The Flying Frisby - money, markets and more

‘Due to our low tax policy . . . revenue has increased.’John James Cowperthwaite, Hong Kong Financial Secretary, 1961-71Fourteenth-century Tunisian, Ibn Khaldun, is probably the greatest philosopher of the Islamic Golden Age. In his magnum opus, The Muqaddimah, he wrote: ‘In the early stages of an empire, taxes are light in their incidence, but fetch in large revenue. As time passes and kings succeed each other, they lose their tribal habits in favour of more civilised ones. Their needs and exigencies grow . . . owing to the luxury in which they have been brought up. Hence they impose fresh taxes on their subjects . . . and sharply raise the rate of old taxes to increase their yield . . . But the effects on business of this rise in taxation make themselves felt. For businessmen are soon discouraged by the comparison of their profits with the burden of their taxes . . . Consequently, production falls off, and with it the yield of taxation.’ Never mind his own Islam, he might have been describing Rome or Greece before, or Britain or the US after. Low taxation and small government accompany the ascent of great civilisations, high taxation and big government their demise.It may be counter-intuitive, but it is an observation that goes back centuries. Low tax rates often bring in greater revenue, while higher tax rates bring in less.Khaldun was not the first to make this observation. It was the guiding philosophy of the fourth caliph, Ali. Take great care, he instructed his governors, ‘to ensure the prosperity of those who pay taxes. The proper upkeep of the land in cultivation is of greater importance than the collection of revenue for revenue cannot be derived unless the land is productive.’ If conditions are bad, then suspend taxes, he advised. “Do not mind the loss of revenue on that account, for that will return to you one day manifold in the hour of greater prosperity of the land and enable you to improve the condition of your towns and to raise the prestige of your state.”Hong Kong’s John James Cowperthwaite acted by the same philosophy and would always push for the low- or no-tax option. Eventually, ‘funds left in the hands of the public will come into the Exchequer’, he said, but ‘with interest’.In 1924, US Secretary of the Treasury Andrew Mellon wrote, ‘It seems difficult for some to understand that high rates of taxation do not necessarily mean large revenue to the government, and that more revenue may often be obtained by lower rates.’But perhaps the most famous proponent of this argument was the American economist Arthur Laffer.In 1974, Laffer was having dinner in Washington DC with two of (recently impeached) President Richard Nixon’s former advisers, Dick Cheney and Donald Rumsfeld, as well as a writer for the Wall Street Journal by the name of Jude Wanniski. Laffer was arguing that the incumbent president Gerald Ford’s recent tax increases were flawed and would not lead to increased government revenue. To illustrate his argument, so the story goes, he drew a curve on a napkin showing the relationship between tax rates and revenue. At very low rates of tax, government revenue is low; but it is also low at high rates (because the economy is weaker, profits are down, earnings are down, evasion is higher and so on), so the curve is bell-shaped. The top of the bell is the point of maximum revenue – that is, the sweet spot at which to place tax rates if your goal is to maximise government revenue. Laffer’s argument caught the imagination of those present; Wanniski would later dub it ‘the Laffer Curve’, even though Laffer later stressed, ‘The Laffer Curve, by the way, was not invented by me,’ and mentioned many others, from Keynes to Khaldun, who had observed the same phenomenon (perhaps we should call it the Fourth Caliph Curve). As President J. F. Kennedy once said, ‘It is a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates.’ It is a lesson that mankind continually seems to forget, and one that continually needs re-teaching. Hence today’s post.(That was an adapted extract from Daylight Robbery, How Tax Shaped our Past and Will Change our Future). This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

You might call it the cable that changed history.In the mid-19th century there were various attempts to lay cables across the Atlantic Ocean between Britain (Ireland) and the US. It took several failures, numerous bankruptcies and over ten years before they got it right. But eventually they did and on July 27 1866 Queen Victoria broadcast a message to US President Johnson. Here’s what it said: Osborne, July 27, 1866To the President of the United States, WashingtonThe Queen congratulates the President on the successful completion of an undertaking which she hopes may serve as an additional bond of Union between the United States and England.Johnson replied:Executive MansionWashington, July 30, 1866To Her Majesty the Queen of the United Kingdom of Great Britain and IrelandThe President of the United States acknowledges with profound gratification the receipt of Her Majesty's despatch and cordially reciprocates the hope that the cable which now unites the Eastern and Western hemispheres may serve to strengthen and perpetuate peace and amity between the governments of England and the Republic of the United States.(Signed) Andrew JohnsonMoney is a form of communication technologyTo send a message by ship could take ten days or more. Now it was a matter of minutes. So somebody came up with the slogan "two weeks to two minutes".Transmission speeds improved rapidly. Morse code became words. It was soon possible to send multiple messages at once. By the end of the 19th century, Britain, France, Germany and the US were all linked by cable.Personal, commercial and political relations were altered for all time.Back then gold was money of course, as were paper notes representing gold. You couldn’t send gold down the cable, however, nor paper. But you could send a promise.And, within a fortnight of Queen Victoria’s message, that’s what two parties who trusted each other did. An exchange rate between the dollar and the pound was agreed and then published in the New York Times on August 10.That is why, to this day, the pound-dollar exchange rate, GBPUSD, is known as cable.Promises, promises, promises“All money is a matter of belief,” said Adam Smith. He had a point.Look at a twenty pound note (if you still use them) and you will see the words “I promise to pay the bearer”. Money is promissory.Of course, promises disappear. Gold doesn’t. The two are quite different forms of money: one is belief, the other is real. Nevertheless, since the dawn of civilisation, we have been using promissory money. In Ancient Mesopotamia, man used mud tokens - a cone or a sphere- representing sheep or barley, baked inside clay balls to log debts owed. Over time, he found it more efficient, rather than bake tokens in balls, to inscribe pictures of the tokens in the mud for the same purpose. That is how the first system of writing came about. In Ancient China, man recorded his debts on bits of leather. After the invention of printing he started using paper. Today the promises are recorded and exchanged between trusted third parties on computers.Millions, probably billions of promises are sent across the internet every second, transferring as quick as words, probably quicker. Not only does (promissory) money evolve with communication technology, it is often the spur, the impetus for communication technology to evolve. Now bitcoin, with its blockchain, obviates the need for trusted third parties altogether. That is one of many reasons it is so special. Here is a money communication network backed instead by mathematical proof and the most powerful and resilient computer network ever known to man: the trusted third party is the blockchain.Why would you not want to own a share of such a breakthrough technology? That, effectively, is what owning some bitcoin is – owning shares in a new monetary technology. And it’s not like they are doing any roll backs.Money has evolved like languageMy purpose with this is to illustrate a point: if you’re sending important promises, you need good communication tools. What is money, then, but a form of communication?Let’s explore further. It’s often said (by me at least) when considering politicians: look at what they do, not at what they say. What we do says more about us than what we say. What we do with our money says even more.And what we do with our money communicates value, not just between buyer and seller, but across the economy. What is the price of this thing? What is its value? The answer is constantly being sent and received, digested and acted upon; and so does the economy constantly, incrementally evolve and develop with each new signal: the how, why and when, of what needs producing and where.Money then is like a language. Constantly evolving and changing. Nobody is really in charge. Not even central bankers. Our fiat system wasn’t really planned. It has just constantly evolved, with billions of people contributing in their own different ways simply by using it. The architects of fiat money did not pla

