Member Info for goldgnome

If you stick physical cash somewhere and come back to it decades later, it will have lost most of its purchasing power. In contrast, if you stick physical gold somewhere and come back to it decades later, chances are it will have retained most or all of its purchasing power, unless you bought right at the top of a rare gold bubble like in 1980 or 2011.
However, in any given 5-year or 10-year period, it could easily lose or gain 25%+ of its purchasing power. Additionally, gold is subject to taxes when sold, and in the physical market is usually bought at a premium to spot and sold at a discount to spot, since the middlemen need to earn a profit to make a liquid market. So, it’s not great for everyday use, unless countries decide to peg their currencies to it. It’s best used as a long-term store of value. There are debit cards that can be linked to gold accounts to make it a medium of exchange, but that introduces a trusted/centralized counterparty.
Plus, it’s risky to hold a lot of gold in self-custody due to the risk of theft. Vaulting services can safely hold larger amounts of gold, but this ironically centralizes it, and over the past century, most countries went through one or more periods of gold confiscation where vaulted gold was taken from the owner. There are very few jurisdictions in the world where someone could have vaulted gold with a third party a century ago and successfully passed it to their grandchildren, for example.
Silver and platinum are similar to gold as self-custodied stores of value, but they are more of a hybrid between currencies and commodities, and as such have lower stock-to-flow ratios and more volatility. Platinum also tends to have less liquidity and bigger frictional costs when physically bought and sold.
Overall, gold is a better long-term self-custodied asset than cash. Many wealthy people retain a small amount of it for disaster insurance.

LONG TERM YOU ARE GURANTEED THAT THE VALUE OF YOUR FIAT CURRENCY WILL GO DOWN. 100 YEARS OF EXPEREINCE HAS SHOWN THAT THIS IS ITS BEHAVIOUR AND A BEHAVIOUR BY FUNDAMENTAL DESIGN. GOLD IN THE SAME LONG TERM , SHOWS THE OPPOSITE BEHAVIOUR. PROFITABLE SUSTANINABLE GOLD MINERS, GIVES EXPOSURE TO GOLD AS A LONG TERM ASSET, AND REVENUE IN THE FORM OF FREE CASH FLOW. VERY ATTRACTIVE GOLD MINERS HAVE A LONG TERM COMMITTMENT TO SHARING THE FREE CASH FLOW WITH HTEIR SHAREHOLDERS AND STAKEHOLDERS. CEY WITH ITS VERY CONSERVATIVE BAANCE SHEET, HISTORY OF DIVIDEND PAYMENTS, HISTORY OF STAKEHOLDER PAYMENTS (EGYPTIAN GOVT) IS AND WILL BE VERY ATTRACTIVE....

Sorry for the rant, but best not to be herded and coralled by the FED which is hell bent on protecting its exhorbitant extraordinary privilege, and furthering a set of ill thought out ideologies and policies thereof.

Govts seem hell bent on revealing their lack of depth. In Oz we have a govt which is advocating that all of the people over 50 [now 60?] had to have AstraZeneca, while they all have Pfizer?

best

th

So, cash is useful as a medium of exchange and less-so as a store of value. It’s something we hold as working capital that we can usually expect to be reasonably stable a few years out (at least in developed countries), but not something that can be considered a long-term store of value outside of the financial system, and sometimes not even within the financial system.
Plus, the current iteration of fiat-only currencies is actually only about five decades old, as it became the norm in 1971. It’s a surprisingly recent system even though we take it for granted today.
And technically, cash does rely on a trusted/centralized third party (the government). It’s just that the trusted/centralized third party doesn’t need to be present for transactions to occur, and doesn’t need to hold it for you. As a bearer asset, cash can be self-custodied and exchanged with other people offline, with no direct counterparty.
Precious Metals: Pros and Cons
Gold and silver are the longest-running fungible stores of value, stretching back thousands of years on multiple continents.
Since gold is nearly chemically indestructible and can be re-melted and re-forged any number of times, it basically lasts forever. Unlike industrial commodities that are regularly consumed, gold has a high stock-to-flow ratio, meaning that its supply/demand characteristics are more like a currency than a commodity. Since it is extremely malleable, it is easy to work into standardized coins or bars. And it’s shiny and resistant to most forms of degradation, which makes it ideal for jewelry.
There was a History Channel documentary a while back called “Life After People” that visualized what would happen to the cities and stuff we left behind if humans suddenly vanished. It basically tracks the decay process until everything we built turns to ruins, crumbling and rusting away. One of the few things that would last hundreds of thousands of years without changing, would be our vaulted gold. The gold vault stored under the New York Fed, for example, would be filled with water and long-buried, but the gold bars would be the same after a bit of cleaning.
It’s hard to find big and accessible earth deposits of it, and it requires processing many tons of rock to get a tiny amount of gold, so only about 1.5%-2.0% gold is dug up each year as a percentage of the current amount that is estimated to exist above-ground. Gold has a 1.5%-2.0% average annual monetary inflation rate, in other words. This has historically been about the same rate as world population growth, so the amount of gold per capita has been pretty consistent over time.
A 1-ounce gold coin could buy you a top-notch outfit a century ago, and can buy you a top-notch outfit today. No more, no less. Based on estimates by the World Gold Council, there is only around one ounce of above-ground gold per person in the world.

