In the previous stages in the Atlas Mountains, I could always see the tire tracks of my competitors in the dirt in front of me. But right now, in the golden Sahara sand, I could not find any tire tracks. It felt like I was walking on a gigantic white canvas.
This was pre-GPS era, you know. All we had to navigate by was a road book given to the competitors. It was so hard to get oriented. I knew I was following the correct heading, but when I looked at my map, I panicked. I was now part of a huge mass of yellow, with “S A H A R A” written across it in a large map font.
No roads. Nothing. Only contour lines.
– Christian Travert, a motocross rider who got lost in the Sahara in the late 80s
A couple of months back I compared the modern investment landscape to a vast desert, yielding little and sheltering less. (Deported to the desert – 26 July).
Charlie Morris over at The Fleet Street Letter declared yesterday that “QE 4 has begun” – that the next grand barrage of central bank stimulus to reduce interest rates of any variety is upon us. I heartily agree, though it’s hard to be happy about it, as the sand gets hotter and the barren enormity of the landscape is brought into ever sharper relief.
Over the past month, the Federal Reserve in the US has bought back all the assets it took six months to sell in order to maintain liquidity in the banking system. In effect, in order to maintain stability it had to print more money in one month than it could get away with destroying in six.
2019 continues to look like a drug-induced re-run of 2019, and not just because Hillary Clinton is talking about becoming president. The returns on assets are sliding down the hot dunes once more to similar depths:Â
That’s in the US. Here in Blighty, even with the pound getting stamped on, the bid for our government’s debt is reaching record heights. Investors are parched – any yield will do.
I said in July that investors would do well to saddle their camels with gold while the sun is still low in the sky. Some of them certainly have been – holdings of gold within exchange-traded funds reached an all-time high in September, at over 2,800 tonnes.
Oasis or mirage?
After a couple of hours of walking, I saw a small black dot in the distance. At first, I thought I was delusional; it was probably a mirage. Since I had nothing else to fix my attention on, I focused on the dot. Suddenly, the dot started moving. I was so excited I started walking faster and faster to catch up. Closing in, I realized that the dot was a man, a Touareg on his camel to be more exact. I knew that yelling was useless. I was still too far for him to hear me. I was also running out of steam, literally, as sweat was evaporating from my body. My heart was beating so fast that I thought I was going to fall and die. I kept at it, pulling one boot out of the sand after the other, making way.
A pivotal point in me being alive and telling you this story today happened at this exact moment. The Touareg stopped, not because he saw me. He stopped just to have tea. Survival is but a succession of seemingly small details that click with one another in most exquisite manner…
The Touareg sat on a small oriental rug on the sand, calmly watching the horizon. He had just parked his camel on the kickstand and was enjoying a fragrant cup of mint tea. His relaxed world and the smell of his mint tea made me feel like I had just stumbled into someone’s house uninvited. I caught my breath and he helped take off my helmet. He gave me a cup of tea and a couple of oranges. I said “Merci!” laughing hysterically. This guy had just saved my life. I had to pace myself sipping on the tea and quickly devoured an orange. To this day, it is the best tasting food I have ever had.
– Christian Travert
If there’s any lesson investors should take from Travert’s near-fatal motocross ride, it’s to make sure they’re acting less like him, and more like the Touareg in their investment decisions.
Art Berman, a petroleum geologist and energy expert, argued recently that “technology is the opiate of our civilisation today”. He pointed out how common it is for people to believe that radical technology which hasn’t even been created, let alone rolled out, will soon fix all of humanity’s problems.
The desert heat is notorious for driving men into madness and delirium. It’s no surprise that in these conditions barely imaginable sums of money are thrown at mirages, in the hopes that they are oases – tech companies which burn billions every year and aren’t even committed to making a profit, for example.
It’s this heat that drove the grand crypto bull run of 2017, which I believe we’ll see return again as the sand gets hotter, and investors desperately scramble for mirages and oases alike. Though bitcoin has surrendered the sunlit uplands of $10k, and retreated to $8k at the time of writing, we’re early days into this rate-cutting cycle: it’s only morning, and the sun has far to rise.
As this day in the desert goes on, there’ll be plenty of desperate and dehydrated motocross riders, and very few wise Touareg calmly watching the horizon.
All the best,
Boaz Shoshan
Editor, Capital & Conflict
Category: Market updates