The Flying Frisby - money, markets and more

US inflation numbers came in on Tuesday at 8.3%. The markets were expecting something lower – after all, the oil price had fallen back, not to mention most commodities.8.3% was above expectations and the markets did not like it one bit. Down they went like liquid through an open sluice. Hopes and dreams of a sustained recovery since the June carnage went with them.Actually, not totally.While the S&P 500, which I use as a barometer for global markets, has been making a sequence of lower highs since the beginning of the year – ie, the broader trend is down – it has also been making a series of higher lows since June, meaning the intermediate trend is up.Yesterday’s lows are still higher than last week’s lows, which were higher than the July lows, which were higher than the June lows. So there is something of an intermediate term up-trend in place.If you draw a trendline off both the lows and the highs, they are both still intact and you end up with something of a wedge pattern, as the chart below shows.If you dabble in such dark arts as day trading, or short-term flips, I would wager that the odds – in the short term – favour going long with a stop just below that rising trend line, with a target  somewhere near the falling blue line around 4,200. That said, as we have just seen, rallies could fail at any time, so if the market moves in your favour, you would want to keep moving your stops up to protect any gains.Unlike some patterns – double tops, head and shoulders highs and lows, for example, which I find quite useful – I have over the years found wedges to be utterly useless as predictive tools. So I am not going to forecast off the back of it.A long-term downtrend will, in a month or two, assuming both those trend lines hold, which is some assumption itself, shortly butt up against a jittery, shorter-term uptrend and one of them will prevail. Seasonally, we are in a bad time of year for markets. The last four Septembers have all seen sell-offs of between 5% and 20%, so stockmarket-wise, I do not  see this as a time to be taking huge risks or making large bets. It’s a time for prudence and capital conservation.Silver – huge potential that’s never realisedI was, however, encouraged by the action in precious metals, in particular the dogs of recent months silver and platinum. Yes, they sold off, but on a relative basis they help up well.This comes on the back of an extraordinary day on Monday when silver rose some 5%. My ambivalence towards silver is long since documented. There is no other metal with as much potential. It is both a monetary metal and an industrial metal, used in virtually every computer related application you can think of – every phone, every computer contains silver –  not to mention all the bio and other tech.It “should” be a play on both currency debasement and technological progress. Yet in practice it proves to be neither and, at $19, is trading at the same price it was in 1980. There is about 15 times as much silver in the earth’s crust as there is gold, hence there is an argument that silver should be 1/15th the gold price, which is what it was historically – over $100, in other words. But I have been listening to such arguments for 20 years and the metal never delivers.Silver aficionados scream manipulation, but they have been screaming that since the 1970s. Why would you want to own something whose price is deliberately suppressed by powers far greater than you? Surely you would want to own something whose price is artificially boosted. There’s more profit in it.I own silver, quite a bit in fact, and I own some silver miners. Because one day, you never know, it might actually go to the moon. That’s its planet after all. I want to make sure I’ve got a seat on the rocket if it does. I don’t think I could live with myself if it went there and I didn’t have exposure, having written about it so much over the years. But I’ve long since stopped holding my breath. Thank you for reading The Flying Frisby. This post is public so feel free to share it.Silver could be about to go on a multi-week bull run That said, I do think silver could enjoy a multi-week rally from here and I’ll explain why. The COMEX is the world's largest futures and options trading exchange for metals. There are three groups of traders: the commercials, the large speculators and the small speculators. The commercials tend to be seen as the smart money, and, as they are often acting on behalf of miners, they tend to be sellers and so they tend to be short.Every Friday evening, the positions of the various traders the previous Tuesday, three days before – the open interest, as it is known – is announced. On Friday we discovered something extraordinary. That the commercials are net long – ie buyers – for only the third time in 40 years. That suggests a genuine shortage of metal. Meanwhile the speculators, who for the most part do not have metal to deliver, are net short. This opens up the possibility for a short squeeze. Anecdotally, I’m also hearing of silver shortages. It’s hard to acquire bullion anywhere close to spot prices.Now this is silver, so don’t get your hopes up and don’t take on too much risk. If it can go wrong it will. But there is every reason to think a multi-week rally is on the cards. If the broader markets correct, then silver will come tumbling down with them. But if they can remain flat or rising slightly, then silver could enjoy a good run.Buying silver is justifiable on a value basis – silver is cheap below $20. It has displayed lots of relative strength over the past two days. My moving average crossover system is also on a buy signal. Go silver!But, remember folks, it’s silver …If you want to buy physical silver, my recommended bullion dealer is the Pure Gold Company with whom I have an affiliation deal. My guide to buying silver is here: If you are in London or nearby on September 28 or 29, please come to my lecture with funny bits, How Heavy?, about the history of weights and measures. It’s in the West End at the Museum of Comedy and it’s a 7-8pm show so you can come along and go out for dinner after. You can buy tickets here. This is a very interesting subject - effectively how you perceive the world. Hope to see you there.This article first appeared at Moneyweek. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

