Funny money out East

GCM (LON:GCM) has announced a Memorandum of Understanding with some Chinese concern to accelerate its Bangladeshi coal opportunity. This is fine and the shares are up from 13p to 50p+. However a Memorandum is not quite the same as Production. Further, on 29th May 2016 GCM borrowed £3m convertible at 11p per share. Given that there are currently only 62m GCM in issue, loan conversion could be pretty dilutive. Anyway, I paid 6.75p for Polo (POL). POL has yet to move but it jolly well ought.

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Funny money out East: The great Indian bank-note clean-up has not yet been sufficiently described over here. The point generally missed is that the 1,000 Rupee note (c. £12) is the highest denomination note in circulation. So for those financing and retaining their undeclared profits the natural medium is this bank note and, also, its 500 Rupee accomplice.


Holders have until late December to change these notes into their bank accounts and take out new notes. Of course such a switch will be noted by the authorities and the owners investigated. If the old issue is not switched by the deadline they are worthless. And they are rather reduced in value right now. For instance, jewellers are well aware of their typical customers’ problem and have increased their selling prices by 20% or so where the customer tends the old notes. Also, I understand the jewellers’ CCTV footage is being investigated by the government.

Further, temples are receiving very large gifts of cash since they benefit from a dispensation in practice.

Anyway, one can see that the preferred medium of convertible exchange in future shall be gold.

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Which brings me to the astonishing weakness of the gold price. I reckon that this is pretty straightforward: higher interest rates are on the way in the US. Hence the sell off. But the rate of inflation will surely exceed these interest credits which will take cash holders back to gold – and how.