Thousands of years before the dawn of civilisation, as prehistoric man hunted and gathered his way through the Stone Age, he came across 6 metals - the six native metals, which occur in nature in a relatively pure state: silver, tin, lead, iron, copper and gold. He found gold in river beds - nuggets, mixed in with sediment, relatively easy to collect and shape.Man adorned himself with it - as well as with bones, teeth, precious stones and shells. This was long before the Bronze Age and the discovery of smelting, when he started using copper, tin and lead.The oldest records we have of man using metal are fragments of gold in Spanish caves inhabited by Paleolithic Man, dating back perhaps as much as 40,000 years. The first records of man using copper came tens of thousands of years later. Lead, tin and iron’s first use came even later.The beauty of gold - dense, glimmering, shining - as well as its imperviousness no doubt captivated Stone Age Man the same way it does his 21st century descendants. We are the same animals, after all, with the same instincts.Gold is symbol of power and status, and of reproductive fitness - look at me I have access to this shiny substance. Like shells, bones and stones, even hand axes - gold was not only used as decoration, but as reward - as an expression of gratitude, as a prize for completing a task, for heroic deeds, as a tool in barter and exchange. In other words, it functioned as early money. Even in prehistory gold was performing the role it has always performed - and always will: to store and display and exchange value.Stone Age man had the same instincts we do today - the same urges, desires and compulsions. Survival is the most basic compulsion. You have to find water, food and shelter, for yourself and for those close to you. Then there is the survival of your species: you have to reproduce. If you survive, thrive and reproduce, so does the species as a whole grow stronger. Our self-interest is good for the species as a whole. And so we have the same basic instincts: fear, desire, love, hate. What often goes unmentioned is our instinct for beauty. What we find beautiful is often good for us in some way. It is why man has always sought beauty.We are instinctively repulsed or alarmed by things that are dangerous – snakes, spiders, a cliff edge, loud noises. Things that aid our survival we find beautiful - the sound of running water, a fit and healthy potential mate, an open landscape with water, varied animal, bird and plant life, good visibility and shelter. With its unique characteristics, beautiful yet impervious, gold found special status in our psyche even before the dawn of civilisation. Our prehistoric ancestors cherished it before they were able to speak. Our instinct for gold, the emotion it inspires, is as eternal as the metal. It is a primal instinct.Beauty is truth, truth beauty,—that is allYe know on earth, and all ye need to know.John KeatsADDENDUM: Good point from tinopener1A version of this article originally appeared at Glint. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

With the entire crypto sector crashing – I thought I should give you some thoughts on bitcoin this morning.Needless to say, it’s not pretty.At all.Faith in crypto has been battered, in most cases, quite rightlyThis time last year, bitcoin went on one its monster runs above $60,000. It then had one of its monster crashes. I can’t remember if it was in Moneyweek or on Twitter, but somewhere I suggested that a reasonable target for the correction might be $20,000. $20,000 was the old high from the 2017 boom and bust and an obvious pivotal price point.But the correction stopped at $30,000, or just below. The conclusion I drew – and on current evidence wrongly drew – was that, as bitcoin matured, its volatility was declining. The 90% corrections of previous bull markets were now 50-60% corrections.Bitcoin had a second run above $60,000 in the autumn, followed by another of its humongous corrections, and lo and behold, $30,000 held again (actually just below, but I use round numbers as they are more readable).As an asset, bitcoin has become highly correlated to the Nasdaq and tech stocks and, as we all know, tech stocks have been walloped. Peloton, for example, which we wrote about yesterday, is down over 90%.So over the past fortnight, I was quite encouraged to see bitcoin holding up quite well relative to other tech stocks. $30,000 looked like it was a floor.Then we got the collapse in the protocol Terra, and its so-called stablecoin UST, and the sector has been absolutely battered.This is big, and it’s going to take some recovering from. The bubble of 2016 was verging-on the-fraudulent ICOs. Today it’s staking and stable coins. The yields on staking – over 20% in some cases – were unsustainable and so they have not been sustained. (If you’re baffled as to what I’m talking about here, don’t worry, you haven’t missed out and at this stage it’s very much for the best). Hundreds of thousands of people have lost money, in some cases fortunes, and as someone who has lost big money in the past, I offer my deepest sympathy. You start blaming yourself for your greed and stupidity, you feel huge shame, worse you start thinking you have betrayed your family, you think you will never get your life back and you sink into a horrible depression. In some cases, people will feel suicidal. I’ve been there (although not the suicide bit) and it is not nice. Yes, you made a poor judgment and it has cost you, but you haven’t betrayed your family. You were only trying to better your lot and thereby make all of your lives better. There is nothing wrong with that. The reputational damage of this episode to crypto is considerable. All those who declared that “crypto is a fraud” are now looking wise, while those, myself to an extent included, who made the argument that bitcoin is a hedge against currency debasement are looking stupid, given that it is off some 65% from its highs.Bitcoin will survive (again) but it’s likely to hit $20,000 and could go even lowerOf course, bitcoin and crypto are not one and the same. Bitcoin remains a product of technical and open-source genius, but forever in its wake, and surrounding it, are disasters, gaffes, frauds and scams. Altcoins, NFTs, the Metaverse, Defi, staking, whatever the latest buzz thing is – all of it is puking value, and the bubble has well and truly burst. Again.And there lies the keyword – again. This is not the first time this has happened, and it will not be the last. And, for all the junk that surrounds it, bitcoin keeps on keeping on.The sector has lost some $1.7trn in value. That is a number similar to the subprime losses that triggered the Global Financial Crisis. But in crypto there are no bail outs. As I write it sits at $27,500. I would have thought we will see a retest $20,000. All the better if not. Oddly this episode might prove good for bitcoin in that it will produce a lot more bitcoin maximalists and hodlers.We hope $20,000 holds, but these are horrible, horrible, horrible markets – and I’m not just talking about crypto. It was oil going bananas in 2008, rising to $150 a barrel, which triggered that collapse. It seems like something not too dissimilar is happening now, following oil’s spike to $130 last month.There will be a lot of forced sellers out there – leveraged players across the board. So we are going to see a lot of liquidation. My advice, if you own quality assets, and you don’t have to sell, is not to. Gold, bitcoin, good companies – whatever. Their price may go lower, but if you are not confident you can beat the market, then don’t sell. Because just as bubbles always burst, so does quality always come good. And bitcoin itself – I’m not talking about other crypto – bitcoin itself is a quality asset: the single-most resilient information technology system in the world, backed by the most powerful computer network ever created.There’s even a chance it could go back to its corona-panic lows of March 2020. Heck, everything else seems to be going that way. That

