy a gold sovereign minted recently, you would typically pay ÂŁ600 to ÂŁ630. For a Victorian sovereign minted 150 years ago or more â which has the same gold content â you would pay ÂŁ660 to ÂŁ680. So, for all that history and antique value, you pay just 10%. Sovereigns are not uncommon. A billion are thought to have been struck. So you get little rarity value. But even so, youâd think you would get more of a premium.
The main exception is the 1937 sovereign struck for Edward VIII. Since he abdicated a few weeks before the coins were struck, they were never circulated. They are often called the âcoinage that never wasâ, and only a few were ever minted. One sold in 2020 for ÂŁ1 million. Thatâs quite the premium. But this is rare.
About ten years ago, I picked up a Justinian solidus, minted in 600AD â the solidus was the dominant coin of the Mediterranean after the Roman aureus. I got it for a 20% premium to the spot value of the metal. And I bought it from a shop in W1, so I was paying the Mayfair premium too.
An ingot recovered from the SS Central America, which famously sank off the Carolina coast in 1857 carrying Californian gold to New York (and triggered a financial panic because so much bullion was lost), recently went up for auction. It weighed 649 ounces, but it was only 21-carat gold (.875 purity). If melted down, you would have 568 ounces of pure gold, which, at todayâs price of $3,300 per ounce, would have a spot value of $1.9 million. It sold for $2.1 million, including the buyerâs premium â little more than the spot value, in other words.
Antique gold very rarely catches the huge premium you might think it deserves.
Beware graded coins
Unscrupulous coin dealers will often try to flog you graded coins. 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 II, 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. In almost all cases, they are trying to rip you off.
Donât pay a premium for graded coins.
A dealer might buy a large stock of coins from the Royal 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 âMint Stateâ. 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 â 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 â quarter or half sovereigns, for example â 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.
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. Donât get involved is my advice. 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.
This article was first published in MoneyWeek's magazine.
Some developments in the bitcoin treasury company story - a new kid on the block
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Subscribe to this amazing publication, why donât you?.
If you are thinking of buying silver or gold bullion to protect yourself in these âinterestingâ times - and I recommend you do - the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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If you enjoy this article. Please like it, share it and so on. It all helps. I thank you.
Itâs time for my annual slagging off of silver.
Why now?
Because, according to one of my WhatsApp chats, itâs breaking out.
Silver is always breaking out. It never actually does.
Was ever there a metal with as much potential as silver? Probably not.
Was ever there a metal you could so wholly depend on to let you down?
If there is, Iâm not aware of it (though these past 15 years, platinum has been running it close).
But maybe, just maybe this time is different.
Really?
Letâs start with a bit of gossip from the front line.
I have three mates who are CEOs of silver mining companies, as you do. All three of them, based in Latin America, have reported back with the same story.
Typically, a miner would pay a company â usually a refiner â to take ore off their hands, treat and smelt it, so it can be sold. So-called off-take agreements would usually amount to $120â180 per tonne of ore. But, at the moment, refiners arenât charging anything. Somebody is subsidising it all.
Could it be that humongous, commodity-guzzling nation that begins with a C, I wonder?
It wants silver for all those solar panels Ed Miliband is buying.
The way things are behaving and moving at the moment, itâs starting to feel like we are moving into a proper commodities bull market. Maybe 2021â22 was just the appetizer.
Stop! Donât get excited. Itâs silver weâre talking about here.
The case for silver runs roughly as follows:
We are in an age of currency debasement, therefore you want to own hard assets. In such an inflationary environment, the monetary metals â gold and silver â perform best. Silver has been money since forever. It is natural money etc etc.
Letâs just address that before we move on.
Gold is still used as money in the store-of-value sense of the word. National banks keep it. Institutions keep it. Individuals keep it. Goldâs role was always more store of value than medium of exchange. Historically, we used silver, copper and nickel for all but high-value transactions.
Silver was not used as a store of value to the extent gold was. Its function was more, as I say, as a medium of exchange. That role has long gone. The gold rushes of the 19th century did for silver.
Long story â itâs in my book, which comes out in August â but to cut it short, the vast increase in gold supply enabled nations to abandon silver. In the case of the US, it was the Coinage Act of 1873 â or as silver bugs like to call it, the Crime of â73 â that began the end of silver as official money. In the UK â largely thanks to the Portuguese discoveries of gold in Minas Gerais (again, long story, itâs in the book) â the process began a good 150 years earlier.
In these cashless times, there is little chance of silver regaining its role as medium of exchange.
As a result, looking at gold-to-silver ratios â it now takes about 100 ounces of silver to buy an ounce of gold â and saying we are going back to the historical average of 12 or 15:1 is mistaken. There may well only be 15 times as much silver in the Earthâs crust as gold (making 15:1 the natural ratio) but without its role as money, this is just not going to happen. Not for any prolonged period.
In the last 100 years, we have only touched this level once â Thursday, March 27, 1980. Uncommon circumstances. Two brothers were trying to corner the silver market.
Silverâs role as money is as good as over. Silver bugs hate me when I say that. But I can only say it like I see it.
Physical silver in your possession is nobody elseâs liability â I get that â and it is outside of the financial system â I get that too. There are many reasons to invest in silver. I own physical silver. But expecting it to be monetised again should not be one of them.
If you are thinking of buying silver or gold bullion, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
If Armageddon comes, youâll be glad you own silver â maybe â but there will be bigger problems on your plate. Like Armageddon.
Everywhere silver
Silver has widespread industrial use, especially in these times of mass electrification. You could write a book about the industrial uses of silver, there are so many. It might not be a very good book, but it would be long.
From medical equipment to electrical appliances, itâs almost harder to find things that donât contain silver than things that do. Every smartphone has silver in it; every computer; every jet engine; every solar panel. The best batteries contain silver. Itâs used in detergent, deodorant, wart treatment, antimicrobial lab coats, 3D printing, plastics, jewellery, wood preservation, water purification â itâs like a picks-and-shovels play on new tech and the growing middle class of the developing world.
Annual silver demand stands at around 1.2 billion ounces. Roughly 60% of that demand â 700 million ounces â comes from industry (500 million from electrical and electronics, half of which is solar panels); 22% from jewellery and silverware; and 18% from investment.
Annual supply is about one billion ounces (80% mining, 20% recycling) â so the market is in deficit. Hence the current rising price.
Most silver is produced as a bi-product of other mines, especially lead and zinc (eg at one point BHP Billiton was the worldâs largest silver producer).
There is, however, a romance to silver. It catches the public imagination â occasionally with explosive results. It did in 1980 when it went to $50 (it had been $2 just a few years earlier). It did again in 2011 when it revisited $50 before collapsing. It nearly took off during Lockdown Meme Mania, but didnât quite get going.
As a result of this romance, it has a tendency to go bananas every few years â but it never lasts. Does romance? Sometimes, if youâre lucky.
There is also the issue of silver price suppression, which some use to explain every sell-off in the silver markets. Thereâs nothing any of us can do about that â even if true â so letâs not go there.
Silver will at some point revisit $50. At some other point it will get above that figure. The mother of all narratives will take hold, and silver will probably end up going to $100 or even $200.
At which point you want to be owning silver stocks âŠ
It will also, at some point, revisit $15.
Thatâs when you donât want to be owning silver stocks.
Here is 100 years of silver prices. If you give any credence to such things, there is the mother of all cup-and-handle formations appearing (thatâs a super bullish pattern), which I have drawn in blue. It projects prices towards the $100/oz mark.
Itâs also apparent on the 50-year chart. (I havenât drawn it here - Iâll let you visualise).
Silver has been in a bull market since summer 2022, but it has, broadly speaking, followed rather than led gold. Itâs now come up against a wall at around $35.
You could say itâs a triple top.
Then again, the more times you test a level, the less likely it is to hold â particularly when each low is higher than the last, as is the case here.
But these last few weeks, all of a sudden, silver is leading gold.
Whatâs more, silver miners are leading silver. Thatâs what makes me bullish.
Here is the silver minersâ ETF, SIL (NYSE: SIL) â and you can see, just as theyâre saying in my WhatsApp chats â the silver miners really have broken out.
I havenât seen this in a long time. Miners leading!!!!! WTF?
This is why Iâm saying itâs starting to feel like a proper metals bull market.
So how am I playing this?
What are the best ways to invest in silver and profit?
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Please do not share, copy, reproduce or distribute any part of this report without my express permission. Thank you.
Many thanks to all the new subscribers who have joined this week, both paid and unpaid. I put this video of my recent North Sea Oil piece up on YouTube, X et al and it generated something of a flurry.
So welcome. I hope you both enjoy and benefit from The Flying Frisby.
Before we get started I just wanted to note that Comstock Lode seems to be catching a nice tail wind, which is good. Enjoy the ride. The AGM is later today for the keener of you out there.
