The Flying Frisby - money, markets and more

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

Inflation in the UK has just hit 10.1%, says the Office for National Statistics. That is five times the Bank of England’s stated target of 2%. FIVE TIMES! Sorry to shout. The joy of the public sector is that you can be this bad at your job and still keep it. Inflation hasn’t been this high in over 40 years.Are you prepared?None of this should be a surpriseWhen you delve below the surface, it gets a lot worse. Retail Price Inflation (the old measure) is 12.3%.Energy prices are rising. We all know that. Food prices too. But the Bank of England base rate is still 1.75%. Carnage or not, it is going to have to go up. That means borrowing costs are going to go up. And house prices are likely to come down.The pain of all this is going to eat into your wealth. On the one hand the value of your most prized asset – your house – is flat or falling. On the other, your costs – from food to energy to monthly mortgage repayments – are all rising. And it’s doubtful your income is keeping up with the increase in costs.A lot of people are going to lose their jobs and their livelihoods in the squeeze (though no one at the Bank of England).And so much of this is self-inflicted.I get so cross when I hear officials say, “no one could have predicted this” and it is “beyond anyone’s control”. We have been warning about it for years on these pages.If the market set the price of money, you can bet your bottom dollar that rates would have risen a lot higher a lot quicker.What are the causes? There’s deglobalisation – China especially has been exporting its cheap labour and deflation for so long, low prices had become normalised. Now nobody trusts anyone any more and globalisation has slowed. You can’t blame those in charge for that.There are the Covid-supply chain issues and the punitive, punishing-the-British-for-Brexit legislation on the continent that is hampering trade and thus raising end costs. Dimwitted, short-sighted, beholden-to-the-Green-lobby energy policy leading to a failure to invest in fossil fuels and nuclear has put up energy costs.Failure to measure inflation properly for decades (especially not including house prices in CPI) has meant interest rates have been too low for too long and asset prices have got totally out of kilter. And finally – yet perhaps, along with artificial rates for years, most significantly – hundreds of billions of money created at no cost through Quantitative Easing, first post 2008 and then through Covid. In short: printing money, debasing money, misguided energy policy and bureaucracy. Too much government has caused this.Now the chickens are coming home to roost. The irony is there is a scramble for cash, even though cash is now officially losing 10% per annum.This must be one of the most difficult investment landscapes I have ever known. How to protect your wealthThe most obvious asset to own in all of this is gold. Yes, in US dollars at least, gold has been a dog since the spring. Not as big a dog as other metals, or indeed tech (until a month ago), but it hasn’t exactly been doing what it did last time all this was happening in the 1970s, although dont forget it has a 50% correction mid decade. The US dollar being so strong has masked things.But let’s look at gold in sterling, and the story is different. Here we see gold in pounds over the last ten years.It was £700/oz in 2015. Today it’s £1,480. A double. It’s in a clear uptrend, and has been a good, low risk hedge against incompetent leadership and the incompetent management of the pound.You can see how gold has been making a series of higher lows – since 2015 in fact. Each sell-off comes to an end at a higher price than the last.Even since 2021 this has been the case. The current sell-off since the spring Russia’s-invasion-of-Ukraine-high has been painful. But the low in July was higher than the lows in January. That is long-term bull market action.My concern looking at that chart is a potential double top just above $1,550. Maybe it all ends there. Maybe it has already ended there.But while this sequence of higher lows continues – and looking at the mess around me – I am going to give the bull market the benefit of the doubt.Self-inflicted or not, the Bank of England is caught between a rock and a hard place. It’s damned if it puts up rates and it’s damned if it doesn’t. It’s going to have to. Looking forward to the winter, it’s easy to see a host of problems – energy shortages, more Covid, further escalation in Ukraine, squeezed citizens, no end of political discontent.I don’t know where all this ends. Often I can see where stuff is going, but this I can’t without getting shudders. We’ll find a solution. We always do. We are human beings, we work, we create, we innovate, we solve problems and life gets incrementally better. But it feels like we are early- to mid-series rather than going into the final episode.So my advice is to own some gold. I’m glad I do. It helps me sleep at night. It’s about the one part of my portfolio that I’m not worried about.The maxim “put 10% of your net worth in gold and hope it doesn’t go up” applies. Finally, here is gold in dollars, again for your reference.The bulls will want those lows around or just below $1,700 to hold – and for that to prove a double bottom. The bears on the other hand will want those highs around $2,050 to prove a double top.For now it looks like we are range-trading between the two.If you’re interested in buying gold my recommended bullion dealer is the Pure Gold Co, with whom I have an affiliation deal. You can buy gold and either store it with them or take delivery. My report on how to buy bullion is here.This article originally 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

