HOT OFF THE PRESS: The Ultimate Australian Gold Gameplan. With gold hitting new all-time highs in four major currencies this year…and Central Bank gold demand going ‘parabolic’, you’re probably wondering what’s going on — and how you can capitalise. That’s why our in-house gold expert Brian Chu just shared his ‘gameplan’ for gold investors in 2023. Find out how to get your copy right here. |
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Why Climate Change Means You Should Buy This Particular Type of Gold Stock |
Saturday, 19 August 2023 — South Melbourne | By Nickolai Hubble | Editor, The Daily Reckoning Australia |
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[8 min read] Quick summary: Central bankers are back to blowing bubbles again. This time, they’ve targeted the green economy for their latest boom and bust. The real question is, how can you profit from this latest cluster of errors? You might be surprised… |
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Dear Reader, For just over 300 years, certain investors have understood that financial manias don’t just happen at random. They are caused. And once you understand what that cause is, you will come to realise that we are on the cusp of another such bubble today. One you can invest in and profit from, if you know how. The first thing to understand is the ‘cluster of errors’ — a technical term invented about 200 years after it was first used to generate a pair of extraordinary fortunes (for the same man). Well, he profited from both the boom and the bust twice over, so you could say he made four fortunes. All using the idea of a cluster of errors. You see, people make mistakes. They invest in doomed schemes. They start businesses that won’t make it. They overextend themselves financially. Their mine comes up empty. Or nature places a storm in the way of their ship. Whatever it is, these things happen to financial ventures. The real question is why they should happen more often at certain times and less often at others. Why does the business ‘cycle a cycle’ rather than just a random distribution of such failures happening at a constant rate over time? The answer can, at least in part, be found by some external influence that causes a general panic. War can turn an unusual number of businesses into disasters at the same time, for example. One example of this, which happens to dominate financial and economic history, is the influence of the money supply. By pumping vast amounts of money into an economy, an unusual amount of business ventures appears to be viable…at first. This causes a boom as asset prices and consumer prices surge. People feel rich, unemployment is low, and investments seem risk-free because of the general prosperity. But in the end, money is just a veil. It acts like a drug, providing a temporary high. Eventually, the realities of the real economy set in. Investors and businesspeople discover that they’ve been duped into thinking the increase in the money supply represented more real purchasing power. But it didn’t. It was just more money, which leads to a higher price level, not more prosperity. The period of adjustment back to that reality is known as a recession. It causes asset prices to crash back to true valuations. Unemployment becomes common as business ventures fail because the prices of their goods must be cut in order to sell. The drug wears off and the hangover sets in. The point of this business cycle is that it is caused by attempting to use the money supply to influence prosperity in the first place. The bust is an inevitable part of the story which must follow such a boom. It is the initial cluster of success which makes things suspicious. Once you understand this sequence of causation, you can profit from it. When central banks attempt to pump up an economy, you know that there will be a boom, a bubble, and then a bust. Each phase can be profitable for investors, businessmen and speculators. The proof is in the pudding. Investors have been using this theory for over 300 years, after all. Its story begins with an Irish-French banker called Richard Cantillon — the first man to make two fortunes from two bubbles caused by central bank manipulation of the money supply — the South Sea Bubble and the Mississippi Bubble. Both times he identified that the money supply was being fiddled with, triggering a vast boom. But he also knew this couldn’t last. And so, near the peak both times, he speculated on the crash. He got so rich speculating on the booms and busts caused by central bankers that he had to fake his own death in a house fire and go on an indefinite holiday in Asia under a pseudonym. In other words, he retired in much the same way that many people want today... Since Cantillon and his book which described the effect of monetary policy on the economy, central bankers have been busy proving him and his theories right again and again. His theories that describe how an increase in the money supply ripples through the economy are known as ‘Cantillon Effects’, and they highlight how investors can profit from such booms. In short, central bankers have engineered boom after bust after boom after bust with their low-interest rates and QE. They have caused precisely the business cycle and