Hello Pezz, Today’s Report:
First day at the office in 2 weeks and I did what I had to do, and then did some more, so that I can travel to a secondary city on the mainland starting Wednesday for three days.
The trip will be a pleasure journey in a manner of speaking, in that I will be visiting the boss of the chemical fertilizer company to which we supply electricity and steam from a captive power plant in which my partner and I have an equity interest (the chemical fertilizer company is the majority shareholder in the co-gen power plant. Our equity stake was inherited as a success fee by way of a workout of a distressed situation for a client.
It has been at least two and half years since I have visited the allocation (its value was always kept on the books as zero), and it is time for a visit, to see what else might be up besides dividends.
The Chinese partner has certainly been very good with managing the power plant as well as remitting the very generous annual dividends. Whoever claims that it is impossible to make money from China joint ventures does not know what he is talking about or does not know what he is doing.
In anticipatory excitement, I got a tranche of HK paper currency, which is hard pegged to the US tissue money, walked across town to the Hang Seng Bank HQ, and asked to swap the paper into something more solid. This time, seeing that Chinese gold Pandas are no longer available anywhere in HK in any reasonable quantity, I decided to aggregate American gold Eagles (I like the packaging).
I did aggregate enough Eagles to wallop someone senseless if swung inside a pillowcase, but did not get my fill, because the bank limited the quantity it would sell to a non-client. This is the first time the constraint has happened to me at the dealing bank. I had in the past purchased 5 times as much at one time without difficulty.
No big deal, I will just return tomorrow and then there is always next week.
This latest gold allocation may seem strange to you, given that I had just done this Message 21896820 notified to you a few days ago. In fact, this trade is precisely the undertaking that generated the necessary surplus cash for the current physical gold purchase. To make sure I do not lose the profit, I solidify it by mineralizing it.
I simply need to mineralize a certain amount of current year active savings before starting the new calendar year. In case I had been remiss in mentioning, I am starting my own gold mine. The rich vein of ore has a purity of 998+ (the American Eagles are not 999), the goodies are no more than 30 feet under ground. And cost of extraction will be zero.
The bullion cost almost USD 500 per SKU. No matter, for these annual savings mineralization exercises, I buy when I buy, and the price premium over 52-week low, +/-20%, is not a concern, since my average price is not that sensitive, and especially given that the gold will break USD 2,500 as surely as the Dollar will lose at least 80% of purchasing power within my immediate planning horizon (17 years).
I am a believer in gold’s magical monetary powers, and so I prefer physical gold. The gold mining share speculators are not true believers in the power of gold. A mine, in the course of its working life, is a wasting asset, and when profits are minimally distributed, and simply reinvested in more mines that do not pay out, is a bad investment, like QCOM.
I use options to speculate in gold (gold mine, according to Barron’s, is just a long life Call option on gold, nothing more. I use bullion to invest in gold.
OTOH, QCOM is a long life Call option on nothing.
Chugs, J |