John Stepek is leaving MoneyWeek. I’ve known for a while, but as his final day was yesterday and we have just had his leaving drinks, so the implications are just sinking in. I first started writing for MoneyWeek in 2006, which means John has been my editor for 16 years. Week in week out, he’s had to plough through my twaddle. I reckon I have written at least 800 Money Mornings in that time (one Money Morning per week for 16 years), though the figure is probably closer to a thousand, as I’ve often written two per week. Plus the stuff I’ve written for the main mag. Each Money Morning averages 1,000 words, often more, so I make that close to a million words of mine that John has read, suffered and edited. What a saint.  A happy accidentI’ve been racking my brains as to a memorable and suitable present to buy him, to say thank you. Then it came to me. What more appropriate way of expressing my gratitude than through a Money Morning itself. For all our plans, for all “the best laid schemes o’ mice an’ men”, life has a habit of taking the accidental route and so it was with my relationship with John. Although it never went, “gang aft a-gley.” Now if John was editing this, he would demand that I explain that Scottish poet Robbie Burns reference. I would say, “everyone knows that quote, we don’t need to explain it.” John would insist we do. And, in order not to patronise those that do know it, I would then find a way of explaining that “gang aft a-gley” means “go wrong” without overtly looking like I am explaining it. The result would be something along the lines of what you’ve just read. You now know, if you were in any doubt, that “The best laid schemes o’ mice an’ men. Gang aft a-gley” is a quote by Scottish poet Robbie Burns meaning, “even good plans go wrong”, but you don’t feel patronised because I’ve explained it, while apparently talking about something else. I learned how to do that through working with John.In MoneyWeek, of course, usually what needs explaining isn’t a great Scottish poet, but some incomprehensible financial or mining jargon. Back to the point. My relationship with both John and MoneyWeek all happened by accident. Back in 2006, as a jobbing comedian and voiceover artist, I had made a bit of money and I was trying to figure out what to do with it. In fact, specifically, I was trying to figure how to turn the pot I had into three or five million quid in order that I could make the musical Kisses on a Postcard happen. I didn’t entirely trust the fund managers I had met to achieve the unrealistic and astronomical multiples I was hoping for. So I started a podcast and began interviewing all these clever people I saw talking on the internet, such as Jim Rogers, Jim Dines and James Turk, to see if I could figure out a plan. Commodities and gold in particular seemed the route, and the show was called Commodity Watch Radio. One of the people I interviewed was Merryn, who said did I want to write a newsletter about commodities? I said I wasn’t sure I was equipped to do that. She said come into the office and have a chat. In I went to meet Merryn and the then MD Toby Bray. There was also some quiet bloke in the corner, John Stepek. We agreed that thrusting me into a newsletter might be a little premature, but John had started this daily email, Money Morning, and perhaps I could start writing, say, one per week and then we’d see how it goes and take it from there? Fine, I agreed.Here we are 16 years on and it’s still going. A temporary plan became permanent. A bit like Income Tax. MoneyWeek’s quiet, consistent rock Clarity has always been one of John’s priorities, but also neutrality. “You’re great on the financial stuff and the macro stuff, Dominic, but when you get onto politics, you get ranty. You confirm the biases of those who agree with you, you annoy those who don’t and you alienate the undecided,” he once said to me. That expression has always stayed with me: “alienate the undecided”. In today’s polarised worlds, if you want notoriety, it pays to be an Owen Jones or a Tucker Carlson, but that was never measured John’s priority, nor is it the MoneyWeek way, which aims to stay broadly neutral on politics. John has always edited my stuff quickly and well, but he’s never been precious about his edits. I, on the other hand, am a control freak, and John has let that be. He doesn’t seem to mind me re-editing his edits - no control freak he. The resulting compromise has almost invariably been a better piece.  