Member Info for goldgnome

I am sure policies can be changed, quickly, in the light of extenutating circumstances, that happen quickly?...at least one would hope. ...

US Federal Reserve chairman Jerome Powell is widely expected to raise interest rates for the first time in three years in the early hours of Thursday ... Sydney time. But that’s unlikely to ease the supply squeeze and could damage business and consumer confidence..... Short-term borrowing costs could become more expensive than their long-term costs..... That points to what Pimco says is a rising risk of recession.

During a recession everything falls in value, from currencies and stock markets, to real estate and property. In times of recession, money is typically withdrawn from investments like stocks and shares, but despite this, money itself also loses value. A lot of value ...

The supply of gold is limited, but money is paper and paper can be printed. The problem is that this rapidly inflates the value of every product and service, known as hyperinflation. Many countries - in particularly Germany - learned this the hard way; with too much money-printing resulting in hyperinflation, and an inability to afford even basic goods ravaging the country in the mid 1920s.

This is why gold performs well in a crisis. Unlike cash, gold maintains its value. Scarcity and its precious metal nature have an enduring appeal, and provide a more baanced supply/demand. Fiat supply is on call and infinite. At the end of a recession, the person who bought gold is likely have reduced their losses, or even made money.

Recessions lasting a year or more are reclassified as depressions. World depressions occurred in 1640, 1837, the long depression of 1873-1896, and the Great Depression in the 1930s. This was possibly the most severe, running from 1929 to 1939 and culminating in the Second World War.

Is that some form of guidance ...?

Recession -> depression -> Significant war.

"Almost there Dad!"

best
the gnome

... And the fight will only increase in the next few years between the fiat money system and hard assets in general. And if we look at the monetary side, there’s a huge fight between Bitcoin as the most successful form of private money one could say. So there’s a huge fight between Bitcoin and the fiat money system.

Central bankers are really scared because of the success of Bitcoin being a private form of money. And they hope to bring their own central bank digital currency so they can take some of the market share of Bitcoin and other cryptocurrencies. But the more central bank digital currencies will be created by central bankers, the more people will start to flee to Bitcoin and other private forms of currency. Because the central bank digital currency is just another layer on top of the fiat money system.

So I think central bankers are trapped. Central bankers will need to fight Bitcoin. But they will fail because investors understand what’s going on, and more people are beginning to understand the fundamentals of this monetary system. That’s why Bitcoin is so successful.

The question for us, is where will gold sit?
The verdict for the fiat currency system looks very poor. The system has operated in an opaque and distrustful way for so long, its social license has essentially vaporised. Possibly related is the complete lack of trust na dlack of leadership int he political system.
https://www.theassay.com/articles/investor-insight/gold-metals-digital-assets-and-private-money/
good luck, get out of fiats

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the gnome

Looks like this might be a good time to clean the books and merge ... aquire....

Rio Tinto has moved to take control of the Oyu Tolgoi project in Mongolia, making a $US2.7 billion ($3.7 billion) bid for the company behind the troubled copper mine, as chief Jakob Stausholm continues his push to tidy up problem issues of the past.

Signalling the mining majors are turning their minds to acquisitions amid the boom in commodity prices, Rio on Monday revealed plans to buy the about 49 per cent of Toronto-listed Turquoise Hill it does not already own.

Lets see what happens...

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the gnome

At Thursday’s meeting, the ECB left its deposit and main refinancing rates on hold, but announced it would wind down its asset purchase program faster than previously forecast.

The ECB could end its asset purchase program by the third quarter, and pledged to do whatever action was needed to fulfil its mandate.

The ECB also significantly upgraded its 2022 inflation forecasts, expecting consumer prices to rise by 5.1 per cent instead of the 3.2 per cent it previously projected.

But the toll on GDP growth is already apparent this quarter, and it now expects the economy will grow just 3.7 per cent in 2022, down from a previous forecast of 4.2 per cent.

‘‘The risks to the economic outlook have increased substantially with the Russian invasion of Ukraine and are tilted to the downside,’’ said ECB president Christine Lagarde during a press conference on Thursday.

‘‘While risks relating to the pandemic have declined, the war in Ukraine will have a stronger impact on economic sentiment and could worsen supply-side constraints again.’’

Economists in Australia have also begun to downgrade their expectations for growth, while increasing their expectations for inflation.

Goldman Sachs is forecasting headline CPI to hit 5.3 per cent year-on-year by the second quarter, driven by higher fuel prices and flood-related disruptions to food supplies.

But the surge in commodity prices is set to weigh on domestic economic growth in 2022. Goldman downgraded its forecast for GDP growth for the year by 30 basis points, or 0.3 of a percentage point, to 3.6 per cent.

CommSec on Monday forecast petrol at the pump will exceed $2 a litre. Every $US1 change in the crude price is roughly equivalent to one Australian cent at the pump, it said, all things being equal in foreign exchange and refining markets.

Stagflation risks mounting as prices soar
William McInnes

Central banks are faced with the daunting task of trying to unravel surging consumer prices driven by the conflict between Ukraine and Russia at a time when global growth is slowing, stoking fears stagflation could make an unwelcome return.