I’m as guilty of this as anyone, but many of us make life more difficult than it needs to be. Achieving basic happiness, or at least avoiding what depresses us, might actually be quite simple.Is happiness, simply, when reality exceeds expectation?When I was a young man I was chronically ambitious. I would lie in bed as a student, dreaming about my future, making Faustian pacts, yet nothing would satisfy me. You could have offered me fame, glory, wealth, the keys to the city and more, and it would not have been enough. I wanted everything. When we discussed our futures, my friend, Gideon, gifted and hugely competent, but not remotely ambitious, used to say: “I just want to be happy.” I thought that was loser talk. Looking back, he was probably right.How often do you watch a film or a show because somebody was raving about it for it to turn out nothing like as good as you were hoping? You end up disappointed. But if you saw the same film with no or low expectations, and it’s pretty good, you might walk away feeling quite elated. Life is the similar. If reality comes in below expectation then we end up disappointed. If it comes in above expectation then we end up happy. Hence this useful formula:Reality > expectation = happinessExpectation > reality = unhappinessBy this formula, then, to achieve happiness you should simply lower your expectations.There is a lot to be said for that. But then there is also a lot to be said for ambition and optimism, which the mindset of low expectation negates. Ultimately, this way of thinking boils down to perception. Your life is no different - it’s the same film - it’s just a matter of how you look at it. Thus should we practice gratitude.Nevertheless, I’m not sure perennially low expectation is a way to live.We are all animalsDespite what we may think of ourselves, no matter how cultured, we are, when all is said and done, animals. If you keep a dog, you will know that, to be happy, a dog needs plenty of outdoor exercise and fresh air, regular and proper food, sleep, love and company. Absent any of these and the animal quickly becomes depressed. Human beings are the same. We have certain basic needs without which we end up depressed. The cause of depression is often (not always) the continued absence of one of these basics.With that in mind, here are seven animal essentials we all need to be happy. If you are depressed, it’s not unlikely one of these is missing in your life. Get it back and you might find other things fall into place. (The problem with depression is that you lose the motivation to do so).I’m not saying that you can’t be depressed or unhappy, if you have all of these things. You can. But a lot of the time, the cause is that one of these is absent. Get it back in your life, and you will find your depression sorts itself out.1 SunThe sun is the giver of all life on Earth, the source of all energy, of light, heat and gravity. Most of us do not get enough of it. We spend too much time indoors under artificial lights. The darker your skin, the more sun you need - and sun can hard to come by in colder northern European climes - but you need sun, whether you’re light or dark. Our ancestors spent most of the day outdoors. When the opportunity presents itself, get plenty of sun, all over your body. We need sun. Only use enough sun block to prevent burning. As soon as you can, wean yourself off. A close family member got herself into the most terrible depressed state last winter. I’m convinced it’s because she did not see sunlight for months, instead lying in bed all day watching crap on her phone.It’s no accident the sun is often depicted with a smile on his face. Get more sun.2 WaterIt’s as obvious a basic requirement as the sun, yet most of us don’t drink enough. Got a bit of a headache? Constipated? Feeling stiff? Allergic? Lethargic? Hungry when you know you’re not? Drink a large glass of water.Just under a pint should do it. That would be pound of water, roughly half a litre. You’ll be amazed how many niggles it clears up.A large glass of water should be the first thing you drink every morning, when you wake up. And don’t drink it cold. Drink it at room temperature or just below. 3 Food Two meals a day is plenty. Avoid snacks. Don’t eat crappy, processed food. Avoid seed oils and ingredients the names of which you don’t understand. Use simple foods - meat, fish, veg, fruit - close to their naturally occurring state (ie unprocessed). Spend time preparing food. Ideally, eat with other people - eating should be a shared communal activity. Regular eating times - routines - are good. And say grace before you eat - it focuses the table, it unifies the group, it expresses gratitude, helps mark where you are and grounds you. Doesn’t matter if you don’t believe in god, saying grace is still a good ritual.Also, rather than eat crap on the run, skip meals. Fasting is good.If you are overweight and want to lose weight, fast. The 5:2 diet works and, most importantly, it is sustainable.But the basic rule is eat regular, healthy meals and don’t eat crap.4 ExerciseGet plenty of it. I’m convinced exerting yourself and getting your heart pumping cures depression. Walk, swim, run, cycle, go the gym, play football, play tennis, lift weights, do HIT, ski, do yoga - it’s all good. Do as much as possible outside, so you get sun and fresh air. And drink plenty of water afterwards.5 AirAs basic as water, food and sun, get plenty of fresh air. Sea and countryside air is better than city. Park air is better than busy street air.Plenty of exercise will get you breathing properly. Breathe deep. Breathing exercises are good, though must of us can’t be bothered. 6 SleepGet plenty of sleep too. Don’t deprive yourself. We need sleep. The body and mind replenish during sleep. I have many of my best ideas when I’m asleep. I often solve problems in my sleep. It’s because the mind carries on working at stuff you have been thinking about in the day.Alcohol and drugs affect sleep badly. I drink too much. Most of us do. Try to avoid drinking at home. Fasting is good as, if nothing else, it stops you drinking. Thus fasting improves the quality of your sleep. There’s nothing wrong with going to bed early. Sometimes I struggle to get to sleep - and that is when the demons come to visit. The best cure for that is plenty of exercise earlier in the day, so you go to sleep tired. Don’t drink caffeine or orange juice after 6pm. Don’t eat too heavily late at night. Don’t shower or bathe just before bed - it will wake you up.Reading helps get you to sleep quickly too. Don’t look at your phone, computer, TV or iPad for at least an hour before bed. The blue light wakes you up.7 CompanionshipAnimals, for the most part, are social. Humans certainly are.I am an only child and quite a solitary person. But I still need the company of others, be they friend or family. We all do.Nature designed humans to live in families, large ones. Unfortunately, the modern world - in particular the big state - is destroying that: the state destroys family by eroding its responsibility. For me that is a major factor in the decline of the west. But that is another issue for another day.Not always possible, but try to live in as big a family unit as possible. The Asians have it right. Your family knows you better than anyone. They know what is good for you and what is not. They monitor you. Humans are happier in family units. Their roles are more clearly defined. Find a partner to share your life with, someone with plenty of shared loves and interests. Don’t burden them with unreasonable expectations. The waitress test is good: if you have a really bad experience in a restaurant, watch how they treat the waiter or waitress. Because that is how they will treat you when things get bad. Do you want that?We need friends almost as much as family - they are the next best thing, and they make for a good substitute in the absence of family. Surround yourself with good people, and people you think are good for you. Hang out with bums and low lives, and you will become a bum and a low life. What you can control and what you can’tMost of the above you have some control over, but so much of what happens in your life is beyond your control. You can’t control who your parents are, at what point in history you were born or where, what is going on geo-politically around you. One example of this, as Malcolm Gladwell observes in Outliers - the Story of Success: neither Bill Gates nor Steve Jobs would have been the men they were if they were born a couple of years earlier or later. There was a cluster of computer geniuses who were all within a one year timeframe that meant they were coming of age at just the point computers were taking off.Your health is not always within your control. (But you can affect it by eating, sleeping, drinking and exercising well - and getting plenty of sun). If you are at school or university or work in a large establishment, you cannot control what is happening above you there. Similarly, if you are freelancer, you cannot control what is happening in the broader work place or the economy. You can only position yourself for it. Any stock trader will tell you, you cannot control markets, only react to them.The loss of a loved one, natural disasters, unforeseen catastrophic events, the talents bestowed on you - there is so much you have no control over. With that in mind my daughter and I put this ‘graph of life’ together yesterday. The black line is your life. Beneath the black line is stuff you can control, above it stuff you can’t.I’m minded of the great line from JRR Tolkien’s Fellowship Of The Ring.“I wish it need not have happened in my time,” said Frodo. “So do I,” said Gandalf, “and so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given us.”You can work hard, position yourself, play your hand well, make good decisions, but so much of what happens in life you have no control over. I gather a standard sports psychology, something Sven-Göran Eriksson used to bang on about, is to only worry about what you can effect. The animal habits outlined above you can, for the most part (companionship is harder), effect. This is obviously a huge subject, and one I will return to, but I think I’ve banged on enough for one day. When I was in my 20s trying to figure out what I wanted to do with, my father always used to say “There are only two that matter: who you love and what you love” - by which he meant your work. Work, tradition, prayer and spirituality, and their relationship with happiness, are things I would like to explore in another post. But we have enough for now.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. 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

“Pound crashes to weakest level since 1985 in blow to Truss” ran the headline on the Telegraph website yesterday.“The Bank of England had one job today”, as economist Shaun Richards put it, “which was to talk up the pound and instead their waffling sees it at US $1.14.” Theresa May Flash Crash aside, that’s a 37-year low.And that’s measuring it against the dollar. If you measure the pound’s purchasing power against essential basics such as energy or houses, its performance has been way more woeful.It’s not just the pound, even if it is one of the worst offenders. It’s all fiat money. I’ve been banging on about it for 20 years but I may as well bang on some more: fiat money and its devaluation is the greatest and most pernicious intergenerational theft in history. Devaluing your currency boosts assets but devalues labour When you devalue money, among numerous other things, you devalue salaries, which is to devalue labour. All the young have is their labour. You boost the value of assets meanwhile, which is what the old have acquired over the course of their lives. The net result is to transfer wealth from young to old. Compounded over decades, 5% one year, 8% another, this process has been devastating. Don’t get me started on the knock-on effects: smaller families started later in life and all the rest of it. So many people of my generation and above think they are business geniuses because they paid the market rate for a house 30 or 40 years ago. You are not. Systematic and incremental devaluation by successive administrations was “what did it”.The Bank of England, the Federal Reserve Bank, the European and Japanese Central Banks – central banking has a lot to answer for. It feels like we might finally be in some kind of endgame for fiat money now. Mind you, I thought we were in the endgame in 2008, so I’m probably wrong this time around as well. I’ve no doubt some new magic words even more unintelligible than “quantitative easing” are being conjured up as I write.Right rant over. I had to get that off my chest. Let us move on. Does a new PM mean you should go long the pound?We have a new government. Money is the issuance of government. The weak pound is all over the headlines. So I thought it would be an interesting exercise today to look, first, at the performance of the pound by successive governments over the past generation. And then to consider whether one should be buyer or seller here.