I have learned so much about writing in our time together. I always wanted to be a writer. I went to drama school because all the best writers started out as actors. But, bizarrely, it wasn’t the entertainment industry that ever gave me the break. It was finance, MoneyWeek, Merryn Somerset Webb and John Stepek. I’ve since written three books, several films and endless content, as you probably know. And here’s the bizarre thing: in all that time, I’d say I have met John in person fewer than ten times. Our entire relationship, one of the most successful professional relationships of my life, has been conducted almost entirely by email. Occasionally we speak on the phone, but rarely.  Who says in this new age of digital nomadery we actually need to meet the people we work for? John must get more emails than Gary Lineker does complaints and yet throughout all of that time he has always replied to me promptly and thoroughly. It sounds trivial. But I’ve had book editors who don’t reply to emails, and it’s a blooming nightmare. Communication breaks down. I usually reply to emails quickly as well, and that has been key to our success. I once heard Merryn describe John as her rock, and he really has been that to the entire MoneyWeek operation. A pillar of quiet consistency, happy for those he edits to get the praise and the glory, while he quietly gets on with it.  He can be strong and stubborn when he needs to, but he’s also been very much live and let live, tolerant of his contributors’ eccentricities and idiosyncrasies – embracing of them even. In all that time, we have never had a falling out. In fact, I can only recall one angry word. I had been trying to write a hugely witty debunk of some nonsense from Nouriel Roubini on gold, in the same ten-point format of Roubini’s original article. But I couldn’t write it to the 10-point Roubini template – we obviously think differently – with the net result that the article I submitted was both late and unpublishable. It meant John had to write a last-minute replacement when he had better things to be doing, such as getting that week’s magazine to print. No wonder he had the hump. I’ve spent this entire article praising John as an editor and I have’t even got to his writing talents. And yet they are what his new employer has signed him up for.  He’s a great writer too.John, thank you so much for everything. I will be forever grateful. I wish you the very best of success in your new job. And you will, I’ve no doubt, have it. Because fortune favours the prepared.PS I forgot to mention the attention to detail.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

The Edinburgh Fringe Festival starts this week. It’s the world’s biggest arts festival, an event that sells more tickets than any other event in the world, with the exception of the Olympic Games.I shall be making my way up to Scotland’s capital to make my own little contribution, a new show that I haven’t finished writing yet (!), “a lecture with funny bits”, about the eternal subject that is weights and measures. Why do I say eternal?Because people have been arguing about them, and trying to impose them since forever.How French revolutionaries tried to decimalise timeThe very first legal documents we have from Ancient Mesopotamia depict rulers with the rod and ring – a yardstick and a measuring string – usually being handed to them by God, as they try and standardise measures in law. Ancient Egyptian documents, illustrations and hieroglyphs abound with similar references. Scales are prominent too.The opening words of the Bible establish our basic measures of time – the day and the week. This is something the French Revolutionaries tried to do away with in 1792 when they decimalised time. One week would be ten days. One day would be ten hours. One hour would contain 100 decimal minutes, and each decimal minute, 100 decimal seconds. Thus one day would be 100,000 decimal seconds per day. When the proles discovered that meant one day off in ten, rather than in seven, the system began to meet with considerable resistance and duly kicked out. The revolutionaries may have got their metric weights and distances over the line, but time was a step too far. What is a “step” by the way, but a measure? A vague but useful measure that fitbits and iPhones and health apps have become obsessed with. I did 14,126 steps yesterday. (It was a long day). What about you?“There is to be one measure of wine throughout our kingdom, and one measure of ale, and one measure of corn,” proclaims Magna Carta. “One breadth of cloths … and let weights be dealt with as with measures.”Even today, when Boris Johnson made announcements about being able to use imperial measures again, the culture wars kicked off. In his 2019 election manifesto Johnson pledged “an era of generosity and tolerance towards traditional measurements”. To the Guardian, however, this was xenophobia and pseudoscience.Which is best – “free market” imperial or “central planning” metric?I often go to the Edinburgh Fringe to do “lectures with funny bits”. In 2016 I did one about tax, which would eventually become my book Daylight Robbery. In 2019, I did one about the philosophies of Adam Smith and how they related to the economics of the Fringe, which would eventually become a film, Father of the Fringe. This time around I thought it would be interesting to do one about weights and measures.  