But we are looking at bitcoin today, and exploring an alternative way to invest in it.
Iâm going through one of those phases where I feel like I donât own enough bitcoin.
So Iâve bought more.
And Iâve bought it in my SIPP - UK-speak for my retirement account.
Iâll explain how in a second.
Letâs just have a quick look at the bitcoin price, and note that we are once again breaking out to new highs.
I know it feels like you are late to the bitcoin story, and yes we all wish we bought it at $10, when we first heard about it. But we didnât. We are where we are, and this story is a long way from being over.
The next chapter in the odyssey is corporate adoption, and that story is just getting started.
I explained the bitcoin corporate treasury model a fortnight ago here, and Iâve made the article freely available to all, so please take a look, but the TLDR is this.
Following a template set by billionaire genius Michael Saylor, more and more companies are converting their treasuries to bitcoin as a means to store value and escape currency debasement. Not only that, they are issuing paperâstock, debt, convertible notesâand using the capital raised to buy more bitcoin. In effect, they are creating fiat money from nothingâit is a debt-based system, after allâand using it to buy a finite digital resource (one that, of course, cannot be created through debt).
Many are scratching their heads and saying, âHow can this be? Itâs not possible! Itâs a bubble.â
What Saylor is actually doing, among other things, is exposing the flaws of debt-based fiat currency. There are now some 70 companies employing this strategy. This will eventually be a stampede, which I urge you to front-run. Corporations have much deeper pockets than private investors, meaning this latest cycle in bitcoinâs mass adoption could become a mega mania.
Shareholders welcome dilution if it means more bitcoin.
The problem of corporate dilution has been flipped on its head. Once, if a company issued 20% more stock, you would expect the stock to fall by a concomitant amount to reflect the dilution. But if youâre using paper to buy bitcoin, the reverse applies. You canât dilute enough. The purpose of a bitcoin treasury company is to acquire as much bitcoin as possible on behalf of all shareholders, by whatever means.
Here is a case in point.
Japanese hotel company Metaplanet (3350:TYO) had a small chain of low-budget hotels across Southeast Asia. Covid decimated the business, and it never fully recovered.
A year ago, seeking a new direction, CEO Simon Gerovich began copying the Saylor model and started using his cash flow to buy bitcoin, then he began issuing debt. Since spring 2024, when the company began its strategy, the stock has risen thousands of percent from below „20 to north of „1,000. Last year, it was one of the best-performing companies in the world, if not the best. How about this for a chart?
In the time that bitcoin has risen 60%, Metaplanet has risen more than 7,000%. (Saylorâs Strategy (NASDAQ:MSTR) has also outperformed bitcoin. Bitcoin treasury companies give you gearing).
With its crap currency and suppressed bond yields, bitcoin is an obvious place for Japanese investors to put their capital, except the government has got in the way.
As with the UK, dumb regulations make it very hard for Japanese investors to buy bitcoin directly. (This came as a result of Mt. Gox, the first bitcoin exchange, which went bust after being hacked in 2013-14). To give you an idea how ponderous things are, to register with a bitcoin exchange in Japan , regulators demand you get a letter by snail mail to verify your address. Nuts.
Whatâs more, when the Japanese sell, they must pay capital gains tax at 55%.
But Metaplanet is a Tokyo-listed company, so investors are buying that instead in their retirement accounts and via their brokers. Far less hassle. Just as, back in 2023, I urged UK readers to buy Strategy as a way to play bitcoin (we are up around 1,000%), Metaplanet has become Japanâs bitcoin vehicleâindeed, much of Asiaâs.
For several days in a row, the company has gone limit-up, and trading has been halted. The mother of all short squeezes seems to be taking place. Itâs the most shorted stock in all of Japan - and the short sellers are struggling to cover.
This bubble has, quite literally, been caused by state regulation. We wouldnât be in this situation if it was easy to buy bitcoin. Itâs enough to make you a libertarian. Itâs amazing that both Japan and the UK were at the vanguard in bitcoinâs early days. Satoshi Nakamoto had a Japanese name and used British English. Now we are both retarded (in both the old sense of the word and the new).
How to profit from the mania
In the UK, Avis-listed The Smarter Web Company (ISIN: GB00BPJHZ015) is now following suit, as several readers have pointed out to me (thank you). Itâs gone from 5p to 45p in a month. Currently, The Smarter Web Company has a market cap of ÂŁ72 million, while it holds only ÂŁ3 million in bitcoin (rounded numbers). Insane, you might think. Probably.
Bitcoin Treasury Companies are outperforming bitcoin. They are the new sh*tcoins.
So which bitcoin treasury company have I gone for?
Here is how I am playing all this.
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Iâve been viewing houses this past fortnight, so I thought Iâd share my anecdotal 2p on the state of the London property market.
Iâm looking in Brockley, SE4, which, if you donât know it, used to be rough AF, but is now where all the cool kids are. The area has benefited from the various London rail line extensions â you can be in Shoreditch or Canary Wharf in 15 minutes; the Jubilee and Elizabeth lines are a similarly short step away â and that has attracted the slay crew to the area.
The road links though are still horrendous though, made worse by 20mph speed limits and bus lane misallocation of essential road space. The drive to west London is interminable.
Brockley has a good stock of beautiful detached, semi-detached and terraced Victorian houses. For example:
With its proximity to Greenwich and the river docks, it was once a wealthy area, though, like most of south-east London, it got bombed to heck in the war.
There are plenty of nice parks too. One of them, Hilly Fields, was modelled on Hampstead Heath, and there are many gorgeous houses in the roads running off it. Not quite Hampstead gorgeous, but getting there.
Brockley also has the highest density of cemeteries in London, if you fancy dying any time soon, itâs highly convenient. It is, I gather, Londonâs most haunted area.
It is only a bit stabby. Nothing like as bad as neighbouring Lewisham. (Maybe âonly a bit stabbyâ will one day become part of estate agentsâ jargon, perhaps to replace âvibrantâ. I canât believe how normalised stabbing now is that Iâm talking like that.)
The stabbiness is offset, however, by the plethora of nice restaurants, cafĂ©s, bars, craft ale breweries, the farmersâ market, mini-festivals, pilates studios et al. I understand, in Browns, the area boasts Londonâs best coffee and, in Babur, its best Indian restaurant. (Technically Babur is in Honor Oak, but, like England and many of its foreign sporting greats, weâll claim it as our own.)
I shot this vid from the steps up to the station.
Brockley feels younger and more up-and-coming than the once-cool areas to the west like Queenâs Park, Kensal Rise, Clapham and so on, probably because of its easy access to east London. (A lot of people from Hackney move down here.)
I moved here begrudgingly and skint in 2015 and have grown to really like it.
But what about the housing market?
Iâve known markets in which estate agents donât give you the time of day, there are so many prospective buyers, but â perhaps because they know I am an unencumbered buyer â the agents are maybe not quite all over me, but certainly on my case: lots of emails, phone calls and the rest of it. That indicates itâs more of a buyersâ market.
But, while I would describe the housing market here as slow, it is not dead. Stuff has been going under offer in the two weeks Iâve been looking, though rarely at asking.
With the costs of moving â Stamp Duty is 10% above ÂŁ925k, and 12% above ÂŁ1.5m, plus an extra 5% if you own another property â buyers have got to really want to buy.
Sellers, meanwhile, have to really want to sell, which often entails reducing their asking prices. Stuff which is unrealistically priced is staying on the market a long time. Look at this one (actually up the road in Honor Oak):
This is a 5,000-square-foot property, not so nice inside, but with access to a 2-acre private garden behind with its own tennis court â quite something in London. From ÂŁ2.5 million to ÂŁ1.75 million and they still canât shift it. (It needs a lot of money spending on it.)
On the other hand, there donât seem to be many forced sellers â people who canât make their payments â and we wonât get any house price crash, long-awaited or not, until that is a reality.
I imagine Brockley, as a young, trendy area, is busier than other parts of town, but that is my overall feel: slow, but not dead.
Iâve looked at a few family houses. I canât really comment on flats, but I gather there is an oversupply of 2-bed flats across London, and it is really hard to shift them. Iâm not sure if this applies to Brockley or not.
It doesnât feel as expensive as it did around 2019â2022 (realised sales prices are a fraction lower, but there is obviously currency debasement to consider too), but nor does it feel super cheap. Weâre a long way off where we were in, say, 2013, even though grander parts of London â Kensington and Chelsea, for example â are back at those 2013 levels.
Where does the housing market go from here?
It all depends on two things: interest rates and Stamp Duty.
Britainâs zombie housing market, brought to you by Stamp Duty.
If rates go lower, the market will not collapse. There wonât be the forced sellers. Weâll continue as we are: stagnant. If rates go higher, the market is in trouble.
But get rid of Stamp Duty, and youâd have a flurry of activity across the country tomorrow. People arenât moving because of the amount of dead money involved. Stamp Duty has immobilised the country.
If youâre buying a two-million-pound house, you will pay ÂŁ153,750 in stamp duty. Cash. Money youâve already paid tax on once. You canât borrow the money. You have to be extremely rich, or extremely desperate for a home, to be willing to pay a ÂŁ150k one-off tax of this kind. Most would rather avoid paying it, so they donât move.
You will pay more if you are not a UK resident.
If you happen to own another property â which most people in that wealth bracket will, either their first flat they never sold, a property they inherited, or a home in the country â and the house you are buying is not your main residence, the tax rises to ÂŁ253,750. A quarter of a million quid.
Thatâs why houses in Kensington and Chelsea no longer sell.
EDIT: My mate, whose kids have now flown the nest, sent me this: "We live in a 4 floor house, 2 floors we don't use, I haven't been to the top floor for about 5 years (seriously). We would love to move and downsize but makes no sense as the costs of buying a new house would use up all the gain on downsizing . IE We just end up with a smaller house."
This happens all the way down the scale. Kirstie Whatsit off the telly was tweeting about it the other day.
My motherâs friend, who is in her 70s, lives in a 2-bed flat two floors up in Wandsworth worth maybe ÂŁ700,000. She is worried about climbing the stairs at her age, and wants to move to another 2-bed flat. She will pay ÂŁ25,000 in Stamp Duty on top of all her other moving costs. She doesnât have 25 grand to throw away.
The result is this nearly dead market. Britainâs zombie housing market.
Stamp Duties were one of the taxes the ignited the American Revolution. If only we had muskets today âŠ
The biggest villains in all this are former Chancellor Gordon Brown for first raising Stamp Duty on property transactions (before him it just one per cent on all properties over ÂŁ60,000), and, worst of all, George Osborne for raising the rates to todayâs ludicrous levels. Rather than address the root causes of unaffordable housing â fiat money, artificially low interest rates, improper measures of inflation and dumb planning laws â he blamed the market, and attacked it with Stamp Duty. But all of Jeremy Hunt, Rishi Sunak, Sajid Javid, Philip Hammond and Alistair Darling must take their share of the blame for failing to do anything about it, when they had the chance. (Weâll give Kwasi Kwarteng and Nadhim Zahawi a pass on the grounds they didnât have the gig for long enough).
Osborne, Brown et al have given birth to the zombie situation we have now. They have immobilised the country in the process.
Government. Yet again. 0 stars. Would not use again.
Itâs enough to make you a libertarian.
Until next time,
Dominic
PS If you enjoyed todayâs article, please like, share and all that stuff. It really helps.
PPS If you missed this weekâs market commentary, here it is:
As always If you are buying gold to protect yourself in these times or relentless currency debasement, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them.
Find out more here.
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Iâve had a flood of new readers sign up to the Flying Frisby this week, Iâm delighted to report, largely as a result of this article on bitcoin treasury companies and of this video on North Sea oil and the next Labour U-turn, which has been doing the rounds on the net.
So welcome everyone. I hope you enjoy the ride.
Todayâs piece is going to be a bit of a hotchpotch, as I gather my thoughts and tidy up a few loose ends.
Weâll start with the macro. Are we in a bull market? Are the animal spirits back in command? Or have we just gone through a bear market rally?
It all depends on tariffs, I guess, and what is going on in the Great Orange Manâs mind. What plans does he have? That I cannot answer, but I will say the S&P500 looks like it might have just put in a lower high.
We want to be above that blue line.
If he goes full tariff again, all bets - well most - are off.
But thanks to the Great Orange Manâs pronouncements on uranium, our speculation Lightbridge Fuels (NASDAQ:LTBR) is now enjoying another of its spikes. If he goes full tariff again, all bets - well most - are off.
But thanks to the Great Orange Manâs pronouncements on uranium, our speculation Lightbridge Fuels (NASDAQ:LTBR) is now enjoying another of its spikes.
Sell the spikes, buy the dips has been the play here. We are on one such spike now, so if the recent pattern continues (it wonât continue forever, nothing does, but it might for a bit) then lighten up between $15 and $20 and buy if it goes back to $9 is the trade.
Sell the spikes, buy the dips has been the play here. We are on one such spike now, so if the recent pattern continues (it wonât continue forever, nothing does, but it might for a bit) then lighten up between $15 and $20 and buy if it goes back to $9 is the trade.
We have quite a well defined, trade-able range emerging here, as defined by the blue lines below.
I donât see it going back to the $2.50-$3 area, where we were lucky enough to first stumble upon this stock, but $8.50-9 looks like the new floor. For now.
Remember: this was an $800 stock once upon a time, so there is a lot of upside left. One should probably keep some money on the table, in case we donât get the dip.
Tell your friends.
The next Starmer U-turn
Turning next to the issue of the re-opening of the North Sea. Since posting that video our Glorious Leader has tightened ties with the EU, and in particular relevance here, its net zero goals. The UK now commits to net zero obligations âat least as ambitious as the EUâ. âWant to get out of net zero?,â says Lord Frost in the Telegraph, âTough: you canât, unless the EU agreesâ.
That said I am sure Captain FlipFlop will find a way of flipflopping his way round any North Sea ties and then spinning it.
There is a review this week. Surely even this government will realise importing Norwegian gas for (net) zero tax take, fewer jobs and a higher carbon footprint than producing our own makes (net) zero sense. More importantly it is gifting Reform. Maybe the needs of the Treasury mean Milibrain - Miliband gets overruled. We will know more as soon as today.
Adding another bitcoin treasury company to my portfolio
In a moment, I am going to take a look at Comstock Lode (NYSE:LODE), further to its AGM this week. I know I keep talking about this company, but it might be the one we all retire on - hence my outsized attention.
But first I also want to continue on the bitcoin treasury company story.
(Despite the outperformance of the treasury companies of late, I still prefer bitcoin and think it should be a core holding. The treasury companies are rather more speculative. However, given the hassle involved, I understand why some in the UK prefer the treasury companies).
How about this for nuts? The UKâs Smarter Web Company (ISIN: GB00BPJHZ015) hit a market cap of ÂŁ175 million yesterday. Its assets: it has about ÂŁ5 million in bitcoin.
The dude who founded it, Andrew Webley, was a month ago running a web design firm in Guildford with net assets of less than ÂŁ50,000. In the company's Retail Investor IPO document, he committed to invest a minimum of ÂŁ30,000...through his ISAâ. (h/t Glen Goodman)
This will not end well.
And we have the FCA to thank. It has made it so difficult to buy bitcoin, investors are buying this company and others like it instead.
If, like many readers, you are playing this one, make sure you get your original investment out, is my advice âŠ
Meanwhile, Metaplanet (3350:TYO) briefly lost a third of its value last week, falling below „800. Now itâs above „1,200, at all-time highs, trading at 450% of the value of its bitcoin.
Itâs a mania all right.
Iâm adding another position, in a stock which has some recent history of manias.
What is it? Ah-ha âŠ
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Good Sunday morning to you,
I am just on a train home from Glasgow, where I have been gigging these past two nights. Iâve had a great time, as I always seem to do when I go north of the wall.
But Glasgow on a Saturday night is something else. My hotel was right next to the station and so I was right in the thick of it. If I ever get to make a cacatopian, end-of-days, post-apocalyptic thriller, Iâll just stroll through Glasgow city centre on a Friday or Saturday night with a camera to get all the B roll. It was like walking through a Hieronymus Bosch painting only with a Scottish accent.
Little seems to have changed since I wrote that infamous chapter about Glasgow in Life After the State all those years ago. The only difference is that now itâs more multi-ethnic. So many people are so off their heads. I lost count of the number of randoms wandering about just howling at the stars. The long days - it was still light at 10 oâclock - make the insanity all the more visible. Part of me finds it funny, but another part of me finds it so very sad that so many people let themselves get into this condition.
It prompted me to revisit said chapter, and I offer it today as your Sunday thought piece.
Just a couple of little notes, before we begin. This caught my eye on Friday. Our favourite uranium tech company, Lightbridge Fuels (NASDAQ:LTBR), has taken off again with Donald Trumpâs statement that he is going to quadruple US nuclear capacity. The stock was up 45% in a day. We first looked at it in October at $3. It hit $15 on Friday.
Itâs one to sell on the spikes and buy on the dips, as this incredible chart shows.
(In other news I have now listened twice to the Comstock Lode AGM, and Iâll report back on that shortly too).
ICYMI here is my mid-week commentary, which attracted a lot of attention
Right - Glasgow.
(NB I havenât included references here. Needless to say, they are all there in the book. And sorry I donât have access to the audio of me reading this from my laptop, but, if you like, you can get the audiobook at Audible, Apple Books and all good audiobookshops. The book itself available at Amazon, Apple Books et al).
How the Most Entrepreneurial City in Europe Became Its Sickest
The cause of waves of unemployment is not capitalism, but governments âŠFriedrich Hayek, economist and philosopher
In the 18th and 19th centuries, the city of Glasgow in Scotland became enormously, stupendously rich. It happened quite organically, without planning. An entrepreneurial people reacted to their circumstances and, over time, turned Glasgow into an industrial and economic centre of such might that, by the turn of the 20th century, Glasgow was producing half the tonnage of Britainâs ships and a quarter of all locomotives in the world. (Not unlike Chinaâs industrial dominance today). It was regarded as the best-governed city in Europe and popular histories compared it to the great imperial cities of Venice and Rome. It became known as the âSecond City of the British Empireâ.
Barely 100 years later, it is the heroin capital of the UK, the murder capital of the UK and its East End, once home to Europeâs largest steelworks, has been dubbed âthe benefits capital of the UKâ. Glasgow is Britainâs fattest city: its men have Britainâs lowest life expectancy â on a par with Palestine and Albania â and its unemployment rate is 50% higher than the rest of the UK.
How did Glasgow manage all that?
The growth in Glasgowâs economic fortunes began in the latter part of the 17th century and the early 18th century. First, the cityâs location in the west of Scotland at the mouth of the river Clyde meant that it lay in the path of the trade winds and at least 100 nautical miles closer to Americaâs east coast than other British ports â 200 miles closer than London. In the days before fossil fuels (which only found widespread use in shipping in the second half of the 19th century) the journey to Virginia was some two weeks shorter than the same journey from London or many of the other ports in Britain and Europe. Even modern sailors describe how easy the port of Glasgow is to navigate. Second, when England was at war with France â as it was repeatedly between 1688 and 1815 â ships travelling to Glasgow were less vulnerable than those travelling to ports further south. Glasgowâs merchants took advantage and, by the early 18th century, the city had begun to assert itself as a trading hub. Manufactured goods were carried from Britain and Europe to North America and the Caribbean, where they were traded for increasingly popular commodities such as tobacco, cotton and sugar.
Through the 18th century, the Glasgow merchantsâ business networks spread, and they took steps to further accelerate trade. New ships were introduced, bigger than those of rival ports, with fore and aft sails that enabled them to sail closer to the wind and reduce journey times. Trading posts were built to ensure that cargo was gathered and stored for collection, so that ships wouldnât swing idly at anchor. By the 1760s Glasgow had a 50% share of the tobacco trade â as much as the rest of Britainâs ports combined. While the English merchants simply sold American tobacco in Europe at a profit, the Glaswegians actually extended credit to American farmers against future production (a bit like a crop future today, where a crop to be grown at a later date is sold now). The Virginia farmers could then use this credit to buy European goods, which the Glaswegians were only too happy to supply. This brought about the rise of financial institutions such as the Glasgow Ship Bank and the Glasgow Thistle Bank, which would later become part of the now-bailed-out, taxpayer-owned Royal Bank of Scotland (RBS).
Their practices paid rewards. Glasgowâs merchants earned a great deal of money. They built glamorous homes and large churches and, it seems, took on aristocratic airs â hence they became known as the âTobacco Lordsâ. Numbering among them were Buchanan, Dunlop, Ingram, Wilson, Oswald, Cochrane and Glassford, all of whom had streets in the Merchant City district of Glasgow named after them (other streets, such as Virginia Street and Jamaica Street, refer to their trade destinations). In 1771, over 47 million pounds of tobacco were imported.
However, the credit the Glaswegians extended to American tobacco farmers would backfire. The debts incurred by the tobacco farmers â which included future presidents George Washington and Thomas Jefferson (who almost lost his farm as a result) â grew, and were among the grievances when the American War of Independence came in 1775. That war destroyed the tobacco trade for the Glaswegians. Much of the money that was owed to them was never repaid. Many of their plantations were lost. But the Glaswegians were entrepreneurial and they adapted. They moved on to other businesses, particularly cotton.
By the 19th century, all sorts of local industry had emerged around the goods traded in the city. It was producing and exporting textiles, chemicals, engineered goods and steel. River engineering projects to dredge and deepen the Clyde (with a view to forming a deep- water port) had begun in 1768 and they would enable shipbuilding to become a major industry on the upper reaches of the river, pioneered by industrialists such as Robert Napier and John Elder. The final stretch of the Monkland Canal, linking the Forth and Clyde Canal at Port Dundas, was opened in 1795, facilitating access to the iron-ore and coal mines of Lanarkshire.
The move to fossil-fuelled shipping in the latter 19th century destroyed the advantages that the trade winds had given Glasgow. But it didnât matter. Again, the people adapted. By the turn of the 20th century the Second City of the British Empire had become a world centre of industry and heavy engineering. It has been estimated that, between 1870 and 1914, it produced as much as one-fifth of the worldâs ships, and half of Britainâs tonnage. Among the 25,000 ships it produced were some of the greatest ever built: the Cutty Sark, the Queen Mary, HMS Hood, the Lusitania, the Glenlee tall ship and even the iconic Mississippi paddle steamer, the Delta Queen. It had also become a centre for locomotive manufacture and, shortly after the turn of the 20th century, could boast the largest concentration of locomotive building works in Europe.
It was not just Glasgowâs industry and wealth that was so gargantuan. The cityâs contribution to mankind â made possible by the innovation and progress that comes with booming economies â would also have an international impact. Many great inventors either hailed from Glasgow or moved there to study or work. Thereâs James Watt, for example, whose improvements to the steam engine were fundamental to the Industrial Revolution. One of Wattâs employees, William Murdoch, has been dubbed âthe Scot who lit the worldâ â he invented gas lighting, a new kind of steam cannon and waterproof paint. Charles MacIntosh gave us the raincoat. James Young, the chemist dubbed as âthe father of the oil industryâ, gave us paraffin. William Thomson, known as Lord Kelvin, developed the science of thermodynamics, formulating the Kelvin scale of absolute temperature; he also managed the laying of the first transatlantic telegraph cable.
The turning point in the economic fortunes of Glasgow â indeed, of industrial Britain â was WWI. Both have been in decline ever since. By the end of the war, the British were drained, both emotionally and in terms of capital and manpower; the workers, the entrepreneurs, the ideas men, too many of them were dead or incapacitated. There was insufficient money and no appetite to invest. The post-war recession, and later the Great Depression, did little to help. The trend of the city was now one of inexorable economic decline.
If Glasgow was the home of shipping and industry in 19th-century Britain, it became the home of socialism in the 20th century. Known by some as the âRed Clydesideâ movement, the socialist tide in Scotland actually pre-dated the First World War. In 1906 came the cityâs first Labour Member of Parliament (MP), George Barnes â prior to that its seven MPs were all Conservatives or Liberal Unionists. In the spring of 1911, 11,000 workers at the Singer sewing-machine factory (run by an American corporation in Clydebank) went on strike to support 12 women who were protesting about new work practices. Singer sacked 400 workers, but the movement was growing â as was labour unrest. In the four years between 1910 and 1914 Clydebank workers spent four times as many days on strike than in the whole of the previous decade. The Scottish Trades Union Congress and its affiliations saw membership rise from 129,000 in 1909 to 230,000 in 1914.20
The rise in discontent had much to do with Glasgowâs housing. Conditions were bad, there was overcrowding, bad sanitation, housing was close to dirty, noxious and deafening industry. Unions grew quite organically to protect the interests of their members.
Then came WWI, and inflation, as Britain all but abandoned gold. In 1915 many landlords responded by attempting to increase rent, but with their young men on the Western front, those left behind didnât have the means to pay these higher costs. If they couldnât, eviction soon followed. In Govan, an area of Glasgow where shipbuilding was the main occupation, women â now in the majority with so many men gone â organized opposition to the rent increases. There are photographs showing women blocking the entrance to tenements; officers who did get inside to evict tenants are said to have had their trousers pulled down.
The landlords were attacked for being unpatriotic. Placards read: âWhile our men are fighting on the front line,the landlord is attacking us at home.â The strikes spread to other cities throughout the UK, and on 27 November 1915 the government introduced legislation to restrict rents to the pre-war level. The strikers were placated. They had won. The government was happy; it had dealt with the problem. The landlords lost out.
In the aftermath of the Russian Revolution of 1917, more frequent strikes crippled the city. In 1919 the âBloody Fridayâ uprising prompted the prime minister, David Lloyd George, to deploy 10,000 troops and tanks onto the cityâs streets. By the 1930s Glasgow had become the main base of the Independent Labour Party, so when Labour finally came to power alone after WWII, its influence was strong. Glasgow has always remained a socialist stronghold. Labour dominates the city council, and the city has not had a Conservative MP for 30 years.
By the late 1950s, Glasgow was losing out to the more competitive industries of Japan, Germany and elsewhere. There was a lack of investment. Union demands for workers, enforced by government legislation, made costs uneconomic and entrepreneurial activity arduous. With lack of investment came lack of innovation.
