Jan 142016
 

Even though investors are constantly told in disclaimer boilerplate that “past performance is no guarantee of future performance” the siren call of historical price charts is hard to resist. In the case of gold and silver, it is impossible to avoid projecting the 1970s bull market on today’s price action due to its epic nature and perfect representation of Dr. Jean-Paul Rodrigue’s bubble behaviour.

Gold bulls would argue that economies and financial systems have not been healed and accordingly the gold price top in 2011 was only a mid-cycle peak similar to the peak of $197.50 in December 1974. In chart form this claim manifests as per below.

bubblecomp1

The claim looks strong based on the similar behaviour during the initial bull phase – excepting the area marked (1), which is OK as history is said to rhyme, not repeat – and the almost identical retracement in terms of size (50%) and relative duration.

The “relative” speaks to the weakness of this charting analogy as to fit the two time periods one has to “speed up” the 1970s – the recent gold market’s build up and retracement took about twice as long at the similar behaviour during the mid 1970s. Maybe the explanation for this is the greater degree of central bank market activities with QE etc to prevent financial market corrections (and corresponding gold market response).

Based on this chart projection, the current gold market is due for a new bull market as marked at (2) and while the 10:1 ratio will warm the hearts of gold holders with that giddy $9,000 scale on the right hand side of the chart, I would note that on this basis it will take around 5 years before gold reaches its previous $1,900 highs sometime in 2020.

Final point I would make is to emphasise the “rhyme, not repeat”. Note that the final price run involved two parabolic price phases, the first marked (4) at around $400 and then another to $850. My advice would be if you see a parabolic price move, sell – there is no guarantee that it will play out exactly the same this time and a 50% correction is reasonable on the other side of the bubble. The $4,000 in the hand could turn into $2,000 just to maybe get $8,000. While hopefully many are sagely nodding right now that they would be so happy with $4,000, the fact is at that time there will be many plausible arguments put forward that even higher prices are inevitable, just as there was when gold was running up to $1,900. But such is the stuff that bubble tops are made of.

Of course this would not be a trademark Bron balanced blog post without a dream-popping counter argument, as per the alternative chart contortion below.

bubblecomp2

Here we see a mid-bull cycle surge marked (1) but the financial crisis marked at (2) prevented a retracement and pushed gold on to its eventual high. On the downside we see a similar levitation/denial after the top before the price crashes and continues its depressing deflation.

Note that the timescales on this overlay are identical – a day in the 70s equals a day in the 00s, which is a factor in its favour. By this chart 2016 will continue to see gold fall down to circa $900 marked (3) before staging another run up over the next three years to around $1400 or thereabouts as marked at (4).

The logic behind this potential future is that while the financial system is hardly fixed and there will be risk events ahead that will drive money into gold, central banks have demonstrated a willingness to take action to prevent the sort of complete economic breakdown that would justify a $8,000 gold price.

Ultimately, which of these futures you subscribe to depends on whether you believe in the narrative that central banks are omnipotent. If you think they have fixed things and/or can hold it together, then sell the coming $1,400 blip. If you think it is still to unravel, then buy the $1,000 dip. Good luck either way.

Read this article in German at GoldSeiten.

Is gold stretched?

 Posted by at 5:00 pm  Investing, Ratios
Jan 132016
 

Last week I wrote about the gold silver ratio as a way of determining which represents better value. Since then the ratio has moved higher, with gold outperforming silver on its move above $1,100. This has brought with it a number of bullish articles and while the move is encouraging and supports the idea that gold may have bottomed, in relative terms gold looks stretched to me at this time if we take a step back and look at the bigger picture.

