I was on a panel with veteran geologist Brent Cook earlier in the week and something he said rather struck me.

Looking at the chart below, it’s hard to disagree.

The Gold Miners Bullish Percent Index has fallen to zero.

Not 5 or 10, but zero. That’s lower in the in the crash of 2008 and during the Covid panic. It has only ever reached this level during the darkest days of the great gold bear market of 2011-16, and even then only twice.

This chart measures the percentage of gold mining stocks that are on Point & Figure buy signals. If every stock is on a buy signal, the reading is 100. If none are, the reading is zero.

A reading of zero does not mean prices cannot fall further, only that not a single stock in the index is in a technical uptrend.

Readings like this only occur at moments of extreme pessimism. But what makes today’s reading so unusual is the backdrop.

In 2008, everything was crashing. In 2013 and 2015, gold itself was in a vicious bear market. During the Covid panic everything was crashing. Today, gold’s above $4,000; silver’s above $60.

The fundamentals for higher prices - central bank buying, irretrievable government spending and, in the case of silver, industrial demand - remain. Yet the mining shares are in the swanny.

And these are monthly charts. Such extremes take time to develop. Daily and weekly indicators can hit zero fairly easily. Monthly indicators rarely do.

This is an extraordinary breadth washout. Why is it happening?

Inflation (in the true meaning of the word)

When gold and silver went bananas late last year and early this, mining companies took advantage of the frenzy, as they always do, to raise capital. Bucket loads were raised.

Typically in Canada there is a four-month hold after a capital raise. It means that capital raised in January, for example, only came free trading last month and capital raised in February is only coming free trading now.

Somebody has to buy all that paper, and, if they don’t, prices fall until somebody does buy it.

Add that to the broader decline in the underlying metals prices, especially gold and silver, and you can see why junior mining is having such a rough time of it, and why Brent thinks things are going to get brutal.

Too much paper.

Not enough people to buy it.

The sector simply needs time to digest all that paper. Another leg higher in gold and silver would increase buying, but for now money is flowing in the opposite direction.

Such extremes can prove excellent buying opportunities - though if you bought the 2013 dip you had a wait on your hands - but we have all this paper to get through.

Many miners are terrible businesses, years from any cashflow. Costs, especially energy, have risen. Dilution is relentless.

The bear case is that mining stocks are warning us that gold and silver are headed lower.

On the other hand, the economics of mining have changed with gold and silver this high. Producers should make a lot of money. They will need to replenish lost ounces. The value of deposits has changed. Previously uneconomic mines start to look viable. The value of genuine new discoveries is immense.

The bull case is that miners are pricing a disaster that doesn’t come. Gold and silver stabilise, the financing overhang eventually clears and the sector re-rates sharply higher. We are near capitulation.

With a BPI reading of zero, one thing is certain: the sector is not over-owned.

Given that June typically sees the low for the year in gold and silver, I favour the bull case. But the summer is always weak. We might have a while to wait if my ongoing thesis that gold and silver range trade for a year proves true.

This is not 2011-16.

It’s a mid-cycle correction.

The question is not so much whether the sector is hated or not. The chart tells us it is. The question is how much longer investors can stay this pessimistic if gold remains above $4,000 and silver above $60.

Lifetime subscription prices go up tomorrow and other matters

Turning to other matters, here is this week’s commentary in case you missed it:

And a reminder that you have one more day to buy a Lifetime Subscription before prices go up.

The current price is £550 until tomorrow. It then rises to £650 before being permanently withdrawn on 30 June.

If you’ve been considering Lifetime Membership, this is your last chance.

Lifetime Membership

Two NBs

1. If you are looking to upgrade and have trouble with payments, please drop me a line (either reply to this email or message me). I need to cancel your membership, issue a refund and then you need to resubscribe.

2. Despite what the sign-up process says, this is a genuine one-off payment for lifetime access. I manually convert memberships myself.

Any problems, please message me on Substack or reply to this email.

Thank you.

Finally I appeared on the Before. During. After podcast with Sam Carrington this week. Good chat about comedy and real life.

Until next time,

Dominic

Imagine you are in the circus, watching a tightrope walker who’s been on the sauce.

He sways, the crowd gasps, he sways again, more gasps, and yet somehow he doesn’t fall. This goes on and on and eventually you get bored watching.

That, it seems to me, is Britain.

Public debt is now knocking on £3 trillion. (Remember you could have spent a million pounds every day since Jesus was born and still not have spent a trillion - that’s how incomprehensible a sum a trillion is). Interest payments now run at over £110 billion a year - more than we spend on education. Debt-to-GDP hovers around 100%. Growth is wilted. Productivity is like blancmange. Taxes are everywhere and record-breaking. Waste and bloat and bureaucracy are rampant.

But the political response to every problem is the same: spend more.

Despite all of this, like our inebriated tight rope walker, sterling refuses to drop. The pound trades around $1.35. The gilt market continues to function. The bond vigilantes, whoever these mystical people are, appear to be away at lunch with Lord Lucan..

Why?

The answer begins with a simple but often overlooked fact that currencies are not valued absolutely, but relatively.

You look at Britain’s fiscal position and conclude the pound must fall, but against what?

It’s not like the US isn’t running unthinkable deficits. Interest payments are exploding there too. The eurozone is if anything more trapped in low growth than we are. Japan’s debt burden is legendary. Never mind the oil, Canada is a basket case. Australian regulation is doing its best to revive the traditions of the penal colony and China has its own economic and demographic headaches.

Subscribe now

All currencies are crap

Then there are interest rates. Britain still offers relatively attractive yields. Ten-year gilts yield around 5%. That may be painful for the Chancellor, whatever her name is, but it is attractive to those looking for income. Japan, the US and most of Europe offer less. Higher interest rates support the pound. They attract computerised capital from around the world, which buys sterling to get the yield.

London remains a financial centre, albeit it one in over-regulated decline. There is still some rule of law and some respect for property rights. The UK is not yet Zimbabwe, Turkey or Venezuela, even if it may feel that way. A country can be badly governed for a surprisingly long time before capital completely loses confidence.

However, none of the underlying problems have actually been fixed, nor are they going to be fixed. We are still spending £48,000 per household through the state. You’ll get greater productivity out of a plate of blancmange. Taxes are not coming down. We are locked in promise, spend, borrow, tax, repeat.

Here’s another possibility. The tightrope walker may never fall off.

But with each step, the tightrope itself gets closer to the ground.

The pound has lost over 40% of its purchasing power just since 2020.

In 2007 a pound cost $2.10, so we are down a third against another unit which in itself is hopeless.

Measured against the constant that is gold, the pound has fallen over 95% since the Gordon Brown sales of 1999.

Here are those declines visualised.

Share

The framing is all wrong. The collapse is not sudden but ongoing.

Maybe we don’t get a dramatic crisis. No Black Wednesday, no run on the pound, no emergency press conference outside the Bank of England or wheelbarrows full of digital bank notes. Just more of this relentless decline.

Every year a bit more debt, a bit more printing, a bit more inflation, another 7% loss of purchasing power, a bit more government spending, a bit more taxation, year after year, decade after decade. The tightrope gets lower and lower but nobody notices because we are all looking at the walker.

Alf Ramsay was on £4,500 a year. Thomas Tuchel gets £5 million. That didn’t happen over night. It was cumulative, incremental and compounded.

The endgame remains debasement

Not just in the UK but everywhere. In a democracy where politicians need votes they will ALWAYS choose inflation over austerity, spending over restraint and dilution over default. This is built in. The incentives are too powerful. They will sacrifice the currency to preserve the system.

Nothing changes until the system itself changes.

Perhaps the tightrope walker never falls. But the rope keeps inching lower and lower until one day it is running along the ground.

The crowd applauds because there was no crash. Meanwhile the currency has lost another 98% of its value.

That is where this is going, gradually but relentlessly. Not with a bang, but with a long, slow debasement.

Sterling has been “collapsing” for decades, and it will “collapse’ for many decades more, likewise dollars and euros and yen.

The debasement of currency is not a new thing, though we have never seen it globally in the way it exists today.

Gold has seen it happen many times before and it has survived every time. It will survive tsunamis, earthquakes and explosions. National currencies will not.

Thanks for reading the Flying Frisby.

Until next time,

Dominic

A quick housekeeping note

I’ve decided to withdraw Lifetime Membership to The Flying Frisby at the end of June.

The current price is £550 until 15 June. It then rises to £650 before being withdrawn permanently on 30 June.

