Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I dont bet on hiccups, it takes too much time and energy (generally losses, but I get a dopamine kick every now and again)
The paper stuff has real issues, and this is what you should focus your thoughts on. Ask yourself, how does the stuff get issued, who does this and why...at present interest rates is the debt servicable, if we have high inflaltion and disasterous productivity (not counting the clicks, likes, and favorable impressions brigade, ,or the hot air and BS of the Musk brigade) ..why does no one talk about productivity these days???
Gold is and will always be gold.
good luck to us all, we may need a lot of it ....
the gnome
Thanks Mr T
You do make an amazing assumption that some of the mortals staggering around the place, with mouths wide open, speaking best guess stuff, would know what the truth is , even if they stumbled over it!
There remains a certain appeal of gold. It cant be created, and it cant be destroyed, which is the opposite of its unit of measure, the US$ LOL, which was made to be destroyed, and has continuously been so for decades...
goodluck punters, gold is not a bad thing
The Gold Gnome
I love some of the "turn of phrases" that issue forth...
The IMF projects that public debt in the world's two largest economies could double by 2053. They also singled out the U.K. and Italy as two nations that face significant fiscal risks as their government debt rises.
"History and logic show that when there are big risks that the debts will either
1) not be paid back or
2) be paid back with money of depreciated value, the debt and the money become unattractive," Dalio said in his commentary.
"Since debts are promises to pay money, when a government has too much debt to be paid, its central bank is likely to print money. This prevents a big debt squeeze from happening by devaluing the money (i.e., inflation)."
"Gold, on the other hand, is a non-debt-backed form of money. It's like cash, except unlike cash and bonds, which are devalued by risks of default or inflation, gold is supported by risks of debt defaults and inflation," he added.
Dalio said that debt and other financial assets are only attractive when the financial system works well and governments can meet their debt obligations without having to print money.
"On the other hand, when the reverse is the case, gold is a good asset to own," he said. "That's the main reason that gold is a good diversifier and why I have some in my portfolio."
Giant investment companies are taking over the financial system. OH WELL NOTHING NEW HERE !!!!
Top firms now control sums rivaling the economies of many large countries, AND WHO WORRIES ABOUT THE DEVELOPING COUNTRIES... UNTIL THERE IS A REVOLUTION...OR SOMETHING LIKE THIS..AND THEN WE CAN SELL NEWS PAPERS ETC LOL. They are pushing into new business areas, blurring the lines that define who does what on Wall Street (I ALWAYS THOUGHT IT WAS ONLY MARGINALLY SHORT OF A FREE FOR ALL !!??) and nudging once-dominant banks toward the sidelines.
Today, traditional and alternative asset managers control twice as many assets as U.S. banks, giving them increasing control over the purse strings of the U.S. economy. .. AND THE MINDS OF THE POLITICIANS WHO SERVE THE SYSTEM ... NOTHING STRONG HERE OF COURSE ... EXCEPT WE MUST TALK ABOUT DONALD ...
The firms—such as Blackstone, Franklin Templeton, BlackRock are becoming more complex and more similar to one another all at once. Investors say this creates risks that markets have never encountered before. AND OF COURSE THE Y ARE ALL USING SOPHISTICATED AI, LOL...AND THEY USE THE SAME ALGORITHMS AND ON THE SHOW GOES...LOL
GOLD is such a simple soul ....
best
the Gold Gnome
Thanks 9billion, Thats an interesting group of people, with some very long experiences and good observations on the monetary system and markets. There are some strange things happening, but when you put them into perspective and understand how the "system": works, its not so strange. I think gold is looking very good, silver as well...and I think gold should cruise past $3,000 .but then again I am biased?
Take your positions ladies and gentlemen, seatbelts on ...
regards
the Gnome
Realistically there is no end to the stupidity in sight .... 70 children die a day ... for what end ... to create a legacy of cruelty, inhumanity, what do they think they are creating .... how do they propose to end this ridiculous situation ... I wish I could get hopeful, but history repeats itself again and again ... I do wonder what the person in the clouds thinks of this ...
best
the gnome
Thanks Tornadotony, the Chinese are playing a very interesting game in the metals and resource space. Just have a look at the devestation they brought into the nickel business globally.
"Australia is no longer competitive in the nickel market, largely due to Indonesia’s recent domination in the sector. This domination strategy has been carefully planned by Indonesia as it looks to boost its downstream industrial policy in critical minerals processing with the backing of Chinese investments."
https://www.internationalaffairs.org.au/australianoutlook/indonesias-nickel-supremacy-chinas-backing-and-australias-decline/
It was done in plain sight over a decade or more, but the stupid industry players sat and watched, but then again what could they do ... game set and match ... just took a bit longer
Look at the other critical minerals. China has a long term strategy, whilst the others mugs chase short term profits and flashy quarterly reports etc.
Good luck the mugs, you will need it ... and it is my bet there is a long term play underway in gold by China, and to be frank, there is no way I would base my strategy around the USD if I were them. Its not in their control, its easily manipulated by the masters who own it and print it ...
No doubt the US wont go down without a fight , ... but the social license does not look flash
the gnome
The Bank of Japan is refusing to raise rates above zero or halt bond purchases even though core inflation is 2.8 per cent and the Rengo wage round is running at 5.2 per cent. This is what a debt trap looks like. With a debt-to-GDP ratio above 260 per cent, Japan cannot return to sound money without risking a fiscal crisis.
Olivier Blanchard, global debt guru and former IMF chief economist, once told me how this would unfold by the mid-2020s. “One day the BoJ may get a call from the finance ministry saying please think about us – it is a life or death question – and keep rates at zero for a bit longer,” he said.
The European Central Bank is also in a debt trap. It continued to buy buckets of Club Med bonds even when inflation was over 10 per cent. This was patently a fiscal rescue for semi-solvent states. The ECB has backed off for now but will be forced to shield Italy again with fiscal transfers disguised as QE in the next downturn.
The Fed has largely monetised the Trump-Biden jumbo deficits. It now faces an invidious choice: either it stays the course against inflation, at the risk of a US funding crisis, a commercial property/banking crisis, and recession, all ending in a return to QE and fiscal dominance; or it cuts rates hard and fast before inflation is under control, also ending in fiscal dominance. Is gold sniffing this out?
Of course, the gold spike may be nothing more than wolf pack speculation by funds orchestrating a squeeze on bullion shorts through the options market, knowing that this sets off a self-fueling feedback loop. If so, the rally will short-circuit soon enough.
My bet is that a big animal with a Chinese accent is bracing for geopolitical or monetary disorder on a traumatic scale... great time for big animals of chinese decent
Lets take two stabs at this mystery, one geopolitical and one financial. It has been clear for three years that Russia, China and Iran are operating in collusion, each feeding opportunistically on each other. All three have fostered belligerent hyper-nationalism as a means of regime survival, and all aim to press their advantage against a fatally complacent West before the window of opportunity closes.
This menace on three fronts has reached a dangerous juncture. None of the major democracies have put their economies on a war-time footing despite the obvious threat.
The West has dropped the ball on Ukraine – or worse, it is preventing Ukraine from hitting Russian oil facilities – and has therefore left the door wide open for a knock-out blow by the Kremlin this summer.
Iran has been emboldened by Putin’s military comeback. It is also flush with money. Joe Biden is so worried about rising petrol prices that he has turned a blind eye to sanctions busting, letting Iran sell as much crude as it wants. This has enabled Tehran to advance its pawns in the Middle East, and now to risk a direct missile strike against Israel.
The third shoe has yet to drop, but China knows that the West has run down its stock of military kit trying to contain these other two crises. Xi Jinping may never have a better moment to tighten the noose on Taiwan with a naval and air blockade, gaining a stranglehold over the West’s supply of advanced semiconductors that can then be used as a bargaining chip. How would the democracies respond to this?
There is a strong suspicion among gold experts that China is behind the surge in buying, building up a war-fighting bullion chest through state-controlled banks and proxies. But others, too, can see that we are living through a fundamental convulsion of the global order, and that the dollarised financial system will not be the same at the end of it. Gold is the hedge against dystopia.
