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Please do not share, copy, reproduce or distribute any part of this report without my express permission. Thank you.
Many thanks to all the new subscribers who have joined this week, both paid and unpaid. I put this video of my recent North Sea Oil piece up on YouTube, X et al and it generated something of a flurry.
So welcome. I hope you both enjoy and benefit from The Flying Frisby.
Before we get started I just wanted to note that Comstock Lode seems to be catching a nice tail wind, which is good. Enjoy the ride. The AGM is later today for the keener of you out there.
But we are looking at bitcoin today, and exploring an alternative way to invest in it.
Iâm going through one of those phases where I feel like I donât own enough bitcoin.
So Iâve bought more.
And Iâve bought it in my SIPP - UK-speak for my retirement account.
Iâll explain how in a second.
Letâs just have a quick look at the bitcoin price, and note that we are once again breaking out to new highs.
I know it feels like you are late to the bitcoin story, and yes we all wish we bought it at $10, when we first heard about it. But we didnât. We are where we are, and this story is a long way from being over.
The next chapter in the odyssey is corporate adoption, and that story is just getting started.
I explained the bitcoin corporate treasury model a fortnight ago here, and Iâve made the article freely available to all, so please take a look, but the TLDR is this.
Following a template set by billionaire genius Michael Saylor, more and more companies are converting their treasuries to bitcoin as a means to store value and escape currency debasement. Not only that, they are issuing paperâstock, debt, convertible notesâand using the capital raised to buy more bitcoin. In effect, they are creating fiat money from nothingâit is a debt-based system, after allâand using it to buy a finite digital resource (one that, of course, cannot be created through debt).
Many are scratching their heads and saying, âHow can this be? Itâs not possible! Itâs a bubble.â
What Saylor is actually doing, among other things, is exposing the flaws of debt-based fiat currency. There are now some 70 companies employing this strategy. This will eventually be a stampede, which I urge you to front-run. Corporations have much deeper pockets than private investors, meaning this latest cycle in bitcoinâs mass adoption could become a mega mania.
Shareholders welcome dilution if it means more bitcoin.
The problem of corporate dilution has been flipped on its head. Once, if a company issued 20% more stock, you would expect the stock to fall by a concomitant amount to reflect the dilution. But if youâre using paper to buy bitcoin, the reverse applies. You canât dilute enough. The purpose of a bitcoin treasury company is to acquire as much bitcoin as possible on behalf of all shareholders, by whatever means.
Here is a case in point.
Japanese hotel company Metaplanet (3350:TYO) had a small chain of low-budget hotels across Southeast Asia. Covid decimated the business, and it never fully recovered.
A year ago, seeking a new direction, CEO Simon Gerovich began copying the Saylor model and started using his cash flow to buy bitcoin, then he began issuing debt. Since spring 2024, when the company began its strategy, the stock has risen thousands of percent from below „20 to north of „1,000. Last year, it was one of the best-performing companies in the world, if not the best. How about this for a chart?
In the time that bitcoin has risen 60%, Metaplanet has risen more than 7,000%. (Saylorâs Strategy (NASDAQ:MSTR) has also outperformed bitcoin. Bitcoin treasury companies give you gearing).
With its crap currency and suppressed bond yields, bitcoin is an obvious place for Japanese investors to put their capital, except the government has got in the way.
As with the UK, dumb regulations make it very hard for Japanese investors to buy bitcoin directly. (This came as a result of Mt. Gox, the first bitcoin exchange, which went bust after being hacked in 2013-14). To give you an idea how ponderous things are, to register with a bitcoin exchange in Japan , regulators demand you get a letter by snail mail to verify your address. Nuts.
Whatâs more, when the Japanese sell, they must pay capital gains tax at 55%.
But Metaplanet is a Tokyo-listed company, so investors are buying that instead in their retirement accounts and via their brokers. Far less hassle. Just as, back in 2023, I urged UK readers to buy Strategy as a way to play bitcoin (we are up around 1,000%), Metaplanet has become Japanâs bitcoin vehicleâindeed, much of Asiaâs.
For several days in a row, the company has gone limit-up, and trading has been halted. The mother of all short squeezes seems to be taking place. Itâs the most shorted stock in all of Japan - and the short sellers are struggling to cover.
This bubble has, quite literally, been caused by state regulation. We wouldnât be in this situation if it was easy to buy bitcoin. Itâs enough to make you a libertarian. Itâs amazing that both Japan and the UK were at the vanguard in bitcoinâs early days. Satoshi Nakamoto had a Japanese name and used British English. Now we are both retarded (in both the old sense of the word and the new).
How to profit from the mania
In the UK, Avis-listed The Smarter Web Company (ISIN: GB00BPJHZ015) is now following suit, as several readers have pointed out to me (thank you). Itâs gone from 5p to 45p in a month. Currently, The Smarter Web Company has a market cap of ÂŁ72 million, while it holds only ÂŁ3 million in bitcoin (rounded numbers). Insane, you might think. Probably.
Bitcoin Treasury Companies are outperforming bitcoin. They are the new sh*tcoins.
So which bitcoin treasury company have I gone for?
Here is how I am playing all this.
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Iâve been viewing houses this past fortnight, so I thought Iâd share my anecdotal 2p on the state of the London property market.
Iâm looking in Brockley, SE4, which, if you donât know it, used to be rough AF, but is now where all the cool kids are. The area has benefited from the various London rail line extensions â you can be in Shoreditch or Canary Wharf in 15 minutes; the Jubilee and Elizabeth lines are a similarly short step away â and that has attracted the slay crew to the area.
The road links though are still horrendous though, made worse by 20mph speed limits and bus lane misallocation of essential road space. The drive to west London is interminable.
Brockley has a good stock of beautiful detached, semi-detached and terraced Victorian houses. For example:
With its proximity to Greenwich and the river docks, it was once a wealthy area, though, like most of south-east London, it got bombed to heck in the war.
There are plenty of nice parks too. One of them, Hilly Fields, was modelled on Hampstead Heath, and there are many gorgeous houses in the roads running off it. Not quite Hampstead gorgeous, but getting there.
Brockley also has the highest density of cemeteries in London, if you fancy dying any time soon, itâs highly convenient. It is, I gather, Londonâs most haunted area.
It is only a bit stabby. Nothing like as bad as neighbouring Lewisham. (Maybe âonly a bit stabbyâ will one day become part of estate agentsâ jargon, perhaps to replace âvibrantâ. I canât believe how normalised stabbing now is that Iâm talking like that.)
The stabbiness is offset, however, by the plethora of nice restaurants, cafĂ©s, bars, craft ale breweries, the farmersâ market, mini-festivals, pilates studios et al. I understand, in Browns, the area boasts Londonâs best coffee and, in Babur, its best Indian restaurant. (Technically Babur is in Honor Oak, but, like England and many of its foreign sporting greats, weâll claim it as our own.)
I shot this vid from the steps up to the station.
Brockley feels younger and more up-and-coming than the once-cool areas to the west like Queenâs Park, Kensal Rise, Clapham and so on, probably because of its easy access to east London. (A lot of people from Hackney move down here.)
I moved here begrudgingly and skint in 2015 and have grown to really like it.
But what about the housing market?
Iâve known markets in which estate agents donât give you the time of day, there are so many prospective buyers, but â perhaps because they know I am an unencumbered buyer â the agents are maybe not quite all over me, but certainly on my case: lots of emails, phone calls and the rest of it. That indicates itâs more of a buyersâ market.
But, while I would describe the housing market here as slow, it is not dead. Stuff has been going under offer in the two weeks Iâve been looking, though rarely at asking.
With the costs of moving â Stamp Duty is 10% above ÂŁ925k, and 12% above ÂŁ1.5m, plus an extra 5% if you own another property â buyers have got to really want to buy.
Sellers, meanwhile, have to really want to sell, which often entails reducing their asking prices. Stuff which is unrealistically priced is staying on the market a long time. Look at this one (actually up the road in Honor Oak):
This is a 5,000-square-foot property, not so nice inside, but with access to a 2-acre private garden behind with its own tennis court â quite something in London. From ÂŁ2.5 million to ÂŁ1.75 million and they still canât shift it. (It needs a lot of money spending on it.)
On the other hand, there donât seem to be many forced sellers â people who canât make their payments â and we wonât get any house price crash, long-awaited or not, until that is a reality.
I imagine Brockley, as a young, trendy area, is busier than other parts of town, but that is my overall feel: slow, but not dead.
Iâve looked at a few family houses. I canât really comment on flats, but I gather there is an oversupply of 2-bed flats across London, and it is really hard to shift them. Iâm not sure if this applies to Brockley or not.
It doesnât feel as expensive as it did around 2019â2022 (realised sales prices are a fraction lower, but there is obviously currency debasement to consider too), but nor does it feel super cheap. Weâre a long way off where we were in, say, 2013, even though grander parts of London â Kensington and Chelsea, for example â are back at those 2013 levels.
Where does the housing market go from here?
It all depends on two things: interest rates and Stamp Duty.
Britainâs zombie housing market, brought to you by Stamp Duty.
If rates go lower, the market will not collapse. There wonât be the forced sellers. Weâll continue as we are: stagnant. If rates go higher, the market is in trouble.
But get rid of Stamp Duty, and youâd have a flurry of activity across the country tomorrow. People arenât moving because of the amount of dead money involved. Stamp Duty has immobilised the country.
If youâre buying a two-million-pound house, you will pay ÂŁ153,750 in stamp duty. Cash. Money youâve already paid tax on once. You canât borrow the money. You have to be extremely rich, or extremely desperate for a home, to be willing to pay a ÂŁ150k one-off tax of this kind. Most would rather avoid paying it, so they donât move.
You will pay more if you are not a UK resident.
If you happen to own another property â which most people in that wealth bracket will, either their first flat they never sold, a property they inherited, or a home in the country â and the house you are buying is not your main residence, the tax rises to ÂŁ253,750. A quarter of a million quid.
Thatâs why houses in Kensington and Chelsea no longer sell.
EDIT: My mate, whose kids have now flown the nest, sent me this: "We live in a 4 floor house, 2 floors we don't use, I haven't been to the top floor for about 5 years (seriously). We would love to move and downsize but makes no sense as the costs of buying a new house would use up all the gain on downsizing . IE We just end up with a smaller house."
This happens all the way down the scale. Kirstie Whatsit off the telly was tweeting about it the other day.
My motherâs friend, who is in her 70s, lives in a 2-bed flat two floors up in Wandsworth worth maybe ÂŁ700,000. She is worried about climbing the stairs at her age, and wants to move to another 2-bed flat. She will pay ÂŁ25,000 in Stamp Duty on top of all her other moving costs. She doesnât have 25 grand to throw away.
The result is this nearly dead market. Britainâs zombie housing market.
Stamp Duties were one of the taxes the ignited the American Revolution. If only we had muskets today âŠ
The biggest villains in all this are former Chancellor Gordon Brown for first raising Stamp Duty on property transactions (before him it just one per cent on all properties over ÂŁ60,000), and, worst of all, George Osborne for raising the rates to todayâs ludicrous levels. Rather than address the root causes of unaffordable housing â fiat money, artificially low interest rates, improper measures of inflation and dumb planning laws â he blamed the market, and attacked it with Stamp Duty. But all of Jeremy Hunt, Rishi Sunak, Sajid Javid, Philip Hammond and Alistair Darling must take their share of the blame for failing to do anything about it, when they had the chance. (Weâll give Kwasi Kwarteng and Nadhim Zahawi a pass on the grounds they didnât have the gig for long enough).
