Dear Investor,
In the process of deciding whether to subscribe for my monthly newsletter, it may help if I explain something about myself, the purpose for which I write, and the background framework within which I operate.
Something in common with Howard Ruff
In Howard Ruff’s latest book he describes how, having reached the ripe old age of 70+, he derives considerable pleasure from being in a position to advise and help others through passing on some of the lessons learned in a lifetime school of hard knocks. Although only 62, I share his sentiment. In fact, for those that are interested, I make available on this website a 37 page copy of my personal testimony (
download testimony as a PDF). It details the incidents in my history which God has used to shape who I am. The rest comes out in the letters I publish.
Parallels in the life of George Bush
In this respect I was touched by an article on President Bush in a recent issue of Newsweek. It tells of how his alcoholism brought his marriage to the brink of destruction and his parents to a place of despair. In 1985 he was finally confronted by evangelist Billy Graham asking him whether he was ‘right with God’. A year later he changed.
“It is easy to mark the turning point in George Bush’s life. It was the morning of July 28,1986, when he woke up, wretchedly hung over after a night of celebrating his 40th birthday at the Broadmoor, a resort in California, and decided to quit drinking. He did not seek therapy or join Alcoholics Anonymous. He just quit, and joined a regular Bible group.” Newsweek 6-13 Sept, 2004
The experience doesn’t make Bush perfect – but it’s a start. It certainly doesn’t absolve him and his administration from probable involvement in a string of nefarious activities – of which the gold conspiracy is probably the least obnoxious.
My personal history, education, and experience
My own come-uppance was financial. Having failed to sell out at the end of the great gold bull market of 1980, debt became my undoing. Through a series of miracles I survived two attempted ‘provisional sequestrations’ but in the process lost my stock-broking business. If anyone knows the dangers of debt, it is me.
My education was at private schools in Natal, South Africa, then a three year BA (Honours) degree in Politics, Philosophy, and Economics at Oxford University in England during the early sixties – majoring in Money, Credit and Development Economics. This was later followed by an MBA in Cape Town. The rest of my life has been spent in South Africa. Growing up in an Apartheid-governed country turned most white South Africans into racists. I was no exception. Then, in 1981, at the age of 39, having lost everything except my house, I became a Christian. Six years later I was able to adopt three black children and love them almost as much as my own.
My working career has been spent in the investment and mining world, first as a stockbroker, then as Executive Chairman of a small publicly listed Gold mine outside Johannesburg, later as a Bond trader, finally as an independent economic advisor to my son. He runs an Asset Management business focused on Gold and Gold shares. It is based in Cape Town and is called: Trinity Holdings (Pty) Ltd.
Why launch a newsletter
I have always enjoyed writing newsletters and commentaries on individual companies, international markets, currencies and politics. For me the launching of an international newsletter is a fulfilment of a process of learning to cope with financial uncertainty and helping others to do the same. There is also another side to the coin of helping others. Even in the early stages of preparation, I am being flooded by comments, suggestions and encouragement from would-be subscribers. In certain fields of study many of them know far more than I do. As Jim Puplava put it:
“Not only have my clients become good friends, they have also become resources of information I can tap into when I need answers to questions…”
Personal investment philosophy
When it comes to market analysis I follow a ‘top-down’ approach. I look at the world economy, then the markets most affected, then the stocks themselves. I focus on fundamentals, but always keep an eye on the ‘technicals’ – particularly the long term ‘weekly’ charts – and am keenly aware of people’s behaviour patterns. I like to keep tabs on the extent of fear and greed in a market at a point of time.
Finally, I always submit my own ideas to what I perceive to be God’s wisdom. That means that there will be occasions when I expose my readers to the ‘prophetic’. This does not make me a ‘fortune-teller. I take a rational view of the world but am also cognisant of what God is saying to his church through reliable and respected prophetic people. Where there are serious economic implications I take careful note. For instance, respected American prophet Rick Joyner believes that before the end of the decade, gasoline prices in the US could reach $20 a gallon from their recent all-time high of $2.
My personal investment strategy is to lay early claim to markets I believe are entering long term bull trends, then attempt to pick a combination of the strongest and fastest horses, backing them all the way to the end. This is predominantly a ‘value’ based approach and is not for everyone. But for those who stay the course, it does pay off. Investors like Warren Buffett and his mentor Benjamin Graham, followed the same approach and their success to date has been the stuff of legend.
I firmly believe that the precious metals Gold and Silver, and the energy commodities Oil and Uranium, will be good places to be over the next decade. Other commodities will follow. The first four could eventually rise dramatically in terms of ALL currencies. In the case of gold the move will likely be in response to a rising threat to the entire international FIAT money system. It is being saddled with a growing mountain of debt it can no longer contain. Few investors understand the extreme gravity of the situation.
Government intervention masks the TRUTH
To compound the problem, there is mounting evidence of deliberate intervention by government in a range of major world markets. Although official actions are designed to be covert, they create such a marked ‘disconnect’ between economic fundamentals and the ‘counter-intuitive’ (contrary to what was expected) response of markets, as to lull investors into a state of confusion. Under circumstances such as these, ‘technicals’ are of little assistance. In fact they can even be misleading. Government pawns are well aware of the importance of skewing the ‘technicals’ to paint the ‘right’ picture.
The situation is made worse by government attempts to justify the results of manipulation by increasingly resorting to statistical distortion of everyday economic indices. The US Administration now publishes figures on employment and inflation which are intended to persuade the man in the street that he is prospering and has nothing to fear. Yet, if he cares to check, the facts of everyday life will tell a different story.
This letter will seek to expose those actions - as and when possible.
Some of our work will focus on what we believe to be the strong evidence supporting our contention - shared by an increasing body of observers - that the commodity markets, particularly the gold markets, are controlled and manipulated by certain central banks and their associated bullion banks. I am therefore a staunch supporter of GATA (Gold Anti-Trust Action Committee) which seeks, on an ongoing basis, to expose each intervention as it occurs. Despite his controversial reputation, I am also a great admirer of Bill Murphy – GATA’s white knight. I respect his courage and persistence in the face of histrionic ridicule by the political and financial establishment.
What gives us hope and makes the exercise exciting and worthwhile, is the conviction that the scale is beginning to tip. The overwhelming nature of the economic fundamentals ranged against the ‘gold cartel’ will, we believe, shortly bring their covert plans and actions to a sudden halt. Simply put, their ‘ammo’ is running out – because the stock of borrowed gold has been depleted.
The Fun of Forecasting
I have always enjoyed being a ‘market pioneer’ and over the years have made a number of high profile and contrarian calls although, to be honest, my forte has been knowing when to buy, not when to sell. I am working on it.
Here is a list of some of my better known calls. It is not exhaustive but includes most I can remember.
“It can happen : Gold at $500”
1976, late : “SA Coal Shares: Haven in the Storm”. At the time South African coal shares were trading at 10% of net asset value. Due to the conclusion of a major export contract with Japan, we forecast that pit-head prices would rise dramatically by the time the first shipments were due. Over a seven year period top producer Tavistock Coal rose from R4,50 per share to R85 – a near 20-fold increase. Pit-head prices rose from R1,40 per ton to in excess of R8,50. I was named “Coal Analyst of the Year”.
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1979, early January: “Peter George: Bullish on Kaffirs”. Four page feature article in Barron’s Magazine. Interviewed by James Grant to discuss the prospects for SA Gold shares and the Rand. At the time gold had corrected back from $240 to below $200 in fear of continued US Treasury Gold Auctions. Certain well-known analysts were predicting the gold bull was about to end. We instead forecast a move to at least $500, possibly as high as $640. Two years later it touched $850.
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1981: Lost stock-broking business. Failed to sell out at the top of the gold market both due to mis-reading the trend and because the majority of our holdings were in illiquid juniors. The press ran a banner headline:
”Downfall of Mr. Gold”
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1983-1987: “Peter George sweeps the Board”. After a fiery take-over battle, elected Executive Chairman of junior gold producer Wit Nigel, listed on the Johannesburg Stock Exchange. During this period I was out of the market. However, at a time when producers were being encouraged to ‘hedge’ production, we took a firm decision not to do it. It paid off.
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1991: “Prosper in the Bad Times”. I wrote a major report predicting a steep decline in SA Long Term Bond rates. In the following 12 months they slipped from 17% to 13,75%, before bouncing. Bond options costing as little as R10,000 each, traded as high as R80,000. Unfortunately I failed to sell except for those who had the sense to ask. Yet today the SA Long Bond rate is trading below 9%. We believe that in the next 3 years, as gold and the rand strengthen in parallel, (albeit not at the same rate) SA Long Bond rates can fall to 6% - in contrast to what will likely be happening to US 30 year rates, which can double or treble from 5% to 12% and more.
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1998, May: “40 days and Nineveh will be destroyed”. Between July and October 1998, the S&P 500 fell 17% from 1180 to 970. Some Asian markets were hit far harder. The South African Industrial Index fell 33% in 4 months, crashing from 9,000 to below 6,000. Having read my report predicting a crash, one of my friends, who was CEO of a major pension fund, used the futures markets to protect the fund. In the process he saved R600m on a multi-billion portfolio of quoted equities.
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2000, March 17: “NASDAQ built on a foundation of lies”. That was the day the NASDAQ hit its all-time intra-day peak of 5,135. Nineteen months later it had crashed to 1108 and its current level of below 2,000 is certainly nothing to write home about. Longer term its looks set to plunge much lower.
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2001, November: “Buy the Rand – dump your offshore trusts”. A month later the Rand surged to an all-time panic low of R13,80/$. But by July of this year, less than 3 years down the line, the Rand had more than doubled in value, briefly trading below R6/$. Over the period it has been the BEST-PERFORMING currency in the world. It is South Africa’s ‘share price’, busy discounting a massive future move in gold, Uranium and other commodities.
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2004 onwards: We believe that if the price of gold rises as high as we project – significantly above $3,000 over the coming decade - the Rand/Dollar exchange rate could ultimately trade close to PARITY with the dollar. It last reached that level in 1980, at the top of the previous gold boom.
Specific recommendations
From time to time we recommend the purchase of specific securities over a range of international markets. Please note this information is only to be acted on AT YOUR OWN RISK. No matter how appealing, all investments should be considered in light of your own personal risk profile, with the assistance of an experienced advisor.
Some points to note
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I am by nature a contrarian as demonstrated by the examples of the market forecasts listed above. If you are looking for a cautious, carefully-hedged, non-controversial opinion on a broad range of topics, this newsletter is not for you. If however you are happy to hear out ‘controversial perspectives’ ahead of time, then I hope you will be entertained and informed. In addition, we should all make some money in the process. The Gold conspiracy mentioned above is one example. There will undoubtedly be others but we will always do our best to ensure that the evidence to support our assertions is sufficient to be convincing.
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I am unrepentantly bullish on South Africa. This has partially to do with the extent to which the country has been blessed with a vast array of mineral wealth. It also derives from a sanguine analysis of the country’s disciplined macro-economic management, since the dismantling of Apartheid and its replacement by ‘Black Majority Rule’. Our ANC Government is by no means perfect and our President’s polite toleration of some of the brutal dictatorships to the north of our border leaves much to be desired. But then the US has in the past played patsy with some pretty nasty international bullies as well. Hopefully in time President Mbeki will be persuaded that mild criticism from the head of Anglo American Corporation is far less damaging to confidence than is the monster-like behaviour of our neighbour Mugabe.
If you have read and enjoyed any of my previous articles, I am confident that with the launching of a regular newsletter, the standard will at least be maintained. I trust I will be able to persuade you to take out a subscription. It will certainly help me to focus and give of my best and I look forward to plenty of feedback from my readers, even if I cannot always respond.
Best regards,
Peter George
