SILVER MOVES

In the last couple of weeks there has been a significant uptick in the price of silver. 

From under 50 dollars an ounce ( an ounce is 31.1 grams), silver has moved to 57 dollars an ounce in a very short while. 

This is not an isolated bubble or a rally that will peter out. I expect silver to shoot up significantly in the next few weeks, months, and years. 

First, some background. Gold is currently at 4200 dollars an ounce. Both gold and silver have nearly  doubled in the last one year. Remember, this is not an isolated stock, where such moves are routine, these two are commodities with one price across the world. 

The total stock of gold in the world above the ground is about 200000 tons. You melt all that gold into one massive cube, it will be about 70 feet by 70 feet by 70 feet, smaller than your average office building. Total value: about 27 trillion dollars. 

Estimates of silver stocks above the ground vary, no one really knows. It could be anywhere between 800000 tons to 1.6 million tons. 

The annual production of gold is about 3000 tons and of silver is about a billion ounces,  about eight times the annual production of gold. 

The ratio of the  price of gold to silver price right now is 4200:57 which is about 75:1. 

( All numbers approximate, you can always google for exact numbers). 

Gold and silver are likely to outperform in the immediate future. Between the two, silver will do much better. 

There are a host of reasons converging to make this happen. 

Central Banks have been increasing their gold reserves over the last few years. This is due to increasing global uncertainty, and fears of de-dollarisation. Any alternative to the dollar will likely need gold backing. Once gold runs out, silver is the next choice. They have both been currency for at least five thousand years now. In times of uncertainty, everyone turns to gold. 

Apart from being a store of value, which contributes to the precious metal driver, silver is also a valuable commodity with a lot of industrial uses. It is very malleable, ductile, and a great conductor of heat and electricity. Biotech, chips, electronics, weapons, all need silver. Some of the silver that is used is not recyclable, and thus silver actually gets consumed. 

Add to this, the new drivers for silver usage. Solar PV cells, electric vehicles, data centers, AI rollout, these are the new users on the block and the demand due to them is exploding. 

In the last four or five years, the silver demand due to all factors combined has been greater than the supply. The shortfall over the four or five years is equal to one year's production. As a result stockpiles are at a record low. 

Meanwhile, US has declared silver as a "critical commodity", other countries will follow suit. This means they will start creating strategic stockpiles. 

Silver producing nations, starting with China, may start putting curbs on its export. 

For the last forty years or more, prices of silver have been suppressed due to banks and financial institutions selling short. When that market unwinds, and the chickens come home to roost, it will be equivalent to financial Armageddon. In both gold and silver, the amount of paper in the market is an order of magnitude higher than actual stocks. 

It is not easy to increase mining capacity for either of these metals . Their supply is finite, and when it comes to silver  most of it is mined as a byproduct while mining other metals like zinc. 

What happens when all these factors combine in the market all at once? Supply shortage, no increase in supply sources, explosion of industrial demand, central bank purchases, easy access due to ETFs, fears of de-dollarisation, geopolitical uncertainty, unwinding of the paper trade, sellers facing a short squeeze? 

Both gold and silver will go through the roof. The gold silver ratio will drop from 75 to, who knows, could be 30 ( recent history) , 15 ( historically has been true) or even 8 ( geological ratio based on stocks and production). 

My prediction is that in the next ten years gold will go to 5x, 20000 dollars an ounce from 4000 levels; and silver will go to 10x, from 50 levels to 500. 

Only thing is, it could happen much faster than that.

Accumulate. Buy ETFs. If you are the kind to believe that the worst might happen, buy physical.

An honest Leadership Strategy

TALKING OF LEADERSHIP STRATEGY, 

Why can't any organisation just say this: 

*Building an ethical organaisation that treats the welfare of the customers as first and foremost, earning reasonable profit as just reward for honest endeavour.*

And no, we don't want to scale, except slowly and naturally, too much aspiration is nothing but greed,

We don't want to be sustainable in the sense of satisfying every passing woke fad,

We don't necessarily want to be technology centric or people centric; the first will be driven by necessity and the second will come naturally; 

We don't want to emphasise on innovation as a goal to be followed, for most people don't know what that means, 

We don't want to emphasise on growth; we want to emphasise on living and evolving.

STRATEGY?

MASTER CLASS IN MANAGEMENT 

The is this ad is from today's TOI. 

Ram Charan is offering a master class for C- suite ( or C suit, maybe the pun is intentional) executives, to drive "exponential" ( arithmetic  won't cut it any more, linear graphs are passe) whatever. 

Presumably, at the end of the session, the C suite leaders will come up with a "leadership strategy".

They don't need to waste their time. I just compiled what the four great leaders who are quoted in the ad ( no doubt his students)  have said, and made a template for making Leadership Strategies. The template has been solely derived from this ad alone, there is no external input, mind it! 

LEADERSHIP STRATEGY 

1. Building a 

2. sustainable / scalable / sustainable scalable / scalable sustainable 

3. Innovation / bold innovation / risk taking innovation / bold risk taking innovation / 

4. Driven 

5. Business / organisation / conglomerate 

6. Through 

7. Responsible leadership 

8. And fostering 

9. Culture of excellence / culture of trust / strong culture of excellence / strong culture of trust and excellence / growth mindset 

10. integrating 

11. Technology and people 

12. To fuel 

13. Future ready

14.  transformation / competitive advantage / exponential growth / all of the above

DAWN OF A GOLDEN ERA

OR: one more chapter in the Gold saga 

For years, every fund manager and so called money expert has been saying, don't buy gold. It is an unproductive asset, it is not used for any useful purpose like producing goods, it is just a lump of useless metal, you should invest in something that grows, and a host of other similar specious reasonings, all pointing to why gold is not good as an investment. In this context, whenever we say  gold, we mean silver also, so I presume they broadly meant silver too, though silver has many more industrial uses than gold does. 

They were negating centuries of human experience. Gold has always been considered a good asset for wealth preservation, across cultures, in every era of recorded human history. 

That is the problem with "experts" of all kinds. This includes, along with money managers, doctors, nutritionists and  gym trainers also - a lot of what they recommend  goes against common sense and centuries of accumulated human wisdom. 

Whenever you see the phrase "experts opine", beware. Their arguments are beguilingly convincing, all the more because they end up convincing each other in their own echo chambers, that since they all think so, it has to be true! 

Now the experts are being forced to eat their own words. Jamie Dimon, CEO of J.P.Morgan, is now saying that gold could even double from current levels. Dhirendra Kumar, a well known figure in Mumbai financial circles,  who heads Value Research, says, yaaa, you know, things have changed, now it's different, gold is good, etc etc but he is still reluctant to say "load up on it", it is never easy when you have to backtrack. 

All this is in the backdrop of the recent spurt in gold prices. If you have not been living under a rock, you know what I am talking about. 

I have always been a fan of gold. In my personal finance classes which I have been conducting over the last thirty years, I have always recommended a healthy allocation to gold, upto 15 percent of the portfolio.   I never spoke about silver since it seemed to rise broadly in line with gold, while being more volatile. Plus, silver ETFs were not available then in the Indian market, while gold ETFs were. 

Things have changed now. 

I am increasing my recommendation to "at least one third of portfolio in gold and silver". Within that allocation, I would say gold two thirds, and silver one third. Personally, I am going even higher. 

Silver has also exploded in price over the last one year. 

For a host of reasons, I feel this is just the beginning. Both gold and silver will do very well in the foreseeable future. 

I could be wrong. 

But that is the essence of all investment strategies, isn't it. You have to take a call and you have to act on your convictions. 

If you are wrong, you end up losing money or not doing as well you could have. It is always a risk. 

But what is life without risk? Even crossing the road involves risk. 

Why did the chicken not cross the road? Is what we should be asking, instead of the usual query of why he did. 

Because he was afraid to go to the other side! 

Because he was frozen with inaction! 

Because he never wanted to take risks! 

Hence, the chicken was doomed to spend his life on this side of the road.

Till one day, a speeding car anyway killed him! 

Where are we heading, with the ascent of AI?

They say AI will double its capability every six months. 

That is ten doublings in five years, which is a thousand times more capability than what exists today in just five years from now. 

Human beings, on the other hand, evolve at "evolutionary" speed. We took several million years to evolve from ape to homo sapiens. 

The human brain has evolved to cope with stress. It has also evolved to survive in the face of too much stress, it just shuts down, and the human being that the brain belongs to, simply "drops out". 

We are seeing that phenomenon already happening among the young. Tang Ping ( lying flat) and Bai Lan ( letting it rot) are recognised epidemics among Chinese youth, for example. 

It is very scary even to think about where the world is heading...