Did you buy a Peloton in the lockdown? I know a couple of people that did. I nearly did. I certainly looked at them online and lusted after one. But then I didn’t get round to buying one. Can’t remember why not. It might have been the waiting list. It might be because I don’t have anywhere to put it…The tech bubble has well and truly burstA Peloton, by the way, is an indoor exercise bike that comes with an app with loads of classes built in, so you can have someone shout at you while you cycle. They do treadmills and things as well.Peloton Interactive (Nasdaq:PTON) was one of the go-to stock darlings of the Covid tech boom. It IPO’d in September 2019 at $29 a share. The IPO price was probably a bit high because over the next month the stock fell by a third to $20. It rallied a bit, but at the height of the Covid panic in March 2020 it sunk even lower to $17.Then people like me started wondering how we could exercise during a lockdown. Over the next nine months the stock went up ten times. By January 2021 it was $171. Then it started falling. Yesterday it hit $11.That’s a fall of somewhere between 93% and 94%. It’s now trading at roughly a third of the IPO price. It can still fall by another 93%.But I still think I want a Peloton. Though where would I put it?Netflix (Nasdaq:NFLX) has gone from $700 in December to $177 yesterday. It’s “only” fallen by 75%. But my kids still watch Netflix. I don’t. But that’s because I’m a stroppy old grinch who doesn’t like TV. I can’t bear actors with shoddy diction, you see, and there are rather too many of them. They brutalise the language and nobody seems to care (except me). Another example of falling standards.Amazon (Nasdaq:AMZN) has gone from $3,773 to $2,177 yesterday. It’s “only” down 43% and it actually makes money. Or so I’m told.Whatever, I still use Amazon ALL the time.The tech bubble has well and truly burst. But tech companies are a lot more real than they were in 2000, last time around.The bursting cannot be blamed on Vladimir Putin and the war in Ukraine, I don’t think. It was a speculative bubble and speculative bubbles, even though they can go on much longer than is “rational”, pop. Suppressed interest rates and digital money printers endlessly brr-ing keep them going, but one day they pop.And it’s not like these declines are confined to Nasdaq stocks.Over the last week the defi protocol Terra has fallen by over 90% and, in doing so, collapsed the entire bitcoin and cryptocurrency ecosystem. We are deep in the bleak cryptocurrency midwinter and eyes are bleeding.Over in the similarly stupidly speculative sector that is junior mining, pain is apparent across the board. Markets are puking. Selfies of speculators now seeking work at McDonald’s abound.The bearish factors at play are obvious - the war in Ukraine, rising geopolitical tension, inflation, interest rates that don’t reflect inflation, fear that interest rates will soon have to reflect inflation, and the likely popping of the global debt bubble.Ukraine aside, these aren’t anything new, it’s just now they all seem to matter, when previously they didn’t.Where can you hide? Bonds are tanking, stocks are tanking, commodities are tanking, precious metals are tanking, crypto is tanking, even cash is tanking – in that it’s losing 10% of its purchasing power every year.Well, that last point may be true, but during a global margin call, cash suddenly starts to look valuable. The good thing about bear markets is that they don’t last forever. I don’t know when this one will end, but it will end, eventually.At a certain point, real businesses with cash flow are going to look very attractive - if they don’t already.The secret I guess is to look around at all those companies you wanted to buy when times were good. Have they changed? No? Well, now’s your chance to pick them up at a discount. When TVs and computers are on sale, people queue overnight round the block to get their bargains. When stocks are on sale, everybody panics and sells.The lesson is to always keep some cash in reserve for times like this. The problem is you spend it when you think something is cheap. It falls by more and you don’t have any cash left to buy it when it is cheaper.Gosh these markets are difficult. The sheer speed of the declines over the last month have been extraordinary.Are we at peak panic yet? I can see lots of opportunities out there. But I don’t think we are quite at the final flush point yet. But I dare say we are not that far away.This would seem to be a bear market of the grinding variety. Far more painful than the short and sharp crash-boom variety we saw during Covid.Stay safe! Awful expression, but I guess in this case it means don’t use too much leverage. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

There are about 65 million people in the UK and 60 million acres of land – almost enough, in theory, for an acre each. (It’s not quite that simple, of course, and not all acres are equal.) Yet about two-thirds of the land – 40 million acres – is owned by fewer than 6,000 people. Land is the most basic form of wealth there is, so if there is a more telling statistic about the unequal distribution of wealth in this country, I’d like to know what it is. And it’s been that way since 1066.Today, so distorted is our system of taxation, many landowners actually receive subsidies for for land. The rest of us, meanwhile, must pay council tax. The largest landowners, whether families or institutions, exploit tax loopholes. Some families pass land from one generation to the next via the tax avoidance vehicle that is the trust, while the rest of us must pay inheritance tax.The complexity and inconsistency of our tax systems are to blame for so much wealth inequality. One group - large institutions, the super-rich, the government - has the resources to find the loopholes and exploit them, the rest of us don’t: and so pay more on a proportional basis. Complexity allows there to be one rule for some and another for everybody else.About the only way the person who starts out with nothing can improve his or her lot is through labour. And yet we tax labour constantly and heavily. The worker pays the vast majority of taxes: 40% of government revenue comes from income tax and national insurance, with another 20% from VAT.The wealth of the super-rich does not derive from their labour, however. It derives from the appreciation in the value of their land, their houses, their stocks, their shares, their bonds, their fine art – what economists call their assets. These go untaxed, unless you sell. So most don’t.If you want to redistribute wealth naturally, rather than via the moral minefield that is state re-allocation, the answer lies in changing the way we tax people.Instead of taxing our labour – what we produce – why don’t we tax what we use? Instead of taxing the wealth that is earned, why don’t we tax the wealth that is unearned? I’m talking about land. Nobody made the land. Nature gave it to us. By building on it, or farming it, or mining it, you have improved it, but the land itself was always there. So let us look solely at the unimproved value of the land. This is easy to assess.Obviously real estate in city centres commands an extremely high value, remote rural farmland very little.If you want the right to occupy a piece of land, and you want the government to protect your title to that land, then a rent should be paid to the community that reflects the value of that land, because it is the needs of the community which have given that land value. The least bad taxWhat I’m describing might sound extremely left wing, but the granddaddy of rightwing economists, Milton Friedman, described it as the, “least bad tax”: that is LVT – land value tax.Who would pay the most if we hand land value tax in the UK? Whoever occupies the most valuable real estate. The Queen (she owns most of it - or rather the crown does), the Duke of Westminster (or rather the Grosvenor Trust, which owns the land), the Duke of Buccleuch, the Duke of Atholl, Captain Alwyne Farquharson, pension funds, utility companies and large government bodies such as the Forestry Commission and the Ministry of Defence.The late duke may have been a canny businessman, but he did not invent anything new, he did not bring some amazing new product or service to the world, which we all wanted to use. His ancestors benefited from the corn laws 200 years ago and the estates were built. Now planning laws are such that few can build anything new. The estate, which owns some of the most desirable land in London, was effectively handed a monopoly and the duke made good from the fact that so many people want to live and work in London.There’s big money to be made in land banking but there is nothing creative about it. You are not bringing anything new to the world or improving it. It is simply exploiting the restrictive planning laws in this country that prevent progress and money supply growth. It is crony capitalism at its worst.If you don’t want to pay land value tax, you don’t have to. This is a tax that is voluntary. You simply sell the land to someone who is prepared to.The amounts of tax payable are clear. It’s an easy tax to administer. It doesn’t require 10 million words of tax code. And there need be no loopholes. The land is here – it is not in the Cayman Islands – and you are the owner.The Green party actually has LVT in its manifesto, but it has it in addition to other taxes. LVT should replace other taxes.Remember the mantra: don’t tax labour, tax land. Not only would it make for a much healthier, happier and more productive society, it would make for one in which wealth is more fairly distributed and one in which the relationship between government and citizen is held

