Inflation – Gold, Silver and Freedom

December 13, 2023December 13, 2023

Platinum, the Jim Rogers View

Investing in platinum and palladium, according to Jim Rogers, is akin to uncovering hidden treasures in the commodities market—both metals bear unique characteristics and play pivotal roles in industrial applications, presenting intriguing investment opportunities for the astute investor.

Platinum: The Precious Metal with Industrial Might

“Platinum wears the dual crown of luxury and utility,” Rogers might opine. He recognizes platinum’s status as a prestigious precious metal, often associated with high-end jewelry and automotive catalysts. However, he would highlight its critical role in industries like automobile manufacturing, emphasizing its scarcity and indispensability in catalytic converters for cleaner emissions.

Palladium: The Unsung Hero of Industrial Demand

Rogers might describe palladium as the silent workhorse of the metals market. He’d underscore its dominance in the automotive sector, particularly in gasoline-powered vehicle catalysts. “Palladium quietly powers the wheels of the automotive world,” he’d suggest, acknowledging its essential role in reducing harmful emissions.

Supply-Demand Dynamics

Supply-demand fundamentals are crucial to Rogers’ perspective on platinum and palladium. He might delve into the challenges of their production, highlighting the concentration of mining in specific geographic regions like South Africa and Russia. He’d likely emphasize that supply disruptions or geopolitical tensions in these regions can significantly impact prices due to limited global production.

Macro Trends and Price Volatility

Similar to his outlook on other commodities, Rogers might relate platinum and palladium’s price movements to broader economic trends. He’d emphasize their sensitivity to global economic conditions, industrial demand, and geopolitical factors. “Platinum and palladium ride the waves of economic cycles,” he’d note, acknowledging their susceptibility to market volatility.

Physical Metals vs. Mining Equities

Rogers might express a preference for physical ownership of platinum and palladium over investing in mining companies. He’d likely highlight the risks associated with mining stocks, including operational challenges, geopolitical uncertainties, and management decisions. “In these metals, owning the physical assets is akin to holding the crown jewels,” he’d suggest, emphasizing the tangible value of owning the metals themselves.

Long-Term Potential

Jim Rogers’ investment philosophy involves seeking long-term value, and he might view platinum and palladium through a similar lens. He’d likely advocate for these metals as potential hedges against inflation and a part of a diversified investment portfolio, emphasizing their enduring industrial significance and scarcity.

In essence, Jim Rogers’ perspective on platinum and palladium investing underscores their dual nature as precious metals with industrial importance. He sees them as integral components of the commodities market, presenting opportunities for investors who understand their unique dynamics and their roles in both luxury and industrial sectors.

Jim is most reknowned for his 1970s Quantum fund management with George Soros and more lately, his move to Singapore. He seems to have a knack for knowing when to buy low and sell high and freely shares his insights via interviews and Books.

October 31, 2021October 9, 2022

A Rising Tide

“Some men just want to watch the world burn.” – Alfred Pennyworth, The Dark Knight (Batman)

If I was to construct a plan with the final objective of watching the world burn, I wouldn’t know where to start, but some people clearly do. For, since March 2020, you couldn’t have introduced a better set of policies to achieve this and worse, the majority of people are going along with it without realising the final endgame and the consequences for them and their way of life.

The main thing that triggered this post has been the recent 50% increase in electricity prices here, followed by an email telling me the price of my wood pellets for heating was going up 10%, followed by another email one month later telling me that…the price is going up another 10% due to increasing raw materials, manufacturing and transport costs. You could not get a clearer message that survival is the future name of the game and soon it won’t be worth working, not at the current rates of pay, at least and time will be best spent fighting for the remaining toilet rolls on the supermarket shelves at any price. Welcome back to the 1970s, a time of shortages, conflicts, stagflation, stock market crashes and inflation. Unless things change, expect the same once more for a new generation, only greatly amplified due to globalisation and the loss of local self-reliance. I myself have clear memories of my mother making hotpot using the electric cooker in the allocated 4 hours of rationed electricity time, in the UK and sitting with candles on dark (k)nights. Oh how it was kind of fun as a child and besides, with a TV with only 2 or 3 channels to choose from and no internet, technology was not so missed as it would be today. Can you imagine the freaking out for many, if the mobile phone goes flat and it cannot be recharged?