I’ve since discovered the subject is enormous and endless, which is why I haven’t finished writing it yet. (It’s going to be held in Adam Smith’s old front room at Panmure House, so a wonderful historic setting.)The inevitable question that gets asked is: which system is better – imperial or metric? I would answer, with the bland neutrality of the on-the-fence politician, that they both have their place.I grew up with the metric system. That was what I was taught at school. But as I’ve grown older, I’ve found myself thinking more and more in  imperial. Feet make more sense to me than 30, 60, or 90 centimetres, or 1.2, 1.5 or 1.8 metres. Inches – a thumb pressed down – make more sense than centimetres. A hair’s breadth means more than a micrometre. I find it easier to orient myself around pints than I do litres, around pounds – the amount you can easily hold in your hand – than I do kilos, and around yards – a pace – than I do metres.But the problem with imperial is that it was never a designed system in the way that metric is. Most measures emerged over time through use. Impractical measures got abandoned, and practical ones stuck. The buku was the distance from which the cry of a buffalo could be heard in Russia. No doubt an extremely useful measure in a country with such vast expanses of land, but of little use today. The pound we use today, however, roughly corresponds with the Babylonian “mesa”. Shoe sizes are defined by barleycorns. A fathom is one’s arms outstretched – 6 foot. A really useful distance, especially for depth. 6 foot is the depth to which in water we can just about stand up in - or bounce - without having to swim.But there are a gazillion measures that found common use in history that have fallen by the wayside. It’s very much a market driven system.Yet as soon as you start to analyse it with the logic of the planner, imperial measures look nuts. Just take a look at some of the flow charts to explain imperial measures on Wikipedia and elsewhere if you want to understand how nuts it looks. Why can’t we just have both?Americans have a “dry gallon” and a “liquid gallon”. What’s more, their gallon is not the same as our imperial gallon (one of the reasons petrol there seems SO much cheaper is that their gallon is smaller). But their gallon is the English gallon because they use the English system, which came over with the settlers.We British, however, use the imperial system with the Weights and Measures Act of 1824, long after US independence, and exported through the Empire, in part to make sure this new-fangled French metric system didn’t take hold.This new-fangled French metric system came about with the French Revolution. “One king,  one law, one weight, one measure,” the Revolutionaries cried. They had, according to the BBC, some 250,000 different weights and measures – differing from town to town and district to district (talk about regional diversity) – and there was considerable fraud.Let us give them “a system for all people for all time” thought the savants, the 18th-century liberal metropolitan elite. Instead of defining measures around the human body and the immediate world around us, they thought, we will design a system around the earth itself. A metre will be one ten millionth of the distance from the North Pole to the equator. So two scientists were sent out to measure the distance from Dunkirk to Barcelona and they would extrapolate it from there. However, one of the scientists, who got arrested for sorcery, then for spying and then saw his money disappear with the hyperinflation of the assignat, under considerable pressure, fudged the data and so the measure is actually wrong. By how much? A hair’s breadth.The metre has since been redefined, first around the speed of light and then around atomic movements, to give it a level of precision the ordinary yard – a pace – will never have. But those redefinitions have always used as their base that first metre which was erroneous and, slightly, fraudulent.We do need one international system of measures that everyone understands, especially for science. But, in the same way it is good to speak more than one language, so should we be familiar with more than one system of measurement. And if you want regional diversity, especially in architecture, then you should embrace diversity of measurement.Today the only countries in the world not officially on the metric system are Myanmar, Liberia and the US. But on the ground traditional measures are used everywhere - from the prevalent half kilo, effectively a pound, to brick sizes (a hand) to cargo ships . People talk and think in traditional measures, because they are practical and rooted in the world around us. Metric is abstract. Long live both.Dominic Frisby’s How Heavy?, a lecture with funny bits about weights and measures, will be running at the Edinburgh Fringe from August 7-15. You can get tickets here.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

