Z Legacy: Finance

It begins: US government issues $700,000 fine against a digital currency

Obama Budget Debt
May 5, 2015
Sovereign Valley Farm, Chile

Well, it was bound to happen sooner or later.

Our beloved amigos at the US Financial Crimes Enforcement Network (FinCEN), have just issued the first-ever 'civil enforcement action' against a virtual currency.

The offending criminal mastermind in this case? Ripple Labs.

If you're not familiar, Ripple is a virtual currency platform that was once the darling of Silicon Valley, attracting top VC firms like[...] Click here to continue reading

Meet the latest country with negative interest rates

Financial-Bank-Account
April 17, 2015
Sovereign Valley Farm, Chile

Let's talk about idiots.

Somewhere out there, some absurdly well-paid banker just placed his investors' capital in yet another financial instrument which is guaranteed to lose money: Australian government debt.

47 investors participated in the Australian government's $200 million bond tender; the participants typically bid the amount they're willing to pay, and the highest bids win the auction.

In this case, and for the[...] Click here to continue reading

It’s happening: more US allies join the anti-dollar alliance

Anti-Dollar-Alliance
March 18, 2015
Santiago, Chile

The United States government just went from “Please, baby, don’t leave me,” to frustrated threats and whining.

After the UK announced it will join new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member late last week, Germany, France and Italy decided yesterday to follow Britain’s lead and join as well.

Welcome to the beginning of the end of the US dollar’s domination. It’s happening.

[...] Click here to continue reading

Et tu, Britain? United Kingdom to join China in the anti-dollar alliance

UK-rmb-gbp
March 13, 2015
Willemstad, Curacao

In another awkward blow to the rapidly waning US-dollar hegemony, America and Britain just had their "It's not you, it's me" moment.



Late yesterday, the government of the United Kingdom announced that they would be applying to join the Chinese-led Asian Infrastructure Investment Bank... as a founding member.

This is huge.

Right now, the United States dominates the global financial system.

But[...] Click here to continue reading

What do you do when none of the clocks have any hands?

Clock-with-no-hands
February 23, 2015
London, England

[Editor’s note: This letter was written by Tim Price, London-based wealth manager and editor of Price Value International.]

“We are all at a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air. We know, by the rules, that at some moment the Black Horsemen will come shattering through the great terrace doors, wreaking vengeance and scattering the survivors. Those who[...]

Click here to continue reading

Bubble? Meet the $25 million grilled cheese truck

Grilled-Cheese-truck
February 9, 2015
London, England 

[Editor’s note: Tim Price, London-based manager and editor of Price Value International is filling in for Simon today.]

There are some time-honoured signs of an impending market top.

One of them is that margin debt has peaked.

Another is that interest rates are going through the floor.

Another is that the velocity of money is also going through the floor.

Another is that Goldman[...] Click here to continue reading

I’ve run the numbers and it’s true—this is a failed strategy

Equities-failed-strategy
February 6, 2015
Victoria, Chile

A few months ago, I needed to satisfy my curiosity.

You see, one of the things I pride myself on about Sovereign Man is that my entire team and I are extremely data-driven.

We make rational, calculated assertions typically based on publicly-available data.

When I say, for example, that the US is broke, it’s because I know how to read the balance sheet in the US[...] Click here to continue reading

This may be the most important transaction in the history of finance

Bitcoin Cryptocurrency Birthday
January 12, 2015
King George Island, Antarctica

Six years ago today, Satoshi Nakamoto, the developer and founder of Bitcoin sent ten units of the cryptocurrency to his colleague Hal Finney as a test.

This was the very first bitcoin transaction ever recorded. And it may possibly go down as one of the most important financial transactions in modern history.

I should caveat this by saying that I am not necessarily a ‘Bitcoin-bug’.[...] Click here to continue reading

Yes, it’s possible for a gold-backed renminbi to dethrone the dollar

Gold-backed-renminbi
December 15, 2014
London, England

[Editor’s note: This letter was written by Tim Price, London-based wealth manager and editor of Price Value International.]
“[W]e want to use our reserves more constructively by investing in development projects around the world rather than just reflexively buying US Treasuries. In any case, we usually lose money on Treasuries, so we need to find ways to improve our return on investment.”
- Unnamed senior Chinese official, cited in[...] Click here to continue reading

“I am a hard working taxpayer who is getting pretty fed up. . .”

