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Money matters:
Graham Macdonald MBMG International Ltd.
Practicing the Golden Rule is not a sacrifice; it is an investment
Part 2
By the mid-1930s, the West was really suffering. In many
countries, manufacturing was down by half and a third of the population was
unemployed and things had still not bottomed out. Countries had to increase the
supply of money and stop the decline in prices. Most governments elected to
debase against gold in order to increase money supply. In September 1931, the
U.K. was the first country by devaluing GBP against gold by 52%. The U.S.
followed suit and devalued the USD by 70% against gold.
Does all of this sound familiar? Well, it should also be noted that the first
gold bull market in the modern fiat money system took place between 1931 and
1934, when the world economy was at the bottom of the Great Depression and price
deflation. After WWII, the world adopted the Bretton Woods which, basically, was
a ‘gold-linked’ system with the USD being the intermediary.
Post war politics also intervened in a big way. Most Western democracies only
have a four year election cycle. With the politicians trying to prove how good
they were this brought about massive problems both socially and economically.
Inflation and credit was the easiest way out for those with a limited horizon.
However, it was bound to come back and bite those in charge and this is why
there was a crisis of confidence in the USD in the early 1970s. This led to
central banks swapping USD for gold which, in turn, ate into the US reserves of
gold. In 1971, Nixon basically de-linked the USD from gold and allowed the USD
to float. In reality, this ended Bretton Woods and gold prices shot up by almost
400% against the USD. There was also massive inflation. Investors ran to gold to
preserve what they had against inflation and hedge against any further drop in
USD value. So, whilst the first gold bull run was due to deflation the second
one was because of inflation.
Gold was very volatile in the late seventies and peaked out in the early 1980s.
There was then a twenty year bear market on the precious metal. There are
various reasons for this but one of them was that inflation in the 1990s
continued to fall and so gold was not needed as a hedge. People no longer needed
it and good old Gordon Brown et al decided to sell gold when it was at its
lowest price in years. In 1999 it was down at USD252 per ounce. What they failed
to notice was that the third major bull market was about to begin.
This latest bull is very different to the one in the seventies and eighties,
especially as inflation has been very low in the last ten years. Amongst other
things, this is mainly due to over-supply and deflation. The Asian Crisis, the
Dot.com crash and the current nightmare has driven inflation and interest rates
down dramatically. Whilst this deflationary environment has emerged, the gold
bull market has unfolded.
It can be argued that the continuous running of the printing presses by Western
central banks raised the probability of inflation and this has led to people
buying gold as a hedge against more inflation. The problem with this is that the
inflation-swap market gives good indications that it will not exceed 1% to 3%
for the next few years and they expect it to get even lower before the end of
the year. It is just not consistent to say the gold market is expecting
inflation when the bond market is reckoning on deflation or low inflation.
The real question is how long will the present bull market in gold last - given
a low/zero inflation situation we now have. The best way to answer this is to
look at the fundamentals of a gold market.
Given the scenario above, there are three main factors that have to be
considered.
1. What is the investment demand for gold? This has been the prime reason for
volatility in the gold market. Demand for gold is because it is still thought of
as a kind of currency and so the price of gold is heavily influenced by:
a) How much newly printed money comes out into the market
b) The level of interest rates
c) The value of other assets
d) The safe haven status of gold
2. What is the demand for gold as a commodity? In reality, this is down to the
jewelry trade. China, India and the Middle East have all had a large demand for
gold in recent years and this is for decorative purposes as opposed to purely
investment.
3. What is the effect of the US dollar? The reason for this is that gold is
usually rated in USD and large fluctuations in the USD will affect the value of
gold.
The easiest of these to deal with is jewelry. This is because it is affected by
the income of the family. When the wage earners are doing well then the demand
for necklaces, rings, etc., goes up. When they are not doing well then the
demand drops. This is basically income sensitive.
The demand for gold as an investment is far more difficult to assess. This, more
than anything else, governs the price of gold. There are many things to consider
and these also do change over time. The fascinating question is what is driving
it today? In the past it was the possibility of inflation. This is no longer the
case and has not been for quite some time. There is much evidence to show that
massive printing of money has affected the value of gold.
On top of this, the Marshallian K (MK) also must be considered. MK is the
money-relative-to GDP ratio. The MK has increased rapidly over the last nine
years which shows that the central banks have been trying to use reflation to
fight deflation. This increasing ratio has coincided with gold going up in
value.
To be continued…
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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
Contre Jour - another French deviation?
Unfortunately for those of British stock derivation, the French were
first into photography, so I suppose they are entitled to give us
photographic terms such as ‘Contre Jour’ (literally ‘against the
light’).
 The
light meter totally fooled.
However, most photographers (French included) seem to be a little in awe
of Contre Jour photography, and stick to the old maxim of having the
light source (generally the sun) coming from behind the photographer. If
you do this, you will be assured of a reasonable, but ordinary
photograph, which will record your friend at the beach, and otherwise be
totally unmemorable.
No, if you want something a little better, it is time for ‘Contre Jour’.
The only difficulty with back-lighting, which is the other (English)
name for ‘Contre Jour’ is in getting the correct exposure. Going back to
the analogy of the girl on the beach, when you take a full-length shot,
the person takes up around 15 percent of the image in the viewfinder. So
85 percent of the shot is not really wanted, but from the camera’s point
of view, that 85 percent will predominate in the exposure meter’s
electronic brain.
Now I know that better cameras have ‘center-weighting’ etc etc etc, but
unless you have ‘spot’ metering, the overall exposure decided by the
camera will be an average of the bright back light and the shadowed
subject in the front. This will give you a dark subject, or even so far
as a silhouette, in front of a well exposed background (in this case,
the beach).
With today’s automatic exposure cameras you must understand that it
doesn’t know what it is that you are photographing. It doesn’t know that
the person’s face in the picture is the most important item. All the
camera’s brain can see is a mixture of bright lights and dark areas and
it will give you an exposure to try and equalize these out.
Unfortunately, in conditions of high contrast in the tropical sun, or
back lit, the camera reaches its limitations and the end result will be
underexposure of the part of the photograph you want. It’s not the
camera’s fault - it just means you have to get smarter.
There are a few ways you can demonstrate your ‘smarts’, and the simplest
is by selective metering. You want the subject to be correctly exposed,
so walk in close to the subject, so the person fills the frame, and note
the exposure values. Now go to the manual mode in the camera, set the
aperture and shutter speed as per the noted values, then walk back and
compose the shot. The subject person will be correctly exposed against a
bright background. Great shot!
Another one of these methods is by fill-in flash. Fortunately, these
days many compacts and SLR’s do have the fill-in flash mode built in,
but many of you do not use it - or even realize that you have this
facility! If you have it - then use it.
Now, for those of you who have the whole kit and caboodle - an SLR with
an off-camera flash, this section is for you. The whole secret of
fill-in flash revolves around flash synchronization speed. Some of the
very latest, and expensive cameras will synchronize flash and shutter
speed all the way through to 1/2000th of a second or better, but the
average SLR will probably say that the synch speed is 1/125th or even
only 1/60th and it is this figure which drives the exposure setting.
Take note of the exposure settings from the position from which you are
going to take the photograph. Now set the off-camera flash to around the
f-stop indicated by the camera’s exposure meter. In other words, if the
camera is going to use f5.6, then try two shots - one with the flash on
f4 and the other on f5.6. Flashes are notoriously unreliable as to their
exact setting, but by taking the two shots, one will be OK, and the
other will be perfect. A correctly exposed subject against a correctly
exposed background.
The third method is to meter for the entire scene and use a reflector to
lift the exposure on the subject.
Brush up on your French and try ‘Contre Jour’ this weekend.
Modern Medicine:
by Dr. Iain Corness, Consultant
Do happy people live longer?
“If you wanna be happy for the rest of your life, Never make
a pretty woman your wife,” went the number sung by Jimmy Soul in 1963. Was
he correct? If you are happy, will you really live longer? After much
research, including clinical studies, the researchers have the answers. Be
happy and stay well. Be aggressive and get heart attacks and cancer, and
shorten your life correspondingly.
Now that does not mean that all happy folk live to be 100 and the misery
bags turn in their credit cards at age 45? No, but there is enough evidence
to show that your personality type influences the kinds of diseases you will
get later in life, and some of these can be very conclusive. And not just a
‘coronary conclusion’!
However, this research is really nothing new, it is more of a reinforcement
of previous knowledge. In the times of Hippocrates, the healers were
interested in the personality of the patient, because even then they felt
that this had a bearing on the disease process. This conclusion was reached
after observation of the patients. Observation was the great trait of the
great medical minds. We would not have developed many ‘cures’ if it were not
for the physicians who noted the deviations from the normal patterns in the
first place.
The combination of mind and body and disease is the basis for holistic
healing, and even though Hippocrates and his healers did not have all our
pharmaceutical treatments, wonderful tests and MRI’s, they did treat the
person, not just the disease.
So why do we fall ill in the first place? Is it a personal weakness, is it
just “lifestyle” or just plain bad luck? Since I am not a great believer in
“luck” be it good or bad, my leaning after many decades of medicine is
towards a type of personal “weakness”. After all, you can take two people
with the same lifestyle but one gets ill and the other does not. Why?
Simply, the sick person was more susceptible than the other - in some way
they had a pre-disposition or call it a “weakness”. Simplistic I know, but
it seems to fit.
So what factors seem to be involved in bringing about the pre-disposition?
Genetics are one, and do play an important part. If your parents are
diabetic then you will most likely have the problem too, but it is not
absolutely inescapable. The modern scientific studies with large numbers of
people have come up with interesting statistics. One famous researcher,
Eysenck, lumped us all into four main personality categories.
Type 1 have a strong tendency to suppress their emotions and tend towards
“hopelessness” and are unable to deal with personal stress.
Type 2 people, on the other hand, are also unable to deal with personal
stress, but react to life with anger and aggression.
Type 3 is less clear-cut with a mixture of all these personality traits.
Type 4 covers the optimistic and relaxed who deal much better with
interpersonal stress.
Using these broad categories and looking at disease profiles that each type
gets returned some amazing facts. Type 1 was the cancer prone group, Type 2
got heart disease, Type 3 got both while Type 4 people were not prone to
either cancer or heart disease. Can you see what’s coming next?
Eysenck did not stop there. He went on to show that when people modified
their personality they also modified their disease profile. When you think
about it, this is staggering stuff! By attention to your personality profile
you can modify your disease profile!
The most significant personality trait was “anger”. Learn to modify your
anger response (and this can be done) and you become less “at risk”. This is
approaching Buddhist philosophy and “jai yen yen” - but you can modify your
personality. That last sentence can make you live ten years longer, happier
and disease free. Forget all the wonder cures, just look at yourself first!
Hippocrates did more than say oaths!
 Heart to Heart with Hillary
Dear Hillary,
Why do so many of your correspondents want to tear into the lovely ladies of
Thailand? I dislike the use of the word “prostitute” to describe people who with
limited education, try to maximize their earning potential. These ladies
sacrifice a lot to give their families a better life than they would otherwise
have. Could it be that when you treat other people like dirt, those people then
treat you like dirt (what goes around comes around) and if they were better
persons they would have been treated with more respect by the ladies they
complain about ripping them off all the time?
My own experience is that you can meet and fall in love with a lady from a bar.
You can also be treated like a king and rest easy with the feeling that you have
found a long term partner. I have been with my Thai wife now for some years and
have been incredibly happy.
My own experience of a former falang wife was that she gave up work once we were
married and never expected to have to work again. She took more money from me in
a month than my Thai partner has taken in two years and when we split up, she
took everything else. I will take my chances with a bar girl any day over a
falang lady. With any woman you will have to pay, one way or another. The Thai
way is cheaper in the long run, believe me, and all you guys out there, start
thinking and stop whining.
Satisfaction
Dear Satisfaction,
You’re not a Rolling Stone are you (“I can’t get no satisfaction” - 1965 Jagger
and Richards, for all the music freaks). I agree that everyone is better off
looking on the bright side. Nobody forces you into relationships, you drag
yourself into them. Think about life and make the best of it.
Dear Hillary,
I was driving up a small street and I saw that it had been blocked off. I went
to do a U-Turn and then noticed a motorcycle taxi coming up behind me far too
fast for the conditions. By the time he saw both me and the barricade it was too
late and he lost control of his bike and slid sideways into the rear bumper of
my car. My car had no damage and he was not severely injured, just a few barked
knuckles, and the motorcycle only had a few scratches, but he demanded payment
from me. As I was in a hurry to get to an appointment, my Thai friend who was
with me said to offer him 500 baht and we eventually struck a deal at 1000 baht
and that was it. What I don’t understand is why I had to pay anything at all? He
was going too fast and ran into me. Why should I pay anything? It makes me
angry.
Confused and Angry
Dear Confused and Angry,
It is not quite as cut and dried as you are making out. Did you indicate you
were turning in the middle of the street? Remember that barricades mean nothing
to motorcycle taxi riders, who just swerve around them. Certainly, you could
have called the police and waited around and gone to the station to make a
report and allowed the nice policeman to deliberate whether the poor little
financially strapped taxi bike rider was to blame, or the angry rich farang.
There is also the viewpoint that in any accident with two moving vehicles it is
extremely rare to see one 100 percent in the right and the other 100 percent in
the wrong. Could the taxi bike afford to pay for his barked knuckles and the
damage to his bike? You would do better, my Petal, to consider it a donation
which allowed you not to have to waste several hours of your time. I believe
your Thai friend gave you good advice, but the choice is always yours.
Dear Hillary,
Whenever I go to any bar and a girl takes a shine to me it all seems to end in
frustration. I buy her a drink, have a chat, pay for her to come with me, show
her my lovely house, which is far better than anything she would be used to,
coming from Isan. Afterwards, she has a shower, demands payment and skeedaddles.
What I want is some nice friendly cuddles, but I’m not getting it. What’s the
drill, Hillary?
Frustrated Freddie
Dear Frustrated Freddie,
Sounds to me that you’re the one with a drilling problem, my Petal. After
re-reading your letter, I have come to the opinion that you are far too self
centered for any relationship with a woman, paid or otherwise. So you have a
nice house. The ladies of the night have probably seen every penthouse in
Pattaya, which will be better than your “lovely house”. There is also the fact
that you appear to me to have a fairly high opinion of yourself, so perhaps it
is the girls’ way of bringing your ego down to size, after they’ve brought the
other bits of you down to size too, if you get my drift. Finally, have you ever
stopped to consider that perhaps you are just a lousy lay?
Let’s go to the movies:
by Mark Gernpy
Now playing in Pattaya
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. And 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. It’s an absolute marvel that it showed up here in Pattaya at
all – cheers to the Major Cineplex chain for bringing it in.
The Reader also
got Oscar nominations for director Stephen Daldry, and for
cinematography. David Hare, nominated for adapting the screenplay for
The Reader from the novel, noted that it’s about “an unrepentant
Nazi war criminal having an affair with an underage boy. It puts a lot
of people off.” The underage boy is David Cross, who was 17 when
filming began. [The crew delayed the filming of the sexually explicit
scenes until after his 18th birthday.] Also starring Ralph Fiennes.
Rated R in the US for some scenes of sexuality and nudity. Mixed or
average reviews.
Revolutionary Road:
US/ UK, Drama/ Romance – This is a brilliant 2-character drama set in
the 50’s based on a novel by Richard Yates, with brilliant performances
by Leonardo DeCaprio and Kate Winslet, brilliantly directed by Sam
Mendes. In other words, just brilliant! I loved it. However, it’s
done very badly at the box office here in Thailand – about as bad as
possible – probably because it’s mostly talk. But what great talk!
Between two actors at the top of their form, together again for the
first time since their legendary performances as the Titanic’s doomed
lovers. It’s a real pleasure to watch them interact on the screen.
Kate Winslet received
the other of her two Golden Globes this year for her performance in this
film – as best actress. It received three Oscar nominations: supporting
actor (Michael Shannon – for a brief but potent turn as a mental patient
who sees through the phoniness surrounding him), and for art direction
and costume design for its pristine recreations of 1950s fashion and
design. Indeed the careful attention to the details of 1950’s life is
one of the joys of this film. Or one of its horrors, if it brings back
bad memories. I highly recommend this film, and urge you to see it.
The story: Frank and
April Wheeler live a life of suburban plenty that seems on its surface
to represent the American dream. In reality the pair is haunted by the
thought that they have betrayed their youthful dreams and are trapped in
a conventional lifestyle that falls far short of the existence they had
imagined for themselves. They decide to move to France to better
develop their true sensibilities, free of the consumerist demands of
America. Rated R in the US for language and some sexual
content/nudity. Generally favorable 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.
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. Set after the victory
at Ayuthaya against the invasion of the powerful Burmese Empire, when
Khan Kluay is appointed King Naresuan’s royal elephant.
Bolt: US
Animation/ Comedy/ Family – I found it a complete delight, containing
many moments of real heart. If you at all enjoy animation, don’t miss
this one. Generally favorable reviews.
Watchmen: US/
UK/ Canada – Action/ Drama/ Fantasy/ Sci-Fi/ Thriller – I think that
once you accept the violence and the comic-book origins, you will find
it a monumental film. If you liked The Dark Knight or A
Clockwork Orange, you should appreciate this. Rated R in the US for
strong graphic violence, sexuality, nudity, and language. Mixed or
average reviews.
Meat Grinder/ Cheuat
gon chim: Thai, Horror – A slasher/horror, torture-porn thriller
about a noodle-shop lady who serves up a special meat with her dishes.
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