Osborne, Brown et al have given birth to the zombie situation we have now. They have immobilised the country in the process.
Government. Yet again. 0 stars. Would not use again.
Itâs enough to make you a libertarian.
Until next time,
Dominic
PS If you enjoyed todayâs article, please like, share and all that stuff. It really helps.
PPS If you missed this weekâs market commentary, here it is:
As always If you are buying gold to protect yourself in these times or relentless currency debasement, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them.
Find out more here.
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Iâve had a flood of new readers sign up to the Flying Frisby this week, Iâm delighted to report, largely as a result of this article on bitcoin treasury companies and of this video on North Sea oil and the next Labour U-turn, which has been doing the rounds on the net.
So welcome everyone. I hope you enjoy the ride.
Todayâs piece is going to be a bit of a hotchpotch, as I gather my thoughts and tidy up a few loose ends.
Weâll start with the macro. Are we in a bull market? Are the animal spirits back in command? Or have we just gone through a bear market rally?
It all depends on tariffs, I guess, and what is going on in the Great Orange Manâs mind. What plans does he have? That I cannot answer, but I will say the S&P500 looks like it might have just put in a lower high.
We want to be above that blue line.
If he goes full tariff again, all bets - well most - are off.
But thanks to the Great Orange Manâs pronouncements on uranium, our speculation Lightbridge Fuels (NASDAQ:LTBR) is now enjoying another of its spikes. If he goes full tariff again, all bets - well most - are off.
But thanks to the Great Orange Manâs pronouncements on uranium, our speculation Lightbridge Fuels (NASDAQ:LTBR) is now enjoying another of its spikes.
Sell the spikes, buy the dips has been the play here. We are on one such spike now, so if the recent pattern continues (it wonât continue forever, nothing does, but it might for a bit) then lighten up between $15 and $20 and buy if it goes back to $9 is the trade.
Sell the spikes, buy the dips has been the play here. We are on one such spike now, so if the recent pattern continues (it wonât continue forever, nothing does, but it might for a bit) then lighten up between $15 and $20 and buy if it goes back to $9 is the trade.
We have quite a well defined, trade-able range emerging here, as defined by the blue lines below.
I donât see it going back to the $2.50-$3 area, where we were lucky enough to first stumble upon this stock, but $8.50-9 looks like the new floor. For now.
Remember: this was an $800 stock once upon a time, so there is a lot of upside left. One should probably keep some money on the table, in case we donât get the dip.
Tell your friends.
The next Starmer U-turn
Turning next to the issue of the re-opening of the North Sea. Since posting that video our Glorious Leader has tightened ties with the EU, and in particular relevance here, its net zero goals. The UK now commits to net zero obligations âat least as ambitious as the EUâ. âWant to get out of net zero?,â says Lord Frost in the Telegraph, âTough: you canât, unless the EU agreesâ.
That said I am sure Captain FlipFlop will find a way of flipflopping his way round any North Sea ties and then spinning it.
There is a review this week. Surely even this government will realise importing Norwegian gas for (net) zero tax take, fewer jobs and a higher carbon footprint than producing our own makes (net) zero sense. More importantly it is gifting Reform. Maybe the needs of the Treasury mean Milibrain - Miliband gets overruled. We will know more as soon as today.
Adding another bitcoin treasury company to my portfolio
In a moment, I am going to take a look at Comstock Lode (NYSE:LODE), further to its AGM this week. I know I keep talking about this company, but it might be the one we all retire on - hence my outsized attention.
But first I also want to continue on the bitcoin treasury company story.
(Despite the outperformance of the treasury companies of late, I still prefer bitcoin and think it should be a core holding. The treasury companies are rather more speculative. However, given the hassle involved, I understand why some in the UK prefer the treasury companies).
How about this for nuts? The UKâs Smarter Web Company (ISIN: GB00BPJHZ015) hit a market cap of ÂŁ175 million yesterday. Its assets: it has about ÂŁ5 million in bitcoin.
The dude who founded it, Andrew Webley, was a month ago running a web design firm in Guildford with net assets of less than ÂŁ50,000. In the company's Retail Investor IPO document, he committed to invest a minimum of ÂŁ30,000...through his ISAâ. (h/t Glen Goodman)
This will not end well.
And we have the FCA to thank. It has made it so difficult to buy bitcoin, investors are buying this company and others like it instead.
If, like many readers, you are playing this one, make sure you get your original investment out, is my advice âŠ
Meanwhile, Metaplanet (3350:TYO) briefly lost a third of its value last week, falling below „800. Now itâs above „1,200, at all-time highs, trading at 450% of the value of its bitcoin.
Itâs a mania all right.
Iâm adding another position, in a stock which has some recent history of manias.
What is it? Ah-ha âŠ
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Good Sunday morning to you,
I am just on a train home from Glasgow, where I have been gigging these past two nights. Iâve had a great time, as I always seem to do when I go north of the wall.
But Glasgow on a Saturday night is something else. My hotel was right next to the station and so I was right in the thick of it. If I ever get to make a cacatopian, end-of-days, post-apocalyptic thriller, Iâll just stroll through Glasgow city centre on a Friday or Saturday night with a camera to get all the B roll. It was like walking through a Hieronymus Bosch painting only with a Scottish accent.
Little seems to have changed since I wrote that infamous chapter about Glasgow in Life After the State all those years ago. The only difference is that now itâs more multi-ethnic. So many people are so off their heads. I lost count of the number of randoms wandering about just howling at the stars. The long days - it was still light at 10 oâclock - make the insanity all the more visible. Part of me finds it funny, but another part of me finds it so very sad that so many people let themselves get into this condition.
It prompted me to revisit said chapter, and I offer it today as your Sunday thought piece.
Just a couple of little notes, before we begin. This caught my eye on Friday. Our favourite uranium tech company, Lightbridge Fuels (NASDAQ:LTBR), has taken off again with Donald Trumpâs statement that he is going to quadruple US nuclear capacity. The stock was up 45% in a day. We first looked at it in October at $3. It hit $15 on Friday.
Itâs one to sell on the spikes and buy on the dips, as this incredible chart shows.
(In other news I have now listened twice to the Comstock Lode AGM, and Iâll report back on that shortly too).
ICYMI here is my mid-week commentary, which attracted a lot of attention
Right - Glasgow.
(NB I havenât included references here. Needless to say, they are all there in the book. And sorry I donât have access to the audio of me reading this from my laptop, but, if you like, you can get the audiobook at Audible, Apple Books and all good audiobookshops. The book itself available at Amazon, Apple Books et al).
How the Most Entrepreneurial City in Europe Became Its Sickest
The cause of waves of unemployment is not capitalism, but governments âŠFriedrich Hayek, economist and philosopher
In the 18th and 19th centuries, the city of Glasgow in Scotland became enormously, stupendously rich. It happened quite organically, without planning. An entrepreneurial people reacted to their circumstances and, over time, turned Glasgow into an industrial and economic centre of such might that, by the turn of the 20th century, Glasgow was producing half the tonnage of Britainâs ships and a quarter of all locomotives in the world. (Not unlike Chinaâs industrial dominance today). It was regarded as the best-governed city in Europe and popular histories compared it to the great imperial cities of Venice and Rome. It became known as the âSecond City of the British Empireâ.
Barely 100 years later, it is the heroin capital of the UK, the murder capital of the UK and its East End, once home to Europeâs largest steelworks, has been dubbed âthe benefits capital of the UKâ. Glasgow is Britainâs fattest city: its men have Britainâs lowest life expectancy â on a par with Palestine and Albania â and its unemployment rate is 50% higher than the rest of the UK.
How did Glasgow manage all that?
The growth in Glasgowâs economic fortunes began in the latter part of the 17th century and the early 18th century. First, the cityâs location in the west of Scotland at the mouth of the river Clyde meant that it lay in the path of the trade winds and at least 100 nautical miles closer to Americaâs east coast than other British ports â 200 miles closer than London. In the days before fossil fuels (which only found widespread use in shipping in the second half of the 19th century) the journey to Virginia was some two weeks shorter than the same journey from London or many of the other ports in Britain and Europe. Even modern sailors describe how easy the port of Glasgow is to navigate. Second, when England was at war with France â as it was repeatedly between 1688 and 1815 â ships travelling to Glasgow were less vulnerable than those travelling to ports further south. Glasgowâs merchants took advantage and, by the early 18th century, the city had begun to assert itself as a trading hub. Manufactured goods were carried from Britain and Europe to North America and the Caribbean, where they were traded for increasingly popular commodities such as tobacco, cotton and sugar.
Through the 18th century, the Glasgow merchantsâ business networks spread, and they took steps to further accelerate trade. New ships were introduced, bigger than those of rival ports, with fore and aft sails that enabled them to sail closer to the wind and reduce journey times. Trading posts were built to ensure that cargo was gathered and stored for collection, so that ships wouldnât swing idly at anchor. By the 1760s Glasgow had a 50% share of the tobacco trade â as much as the rest of Britainâs ports combined. While the English merchants simply sold American tobacco in Europe at a profit, the Glaswegians actually extended credit to American farmers against future production (a bit like a crop future today, where a crop to be grown at a later date is sold now). The Virginia farmers could then use this credit to buy European goods, which the Glaswegians were only too happy to supply. This brought about the rise of financial institutions such as the Glasgow Ship Bank and the Glasgow Thistle Bank, which would later become part of the now-bailed-out, taxpayer-owned Royal Bank of Scotland (RBS).
Their practices paid rewards. Glasgowâs merchants earned a great deal of money. They built glamorous homes and large churches and, it seems, took on aristocratic airs â hence they became known as the âTobacco Lordsâ. Numbering among them were Buchanan, Dunlop, Ingram, Wilson, Oswald, Cochrane and Glassford, all of whom had streets in the Merchant City district of Glasgow named after them (other streets, such as Virginia Street and Jamaica Street, refer to their trade destinations). In 1771, over 47 million pounds of tobacco were imported.
However, the credit the Glaswegians extended to American tobacco farmers would backfire. The debts incurred by the tobacco farmers â which included future presidents George Washington and Thomas Jefferson (who almost lost his farm as a result) â grew, and were among the grievances when the American War of Independence came in 1775. That war destroyed the tobacco trade for the Glaswegians. Much of the money that was owed to them was never repaid. Many of their plantations were lost. But the Glaswegians were entrepreneurial and they adapted. They moved on to other businesses, particularly cotton.
By the 19th century, all sorts of local industry had emerged around the goods traded in the city. It was producing and exporting textiles, chemicals, engineered goods and steel. River engineering projects to dredge and deepen the Clyde (with a view to forming a deep- water port) had begun in 1768 and they would enable shipbuilding to become a major industry on the upper reaches of the river, pioneered by industrialists such as Robert Napier and John Elder. The final stretch of the Monkland Canal, linking the Forth and Clyde Canal at Port Dundas, was opened in 1795, facilitating access to the iron-ore and coal mines of Lanarkshire.
The move to fossil-fuelled shipping in the latter 19th century destroyed the advantages that the trade winds had given Glasgow. But it didnât matter. Again, the people adapted. By the turn of the 20th century the Second City of the British Empire had become a world centre of industry and heavy engineering. It has been estimated that, between 1870 and 1914, it produced as much as one-fifth of the worldâs ships, and half of Britainâs tonnage. Among the 25,000 ships it produced were some of the greatest ever built: the Cutty Sark, the Queen Mary, HMS Hood, the Lusitania, the Glenlee tall ship and even the iconic Mississippi paddle steamer, the Delta Queen. It had also become a centre for locomotive manufacture and, shortly after the turn of the 20th century, could boast the largest concentration of locomotive building works in Europe.
It was not just Glasgowâs industry and wealth that was so gargantuan. The cityâs contribution to mankind â made possible by the innovation and progress that comes with booming economies â would also have an international impact. Many great inventors either hailed from Glasgow or moved there to study or work. Thereâs James Watt, for example, whose improvements to the steam engine were fundamental to the Industrial Revolution. One of Wattâs employees, William Murdoch, has been dubbed âthe Scot who lit the worldâ â he invented gas lighting, a new kind of steam cannon and waterproof paint. Charles MacIntosh gave us the raincoat. James Young, the chemist dubbed as âthe father of the oil industryâ, gave us paraffin. William Thomson, known as Lord Kelvin, developed the science of thermodynamics, formulating the Kelvin scale of absolute temperature; he also managed the laying of the first transatlantic telegraph cable.
The turning point in the economic fortunes of Glasgow â indeed, of industrial Britain â was WWI. Both have been in decline ever since. By the end of the war, the British were drained, both emotionally and in terms of capital and manpower; the workers, the entrepreneurs, the ideas men, too many of them were dead or incapacitated. There was insufficient money and no appetite to invest. The post-war recession, and later the Great Depression, did little to help. The trend of the city was now one of inexorable economic decline.
If Glasgow was the home of shipping and industry in 19th-century Britain, it became the home of socialism in the 20th century. Known by some as the âRed Clydesideâ movement, the socialist tide in Scotland actually pre-dated the First World War. In 1906 came the cityâs first Labour Member of Parliament (MP), George Barnes â prior to that its seven MPs were all Conservatives or Liberal Unionists. In the spring of 1911, 11,000 workers at the Singer sewing-machine factory (run by an American corporation in Clydebank) went on strike to support 12 women who were protesting about new work practices. Singer sacked 400 workers, but the movement was growing â as was labour unrest. In the four years between 1910 and 1914 Clydebank workers spent four times as many days on strike than in the whole of the previous decade. The Scottish Trades Union Congress and its affiliations saw membership rise from 129,000 in 1909 to 230,000 in 1914.20
The rise in discontent had much to do with Glasgowâs housing. Conditions were bad, there was overcrowding, bad sanitation, housing was close to dirty, noxious and deafening industry. Unions grew quite organically to protect the interests of their members.
Then came WWI, and inflation, as Britain all but abandoned gold. In 1915 many landlords responded by attempting to increase rent, but with their young men on the Western front, those left behind didnât have the means to pay these higher costs. If they couldnât, eviction soon followed. In Govan, an area of Glasgow where shipbuilding was the main occupation, women â now in the majority with so many men gone â organized opposition to the rent increases. There are photographs showing women blocking the entrance to tenements; officers who did get inside to evict tenants are said to have had their trousers pulled down.
The landlords were attacked for being unpatriotic. Placards read: âWhile our men are fighting on the front line,the landlord is attacking us at home.â The strikes spread to other cities throughout the UK, and on 27 November 1915 the government introduced legislation to restrict rents to the pre-war level. The strikers were placated. They had won. The government was happy; it had dealt with the problem. The landlords lost out.
In the aftermath of the Russian Revolution of 1917, more frequent strikes crippled the city. In 1919 the âBloody Fridayâ uprising prompted the prime minister, David Lloyd George, to deploy 10,000 troops and tanks onto the cityâs streets. By the 1930s Glasgow had become the main base of the Independent Labour Party, so when Labour finally came to power alone after WWII, its influence was strong. Glasgow has always remained a socialist stronghold. Labour dominates the city council, and the city has not had a Conservative MP for 30 years.
By the late 1950s, Glasgow was losing out to the more competitive industries of Japan, Germany and elsewhere. There was a lack of investment. Union demands for workers, enforced by government legislation, made costs uneconomic and entrepreneurial activity arduous. With lack of investment came lack of innovation.
Rapid de-industrialization followed, and by the 1960s and 70s most employment lay not in manufacturing, but in the service industries.
Which brings us to today. On the plus side, Glasgow is still ranked as one of Europeâs top 20 financial centres and is home to some leading Scottish businesses. But there is considerable downside.
Recent studies have suggested that nearly 30% of Glasgowâs working age population is unemployed. Thatâs 50% higher than that of the rest of Scotland or the UK. Eighteen per cent of 16- to 19-year-olds are neither in school nor employed. More than one in five working-age Glaswegians have no sort of education that might qualify them for a job.
In the city centre, the Merchant City, 50% of children are growing up in homes where nobody works. In the poorer neighbourhoods, such as Ruchill, Possilpark, or Dalmarnock, about 65% of children live in homes where nobody works â more than three times the national average. Figures from the Department of Work and Pensions show that 85% of working age adults from the district of Bridgeton claim some kind of welfare payment.
Across the city, almost a third of the population regularly receives sickness or incapacity benefit, the highest rate of all UK cities. A 2008 World Health Organization report noted that in Glasgowâs Calton, Bridgeton and Queenslie neighbourhoods, the average life expectancy for males is only 54. In contrast, residents of Glasgowâs more affluent West End live to be 80 and virtually none of them are on the dole.
Glasgow has the highest crime rate in Scotland. A recent report by the Centre for Social Justice noted that there are 170 teenage gangs in Glasgow. Thatâs the same number as in London, which has over six times the population of Glasgow.
It also has the dubious record of being Britainâs murder capital. In fact, Glasgow had the highest homicide rate in Western Europe until it was overtaken in 2012 by Amsterdam, with more violent crime per head of population than even New York. Whatâs more, its suicide rate is the highest in the UK.
Then there are the drug and alcohol problems. The residents of the poorer neighbourhoods are an astounding six times more likely to die of a drugs overdose than the national average. Drug-related mortality has increased by 95% since 1997. There are 20,000 registered drug users â thatâs just registered â and the situation is not going to get any better: children who grow up in households where family members use drugs are seven times more likely to end up using drugs themselves than children who live in drug-free families.
Glasgow has the highest incidence of liver diseases from alcohol abuse in all of Scotland. In the East End district of Dennistoun, these illnesses kill more people than heart attacks and lung cancer combined. Men and women are more likely to die of alcohol-related deaths in Glasgow than anywhere else in the UK. Time and time again Glasgow is proud winner of the title âFattest City in Britainâ. Around 40% of the population are obese â 5% morbidly so â and it also boasts the most smokers per capita.
I have taken these statistics from an array of different sources. It might be in some cases that theyâre overstated. I know that Iâve accentuated both the 18th- and 19th-century positives, as well as the 20th- and 21st-century negatives to make my point. Of course, there are lots of healthy, happy people in Glasgow â Iâve done many gigs there and I loved it. Despite the stories you hear about intimidating Glasgow audiences, the ones I encountered were as good as any Iâve ever performed in front of. But none of this changes the broad-brush strokes: Glasgow was a once mighty city that now has grave social problems. It is a city that is not fulfilling its potential in the way that it once did. All in all, itâs quite a transformation. How has it happened?
Every few years a report comes out that highlights Glasgowâs various problems. Comments are then sought from across the political spectrum. Usually, those asked to comment agree that the city has grave, âlong-standing and deep-rooted social problemsâ (the words of Stephen Purcell, former leader of Glasgow City Council); they agree that something needs to be done, though they donât always agree on what that something is.
Thereâs the view from the right: Bill Aitken of the Scottish Conservatives, quoted in The Sunday Times in 2008, said, âWe simply donât have the jobs for people who are not academically inclined. Another factor is that some people are simply disinclined to work. We have got to find something for these people to do, to give them a reason to get up in the morning and give them some self-respect.â Thereâs the supposedly apolitical view of anti-poverty groups: Peter Kelly, director of the Glasgow-based Poverty Alliance, responded, âWe need real, intensive support for people if we are going to tackle poverty. Itâs not about a lack of aspiration, often people who are unemployed or on low incomes are stymied by a lack of money and support from local and central government.â And thereâs the view from the left. In the same article, Patricia Ferguson, the Labour Member of the Scottish Parliament (MSP) for Maryhill, also declared a belief in government regeneration of the area. âItâs about better housing, more jobs, better education and these things take years to make an impact. I believe that the huge regeneration in the area is fostering a lot more community involvement and cohesion. My real hope is that these figures will take a knock in the next five or ten years.â At the time of writing in 2013, five years later, the figures have worsened.
All three points of view agree on one thing: the government must do something.
In 2008 the ÂŁ435 million Fairer Scotland Fund â established to tackle poverty â was unveiled, aiming to allocate cash to the countryâs most deprived communities. Its targets included increasing average income among lower wage-earners and narrowing the poverty gap between Scotlandâs best- and worst-performing regions by 2017. So far, it hasnât met those targets.
In 2008 a report entitled âPower for The Publicâ examined the provision of health, education and justice in Scotland. It said the budgets for these three areas had grown by 55%, 87% and 44% respectively over the last decade, but added that this had produced âmixed resultsâ. âMixed resultsâ means it didnât work. More money was spent and the figures got worse.
After the Centre for Social Justice report on Glasgow in 2008, Iain Duncan Smith (who set up this think tank, and is now the Secretary of State for Work and Pensions) said, âPolicy must deal with the pathways to breakdown â high levels of family breakdown, high levels of failed education, debt and unemployment.â
So what are âpathways to breakdownâ? If you were to look at a chart of Glasgowâs prosperity relative to the rest of the world, its peak would have come somewhere around 1910. With the onset of WWI in 1914 its decline accelerated, and since then the falls have been relentless and inexorable. Itâs not just Glasgow that would have this chart pattern, but the whole of industrial Britain. What changed the trend? Yes, empires rise and fall, but was British decline all a consequence of WWI? Or was there something else?
A seismic shift came with that war â a change which is very rarely spoken or written about. Actually, the change was gradual and it pre-dated 1914. It was a change that was sweeping through the West: that of government or state involvement in our lives. In the UK it began with the reforms of the Liberal government of 1906â14, championed by David Lloyd George and Winston Churchill, known as the âterrible twinsâ by contemporaries. The Pensions Act of 1908, the Peopleâs Budget of 1909â10 (to âwage implacable warfare against povertyâ, declared Lloyd George) and the National Insurance Act of 1911 saw the Liberal government moving away from its tradition of laissez-faire systems â from classical liberalism and Gladstonian principles of self-help and self-reliance â towards larger, more active government by which taxes were collected from the wealthy and the proceeds redistributed. Afraid of losing votes to the emerging Labour party and the increasingly popular ideology of socialism, modern liberals betrayed their classical principles. In his War Memoirs, Lloyd George said âthe partisan warfare that raged around these topics was so fierce that by 1913, this country was brought to the verge of civil warâ. But these were small steps. The Pensions Act, for example, meant that men aged 70 and above could claim between two and five shillings per week from the government. But average male life- expectancy then was 47. Today itâs 77. Using the same ratio, and, yes, Iâm manipulating statistics here, thatâs akin to only awarding pensions to people above the age 117 today. Back then it was workable.
To go back to my analogy of the prologue, this period was when the âtrainâ was set in motion across the West. In 1914 it went up a gear. Here are the opening paragraphs of historian A. J. P. Taylorâs most celebrated book, English History 1914â1945, published in 1965.
I quote this long passage in full, because it is so telling.
