The Flying Frisby - money, markets and more

Here is an interview with Alex Langer, CEO of Sierra Madre Gold and Silver. This video was exclusive to paid subscribers, but I am now releasing it for one and all.I own stock in this company. I know that we are in the thralls of a really bad junior mining bear market, and thus that you might not have the appetite for speculative silver development plays, but I still think there might be an opportunity here. Have a listen. (You can listen to it above or via Apple podcasts, Spotify or your regular podcast provider). See what you think. If you prefer you can watch the video of the interview. The transcript is here. My previous notes on the company are here and here. (My guide to investing in silver is here, and if you want to buy physical, here is where to go).Sierra Madre Gold and Silver (SM.V)Share price: C$0.36cFully diluted: 148m sharesMarket Cap: C$59mCash: US$9mYou can find out more about Sierra Madre here. Buying Canadian stocksIf you don’t have a broker who can deal with Canadian stocks, Interactive Investor is a cheap and usually fairly reliable option for UK investors.They have their shortcomings, but they are cheap. If you sign up with them, say I referred you – frizzers@gmail.com – and you will get a year for free, while I gets a referral fee.If you have signed up with Interactive Investor in the past, please can you drop me a line at the above email and let me know.Disclaimer:I am not regulated by the FCA or any other body as a financial advisor, so anything you read above does not constitute regulated financial advice. It is an expression of opinion only. Resource stocks are famously risky, especially small and midcaps, so please do your own due diligence and if in any doubt consult with a financial advisor. Markets go down as well as up. Especially small and midcap resource stocks. I do not know your personal financial circumstances, only you do, but never speculate with money you can’t afford to lose.Further to my email last week, A Hidden Gem in The Silver Markets, about Sierra Madre Gold and Silver (SM.V), here is my interview with the CEO, Alex Langer. 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

Before we get started today, if you haven’t already seen it, check out my interview with Alex Langer of Sierra Madre. There could be quite an opportunity setting up with this silver mining company.There are just a handful of tickets left for my lecture with funny bits about gold in London on October 19. I’m not sure when I will next be doing this show so book early to avoid disappointment and all that.And, if you haven’t yet seen Programmable Money, I think you will be amused.Right, house prices. They are in free fall …“Fastest fall in 14 years” said the Guardian on the back of the latest numbers from the Halifax, which reported year-on-year falls of 4.7%. The Telegraph was similarly gloomy. ”London house prices slump,” said City AM. “6 months of consecutive declines,” noted the FT. The latest Nationwide numbers showing declines of 5.3% are even worse.But, some context. Here are house prices since 1950. Relentless. The current declines are a mere blip, though it may not fee like that. I have long-argued that houses are, in effect, financial assets whose prices are largely determined by the availability and cost of money. When lending is loose and money is cheap, house prices rise. When lending tightens and the cost of money goes up, so do house prices fall. With rising rates, the reality of this is now plain to see.It would seem that the housing market peaked in summer 2022. I know nominally it was November, but in reality it will have peaked 6 to 9 months before that because of the various lags in house price data reporting. (There is a chap called Charlie on Twitter, who is very good on this by the way). Housing data lags the market because moving home is such a slow process: you decide to move, you put your house on the market, you wait for a buyer, it takes time to exchange and complete, then there are several months more before the Land Registry actually reports the transaction. But from August 2022 to August 2023, according to Bank of England data, mortgage lending has fallen by 43%, while the number of approvals is down 36%. Of course house prices are falling.How far do house prices fall?The answer to that lies with the Bank of England Monetary Policy committee, gilt markets, interest rates and all the rest of it. Sterling also has issues, which is going to put upward pressure on rates. But with another million or so cheap fixed rate deals coming to end in the next year, and another million the year after that, something like two million households are going to be hit with much higher mortgage costs. Just how much will those costs be? The genius that is Merryn Somerset Webb, as always, has the answer: “Mortgage on 350k at 2%: £1484 a month and total payment £445,126. Mortgage on £350k at 5.5%: £2149 a month and total £644,745. To get payment back to £1484, you can only borrow £243k (total payment 447k). And that's why house prices are falling.”Considerable problems lie