moore_capital54

Hi Guys, We continue to own the name and have even added to it recently. What this management team has done in less than two years is nothing short of amazing. I recommend anyone interested to read up via the company's IR page: https://www.goldmoney.com/newsroom/investor-relations or SEDAR filings. XAU also recently announced an NCIB for up to 3 million shares and insiders have been buying. I originally made a bet on management here as I had a pre-existing relationship with the young lads yet even I have been impressed with how well they have executed so far and how they've been able to acquire nearly C$2B of precious metal assets under stewardship. What is becoming evident in the Goldmoney story is that the company is seeing success from countries that are non-USD/EUR anchored. Think Venezuela or India right now. A combination of Paypal/Bitcoin using Physical Gold. Happy New Year!

Nope but I did end up finding it! https://www.amazon.com/Only-Yesterday-Informal-History-1920s/dp/0060956658/ref=sr_1_2?ie=UTF8&qid=1465668361&sr=8-2&keywords=since+yesterday Only Yesterday and Since Yesterday. I recall reading these online and they were great accounts of the period from non-financial perspective. Thank You for trying to assist.

Greetings old friends, Years ago, I remember reading about a book (I believe it was an online pdf version) that was a remarkable accounting of the years leading up to the 1929 crash. The name escapes me and I have been unable to unearth via search or memory. I think it may have been ericopoly or another member that brought it up. This would be much appreciated for a project I am working on internally. Best, Moore

Hi Cardboard. I appreciate the kind words. Actually, we did not escape this recent volatility unscathed even if we were preparing for it. It's very difficult to know exactly when the shoe will drop and as we have seen the past 6-7 days, things can also quickly snap back. Overall, I still maintain decent long exposure and as such (like everyone else) have seen some negative surprises in the portfolio over the last few weeks. That said, the most important factor in our portfolio's performance over the last 2 years was our allocation in gold and USD denominated fixed income securities. Being in Canada, we outperformed our peers on the FX component which has been a great boost.

Why's that? Well, the only way to slow inflation in the supply chain of commodities as I describe is by increasing the cost of capital (raising interest rates) or implementing price controls. I assume they will try the latter first (bringing us ever closer to the socialism/communism we all despised) but that won't be enough, they will need to stop the capital from capitalizing on the steep contango in the markets (at that point) and the only way to do that is raising rates aggressively. But they cannot raise rates because of the $19T in gov owed debt. Each 1% interest rate hike widens the deficits and brings the US closer to notional insolvency. It's going to be very interesting to see how they deal with this.