Until August 1914 a sensible, law-abiding Englishman could pass through life and hardly notice the existence of the state, beyond the post office and the policeman. He could live where he liked and as he liked. He had no official number or identity card. He could travel abroad or leave his country forever without a passport or any sort of official permission. He could exchange his money for any other currency without restriction or limit. He could buy goods from any country in the world on the same terms as he bought goods at home. For that matter, a foreigner could spend his life in this country without permit and without informing the police. Unlike the countries of the European continent, the state did not require its citizens to perform military service. An Englishman could enlist, if he chose, in the regular army, the navy, or the territorials. He could also ignore, if he chose, the demands of national defence. Substantial householders were occasionally called on for jury service. Otherwise, only those helped the state, who wished to do so. The Englishman paid taxes on a modest scale: nearly ÂŁ200 million in 1913â14, or rather less than 8% of the national income.The state intervened to prevent the citizen from eating adulterated food or contracting certain infectious diseases. It imposed safety rules in factories, and prevented women, and adult males in some industries,from working excessive hours.The state saw to it that children received education up to the age of 13. Since 1 January 1909, it provided a meagre pension for the needy over the age of 70. Since 1911, it helped to insure certain classes of workers against sickness and unemployment. This tendency towards more state action was increasing. Expenditure on the social services had roughly doubled since the Liberals took office in 1905. Still, broadly speaking, the state acted only to help those who could not help themselves. It left the adult citizen alone.
All this was changed by the impact of the Great War. The mass of the people became, for the first time, active citizens. Their lives were shaped by orders from above; they were required to serve the state instead of pursuing exclusively their own affairs. Five million men entered the armed forces, many of them (though a minority) under compulsion. The Englishmanâs food was limited, and its quality changed, by government order. His freedom of movement was restricted; his conditions of work prescribed. Some industries were reduced or closed, others artificially fostered. The publication of news was fettered. Street lights were dimmed. The sacred freedom of drinking was tampered with: licensed hours were cut down, and the beer watered by order. The very time on the clocks was changed. From 1916 onwards, every Englishman got up an hour earlier in summer than he would otherwise have done, thanks to an act of parliament. The state established a hold over its citizens which, though relaxed in peacetime, was never to be removed and which the Second World war was again to increase. The history of the English state and of the English people merged for the first time.
Since the beginning of WWI , the role that the state has played in our lives has not stopped growing. This has been especially so in the case of Glasgow. The state has spent more and more, provided more and more services, more subsidy, more education, more health care, more infrastructure, more accommodation, more benefits, more regulations, more laws, more protection. The more it has provided, the worse Glasgow has fared. Is this correlation a coincidence? I donât think so.
The story of the rise and fall of Glasgow is a distilled version of the story of the rise and fall of industrial Britain â indeed the entire industrial West. In the next chapter Iâm going to show you a simple mistake that goes on being made; a dynamic by which the state, whose very aim was to help Glasgow, has actually been its âpathway to breakdownâ . . .
Life After the State is available at Amazon, Apple Books and all good bookshops, with the audiobook at Audible, Apple Books and all good audiobookshops.
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Youâll find the full list of North Sea Oil Cos here, in the second half of the article:
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If you are thinking of buying gold to protect yourself in these uncertain times, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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At the Battle of Ideas last October I went head to head with comedians Simon Evans, Nick Dixon, Paul Cox, Cressida Wetton and Ethan Green to debate who is the greatest.
I made the argument that it was John Cleese. My initial pitch has just been released, so here, for your Sunday morning consideration, it is.
I ended up winning the debate, but it was a close shave.
Who, in your view, is the greatest? And why? Please let me know in the comments.
If you enjoyed this video, please give it a like, share it somewhere, all that stuff. Thank you!
And please subscribe to this excellent Substack, if you havenât already.
Speaking of comedy, there are still a handful of tickets left for my show on Tuesday, if you happen to fancy some subversive musical satire. Thatâs the Mid-Year Review on Tuesday, May 20 in London in sunny East London. I am just going through the set list - it is going to be an epic night.
In other news, for long-suffering shareholders in STLLR Gold, the company just announced its latest PEA and MRE. We have been waiting a long time, and the market did not like it one bit. While the resource, 11 million ounces, is huge, the CAPEX to build this mine, $1.87 billion, is even huger. At $3/oz in the ground, itâs hard to think of a mining company thatâs as cheap. But those ounces are cheap for a reason. Here, in case you missed it, is my write up from yesterday.
Until next time
Dominic
If you are thinking of buying gold to protect yourself in these uncertain times, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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Today, using the political compass as our mapping tool, we explore diversity of opinion in BBC Radio comedy.
The political compass, as Iâm sure you know, incorporates the, in my view, more important authoritarian and libertarian, as well as left and right.
If you enjoyed this video, please give it a like, share it somewhere, all that stuff. Thank you!
And please subscribe to this excellent Substack, if you havenât already.
In case you missed them, here are my pieces from earlier in the week.
Gigs Coming Up
Here is a list of shows I have coming up, in case of interest.
The big one is The Mid-Year Review Wearing on next Tuesday, May 20 in London.
Otherwise itâs:
* London, Crazy Coqs, May 14. SOLD OUT. (Waiting list only)
* London, Backyard, May 20. The Mid Year Review Tickets here
* Sevenoaks, Out of Bounds Comedy Club, July 11. Tickets here.
* Bedford, Quarry Theatre, July 27. Tickets here.
* London, Crazy Coqs, Sept 24. Tickets here.
* London, Crazy Coqs, Nov 5. Tickets here.
* London, Crazy Coqs, Dec 3. Tickets here.
Happy Sunday!
Until next time,
Dominic
If you are thinking of buying gold to protect yourself in these uncertain times, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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Fun fact: the only countries that own more bitcoin than the UK are the US (which own 207,000) and China (194,000). The UK has 61,000 bitcoin - worth almost $6 billion.
They are mostly seized bitcoin, a lucky legacy from the early days when the UK was at the heart of bitcoinâs evolution. (Remember Satoshi Nakamoto wrote in British English, the Times was referenced in the Genesis block, and many of the early conferences and meet-ups happened here). The FCA, in its wisdom, put a stop to all that, and so we fell behind.
The stupidest thing our Chancellor can do, even with the parlous state of the national finances, is to sell those bitcoin. History would look back on her as an even greater fool than Gordon Brown for selling the national gold.
This legacy has given the UK an extraordinary advantage in the global arms race that is bitcoin adoption. We would be mad to spurn it.
Meanwhile, something extraordinary is taking place in the corporate world of bitcoin adoption, and I think it is going to accelerate rapidly very soon.
It is being spearheaded by Michael Saylor, Chairman and Founder of Strategy (NASDAQ:MSTR).
I recommended MicroStrategy, as it used to be called, to readers back in August 2023, largely because it was a means to get bitcoin exposure via your broker. You wouldnât have to jump through all the hoops of buying bitcoin through exchanges, which the FCA has made so difficult.
It has been a big win for readers, having more than 12xâd since we tipped it, outperforming bitcoin by a considerable margin. (Bear in mind it has undergone a 10-for-1 stock split since that article.)
You really should upgrade your subscription :)
Strategy now has some 555,450 bitcoin, meaning it has more bitcoin than any other publicly traded company in the world (excluding the ETFs, which now hold 1.35 million). Note again: there will only ever be 21 million bitcoins - rather less if you discount the 2.5 million that have likely been lost, and the 1.3 million that Satoshi never touched and probably never will).
Saylor is also the worldâs most articulate and charismatic proponent of bitcoin. The man is a genius, and I do not use that word lightly.
He has turned Strategy from a quiet, business intelligence software firm, which traded sideways for 20 years with a market cap less than $2 billion, into one of the most talked-about and traded stocks in North America with a market cap north of $100 billion. Options traders love it.
His method for doing so - extraordinarily bold at the time, though now it looks easy - was brilliantly simple. He bought bitcoin. He was worried about the erosion of the value of the corporate treasury due to inflation and currency debasement. he started slowly. Then, in buying bitcoin and using it, as tends to happen, he caught the bitcoin bug. He started issuing paper - stock, debt, convertible notes - and bought more bitcoin. Just last week he bought another 1,895 bitcoin, funding the purchase with sales of common and preferred stock.
In effect, he is creating money out of (almost) nothing and using it to buy the hardest money in the history of mankind. (Sorry, goldbugs - and you know Iâm on your team - but bitcoin is harder money, because the supply is more finite).
In doing so, he has enabled many of his investors to retire early.
But he has also set in motion something quite extraordinary.
Other companies are starting to follow his model. Iâm surprised more havenât, but it takes extraordinary courage and vision to do what he did, as demonstrated by the fact that more companies havenât copied him. Theyâre too cautious. Even with him having blazed the trail and shown the way.
I think thereâs a very good chance Strategy becomes a trillion dollar company, while Michael Saylor becomes the worldâs richest man.
To call the pre-bitcoin Strategy a zombie company is harsh, but it was not really going anywhere. Interestingly, it is zombie or near-zombie companies with large treasuries that are most likely to follow the Saylor model. Their need for a new direction is greater.
Microsoft (NASDAQ: MSFT) recently gave Saylor 5 minutes - 5 minutes! - to pitch his model to them, and duly ignored it. It is their loss. But Microsoft is Microsoft. At the moment, it doesnât need bitcoin, and it doesnât need to take the risk.
GameStop (NYSE: GME), on the other hand, is a different matter. Remember GameStop from 2021 and all those memes during lockdown? The video game retailer had more than 3,000 outlets, and its business model was considered defunct. People buy games online now. But some private investors noted that the short position exceeded 100% of the issued shares of the company, and started buying. The ensuing short squeeze sent the stock from $17 to north of $500, and, it is said, almost broke Wall Street. (Not quite, but you get the point).
The problem is GameStopâs business model is somewhat defunct. This year, it closed over 400 stores. This week, it sold its Canadian outlets.
But the company has about $4.7 billion in cash, low debt, and just raised another $1.5 billion, it announced.
What does it do now?
Bitcoin is the answer.
We donât yet know how much it has bought, but its earnings call is on June 6, so perhaps we can expect an announcement then.
The Japanese company Metaplanet (3350:TYO) is doing something similar. Formerly a zombie hotel company, now known as the âAsian MicroStrategy,â it has bought some 5,555 bitcoin. It bought another 555 this week after it issued its 13th set of bonds. The stock rose 40% on the news. Since spring 2024, when the company began its strategy, the stock has gone from below „20 to north of „600.
The same thing is happening as happened to Saylor. Initially, the company bought it as a hedge against currency debasement. It discovered it was onto something. Now it is doing all it can to issue paper - bonds, warrants, stock, you name it - and use the proceeds to buy bitcoin.
Perhaps GameStop will make a similar discovery.
A year ago, Semler Scientific (NYSE: SMLR), which provides technology products and services for healthcare providers, made its first purchase of bitcoin: 581. It couldnât stop accumulating. Now it has 3,467 bitcoin.
Sol Strategies (CA:HODL), my old company, is doing something similar for Solana, having just announced a $500 million convertible note. This company had a market cap of barely C$20 million a few months ago.
What started as a trickle is starting to flow. The more companies that do this, the bigger the rush is going to get. Corporations are changing they way they store capital. They are changing the capital they store.
The implications for how corporates hold their treasuries are one thing. The implications for fiat money are extraordinary. Issue debt - ie create money - and buy hard digital assets with it.
This is going to be a big, big theme in the next few years.
If you enjoyed this article, please like it, share it, all that stuff :)
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I thought I might share a few random bits and bobs from my little life for you to ponder today, starting with various interviews.
Here I am on the mighty James Delingpoleâs podcast, talking about most subjects, though squabbling about conspiracy theories.
Then there is this interview with Jasmine Birtles for the Money Magpie podcast, talking mostly about gold and property. (Audio on Spotify; video on YouTube).