Stock markets have taken quite a tumble this past week or so, and there has been a great deal of noise about the end of the tech bubble. Even with some 70%-plus corrections, many tech companies’ valuations remain extraordinarily high. What seems to have gone rather less reported is the extraordinary battering that metals have taken too. Whether base or precious, ferrous or platinum group, Russia-centric or dispersed, they have been walloped. The reason? Their nemesis has risen…The US dollar is the most important price in the worldWe have have been fretting about the US dollar for some time now. A year ago in June, over at Moneyweek, we wrote that “everything hinges on the direction of the dollar” and then in November we warned investors to “beware - the most important price in the world is rising”.We were worried, first, it would rise and then that it was rising. Well, talk about risen.The US dollar has been, of late, doing its best impersonation of bitcoin on one of its bull runs. It’s gone parabolic. And right now, it’s at a particularly critical juncture.The problem with the dollar is that, when it rises, everything else tends to go down the swanny – generally speaking, of course. It’s a bit of a chicken and egg job. I’m never quite sure if the dollar is rising because everything else is tanking, or if everything else is tanking because the dollar is rising.In any case, we speculators prefer an environment in which asset prices rise and the dollar falls. We may give it the big one about the Federal Reserve’s money printing, but we still want them to do it – if it means the well being of our portfolios is preserved.Central bankers and politicians are not the only hypocrites!But back in June we identified two key levels for the US dollar: 88-9 and 103.This is the US dollar index we are talking about here. That’s the US dollar measured against the currencies of its major trading partners – the euro and the Japanese yen mostly, with a bit of pound sterling, Swiss franc, Canadian dollar, and Swedish krona thrown in.The only currency that has been outperforming the dollar of late has been the Russian rouble. Go figure. But note that one is the petrocurrency and the other is gas money. Fossil fuels pay. Indonesia should start demanding rupiahs for its coal (it’s the world’s largest exporter).In any case, after its bonanza of the last 12 months, the dollar index now stands at 103. With the exception of the dotcom bust era 2000-2002, this would be as high as it has been since 1985, when the G5 nations had to get together and agree to devalue it.Yet even with its relative might, US inflation still stands at 8.5%. That’s fiat currency for you.Investors should pray that the US dollar starts falling from hereI cannot stress enough what an important technical level 103 is. If the dollar goes above 103 and stays there, what is currently an eye-watering situation is going to become eye-bleeding.If it makes a high here, or does a false move and a fast one in the other direction, then the long metals, anti-US dollar, inflation trade is back on.In fact, it’s pretty extraordinary how well metals have done this past year, given US dollar strength. That’s shortages and years of under-investment for you. Wait and see what happens to them if the dollar starts falling!In any case, let’s take a look at the long-term chart of the US Index to give you an idea of where we are in the grand scheme of things.This recent rally looks miniscule on the 40-year chart, but let me tell you, it’s been quite something. As anyone who followed it through 1984, 2008 and 2014 will tell you, parabolic US dollar moves can go on longer than you think. But dollar moves also tend to end with spikes such as the one we have just seen. And 103 is an obvious place for a spike to end. The Fed has raised the federal funds rate by 50 basis points at its rate-setting meeting this week, as expected, and the pressure has eased off. But one wonders if general geopolitical jitters are a bigger factor here.Bottom line - and without trying to second guess policy-makers - if we get a move above 103, 120 comes back into the frame. That really would hurt. Below 103, pressures ease.But in this increasingly nuts world, the only real surprise seems to be no surprises. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

I was lucky enough to attend the Students for Liberty conference, LibertyCon 2022, in Prague last weekend.Oh, my goodness. What a beautiful city is Prague!I’d never been before, but I shall be returning ASAFP.While there, I heard a talk by Li Schoolland, a Chinese-American business woman, who is the Director of External Relations Asia Pacific for the Acton Institute. She fled China in 1984, having survived Chairman Mao’s Cultural Revolution.She made the case that China, not the US, is the “paper tiger”. What did she mean and what does it imply for investors and the Chinese economy?China is in troubleThe expression “paper tiger” is used to describe something that appears powerful or threatening, but is in fact weak and vulnerable. The term was made famous by the notorious chairman of the Chinese Communist Party and founder of the People’s Republic of China, Mao Zedong, in 1957. He said: “All the reputedly powerful reactionaries are merely paper tigers. The reason is that they are divorced from the people. “Look! Was not Hitler a paper tiger? Was Hitler not overthrown? I also said that the tsar of Russia, the emperor of China and Japanese imperialism were all paper tigers. As we know, they were all overthrown.“US imperialism has not yet been overthrown and it has the atom bomb. I believe it also will be overthrown. It, too, is a paper tiger”.There’s rather a lot to unpick there. As time is of the essence, we shall ignore that classic of the Godwin’s Law genre (whoever mentions Hitler first loses the argument), as well as the hypocrisy of criticising authoritarian rulers for being divorced from the people when you are an authoritarian ruler.Schoolland’s main argument was that today China’s regime is “divorced from the people” and so is a paper tiger. As an authoritarian, corrupt and often incompetent planned economy, it is vulnerable. The events of the past week would seem to bear her out.“Don’t buy Chinese stocks!” she said. There are so many frauds. Many exist solely to secure funds, with no operating business behind them. Over 60% of China’s market capitalisation is state owned. “If you buy stocks, you are supporting an authoritarian regime.” Even something like TikTok (ByteDance is the parent company) is “under the regime”. I’ve been unable to verify this: but Schoolland argued that, never mind its use as a surveillance tool, if you read the small print, then once uploaded, your videos effectively become the property of the Chinese state.Like TikTok, central bank digital currencies (CBDCs) – a field in which China very much has the lead – are a useful surveillance tool. Those tools will now be used on all those athletes who downloaded money apps during the Olympics. As well as to control, they will be used to market stuff. The app will know if you need a loan, say, as well as what type of loan and what your circumstances are, and so will begin marketing financial products to you.Property is no better as an asset class. Over 30% of the build cost of a property in China is government bribery, she says. I’m not quite sure how you verify that figure, but it doesn’t sound implausible.Meanwhile, despite all the pictures you might see of amazing buildings in China’s cities, says Schoolland, more than 43m people still live on less than a dollar a day – although that has come down from more than a hundred million in the 2000s.China is heavily indebted too, which makes it vulnerable. Its debt-to-GDP ratio, Schoolland argues, is greater than the stated 70%. It’s closer, in fact, to 275%.Shanghai is unravelling with the extended lockdown there. Supply chains are breaking down. There is much discontent and, Schoolland insists, revolution is very much in the air. China needs a new system, not just a new leader, she says.How to play China’s efforts to revive growthThe evidence of the past few weeks hints that Schoolland may well have a point. Supply chains have been disrupted, inflation is biting – especially in food and energy prices, interest rates are being held down, the currency’s at its weakest since late 2020, international funds are selling out of Chinese assets, attempts to lure domestic investment into capital markets aren’t working, the stock market is down over 20% this year – and a slowing property market is also eroding wealth. On top of everything else, the evidence of the last two years is that viruses are beyond government control, and that lockdowns do more damage than good. Nevertheless, President Xi Jinping remains committed to “covid zero”. Irony of ironies, he blames covid on the germ warfare of “US imperialism”.But you can’t just ignore China as an investor. It’s too big. The way to play it, for me, is to be in the business of selling it stuff. President Xi has committed to boosting infrastructure construction to bolster the economy. Planned investment this year amounts to at least $2.3 trillion, according to Bloomberg. Load up on base metal mining stocks, is my advice.Base metals and their miners

