GETTING BACK TO BASICS
Investment strategies that weather any storm
GETTING BACK TO BASICS
Investment strategies that weather any storm
The Coinage Act of 1792
The Coinage Act of 1792 set the ratio of silver to gold at 15:1. U.S. gold coins were undervalued compared to silver, so they were exported and melted. Silver dollars were also exported for use in international trade or stored as bullion.
Section 19: “if any of the gold or silver coins … shall be debased or made worse as to the proportion of fine gold or fine silver therein contained … every such officer or person who shall commit any or either of the said offences, shall be deemed guilty of felony, and shall suffer death.”
Threats - High Inflation
Threats - High Inflation
Threats - High Inflation
Maintaining long-term wealth becomes challenging during periods of high inflation.
Investors need asset classes that hold their value during such times in history.
Our view is that by strategically holding assets that hold their value in relation to the value of gold or silver can help maintain long-term purchasing power
Threats - The Cult of QE
Threats - High Inflation
Threats - High Inflation
Quantitative Easing floods money into the government sector.
QE has contributed to a shrinking middle-class.
The government sector has grown enormously as a percentage of GDP.
BRICS New Development Bank
BRICS : Debt-to-GDP Ratio
What is the common denominator within these top tier Western economies? DEBT
G7 + : Debt-to-GDP Ratio
Countries that represent the majority of the world’s GDP are banding together to create an asset backed currency to compete with the US$. This will inevitably increase the cost of capital for fiat currencies of those countries that have high debt service in relation to their GDP
The BRICS Has Overtaken The G7 in Global GDP
The current BRICS five now contribute 31.5% of global GDP, while the G7 share has fallen to 30%. The BRICS is expected to contribute over 50% of global GDP by 2030.
In 2021, Egypt, United Arab Emirates, Uruguay, and Bangladesh took up shares in the BRICS New Development Bank. Saudi Arabia, Argentina, Algeria, Mexico, and Nigeria are in talks of potentially joining the BRICS. The New Development Bank is starting to rival the IMF and the World Bank as a source of funding for various countries, especially those negatively impacted from structural changes implemented by the IMF.
Uranium Boom
World Nuclear Association – “Production from world uranium mines has in recent years supplied 90% of the requirements of power utilities.”
As populations and their electricity demand grows, so will the demand for nuclear energy and uranium.
Royalty Companies
Royalty companies finance mines and other capital costs in exchange for a royalty on the ultimate production of an asset(s). Analytically, we focus on the strength of the royalty stream by making a determination about the quality of the asset and where it is in its lifecycle.
One such company is Triple Flag Precious Metals (NYSE ticker/price) which is over 60% owned by Elliot Management. Expert at finding high quality deposits, Triple Flag currently has 29 producing royalties which over 200 are in development or exploration stage.