So, let’s look at some of the ways the world is burning. Advance warning – in some cases, it really is, literally :-

Paying productive people to stay at home and do nothing, rather than contribute, or worse, paying them to do unproductive tasks like PCR testing (possibly, this is destructive, but let’s leave that for another day). All the while, increasing the taxation and debt burden on the shrinking productive sector. For yes, furlough still exists, paying people close to full salaries to stay at home and do nothing, while the better employees get paid the same and are required to actually go to work and carry the load of two people.

Telling businesses to not let in particular customers, or lock down completely and suffer the consequences. You’ve probably seen those consequences on your very own High street, where many businesses have closed down completely? Certainly, even if some did not go bust, many owners seem to have decided it’s a good time to retire. It would have been nice to see more businesses resist, like the hairdressers in Bradford who stayed open throughout and accumulated over £18,000 of illegally-issued fines, which recently got written off. Common Law and Maritime law are worthy of additional study, if we are to survive.

Ordering farmers to burn or destroy crops instead of allowing them to reach the free markets and reduce rising prices. Every food commodity is going up in price, just look at corn and beef, for example.

Emptying reservoirs at a key time. This one is a worldwide occurrence when you start looking, and has left many, such as California farmers, puzzled as to why their fields stand barren and unproductive while water is, quite literally, flushed down the drain.

After years of simply burning excess natural gas into the atmosphere, it’s become the new hot commodity. Perhaps next time someone tells you that you are responsible for the global warming con, you should picture this burning that’s been going on for years. Natural gas prices are now up over five times in just a few months. It could have been eased had the pipeline from Russia had been allowed into Western Europe, but again, interference with perhaps darker motives has played a part. Natural gas isn’t just used for heating homes and generating electricity, it is one of the main components of fertiliser production, so expect this to feed into higher food prices too.

Starving traditional energy production of finance – you must’ve heard the awful ESG stamp on some investing funds, promising not to invest in dirty businesses. Define dirty. I note the influential Blackrock in the USA made promises here. Here’s some financial musing – think of completely avoiding any fund with ESG compliance and buy funds that unashamedly invest in oil, coal and essential resources – the world needs them and will continue to do so for a long, long time. In fact, the IT sector knows this and the cynic within me wonders if the gigantic predicted increases in power consumption forecasted for the next 20-30 years are due to increased IT usage for the mega-servers of the internet of things. The secondary cynic also wonders how well those ESG funds will perform in the coming years, when it comes to the pensions of the masses. I bet the investment bank fees are good though and, for sure, when you collect your meagre pension they will console you by saying you invested to save the planet. Shame you’re starving to death because your pension has been stolen from you, but hey?

The U.K. quite cleverly introduced a new legal grade of petrol in September 2021, with twice as much ethanol in it as before. They also introduced a very clever temporary shortage to clear the garage tanks of the old petrol, so the new grade could be rolled out. Okay, perhaps my cynical brain is in full flow today, but it’s hard not to be with stories like this. How is the ethanol produced? From corn, of course, so this new petrol puts even more pressure on food prices. Worse still, some older cars may end up with damaged engines from this new petrol grade and be fit only for the scrapheap. While getting older cars off the road is often touted as being good for the environment, don’t forget the gigantic manufacturing and transportation costs, or the estimated 500,000 litres of clean water used for every car produced.

By now, you should be aware that you are under attack from all directions and you’re probably wondering what you can do to counter some of this. I have often placed stock upon Zigging while the World Zags. In a time where people are spending more and more time in the virtual, meta world, you could probably not do much better than go out into the woods and hug a tree. After all, when was the last time you experienced a real hug, one with energy and genuine love? I’m not joking either, I personally am making major steps to more frequently let the mobile phone go flat – at the very least it’d be interesting to see what happens if I do once the covid passport is mandatory. Yes, once. Do – talk to people (or trees), read books, write with a pen and paper, meditate and listen to the birds sing. Don’t – watch TV (there’s a reason it’s called TV programming), subscribe to Netflix, read newspapers or drive when you could walk. Feeding the machine with your energy cannot be a good thing. Of course, there are some things I cannot overcome yet, such as working in IT and writing this electronically, but there again, put your supposed carbon footprint into the context of those items above and realise it’s not your fault, or that of the neighbour you are being encouraged to hate.

As a final thought, in reverse Sumerian Gematria, Batman equates to 666…

May 23, 2021October 9, 2022

How Do You Solve a Problem Like the Pension Crisis?

For my entire adult life, I have repeatedly had it hammered into me that the country I am from is facing a massive crisis due to huge pension liabilities building up in developed nations. From a time when it took 10 working people to fund one pensioner, we are now down below 2 working people per pensioner in some Western nations.

Mish's Global Economic Trend Analysis: US and Canada ...

These liabilities take many forms. For example, people in all of these countries were encouraged (read : forced) to pay into government schemes that promised to fund their old age and that promised land of loads of time to spend gardening, seeing the grandchildren, or going on cruises when you ceased working. Except…well, the governments took the money but in the case of the UK, for some reason forget to actually start up the fund to invest the money into. I would suspect other countries did the same, but you can update me via email on that below. No matter, the ledger entry liability where the government (through future taxpayers) must pay those pensions to the retirees and also fund their other welfare and healthcare needs still exists. When it comes to ledger entries and simple accounting, there’s no doubt that pensioners are a liability, IF we measure life in such simplistic terms. Fortunately, any non-sociopathic human doesn’t. for the sociopaths, it’s worth noting that 48-49 is the peak age for economic activity in human life – after that the trajectory is forever downwards.

What’s not often mentioned, however is how much capital these pensioners themselves saved up themselves to pay for their retirement. A huge percentage of world equity markets and the cash lying dormant in bank accounts, awaiting circulation, is owned by these very people being lamented for their inconsideration of daring to stay alive beyond their economic sell-by date. Yes, those very people who spent every month of their 30-40 year working lives, investing their excess capital above living expenses into funds, naively believing it’ll some day provide for their retirement. I can understand the level of trust then, but it’s harder to share now. However, another byproduct of this is that these are the very people who have dramatically high levels of trust in the existing system and that government will look after them. Therein lies another key factor of the recipe described at the end, for, you may have noticed a common denominator by now that all of these liabilities are extinguished, if only you can get the people themselves to die off. More on that later.

As an early example of the legalised wealth transfer from these retirees (hell, I will be one myself quite soon, if all goes to plan*), in 2012, the United Kingdom took ownership of the Royal Mail Pension scheme. Now, as you can probably imagine, this pension scheme has had many, many years to accumulate capital and invest it and so it did. By 2012, these assets had grown to £30bn, a huge sum. No matter, with the prevailing calculations in place, this pension fund was deemed to be in deficit compared to it’s liabilities. It’s probably worth pointing out at this point that it’s nice to be able to gently nudge a pension fund into being deficient on it’s liabilities, when you implement laws that force it to invest a fixed percentage of it’s assets in government bonds paying 0.1%, instead of being able to freely invest in dividend-paying safe stocks, or even hold the ultimate safe haven asset, Gold, and watch that appreciate. Well, okay, maybe appreciate in fiat currency, since Gold can only ever stand still priced in itself. The government solution to this was to offer the Royal Mail an opportunity for the government to take the assets, all £30bn of them, and in return offer nothing, but to pay the future unfunded liabilities of those pensioners who once worked for Royal Mail. As an early example of taking something now, in return for an unfunded future promise, it was wonderful. expect more of this to occur in future.

On a similar vein, I almost called this post “Last Coal Miner standing”, for there is one huge pension fund out there with assets way in excess of liabilities and which defaults back to the government once the last recipient expires. The Coal Miners’ Pension Fund. For the main reasons that coal miners, due to the nature of the work, tend not to live as long in retirement, as I know to our historic familial cost and that coal mining is a supposedly a declining industry (demand is still huge though, but you can engineer a decline, can’t you?).

The Coal miner’s pension fund actually did something dramatically clever way back in the 1980s. Identifying that investment trusts often trade way below the net value of their assets (NAV), they spotted Globe investment trust, the UK’s biggest at this time, was trading on a huge 30%+ discount to NAV and decided the best and cheapest way to increase the assets of the fund was to buy this trust and incorporate it into the fund. A wonderful move, whoever did it deserves the highest praise and I bet it was someone who sat outside the city circle, who genuinely had the best interests of the pension fund members in mind. Fast forward 40 years and sadly, the government doubtless has their eyes on this fund big-time and I am concerned how long that huge pool of money, paid in by hundreds of thousands, if not millions of men, will remain out of the clutches of the elite. See this kind of thing as the asset side of the equation, that they prefer not to tell you about, when they tell you about pensioners, with all their knowledge and wisdom, being liabilities. The same goes for firefighters, teachers and whoever else out there spent their working life trusting some pension to cater for them in retirement. You may well be disappointed.