When I look at the things fossil fuels have made possible for mankind, I sometimes shake my head and wonder why we loathe them so much.The energy created by fossil fuels have opened up so many possibilities for so many people. We can go just about anywhere, quickly and safely. It really is possible to experience the whole world. The trading opportunities that have opened us mean the whole world can be brought to us, without our having to leave our warm, safe, well lit homes. We live longer, better, safer lives thanks to fossil fuels. We can communicate with anyone anywhere. We have instant access to unlimited information. Billions have been brought out of poverty thanks to this unique, low-cost, reliable energy source. We enjoy lives and luxuries even the most decadent figures in history from Marie Antoinette to Caligula could never have dreamed of. Life expectancy has rocketed, As Alex Epstein says, and poverty has plummeted.We still have a long way to go, of course. Perfection has not yet been attained. I question the morality of trying to abandon these energy sources when there are still billions of poor in the world who have yet to experience the luxuries we now take for granted that have been made possible. It’s like pulling up the ladder after you’ve climbed, so that others cannot climb too.And we have got so much better at consuming these energy sources too. Even in my lifetime the smoggy air of London has got cleaner. Stone Age man would burn down a whole chunk of forest just to trap an animal. As human beings progress we get consume more energy and we consume it better.I know this is a view that many will not hold, but wake up to the benefits of fossil fuels, embrace them, celebrate them, don’t denigrate them, and for the good of man invest in them too. It’s your moral duty!They are even making the transition to renewable energy possible. That’s what so few seem to get. To get your green revolution, all the metal that’s required for wind turbines, lithium batteries and solar panels, to then manufacture and transport them on site, you’re going to have to burn a heck of a lot of fossil fuel. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

It’s a touchy subject, to put it mildly, but today we consider UK demographics. What will the UK population look like in 2035? Very different from today is the answer.I happened upon these Department of Education statistics, as you do, from the January 2021 school census. They are telling.White British now make up 64.9% of UK primary school kids, while what the DoE calls “minority ethnic” makes up 33.7% (the remaining 1.6% is unclassified). Minority ethnic means Asian (12%), white non-British (8%), black (6%) and mixed (6%) - the category my two eldest kids come under.Bear in mind that this is the whole of the UK. So it includes primary school kids in remote rural parts of the country, where British will make up probably over 90%. Where I am in south-east London in the borough of Lewisham - white British makes up a much lower percentage. I’d guess less than 20% of some classrooms.This 65/34 ratio compares with roughly 80/20 in 2006, and 85/15 in 2002. So that's a roughly 70% increase of minority ethnic in 15 years, or 125% in 19. I hope I have those calculations right - statisticians please correct me, if I haven’t. Another 70% rise in 15 years would take us to 58% - thus white British minority in primary schools - by 2035. What is the case in primary schools will within a generation or two reflect the country as whole. Demography is destiny, as the saying goes. Here are those stats visualised:You will notice a slight levelling off in the past couple of years. That will be, I venture, Covid slowing the movement of people. Possibly also some white Europeans seeing their children as “white British”, particularly as they get older and into secondary school. (My thanks to AW for the charts).Given the pandemic, it is probably not wise to adjust the trend off the last data point. Thus we project those trends as follows:At some point between 2030 and 2035, white British are likely to be a minority in Primary Schools. White British are already a minority in state nursery schools (although the headcount is much lower so as to be, statistically, not so significant).White British have long since been a minority in London. That landmark was reached in the mid-noughties. I couldn’t find the results of the 2021 Birmingham census (I gather they are not out yet), but white British are, at least according to the BBC, likely to already be a minority there too. (In 2011 they were at 53%). What to make of it all?Some will see this as a good thing - champions of multi-culturalism, those who don’t like white people or feel Britain needs to atone for the Empire and so on - others will not. Is it a good thing? A bad thing? It almost doesn’t matter what your opinion is. It is not something that British people were ever given a vote on and that is the trajectory we are now on. There are more people in the world than ever before. More of them than ever before are on the move - whether displaced by wars, by lack of water, by poverty, hunger - or whether they’re simply looking for better opportunities. Can you blame people for wanting to move to improve their lot? It’s quite natural and normal. As we have better planes, trains, and automobiles - and boats - than ever before, people are able to move quicker and further than ever before. This is a global migration of people of historic proportions, a tide in the affairs of men.As libertarian who isn’t crazy about the idea of national borders I’ve always had a fairly relaxed attitude towards movement of people. If you want free minds and free markets you have to have free movement as well. However, if you want an expansive and benevolent welfare state, then open borders don’t work. Infrastructure, transport, schools, healthcare, welfare all get overwhelmed, and locals will feel that they are not getting what they pay tax for.Free markets can quickly adapt to large scale mass movement of people. Businesses won’t complain if they have more people to sell to, or cheaper labour to employ. State systems - education and the NHS, for example, heavily unionised and regulatory, as they are - cannot move so quickly. Nor, with such restrictive planning laws, and the way land is distributed, can home building. The reality of the social democratic world in which we live today is that we do have national borders and an expansive welfare state.The UK, in the way it currently operates, will struggle with immigration levels over 200,000 a year for a sustained period. We don’t have the infrastructure. Net migration is currently at 313,000, though I imagine Covid will have changed that.My eldest son, who is an Afro-Caribbean, Anglo-Saxon, Latin, Nordic, Celt, was saying to me the other day how Britain is better off geographically than Ukraine, because, as an island, we are so much harder to invade. The immigration we have seen over the last twenty years would suggest otherwise.But how do you get the numbers down? Do you even want to get the numbers down? I gather something like 700,000 people come to the UK

It’s a national religion for some, heresy for others. Today we look at house prices.But we do not consider property through the window of the estate agent’s, but rather through the prism of an 18-year cycle, one that was brought to public attention by economist Fred Harrison is his cult classic Boom Bust: House Prices, Banking and the Depression of 2010. He published it in 2005 so, if you’re into forecasting, that’s some title…Cycles are often what you want them to beBefore we start, let me issue my usual disclaimer on cycles. Cycles exist everywhere: the seasons of the year, night and day, the life cycles of plants and animals. They exist within our own bodies in the form of circadian rhythms. They exist, sort of, in markets too – there are good times and bad times, bull markets and bear markets, four-year presidential cycles, commodity super-cycles and more. Mining companies, in particular, go through clear cycles – perhaps phases is a better word – from exploration and discovery, through development and mine building, to actual production.I’m a keen observer of hype cycles. How much of this story is known? How much more hype is left in the tin? Or is this story now tired?And cycles can make for good copy. Kondratiev made his name pedalling them. We like reading about them because they bring a veneer of certainty where there is in fact, often none.But cycles – especially in markets – are also arbitrary, random and uncertain. It’s easy for an academic to look back at history, find a pattern and declare it a cycle. When real life doesn’t fit the model, you’ll hear something like: “Well, the war upset the cycle”, or “they printed loads of money, so the cycle didn’t work out” or whatever. Cycles in markets are not fixed and predictable in the same way as the days and weeks of the year. And they are not so apparent in real time - only in the rear view mirror.You get the point. There is a certain amount of salt to pinch when it comes to cycles.Nevertheless they are useful instruments. I know some who swear by them, especially Harrison’s, whose book was clearly brilliant in its forecast. I remember thinking in 2005: “This market is nuts. It has to crash”. Many felt the same way, including many of the brightest minds in the City. A whole website - housepricecrash.co.uk – sprung up around the theme. Many of us were certain the game was about to end. Then I stumbled across this brilliantly prophetic article by Harrison in MoneyWeek saying, “No, we are a couple or three years from the top”. He was right. After last week’s missive on house prices versus gold, I was thinking about our distorted property market and the spectre of rising interest rates. The thought occurred to me that we must be close to Harrison’s next peak. Lo and behold, Merryn Somerset Webb interviewed him in the latest MoneyWeek podcast.Harrison’s short answer is that 2026 will see the top of the market. We have another three years, in other words.A quick guide to the 18-year property cycleLet me quickly explain how his thinking works. His idea – and it is more about land prices than it is house prices, though the two tend to rise and fall together – is that property tends to see 14 years of price growth, followed by four years of decline.Broken down an 18-year cycle might something like this:Harrison says he can follow prices back some 200 years to find this clear 18-year cycle at play. I don’t have all the data to cross check back that far, but I do have the data going back to 1951 (care of Nationwide), so let us at least check that. Before World War II, property was not the overpriced monster it is today. Home ownership was lower (sub-25% most of the time – most people rented from private landlords) and mortgages hardly existed (they only really reared their heads in the 1930s), so the cycle, even if visible, would not have been as pronounced as it is in today’s debt-ridden fiat era.The top of the last cycle (in the UK) actually came in the third quarter of 2007. The average house price then fell from £183,000 to £149,000 in the first quarter of 2009. It would be 2012 before the market properly got going again.There was definitely a buying window during that 2009 to 2012 period, but prices, especially in London, did not fall by anything as much as many buyers were hoping. That’s mostly because there were few forced sellers, because interest rates were slashed. Had there been, then house prices would have come down by a lot more. They fell by a lot more than 18% if you were a foreigner, however, as the pound lost a good 30% in the foreign exchange markets (measured mostly against the US dollar).Go back 18 years and you have the crash of 1989-94. Prices peaked in the third quarter of 1989 at £63,000, before falling to £51,000. Things got going again in the mid-to-late 1990s. The pound lost a lot of value in the forex markets then too.The cycle is working well.Going back 18 years further takes us to 1971-72. The 1970s were a horrible decade economi

An independent Scotland could become the richest country on earth. I’m not joking. It has all the necessary ingredients. Let me explain.Each year the World Bank, the IMF and the CIA each independently publish a list of the richest countries in the world - as measured by GDP per capita at purchasing power parity.The UK sits at a rather disappointing 26th but topping those rankings, year after year, you have the likes of Qatar, Luxembourg, Singapore, Brunei, Norway and Switzerland.(I’m discounting Ireland because its figures are distorted by the number of corporations domiciled there)Some of these nations have got on that laist thanks to their oil. But oil isn’t everything – otherwise the likes of Saudi Arabia (17th), Russia (57th) or Iran (65th) or Venezuela (don’t know) would feature.Others have got there because they are financial or commercial centres. But the same regulatory options that have enabled them to be so are open to other countries - they have just not been adopted.There is, however, one characteristic common to all the top ten ranking nations. It is that they are small. The UAE is the most populous on this list with 10 million; Switzerland 8 million; Singapore and Norway both have around 5 million; Qatar 3 million; the rest are all sub 1 million.The US (13th - 330 million) and the Netherlands (15th - 17 million) are the only large nations to feature in the top 15. In 1950, and indeed in 1970, the US was top. Back then though, its states were semi-autonomous and, on a gold standard, its money was independent. As its state has grown and power become more centralized, its ranking has slid.This is because there is a direct correlation between the size of the state and the wealth of the people - the bigger the former, the smaller the latter. The more power is concentrated, the less wealth is spread.But in a small nation, forced to live from a smaller tax base, there is more of a limit to how big state institutions can grow. Monitoring becomes more efficient, it is harder to obfuscate, so there is more transparency and accountability, and less waste. Change is easier to implement, making a nation flexible, dynamic and competitive. With fewer people, there is less of a wealth gap between those at the top and the bottom.The evidence of history is that the free-est countries with the widest dispersal of power have always been the most prosperous and innovative.The city-states of pre- and early-Renaissance Italy are a good example. There was no single ruling body except for the Roman Catholic Church. If people, ideas or innovation were suppressed in one state, they could quickly move to another, so there was competition. Venice, in particular, showed great innovation in turning apparently useless marsh into a unique, thriving city. Renaissance Italy became breathtakingly prosperous and produced some of the greatest individuals that ever lived.But it would be overtaken by Protestant northern Europe. The bible was translated into local vernacular, and Gutenberg’s printing press furthered the spread of knowledge – and thus the decentralization of power. The pace was set by Holland, also made up of many small states, then Britain led the pack. In spite of its union with Scotland and its later empire building, England would disperse centralized power by reducing the authorities of the monarch after the Civil War of 1642–51, and later by linking its currency to gold.Since its unification in the late 19th century, Italy has been nothing like the force it once was, blighted by infighting, bureaucracy, organized crime, corruption, rent- seeking, inflation and division. Its state is bloated, its political system dysfunctional.So back to Scotland.With independence it would have the opportunity to enact the same legislation, taxation and regulation that other top ten countries on that list employ, following, say, the blueprint of Singapore. It already has a rich tradition in trade, finance and banking.It has the oil.And, with just five million people, it is small.It has all the ingredients to be the richest country on earth – on a per capita basis. It has ‘the triple’. I can think of no other nation in the world with such a wonderful opportunity.The Scottish contribution to the world, whether in engineering, invention, industry or finance, has been astounding. Think Adam Smith, Alexander Fleming, John Logie Baird, James Watt. You cannot doubt Scottish talent - they are a formidable people. But they do not dominate the global stage as they once did. There will be a tough period of adjustment to get through, yes, but independent, living off their tax base, with dynamism and self-belief restored, they can do so once again.But, first, they must make the right choices.This article originally appeared in the Independent. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Today we return to one of my favourite subjects, and one that we periodically visit: UK house prices measured in gold.As regular readers will know, I am firmly of the mind that unaffordable housing in the UK (and indeed across most of the developed world) is as much a consequence of our system of money and credit as it is of dumb, prohibitive planning laws.If interest rates reflected actual inflation, the story would be very different. I’m not talking about the consumer price index (CPI) measure targeted by the Bank of England (and even that now stands at over 6%). I’m talking about the inflation of the money supply, whether via debt expansion or quantitative easing (QE), and the resulting costs felt. House prices are currently rising at roughly 11% a year, and you’re telling me inflation is only 6%? Pull the other one.The incremental effects of these rises – 7% one year, 12% the next – over many decades have made house prices ludicrously unaffordable to young people. It’s been going on since at least the early 1990s, and the days when Ken Clarke was chancellor, and before. Salaries have not kept up.If interest rates rose to reflect our current 11% house price inflation then the ensuing rush for the exit would pretty quickly make house prices affordable again. The entire house-of-cards economy would come crashing down too, but that’s another matter.For this reason, we conduct the occasional exercise of measuring house prices in sound money. Gold has served this role since the Stone Age, and so we bow to the wisdom of Mother Nature, and use it here.The pound in your pocket has lost a lot of value compared to a house…The average price of a house in the UK is now £274,000 according to the Office for National Statistics and the Land Registry. The average salary is £31,285, so house prices are at roughly nine times earnings.The house-prices-to-earnings ratio in most big cities, especially in the south, is much more distorted than that. It was three times when I bought my first flat in London in 1993.We’ll start with house prices in pounds. This chart goes all the way back to 1953, when mortgages barely existed. Debt is the big driver of house prices – if there is no debt in a market, prices will reflect local cash levels and be much lower. Introduce debt, and up go prices. (Debt, even with all that QE, remains the biggest supply of new money).On the other hand, debt makes it possible to do things now you would otherwise not be able to do – like buy a house. But keep debt costs low and more money enters the system, prices stay high and the economy “grows”. That’s why the authorities prefer to keep interest rates down.“You’ve never had it so good”, was the government’s cry at the time, as the Tories actively encouraged a “property-owning democracy”. Stamp duty was cut and the government lent money to building societies, so they could issue mortgages. Home ownership rose from 29% in 1951 to 45% by 1964, and the train of higher prices was put in motion. They rose by over 50% during that period. The above chart is astonishing in its relentless rise higher. It looks like bitcoin! The crash of the early 1990s, in which hundreds of thousands of people lost their homes amid surging interest rates, is a mere blip. Far fewer lost their homes in 2008, because rates were slashed.But looked at from another perspective, you can see just how much value your money has lost. In 1953, the average house cost £1,891. Today it’s 150 times that. The pound has lost more than 99% of its purchasing power in 70 years. Money. Huh! It’s a fraud. But you can’t do without it.… but the gold in your vault has notNext we turn our attention to UK house prices measured in a much sounder form of money - one that central banks can’t print. This is the same house prices measured in gold since 1953.As you can see, it’s rather a different story.Back in 1953 the average house cost 150 ounces of gold. Same price as in 2020. Wait a minute, what?And today a house will cost you 205 ounces of gold. Wait a minute you’re telling me house prices are only up 30% since 1953?If you measure them in gold, yup.In 1980 you could buy the average UK house for 50 ounces of gold. You could have done so in the 1930s as well (not shown on the chart). In 2004, with gold sitting at around $400 an ounce, and the average house at £150,000, it took over 700 ounces to buy a house. The noughties aside, the long-term “normal” price of a British house in gold terms ranges between 150 and 300 ounces.So what’s next for the house price to gold ratio?I thought the end was nigh for the housing bubble in 2007. I was wrong. I didn’t foresee interest rates being slashed like that. Woe betide anyone who calls the top in housing. The only thing that will send house prices lower is increased rates – though even at 3% or 4% there would be problems. No policy-maker wants falling house prices on their watch, partly because they own houses, partly because of the damage to their reputation and part

