Member Info for goldgnome

Some interesting big bets.
1. Bitcoin. A lot going on by a few big players. If there was any doubt of the chutzpah that is the bitcoin investment phenomenon, it is demonstrated by Bit Digital, the world's biggest listed bitcoin-only miner. Last week, Bit Digital surpassed $US1 billion ($1.3 billion) in market capitalisation on the Nasdaq sharemarket. On Monday, securities analysts and investors Anne Stevenson-Yang and the Sydney-based Tim Murray declared the Chinese-American company a scam.
Bit Digital's last chairman and chief executive, Zeng Erxin, is on the run from police, they reported, and a recently departed director and chief financial officer are both in jail.
"We will show that the assets probably do not exist, and the business is designed to steal funds from investors," the analysts wrote in a report published by their firm, J Capital Research. "The executives who still secretly control the company are in jail or are fugitives from the law. This team not only stole from investors in Shanghai, but they even diverted cash into their personal bank accounts."

Bit Digital has ignored the allegations, and at least five US law firms are investigating possible securities-fraud lawsuits.
In reality, it is the bitcoin boom that is on trial. From an esoteric way to make payments a decade ago, the cryptocurrency peaked at $US41,946 last Thursday.
Ripple's investors include private equity firm Andreessen Horowitz and consulting firm Accenture. On December 22, the US Securities and Exchange Commission accused Ripple of selling about $US1.3 billion in XRP currency without filing the necessary paperwork, circumventing the need to disclose important financial and operational information...and on the circus goes ...

2. will be next
the gnome

The main problem is not ISIS but the mafioso, who make buckets of money controlling the trading drugs, people etc across the
Sahara. They do not need to go into the ppulated areas, where they cause conflict, just wait int he sanddunes, and the caves. Great cash flow business, low CAPEX, high margins.
The massive destablisation caused by the reckless action and freeing of Libya, created a flow of mercenaries into the Sahara who were all dreesed up and gunned up, who were unemployed ... Effectively this has destabilised Mali, Niger, and the northern reahes of Burkina Faso by encouraging and financing banditry. I think ISIS is realsitcally a minor player int he mix. Banditry is also minor, and getting less. Much easier to go for the high margin drug trade, and also human trafficking, than stealing chickens and goats, and robber the poor.
https://globalinitiative.net/wp-content/uploads/2014/12/Shaw-Reitano-%E2%80%93-The-Political-Economy-of-Trafficking-and-Trade-in-the-Sahara-December-2014.pdf
https://www.crisisgroup.org/africa/sahel/mali/267-narcotrafic-violence-et-politique-au-nord-du-mali

a cycnical gnome.

In a deceptively cryptic tweet, the world's richest man told his 42 million followers to just: "Use Signal."

Many of them followed that order blindly, and it led to a very expensive mistake.

They thought Mr Musk was telling them to buy shares in a small medical device firm (Signal Advance). So they did, without knowing what it actually was.

By adopting the "buy now, think later" strategy, they drove the company's share price up by an astonishing 11,708 per cent (in just three days).

Absolutely amazing stuff. Dont ever think the market has any brains.

best
the gnome

If people think that CEY made a mistake due to the small pit wall failure, spare a thought for Rio, with their abhorent handling of geotechnical issues in their Tier ONE Cu-Au mine in Mongolia. First class failure, lack of process, and the costs run into the $billions, and it could be a lot more ... to the extent the MONGOLIAN GOVT thinks the project is UNATTRACTIVE!

Mongolia threatens to terminate Rio Tinto's Oyu Tolgoi expansion
Rio Tinto and the Mongolian government are locked in a game of brinkmanship ahead of a major mining decision in May, with the company seeking resolution of a number of geological, financial, engineering and power supply issues before it considers a request to change the agreements governing the $US6.75 billion Oyu Tolgoi project.
Mongolia escalated the stoush over the troubled copper project on Monday, when it told Rio and other foreign investors that it would use its powers to terminate the 2015 agreement that governs the fiscal terms for the underground expansion of Oyu Tolgoi unless it became more economically attractive to the host nation.
The Mongolian government says massive cost and schedule blowouts have rendered the project unattractive. Bloomberg

The threat to terminate the 2015 agreement came after the project manager, Rio, advised last year that the cost of the project had blown out by $US1.45 billion and sustainable first production was delayed by about 22 months.