If you’ve been considering Lifetime Membership, this is your last chance

Lifetime Membership

NB despite what the sign-up process says, this is a genuine ONE-OFF payment for lifetime access. I manually convert memberships myself.

Any problems, please message me on Substack or reply to this email.

The book

The Secret History of Gold is getting rave reviews and is available around the world at all good bookshops, with the audiobook read by me is especially popular.

Hello,

A quick note about The Flying Frisby.

For several years I’ve offered a Lifetime Membership. The idea was simple: make a one-off payment and never have to think about subscription renewals again.

A surprising number of readers have taken me up on it.

However, I’ve decided to withdraw that offer permanently at the end of June.

The timetable is as follows:

• Lifetime Membership remains available at £550 until midnight on 15 June.

• From 16 June, the price rises to £650.

• At midnight on 30 June, Lifetime Membership will be withdrawn permanently.

Until then, it remains available for a one-off payment.

Lifetime Membership

To be absolutely clear, this is a genuine ONE-OFF payment for lifetime access.

Substack displays it as an annual subscription when you sign up. Once you have subscribed, I manually convert your account to Lifetime Membership myself.

If you encounter any problems at all, simply reply to this email, or message me on the Substack app, and I’ll sort it out personally.

Lifetime Membership

If you've been considering it, this is the final opportunity. Once the deadline passes, the only subscription options will be monthly and annual membership.

If you’re already a Lifetime Member, congratulations. You’ve locked in access for life and nothing changes.

The Flying Frisby has been going for many years now. Thousands of articles, podcasts, a few videos, some bad jokes and more than a few good investment ideas.

All the best,

Dominic

Lifetime Membership

Let’s start with a quick market update after Friday’s brutal action

The last few days have not been pleasant for owners of gold, silver, miners or indeed bitcoin. Friday saw on 8% fall in silver. How January’s euphoria has reversed. That’s silver for you.

My ongoing thesis that gold, silver et al go nowhere for a year remains in place.

The structural backdrop for gold’s bull market also remains: growing government debt, huge fiscal deficits, ongoing central bank accumulation, de-dollarisation. But the heat needed to come out of the market, and now it is doing just that.

Silver I’m less certain about, as per usual. Its monetary role is largely gone, but if/when gold gets going again, silver will get pulled higher. Industrial demand remains robust. A year ago if you’d said silver will be $68 yet silver investors will be despairing, you’d have been laughed at.

That said, I think it probably needs to go back and retest $50 before this correction is done.

Miners will follow the metal. But it’s important to remember they are effectively leveraged financing vehicles. When risk appetite disappears, they get destroyed almost regardless of geology, though the good ones will come back.

In commodity bull markets, investors usually lose money by selling the bottom, sometimes through despair, sometimes because too much leverage forces them to.

I still lean toward “structural bull market, cyclical correction”. Though correction is perhaps to light a term when 50-80% of junior mining market caps get wiped out. The sector is not for the faint hearted, though we all love it when it goes up.

Remember the great Shelby Davis quote, “You make most of your money in a bear market, you just don’t realize it at the time”.

I need to conduct a proper bear market portfolio review, which I shall do very soon.

As for bitcoin, its correction looks dramatic, but in percentage terms it remains fairly normal by bitcoin standards. I covered it in this week’s commentary:

A quick housekeeping note

I’ve decided to withdraw Lifetime Membership to The Flying Frisby at the end of June.

The current price is £550 until 15 June. It then rises to £650 before being withdrawn permanently on 30 June.

To be clear, despite what the sign-up process says, this is a genuine ONE-OFF payment for lifetime access. I manually convert memberships myself.

If you’ve been considering Lifetime Membership, this is the final opportunity.

Lifetime Membership

Any problems, please message me on Substack or reply to this email.

Finally, this week I appeared on the Grant Williams podcast, talking about the book. Feedback has been really good. Grant is one of the best interviewers out there and I really enjoyed it.

Thank you for being a subscriber to the Flying Frisby.

Until next time,

Dominic

I was going to write about money transfer company Wise (WISE.L/WSE.US) this week.

The company recently listed on the Nasdaq, demoting its London listing to secondary, and the prospects looked rosy. UK-listed companies trade at lower valuations because they are listed in the UK. America not only has greater depths of capital, it values tech, growth and success. In the UK they get ignored, taxed or regulated - or all three.

And there is another thing. Have you ever tried being an American and sending money abroad? Boy, is it tiresome. And slow, and bureaucratic, and expensive. Wise solves a genuine problem of cross-border payments and solves it well. Its user base was therefore growing.

Meanwhile, its infrastructure is increasingly becoming embedded throughout the banking system itself, the plumbing behind international payments.

But then on Monday Belgium announced it was investigating Wise, as it suspected the company is “used by criminals to launder the proceeds of fraud, corruption and drug trafficking”, and the stock promptly sank 15%.

I have little doubt that Wise, like Revolut and every other payments platform, is used for money laundering, just as Facebook is used for hate speech, and WhatsApp to deal drugs. Money itself is used for money-laundering. Banks are used for money laundering. The stock market is used for money laundering. Cash is used for money laundering too. I guess, the question is whether the company is guilty of “non-compliance with anti-money laundering legislation”.

Maybe it turns out to be procedural and manageable - the rebound in the stock suggests that is the case. Maybe it becomes something more serious. We shall see - and I shall probably wait before committing my precious capital. How long will I wait? Not sure. These kinds of investigations have a tendency to drag on.

But the episode brings me to why bitcoin was invented int he first place, and this week I have had several worried messages about it. Do I still like it? And, more importantly. WTF is going on?

As I’m sure you know, the price has fallen quite sharply.

On one of my investor WhatsApp groups, which has some smart people, many are asking if it really is game over for bitcoin. “Does ANYONE have a good document about the actual use cases of bitcoin?” asked one. “I simply don’t see the point. I see a 15-year track record of promises that it will change the world but with zero actual use cases in my life.”

Somebody else chimed in, “The world is changing meaningfully with AI, chips, oil, geopolitics, rare earths, gold, silver etc. I’m just not sure bitcoin fits”

These observations are quite valid. What’s it for? You just need to look at the price to see it isn’t a hedge against inflation. Nobody uses it for micropayments. It hasn’t solved financial exclusion in the Third World. It’s not private. It’s not used as a day-to-day medium of exchange. It hasn’t replaced fiat. It hasn’t fixed any of things it was supposed to fix. Quantum computing’s going to take it out. What’s the point?

Remember: narrative follows price. Not the other way round.

Bear markets are vicious. They grind you down psychologically. They make you doubt the underlying asset itself.

So let’s address that question. W hat is the point of bitcoin?

Read more

Following on from last week’s piece about the extent to which I use AI, I’ve had a surprising number of messages asking which AI I actually use and what for.

I should immediately stress that I am not some sort of AI guru. I know people use Claude to write code, automate businesses and build entire internal operating systems. That is beyond me. I can’t code. I’m a one-man band, who occasionally hires freelancers. I’m self-taught. But here’s what I actually use and what for.

I stress the best method of all is trial and error. You get results quickly. If you don’t get what you’re looking for, adjust the prompt, or try a different app.

Let’s start with the visual stuff.

Pretty much every image accompanying my articles, such as the one above, is generated on Midjourney. I’ve experimented with ChatGPT, Grok and other image generators, but I like Midjourney’s images the most.

My prompt is often just the article title plus the aspect ratio. Four options appear. I pick the best one.

That alone would have seemed miraculous ten years ago.

I also use Midjourney extensively for music videos. For example, in this video about the lighter side of hyperinflationary collapse, almost every visual was AI-generated from the lyrics. My editor, Goat, then used Runway to animate the images. We filmed my face against a green screen and plonked it on top afterwards.

If Midjourney didn’t produce what I had in mind, I simply kept adjusting the prompt until it did, or I tried another image generator as a last resort

Even as recently as five years ago, let alone twenty, to make a video like this would have cost hundreds of thousands, millions even, and taken many months. We would have needed teams of animators, post production specialists, Soho studio space and lord knows what else. That, to my mind, is the genuinely revolutionary part of AI. Democratisation of media and all of that.

But on top of it all you still need someone - in this case my editor Goat - who knows what they’re doing.

People often argue that AI ia replacing creativity. What it is actually doing, at least in my case, is dramatically lowering the cost of production and making creativity available to all. The possibilities for creative littlemen like me are enormous.

