The Golden PooIn this excellent interview with Jan Skoyles, Ben Davies, CEO of Hinde Capital discusses the latest in the gold, silver and bitcoin markets. Davies and Skoyles break down the data on the gold and silver ETFs, check out the physical markets, explore the future of gold for China, discuss the outlook for Bitcoin and then Davies reveals a surprising new shape to certain gold ingots in the black market.
Davies, who predicted the imminent 2011 correction in silver only 3 days ahead of the top gives his views on silver today (there is massive demand at these low levels), and reminds readers that even with 2013’s massive correction (and 60% off the highs in silver), gold and silver remain the top performing asset since the Lehman collapse.
When asked his thoughts on whether the gold bubble has burst Davies replied: Gold has not had any sort of trajectory for any duration as the NASDAQ bubble, or even the recent move in silver which was in real terms hugely undervalued (just to get back to 1980’s real levels silver would need to reach $400).  When people talk about gold being in a bubble, its pretty clear there has been no exponential move higher.
Actual invest-able gold is less than 0.5% of global assets ($22o trillion).  In the 1960’s with the London gold pool the number was about 5%.  It doesn’t take much increase in that number to see a drastic increase in the gold price. 

Ben Davies: Turning adversity into gold (via Futures Magazine)

By Michael McFarlin September 1, 2013 • Reprints It was a chance encounter after a back injury that turned Ben Davies’ attention from sports to the markets, but the same competitive spirit still drives him in advocating for monetary reforms. Cutting…

I had the chance to reconnect with Mark Mahaffey, co-founder of the London-based Hinde Capital, and co-manager of the Hinde Gold Fund—one of the world’s top performing gold funds, even amidst the shocking metals correction of the last two years.
It was a fascinating conversation, as Mark indicated that a predictable, ‘speculative cycle’ is now playing out in the equity and gold markets, punctuated with unrealistically bearish news stories on gold. This cycle timing, combined with aggressive monetary base growth—suggest increased exposure to the metal is warranted.

Speaking to the concept of the “speculative cycle”, Mark noted that, “The cycle of sentiment never really changes. At the top we have total confidence, delusion, irrational exuberance and it gives way to hope, anxiety, panic and despair—and then total disgust at the lows.
Sentiment towards gold is [currently] of total disgust and the confidence of owning equities is supreme. The media has done a great job of getting gold to exchange at lower prices, and even Ben Bernanke said [last week] that gold was exchanging at lower prices because [investors] don’t really need the disaster insurance now.
So f
rom an asset allocation perspective, I would certainly be decreasing my equity exposure…and increasing my gold exposure here…as it often pays well to be contrarian of the extremes.”
Hinde Capital’s Mark Mahaffey’s thoughts on gold are below:

The global crisis is a financial crisis driven primarily by global trade and capital imbalances.  This is the macro theme we have pursued these past 7 years. We believe the global crisis is in full swing again and asset prices are in danger of falling globally.   Money is less effective at catching the falling knife.  Emerging market countries are exhibiting the signs of crisis-like price action associated with deteriorating balance of payment balances, even though many have built up significant foreign exchange reserves.   Investors and policymakers do not believe this is the beginning of a major EM contagion crisis. They are lulling themselves into a false sense of security. They see the EM market tremors, and do not fear are-run of the EM crises of old.  They are right. This is not (just) going to be an EM crisis. Recent events portend a far more serious crisis is at hand; the unraveling of our global monetary system.

Ben Davies of Hinde Capital’s full MUST READ letter on the unraveling of the global monetary system is below:

Ben Davies Hinde CapitalIn this MUST LISTEN interview, GoldMoney’s Alasdair Macleod talks to Ben Davies, co-founder and CEO of Hinde Capital. They talk about the recent weakness in the gold price and factors that will propel gold higher.

Ben Davies states that revaluing gold and backing the monetary system with it could be one of the least disruptive ways out of the credit mess. The continuance of debt monetisation on the other hand has the potential to cause a hyperinflationary collapse. Davies is especially pessimistic about Japan, and sees a lot of trouble ahead and talks about Fukushima as a turning point for the country. He also talks about the dire straits the British pound is in.

Davies discusses the recent disappointing performance of gold bullion in light of all the monetary inflation around the globe. However, he points out that the physical market is fairly tight which usually occurs around a price bottom. They also talk about the pressure on the gold mining industry, China’s accumulation of gold, Comex gold data and the possibility of another banking crisis.

Davies’ full interview is below:

Ben Davies Hinde CapitalGoldMoney’s Alasdair Macleod has released an interview with Ben Davies of Hinde Capital. They discuss the idea of nominal GDP targeting as a monetary policy strategy for central banks.

Nominal GDP growth is the sum of real GDP growth plus the inflation rate. Davies says that proponents of a nominal GDP targeting — so-called market monetarists — are gaining momentum in central banks and the media. They discuss how depressions are not caused by tight monetary conditions but rather by the preceding excessive expansion of credit. Davies points out that credit and debt are two sides of the same coin, which makes it impossible to clear one without the other.

Davies says that by driving down long term interest rates, central banks are trying to draw investors into equities in order to create a so-called wealth effect. However, he explains that debt levels are simply too high for this method to translate into sustained long-term growth. He foresees stagflation with low growth and excess liquidity.
Davies’ full interview is below: