By Dominic Frisby
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For the first time in history, gold went above £2,000/oz yesterday.
This is a huge landmark in the decline of sterling.
Of course, nobody in the UK echelons of power is talking about it.
We are, however, because it matters. Who is buying so much gold that price keeps going up? Why are they buying? There are hugely significant developments taking place in Asia that have the potential to reshape the global financial order.
This bull market is not like previous bull markets. It’s not driven by retail buying. What’s driving it is far more significant than that.
Clowns to the left, cretins to the right
Here is gold in pounds since Gordon Brown sold ours in 1999. It’s quite something—over ten times higher! What a clown.
Meanwhile, in other currencies, gold continues its march. Here it is in dollars, the preferred benchmark, over the past three years. This is proper bull market stuff.
I know I have said this a million times, but I really urge you, if you haven’t already, to diversify out of sterling—indeed any form of fiat money—and use gold as your savings vehicle.
The gold price action is telling us something.
The way this government is going—it’s proving almost as rudderless as the Tories were, and in record time—sterling could have real problems, and soon.
To my knowledge, not one influencer in the Labour Party, over the course of its conference this week, mentioned stewarding the currency, protecting its value, or any of that stuff. Just as every government before it has, they will use sterling devaluation to compensate for their deficit spending.
The pound is only holding up in the forex markets because the Bank of England did not cut rates last week, when the Federal Reserve and the ECB have gone into a rate-cutting cycle.
Perhaps, more significantly, no one in the Labour Party is discussing what is happening in Asia. Central banks are buying gold in huge quantities. They are no longer waiting for the price to pull back before making their purchases.
Perhaps most significantly of all—they are not reporting all their gold purchases. It is happening on the quiet.
If you want to buy gold to protect yourself in these uncertain times, let me recommend The Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, US, Canada and Europe or you can store your gold with them.
De-dollarisation is happening in front of our very eyes
The implications for the West are huge. But, despite the geopolitical significance, this issue is nowhere close to the Labour radar.
This goes back to early 2022 and the Russian invasion of Ukraine when the US confiscated Russia’s US$300 billion. Most of the rest of Asia looked at that and thought, “we need to de-dollarize.”
China, as we know, has quietly been reducing its holdings of US Treasuries. It now holds $777 billion in US Treasuries, which is about 10% of the US national debt held by foreign entities. This compares to 22% in November 2013. That is quite the reduction.
China has also, as we know, been accumulating vast amounts of gold.
Analyst Jan Nieuwenhuijs calculates that China has bought 1,600 tonnes of gold since Covid. I think the number is higher. That is on top of the 370 tonnes it mines annually—and most of that mining is state-owned.
I was having dinner with a VIP Chinese investment banker last night. I asked him about the Chinese mentality and de-dollarisation. “It is a matter of pride,” he said. China does not want to be beholden to the US. Global reserve currency status is a goal. There has never been a global reserve currency that did not start out backed by gold.
For now, it continues operating by its doctrine, “we must not shine too brightly,” but all the while it is accumulating gold and reducing its dollar dependency.
But it is by no means the only country doing this.
Saudi Arabia was “caught” a fortnight ago secretly buying 160 tonnes of gold in Switzerland—kudos to Jan Nieuwenhuijs for the scoop.
“One thing is for certain,” says Jan. “Saudi Arabia owns much more gold than it wants the world to believe.”
This is significant because Saudi Arabia was such a key player in establishing the petrodollar in the early 1970s after the US came off the gold standard, enabling the dollar to retain its status as the global reserve currency.
Saudi Arabia could be quietly repositioning itself as an ally of the next global superpower. It could also, as we shall see, be at the heart of a new global payments system.
The new international payments system which bypasses the US dollar
I’m delaying the follow up to last week’s piece on sleep for another week because I am still experimenting ;). In the meantime, I hope today’s little story will put a smile on your face.
And a reminder there are just a handful of tickets left for my “lecture with funny bits” at the Museum of Comedy on October 10th - October 9th was cancelled - sorry. This is a super interesting show, even though I say so myself. If you are free, I really recommend it.
In 1914, a young German named Heinz Kurschildgen started his first job as an apprentice in a dye factory in his hometown of Hilden. He became fascinated by the chemicals he was working with, and built a small laboratory at home to conduct experiments.
Before long, he thought he had found a way to make gold, and even persuaded several investors to give him money. However, it soon became clear that he couldn’t make gold and found himself prosecuted for fraud. The courts let him off on the grounds that mentally he was not all there, but only on condition that he solicited no further investments with schemes to make gold.
He was soon claiming he could make other transmutations, and became something of a joke figure in his hometown, where a bust was even erected in his honour, albeit ironically, inscribed with the words: “For the genius gold-maker, from his grateful hometown.”
But in 1929, he returned to his first calling, which was kidding people he could make gold. He approached German President Paul von Hindenburg and Head of the Reichsbank, Hjalmar Schacht, with a proposal to make the gold they needed to pay off Germany’s WWI reparations.
These had been set at 132 billion gold marks, which translates to 47,300 tonnes. To give you an idea how unrealistic a figure this was: it was an amount not far off all the gold that had ever been mined in history by that time. That would take quite some alchemy.
But Kurschildgen was not a man to be deterred. He raised a load more money, defrauded his clients, and ended up with another 18 months in jail.
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After his release, he was soon at it again. This time, he approached the newly elected Nazi government with a plan to make petrol from water.
Chief Scientific Advisor, Wilhelm Keppler, paid him a visit and Kurschildgen agreed to reveal his methods and surrender the rights to the government. Meanwhile, his claims about being able to make gold piqued the interest of SS leader Heinrich Himmler, who had a notoriously superstitious streak and a fascination with alchemy. Himmler started generously funding Kurschildgen to conduct his experiments.
But Reichsanstalt physicists soon declared his contraptions useless, and Kurschildgen ended up in a concentration camp.
“Himmler has fallen for a gold and petrol maker,” said Joseph Goebbels in his dairy. “He wanted to defraud me, too. I knew what he was about straight away”.
After two years Kurschildgen was released for good behaviour. Himmler had him put straight back in the camp. On no account did he want this embarrassing story becoming public.
After the war, Kurschildgen tried to get recognized as a victim of Nazi persecution, so he could claim compensation. “The Gestapo would stop at nothing to get my invention," he told the courts.
As with most of his ventures, his petition was unsuccessful.
Even so, you can’t fault the man’s ambition.
Until next time,
PS Don’t forget Shaping the Earth on October 10th.
If you are interested in buying actual gold in these uncertain times, then look no further than my recommended bullion dealer, the Pure Gold Company. Premiums are low, quality of service is high, and you get to deal with a human being who does not moonlight as an alchemist!
There are just a handful of tickets left for my “lecture with funny bits” at the Museum of Comedy on October 10th - October 9th got cancelled - events beyond our control, sorry. This is a super interesting show, even though I say so myself. If you are free, I really recommend it.
Some charts have been doing the rounds this week, and I wanted to take a look at them today, as a couple of you have been asking about them.
The first is this one, which shows that, relative to stocks, commodities are as cheap as they have ever been.
I have little doubt that there will be another bull market in commodities, that it will come when people are least expecting it, and that, when it does come, it will blow everyone’s minds, just as previous commodity supercycles have done.
But here’s the thing: we have got better at producing commodities. Modern farming methods mean we can produce more grains and softs at cheaper prices than ever before. Yes, sometimes there are events beyond human control that get in the way—bad weather being the most obvious example—but the broader trend will always be towards lower prices (especially if you use ratios and thereby strip out the fiat factor).
But these are the commodities that we grow. What about fossil fuels and metals, which are finite resources? We’ve long since taken the easy stuff.
Well, yes. But the same logic still applies. Modern mining means we can now explore far-flung corners of the earth and economically produce from much lower-grade rock. The same applies to fossil fuels. Fracking is an example. This new technology meant that previously uneconomic deposits became economic. The result was a glut of supply and lower prices.
So, while I do not doubt that commodities will have their day, I also look at the chart above and see no reason why they can’t get cheaper still. The trend of the last two or three years is lower. That ratio could quite easily go back and retest its 2020 lows. It could go even lower.
There is a lot of value to be had from ratio charts, but you also have to factor in basic stuff like improved productivity. However, there are other factors too. Many think we are heading towards some huge international conflict. If so, international trade will suffer, countries will start stockpiling, and commodity prices will quickly revert to 1973-4/1999/2008 levels.
Are you buying gold to protect yourself in these uncertain times? Let me recommend The Pure Gold Company. Premiums are low, quality of service is high and you deal with a human being who knows their stuff.
Here’s another ratio that is doing the rounds: gold miners versus gold
Now this one is pretty compelling. Time to pile in to gold miners? Let’s see. and let’s also check in on the miners we own.
Innocent sleep … sore labor’s bath,Balm of hurt minds, great nature’s second course,Chief nourisher in life’s feast.William Shakespeare
Sleep is so important to your well-being. Your mind works better when you sleep well. Your moods improve. Your outlook improves. Your physical condition improves. Your health improves.
Life is better when you sleep well.
We spend—get this—a full third of our lives asleep. Yet how much do we treasure sleep? How much do we guard our sleep time? How much effort do we put toward improving our sleep?
Like so many things in this modern, fiat world of declining standards, the value of sleep has been overlooked.
Science may only just be starting to acknowledge the benefits of good sleep, but it’s something we’ve intuitively known since forever. From time immemorial, art and literature have been filled with references to the value of a good night’s sleep. The Ancient Greeks, Hippocrates among them, knew it was a prerequisite for good health. Many cultures considered dreams to be a form of contact with the divine.
I used to think I had mastered the art of sleeping. In the last couple of years, I’ve learned this is far from the case.
However, I’ve put in a lot of work and now, in my newfound role as health guru, I feel I’m in a position to dish out some advice on how to improve your sleep.
England cycling coach David Brailsford used to talk about the incremental effects of marginal gains. Sleep improvement is very much the same. There are lots of little things you can do, and, with the accumulation of these, you will see vast improvements.
Here are ten ways to improve your sleep, including how to deal with waking up in the night, bedtime habits, alcohol’s impact, melatonin, peeing in the night and more …
1. How to get to sleep
I always struggled to get to sleep, even as a youngster. I can remember lying in bed for endless hours, really trying to get to sleep and not being able to.
When you’re lying in bed trying to sleep, and you can’t, that is when the demons come: unwelcome thoughts creep into your mind and then start looping over and over. It’s good to be able to fall asleep quickly.
I now realise one of the reasons I got into the habit of drinking too much was that, after a few drinks, whenever I lay down, I would go straight to sleep. Drinking was a way of avoiding that difficult period of trying to get to sleep.
My other method was doing loads and loads of physical activity and then going to bed absolutely shattered. Not always possible.
So, here’s the first lesson I’ve learned, and this is the best hack ever.
First thing in the morning, go outside and get 15 or 20 minutes of sunshine. Do this as soon as you wake up. Make your morning cup of tea or coffee, then take it outside and get some sun. Even if it’s cloudy and cold in the middle of winter, go outside and stand where the sun would be. Open your eyes towards it. You’ll still get some rays.
This has been shown to regulate your circadian rhythms. In my view, it’s the single best thing you can do to help you fall asleep at night.
You’ll find, like magic - or is it clockwork? - that as soon as the sun goes down that evening, you’ll start feeling tired.
2. Darkness.
Darkness aids sleep. Blackout curtains in the bedroom are a good idea, but if that’s too much hassle, there’s a simpler, cheaper solution: sleep masks.
I’ve only lately taken to wearing sleep masks in bed (I’ve always used them when travelling) and I’ve come to love them. Go for a silk one—they’re very comforting. I use this silk one by Alaska Bear.
3. Breathe Better
There is a simple product for this too. Mouth tape.
Stick a little bit of this tape across your mouth and it forces you to breathe through your nose. You’ll be amazed. You sleep so much better if you only breathe though your nose.
I’m currently using this light weight one and I like it. My son prefers this heavy duty stuff, which might be better as a stating point to change your breathing habits.
If you sleep on your back and then snore, mouth tape can really help out.
4. Get a sleep tracker
I use the Whoop fitness tracker, which you wear on your wrist.
When I compare my data with friends using other devices like Garmin, Apple, Fitbit, Whoop, and Aura, there’s quite a bit of divergence between the brands, particularly on calories burnt. I don’t think it really matters: it’s the act of monitoring and tracking that leads to improvements.
Whoop seems to generally regarded as the best for tracking sleep though.
An unintended but incredibly beneficial side effect of getting a Whoop is that it will massively cut down your drinking. More on this in a moment.
5. Room temperature
Don’t forget Shaping The Earth, “my lecture with funny bits” in London this October 9th and 10th at the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”.
Three subjects I want to briefly look at today, starting with everyone’s favourite non-government money.
There were rich promises of huge gains in bitcoin with the launch of the bitcoin ETFs and the halving cycle. Neither has quite materialised.
Bitcoin is “only” up by 30% this year, though to read some of the commentary, you’d think this is another Bitcoin winter.
The problem is that most of those gains came in February. For the other eight months of 2024, we’ve been generally stagnant. In fact, since March, we’ve been making a series of lower lows and lower highs and are clearly in a downtrend—hence the despondency.
However, despondency is often the ally of the contrarian investor, and with that in mind, I want to share a table with you (borrowed from Coinglass).
It shows Bitcoin’s quarterly performance. I’m sharing this now because we’re heading into Q4, which has historically been Bitcoin’s best quarter, with average returns close to 90%.
Seasonal patterns aren’t always the most reliable indicator, but the odds are favourable: seven positive Q4s against just four negative ones.
Better than Q1, which is 50:50; Q2 with seven positive and five negative; and Q3, which shows five positive and seven negative years (including this one, which isn’t over yet).
Let’s hope those averages hold.
I argue that Bitcoin should be a core holding. Many don’t like bitcoin, but the potential is so huge that, in my view, the greater risk is not owning it rather than owning it.
My guide to buying Bitcoin is here. And here, I detail the easiest way for UK investors to gain exposure via a traditional broker.
How Japan finances the world - and why we should be worried
About a month ago we explained the summer turmoil and the unwinding of the yen carry trade. The big question we all want to know the answer to is: was that it? Are we done now, or is there more to come?
When I was 19, I started getting these weird heat rashes.
Every day, whenever I got hot, these debilitating, paralysing heat rashes would envelop me. Burning, bumpy, red weals suddenly covered my body. So itchy—you wanted to scratch everywhere, though scratching brought no relief. Once the rash started, there was nothing I could do. I just had to wait for it to pass, which would take about half an hour.
I didn’t even have to get so hot that I broke sweat for the rash to come on. Just walking briskly would do it, getting flustered, wearing a layer too many, even having a shower.
And it came every day, usually mid-morning.
I thought it might be stress that was causing it, but it was the other way around: these rashes were causing the stress.
I found a way of coping with it: do intense exercise every morning and actually induce the rash. Then it seemed to burn itself out for the rest of the day.
But the next morning, it would be back again.
I went to see doctors about it. None of them knew what it was. As GPs often do when they don’t know the answer, they brushed it aside, “Oh, it’s probably stress.” I wasn’t making this up! But unless I actually had an attack in front of the GP, there was no way of showing them what it was.
I saw a dermatologist, who gave me anti-depressants. I saw Chinese herbalist after Chinese herbalist, who all concocted these disgusting teas for me to drink. Lord knows what damage I did to my liver drinking that stuff. I saw an acupuncturist who declared brightly that he could cure it. But he couldn’t.
It made my life a nightmare, because you never quite knew when the rash was going to hit. What if it came on when I was on stage? During that all-important meeting? When I was with a girl I liked? It was a source of acute embarrassment.
The condition disappeared, bizarrely, if I went to the tropics. Why, Lord knows. But as soon as I got home, back it came.
Then I noticed the condition also disappeared in the summer. What was that about? I realised the antihistamine I was taking for hay fever also prevented these rash attacks.
But I didn’t want to take antihistamine every day—that couldn’t be healthy—so, once the hay fever season was over, I would go back to keeping it at bay by trying to do intense exercise every morning and burning it off.
When I got married and had kids, aged 30, this became impossible, so I resigned myself to daily antihistamine. This started with Clarityn (Loratadine), moved onto Zirtek (which I hated because if I drank alcohol, I used to get incredibly drunk and that led to a lot of bad decisions and mistakes) and, eventually, Xyzal, which I found I only needed to take every other day. The potential long-term damage of sustained anti-histamine use was a gamble I was prepared to make to avoid the daily nightmare of this condition.
If you are buying gold to protect yourself in these uncertain times, then let me recommend The Pure Gold Company. Premiums are low, quality of service is high and you deal with a human being who knows their stuff.
Eventually, I discovered that the problem I had was a condition called heat-induced cholinergic urticaria. I went to see a specialist at St Thomas' Hospital. “There is no cure,” she told me. “Sometimes it clears up by itself,” she told me, “sometimes not. You’re lucky antihistamine stops it. For many that doesn’t work.”
I volunteered to be a guinea pig so she could experiment on me as part of her research into the condition. I would go to the hospital, have a hot bath, my skin would erupt, and then she’d prod me and prick me and nod and mutter, but it got me no nearer to a cure.
Here I am at 54, and it has not cleared up.
What is the cause?
