Comment of the Day
Video commentary for February 7th 2022
Email of the day - on gold, governance, trading, and uncertainty
A bad back currently prevents me golfing, walking the dog, or driving the car and, in my opinion justifiably, I am feeling a grumpy.
So here are a few gripes for you:
First gold:
For several years you taught us that the gold price follows an approximate 35-year cycle between highs, although the gold price could outpace stock indexes for short periods in between those highs. We’ve not heard too much about the 35-year cycle for a while, the message now being that it is not unusual for gold to trade in a boring range for up to 18 months or so before breaking out conclusively up or down. You believe it will break to the upside taking out previous highs (which runs contrary to your 35-year cycle theory). I hold a fair chunk of gold and silver miners in ETFs but regard the holding as a hedge rather than representing a belief that gold will imminently break to the upside. It might and it would be nice if it did but I doubt it. As David said, investment options are similar to a beauty parade and for the foreseeable future, many options are likely to look superior to gold.
Second India v China:
You are very hard on China and its political system. Having lived most of my life in Asia I take a less severe view. Like most observers I was disappointed to see that XI, the reformer, had no intention of political reform but on reflection, I think he’s probably right to opt for political stability at a time when China is still struggling to bring modernity to all its people and regions; when lightening-speed technological change is taking place across the globe and when it finds itself in an inevitable struggle to assert what it regards as its rightful influence on global institutions and practices. On a smaller scale in Singapore Lee Kuan Yew did much the same thing and while there is now a little more political tolerance in Singapore than there was, the Government – and most of its people – believe that full-throated democracy would lead to economic and societal break-down. That would be Xi’s worst nightmare.
My grouse is not so much with your view on China but with your uncritical view of India. I agree with you that India should do well given its demographic advantage and talents of its people. However, I think the Modi government is quite repugnant in its covert – and not so covert – support of extremist Hindu nationalism represented by terrorisation of the Muslim and Christian communities, and by its appalling failure to do much about the abuse of women, also fuelled by Hindu extremists. In the medium term, I fear this, together with over-dependence on coal, will limit India’s investment appeal and therefore its economic potential.
To declare my investment positions, I have reduced my exposure to India and wait for an opportunity to reinvest in China. My favourite Asian market currently is Vietnam.
Third, the purpose of your ‘service’:
Under David’s direction, Fuller Money provided objective macro oversights together with some trading suggestions/recommendations and some investment suggestions/recommendations. He often put his money where his mouth was and invested in his recommendations. Towards the end of his career, he stopped publishing his investment portfolio which I regarded as a pity. Under your direction, Fuller-Treacy Money continues to provide objective (if sometimes convoluted and long-winded) macro oversights, but I find it difficult to work out whether beyond that you are offering trading hints or investment hints. I use the word ‘hints’ rather than ‘suggestions’ because in this aspect you are far more non-committal on specifics than was David. The details you provide of your own investment activities suggest that you are a trader with long(ish) term investments in gold bullion, gold miners and Rolls Royce. I made several profitable purchases based on David’s recommendations but so far have identified none under your watch.
Fourth Daily Audio and Video:
From emails you have referred to from other subscribers, I am confident that I am not alone in being irritated by several of your constant refrains. Three which particularly annoy me are ‘The big question is ….’ (to which we never get an answer); ‘[Gold (for example) has a lot of work to do’ (which is a nonsense, better to identify factors which might influence buying/selling decisions) and; ‘I can’t talk and chew gum at the same time’ (which sounds quite catchy heard for the first time, but grates increasingly after many repetitions).
So, getting that off my chest makes me feel slightly less out of sorts. I shall be renewing my subscription in March. It’s been part of my routine for too long.
My view - Thank you for this detailed email, your long-term support and I hope you back feels better soon. If it is muscular, rather than a herniation, I strongly recommend Yunnan Baiyao. I’ve pulled muscles in my lower back on several occasions either playing tennis or lifting. If it is taken quickly after injury, it provides a powerful, quick solution with no side effects I have experienced.
This article from Bloomberg may be of interest to subscribers. Here is a section
Trudeau has largely been out of sight during the protest after testing positive for Covid-19 a week ago and going into isolation. On Friday, he said calling in the military was “not in the cards,” but he’s been silent since then and doesn’t have any public appearances scheduled Monday.
The ministers of public safety, transportation and emergency preparedness, along with other Ottawa-area lawmakers, will hold a briefing at 12:45 p.m. in Ottawa on the federal government’s response.
Carney, who was governor of both the Bank of Canada and the Bank of England before joining Brookfield Asset Management (TSX:BAM.A) Inc., issued his call to action Monday morning in an opinion piece in the Globe and Mail newspaper.
“Those who are occupying the downtown of our nation’s capital should be in no doubt. They are no longer simply advocating a different strategy to end Covid-19,” Carney said. “They are not patriots. This is not about ‘restoring freedom’ but beginning anarchy.”
My view - The protests in Canada are just one more symptom of the global unrest provoked by the pandemic. People have not been satisfied with the inability of governments to react in a timely manner to emerging data, or with their failure to formulate common sense strategies to limit risk and enhance mobility. Truckers are truly essential workers and losing that status in how they are treated by the government is at the root of these protests.
Bitcoin Notches Longest Rally Since September; Shiba Inu Jumps
This article from Bloomberg may be of interest to subscribers. Here is a section:
The break above $43,000 could cause the current up move to target toward the $45,000 level, according to Nathan Batchelor, lead Bitcoin analyst for SIMETRI Research.
“People are starting to feel a little more comfortable dipping their toes back into some of these riskier asset classes after the pullback,” Lindsey Bell, chief markets, and money strategist at Ally Financial Inc., said. However, Bell says the market in general isn’t necessarily out of the water yet with lingering uncertainty on multiple fronts, including the speed at which the Federal Reserve and central banks could act to quell rising inflation.
A strengthening relationship between Bitcoin and the stock indices has emerged in recent months, particularly with the technology heavy Nasdaq 100 index. The correlation between the Nasdaq and Bitcoin currently stands at 0.43.
Gritt Trakulhoon, an investment analyst at Titan Global Capital Management USA Inc., said the dramatic rise in Shiba Inu could be attributed to development progress on a blockchain add-on, known as a layer-2 network, specifically designed for the token called Shibarium. The memecoin is based on the Ethereum blockchain.
“It doesn’t take a lot of effort to push them higher or lower,” Bell said. “Because Bitcoin is such a large market cap and more liquid than some of these other ones, in a way -- it’s not necessarily stable -- but it’s more stable than some of the other ones.”
My view - Buying the dip is an almost instinctual action for investors and particularly following 50% in bitcoin. There is still a great deal of cash in the financial system and dry powder in the private equity sector totals trillions. At least some of that money is now flowing back into the crypto sector as risk appetite begins to recover.
The Chart Seminar 2022
With global vaccination rates rising, the prospect of anti-COVID pills on the horizon and the promise of travel restrictions being dropped, it is time to start thinking about venues for The Chart Seminar in 2022.
Please drop sarah@fullertreacymoney.com a line if you would be interested in attending an event next year, as well as your preferred location.
At present I am looking at a late May date for a London seminar and I am open to other times and locations subject to demand.
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