ahead. All in all, I don’t think the worst is over by a long chalk and, a year from now, I think we will see distressed selling, along with opportunities for bargain hunters. This could all have happened in 2008, but the powers-that-be saw fit to suppress rates and print money. Then we got Help to Buy. I don’t quite know what they will do this time around - no doubt something is being planned - but in the meantime it seems we are seeing the beginning of the unwinding of a 30-year, generational bull-market/bubble. By way of reference, here is the that infamous Jean-Paul Rodrigue illustration of the lifecycle of a bubble. (I used to have this on my wall, I liked it so much). I would argue that we are probably in the fear stage, with the bull trap having come during Covid, but it may be we are still in the denial phase. As with so much academic projection, real life is never quite as neat and tidy.At the same time, as those of us who were around in 2008 will testify: all ye who call the end of the UK housing market bubble, beware. The housing market has a nasty habit of making bears look stupid. Some see a correction of 35% or more in nominal terms. Others are more muted at 5-10%. Both are possible. In the short term I think housing goes lower. A 1989-94 scenario looks more likely than 2008-11, though I reserve the right to change my mind, as events unfold. So to gold Here you can see gold vs sterling since 1999 when Gordon Brown sold ours for £150/oz or thereabouts. Today, such is the rise of gold (or the decline of sterling more like), we are at £1,500/oz.Josh Saul of Pure Gold Company has reported to me numerous times over the past year how many buy-to-let and other property investors have been selling real estate and buying gold. When will they flip back into property?Gold is the oldest money in the world, it is a constant, so I like to take a periodic look at house prices measured in gold. Of course, we do not use gold to buy houses. We use sterling. But as the verse goes:“Money is a matter of functions four.A medium, a measure, a standard and a store.”While gold may no longer have much use as a medium of exchange, as a store of value, a standard of deferred payment and a measure of relative value (ie unit of account) it remains and will always remain a far more effective form of money than fiat, because it is permanent, constant and you can’t print it. If the average UK house is now £288,000 (it isn’t - it will be lower because of time lags) and gold is £1,500/oz, then the average UK house price in gold is 192 oz.Here, courtesy of Nick Laird at goldchartsrus.com, we see the cost of UK house prices, measured in gold, since 1950.It’s a rather different story to nominal UK house prices, as displayed above. By this measure, the peak of the UK housing market was 2004. Sterling was (relatively) strong at more than $2 . The UK housing market was booming. Gold was sitting around $400/oz.The depths of the market came in 1979. The UK economy was weak. There was civil unrest. Gold was at the end of its epic bull market of the 1970s when it hit $850/oz. The average UK house could be bought for around 50 ounces of gold.How much have we been ripped off by fiat ? If gold is to increase by say 20% against sterling, and nominal house prices are to come down 10%, then those 2008-11 and 2020 lows of 150oz for the average UK house look pretty nailed on. If house prices come down 30 or 35%, however, as they did in 1989-94, and the gold price were to double, then those late 1970s and early 1980s numbers around 50oz for the average UK house suddenly come into play. Barring a full-blown sterling crisis (don’t rule it out), I’d say that was unlikely. For no particular reason, other than round-number-itis, I have a target of 100oz.Of course, the other possibility is that gold falls, and house prices resume their uptrend. How many ounces of silver to buy the average UK house?Here, for the silver bugs, is the same ratio but for silver.Look how cheap houses in silver were in the 1970s. You could get the average UK house for about 1,000oz!Will silver ever go back to those levels? I doubt it. It has the potential, but, as we know, silver always disappoints.Finally, for American readers, are US house prices in gold and silver.Post 2008 they almost went back to 1980 levels.Here they are in silver. Tell your friends about this amazing article 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 is an absolutely stellar line up of speakers at New Orleans Investment Conference in November: Dave Collum, Rick Rule, Matt Taibbi, Peter Schiff, Konstantin Kisin, Lyn Alden, Danielle DiMartino Booth, Jim Rickards and many more besides, yours truly among them.So I got together with Brien Lundin, the organizer, to chat about the event, as well as to get his take on the state of the markets. You can listen to this conversation here, or via Apple podcasts, Spotify or your regular podcast provider. Ths video version of the conversation is here.If you happen to be in that neck of the woods, please come and say hi. I hope to see you there. It’s a great event: New Orleans is unique.And if New Orleans is too far to travel, there is always my gold show in London on October 18th. 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.comWhen it comes to investment returns, asset allocation, as I said on Monday, has repeatedly proven to matter more than individual stock picking: the market you choose matters more than the companies you select within that market. With this in mind, if you haven’t already, check out the pieces I have recently put together about portfolio allocation:* My own…

