Putin, or whoever advises him, made an interesting point when speaking in St Petersburg last year:
I’ve been moving my portfolio of shares to reflect the above. One third of my share portfolio is into mining and similar - shares backed by something. I’m still slowly loading up on precious metals and am looking to buy another Rolex watch (I know that the price has dropped of late). I’ve taken the view that The West’s domination of the financial world is coming to an end. The other seven billion people in the world increasingly see our weakness as a debt riddled group of countries whose capability to produce seems to get less and less each year.
As monetary inflations progress there comes a point where this understanding changes. Increasing numbers of consumers will become aware that fiat money is losing purchasing power rather than the prices of goods rising. Trust in paper money begins to evaporate and the move into physical goods commences, gradually at first but then at an increasing pace. This is what the Austrian economist von Mises called “Katastrophenhausse”
I think you are conflating equities, stocks, with fiat money. They are not the same. You wrote:
One third of my share portfolio is into mining and similar - shares backed by something.
The question to ask is whether mining and similar are more productive than Tesla and similar. How will they be impacted by inflation? Which one will fare better. IBM came put of the Great Depression in great shape because they had the accounting machines that FDR’s New Deal bureaucracy needed. Kennedy came out of Prohibition in great shape because he had the liquor import licences…
IBM
IBM provided the punched card equipment and the expertise about accounting and payroll data that made it possible to implement the law. The project had an immense impact on IBM. In the mid-1930s, the company was struggling to survive the Depression. By the late 1930s, IBM was one of the hottest companies of that difficult era; the Social Security project catapulted IBM from a midsize corporation to the global leader in information technology.
Ever the opportunist, Kennedy also planned to mix business and pleasure. His ultimate prize would be to gain the British rights to send Scotch whiskey, gin, and other imported liquors to a thirsty United States, now that Prohibition appeared almost over.
The Captain
Google search is possibly the most influential technology developed in the 20th Century!
I see investing in mining as investments back by tangable assets which are scattered all around the world.
Investments in The West seem to be centred around intangables like crypto, tech companies, finance, etc. For example, the Bank for International Settlement’s last quarterly report talked of F/X derivatives that were in a ‘fog’ amounting to $100 trillion. This is estimated as these derivatives do not appear on Blance Sheets and are usually just memtioned in the notes to the accounts in a language that few understand. I think that the BIS estimated the F/X derivatives at about $17 trillion in 2008!
I’m not sure if mining is more productive than Tesla but I know which I prefer.
I’ve been moving my assets outside ‘The West’ for some time now as i think that its days are over. Just my ‘gut feeling’ which has served me well over the years.
With all that’s troublesome about America, should it collapse, I’m not sure what the remaining safe haven might be or which the world’s new reserve currency will be.
In concept, I agree with Divitias. Those who might have peeked at my equity portfolio which a posted a few weeks ago would have noticed that over half the portfolio is devoted to foreign companies and it is over-weight on mining and energy logistics companies (as a hedge against inflation). In a nod in the general direction of the Capt, there is a sizable block in electrical equipment manufacturers (world-wide) as I believe the movement toward EV’s and off of coal as well as eventually rebuilding Ukraine’s energy infrastructure is going to generate (ha ha pun) a lot of briskness in that bailiwick.
Putin is relating to the USD and Euro getting weaker, but inflation, once interest rates are normalized is compensated for by the equity market - assuming there is not a seea-change in confidence in a major currency.
I loaded up on miners during Covid when prices were surpressed. They are on the up now, well up in some cases. I’ve seen a few articles of late recommending asset backed investments which might be pushing prices up.
With several metal prices hitting record-highs this year, the commodity super-cycle is boosting mining companies’ profit margins and stock value. As a result, many may be looking to learn more to determine whether or not to invest in mining stocks in 2022. Read on to learn more about the top performing mining companies this year and the mining stocks to watch.
I avoid politically sensitive areas and find that many of the ones I’m invested in are in The Southern Hemisphere which suits me fine.