I’m still not quite sure if something I did caused it. Urticaria is from the same allergic school of illnesses as asthma, eczema, and hay fever, from which I suffer a little (asthma especially if I run or am near cats), so it might be hereditary or genetic. It affects young men more than any other group, which is what I was.
I’ve been on numerous forums where fellow sufferers discuss the condition, and a lot of us took the antibiotic tetracycline. I took it for years as a teenager to help with my acne. God, it makes me cross that I was allowed—even encouraged—to take it for so long. Bloody doctors, or one in particular (no longer with us so I won’t name him and speak ill of the dead), and my mother’s blind trust in them. I thought it might be tetracycline.
I had spent two months in Egypt just before I got my first outbreaks, and I got very ill with Giardia, a form of dysentary. Maybe I lost some essential bacteria in my stomach or something, or got leaky gut. (I’ve taken a million probiotics and all the rest of it—didn’t work).
Also just before the first outbreaks, I got the sh*t kicked out of me in a park in Milan by a group of young Italians - I mean properly beaten up, 7 v 1 and I made the mistake of fighting back - so maybe it was somehow related to that.
Maybe it was the accumulation of everything.
Nature’s magic superfood comes to the rescue
One of the unintended benefits of my health drive in recent years is that my asthma, which I’ve had since I was born, appears to have, for no apparent reason, gone. I haven’t been near cats to test it there, but I no longer need my puffer to play football. (Don’t know why. It might be an age thing; a health thing, most likely a seed oil thing).
Then I forgot to take my antihistamine for a few days, and I noticed that I wasn’t getting urticaria attacks either. Praise the Lord! I thought my urticaria might’ve cleared up too.
No such luck, as it turned out. It hadn’t. I went abroad and, after a few days, it came back.
Then I realised there was something I’d been taking at home, and I hadn’t taken it away with me.
It made all the difference.
That mysterious ailment you’ve had for ages and can’t rid of. this might sort that out too.
Before we get started, I have put together some videos of recent pieces, as I slowly expand the video content on here. I don’t currently email these out in order to save your inboxes (but please let me know if this is something you would like me to do). What do you think of these vids? Would you like more of them? Let me know. We have house prices, scams and immigration - everyone’s favourite subjects.
Don’t forget Shaping the Earth. Tickets are selling fast. October 9th and 10th at the Museum of Comedy.
But today, it’s seed oils. Dreaded seed oils. They are to food what fiat is to money.
Robert F. Kennedy has been grabbing headlines this week, not just for his alliance with Donald Trump, but for his criticisms of the American food industry, which he holds responsible for the epidemic of obesity and poor health.
I can’t believe what he has to say is even considered controversial, when it’s so obvious it’s true. Yet Time, The Guardian, The New York Times, and all the usual suspects have all come out to smear him.
Surely it’s clear? Processed food is bad for your health. Processed food causes obesity. Processed food is the cause of many modern illnesses. Don’t eat processed food. It is bad for you.
I’m not a doctor. Then again, I’m not an economist either. I’m just a guy who gets interested in stuff, especially systems—how they work and what their effects are.
In the noughties, I became very interested in our systems of money, largely because I couldn’t understand why houses cost so much relative to what people earn. Before long, I felt I had a good grasp of how money works. I ended up writing a film that became an internet sensation (and got horribly plagiarised in the process), several books, and umpteen articles, all making the case that if the West is to save itself and create a level playing field, we need sound money. Whether that’s based on gold or bitcoin doesn’t really matter. Money needs to be independent, rather than a tool of government.
Recently, I’ve become very interested in health - on particular, improving mine. For years, I have been unable to understand why I—and millions like me—could never keep weight off.
I have become convinced that seed oils are to health what fiat money is to the economy. It is that fundamental, in my mind. Thanks to bitcoin and gold, the fiat money narrative genie is out of the bottle. Fiat is not going to die tomorrow—it will probably take decades —but more and more people are realizing how bad it is and are taking steps to escape the system via alternative money.
The same thing needs to happen with seed oils. I find myself becoming as passionate about this as I was about money 15 years ago. Why are so many people obese? Why are so many people, who work on their health, diet, and fitness still 10 or 20 pounds heavier than they’d like to be? Why were so many people skinny in the 60s and 70s, but not now? Are people greedier now than they were then? They can’t be. We are the same human beings. Indeed, we exercise more.
What’s changed is processed food. It barely used to exist. Now it’s almost impossible to avoid. The main enabler of processed food, the thing that gives it such a long shelf life, is seed oil.
