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PROMISE, LAST IT ABOUT THE WORLD BANK AND THE IMF!
MY QUESTION WAS AND REMAINS WHY DID THEY TIP SO MUCH MONEY INTO THE AID AND LOANS BUCKET WHEN THEY KNEW THE BUCKET WAS LEAKY (TO PUT IT POLITELY).
DON'T CHARGE POOR FOR YOUR OWN INCOMPETENCE.
The IMF estimates about $1 trillion in tax revenues could be realized globally every year, if corruption were curbed. That is a staggering sum; nearly twice as much is needed to help 49 low-income countries achieve the SDGs by the 2030 deadline.
The global focus on anti-corruption efforts – especially in poor countries – is a relatively recent development. It was not until the so-called “Cancer of Corruption” speech in 1996 by then-World Bank President James Wolfensohn (CORRUPTION WAS KNOWN WELL BEFORE THIS!!!) that the international lending community uttered the dreaded “c-word” (i.e. corruption) in public. With that, the floodgates opened and billions of dollars have been spent in an effort to help developing country governments address their corruption problems.
THEY NEED TO DO A LOT MORE
“Africa has turned into a pawn in the chessboard of experimentation for all manner of ill-digested development theories and pet hypotheses."
The efforts of the IMF and World Bank have been close to abysmal from what I have seen in Africa, and one could add in various other countries in South America, Latin America SE Asia.
The game that gets played runs along 2 lines.
One is to change the taxation and investment laws (IMF guidance), to compensate investors for the additional risk of investing in a risky country. Net result is that a non sustainable asset gets taken away, government income is minimised and benefits to the local people at the point of mining is very minimal, but there is an environmental legacy not to mention a depreciation in many of the dry places of non-renewable water. In some dry countries the water in the palaeochannels/ground which are sucked dry, dates in excess of 10,000 years ao, and now being desert will not be renewed. Profits are made, but where?
The second is the transfer pricing profit shifting taxation rort, which means that the local mining company's profits in the developed country are then shifted to alighter taxation regime. The mining company HQ in some tax haven employs all the staff and owns all of the equipment, and hires staff and equipment out to local comp at good prices to reflect additional risk (etc), and right before your eyes the costs of mining gold in the developing country are more than the income..and away go taxes. So no or minimal local profit means minimum local tax, which means minimium loca income to the host government. Now ask yourself if the WB and IMF were really concerned with development and poverty aleviation etc, they would have got on top of this right from the start, such that the maximum value is derived for the owners of the resource in the ground?
Outside of mining you come to infrastructure gravy train. Large loans are made (why would the WB and IMF give out small loans when their running costs are so high due to their extravagant admin costs) to governments, who clip the ticket in every way possible, such that roads are paper thin (like other magnificent infrastructure projects and white elephants) and fail surprisingly quickly (and v little benefit goes to poor local people) yet the debt is born by those poor people who have not been the beneficiaries of the loan for generations.
My argument is to wipe out all of the misplaced debt, put in place proper governance with rigorous independent auditors, and use the money to teach the people to fish, not give their governments handouts to buy houses in Europe or wherever, or send their children to elite schools, who in turn return and become part of the ticket clipping elite in the next generation.
Sorry for the rant, over now...I have taken my medicine, but please dont mention the World Bank, the IMF of the PhD economists
JP Morgan's infamous statement to Congress in 1912 that "gold is money, everything else is credit" is an underlying concept in the money game.
Move forward to the recent claim from the Perth Mint "That said, gold is not only a crisis investment, having delivered long-run returns of more than 9 per cent per annum over the last five decades,"
We now have SendGold, a trading platform specific to the commodity and which bills itself as the world's first "gold as a service" technology provider. The founder : "I realised how fragile the monetary system is," she says. "It was bets on top of bets that nobody understood."...SendGold is limited to the purchase of physical gold title , which is more expensive due to the need for storage, auditing and insurance, but provides greater defensiveness. The SendGold platform has been experiencing a surge as more investors cotton on. Although its sweet spot is more experienced investors between the ages of 35 and 55, SendGold is drawing in gold enthusiasts across the spectrum with minimum purchases as low as 50¢ and investors aged 18 to 97 using the platform. It charges brokerage of about 1 per cent.
Since January it has seen transaction volumes snowball by 819 per cent and the average transaction size grow by 311 per cent.
Some 80 per cent of that activity is coming from Australia, where SendGold is headquartered. It operates in 14 countries, with a focus on the developing world markets where remittances and gifts are an important cultural feature of the local financial services landscape.
The darlings in the FinTech space have been focussed on ultimtately debt, and feed into the the buy now, pay later phenomenon. Someone will have to pay of cou
The Perth Mint oversaw the sale of 120,000 ounces of minted gold bars and coins in April, which is triple the average monthly sales over the past eight years.
But where the rising demand for gold is really evident is in the market for gold-backed exchange-traded funds. "More than 700 tonnes of gold was bought through these vehicles in the first six months of the year globally," "That’s more than any full calendar year going back to 2003, when gold ETFs were first launched."
The ASX-listed VanEck Gold Miner ETF rose 44 per cent in 2020 and hit a record close of $60.75 on Monday, and gold mining companies were also benefiting from the surging price.
VanEck rival BetaShares has seen inflows into its currency-hedged Global Gold Miners ETF in the first six months of 2020 already exceed the whole of calendar year 2019.
Gold ETFs have the additional "counter-party risk" of being managed by a third-party investment manager, she says.
We also have a new joint venture made up of Perth Mint and ASX-listed Security Matters Limited called trueGold that will focus on supply chain integrity and freezing out so-called conflict gold. Hope the JV works a bit better than their web site
as good a
I once had a chat with some brand new prospective politicians in a developing country who argued that it was difficult for them to get funding from the developing world without opening up their resources to International companies.
One of them said isn't it strange we need to take out our resource from under the ground so that banks can put it back under the ground. We only get a small percentage of it's worth and have to wait years before we can access even the small percentage whilst the International companies repay their loans with our resource.
Must admit to having some sympathy but together with the IMF and World Bank and AID from other countries the developing country has become far stronger albeit still has a long way to go and was one of my favourite countries to visit.
Gold (Physical) is in limited quantity ,always will be.
That is its universal value.
Always has been always will be, with it you can always Barter for essentials, worldwide.
I agree that Gold has always been seen as a store of value, but has not always held it's value.
I had a teacher at school who was in Hungary at the end of WW2. Inflation was rife and the currency worthless. He told us of people trading Gold jewellery, rings, coins and even teeth for simple things like cigarettes, bread, eggs and milk.
The thing with Gold is that you can't eat it, smoke it or drink it. It only has value in a civilised society.
Money hasn’t been a store of value for centuries, the pound has fallen 4500% in the last 100 years alone. Now we can add negative rates and so extra cost of holding cash to that. Money is historically a means of exchange, gold the store of value. However Tiger is right that short term (next few years) we may get deflation in shares and an overall lower PE for the market given the heightened risk, while inflation elsewhere. Doubly good for the best long term store of value historically, gold, whose rise I believe will outweigh falling markets on our share. So glad you are still 80% in Prof, and hope Tiger is for once wrong though he may be proved very wise as ever as I am wiped out. Great we put our money where our mouths are. Ps remember in the fall from 2017 I was nearly drummed off this board for my pessimism through the two years it took gold to get going again, so not always a bull!
US Dollar net shorts surge to highest in nine years.
Kitco .CFTC ,Reuters.
Good morning all. I certainly would not like sitting on a pile of dollars ,when it seems the inevitable happens.
Peter Schiff is predicting year end.
But he's being making similar predictions for years.
It will happen ,but like everything ,the timing is difficult.
Absolutely brilliant line:
'If any of you ever do have to live through hyper-inflation, remember money will still work as a means of exchange, but it will cease to work as a store of value.'
Your thinking mirrors mine ref the opportunity cost of cash. I have been caught out a few times by going nearly all cash when I thought the markets were toppy only to see them continue to climb while my cash was of course static. Having said that there is wisdom in Tiger's approach and not being too greedy so I do have c20% in cash at present.
I am pleased to see gold close the week above 1975 and close to a record high; ditto pleased to see Cey close in the 200s. I have great hopes for Tuesday's interims and a good dividend being announced and expect a strong market reaction. Given I expect gold to move into the 2000s sometime in Aug, the two factors could be enough to drive CEY up to the 250 you mentioned. Like you I expect that and am starting to dare to think of 300 as being reasonable. I would love that to be by year end but pretty much everything would have to go in our favour for that to happen.
The link to Yahoo Finance historical date: cey.l
I referred to.
Tiger, we are all products of our own history, but in a way that is our challenge in forecasting as it can over influence us, so why this board is so useful, as now when for once our views diverge; I agree with all you say but with my history draw the opposite conclusion. The opportunity cost of cash is too high with current PM possibilities. However I do agree they have risen too far too fast and need a breath, no reason not to hold, and that it depends on the speed of the crash. I started my rant saying that the only lesson of history is that history has no lessons, but if we have had the 1929 crash and the 1930 recovery then it takes the next quarter century for markets to get back here, a long slow fall and good for gold and us. Couldn’t you keep just a bit in Cey and Hoc (silver may rocket). And let’s compare notes at Christmas.
But it was August 13th before the share price peaked and went even higher on the 38th of August, the day before the ex-dividend date.
Interesting if your situation denotes trading.
It actually highlights how difficult it is to call the right day to trade.
(I spent ages trying to figure out how to share Yahoo Finance historical data page on Centamin but sadly I’ve been defeated) it is worth looking back at last August’s trading details if you have access.
Thanks Tiger, very interesting, much appreciated.
SETTING THE BAR
PRECIOUS METALS NEWS
Gold and silver markets see new heights as gold crosses US$1975, for the best gain in 2 years, and silver hovering around the US$25 mark, at the time of writing.
As central banks print more money and bonds return crashing, precious metals prices are increasing as a result of basic economic fundamentals. Traders on the main gold futures exchange in New York have issued the largest daily delivery notice on record.
There are concerns that the economic recovery in the US could be grinding to a halt amid the ever-increasing coronavirus cases exerting continued heavy pressure on the dollar.
Just to finish my rant...
Anyway, that's my grand plan. Only time will tell if it's a good one. But I don't lose anything by getting out of the market for a while (no inflation yet). And, in truth, I have been very lucky already so far this year. And luck is a lady, she should never be pushed.
I guess we're all the products of our experience. I worked in Russia in the early 1990s, so I've actually lived through a hyper-inflationary episode almost equal to the Weimar Republic or Zimbabwe. I once was paid $4,000 in cash (in roubles) - the bundles of banknotes filled a big holdall. I figured that if anybody tried to mug me, I was just going to hit them with the money and run off. That's what you call hard currency! Then, when I got the roubles home, I didn't know where to hide them, so I just packed the fridge with them. I think my sub-conscious was telling me that the roubles would go off if they weren't kept fresh. No wonder the Russians nicknamed them "kapusta" - cabbage.
Overall, the rouble-dollar exchange rate dropped from about 1:1 to 50,000 to 1 in a couple of years. All savings were destroyed, pensioners were left in complete penury, and spivs, money-changers, and criminals became Russia's new aristocracy. Later, the police and KGB moved in on the criminals' rackets and took them over for themselves, and that pretty much is where Russia still is today - a country which, for all its glorious culture, is run by wolves and jackals.
If any of you ever do have to live through hyper-inflation, remember money will still work as a means of exchange, but it will cease to work as a store of value. So as soon as you lay hands on any cash, immediately go out and buy whatever long life goods are available. You can work out how to sell them later. (Obviously gold and silver are the best option, but failing that, cars and tinned food also work. I have a friend who was (for a while) the proud owner of three tractors, even though he'd never left downtown Moscow in his life.)
As for the here and now, I think we all know that the wider stock market is wildly overpriced, especially as we are in a serious recession. And that printing money is a very dangerous game; at some point the real value of the dollar (and even more so, our poor pound) is going to be questioned by the market. Things just can't go on like this. My own opinion is that things are so precarious that it will only take one unexpected bad news headline to set off an avalanche.
However, inflation hasn't arrived yet, though it may be coming. So holding cash is (for now) a viable option.
The key question I ask myself is how will gold and gold miner shares behave when the stock market slides. I think the answer depends on whether the slide is market sudden and violent (in which case even gold will get swept away in the desperate need for liquidity), or whether it will be more gradual, allowing gold to rise against the falling stock market). I'm inclined to thinking the former is more likely than the latter, but that's only my best guess.
If I'm right, then I'll be in cash for the bottom of the maybe coming stock market crash, at which point I will pile into the most stable gold miner shares I can find - obviously one of them will be Centamin.
Tiger, you are right as ever and I agree that ‘usually’ it pays not to be too greedy, and ‘usually‘ gold shares fall on a market collapse as everyone seeks liquidity. However I have said before that I think this is not ‘usually’ , with negative real interest rates, and huge money printing meaning, I believe, that gold
will only be hit briefly, and with our secure and rising dividends we will have a temporary setback from quite a bit higher than here; I am expecting Cey to make 250 by autumn and £3 by Christmas and wouldn’t want to miss that possibility. Of course you would be the one laughing when it falls back to a pound but I have a feelingly nay hope that it won’t this year.
My German mother in-law and a dear friend who was a commissioned officer in the SOE and involved with the rebuilding of Germany post WW2 have given me similar accounts of just how bad things were.
Also look at how bad things are in Zimbabwe!
I value your opinion and would like your opinion on something which bothers me.
I have contact with a number of German friends who were raised after the demise of the old Reisemark. I have heard stories of people being paid with wheelbarrows of worthless paper money.
I know people who actually bought goods and stored them until trading after the war was recommenced. It made them wealthy.
In the light of this, I mistrust notes which say I promise to pay the bearer. I also mistrust ETFs.
I know nothing is safe but if stock markets collapse, you still have something.
I think PMs will go up further, then plan to topslice and invest into other low value stocks.
Maybe I mistrust cash too much.
I am still batting to understand why gold does not go through the roof! Must be the virus
Have an outrageous weekend all...
Hi Mr. Tibbles!
Yes, the American mega-tech stocks are crazily overvalued by any normal metric - even if we weren't in the midst of a recession. And someday they will crash back down to a more sane level. But it won't be today - not after the excellent Q2 results they released last night.
The thing is, the mega-techs are now so big (mcap more than $5tn - bigger than the entire German stock market), that when they do crash, they will bring the whole house of cards down with them. Even stable, debt-free, cash-rich, highly profitable gold miners like Centamin will be caught up in the tidal wave of panic selling and deleveraging.
I sold my entire portfolio yesterday, thinking (wrongly, I believe) that we were on the cusp of a crash. I've bought back a few Centamin shares today. But, by and large, I'm waiting in cash for the great stock clearance sale to begin. I'm not sure when that great liquidation will occur, but I figure it must be fairly soon, and I don't want to miss it.
And if I'm wrong (again), well, I've already more than made my investment target for the year. And it doesn't pay to get too greedy.
...back again at the same price.
Maybe a glitch in the system.