First, consider gold relative to the other precious metals and oil. In the charts below a higher number indicates relative overvaluation. Only for palladium could you argue that gold is not stretched. By the way, look at the volatility in the oil ratio. You often see people talking about the stable gold:oil ratio but movements from 10 to 30 is an increase of 200% and a fall from 30 to 10 is a 66% reduction – hardly stable.

ratios

Next, if we look at agricultural commodities (click here for a bigger version). The left hand side has the breakfast club commodities – OJ, coffee, sugar, corn and bacon – and the right hand side has cotton, coca, soybeans, lumber and cattle. Only two of these ratios are within long term ranges with the rest at elevated levels.

ratios2

Finally, the charts below compare gold to other metals (in these charts the ratio is inverted, so a low figure indicates gold is relatively more expensive – click here for a bigger version). Again, most of the ratios are at the extreme end of long term high/low trading ranges.

ratios3

Of course the above charts may be reflecting the relative weakness of commodities but on that logic when commodities recover that will just put the ratios back into their normal ranges, meaning gold will not get a boost from that general money flow into commodities when (if) it happens. No doubt gold is attracting fear money at this time and moving up along with the US dollar – another example of its non-correlated behaviour with asset classes – but it is still too early to call as the chart below puts the move above $1,100 into context.

ratios4

Gold has been above the 200 day moving average before and failed and it doesn’t take a technical analysis genius to look at the chart above and see that gold has to move to at least $1,150 and hold before shorts will lose their confidence (although recent equity jitters and questions about the strength of economic recovery would be giving them pause for thought).

In terms of Asian demand, Perth Mint is seeing good premiums on kilobars in the fact of this price rise. Normally demand dries up on price surges so this is positive but we wouldn’t classify demand as crazy either, which considering Yuan devaluation and the fact that early February is Chinese New Year could also be read negatively.

All up, I feel that gold is a bit stretched and thus likely to grind sideways in the medium term as it builds a base and other metals and commodities catch up.

Read this article in German on GoldSeiten.

Jan 042016
 

In August I did an analysis of the ideal percentage allocation between gold & silver. This assumed one picks a percentage allocation and sticks with it. Another investing approach is to switch between gold and silver based on one’s view of which metal will outperform the other in the future. One way to determine the point at which to switch is to use the gold/silver ratio.

Below is a chart of the gold/silver ratio, calculated by dividing the gold price by the silver price. Another way of looking at this chart is that is shows the price of gold in ounces of silver.

ratio3

On the chart I have marked some reasonable high and low trading bands based on historical movements in the ratio. When the ratio is high, it is saying that gold’s price in ounces of silver is high, so sell gold and buy silver (light grey line). When it is low, gold is relatively cheap, so sell your silver and buy gold (gold line).

It is important when dealing with ratios to keep in mind that they are just a relative performance measure. Switching between metals at a high or low ratio does not guarantee dollar profits, as the ratio can change when both gold and silver are falling in price (in which case it is just telling you which metal is losing you less money).

You can see from the chart above that in February 2011 the ratio broke through 45, which based on history looked like a reasonable ratio low and thus a signal to sell silver and buy gold. The ratio then had a relatively steady climb to 75 in November 2014, a historically high point and with some commentators suggesting silver will be the outperforming metal going forward based on this high ratio.

However, the chart below shows the dollar performance of gold and silver since 2011.

ratio4

First, note that the ratio had you out of silver and missing its 50% increase. Gold still went up initially but you can see from the chart that while the ratio moved from 45 to 75 over nearly four years, both gold and silver fell over that time period. The ratio signal did “work” in the sense that gold did outperform, only falling 15% compared to silver which fell 49% between Feb 2011 and Nov 2014.

The other caveat is that the ratio trading bands (or any trading bands) are not guaranteed to work in the future. You will notice on the ratio chart that prior to the mid 1980s a reasonable gold:silver ratio trading band appeared to be 30 for a switch to gold and 40 to switch to silver. However in 1983 you would have got into silver at 40 waiting for the ratio to get back to 30 as it had done many times in the past 12 years but instead it only got into the low 30s before climbing to nearly 100 in 1992.

It should be clear from the chart that something structural or fundamental changed in the gold or silver market during the mid 80s to early 90s with gold and silver moving into a new “relative” relationship. Possibly that structural change was the decision by the United States to liquidate its Strategic Stockpile of silver, as detailed here, see the chart below.

ratio5

Note that the rate of stockpile reduction increases from 1985 onwards, around the time the gold:silver ratio begins its dramatic run to 100, and that when the stockpile drops to its first low point in 1993 the ratio breaks below 90 (which it has never seen again).