I made this video using Grok and Neural Frames

And this one was generated entirely in Neural Frames

Ironically, we used no AI in the music itself. We edited the videos either in Capcut or FinalCut.

By the way, if you enjoy these videos, the first place I upload them is at my comedy Substack, so sign up to that. It’s free.

Dominic Frisby's Comedy News

Become one of the elite. Type your email in the box below. Plus get a copy of my guide to The Top 10 Comic Songs of All Time. All free. No charge. Bargain!

Writing, research, advice and more

This next video, about the most prolific slaving civilisations in history, generated millions of views across social media, and became the most viewed page on this Substack. It is an interesting case.

Not because of the images themselves, which were generated with Midjourney, but because of the research. AI couldn’t and in some cases wouldn’t do it.

Claude flat out refused because of the subject matter. It would not engage. (IN other words it is biased). ChatGPT couldn’t get its head round what I was trying to do. Grok came closest but in the end I worked with a human researcher, Sam, who I knew from my book, who turned out to be much better.

I have paid subscriptions to Claude, ChatGPT, Grok and Venice.

I cooled somewhat on Claude after the slavery episode. Around the same time I was in a nasty dispute with three former business colleagues and needed some help. Claude kept getting hysterical and calling on me to speak to a lawyer, which I didn’t have the time or budget to do, whereas ChatGPT gave the me the help I was looking for. So between the two episodes Claude has been rather demoted in my office, though I still use it as a sounding board for anything to do with writing - where it is strong - if I want a second or third opinion. I get that the experts think Claude is the boss, but for me it is too captured. ChatGPT has replaced it as my primary all-rounder.

In general terms, ChatGPT is the most user-friendly though you have to go into the settings and tell it to stop being sycophantic, as that just gets annoying. (They are all as bad as each other for sycophancy).

I’ll use them all for brainstorming, proofreading, titles, summarising transcripts, challenging arguments, evaluating, drafting legal docs and agreements, advice, helping with negotiating. But I tend to go to ChatGPT ahead of the others, especially for anything to do with diet, health, personal development, mentoring, problem solving, advice and so on. It is basically having an extremely fast, but not always reliable assistant. You cannot blindly delegate to it, you have to oversee, because it is not always right, even if it behaves like it is.

Grok is the best for anything current. If I am writing a satirical song, for example, and I need an overview of a politician or a news story, Grok is best by far. I think it’s because Grok has X to mine from.

Regarding investments, Grok beats most hedge fund managers, apparently. I use it to gauge sentiment around companies and themes: it can quickly tell me whether people are already talking about it or whether almost nobody is. That is very useful. If thousands of people are discussing a company, the hype cycle is probably already fairly advanced. If nobody is discussing it, that is more interesting.

For ongoing projects, however, I still prefer ChatGPT and Claude. I find their their folder systems are more user-friendly and easier to organise, particularly for themes I want to keep coming back to. Grok - or is it me - seems to lose conversations between the app and when I use it via X.

Grok could quickly become my go-to allrounder, though I have some shares in SpaceX, so I am probably biased. Broadly speaking I have greater faith in Elon Musk’s integrity than I do Sam Altman’s, even if for now I have voted with my usage for Sam Altman.

Claude may be the most capable technically, particularly for coding and analysis, but I also found it the most censorious. Venice, by contrast, is the least filtered. And it gives you access to Seedance 2.0 (which is the best of the video generators), but it has other technological shortcomings.

None of them are neutral, and you still need to judge what they tell you - which requires a functioning brain. I find AI really suits a one-man band like me, who has some experience, knowledge and who still retains a modicum of cognitive ability. It makes me so much more productive. But you still need a functioning brain.

At the same time, I would argue that people who refuse to engage with AI at all - while I admire them - are putting themselves at a disadvantage. The productivity gains are simply too large.

AI has not made me less creative. If anything, it has made me more productive creatively. Ideas that were once stuck in my head can now be realised.

This Friday I am speaking at the New Culture Forum Literary Festival along with Alison Pearson, David Frost, Bill Cash and many more. It looks to be superb event. Flying Frisby readers can get a discount using the code LITFEST15.

If you are a Lifetime Subscriber and fancy it, drop me a line and you can come as my guest without having to pay a single penny. How about that!

(By the way I will shortly be ending lifetime subscriptions on June 7, if a Lifetime Subscription is of interest, sign up now)

Subscribe now

Here is this week’s commentary in case you missed it

Finally, this week I appeared on Blue Dot radio in the US talking to Dave Schlom about the book. Was a good interview.

Thank you for being a subscriber to the Flying Frisby

Until next time

Dominic

Share

Following my recent pieces on Namibia, several readers got in touch asking pretty much the same question: Fine. But how do you actually invest there?

Frontier markets are notoriously difficult to access. Interesting companies are privately owned, illiquid, unlisted or buried on obscure exchanges your broker has never heard of, or they carry their own small company risk that does not reflect the broader themes of the country.

To try and answer the question properly, I spoke to economist Rowland Brown, founder of Cirrus Capital, the country’s largest stockbroker, to discuss the best ways to invest in Namibia and where he sees the biggest opportunities.

The full interview follows, but here are 7 things that stood out to me.

1. Namibia’s growth could accelerate dramatically

Namibia has averaged around 4.5% annual growth since independence in 1990. But Brown thinks the next decade could look very different. The reason is oil.

Offshore discoveries by majors such as Shell plc and TotalEnergies could transform the country’s fiscal position. Brown estimates that production of 450,000 barrels per day by 2030 could increase government revenues by roughly 60%, which is quite frankly an astonishing number.

Namibia today has a population of roughly 3 million people. It is rich in uranium, diamonds, copper, gold and fisheries. Add large-scale oil production and the country starts to look strategically very important.

2. The banks are surprisingly attractive

One thing I had not appreciated before speaking to Brown was how profitable Namibian banks are. According to him, the major listed banks are producing returns on equity of roughly 20-30%, while trading on earnings multiples of only four to five times.

The problem is that these banks are listed only on the Namibian Stock Exchange, meaning overseas investors generally need a local broker to access them.

The main players include Standard Bank Namibia, First National Bank Namibia and Capricorn Group

Brown is particularly positive on Standard Bank Namibia because of its positioning for both the uranium and oil industries. Chinese involvement in Namibian uranium mining has also strengthened relationships and financing channels there.

3. But there is also a way to buy Namibian government debt

This was another thing I did not know. There is an exchange traded Namibian government bond index called STXNAM, tradable in Johannesburg.

Namibian government debt currently yields around 12%, while inflation is around 3%, according to Brown.

That obviously comes with frontier-market risk, but Namibia’s debt position is arguably stronger than many developed countries. Roughly 80% of the debt is domestically owned, largely by pension funds and banks.

Unlike other countries I could mention, Namibia has not yet completely financialised itself into oblivion. Ahem.

4. Uranium remains one of the biggest long-term themes

Namibia is already the world’s third-largest uranium producer - a lot of that uranium is at the margin. China has a role to play in this.

Chinese investors came into Namibian uranium aggressively after Fukushima , when uranium prices were deeply depressed and western capital had largely disappeared.

With uranium prices having recovered, those investments are working. We discussed various companies operating in Namibia including Paladin and Deep Yellow, the problem is that many of them are multi-jurisdictional, so you don’t get the pure country play. ASX-listed Bannerman Energy (ASX:BMN) is the closest to being a near-pure Namibia uranium play.

5. Oil exposure is harder than you think

As with uranium, the oil frustration is that the obvious opportunities are often buried inside giant conglomerates.

Brown mentioned Sintana Energy (SEI.V), Hosken Consolidated Investments (HCI), which holds a near-50% stake in London-based, privately owned Impact Oil & Gas, which owns significant exploration rights in the Venus discovery offshore Namibia, and Reconnaissance Energy Africa (RECO.V). ReconAfrica is a speculative onshore exploration story and Brown was careful to stress that it remains high risk.

6. Copper may ultimately become the biggest story

One company we discussed at length was Koryx Copper (KRY.V), which is now a development story rather than a speculative discovery punt.

The project benefits from simple geology and open-pit potential, good access to roads and ports, nearby power and water infrastructure and significant associated gold

Brown repeatedly emphasised on management quality, and I actually met the boss too while I was out there - Heye Dawn - an impressive man. Junior mining is littered with “lifestyle companies”. This is not one of those situations, though it remains speculative mining investment and is vulnerable to falling copper prices, being quite low grade. But I am quite bullish about copper, as you know.