An insightful post from Dalio who has been both prescient and correct in most of his predictions post 2008. A period I distinctively recall from this board was the summer through fall of 2011. There were several EU related headwinds (PIIGS, Cyprus, Greece) and this was before the announcement of the EURO-TARP (Draghi "whatever it takes" speech). Equity valuations in the US were dropping and the board collectively sought and identified several incredible long ideas. The most obvious was BAC but there were also others. Since then, much has changed in macroeconomics, central Bank experimentation ("policy"), and even geopolitical/social momentum. We are seeing upheaval in virtually every key pillar of our investment methodology as value investors. The risk-free interest rate is gone, we are on the precipice of an asinine concept known as negative interest rates, the balance of economic causality appears to have shifted to the other side of the planet (lets not forget that China started this global selloff in commodities and now equities), and socially there is an increasing reliance on centrally planned top down stratified policies in economics, politics, and even academia. The point I am making is, we have to be realistic about our goals in such a changed environment. The margin of safety as calculated by our traditional methodology appears to be wider than at any time since 2011, we should probably spend more time trying to identify and flush out some great ideas (I am buying ESV, CG, POT, and GLRE here). However, we should also come to terms and plan for what seems like a 1970's era hyperinflation/stagflation which I believe is inevitable at this stage. The majority of academics (Larry Summers and his cabal) and thought leaders are so focused on deflation and stimulating aggregate demand. The majority of market participants are fearing a systemic event such as 2008 and sell everything at any sign of stress. I am highly confident now 8 years since 2008, we won't see either of those events materialize. The academics and central planners at the helm of the global financial system have shown to be relentless in their willingness to devalue their fiat currencies for the purpose of saving the system. Any worthless loans will be reversed repo'd ad infinitum while a simultaneous QE or its simulacra stabilizes the system. So an end of the world systemic event emanating from the financial system won't happen again. Remember, the reason 2008 happened was none of us believed the Fed had the authority or moral gumption to devalue 20-30% of the monetary base for the purpose of bailing out the AIG swaps. I, and most market participants thought the sensible thing to do was allow the equity holders of the SIFY's to lose 100% of their equity while protecting the depositors, government sponsored securities, and senior or Triple AAA rated debt obligations of those SIFY's. That was why any intelligent investor was selling or shorting (before they implemented rules disallowing us to do so) those SIFY's. But that's not what was concocted by Kashkari/Paulson. They decided to have the central bank bail the equity of the SIFY's under a solipsistic view that this was the only way to save the system. That model has since been replicated by every central bank. So again, the point here is stop worrying about systemic, it won't happen. Even in China, that won't happen. Deflation - The world is short on aggregate demand and the reasons have not been fully understood. My opinion is that a lot of this cause/effect has to do with cultural/non economic reasons relating to the deferral of household formation and overall decline in fertility rates among the GenX and Millenial generations. Nevertheless, the academics and central planners continue to fear deflation and do all that they can to stimulate notional fiat currency denominated growth. This brings us back to MP3 as Dalio puts it, It will eventually succeed. There will not be a deflation, not if denominated in fiat currency. What we will however have is a 1970's style commodity cycle where we get inflation in the things we need and deflation in the things we already own. Not all equities will fare well in such a cycle. More importantly, I am unsure how the central planners will end such a cycle as they do not have the flexibility that Volcker had in the late 1970's.

Merry Christmas to all!

Some more shocking flaws in your argument. You make the assumption here that owners of gold arbitrarily decide to "load up" at a specific USD/XAU cross. That argument can be extended to any of your "optimizing purchasing power productive assets" or securities as you most likely infer. Picking tops or bottoms is a fools errand. Comparing gold to investments generating a rate of return is too a fools errand. Well then, what should gold be compared to? How about currencies? Guess what happens when you compare gold to currencies over long-periods of time. Against the world's reserve currency gold's up 8.1% per annum since its demonetization. Against currencies relevant to the rest of the world's 7 billion person population, Gold is up a lot more. The difference between a currency and an investment is that a currency does not need to be timed. It's accumulated as working capital over as a person generates a productive surplus. An investment, is a decision to take risk by allocating a portion of that surplus for the future. Lots more points but the day is beautiful and I prefer to spend it with my daughters. Cheers!

Gold is down by 30% to you and other american elites living in USD. Priced in other currencies, Gold is near an all-time high. As a Brazilian measuring their purchasing power in Reals what Gold is doing or if you have a bloomberg terminal type in XAU/BRL. This ties in well with your other comment re: Purchasing power. It is elitist and naive to assume that everyone out there has access to complex financial assets (as you call them productive). For the majority of people on this planet, they subscribe to a belief that a surplus of savings over expenditures will lead towards social mobility. Then, when they generally reach retirement - they figure out how messed up the system really was and that all that surplus of savings was withered down by some external actor. I am not defending BitGold stock or analyzing it for a margin of safety. It's currently incalculable under traditional metrics. What I see is an asymmetry in terms of what this could potentially become and I wanted to share the name with the board and let others make their own decisions. You have spent too much time assessing everything through the lense of an Elite American living in NYC I presume. There are billions of unbanked or underbanked people. Those are the people embracing bitcoin and paypal. Those are the people paying exorbitant fees to MoneyGram and WesternUnion. Not GoldBugs.