“Buy on silence, sell on headlines,” is a good little investment motto that I’ve just invented. When something makes the headlines, there is often not a lot of narrative left in the tank,  the story is mature and the next stage is exhaustion. It’s standard contrarian market psychology. Does the fact that the weak pound has made the headlines mean it’s time to take the other side of the trade and go long? Could be.We’ll start with a chart of the pound against the dollar – aka cable – since 1970. And by the way, the dollar has a much larger market cap than the pound, so what is going on on the other side of the pond tends to have a greater effect on cable than what is happening here. That is the case at present. The pound is weak, but so is the euro, the yen and any other number of currencies you care to mention – except the Russian rouble. Current pound weakness is as much a function of US dollar strength as anything. The chart of the pound against the euro over the last three years is much flatter.In any case, cable is the benchmark, so here is the pound against the dollar since 1970, when it was $2.40 (!).The broader trend is down, but there are periods of relative strength – 1976-1981, 1985-1991, 2000-2007. We’ve basically been in a downtrend since 2007, shortly after Tony Blair stood down and Gordon Brown became PM. It is what is known in the game as a secular bear market. Now we consider the same chart, but this time I have overlaid the government. Even though several prime ministers have led successive governments – Wilson, Thatcher, Major and Blair for example – for the sake of clarity and simplicity I have marked the chart by PM. Needless to say the dates of the red and blue lines are approximate. The first observation I make is that, despite their reputation for fiscal competence, the Tories have not been good stewards of the currency. In the case of Edward Heath and David Cameron, the pound was marginally stronger when they stood down than it was when they took office. Despite his presiding over Black Wednesday and the ERM fiasco, for John Major the pound was only a few per cent lower than it was when he started.But in the case of – and this surprised me – Margaret Thatcher, plus Theresa May and Boris Johson it was lower. Labour’s record is mixed. Harold Wilson saw it lower, Jim Callaghan higher (that surprised me too). Tony Blair has the best record of all – it went from roughly $1.60 to $2.10 – and Gordon Brown the worst.That said Blair was one of the few PMs – perhaps the only one – to stand down from a position of strength. Normally PMs are stood down because there is something voters or MPs or both are not happy with, which will be reflected in a weak currency.Lower taxes and higher spending should encourage growthBack to today. This latest move in the dollar has been extraordinary. I’ve long been suggesting the US dollar index could go as high as 120 (another 10% from here – though exhaustion indicators are starting to appear), but at a certain point purchasing power parity will kick in and currencies will reflect relative valuations. On a purchasing power parity basis the pound is very cheap at $1.14. The other observation I make about the above chart is that new administrations have often marked turning points in the currency. This, one could argue, was the case for Wilson, Callaghan, Major, Brown, Cameron, May and Johnson.Despite the Tories’ record for incompetence, Liz Truss has put together a cabinet that is, broadly speaking, actually conservative. Unlike previous administrations, it is not full of wets and social democrats, who happen to be in the Conservative Party. Lower taxes and less spending (I’ll believe that when I see it) should lead to economic growth, which should help the currency. The big kahuna though is where the Bank of England base rate goes – and indeed the Fed Funds Rate.I’d say there is a not unreasonable chance that, with a new government, we could mark a turning point for the pound. We’re at a point of extremity where such a turn could happen. But let’s see what government does first, before we get too excited. As I say, another not totally unreasonable possibility is that we are in the endgame for fiat. In that case the pound slides below parity. If you want to buy gold to hedge yourself against all of this, my recommended bullion dealer is the Pure Gold Company with whom I have an affiliation deal. If you are in London on September 28 or 29, my lecture with funny bits, How Heavy?, about the history of weights and measures is coming to the Museum of Comedy. It’s a 7-8pm show so you can come along and go out for dinner after. You can buy tickets here. This is a very interesting subject - effectively how you perceive the world. Hope to see you there.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.This article first appeared at Moneyweek. 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

Morning All,A slightly admin-y email today.First up: How Heavy? - the surprisingly popular "lecture with funny bits" I did at the Edinburgh Fringe this year- is coming to London’s West End for a short run later this month at the Museum of Comedy on September 28th and 29th.It's a show about the history of weights and measures, and is, I promise you, a VERY interesting subject. Weights and measures effectively determine how you perceive the world. It's a nice, early 7pm start. You'll be done by 8pm - free to go and have dinner or whatever you fancy - and will give your evening a strong intellectual foundation.Please come along. You can get tickets here.Second up: there have been some significant announcements by two of the companies in my portfolio - major holdings - in the last 24 hours. I will be updating paid subscribers on these asap, hopefully later today.Third up: this article was supposed to all subscribers last week, but due to a cock-up at HQ it only went out to paid subscribers. The YouTube version has been very popular - it’s obviously caught a nerve - so in case you want to read it, here is a link:Until next time.Dominic 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

My apologies if you have received this twice. Cock up at HQ.Over a Zoom call earlier in the week,  I heard some people discussing the “Russian Davos” which they had attended back in June. I didn't even know such a thing existed, such is my Western, Ptolemaic view of the world. (Ptolemaic, by the way, to save you having to look it up, means you think you are at the centre of the universe, and everything revolves around you).So the Russian Davos, or as it’s properly known, the St Petersburg International Economic Forum, held in June, is an annual event that began in 1995 to signal the (then) new Russia. It would attract global political leaders, business titans, finance bigwigs and all the usual shizzle. The event went ahead this year, though, for obvious reasons, the VIP headcount was significantly down. Gone were the likes of (once) German chancellor Angela Merkel, ECB chief Christine Lagarde, Goldman Sachs' Lloyd Blankfein, Citi's Vikram Pandit and ExxonMobil's Rex Tillerson. Top billing went to presidents of Egypt (via video link), Kazakhstan, Armenia and other allied states.There were representatives from the likes of China, India, Iran, Serbia, Turkey, Venezuela, Egypt, Belarus, Central African Republic, Nicaragua and the United Arab Emirates. Quite a collection. Non-Western nations that have not imposed sanctions had greater prominence. The Western economy has been shaped by cheap commodity prices The official title of the forum was "New Opportunities in a New World", and the recurring