Rapid de-industrialization followed, and by the 1960s and 70s most employment lay not in manufacturing, but in the service industries.
Which brings us to today. On the plus side, Glasgow is still ranked as one of Europeâs top 20 financial centres and is home to some leading Scottish businesses. But there is considerable downside.
Recent studies have suggested that nearly 30% of Glasgowâs working age population is unemployed. Thatâs 50% higher than that of the rest of Scotland or the UK. Eighteen per cent of 16- to 19-year-olds are neither in school nor employed. More than one in five working-age Glaswegians have no sort of education that might qualify them for a job.
In the city centre, the Merchant City, 50% of children are growing up in homes where nobody works. In the poorer neighbourhoods, such as Ruchill, Possilpark, or Dalmarnock, about 65% of children live in homes where nobody works â more than three times the national average. Figures from the Department of Work and Pensions show that 85% of working age adults from the district of Bridgeton claim some kind of welfare payment.
Across the city, almost a third of the population regularly receives sickness or incapacity benefit, the highest rate of all UK cities. A 2008 World Health Organization report noted that in Glasgowâs Calton, Bridgeton and Queenslie neighbourhoods, the average life expectancy for males is only 54. In contrast, residents of Glasgowâs more affluent West End live to be 80 and virtually none of them are on the dole.
Glasgow has the highest crime rate in Scotland. A recent report by the Centre for Social Justice noted that there are 170 teenage gangs in Glasgow. Thatâs the same number as in London, which has over six times the population of Glasgow.
It also has the dubious record of being Britainâs murder capital. In fact, Glasgow had the highest homicide rate in Western Europe until it was overtaken in 2012 by Amsterdam, with more violent crime per head of population than even New York. Whatâs more, its suicide rate is the highest in the UK.
Then there are the drug and alcohol problems. The residents of the poorer neighbourhoods are an astounding six times more likely to die of a drugs overdose than the national average. Drug-related mortality has increased by 95% since 1997. There are 20,000 registered drug users â thatâs just registered â and the situation is not going to get any better: children who grow up in households where family members use drugs are seven times more likely to end up using drugs themselves than children who live in drug-free families.
Glasgow has the highest incidence of liver diseases from alcohol abuse in all of Scotland. In the East End district of Dennistoun, these illnesses kill more people than heart attacks and lung cancer combined. Men and women are more likely to die of alcohol-related deaths in Glasgow than anywhere else in the UK. Time and time again Glasgow is proud winner of the title âFattest City in Britainâ. Around 40% of the population are obese â 5% morbidly so â and it also boasts the most smokers per capita.
I have taken these statistics from an array of different sources. It might be in some cases that theyâre overstated. I know that Iâve accentuated both the 18th- and 19th-century positives, as well as the 20th- and 21st-century negatives to make my point. Of course, there are lots of healthy, happy people in Glasgow â Iâve done many gigs there and I loved it. Despite the stories you hear about intimidating Glasgow audiences, the ones I encountered were as good as any Iâve ever performed in front of. But none of this changes the broad-brush strokes: Glasgow was a once mighty city that now has grave social problems. It is a city that is not fulfilling its potential in the way that it once did. All in all, itâs quite a transformation. How has it happened?
Every few years a report comes out that highlights Glasgowâs various problems. Comments are then sought from across the political spectrum. Usually, those asked to comment agree that the city has grave, âlong-standing and deep-rooted social problemsâ (the words of Stephen Purcell, former leader of Glasgow City Council); they agree that something needs to be done, though they donât always agree on what that something is.
Thereâs the view from the right: Bill Aitken of the Scottish Conservatives, quoted in The Sunday Times in 2008, said, âWe simply donât have the jobs for people who are not academically inclined. Another factor is that some people are simply disinclined to work. We have got to find something for these people to do, to give them a reason to get up in the morning and give them some self-respect.â Thereâs the supposedly apolitical view of anti-poverty groups: Peter Kelly, director of the Glasgow-based Poverty Alliance, responded, âWe need real, intensive support for people if we are going to tackle poverty. Itâs not about a lack of aspiration, often people who are unemployed or on low incomes are stymied by a lack of money and support from local and central government.â And thereâs the view from the left. In the same article, Patricia Ferguson, the Labour Member of the Scottish Parliament (MSP) for Maryhill, also declared a belief in government regeneration of the area. âItâs about better housing, more jobs, better education and these things take years to make an impact. I believe that the huge regeneration in the area is fostering a lot more community involvement and cohesion. My real hope is that these figures will take a knock in the next five or ten years.â At the time of writing in 2013, five years later, the figures have worsened.
All three points of view agree on one thing: the government must do something.
In 2008 the ÂŁ435 million Fairer Scotland Fund â established to tackle poverty â was unveiled, aiming to allocate cash to the countryâs most deprived communities. Its targets included increasing average income among lower wage-earners and narrowing the poverty gap between Scotlandâs best- and worst-performing regions by 2017. So far, it hasnât met those targets.
In 2008 a report entitled âPower for The Publicâ examined the provision of health, education and justice in Scotland. It said the budgets for these three areas had grown by 55%, 87% and 44% respectively over the last decade, but added that this had produced âmixed resultsâ. âMixed resultsâ means it didnât work. More money was spent and the figures got worse.
After the Centre for Social Justice report on Glasgow in 2008, Iain Duncan Smith (who set up this think tank, and is now the Secretary of State for Work and Pensions) said, âPolicy must deal with the pathways to breakdown â high levels of family breakdown, high levels of failed education, debt and unemployment.â
So what are âpathways to breakdownâ? If you were to look at a chart of Glasgowâs prosperity relative to the rest of the world, its peak would have come somewhere around 1910. With the onset of WWI in 1914 its decline accelerated, and since then the falls have been relentless and inexorable. Itâs not just Glasgow that would have this chart pattern, but the whole of industrial Britain. What changed the trend? Yes, empires rise and fall, but was British decline all a consequence of WWI? Or was there something else?
A seismic shift came with that war â a change which is very rarely spoken or written about. Actually, the change was gradual and it pre-dated 1914. It was a change that was sweeping through the West: that of government or state involvement in our lives. In the UK it began with the reforms of the Liberal government of 1906â14, championed by David Lloyd George and Winston Churchill, known as the âterrible twinsâ by contemporaries. The Pensions Act of 1908, the Peopleâs Budget of 1909â10 (to âwage implacable warfare against povertyâ, declared Lloyd George) and the National Insurance Act of 1911 saw the Liberal government moving away from its tradition of laissez-faire systems â from classical liberalism and Gladstonian principles of self-help and self-reliance â towards larger, more active government by which taxes were collected from the wealthy and the proceeds redistributed. Afraid of losing votes to the emerging Labour party and the increasingly popular ideology of socialism, modern liberals betrayed their classical principles. In his War Memoirs, Lloyd George said âthe partisan warfare that raged around these topics was so fierce that by 1913, this country was brought to the verge of civil warâ. But these were small steps. The Pensions Act, for example, meant that men aged 70 and above could claim between two and five shillings per week from the government. But average male life- expectancy then was 47. Today itâs 77. Using the same ratio, and, yes, Iâm manipulating statistics here, thatâs akin to only awarding pensions to people above the age 117 today. Back then it was workable.
To go back to my analogy of the prologue, this period was when the âtrainâ was set in motion across the West. In 1914 it went up a gear. Here are the opening paragraphs of historian A. J. P. Taylorâs most celebrated book, English History 1914â1945, published in 1965.
I quote this long passage in full, because it is so telling.
Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman. He could live where he liked and as he liked. He had no official number or identity card. He could travel abroad or leave his country forever without a passport or any sort of official permission. He could exchange his money for any other currency without restriction or limit. He could buy goods from any country in the world on the same terms as he bought goods at home. For that matter, a foreigner could spend his life in this country without permit and without informing the police. Unlike the countries of the European continent, the state did not require its citizens to perform military service. An Englishman could enlist, if he chose, in the regular army, the navy, or the territorials. He could also ignore, if he chose, the demands of national defence. Substantial householders were occasionally called on for jury service. Otherwise, only those helped the state, who wished to do so. The Englishman paid taxes on a modest scale: nearly ÂŁ200 million in 1913â14, or rather less than 8% of the national income.The state intervened to prevent the citizen from eating adulterated food or contracting certain infectious diseases. It imposed safety rules in factories, and prevented women, and adult males in some industries,from working excessive hours.The state saw to it that children received education up to the age of 13. Since 1 January 1909, it provided a meagre pension for the needy over the age of 70. Since 1911, it helped to insure certain classes of workers against sickness and unemployment. This tendency towards more state action was increasing. Expenditure on the social services had roughly doubled since the Liberals took office in 1905. Still, broadly speaking, the state acted only to help those who could not help themselves. It left the adult citizen alone.