7. The currency question is fascinating

Namibia’s currency is pegged to the South African rand. The rand is not exactly the Swiss franc.

But Brown made an interesting point: without the peg, Namibia’s currency would probably be wildly volatile because of the country’s dependence on commodity exports. So the peg may actually make Namibia more investable, not less.

Longer term, if oil revenues become large enough, Namibia could gain greater flexibility, perhaps moving towards some form of trade-weighted currency basket more heavily linked to the US dollar.

That is speculative for now, albeit interesting.

Anyway, enough from me.

The full interview with Rowland Brown follows. For those who want to go deeper into the weeds on Namibia, uranium, copper, oil, banks and frontier-market investing, I recommend you listen. Brown knows his onions. And you can contact Rowland via Cirrus Capital.

One thing becomes very clear very quickly. Namibia may still be a small frontier market, but it no longer feels peripheral.

Thank you for being a subscriber to The Flying Frisby.

Until next time,

Dominic

My youngest daughter, who is supremely intelligent, refuses to use AI. She doesn’t want it plagiarising her, she says, and she doesn’t want her mind to get lazy. She’s currently taking her finals at Cambridge, where, she tells me, almost everybody is using it for everything. But she won’t. And good for her.

Another friend won’t touch it either, because she is so fiercely protective of her privacy and doesn’t like AI and social media having so much access to our inner lives.

But these people are exceptions. Almost everyone I know is now using AI constantly.

I am a prime offender.

I use it to make trivial decisions. I get it to draft emails and messages that are too sapping to write myself. I’ve used it to draft contracts that would otherwise have cost me thousands in legal fees. I use it to summarise research papers and articles, evaluate investments, plan trips and organise logistics. It’s a great sounding board. It helps me proof read these articles, does the pics and writes all the SEO stuff I can’t pretend to understand.

It is my personal trainer, and tells me what exercises to do. Yesterday I got it to analyse my body fat from a photograph. I’ve even had it analyse my stools.

Last year (and the year before, and the year before that), I was stuck in a toxic relationship I couldn’t seem to break out of, even after we separated. At one point I thought I was going mad. I eventually uploaded our entire WhatsApp exchanges into AI and asked it to tell me WTF was going on. I discovered I have “fixer bias” she was an “anxious attachment avoidant”, or something like that, and the combination of the two types is highly toxic and addictive. Finally, I understood why I couldn’t break out of the loop, and what I now had to do to move on.

My mother uses it non-stop as well, and it has become a brilliant companion to her.

My son and daughter-in-law, both of whom I live with, constantly take the mickey out of me because I’ve become so dependent on it.

One of my faults, and there are many, has always been that I give my power away too easily, especially in negotiation. I worry too much about upsetting people or creating friction. Using AI has helped me phrase things, removed my stupid ego from the conversation, helped establish boundaries, not made me look needy or arrogant, stopped me saying the wrong thing to the wrong person at the wrong moment. As a result I have closed several deals and opportunities over the past year that I simply wouldn't have managed previously. I wouldn't have known what to say. I would have held back, worried about rubbing someone up the wrong way. Instead, everyone walked away happy.

But it’s not just me. I’ve noticed many others doing it too.

When I travelled to Namibia recently, the trip was logistically complex. I spoke to the travel agent almost every other day. Being lazy, I got AI to write my messages to her, but I saw she was doing it back to me. I knew what she was doing and she probably knew what I was doing. It didn’t matter, the important thing was the trip. Neither of our egos got in the way, and the trip went without a hitch.

Which got me thinking.

Never mind the looming political and financial crises, or the various civilisational catastrophes currently unfolding, at grassroots level, something quietly significant is happening: more and more people are using AI to advise, negotiate, communicate and make decisions. Outcomes are improving as a result.

If more and more people consistently make better decisions, the cumulative effect of all these better outcomes will be enormous. Better decisions, better communication, fewer conflicts, fewer bad deals, fewer toxic relationships dragged out past their natural end. The incremental gains, multiplied across enough people, look genuinely civilisational.

The really profound shift is not that AI writes emails, and makes you generally more productive. We have always “outsourced” cognition. Writing outsourced memory. Calculators outsourced maths. SatNavs outsourced navigation. AI is outsourcing judgement itself.

I was actually considering reaching out to somebody recently. AI advised me not to, and when it explained why, I realised it was right. Contacting them would have been selfish and unfair.

Now, obviously, there are downsides.

By relying on AI, parts of the brain undoubtedly atrophy. I used to remember phone numbers effortlessly. Now I barely know anybody’s number because my phone remembers for me. The same thing happened with memory generally. Human beings once had extraordinary recall because they had to memorise stories, events and oral histories. Writing killed that. I had a good sense of direction, which I barely tap now I have Google Maps et al.

AI will also increase manipulation, cowardice and passivity. As individuals we become weaker and dependent. Eyesight was probably better before we invented glasses.

There is also something deeply unsettling about a computer programmed by someone anonymous who isn’t you helping make your decisions for you. Part of living is making wrong decisions, suffering the consequences and learning not to repeat them. But frankly, I'm done with bad decisions. I've made enough wrong decisions for one life. I’m 56 now. I just want to make optimum choices and have a really good next three or four decades, or however long I’ve got left.

There are also obvious dystopian implications. AI companies now potentially have access to thoughts, fears, fantasies and private conversations that once existed only inside your own head. What happens when AI records become admissible evidence? What happens when the things you've confided to a chatbot are subpoenaed? These are not hypothetical worries. They are coming. Stupid conversations with a chatbot that you thought were just in your head could be used as evidence against you. There are all sorts of dark possibilities.

But on balance, and with eyes wide open, I think the impact is going to be enormously beneficial. Not just for individuals but for mankind as a whole.

In case you missed it, this week's commentary is on copper. Not the sexiest subject, I grant you, but an important one, and I think it's one of the better pieces I've written in a while.

I also have an interview with Goldfinger Capital about The Secret History of Gold, which continues to get extremely encouraging feedback..

Thank you, as always, for subscribing to The Flying Frisby.

Until next time,

Dominic

There’s a lot more to AI than software.

AI requires electricity, transformers, substations, cooling systems, data centres and more. That all means copper. Lots and lots of copper.

Right on cue, the copper price hit fresh highs last week at $6.68/lb, before pulling back.

So today I am going to take a long overdue look at copper. Was last week’s action just a spike that will soon fade away? Or was it part of something much bigger? TLDR - the second one.

Let’s start with a 50-year chart to give you some historical context.

Copper peaked in the great inflationary blow-off of 1980, before spending the next twenty years doing essentially nothing. The 1980s and 1990s were an age of globalisation, disinflation and cheap commodities. Who cared about hard assets or mining?

Then came the rise of China and the supercycle of the 2000s. China urbanised, industrialised and turned itself into a superpower. Copper exploded higher, peaking in 2011.

That boom then gave way to a long hangover. The 2010s were dominated by tech stocks. Mining died a death. To survive mining companies cut capex, reduced exploration and focused on balance sheet repair rather than growth. That decade of underinvestment laid the foundations of the shortages being revealed today.

Meanwhile, while investors were busy buying software companies and meme stocks, the world quietly decided it wanted to electrify everything.

Share

The really striking thing about the chart is the speed of the rallies when they come. Then the amount of time copper spends going nowhere.

Now here’s the ten-year chart, with the one-year moving average in red and the 55-day moving average in blue.

To my eye, copper appears to have formed a major bottom in 2020 during the Covid panic. The violent correction in 2022 increasingly looks like an early-cycle shakeout.

Technically, the chart is undeniably bullish. Copper is trading above both moving averages, both of which are rising strongly. Momentum remains positive.

That said, in the short term, the metal does look extended. Sentiment has become hyper bullish. Every investment bank now seems to have a copper supercycle note. Type “copper” into X and see what comes up: we are going to the moon on a copper superjet (powered by electricity natch).

Now here’s the three-year chart, to which I’ve added the 50- and 200-day moving averages and the RSI. The trend is your friend, and it is up.

Historically, copper tends to be seasonally weaker over the summer months, and this is a spiky chart within its uptrend. I think we see some range-trading and consolidation over the summer months, which will provide something of a buying opportunity.

But the charts are only half the story.

The more interesting question is why copper may be entering an entirely new structural era.

Read more

As Dominic Frisby recounts, Gold has captivated human beings since time immemorial. In doing so, it has shaped the course of history. The author has collected some cracking stories.

The reviewer even cited one of my quips.