theme was how to improve trade between non-Western powers in a US dollar controlled world of sanctions. "A new form of international cooperation: how will payments be made?" was the title of one such talk. Time and time again the conversation came back to a new, non-Western international currency.Which brings me to the second strand of thought that makes up today’s piece: the latest contribution from Credit Suisse analyst, Zoltan Pozsar. Pozsar has long since argued that Bretton Woods III, a new world monetary order, is happening before our eyes and that new money systems east of Europe will be based around commodity-based currencies.In his latest, War and Industrial Policy, Pozsar, who I am fast becoming a fan of, argues that there were three forces that shaped the western economy before Covid - cheap immigrant labour, cheap Chinese goods and cheap gas. Such a trinity is no longer possible in a world in which international trust is fast evaporating. “The “cartoon” version goes like this: China got very rich making cheap stuff, and then wanted to build 5G networks globally and make cutting-edge chips with cutting-edge lithography machines, but the US said “no way”. As a result, Chimerica is going through a messy divorce. The two sides don’t talk anymore.” Meanwhile, “Russia got very rich selling cheap gas to Europe, and Germany got very rich selling expensive stuff produced with cheap gas.” Those two sides aren’t talking any more either. “Chimerica does not work anymore and Eurussia does not work either,” he says and now, in the divorce, it seems Russia and China are “getting it on”. Meanwhile, out west, QE and zero interest rate policies are no longer possible in a world without cheap Chinese and Russian exports. There is now a rush to regain control of key technologies, especially microchips, and key commodities, especially oil and gas (and soon in my opinion metals and grains). Pozsar adds straits to the key list - the Taiwan Strait, the Strait of Hormuz, and the Bosporus Strait.“I think that four themes (re-arm, re-shore, re-stock, and re-wire the electric grid) will be the defining aims of industrial policy over the next five years … the global order is at stake.”Inflation or not, high rates or not, there is a commodity-intensive demand shock coming that “could easily drive another commodity super-cycle.”So to the third strand. “The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” Vladimir Putin said last month.In this regards we have former Kremlin adviser, now Minister in Charge of Integration and Macroeconomics of the Eurasia Economic Union (EAEU), and an influential economist, Sergey Glazyev. He is, according to some reports, supervising the adoption of a new money system for the EAEU and China. “The world’s new monetary system, underpinned by a digital currency, will be backed by a basket of new foreign currencies and natural resources”. “A currency like this can be issued by a pool of currency reserves of BRICS countries, which all interested countries will be able to join. The weight of each currency in the basket could be proportional to the GDP of each country (based on purchasing power parity, for example), its share in international trade, as well as the population and territory size of participating countries. In addition, the basket could contain an index of prices of main exchange-traded commodities: gold and other precious metals, key industrial metals, hydrocarbons, grains, sugar, as well as water and other natural resources.”You can bet your bottom dollar that many of China and Eurasia’s brightest minds are plotting such a system, but it’s a lot easier said than done. Apart from anything else there is the issue of storing all these commodities. Not all of them keep. Others take up a lot of space. Which is why, in the past, gold alone has been used to back money. It keeps very well and you don’t need a lot of space to store it. The bullish backdrop for commodity prices Russia and China both have lots of gold - we have long argued that China’s gold reserves are ten times what they say they are. It would be a lot easier to use a gold-backed international currency. Or, well, gold. But governments everywhere, whether controlled by tyrants or technocrats, are always going to want to maintain the option to print, debase and manipulate, so gold alone is unlikely. But you never know. It works as an international money.Against this highly-bullish-for-commodities backdrop, we have a situation here in the west that looks like the dead cat bounce in stocks is now over, and the bear is again gnashing his teeth. That teeth gnashing has extended to commodities, be they metal, fuel or grain, and now, once again, there is a rush for the exit. The main priority is to preserve capital, not positions. The price action - certainly in metals, less so in oil and gas - has the hallmarks of a bear market, not a supercycle.I keep saying these markets are difficult. But they are. While there is a liquidity squeeze all bets are off. But at a certain point, to my eyes at least, it looks like commodity prices are going to rocket. If only I knew when.To hedge yourself and buy gold or silver, check out the Pure Gold Company.I will be performing my lecture with funny bits, How Heavy?, about the history of weights and measures at the Museum of Comedy in London on September 28 and 29. You can buy tickets here. Please come along. You will not be disappointed. It is a surprisingly interesting and entertaining subject.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.This article first appeared at Moneyweek. 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

While on holiday in Sark this week, I stumbled across a book in the local post office: “Silver Mining On Sark” by David Synnott, which describes an ill-fated mining operation on the island between 1836 and 1847. Books are distilled knowledge, and I love the stuff you can find in them. Often stuff you don’t find online.“Plus ça change, plus c’est la même chose”, runs the old French saying. It applies to mining, it seems, as much as anything.  We don’t use canaries any more; mines are powered by diesel and electricity, not horse-, donkey- or and manpower; helmets have torches instead of candles and there is underground lighting; and a higher premium is placed on human life than in the early 1800s, when workers were much more disposable. But the game is exactly the same: you’re trying to extract metal from rock and sell it at a higher price than you mine it for.  The tricks of the trade, aka scams, are the same too. So let me tell you the story of Sark’s silver mine.  How a silver mine brought the boom times to a tiny island Sark, by the way, is a tiny island about two miles square, located between Guernsey and Jersey in the English Channel – much closer to France (25 miles) than England, which is over 200 miles away.  