inflation they’re supposed to mitigate. Sometimes, they even admit to this, such as during the Great Depression. The tech bubble, the housing bubble, the bond bubble, the roaring 20s, the swinging 60s, and so on and so forth. Each is pumped up by central banker policies and followed by inevitable crashes. The thing is, we’re about to embark on another one of their adventures. Central bankers have decided to make climate change their latest cause for targeted monetary intervention. Can you guess what happens next? One after the other, and sometimes in groups, the central bankers of the world have declared how they will help finance the green transition. They plan to shift bank regulation to favour green initiatives. Provide cheaper funding from the central banks for green finance. Invest in green bonds directly. Stress test large financial institutions for exposure to so-called stranded assets such as oil wells. Exclude fossil fuel companies from central bank asset holdings. Quite frankly, the fact that central banks are intervening at all is extraordinary. But to do so in favour of the green transition specifically is mind-boggling. They have turned themselves into central planners of the economy — another way in which a cluster of errors occurs. Whatever their method or motivation, central banks are about to blow another bubble with their targeted manipulation of the money supply. That’s what Cantillon Effects make clear. It’s a bubble we can profit from. The only question is how. The best answer, in my opinion, is probably a bit of a surprise to you. You see, green tech companies have a habit of failing or going bust. We better not mention why for fear of upsetting someone… The real bottleneck to the green energy transition lies not in green energy, but in the commodities needed to roll it out. According to my research and upcoming book, Dark Green, an impossible number of commodities are needed to build the grid, infrastructure, renewable energy power plants, energy storage, and all the rest of it. And when I asked eight different experts which commodity they believe to be at the centre of such a shortage, they almost all said copper. That’s because you can’t replace copper with substitutes in many applications needed for the green energy transition. But that’s only half the story. The green energy transition will also be accompanied by vast inflation of the sort we’ve only had a foretaste of. As energy becomes scarce and central banks create vast amounts of new money to try and keep the green bubble going, the price of everything will have to rise. In such an environment, gold is an excellent investment because it offers a way to opt out of the devaluing currency. Rather conveniently, gold and copper are often found in shared deposits. And there is a long list of gold and copper miners as a result, many of whom are listed in Australia. My old friend and co-conspirator, Brian Chu, has been busy digging up such companies over at The Australian Gold Report. He also discovered a shocking secret about what the Chinese have really been up to as they soak up vast tracts of Africa and Australia... To sum up today’s Daily Reckoning Australia, central bankers are about to use their blank cheques to finance a green bubble. And the real-world constraint they will run into is commodities. That’s how to profit from the coming bubble. Just don’t forget to sell out when the time comes. All bubbles burst. Regards, Nickolai Hubble, Editor, The Daily Reckoning Australia Weekend Advertisement: REPORT: Central Bank gold demand goes ‘parabolic’ Why are the most powerful financial institutions in the world piling into the oldest crisis hedge there is? And with the ASX chock full of gold stocks, how can Aussie investors take advantage? Click right here and gold expert Brian Chu will explain. |
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The Green Fraud: How Climate Alarmists Are Scamming You (Part Six) |
| By Jim Rickards | Editor, The Daily Reckoning Australia |
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Dear Reader, Financial elites claim the climate is a threat as a basis for garnering power. A powerful echo chamber of academics, wealth managers, bankers, regulators, celebrities, politicians, and CEOs who talk up climate threats has emerged. They create feedback loops in which media attention justifies bank regulation, which supports green investing, which supports research grants, and so on until the world is thoroughly convinced that a climate catastrophe is real. It’s not real, but the narrative thrives. Consumers will bear the costs of the scam One of the most potentially damaging developments is the creation of the Glasgow Financial Alliance for Net Zero (GFANZ), an elite group using climate alarm as a Trojan horse to pursue global financial control. The head of GFANZ is Mark Carney, previously the head of three central banks — Canada, the UK, and the Bank for International Settlements — and de facto leader of the global financial elite. His co-chair is Michael Bloomberg, multibillionaire of the eponymous information network and prominent climate alarmist. The GFANZ principals list includes the usual suspects: Brian Moynihan, CEO of Bank of America; Larry Fink, CEO of BlackRock; Jane