The takeaway is don’t just trade a ratio purely based on historical numbers without some theory as to how the two assets are related and whether the environment in which that relationship exists is likely to continue in the future.

Dec 182015
 

I am often asked by US residents whether precious metals are reportable under IRS and FinCEN foreign asset/account reporting obligations:

  • Form 8938, Statement of Specified Foreign Financial Assets
  • FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)

According to the IRS comparison of these requirements, “precious metals held directly” is not reportable.  So what does “held directly” mean? The IRS’ own Q&A confirms that safe deposit boxes are not reportable but otherwise provides no explanation of the term.

Mark Nestmann says that “direct ownership means you don’t hold the assets in any type of account” and that “assets you hold in a box at an offshore private vault to which only you have access may also to be non-reportable” but that “you must report offshore holdings of physical gold offshore to which you don’t have exclusive access on the FBAR”  (my emphasis).

Simon Black confirms this interpretation, saying that “gold in a ‘gold account’ does need to be reported, like GoldMoney. But storing coins or bars in a safety deposit box offshore does not”.

The most detailed analysis I have come across is from Michael DeBlis, III, Managing Partner at DeBlis Law, who, like Nestmann, sees access as the key to determining reportability:

“In a case where unrestricted access is granted by the owner to the foreign financial institution (or person engaged in the business of banking), it would indicate that the vault is a financial account and an FBAR is required if the currency notes exceed the reporting threshold. On the other hand, where the owner maintains exclusive control over the vault and does not give the foreign financial institution (or person engaged in the business of banking) access, reporting currency cash notes stored in such a vault is not required regardless of value.” (my emphasis)

This means that to avoid having to report your offshore gold and silver you need to store it in a safety deposit box, or similar, to which only you have the key such that the custodian/operator does not have unrestricted access without you being there.

Of course the problem with this arrangement is that if you need to sell your metal, you have to fly over and physically visit the storage operator to withdraw your metal so that it can then be delivered to the bullion dealer (which may be the same person operating the facility). This obviously adds significantly to the cost and makes such transactions uneconomic.

It is therefore with interest that I came across a new product by mobile/cell phone accessory firm Dog & Bone called LockSmart. It is a keyless Bluetooth padlock which is controlled from your phone, and allows you to “share your ‘key’ with someone in a different region, city, state –even country –in an instant. And could securely share multiple ‘keys’ instantly, yet still enjoy the confidence to, just as quickly, take those ‘keys’ away”.

ResizedImage600357-DB-LockSmart-lifestyle-visuals11

One could argue that a safety deposit box or similar secured with LockSmart would satisfy the “exclusive control” and “restricted access” requirements, but allow you to remotely give access to your metal to your custodian to remove and ship your metal as directed, and then upon relocking the box you can withdraw your digital key and thus restrict access to the box again. Sure, you have to trust the custodian not to take all of your metal out and/or follow your instructions, but that is the same trust one has to have with conventional, and reportable, storage facilities.

Of course I am not guaranteeing that such an arrangement would satisfy the FBAR/8938 requirements, which would probably hinge on how much “restriction” constitutes “directly held”, and you should get your own tax advice. I would note that even if metal stored under such conditions was not reportable, the fact is that if you have a reasonable value of gold and silver, the US government would be able to trace that you had purchased it by following bank transfers to the bullion dealer.

Dec 012015
 

The Perth Mint’s latest minted coin and bar sales are out, which reflect retail investor interest. In silver we posted our fifth best month in four years, although the September figure probably should be ignored because we were stocking up for months beforehand for the launch of our silver Kangaroo coin and didn’t expect to sell that all in one go.

PerthMintCoins02

For gold, sales dropped back down to the circa one tonne per month they have been averaging this year.