Remains show the island was inhabited in Neolithic times, but for many periods in the island’s history there was nobody here at all. Today it has around 500 residents. There are famously no cars on the islands – only tractors, horses, bikes and mobility scooters – and no street lights, giving you probably the best view of the night sky in Europe. It’s famous for its harsh, windswept landscape with sheer cliffs and jagged rocks. It still has a feudal lord – who, by the way I beat at table tennis – and its own parliament. In the early 1800s the language spoken here – the patois – was similar to Old Frankish. Very different from the Cornish spoken by the miners who would soon settle there.  If you take a boat trip round the island, there are visible copper salts leaching in the cliffs – which no doubt explains its appeal during the Bronze Age – and it was these visible salts that attracted prospectors to the island in the early part of the 19th century. The Cornish at the time had one of the most evolved mining cultures in the world (also dating back to the Bronze Age), and they were operating mines as far afield as Argentina, North America (especially California, Wisconsin, Pennsylvania, Michigan and Virginia – in Chesapeake they even have a Cornish accent) and South Africa, where they operated the world’s largest copper mine at Okiep, 300 miles north of Cape Town. They were in Australia and New Zealand as well.Even the great Mark Twain – he of “a mine is a hole in the ground with a liar standing next to it” fame – was of Cornish descent. In 1835, funded by an English mining adventurer called John Hunt – adventurer is a far better term than entrepreneur, is it not? – a team of Cornish miners arrived on the island to mine the copper. They soon found lead and silver nearby, and began mining that too. And so was Sark’s Hope Mine built.  They should have called it the No Hope Mine – what was prospering in 1839 went badly wrong. How?  Profits erased by extravagant dinners and lax accounting In the age old tradition of mining, management misled the shareholders. When the ore body was clearly not enough to support the mine, the mine captain deceived where possible to keep the game going.  Management had a vested interest in doing so, even if it was no longer profitable. Their salaries depended on it. There were also some two hundred Cornish workers were employed by the mine, together with their wives (who may also have been employees – “bal maidens”, they were known as) and their families. Sark’s population soared to 790, the highest ever recorded. Management no doubt felt loyalty to its people, as well as their own salaries.As they chased ore, expanding the mine with the promise of finding more silver, the mine extended some 800 yards and with tunnels 300 feet out to sea where they were mining 20 fathoms – 120 feet – below sea level. You can imagine the noise in those tunnels when there’s a storm blowing overhead, waves crashing and all the rest of it. They actually had quite an ingenious device in play should the mine ever flood that would save the mine and some of its occupants.  General equipment could be brought in from Guernsey, but the speciality stuff had to be acquired from Cornish suppliers, with the effect that Guernsey and London shareholders capital went to the “picks and shovels” suppliers in Cornwall.  Management would go on jollies to Guernsey for their count house dinners, a tradition they had brought over from Cornwall – dinners which acquired legendary status for their extravagance – where news of the mine would be delivered to shareholders.  (The count house is the mine office, where the managers worked and where the miners were paid. You’ll still find pubs or estuarants in Cornwall called the Count House.) Mining has a long and rich history of this. I remember the boom of the 00s and you would see management of non-producing exploration companies living it up at the Savoy, driving Ferraris to expensive lunches and dinners. Who’s paying for it all? The cost of dinners would be buried in the company accounts. On another venture one outadventurer - an investor or shareholder - is said to have asked why he couldn’t see the spirits from a recent count house dinner in the accounts. The bursar, or what we might today call the CFO, declared that the spirits are there, you just can’t see them.  There was a long Cornish habit of swindling “outadventurers” – investors – from London. It seems they took the habit with them to Sark. Of course, sometimes mines work - and everybody makes a lot of money. That’s the same lure that draws people in and will always draw people in. It’s only when the mine doesn’t work that things go belly up.That’s not to say working mines was easy. Many lost their lives to it – 20% of Cornish miners were killed or incapacitated before they reached 40, so Cornwall became known as the county of widows. If you saw someone’s window open in Cornwall in winter, it’s likely that the occupier was a former miner gasping for air as his lungs were so damaged from breathing in the dust of thousands of gunpowder explosions. As things went wrong in the early 1840s, the Seigneur of Sark – the feudal lord – borrowed money to try and keep the business going. But in 1847 the business finally collapsed. The Seigneur lost a lot more than his shirt. He died a year later, crushed with debt. His creditor, one Marie Collins, foreclosed on the debts and his son lost the fiefdom to her.  The son, Peter Carey, would become “a low life scamp”, to quote the (probably biased) archive of the Seigneurie. Sark got a new Seigneur - a Dame actually - and that same family retains the fiefdom to this day. The mine has never been reworked or re-explored. Now it’s all grown over.   Irony of ironies, in Guernsey there is still a record of all the money paid out to shareholders, but those that recorded the company’s income have been “lost”. Still, the episode had some long-term effects on the island For a period there was an influx of capital. Prosperity then depression. It brought Methodism to the island from Corn wall, a school for girls and a doctor. It kick-started the tourist industry. The area around the mine – previously just heath – began to be farmed. The English language came to the island. The houses that were built for the mine workers housed the Sarkese for many decades to come. Apparently because they weren’t built by the Cornish, but by the locals – so they were built with more longevity in mind “In this spot,” said local historian Edgar Barnes in 1890, “centred anticipations never to be fulfilled, and hopes doomed to dire disappointment. At the bottom of the mine lie buried the fortunes of an ancient family, the hard earned savings of people who had little to spare, and the wasted energies of hundreds of stalwart men who had hoped to share in the wealth which their efforts were to have won. And now all has vanished, as if it had never been, save that there still remain – ghostly monuments of failure – the shafts and the chimneys and the ruins of the various offices.” This is a story that has played out many times through the history of mining, and still plays out today. Investors – caveat emptor.If you are interested in buying bullion - safer than miners - check out the Pure Gold Co.If you are in or close to London towards the end of the month, I will be performing my lecture with funny bits, How Heavy?, about the history of weights and measures at the Museum of Comedy in London on September 28 and 29. You can buy tickets here.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.This article first appeared at Moneyweek. 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

A interview in today’s programme with a highly eloquent young man, Peter Young, of the Free Cities Foundation. Peter discusses China (he lived there for ten years), the Free Speech Foundation and, finally, whether today’s young will end up poorer than their parents. For details on Peter’s October conference in Prague, visit Life Time Liberty.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

There have been some developments behind the scenes at The Flying Frisby, which are going to add considerable value. In addition to my own contributions, starting this week, once per month for paid subscribers only, Dr John Wolstencroft is going to be writing for this Substack, sharing some of his investment ideas and research.I first met Dr John in 2006 at a dinner and talk by commodities trader Mark Shipman for a spread betting company. It was clear then that here was a formidable intellect and we discovered a shared interest in junior mining companies. John’s a doctor in computer science, by the way, not medicine, and at another dinner in 2007 - this time for a silver miner in which John had invested (and did extremely well in making 20 times his money) - John coined the expression “global margin call” to describe what he thought might be ahead. 2008 and the Global Financial Crisis duly followed and John began to acquire prophet-like status in my perceptions.I interviewed him many times on my podcast - then called Frisby’s Bulls and Bears - and in particular I remember one interview - 18 Steps to Mining Ruin - (YouTube version here) - in which he described how a junior mining company can take itself from a p/e of just 1 to a p/e of 100 in 18 easy steps. We were in the early stages of the mining bust, so again his words were prophetic. Many companies unwittingly followed his model.He might have these visionary qualities, but he can’t pronounce his own name. The L of Wolstencroft is, I argue, silent - as in calm, yolk or Holborn - and so Wolsten should almost rhyme with Worcester. John, however, smiles patronisingly and reminds me that it’s his name and not mine - the subtext being that he’ll pronounce however he damn well likes.Since the 2012-13 mining bust, John has taken a much more cautious, risk-averse approach to investment - seeking out safety, value, yield and so on. He is a great champion of investment trusts, a sector he follows closely. Penny stocks and the like are not for him. Well, they are. But not here .With this in mind, I have asked him to contribute to The Flying Frisby, as I felt he would add value for paid subscribers. While I can focus on the racier stuff, as well as bullion and bitcoin - all of which can multiply manifold in times of plenty - John will focus on much lower-risk investment trusts and the like, which will be more defensive and preserve capital in trickier times (such as now).John will be writing for The Flying Frisby roughly once per month, with the first of his missives - on oil and gas - to be published later this week. So look out for that. I’m thinking of calling his letters - Sensible Investment Trusts With Dr John - or something like that.This is still an experiment, but I think it will work out.Welcome Dr John.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.. 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

After a month or so of welcome respite, the dreaded US dollar has got stronger again. It really is the scourge of everything.Stockmarkets have been walloped, the yen, pound and euro have been walloped, and commodities have been walloped. Again.The US dollar index shows the dollar against the currencies of its major trading partners – the yen, the euro and so on – so it is perhaps the most useful vehicle to study the dollar. Given the magnitude of foreign exchange markets and the fact the US dollar is the global reserve currency, I see its price as the most important price in the world. Here we see the US dollar index over the past three years. You can see that textbook double bottom it made in 2021, with the pattern completing in June. We were writing about it – see here and here.Since then, through all of the financial and inflationary turmoil of the past year, it has marched inexorably higher. Now it’s retesting its highs around 109.My stated fear for some time is that it goes to 120. Why 120? There is some history there.Here is the dollar since 1980. You can see that 120 is the level it got to shortly after the turn of the century – and where it peaked around 2001-2002, helping to usher in that epic bull market in commodities.It actually got to 165 in 1985 – after Fed chair Paul Volcker tightened a lot quicker and harder than anybody else (not unlike what is happening now). The G5 nations – France, Germany, Japan, the UK and the US – then agreed to weaken it so as to reduce the mounting US trade deficit. What followed were epic bull markets in both the Japanese yen and the German mark, and the stage was set for Japan’s “lost decade”.This agreement was known as the Plaza Accord. I don’t think we are quite at Plaza Accord levels of concern yet, by the way. Heaven knows what happens to the UK and Europe if the dollar goes to 165 again. But if it gets through 109, I would say 120 is back on the cards, possibly even this year, more likely early next.The US dollar is the best of a bad bunchThe euro just slid below parity with the dollar yesterday. The last time that happened was around the turn of the century (when it got to $0.82). It’s at 20 year lows. The pound’s at $1.17 – that’s flash crash, Theresa May Conservative Party Conference depths of rubbish.The reasons the US dollar is rising are fairly obvious. Capital is panicking and the dollar is the first place it goes to in a panic. It “should” be gold that capital flees to, really, but it isn’t. It’s the