This is a free preview of a paid episode. To hear more, visit www.theflyingfrisby.comYou can find vehicles by which you can play this portfolio here.But, after a lot of hype, here it is: the do-very-little portfolio.Lots of us have busy lives. We don’t have time to constantly monitor companies, markets, technological developments, politics and all the rest of it. We have other things going on that we prefer to or have to devote our attention to.Yet we want to invest our money well - safely, sensibly, profitably. We want our money to be invested in areas that will thrive in that not-too-distant future. We might also want to have a bit of fun with an investment every now and then. Soliciting comments from paid subscribers earlier this year, the above describes many of you. With all this in mind, I have come up with the do-very-little portfolio. I was originally going to call it the Do F All portfolio, but, as it involves a bit of action taken every now and then, I’ve gone with do-very-little. A portfolio that does not require constant monitoring, only the occasional re-balance, but that should do well given the broader macroeconomic conditions in which we find ourselves.Here I am writing this missive at breakfast on a beautiful terrace in southern Italy, overlooking the sea, in one of those villages where nobody seems to do much and yet they lead long, full and contented lives, and the phrase “dolce far niente” comes to mind. What better name for this portfolio?The portfolio I am going to propose has something of the cockroach to it. It’s not as immune as Harry Browne’s portfolio which I covered the other day. It is probably overweight equities and underweight bonds. But it also contains plenty of possibilities to grow. Cockroach with a bit of spice. It’s similar, but not the same as my own portfolio (which is not for everyone).When it comes to investment returns, asset allocation has been repeatedly proven to be more important than individual stock picking. The market you choose matters more than the securities you select within that market. It’s more important to be in crypto or energy or biotech or banking when that sector is rising than it is to pick the best coin or company. Similarly, it’s more important to be out of that sector when it’s tanking. In other words, it doesn’t matter so much which horse you bet on, as which race you are in. We have a large allocation to energy, for example, especially oil, gas and uranium. I think conditions are all good for these. But that will not always be the case. In the 1970s and the 2000s you wanted to own energy. In the 1980s and 90s you probably needn’t have bothered. So here we go. The Dolce Far Niente portfolio. What does it look like?The Dolce Far Niente Portfolio

A quick heads up before we come to today’s piece: I am taking my “lecture with funny bits” about gold to the West End for one night only. October 19th is the date. (That’s the show I did at the Edinburgh Fringe). If you like gold, you will like this show. I promise. It’s super interesting. You can get tickets here. Hopefully, see you there.So, continuing the recent theme of portfolio allocation, today we talk cockroaches …I narrated a documentary once about cockroaches. Never mind the repulsion we may feel towards them, they really are the most amazing creatures. In fact, that repulsion may work in their favour because nobody wants anything to do with them, thereby bettering their chances of survival.  Cockroaches have been around since before the dinosaurs. According to Wikipedia, they are some 320 million years old, having originated during the Carboniferous period. They are hardy as hell. They can survive and thrive in tropical heat or in freezing, sub-Arctic temperatures below minus one hundred degrees (Fahrenheit or Celsius). They can survive the dryness of the desert where there is no access to water, but they can also survive in and under water. Many cockroaches even survived the nuclear bombs dropped on Hiroshima in 1945 - they are known to be resistant to radiation. You can even cut off a cockroach’s head and it will live on, at least for a bit.How nice to have a portfolio that is as hardy. We should all have something of the cockroach to our portfolios.In the wake of the Global Financial Crisis back in 2009 I remember seeing a presentation by Marc Faber in which he described a portfolio for all economic weathers. It broke down as follows:* 25% gold and cash. * 25% equities. * 25% bonds. * 25% real estate.  