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Money matters:
Graham Macdonald MBMG International Ltd.
Practicing the Golden Rule
is not a sacrifice; it is an investment
Part 3
The reason that MK (Marshallian K - the money-relative-to GDP
ratio) has any influence at all on the value of gold is that, as stated last
week, many still believe it has a monetary standard. Thus when deflation is
around and governments try to devalue currencies in order to reflate their
economies, gold goes up in value.
However, this does open up a potential can of worms. As we know, the world is,
putting it less than technically, in the pooh at the moment. Most nations when
they get to this stage adopt devaluation as a strategy to kick start the economy
again without worrying about inflation. However, if all countries did this then,
in reality, no currency would be devalued.
This would then lead to a decline in interest rate, yet more money in
circulation and constant revaluation of the money standard. To put it in context
and, in particular Point 3, if there is no currency devaluation then all of
them, especially the US dollar, must be devalued against gold.
Some people think that a rising money-relative-to-GDP ratio can actually lead to
an increase in inflation. However, there is nothing to support this as, over the
last thirty years, the link between MK and inflation has been negative.
Basically, an increase in money-relative-to-nominal GDP has coincided with a
decrease in inflation.
As mentioned above, there are also other areas that impact the value of gold.
The safe haven to guard against political and economic crisis is one. Gold is
seen as the place for wealth preservation.
Despite all this, the most important question on everyone’s lips is how long
will the present gold bull market last and can it go up even more?
Anyone who is a long term reader of this column knows that I am a great believer
in cyclical trends and the one for gold is very bullish. Nonetheless, there are
a couple of problems that need getting out the way first. For instance, monetary
reflation is not good enough and is stifling gold prices. With the recent
announcement of the Fed saying it was going to buy bad debt then this has eased
a bit but it needs more. Also, everyone is bullish on gold so there may be a
short term correction soon.
Nonetheless, with the breakdown of economic activity and share prices falling
through the floor means that the central banks are going to have to combat debt
deflation by printing yet more money. There is a good possibility of a
depression knocking at the door and quantitative easing will only increase as
seen by the Fed and promises from the Bank of England to do the same. Without
doubt, the Fed is being aggressive. On top of what it has already, the Fed has
committed to Term Auction Lending Facility (TALF) and the Public-Private
Investment Fund (PPIF) which could add another USD2 trillion to its balance
sheet.
To put things more succinctly, the Fed has already doubled its balance sheet
since September last year. It is about to double it again. With all this and the
printing of yet more money the USD price of gold should finally break out to new
record highs. This is just in America. What about the rest?
The UK has already committed and is in the same boat as the US.
The Bank of Japan is having massive pressure put on it to print money. Indeed,
the country could well be in depression already. Industrial production is down
by over 30% and exports have dived by 44%. If the authorities do weaken and edge
to quantitative easing then the yen will weaken and the JPY price of gold will
go up dramatically.
The European Central Bank is being cagey about its next step. However, it is in
unchartered territory as a few countries have already fallen into debt
deflation. In the past, these nations (usually the PIGS - Portugal, Italy,
Greece and Spain) would just devalue accordingly. This time they do not have
this option. With ever increasing losses in the banking system, the question is
who will bail out Europe? Some analysts are even asking if there will be a euro
when all this is finished. Whatever the final decision is, it will probably
include some sort of quantitative easing.
What all of this points to is that global MK will increase more and more as the
central banks have to grow their balance books to combat the problems seen
today. This war on deflation, and possible depression, could last a long time as
could the continuous printing of money. All of this means the outlook for gold
is good for many years to come.
For yet more confirmation that gold is still in a position of good health then
look at a Gold Indicator as it should be based on real interest rates,
trade-weighted USD and G7 MK. At the moment, the arrow is still pointing upward
showing the market to be intact. This should attract new investors as they will
regard gold as an investment, a hedge against major currencies AND a safe haven
from any further economic and political uncertainty.
