Tuesday, 21 November 2023 | By Greg Canavan | Editor, Fat Tail Daily |
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[1 min read]
In this issue: Brian Chu’s awakening to gold Bill Bonner: Continued decline and fall, plus an historic moment for the long-suffering Argentines and more... |
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Dear Reader, Today’s essay comes to you from Hong Kong. Our gold analyst Brian Chu is back there visiting family. It’s a bustling and prosperous city. But that is slowly changing now it’s under the control of mainland China. When socialism comes to town, capital departs. History tells you this. Look no further than Argentina. It was one of the wealthiest countries in the world in the early 1900s. Then the socialists got their hands on it. The country slowly turned into a basket case. (Australia, take note.) But it’s not gotten to the point where the people have — finally — had enough. They’ve elected a libertarian President who understands that government is the problem, not the solution. Will he succeed? Will the CIA allow him to succeed? More on Argentina from Bill Bonner and Joel Bowman below. Joel’s an ex-pat Aussie who now lives and works in Buenos Aires. Enjoy… Reflections in Hong Kong: My Awakening to Gold |
| By Brian Chu | Editor, Fat Tail Daily |
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[4 min read] Dear Reader, Greetings from Hong Kong, the Asian city where east meets west! I want to share some reflections from my trip so far (it’s only been a day!). I was born in Hong Kong, lived there for a few years before migrating to Australia in 1989. Since then, I’ve flown back several times to visit my relatives as that’s where most of them live. The last time I came here was in October 2018, and before my son, Cyrus, was born. Much has happened in Hong Kong since I last visited. We’ve watched on TV the protests that turned violent in 2019. Then came the Wuhan virus outbreak. Hong Kong experienced one of the longest and harshest control measures, almost rivalling Victoria. Things have now returned to normal, somewhat. But I can sense that some things aren’t the same… Off to a good start Our trip started well. The flight to Hong Kong was quite long — just under nine hours. I can tell you I didn’t look forward to it. Long flights in a stuffy cabin with insufficient oxygen usually leave me feeling half-dead. The good news is that this flight was an exception. Let me show you some photos. This is one with my son: Here’s another with my wife, Cindy, and Cyrus having their lunch: After touching down, we picked up our luggage, and met up with my brother-in-law. We took the taxi to his place, which is in the west of the New Territories. The trip would normally take 45 minutes to an hour. However, the Hong Kong government built a tunnel from the airport to the suburb in 2020. It cut the travel time to 20 minutes! Amazing, isn’t it? Witnessing the legacy of the failing fiat currency system in action Before 2019, I used to travel to Hong Kong every one to two years. Each time I travelled there, I marvelled at how quickly things would develop. There’d be new roads, tunnels and train lines to turn a vibrant city into an even more compact community. You can literally travel from one end of the city to another in just over an hour. (We’ll travel to Macau next week via the Hong Kong-Zhuhai-Macau bridge. It’s currently the world’s longest road and tunnel system extending 55 kilometres across the Pearl River Delta. I’ll share some photos of that.) Those who have visited Hong Kong will understand how it’s a city of contrasts. The wealth disparity is evident. There’s a huge contrast between the bright lights, skyscrapers and luxury apartments in the Central and Mid-Levels district and the residential suburbs…complete with the old, rundown shacks in the hillsides and outskirts. Yesterday, I was shopping in the local street markets. Here’s a photo of a local butchery (notice they hang the meat out in the open without refrigeration, something that wouldn’t pass our health requirements!): Pork ribs were selling at HKD36 a catty (around 600 grams), which is equivalent to AU$12 a kg. Pork pieces were selling at HKD12 a catty or AU$4 a kg. Here’s another photo of me at a local grocery store: I also grabbed two 440mL cans of Hoegaarden beer at a 7-11 convenience store for AU$2 each! But that’s where the bargain prices seem to end. For many years, I could buy everything for cheap in Hong Kong. Now, this is no longer the case. It was quite a shock I must say. With fresh fruits and vegetables, desserts, dining out and most other goods, I’m paying Sydney prices. Now that mightn’t be noteworthy to you. After all, inflation is everywhere. Even our politicians and economists tell us we should just live with it, right? Not so. Salaries and wages for the ordinary Hong Kong resident are much lower than in Australia. I’m not talking about expatriates and those in the upper class who earn more than most. They can live like kings in Hong Kong, complete with au pairs, chauffeurs and multiple residences. Currently, the average annual income in Hong Kong is around HK$300,000 or AU$60,000, based on Numbeo. A one-bedroom suburban apartment costs AU$32,000 a year to rent. This is more than half the average income! If you think paying your mortgage is tough, Hong Kong residents will tell you to hold their beer. My awakening a decade ago I could still remember it was exactly a decade ago that I was walking downtown in the suburb where I grew up. There were plenty of streetside stores selling fresh food, meats and assorted items. Much like the markets I walked around today. Back then, I was single and earned a relatively solid income as a university lecturer. But as I looked at the property prices in the real estate agencies, my heart started to sink. I realised that I would struggle to afford a place in the downtown area! That began my awakening. Inflation and bad financial management by our leaders had been robbing us silently. I needed to do something to combat it. Fortunately, at that point I had already learned about the secret of gold, and was starting to build a portfolio of gold stocks to try to fast-track my wealth accumulation. And you know the rest… Gold providing stability in a changing world Ten years on, we can see how the challenges are escalating. Inflation is running wild. Government officials are now more corrupt and self-serving. The world is destabilising. But some things haven’t changed. Like gold and its ability to retain its purchasing power. And gold stocks being able to multiply gold’s moves. We’ve gone through some tough tests these past two and a half years. But things are turning around in gold’s favour. And gold stocks are fast setting up for a rally. Remain patient and stay hopeful. God bless, Brian Chu, Editor, Fat Tail Daily Advertisement: Something’s afoot in China… So believes expert gold analyst Brian Chu. In a riveting new report, he exposes why China intentionally blew up an Aussie mine in Africa… …and stole millions in gold from it. Brian also reveals why this plot could trigger a chain reaction of events — culminating in a group of Aussie miners on a tear. Access his report here. |
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By Bill Bonner and Joel Bowman [5 min read] Dear Reader, Is Western Civilisation in decline? More evidence in a minute. First, in an historic turnaround, a democratic government has voted to shrink itself. At least, that is our reading of yesterday’s election in Argentina. The voters have had enough. Bloomberg: Argentina Takes Leap Into Unknown With Javier Milei as President Libertarian outsider Javier Milei won Argentina’s presidency promising a radical shakeup to fix decades of policy mismanagement, a strategy that resonated with a populace suffering under a nosediving economy and one of the world’s fastest inflation rates. With 99% of ballots counted after Sunday’s runoff election, Milei took 56% of the votes to 44% for Economy Minister Sergio Massa of the incumbent left-wing Peronist coalition, according to the official electoral authority. Will this be good? Bad? We don’t know. But we’re sure it will be fun to watch. Our man on the scene, Joel, will have more below. I, Capitalism In the meantime, while Argentina may be correcting mistakes, the rest of the West is making more than ever. A small illustration: An English friend showed up for dinner on Saturday. He drove a new Citroen, built by the company founded by Andre Citroen in 1919. It had front-wheel drive, invented by Citroen himself, but was assembled from products and materials gathered from all over the world. It burned gasoline that came from the Total station down the road; Total was established in 1924…its fuel comes from several sources, none of them local. This gas may have been imported from its Jubail refinery in Saudi Arabia. We sat down in a house built by others, more than a century ago, to a simple dinner of fish (perhaps from the North Atlantic…‘harvested’ by a Portuguese fisherman) with tomatoes from North Africa…local carrots…and a dessert made with sugar imported, most likely, from Central America. Then, after dinner…followed coffee that had been introduced to Europe by Venetian traders in the 16th century. The beans were grown in Ethiopia and made their way to the local grocery store. Woke Nonsense After the dinner was completed, it began to get dark, so we turned a switch and the electric lights came on. None of us at the table had anything more to do with inventing electrical illumination than we had with any other part of the evening’s comforts. None of us could reproduce either the simplest electric light, nor the electricity to power it, even with the working models right in front of us. A Russian invented an arc lamp as early as 1802. Thomas Edison and Joseph Swan developed a more practical form of light — an incandescent bulb — much later. It was into this soft light that we pulled out our guitars, spoons, and harmonicas — none of them made by ourselves — for a little musical distraction. It was then that our guest apologised. ‘I always feel a little guilty about playing the blues,’ he said. ‘Why’s that,’ we asked? ‘I mean, I’m not Black. It is someone else’s music.’ ‘Cultural appropriation,’ is the ‘woke’ term. It is such an absurd idea, that we will move on immediately. We only bring it up to remind ourselves how much of modern material civilisation was developed in the West…and how much of it has been happily appropriated by the rest of the world. Sharing is Caring Trains, planes, automobiles…internal combustion engines, electric engines…rotary engines…elevators…painless dentistry…air-conditioning…microchips…wood chippers…Chip & Dale…TV…the internet…social media — all were developed by Europeans. But today, non-Europeans manufacture them, reproduce them, enjoy them, and improve them.. That is, of course, the way it works. Knowledge…technology…culture…art... music…math — all get appropriated. And misappropriated. The Wright Bros. were widely doubted and dissed in America. When they reported that they had built a ‘flying machine,’ many people considered them frauds. After all, they were guys who ran a bicycle shop in Dayton, Ohio. Unlike other aeronautical pioneers, they had no college degrees, no government funding and no scientific credentials. So, they went to France. In 1908, Wilbur demonstrated his plane at Le Mans. He flew a figure 8 pattern, proving that he could not only go aloft but control the plane’s movements. The French were delighted…and soon Wilbur, Orville, and their sister Katharine, a school teacher, were the toast of Paris. They were invited to meet with presidents and royalty…while the whole world raced to get into the air. Only six years later, the French, English and Germans were using aeroplanes to drop bombs on each other. So it goes…products, ideas, language, germs, designs, technology are always on the move. Evolving….changing. Always appropriated. And often improved! The Chinese may have invented pasta…but they didn’t make ravioli it the way our aunt, Alma di Grazia, bless her soul, used to make it. … Joel’s Note: When we want to know what’s happening here in Argentina, we just stick our head outside our apartment window. When things are going poorly — high inflation, unpopular public policies, losing football teams, etc. — the locals bang their pots and pans, creating a deafening ‘cacerolazo’ protest that rings out around the city. When things are going well — World Cup victories, the end of pandemic lockdowns, resounding defeats for the ruling Peronist ‘caste’ — they take to their balconies to sing and celebrate. The cheering started shortly after 8 o’clock last night. That was how we found out who had won the presidential election. ‘Vamos Milei!’ hooted the crowd across the way, proclaiming victory for the self-described anarcho-capitalist candidate. ‘Vamoooooooos Argentina!!!’ Cars honked their horns up and down the street, the way they do when one or another football team scores a ‘goooooooool!’ Folks crowded the plazas and pizzerias, cheering and hugging each other. Below our apartment window, at a Romario’s Italian restaurant, we watched a family of 10 or 12 embrace in tearful celebration. And this is the capital city, where the incumbent, Sergio ‘200% Inflation’ Massa, was favoured to win heavily. (Gotta love those polls!) For their part, the mainstream press dutifully carries the election story. Their ‘reporting’ is full of all the usual slander and claptrap... Milei is a ‘Trump sympathiser’... a ‘climate denier’... a ‘conspiracy theorist.’ But beyond the cheap epithets and puddle-deep analysis, few will mention that last night’s victory for Milei represented a staunch repudiation of seven decades of Peronist populism, which dragged the once-prosperous nation from the top of the world into the economic doldrums. With 56% of the vote, Milei garnered the single highest percentage of any presidential candidate since Argentina’s return to democracy, back in 1983. And who voted for him? The poor. The working class. Even the youth swung heavily in his favour. (The Peronists now surely regret having passed a law a few years ago to lower the voting age. Whoopsie!) And while the political caste cry into their mate this morning, the rest of Latin America is watching closely. They are energised. They know that, if it’s possible to disrupt the establishment in Argentina... it might just be possible in their country, too. Regards, Bill Bonner and Joel Bowman For Fat Tail Daily All advice is general advice and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment. |
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