Dylan Grice, who at the time was an analyst with SocGen, advocated something similar. He called it the Cockroach Portfolio, after that most hardy of creatures.But the idea of a permanent, cockroach portfolio for all weathers was probably first popularised by an American investment advisor, Harry Browne, who died in 2006. Browne was also an author and politician. His books, mostly centred around investment, sold more than 2 million copies, and in 1996 and 2000 he was the Libertarian Party’s presidential nominee. But, as an investment advisor, in 1982 he developed what is known as “the permanent portfolio” investment strategy, which he then wrote about in his 1999 personal finance book, Fail-Safe Investing: Lifelong Financial Security in 30 Minutes. This portfolio would assure "you are financially safe, no matter what the future brings."Browne’s idea was that there are four macroeconomic environments - four seasons if you like: inflation, deflation, growth and recession. One of those macroeconomic environments would always apply.So his portfolio was allocated in such a way that some of it would perform well in each of those seasons.* 25% in US stocks. That would do well in times of growth. * 25% in long-term U.S. Treasury bonds. These would also do well during times of growth - and in deflation too. * 25% in cash. That’s for recession. * 25% in gold, meanwhile, would see you through the inflation.All in all, therefore, Browne’s portfolio for all economic seasons looked something like this. (You would re-balance once a year to maintain that allocation)Browne’s differs from Grice and Faber’s because it contained no allocation to real estate.But there you have it: a portfolio allocation that might even make it through a financial nuclear financial fall-out like a cockroach.I have two criticisms. First, if you go back to 1982, when Browne first conceived this portfolio, the S&P500 has outperformed by some margin. Sure, the cockroach portfolio is much less volatile, but what’s the point of it, when you can just get an S&P tracker? You could argue that this has been an extraordinary period for US equities, but even so …Indeed, if you want total cockroach, why not own gold and gold alone? Gold, being indestructible, is even more hardy. It’s been around a lot longer, and it lasts a lot a lot longer. When you, me, humanity and the cockroach itself are all long gone, gold will still be there shining away. (If you are interested in buying gold, by the way, Pure Gold Company is the place).The reason not to just own gold is that you want diversificationA word on diversificationLook at some of the richest people you know and I’ll bet you close to none of them made their fortune by having a diversified portfolio. They might have made their money from their profession or by building a successful business, in property, bitcoin or trading. Out of an inheritance or a divorce, maybe. Perhaps they wrote a book, a film, a play or a song that turned out to be a smash hit. Perhaps they are a celebrity or sports star. Whatever. Most of the time they were anything but diversified. Rather they were concentrated.But if the majority of the super rich made their money being concentrated, they kept it by being diversifiedThe purpose of a diversified portfolio is not so much to make your fortune, but to keep and grow what you have. I understand that even Warren Buffett, who is the big example that counters my argument, had a few big wins early on and then grew his fortune building a successful investment business and levering what Einstein called the eighth wonder of the world - compounding - in his favour. I was chatting with a mining investor I know the other day. He made $40 million in 2005-2006. But he was moaning about the fact that he stayed concentrated and so handed a vast lump of it back. Had he instead diversified and then grew his wealth at say 5% a year, he would now be sitting on a pot more than double that size. At 10% a year, he would now be sitting on over $200m. Concentration is how you make your fortune. Diversification is how you keep and grow it. Unfortunately, concentration is also how you can lose a fortune. Let’s say you went all in on bitcoin in 2013. Or tech or whatever. You’d be minted. But if you went all in on mining in 2013. You’d be borassic. I think you get the point.My do very-little-portfolio is coming soon. Keep your eyes peeled.Interested in buying gold to protect yourself in these uncertain times? My recommended bullion dealer is The Pure Gold Company, whether you are taking delivery or storing online. Premiums are low, quality of service is high. They deliver to the UK, US, Canada and Europe, or you can store your gold with them. More here. 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.comLots of exciting things coming up on this Substack in the next couple of weeks. If you missed them last week, be sure to check out:* Dr John’s special report on North American oil and gas plays. A real opportunity setting up here. * Another opportunity also seems to be setting up in uranium: read about the coming supply squeeze and how to play this (almost)…

I wrote this article for Moneyweek the day before the EU referendum, on June 22, 2016. I thought with everything that has happened since, as your Sunday morning thought piece, this was well worth re-reading and thinking about. It’s amazing how many of these things remain issues, especially immigration, and how few have been properly acted upon.It’s also amazing just how our leaders have failed us. Brexit was such an opportunity to “reset”, to start again, to re-design our country at a time when so many are craving change. In that regard, you would probably have to say that Boris was the biggest missed opportunity of the lot, especially given the mandate he had in 2019. I love Europe, but I want to leave the EUIt’s obvious. But based on some of the things I’m reading on social media and elsewhere, it needs saying again. Voting to leave the European Union (EU) is not voting for Boris or Nigel or anyone else. The elected Conservative government will remain in power until there is another election, at which point we can vote for a different party if we so wish. This is simply a vote on whether we should remain part of the administrative body that is the EU. It does not mean you will no longer be able to travel to France. It does not mean your continental friends will not be able to come to the UK. And it doesn’t mean we will no longer be able to trade with our European brothers.I should say, my grandparents were Italian. I speak five European languages, three fluently. I have lived several years of my life on the continent, and I do business with people in Europe all the time. I’m a europhile.And I want out of the EU. Here are ten reasons why.1. Centralised power is the wrong way to goPeople thrive most in societies in which power is distributed as thinly and widely as possible. In such environments they are happier, healthier, wealthier, freer, and they achieve more.The EU, by design, centralises power in Brussels. We are moving into an age of decentralisation and localisation. The EU is the wrong model for the times.2. Fringe nations perform better Since the inception of the EU in 1993, the economies of Norway, Switzerland and Iceland (even with its financial crisis) – the fringe nations – have on a per capita basis dramatically outperformed their neighbouring EU economies.We would be a fringe nation and that would suit us.3. Regulation should be localAround 65% of regulation is now set in Brussels. It is of a one-size-fits-all variety, and so often inappropriate to local circumstances. Rather than facilitate progress, regulation hinders it. Yet, once in place, regulation is hard to change. Rather than get cut, it is added to. We already have too much in our lives. What we need would be much better set locally, according to local needs and circumstances.4. The economic disaster that is southern EuropeWe now have 39% youth unemployment in Italy, 45% in Spain and 49% in Greece. These countries are unable to do the things they need to do to kickstart their economies because decisions are being taken on their behalf; not locally, but in Brussels. I cannot support with my vote an organisation that has inflicted such misery on its people. Reform of a bureaucratic organisation like that from within is an impossible undertaking.5. Immigration policy is becoming ever more importantThere are more and more people in the world and – whether it’s those displaced by wars, by lack of water, by poverty, hunger or lack of opportunity – more and more of them are on the move. We are in a migration of people of historic proportions.The UK, in the way it currently operates, will struggle with immigration levels over 300,000 a year (and growing every year) for a sustained period. We don’t have the infrastructure. I wonder how we get those numbers down. I’m not sure we can, either in or out of the EU. It is a tide in the affairs of men. But we are in a better position to do it with total control of our own borders and border policy.6. Trade deals are a red herringAs a percentage share, British trade with the EU, despite the single market, has fallen by almost 20% since 1999. British trade with the US, on the other hand, has grown. We have no official trade deal with the US.Here’s a chart of exports for your delectation.There is no point having a common market if the economies of the countries you’re in that market with are dying. 7. Further integration with the EU = economic declineWhen Britain joined the Common Market in 1973, the EU (as it is now) produced 38% of the world’s goods and services – 38% of global GDP. In 1993, when the EU formally began, it produced just under 25%. Today the EU produces just 17%.The obvious explanation for this is the rise of the Asian economies, which have taken on a bigger share of global GDP. But why then has the US’s share not fallen by as much? The US’s share of global GDP stood at 30% in 1973, 27% in 1993, and stands at 22% today. That’s a 55% drop for the EU versus a 27% drop for the US.Run away.8. Democratic accountability mattersThe EU is not a democratically accountable body. I didn’t vote for the administrators and nor did you. I don’t know who most of them are. If we want to vote them out, what do we do? We can’t do anything. And if you want some idea as to the esteem in which they hold democratic process, how about this from the president of the European Commission, Jean-Claude Junker: “prime ministers must stop listening so much to their voters and instead act as ‘full time Europeans’.” Or how about another one of his remarks: “when it gets serious, you have to lie”. Just what you want in a president. Do you remember voting for him? I certainly don’t.9. Land ownership and the Common Agricultural PolicyThere is no greater manifestation of the wealth divide in the UK than who owns land and who doesn’t: 70% of land in the UK is owned by fewer than 6,000 people. Yet these people are not paying tax on the land they own, they are receiving subsidies for it. Landowners are being paid by the EU to own land. Of the EU budget, 40% goes on agricultural policy. This has created vast amounts of waste. It has propped up inefficient businesses that have failed to modernise. It has re-enforced monopolies which should be broken up. Worst of all, it has meant that African farmers have been unable to compete, depriving millions of a livelihood (not to mention cheaper food for the rest of us). I cannot endorse with my vote an organisation that does this and shows zero inclination to change its ways.10. The Common Fishing Policy60% of EU water is British or Irish. We have not been given any continental land (why should we be?), yet we have had to cede control of our waters to gain EU membership. What was once a huge industry and the largest fishing fleet in Europe has all but disappeared.The French, Italians, Spanish and Greeks had fished out the Mediterranean. They were given access to our waters and our quota was reduced to 13% of the common resource. The quotas system brought about the dreadful practice of discards (putting dead fish back in the sea), and reformed EU regulation now means that rather than being put back in the water, it is brought back for landfill instead. Let’s have our waters back.I don’t think it takes a genius to work out which way I’m voting tomorrow. Good luck with whatever you choose to do in what will be a historic occasion. I’m looking forward to it. I believe, in the event we vote to leave, once we actually do leave, we will experience an economic boom that will take everybody’s breath away, to the extent that we will look back and wonder why we were even discussing it. Fingers crossed. If you think this article might persuade any of the many wavering, undecided voters, please share it with them.From next week, I’ll be back with the usual investment thoughts and ideas.So … What do you think? How right was I? How wrong was I? Post your thoughts in the comments. Obviously, seven years on a lot has changed. With the benefit of hindsight, things now look very different. So many bad decisions have been made. But it’s very interesting to look back and see where we were, where we could have been and where we are now. 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.comNews broke late yesterday of what could prove a landmark court ruling for bitcoin.Even the Financial Times, which has been talking bitcoin down for over ten years now, called it “a big win”.The reason this is potentially such a big ruling is that it opens the door for a bitcoin ETF. (See footnote if you want to know what an ETF is).NB If you are interested in buying bitcoin, here is my guide. The exchange I use is Coin Corner. And here is an even simpler method, if you want to go via your broker.Some background:The Greyscale Investment Trust (OTC:GBTC), which listed in 2013, buys and holds bitcoin. So in buying the trust - which you buy or sell as you would any other security (unless you are British, thanks to FCA rulings) - you are, in effect, buying bitcoin, or at least getting exposure to the bitcoin price. GBTC now has something like $17 billion under management.  However, being a trust, you cannot sell your GBTC shares and redeem them for bitcoin. You can only sell your shares in the trust to someone else. This means in effect that the trust cannot sell its bitcoin: the amount of bitcoin in the trust can only increase (as it issues more shares). At first, the trust traded at a considerable premium to the bitcoin price - as it was the only way investors could own bitcoin via a broker. At times GBTC traded at double the value of its bitcoin holdings. However, in recent years, this reversed, so that by December last year the trust was trading at a 50% discount to the bitcoin price. What was the point of owning the trust then, if it doesn’t track the bitcoin price?Greyscale had a problem. The solution was to convert the trust into an ETF and for years Greyscale has been trying to get permission. Thus would it be able to buy and sell bitcoin according to market demand. But the US Securities and Exchange Commission (SEC) rejected its application.  The SEC has repeatedly ruled against other bitcoin ETF applications too. There have been so many. The Winkelvoss brothers tried to get one listed. So did Cathie Wood. They were all rejected. There are currently at least half a dozen other proposals under consideration from the likes of BlackRock, WisdomTree and Fidelity, but the short of it is that the SEC, like the FCA here in the UK, does not like crypto. Indeed, SEC Chair, Gary Gensler, has issued a plethora of regulatory actions against the likes of Coinbase and Binance, the latter being the largest crypto exchange in the world. (To be balanced, the SEC has greenlit ETFs based on bitcoin futures, but it has argued, and not so unreasonably given its remit, that bitcoin trades on unregulated exchanges and can be prone to market manipulation).Yesterday, however, a federal appeal’s court in Washington ruled that the SEC was wrong to reject the Greyscale’s bitcoin ETF application brought last year. “The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products,” said one of the three judges.The Grayscale appeal focused on one simple question: whether it could offer a spot bitcoin ETF that would expose retail investors to the real-time price of bitcoin. The fact is there is a lot of demand for a bitcoin spot ETF, not just in the US but worldwide. We shall see if the SEC now appeals, but the short of it is that a spot bitcoin ETF now looks a lot more likely.What are the implications for the bitcoin price?An ETF will open up entirely new markets for bitcoin both at the retail and the institutional level. It will bring a lot more money into bitcoin. With bitcoin’s limited supply that has to be very bullish.It also opens up the door for ETFs in the likes of ethereum, litecoin and bitcoin cash. And all three rallied strongly on the news.By way of example, you just need to see what happened to bitcoin cash when it listed on EDX Markets in June, opening up the door for a lot more money to come into the sector. The price went up 200%. I think a lot of buyers might have thought they were buying bitcoin, but the price still rallied.A word of warning, however. And I’ll bet you this is what happens when we eventually get a bitcoin ETF.

This is the last of these pieces about gold in ancient history. I’m back from the Edinburgh Fringe now, and more regular market commentary will resume. Lots of exciting things happening on this Substack. If you missed them this week, check out Wednesday’s piece on uranium, the coming supply squeeze and how to play this (almost) inevitable bull market. On Monday I covered bitcoin - in particular, how UK investors can get exposure via a traditional broker (and thus have it in their SIPP or ISA). And Friday I told the story of one of the maddest gigs I have ever done.Coming up this week: Dr John will be sharing his picks of the North American oil and gas plays. Plus together, with Dr John and Charlie Morris of Bytetree, I have been working on the the Do F All portfolio: a do-very-little portfolio for the hands-off investor, who wants to invest his or her money safely and well, without constantly having to monitor it. There’ll be a podcast and a piece about that very soon.So look out for all of those. For now, your Sunday morning thought piece, a historical piece with many parallels to today: the Romans and the debasement of money. The Roman Empire is probably more famous for debasing its currency, than for its money itself. But for that debasement to have been so prolonged (it went on for hundreds of years) and, some might say, effective, it needed an established, widely recognised and credible money as a starting point. Here look at the rise and full of sound money in Ancient Rome. There are many parallels to today.The geology of central Italy is not particularly abundant in gold and silver, and it was only really after Rome began expanding beyond central Italy in the third century BC that it started using gold and silver. Commodity money tends to be determined by the resources available.  Bronze (copper and tin) is abundant in the area, and bronze, in the form of weights - aes rude, often as heavy as 11oz (300g) - was the early currency of choice. As the Republic expanded, so did access to gold and silver, either from loot, tribute or mine supply, and so did these precious metals make their way into Roman money. The first silver denarius was minted in 211BC. Within 50 or 60 years Roman coinage was widespread across Italy. Much of the silver to mint the coins came from mines in Macedonia, which Rome now controlled. For the next 500 years this silver coin, containing about just over 1/8th of an ounce (4g) of silver - a little bit more than the weight of a 1p coin - would be the backbone currency of Rome. One denarius was exchangeable for ten asses (the aes rude evolved to become the as) - hence its name “of ten”, or tenner. It was 95-98% pure silver. To give you some kind of benchmark, sterling silver is only 92.5% pure. The purchasing power of a denarius would be more than the underlying metal value - ranging between 1.5 and 3 times the value. That’s seigniorage for you.The denarius lives on today, especially in many Latin  languages. The Italian word for money is “denaro”, “dinero” is Spanish, “dinheiro” is Portugese, “denar” is Slovenian. In many Arab nations, the currency is the dinar. The symbol for the English penny used