Member Info for goldgnome

The view is that the Cetral Banks ahve the best staff, and can dio now worng. The real world suggests a different view.

The governor and other Reserve Bank officials, have maintained the line that the 2020 pandemic was a moment of intense uncertainty and stress. The calculus was to risk doing too much rather than too little.

But most of the errors could have been avoided, and were made long after the terror of March 2020 had subsided.

The four policy responses were:

1. The RBA pledged to pin the three-year government bond rate to the cash rate. This yield curve control target effectively signalled to markets that low rates would be in place for three years;
2. The RBA pledged to keep interest rates on hold for three years;
3. The RBA extended $200 billion in cheap funding to commercial banks via the term funding facility; and,
4. The RBA embarked or an extensive bond-purchase program, also known as quantitative easing.

All seriously short of the money

the Gnome

As for what’s ahead, the US will be entering a big election year in which 33 Senate seats, the presidency, and control of the House will be fought over by a number of populist candidates and will probably take place when there are poor economic conditions, so the fights will be vicious. That will be risky. Following rules and compromising, which is required to make democracies work, will be tested. Because populists are so committed to winning at all costs and are unwilling to compromise, more-intense-than-expected battles are more likely. Each one of these forces is a part of the system. For example, the debt ceiling increase will not go as smoothly as most people expect and will likely become a big election issue that will split the country because both sides will fight for victories and will be less willing to compromise. Also, in this election year, aggressiveness with China will intensify because most everyone is anti-China, so those running will want to outdo each other with their China-bashing. Continuing engagement between US and Taiwanese leaders will likely still happen, which, together with the Gallagher House Select Committee on the Chinese Communist Party hearings, will push the US-China conflict closer to the brink (or over the brink). In my upcoming post on China based on what I learned in my recent travels there, I will delve more deeply into these issues.

In summary,
1) the world is certainly changing and will certainly change dramatically and
2) how well this goes will depend on how well the changes are managed.

If the people who have their hands on the levers of power rise above their tendencies to focus on fighting to maximize their own benefits and instead focus on working together to do what is best for the whole and divide the pie well, the financial/economic, domestic political, and international geopolitical orders can change in peaceful ways to create a better world order for most people. Presumably we want that, so we should be strongly against war and in favor of bipartisan pursuit of what is best for most people. However, some will argue that that perspective is too idealistic and that we should be more realistic about what is likely and plan accordingly. I agree that history has shown that the pursuit of self-interest has proven to be a more powerful force than the pursuit of collective interests and that there is a good chance that movement to higher-level thinking and better outcomes is unlikely, so we also should be prepared for the worst. If we are prepared for the worst, we will be fine.

cheers
the gnome

Bushy

Sounds like you should get the yacht out of the garage and sale the Med for a few decades. Dont worry about the internet or mobile coverage, you are beyond that sort of caper

Good luck to you

Always interesting to read the news on what passes for a political system in the US. Vote rigging and influencing is the news worthy items now (always been that way?), and who better to get into a stoush than dear ol' Rupert and his cohorts, and those that worship money and political power.

Fox settled a defamation lawsuit by Dominion Voting Systems for $US787.5 million ($1.2 billion), averting a high-profile trial putting one of the world’s top media companies in the crosshairs over its coverage of false vote-rigging claims in the 2020 US election. In February court filings, Dominion cited a trove of internal communications in which Mr M and other Fox figures privately acknowledged that the vote-rigging claims made about Dominion on-air were false, like so much else, including the construct of their financial system, which is built firmly on hot air, but I wont go there today.

Whether a settlement is really a final settlement with Dominion is complicated by an almost identical lawsuit by a second voting machine company, Smartmatic, claiming $US2.7 billion damages. That’s $US4.3 billion at stake, even before any punitive damages. Go for it guys !

Murdoch faced what would be the biggest threat to his empire since the 2011 hacking scandal, oh how could we forget that? Murdoch’s legacy is at stake(and what a legacy it is?!) Unlike the UK hacking scandal, where News executives were blamed, records show Murdoch was directly responsible for Fox News management, at least on paper...

How did it get to this? The panic that seized Fox News after Donald Trump lost the 2020 election produced a series of editorial decisions by line managers and hosts that now appear short-sighted, sometimes mind-numbingly dumb and in hindsight entirely unnecessary. Anything new here..or newsworthy?

The business models seemed to be to focus on the "popular" news, which got the masses in, giving him the power of influencing the masses. It is the masses that vote of course, and this attracts the people who the masses vote for, and hence the power was in the influencer, sadly...and so on...

Great to see him and his coohorts face some form of justice, even bankruptcy, .... and the world would be a better place.

farcical really, they could do so much better
...

Thanks Lucky

I am not sure the Chinese what world dominance, it has never been their desire over the last few thousand years.
I do think, they , like others want ar more stable and equitable system, in which they can access the resources they need to look after their own.

The USD is unstable, and untenable, as is their "financial system". An exorbitant privilege as others have said. It serves the purpose of the US first second and third, and then the rest of the world fits in sometime after this.

Abolishing interest rates, and swapping for shares, is what the Islamic finance system does in part...and of course this means we do cut out some of the "money men" who would be upset, and have been in the past when this was suggested. I often wonder whether this is not te root of the difference between the muslims and the jews, but I won't go there today

Interesting thoughts,

best
the gnome

Lucky

The US$ has been fiat currency for decades, or have I missed something? and has long lost its social license to operate as the saviour (self appointed) of the (western) world. Endlessly conflicted with self interest.

What China has done and is doing is of far more importance, and I suspect far more sustainable.

People’s Bank of China Governor Yi Gang said that Beijing has largely ended regular foreign-exchange intervention, and pursues a policy aimed at enhancing the ease of use of the yuan for Chinese households!?...he said his own perspective is that history shows that “sooner or later” the market defeats the central bank. A slide in Yi’s presentation at the PIIE showed that “in recent years, PBOC has by and large exited from regular intervention”.
https://www.piie.com/

In its semiannual foreign-exchange reports, the US Treasury Department has consistently criticised China for a lack of transparency in how the country manages its exchange rate...lack of transparency, kettle and the pot joke?

China has in effect reinvented the concept of money, transforming a backward, antiquated cash-based finance system into one centered on super-apps created by technology giants Alibaba and Tencent. In the book ["The Cashless Revolution: China’s Reinvention of Money and the End of America’s Domination of Finance and Technology" Martin Chorzempa] is a portrait of a system grappling with unprecedented challenges, an investigation into the financial and ethical questions in their wake, and an exploration of the impact on the lives and habits of people across the globe.

Go gold
Enjoy the weekend ! Let your hair down !

the Gold Gnome

Interesting. Newcrest has some marginal mines, does not need a lot to go seriously wrong. I would not be parting with this sort of money, unless I was desparate..and there lies a story, a growth story...

There are remarkably few large scale tier one gold ore bodies, very very few, and it will not get any better.

best
the gnome

Peter Williams was also a co-founder of Independence Group (now about $11b), was directly involved in setting up Papillion (5-6 m ozs, Fekola deposit) in Mali and Gryphon Minerals (5 m ozs, Wahignion in Burkina Faso) and is involved with African Gold in Cote Ivoire ...https://www.listcorp.com/asx/a1g/african-gold-limited/news/pegmatite-discovery-on-agboville-project-cote-divoire-2827441.html

as they say, been around a bit

TheGnome

MrBond

Ther US Military investors are certainly havng a few best shots , so to speak

1. Russia on the Ukraine
2. China on the Taiwan issues
3. Israel is always a good bet as usual, plenty going on, as usual

There is a lot to like about Lyn Aldens analysis. Not all right, but more right than wrong.

Some interesting comments on us$, gold, and stable coins. Once the broad community loses trust in such institutions as Central Banks and "popularity" governments , and in such entities as the US$, then it is hard to rebuild the trust in the ways that have failed us. The move to gold by the central banks is one to watch...we know India, and Chinas view on gold, and these are the leaders in the new world.

https://www.youtube.com/watch?v=5ymdNmNd1KM

https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
I wonder whether the US ever asks itself what sort of country it might be with out the massive military machinery expenditures, some of the hopeless wars it gets itself into time and again that fail each time, and yet no one seems to learn, or at least those in power dont learn.

https://www.youtube.com/watch?v=sxvjsbQ85tQ

More interesting commentary, and I certainly dont believe all of this. I dont think Ray understands the Chinese mindset...gets close though
https://www.youtube.com/watch?v=8lOVRWng_eU

go gold

the gnome

Bank of America lifts gold forecast by 10pc to $US2200 an ounce

Apr 6, 2023 – 5.00am

As the peak for interest rates comes into view, Bank of America is forecasting that the price of gold will rise to $US2200 an ounce in the fourth quarter. It previously had gold at $US2000 in the December quarter.

Bank of America previously said it expected gold to rally this year, “driven by a view that central banks have no silver bullet in bringing inflation under control (e.g. energy prices or supply chain disruptions cannot be directly influenced by monetary authorities).

“A re-acceleration of China’s economy should push aluminium and copper up into year-end,” BofA said. Bloomberg

“This remains our core view and we see scope for gold to move higher once the end of the hiking cycle is reached.”

BofA said gold’s move on the banking crisis proved fleeting because Credit Suisse’s collapse came after near two decades of struggle and “the problems with regional US banks were heavily influenced by a lack of oversight”.

“As such, while we acknowledge the recent issues, they are not indicative of a wider banking crisis, in our view.”
In a metals note, BofA’s commodities team said it was updating forecasts for most metals “mostly marking to market prices” after China’s faster reopening pulled forward rallies the bank expected later in the year.

“Indeed, a re-acceleration of China’s economy should push aluminium and copper up into year-end,” the team said. However, “we are making more aggressive calls on nickel (bearish), iron ore (bullish), coal (cautious) and lithium (bearish)”.

Central bank gold buying update: 2023 sees the strongest start to a year in more than a decade
Anna Golubova

Tuesday April 04, 2023 16:10

(Kitco News) The gold market continued to receive support from central banks as countries kept adding gold to their reserves in February, marking the strongest start to the year since at least 2010, according to the latest data released by the World Gold Council (WGC).

Global gold reserves increased by 52 tonnes in February, rising for the 11th month in a row, the WGC said Tuesday. In January, central banks bought 74 tonnes of gold. And that follows record levels of last year, with 1,136 tonnes purchased.

Year-to-date, central banks' net purchases stand at 125 tonnes. "This is the strongest start to a year back to at least 2010 – when central banks became net buyers on an annual basis," said WGC's senior analyst Krishan Gopaul.

Interesting to see China, wo is the worlds largest gold producer, continue to buy gold strongly. India and China will lead the world financially very soon, if they dont already. Our stats in Oz are so poor they do not reliably show the amount of Chinese ownership of Mining, Agriculture, infrastructure, and services. Not to mention our wineries, some household names
https://buyausmag.com.au/41-australian-vineyards-owned-by-chinese-firms/

the gnome

Will anyone be surprised when the liquidity crunch kicks in?

https://www.youtube.com/watch?v=O_Idoye10To

Lots of fun to come, some very predicatble, and good for gold ...

best
the gnome

You are dealing with a market, which is known for decades, to be irrational.

Not sure why you are surprised. Just grab the opportunities, or ride the trend

best
the gnome

Like all central banks, the Federal Reserve was designed to make money for the government from its monopoly on issuing currency. The Fed did generate profits, which it sent to the Treasury, every year from 1916 on—until last fall. In a development previously unheard of, the Federal Reserve has suffered operating losses of about $42 billion since September 2022.

That month, the massive interest-rate risk created by the Fed’s asset-liability maturity mismatch began generating cash-operating losses, and the losses now average $7 billion a month. This is because the Fed’s trillions of dollars of long-term investments yield 2% but cost 4.6% to finance. The Fed will soon have negative equity capital, and as operating losses continue to mount, its equity-capital deficit will grow.

In a July 15, 2022, note, the Fed’s Board of Governors discussed the possibility that the system could incur substantial operating losses as it increased interest rates to fight inflation. The Fed tried to play down the importance of the issue, arguing that its “mandate is neither to make profits nor to avoid losses”—a deflection that is disappointingly transparent to anyone familiar with central banking.

The Fed traditionally avoided policies that would expose it to significant losses. In the early years, member banks could borrow from reserve banks only by posting specific collateral. The Federal Reserve Act required loans to be backed by qualifying short-term self-liquidating bills—what today we call commercial paper. Over time, loan collateral requirements evolved, but as they did, the Fed introduced policies to protect it from losses when lending to member banks.

Avoiding credit losses is a requirement Congress added to the Federal Reserve Act in 2010. Section 1101 of the Dodd-Frank Act requires the Federal Reserve Board to establish “policies and procedures . . . designed to ensure that any emergency lending program or facility . . . protect taxpayers from losses.” Federal reserve banks are also mandated to assign “a lendable value to all collateral for a loan executed by a Federal reserve bank . . . in determining whether the loan is secured satisfactorily.”

While the Federal Reserve Act requires the Fed to avoid taking credit related losses that could have an impact on taxpayers, it makes no mention of losses from interest-rate risk exposures. The act’s authors never imagined such losses. Monetary policy was all but assured to generate Fed profits prior to 2008. That changed once the Fed started paying banks interest on their reserve balances and making large open market purchases of long-maturity Treasurys and mortgage-backed securities.

Fed losses from its interest-rate-risk exposures—unrecognized taxpayer losses—are now being realized in ways Congress never intended and at magnitudes neither the Congress nor the Fed ever expected.

good luck punters

the gnome

Life of Mine plan/assett review
28 dec 2021 https://www.globalminingreview.com/exploration-development/28122021/centamin-completes-life-of-asset-review/
8 Feb 2022 https://www.globalminingreview.com/mining/08022022/centamin-surkari-gold-mine-to-transition-to-owner-operator-mining/
31 Aug 2022 https://www.centamin.com/media/2868/cey_disclosures_on_tailings_management_2022_v0.pdf

16 March 2023, a few things that caught my eye ....

Capex guidance is US$225 million, weighted towards H1 (55:45), as the Company continues to identify growth and
optimisation projects at Sukari, including development of a gravity circuit; expansion of the dump leach capacity;
and commencement of the underground expansion. This also reflects inflationary pressures on the contracted
waste-stripping programme specifically from higher fuel prices

• Exploration spend is budgeted at US$30 million, including US$23 million for the pre-development study work on
the Doropo Project....sounds good to me ....

2023 KEY MILESTONES

• June 2023: Doropo Project (Côte d’Ivoire) complete pre-feasibility study

• H2 2023: Sukari Gold Mine (Egypt) update Life of Mine Plan (NI 43-101), including underground expansion, and

• Announcements on the ongoing exploration programmes

I feel reasonably informed. There are a few companies who do a lot worse. Quite a few.

regards
the Gnome

HARARE, Zimbabwe—On a recent afternoon, Rutendo Manyowa handed over a U.S. $5 bill to pay for her $3.50 order of chicken, fries and a soft drink at a popular fast-food joint in the Zimbabwean capital. But instead of a $1 bill and two quarters in change, the cashier handed Ms. Manyowa three slips of paper, bearing the restaurant’s name and the amount of money she could use to buy her next meal.

Zimbabwe, the country that brought the world the one-hundred-trillion-dollar bill, has reached a new stage of monetary dysfunction. Because of a lack of small change, businesses have started printing their own “money”—scraps of paper, sometimes handwritten, that customers can use to pay for future purchases. Others are handing out change in-kind, making customers whole with juice boxes, pens or slices of cheese.

The paper chits and other pecuniary workarounds are the latest products of two decades of extreme mismanagement of Zimbabwe’s currency.

Restaurants and supermarkets have started printing paper chits to use as change. Some stores keep books to record the names of customers who are owed money.
ADELAIDE MOYO
It started in the early 2000s, when the government of then-President Robert Mugabe printed ever more money in an attempt to compensate for a collapse in agricultural production that followed a controversial land-redistribution effort. After monthly inflation peaked, by one measure, at 79.6 billion percent, the government in 2009 abolished the Zimbabwe dollar and began using U.S. dollars instead.

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That switch brought a few years of monetary stability, until the Reserve Bank of Zimbabwe could no longer meet the demand for U.S. dollars. Money stored in bank accounts couldn’t be withdrawn in cash and, in early 2019, the central bank reintroduced the Zimbabwe dollar, changing U.S. dollar-denominated savings and domestic government debts into a local currency of rapidly declining value.

Today, $1 costs more than 900 Zimbabwean dollars and inflation hit 230% in January. Most businesses once again demand payments in U.S. dollars, although the Zimbabwe dollar remains the country’s official currency.

That’s where the issue of change comes in. Zimbabwean commercial banks and the central bank import U.S. dollar bills for local use, but their heavy weight and low value makes flying in coins from overseas uneconomical. One-dollar notes—the most widely used bills in a country where even before the pandemic nearly 40% of people lived on less than $1.80 a day—are also often in short supply.

The paper IOUs have proven an unsatisfactory fix. For starters, they aren’t fungible. Ms. Manyowa, a 23-year-old college student, spent 15 minutes waiting by the till of a Harare Chicken Inn until another customer paid with a $1 bill she could use for the bus fare home.

“It’s frus

What we see are a series of desicions which loads more debt onto the balance sheet of countries, and this just goes on and there are no bounds. And we see posturing for a war with Russia, and if thats not enough the USA war machine will take on China. RECAPPING: The U.S. has carried debt since its inception. Debts incurred during the American Revolutionary War amounted to over $75 million by January 1, 1791. Over the next 45 years, the debt continued to grow until 1835 when it notably shrank due to the sale of federally-owned lands and cuts to the federal budget. Shortly thereafter, an economic depression caused the debt to again grow into the millions. The debt grew over 4,000% through the course of the American Civil War (what a great war?) increasing from $65 million in 1860 to $1 billion in 1863 and around $2.7 billion shortly after the conclusion of the war in 1865. The debt grew steadily into the 20th century and was roughly $22 billion after the country financed its involvement in World War I (another war?).

Notable recent events triggering large spikes in the debt include the Afghanistan and Iraq Wars (wars again!), the 2008 Great Recession (engineered by gross greed and stupidity!), and the COVID-19 pandemic (mutliated by the governments and did their actions create more value destruction than normal?). From FY 2019 to FY 2021, spending increased by about 50%, largely due to the COVID-19 pandemic. Tax cuts, stimulus programs, increased government spending, and decreased tax revenue caused by widespread unemployment generally account for sharp rises in the national debt...

You can bet on the steady devaluation of the US$ and its fiat mates, as sure as the sun rises in the east.... The devaluation essentially means that a reliable true asset like gold (not talking about a utility, but gold has utility) will go up in us$ price, as it has.

There are clearly no bounds on the stupidity of elected govts (no qualifications needed), and the ridulously inadequate modelling of the economists who provide the "light"

good luck punters

the ever irreverant Gold Gnome, who is splashing in his pool

WORTH A READ
What I Think About the Silicon Valley Bank Situation
Ray Dalio

March 14, 2023
I've been doing an AMA on social media and getting a lot of great questions I've been sharing here. Here are some thoughts I had in response to a question about Silicon Valley Bank.
I think that it is a very classic event in the very classic bubble-bursting part of the short-term debt cycle (which lasts about seven years, give or take about three) in which the tight money to curtail credit growth and inflation leads to a self-reinforcing debt-credit contraction that takes place via a domino-falling-like contagion process that continues until central banks create easy money that negates the debt-credit contraction, thus producing more new credit and debt, which creates the seeds for the next big debt problem until these short-term cycles build up the debt assets and liabilities to the point that they are unsustainable and the whole thing collapses in a debt restructuring and debt monetization (which typically happens about once every 75 years, give or take about 25 years).
While in different cycles the sectors that are in bubbles are different (i.e., in 2008 it was heavily in residential real estate and now it’s in negative-cash-flow venture and private equity companies as well as commercial real estate companies that can’t take the hit of higher interest rates and tighter money), the self-reinforcing contraction dynamic is the same. Based on my understanding of this dynamic and what is now happening (which line up), this bank failure is a “canary in the coal mine” early-sign dynamic that will have knock-on effects in the venture world and well beyond it.
To put this in context and think about how this will likely play out, I find it useful to go to my archetypical debt cycles dynamic that I cover more comprehensively in my book Principles for Navigating Big Debt Crises than I can cover here. I am linking to the PDF version available for free here and will summarize in this Observations.

Because one man’s debts are another man’s assets and most people are levered long (i.e., they are holding assets financed by debt), when interest rates rise and money becomes tight, assets fall in value, which hurts debtors, creditors, asset holders, and financial intermediaries, which causes a self-reinforcing contraction and contagion because when money is needed, other assets are sold and when creditors are hurt, they curtail lending. Those financial intermediaries (most importantly banks) that are most leveraged long to the asset bubble that is bursting are particularly affected. It is classic that coming out of an extended period of very low real interest rates and abundant credit, there is an enormous amount of leveraged long holding of assets that are going down due to higher interest rates and tighter money, which is producing this classic dynamic of dominos falling.
https://www.linkedin.com/pulse/what-i-think-silicon-valley-bank-situation-ray-dalio/

Thanks Bob

I do not know how many banks in Russia have failed. I do care about the greed and stupidity that I have to pay for, that is exhibited in the USA. Is is just ridiculous. The auditors and regulators check list is very well known , and easy to impliment, so just why does this stupidity continue to happen. Who benefits (a few). Who does not (most). Why are "Banks" who love risky bets, allowed to become...too big too fail! NOthing new?
https://www.rollingstone.com/politics/politics-features/taibbi-bernie-sanders-banks-732633/
https://www.youtube.com/watch?v=sdhX92ZttnU

It is a reasonably simple matter to have a stable major bank system. No rocket science here, but of course, this would be boring, would not attract "talent", and precious investment capital may not be spent optimally to create...speculation (etc)...LOL

Although on the flip side, if I may, it is a great buying opportunity for tier 1 assets, as these get marked down (not all) by the madness of the masses and the "autotrades".

I think the masses deserve a lot better than is served up by a poorly engineered, poorly regulated and unstable financial system.

In Oz, the Pollies have decided to double down on the national debt and buy $360b of second hand subs, so we can have nuclear subs steaminig up and down over 4,000 kms of coast line each, to protect our national interest and keep the Chinese invasion force out, when at the same time we have so many Chinese students (does anyone recall the wooden horse and the downfall of Troy?) cominig in throught the airports and applying for permanent residency, they dont (or cant) even count them. Strange world.

No one seems to want to learn from failures

good luck to us all, tier one assets is the go for me ...

best
the Gnome