So, to conclude, the case for gold is good. The bull market is set to run for a
few years yet. Yes, as stated before in this article, there will be ups and
downs but the trend will be upward. In a deflationary era the central banks have
to print money and all currencies must devalue against the monetary standard.
This is especially true for the US dollar.
We would hold that as part of an actively managed, diversified, multi-asset
class portfolio, investors should have 10%-15% invested in gold. If one looks at
a regression model then the following may well occur:
Scenario A – Marshallian K grows 25% + US Dollar falls 10% = Gold at USD1,400
p.oz
Scenario B – Marshallian K grows 40% + US Dollar falls 30% = Gold at USD2,500
p.oz
Scenario C – Marshallian K grows 25% + US Dollar rises 20% = Gold at USD900 p.oz
This then is another sign that gold will end up anywhere between USD900 and
USD2,500 per ounce. I would be amazed if it was less than USD1,400 p.oz. in
three years time.
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The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the above
article nor bear any responsibility for any losses achieved as a result of any
actions taken or not taken as a consequence of reading the above article. For
more information please contact Graham Macdonald on
[email protected]@mbmg-international.com.comm.com.com
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Snap Shots: by Harry Flashman
Portraits packing a punch
This week let’s put some punch into your photographs. Remember that the
most commonly photographed subject is neither elephants nor local
politicians, but is a person you know. Be that wife, parents, children
or country cousins, the main subject for the majority of amateur
photographers is people. Take a look at your photo albums if you don’t
believe me. For many of those photos they are of the type, Mum and Dad
at the zoo or the kids at the beach, or your sister in Chiang Mai.
 Blue,
white and yellow contrasts.
What you have to consider is “why” you are recording this split second
in time for posterity (because that is what a photograph is - a slice of
time ‘frozen’ for posterity). When you realize “why” - your shots will
improve.
It is simple really - in actual fact, you are recording a time “when”
your relative was “in” a particular place. Consequently, you have two
important items to show in the shot - “who” and “where”.
Take “where” first. This is the background to the shot, and in many ways
a most important item. While you may know that the shot was taken in
Chiang Mai, nobody else does, and certainly not in a few years time,
unless there is something in the photograph that relates to the
location.
So rule number one is to make the background “specific” for the
location. Mum and Dad with a giraffe probably does mean a zoo somewhere,
but a sign always helps to pinpoint the location. Likewise with your
sister in Chiang Mai. Get somewhere in the city that either says Chiang
Mai, or use some local landmark that is unmistakable, like the moat in
Chiang Mai or the bay in Pattaya.
Now remember that after you have found a good background location, you
have to stick a person in it too, and the concept here is not to make
the subject (Mum, Dad or your sister) part of the background. You have
to well and truly separate the two. The subject is the “hero”, so bring
the subject up close. So rule number two is to bring the subject away
from the background, to make sure the subject is the principal item of
interest.
What you do now is to juggle the two items around so that you get the
best shot possible. Try taking one shot where the subject is central,
and the background extends on both sides. The next two shots should be
taken with the subject 1/3rd in from the left border for one and similar
placement in from the right border of the shot for the second photo
(back to the Rule of Thirds).
The third tip is to look again at the background before you pop the
shutter button. This requires you to practice looking through the
viewfinder with the critical eye. It means that you look beyond the
breathtakingly beautiful model posed before your lens and stretch your
focus through to the background. Now look for contrasts.
This simply means to have a light background if the person you are
shooting has dark hair, and the reverse for those with blonde or white
hair. Now to get this may require you to move the model, move yourself
or move the location again. This is worthwhile. No matter how good the
shot looks as you try so diligently to get a pin point focus on your
subject - if there is no contrast between subject and background you
will be disappointed in the final photograph. The person’s hair will
disappear into the background. This is especially so when photographing
the very dark haired people of Thailand. Just look at some of the social
page photographs in this issue of the Mail and you will see just what I
mean.
Probably the last item to consider is color. When all else fails, or is
impossible, position your subject against a contrasting colored
background. A yellow dress in front of a red door, for example, will
always stand out. Blue and white are also good contrasts. And of course,
never forget stark black and white, the ultimate contrast!
Modern Medicine:
by Dr. Iain Corness, Consultant
Dengue Fever - again and again and again
We are about to enter that phase of collective insanity in
Thailand called Songkran. There will be many puddles of water left, despite
water shortages, the ideal breeding ground for the Aedes aegypti mosquito to
breed. The Aedes aegypti is not some opera (that’s Aida), but is the name of
the mosquito which carries the Dengue virus.
We see many westerners in my hospital with Dengue Fever. These are not an
isolated group that caught it from drinking out of damp glasses in the same
bar. And if you don’t think it is important, there were 10 fatalities last
year. That’s more than died from the SARS epidemic that had people cringing
in their homes afraid to go out without a gas mask.
So, despite my previous pleas (and those of the Public Health Department),
Dengue Fever and its potentially fatal variant, Dengue Haemorrhagic Fever
(DHF) is still with us. The latest figures have now prompted me to repeat my
advice on this subject. If you remember reading about it before, I
apologize, but the subject matter is very important. This is an important
ailment that can be avoided.
However, first you should understand a little more about Dengue. It was
first described in 1780 by a Benjamin Rush in Philadelphia (so it didn’t
start here), when the name Break Bone Fever was applied, with the symptoms
of pain in the bones and rise in temperature. The name “Dengue” came in 1828
during an epidemic in Cuba. The new name was a Spanish attempt at a Swahili
phrase “ki denga pepo” which describes a sudden cramping seizure caused by
an evil spirit! Let me assure you that the local brand of Dengue Fever owes
nothing to spirits, evil, bottled or otherwise.
Like Malaria, the virus is carried by mosquitoes. The virus itself is
related to Japanese encephalitis, Murray Valley encephalitis and Yellow
fever, and there are four “serotypes” or subgroups of it.
The mosquito lays its eggs in water containers, preferring the clean water
found in water tanks and pots, in the saucers under pot plants and even
under the pet’s food dish (or left over from Songkran). Inside discarded car
tyres is another favorite spot. These mosquitoes are not of the adventurous
type and feed during the day and spend their time within 200 meters of their
hatchery. Consequently, the eradication of any local breeding areas becomes
very important towards maintaining your own health, as you can see. Keep
your home free from lying water for a radius of 200 metres and you’re
looking good!
Simple Dengue (if you can call it that) has an incubation period of around
four to seven days and then the full blown symptoms of high fever and
headache begin. The headache is usually behind the eyes and is made worse by
eye movement. From there the pains progress to the limbs with acute muscle
pains, which gave it the old name “Break Bone Fever”. Interestingly, some
patients complain of a metallic taste in the mouth. (Please don’t ask - I
have no idea why!)
On the other hand, Dengue Haemorrhagic Fever can certainly be fatal! It
appears that Serotype 2 may be the culprit here, but does not usually
produce DHF unless you have been previously bitten by types 1, 3 or 4. In
addition to the symptoms of Classical Dengue the skin begins to bruise very
easily as the blood haemorrhages into the skin. Children are also more
susceptible to this than adults. This also becomes much more of an emergency
and is best treated in the Intensive Care Unit (ICU) of your favorite
hospital.
With our ability to treat the viral ailments being very limited, the defense
against the Dengue virus lies in the preventive measures. The other
precautions are to wear long trousers and long sleeved shirts, especially at
sun up and sun down, when the mosquito is at its most ravenous. The other
factor to remember is “D” for Dengue and “D” for DEET. DEET is the magic
ingredient in mosquito repellents, so when you go to buy some, check the
label - if it has DEET, then get it. And then remember to use it!
 Heart to Heart with Hillary
Dear Hillary,
I have heard some comments about some Thai bar girls, who I think should be
called ladies, as I have never had a bad experience with one. I made my 1st trip
to Thailand last December for a couple of weeks. I spent the 1st week in
Bangkok, which I found too commercialized and crowded, being a country boy. I
heard Chiang Mai was a lot quieter, so I went to have a look. I soon found the
bar area, and settled into a seat, when a young attractive lady welcomed me,
hello sexy man she said, I was impressed as I thought that was a nice greeting
which I never received in OZ. After we had a few drinks, I said to her what is
your job here are you a bar girl? She asked me how long I was there for and I
told her a week, she then told me she was the cashier, but the boss’s daughter
was there for a week, so she was doing her job for a week and all she did was
pick up the empty glasses and cleaned the tables and did not go with any man.