This idea that nobody would spend gold because gold "appreciates in value indefinitely" shows a lack of understanding on your part of how economic transactions occur and their chronology on a timeline of commodity/money/capital interchange. I highly recommend you view Ray Dalios Video: The economic machine to brush up on some basic econ 101. Here is just a simple example to help drive this point across: We are on the eve of October 27, 1929. It's a sunday and I am a wealthy stock speculator. My net worth is $100,000. You, are a young Barber working at the local Barber Shop. On Monday morning the market collapses. My net worth drops by 50%. I now have 50% less to spend. Previously, you were charging $.50 cents per shave. That week I come in and need a shave but I ask for a discount. You, under pressure by other clients acquiesce and reduce the cost to $.35 cents per shave. I pay, and life goes on. Eventually this cycle ends once the asset values match or are able to support the debt levels. Did life cease to exist upon the credit deflationary event? No. Did I stop getting a shave? No. The point is, that I continue to pay you in gold. The gold you accumulate by maintaining a surplus over your own personal expenditures serves as savings fueling more stable growth in economic activity. Compare that to a fiat system where the ultimate goal is to get my networth right back to $100k never providing you with the opportunity to achieve any social mobility. That was why civilizations chose gold. Because any other system disproportionately allocates capital and thus wealth. This idea that gold is barbarous or is for elites is nothing more than a meme created in the late 1920's. A well articulated economic theory was developed and rigorously tested starting from the time of Newton to Von Mises and Marx. We all know how it works, but we also understand that its become extremely difficult to change the current system. Keynes was always an outlier and was embraced by very radical politicians at the time. As for Mungers and others views on Gold being deflationary or causing credit events. As munger likes to say, always consider the incentives of the person on the other side. There is no evidence of gold being the source of deflation or causing credit events. It was in fact the creation of Federal Reserve in 1914 allowing for fractional reserve banking to proliferate followed by speculative mania in stocks (with no SEC or margin requirements) that led to the boom and subsequent bust. As gold was "fractionalized" when a run on banks began there was not enough gold to support the M2/M3 supply floating in the economy. In other words, the base money (gold) was about 1/8th of the amount of receipts outstanding for its redemption. In searching for a solution to the obvious issue beyond temporary band-aids such as revaluation of the gold value following forced sale by citizens in 1934 and the lowering of the federal funds rate, JMK was putting the finishing touches on The General Theory.. (http://en.wikipedia.org/wiki/The_General_Theory_of_Employment,_Interest_and_Money) producing a potent elixir for the solution seeking politications of the 1930s. Don't buy the BS that Munger and others are incentivised to feed you. In 2008, when the world was on the cusp and people on this message board began to worry not just about permanent loss of capital but counter-party risk and safety of capital (and many I know have still not rebounded from those permanent losses and or counter-party defaults from traders to portfolio managers) gold provided uncorrelated tail risk hedge from permanent loss of capital and salvation from counter-party risk (physical). That was why the best performing hedge funds of our era all sought gold ownership physically and continue to hold it til this day. They include: Einhorn, Loeb, Dalio, Singer, Soros, Baupost (yes Baupost is one of the largest owners of gold both in ground and physically), and a plethora of others. Munger and Buffett placed their patriotic duties ahead of their business legacy in 2008. I would have done the same. A continued rush into precious metals would have complicated this "recovery" and lead to significant write downs in core investments for Berkshire. Their actions previous to the sudden hatred of precious metals confirm no only their understanding of their importance in society, economics, and markets but also their ability to capitalize on movements in those markets. Consider every macro buffett has written from his well documented critique of the US dollar in the early 2000s in Fortune Magazine (he was the first to openly criticize the trade and budget deficits and china's holdings of the national debt) to Buffett's purchase and attempt to corner the silver market in 1999 after purchasing several billion ounces and soaking up the COMEX inventories. I may be mistaken but I believe he even mentioned in several press interviews at the time that one of the reasons for his purchase was gold and silver no longer being money and the rampant printing of fiat money to make up the delta between the governments revenue (taxes) and spending. There are even more examples. Even in this years Annual Letter, Buffett critiques negative interest rates (which makes holding gold less expensive than owning fiat currencies) and says he couldn't have ever imagined us going this far with central bank experimentation. I recall in 2007 or 2008 sitting at the Annual Meeting in Omaha and Buffett putting up a slide of a trade ticket for T Bills purchased by Berkshire yielding "only 5 bps" - these were 30-60 day T-Bills. Golly how we would love to earn that today. Back to BitGold, what they are attempting is an interesting experiment and has the potential to resolve these academic debates. By decimalizing fully reserved gold and digitizing it in a manner that makes it compatible with every payment system we use today, how can there be a credit deflationary event? A run? People redeem physical. Deflation? People spend less by simply decimalizing their gold. Eventually, the business cycle runs its course and the economy continues to expand. Much better than the hokey pokey system we have today. Your entire investment framework today relies on Yellen and Draghi. This cycle is long in the tooth and while i fully embrace the bottom-up methodology, I know in my bones that there is not sufficient margin of safety right now aside from possibly the energy sector due to the recent declines in oil prices. Good Luck.