Are the people at the top – the directors – buying or selling shares in their own company?If they are buying, that’s usually a good sign. But if they’re selling, not so good.They might be selling because they need the money for something: to buy a property for example, to pay school fees, to settle some debts.Then again, they might be selling because they don’t like the look of what’s going on.Directors’ dealings can offer telling signals as to whether insiders think the company is about to thrive or dive. That’s why so many follow them.With that in mind, I had a meeting with Joshua Saul yesterday, CEO of bullion dealer and storage company, the Pure Gold Company. He told me something that I found fascinating - similar to the value of director dealings as a potential indicator. I’d like to share that knowledge with you today.Who’s been buying bullion and why?Why are doctors queuing up to buy gold?The Pure Gold Company must now be one of Europe’s top bullion dealers, with a large and varied customer base, from institutions to individuals. As such, it knows who is buying, who is selling and to what extent.But, to help them make the right investments, it also makes an effort to get to know its clients: are you old or young? What do you do for a living? Why are you interested in buying gold? And so on. As a result, it gains an insight into people’s professions and motivations and that data, “both quantitative and qualitative”, to use Saul’s words, “reveals trends about the market”.There has, over the past couple of months, been a marked increase in buying from two professions: doctors and investment bankers. Weird, huh? The latter I sort of get, but the former.Most doctors I know work pretty hard. Their diaries are full and their time is precious. Unlike many other professions, I would venture that their ability to monitor markets, research investment ideas and so on is limited. (Any doctors out there, please correct me if I’m wrong).You have to be bright to make it through medical school, to qualify and practice, so doctors, for the most part, are not stupid. But at the same time, I would venture, as a rule, that their fingers are not particularly on the investment pulse, unless their investments are somehow related to the medical field – which gold isn’t.So what gives with doctors buying bullion?Doctors for the most part have money. It’s a well-paid profession. In some cases very well paid. And they are making money all the time. “My belief,” says Saul “is, first, they’ve been too busy up until now to take much of an active role in their investments, but having seen their pensions fall, have started to to be more proactive – driven primarily by safety and security”.Makes sense. They’ve been making good money, but on the other hand, they have been watching the value of their Isas and pensions fall quite dramatically. As a result, they are turning to the alternatives, which are gold and silver.Investment bankers are getting keen on gold again“Why then has there not been an uptick in, say, lawyers or pilots or computer programmers?” I ask. There has been, it turns out, but the most notable increase has been doctors – by 44% in the last four weeks – and, as we are about to consider, investment bankers. Investment bankers’ buying of coins and bars has increased by a – quite astounding, in my view – 59% over the past four weeks.  I have to say, the implications of a 59% jump in investment bankers buying gold for their personal portfolios has some alarm bells ringing. What’s going on at the banks? Are there problems looming? What do they know that we don’t? Something similar was going in the lead up to the Lehman crisis.Possibly so. When asked about their motivation and timing, says Saul, many cited counterparty risk, exacerbated by the severe inflationary environment. Political uncertainty has been a factor too. Many fear inflation. The high cost of sitting in cash while waiting for opportunities in other asset classes, has become too high. The other factor cited was the consequences of escalating interest rates at a time of high and increasing debt, both individually and nationally. Overall, says CEO Saul, there has been a 39% increase in people purchasing gold bars and coins in July compared to the monthly average over the last 12 months, and a 42% increase in people purchasing silver bars and coins.Perhaps more tellingly, there has been a 67% increase in people selling equities within their pension to purchase physical gold bars within the same vehicle. This type of knowledge may mean absolutely nothing. I don’t think it’s reason alone to go out, sell everything, buy gold and run for the hills. But it’s one of those telling insights, I’d say, to have at the back of your mind as you make your broader macro investment decisions – how you determine your asset allocation. People are buying bullion. Especially investment bankers. It also explains the uptick in people asking me how to buy bullion. If you’re concerned about geopolitics or inflation or solvency, and you feel an investment that is “outside the system” and “no one else’s liability” is worth having, this is the type of thing that might cap your thinking and seal the deal. So there we go, I’ll leave it with you to make of it what you will – a bit like those director dealings.If you’re interested in buying bullion yourself, consider the Pure Gold Co, with whom I have an affiliation deal. My report on how to buy bullion is here.If you’re interested in miners, paid subscribers received this update last week. There might be some opportunities, given the current sell off.And, finally, If you are in Edinburgh next week, I will be performing my show, How Heavy?, a lecture with funny bits about of weights and measures, at the Fringe. You can get tickets here. Hopefully, see you there.This article first appeared at Moneyweek.Until next time … This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.theflyingfrisby.com/subscribe

I was at a dinner the other night with a buddy who is a much cleverer investor than I am. The conversation went something like this.Clever Mate: “Inflation is 10%. Rates are going to have to go to 10% to get it under control. I’m 60% in cash.”Me: “The system can’t take rates at 10%.”Clever Mate shrugs. There is an awkward silence.Clever Mate: “It will have to.”Another more awkward silence follows as I digest the implications. Do central bankers have what it takes to tackle inflation?Have today’s central bankers – the liof Jerome Powell, Christine Lagarde and Andrew Bailey – got the bottle to “do a Volcker” and put rates up to these kinds of levels? (In 1981, then-Federal Reserve chairman Paul Volcker raised the Fed Funds rate to 20%.).It’s not just the chair or the governor, of course – though they will be the ones making the announcement – but the boards behind them. To make such a decision, with such ramifications, would not just require extraordinary bottle, but extraordinary conviction as well. It’s hard to have one without the other. I’m not sure Bailey or Lagarde have the right belief systems. In the case of Lagarde, I’m as sure as dammit the career and reputational risk would be intolerable to her.So my view, on this side of the Atlantic at least, is that a softly, softly approach will prevail and that rates will go up slightly, while those in charge prevaricate and hope that this unfortunate inflationary episode does prove to be temporary and passes.We will have a clearer idea of Powell’s intentions later this week when he makes his announcement.But here’s the point. Volcker is widely credited with curtailing the inflation of the 1970s. However, when he was appointed in 1979, inflation was long entrenched. From the Vietnam War to the abandonment of the gold standard in 1971 to the oil crisis of 1973 and through all the economic turmoil of the 1970s, inflation was not something new or just a few months old, as this episode is today. Volcker’s hiking of rates came off the back of a decade of this and, what’s more, President Carter appointed him specifically to do what he did. Even against all of that, his actions still provoked enormous ire.Today’s central bankers do not have the same backdrop. The inflation narrative is too new, and there is still the hope that this is all temporary. So my forecast is for them to do the least possible for now, with Powell probably remaining the boldest of the three. Rates may have to go to 10%, as my buddy argues, but the stage is not yet set – and this current pullback in commodities may give them some respite.Inflation redefined I had a thought in the shower this morning, as you do, and it was this.The classic definition of inflation, as regular readers will long since know, is “the expansion of the supply of money and credit with the consequence of higher prices.” You inflate – blow up – the money supply and, as a result of there being more money about the place, prices go up.However, because of semantic shifts (which is a high-falutin way of saying “a shift in the meaning of language over time”) this is no longer the definition of inflation. Inflation now just means “higher prices”. Somewhere along the line, whether due to a conspiracy by central planners and bankers is not known, the bit about expanding the supply of money and credit got dropped. The semantic shift has gone a stage further still. Inflation no longer means just rising prices, but rising prices of goods and services included in the core price index (CPI) measure of inflation. So house prices rising, for example, doesn’t mean inflation. It’s nuts because, as we know, the main reason house prices go up is because of an increase in the supply of money and credit – more and cheaper mortgages.However, such semantic shifts are beyond the power of this lowly writer to control. So there is little more I can do than rage, rage against the dying of the light, then go about my day.Anyway, I’ve got through the preamble, so here’s the thought. Inflation, by its modern definition, actually leads to a shrinking of the money supply, or at least it should do, if central banks follow their remits to curb it. If inflation is 10% then rates go up to curb it (though perhaps not as high as 10%). As rates rise, many deleverage and pay down debt. (Leverage is another means by which money and credit are created). If rates rise a lot, this can become a scramble.In other words, with inflation (by today’s definition) the supply of money and credit contracts. That means asset prices – house, bond and equity prices – fall, as they are what we use leverage to buy. Even car prices. (Finance costs more).These are mostly not included in CPI, but in such a deflationary event as interest rates rising to levels concomitant with current CPI inflation, you can expect CPI to fall too. To summarise, inflation originally meant the expansion of the money and credit supply with the consequence of higher prices. Today inflation, and the central bank reaction to it, portends the contraction of the supply of money and credit with the consequence of lower prices. That is some semantic shift.I don’t know how central bankers get us out of this. But no doubt all sorts of plans with even longer and more unpronounceable names than quantitative easing (QE) are being formulated as we speak.Remember how they suddenly came up with QE in 2008? We all looked on baffled and blindsided. Except similar rabbits to be pulled out of hats.Dominic will be performing his show, How Heavy?, a lecture with funny bits about the history of weights and measures, at the Edinburgh Fringe this August. You can get tickets 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

Metals are not going to stop crashing until the US dollar turns.I’ve been banging on about that for some time. I don’t know when that will be. Nor does anyone. But this US dollar action feels like the parabolic blow-off that you get towards the end of bull markets, rather than the creeping disbelief you get at the beginning.I’m hearing talk of forex interventions coming. That may or may not be so. So I’m not ready to pull the trigger just yet. But… I’m closely following the price action of two metals that look remarkably cheap. They are silver and platinum. I mentioned them last week.Platinum looks cheap, regardless of what happens nextThe case for platinum, the main use of which is in catalytic converters for diesel engines, is pretty simple. You would normally expect it to trade at a 25% premium to gold. That is the historical average. But demand has been shattered since the Volkswagen emissions scandal of 2015 and the subsequent move away from diesel engines.Gold is currently at $1,720/oz. If history is any guide, platinum “should” be north of $2,000/oz. It isn’t though. It’s $830.I don’t really know what’s going to change on the demand side. Platinum may have a major role to play in fuel cells and the hydrogen economy (as a catalyst), but so far this has not been perceived as significant enough to push the price higher.In any case, here is a 20-year chart of platinum. I’ve drawn a dashed blue line around $780 and you can see the platinum has been below this level just once in almost 20 years – during the Corona panic of March 2020.It went to $600/oz intraday back then. Otherwise the $770 area has been the floor.So if you can pick platinum up below $800, let’s just say your downside is likely limited.And now to the disappointment that is silverSilver is not quite as clear cut. Oh, silver! How I used to love it back in the noughties. Experience changed my view. Was there ever a metal with so much potential? Silver is to electronics and modern tech as sugar or salt is to food. It is in just about everything. Then there is its monetary allure as well. Didn’t silver go to $50 during the inflation of the 1970s? Aren’t you supposed to take refuge in precious metals during inflationary episodes? Here we are in 2022 and silver has fallen off a cliff. It’s sitting at $18. For five years between 2015 and 2020 that $19-20 area was resistance. Technical analysis 101 says $19-20 should now be support. But silver – being silver – has cut straight through it.It went to $12 in the corona panic and $8 in 2008, but the $14 zone has for many years been a pivotal price zone.Here’s a long-term chart with a dashed line drawn at the $14 mark.Can it get to $14 on this move? It would be extraordinary, given the amounts of money that have been printed, for it to go that low. There should be some support at $18 and at $16, but it’s silver, so never underestimate its capacity to disappoint.If the US dollar index goes to 120, a number I’ve been harping on about for months, then silver will get that low. And in a panic it will probably surpass it (if surpass is the right word).As I say, I’m not quite ready to pull the trigger. My appetite for risk has been somewhat tempered by the market action of recent months. But, as with platinum below $800, your downside is limited buying silver at $14 or below.When I say buying silver or platinum, I don’t necessarily mean going down to the bullion shop and buying bars, nice though they are. I mean physical metal stored in vaults, ETFs (exchange-traded funds), mining companies, even options or spread betting the price (though these last two are only for the experienced and highly risk-aware, so if you don’t already know how to do it, I suggest you don’t).If we get to those kinds of levels I’ll put out another piece explaining in more detail some ways to play it. I must say if silver goes to $14 I’m likely to get out the leverage.But I’m not quite ready to pull the trigger yet. Bottom fishing is a dangerous, and often expensive game. However, silver and platinum are very much coming into the “buy” zone. And at a certain point they will be irresistibly cheap. I’d say we are nearly there, but not quite yet. Patience…For those after physical metal, my current recommended bullion dealer in the UK is The Pure Gold Company, whether you are taking delivery or storing online. Premiums are low, quality of service is high. You can deal with a human being. In Ireland it’s Goldcore. Both deliver to the UK, US, Canada and Europe, or you can store your gold with them. I have affiliation deals with both. 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