For years, gold bugs, bitcoin bugs, hard money obsessives and monetary historians have been treated by the mainstream economic press, ergo the Economist and the Financial Times, as, at best, harmless eccentrics and, more usually, outright lunatics.

This despite the fact that both gold and bitcoin keep breaking to new highs.

I should stress the reviewer was still distinctly sniffy about both my history of money and my arguments about the importance of currency that retains its purchasing power. Certain points were, shall we say, selectively interpreted.

Nevertheless, the review repeatedly says the book is “worth reading”, which is about as warm an endorsement as one is likely to get from a publication of that persuasion, partly because I have “collected some cracking stories” (no mention of how well they are told), but - and this is the point I want to get to - also because:

“Gold still matters a lot”.

I almost did a double take reading that sentence in the establishment economic press.

We have gone from “barbarous relic”, crank territory and the preserve of eccentrics to “gold still matters a lot.” That is a significant development I would say.

Here’s the review in full in case of interest.

More importantly, here is a link to the opus if you want to get your first edition of what is surely destined to be a classic.

In other news

This week I appeared on Greg Moffit’s Legalise Freedom podcast. Here is the link to listen.

And here is this week’s commentary. (A lot of very positive feedback on this one).

Namibia sits on the south-west coast of Africa. Below Angola, above South Africa, with Botswana to the east.

Portuguese explorers first reached the coast here in the 1480s. No natural harbour, brutal surf, cold Atlantic fog, the Namib Desert running straight into the sea, little access to fresh water. They planted crosses to mark their claims, turned around and went home again, never to return.

Today that coast is known as the Skeleton Coast because of shipwrecks and whale bones.

Three hundred years later, having decided there was too much tropical disease in Gambia, the British looked at Namibia as a possible penal colony. They decided it was too inhumane.

It was Germans and Finns who eventually settled on the coast another hundred years on.

Namibia is about three and a half times the size of the UK, and yet its population is only 3 million. It is big and empty. Most of it is desert.

I’ve got more endless expanse shots than I know what to do with. Here is just one of them. Plus a short vid shot from a hot air balloon which gives you an idea of the sheer endlessness of the place.

Even in the capital city, Windhoek, there is just so much space.

The only two places in the world that are less densely populated are Greenland and Mongolia. Namibia beats even Australia and Mauritania, which is mostly Sahara desert.

Demographically, the country is roughly 87% black, 6% white and 5% mixed race, with the Ovambo people to the north making up about half the population. I saw a few Asians while I was there too.

Share

A country of extremes

There are still bushmen and other ancient hunter-gatherer people living as they have lived for centuries, yet other parts of the country are extremely modern. There are shopping centres to rival our own, good roads (the best in Africa, I was told), great restaurants, commercial farms and more. About half the population is urban.

The national language is English, adopted after the country gained independence from South Africa in 1990, but I found that people, black and white, would as often speak amongst themselves in Afrikaans and, up north, Ovambo. On the coast German is widely spoken. (The country was a German colony from the 1880s until World War I, when South Africa, then British, invaded. Hence it has great beer.)

The controlling political force is the South West Africa People’s Organisation (SWAPO), which has governed since independence in 1990. SWAPO is nominally social democratic, but there are still strong liberation-era left-wing instincts, as evidenced by streets in the capital renamed after independence: Fidel Castro Street, Robert Mugabe Avenue and so on.

All being said, Namibia functions well.

It is a stable democracy with rule of law, an independent judiciary (the government sometimes loses cases), relatively free markets and low crime by African (and European) standards.

Immigration law is tight too. Having seen the problems stemming from mass immigration into South Africa, Namibia has taken a more controlled approach.

Indeed I heard repeated frustrations from mining companies trying to obtain visas for geologists and mining engineers where the local expertise either does not exist or is employed elsewhere.

Official unemployment is 37%, but I heard from several different sources that the real number is above 50%. 50%! Very sad.

Nominal GDP per capita sits around US$5,000, roughly double that adjusted for purchasing power, which puts it above most of sub-Saharan Africa. The World Bank classifies Namibia as a lower-middle-income country, alongside countries such as Albania, Argentina and Belize. But these numbers are misleading.

The country has vast wealth through its natural resources and related industries: uranium, copper, diamonds, fishing and tourism. Spread that revenue across just 3 million people and the averages look impressive.

There is also serious rural poverty.

Namibia combines first-world infrastructure with third-world unemployment.

The currency is pegged to the South African rand, not one I would have chosen. Official inflation sits in the 2-3% range.

About 88% of the country’s sovereign debt is held domestically, and there appears to be healthy demand for its bonds. The country has also recently begun a sovereign wealth fund, which is reportedly growing at an impressive 16% since 2022. The central bank has recently also implemented a gold acquisition programme. Kudos.

The country has high institutional savings and one the larger stock exchanges in sub-Saharan Africa.

Food is cheap, protein in particular. The country has an enormous cattle herd, almost as large as its population. Recent outbreaks of foot-and-mouth disease in neighbouring countries are therefore a cause for concern, as you can imagine. (Not my bag, but I reckon there is an opportunity exporting Namibian biltong to the UK, where it is expensive. I brought back loads).

Other goods, however, can be expensive because the country relies heavily on imports.

The main industries - tourism and natural resources

Ports are expanding. The railways are not great, though I hear they will be improved. The roads, however, are excellent, as I said.

Namibia is also the world’s third-largest uranium producer after Kazakhstan and Canada. Chinese interests hold majority stakes in the country’s three largest uranium mines, not to mention other metals.

Oil and gas have recently been discovered offshore. Shell plc is one of the pioneers.

As for gold, Namibia only really became a meaningful gold player after independence, since when roughly 15 million ounces have been discovered, much of it alongside copper. Among the larger players is B2 Gold (BTO.TO), which is well known in the country. Large parts of the country remain un- or under-explored. And I think that is where a lot of the big opportuities lie.

There also appear to be rare earth deposits in some abundance. Kendrik Resources (KEN.L) recently made some progress here. Solar, wind and hydrogen projects are also attracting investment too

Chinese money helped build the SWAPO headquarters, and they are investing significantly in mines in the country.

Of note is that the USA recently spent heavily developing their embassy. It is big. Former Trump attorney John Giordano is now ambassador, a surprisingly high -profile appointment for such a low-profile country.

One theory I heard repeatedly was that, given deteriorating US relations with South Africa, Washington increasingly sees Namibia as strategically important in terms of Atlantic access, energy routes and influence in the south Atlantic. Not quite the Panama Canal or Strait of Hormuz, but it could be something of a chokepoint.

Namibia feels like a country at the cusp of something.

It has space, resources, energy, political stability and strategic importance.

Next week I want to look in more detail at Namibia as an investment destination, particularly its mining sector, where some very interesting things may be developing.

My thanks go to to Rowland Brown and Chanel Marais of Cirrus Capital for bringing me to Namibia and for organizing what was a brilliant and instructuve conference.

Thank you for reading the Flying Frisby.

Until next time,

Dominic

Subscribe now

As I’m sure you know, it is all but impossible to destroy gold. Yes, yes, nuclear explosions, blah blah, mercury, aqua regia, but to all intents and purposes gold is permanent. It’s been here since before the earth itself, and it’ll be about long after it’s gone, shining away.

That also means that all the gold that has ever been mined still exists. Some of it has been lost, of course, but it’s still there somewhere, even if it’s sitting in sunken Spanish galleon off the coast of Tobago.

There are just under 7 billion ounces of gold in the world, and just over 8 billion people, so about 4/5 of an ounce per person.

Until the gold rushes of the 19th century, there were roughly 2/5 of an ounce per person.

As you can see by the chart below there is now more gold per capita than ever before.

What’s really interesting, however, is how closely cumulative gold supply tracks global population growth. The two rise at remarkably similar rates over centuries.

Gold supply expands slowly, organically and roughly in line with humanity itself. No central bank planned it that way.

Right there is why gold is nature’s money.

Share

But there are some changes afoot.

Population growth is slowing rapidly. It is actually going backwards in some parts of the world. The Matt Ridley argument is that this is a result of prosperity.

Merryn Somerset Webb thinks it’s even more specific than that. She blames smart phones.

She may have a point. South Korea is perhaps the most advanced smart phone nation. When I went there in 2015 I remember thinking that, technologically, it was a good 10 years ahead of Western Europe. Recently we learn it has the slowest population growth of the lot.

Annual gold mining supply is at record levels, however: 3,600 tonnes last year. Does this mean gold per capita is set to increase?