Fraser, CEO of Citi; Nili Gilbert, board member of the David Rockefeller Fund; and their ilk. The complete membership controls more than US$130 trillion in assets. GFANZ’s convening power was the United Nations. GFANZ plans to pressure central banks and bank regulators to issue rules that will steer asset allocations and bank lending away from oil and natural gas providers. Also, ancillary businesses such as pipeline and crude oil shipping toward unreliable energy sources such as wind turbines, solar modules, and batteries built from poisonous chemicals. The real purpose of these efforts is centralised control of global finance by an elite group. Climate alarm is a convenient platform. What better way to impose global control than to rely on a global catastrophe, even an invented one? GFANZ is just the beginning of a series of steps to employ unified financial control to squash dissenting voices and push unpopular agendas such as gun control, population control, world money, and world taxation. These efforts will fail, as they always do, but not without damage in the meantime. Predictable results include higher energy prices, energy shortages, disruptions in transportation logistics, and tax burdens imposed on reliable sources of oil and natural gas. Consumers will bear the costs. In light of unsettled real science, what conclusions can be drawn? The following appear: The climate is changing. It always has and always will. There’s plenty of room to disagree with the climate alarmists without falling into the trap of being a ‘climate-change denier’. Yes, climate changes, yet it’s a slow process and quite complex. What’s needed is observation and experimentation, not hysteria. Carbon emissions are increasing. These emissions consist mainly, but not exclusively, of carbon dioxide (CO2) and methane (CH4). The quantity is small relative to the composition of the atmosphere: nitrogen (N) and oxygen (O) together make up 99% of the atmosphere; argon (Ar) makes up over half the remaining 1%, but the reflective heat-trapping qualities of carbon dioxide and methane are significant. So, humans are contributing to carbon emissions, but they are not the sole source, and the impact on total warming is unclear. Sea levels are rising. This is true, but they have been rising for 100 years at about the same pace, and there’s no evidence of the impact of global warming on sea levels. The current pace is about seven inches per century. That’s far from an existential threat, and, no, cities will not be underwater. Solar modules and wind turbines can contribute renewable energy to the grid to reduce carbon emissions. Yet they are not a substitute for oil and gas. They are intermittent sources and, therefore, unreliable. Battery storage is too expensive and causes its own increase in the use of poisonous chemicals. Even as solar and wind capacity increases, global demand for energy will increase faster. EVs have limited range and charge with electricity provided by oil, gas, and coal and therefore do not reduce overall emissions. Far from the hysterical claims of climate alarmists, the prospect of climate change is straightforward. Climate change will continue despite efforts to reduce emissions. Wind and solar power will grow, yet they will not replace oil and gas. The more extreme remedies of the climate alarmists, such as global carbon taxes, caps on carbon emissions, and a ban on oil and gas exploration and development, will fail. This is because they lack popular support and are unnecessary, according to the best available science. Shutting down the Keystone XL Pipeline project is a high-profile political theatre, but it won’t change anything. Alberta tar sands oil will still arrive in the US. It’s just that it will come by rail instead of pipeline. (By the way, Warren Buffett owns the railroad that will carry most of this oil.) Rail transportation is dirtier than pipeline transportation. The alarmists don’t care — they just want the show of shutting down a pipeline. So, there will be costs imposed and inefficiencies locked in because of political posturing. In the end, CO2 emissions will continue to rise but at a slower rate. Sea levels will rise for reasons unrelated to emissions, but at such a slow rate as not to be noticeable. Average global temperatures may rise slightly for reasons that science does not fully understand, although we could just as easily flip to a cooling trend.
Energy demands will increase as developed economies continue to grow in order to support aging populations. Developing economy energy demands will grow even faster to support a youth cohort looking for at least a middle-income lifestyle. Oil and gas are not going away. They are too important, have too many embedded structural advantages, and have huge economies of scale. Once politicians and the media become more aware of the real science of climate change and distance themselves from climate alarmists, the oil and gas industries will regain their footing. While climate alarm may fade, the damage to the economy will not. Regards, Jim Rickards, Strategist, The Daily Reckoning Australia All advice is general advice and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment. |
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