All this was changed by the impact of the Great War. The mass of the people became, for the first time, active citizens. Their lives were shaped by orders from above; they were required to serve the state instead of pursuing exclusively their own affairs. Five million men entered the armed forces, many of them (though a minority) under compulsion. The Englishmanâs food was limited, and its quality changed, by government order. His freedom of movement was restricted; his conditions of work prescribed. Some industries were reduced or closed, others artificially fostered. The publication of news was fettered. Street lights were dimmed. The sacred freedom of drinking was tampered with: licensed hours were cut down, and the beer watered by order. The very time on the clocks was changed. From 1916 onwards, every Englishman got up an hour earlier in summer than he would otherwise have done, thanks to an act of parliament. The state established a hold over its citizens which, though relaxed in peacetime, was never to be removed and which the Second World war was again to increase. The history of the English state and of the English people merged for the first time.
Since the beginning of WWI , the role that the state has played in our lives has not stopped growing. This has been especially so in the case of Glasgow. The state has spent more and more, provided more and more services, more subsidy, more education, more health care, more infrastructure, more accommodation, more benefits, more regulations, more laws, more protection. The more it has provided, the worse Glasgow has fared. Is this correlation a coincidence? I donât think so.
The story of the rise and fall of Glasgow is a distilled version of the story of the rise and fall of industrial Britain â indeed the entire industrial West. In the next chapter Iâm going to show you a simple mistake that goes on being made; a dynamic by which the state, whose very aim was to help Glasgow, has actually been its âpathway to breakdownâ . . .
Life After the State is available at Amazon, Apple Books and all good bookshops, with the audiobook at Audible, Apple Books and all good audiobookshops.
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Youâll find the full list of North Sea Oil Cos here, in the second half of the article:
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If you are thinking of buying gold to protect yourself in these uncertain times, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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At the Battle of Ideas last October I went head to head with comedians Simon Evans, Nick Dixon, Paul Cox, Cressida Wetton and Ethan Green to debate who is the greatest.
I made the argument that it was John Cleese. My initial pitch has just been released, so here, for your Sunday morning consideration, it is.
I ended up winning the debate, but it was a close shave.
Who, in your view, is the greatest? And why? Please let me know in the comments.
If you enjoyed this video, please give it a like, share it somewhere, all that stuff. Thank you!
And please subscribe to this excellent Substack, if you havenât already.
Speaking of comedy, there are still a handful of tickets left for my show on Tuesday, if you happen to fancy some subversive musical satire. Thatâs the Mid-Year Review on Tuesday, May 20 in London in sunny East London. I am just going through the set list - it is going to be an epic night.
In other news, for long-suffering shareholders in STLLR Gold, the company just announced its latest PEA and MRE. We have been waiting a long time, and the market did not like it one bit. While the resource, 11 million ounces, is huge, the CAPEX to build this mine, $1.87 billion, is even huger. At $3/oz in the ground, itâs hard to think of a mining company thatâs as cheap. But those ounces are cheap for a reason. Here, in case you missed it, is my write up from yesterday.
Until next time
Dominic
If you are thinking of buying gold to protect yourself in these uncertain times, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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Today, using the political compass as our mapping tool, we explore diversity of opinion in BBC Radio comedy.
The political compass, as Iâm sure you know, incorporates the, in my view, more important authoritarian and libertarian, as well as left and right.
If you enjoyed this video, please give it a like, share it somewhere, all that stuff. Thank you!
And please subscribe to this excellent Substack, if you havenât already.
In case you missed them, here are my pieces from earlier in the week.
Gigs Coming Up
Here is a list of shows I have coming up, in case of interest.
The big one is The Mid-Year Review Wearing on next Tuesday, May 20 in London.
Otherwise itâs:
* London, Crazy Coqs, May 14. SOLD OUT. (Waiting list only)
* London, Backyard, May 20. The Mid Year Review Tickets here
* Sevenoaks, Out of Bounds Comedy Club, July 11. Tickets here.
* Bedford, Quarry Theatre, July 27. Tickets here.
* London, Crazy Coqs, Sept 24. Tickets here.
* London, Crazy Coqs, Nov 5. Tickets here.
* London, Crazy Coqs, Dec 3. Tickets here.
Happy Sunday!
Until next time,
Dominic
If you are thinking of buying gold to protect yourself in these uncertain times, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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Fun fact: the only countries that own more bitcoin than the UK are the US (which own 207,000) and China (194,000). The UK has 61,000 bitcoin - worth almost $6 billion.
They are mostly seized bitcoin, a lucky legacy from the early days when the UK was at the heart of bitcoinâs evolution. (Remember Satoshi Nakamoto wrote in British English, the Times was referenced in the Genesis block, and many of the early conferences and meet-ups happened here). The FCA, in its wisdom, put a stop to all that, and so we fell behind.
The stupidest thing our Chancellor can do, even with the parlous state of the national finances, is to sell those bitcoin. History would look back on her as an even greater fool than Gordon Brown for selling the national gold.
This legacy has given the UK an extraordinary advantage in the global arms race that is bitcoin adoption. We would be mad to spurn it.
Meanwhile, something extraordinary is taking place in the corporate world of bitcoin adoption, and I think it is going to accelerate rapidly very soon.
It is being spearheaded by Michael Saylor, Chairman and Founder of Strategy (NASDAQ:MSTR).
I recommended MicroStrategy, as it used to be called, to readers back in August 2023, largely because it was a means to get bitcoin exposure via your broker. You wouldnât have to jump through all the hoops of buying bitcoin through exchanges, which the FCA has made so difficult.
It has been a big win for readers, having more than 12xâd since we tipped it, outperforming bitcoin by a considerable margin. (Bear in mind it has undergone a 10-for-1 stock split since that article.)
You really should upgrade your subscription :)
Strategy now has some 555,450 bitcoin, meaning it has more bitcoin than any other publicly traded company in the world (excluding the ETFs, which now hold 1.35 million). Note again: there will only ever be 21 million bitcoins - rather less if you discount the 2.5 million that have likely been lost, and the 1.3 million that Satoshi never touched and probably never will).
Saylor is also the worldâs most articulate and charismatic proponent of bitcoin. The man is a genius, and I do not use that word lightly.
He has turned Strategy from a quiet, business intelligence software firm, which traded sideways for 20 years with a market cap less than $2 billion, into one of the most talked-about and traded stocks in North America with a market cap north of $100 billion. Options traders love it.
His method for doing so - extraordinarily bold at the time, though now it looks easy - was brilliantly simple. He bought bitcoin. He was worried about the erosion of the value of the corporate treasury due to inflation and currency debasement. he started slowly. Then, in buying bitcoin and using it, as tends to happen, he caught the bitcoin bug. He started issuing paper - stock, debt, convertible notes - and bought more bitcoin. Just last week he bought another 1,895 bitcoin, funding the purchase with sales of common and preferred stock.
In effect, he is creating money out of (almost) nothing and using it to buy the hardest money in the history of mankind. (Sorry, goldbugs - and you know Iâm on your team - but bitcoin is harder money, because the supply is more finite).
In doing so, he has enabled many of his investors to retire early.
But he has also set in motion something quite extraordinary.
Other companies are starting to follow his model. Iâm surprised more havenât, but it takes extraordinary courage and vision to do what he did, as demonstrated by the fact that more companies havenât copied him. Theyâre too cautious. Even with him having blazed the trail and shown the way.
I think thereâs a very good chance Strategy becomes a trillion dollar company, while Michael Saylor becomes the worldâs richest man.
To call the pre-bitcoin Strategy a zombie company is harsh, but it was not really going anywhere. Interestingly, it is zombie or near-zombie companies with large treasuries that are most likely to follow the Saylor model. Their need for a new direction is greater.
Microsoft (NASDAQ: MSFT) recently gave Saylor 5 minutes - 5 minutes! - to pitch his model to them, and duly ignored it. It is their loss. But Microsoft is Microsoft. At the moment, it doesnât need bitcoin, and it doesnât need to take the risk.
GameStop (NYSE: GME), on the other hand, is a different matter. Remember GameStop from 2021 and all those memes during lockdown? The video game retailer had more than 3,000 outlets, and its business model was considered defunct. People buy games online now. But some private investors noted that the short position exceeded 100% of the issued shares of the company, and started buying. The ensuing short squeeze sent the stock from $17 to north of $500, and, it is said, almost broke Wall Street. (Not quite, but you get the point).
The problem is GameStopâs business model is somewhat defunct. This year, it closed over 400 stores. This week, it sold its Canadian outlets.
But the company has about $4.7 billion in cash, low debt, and just raised another $1.5 billion, it announced.
What does it do now?
Bitcoin is the answer.
We donât yet know how much it has bought, but its earnings call is on June 6, so perhaps we can expect an announcement then.
