Ben Davies

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The Gold Symposium Keynote Presentation 14 & 15 November 2011 Luna Park

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Ben Davies

  1. 1. Hinde Gold FundSingularity – Transcendent MoneyGold Symposium, Sydney AustraliaNovember 2011
  2. 2. Singularity – tranScendent MoneyKey ConCepTS– Singularity– exponential vs Linear Growth Trends– Law of Accelerating Returns vs Law of diminishing Returns– Financial Oppression– internet Reformation– Transcendent Money– Monetary Singularity 02Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  3. 3. Singularity - MatheMatical 03Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  4. 4. Singularity – Schwarzchild Black hole 04Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  5. 5. Singularity – “Mother of all”Big Bang - (Keplers) Supernova nucleosynthesis. 05Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  6. 6. Singularity – technological“The singularity will allow us to transcend the limitations of our biological bodies and brains. There will be no distinction, post singularity, between human and machine.” CoUnTDoWn To SInGULARITy 06Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  7. 7. Singularity – exponential trendLinear vs exponential trend growth. note the initial imperceptible growth which acceleratesat a point in time called the “Knee of the curve”. LIneAR VS eXponenTIAL GRoWTH 07Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  8. 8. Singularity – law of accelerating returnSexponential curve on Log Scale – the exponential of the rate of exponential. eXponenTIAL GRoWTH oF CoMpUTInG 08Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  9. 9. Singularity – Moore’S lawdynamic RAM (Random Access Memory) illustrates Moore’s Law.dRAM size shrink by half every 5.4 years.Cost of dRAM per square millimeter falling - dRAM bits per dollar doubles every 1.5 years. DynAMIC RAM DynAMIC RAM pRICe 09Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  10. 10. Singularity - productivityHalf-lifes or doubling times. 10Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  11. 11. Singularity – progreSSive purchaSing power pRoCeSSoR peRFoRMAnCe 11Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  12. 12. Singularity – productivitydemand outstrips deflation in cost of information technologies. ToTAL BITS SHIppeD 12Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  13. 13. Singularity – productivity Miracle?Real GdP growth. A productivity miracle or a function of credit expansion? ReAL GRoSS DoMeSTIC pRoDUCT 13Source: Ray Kurzweil, 1999Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  14. 14. Singularity – law of diMiniShing returnS DIMInISHInG ReTURnS FRoM An ADDITIonAL $1 oF DeBT In THe US eConoMy 1.4 Annual change in GDP divided by the annual change in total debt to GDP, 4Q mov average. 1.2 1.0 0.8 0.6 0.4 0.2 0.0 -0.2 -0.4 Sep-60 Sep-63 Sep-66 Sep-69 Sep-72 Sep-75 Sep-78 Sep-81 Sep-84 Sep-87 Sep-90 Sep-93 Sep-96 Sep-99 Sep-02 Sep-05 Sep-08Source: Marc Faber – Gloom Doom Boom Report 14Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  15. 15. Singularity – linear deBt trendS TOTAL DEBT & LIABILITIES AS % OF GDP 400% 200% 0% -200% -400% -600% -800% -10,00% -1,200% -1,400% -1,600% -1,800% Italy Germany France Portugal United United Spain Ireland Greece States Kingdom Cost of ageing Structural deficit Initial debt level Source: EU Commission, Eurostat, CBO, IMF, Morgan Stanley Research 15Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  16. 16. Singularity – exponential deBt trendS THe US M2 FITTeD To An eXponenTIAL TRenD THe US ToTAL DeBT (In USD BILLIon) FITTeD To An eXponenTIAL TRenD 12,000.0 60,000.0 10,000.0 50,000.0 8,000.0 40,000.0 6,000.0 30,000.0 4,000.0 20,000.0 2,000.0 10,000.0 0.0 0.0 Dec-58 Dec-60 Dec-62 Dec-64 Dec-66 Dec-68 Dec-70 Dec-72 Dec-74 Dec-76 Dec-78 Dec-80 Dec-82 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 Dec-58 Dec-60 Dec-62 Dec-64 Dec-66 Dec-68 Dec-70 Dec-72 Dec-74 Dec-76 Dec-78 Dec-80 Dec-82 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Dec-12 M2 (USD billion) Exponential Forcast Total Debt (USD billion) Exponential Forcast 16Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  17. 17. Singularity – log Monetary trend US MoneTARy BASe (LoG TeRMS) 8.0 7.5 7.0 6.5 6.0 Dec-95 Jul-96 Sep-97 Nov-98 Jun-99 Jan-00 Aug-00 Dec-02 Jul-03 Sep-04 Nov-05 Jun-06 Jan-07 Aug-07 Feb-97 Apr-98 Mar-01 Oct-01 May-02 Feb-04 Apr-05 17Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  18. 