lol. Great to hear from you Parsad! I have been lurking as I said but have decided to stop posting for several reasons. I am a man of leisure now. :)

Greetings to my old friends at CoB&F. It has been a very long time since I contributed to the board. I have been in semi retirement while watching these markets stay irrational longer than I had believed or have had any interest in participating. My core investments continue to outperform while my shorts have been "normalizing" my overall investment returns. I continue to be baffled by the state of affairs on a macro basis while finding it more difficult to "hunt" for undervalued long opportunities. On the metals, mining and energy side (an industry I have historically enjoyed analyzing and participating in) I see the most interesting risk/reward value proposition currently even though core positions in that industry have too underperformed. Overall, a good way to summarize my portfolio performance since actively participating on the board is this: I have been muddling through at 5-6% per year in USD terms (as a Canadian that equates to a lot more) but have a very high level of cash and short-duration instruments as i await for the market to provide me with a much wider margin of safety. I felt it was necessary to provide this brief update before getting into the topic of the post. I do lurk from time to time and sincerely miss the high-energy debates and conversations. I have decided to come out of hibernation and share a new investment idea. Last week a company was listed on the TSX V run by a young CEO (Roy Sebag) whom I have been extremely impressed with over the years through several business and non-business interactions. The company is called BitGold and it was listed under the symbol XAU. I am going to provide a few links on the business as well as a write-up on Marc Fabers Gloom Boom and Doom report. The company is essentially a paypal like platform operating on an electronic gold standard. It is backed by the Soros Family Office and other major investors. Paypal is unavailable to most of the world's internet population. This is partly the reason why so many have embraced bitcoin. The issues or arguments against bitcoin have (in my view) to do with its volatility, security and complexity. I believe what BitGold is doing has the potential to succeed in ways similar to paypal or smaller online wallet providers such as Skrill. This could result in a fantastic business that generates recurring cash-flows and high returns on equity capital. The biggest issue I see with analyzing this stock is that the business was just launched two weeks ago and the valuation is clearly ahead of itself. That being said, there aren't many owner-run TSX V companies with two co-founders accepting a $1 salary, owning 60% of the company, and backed by such an impressive cadre of investors launching a global internet based financial services business. The two founders also understand gold and are able to very quickly articulate why gold is a currency and not an investment. They aren't gold bugs. The Links: www.bitgold.com http://business.financialpost.com/investing/bitgold-begins-trading-on-tsx-venture-exchange-as-gold-transaction-platform-builds-momentum http://www.northernminer.com/news/bitgold-surges-on-tsxv-debut/1003625979/?&er=NA http://www.bnn.ca/News/2015/5/13/A-new-way-to-use-gold-BitGold-soars-in-TSX-Venture-debut-.aspxCEO Interview - I have been extremely impressed with my interactions with Roy Sebag the 29 year old CEO of BitGold. He is multi-disciplinary and brilliant. http://www.321gold.com/editorials/moriarty/moriarty051515.html Another anecdote on the CEO which I found to be consistent with my interactions. There are a lot of other links on the web as I have been seeing more and more press outlets cover the story. I have attached a copy of Fabers GBD Report as well for registered members of CoB&F. BitGold is mentioned at length at the bottom of the report. In full disclosure, I own shares of XAU that I have purchased on the first day of trading on May 13, 2015. GBD_Report_BitGold_May_2015_copy.pdf

Own it and really love it down here.. Ripe for a buyout. Good eye.

BTW one of our new favourite blogs is www.cliffkule.com - it is maintained by an employee at Al Friedberg (something most people don't know).