The Japanese company Metaplanet (3350:TYO) is doing something similar. Formerly a zombie hotel company, now known as the âAsian MicroStrategy,â it has bought some 5,555 bitcoin. It bought another 555 this week after it issued its 13th set of bonds. The stock rose 40% on the news. Since spring 2024, when the company began its strategy, the stock has gone from below „20 to north of „600.
The same thing is happening as happened to Saylor. Initially, the company bought it as a hedge against currency debasement. It discovered it was onto something. Now it is doing all it can to issue paper - bonds, warrants, stock, you name it - and use the proceeds to buy bitcoin.
Perhaps GameStop will make a similar discovery.
A year ago, Semler Scientific (NYSE: SMLR), which provides technology products and services for healthcare providers, made its first purchase of bitcoin: 581. It couldnât stop accumulating. Now it has 3,467 bitcoin.
Sol Strategies (CA:HODL), my old company, is doing something similar for Solana, having just announced a $500 million convertible note. This company had a market cap of barely C$20 million a few months ago.
What started as a trickle is starting to flow. The more companies that do this, the bigger the rush is going to get. Corporations are changing they way they store capital. They are changing the capital they store.
The implications for how corporates hold their treasuries are one thing. The implications for fiat money are extraordinary. Issue debt - ie create money - and buy hard digital assets with it.
This is going to be a big, big theme in the next few years.
If you enjoyed this article, please like it, share it, all that stuff :)
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I thought I might share a few random bits and bobs from my little life for you to ponder today, starting with various interviews.
Here I am on the mighty James Delingpoleâs podcast, talking about most subjects, though squabbling about conspiracy theories.
Then there is this interview with Jasmine Birtles for the Money Magpie podcast, talking mostly about gold and property. (Audio on Spotify; video on YouTube).
Also this radio interview with ABC Australia, I was quite pleased with. Here it is.
And, if bitcoin is your thing, here I am on the Discovering Bitcoin podcast.
Right. Thatâs all the interviews done.
A Thief in our Midst
Turning to matters closer to home, there is a beautiful cat, pictured below, which belongs to a Chinese lady, who lives three doors up. She visits my garden every morning (the cat not the Chinese lady) as I am getting my 15 minutes of sun, purrs seductively, gets stroked, and then wanders off on its day to do who knows what. If I leave the back door open, she will come into my house and visit me at my desk, stretch out luxuriantly and, if I pick her up, start padding my chest pleasantly. I thought we had become friends.
Well, you canât trust anyone.
I now discover this feline fiend has been sneaking into my sonâs room to steal his socks, which it then brings back to its owner three doors up.
Here it is. Caught red handed.
A Rare Trip to the Theatre
On Wednesday I went to see The Comedy About Spies in the West End. Itâs not something I would have normally gone to watch, but my friend Tom Woods had some tickets he couldnât use and so off I went with my next door neighbour. I thought it was terrific. Thank you Tom!
Iâm obsessed with farce. Always have been since I first watched Fawlty Towers as a little boy. (I actually did my university thesis on Fawlty Towers). Itâs my favourite form of theatre by a country mile. I love the precision of it, along with the heightened emotion and panic. Done well there is no better narrative form, in my opinion.
Films like Midnight Run and TV series like Curb Your Enthusiasm, in my view, embrace farcical plot schemes. But if you want a farce in its purest form on film, watch Whatâs Up Doc. Just the best.
The premise of The Comedy About Spies is a little bit forced, but the jokes are fab, there are hundreds of them, one after the other, they are brilliantly executed and with incredible precision - itâs wonderful to see a show this tight. By the end I even found myself moved by the characters. I LOLed many times. What can I say? Itâs really good.
Whatâs your favourite farce? Let me know in the comments.
The South Africanisation of Everything
In other, less positive news, on Tuesday evening I found myself walking down the Kilburn High Road for the first time in about 25 years. It was always a bit rough around the edges - up there with Elephant & Castle and Streatham High Road as one of London's most worst thoroughfares - but my God it was eye-opening as to where the UK is going / has gone.
Litter everywhere, people off their faces, drugs being dealt openly on the street, beggars, a woman knocked over by a bloke cycling a Lime bike on the pavement, the bloke unapologetic, little trust between visible between people in this multi-cultural mayhem. Talk about lack of cohesion.
(I drove through Harlesden the other night and that was bad too).
It confirmed my theory of the South Africanisation of everything. (Actually itâs my friend Alexâs theory, but I have purloined it).
It prompted me to dig up this piece from a couple of years back, which at one point was the most read piece on this âere Substack. On re-reading it now, Iâm rather proud of it. Recommended.
The Secret History of Gold
In personal news, I am glad/relieved to say I submitted the final proofs for my new book on gold which comes out in August - the Secret History of Gold (I havenât actually announced it yet, which I will in due course). Writing a book is an enormous undertaking. Publicising it is an even greater one. Iâm glad stage one is complete.
How about this for a fact?
In 1930 the price of gold was ÂŁ4.25 per ounce, as it was in 1716 when Isaac Newton set the price over 200 years earlier. FOUR POUNDS 25p. Today it's ÂŁ2,475 per ounce. From ÂŁ4.25 to ÂŁ2,475.
That's how much we've been robbed by currency depreciation.
How have they (successive governments) been able to get away with this?
Because representative democracy does not work is why.
Thank goodness for gold. Thank goodness for bitcoin. Speaking of which:
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
The Mid-Year Review
Wearing my satirical comedy hat, I have a big gig coming up on May 20 in East London. These nights are usually pretty memorable - and for the right reasons.
If you are free, come along. You can get tickets here. It would be great to see you.
Finally, in case you missed this weekâs commentary, here it is:
Have a lovely bank holiday weekend.
Fun fact: Mayday - not as in the bank holiday, but as in the distress call for a ship or a plane is actually from the French, âMâaidezâ - help me. May Day is an ancient festival to celebrate the beginning of summer (or as is the case in the UK this year, the end of summer), though socialists hijacked it with International Workersâ Day.
So now we are all crying âMâaidezâ on May Day.
Tell your friends about this entertaining catch up.
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I spoke about gold this week to ABC Australia. This little interview may be of some interest. Here it is.
Meanwhile âŠ
Itâs as though the whole tariff thing never happened, the way stock markets are rallying. I think itâs seven green days in a row now.
Everybody is getting very excited about a rare technical signal we got last Thursday - - there have only been 16 of them since the S&P500 was created in 1957, including the latest on April 24, 2025. But this signal has a 100% reliability record, and has been followed by average 6-month returns of 15% and a 12-month returns of 23%.
Thatâs a pretty stellar record.
So I just wanted to offer my 2p.
The indicator - the Zweig Breadth Thrust Indicator (ZBT) - was first observed in the 1986 Martin Zweig book, Winning on Wall Street (which I confess to not having read). It occurs when a market swings from an oversold to an overbought reading within 10 trading days.
Eight of them have occurred since the book was published: in 2004, in 2009 (shortly after the March lows at 666), in 2011 after the taper tantrum, in 2013, 2015, 2018 and in 2023 twice. Now we have one coming off the âtariff tantrumâ, as Iâve just dubbed it.
However, before you go out and gamble your entire life savings, note that back in 2015 technical analyst Tom McClellan published a detailed study of ZBT signals, which went back much further than the 1957 formation of the S&P500 - all the way to 1928.
During the bear market of the 1930s Great Depression, there were multiple occurrences of the signal - 14 of them - and it was horribly unreliable: 10 led to losses or negligible gains, 2 preceded strong rallies, and 2 were flat. It was useless, in other words.
So, in short, itâs been good since 1957, but was rubbish before. A bit like stereos.
There are plenty of reasons to remain cautious. The high levels of volatility we are witnessing are consistent with a bear market not a bull market. There are also high levels of uncertainty: what is actually going to happen with tariffs? Nobody quite knows. Iâm not sure even the President.
Plus we are going into May, usually a weak time of year for the stock market.
And it may be that the consequences of Trumpâs tariff talk have not yet been felt in the US on the ground. One argument is that there has been a huge drop off in container ships leaving China. A container would typically take 30 days to reach LA, and another 10-20 days to get to the major cities - Houston, Chicago, New York et al. So the drop-off in container ships leaving China after Liberation Day wonât be felt until mid-May. If there is a pick up in shipments, that wouldnât be felt till another month after that. Some are saying supply shortages are coming to the US. Have a read of this and see what you think. Markets usually price this kind of stuff in, but you never know.
Cui bono?
Among the sectors that should benefit from Trumpâs America first policies are US domestic mining and manufacturing. Here the regulatory environment is changing fast. Trump signed an executive order on March 20 with the aim of accelerating production of critical minerals. Federal agencies have actually been mandated to look to the US for priority metals - copper, gold, nickel, uranium and so - when they previously looked abroad. We are already seeing faster permitting. I hear that formerly dormant projects are seeing activity for the first time in years. Emails are being answered promptly, applications are being processed, even in states like California.
