But but but, she’ll be right
Not sure how many readers of these pages need reminding gold now trades at AUD $4156 on Sunday, 27th of October 2024. It is worth reiterating we could still be in early stages of precious metal investment recognition by many. Western institutional and retail investment participation in this booming sector, as a % of investable assets, remains very low.
Gold and gold miners as a percentage of global assets:
Source, Tavi Costa, Crescat Capital; www.silberjunge.de, Erste Group Research, Lawrence Lepard, Bloomberg, McKinsey & Co. Ltd.
Below, outflows galore!
More outflows!
Highly under-owned.
We’re not going to harp on gold today, the price tells us all we need to know about the underlying risks in this financial system. We’d like to share an equally important set of investment considerations for Australian investors; some we’ve been tossing around in our own analysis for quite some time before being enlightened by the following presentation by Freelancer.com CEO Matt Barrie last month.
We were aware of Matt’s formidable intellect through his guest appearances in other financial commentary we follow. We’ve been particularly impressed with Matt’s analysis in the advanced IT/AI and nuclear energy space. But it’s this recent presentation that really hit home.
His thesis, an uncomfortable truth for many, is one we’re going to try and share below for the time poor, otherwise take the time to listen to the presentation in the link above.
Let’s start our summary with the fact that Australia is the only country in the world where, as Matt puts it, “middle class houses are auctioned like artistic paintings”. We’re sure that most sensible investors realise real estate valuations in this country are off the charts, relative to any other OECD comparison except, maybe, Switzerland. As a result, Australia represents less than 2% of global GDP, 0.33% of global population but its largest bank, CBA, is in the top 15 of global banks by market capitalisation? Good management perhaps? Or, the fact that there is one stand out product line, residential mortgages.
So much so that CBA is bigger than the biggest banks in the following jurisdictions:
- Japan
- Switzerland
- France
- Germany
- Spain
- India
Incredible.
With all this leverage, what happens when we start to see some stress in the system?
But but but, we have plenty of job creations, right?…………
Like, the Bill Shorten NDIS economy. (no wonder he’s run off, again)
Bill’s NDIS now costs $42BILLION per year,
Healthcare is but one inefficient boondoggle, just look below at how many jobs have been created in industry that actually produce something. Australians should be extremely concerned with this. Again, with such concentrated media ownership in Australia, one should not be surprised at the apathy to these issues.
And what contribution does the unskilled migration intake have on all this?
It’s interesting that the country is bringing in 65,000 people per month with no job growth anywhere except in NDIS and the industry of bringing in new migrants. Australia is becoming the beacon of the “demographic replacement” experiment happening the world over. Low domestic fertility rates balanced by immigration mismanagement.
Btw, Australia’s largest employer is the NSW govt.
Sustainable?
Through a combination of regulatory factors, political assistance and sheer greed no more could have been done to create the mother of all property bubbles, right here, in Australia. Even so, some stats suggest we’ve built enough or, at least by crane activity could be on our way to building enough. Recession always helps.
Like we said, could be enough. There is nothing like our crane “winning”, anywhere in the world, including China.
If Sydney houses dropped by two thirds, they would be extremely unaffordable.
Lastly, look out below! What is China doing with all this iron ore since mass housing and infrastructure construction has slowed/stopped? We suggest investors start considering this seriously. Like, who really noticed the German or Japanese industrial build up prior to WW2?
Australian exports to the rest of the world
(Australian bureau of statistics)
Finally, we haven’t even dealt with the combination of sky-high Australian energy prices in a country with abundant energy. But hey, your property value still goes up, eh? Nothing sums up our view of the average Aussie investor right now than this little image below!
She’ll be right mate!!
Peace.