Of course, it’s completely disgusting and represents theft on the most massive scale. So, that raises the question – what’s the best way to deal with it? Well, in an ideal world you might…nope, it’s pointless, that ideal world does not exist at all. The solution, I fear is somewhat simpler.

Spend years convincing old people they are a liability and that they are dinosaurs who unnecessarily consume resources and contribute to global warming through CO2.
Try to engineer an age divide, where the old are presented to the young as the people who stole your assets and who, by virtue of the happier times in which they lived, are somehow responsible for you not having a job and struggling in life.
Introduce a new virus, then tell those trusting old people who still believe the state will provide that their best protection is an injection, as insurance against never feeling the full symptoms of this virus. Yes, that truly is all it promises – that you won’t get the symptoms quite so bad.

Things not to tell them include :- that the injection is experimental until 2023 and that you are part of the human experimental pool, or that the leading French Nobel prize winning virus expert believes you may well have just reduced your life expectancy to two years.

Pension crisis solved and best of all, the pensioners themselves agreed to it.

*It won’t, whatever else happens in life, the “plan”, as I imagined it, will not occur. You will own nothing and you will be happy. Or else.

February 20, 2021October 9, 2022

Bitbubble

Last night was one of those nights where you wake up and things occur to you. I’ve had quite a few of those lately, but this one seemed especially illuminating. For a while now, we’ve had the word bubble planted in front of us by the media for quite a while to convince us stock markets, bond markets, commodity markets and biggest of all, cryptocurrencies are too high and may be about to crash.

Using reverse psychology, you should wonder if there really is a bubble. After all, a real bubble happens when everyone is too carried away by the emotion and success to recognise the bubble for what it is. In fact, bubbles don’t normally get identified until long after they pop. In hindsight, a graph usually makes it clear and everyone who once yelled loudly about their success now remains quiet and tries to forget the whole sorry episode.

Perhaps the one where you could say the graph seems to show a bubble, is Bitcoin. While I regret not being in on the Bitcoin boom, I’m still not convinced and find myself on the side of Peter Schiff and Jim Rogers, versus such other illuminaries as Doug Casey and Robert Kiyosaki. Yes, billions are being made and yes, we can agree fiat currencies are in massive decline. However, to me, the best medium to avoid that is the precious metals, with thousands of years of history to prove it, not electronic bits on a screen with no intrinsic value. Of course, the blockchain technology, decentralisation and ability to pay without banks are excellent, but it all runs on establishment hardware. Beginning with your smartphone, then the networks that pass your data across the world. As the establishment gets better at tracking, they will undoubtedly find ways to switch you off if they want to. There are certainly some fascinating debates out there to watch on the subject between these knowledgeable and successful people. Meanwhile, stories like this, about a German who won’t give the police his password and would rather sit in prison, remain amusing and stick two fingers up to the powers that be.

I am certainly an interested observer. Even the mysterious Satoshi Nakamoto, who supposed started up Bitcoin is an enigma. For some reason, his name reminds me of the government department, the NSA (National Security Agency) and it’s always seemed strange that organisations with a global reach and unlimited funds are unable to track down the person who started it all. As an adult, you know that sometimes the best way to keep a child or dog occupied is to throw them a ball and part of me has wondered lately if that’s exactly what’s happened here. Throwing a ball to keep people busy and distract them from the best investments, while you clean up on the cheap.

Take, for example, the recent purchase by Te sla of $1.5 Billion worth of Bitcoin. Why would they do that, you might wonder? Whatever reasons are given, I find myself doubting they are the full truth. Then, we hear that Apple may also buy Bitcoin. Both stories helpfully plugged on mainstream media, to ensure maximum public reach.

So why are they buying?

Last night was my own Eureka moment. On a yearly basis, there isn’t enough silver mined to meet demand. Only about 80%, with the rest met by recycling. Fair enough, excellent reuse, but for how long will there be enough scrap silver to go around, and, if a sniff of inflation came around, how many of those recyclers would be willing to sell their metal at the current prices? It led me to get thinking about the products of Tesla and Apple, and the amount of silver they consume yearly. In the case of Tesla, one electric car consumes 1 kilogram of silver. It doesn’t sound like a lot, but if they make one million cars a year, then they will consume 5% of world silver demand. To put that in perspective, Ford alone produced 4 million cars last year. When it comes to Apple, I am grateful to this excellent infographic for explaining it all very clearly, albeit it from 2013. I can only guess that bigger iphones means even more metal in there.

Here’s my view – the public has been thrown a ball to play with. Indeed, it may continue to shoot up and entertain us all, the same way the Dutch went wild for Tulip bulbs in Amsterdam in the 1600s, and for a while, we may all feel ourselves rich or stupid for not participating. Indeed, some will walk away with fortunes. The majority probably won’t, however.

Meanwhile, the elite can stock up on the proven store of value and have a good laugh as many lose everything and are forced to succumb to The Great Reset.

November 14, 2020October 9, 2022

Oil and Gold

Oil is still one of the biggest building blocks of life. Regardless of whether you now work from home instead of driving to work every day in the gas-guzzler or not. It’s used in everything – fuels, plastics and pharmaceuticals, to name a few. In fact, if you now work from home, chances are you’re turning up the winter thermostats a bit more often than you would at work. You’re probably also buying a lot more food from the supermarket, most of it encased in plastic packaging. Even if your heating system is not oil-based, oil remains one of the main fuels available for generation of electricity, and could well do so for many, many years, regardless of how many windmills they build.

So, the good news. You’ll be pleased to hear is that oil is at an all-time low, when measured against gold. Luckily enough, since with your earnings being one-sixth of the 1970 value, you may not be able to afford to keep the house warm or drive a car otherwise. Any apparent price rises you see at the pumps are merely an inflation of your fiat currency.

Now for the bad news, can it continue?

Maybe not. For many years, gold and Oil actually maintained a near 10:1 ratio relationship.

(Chart: Gold/Oil ratio 2010 to 2020)

As the chart shows, this relationship has become distended as a result of the Corona crisis. There’s now a near 50:1 relationship as of August 2020. This may imply oil is actually quite cheap, gold is expensive, or that the ratio no longer holds. There has been a multitude of media articles heralding the death of oil. However, it seems to have missed the attention of many that all of this data – everyone’s Facebook posts, Instagram images, or cloud software solution is stored on a server somewhere that requires electrical power to run. For sure, in the case of one Instagram post, that electrical consumption is miniscule, but multiply it across a world of 7 billion people, and you get an idea now of the immense electrical power required. Oil, natural gas, and coal are still heavily used in electrical power generation across the globe.

(Chart: Actual and predicted power sources to 2030)

The eagle-eyed among you may have spotted the chart dates from 2003. This was deliberate since more recent data shows it to be correct. If so, the future trend for oil consumption is still upward.

(Chart: Energy consumption to 2040)

So, and this is only a question, not investment advice, maybe oil itself is not finished yet as an investment. If not, could it revert back to the 10:1 ratio with gold and if so, at what price for both?

November 14, 2020October 9, 2022

Food and Gold

100 years ago, the average household spent up to 50% of its income on food. Today, that figure is nearer 10%, giving us all more disposable income for consumer goods, bigger mortgage repayments, and exotic holidays. Food is cheap, almost too cheap, in fact. As some farmers struggle to turn a profit and big supermarkets control the supply chain.

(Chart showing food prices as a proportion of income)

Of course, some of this is due to technological improvements in farming and manufacturing, but much of it is due to fiat currency inflation versus gold. Perhaps it can’t last forever – we may well already be being prepared for future food shortages and increases in food prices. You may have already noticed shortages during the crisis or increases. On a personal level, visiting the supermarket regularly, a 20-25% increase in fruit, vegetables, and dairy products has occurred since March 2020, when Corona began. That’s interesting, as these products are all the ones with the shortest shelf life, that are most immediately impacted by price rises. Others, like dried, tinned and frozen goods, may be in huge stock at warehouses down the supply chain behind the supermarket facade, and price rises may take longer to feed through. Observe these headlines from recent times, as to what they may be planting the seed in your head to germinate for:-

“UK potato farmers fear another washout for this year’s crop. “

The Guardian, August 2020

“Bread price may rise after dire UK wheat Harvest.”

BBC News, August 2020

“Coronavirus: Meat shortage leaves US farmers with ‘mind-blowing’ choice.”

BBC News, May 2020

If you wonder how far food prices can rise during a monetary crisis, then here is an example of prices from “Fiat Money Inflation in France,” an excellent study of the hyperinflation that occurred there during the French revolutionary times, which coincide with the decline of the French empire before the handover to Great Britain.

Now, how well covered are you for those kinds of price rises in basic commodities, the essentials of life?

What is inflation?