She left me and did some work and stopped and talked to some men, so I thought
she must know them. Near closing time she came back to me, so I thought I would
ask her to come back to my hotel, and she agreed. When we got back to the hotel,
I said to her I had a crook knee so I will walk up to the 5th floor for exercise
and you take the lift, half an hour later I got to my room and I had to wake her
to let me in, she said she had a woman’s problem and had to go back to bed. In
the morning she told me I owed her 3000 baht for her stay at the hotel, so I
felt I had to pay.
We had just finished breakfast when she received a phone call, when she finished
she appeared upset, and I asked what was wrong, she said her mother said her
father was out in the rice field when his buffalo trod in a hole and broke its
leg, it then stumbled and stepped on her fathers foot who then fell and pushed
over a tin of pesticide which ran into the rice field, then his pet dog drank
some water and had to go to the vet. I said can I do anything to help, she said
she had B. 1000 saved but she said she needed B. 24,000 more to pay for all the
damage. I felt terrible but she could be my future wife so I offered to pay her
if she would pay me back when I returned and she said she would. When I got back
to OZ I found out my job had gone to Asia and I could not afford my rent so I
had to go to a boarding house, which isn’t too bad, there are a couple of people
who speak broken English. My job center asked me what I wanted to do and when I
told him he said there wasn’t much call for a 70 year old animal carer at the
zoo, any way the local church puts on a good lunch every day.
Scotty.
Dear Scotty,
What trials and tribulations you have been through, my Petal. And all since last
December, barely four months ago. But I do have a glimmer of hope for you
Scotty. At 70 years of age you must be eligible for an old age pension, although
in your case, it might be a mental invalid pension, I fear. What you have to do
is come back to Chiang Mai and get a job as an animal carer at the Chiang Mai
Safari Zoo, but bring your pension entitlement with you. Your future wife will
be waiting, picking up empty glasses and cleaning the tables as before, as the
boss’s daughter will be enjoying the cashier’s job so much she will have
continued in the post.
Just like you, I hope the buffalo has recovered, but if not, don’t worry, the
rice farmers usually have two, one for use in emergencies, but still prone to
breaking legs and getting trench mouth as well as other expensive diseases. It
might be cheaper to just buy Papa a tractor. And make sure you give your
intended the bank book for the monthly pension check, so she can budget properly
for you both.
Dear Hillary,
Pater has suggested that I give you a stiff one! What’s your bottom line,
Hillary, a dram of Speyside’s finest, cognac de la belle France or aunties’
favourite, G & T? Bottom line, please!
Mistersingha
Dear Mistersingha,
If you don’t know by now that Hillary’s favorite tipple is French champagne
(vintage of course and you won’t go wrong with Veuve Clicquot, and La Grand Dame
if you’re feeling flush) then you are even slower on the uptake than I imagined.
Why don’t you and Pater and all your uncles pop back to Blighty for an extended
holiday and leave us all in peace? That’s a good chap. And remember to take your
tablets!
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
The Reader and
The Wrestler continue at Major Cineplex, and the chain should be
commended for bringing these fine films to Pattaya, and continuing to
show them. Take advantage of their presence, because these two
Oscar-nominated pictures are well worth seeing.
The Reader: US/ Germany, Drama/ Romance – Directed by Stephen
Daldry. Kate Winslet won two Golden Globes this year, and one of them
was for best supporting actress for her role in this film about an
unrepentant Nazi war criminal having an affair with an underage boy.
She won the Oscar for the role as well, as best actress. It’s a fine
fine film! Kate’s performance is something definitely not to be
missed. I recommend it and urge you to see it. Also starring Ralph
Fiennes. Rated R in the US for some scenes of sexuality and nudity.