Also this radio interview with ABC Australia, I was quite pleased with. Here it is.
And, if bitcoin is your thing, here I am on the Discovering Bitcoin podcast.
Right. Thatâs all the interviews done.
A Thief in our Midst
Turning to matters closer to home, there is a beautiful cat, pictured below, which belongs to a Chinese lady, who lives three doors up. She visits my garden every morning (the cat not the Chinese lady) as I am getting my 15 minutes of sun, purrs seductively, gets stroked, and then wanders off on its day to do who knows what. If I leave the back door open, she will come into my house and visit me at my desk, stretch out luxuriantly and, if I pick her up, start padding my chest pleasantly. I thought we had become friends.
Well, you canât trust anyone.
I now discover this feline fiend has been sneaking into my sonâs room to steal his socks, which it then brings back to its owner three doors up.
Here it is. Caught red handed.
A Rare Trip to the Theatre
On Wednesday I went to see The Comedy About Spies in the West End. Itâs not something I would have normally gone to watch, but my friend Tom Woods had some tickets he couldnât use and so off I went with my next door neighbour. I thought it was terrific. Thank you Tom!
Iâm obsessed with farce. Always have been since I first watched Fawlty Towers as a little boy. (I actually did my university thesis on Fawlty Towers). Itâs my favourite form of theatre by a country mile. I love the precision of it, along with the heightened emotion and panic. Done well there is no better narrative form, in my opinion.
Films like Midnight Run and TV series like Curb Your Enthusiasm, in my view, embrace farcical plot schemes. But if you want a farce in its purest form on film, watch Whatâs Up Doc. Just the best.
The premise of The Comedy About Spies is a little bit forced, but the jokes are fab, there are hundreds of them, one after the other, they are brilliantly executed and with incredible precision - itâs wonderful to see a show this tight. By the end I even found myself moved by the characters. I LOLed many times. What can I say? Itâs really good.
Whatâs your favourite farce? Let me know in the comments.
The South Africanisation of Everything
In other, less positive news, on Tuesday evening I found myself walking down the Kilburn High Road for the first time in about 25 years. It was always a bit rough around the edges - up there with Elephant & Castle and Streatham High Road as one of London's most worst thoroughfares - but my God it was eye-opening as to where the UK is going / has gone.
Litter everywhere, people off their faces, drugs being dealt openly on the street, beggars, a woman knocked over by a bloke cycling a Lime bike on the pavement, the bloke unapologetic, little trust between visible between people in this multi-cultural mayhem. Talk about lack of cohesion.
(I drove through Harlesden the other night and that was bad too).
It confirmed my theory of the South Africanisation of everything. (Actually itâs my friend Alexâs theory, but I have purloined it).
It prompted me to dig up this piece from a couple of years back, which at one point was the most read piece on this âere Substack. On re-reading it now, Iâm rather proud of it. Recommended.
The Secret History of Gold
In personal news, I am glad/relieved to say I submitted the final proofs for my new book on gold which comes out in August - the Secret History of Gold (I havenât actually announced it yet, which I will in due course). Writing a book is an enormous undertaking. Publicising it is an even greater one. Iâm glad stage one is complete.
How about this for a fact?
In 1930 the price of gold was ÂŁ4.25 per ounce, as it was in 1716 when Isaac Newton set the price over 200 years earlier. FOUR POUNDS 25p. Today it's ÂŁ2,475 per ounce. From ÂŁ4.25 to ÂŁ2,475.
That's how much we've been robbed by currency depreciation.
How have they (successive governments) been able to get away with this?
Because representative democracy does not work is why.
Thank goodness for gold. Thank goodness for bitcoin. Speaking of which:
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
The Mid-Year Review
Wearing my satirical comedy hat, I have a big gig coming up on May 20 in East London. These nights are usually pretty memorable - and for the right reasons.
If you are free, come along. You can get tickets here. It would be great to see you.
Finally, in case you missed this weekâs commentary, here it is:
Have a lovely bank holiday weekend.
Fun fact: Mayday - not as in the bank holiday, but as in the distress call for a ship or a plane is actually from the French, âMâaidezâ - help me. May Day is an ancient festival to celebrate the beginning of summer (or as is the case in the UK this year, the end of summer), though socialists hijacked it with International Workersâ Day.
So now we are all crying âMâaidezâ on May Day.
Tell your friends about this entertaining catch up.
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I spoke about gold this week to ABC Australia. This little interview may be of some interest. Here it is.
Meanwhile âŠ
Itâs as though the whole tariff thing never happened, the way stock markets are rallying. I think itâs seven green days in a row now.
Everybody is getting very excited about a rare technical signal we got last Thursday - - there have only been 16 of them since the S&P500 was created in 1957, including the latest on April 24, 2025. But this signal has a 100% reliability record, and has been followed by average 6-month returns of 15% and a 12-month returns of 23%.
Thatâs a pretty stellar record.
So I just wanted to offer my 2p.
The indicator - the Zweig Breadth Thrust Indicator (ZBT) - was first observed in the 1986 Martin Zweig book, Winning on Wall Street (which I confess to not having read). It occurs when a market swings from an oversold to an overbought reading within 10 trading days.
Eight of them have occurred since the book was published: in 2004, in 2009 (shortly after the March lows at 666), in 2011 after the taper tantrum, in 2013, 2015, 2018 and in 2023 twice. Now we have one coming off the âtariff tantrumâ, as Iâve just dubbed it.
However, before you go out and gamble your entire life savings, note that back in 2015 technical analyst Tom McClellan published a detailed study of ZBT signals, which went back much further than the 1957 formation of the S&P500 - all the way to 1928.
During the bear market of the 1930s Great Depression, there were multiple occurrences of the signal - 14 of them - and it was horribly unreliable: 10 led to losses or negligible gains, 2 preceded strong rallies, and 2 were flat. It was useless, in other words.
So, in short, itâs been good since 1957, but was rubbish before. A bit like stereos.
There are plenty of reasons to remain cautious. The high levels of volatility we are witnessing are consistent with a bear market not a bull market. There are also high levels of uncertainty: what is actually going to happen with tariffs? Nobody quite knows. Iâm not sure even the President.
Plus we are going into May, usually a weak time of year for the stock market.
And it may be that the consequences of Trumpâs tariff talk have not yet been felt in the US on the ground. One argument is that there has been a huge drop off in container ships leaving China. A container would typically take 30 days to reach LA, and another 10-20 days to get to the major cities - Houston, Chicago, New York et al. So the drop-off in container ships leaving China after Liberation Day wonât be felt until mid-May. If there is a pick up in shipments, that wouldnât be felt till another month after that. Some are saying supply shortages are coming to the US. Have a read of this and see what you think. Markets usually price this kind of stuff in, but you never know.
Cui bono?
Among the sectors that should benefit from Trumpâs America first policies are US domestic mining and manufacturing. Here the regulatory environment is changing fast. Trump signed an executive order on March 20 with the aim of accelerating production of critical minerals. Federal agencies have actually been mandated to look to the US for priority metals - copper, gold, nickel, uranium and so - when they previously looked abroad. We are already seeing faster permitting. I hear that formerly dormant projects are seeing activity for the first time in years. Emails are being answered promptly, applications are being processed, even in states like California.
This new environment is positive for oil and gas producers, miners, explorers and developers in the US. The problem is that commodity prices have dropped off a cliff. Thereâs always a catch.
Even so, one company that should benefit from this new macro environment is this potential multi-bagger.
On which, note I wanted to give you a related heads up.
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We have a video for your Sunday thought piece today, in which I walk round my local supermarket and identify all the foods which have seed oils (spoiler - almost all of them).
Ever wondered which foods in your supermarket are packed with seed oils? Join me on a clandestine mission around my local shop to unveil some hard truths about pizzas, hummus, sausage rolls, and even granola. Seed oils infiltrate nearly every packaged itemâand you should care.
By the way, my original piece on seed oils is one of the most read articles on this substack, interestingly enough. Here is is, if you havenât already read it:
I hope you find it useful and/or entertaining.
Have a lovely Sunday.
Dominic
PS ICYMI, hereâs my midweek commentary:
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
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Gold again today. I just canât stop writing about it.
Another day. Another new high. We touched $3,500 in the early hours of yesterday morning.
Thatâs 27 new highs in the gold price so far this year.
Yet there is still something about this bull market that doesnât feel right or complete: itâs not confirmed by silver, which should be trading north of $50. Instead itâs mired around $32. Nor is this bull market confirmed by the miners, which, in most cases, are nowhere near all-time highs.
Nevertheless, on the basis of goldâs price relative to equities, commodities and houses, as outlined last week, gold is starting to look expensive. Is it time to have an eye on the exit?
In the short term, maybe. Itâs overbought. We are going into a weak time of year for gold (May to August). But thatâs why I like physical. It stops you trading!
How about this for a chart?
It now takes more work than at any time in the last 100 years to buy an ounce of gold.
This is as much a function of declining wages in real terms, and the erosion in value of fiat, as it is the price of gold, but all the same itâs pretty incredible: how weâve all been lied to!
There are, though, many signs that gold is now fully valued.
But these are not normal times.
And a âproperâ bull market will see blow-off tops in silver and the miners. We donât have that yet.
Let me give you six more reasons (ie largely previously unmentioned reasons) not to be selling your gold.
1. You live in the UK.
(This is one I have mentioned before). Do not be fooled by the fact that the pound has been performing relatively well in the foreign exchange markets this year. It has lost 37% of its purchasing power since 2020 and has repeatedly proven to be a rotten store of value.
The interest on UK gilts is rising, meaning it is getting increasingly expensive for the government to pay for its own debt. Weâre above Liz Truss levels and the trend is rising.
Weâve got high energy costs too.
What this government is actually doing to rein in its spending is one thing. What needs to be done is something else. There is no Elon Musk taking the guillotine to it all. The scale of our government inefficiency, waste, corruption, misallocation of capital is both larger, relative to GDP, and more entrenched than in the US. At the level of government we are not even having a conversation about what needs to be done, let alone actually doing anything.
Nor is there any likelihood of this country re-industriali sing. Weâll just have to hope people buy our services, what few we offer. In the meantime weâll keep borrowing to pay for stuff.
The only way is currency debasement. There has never been a Labour government that did not devalue sterling. Think this one will be any different? Do not store your wealth in sterling. They take enough from you in taxes as it is. Donât let them take any more.
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
2. Chinese retail
Iâm endlessly wittering on about Chinaâs central bank buying gold, but one thing I confess Iâve overlooked is Chinese retail buying. Its real estate and stock markets have both been rubbish, the former especially, so they are buying gold instead.
Then think about the sheer size of Chinaâs retail market: over a billion potential buyers. Never mind central bank buying, the potential scale of this thing is enormous. What if they al buy an ounce each?
When do they stop buying and start selling? When their real estate and stock markets pick up âŠ
Meanwhile, Chinaâs central bank, the PBOC, which says it bought 5 tonnes last month, actually bought ten times that.
(De-dollarisation, which is perhaps the biggest factor of the lot, except re-monetisation, does not even make it onto this list as Iâve covered it so many times before).
3. What about Western retail? What about Western institutions?
Western retail and institutional investors have been slow to this bull market and are under-allocated. As my buddy Ross Norman says, âthis gold rally has not, to date, been driven by retail investors buying coins and bars, high net clients clamouring for physical, nor institutions buying the gold ETF, not even speculative flows to any great extent. This has been an incredibly low participation rally. A stealth run evenâ.
Portfolios are roughly 2% allocated to gold at present. They were four times that at the peak of the last bull market in 2011.
That means a lot of room for more Western buying.
Since the confiscation of Russian assets, central banks have bought every pullback to the 50-day moving average. But itâs not just central banks now, retail and institutional investors the world over are coming to the party.
And if you think theyâre underweight gold, wait until you see how underweight they are gold miners. (Even these are slowly starting to move - MTL anyone :)?)
4. Gold vs the Nasdaq - OMG
Trends in this ratio tend to go on for a long time, like ten years or more.
How about this for a chart?
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Congratulations to all who bought. Gold is now trading above $3,300. Goldman Sachs has raised its target to $4,000/oz. Itâs all going swimmingly. But nothing lasts forever.
(Actually gold does, but you know what I mean).
So, today, I want to ask: when do we sell our gold?
To answer that question, I am going to look at some long-term ratios.
How is gold looking relative to stocks, to other commodities and against house prices? (Weâll look at gold versus house prices in the US, the UK and Australia).
There is a strong argument, by the way, for never selling your gold, especially if youâre in a country such as the UK with an unreliable national currency. If you donât need the money, keep the gold and pass it on to your heirs - and tell them to do the same. But macro conditions are not always as gold-friendly as they are now. See the 1980s and 90s for more details.
Whatâs more, given how these trade wars are unfolding, with unpayable levels of debt across the western world and Chinaâs extraordinary accumulation of gold, there is a significant chance - say, 25% - that gold ends up being remonetized somehow.
(If China wants global reserve status for its yuan, itâll almost certainly have to make it exchangeable for gold - meaning higher gold prices. But even if not, all China has to do is declare itâs real gold holdings, and the price will rocket).
In the event of remonetisation, which also means some kind of crisis, gold prices will be dramatically higher. However, itâs also likely that your gold would either be confiscated or heavily taxed, so that the gains from the revaluation (aka fiat devaluation) pass to the state rather than the citizen, as happened in the US under Roosevelt in 1933.
But let us leave such speculation for another day.
As always, if you are looking to buy gold, the bullion dealer I use and recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. Find out more here.
Gold vs Stocks
I want to start with the Dow-to-Gold ratio: how many ounces of gold does it take to buy the Dow?
There is much history in this chart. Itâs quite something.
You can see how, most of the time, the ratio stays within that green band. It is only at points of maximum extremity that it goes beyond, such as:
* The peak of the stock market in 1929
* The Great Depression in 1932
* The suppression of gold in the 1960s, ending with the collapse of the gold standard in 1971
* The peak of 1970s gold mania, inflation, and the Soviet invasion of Afghanistan
* The end of the gold bear market in 2000 and the peak of Dotcom
Today, with gold at $3,300 and the Dow at 40,000, it takes 12 ounces of gold to buy the Dow - and we are in the low- to mid-range of that green prediction band.
At the peak of the last gold bull market in September 2011, the ratio reached 5.7.
To reach such a level again, either the gold price would have to double (possible) or the Dow would have to halve (unlikely, I would have thought).
Most probable is something along the lines of the Dow falling 25% and gold rising another 50%.
Would this ratio ever go to 1:1, as it did in 1980? If so, we would be looking at a gold price in the tens of thousands.
Itâs possible, I suppose.
I think a ratio of 5-8 is a reasonable possible target.
Hereâs a similar history of gold against the S&P 500:
Today, we are at 1.7. It takes 1.7 oz to buy the S&P.
The ratio reached 0.2 in the 1930s and 1940s. It went to 0.13 in 1980.
I doubt weâll see that again.
But that 2011 level of 0.6, or perhaps even a little below if things get really spicy, is not an unreasonable target, I suppose. That could mean the S&P500 at 4,200 and gold at $7,000/oz. Something like that.
So thatâs some bull food for you.
In the interests of balance, letâs now put some bearish fodder on the menu.
Weâll start with gold versus oil - and the bad news. Then weâll look at gold and house prices.
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Iâm excited to share a brand-new video diving into one of the most gripping questions in finance and geopolitics: How much gold does America actually have?
You may have read my piece on this from a few weeks back. Here it is in video form: a deep dive into the rumours, history, and high stakes surrounding US gold reservesâand what the upcoming audit might reveal.
My thanks go to Will Freeman for all his hard work crafting this.
Whether youâre revisiting the mystery or uncovering it for the first time, this is a story that matters in todayâs world. Please let me know what you think in the comments.
Given everything that is going on in the world, we recommend people to own some gold in the portfolio. Our recommended bullion dealer I recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. More here.
And if you missed yesterdayâs piece - also on gold - here it is.
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 broke out to new highs on Friday: $3,237/oz. It is proving one of the prime beneficiaries of all the market mayhem, and no surprise.
Gold is your hedge against government, and this is all a creation of government.
Where to park capital? Equities are all over the place and will continue to be for the foreseeable future. With US authorities transparent about wanting it lower, the US dollar is not the safe haven itâs been since 2007 in market sell-offs. As for treasuries, theyâve become a weapon in the trade wars.
Inert gold, on the other hand, is neutral. It doesnât care which side of the trade wars, the culture wars, or any other wars youâre on, and at the moment, it seems everyone wants a piece.
China, we learn thanks to the sleuthing of analyst Jan Nieuwenhuijs, bought another 570 tonnes in 2024. Who knows how much more it has bought in 2025? To put that 570-tonne number in perspective, the UKâs total holdings are 310 tonnes.
Tell your friends.
Whatâs driving it all?
This move in gold started shortly after the US confiscated $300 billion in Russian state holdings after Russiaâs invasion of Ukraine. It hasnât been driven by retail. Central bank buying has pushed up the price.
If youâre not on Team US or Team G7, why own assets they can confiscate, like dollars or treasuries?
Own gold instead. The US would have to invade you to take your goldâor send in Kellyâs Heroes.
In 1950, gold made up 70% of international reserves. In the noughties, it was just 10%. The dollar, meanwhile, reached 60%, with the euro at another 20%.
Now gold is at 20%, the dollar at 45%, and the euro at 15%. The trend is clear, as this cool little video from Nieuwenhuijs and Money Metals shows:
In my opinion, weâll be at 40% five years from now.
Hereâs gold since late 2022. Every pullback has been bought. Itâs as though someone with deep pockets is saying, âBuy the pullback every time it hits the 50-day moving average (red line).â
The UK seems to have been forgotten in this global rout, but I have little doubt the chickens of our shocking national finances and woeful productivity will soon come home to roost in the form of a sterling crisis. Thatâs when we overlooked Britishers will be mighty glad we have our gold.
Gold is now ÂŁ2,475/oz. Another year of this, and weâll be north of ÂŁ3,000.
Summer is approaching, and May to August is typically when gold is weakest. Take advantage of pullbacks, is my advice. Do what the Chinese are doing. Theyâre smarter than we are (when it comes to gold, at least).
With oil having cratered, we should finally see gold miners fetch a proper bid. (They are already moving a little). Energy can represent 15% to 40% of mining costs. Lower costs and a higher price for the final product should mean they make more money, and thus higher share prices. (Iâll cover miners again soon, I promise, though I am worried Iâll jinx it)
Hereâs something Charlie Morris observedâand you really should subscribe to his gold newsletter, Atlas Pulse; itâs top dog in a crowded field - itâs free. GDX is the largest gold mining ETF by far. Despite higher gold prices, itâs seen outflows of 25% over the past year. When inflows start, these things will rocket. The sector is tiny relative to the capital out there.
Hereâs three years of Brent, FYI. Itâs almost the reverse of gold. Good for mining.
If youâre interested in buying gold, by the way - and you should own some, if you donât already, given everything that is going on - the bullion dealer I recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. More here.
A 2-minute video for your Sunday entertainment
Iâve got lots of content coming up over the next fortnight. Iâve just returned from two days of bitcoin conferences, so Iâm fired up about that. Iâve got that gold mining piece to write. I have a lot more to say about gold. I have a fab video to share with you which I will send out tomorrow. And I want to explore where we should deploy capital in all this market mayhem: which sectors will do well in tariff wars, and which wonât. So, plenty to come.
You ought to subscribe.
In the meantime, as itâs the weekend, enjoy this silly little 3-minute vid I put together for my comedy Substack - not to be taken seriously - about alien invaders on planet Earth stealing our gold at the dawn of civilization. (Click the image below)
Finally, if youâre interested in gold and havenât already seen it, hereâs my guide to investing int he shiny stuff.
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 -
This is a free preview of a paid episode. To hear more, visit www.theflyingfrisby.com
I donât normally put out market commentary on a Sunday, especially on a Sunday evening, but the events of last week were so extraordinary I feel I have to.
We are in full-on crash mode, it seems. The price action reminds me of the Covid panic or even 2008. It almost doesnât matter what you own. Portfolios around the world have been battered.
The declines in the final two days of last week, since so-called âLiberation Dayâ, when President Trump announced his tariffs, are roughly as follows:
* Bitcoin: -1%
* Gold: -3%
* S&P 500: -9%
* Nasdaq: -10%
* Brent Crude: -12.5%
* Copper: -13% (phew!)
Magnificent Seven:
* MSFT: -6%
* GOOGL: -7%
* AMZN: -13%
* META: -14%
* NVDA: -15%
* TSLA: -15%
* AAPL: -17%
We are, of course, very long gold and bitcoin here at The Flying Frisby, so I guess weâve come out of this comparatively unscathed. Whatâs more, we have a good allocation to wealth preservation in the Dolce Far Niente portfolio. But our speculative positions, like everyoneâs, have been hit, and Iâm angry with myself for not getting more defensive sooner. Iâve been saying for some time I donât like the price action one bit- eg here and here - and the words of that freaky preacher keep ringing in my ears.
In any case, thereâs no point beating myself up. Life is easy in hindsight. Investing is even easier.
I spent considerable time on Friday and Saturday reading and watching interviews, trying to understand exactly what these tariffs are about and what the implications are, and I think I have come up with something of a roadmap.
Weâll start by explaining the plan. Then weâll look at what comes next. And, finally, weâll look at what to do with some of our recent speculations.
Why our opinion is irrelevant
Iâm a free-trade guy, or at least I was. Iâm not quite sure what I am any more. But Iâm not going to waste my time - or yours - here with arguments about whether tariffs are a good thing or not. Thereâs no point. My time - and yours - would be as well spent howling at the moon. As far as I know, Donald Trump isnât a reader of The Flying Frisby. He knows his own mind and heâs not going to turn to this Substack, or any of our social media feeds, for policy advice.
Donât be like DT. Subscribe to the Flying Frisby.
Tariffs are here, and theyâre here to stay. Trump is attempting a major economic redesign - the kind of reset that those who rail against economic injustice have been calling for for years. Now itâs here, and as we look at our portfolios, many of us arenât so sure we want it.
What I want to understand, first, is the logic behind the tariffs, then their implications, so we can best navigate them.
The first thing to note Iâve already said: Trump isnât going to backtrack. As I watched tumbling share prices on Friday, I thought to myselfâheâs going to backtrack. He has to. But Trump isnât the Conservative Party, or indeed the Labour Party, changing tack at the slightest sign of discontent.
Critics say heâll cave if stocks keep tanking, Iâm not so sure. His track record suggests otherwise, and heâs put a loyal and strong team together to back him up and implement his plan.
Heâs going to give his tariffs longer than a couple of days to have an impact.
Many say Trump hasnât properly thought this through. Of course, he has. Heâs been thinking about it night and day for years. Heâll have been thinking about little else as he wrestles with the problem of how to reinvigorate industrial America. That doesnât mean his plan will work, but the idea he hasnât thought about it is just a facile invention of Trump perma-critics to use against him.