Inflation is already sitting at its highest level in decades in some advanced economies, and with key food and energy commodities spiking in the past few weeks, economists believe the peak could still be some months away.

But those sky-high commodity prices will weigh on growth, particularly for energy importers, leading the European Central Bank to on Thursday downgrade its forecast for 2022 output to 3.7 per cent, slowing from 5.3 per cent in 2021.

US consumer prices for February rose 7.9 per cent from a year earlier, the fastest rate of inflation in 40 years according to official data out on Thursday, and the sharp rally in commodity prices suggests the peak is still some way off.

The US Federal Reserve is certain to raise interest rates next week from its present range of zero to 0.25 per cent.

‘‘I think stagflation is a real risk,’’ said Damien Boey, chief macro strategist at Barrenjoey. ‘‘The US is heading for stall-speed growth on the back of various factors [and] Europe is headed for worse outcomes, notwithstanding the ECB’s currently optimistic forecasts. So, the big two economies in aggregate are not looking at much expansion, while inflation is elevated.’’

Key global commodities have spiked this quarter: wheat prices are already up more than 40 per cent since the start of the year. Ukraine and Russia alone account for 29 per cent of international wheat sales annually.

Meanwhile, Brent crude is still up more than 40 per cent, even after retreating from a high of $US139 a barrel at the start of the week. The May Brent contract was down 0.1 per cent to $US109.19 a barrel on Friday.

European gas prices have more than doubled since the start of the year despite coming off record highs through the week.

A short-squeeze in nickel sent the LME price of the commodity parabolic, rising by 130 per cent since the start of the year. Nickel is a key component of stainless steel, electrical inputs and lithium batteries.

‘‘The US CPI will potentially pass 9 per cent in the following months as it has yet to fully account for the spike in global commodity prices and the broader implications of wide-reaching sanctions against Russia,’’ said Cameron McCormack, portfolio manager at VanEck. ‘‘Stagflation is now a possibility. Investors need to prepare for this scenario.’’

I am happy for the dividend to be lower say at the Newmont level, but it depends on how they use the excess cash. Has to be used to grow the company and not be wasted on stupid pursuits

cheers

"So need gold around $2200 for profits to be where they were, Gnome and others what do you think?"

Good question!

Like I said, it does depend on how the company plans ahead and sees the future. For instance it might have predicted an Oil Chris for its supply source, and bought enough fuel for a 12 month period to minimise such risk? It may have gone further, and I would argue should have. It may have a group that focusses on managing future risk and managing such risk. Top Managers do this. Or try to do this.

I suspect the (top?) CEO should be across this and positioned wisely. Given "commodities at risk in Ukraine and Russia"(assuming the normal sanctions game), as I have mentioned previously, it would not be rocket science to position and manage. The management instrument machinery is here now.

There is not sufficient clarity in reporting to answer the above, which is a sad reflection on the LSE. Not much good expousing the virtues of the market, when there is insufficient clarity in the market rules for the market to be efficient (some minor drivel overlooked by the economists of deity standing)

sorry to be obtuse, but this is the nature of "the market"

good luck

the gnome

One of the magic mysteries of the universe, is trying to figure out how much an "up tick" in the latest greatest social media platform (company) is worth. 2,000 tonnes of gold is the obvious answer. ?

The contrary answer, is without doubt ... it is worthless (at least for me). In fact worth nothing! I have never been persuaded, by a 20 second shout or a shriek, a wiggle, a giggle, and there is an extraordinaryingly high chance I never will.

The 20 second, or 10 second or 4 second grab is a grab into nothing. No impact. Highly possibly negative impact " How can a company be so stupid to think this will work?"

How much does it cost? I am effectively delegating my vote, to an unelected gathering of entities, whom I know nothing about...

Invest on this at a p/e of 200/1, versus CEY 10/1 hmm ... tough decision..

Invest in a financial system that is complex, opaque, contrived and conficted.... gimme a break

Its where the dumb people go.

and good luck to them

the gold gnome

March 10 (Reuters) - Meta Platforms (FB.O) will allow Facebook and Instagram users in some countries to call for violence against Russians and Russian soldiers in the context of the Ukraine invasion, according to internal emails seen by Reuters on Thursday, in a temporary change to its hate speech policy.

The social media company is also temporarily allowing some posts that call for death to Russian President Vladimir Putin or Belarusian President Alexander Lukashenko, according to internal emails to its content moderators.

"As a result of the Russian invasion of Ukraine we have temporarily made allowances for forms of political expression that would normally violate our rules like violent speech such as 'death to the Russian invaders.' We still won't allow credible calls for violence against Russian civilians," a Meta spokesperson said in a statement.

so the new governors of the world have had their democratcially accepted view, phew...LOL (sadly)

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the gnome....

MY_CPI has doubled PLUS! Petrol now $2.20/litre, Diesel $2.10, thats through the $10/gallon hurdle. House prices through the roof. Rents sky high, if you can find them. Wheat? Bread up 40%. But supply chain bottlenecks, skyrocketing fertiliser prices and tougher growing conditions linked to climate change present significant challenges to the Australian solution...so not all beer and skittles for the farmers...
Council rates up, federal taxes will climb, CPI 6% my ?ss

the gnome

Western investors are raising the risk of Russia’s President Vladimir Putin using nuclear weapons, following powerful sanctions imposed on Russia that have smashed the rouble and wreaked havoc on the country’s financial system.

Billionaire investor and hedge fund manager Ray Dalio spoke of concerns earlier this week of Russia resorting to nuclear weapons, while a new analysis by BCA Research put the chance of them being used in the next 12 months at 10 per cent.

The US has banned imports of Russian oil, gas and coal over the country’s invasion of Ukraine, while Western countries have also sanctioned Mr Putin’s inner circle and cut off most of Russia’s banks from the SWIFT international payments system.

Nickel through the roof, Uranium to do the same. Wheat ... etc

Interesting set of circumstances,

good luck to us all !
the gnome

You would think CEY would have purchased some additional capacity in reserve?

You know what happens when the hammer hits the anvil.... there will be some wild oscillations, but hopefully there will be a better outcome ... but sometimes one is surprised?

I expect gold to rise...

No matter what the short term chatter in gold prices is the gold futures graphs are very interesting

https://www.wsj.com/market-data/quotes/futures/GC00?mod=md_cmd_overview_quote

The price of nickel traded in London rocketed as much as 90 per cent to a record high as fears of a Russian supply shock .... short-term squeeze in one of the wildest sessions in living memory.
The metal, which is a key component in lithium-ion batteries and stainless steel, leapt to nearly $US55,000 a tonne, surging past the previous record of $US51,800 reached in 2007. It settled at $US50,925 a tonne, up 76 per cent, marking the largest single day gain for nickel in the three-month LME contract’s history.

good quality nickel deposits are in very short supply as well...

Expect over the longer term, this is where the price has to head for nickel ...

get set, go

Here is a look at the supply side from exploration in gold...and it is going to get a lot worse!

https://www.spglobal.com/marketintelligence/en/news-insights/blog/a-decade-of-underperformance-for-gold-discoveries

Its not so much commodities are running out, but it is a case ...

1. that the mining head grades are decreasing and costs are increasing. So it follows that the price of commodities are going to go up or it will be uneconomic to mine, and furthermore

2. the prices are so low, such that the reward is too small, for the risk which is now signficantly increasing in exploration away from mines, HENCE EXPLORATION will now SOON NOT be justifiable or investable, and GREENFIELDS WITH A PROBABILITY OF LESS THAN 1/1000 WILL BE OUT OF THE QUESTION.

3. The risks are getting significantly greater every year. Technical risks as we dig deeper, environmental risks, change of government risk, change of legislature (see my post on the TITLE FIGHT), access to water..all compounding...

4. The Mining industry is (and will not) NOT seen as a go to employer for smart young people. Go to low carbon, feet under the desk, comfortable int he city jobs hitting a key board....

So now the risks are increasing year on, the mines and cost of mining is increasing, the grades are decreasing, the mines are getting deeper, The rewards need to go up, and this means the commodity prices will have to go up to keep pace. mine margins (notable exception of Iron Ore) need to stabilise or get better. The Miing industry badly needs to attract bright people..very few in the industry is my take.

Why bother on a punt on some 2 bit junior exploration company in the DRC, when you can stay at home and invest in the latest crypto?

"Sydney-based crypto platform Immutable has soared to a $3.5 billion valuation after closing a $280 million funding round, led by Singaporean sovereign fund Temasek, with money from gaming star Animoca Brands and Chinese tech and video gaming giant Tencent. The funding round comes just six months after Immutable raised $82 million and also includes investments from local venture capital firms AirTree Ventures and King River Capital, which both have dedicated web3 investment funds. Robbie Ferguson, who co-founded the company with his brother James and engineer Alex Connolly in 2018, said the fresh capital will mostly be used to expand the fast-growing team and snap up other crypto businesses."

THats a ten bagger in 3 years or a bit more ... the mining industry will not be able to compete for the investor $$$, unless a few significant things happen, and cant see it myself.

So companies with proven reserves, know major mineralisation event, good managment, good board will do very very well.

good luck all

the gnome

The mining speculators...will battle ...

best
the gnome

my apologies, the prediction was for very year, for the next 20 years, based on a 5 year moving average ...lol
The wokes, brash blokes and other lunatics are firmly in control.

Want a US$, I got da plenty!
You gotta da credibility?...donna know where to buy that stuff..tried for decades

Just u buy a da us$, I got plenty.

best the gnome

Predictions?

1. The purchasing power of fiat currency will go down year after year (as it has for 100 years?)
2. More debt will be issued, at infinitem and without constraint (as it has for 100 years?)
3. The Federal Reserve, a privately held powerful institution, will lose its power rating, and this is over due. No credibility
Not elected. Not democratic, and past a joke
4. Trust in the "system" will continually erode.
5. Bill Clinton will push Joe Biden aside, after consuming a carefully measured amount of viagra... LOL Trump will arise from the dread...

good luck to us all, May your dreams come true ....

Invest in real things, not fiats

best
the gnome