The blowouts were doubly frustrating for the Mongolian government, which as a shareholder in the mine is liable for its share of the higher construction costs but must also now wait longer for royalties and other benefits to start flowing.

You can draw your own conclusions (called out by the Mongolian Government?) but there are many large mining companies which do not have proper management systems, are not across practical technical issues. As for Rio, blowing p caves, you do have to wonder what's been going on at the top, and the bottom, and in between.

best
the gnome

Mr T
Stephanie is an academic and an economist. Real life experience in how the world works is not great, but of course that should not stop one from expressing opinions. It should however warn one, to have a good look at what is basically an academic theory which is not thought through and put in the context of the real world. Various others have been prattling on about this (she is not the first?), and most recent Rutger Bregman, also, perhaps oddly, an academic, historian and economist who dabbles in philosphy.
The idea, basically is one of the free lunch ideas, which surface. Existing experiences?– Venezuela today; Zimbabwe in 2008; Yugoslavia in 1994; Hungary in 1946; Greece in 1944; Wiemar Germany in 1923 — there are the large costs, and negative social impacts.
Interesting topic for real considered analysis and discussion but perhaps not on this site.
https://www.brookings.edu/opinions/is-modern-monetary-theory-too-good-to-be-true/#:~:text=The%20problem%20with%20the%20MMT,must%20pay%20for%20fiscal%20deficits.

One of the problems of being led by economists and people not experienced in how the world works, is that people can game the "system" very easily.
The recent revelation relating Banks and laundering, by FinCen and ICIJ being a large embarassing example of gaming the system, and this is a well established system?
https://www.icij.org/investigations/fincen-files/heres-what-is-changing-after-the-fincen-files-shook-the-world-of-banking/

best
the gnome

Yes, and interesting to see the rise and rise of the concept of the Universal unconditional basic income, as distinct from welfare. Stephanie Kelton says it does not matter how much debt a country takes on, as long as the debt is owed to same country in same currency.

And away we go

best
the gnome.

Mr T

"Investors" are dumping lower yielding assets like gold to buy higher volatility securities like Tesla shares and bitcoin,

should read

The LEMMINGS are dumping lower yielding assets like gold to buy higher volatility securities like Tesla shares and bitcoin,

The behaviour of the masses is always interesting.

I cannot work out why the Lemmings think Tesla is going to do better in the electrical car market than some of the other companies who have moved in this direction.

https://www.ucsusa.org/resources/comparing-electric-vehicles
https://insideevs.com/reviews/344001/compare-evs/

the gnome

Yes Mr T, Transparency...

Its a concept oft talked about, but rarely done.

regards
the Gnome

Thanks Mr T.

I have had more luck with the penny dreadfulls than poor Adolf. How bad could it have got for him, losing the war and losing on the penny dreadfulls. If investing on the penny dreadfull sector some tips

1. Keep a close tab on the directors of successful companies, and avoid the directors of penny dreadfulls which deliver bad outcomes and exhibit bad behaviours/ethics
2. Look at the free options being granted by the directors to the directors
3. Note v carefully the amount that gets paid out in cash to the directors.
4. Note how many directors have their snouts in other troughs, such that they do not have full focus on what is happening in the company. (esp at the executive level)
5. Have a good look at the technical TEAM, as it is a team that wins the day more than not, as opposed to the promoted MESSIAH. (It is remarkable how the Messiah cult surfaces so much these days. Elon Musk is todays pinup)..best to have a geologist, geochemist and geophysicist of noote and demonstratable skills
6. Track carefully the amount of money that actually goes into the ground! in real exploration.
7. Look v carefully at who the top 20 investors are, examine reputations/behaviours/ethics
8. Dont worry aboutt he talk, its the walk that counts

thats enough

good luck
the Gnome

Yes, very interesting Mr T. Things do seem to be not what they appear.

Fundamentally the question is...who is running the USA. With the moves to censor the speech, (a consitutional right) of the President no less ... and many others, by the democratically elected likes of Google, Facebook, Twitter etc, it does make one wonder. Or as what put some years ago...just who are the baddies

https://www.youtube.com/watch?v=hn1VxaMEjRU

Of course there have been some baddies around for a while, but best not to mention them apparently.
https://www.youtube.com/watch?v=v4OzI9GYag0

Funny old world? with a very strangely constructed market place..efficient, well designed, tranpsarent etc,

I do like the idea of their being a bit more substance to the market with a dash of gold

best
the Gnome

Certainly one of the things that will be different coming into the near and long term future will be the demise of the US$ as the global standard. They have lost their legitmacy through their own continual greed and stupidity. When European governments complained about US monetary policy exporting inflation in 1971, the US treasury secretary, John Connally, declared that the US dollar was “our currency and your problem”. He spoke the truth, for changes in the supply, demand and price of dollars in the ensuing 48 years have proven more important for the global economic cycle than perhaps any other variable. The worry for investors is that the potential end to the US dollar’s primacy heralds a period of financial dislocation, just as when the pound sterling lost its role as top dog in the inter-war years. Call it financial dislocation or whatever, there simply has to be a more robust financial structure evolve. Without doubt this will involve China and a stronger Asian influence (including India) . The role of gold is going to be interesting, and the purchasing of a wide variety of Central Banks hints at a continued role for Gold. Gold buying by central banks, an important driver of bullion’s advance in recent years, is forecast to pick up in 2021 after a relatively slowdown in 2020
https://www.bloomberg.com/news/articles/2020-09-29/gold-buying-by-central-banks-seen-climbing-from-near-decade-low
The trend of increasing purchases since 2002 is of interest
https://qz.com/74459/why-central-banks-have-been-hoarding-gold-since-2009/
The tipping point, oddly enough being 2008/2009. Anything happen int his time period?
http://www.usfunds.com/investor-library/frank-talk/top-10-countries-with-largest-gold-reserves/#.X_kZqOgzaF4
I have heard arguments that gold is relict from the past, but counter to this, relicts are sometimes very useful, and more than not very difficult to get rid of. The reptilian brain (or survival brain or part of the relict brain) operates on instinct and is responsible for survival functions of the body. This part of the brain controls autonomic functions (e.g., heart rate, respiration, body temperature) and is responsible for reflexive actions in response to stress and trauma such as crying out for help, fighting, fleeing, freezing, and feigning death. This part of the brain acts very quickly, more quickly than the neocortex.

This time will be different and I hope a lot better. The madness in the market over the last 50 years provides enough lessons,
Kindleberger, 2000, pp. 77-78; 122-29), Edward Chancellor, Devil Take The Hindmost: A History of Financial Speculation, New York: Farrar, Straus and Girous,1999), ch. 3.
The fallout from the virus "managment" by various governmentsa round the world, will provide the impetus.

best
the gnome

There are some minor details that people miss in the market, in all the froth and bubble and delusion...

Knut Wicksell the Swedish economist of the XIXth century
attracted much of the attention for his theory of interest. Readers wishing
to deepen the analysis can refer to Charles’ Gaves book, Stagnation or Burst?
https://web.gavekal.com/books
In a nutshell though,
not one but two interest rates drive market cycles: a “natural” rate of the economy, and
a financial “market” rate. If, for instance, the market rate is higher than the natural rate,
investing is worthless, and the economy contracts.
We here apply the Wicksellian analysis to the book value of, say, the S&P 500. A good
proxy for the market rate is the 10Y US T-Bond rate. If the book expands faster than the
market rate, buy the S&P index. It means that investing in tangible productive capacities
is worth it. Alternatively, safely buy US T-Bond. In such a situation, tangible investments
are destroying value - not a good sign for equity investors.

For the first time since the end of the subprime crisis in 2009, the S&P 500 book stopped
growing on December 31st, 2020 over 12 rolling months. The US market momentum is
therefore fully supported now by intangible value.
This does not mean that the US equity edifice is falling apart; intangible value generates
much higher yields than tangible value, as we will see in upcoming publications. However,
it does mean the tangible pillar is showing signs of weaknesses. The 10Y US yield priced
at 0.9% is low by historical standards, but still too high to support book value expansion

good luck punters

the gnome

and last but not least, we cross to Jeremy Grantham ... who has been around a bit ...

Grantham, who founded US asset manager GMO, argues that the long bull market we've experienced since 2009 has now matured into a "fully-fledged epic bubble", which will "be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000".

"today's wounded economy is totally different: only partly recovered, possibly facing a double-dip, probably facing a slowdown, and certainly facing a very high degree of uncertainty".

Despite this dour economic outlook "the P/E [price to earnings] ratio of the market is in the top few per cent of the historical range and the economy is in the worst few per cent".

"My best guess as to the longest this bubble might survive is the late [northern hemisphere] spring or early summer, coinciding with the broad rollout of the COVID vaccine. At that moment, the most pressing issue facing the world economy will have been solved.

"Market participants will breathe a sigh of relief, look around, and immediately realise that the economy is still in poor shape, stimulus will shortly be cut back with the end of the COVID crisis, and valuations are absurd."

Of interest to the smarter investors is that CEY's PE ratio is at near historical lows
https://ycharts.com/companies/CELTF/pe_ratio

No debt, plenty of cash to sustain dividend... 15 years reserves of gold production at 500k ounces per year...new board, new mngt...a few million ounces on the books in the under-explored Cote D'Ivoire...

best
the Gnome

Politicians wearing gas masks have fled the House of Representatives and the Senate chambers after rioters stormed the US Capitol in Washington.
President-elect Joe Biden and Vice-President Mike Pence have strongly condemned the violence and urged the mob to go home.
Donald Trump has tweeted false claims the election was stolen from him and told the rioters "we love you" and "go home in peace".
... at least one person was shot and soliders will be deployed.

and now we cross to Ray Dalio, in his 8th and pth chapter, of PRINCIPLES just released online
https://www.principles.com/the-changing-world-order/#chapter8
" the biggest thing affecting most people in most countries through time is how people struggle to make, take, and distribute wealth and power, though they also struggled over other things, most importantly ideology and religion,,,, how these struggles happened in timeless and universal ways throughout time, and how these struggles had huge implications for all aspects of people’s lives, starting with what happened with taxes, the economy, and how people were with each other through periods of boom and bust and peace and war, and how they unfolded in cyclical ways, like the tide coming in and out..."

Now we cross to Warren Buffet..

What motivates most gold bugs, he wrote in 2012, "is their belief that the ranks of the fearful will grow". Well, fear came to 2020 in a big way, and Buffett, 90, wasn't going to miss out. In August, his investment company Berkshire Hathaway took a £430 million ($760 million) stake in Canadian miner Barrick Gold, whose fortunes are intimately tied to the gold price.
Well he went into Barrick and between $25-30, and the price now $24.50. Lets hope he is right for 2021.

In the Dalio stakes, gold is a mighty good bet, ...

https://www.youtube.com/watch?v=8eIqwBXmcl0
He has been saying the same thing for a while now
https://www.youtube.com/watch?v=is_XT68gW-w
investing when gold was $1200-1300/ozs circa early 2019

Has the world got better?, well done .... I am with you, comfortable with my 2006/7 strategy, the GFC was just the beginning.

best
The Gnome

The price impetus in the US may well come v soon, esp if the shooting starts on Jan 6. Buckle up for an historically ugly week in US politics. On Tuesday evening, votes will be tallied in two runoff elections in Georgia that will determine which party controls the US Senate. The final margins in these two contests will be thin, and we're bracing for charges, conspiracy theories, lawsuits, and more partisan bitterness. Georgia attracted extra attention on Sunday when leaked audio emerged of President Trump pressuring Georgia's secretary of state to "find the votes" needed to overturn President-elect Biden's victory there. Tomorrow, at least one dozen Republican senators will defy Majority Leader Mitch McConnell to contest the presidential outcome as Congress certifies the final electoral vote count. There has been no spectacle like this in the US Capitol building since the contested US presidential election of 1876. There will also be angry civilians with guns in the streets of Washington this week in support of Trump's call for Congress and the courts to overturn Biden's victory. The risk of deadly violence is real.

And for light relief have a look what is happening in Peru. In November, Peru had three presidents in 10 days. One lasted six days. Elections in April. Three presidential candidates have been accused of corruption or murder and 68 of the 130 present-day members of Congress have administrative or criminal charges pending in the courts. It is a sad state of affairs.

If POG is correlated to uncertainty and civil disorder, could be in for boom times.
best
the Gnome

Before proceeding too far, lets review the predictions for 2020. Who said a killer virus would emerge that plunge the global economy into the worst recession since the Great Depression, leading to one of the biggest stock market crashes in history and the price of oil tumbling to be below zero dollars a barrel, only to be followed by one of the fastest economic and market recoveries in history... not many? Not any, so who is going to make a fool of themselves and predict 2021

Monetary and fiscal policy are the two biggest inputs to financial markets, and we don’t see any restraint in sight.

The Fed has pumped about $3 trillion directly into the financial system this year, mostly via its purchases of bonds, increasing its balance sheet assets to $7.24 trillion.

It’s planning to continue to pump $120 billion into the bond market every month for as far as the eye can see while keeping interest rates at zero well into 2023.

Political morederation is back on the rise, with some notable exceptions. If history is any guide, political moderation is great for financial markets. Consider the 1950s and the 1990s, when the ideological differences between Democrats and Republicans were relatively small. We’re not there yet, but the 2020s have the potential to be very friendly to financial assets.

So dont hold fiats is the short of it all, but get into REAL ASSETS asap . Real Estate is starting to move up, esp in Oz, share makret with certain sectors moving nicely, and gold will move very well. I am still thinkning there is a lot of gamesmanship int he bitcoin world (as noted previously).

The virus has now predictably mutated and will probably continue to do so, the vaccines will need to mutate as well, and the impact on businesses is problemtaical. People will go through lockdowns of various degrees, and borders will shutter shut and open according to politcal processes .. sceince seems to be missing out in Oz.

Given attention spans seem to be down to 8 seconds, perhaps trying to predict a year ahead is too mcuh to expect. Perhaps lets try to do the next 3 months?

Good luck, but my prediction is gold and gold miners are going to do very well. Gold miners with good leadership, fincial discipline, excellent onsite managment and TIER ONE gold orebodies will excel. Gold exploration companies (juniors) will do well if they have the right financial structure aligned with a good experienced balanced exploration team (these are in very short supply)...

good luck all, and esp. those in the UK!

the Gnome

Thanks Mr T

The fundamentals are that the volume of the sampling of the ore/mineralisation by drilling is minute compared with the volume of the ore. Statistics does not change this. Also the next problem is the sampling is 1 dimensional, and generally orebodies are 3dimensional. There are 2 ways to get around this

1. Drill more holes (in lots of different directions). This is VERY expensive and slow
2. Use some geophysical method which images what is between the holes in a relevant way. This is less additional cost, but depending on the physical character of the mineralisation contrasted against the alteration or host rock, may or maynot work. I suspect they have not done any of this at Sukari.

What they should be doing is continually reconciling their model (shape and volume) predicted by using whatever relevant statisitcal algorithm, against what was actually in the ground, and if there is a difference (generally there is), then parameters on the statistical algortihm are changed to cause improvement. Repeat ad-nauseum. As an investor you often do not see this sort of work being reported.

Word of tougher lockdowns int eh UK? Grief! Good luck all.! We have still got state borders shutting and opening with gay abandon causing utter pandemonium for anyone trying to plan a holiday let alone run a national (lets not think about international) business. This is not going to end.

best
the gnome.

This report looks at the underground mining porposition, for caving. The key take home to me is

"Unfortunately, the inadequate underground exploration
drilling limited the resource classification and confidence levels, having
inadequate drilling to represent the vast footprint block cave area.
Consequently, the head grade and the modelled grade required annual
revisions. The head grade and modelled grades diverted from each other
more than once, despite all the numerous studies with minor and
significant model improvements."

This is a never ending story, and it runs from the massive undersampling completed by drilling in all mines around the world. Typically the effective physical sample of the ore volume, by the drill (volume) runs at about 0.008%. So in between these drill lines (1D) of information we have interpolation and extrapolation using various algorithms to try to derive a 3d volume of ore. If the orebody is heterogenous in 3D, then simply the task of estimating the volume and geometry of the ore is mathematically and statistically unsolvable, and at best an educated guess. Of course this has never stopped a well meaning Geologist from doing such a calculation and swearing on a stack of bibles that the result is accurate to +/-10%?!
Some orebodies are less heterogenous than others, and nature has been kind to the geologist (porphyry coppers?). Some are more predictable due to structural controls and patterns that are understood. Others are chaotic.
The key in my experience is to have a very good Mine Geologist fully focussed on resource development and understanding, and to retain that geological knowledge in the mining operation for as long as possible.
Getting the resource modelling side wrong is very limiting and can be very exensive. The limiting factor on the expansion of the massive Olympic Dam deposit in South Australia is heterogneity of the geomet zones. It is arguable whether the deposit will ever payback its capital.

best

Hi Sotolo,

There is some v interesting machinations going on in the bitcoin market, as its price blasts onwards and upwards. One of the key protagonists is a very interesting guy, who has a fair bit to say, and who has put a very sizable bet on the table (?$2.5b?). His talk follows his money, and his investments in December alone qualify him as a whale, and to me he appears to be moving the bitcoin value, single handledly. A dangerous lead. Perhpas he has not read about the Hunt borthers and their foray into the silver market. Of course there are some differences and this itme it will end differently.
The strategy has been more than good for Saylor, who claims to personally own nearly 18,000 Bitcoin, and for MicroStrategy, whose stock has risen from about $92 in mid-March to nearly $400 at the end of the year. The price of Bitcoin rose more than $10,000 in December alone.
The argument that Saylor uses for bitcoin, is similar to the argument for gold, and is worth listenting to.
https://www.youtube.com/watch?v=CTA3PKB4PoI

China's digital currency (DCEP) is coming along after 5 years plus of development. Its different and is issued by the central bank, which makes it totally different from cryptocurrencies like bitcoin and Facebook Inc's Libra. Since all currencies issued by the central bank are debt, the nation will use its power to guarantee the digital currency's repayment for credibility. Like Bitcoin, DCEP utilises a blockchain technology which acts as a universal record of every transaction ever made on that network, and users collaborate to verify new transactions when they occur. In practice, that means users don't need a bank if, for example, they want to pay each other, perhaps with their phones. Interesting in taking away some of the unnecessary financial infrastructure- banks- who have shown they are inefficient at being able to trace the money laundering rife aorund the world, as well as a host of other things that have led to them immolating their social liscenses to operate as far as I am concerned. So there is good in the new crypto system.
So the question of trust arises, and one asks who do you trust more? Banks, Facebook, Governments, China? And is the government going to get in the way, and if so how.
China's regulatory authorities announced on Dec. 24 that Alibaba is under investigation on suspicion of violating the anti-monopoly law. Ant Group, the financial company under the umbrella of Alibaba, also faced questioning and guidance from financial authorities. Facebook, not to be outdone is facing its own trust issue as filed inthe courts in USA. Ten Republican attorneys general, led by Texas, are alleging that the two companies cut a deal in September 2018 in which Facebook agreed not to compete with Google’s online advertising tools in return for special treatment when it used them...
Who would you trust? Who have your trusted so far? Gold (its not perfect but then what is?)?

best
the gnome

"We seem to have this idea that you can just print money and throw it at any problem that we have," he said.

We are in danger of really damaging our own children. They will not say of us that we have handed on a country in great order.
"That was part of the message in 1996: the need to end the intergenerational theft when you're winding the debt back. We need to be more productive, we need to build a stronger economy. It will create more jobs, it will lower your tax burden."

— John Anderson, former deputy PM of Australia

Good luck to all the investors and punters in the New Year! Things can only get better?!

For those requiring some light reading "The great imperial hangover" by Samir Puri is and engaging and balanced read
https://www.amazon.com.au/product-reviews/B07ZQTJG68/ref=acr_dp_hist_5?ie=UTF8&filterByStar=five_star&reviewerType=all_reviews#reviews-filter-bar

the gnome