Trump may be a bit of a clown - he has a comedic instinct and canât resist a gag - but heâs not stupid. Clowns rarely are.
Why Trumpâs doing what heâs doing
Trump intensely dislikes the decimation of industrial America, which began in the 1980s and still continues, with the outsourcing of manufacturing to Asia and elsewhere. Even 40 years ago , he was giving interviews about this (hence why I say he has thought it through) and he wants to restore it. Thatâs part of what he means when he says, âMake America great again.â
He can see that while the American coasts may have thrived, thanks largely to finance and tech, much of what is in between has not. This is the America he wants to make great again.
There are two reasons he wants to revive American industry.
First, is that he believes the model by which America takes on debt to buy cheap stuff from China is unsustainable and has to stop - and the sooner the better. So itâs for the good of the American economy.
Second, is for reasons of security. While China and the US may be trading partners now, they are also rivals, and if your rival is making your essential military and strategic equipment and components, whether itâs semi-conductors, industrial and consumer electronics, pharmaceuticals or battery and energy storage systems, you have a big problem on your hands. Covid exposed just how fragile supply chains are, and Trump has taken it as an early warning sign.
Something very similar, as readers of Daylight Robbery will know, happened in the US after its War of 1812 with the British, a war that lasted three years. The war badly exposed US over-reliance on British industrial goods, so the US introduced tariffs in 1816 to try and nurture and grow its own industry. Those tariffs ended up having grave long-term consequences (they were a major factor in the lead up to the civil war - but that was 45 years later). In the short term, they worked. (More on this here).
Coming to America
âCome and build your factories in the US,â Trump is saying. âThen you wonât pay tariffs. Relocate from China, Mexico, Vietnam.â
Hereâs a case in point. Jaguar Land Rover has already announced itâs halting shipments to the US for one month. Now, this companyâs management - remember its recent rebrand? (see below) - is on the opposing side of the culture war to Donald Trump and MAGA, so that is one factor at play. But when I wrote my piece about how good self-driving Teslas are, a lot of people commented that the Jags are better. I donât knowâI havenât been in one. But for sure, Jaguar Land Rover wonât want to lose momentum or network effect in this all important arms race, particularly while Tesla is struggling: 45% off its recent highs, victim to nationwide vandalism and Elon Musk no longer the darling but the villain of the eco-warrior left. So what does Jaguar do now? Not sell into the all-important US markets? Pay 25% tariffs? Or build a factory stateside? I think the answer is fairly obvious.
Whatever it chooses to do, itâs going to take longer than a couple of days.
With DOGE and the shrinking of the US state, meanwhile, thereâll be plenty of workers to fill those new positions. As the US state shrinks, its private sector grows. Thatâs the idea, anyway.
His tariffs may lead to higher prices for American consumers, as many have pointed out, but not as high as widely thought, argues Treasury Secretary Scott Bessent in this recent interview with Tucker Carlson (a recommended watch, by the way). Bessentâs calculations are that tariffs wonât gouge consumers as much as feared. Whatâs more, the revenue from tariffs could eventually enable lower levels of taxation back home, which will further ease pressure on US citizens, those who work at least.
What about the upheaval Trump tariffs cause to the rest of the world? Not his problem. America first.
Yet heâs creating enormous uncertainty, and markets are tanking. On Friday, markets were in full panic mode, and the baby was being thrown out with the bathwater. What about that?
The amazing stat which shows why Trump wonât give two hoots about the stock market - for now
At this point, I want to press upon you one of the most telling statistics Iâve seen for some time:
* The richest 1% of Americans own 50% of US stocks, worth $23 trillion.
* The bottom 50% of U.S. adults hold only 1% of stocks, worth $480 billion.
If you expand to the top 10%, that group holds 87% of stocks, valued at $36 trillion.
If Iâm correctly inferring Bessentâs comments, at this current point, Trump doesnât care about Wall Street, or Silicon Valley, or the parts of the US economy that have become so rich over the past 40 years. Itâs the bottom 50 - or even 80% - that Trump is concerned with. They hardly own any stocks, so the market mayhem wonât matter so much to them. Wall Street has made good for decades. It can suffer a bit of pain while Main Street gets rebuilt.
Itâs worth noting, by the way, that US equities were enormously overvalued when Trump took office, so some kind of correction had to happen anyway. The Shiller price-to-earnings ratio was at its third highest level in history (the only times it was higher was 2000 and 2007, and we all know what happened next). Thatâs why Warren Buffett built up his enormous cash position two months ago ($330 billion). Buffett, by the way, really is a genius.
Best to get the inevitable correction out of the way early in the Presidency. Whatâs more, as Bessent points out, these market declines began several weeks ago with Chinaâs AI announcement of DeepSeek, the app that can do everything ChatGPT and Grok can do with much lower power use. Prior to that, the Magnificent Seven had driven the extraordinary gains seen in the S&P 500 over the previous 18 months. Strip them out, and the picture was much less rosy. (Now the Mag7âre down 30-45%).
Trumpâs announcement may have pricked the bubble, but a bubble is still a bubble and if one thing doesnât burst it, something else will.
Trumpâs plan, meanwhile, (and Iâm not saying itâll work, everyone will have their opinion) is not to boost the stock market. It is to reset the economy. The economy and the stock market are not the same thing.
Some numbers
The US is trapped in a vicious debt spiral.
$36 trillion is the current US National Debt. The US will spend $6 trillion this year, while only collecting $4 trillion in tax revenue. So there is a $2 trillion deficit. It will borrow the difference, and the debt will grow to $38 trillion.
The DOGE plan is reduce the deficit by 1 trillion by getting rid of waste, corruption and more.
The tariff plan is to raise another half trillion in revenue. Plus, as a result of tariffs, more business relocates to the US, which also increases revenue. Mass deregulation will also make doing business easier and further add to both economic growth and tax revenue.
Then there is Trump citizenship plan. According to Grok, 1 million people worldwide could realistically afford to buy a US residency for $5 million. Letâs say 10% of them did that. Thatâs another $500 billion and the $2 trillion deficit is eradicated.
Suddenly the US is running a surplus.
This all means the US gets in a better position to lower taxes, which will further increase revenue (the golden rule of Daylight Robbery), because trade will increase as a result. Trump could lower corporation taxes to 15% which would be a lot more attractive than the rates of 20-30% paid in Europe. So business relocates to the US. He could lower income taxes, especially for high earners, thereby attracting higher earners to the US.
Meanwhile, the cost of all that debt starts to come down, thereby freeing up even more capital.
And, suddenly, you are in a virtuous cycle.
These numbers make it look easy. But to get there takes an enormous fight - standing up to vested interests, taking on a cultural establishment that detests you, the media, the woke, Trump Derangement Syndrome and so on. Itâs not easy, and it requires a lot of backbone.
The three essential keys to the Trump reset
So what fundamentals does this economic reset need, and how does the US get there?
First, it needs cheap energy. Cheap energy is fundamental to economic growth: economies need energy. Thatâs happening. Crude has fallen more than 10% since âLiberation Dayâ. Falls were turbocharged when, on Thursday, 8 OPEC nations made the surprise announcement that they were ending output cuts and increasing supply. Plus we have the domestic policy of drill baby drill. What with the plethora of natural gas and other shale energy co-products, weâre going to see a lot of cheap energy. (Which is going to make our own Ed Milibandâs high-energy-cost policies look even more deranged.)
Second, it needs a cheaper dollar. A weaker dollar will encourage investment and relocation from overseas (it makes the US cheaper). Thatâs happening too. Indeed, what was so unique about this weekâs panic is that the dollarâusually the first port of call in a financial stormâdidnât rise (at least not at first). Here is the US dollar index. Itâs coming down. Itâs already down almost 10% from its highs. That means America just got 10% cheaper to invest in. A move back to the low 90s, or even below, would be ideal.
What is the third component?
And what next for markets?
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To watch a video version of this article, click here:
We have more stock tips for you today with multibag potential.
But first, letâs get political.
Remember how the Conservative Party from David Cameron onwards effectively abandoned the right and became social democrats?
Increased state spending everywhere, so that instead of shrinking the state they grew it, more taxes, higher taxes, more planning and regulation, more quangos and experts, âowningâ the NHS, green subsidies, Net Zero, social liberalism, MPs who didnât represent the views of the membership, increased immigration, weaker policing, increased crime - and so on. Those were the days, eh?
The Tories were so bereft of first principle, and so terrified of the left, particularly the left-wing media, that they pandered to it and eventually became it.
I remember going on podcasts 18 months ago making the argument that Labour would do the same thing and lurch right.
After an insert-disparaging-adjective-here first six months, which saw Prime Minister Keir Starmerâs approval ratings drop below even those of Rishi Sunak, we are starting to see that happen.
With the books not balancing, suddenly spending is being cut. Not by a lot, but itâs happening. Starmer has axed NHS England, something the Tories would never have dared do, criticising âtwo layers of bureaucracyâ. We have what the Independent calls âAusterity 2.0â with cuts to disability benefits and welfare spending. The foreign aid budget has been cut to spend more on defence. All of a sudden he is as champion of small businesses. Heck, heâs even fixing the potholes. Meanwhile, he is boasting on X about âsecuring our bordersâ and âremoving illegal immigrants at the highest rate in 8 yearsâ.
âIf you donât have the right to be in this country, then you shouldnât be here. Itâs that simple,â he said yesterday. Does that sound like a Labour leader or Nigel Farage?
When fantasy meets reality
The next right-wing shoe to drop is fossil fuels.
Ed Milibandâs fantasies of climate justice and clean energy are slowly being exposed. His green delusion is going to be abandoned. If an economy is to grow, then it must consume more energy, not less. Wind and solar power are too expensive and too unreliable, never mind the damage they do to the environment and the carbon footprint they leave. They are already pledging to paint offshore wind farms black because of all the birds they are killing. Finally, an admission of the wildlife these things destroy.
Offshore wind is not going to replace oil and gas. Fossil fuels remain a better, cheaper, cleaner and more reliable source of energy. For an already heavily taxed country that is living well beyond its means, where growth is the only thing that can save it, with the added pressure of Trump tariffs soon coming, needlessly expensive energy is not possible.
The Reform party is making the cost of Net Zero one of its main lines of attack. All Labour has to do is further abandon the left of its party, a process which is already half complete, just as the Tories abandoned the right, and let Miliband go, which is inevitable anyway, and the Reform weapon is blunted.
All the above is preamble to my main argument today. North Sea oil and gas is going to stage a comeback. This is going to happen, as sure as eggs are eggs. Political and economic reality mean it is inevitable. Otherwise, the national finances, and with them the Labour Government, evaporate. Power is more important to politicians than adhering to any zealotry, green or otherwise.
The ban on new North Sea oil and gas licenses will be lifted. The taxes on North Sea oil companies will be lowered to incentivise activity (itâs effectively 78% at present. Are legislators demented?). And all those companies that saw their businesses and market caps decimated by this deluded religion are going to make a comeback. Some will multiply many times over. Thatâs what I think is going to happen, anyway.
This also means, for we observers on the foothills of inconsequence, the time is nigh to buy North Sea oil and gas companies.
So what are these companies and how do we invest?
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A rant for you this Sunday morning. Enjoy!
If you are buying gold to protect yourself in these uncertain times - and you should if you do not already own some - as always I recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. More here.
By the way, in case of interest, I have the following comedy shows coming up int he next fortnight.
* Bath, April 3. Tickets here. SOLD OUT
* Bordon, Hampshire. April 12. Tickets here.
