Tabula Rasa

LENSES

On any given day there are many forces that combine to directly or indirectly influence our daily lives, some we have control over and some not. A tap on your screen and opinion is globally shared along with ideas and ideology. Looking out at numerous geopolitical events and viewing the vast ocean of information available, in order to gain perspective you need to focus the lens that you are looking through.

Our respective lenses are generally shaped by our accumulated experiences, successes and failures, parents, teachers, mentors, chance encounters, what information we are exposed to and how we process and assimilate that information. Forming a coherent picture of the world around us and gaining a better perspective of our place in it.

“For instance, on the planet Earth, man had always assumed that he was more intelligent than dolphins because he had achieved so much—the wheel, New York, wars and so on—whilst all the dolphins had ever done was muck about in the water having a good time. But conversely, the dolphins had always believed that they were far more intelligent than man—for precisely the same reasons.” — Douglas Adams, The Hitchhiker's Guide to the Galaxy

Sifting through the torrent of propaganda and focusing our lenses on facts is becoming more difficult. Somewhere, somehow there is always something in our daily feeds about Ukraine...Fatigue sets in, disinterest...Do I need to read-listen-watch more of this? Is now the time to be taking your eye off the events concentrated over this region?

I don't think so.

Great geopolitical rivals are at war. The battlefield is Ukraine. It will affect the relationships between countries, redraw borders, shake the monetary system, grant or deny access to resources and intensify the technology race. The BRI, Europes energy security, military superiority, elections, the cauldron of the Middle East, currencies, geographic chokepoints, assasination attempts on generals and presidents, the dollar collar, coups in far flung regions and the price of my favourite olive oil going up 300% in 36 months, unfortunately, is all part of the same war.

One of the lenses I use and have found helpful to look through is gold. When looking at the price of property for example, a stock price or even a vehicle, I would always ask how many ounces of gold would that cost? One thing is certain right now the cost of gold in all currencies is significantly more expensive than it has ever been and you can get more currency for your gold than ever before. Central bank gold buying has continued at a steady pace over the last few years and this signals a nervousness about the value of reserves...in whatever form they might be held. International trade settlement has been knocked on it's ear. Should we use currency or fungible commodities?

Silver. As far as lenses go, can be equated to the blue and red glasses that you are given to watch a 3D movie or the tinted glasses through which to view an eclipse, one giving you an outsized sensory explosion that can make you jump in fright to not get hit by an imaginary freight train coming out the screen and the other, clearly watching an event unfold that cannot be observed comfortably with the naked eye. Silver breaking out and piercing certain levels is significant. This essential material, so important for so many applications least of all I suspect, to military hardware, energy generation and computational power which would include so called AI. Maintaining technological superiority in the event supply chains could become further disrupted might become vitally important. A little silver stockpile might go a long way.

We know that BHP went after Anglo for their copper assets for reasons that were well covered in the press. The merger however, was STRICTLY conditional on the discarding of Anglo's South African assets. I couldn't help but think there might be a geopolitical flavour to this move.(a bit of speculation on my part and looking through the lens of copper) BHP, a giant Australian company falling under the western sphere of influence trying to secure what is becoming increasingly rare and more expensive to develop copper mines to ensure supply into the west. South Africa, a BRICS country with leanings toward the East and where Anglo was born, with a large South African shareholder base and the domicile of large natural resource assets. This deal could have strategic overtones as to where that copper might be sold in the future. Copper is a fungible commmodity, a former monetary metal that has also been used out of stockpiles in Chinese warehouses to increase or decrease liquidity when needed, whether the price is high or low. If it is electric, there is copper in it, countries that secure supply can secure consistancy in upgrading, maintaining and modernising their infrastructure.

Energy prices have recently been moving distinctly sideways which could be indicating lacklustre global demand from a constrained consumer. Energy could be keeping a lid on global inflation but were it to start to move higher the inflationary impact would be felt more acutely by all. This lens needs a little polishing. With all the geopolitical tripwires that are visible, as in the past, if any one of these wires are tripped, markets could get very...interesting. I am always on my toes for that day when politicians sound sensible and peace and tranquility engulf the world, sending oil to $10 a barrel and cutting the gold price by 50%.

The rates lens could have a little scratch on it or quite possibly a crack. With participants hanging onto every word out of the Fed for direction, announcement of rates have become like watching a slow motion coin toss with focus on watching the flipped coin while still in the air waiting for it to settle. Heads, rates up. Tails, rates down. Although as far as prognosticators go, Jim Grant believes rates are more likely to go up than down in the coming months.

Geopolitical perspectives can vary from person to person. Who is right and who is wrong? It is questions like these that can detract from the fact that these events are happening regardless of what our opinion might be. War spending is almost always entirely funded through debt and who pays that debt?

You.

Looking through the lens of war brings into focus uncertainty. You could look back at other precedents like World War Two, high inflation and prices of agricultural commodities skyrocketing (kept in check by strict rationing) but with unsustainable global debt currently at record levels, this time could very well be different, there is no analog. In a conflict where the death toll could be approaching one million, one thing is certain, it is a big war and the stakes are high. Mandatory military service on the lips of many politicians and some European countries already legislating this. France trumpeting sending in troops to 'specialist advisors' from numerous countries already on the ground, billions of dollars in funding and weaponary sent, yet Russia still making more dramatic gains daily. Viktor Orban visiting Ukraine, Russia and China in fourteen days, in what could be called rogue diplomacy as it was done without the consent of his European counterparts. NATO wanting to turn the Western Ukraine into a no-fly zone firing on Russian military assets from Poland.

Oh. Let's not forget the Chinese troops that have just landed in Belarus for two weeks of war games a stones throw away from the conflict zone and within sight of the Polish border. Somebody somewhere is underlining a fine point with this rare action so close to Europe.

Escalation? To maintain hegemony or to break it? Perhaps.

Geopolitically, geo economically many things seem to be converging. All those things we percieve as having or maintaining value should be scrutinised. Share prices, property value, commodities, currencies, bonds...all of it. Events are moving quicker and quicker and it is always prudent to be cautious.

At least that is what I see when I focus my lenses.

Thank you for taking the time to read this.