We suggested a couple of weeks back that oil might due a hit as seemed the only sector that hadn’t been walloped and so it has turned out. Both Brent and West Texas Intermediate slid back below $100 a barrel joining metals on the downward slope. Metals have been battered even harder, of course, with silver – as often seems to be the way – leading the fall downwards. How can silver be trading below $20 an ounce? How can platinum be below $850?I’m not saying they aren’t going lower. They probably are. But there’ll come a time in the future when we’ll be wondering how on earth it was possible to buy these metals at these prices. Silver below $20. Platinum below $850. Platinum is half the price of gold!Remember when nickel went to $100k per tonne? It’s $21k now.Wheat’s at $800. It was $1,300 in March. Corn, oats, soybeans, lumber – you name it, there’s pain. Never underestimate the bust-to-boom-to-bust potential of raw material markets, I guess is the lesson. They always seem to return whence they came. With this rout in commodities prices, this inflationary episode could yet prove to be transitory. (I stress I’m using the word inflation with its modern meaning: rising prices of goods in the CPI basket. The other kind of inflation – debasing money by creating too much of it – isn’t going anywhere). The villain in the piece has been the US dollar. The dollar index is now at 107. Can it go higher? Maybe. It’s come a long way already.June of last year we thought it had made a double bottom at 89-90. 103 was the huge line in the sand. It got through that at the second attempt. 120 is the next big one. It really would be an outlier if it got there – but this is a time of outliers. The euro is now $1.01. Parity beckons. In 2000, with the dotcom chaos, it got to 82c (this was also before it had fully launched across member states). Is it going there again? Again, it would be an outlier, but it’s possible.The pound’s at $1.18. I wouldn’t rule out parity there either.Could capitulation by the Bank of Japan mark the end of the dollar bull run?But I will say this. “Long dollar” is a crowded trade. Everybody’s talking about it. When it turns – and it will sooner or later – there’s going to be a lot of money made on the other side of this trade. FX traders are going to be all over it. Long anything anti-dollar – gold, the euro, perhaps even the yen.The yen’s at lows not seen since the Asian crisis of 1998. But could Japan have its own “Swiss bank” moment?I’m referring to 2015, when Switzerland announced that it was going to abandon the franc’s peg to the euro (it was pegged at 1.20 euros to the franc) and the franc instantly shot up 20% as a result. That is an astonishing amount for a major currency. The move destroyed many a forex trader’s fortune, not to mention the many people who had Swiss-denominated mortgages and other forms of debt. Many of them were from poorer nations with weaker currencies.The yen is not pegged to any currency, but the Bank of Japan has committed to holding its  benchmark 10-year government bond yield to 0.25%. With this so-called yield curve control, it pins down borrowing costs and “stimulates growth” (ergo cause asset price inflation - except that it hasn’t worked for years).For decades now, shorting Japanese bonds (ie betting on higher yields) has been the mother of all widow-maker trades. I’m not ready to fall into that trap, even if Japan’s buying of its own bonds has gone nuts. The government now owns over 50% of its own bonds, and the rate of purchase has accelerated as it tries to hold the 10-year yield at 0.25%, even as the rest of the developed world starts “quantitative tightening” (ie doing the opposite). Don’t fight the printers. You’ll lose.But even with private sector savings exceeding the fiscal deficit and so much government buying, there is a possibility Japan has to stop defending the 0.25% mark. It may be because yields get too low relative to other nations’. It may just be that inflation pushes it over the brink (and a weaker currency means higher inflation).But, cripes, there is some reversal in the yen (and thus in the dollar) that is waiting to happen.Here’s the yen since 1990 (when the red line falls, the yen is getting weaker – the Y-axis shows how many dollars you can buy for 10,000 yen).I don’t know when the dollar turns – but there’s going to be a mad scramble when it does. 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