Piet Viljoen Profile picture
Jan 31 10 tweets 2 min read Read on X
Gold is hitting all-time highs in all currencies.- including king $. What does it mean?
If gold is at all-time highs, that means fiat currencies are at all-time lows.
New lows in an asset are not a bullish signal.
Fiat currencies are backed by nothing except trust in the system. So, if they are at new lows, that must imply that trust in the system is at all-time lows.
There's a reason the currencies of banana republics in Africa and elsewhere always reach the functional equivalent of 0. The reason is that those countries' governments do not engender trust. They are in it for themselves, taking as much as possible out of the system without any sense of embarrassment or responsibility.
Sound familiar? Tip: that's South African political leadership in a nutshell. Our monetary straightjacket is the only thing keeping our currency from going to the dogs entirely.
Hard assets—gold (and other physical commodities), land, bitcoin, art(?), and wine(?)—are the best protection against a breakdown in trust. To be clear, portable hard assets are better than those you can't carry around with you.
Until recently, financial assets domiciled in the USA could also have been seen as such.
But I think that time is over, or close to being over. There is a school of thought that even the USA is Zimbabwifyng (is that even a word?) itself. The political leadership is in a race to the bottom, and a trust breakdown is in full swing.
Historically, governments have tried to get out of this predicament the easy way by printing money. That's not happening yet, to any great extent, in the West, but it could be on the cards.
Once you have a trust breakdown AND money printing, gold goes parabolic. As it has done in terms of Zimbabwean dollars, Malawian Kwacha, etc.

Could that happen in the West (USA)?
I would say the possibility is not 0, which implies that the correct weighting of gold in your asset allocation should not be 0.

Even if you think it is a barbarous relic.

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More from @pietviljoen

Apr 11, 2022
Balwin properties. A thread.

Balwin has just bought a head office building for over R100mn, eliciting lots of comments on fintwit. Given that one of the key tasks of any management team is capital allocation, what does this action tell us about Balwin's management?
To answer this, we need to examine what management's options were for deploying such a substantial amount of capital.

The first and best investment option for management is generally to invest to expand the business.
This can take the form of additional working capital, or even additional equipment and/or staff. However, this only makes sense if the business can earn a return on investment above its cost of capital. Balwin has been unable to do so for several years now.
Read 11 tweets
Jan 11, 2022
A thread on the investment opportunity in SA
Today, many assets outside of the USA are cheap. Low interest rates have inflated the value of “capital-light” businesses with stable or growing income streams. The rest have been left behind.
The really cheap markets are those that are politically unstable and reliant on resource extraction.

The JSE is one of those. Insiders are taking companies private at a record pace, proving their cheapness. Small companies are ignored and offer huge potential.
For example, last year Aveng and Steinhoff were up over 400%, PPC 350%, and Merafe 300%. Many other shares also increased substantially.

It would be sensible to allocate some assets to a fund that is still small enough to take advantage of these undervalued small companies.
Read 8 tweets
Jan 22, 2020
Thank you for asking, I had hoped someone would. We are in a similar (albeit much, MUCH smaller) situation, so we have thought about it. A lot. Here follows a thread.
1. Firstly, one has to recognize that the market is generally right about things, and it pays to listen to it. So what is the market saying when an investment holding company trades at a big discount to its core asset.?
2. Probably it thinks you are destroying value in your non-core, "growth" assets, and/or your overheads are too high, and/or you are not properly disclosing your tax (or any other contractual) liabilities.
Read 12 tweets
Nov 27, 2019
Brait. Easy come, easy go.
The biggest shocker in Braits results is not the unrealistic valuation of their assets (over a long period of time) but the absolute level of operating expenses. Over R250mn p.a. to manage what was effectively 5 assets.
The price of the Brait rights offer will contain good info as to who has power in future. New s/holder Ethos will want as deep a discount as possible, while diluting s/holder Titan will want the price as high as possible. Revealing that a maximum price has already been set.
Read 4 tweets

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