Probably but there is a big but and it looks like this.

Share

How about that for a table?

No new major discoveries - 2 million ounces or more - in 2023 or 2024. As far as I know there were three in 2025 - in China, in Saudi Arabia and in Iran.

But look at the trend.

We have been below the 10-discovery threshold since 2009. Discoveries peaked in 1995.

The long-term implications of this are enormous.

Gold is not like other commodities, copper, oil or wheat, say, where annual production dramatically affects price because so much of what was produced previously has already been consumed. Almost all the gold ever mined still exists somewhere, as i say.

But mining supply still matters at the margin.

The collapse in discoveries has not yet translated into falling production because it takes such a long time to bring a deposit into production. The average time from discovery to production is now around 17 years.

But we are now roughly 17 years on from the late 2000s, when the discovery rate began to fall off a cliff.

In other words, we may not be far away from the point where the collapse in discoveries finally starts feeding through into stagnating or declining mine supply.

And unlike previous cycles, there do not appear to be dozens of giant new deposits waiting quietly in the wings.

(Obviously, a higher gold price offsets some of this because lower-grade ore becomes economic to mine.)

Here is the long-term production chart. You can see how supply has largely plateaued over the last ten years .

Perhaps that also helps explain why, after 50,000 years of use (yes, that figure is correct), demand for gold from individuals, institutions and central banks remains so strong.

Subscribe now

Lots of interviews to share with you this week

I’ve been promoting the release of The Secret History of Gold in the US.

First up with my US BFF, Tom Woods

On Financial Sense with Jim Puplava (audio only)

On Kitco News with Jeremy Szafron

And, finally, Clem Chambers

Last, but not least, here is this week’s commentary, in case you missed it, looking at the precarious state of the UK’s finances.

Thank you for being a subscriber to the Flying Frisby.

Until next time

Dominic

It is always nice to be a national of a country that is leading the pack. It makes one proud to be a world leader.

When it comes to cracking sovereign debt markets, however, you do not want to be leading the pack.

But that is where we are in the UK.

Even Mohamed El-Erian is tweeting about it.

Yields on 30-year gilts, ie UK long-term government borrowing costs, hit 5.75% this week, the highest level since 1998, and the highest in the G7.

It’s local election day in the UK today, one of those events when we are kidded into thinking that a cross on a piece of paper is going to make the slightest iota of difference. This has barely been discussed as an issue, when it should be front and centre.

The cost of servicing UK debt is now north of £100 billion, roughly 7% of annual expenditure.

All you young folks grinding away at your desks to pay Income Tax, that’s what much your effort is being expended on: servicing debt. It’s not like you are contributing to anything new. As I say in Daylight Robbery, debt is a tax on the future.

UK public spending is now £48,000 per household. That’s how out of control things now are.

This is only going to get worse. You have to own gold.

One reason sterling has held together better than many expected is that UK interest rates remain high.

Whether the Bank of England formally raises rates further or not, the market itself is already tightening financial conditions. Happy mortgage day, everyone. The post-2008 era of low rates is well and truly over.

So-called yield curve control will have to come, to stop the government admitting they are insolvent. And that means further currency debasement.

All the political turmoil that’s coming as Labour tries to get rid of Keir Starmer after today’s rout is not going to help. The next General Election is still three years away. Labour will put that off for as long as possible as half of them are going to lose their seats.

When the next General Election does come, the result is going to be, as they say in women’s circles, “well hung”. No party has more than 25% of the vote. Reform is currently polling highest on 25% (next are the Tories and Labour on 19%), but thanks to our electoral system Reform’s 25% will not necessarily translate into 25% of seats, unless deals are done. The most likely victor will be a coalition, probably RefCon, but don’t discount the possibility of GreenLab.

I should perhaps say this. 5.75% is not “instant crisis” serious, and the yield has come off a little amidst the latest potential for peace in Iran. Today it’s 5.63%. We are now at the “the market is starting to ask questions” stage.

Share

For context, in 1992 long-dated yields went to 9% even while the base rate hit 15% on Black Wednesday itself.

We can survive 5.75% for a little bit, but as you can see from the chart below: this is a upwards trend and it is going higher.

The UK is uniquely vulnerable: large fiscal deficits, persistent current account deficits, high debt-to-GDP, high taxes, high energy costs, heavy state-spending commitments, no political appetite for belt-tightening, low growth, low productivity, a service-sector-led economy much of which can be replaced by AI, financial services suffocated by regulation, short average debt maturity rolling constantly into new rates, the Bank of England now selling gilts not buying. Then there are the demographic issues: an ageing population, the most productive leaving, and a reliance on foreign capital which, at present, is not coming but going.

What does this all translate to? Higher mortgage rates, increased government refinancing costs, higher taxes as a result, forced spending cuts, pension funds and leveraged financial institutions coming under pressure, weaker growth and sterling vulnerability.

If you are a reader from outside the UK, you can look at the UK and know what is likely coming to you soon after.

The government itself will get into a terminal loop: higher yields → higher debt servicing → larger deficits → more issuance → higher yields.

Read more

The Secret History of Gold comes out this week in the US. So this is, whether I like it or not, a big week.

The reviews on Amazon have been very encouraging. 4.9 is a pretty good ratio. (And the only 3* review was because the book arrived with a damaged dust cover, so I’ll take that as a win).

In the run-up, I’ve been doing a number of interviews. I thought I’d share the best of them and why they’re worth your time.

Here I am talking gold to Michelle Makori, who does something most interviewers don’t bother with: she prepares. We cover lots of history, where we are now and where this cycle might go next. Ignore my red nose. It was sunny.

And here’s a conversation with Michael Maharrey of Money Metals. This one goes deeper into the monetary side of things, and why gold keeps reasserting itself.

The macro case for gold is as strong as ever, particularly if you live in a second tier nation (most of Western Europe) or below. Price action is hesitant, and my view remains that we are in a period of consolidation after last year’s run up. A good time for positioning.

Finally, here is this week’s commentary

With an additional note on for paying subscribers here.

Until next time,

Dominic

I bought Arizona Metals (AMC.TO) a few weeks back on the basis of its chart formation.

The company today just released its Preliminary Economic Assessment (PEA) for its for the Kay Mine project, and it’s a shocker.

Kay shows an after-tax NPV of MINUS (!) US$6 million and an IRR of just 4.9%, against initial capex of US$6…

Read more

Something of a thought experiment today, motivated by the fact that I don’t want to go through another bear market in mining. I’m done with them. The false dawns, the endless grinding declines, the frustration.

You might remember me saying, mid bear market a few years ago, “One more bull market and I’m done.”

So the question I’m asking today is, “when can we expect this bull market to end?” It might already be over, for all I know. Or there might be another five years in the tank.

I’m asking this question because I’m finding myself more and more tempted by high-risk mining exploration plays. I’m seeing value in companies that today have a market cap of C$50 million that a year ago I would have been more reluctant to invest in when their market caps were under C$10 million.

Last week I bought one. I like it. But the way I bought it ignored all the risk-aversion built up over ten years of bear market.

If we are in a secular bull trend for metals, then companies like this will do very well. But come a bear market, they will grind lower and lower, eventually reaching a point where they trade for little more than their cash value.

My broad thesis for gold and silver, as you know, is that we trade sideways for a year, while the market works through the excesses of 2025. A mid-cycle pause, so to speak, before we eventually go to the $7 to $10,000 by the end of the decade. At present I feel more bullish about base metals such as copper and zinc. Rising prices here will preserve the bull market in mining more generally.

But this is just one writers’ thesis.

The mining cycle

So today we are going to study two long-term charts.

I have got a fantastic chart of the copper price, adjusted for inflation, going all the way back to 1900. Copper is a good proxy for industrial metals and to some extent gold and silver as well. There is a lot to learn from this chart, some of it quite unexpected.

Yes, mining and mining methods have changed over the years. Grades used to be a lot higher (there were higher amounts of metal in the rock) but this is offset by improved extraction methods meaning lower grade rock is now economic. Bottom line the world is consuming more copper than ever before.

The mining cycle however still exists. Today, if anything it takes longer than ever before. If there is a shortage of supply of metal resulting in a price rise, it still takes many years and a lot of investment to increase supply from existing mines. Companies, which tend to be risk-averse, have to be persuaded for example that the higher price warrants the extra investment - that the higher price is here to stay. Once the investment is made it can take a long time to build out the mine. Then there are regulators to get past. This can take years too.