PerthMintCoins01

The gold chart shows a general decline, ignoring spikes, where silver is more consistent. This divergence between gold and silver coin buyers is more obvious when you look at US Mint and Royal Canadian Mint sales over the last 15 years.

For silver you can see that sales were flat and then grew dramatically as a result of the financial crisis in 2008 and while easing off, yearly sales are still increasing year on year.

etfssilver

For gold, it too had the financial crisis spike but from that initial “fear trade”, but in contrast to silver, each year’s sales have been lower than the last (and it is not like that happened as a result of the gold price peaking in 2011, the decreasing interest was from 2009 onwards).

etfsgold

I have commented on this divergence between gold and silver before and it is also obvious in the balances of ETFs. The charts below from Nick Laird show the total ounces held in ETF, futures warehouses and other online storage services.

etfs

Gold ounces held have declined with the gold price but for silver it has held up in the face of a much larger price drop. Seems silver investors are fearless whereas gold’s are fickle.

This article has been translated into German on Goldseiten.

Nov 142015
 

The Perth Mint recently released its 2015 Annual Report. This article discusses the Mint’s financial results with a focus on those areas where conventional financial analysis would fail due to the unique aspects of a the Mint’s business model. Below is a summary of the Perth Mint’s financial results (figures in thousands of Australian dollars) – the full report can be downloaded from our Annual Report webpage.

pmar

Some general comments on the figures:

  • Financial Year – Australia works on a 30 June financial year end.
  • Sales Revenue – this figure excludes loco swaps and other payments for metal by way of metal account credits, that is, it only includes transactions involving cash (the volume of metal we process inclusive of loco swaps is around $15 billion). It includes metal purchased back – for example, if we sold $100 worth of metal and bought back $50 worth, we would record the $150 worth of transactions as “sales”.
  • Trading Profit – Sale Revenue less cost good sold.
  • Tax – this is calculated at the Federal corporate tax rate of 30% that would apply if the Mint was a company. As a Statutory Authority, the Mint does not pay Federal tax and instead the tax equivalent is paid to the West Australian government.
  • Current Assets – the majority of this is the Mint’s precious metal that backs its Depository client holdings. Note that Allocated holdings are not recorded on the Mint’s balance sheet
  • Current Liabilities – the majority of this is the unallocated and pool allocated liabilities to Depository clients.
  • Shares – this represents the paid in capital of the Mint’s owner – the West Australian government.
  • Cash – this includes money held with the Mint by Perth Mint Depository customers, which is usually much higher than the Mint’s own cash balances.
  • Financing Activities – the Government requires the Mint to be self-funding, so this only represents tax equivalent and dividends paid to the Government.

The Perth Mint’s profit before tax for the year ended 30 June 2015 was just under $20 million, down from a high of $40 million achieved three years ago. The chart below shows that, unsurprisingly, the Mint’s profits are related to precious metal prices.

pmar1

In 1999-2000 profits were boosted by sales of Sydney 2000 Olympic Coin Program numismatic coins and physical coin sales driven by Y2K fears of computer malfunctions. The 2009 financial year saw unprecedented investment volumes during the height of the global financial crisis.

To capitalise on the interest in precious metals as the bull market developed, the Mint invested in capital equipment (increasing annual expenditure from $4 million to $12 million post financial crisis) and expanded its Depository business and associated working inventory levels to allow its factories to operate more efficiently.

pmar2

As the the Mint is required to be self-funding while at the same time paying tax equivalent at the rate of 30% and then 75% of remaining profits as a dividend, its ability to expand capacity is restricted. The chart below shows how much of its profit the Mint retains (the payout policy was not in place in the 1990s). Theoretically the Mint should be paying out 30% + (70% x 75%) = 82.5% but it varies depending on the application of arcane tax law.

pmar3

This chart also demonstrates the difference a bull markets makes – the first eight years covers a somewhat stable precious metal price period during which the Perth Mint was being rejuvenated. The 1997-2005 covers a bear market and tentative bull market but the post 2005 period demonstrates the Mint’s potential envisaged by the architects of the Mint’s late-1980s modernisation.

Analysis of the Mint’s margins is made difficult by the fact that the products the Mint sells differ in gross margins dramatically in addition to the mix of products sold varying depending on precious metal prices. The chart below shows the Mint’s gross margin (trading profit / sales revenue) and profit margin (profit before tax / sales revenue) over time.

pmar5

Normally such declining margins would be a cause for concern but this merely reflects increasing volumes of low margin bullion coin and bar and Depository sales relative to high margin numismatic coin sales as the bull market developed from 2001 onwards. The Mint has actually increased numismatic coin volumes and profits but these figures get overwhelmed by high value bullion sales when working out aggregate margins.

The increased capital expenditures and precious metal inventory levels would normally raise concerns about the profitability or capital efficiency of a business. The chart below shows the Mint’s return on equity (profit before tax / equity) over the last couple of decades.

pmar6

Even after $90 million worth of capital expenditures over the past 10 years and holding $3 billion worth of working inventories, the Mint has exceeded a 15% return on equity. A key contributor to the Mint’s profitability comes from the unallocated balances of Perth Mint Depository clients, which is the major source of funding for the Mint’s working inventory. While the value of Perth Mint’s precious metal assets can be easily found in note 11 on page 27, the liability to Depository clients is note so clearly identified, merely being called “Current liabilities – precious metal borrowings” in note 21 on page 34 but the giveaway to its nature is the note that “These do not attract interest and are utilised in the consolidated entity’s operations”. Leasing from external parties in note 18 on page 33, which is clearly identified as interest bearing.

pmar7

As explained here, the Perth Mint’s unallocated is a win-win situation where the Mint has free funding for the precious metal it uses in its business while clients get 100% backed safe storage of their precious metal for free. The Mint also leases in precious metal from bullion banks to cover fluctuating operational requirements. The very small amount of metal the Mint owns is mostly related to pre-purchases of metal for numismatic coin programs where the selling price is fixed, otherwise the Mint has no exposure to changes in precious metal prices – this being borne by Depository clients or the lenders from whom the bullion banks have sourced metal.

The existence of this large funding source from Depository clients at zero interest rates does complicate traditional solvency risk assessment. For example, a classic Debt to Equity ratio for the Mint would result in a figure of over 25:1, as shown in the chart below.

pmar8

It is not coincidental that the Debt to Equity ratio above increases along with the increase in Depository client metal – as Depository clients buy unallocated gold the Mint buys physical gold and willingly increases its inventory as this gives its operational flexibility. The purpose of such a ratio is to highlight the risk to a company’s profits due to excessive interest expenses. However, with unallocated metal incurring no cost to the Mint, including such metal in the calculation hides the true risk. If one backs out the unallocated liability then the ratio averages 0.90.

Solvency metrics like the Current Ratio also get tripped up by the large value of unallocated metal, and particularly so for more aggressive ratios like the Acid Test, which ignore inventory on the assumption that it is not easily converted to cash without some loss of value. The chart below shows the conventional current ratio in blue and a revised ratio in green, which excludes the Mint’s precious metal assets and liabilities.

pmar9

The point of solvency ratios is to assess the ability of a company to meet its current obligations. However, as precious metal inventories are as good as cash in that they can be readily sold, one needs to remove the precious metal value (not cost of manufacture, which would be lost in a forced liquidation) from assets and the corresponding precious metal liability as these dominate the calculation – otherwise the ratio has no information value as it is basically 1, as the blue line shows. The green line thus gives a better representation of the Mint’s short term solvency.

While the Perth Mint is a profitable and financially conservative business on a standalone basis, ultimately our clients take comfort from the explicit Guarantee of the performance of the Mint’s obligations by the West Australian Government as enshrined in the Gold Corporation Act 1987.

Nov 052015
 

Last week I was in Sydney for the Precious Metals Investment Symposium. While the turnout was down on last year (surprising as the Australian gold price has been performing but I suppose people just look at the US price) the speaker turnout was excellent. For me the standouts were opening speaker John Butler, Keith Weiner and Jayant Bhandari. The presentations by Keith and Jayant were complimentary, with Keith covering his idea of yield purchasing power and how low interest rates were resulting in people eating their seed corn, and Jayant explaining why countries like India are so interested in gold (zero yield is better than negative yield), forecasting that the West is headed in the direction of negative yields/capital destruction.

On Monday night Mark from Gold Stackers roped me into helping him with the launch of the Back to the Future coins, which involved me putting on white coveralls and a wig to “act” as Doc Brown in a skit (emphasis on the double quotes around the word act). It was all good fun but thankfully I have not seen any pics of our attempt at acting circulating on the internet.

Tuesday night saw the Precious Metal Award Gala Dinner at which I was humbled to win the ‘Maggie’ Bullion Award, which is named in honour of an Australian coin dealer known for her exceptional focus on customers, who died unexpectedly last year.

Last night I recorded an interview with Dale Pinkert at FXStreet, covering a wide range of topics including:

  • bitcoin
  • personal vs third party storage
  • banning of gold in safety deposit boxes
  • manipulation
  • German repatriation
  • Chinese gold accumulation
  • price expectations for gold and silver

Towards the end I also discussed why gold has not responded to recent geopolitical and economic events, which is based on my view that everyone has a different level of trust in the politicians and central bankers to keep things under control.

The Gold Warrior

 Posted by at 9:08 pm  Bubbles, Investing
Oct 142015
 

“Fourty four years after the end of the Bretton Woods System global central banks have manipulated the cost of risk in a competition of devaluation leading to a dangerous build up in debt and leverage, lower risk premiums, income disparity, and greater probability of tail events” says Chris Cole of Artemis Capital in his recent paper titled Volatility and the Allegory of the Prisoner’s Dilemma: False Peace, Moral Hazard, and Shadow Convexity.

Izabella Kaminska at FT Alphaville, praised it as “rare glimpse into his imaginarium” but I wonder if this was also a way to downplay its talk about tail event risks which are “equated with a loss of faith in the entire dollar system”. Precious metal investors will consider it far from imaginary and find much to agree with, such as:

“We are nearing the end of a thirty year ‘monetary super-cycle’ that created a ‘debt super-cycle’, a giant tower of babel in the capitalist system. As markets now fully price the expectation of central bank control” it is not possible for those central banks to “remove extraordinary monetary accommodation with risking a complete collapse of the system”.

Chris makes a number of complex points in an entertaining way but ultimately I see the piece as a case against complacency. One point that caught my eye and which I think goes a long way to explaining gold’s bear market is his identification of a shift from the central bank put, “policy action employed in response to, but not prior to, the onset of a crisis”, to pre-emptive central banking, which is “monetary action in anticipation of future financial stress to avert a market crash before it starts”.

Chris says that this “shift toward pre-emptive central banking occurred in the summer 2012: first with Mario Draghi’s pledge to do ‘whatever it takes’ to save the Euro on July 26th; and followed thereafter by Bernanke’s QE3 speech at Jackson Hole on August 30th.” He demonstrates this shift on a chart of the VIX and financial stress indexes. I have reproduced this chart, with the gold price overlayed, below.

artemis1

Note that the period between Draghi’s ‘whatever it takes’ and Bernanke’s QE3 was gold’s last hurrah before its relentless downward trend. Once the markets realised that central bankers would intervene to prevent excessive losses, gold lost favour and we entered the weird world where “bad news is good news [but bad for gold] and vice versa because the intervention is more important than fundamentals”.

However, Chris argues that by artificially suppressing volatility all central banks have done is encourage “rampant moral hazard” and merely “taken tail risk from the present and shifted it into the future … the risk is not gone”. His solution is to “to own volatility on both the right and left tail of the return distribution … when markets are euphoric buy optionality to protect against deflation” in asset prices.

Izabella notes that such insurance is “expensive. For a reason. There’s a cost to maintaining resilient independent defences that depend on no-one.” I think it is obvious to this audience what that insurance might be, but Izabella notes a possible solution to this era of “central bank arms race of devaluation” as being “a united central bank equilibrium where all currencies became tied to one central global bank”.

Izabella summarises Chris’ comments about Mad Max 2 as “the ultimate long convexity film, because only someone with nothing to lose (no skin in the game) can really defend those who do”. Many have argued that gold sits outside of the financial system – being no one’s debt/obligation – making this “no skin in the game” asset capable of defending the rest of one’s investments from central bank hubris. Might it also make it an independent reference point to which currencies could be tied?

Frank Holmes of US Global Investors is known for talking about gold’s Love Trade and Fear Trade. Buried in Chris’ 50 page piece is a line which I think could be appropriated as the ultimate gold sales letter call to action:

“Buy the fear and you will be protected from the horror.”

The Gold Warrior

Sep 292015
 

On Friday I recorded an interview with Kerry Stevenson of Symposium, a firm which focuses on events promoting Australian resource companies and precious metals. The podcast was posted today and you can listen to it here. Kerry asks me how I got into the precious metals business and we discuss the purpose of precious metals in a portfolio. I talk about why I own gold, how banking has changed, money and debt and the Ponzi-like instability introduced into an economy if money is created for non-productive purposes. I also discuss how economies have been able to get away with excessive debt issuance, making mockery of calls for a reckoning.

The interview was a teaser for the Precious Metals Investment Symposium which will be held in Sydney on October 26-27th. I will be speaking on the Tuesday on:

Why hasn’t the bullion banking system failed?

For years commentators have said that the failure of bullion banking is imminent and futures will default, yet nothing has happened. Why have they been so wrong? Bron will look into the mechanics of the paper/physical nexus to answer the question: will Paper always beat (pet) Rock?

The talk will partly cover the material in my fractional reserve bullion banking series of posts, but in a more easy to understand graphical way.

Kerry and Marcus have put together a really good speaker list, in addition to the mining company presentations. Well worth $199 for an early bird ticket. Look forward to meeting and chatting with my Australian readers in Sydney.

While I’m on conferences, I will also be speaking at Mines and Money in Hong Kong April 5-8th. I’m talking to our dealers in the region to see if they can line up some client seminars in Hong Kong and Singapore around that time.

Chill out, gold-dudes

 Posted by at 12:20 pm  Investing
Sep 182015
 

On Wednesday Bill Holter responded to my post Who is the player and who is being played? finishing up with “comments welcome (even from Bron Suchecki)”. So I emailed him last night. Right up I apologised for the inference that he was playing people – that was a rhetorical step too far. People who have been reading me since 2008 when I started my personal blog will know when I go after something I usually go hard. Probably something to do with growing up in a working class suburb, where you learn quick to get on the front foot.

Bill was surprised to get a reply from me, which I think reflects the expectation these days that many on the internet are willing to dish it out but can’t take it. I didn’t know how Bill would respond but the way he did speaks volumes. Others I’ve butted heads with get all personal or you can see the hate flowing through their responses. Indeed there was a lot of anger in some of the comments and tweets to my post and I found myself asking, why?

No doubt my calm approach to trying to understand these opaque precious metals markets infuriates those I disagree with. How can I be so cool when so much is wrong about how our economy operates? Simple – I own gold! (and I eat what I cook, storing it at The Perth Mint). Do I think the precious metals market will default any day soon? No, but if I’m wrong my gold has me covered.

I mean, chill out, gold-dudes, why all the anger? Isn’t that is the point of holding gold – insurance to give you peace of mind? If you not getting that from your metal, then you’re doing something wrong.

While many may find this hard to believe, the fact is The Perth Mint is on your side. That the West Australian Government has retained ownership of the Mint through waves of privatisation is, I think, a demonstration of its support for the gold industry. Precious metal ownership is only a few percent of the population so we should focus on what we have in common rather than what divides us.

Does this mean I’m not going to pull people up when I think they have the wrong end of the stick? Nope. But I will make a resolution to be civil about it, keeping in mind that we are striving for the same thing. For those  also after the truth that shouldn’t be a hard ask.