Physical Cash: Pros and Cons (and lets not mention the Egyptian pound!)

Physical cash depreciates in value over time. Policymakers around the world target a positive inflation rate, often 2% or higher, and the amount of fiat currency in existence grows over time.
The word “fiat” means an authoritative declaration. Fiat currency is just paper or bits of information with no inherent value or supply caps, and thus is not something that usually self-organizes towards usage. It requires the government to mandate its use by force, which means by taxing other asset transactions, making taxes payable only in their government-issued currency, and in some cases implementing capital controls or banning competitor assets to their currency.
An exception to the rule that fiat currencies tend not to self-organize, would be that in various developing countries with particularly weak currencies, dollars or euros are sometimes traded in black markets or out in the open, and are considered a relatively hard form of money compared to the local alternatives.
An example of a developing market currency that historically has issues, is the Egyptian pound. Egyptians saw their cash savings lose half of its value against the dollar or euro practically overnight in November 2016, whether it was held in a bank or not. And that’s a country with 100 million people.

Over the past century, the strongest currencies, like the Swiss franc and US dollar, lost over 95% of their value. The average currency lost more than that, like around 98-99%. The worst currencies lost 100% of their value.
Even in a less extreme and more recent environment, the dollar lost about 40% of its value against official consumer price inflation since the year 2000.
The only way to counteract that is to hold cash with a bank to earn interest, and thus involve a counterparty. In particularly inflationary decades, the interest often isn’t enough to keep up with inflation. This chart shows T-bill interest rates minus the official CPI inflation rate since the 1930s; whenever it’s below zero it means T-bills (and by extension bank cash accounts that generally have similar rates) aren’t keeping up with inflation even when earning a yield.

And for longer-term savings instruments, here is a chart of the inflation-adjusted forward annualized rate of return of buying 10-year Treasury notes that year and holding them to maturity. You can see the three decades where bondholders got massacred, because the underlying dollars were devalued. During those times, anyone who bought Treasuries and held to maturity received annualized real returns of as low as -4% or -5% during the full duration of the note.

Cut down version of an article in Alpha
Why Gold And Bitcoin Are Popular
...few asset classes are quite as controversial as gold, bitcoin, and other alternative monies.
Since they are not cashflow-producing businesses or industrial commodities with analyzable supply and demand balances, the bull/bear gap is unusually wide when it comes to valuing things like gold or bitcoin, not just in terms of price but in terms of the very purpose for their existence as investable assets.
It was illegal for Americans to own gold for about 40 years, from the mid-1930s to the mid-1970s. In some places today, it’s illegal to own bitcoin. Governments (and economists, there I go again, sorry) sometimes find them to be dangerous. How could something so useless, also be so dangerous? Useless things rarely get banned, and instead can be safely ignored as they work their way towards oblivion over time.
The Concept of Self-Custody is Rare
There are remarkably few financial assets in the world that you can hold for a long time without trusting a centralized counterparty to hold it for you.
The vast majority of assets, like stocks and bonds and cash accounts, are held by financial institutions on your behalf or rely on centralized databases listing you as an asset owner.
Real estate is the biggest asset class that you self-custody (in a manner of speaking), but it’s not portable or liquid or fungible.
Collectibles are often a self-custodied form of asset, but they’re not very fungible or liquid, meaning that each individual unit has various quirks such as date, condition, or type that make it hard to exchange for other goods or services. The same is true for gems.
That leaves physical cash, precious metals, and cryptocurrencies as the only asset classes that can be self-custodied and traded with others without a trusted/centralized third party, while also being sufficiently liquid, fungible, and portable. In other words, they are among a small number of money-like bearer assets.
If you think about it, it’s actually really hard to invent a money-like asset that derives value from itself. If you and me want to exchange fungible value in any arbitrary amount without a third party, online or offline, there are remarkably few ways to do it. Usually we don’t particularly want to do that so it’s not a problem (we’re fine with a third-party involved, like a credit card transaction), but if we think about how we would do that if we wanted to, there are surprisingly few options.
Just about any mechanism that we can exchange value with, in a way that is liquid and fungible, requires processing/verification by a centralized third party, and that third party can spy on the transaction or block the transaction. Physical cash, precious metals, and cryptocurrencies are the exceptions, where they can be both held and transacted with outside of any centralized third party custodian or verifier.

Thanks for sharing this Mr T.

Some very interesting commentary and analysis. I like what I'm hearing about Doropo, and this does look like a worthwhile diversification of production, and increase in production to 700-750k per ounce pa. I think there is a lot more work to be done in Cote Ivoire, and far more opportunities, so getting a better footing in this country is an excellent move. Governments take a lot more notice of you when you are in production.
I get a good feeling that the production base in Egypt is in good hands , and they only need an exploration win, and this will fly.
Dips in the SP inspired by the FED's rantings and misplaced ideolgies are great buying opportunities, and I am in again.

best
the Gnome

What a last 24 hours in thed fin markets, not just for gold, but for just about anything. The Oz currency plummeted 1 per cent to as low as US75.98¢ , the US dollar surged 0.8 per cent in a move that went against the expectations many strategists had pencilled in for this year.

The comments from the Fed “had a profound impact on currency markets,” said NAB’s head of FX strategy, Ray Attrill. “We’ve had our forecasts at US80¢ for the end of the [June] quarter. That’s now being seriously challenged.” (trashed?)
A sell-off in US 10-year bonds pushed the yield up 8 basis points to 1.58 per cent while inflation expectations, as measured by breakeven rates, dropped, creating a favourable setting for the US currency.
“You had this background where many traders were short the US dollar and long the euro, and what we saw last night was the Fed conceding that economic dynamics are good enough that tapering discussions have been given the green light,” said ANZ FX strategist John Bromhead.
Powell emphasised that this was an “extraordinarily unusual time”, and emphasised that forecasts for the timing of future interest rate hikes should be taken with a “big grain of salt”. In fact taking note of what 500 or so PhD economists think has got to be a red flag at the best of times. The power bequethed to these fine brethren is frightening.
IN fact all bets on the future prices of anything would have to be with a grain of salt, except, real income producing assets?

Noted Aofie,

My apologies if I do rant on about economists. I will show more restraint. There are good economists, Banerjee, Perkins, Collier, Ha-Joon Chang etc, but more restraint from me.
Good to see the Fed Economics group is starting to have a dose of reality. Federal expects inflation will climb to 3.4 per cent this yearhe real one will probably be closer to 8% as commented on before), higher than the central bank’s previous forecasts, and projected for the first time that there could be two interest rate hikes in 2023. As recently as March, the Fed predicted inflation would be 2.4 per cent for this year. Earlier estimates didn’t project an initial rate hike until 2024. Oh well thats enough of that (like predicting share prices, or the POG, or CEY SP?!), but my bet is inflation is going to rise a lot more than they are predicting.
"The problem right now is that the demand is very strong, and incomes are high," Powell told reporters on Wednesday. The 10-20+m who flip burgers, open doors, sweep floors, work in hospitality, tourism would beg to differ, but what would they know?

The housing market has gone nuts in Queensland as more smart and able people flee Victoria(stan) and the Gold Coast white shoe Real Estate (RE) shufflers and bustlers come to the party. I will get an email in the morning from the Qld RE group telling me of a hush new off market house (or 5) ... just released at a steal... $x.ymillion, and in the afternoon I will get another saying..."you missed the opportunity, but wait, there is another and here it is...sleep on it and let me know in the morning!" The fun never stops in Queensland Real Estate...and especially as people rush to invest in REAL assets, no pun intended...LOL

best
the gnome

A join of B2Gold and CEY may not be a bad fit?

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the gnome

Noted Cowichan, and agreed in part
The 3-5 years may not work for all professions. The main points
1. If you know you have 3-5 years, you really put in/focus. Conversely I know quite a few who have the long term/lifer view who have went to sleep at the wheel many times, and who build up a belief of entitlement. But there is a role for longer termers, if they manage themselves and are managed well.
2. Despite how wonderful you are, there is always someone in the wings that is potentially as good if not better, and deserves to "have a go" at the wheel.

Talent in the country? The main talent is to be able to continually gain the respect and trust of quality local people. Dare I siggest that the best talent is the local people themselves, so finding the right talent in the country to me is key. So I am not at all fazed by seeing a wandering French (probably the most detested race in West Africa) Geo move on, but would really like to see them identify top local talent and hire This is how you build in-country on a solid sustainable base, and this is where CEY shoud be in Burkina Faso and Cote Ivoire...now.
In Burkina the previous "mngt" was so stupid they hired a foreign national to be the country manager. An abysmal choice at best, the man was immensely unpopular with local people and government, as well as having some other "foibles unbecoming"...

best
the gnome

The tone of commentary by the professional investment community about the Fed Policies is starting to get deafening. No doubt even the Fed will hear and change...not sure when. But the policies are clearly not sustainable, and the ethics of kicking the can (soon to be a barrel!!) down the road is questionable at best.

“You’ve got the “You’ve got the craziest mix of fiscal and monetary policy since the Federal Reserve Board was created,” he said.

If, at its meeting this week, the Federal Reserve says the US economy is on the right path, “then I would go all-in on the inflation trade, buy commodities, crypto and gold,” Mr Tudor Jones said. “If they course-correct, you will get a taper tantrum and a sell-off in fixed income and a correction in stocks.”

“We’re still acting like we’re in a black hole. In fact, the economy has accelerated,” Mr Druckenmiller
https://en.wikipedia.org/wiki/Stanley_Druckenmiller

If the central banks treat these numbers with nonchalance, then I think it’s just a green light to bet heavily on every inflation trade.

— Paul Tudor Jones

The warnings from the hedge fund world are echoed by some prominent economists. Larry Summers, the former US Treasury secretary under president Bill Clinton, last month accused central bankers of “dangerous complacency” in the fight against inflation.

all grist to the mill
best
the gnome

Thanks Cowachin
My personal take is that as an Exploration Manager, or in any position for that matter, 3-5 years is the length of residency. Give it your best in that time, and then hand the baton to the next person. So I see change as being very heathy. Its a pity CEY did not change a few of its Directors more regularly in the past, and of course now.

Lovely to see the Doropo Deposit rated at 5.4 M Ozs. A quick fact check suggests 3.5 M Ozs MandI Jorc, so perhaps Pardey is up to his old tricks. Steven Michael another NED on the company worth a fact check (highly recomend people do this!!) has some interesting history with Arrow Minerals (look via LinkedIN profile and follw the connects). Historically with a reputation more as a life style choice than an aggressive exploration focussed company. Of interest was the eye watering $Salary plus perks he used to pull as the MD of the company = $460kpa, and thats for an accountant running a Junior Exploration company which went nowhere year after year? Page 20 link below ...
https://arrowminerals.com.au/wp-content/uploads/2020/08/AMD-Annual-Report-2018.pdf
It amazing how quickly one can do some background checks these days...and its well worth doing them to have a look at some of the "key players"
No more fact checks for me on this company, I am out of the door...and down the road...good luck to the bled talent!
best
the gnome

Macron is not the smartest guy in the room, or the most worldly. MIstake a day seems to be his mantra. Good luck to the French, you get what you elect. We are suffering downunder...but apparently we are doing so well. A lot of small businesses wil shut their doors, especially if another shut down is called by the Chief Health Officers.

Australia's Productivity Commission chairman Michael Brennan pointed out last week that in the decade since 2010 – even excluding last year – Australia recorded its slowest growth in GDP per capita of any decade in at least 60 years. Add in last year it was a lot worse. Significance? Without productivity growth one will not get sustainable wage growth. Not surprisingly, there has not been any substantive wage growth for a decade in Oz. If your job does not deliver gain in income, then look to some other investment to make it up! Capital growth, Dividends, sustainable dividends.

Without a comprehensive economic reform program, Australia will inevitably have weak growth in living standards during the remainder of the 2020s and into the 2030s. Probably living standards will decrease. And without economic reform, the current budget settings will prove unsustainable. Given Australia's "leaders" inability to action reform (why, they are relaxed comfortable, and on a pension at the end of their term?) what would you bet on? CEY?

Of course, more reports, investigations and recomendations. G7 meetings and G145.9 meetings

In the meantime, good to seek investments in real assets, income (diviends) if you please, and CEY has done an excellent job on the dividends front, and my bet is this will continue, espcialy with the old management gone. MandA target probably. I certainly would not bet on productvity reform and increase, taxation optimisation, and a larger Oz government

good luck punters!
and luck we need!!
the gnome

Mr T

the exploration was compromised, which can oftne be the case, when you are a junior and the brokers and analysts are barking (mad?) at you. having to manage an influx of 5-7 RC drill rigs, plus auger rigs, plus geochem sampling crews in locality which might be 1 or 2 bus stops from the end o the world is a tough thing to do. Personal experience.

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the gnome

Thanks Cowichan

I would beg to differ. If one looks at the time lines of Ampella and the Batie discovery you will see

1. Batie was in fact detected before Paul Kitto joined Ampella by regional targeting off the country wide aeromagnetics, local geological knowledge provided by Dr Morour Francois Ouedrago who happened to have done his PhD in the area in 1987 during which he noted the structural controls and wide spread alteration associated with the gold occurrences that were detected originally by artisinal miners and then mined by the French in a small (think wheel barrows) way (1950's?), then follow up stream sediment sampling by Ampella pre-Kitto. Ampella had got ground in the area (2007) as one can see by their prospectus, but they could only get what was available at time of listing..it took a year or so) Paul got the prospect drilling going that led to the Konkera discovery, but without knowing the broader crustal scale target existed, where etc, the drills could have gone anywhere.
2. The fact that Batie mineralisation is refractory, appears not to be known long after a lot of money and time was spent by Ampella, and then even more by CEY. Note it was known by CEY when they bought it, but they did not regard it as a first order issue? (it maybe solvable with a new approach, new technology which can often be the way with such metallurgical issues, but soemtimes these can take decades!)

Begs the question why did it take so long to know this. To answer somewhat broadly, there is common industry practise to try and measure the total gold grade in a sample. Today we have new technology which does this more convincingly than previously..see link below
https://www.csiro.au/en/work-with-us/industries/mining-resources/sensing/photonassay-xray-gold-detection
However the new technology still has the old thinking embedded. It is not the total gold, it is the total extractable gold that a mining company makes money out of.

So what should have been done at lets say a JORC resource of 1 m ozs, is that a through GeoMet study should have been done...

The shortcoming can be addressed further down the track (far from ideal), if one has good quality geological logging, backed by such measurements as made by a portable XRF, so that a mineral zonation can be confidently established within the resource volume. The problem here is how to get consistent high quality geological observations in a rushed drill out in Africa. Common failure point...and on the story goes.

So I would not be so despairing of CEY bringing the Batie mineralisaiton into Mining.

Yes they did not cover themselves in glory in their exploration efforts (needed more exacting site based QA/QC is what I have heard through the bougainvillea's).

Issues
1. Met related, robust geomet model, recovery and process
2. Possibly strip ratio?
3. energy costs
4. Competitive ROI reurn on capital meeting corporate objectives.

Love to have a new updated JORC reso

Difficult to imagine why anyone would take any notice of an economist (Economics: the "art" that came into being to 'make astrologers look respectable')

.... but we have Krugman (of NY Times fame, and regarded as a savant amongst the economists of the world), sailing forth yet again about bitcoins (and yes he has done gold to bits!) , and this is after his "interesting" analogy between bitcoin and the gold standard? Recapping in part "In April 2013, Krugman invoked Adam Smith to make another moral case against bitcoin, this time claiming that the use of gold, silver, or bitcoin as money was a waste of resources. "Smith actually wrote eloquently about the fundamental foolishness of relying on gold and silver currency, which— as he pointed out—serve only a symbolic function, yet absorbed real resources in their production, and why it would be smart to replace them with paper currency," Krugman wrote. "And now here we are in a world of high information technology—and people think it's smart, nay cutting-edge, to create a sort of virtual currency whose creation requires wasting real resources in a way Adam Smith considered foolish and outmoded in 1776.""
I wont bore you with the details but it does seem that Krugmans arguments are based purely on his desire to maintain the monetary power of a group of PhD economists stuffed inside a private unelected institution, called the Fed. If you like to have a chuckle read
https://reason.com/2021/06/10/paul-krugmans-10-year-history-of-being-wrong-about-bitcoin/
The argument would make more sense given the faith in markets as a the "value determining means" in the global financial structure, to have the markets far more transparent with clear, efficient and effective rules to ensure the desired outcome.

Not to suggest all economsits are wayward, as I did enjoy the thoughts of Galbraith, and chuckled on his aside about economic forcasting...You might be as well off consulting a fortune-teller....he also argued that Americans would lead longer, more fulfilling lives if they spent less on private luxuries and more on their external environments (good grief!)

Thats it for the weekend, one more game of football to go, and it should be a good few weeks for gold! and CEY

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the gnome

Reading the recent inflation numbers made me recall the appearance of the Burrito Index.
https://www.businessinsider.com/if-people-knew-the-actual-inflation-rate-it-would-crash-the-economy-2016-8?IR=T
If the real inflation was advertsised...Global investors might start demanding yields on Treasury bonds that are above the real rate of inflation. If inflation is running at 7%, then bond buyers would need to earn 8% per year just to earn a real return of 1%.

What were the US figures? 5% for the last 12 months. For the last 3 months however it was 2%, which if maintained would lead to 8% inflation annualised. Even if you take out the things the central bankers think are irrelevant (energy and food prices?), we get 1.9% for the last 3 months, and this gives 7.6% annualised.
The value of the fiat currencies is going south, but of course they dont want to worry the peasants (whose salaries and wages have been going no wehere for years), and I strongly suggest you do your own Burrito Index...call it the borwn ale index or whatever, but watch what effects you, and take with a grain of salt (n Australia we have large Salt Lakes) anything you read in the press or what the economists and pollies say...

Gold to the moon.

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the gnome

Thanks Mr T
In regard to the gold markets and their structure I find Andrew McGuire's sessions very interesting. The pity is that most do not know about these, nor do they know about the things that effect them profundly orchestarted by unelected people following their favourite idelogies, and so they walk on in sad disarray, barking at headlines and shadows as they flicker into the screen. One doesnt have to spend too long thinking about why mental health issues are rising expnentially, and this even without the divine right to lockup the peasants to save them from the monsters (Vicotrian Chief Minister of Health speak for the virus).
But all is not lost, we all fight on, and laughter is by far the best medicine...
https://www.youtube.com/watch?v=ZtYU87QNjPw

best
the gnome

Yes, we have running those style of experiments in Victoria over the last 18 months. The excuse has been the "virus" and the punshment has been to see how many days the "authorities" can keep the population locked up in their houses, without their being a breakout. The experiments are ongoing until the virus is eliminated 100%. So will be on going for the next 50 years I expect.

For those with time on their hands, considering a career move
https://www.youtube.com/watch?v=pA6CGuXEKtQ

regards
the gnome

The housing prices will go up for a while. Then people will realise they do not have a job, do not have certainty in the job they have or the business they are in, cant pay the looans interest, the interest rates will go up, the banks will close down on the loan books, the young people will realise home ownership is being closed out to them yet again and be ****$d off, the governments will continually expose that they have no idea whether to exterminate the virus (which incidentally has rarely if ever happened, but whatever does one learn from medical history?), or behave rationally, and on we go...then we get a social revolution, and life goes on...

all good fun
the gnome