18. Singularity – Money velocity MoneTARy VeLoCITy yoy 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% Jun-61 Jun-64 Jun-67 Jun-70 Jun-73 Jun-76 Jun-79 Jun-82 Jun-85 Jun-88 Jun-91 Jun-94 Jun-97 Jun-00 Jun-03 Jun-06 Jun-09 Recessions Monetary Velocity YoY 18Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  19. 19. Singularity – “puMpty puMpty puMp...” 19Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  20. 20. Singularity – e.f.S.f.european Financial Stability Facility or european FUBAR Slush Fund?“it is tied to higher risks of losses and to increased sharing of risks. The way they are constructed, the leveraging instruments are not too different from those which are responsible for creating the crisis, because they are concealed risks.”Jens Weidmann, President of the German Bundesbank 20Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  21. 21. Singularity – MonolineAMBAC: the muni and sub-prime monoline insurer.A taste of things to come for the eFSF monoline insurer? AMBAC US (SHARe pRICe) 100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 Jul-91 Jul-92 Jul-93 Jul-94 Jul-95 Jul-96 Jul-97 Jul-98 Jul-99 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07 Jul-08 Jul-09 Jul-10 Jul-11 21Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  22. 22. Singularity – gloBal Monetary trendSUK Qe has been 45% bigger than the Fed’s Qe. BAnK oF enGLAnD ToTAL ASSeTS eCB ToTAL ASSeTS600,000 3,500 3,000500,000 2,500400,000 2,000300,000 1,500200,000 1,000100,000 500 0 0 Jun-06 Sep-06 Dec-06 Jun-07 Sep-07 Dec-07 Jun-08 Sep-08 Dec-08 Jun-09 Sep-09 Dec-09 Jun-10 Sep-10 Dec-10 Jun-06 Sep-06 Jun-07 Sep-07 Jun-08 Sep-08 Jun-09 Sep-09 Jun-10 Sep-10 Jun-11 Sep-11 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Jun-11 Sep-11 Mar-07 Mar-08 Mar-09 Mar-10 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-11 22Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  23. 23. Singularity – gloBal Monetary trendSThe illusion of sobriety. JApAn BoJ BALAnCe SHeeT ToTAL ASSeTS (100 MILL Jpy) CoMpoSITIon oF FeD BALAnCe SHeeT, SeCURITIeS poRTFoLIo1,800,000 100% 90%1,600,000 80%1,400,000 70%1,200,000 60%1,000,000 50% 800,000 40% 30% 600,000 20% 400,000 10% 200,000 0% Dec-08 Jun-09 Aug-09 Dec-09 Jun-10 Aug-10 Dec-10 Jun-11 Aug-11 Oct-08 Feb-09 Apr-09 Oct-09 Feb-10 Apr-10 Oct-10 Feb-11 Apr-11 Oct-11 0 Apr-98 Oct-98 Apr-99 Oct-99 Apr-00 Oct-00 Apr-01 Oct-01 Apr-02 Oct-02 Apr-03 Oct-03 Apr-04 Oct-04 Apr-05 Oct-05 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Agencies MBS US Treasuries 23Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  24. 24. Singularity – price trendSQe impact on corporate bond spreads, S&P500, Commodities and dollar. BAA CoRp SpReAD AnD S&p RATIo ConTInUoUS CoMMoDITy InDeX AnD ASIAn CCy InDeX 700 500 1,900 650 1,700 480 600 1,500 550 460 1,300 500 1,100 440 450 900 400 420 700 350 500 300 400 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11 Oct-11 QE1 S&P QE2 BAA Corp Spread (scaled) QE1 Asian Currency Index (RHS) On Hold to 2013 QE2 Continuous Commodity Index On Hold to 2013 24Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  25. 25. Singularity – coMModity vS fiat paper MoneyGold price (y) or (1/x) is an inverse function of paper money (x). pURCHASInG poWeR oF FIAT Money AnD THe GoLD pRICe Gold Price Purchasing Power of Fiat Money (increasing) > 25Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.
  26. 26. Singularity – financial oppreSSionMonetary and Fiscal Policy at a ‘practical limit’Financial Legislation, regulation and taxation enables ‘Capital Conscription’Conscripted Capital ie ‘grab’ capital mandatorily• Quantitative and Qualitative easing (financial repression)• ‘dodd-Frank –esque’ Global Financial Regulation Acts• nationalisation of Money Centres and Pension companies• FATCA, FTT or Tobin Tax, double Tax Treaties (US, UK and Switzerland)• Mining Taxes, Windfall Taxes, nationalisation of Mines 26Hinde GOLd FUnd november 2011 All material is compiled from sources believed to be accurate, but no accuracy can be guaranteed.Singularity – Transcendent Money The presentation is for information purposes only and is not a solicitation to invest.Confidential Unauthorized reproduction or distribution is strictly prohibited.

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