This new environment is positive for oil and gas producers, miners, explorers and developers in the US. The problem is that commodity prices have dropped off a cliff. Thereâs always a catch.
Even so, one company that should benefit from this new macro environment is this potential multi-bagger.
On which, note I wanted to give you a related heads up.
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We have a video for your Sunday thought piece today, in which I walk round my local supermarket and identify all the foods which have seed oils (spoiler - almost all of them).
Ever wondered which foods in your supermarket are packed with seed oils? Join me on a clandestine mission around my local shop to unveil some hard truths about pizzas, hummus, sausage rolls, and even granola. Seed oils infiltrate nearly every packaged itemâand you should care.
By the way, my original piece on seed oils is one of the most read articles on this substack, interestingly enough. Here is is, if you havenât already read it:
I hope you find it useful and/or entertaining.
Have a lovely Sunday.
Dominic
PS ICYMI, hereâs my midweek commentary:
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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Gold again today. I just canât stop writing about it.
Another day. Another new high. We touched $3,500 in the early hours of yesterday morning.
Thatâs 27 new highs in the gold price so far this year.
Yet there is still something about this bull market that doesnât feel right or complete: itâs not confirmed by silver, which should be trading north of $50. Instead itâs mired around $32. Nor is this bull market confirmed by the miners, which, in most cases, are nowhere near all-time highs.
Nevertheless, on the basis of goldâs price relative to equities, commodities and houses, as outlined last week, gold is starting to look expensive. Is it time to have an eye on the exit?
In the short term, maybe. Itâs overbought. We are going into a weak time of year for gold (May to August). But thatâs why I like physical. It stops you trading!
How about this for a chart?
It now takes more work than at any time in the last 100 years to buy an ounce of gold.
This is as much a function of declining wages in real terms, and the erosion in value of fiat, as it is the price of gold, but all the same itâs pretty incredible: how weâve all been lied to!
There are, though, many signs that gold is now fully valued.
But these are not normal times.
And a âproperâ bull market will see blow-off tops in silver and the miners. We donât have that yet.
Let me give you six more reasons (ie largely previously unmentioned reasons) not to be selling your gold.
1. You live in the UK.
(This is one I have mentioned before). Do not be fooled by the fact that the pound has been performing relatively well in the foreign exchange markets this year. It has lost 37% of its purchasing power since 2020 and has repeatedly proven to be a rotten store of value.
The interest on UK gilts is rising, meaning it is getting increasingly expensive for the government to pay for its own debt. Weâre above Liz Truss levels and the trend is rising.
Weâve got high energy costs too.
What this government is actually doing to rein in its spending is one thing. What needs to be done is something else. There is no Elon Musk taking the guillotine to it all. The scale of our government inefficiency, waste, corruption, misallocation of capital is both larger, relative to GDP, and more entrenched than in the US. At the level of government we are not even having a conversation about what needs to be done, let alone actually doing anything.
Nor is there any likelihood of this country re-industriali sing. Weâll just have to hope people buy our services, what few we offer. In the meantime weâll keep borrowing to pay for stuff.
The only way is currency debasement. There has never been a Labour government that did not devalue sterling. Think this one will be any different? Do not store your wealth in sterling. They take enough from you in taxes as it is. Donât let them take any more.
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
2. Chinese retail
Iâm endlessly wittering on about Chinaâs central bank buying gold, but one thing I confess Iâve overlooked is Chinese retail buying. Its real estate and stock markets have both been rubbish, the former especially, so they are buying gold instead.
Then think about the sheer size of Chinaâs retail market: over a billion potential buyers. Never mind central bank buying, the potential scale of this thing is enormous. What if they al buy an ounce each?
When do they stop buying and start selling? When their real estate and stock markets pick up âŠ
Meanwhile, Chinaâs central bank, the PBOC, which says it bought 5 tonnes last month, actually bought ten times that.
(De-dollarisation, which is perhaps the biggest factor of the lot, except re-monetisation, does not even make it onto this list as Iâve covered it so many times before).
3. What about Western retail? What about Western institutions?
Western retail and institutional investors have been slow to this bull market and are under-allocated. As my buddy Ross Norman says, âthis gold rally has not, to date, been driven by retail investors buying coins and bars, high net clients clamouring for physical, nor institutions buying the gold ETF, not even speculative flows to any great extent. This has been an incredibly low participation rally. A stealth run evenâ.
Portfolios are roughly 2% allocated to gold at present. They were four times that at the peak of the last bull market in 2011.
That means a lot of room for more Western buying.
Since the confiscation of Russian assets, central banks have bought every pullback to the 50-day moving average. But itâs not just central banks now, retail and institutional investors the world over are coming to the party.
And if you think theyâre underweight gold, wait until you see how underweight they are gold miners. (Even these are slowly starting to move - MTL anyone :)?)
4. Gold vs the Nasdaq - OMG
Trends in this ratio tend to go on for a long time, like ten years or more.
How about this for a chart?
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Congratulations to all who bought. Gold is now trading above $3,300. Goldman Sachs has raised its target to $4,000/oz. Itâs all going swimmingly. But nothing lasts forever.
(Actually gold does, but you know what I mean).
So, today, I want to ask: when do we sell our gold?
To answer that question, I am going to look at some long-term ratios.
How is gold looking relative to stocks, to other commodities and against house prices? (Weâll look at gold versus house prices in the US, the UK and Australia).
There is a strong argument, by the way, for never selling your gold, especially if youâre in a country such as the UK with an unreliable national currency. If you donât need the money, keep the gold and pass it on to your heirs - and tell them to do the same. But macro conditions are not always as gold-friendly as they are now. See the 1980s and 90s for more details.
Whatâs more, given how these trade wars are unfolding, with unpayable levels of debt across the western world and Chinaâs extraordinary accumulation of gold, there is a significant chance - say, 25% - that gold ends up being remonetized somehow.
(If China wants global reserve status for its yuan, itâll almost certainly have to make it exchangeable for gold - meaning higher gold prices. But even if not, all China has to do is declare itâs real gold holdings, and the price will rocket).
In the event of remonetisation, which also means some kind of crisis, gold prices will be dramatically higher. However, itâs also likely that your gold would either be confiscated or heavily taxed, so that the gains from the revaluation (aka fiat devaluation) pass to the state rather than the citizen, as happened in the US under Roosevelt in 1933.
But let us leave such speculation for another day.
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
Gold vs Stocks
I want to start with the Dow-to-Gold ratio: how many ounces of gold does it take to buy the Dow?
There is much history in this chart. Itâs quite something.
You can see how, most of the time, the ratio stays within that green band. It is only at points of maximum extremity that it goes beyond, such as:
* The peak of the stock market in 1929
* The Great Depression in 1932
* The suppression of gold in the 1960s, ending with the collapse of the gold standard in 1971
* The peak of 1970s gold mania, inflation, and the Soviet invasion of Afghanistan
* The end of the gold bear market in 2000 and the peak of Dotcom
Today, with gold at $3,300 and the Dow at 40,000, it takes 12 ounces of gold to buy the Dow - and we are in the low- to mid-range of that green prediction band.
At the peak of the last gold bull market in September 2011, the ratio reached 5.7.
To reach such a level again, either the gold price would have to double (possible) or the Dow would have to halve (unlikely, I would have thought).
Most probable is something along the lines of the Dow falling 25% and gold rising another 50%.
Would this ratio ever go to 1:1, as it did in 1980? If so, we would be looking at a gold price in the tens of thousands.
Itâs possible, I suppose.
I think a ratio of 5-8 is a reasonable possible target.
Hereâs a similar history of gold against the S&P 500:
Today, we are at 1.7. It takes 1.7 oz to buy the S&P.
The ratio reached 0.2 in the 1930s and 1940s. It went to 0.13 in 1980.
I doubt weâll see that again.
But that 2011 level of 0.6, or perhaps even a little below if things get really spicy, is not an unreasonable target, I suppose. That could mean the S&P500 at 4,200 and gold at $7,000/oz. Something like that.
So thatâs some bull food for you.
In the interests of balance, letâs now put some bearish fodder on the menu.
Weâll start with gold versus oil - and the bad news. Then weâll look at gold and house prices.
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Iâm excited to share a brand-new video diving into one of the most gripping questions in finance and geopolitics: How much gold does America actually have?
You may have read my piece on this from a few weeks back. Here it is in video form: a deep dive into the rumours, history, and high stakes surrounding US gold reservesâand what the upcoming audit might reveal.
My thanks go to Will Freeman for all his hard work crafting this.
Whether youâre revisiting the mystery or uncovering it for the first time, this is a story that matters in todayâs world. Please let me know what you think in the comments.
Given everything that is going on in the world, we recommend people to own some gold in the portfolio. Our recommended bullion dealer I recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. More here.
And if you missed yesterdayâs piece - also on gold - here it is.
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 - Mostra di più