dollar. Then there’s the fact that the Federal Reserve Bank, America’s central bank, is tightening faster and more aggressively than the Bank of Japan, the Bank of England or the European Central Bank. Europe and the UK, meanwhile, have a plethora of gas-related problems and looming winter crises that they could do without.Forex-wise, the US dollar is the best house in a bad neighbourhood. You could say the same about its economy more generally.Yesterday was a grim day in the stockmarket, but there were some observations I was happy to make. First, that base metals – copper, zinc, tin, iron ore, and so on – which took one hell of a beating in June, actually held up quite well. That would suggest that they may have already made their lows.The action in precious metals – platinum and silver especially – over the past week has been less encouraging. Ditto bitcoin.Oil, meanwhile, looks like it is making an interim bottom and turning up. The last thing central planners want now is higher oil prices, but the market gods will care very little about that.Might be time to load up again on oil stocks if you are not already loaded. But more broadly speaking, these are risky markets, to put it mildly. Stay defensive, conserve capital, hunker down and await more benevolent financial times.If you are in or close to London towards the end of the month, I will be performing my lecture with funny bits, How Heavy?, about the history of weights and measures at the Museum of Comedy in London on September 28 and 29. You can buy tickets here.The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.This article first appeared at Moneyweek. 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

How did gold come into existence? No one really knows.Its origins are thought to lie in supernovae and the collision of neutron stars. It was present in the dust which formed the solar system four and a half billion years ago and came to earth via the asteroids that then bombarded the planet.According to the Bible, gold and silver are products of God. “The silver is mine, and the gold is mine, saith the Lord of hosts” in the book of Genesis. Although - given that in those days the distinction between God and King was not that always that distinct - that might he been a ploy to control capital.Given its unique characteristics - beautiful, eternal, immutable - it is no surprise that  gold found special status at the dawn of civilisation. Our prehistoric ancestors cherished gold even before they were able to speak. Nor did that captivation fade after pre-history. Whether Asian, African, American, Mediterranean, Germanic or Celtic, gold occupies a place in the history, legend, mythology and folklore of almost every ancient culture: the most prized of all metals. Today we know of 90 or more metals. Many you’ve probably never heard of, let alone touched or seen.  The likes of Cesium, Nihonium, Flerovium, Moscovium, Livermorium, Yttrium or Zirconium. But until the 13th century we knew of just seven: gold, silver, copper, tin, lead, iron, and mercury. There were also only seven known celestial bodies: the sun, the moon, Mars, Mercury, Jupiter, Venus and Saturn. Each metal came to be associated with a celestial body - silver, light and shining, with the moon, iron, rusty and red, with Mars, Mercury with its namesake, Jupiter with tin. With its glimmering yellow colour, gold was associated with the sun.To the ancient Greeks, and other cultures besides, the sun was a golden chariot driven by the sun god, Apollo, across the sky each day. The Egyptian sun god Ra was depicted as a yellow blaze of gold. The Incas of South America believed gold to be the “sweat of the sun.” The Latin word for gold, aurum, derives from Aurora, the goddess of dawn, who rose each morning to announce the sun’s arrival. The root of the word by which the Celts and Greeks referred to gold was the Sanskrit “Harat” which means colour of the sun. The symbol for the Sun (a circle with a dot in it - ☉)  was once the alchemical symbol for gold. Plato and Aristotle both thought gold was obtained by combining intense sunlight with water. We actually find gold in tiny particles embedded in ancient rocks, or as grains or nuggets in riverbeds where it collects after rushing water eroded away the rocks.There are seven days of the week too, and so did each metal come to be associated with a day. Gold’s day, of course, was Sunday.Unlike feminine silver, gold is a masculine metal, connected not just with the sun but with the lion, a symbol of strength. It represents wealth, prosperity, authority and charisma. It was an aid to healing, to protection, to growth, and knowledge - all qualities associated with the sun and the gods of the sun. The ancient Greek sun god Apollo was also the god of healing and diseases, while his son, Asclepius, was the god of medicine. Apollo delivered people from epidemics. What’s that about Vitamin D (which we get from sunlight) being an aid against COVID, while Vitamin D deficiency is linked to more severe cases? Apollo was also a god who could bring ill-health and deadly plague.Gold, like obscurity, is immortal. It is permanent, never rusting, nor tarnishing. In the museums of Cairo you will find a golden tooth bridge made 4,500 years ago for a pharaoh and it is good enough to go in your mouth today. Gold represented perfection, purity and excellence - “neither moth nor rust devoureth it”, said an ancient Greek text. Because of gold’s imperishable characteristics many imbued it with divine qualities, and it is forever associated with the eternal, the permanent and the incorruptible. Kings and queens decorated their bodies with gold to demonstrate their power, to impress, to dazzle, to command and to authenticate their god-like status. In ancient Egypt gold was a royal prerogative and pharaohs were buried with their gold to aid their travel into the next world. Tutankhamun, whose father was the sun god, Ra, was buried in a golden shrine. Gold was a gift from and given to the gods. Indeed it was the breath of the gods.The myth of the Golden Apples of Hesperides is that they conferred immortality on whoever ate them. From Hercules’ quest for these golden apples to Arthur’s for the Holy Grail to Frodo’s to destroy the precious ring of power, gold is a symbol of incorruptible quest, ambition, or purpose. Even today the young student gets a gold star, the athlete a gold medal. It is a symbol of achievement.For numerous reasons, I am a believer that everybody’s investment portfolio should have an allocation to gold. My recommended dealer is The Pure Gold Company. The Flying Frisby is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.An earlier version of this article first appeared at Glint. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe