You're listening to Strictly Business Podcast with Lindsay Williams. The JSC has closed its doors for another day, so it's time for the 5 o'clock shadow. And as always on a Wednesday, I speak to Skulk Lowe, Portfolio Manager at PSG Wealth Old Oak in Cape Town. Now, Skulk, I spoke to you off air and asked you to get a wire coat hanger. And I asked you to insert one end of the wire coat hanger in your right cheek. and the other in your left cheek to see if it would fit.
And I'm betting there was room to spare with the smile on your face. I know exactly what you're talking about. I mean, that smile is as good as gold. Good as gold. Isn't it fantastic news? I mean, it just doesn't stop. I mean, on the one hand, it is fantastic. On the other hand, you're beset with worries because it is so fantastic and it just doesn't look real to me. I mean, I looked at... it my screen, it was 42.20 a little while ago. Obviously, it's churning around that 4,200 level.
But these are levels you could never have predicted or hoped for, Skulk. No, I mean, I've been verbally positive on the goal pass for many, many years. So there's no doubt. But I mean, this is just crazy. I mean, this is now bordering ludicrous.
I mean, because, you know, we had... this conversation exactly a week ago where we sort of had a similar not a coat hanger intro but but a very similar intro where we went like can you believe it gold just ran through four thousand dollars i mean now we're talking about four thousand two hundred dollars i mean that's that's five percent another five percent in in one week i mean if you look at the the levels that we've seen in in the beginning of september beginning
of september we were trading three three and a thousand per ounce. If we take the clock back to the 1st of January, you'll be talking about $2,500 per ounce. I mean, so yeah, you need to be in it to win it. And I think I've looked at a graph earlier today where they plot the current movement of the gold price. And they look at the previous, I think the previous massive spike that we've seen somewhere 30, 40 years ago.
And the one thing is when gold move, don't be in too much of a rush to call tops on this one because usually when something like this happens, it can go a hell of a lot higher. There's two things I would say to you, Skel. The first is that a German friend of mine was watching German TV and she phoned me up and she said, I've just liquidated my savings and I'm putting it into gold. Oh no. Big ring of a bell, a huge bell.
And the other thing is, it hasn't happened yet, but if there is any indication from a layman's point of view, that's me, I'm not an expert like you, when the shares don't match the actual rise in the price of gold, so let's say gold goes to 4,500, but the shares stay stable or even go down, from the level they were when they were 42.50, when the gold was 42.50 or something, that would be the time for me to say, no, that's it, thank you very much. Is that it?
It's called a non-confirmation, I think. Yeah, that's definitely a non-confirmation. Excuse all the secretaries now, but they usually say when the secretaries start buying equities, that's the closest time to we see a crash in the market. Vietnam. Yeah, it is. There was a lot of good reasons why gold should have moved over $2,000 and into the $2,000 levels. And on that note, do you remember that day I sent you? I think it was March 17, 2022.
I sent you a screenshot of the trading market, live trading market in gold. And it was a bid of $9.98 and a half. Offer of $19.98 and a half was the bid. 1999.3 was the offer or something. And we got so excited because it was just about to go through 2000. And now look at it. We're still talking about this blasted thing. It's three years ago, Lindsay. And I think more important, I can still remember that day as well. Because I'm not going to look for it now.
But I remember I still published a tweet, tongue in the cheek, just stating. Do you remember when gold was still trading below $2,000? Wink, wink, nudge, nudge. And now it's just crazy to think. I mean, it was a joke that day. But I mean, here we're sitting three years ago, and I want to ask you. Can you still remember when gold was still trading below $2,000? I can remember when gold was trading at $250 an ounce, but that's another story.
I've got another story for you now, and you probably know it, but it's very interesting. You're more of an accountant-leaning person than I am. How much gold does the U.S. have in its reserves? Have you any idea? Give us a rough figure. No, don't give me a rough figure because you're going to be way out. I'll tell you it's got 261.5 million ounces.
I mean you've seen the film Goldfinger, the James Bond film where he was trying to knock off Fort Knox which is where a lot of the gold is kept underground and it's encircled by troops 24 hours a day. But the important thing here is that the book entry for gold is from 1973 and it hasn't been changed in all these decades. $42. And 22 cents per ounce. So if Trump ever finds this out, I mean, he's too stupid to know it.
But if he works out that gold at 4,000 is very different, it's 100 times different to what the gold is valued at, he could probably say, I'm going to value it at 4,000. Therefore, I'll be the president that made gold go up from, I don't know how many billion it is, to just about a trillion dollars worth they've got. And you go from there. But the book entry is obviously important to the Treasury. What would happen if they actually valued it at real prices?
What would it mean for the United States and indeed the world? I think there's quite a lot to digest, what you just mentioned. But I think one thing that I think is important to note is that the U.S., they haven't increased their gold in... Decades. Yeah. We know the Bank of England. They look really bad. I think they must be one of the only central banks that's actually reduced their gold reserves over the past, let's quote, 25 years.
And man, oh man, can you still remember what levels they actually sold? The last couple of tons or the last 200,000 ounces or so were sold by a Scottish fellow. He goes by the name of Gordon Brown. He was the Chancellor of the Exchequer at the time and then went on to become Prime Minister. I think it was $252.20. And everyone waited for that last bit. They flagged it. They said, we're selling all our gold, we've got X amount left.
And all the traders were licking their lips and rubbing their hands together and saying, right, Gordon Brown's out. And they just bought it from then on in. That was the signal for the turn in the gold price. Gordon Brown, bless him. Anyway, just to go on, you're still long and are you still bullish? Yeah. So, I mean, when you look at the United Kingdom, they had just shy of 500 tons. So, about 300, let's go, 480 tons back then. They're currently sitting with reserves, you know, 310 tons.
That is shameful. That is crazy. That is crazy. But to your point again, United States is exactly the same. When we look at the current reserves for, what's the second? Second largest is Russia. No, I'm lying. There's going to be France. But I mean, if you look at something like China, they're currently sitting with 2,279 tons gold. In 2000... China was sitting with 395. Look at that. They've just been accumulating all the time. They're very clever. Exactly.
Russia has probably been drawing down in order to pay for the war in Ukraine. That's what I think. I know they've been doing that with platinum group metals. But anyway, central banks have been buying. And normally, in normal geopolitical circumstances, unless there's something disastrous going on with an economy, they're normally quite strong holders. So in other words, if they buy it at 4,000, they're not going to be selling it at 4,500. They'll hold on.
But look at the effect that it had, for instance, on the South African market. I had an interesting conversation today, and I'll do some name-dropping. We had a conversation with Cornelius Ziermann. He's one of the fund managers, the fund manager of the Fairtree Global Emerging Market Fund. Yeah. And. We were talking about losing alpha, gaining alpha, and I said, well, you guys were pretty overweight in gold. But interesting, so two years ago, I said two could be...
It could be a little bit longer. It could be that quarter 2022. The weight within the oil share, gold shares. Remember, at that stage, Sabania still watered, I mean, not even 10% of the profits were made out of gold mining. Today, it's just 50%. I think 47%, 48% of the profits is made out of gold. So we didn't count... So, Banya Stillwater has a gold counter back then. So, there was only five gold counters. So, it's Anglia Gold, Goldfields, Harmony, Durban Rediputi, Pan African Resources.
They didn't make up 4% of the JSE. And now? Total weight. Today, as we sit here, it's over 16%. That's just the gold counters. And that's the market capitalization of the stocks? That's the market capitalization. within the JSE All Show. by the JSE All Share in some form of ETF, like, for instance, Satrix, Satrix Alls. 16% of your holding, of your investment, will be invested in five gold mines. 16%.
If you, exactly a year ago, if you invested in PGMs, now that's the likes of the Volterras, Anglo-American Platinum, Impala Platinum, and Northern Platinum. That didn't make up, it was just over 2%. Today, as we sit here, the total weight of those three counters is now 8%. So, if you combine the likes of your PGM counters and your gold counters, it's now getting very, very close to a quarter of the total JSE. That's just precious metals.
And that's just pretty... pretty much coming out of seven counters. No, sorry, it's eight counters. It's exciting in many ways, isn't it? Because it's like the old days. But on the other hand, it leaves the market a little bit vulnerable should there be a bit of a knockoff. Yeah. Yeah, no, it's definitely worrying because, I mean, the words that I heard the most over today's conversation were that words. called concentration risk.
Suddenly we're sitting with a bit of concentration risk in the JSE as well. Here's a very interesting one. And we've often had this conversation, Lindsay, where we discuss the different indices. Back then we talked about what's the difference between the JSE cap SWIX or cap all share compared to the JSE normal all share. And that's just usually... That's just that they cap certain companies.
You don't have a scenario like, for instance, what's it, five years ago, six years ago, where a NASPAS suddenly makes up more than 20% of your total index. And that's why they created this.
But if you look at the return profile of both these indices, you would note that it's really been very, very close, close in terms of um performances so in dollar terms if you look at it year to date year to date uh the dollar return for for the jse is now way over 36 closer to 40 40 then you get something called the the um you could get something called the msci south african index now this is why by the way scalco I couldn't manage to carry on a career in financial services.
It just became too complicated. But go on. Yeah. So you had your, what we call the JSE, or the MSCI South Africa. Now, whenever you get an interview, a lot of people will be very well known, you know, on what is the MSCI world or MSCI all country world. Here's a little bit of a lesson. When somebody says they follow the MSCI world, You know that you've got no, no exposure to any emerging markets. It's literally, you just invested in developed markets.
When it's got that all-country world in front of it, then it's the developed markets or the MSCI world with emerging markets. And that accounts for about, let's call it 15% of the total MSCI all-country world is the emerging markets and the remaining 80%. 85% will be developed markets. So then how do you get classified to become part of the MSCI?
So if that specific company is listed in South Africa, because remember, if you invest in the likes of British American tobacco company, although we got a secondary listing in South Africa, the primary listing is in the UK. So that company will form part of the MSCR UK, not South Africa. Okay, so because of its London listing, that takes precedent over the... Johannesburg listing. That's it. Exactly.
So if you invest, for instance, in Richemont, Richemont, although it's again got its listing in South Africa, its primary listing is in Switzerland. So that will form part of the MSCI Switzerland. So when somebody invests in the MSCI South Africa, that will be your pure South African companies. That will be your NASPAS. because it's still got its primary listing in South Africa. That will be your South African banks.
So just to get and a lot of people will usually say that's more reflective of your SA Inc. type of stocks, although it's a little bit difficult to say that, but that is sort of your SA Inc. stocks. Do you want to take a guess, year-to-date, what the MSCI South Africa is currently what it's done year-to-date? in dollar terms. Yes, it's $18 in dollar terms. Gosh, I don't know. Scalp, 27%. There's that laugh again. There's that coat hanger coming in. You should try harder.
It's currently 65%. Not bad. In dollar terms, year to date. Dollars terms, crikey. But then again, in round terms, it'll be less than that because the round's been stronger against the dollar. Slightly, slightly. Slightly less, but I mean, it just shows you what our pure South African countess has done this year. And yes, it is. Remember, your Impala Platinum has got its main listing in South Africa. Your Durban-Rudipur Deep, your Northern Platinum, those all companies.
This is all hindsight, Scott. This is all hindsight. This is where you're going to earn your money. I was talking to a fund manager yesterday, very, very good fund manager as well. A woman who talks her mind and I said, what differentiates your fund from the rest? Because she outstrips everybody. And she said, I'm a good seller. And that was the only thing she said about being differentiated from the herd, selling properly. She said, we're very good buyers, anyone can buy.
You buy gold because it's doing so well. I'm a buyer, You don't get many people saying, gosh, he or she's a good seller. That's my lesson of the day. So tell us, where is it going? When are you selling? When am I selling gold? Yeah, when are you selling gold? Come on now. It's not very well being a buyer. So currently, I don't want to sound like a typical economist. They always say you need to find yourself a one-handed economist.
Economists always remember, they always say, on the one hand, we see interest rates going up. It's called political correctness. It's called corporate governance. But anyway, go on. But I mean, if I'm going to be a one-handed portfolio manager, I do think that that gold is currently overvalued. I do think it's done a little bit too much too quickly. Because, I mean, we've seen a massive, massive retracement.
There's a lot of people that say, well, if we currently look at all the gold reserves, available in the world and still need to attach some sort of valuation of all the money that's been printed and a gold can pretty much go to a hundred thousand over a hundred thousand dollars per ounce I'm not in that court we've gone beyond that but gold has done a lot I'm always worried when the likes of of the Goldman Sachs is like for instance last week came out and say well they now increase
their forecast for gold. um you're so brave of them i mean they said it would be 4 000 in the first quarter of 2026 it goes to 4 000 two days later and then they say oh it's going to go here next i'd love to get a seven figure figure just to talk to state the obvious which is what these people do a lot of the time and i'm of course being jealous and generalist generalistic about it anyway scout go on sorry goldman sachs So they're calling it $4,009, and then I always get a bit worried.
And it's like you mentioned, if I look at media, if I look at social media, and if I look at I get very similar vibes. that I actually got a year or so ago when people, when Bitcoin just went through the $100,000 mark and people were saying, well, this is only the beginning. It's now going to go to a million dollars. That's where I get a little bit worried. But remember, and we've had this conversation, I'm still invested in the gold mines.
And when you've got a mine, like for instance, the likes of a gold fields, gold fields, they're all in cost. That is what it costs them to go down those mines, to mine these gold. Dig it out of the ground, in other words. Yes, that's all in cost. They're mining this for anything between $1,700 and they haven't reached $2,000. So let's call it $2,000 per ounce. The longer that the gold prices stay at these current levels, these mines are printing money. They've got 120% margins.
It's extraordinary what's going on. So suddenly the gold mines, that's usually been something you trade, not invest in, is suddenly a great company to be invested in because they extremely, well, the cash flow positive, they don't have any debt on their balance sheets. Yes, as long as the gold price stay at these levels, I'm happy. I'm happy to hold my investment in gold because gold, they're actually still doing really, really well.
Well, I hope you're just ready for something that happens in the future, which will happen, of course. It is going to happen. It never goes up in a straight line. Nothing as parabolic as this anyway. So just be ready. I know you always are. And you'll be the first or second one to press the sell button as soon as that gold price tips over, which it will one day. Not yet, though. OK, Scott, we've talked about the exciting stuff. Let's get the boring stuff out the way now.
Karoo's numbers came out from the JSC today. Share price down around about 10%. There was some sort of corporate activity at AECI, and that share price down 8.5%. Do you want to talk about either of those briefly? AECI, where we can chat about Kuru, I always struggle because that's not the way you spell the Kuru. Exactly, it's got five O's, hasn't it? I struggle to read any trading statements or financial statements when they spell Kuru with five O's.
I agree, so they can go and stop being stupid and spell it properly and then we'll have a look at it. AECI now, bang bang. Now all the listeners will remember Karu is the one with the five O's. Yeah, ACI, the CEO now resigned. He stepped down as CEO. He's been CEO for, and he stated that it's for personal and family reasons. And people know this is a company that I do like.
But this is one of those that's just been such a frustration for me because Although it's definitely a value stock, it's a company that's been well managed over the years. And it's a company that's looking financially healthy. They've been selling off some of these offshore companies that they had. So the company is looking, I would say, financially very, very sound.
But when a CEO surprised the market by stepping down or noting that he's going to step down, And people usually ask the questions, why? Why? Personal reasons. Why not? Sometimes you feel like stepping down, don't you? And going and sitting with a cool something in your hand and looking out and saying, goodness me, I'll miss gold. But, God, goodness me, it's served me well. You'd like to do that, surely, one day. Correct.
And it's been in that position or on the leadership position for over 18 years. So, I mean, it's… Somewhere along the line, you just know it is time. But the market did not like that at all. And the share price, that was down 8.8% today on the news. Okay. I know it's time to get on with the markets because we've been… jabbering on for far too long. Dollar-Rand is 1732, a little bit of risk off, got the Rand a little bit weaker.
The dollar though is 0.4% down against the Rand, so overnight the Rand was weaker than it is. British Pound against the Rand 2320, Euro-Rand back above 20, 2015. Euro-Dollar is 116.35, that's a Euro that's about a quarter of a percent higher against the greenback and British pound against US dollar.
is 133.95 over to gold 4200 on the noggin it's 59 up or 1.4 platinum up 22 to 16.99 16.99 is 1700 a big number i'll look on my graph later on the palladium price is not slipping but slipping relative to platinum it's only up ten dollars an ounce to 15.99 dollars per ounce okay let's move to other commodities now the oil price is all over the place in the last couple of months. And I think it was on Monday, it was on Friday, it was down about 5%. Today, it's down 0.4%.
That's Brent crude $62.02 a barrel. West Texas crude $58.42, which is down 0.3%. And the copper price has, it got very, very close to a year high the other day, a real high anyway, because it had a couple of spikes, which were to be taken off the graph But anyway, it's $4.97 a pound at the moment, was $5.20 a pound a couple of days ago. That's commodities. S&P 500. After some good bank results, 67.42, up 0.8%.
The U.S. 10-year bond price, 4.01%, just about to break its big figure from 4 to 3. The South African 10-year bond. is maybe going to go from 9 to 8. It's 9.04 at the moment. Really good performances in bonds. You could have bought gold. You could have bought bonds. You could have bought Bitcoin. I mean, you could have bought the stock market. Four things all going up together. I've never seen that skulk. Bitcoin, $111,180 per coin. That's down 1.5%, underperforming.
I'm exhausted after all that. Do you hear what I just said, Scalp? Four asset classes that don't always go in the same direction, going in the same direction. Bonds, stocks, gold, and let's leave out Bitcoin because it wasn't there during the good old days. Three in a row. That's ridiculous. There we go. You could have written all those asset classes on a piece of paper, put it in a dartboard, throw the dart, and you would have made money. It doesn't matter which and where it landed.
Yeah, there's definitely some optimism today from a US point of view. I mean, you and I have been talking about it Friday. It was just as if all hell broke loose. I mean, Trump went like, I'm going to be really tough on China. I'm going to increase their tariffs and it's going to be beautiful. I love it when he says, I don't want to hurt China. I want China to do well. I've got a great relationship with President Xi. And then he says, by the way, 100% on everything. He's such a nitwit, that man.
And then I think 24 hours, because then Friday, all hell broke loose. We had markets and I was sort of going like, yes, at last, because I have some cash that I need to deploy. And it's just tough to deploy it in a market environment that's just, as you mentioned, where everything just goes up. There's no specific asset class that's standing out as a, oh, this is a great opportunity. And markets retraced. And 24 hours later, he tweeted. He didn't even come out with some statement. He tweeted.
He says, no, don't worry. China will be OK. China will be fine. The taco's back. People forgot about the taco factor. Trump always chickens out, in other words. But he's checking it out again, but this time it only took him 12 hours to check it out. Literally 12 hours. And how the markets reacted. So the model, the story again, reiterated to me, was currently the political decision, specifically in the U.S., is now being dictated by market movements. I'm 100%. Because we've seen it.
We've seen it in April, Liberation Day speech. We've done that and it was just like it was tough. Man, are we going to take you to town on tariffs? And then markets. got very, very close to really correcting. I think it did in some senses. S&P was down 17%, I think, in three days. There we go. So there was a proper, proper, proper correction. And then he backed down. So clearly markets are dictating the political decisions. But I think today it's more, I think, the Powell show.
I mean, Powell did come out. And it's funny how the market actually took what he said as What has he said, please? Tell us what he said. He actually came out and he said that there's no real indication that things are changing in terms of the US economy. But he just said, but cautioned that a notably softer labor market is emerging. And we've seen it in some of these. these data releases recently. Yeah, we haven't got the data anymore because the government's shut down.
But as soon as the government comes out, we might get the non-farm payrolls and we might get the ADP numbers as well. And we also might be able to go to Yosemite National Park to have a look at the animals. Everything's closed down in America. No, exactly. It's still government shutdown. But I mean, what I want to get to is The market took his... let's call it his caution towards a notably softer labor market as dovish. And the CME FedWatch tool suddenly went from, ah, it was positive.
But now, as we said here, 97% probability that we'll see a rate cut again on the 10th of December. Okay. So there we go. Don't be best against that one. It's the second one after that. that is the important one. What have we got? September and December. But anyway, Skulk, I'm getting thirsty. So let's get on to the moves up and down on the JSC. MTN, the big winner today, up 8%. Rishwan up 5.5%. Harmony, 4.5%. Advertech, a 3.6% gainer. And Capitech up 3.2%.
Downside, ACI is not on my screen, but I'm going to say 8.8% down for that one. Karoo, though. Down 9.8%. That was a nervous laugh, by the way. Carew with Five O's shareholders. Growth Point down nearly 6%. AVI down 4.5%. Fortress B down 4.4%. And Nepi Rock Castle down 2.3%. Property stocks in there, Skunk. Any ex-divs you should tell me about? Yeah, yeah. Fortress and Growth Point, both ex-divs stories for today. Okay, good. Because that would have sort of soured your gold euphoria.
A little bit. Any other stocks that you've got that I didn't mention? No, I think you've mentioned all. We talked about the winners. We talked about the losers. Good. So give us the closing JSC indices, if you would. So the JSC today closed at 111,635 points. I mean, it takes me longer to read the market. I think they should have a 10 for 1 split or something like that. And that's up 69 basis points for today. Most of the gainers came from the industrial side.
That was up 1.2%, while resources were up again 0.63%. Financials were slightly in the green, 0.2%. But as mentioned, the property stocks did retrace a little bit today, down 2.1%. We look at the value trade, not a bad day at all. We've surpassed $30 billion today. $32 billion traded on the JSC today. I mean, it's been solid, Lindsay. I mean, you know, often... had these conversations on the value traded on the market.
I mean, this is now the second time this week alone where we've surpassed the $32 billion trade. And I think most of, when I look back, past, let's go to five trading days, the average for the past five trading days was just shy of $29 billion. Okay, just finally, because we're running over time, JSE Limited, what's it done? today and what has it done over the last month or so, if you would?
Because these numbers you're talking about, 32 billion, must be filtering through to the numbers for the JSE itself. Yeah, that's a really interesting question that you're having there because, I mean, we know that Dr. Leila Farid, she's now announced that she's going to step down as the CEO of the JSE. And. And immediately I went and said, well, she started at Tenor as a CEO on the 1st of October 2019. And over that period, just for interest sake, the JSE All Share has improved or has grown.
By 153%. So, yeah, that will be good. She can't take credit for that. But where's the JSE limited? That's the one. JSE, however, over that same period has only grown 57%. So it's an 8% growth per annum versus the JSE's growth by 17%. And we know why. We know that we've only seen volumes pick up. over the past few months. And yeah, hopefully that will turn. I do think that there might be some opportunity. That might be something to look at, definitely. Okay, great.
We'll keep an eye on that for the remainder of this quarter. Meanwhile, Skulk, we'll reconvene this time next week. And where will the gold price be? Should we have a guess? No, no, no. Let's not spoil it. Let's not get into that guessing game and who got it right, who got it wrong. Because we're both going to get it wrong. We know that. Skulk, thank you very much for your time. When we were young, I just want to say, when we were young, we're getting old, Lindsay.
When we were young, there would have been a black label bet on this every day of the week, for sure. Now we're getting old. Now we don't want to even guess. Do you know what? I don't need to guess what the alcohol, the ABV of a black label is. It's 5.5%. And it's delicious as well. And it's relatively cheap. And it's the beer of the people in South Africa. And that was my beer of choice, of course. You know what my beer of choice is now? Well, you wouldn't know. It's called Warsteiner.
It's a fine beer, but it's a non-alcoholic beer. But I've sort of beat the system, because if you look at the back, it says less than 0.5%. So I've worked out if I drink 632 of them, I can get pissed, which is great. LAUGHTER I found a loophole. Skullclaw is a portfolio manager at PSG Wealth Old Oak in Cape Town, and that was the five o'clock shadow.
The views and opinions expressed in these podcasts are those of Lindsay Williams and various contributors and do not reflect the policy, position, or opinion of any other agency, organisation, employer, or company associated with StrictlyBusinessPodcast.com. Assumptions made on the analyses are not reflective of the position of any other entity other than the speaker or the author.
And since we are critically thinking human beings, these views are always subject to change, revision and rethinking at any time. Please do not hold us to them in perpetuity.