Unemployment-Angry-Computer
December 1, 2014
London, England

[Editor’s note: This letter was written by Tim Price, London-based wealth manager and editor of Price Value International.]

So the Swiss have decided not to force their central bank into underpinning its reserves with harder assets than increasingly worthless euros.

At least they had the chance to vote.

But in the bigger picture, the rejection of the “Save Our Swiss Gold” initiative flies in the face[...] Click here to continue reading

How to profit from a decline in the renminbi

Renminbi
November 28, 2014
Bali, Indonesia

[Editor's Note: This missive was penned by Sovereign Man’s Chief Investment Strategist Tim Staermose]

I spent two days in China earlier this week. Among other things, I wanted to get a feel for where people on the ground see the currency heading.

My personal view is that, as the US dollar keeps strengthening against the euro, yen, etc. China will find it increasingly difficult to bear the[...] Click here to continue reading

Smacking a skunk with a tennis racket

Ben-Bernanke-Crash
November 24, 2014
London, England

[Editor’s note: This essay was penned by Tim Price, a London-based wealth manager and editor of Price Value International.]

On Monday 15th November 2010, an open letter to Ben Bernanke was published:
“We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk[...] Click here to continue reading

Here’s what I think the financial system will look like in the future

pharoah-future-gold
November 12, 2014
Santiago, Chile

Thousands of years ago whenever the Pharaohs of Ancient Egypt passed away, they were buried with all of their gold in a specially constructed tomb.

The idea was to ward off thieves with booby traps and other perils so that these perceived demigods could enjoy their riches for eternity.

It worked. In the case of Tutankhamen, his gold was untouched by both thieves and desperate government tax[...] Click here to continue reading

Three super safe and private facilities to store gold abroad

gold-bars-vault
November 12, 2014
Santiago, Chile

At USD $1160, a lot of gold owners are looking at the paper price right now and panicking.

The conventional wisdom is that, because it takes fewer pieces of paper to buy an ounce, gold is a bad ‘investment’.

This isn’t the right idea. It shouldn’t be viewed as an investment at all.

Gold isn’t something that you buy with paper currency hoping to sell it[...] Click here to continue reading

Historical figures’ salaries in gold: Mozart and Beethoven

Mozart-Prague-Opera
November 12, 2014
Santiago, Chile

When Wolfgang Amadeus Mozart first came to Prague on 11 January 1787, he was an absolute sensation.

His smash hit opera Le nozze di Figaro had been released in the city a few months prior, and the people were absolutely wild about it.

So this time, in 1787, he came to town to conduct the opera himself. This was like the Beatles coming to America for[...] Click here to continue reading

Avoid this accident waiting to happen in investment markets

shutterstock_151408784
November 10, 2014
London, England

[Editor’s note: This letter was written by Tim Price, London-based wealth manager and editor of Price Value International.]

In 1975, Charles Ellis, the founder of Greenwich Associates, wrote one of the most powerful and memorable metaphors in the history of finance.

His essay is titled ‘The loser’s game’, which in his view is what the ‘sport’ of investing had become by the time he wrote it. His[...] Click here to continue reading

One simple chart to explain the defining problem of our times

Bending Time, Lost in Time
October 13, 2014
London, England

[Editor’s note: Tim Price is a London-based wealth manager and editor of Price Value International.]

“When sorrows come,” wrote Shakespeare, “they come not single spies, but in battalions.”

True. And Jeremy Warner for the Daily Telegraph identifies ten such sorrows in his ‘ten biggest threats to the global economy’:

1)  Geopolitical risk;

2)  The threat of oil and gas price spikes;

3)  A hard[...] Click here to continue reading

This is the best currency to hold for now (you may be surprised)

Cash
October 10, 2014
Santiago, Chile

I just got off a two-hour conference call with the board of directors of our agricultural investment company.

I’m fortunate that our board is comprised of some incredibly smart people, including a senior executive at one of the largest sovereign wealth funds in the world, another investment banking executive, private wealth manager, etc.

These are very intelligent people who understand both finance and agriculture.

Our conversation[...] Click here to continue reading

Koreans are getting in on the trend — renminbi deposits in Korea surge 55-fold

The risk of China
October 9, 2014
Santiago, Chile

The Bank of Korea -- South Korea's central bank -- released data that says South Korean domestic deposits have reached 16.19 billion Chinese renminbi in July this year, which is a 55-fold increase from the same period last year when renminbi deposits accounted for only 290 million.

According to data from South Korean banks, the proportion of foreign currency deposits held in renminbi was 0.4% at the end[...] Click here to continue reading

Presenting the ‘Hookers and Blow’ GDP component for select European economies

oie_7223325gXjCWNLr
October 7, 2014
Santiago, Chile

Now that European Union countries are required by law to keep tabs on illegal activities as part of their economic indicators, we decided to look at some select European countries more closely.

The new accounting rules mandated by the EU’s statistics office, Eurostat, include revenue from illegal activities related to drugs trafficking, prostitution and cigarette smuggling.

Of course, there’s no actual reliable data to measure these illegal[...] Click here to continue reading

This is huge: Chinese renminbi becomes directly tradable with the euro

Renminbi
October 1, 2014
Santiago, Chile

The Chinese central bank, People's Bank of China, issued a press release announcing the authorization of direct trading between the renminbi and the euro on the inter-bank foreign exchange market.

This is huge. The euro is the second most traded currency in the world, after the US dollar. The European Union is already China's biggest trading partner and this is a major step in further increasing trade and[...] Click here to continue reading

The West has lost what made it culturally exceptional.

Bending Time, Lost in Time
September 1, 2014
London, England

[Editor’s note: This missive was penned by Tim Price of PFP Wealth Management in the UK, a frequent contributor to Sovereign Man]

“Sir, Arnaud Montebourg, the former French economy minister and the sourest note in the Hollande repertoire, dares to complain of “absurd” austerity policies ? (“Hollande purges cabinet following leftwing revolt”, August 26.) If those policies are absurd, it is because they were not accompanied by the[...] Click here to continue reading

Who will end up wearing the Emperor’s new clothes?

The Emperor's New Clothes
August 26, 2014
London, England

[Editor’s note: This missive was penned by Tim Price of PFP Wealth Management in the UK, a frequent contributor to Sovereign Man]
Few films have managed to convey the feeling of approaching menace more effectively than Jeff Nichols’ 2011 drama, ‘Take Shelter’.

Its blue collar protagonist, Curtis LaForche, played by the lantern-jawed Michael Shannon – whose sepulchral bass tones make his every utterance sound like someone slowly[...] Click here to continue reading

Ever wonder why the prostitutes and bankers share the same neighborhood?

Podcast #16
August 20, 2014
Frankfurt, Germany

Sometimes I am convinced it was completely by design, and not a weird little coincidence, that one of Germany's most sprawling red light districts is just steps away from the European Central Bank.

This fact becomes comically obvious right around happy hour... as self-congratulatory ECB economists and their bureaucratic bank underlings crowd the bars and cafes after work which are simultaneously frequented by pimps, thugs, and other assorted[...] Click here to continue reading

It’s time to confront brutal facts

US Dollar
August 11, 2014
London, England

[Editor’s note: Tim Price, frequent Sovereign Man contributor and Director of Investment at PFP Wealth Management, is filling in while Simon is teaching at his entrepreneurship camp.]

On September 9th, 1965, US Navy pilot James Stockdale was shot down over North Vietnam and seized by a mob.

He would spend the next seven years in Hoa Lo Prison, the infamous “Hanoi Hilton”.

The physical brutality was[...] Click here to continue reading

Pump and Dump promoters are at it again: check out the newest scam

Pump and Dump
August 5, 2014
Vilnius, Lithuania

Roughly a month ago, my colleague Tim Price wrote an article exposing CYNK Technology Corp.

The day we published, the stock (OTC: CYNK) had a market cap in excess of $1 billion; it rose to more than $6 billion at its peak.

All this with one employee, no assets, no revenue, no website, and no product… What could possibly go wrong?

The CYNK bubble was, of[...] Click here to continue reading

Lessons in investment warfare

Winston Churchill
“Let us learn our lessons. Never, never, never believe any war will be smooth and easy, or that anyone who embarks on that strange voyage can measure the tides and hurricanes he will encounter. The statesman who yields to war fever must realise that once the signal is given, he is no longer the master of policy but the slave of unforeseeable and uncontrollable events.

“Antiquated War Offices, weak, incompetent or arrogant commanders, untrustworthy allies, hostile neutrals, malignant[...] Click here to continue reading

Argentina Economy Minister: “Who believes in the rating agencies?”

Argentina
August 1, 2014
Tallinn, Estonia

What a disaster.

For the second time in the last fifteen or so odd years, Argentina has defaulted on its debt. And as we reported a few weeks ago, there was no easy way out.

Years ago, most of the creditors that Argentina had stiffed in 2001 agreed on a settlement; they accepted a much lower payment than they were actually owed, figuring that getting -some- money[...] Click here to continue reading

They call them ‘junk bonds’ for a reason…

Stocks
July 21, 2014
London, England

[Editor’s note: This missive was penned by Tim Price, Director of Investment at PFP Wealth Management in the UK and frequent Sovereign Man contributor.]

They call them ‘junk bonds’ for a reason. They now constitute an offence against linguistic decency: ‘high yield’ no longer even is. Consider the chart below:


(The index in question is a benchmark for the broad high yield bond market.)

Not for[...] Click here to continue reading

Delusional IMF “delighted” to be marginalized by BRICS

IMF
July 17, 2014
Malaga, Spain

Like a lot of kids who grew up in the 80s, my parents enrolled me in organized basketball when I was around 9 or 10 years old.

We weren't really any good... just a bunch of kids from the Nintendo generation who would have rather been playing Jordan vs. Bird in our living rooms instead of dribbling through the real thing.

In all honesty I have to[...] Click here to continue reading

Happy birthday paper money: celebrating 353 years of wanton destruction

Cash
July 16, 2014
Malaga, Spain

If you ever find yourself vacationing in the western Pacific, I highly recommend swinging by Yap Island, home of one of the most bizarre forms of money in history.

Over a thousand years ago, natives would mine enormous chunks of limestone and carve them into gigantic circular discs.

I'm talking REALLY big... a typical disc would be 5 to 10 feet in diameter, over a foot thick,[...] Click here to continue reading

Cyprus: Despite 16 months of capital controls, banks still pitifully capitalized

Cyprus
July 14, 2014
Istanbul, Turkey

It’s been over a year since the banking system in Cyprus officially went bust.

On Friday, March 15, 2013, practically everyone in the country went to bed thinking that everything was just fine.

Many had probably gone to the bank that very day to do business, or logged on to an Internet banking platform.

Yet the very next morning, they woke to a completely new reality:[...] Click here to continue reading

Top of the market? Meet the $1 BILLION company that has zero revenue…

Broke
July 7, 2014
London, England

[Editor’s Note: Tim Price, frequent Sovereign Man contributor and Director of Investment at PFP Wealth Management, is filling in today while Simon is traveling in Iraq.]

Lord Overstone said it best. “No warning can save people determined to grow suddenly rich.”

Case in point-- CYNK Technology Corp, a listed company that as of this morning has a market capitalization in excess of $1 BILLION.

According to[...] Click here to continue reading

The US government tells the whole world to go FATCA themselves

America
July 1, 2014
Vienna, Austria

If you want to gather honey, don’t kick over the beehive.

This was how Dale Carnegie titled the first chapter of his 1936 personal development masterpiece—How to Win Friends and Influence People.

Carnegie had sensible advice: if you want to keep people on your team, first and foremost don’t piss them off. Duh. Seems pretty obvious.

I think the US government could use a little Dale[...] Click here to continue reading

A time of universal deceit

Gold
June 30, 2014
London, England

[Editor’s Note: This column was written by Tim Price, frequent Sovereign Man contributor and Director of Investment at PFP Wealth Management in the UK]

“We are currently on a journey to the outer reaches of the monetary universe,” write Ronni Stoeferle and Mark Valek in their latest, magisterial ‘In Gold we Trust’. Their outstanding work is doubly valuable because, as George Orwell once wrote,

“In a[...] Click here to continue reading