Mixed or average reviews.
The Wrestler: US Drama/ Sport – Mickey Rourke’s portrayal of an
over-the-hill athlete has won him many accolades, including a Golden
Globe win and an Oscar nomination as best actor. I think it’s truly
quite a wonderful performance of a loser of a professional wrestler who
you wouldn’t ordinarily care about. But you end up caring about this
man considerably. Rated R in the US for violence, sexuality/nudity,
language and some drug use. Don’t be put off by your dislike of
professional wrestling; it’s a marvelous film. Reviews: Universal
acclaim.
Race to Witch Mountain: US, Adventure/ Fantasy/ Sci-Fi/ Thriller – A
perfectly acceptable and innocuous action/ adventure film for children
(mostly) with all the standard chills and thrills, chase-movie suspense,
and wisecracking humor – and a few slam-bang action setpieces. Well
done of its type, and the ex-Rock Dwayne Johnson is (mostly) charming as
a Las Vegas cabbie who enlists the help of a UFO expert to protect two
children with paranormal powers from the clutches of an organization
that wants to use the kids for their nefarious plans. Mixed or average
reviews.
Monsters vs. Aliens: US, Animation/ Sci-Fi – Has gotten some rave
reviews from a number of reviewers, and some highly critical. I found
it half imaginative and highly amusing, half irritating. All five of
the monsters come from low-budget science fiction films of the 1950s.
The towering – and irritating – Ginormica (Reese Witherspoon) was
inspired by Attack of the 50-Foot Woman. The “missing link” is
from Creature from the Black Lagoon. The roaring, wordless
Insectosaurus is a Godzilla slug magnified by radiation, and Bob
the Blob comes from, of course, The Blob. Dr. Cockroach has a
counterpart in The Fly, where another scientist acquired some of
the characteristics of an insect after a failed experiment. Mixed or
average reviews.
Sassy Player / Taew Nak Te Teen Rabert: Thai, Comedy/ Drama – A gay
teen soccer comedy in the vein of “Satree Lek” (Iron Ladies).
There’s a little bit of everything in the film – something for
everyone. It’s fun. Directed by Poj Arnon (Bangkok Love Story).
A girl’s school decides it wants to field a team to contest national
secondary school football championships, and calls for applications from
young men. It ends up with 16 applicants, seven of whom are katoey -
not ‘real’ men at all. Can football players of the third gender prove
their mettle on the pitch? See the movie to find out.
Rahtree Reborn: Thai, Horror/ Romance – Starring Love of Siam
heartthrob Mario Maurer, and Cherman Boonyasak, who played his putative
sister in that film. It’s a sequel to Yuthalert Sipapak’s famous horror
films Bup Pha Rahtree and Rahtree Returns, set in the same
haunted apartment. Surrounded by the tranquility of the apartment, a
horrible spirit in room 609 is lurking, soon to be awakened. This time
the terrors are tripled. Directed again by Yuthalert Sipapak. Straight
razors and a barber’s chair are featured prominently in the posters for
this film. Shades of Sweeney Todd, again!
Make It Happen: US, Drama – Embarking on a journey to fulfill her
dreams as a dancer, a young girl discovers a new style of dance that
will prove to be the source of both conflict and self-discovery. From
the writer of dance movies such as The Step Up and Save The
Last Dance.
Knowing: Australia/ US, Drama/ Mystery/ Thriller – Just a lot of
fun, and well-done. A teacher opens a time capsule that has been dug up
at his son’s elementary school; in it are some chilling predictions –
some that have already occurred and others that are about to – that lead
him to believe his family plays a role in the events that are about to
unfold. Starring Nicolas Cage.
Khan Kluay 2: Thai, Animation – Khan Kluay, the legendary elephant,
is back in action in this sequel to the animated movie Khan Kluay.
After the victory at Ayuthaya against the invasion of the powerful
Burmese Empire, Khan Kluay is appointed King Naresuan’s royal elephant.
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