What are seed oils?
"Seed oils" is a catch-all term for the various vegetable oils that have replaced animal fats to become a mainstay of the Western diet: sunflower oil, rapeseed oil, canola oil, soybean oil, corn oil, palm oil, margarine, and so on. Anything hydrogenated is bad.
Seed oils were mostly invented for industrial purposes, but because of their price and properties, “entrepreneurial” companies, assisted by regulators, quack research, and lots of PR, gradually added them to their food products, so that seed oils have now, mostly, replaced animal fats
Just look at how they’re made. You gather seeds from plants such as soy, corn, cotton, safflower, or rapeseed; heat the seeds to extremely high temperatures, so the fatty acids oxidize; process the seeds with petroleum-based solvents such as hexane to extract the maximum amount of oil; add chemicals to remove the foul smell (this deodorization process produces harmful fatty acids); and then add more chemicals to change the colour and appearance of the oil. Not healthy.
One of their properties is that they don’t break down easily (they can thus help lengthen food’s shelf life). The problem, it seems, is that the human body can’t properly break them down either.
Okinawa in Japan became famous for its longevity, with many people living well into their 90s and 100s. Then along came Western processed food, and suddenly there is an increase in obesity, diabetes, and other modern illnesses. The once famously long-lived population is now seeing both a decline in life expectancy and an increase in health problems that were previously unknown.
When correlation equals causation
This chart shows the consumption of vegetable oil in the US since the late 19th century. We didn’t used to eat seed oils; we ate animal fats. You can see they change in diet.
Sugar often gets the blame for the rise in obesity, but if you look at current US sugar consumption, it’s not that different from what it was in the 1930s or 40s. Obesity has grown, while sugar consumption has remained broadly flat.
Now, let’s look at vegetable oil consumption and obesity rates. They correlate. And in this case, correlation is causation.
A cock-up at HQ some of you didn’t see Sunday’s piece about a scam in the gold bullion markets. Here it is ICYMI:
Also in video format if you prefer.
Now we look at what must be the most important price in the world: that is the price of the global reserve currency, the US dollar.
Does it go up or down from here?
There is probably no more important question in global finance to know the answer to.
If the dollar is falling, it usually signals boom times for assets: equities and commodities especially. The US prints and spends, and then exports the inflation. Money gets loose and the party rocks.
But when the dollar is strong, everyone gets the jitters.
Today the US dollar is seriously oversold.
Conversely, the inverse trade—gold—is at all-time highs. US equity markets are flirting with all-time highs, while the euro and the yen, even the pound, have been soaring.
What’s more: the US General Election is coming.
On which note, how about this for a chart?
Since 1985, the dollar has declined with the Republicans - Reagan, Bush x2 and Trump - and rallied with the Democrats - Clinton, Obama, and Biden.
Who wins in November has a big impact on the price
But there’re several months to go till November, and a lot can change in just a few weeks.
Let’s start with US dollar index, which tracks the dollar against the currencies of the US’s main trading partners', over the past year.
Look at the RSI.
The RSI has gone beneath 30 for the first time in over a year. You would typically expect a reversal from these levels.
Look at the 3-month rally the dollar had starting in July 2023, the last time it was this oversold, it was quite something.
In fact, based on this, I have taken a small short position in cable, betting that the dollar will rise against the pound.
Last week, Fed Chief Jerome Powell indicated that the Federal Reserve is now ready to start cutting rates, which should be bearish for the dollar. However, oversold is oversold.
"The time has come for policy to adjust." he said. "My confidence has grown that inflation is on a sustainable path back to 2%."
The market is somewhat divided as to whether that cut will be 0.25% or 0.5%, but lower rates go. The inflation—by their definition—monster has been tamed.
“The 2-year yield has fallen to 3.9% compared to base rates at 5.5%, which is the bond market’s way of pricing in future rate cuts,” says Charlie Morris at Bytree. (Have you subscribed to his letter? You should.) "The difference, at -1.6%, means that a full rate-cutting cycle lies ahead. Indeed, this reading is more pronounced than seen in 2001 and 2008, implying the cuts could come thick and fast."
2001 and 2008 were major turning points in the US dollar.
What about sentiment?
To gauge this, I ran some polls on various WhatsApp chats and Twitter/X. What did they show?
You can also watch this article in video format here:
There are some unscrupulous bullion dealers out there who are taking advantage of rookie buyers who don’t entirely know what they are doing when buying gold.
I am not going to name names. But don’t fall the scam
If a dealer tries to flog you graded coins, in almost all cases they are trying to rip you off. Don’t pay a premium for graded coins.
You are not buying gold to try and be clever and hope that your coin gets some kind of rarity value. In most cases, that will not happen. There are clever people who know this market better than you already playing this game. Don’t get involved. Your priority is to get as much gold for your money as possible. You are buying gold to preserve purchasing power, not to lose it.
If a dealer tells you that some recent sovereign, for example, is extremely rare, that it was one of the last coins minted under Queen Elizabeth or some such, and that it has been graded and has a special certificate and blah blah, and it therefore carries a huge premium, they are trying to pull a sly one. The reality is that the extra premium paid is almost impossible to claw back when you come to sell.
It really annoys me that bullion dealers are doing this. When buying gold, trust is everything and they are breaching that. You are buying gold for safety, not to be ripped off.
Eventually, the FCA or the Office For Fair Trading or someone will eventually come after the dealers, but it will be too late. We all know how slow these organisations can be and by this point many more people will have been scammed.
Why do dealers do it?
A dealer might buy a large stock of coins from the Mint. Coins are often of a slightly different quality. Dealers then send them off and pay a small fee to get them graded according to their Mint State. The scale ranges from MS-60 to MS-70, with MS-70 being a perfect, flawless coin. They then charge a large premium for coins with high grades, even though they barely paid any premium when they bought the coins
The margins when dealing in gold are on the slim side - sometimes just a few percent. But if they get an additional premium for the rarity, that margin can rise to 100%. No wonder there are so many unscrupulous salesman trying to flog graded coins.
Fractional coins—¼ or 1/2 sovs for example—or older coins do trade at a higher (though not enormous) premium. These can trade for 15-20% above the spot value of the gold content. But you are likely to get that back when you sell. (Demand for fractional coins has increased this last year while it has fallen for 1oz coins).
But for graded coins you can end up paying 100% premium to the spot value of the gold, yet when you come to sell you get little more than the spot value. So when you come to sell, you can lose over 70% even if the spot price of gold has increased.
It’s like buying a painting by a modern artist and being told by the vendor he’s more famous than he is, only to find out later on that he isn’t.
Don’t fall for it. And spread the word. The more people that know about this the better.
If you are interested in buying gold in these uncertain times, then check out my recent report, and look no further than my recommended bullion dealer, the Pure Gold Company. Premiums are low, quality of service is high, and you get to deal with a human being who knows their stuff and won’t try and flog you graded coins at rip-off premiums.
IMPORTANT: somebody keeps impersonating me on various social media, including on here asking readers to message them on WhatsApp. It is not me. Don’t engage. Please report and DON’T send any money.
Finally, my Edinburgh Fringe show Shaping the Earth, a “lecture with funny bits” about the history of mining, is coming to London October 9th and 10th to the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”. It’s a really interesting show, even though I say so myself.
If you would rather watch this piece go here:
IMPORTANT: somebody has been impersonating me on Substack, on Instagram and on YouTube. Please don’t engage. Report and block. And please DON’T send any money.
Thanks to all who came to see Shaping The Earth up in Edinburgh. The show got incredible feedback. I am doing it in London October 9th and 10th at the Museum of Comedy. Please come if you fancy a bit of “learning and laughter”.
House prices have to come down some time. But when exactly? That’s what we all want to know.
So here’s your answer.
The declines start in the US and Canada in 2025, followed by the UK, Europe and Australia in 2026.
That’s what the 18-year property cycle says, at least.
Today we explore that cycle and what it says about house prices.
18 Years of Boom and Bust
Economist Fred Harrison, who first covered the theory in his 1983 book, The Power in the Land, is very much the Godfather of the idea that real estate follows a predictable pattern over an 18-year period.
I first stumbled across Harrison in 2005, when so many were sure house prices had to come down (needless to say they didn’t), on reading his brilliantly prophetic article for MoneyWeek, arguing that we were two or three years from the top. Wasn’t he right.
Today, by most accounts, property should have already crashed. Real estate prices bear little resemblance to earnings. With the rise in interest rates that followed Covid, mortgage-holders found themselves with higher costs. Some were forced to sell, while prospective buyers could no longer afford to borrow as much as before. Increased taxes - I’m looking at you, Stamp Duty in the UK - have only added to the unaffordability.
And yet, while the market may be slow and stagnant in many parts of the country and indeed the world, it is not exactly crashing.
There was one school of thought that was steadfast in all the house-price bearishness which followed Covid, saying property’s time to crash had not yet come. They were the acolytes of the 18-year cycle in real estate. Yet again they’ve been proved right.
Real estate peaks in 2026, they said. After that we get four years of decline.
You know my views on cycles.
We have the seasons, days and nights, the moons, menstruation, the cycle of life - cycles are turning all around us. There are economic and investment cycles too: bull markets and bear markets, commodities super-cycles, Gordon Brown was always blathering on about the economic cycle, mining is cyclical. New technology goes through a clear cycle as it evolves and is adopted.
On the other hand, it’s easy to look back at the past, find some random pattern and declare it a cycle. Actually trading them in real time is a very different matter. In fact, the human need for narrative and the fact that cycles make for good copy mean it’s very easy to get wedded to the idea of a cycle, when a very different reality is staring you in the face. After 2008 many got it stuck in their heads that this was Kondratiev Winter and the next Great Depression, and, as a result, missed one of the most rip-roaring bull markets in history.
With all that said, the 18-year cycle in real estate has proved remarkably reliable, and, says Akhil Patel, author of The Secret Wealth Advantage, and one of Harrison’s great disciples, it goes all the way back to the turn of the 19th century. (I’ll show you that data in just a sec).
Looking to buy gold in these uncertain times? Check out my recent report, and look no further than my recommended bullion dealer, the Pure Gold Company. Premiums are low, quality of service is high, and you get to deal with a human being who knows their stuff.
Broadly speaking, there are four phases to the cycle - and it actually lasts about 18 and a half years.
* Years one to seven. A silent rally followed by …
* A mid-cycle slowdown or dip at around the seven year mark.
* The explosive phase. That’s when house prices really get on the map. Think 1983 to 1989 or 2002 to 2007. In the last couple of years you get a classic blow-off top - the winners’ curse.
* Finally, the correction which lasts around four years. Think 1989 to 1993 or 2008-2011. Then the cycle starts again.
Here it is, illustrated.
This is, says Akhil, “primarily a North American phenomenon, though Britain and Europe follow the US and, increasingly, emerging markets do as well.”
Here, for the historians out there, is a table from Akhil’s book that shows the data in the US going all the way back to 1800.
Recent turns of the cycle
There is no doubt the cycle has played out in the UK over my lifetime. (The US is typically 6 months to a year ahead of the UK ). From the mid-1970s through to 1989 there was an extraordinary boom in the UK, followed by that infamous crash from 1989 to 1993 and negative equity so bad that thousands simply posted their keys in the letter box and walked away from their homes. Prices peaked in the third quarter of 1989 at £63,000, before falling to £51,000.
But in 1993 things got going again. By the turn of the 20th century property erotica was all over the television, houses had become financial assets and today’s intergenerational wealth divide was just beginning to show its face.
The market peaked in Q3 2007, and declines followed, though it wasn’t such an out and out crash as 1989-93, largely because there were few forced sellers with the slashing of interest rates. The average house price then fell from £183,000 in Q3 2007 to £149,000 in Q1 2009. They fell by a lot more than 18% if you were a foreigner, however, as the pound lost a good 30% in the foreign exchange markets
It would be 2012 before the market properly got going again. We saw the mid-cycle dip around about Covid time, and now we are in the explosive phase, though in many parts of the country this is one helluva limp explosive phase. While prices are rising in some areas, the market is stagnant in many others.
It’s clear from all the leaks that Labour are looking at ways to extract some of the wealth tied up in housing. Whether that’s going to come from increased council taxes (0.5% levy of the value of the property - a number that will only go one way), capital gains tax on the sale of your main residence, increased attacks on buy-to-let landlords, increased Stamp Duty or by some other means, we do not yet know. (Labour are doing what the Tories used to do: leaking and then seeing what the reaction is).
None of that bodes well for house prices. Nor do their plans to increase housing supply via new builds, or indeed the mass exodus of people with money.
On the other hand, lower interest rates, which are coming, should give the market a boost.
Overall, my advice to any prospective buyers is to wait. I think this market is primed for big falls, but, like the 18-year guys, I don’t think these falls come for another couple of years. That said, often not buying a home means putting the rest of your life on hold, which is not a good thing to do.
If there’s a place you’ll be happy in, and you can afford it now, then do it. Cost is not always the main priority. And, of course, there’s always the possibility the 18-year-cycle guys have got it wrong.
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