to be ‘d’ - as in 1d.Heads of emperors appeared on coins, and so, as a result, did their use as imperial propaganda. The more coins circulating around the ever-growing empire, spreading the message of Roman imperial might, the better.As a side note, consider this Trajan denarius from AD 101. On the reverse we see Providentia, Roman goddess of foresight, overlooking a globe (the world, the empire).Similarly, this Roman aureus of Hadrian from 117AD, when he became emperor, and when the Roman empire was at its most extensive, shows, on the reverse, Trajan, the previous emperor (on the right) passing a globe - the empire - to Hadrian who accepts it. This Hadrian sestertius (there were four of these brass coins to a denarius) tells the same story.This surely kills the notion that people thought the earth was flat. Several centuries earlier Aristotle had argued that the world was round saying. "the Earth is spherical". While in 240 BC, Greek astronomer Eratosthenes actually calculated the circumference of the earth, and accurately,  by measuring the angles of shadows.Coin clipping and the debasement of moneyThe infamous debasement only began shortly after the Republic became Empire, and control of money passed from the Senate to the Emperor. It lasted several hundred years. By the first century AD, taxation and tribute only covered around 80% of the imperial budget. The shortfall was met by mining and the loot of newly conquered nations. But the empire was no longer expanding at the same rate, so this was becoming an increasingly risky strategy. Shortfalls, especially under extravagant emperors, became increasingly common. The solution to excess spending, as today, was not to rein it in, but to debase the currency. In AD64 Nero reduced both the amount of silver in a denarius (to 3.5grams) as well as the purity of the metal itself (to 93.5%).  A few decades later, under Trajan, the Roman Empire reached its greatest extent. From then on, it receded. That meant the supply of loot from newly conquered territories also receded. By lowering the amount of silver in its coins, Rome could produce more coins and "stretch" its budget. Successive emperors followed Nero’s strategy. As with boiling frogs and the debasement of currency today, the process was gradual. 100 years after Nero, around 150AD, the purity of silver had been reduced to 83%. By 250AD the silver purity was 50%. But then the debasement accelerated. By 275AD it was just 5%. As time progressed, the sleight of hand was exposed. By the time of Diocletian, who was emperor from 284 to 305AD, there was so little precious metal in the money, the emperor had to resort to price controls. It was under Diocletian that the last denarii were minted.The most important gold coin of Ancient Rome was the aureus, similar in size to the denarius, but containing roughly twice the weight of precious metal (gold is denser than silver). It would be a bit heavier than a 2p today. An aureus was 25 denarii, so the gold-silver ratio would have been about 1:12, the historical norm. Nero reduced the gold content to 7.3g (coincidentally perhaps the same weight as the sovereign of the British Empire). By 210AD the gold content had fallen to 6.3g. However, unlike the silver denarius, the aureus kept its near-100%, 24-karat purity.By the fourth century, the idea of obtaining an aureus for 25 denarii was long gone. In 301, one gold aureus was worth 833 denarii; barely a decade later, the same aureus was worth 4,350 denarii. In 337, Constantine, who had re-located the heart of the Empire to Constantinople, replaced the aureus with the solidus - about 4.5 grams of 24 karat gold. Initially, one solidus was worth 275,000 denarii, but by 356, one solidus was worth 4,600,000 denarii. Talk about inflation. (That last stat is from Wikipedia and it sounds dubious).However, in a breathtaking show of hypocrisy that even leaders today would struggle to pull off, the Roman authorities, despite the declining quality of the metal content of their denarius, refused to accept anything other than gold and silver in payment of taxes. Take in the good money, send out the bad.Of course, one key reason for the relentless debasement was a bloated Roman state that was incapable of living within its means. But another reason must be lack of raw material. As central Italy had little supply, the metal had to be obtained elsewhere and most of it came in the form of war booty and the subsequent tributes and taxes levied. No wonder Rome was constantly at war. That was its business model. But the expense of continual wars, without the corresponding payback of loot from the newly conquered, made the model unsustainable. The expansion ceased, but the spending didn’t.Interested in buying gold to protect yourself in these uncertain times? My recommended bullion dealer is The Pure Gold Company, whether you are taking delivery or storing online. Premiums are low, quality of service is high. They deliver to the UK, US, Canada and Europe, or you can store your gold with them. More here. This is a public episode. 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