Here’s something to contemplate this Sunday morning: where are rates going?In many ways it’s the most important question in finance - the biggest question in investing: what is the future price of money going to be?Policy makers are caught between a very big rock and a very hard place. Official UK inflation stands at 8.5%. It’s higher if you use the traditional RPI as a measure. But real inflation is much higher still. Official measures only look at the price of goods and services, which are mostly prone to the deflationary forces of increased productivity. If you include things like house prices and financial assets inflation is much, much higher - over 10%. The same argument applies pretty much everywhere across the developed world.Looked at another way, money is losing value at over 10% per year. The same salary in a year’s time will effectively be 10% lower in that it will buy you 10% less . The purchasing power of your savings will be 10% lower. The already extraordinarily large inequality gap between asset owners (the rich, the old) and everyone else (the young) will be 10% bigger.Any responsible central bank, whose core remit is to keep a lid on inflation, would “do a Volcker” and hike up rates until this messy situation is under control. But they can’t. There is too much debt in the system. If rates were put up to a level that reflected actual inflation - ie north of 10% - the housing market would collapse, stock markets would collapse, the bond markets would collapse and government’s own debt servicing costs would go bananas. Their budgets would be blown. In other words the whole system comes tumbling down. It’s a house of cards.So they will make a lot of noise, edge rates up by ¼% here and ½% there and hope this unfortunate inflationary episode goes away.Good luck with that.Thanks very much for reading. Please check out my paid letter. Our stocks are starting to lift off. It looks like we are in a bull market. Bull markets don’t last forever, but they are fun when they do. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

