Gold: The Unsurance Policy

Grant Williams’ presentation to last month’s Mines and Money London conference

This is the presentation that Singapore-based fund manager Grant Williams, Of Things That May You Go Hhhmm, gave at Mines & Money in London in early December laying out why he believes the gold price is languishing despite a wealth of what would ordinarily be positive catalysts.

He says that currently, outside those who focus on precious metals, there is an enormous amount of apathy but, he suspects, that apathy will shortly turn to enthusiasm – an enthusiasm which will expose the rift between paper prices set in NY and the structural changes undergone in the physical markets over the last several years.

But for now… Nobody Cares.

Williams says that while nobody seems to care about gold anymore, at least at establishment levels in the West, in fact central banks have turned from sellers to buyers and demand for metal is robust nearly everywhere, especially in China, where the Shanghai Gold Exchange is delivering 52 times more metal than the exchange perceived to set world prices, the New York Commodities Exchange.

Plus while the gold price has been slaughtered for four years, simultaneously the fundamental factors supporting a higher price have increased greatly.

Williams notes that market rigging by central banks and their agent investment banks may be a cause of pricing incongruities. He concludes that eventually everyone will care about the gold price and that there’s not enough gold to accommodate everyone.

You can scroll down to watch the full 28 minute presentation below which is very entertaining with Williams usual dry wit.

Alternatively, here is a brief written overview of his presentation:

Why gold is not “the worst investment ever”. But:

  • How GLD volume shows the antipathy to gold.
  • How Google Trends searches for Gold Mining Stocks have steadily declined since the peak interest in 2011
  • How “Raw Sewage” is more popular than “gold”!
  • Why holdings of the gold ETF has fallen steadily while holdings of the silver ETF has remained very stable.

How gold has remained so unloved even in the face of expected gold positive news such as:

  • Greece
  • Cyprus
  • European QE
  • More Japanese QE
  • Debt ceiling increases
  • China slowdown
  • Currency Wars
  • Interest rate cuts
  • Additional $57 trillion in debt
  • Negative rates

Why might this be? Because:

  • The Gold Bull market is over
  • Central bank competency = no need for insurance policy
  • Zero inflation
  • Massive short selling by bullion banks
  • Overt manipulation by central banks
  • Some combination of the above

But really – Because nobody cares

Because share markets have gone up, as has the US Dollar.

However:

  • In multiple other currencies gold went up significantly
  • Consumer demand went up dramatically in 2015 not seen since the GFC and a level of price awareness on a par with Chinese and Indian retail investors.
  • Central bank purchases of gold have continued while purchases of US treasuries have gone down.
  • Shanghai gold exchange withdrawals have tripled since 2005.
  • While COMEX deliveries have continued to decline.

What if People other than Chinese and Indians started to care?

  • Impact on the gold space if 0.3% of pension fund assets ($100 Billion) went into gold.
  • How supply continues to tighten.
  • How there are now 280 claims per ounce of gold held in the COMEX, but still nobody cares.

Gold: The Unsurance Policy

  • The degree to which you are unsure about the world avoiding a repeat of 2008 is equal to the amount of gold you should hold.
  • If you think there is a 5% chance of a repeat then hold 5% in gold.
  • Be sure to listen to his brilliant analogy of holding gold as insurance.
  • How vastly higher prices will come when it changes to “Everybody Cares”.

 

 

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