However, there is a parallel explanation. Covid finally broke our spendthrift governments. The talk in hedge fund land is that some big beasts are taking bets against “fiscal dominance” across the West.
It is a collective judgment that too many countries have pushed public debt beyond 100 per cent of GDP and beyond the point of no return under prevailing economic ideologies and political regimes. Budget deficits have broken out of historical ranges and are running at structurally untenable levels for this stage of the cycle.
Central banks will bottle it – under this scenario – in order to mop up issuance of treasury bonds. They will let inflation run hot to help states whittle down debts by stealth default. You might argue that this is what they already did by letting rip with extreme money creation during the pandemic.
Exactly, the signs are well recognised and documented now.
Its just a matter of how the final chapter is written. They started with a few bangs and thats the way they may well go out (with a bit of interest, so to speak). Worship of invididualism plays into the hands of the second law of thermodynamics, which leads into huge energy losses in the system for very little gain. Sad .. cest la vie
the gnome
You have to love the headlines ...
Though the average interest rate the U.S. is paying on its debt seems modest at 3.27%, especially when compared to current Treasury and mortgage rates, it’s the highest we’ve seen since 2008. Back then, the U.S. debt was slightly above $10 trillion; fast forward to today, and it has ballooned to over $34 trillion. Notably, while it took over a century to reach the first $10 trillion, the most recent $10 trillion was amassed in just four years.
Despite political shifts in the White House, the upward march of debt has continued unabated. This was of less concern when interest rates were low. However, in the wake of 2022’s significant inflation and the Federal Reserve’s aggressive response, the true weight of the national debt has come into sharp focus.
The consequences of these higher rates are stark, with annual interest payments on the debt now topping $1 trillion—overtaking defense spending and on par with Medicare. This trend suggests that interest payments could soon surpass even Social Security as the largest budget expenditure.
The U.S. is on the brink of a financial challenge with nearly $9 trillion of its debt approaching maturity within the next year. This debt will need to be refinanced at interest rates much higher than when it was originally taken on—almost twice as high, in fact...
The rise of the gold vigilantes—large global investors, central banks, and institutions who are increasingly favoring gold over Treasuries, reflecting concerns over the escalating levels of US debt and debt servicing costs... not to mention the irresponsibilties of most governments, and financing of various wars, and so on
Nice turn of phrase?
the gold gnome
Gold futures have set another record high, with the rally driven by central bank purchases, safe-haven demand and geopolitical tensions. Iran set to reek revenge on Israel, and of course the US Navy comes charging in ... a pathetic mess, with no sustainable end in sight, ensuring a legacy of hatred unrivaled (on average 70 children have died every day for the last 6 months...collateral damage, gimme a break, give us all a break?) ....Back to gold
June futures on the New York Mercantile Exchange were recently up 1.7% at $2,413.5 a troy ounce, having hit a fresh all-time high of $2,416.5 earlier in the session. They have gained 4.6% over the last week and over 14% in the year to date.
Strong purchasing by central banks and sustained demand from individual investors—particularly in China and India—continue to provide solid support for gold, attracting speculative investors and maintaining high prices, Sucden Financial analysts said in a note.
Gold has also gained as tensions in the Middle East and Ukraine boost its safe-haven appeal, ING analysts said in a note.
The precious metal has shrugged off Wednesday’s hotter-than-expected U.S. consumer-price index data, which had raised concerns that the Federal Reserve might postpone interest-rate cuts longer than initially anticipated and sent U.S. Treasury yields up. Gold traditionally has a strong relationship with interest rates, as higher rates reduce the appeal of the noninterest bearing metal, but the rally has persisted.
“With markets hovering around all time highs, investors are increasingly looking to assets like gold to provide a hedge against any risk of a stock market fall,” said Will Rhind, chief executive of GraniteShares and issuer of the BAR physical gold ETF in a note.
the gold gnome
A very interesting read on things related to Gold and CEY, but a few might regard as off topic. ALICE (new book) by Stuart Kells (Australian so beware) is about the farce, that passes with grim effect, as a Financial System, and if you ever wondered what happens in the marvellous banking system, and their friends in high places then grab a copy, and a glass of good whisky. The Fin system has been in disrepute for a few decades now, but has survived on information asymmetry, and outstanding amounts of BS from the chosen few (we can guess who they are). The brainwash asymmetry has been steadily eroded, and this is probably one of the more succinct exposes.
Misunderstandings about money and banking affect the incentives and tactics of the largest private banks, and how well citizens and taxpayers hold governments and financial regulators to account (joke really, as they do not). They prevent us all from having an adult, evidence-based conversation about debt, taxes and monetary policy. Without such a conversation (knowledgeably adjudicated by finance writers and journalists) citizens will forever be bit-part players in capitalism – the irresistible targets of participants with better information.
Protecting customers, taxpayers and the community as a whole from the excesses of modern banking requires a new understanding of the roles of banks and governments in finance; a new understanding of loans, deposits and derivatives as one family of financial contracts; and a new awareness of the privileged position of private corporations in the global financial system.
Crucially, society as a whole needs to think differently about the nature of money –possibly by first discarding the term itself. “Money” encompasses a range of phenomena that have intrinsically different purposes and risks. Commercial bank deposits are materially different to banknotes, for example, which are different to reserve funds. Money as a concept is increasingly outdated and misleading.
A better understanding of money would open up the possibility of important innovations such as lending-only and deposit-only institutions; new mechanisms of financial prudence and oversight; and an integrated monetary and fiscal policy that uses monetary and fiscal levers in concert.
A new financial conversation would make the causes of inter-generational inequities more explicit, and it would allow the community to rethink allowing “too big to fail” banks to earn, year in year out, enormous risk-free profits.
The banks operate under a social contract (almost) with the tax payers via the governments of the day, but have managed to write the terms and conditions of the contract, oddly enough, to their advantage? Pass the risk and the bailouts to the tax payers, and they take the bonuses and the Ferraris, and the odd yacht (etc, yawn).
and on the show goes ...
Isnt enough enough? The great thing about gold is it is arguably in our DNA and cannot be printed adh
A very squeezed market
There’s one further reason to expect another boost, according to investors. Unusually in this environment, investor demand for gold-backed exchange traded funds – typically a key driver for bullion – has yet to materialise. In fact, total holdings are close to the lowest level since 2019, according to data compiled by Bloomberg.
According to Ben Ross, who manages about $US410 million in commodities strategies at Cohen & Steers, that’s largely explained by investors chasing returns in the money market. But once the Fed starts cutting interest rates, that will eventually trigger fresh inflows into ETFs and boost gold prices further.
That, according to Ruffer’s Mr MacInnes, will create a very squeezed market.
Fed fund futures are currently pricing the first interest rate cut by the US central bank in July or September of this year.
Of course, not everyone is sold on bullion’s continued run. Jay Hatfield, chief executive officer of Infrastructure Capital Advisors, has no plans to add gold in the next 12 months, opting instead for equities as central banks start to cut rates.
There are small-cap stocks trading at “historic lows on a relative multiple basis” that will do much better than gold, he said.
Near term, the sudden exuberance in the market could induce a correction. Gold’s rapid ascent has lifted the 14-day relative strength index to a level that indicates prices have risen too far, too fast.
“There’s quite a bit of expectation going into the current price,” said Darwei Kung, head of commodities and portfolio manager at DWS Group. Mr Kung is still bullish into the second half and expects more participants to increase allocations.
JUST MIGHT INCREASE MY ALLOCATION, WHICH SITS AT ABOUT 15% OF MY PORTFOLIO ....
Good luck, and better hunches and bets
the gnome
Gold’s dizzying ascent isn’t over yet, say fundies
Sybilla Gross and Yvonne Yue Li
Gold’s rally to successive record highs isn’t over, according to macro fund managers, and the factors that have powered a near-20 per cent surge since mid-February are expected to fuel more gains in the precious metal.
The higher prices have been fuelled by expectations that the US Federal Reserve will lower interest rates this year, typically an environment that reduces the opportunity cost of holding the metal. Meanwhile, messy conflicts in the Middle East and Ukraine support demand for safe-haven assets, and purchases by global central banks add to a bullish backdrop.
On Wednesday, gold was trading at a record high of $US2,352.78 an ounce before key inflation data that could help shape the Fed’s outlook on interest rates.
The current momentum is a signal to increase holdings in gold, according to Rajeev De Mello, global macro portfolio manager at GAMA Asset Management. Prices might now be vulnerable to a slight correction, he said, but any pullback was likely to bring in more buyers.
“It’s a relatively small market, and it can squeeze higher very fast,” he said, comparing it to the size of US government debt securities. “It’s a very momentum-driven asset, really.”
Gold’s sharp and sustained move higher has vexed some observers because it’s happening at a time when real yields remain elevated. That’s typically a headwind for precious metals because they don’t pay interest.
But investors have not been deterred. In New York’s Comex gold futures market, money managers are placing more bullish bets on gold, with net long positions rising to a near four-year high in the week ended April 2.
One key factor has been enthusiasm among central banks, encouraging buyers such as Matthew Schwab, head of investor solutions at Quantix Commodities with $US933 million under management.
Central bank purchases
The firm’s long-only fund has been overweight gold since 2022, with bullion’s weighting about 30 per cent – compared with about 15 per cent in the Bloomberg Commodity Index.
Purchases by central banks totalled more than 1000 tonnes in 2022 and 2023 with much of that led by economies, particularly China, where efforts to diversify away from the US dollar have accelerated.
“What I think is really, really bullish about gold is that those ounces will be taken off the market and never come back,” said Duncan MacInnes, investment director at Ruffer Investment Co. “And that’s clearly very different to the [exchange traded funds] where ultimately everyone’s a trader of it.”
Last month, he increased his exposure to gold and silver to roughly 8 per cent across his two portfolios, which combined have about $US3 billion under management.
The idea that people will always make rational decisions in their own self-interest is just plain wrong...one of the key planks of economic theory (lets not use the word wisdom)
Kahneman’s greatest insight was that investors make mistakes, which sounds like the bleedin’ obvious. But his groundbreaking realisation was that our mistakes are the norm, not the exception. In our busy lives, we constantly rush to judgment using mental shortcuts (or heuristics), leading to persistent biases in our decision-making. Even when clear evidence suggests we ought to rethink our positions, we often cling fast to our initial judgments. Gulp, sounds like me?
...once you accept the humbling conclusion that you will inevitably make mistakes, you can seek to understand them and therefore become a better investor.
We hate losing money far more than we enjoy gaining it!!?? Losing $100 hurts twice as much as the pleasure from gaining $100. Even in sport, it has been shown golfers play better when putting for par (fearing the “loss” of a bogie) than when putting for the “gain” of a birdie. Loss aversion is in our DNA. As humans evolved, threats were always far more consequential than opportunities...phew its not just me ...
A study revealed 74 per cent of professional fund managers think they are above average. The other 26 per cent thought they were average. Mathematically, this is simply impossible, half must be below average. In Kahneman’s view, overconfidence is the most significant of our biases. He said: “What would I eliminate if I had a magic wand? Overconfidence.”
Research by Kahneman and Tversky provided important insights into the phenomenons known as “anchoring bias” and the “endowment effect”.
Anchoring bias describes the fact that investors rely too heavily on the initial opinion or piece of information they are given on any topic. Imagine, for example, you were told a widget sells for between $85 and $100 but is available today for $75. You might view this as a good deal.
However, if you were simply told a widget costs $75, you’d far more likely question what is a widget? And you’d question its true value. The deliberate “anchor” placed first in the information you are given distorts your financial analysis and is a common pitfall in financial decision-making.
The endowment effect is a term coined by Richard Thaler, and in a 1991 study, Kahneman and colleagues proposed that it occurs, in part, due to loss aversion. A mistake investors make is when we own something (such as a share in BHP), we mentally give it more value than it might objectively hold. This leads to a paradox where we are more likely to keep a BHP share we own rather than acquiring one we don’t, despite the result being the same in both scenarios – ownership of the share.
This cognitive bias skews our perception, often preventing us from selling assets when it might be prudent to do so, as we overestimate their worth due to per