As for new mines it can take over a decade or more to take a mine from discovery to production. Making the discovery in the first place can take years too.

All the while there is a shortage of metal and prices keep on creeping up.

Eventually there will be an excess of metal and prices start falling again. Then all the mines need to be shut down. That takes time. Once they’re shut and everyone has lost their shirt, there is considerable reluctance to ever do anything again (see my opening comment)

Then the metal price starts going up again.

The world may be unrecognisable from the first half of the 20th century. The mining cycle is unchanged however.

So what do these cycles actually look like over the long term? And more importantly, where are we now?

To answer that, we need to look at two charts. One, as I say, goes back to 1900. The other is the oldest mining index there is.

One thing to keep in mind as you look at these charts: the biggest gains in mining don’t come at the end of a bull market. They come early.

The Barron’s Gold Mining Index (BGMI) was originally put together by Barron’s magazine in 1938 to track the performance of 25 mining companies. (Barrons used to publish weekly values for steel, automobile manufacturing, gold mining and other industries)

Here is the index, with red and blue representing bull and bear cycles, going back to 1938. (Broadly speaking mining was a good place to be in 1930s - before this chart - after the stock market crash of 1929 eventually bottomed in 1932).

But you can see there was no break-out until 1965. So at least 25 years of range-trading.

Once the break out occurred, it was bull market for 15 years until 1979. But there were two huge shake-outs along the way - one from 1968-1970, the other from late 1974-1977.

Then from 1980 to 2001 another 20+ years of range-trading and decline.

That 2001–2011 bull market did break out in real terms, but the move ultimately failed to sustain itself.

Another bear market from 2011-2015.

And then I guess you’d say bull market from 2016 but again with two huge shake-outs 2018 to 2020 and 2022-2024 (the one when I declared one more bull market and I’m done).

But here’s the thing. We only got a proper break-out from that 1980 high last year - 45 years on

You can see just how long these cycles are.

Now let’s look at copper

And my goodness me - how long does it range trade for?

The cycles are marked in red and blue, as before

That’s the nominal price of copper, it might be useful to look at the CPI adjusted price, for obvious reasons.

You can see just how long the cycles are.

With shake-outs along the way you are basically looking at a bear market from 1907 to 1932.

A bull market from 1932 to 1975, which, in CPI-adjusted terms, peaked at the 1907 high.

25+ years of bear market from 1975 to 2002.

The 10-year bull market of the noughties, followed by a 10 year bear.

In CPI-adjusted terms copper is still trading below the 2011 high - never mind the 1975 and 1907 highs.

The conclusion is that this bull market still has legs, but also that mining cycles are longer, messier and more deceptive than most investors expect.

However, mid-cycle corrections (such as we are currently seeing in gold) are to be expected. The longer-term bull market thesis is still intact.

There is one other observation I would like to make, and I believe it’s an important one.

And it leaves me in an awkward position.

I find myself taking more risk just as the part of the cycle where the biggest gains are typically already behind us.

While mining cycles are often longer than people think, equity performance is heavily front-loaded. That’s when the biggest gains are found, coming out of the bear markets. Most investors arrive half way through, so miss the early big gains and then get caught out when the thing turns.

I know that’s what happened to me in the 2000s. Big money was made from 2001 to 2005/6. I only really got involved mid decade and while 2006-11 was great, there weren’t quite the returns seen from 2001-6.

So the ten baggers of last year, such as we enjoyed with Sierra Madre (SM.V)? It’s still possible to find them lower down the food chain in the explorers, where there is greater risk, but they won’t be as common.

Share

Until next time,

Dominic

Disclaimer:

I am not regulated by the Financial Conduct Authority (FCA) or any other regulatory body as a financial advisor. Therefore, any information provided in this newsletter does not constitute regulated financial advice. It is solely an expression of opinion. Small-cap stocks are inherently risky. Please conduct your own due diligence and consult with a financial advisor, if you have any doubts. Remember, markets can both rise and fall, especially in the case of small and mid-cap stocks. I am not aware of your individual financial circumstances, so only invest money that you can afford to lose.

Having just spent a fortnight in Namibia, I’ve become attuned to stunning landscapes. Even so, I was blown away by the beauty of the place.

Here are some snaps to get you in the zone.

I went with a French friend who wanted to see the “real England”, but not too far from Stansted Airport.

As we drove into East Bergholt, I began, as I always do as soon as I see them, to despair at the ugliness of modern buildings. No wonder we have so many NIMBYs, when what gets built around beautiful villages is so bland and ugly. Objection is both rational and natural.

But then we turned a corner and everything was suddenly stunning.

It’s not a part of the world I knew. I had lazily assumed all of Essex looked like Basildon. It doesn’t. It was glorious. You could really see the Dutch and Flemish influence in the architecture and the colours they were painted - so different to the equally beautiful Cotswolds, where I was last weekend doing gigs.

We were only sixty miles from London, but it still felt like an England of old, unblighted.

My French companion could not understand what I had been moaning about when I complain about decline. This was the England she knew growing up, and she got excited by everything. Scones. Tea. Churches. Beautiful landscapes. Polite conversation. Phone boxes. Properly kept gardens. Even the beer. “It’s not cold,” she said, before promptly downing it.

My oft-cited complaint that the England she knew is disappearing seemed nonsense. There was no evidence of it here.

As we walked into Manningtree, the buildings got ugly again. Warehouses and industrial buildings, in particular. Nineteenth century warehouses were often things of beauty. Why can 21st century warehouses not be? (The answer lies in our system of measurement, but that’s for another day).

Then we learnt about Matthew Hopkins, the Witchfinder General, who operated here, exploiting the social upheaval of the English Civil War to have hundreds of women executed as witches. Among his methods of getting to the “truth” he used sleep deprivation to extract confessions; he tied victims to chairs and dropped them into the estuary. If they floated, they were witches. If they sank, they weren’t. I guess the victims lost either way. He strip-searched women looking for signs of the mark of the devil. If he couldn’t find any he pricked them with knives until he found the signs he was looking for. Just horrible. Maybe the English past isn’t quite so idyllic after all.

Here’s what makes it worse. For every witch he successfully hunted down, the government gave him fee. He got very rich. Show me the incentive and I will show you the outcome. A lot of innocent dead women. An early gruesome example of the law of unintended consequences. Remind me why I’m a libertarian again.

Today, if we are heading into the civil war many think we are, who knows what kind of witch hunts we are going to see in the name of some nuts ideology?

We caught a train from Mistley back to Manningtree. More grim modern housing. Lots of it too.

More walking then a short river boat tour. We mentioned we were staying at a village up the road, East Bergholt, and one of the locals declared this was the last chance to enjoy it before more new-build goes up. “We need 1.5 million homes,” he said. “The question is, do we have 1.5 million people who are going to buy them?”

Articulated right there is the property crisis coming to a town near you.

I have long argued that beautiful property will keep its value. Ugly new build won’t. Beautiful is pretty much synonymous with period. It was built using traditional measures, where proportion is intrinsic. No such proportion is inherent to metric.

We are already seeing the unravelling of the new-build market in London. That unravelling is coming to everywhere there is ugly new build, whether blocks of flats or houses.

We did find one modern close in East Bergholt that was actually beautiful by the way. So it’s possible. But it’s the exception, not the rule.

This is one of the reasons I invest so much of my capital outside the UK. I don’t like sterling, so I hold gold and bitcoin, and I don’t like gilts. A weakening property market, which is happening right on cue, will create problems for both.

Idyllic corners of England do still exist. Many of them. UK shares already offer value. There is a lot to like in the UK, as my French companion kept pointing out. But there are also big problems ahead, with a leadership class that, shall we say, falls short.

Opportunities abroad, however

I sit regularly on a roundtable with Doug Casey and a number of other mining newsletter writers. A company presents. The experts grill them. The company logs off, and then we discuss it.

I liked this week’s so much I bought shares while the presentation was still happening.

The company is …

Read more

Happy St George’s Day to you.

My apologies for the late arrival of this week’s missive but I found myself without electricity this morning due to, and I quote, “a fault with the electricity”

Never mind. Here we are.

Everything seems so headline driven and yet contradictory at the moment. With every change in circumstance, especially at the Strait of Hormuz, a different narrative seems to emerge only for it to peter away almost as quickly.

You’ve got to be long oil and gas. Buy. There’s no point. The strait is open. Sell.

With so much geopolitical tension you have to be long gold and silver. Debt, deficits, debasement, de-dollarisation, conflict, central bank buying. But gold and silver aren’t moving. They had their move last year.

Equities make even less sense. You don’t want to be long equities. You need to reduce risk. World War Three is coming. And the S&P 500 has just broken out to record highs.

So you end up with this strange situation where the stories are compelling, but the price action is inconsistent. Narrative is not confirming price. Price is not confirming narrative.

That’s usually where mistakes get made.

You feel like you should be doing something. You look for reasons to act. You react to headlines. You convince yourself you’ve spotted an opportunity. And then the move reverses, or fades or never quite follows through.

These are the environments that chop people up. False breakouts. False breakdowns. Strong opinions built on weak signals.

That’s why I am such a big advocate of the Dolce Far Niente portfolio.

Sometimes doing nothing is the best policy. In fact, often.

We had a position in oil and gas so we didn’t need to panic when the bombing of Iran began. We had a position in equities, so even though I was arguing this would be a typical second year of a presidential term, with no meaningful movement until the final quarter, we had exposure to this latest (probably stimulus driven)rally in the S&P 500 to new highs. You can also be wrong, as is often the case when you are a commentator - and it doesn’t matter.

What am I doing with my own money?

Not that much to be honest.

I’m looking around and I can’t see any obvious mispricings. There are areas that look interesting. Software looks attractive. Bitcoin, which has increasingly behaved like a proxy for that part of the market, is quietly ticking higher again. Chemicals look cheap.

Copper too is looking attractive. The long-term story is obvious: electrification, underinvestment, constrained supply. What is notable is that the miners are starting to behave better than the underlying metal. That is often where these moves begin. Our new copper play is already up 20% in barely a fortnight.

There is a Namibian copper story I am looking at too. More on that soon.

Nor am I trimming anything.

There is no euphoria to sell into. No obvious excess. And equally no panic to buy. So positions are left alone.

There is one area where I do have a clear opinion, and that is oil and gas. But my decision is to hold existing positions rather than add new ones.

The market seems to be treating the Middle East situation as temporary. I’m not convinced that’s right - at least not the effects on oil and gas, and I’m staying long, despite the temptation to take profits. I think we are in a new bull market.

Positioning in the sector still doesn’t look extreme. Sentiment is not euphoric. Oil could drift lower if tensions ease and the market continues to treat events as passing rather than structural. But this feels more like the beginning of a bull market rather than the end.

The same goes for gold and silver - mid-cycle pause is my prognosis there. I think bitcoin probably outperforms them over the next 12 months, but If I’m wrong, it doesn’t matter because I own both.

Doing nothing feels like inaction. It isn’t. It is a decision not to play a game where the signals are unclear and the odds are not obviously in your favour.

Right now, that is where I am.

If you’re interested in my three largest oil positions, you can find them here.

Until next time,

Dominic

Share

Namibia has almost everything. Resources. Location. Roads. A small population. On paper, it should work.

And yet.

Driving through Windhoek, the capital, my guide pointed out a hospital: the Katutura State Hospital.

“You don’t want to get sick here,” he said.

It didn’t look too bad from the outside. A bit craggy. But I’ve seen worse.

The place is infamous apparently. Rats. Endless waits. People lying untreated in corridors. People deliberately go at 3 in the morning, because it betters your chances of being seen the next day. My guide described his own time there when he broke his arm last year. Oof. It makes NHS Accident and Emergency waiting times look slick.

Across the road, stood a gleaming monstrosity - the SWAPO (ruling party) headquarters. Brand new. Vulgar. Expensive. Impossible to miss.

It wasn’t discreetly tucked away. It was right there, bearing down on the hospital.

My first reaction was simply how ugly it is. A few years and that will look truly horrible, I explained to my guide, who seemed baffled by my prediction.

His point, however, that I hadn’t yet thought of, was simply how the building had attracted controversy: all that money being spent on what is essentially a vanity project, with the hospital over the road.

It was built by the Chinese, funded through a grant from the Chinese government, rather than a commercial loan, at a cost of $50–60 million (figures vary). Because it’s a grant, it doesn’t sit as formal public debt.

What could the Chinese possibly want in Namibia. (Clue Namibia, among other things, is the world’s 3rd largest uranium producer and the Chinese pretty much control the 3 largest uranium mining companies operating there. Then there are all those other resources too)

There, in a single snapshot, lies the problem. A classic of the resource curse genre.

Easy money distorts behaviour.

In theory, natural resources should make a country rich. In practice, they often do the opposite. Incentives determine the outcome.

If a government can fund itself from its natural resources, from its oil or metal, what does it care about tax payers? If it doesn’t rely on its citizens, it doesn’t feel accountable to them. Instead of serving the public, the state begins to serve itself.

Money flows in. It gets spent badly, siphoned off, used to entrench power.

At the same time, the rest of the economy suffers. Why build a broad industrial base when the ground is already doing the work for you? You end up with a narrow, fragile system built around extraction.

Two countries with similar resources can end up in completely different places.

Norway built institutions, saved its oil wealth, invested for the long term. Venezuela (which has greater oil resources than even Saudi Arabia), spent it, politicised it and hollowed out everything else.

Don’t get me started on what the UK did with its oil. (First thing the government should do Monday morning by the way is renegotiate North Sea division with Norway).

Same starting point. Opposite outcomes. One has one of the lowest GDP per capitas in the world, the other has one of the highest. The difference is governance. Incentives. Culture.

Namibia now has some choices to make. It is somewhere near the beginning of that path. It has oil discoveries offshore. It is already a major uranium producer. It has copper, gold, rare earths, diamonds, zinc, lithium and tin. Fish. The opportunity is obvious.

But so is the risk. The easy choice is to follow the same path as most of the rest of Africa. The harder choice now, but one that will result in better outcomes, is one of good governance.

The debate around that SWAPO headquarters touches on exactly this point. Despite what I’ve said, there is no single scandal you can point to and say “there it is”. It’s all a bit more murky. But the criticism you hear, quietly and repeatedly, is about priorities. Why spend heavily on political infrastructure when basic services are under strain? Why is the party so well housed while public systems struggle? There are major questions too, as with much infrastructure in Africa, about foreign financing and influence, especially from China.

You don’t need a formal corruption charge to expose everything. You can see it in how capital is allocated.

Oddly, the countries that often do best are those with very little as far as natural resources are concerned. Hong Kong, Singapore, even Venice a millennium earlier. There was no safety net. They were forced to trade, to manufacture, to compete. They had to create value because there was none sitting in the ground.

Namibia doesn’t have that pressure. So it has to choose discipline, and that is the hard part.

When you see a failing hospital on one side of the road and a gleaming party headquarters on the other, it tells you something about priorities. Never mind what politicians say, look at what they do.

Share

I’ll be back with more later this week.

Thank you for being a subscriber to the Flying Frisby.

Until next time,

Dominic

PS Here is this week’s piece.

I’m travelling, so this week’s note will be brief.

What a country Namibia is. I don’t think I’ve ever been anywhere with so much potential.

But also what a mess. Official unemployment is 37%. Real unemployment is likely over 50%. Can you imagine?

Per capita GDP is about $4,200. That puts it at 119th the global rankings.

The countries that top the list include the likes of Luxembourg, Switzerland, Singapore, Norway, Qatar. Small populations. Either financial centres with low tax, strong rule of law and minimal corruption, or oil-rich.

Strip out the statistical quirks like Ireland, where corporate domiciles distort the numbers, and the pattern becomes even clearer.

With the exception of the US, they are all small, with populations under 5 million.

Namibia has just 3 million people.

Oil has just been discovered offshore. It is the world’s third largest uranium producer, and has an abundance of other natural resources. It’s safe. There is rule of law. It ports are good. Its roads are even better. And its location towards the south of Africa means it can easily sell into Asia, the Americas or Europe.

It fits the template, in other words.

I spoke at a conference here this week. There were senior figures in the room, including the governor of the central bank. I made the case that Namibia could make the top ten within a generation, just as Hong Kong did after World War Two when its per capita GDP was on par with most of Africa. Follow the Hong Kong model - low taxes (they never exceed 14% of GDP), simple taxes and positive non-intervention. (You can read about that story in Daylight Robbery)

It is not such a nuts idea.

Namibia’s people are entrepreneurial. Everywhere I went, someone was trying to sell me something.

Everything is there.

So what’s missing?

“You need minimal corruption,” I said.

That got a laugh.

And there it is.

I’ll have more on how to invest in this extraordinary country soon.

Until next time,

Dominic