* London, Crazy Coqs, May 14. SOLD OUT. (Waiting list only)
* London, Backyard, May 20. The Mid Year Review Tickets here
* London, Crazy Coqs, Sept 24. Tickets here.
* London, Crazy Coqs, Nov 5. Tickets here.
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From this weekâs Moneyweek Magazine âŠ
Two rumours have been swirling around the gold markets for many years. Some have called them conspiracy theories. Others note that conspiracy theories often prove true. Whatâs the difference between conspiracy and truth? About 30 years.
The first is that China has far more gold than it says it does. We actually now know this to be true. The other is that America has far less than the 8,133 tonnes of gold it says it possesses.
This rumour has been doing the rounds since 1971, when Peter Beter, a lawyer and financial adviser to former president John F. Kennedy, said he had been informed that gold in Fort Knox had been removed. He went on to write a best-selling book about it: The Conspiracy Against the Dollar.
The problem is a total lack of transparency on the part of the US authorities, something that according to current US president Donald Trump, and the head of the Department of Government Efficiency, Elon Musk, will not be the case for much longer.
Roosevelt triggers a boom
But to understand this situation we need to go back in time, all the way to 1933, when US president Franklin D. Roosevelt famously devalued the US dollar and revalued gold upwards by 70%, from $20 an ounce (oz) to $35/oz, in order to bolster growth. US gold reserves would increase to unprecedented levels in the next 15 years.
Some of the gold came from US citizens. It was now illegal for them to own gold and they had to hand any they owned over to the authorities. Some came from the fact that the government then bought all US mined supply (the upwards revaluation of gold triggered a mining boom) and any gold imported to the US assay office. The US even began buying gold on foreign markets to protect the new higher price.
Thus US official holdings in 1939 on the eve of World War II totalled 15,679 tonnes. They would only increase. With Nazi invasions, European nations sent all the gold they could across the Atlantic, either for safekeeping or to buy essential supplies; 1949 saw the high watermark of US gold holdings â 22,000 tonnes, as much as half of all the gold ever mined.
In July 1944, with it clear that the Allies were going to win the war, representatives from the 44 Allied nations met at the Mount Washington Hotel in Bretton Woods for the United Nations Monetary and Financial Conference to design a new system of money for the new world order.
International accounts would be settled in dollars, and those dollars were convertible to gold at $35/oz. Countries had to maintain exchange rates within 1% of the US dollar. In effect, the US was on a gold standard, and the rest of the world was on a dollar standard.
The system relied on the integrity of the US dollar to work, and that integrity was in question, even before the end of the war. The June 1945 Federal Reserve Act reduced required gold reserves for notes outstanding from 40% to 25%, and against deposits from 35% to 25%. Between 1944 and 1954, because of increased supply, the dollar lost a third of its purchasing power, though the $35 Bretton Woods price remained.
âSix major European countries,along with the UK, co-ordinated sales to suppress the gold priceâ
US government spending was soaring, and it began running balance of payments deficits â made worse by the costs of foreign aid, Americaâs new welfare systems and maintaining a military presence in Europe and Asia. Gold began leaving the US. By 1965 reserves had fallen by 9,500 tonnes, down 40% from the 1949 peak.
Successive US administrations tried to stop the outflow, without success. Dwight D. Eisenhower banned Americans from buying gold overseas, Kennedy imposed the âequalisation taxâ on foreign investments, and Lyndon B. Johnson discouraged Americans from travelling altogether. âWe may need to forgo the pleasures of Europe for a while,â he said.
Fears that the dollar would devalue following the election (won by Kennedy) sent the gold price in London to $40/oz. The Bank of England, in collusion with the Federal Reserve, began increasing gold sales to keep the price down.
Thus did the London gold pool begin, with the addition of six major European nations the following year (Belgium, France, the Netherlands, West Germany, Italy and Switzerland), which co-ordinated sales to suppress, or âstabiliseâ, to use their word, the gold price and defuse unwanted, upward market pressure.
But the pool struggled against growing demand. In 1965, an ounce of gold was still $35, but the purchasing power of the dollar had decreased by 57% from 1945, while gold reserves had also fallen sharply. The culprit was the costs of the US government, in particular the Vietnam War and president Johnsonâs enormous welfare spending.
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Bretton Woods under pressure
With inflation rising at home and international confidence in the dollar waning, these programmes were not just costly â they undermined Bretton Woods. Non-American nations felt aggrieved that they had to produce $100 worth of goods and services to get a $100 bill, when the US could just print one. French finance minister ValeÌry Giscard dâEstaing called it âAmericaâs exorbitant privilegeâ.
President de Gaulle, meanwhile, had had enough. He ignored the pool to turn all French dollars and sterling balances into gold. The French even sent battleships to New York to collect their gold. De Gaulle became the target of several assassination attempts â coincidence, Iâm sure. There were rather more US dollars in the world than there was gold to back them, he felt, and he was right.
By 1967, US foreign liabilities were $36bn, but it only had $12bn in gold reserves â a third of what was needed to back the dollar. West Germany, Spain and Switzerland began demanding gold for their dollars. Even the British, with sterling going through one of its quadrennial collapses, asked the Americans to prepare $3bn worth of Fort Knox gold for withdrawal. Private gold demand was overwhelming.
âThe floor of the Bank of Englandâs weighing room collapsed under the weight of all the bullionâ
In November 1967, the British government devalued the pound by 14%, from $2.80 to $2.40, in order to âachieve a substantial surplus on the balance of payments consistent with economic growth and full employmentâ.
In that month, the London market saw greater bullion demand than it would typically see in nine: as much as 100 tonnes per day. To stem demand they banned forward buying, leverage and the purchase of gold with credit. The pool still lost 1,400 tonnes that year, more than a whole yearâs mined supply.
Selling pressure on the US dollar only increased when the Viet Cong and North Vietnamese Peopleâs Army of Vietnam launched the first of a series of surprise attacks on US armed forces in South Vietnam in January 1968.
Desperate to prop up the system, US military aircraft flew tonne after tonne of gold to RAF Lakenheath from where it was trucked in military convoys to the back entrance of the Bank of England: at one point the floor of the Bank of Englandâs weighing room collapsed under the weight of all the gold.
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Shoring up the system
In the four days between 11 March and 14 March 1968, some 780 tonnes were sold to market. The effort to protect the price was deemed hopeless. On 15 March, UK chancellor Roy Jenkins declared a bank holiday, and the gold market was closed for a fortnight, âat the request of the United Statesâ.
Zurich also closed. Paris stayed open with gold trading at a 25% premium. All in all, the final 15 months saw over 3,000 tonnes sold to market to protect that $35 price. The pool had lost more than an eighth of its reserves.
Two days later, in the rushed-through Washington Agreement, governors of the central banks in the gold pool declared there would be one fixed gold marketfor official government transactions at $35/oz and another, free-market, price for private transactions. Not for the last time, central bankers were living in a world of their own.
Gold is one thing. Gold standards are another. They tend not to last, particularly bogus ones such as this one, under which citizens themselves did not handle gold. Keynes called them barbarous â ironic, perhaps, given that he was one of the architects of this one.
In August 1971, president Nixon took the US off the gold standard, a âtemporaryâ measure that remains more than 50 years later. For the first time in history, gold â Switzerland aside â played no part in the global monetary system.
Of course it was the fault of the speculators. It always is. âI have directed the secretary of the Treasury to take the action necessary to defend the dollar against the speculators,â Nixon said, deflecting responsibility, and âto suspend temporarily the convertibility of the dollar into goldâ.
High time for a US gold audit
The US keeps its gold in four places: at Fort Knox, Kentucky (roughly 56% of its 8,133 tonnes); at the Federal Reserve Bank of New York (8%); and the remaining 36% at the mints in Denver and West Point. There has not been a proper public audit of this gold since 1953. There have been internal audits, especially between 1974 and 1986, but these were not transparent.
There are many people, among them gold experts, who do not believe the gold is there. The US spent it trying to suppress the gold price in the 1960s, theysay. But in this new age of American transparency, both Trump and Musk have repeatedly pledged that this gold will be audited.
There is talk of it being done on a livestream. Trump has even suggested the gold has been stolen. âWeâre actually going to Fort Knox to see if the gold is there,â he said, âbecause maybe somebody stole the gold. Tonnes of gold.â
Theyâve been making such light of it, one has to assume they know the gold is there. Musk was laughing about the conspiracies on podcasts, and he even posted a picture of a Fort Knox starter kit: a brick and some gold spray. I canât see how they would be joking if there were any serious doubts.
Secretary of the Treasury, Scott Bessent, has said quite categorically that the gold is there. The last audit was in September 2024, he said in a recent Bloomberg interview, before looking down the camera and assuring the US people that âall the gold is present and accounted forâ. But this would only have been an internal audit, and it would not have been a full audit.
According to the US Mint, âthe only gold removed has been very small quantities used to test the purity of gold during regularly scheduled auditsâ. No other gold has been transferred to or from the depository âfor many yearsâ. How long is many years, though? As far back as the 1960s?
Itâs quite astonishing just how secretive the whole thing is. They opened the vaults for a congressional delegation and certain members of the press to view the gold in 1974. There were rumours swirling about then too. âWeâve never done this before and weâll probably never do it again,â said the then director of the US Mint Mary Brooks.
âThe gold commonly confiscated under Roosevelt contained some copper, and is not pure enough for saleâ
Then in 2017, during Trumpâs first administration, Treasury secretary Steven Mnuchin and Senate majority leader Mitch McConnell were invited to view the gold. âThe gold was there,â Mnuchin said. He is âsureâ nobodyâs moved it. There are âserious security protocols in placeâ. But there are more than 4,000 tonnes in Fort Knox. A tonne would be about the size of a medium to large suitcase. Did he see all 4,000 of them?
The other big issue is the purity of the gold. What is there might not all be of good delivery quality, meaning it would not be readily accepted in international bullion markets. If much of the gold is the bullion Roosevelt confiscated in the 1930s, it will be in the form of âcoinmeltâ: melted down coins.
The commonly confiscated coins, such as the $20 double eagle, were only 90% pure and mixed with copper to make them harder. When melted down, they were not always properly refined to modern standards, while the bars they were melted into weighed 320-330 ounces, not the 400 oz bars of good delivery standard today. In practice, this means Fort Knox gold would not be accepted without additional processing.
But, until a proper audit takes place, this is all speculation, albeit reasoned speculation. We donât know the full facts. The reasons given for not conducting a full audit are flimsy: we donât need to, it would be too much of an undertaking. Please!
If the US gold turns out not to be there, then the gold price goes up â potentially a lot. If it is there, itâs business as usual.
For now, Iâd say the markets are behaving as though it is business as usual. They are climbing, and every dip is being bought, largely, it seems, by central banks (especially in Asia), who are diversifying their holdings and de-dollarising. But this audit cannot come quickly enough.
Large volumes of physical gold - over 1,000 tonnes by some counts - have recently been transferred from London to New York. One theory is that was the gold was transferred in anticipation of tariffs. Another is that it was the US buying ahead of its audit. We will soon find out.
Finally, I would just like to debunk one theory doing the rounds. US gold is currently marked to market at $42/oz. After the audit, those 8,133 tonnes â assuming they are there and of good delivery quality â could be marked to market at current prices, meaning a significant uplift in the value of holdings.
The theory doing the rounds is that Treasury ecretary Bessent will use some of the upwards revaluation to monetise the balance sheet â not unlike how Roosevelt did in 1933 â to create funds for, among other things, the strategic bitcoin reserve. But Bessent has quite clearly stated that is not his intention.
This article first appeared in Moneyweek Magazine.
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