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Federal Reserve Chairman Jerome Powell said he was prepared to begin raising interest rates to cool down the economy but that he also was optimistic that supply-chain bottlenecks would ease this year to help bring down inflation (we have heard the same language about inflation)

The central bank will use its tools “to prevent higher inflation from becoming entrenched,” “What we have now is a mismatch between demand and supply. We have very strong demand in areas where supply is constrained,” such as for cars, he said.

The rhetoric about gold and inflation etc is about as good as that about covid. In 2000, gold was about us$450/oz, and now it is about us$1800.
If you want to compare the value of a $450.00 Commodity (get similar numbers if you compare other things) in 2000 there are four choices.
In 2020 the relative:
real price of that commodity is $676.00
real value in consumption of that commodity is $725.00
labor value of that commodity is $778.00 (using the unskilled wage) or $756.00 (using production worker compensation)
income value of that commodity is $785.00
economic share of that commodity is $917.00
https://www.measuringworth.com/calculators/uscompare/relativevalue.php

So us$1800 or us$ 917?

If you look at purchasing power of GBP450, it is about GBP 867

draw your own conclusions, do your own research. There are other ways to do the comparisons, but you should do them. I have close to zero faith in the Fed, or various flavours of politicians (looks like or PM did not know his government was in control of the Australian borders? LOL! the next volley in the tennis tournament [torment] down under!) or economic theories, or people who are paid per the word (social commentators) or per views.

the gnome

I won't mention the cricket again..England 6/215..Djokovic visa to bat for UK refused. Australian PM declares no conflict of interest..

BACK TO BUSINESS ...

SWOT Analysis For 2022

Last year had its fair share—and more—of exogenous shocks: the Texas big freeze, the Suez Canal shutdown, the delta scariant, wildfires in California, and supply chain disruptions everywhere. It was also rich in extraordinary policy responses: quantitative easing amid the highest inflation rates for a generation, fiscal stimulus despite nominal GDP growth in double digits, new lockdowns, sweeping vaccine mandates, and in some countries naked discrimination against the unvaccinated. On top of all that, add a hefty sprinkling of unexpected market developments: GameStop, Spac speculation, and the NFT craze to name just three.

Against this backdrop, the world’s major currency pairs saw limited volatility, bond markets absorbed the inflation shock and did not sell off, gold was about as exciting as watching paint dry, and in 252 trading sessions the US equity market delivered 72 new all-time highs. So, the question for investors is clear: will this strong momentum continue into 2022?

Policy is starting to shift. Instead of adding US$120bn of fresh liquidity into the system every month, the US Federal Reserve is now tapering its bond purchases and signaling that it will raise interest rates in 2022.

The speculative fever is dying down: unprofitable companies are no longer beating proven cash flow generators. Aside from the big monopolies, tech stocks are no longer outperforming. The Spac craze has ended.

After sitting on their hands for most of 2021 as domestic growth rolled over, Chinese policymakers now seem ready to ease and to give cash-strapped companies a little breathing space.

Energy prices—whether for natural gas, coal or electricity—are shooting up everywhere, in large part because of a lack of investment in key energy infrastructure over recent years.

US and European government bond yields no longer seem as swayed by negative developments on the Covid front.
So the odds are that 2022 will be different to 2021. But how?

Interesting times (apart from the cricket)
the gnome

PRESENTATION TO THE PDAC 2021 POST CONVENTION PROGRAMMING SESSION ON EXPLORATION SUCCESS AND STRATEGY

Gold-Exploration-Trends-PDAC-May-2021
The following presentation looks at the global trends in exploration for gold. It also introduces a number of new metrics (associated with drilling and the number of companies) for assessing exploration performance.

Key observations were:

Exploration expenditures are extremely volatile – with boom/busts of +/-70% not uncommon.
The overall level of exploration spend is mainly driven by changes in the gold price.
The impact of COVID-19 on the level of exploration activity is complex and dynamic. On the negative- side, office closures and travel-restrictions and have made it difficult for geologists and drillers to work on projects in remote areas.
On the positive-side, market uncertainties, coupled with low interest rates has caused the price of gold to go up (from US$1420 in 2019 to $1771/oz in 2020) – thereby encouraging to be more active in the field. The net effect was a modest increase in the World’s overall spending on gold exploration … up from $4639m in 2019 to $4830m in 2020.

It is worth noting that the level of activity varied by Region – with expenditures in 2020 up in Canada (by 4%) and Australia (by 15%) and down in Africa (by -6%) and Latin America (by -15%).

On average around 40-50 significant gold deposits are found in the World each year.

Over the last decade (2010-19) Canada accounted for 12% of all gold discoveries and Australia 15% by number.
In terms of ounces over the last decade a total of 628 Moz of gold was found in the World. Ten of these contained more than 10 Moz each. This includes three Cu-Au deposits, where gold is a by-product.
After adjusting for by-product credits the “average cost per ounce found” rose from $15 in 1980s to $61 in the last decade (all in constant 2020 US Dollars). Part of the reason for the increase was cyclical (associated with higher labour and drilling costs – which have now come back down) and structural (namely the extra cost of exploring under deeper cover and/or in more remote locations).
In terms of “$ spent per discovery”, unit costs unit costs have risen from $41m in the 1980s to $142m in the last decade.
In terms of “metres drilled per discovery” the amount of drilling required rose from 336,000 metres in the 1990s to 551,000 metres in the last decade.
In terms of the “number of holes drilled per discovery”, the amount of drilling required has stayed relatively constant at 6700-6900 holes over the study period (1990 to 2019). The challenge is that the average depth of the hole doubled from 41 metres to 82 metres over this period.
In terms of the number of “gold discoveries made per Company per year” performance in the Western World over the last two decades has declined from 1-chance-in-25 to 1-in-29.
Given that most companies have modest exploration budgets (of ~$3 to 5 m pa) the odds of a given company findi

In Aus

The covid joke of the week: "Want to get a fast test? Play the Poms."
But for the people who had waited in a testing queue for longer than England's second innings, it was no laughing matter.

Australia's skyrocketing property market boom that has seen house prices increase 22 per cent in 12 months.
Australia's 10.7 million homes are now worth $9.3 trillion dollars — or an average of $869,000 each — and that's an increase of $1 trillion in just six months...good work? If only there was a good job around?

Two thirds of the country live in just five cities. There's no other country on Earth where the population is so very concentrated.

Former Treasurer Peter Costello (all the formers are coming out and staing forward looking opinions, when none of what they said before ever turned out) has labelled the Reserve Bank of Australia "irresponsible" for stating it would keep interest rates where they are until 2024....and I will bet they wont be able to do this even in 2022 LOL!

In the USA
Mortgage lenders issued $1.61 trillion in purchase loans in 2021, according to estimates by the Mortgage Bankers Association. That is up slightly from $1.48 trillion in 2020 and above the previous record of $1.51 trillion in 2005.
The mortgage boom reflects a thriving housing market and the corresponding run-up in prices over the past year. Many of the forces that pushed Americans into the housing market in the early months of the pandemic—low interest rates and a desire for bigger homes—continue to drive up prices and mortgage balances. What’s more, many Americans got raises and built up savings during the pandemic, giving them the means to buy.

“All of that extra income goes somewhere, and a lot of it went into housing,” Lots more into equities esp at the big growth stocks, and the cryptos? Great way to re-build an economy?

MASSIVE MIGRATION? Migration from high- to low-tax states—especially those in the Sun Belt—has been going on for well over a decade. But the trend picked up during the pandemic, as Democratic states tended to impose the strictest lockdowns. NY a big loser, and who would really want to live there?

DEBT OF ALL KINDS AMASSING....Why Student Debt (not a small amont and growing by the day?) keeps growing?—Even When Borrowers Keep Paying ??...Some loan payment plans aren’t enough to cover interest, and a punishing tax bill can await years down the line. Lets get educated.

Equality...pass on this ....

thats all, must watch the cricket!

best
the gnome

A billionaire took out a full-page ad in the Wall Street Journal in 2017 warning of the dangers that bitcoin futures posed to capital markets.

These days, the billionaire is well versed in real assett speak. Worth $25 billion, she said it’s prudent to have 2 per cent to 3 per cent of one’s personal wealth in gold, just in case fiat currency goes to “hell.”

Well imagine the above getting reported in the media? But it is what is happening more and more at the top end, behind closed doors. It reflects a growing distrust in fiat, governments and endless economic theories, which have little to do with reality and human behaviour.

Here is the original article without my editing ...

XXXX took out a full-page ad in the Wall Street Journal in 2017 warning of the dangers that bitcoin futures posed to capital markets.

These days, the billionaire is well versed in cryptospeak. Peterffy, worth $25 billion, said it’s prudent to have 2 per cent to 3 per cent of one’s personal wealth in cryptocurrencies, just in case fiat currency goes to “hell.”

He owns some himself, while HIS (conflict of interest here??!!) firm Interactive Brokers Group Inc. recently offered customers the ability to trade Bitcoin, Ethereum, Litecoin and Bitcoin Cash, after detecting “urgency” from its clients to get in on the action.

Peterffy, 77, said Greenwich, Connecticut-based Interactive Brokers will offer the ability to trade another five to 10 coins or so starting this month.

It’s possible that cryptocurrencies could reap extraordinary returns — even if the opposite is also true, Peterffy said.

“I think it can go to zero, and I think it can go to a million dollars,” he said in an interview. “I have no idea.”

IMAGINE WHY ONE WOULD BE ON SOMETHING WHICH HAS A DOWNSIDE RISK OF LOSING THE LOT, WHEN YOU CAN HAVE SOMETHING LIKE GOLD WHICH YOU CERTAINLY WONT LOSE THE LOT.

Aside, There is considerable rumour of the central banks inventing their own crypto, or digital currency, but if they do, what does it solve? They can keep printing their favourite crypto as much as they like, and the same game goes on. Nothing solved?

The real problem is continual economic incompetence displayed by various governments and led well by the US, and the private Fed Reserve (not government, and have different masters to serve, need to keep this in mind).

Going to be a great year for gold. No new discoveries. Head grade of mines steadily decreasing (otherwise supply side will look very dry, and the supply side of gold from mines out 10-20 years is looking very dry!!!)

best
the gnome

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