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:
Wise Up: Why I’m Still Buying Bitcoin
I was going to write about money transfer company Wise (WISE.L/WSE.US) this week.
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 It then rises to £650 before being withdrawn permanently on 30 June.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.
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