If you want to listen to this article, you can via the button above. “Look at what they do, not at what they say.”If you are seeking truth of any kind, this is a great maxim to live by - particularly when it comes to politicians. And lovers.And indeed mining CEOs.My advice today is to apply the maxim to your author, because there is a marked divergence between what I say on the subject of gold mining companies and what I actually do.We’ll start with what I say…Here’s why everyone believes that gold miners are a leveraged play on goldTalk to any grizzled goldbug who remembers the 1930s – there must be one or two that were there at the time – and one or two more that have read about them. In the US, the story went as follows. After the stock market crash of 1929, the US sunk into an economic recession that became known as the Great Depression. In order to fund a government stimulus programme, the President, Franklin D Roosevelt, confiscated his citizens’ gold. It became illegal for Americans to own gold. Like the loyal citizens they were, Americans handed their gold in and the authorities gave them dollars in exchange at the official exchange rate of $20 per ounce.Roosevelt then devalued those dollars by 40%. The official price of gold would now be $35 per ounce. Some moaned, while many didn’t notice, but the cannier folk thought: “We might not be able to own gold, but we can own gold mining companies – and their profit margins have just gone bananas.” Homestake was the biggest gold miner in North America at the time. Its share price multiplied many times over. It became the investment of the decade.Fast forward to the 1970s, a decade which policy-makers seem intent on re-living in some kind of Black Mirror parallel universe situation. Inflation was rampant, money was debased, the gold standard was abandoned and there was an energy crisis. The decade ended with Russia invading a neighbouring country, in this case Afghanistan.Gold went from $35 to (briefly) $850 over the course of the decade. But gold miners – whoosh. They multiplied and multiplied and multiplied. They were the investment of the decade.Thus has it been implanted in our psyche that gold miners give you leverage to the gold price. When gold goes up, gold miners go up by more.Except they don’t.Gold miners have been terrible investments compared to boring old goldHere we now present Exhibit A, which is the ratio between the HUI, the index of unhedged gold miners, and gold since the mid-1990s. The chart has been falling since late 2003. In other words, gold has been outperforming gold shares. Apart from odd bouts of outperformance, this has been the case for more than 15 years now.Barrick, off and on the world’s largest gold mining company, has had a good couple of years since it changed management. Even so, it is still trading at the same price it was in 2005. Gold was selling for less than $500 an ounce in 2005. It’s $1,900 now.In 2018, Barrick was trading at the same price it was in 2001. In 2001, gold was $250.In other words, what has been the point of owning gold miners, when you could simply have owned gold? And some would argue what is the point of gold, when you can own bitcoin?So how do to explain the underperformance of miners? The reason, in my view, aside from a proliferation of incompetence among management, is that, starting in around about 2003, when that chart peaked, we saw a plethora of different ways by which ordinary investors could buy and hold gold.Aside from taking delivery of bullion itself, we saw the rise of online storage companies – Goldmoney, Bullion Vault, Goldcore and so on. The exchange traded funds (ETFs), by which investors and institutions could buy and hold gold via a broker, came into existence. Cheap online brokers became commonplace. If you wanted something a bit racier, there were spreadbets, futures, CFDs, covered warrants, leveraged ETFs and more. Why bother with individual company risk with some many options? They made the gold miner’s role as the levered way to play gold even more redundant. Has that changed? No. It’s very hard to intellectually justify owning a gold miner in the face of the above. So that is what I say.But what do I do? I own a load of gold miners. I’m overweight gold miners. I’ve spent a lot of time researching mining companies. I think the ones I own are really good – exceptional even. But they are still gold miners – and sector allocation usually proves more important than individual company selection.I do look at that above ratio and suggest that it has made a low and is now rising. The low came at the end of 2015 and it was re-tested in the coronavirus panic of 2020. It looks like it’s on the rise. I also note an odd divergence over the last month, as the chart below shows. Gold sold off. Gold miners didn’t. They actually outperformed. What gives?Gold is in red. The miners are in blue. See the outperformance??Gold mining companies are better run, generally, than they were. There are

Commodity prices have started to cool – with the exception of one industrial metal that is in short supply but is an essential ingredient in almost everything. Dominic Frisby looks at copper.The Substack picks are here See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Was that the high? The pound moves in an eight-year cycle, and in its next cycle, it may have nowhere to go but down.Click here to view the charts at frisby.substack.com See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Commodities from gold to oil have fallen dramatically after weeks of strong gains. What might be next for commodity prices? Check out The Flying Frisby on Substack See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

In which I look at the commodities Russia produces, how markets have been affected by its invasion of Ukraine and subsequent sanctions, and what the investment implications are for youSubstack is here See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Today’s Special Report is about one of my biggest single positions. It represents one of the largest investments I have ever made. It is a gold miner, a “late stage development play” that is on the verge of becoming a mid-tier producer. Within three years, it is going to have three producing mines.More here See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

The price of gold has come within a whisker of its record high. Dominic Frisby looks at where it might go from here.Substack is here See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

China almost certainly owns a lot more gold than anyone else –including the USA. But how much? And why does it need so much gold? Dominic Frisby explains.You can see all the charts on my Substack. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Inflation, war, currency debasement – the world is changing fast and investors need to adapt. That means owning both gold and bitcoin, says Dominic Frisby.Check out my new Substack, The Flying Frisby See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

As Russia invaded Ukraine, the price of gold shot up spectacularly. But it couldn't hold on to all of its gains. Where does it go next?Check out the Substack. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Successful investors must be patient, finding a balance between doing nothing and sudden, decisive action. And there's no better role model than Sir John Templeton.Check out my Substack. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Just pimping my new letter on Substack. Please check it out ... See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Sorry about the wind on this one, but ... If you want to make money investing, you need to buy stocks when they’re cheap. And right now, says Dominic Frisby, there’s nowhere cheaper than Russia. Here’s how to play it. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Copper may have a useful role to play in the green transition. Dominic Frisby explains how investors can get exposure to copper. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Silver is the most frustrating of metals for investors, with huge potential that it hardly ever realises. Here, Dominic Frisby outlines the case for buying silver – and the case against. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

It’s been a terrible week for stockmarkets. But not everything is crashing – “real” assets such as base metals and energy are holding up well and should have a good 2022. Dominic Frisby picks the best ways to buy in. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Gold is traditionally the go-to asset during inflation. But with inflation at 30-year highs, it has gone nowhere. Dominic Frisby investigates why, and looks at what might happen to the gold price in 2022. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Bitcoin has had its worst-ever start to a year. But it remains the “future of money”, says Dominic Frisby. Here, he looks at what might come next for the bitcoin price. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

As 2022 dawns, Dominic Frisby dusts down his crystal ball and takes his annual shot at predicting some of the most important events for investors in the coming year. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Dominic Frisby looks back at the predictions he made at the start of the year and finds that, all things considered, he hasn't done badly at all. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Fossil fuels are the subject of a lot of hate. But without them and the cheap, reliable and abundant energy they have provided, we’d be lost, says Dominic Frisby See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Money has always moved in 100-year cycles. And we’re at another turning point now, says Dominic Frisby – money has gone from gold to paper, and now to technology. Here’s what that means for you. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

The film premieres this Sunday December 5 and can be watched here: https://youtu.be/o6e6TpIrba0 See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Stockmarkets have had a bit of a swoon recently as the Omicron variant spreads around the world. But is this just a market tantrum, asks Dominic Frisby, or the beginning of a crash? See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

The US dollar is rising fast – and that’s caused a fundamental shift in the investment landscape, says Dominic Frisby. Here, he explains what that means for you. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Apologies for the awful audioPlatinum has disappointed investors perhaps more than any other commodity in the last five years. But its day will come, says Dominic Frisby. Stock up now while it's cheap. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Bitcoin has hit a new record price. And the most likely thing to follow new highs are more new highs, says Dominic Frisby. Here, he explains why bitcoin is here to stay, and why you should buy in. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

The US dollar is rising fast – and that’s caused a fundamental shift in the investment landscape, says Dominic Frisby. Here, he explains what that means for you. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Cryptocurrencies such as Shiba Inu and Doge are jokes that have created billionaires. But there's a more sinister side to so-called "meme coins", says Dominic Frisby, that could cost you dear. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Bitcoin has hit a new record price. And the most likely thing to follow new highs are more new highs, says Dominic Frisby. Here, he explains why bitcoin is here to stay, and why you should buy in. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Curse you US embassy website See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Time to dive in? See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

Where to invest? See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

The Philip Bratby article is on p28-29 here: https://issuu.com/sheepwashchronicle/... See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

The ethereum blockchain and its ether cryptocurrency is second only to bitcoin in size and importance. But what exactly is it and what is it for? Dominic Frisby explains all. See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

El Salvador has become the first nation to adopt bitcoin as legal tender. That’s an extraordinarily bullish move both for bitcoin and for El Salvador See acast.com/privacy for privacy and opt-out information. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe